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Tuesday, 26 June 2012
Page: 8118


Mr TURNBULL (Wentworth) (16:30): In this, the third report by the Joint Committee on the National Broadband Network on the rollout of the National Broadband Network, there are some very important criticisms made of the NBN Co. by the whole committee, not simply by the coalition members, which go to the whole function of the committee and indeed the accountability of the NBN Co. for this massive public investment. The recommendations complain about the failure of the NBN to respond to questions, whether it is questions on notice or questions in committee hearings.

Recommendation 2, for example, calls on the government to include meaningful, consistent KPIs and statistics, such as homes passed, homes connected and services in operation. These are meaningful terms that people can understand, as opposed to the rather bizarre concept that the NBN Co. has invented—I have never seen it anywhere else in the world of telecommunications—where it boasts not of the number of households that have been passed but of the number of households that are contained within areas in which construction has commenced, as though that has any relevance. The fact that you are living in a house which is part of an area of 20,000 households and that the NBN has put a shovel in the ground somewhere in that area does not bring you better broadband services. It does not do anything for you, in fact. It is obviously just a device to get over what has been an extraordinary failure in delivery.

I think it is important to run through some of the NBN's scorecard as at June this year. Let us take the most important metrics. In their corporate plan, the NBN estimated that by 30 June 2012—in other words, by the end of this month—there would be 145,000 households passed with the fibre optic cable. As of May, 18,200 premises were passed; so not even 15 per cent has been achieved.

They also estimated in their corporate plan, which was published just at the end of 2010, that by the end of this month 172,000 households would be passed in greenfields areas—that is, in new housing developments, as opposed to the brownfields areas, which of course are built-up areas. They said, 'We'll have passed 172,000 households in greenfields areas by the end of June 2012.' By the end of December 2011, which is the latest number we have, they had passed a massive 951 households. That is an extraordinary failure, barely five per cent of what they had forecast.

They forecast that by the end of this month there would be 1,000 households with active connections to the fixed wireless service. This is the service that will go into the four per cent of the country which will not be getting the fibre-to-the-premises service or the satellite service. They said, 'One thousand will be connected by fixed wireless as at the end of June.' As at the end of May, they had active connections to 52 households. There is a bit of a pattern here—it is another five per cent achievement. The total number of active connections that they forecast, therefore, by 30 June 2012 was 151,000 active connections, and as of May the active connections are in fact 11,000. Of those 11,000, 7,300 are on the interim satellite service. So in terms of the whole purpose, the whole thrust and the object of the NBN Co., which is the fibre-to-the-premises rollout, supported by the fixed wireless roll-out, it is a colossal failure. When you move out to 30 June 2013, they had estimated in their corporate plan that there would be 805,000 households to be passed in the brownfields areas, and it now appears from their latest publication that there will be only 236,000 households passed.

This is a colossal failure, and the government really provides very little in the way of explanation other than to say that it took some time to finalise the negotiations with Telstra. What they overlook is that the negotiations with Telstra included, from the very outset, an arrangement that the NBN Co.—before all the precedent conditions were satisfied—could have access to Telstra's infrastructure, and they have had access to that for just under a year. So, as an excuse, the Telstra contractual negotiations are very, very thin.

In the industry, there is general amazement at the slowness of the NBN Co.'s rollout. There is general amazement and disappointment at what appears to be much less than competent management on the part of the NBN Co. But I may say that it goes further than that. While you can attribute much of this delay to poor management on the part of the NBN Co—and that is certainly what people in the industry and in the civil engineering world are saying—there is also this problem: the universal experience around the world has been that building fibre-to-the-premises networks is inordinately slow and expensive. Even in Singapore, where they are building a fibre-to-the-premises network—or seeking to do so—it has taken much longer, cost a lot more and resulted in some pretty acrimonious litigation between the various parties in that tiny country, with all of the advantages of density that it offers in terms of a rollout of this kind.

If you want to compare a statistic or a metric between Australia and the United States, Telstra's experience with its small fibre-to-the-premises rollout in South Brisbane, where it has more houses connected just in that little suburb of Brisbane than the NBN Co. has all over Australia, is, as they have told us, that once the fibre is bought to the premises it is still taking one man-day—that is to say, generally it takes two technicians half a day—to cut over the services over to the fibre from the copper, and they have not been able to get that time down. That is obviously very expensive given labour costs. Interestingly, the experience of Verizon, which has done a similar fibre-to-the-premises rollout in America—which they have now stopped because they simply could not make it pay—is that it has taken exactly the same time, one technician-day, to achieve that cut-over. This goes to a key recommendation in the coalition members' and senators' dissenting report here. What we have urged them to do is to investigate ways of speeding up the rollout by using existing infrastructure where possible and deploying different architecture, such as fibre to the node, where appropriate, because the one thing we know—and again this is global experience—is that you can achieve very high speeds using fibre to the node. You do not need to go very far: TransACT is doing it here in Canberra. They are getting 60 megabits per second down and 10 megabits per second up on fibre-to-the-node architecture using VDSL for the last copper piece. They are doing it right here. In the UK they are delivering 80 megabits per second download speed. So in terms of functionality and outcome it is much more than adequate, certainly more than people are likely to pay for. But the government refuses to investigate that, refuses to look at that, in a pig-headed way that is having the consequence of depriving Australians of upgraded broadband services.

The approach we would take and will take if the Australian people return us to government, and the approach we would urge the government to take, is to target the underserved areas first. Don't overbuild areas that are already well served with broadband. This is one of the most extraordinary aspects to the NBN Co., and I look at the member for Chifley over here, who has complained bitterly about areas in his electorate that are not in the three-year rollout, areas which have got little better than dial-up. He quite rightly cannot understand any more than I can why the NBN Co. is not addressing those areas. If his constituents vote for the coalition and a coalition government is returned with the support of a new coalition member for Chifley, he will be able to console himself in his defeat with the thought that they will get their services upgraded more quickly. In his electorate these areas are not getting upgraded and yet here in Canberra in the suburb of Crace, where TransACT has installed fibre to the premises, the best architecture you can get, the NBN Co. is going to overbuild it. In Ballarat, where TransACT, for example, has an HFC network and again is delivering very high speeds, 100 megabits per second, the NBN Co. is going to overbuild that to deliver people—wait for it: 100 megabits per second. The same is true in my electorate. They are going to overbuild areas well served by HFC in my own electorate with their fibre-optic cable and yet neglect areas that are poorly served.

The approach that the government should be taking—if the NBN Co. were run in a businesslike way, in a sensible way as opposed to this ideological obsession with fibre to the premises—is to target the areas that are poorly served first. It would then ensure that those areas receive infrastructure upgrades as a priority. It would use a mix of technologies so that the rollout were cheaper, faster and as a consequence more affordable, bearing in mind that income or lack of it is the biggest obstacle to broadband usage. If it did that, we would see the object of the NBN Co., which we all understand to be giving all Australians access to very fast broadband at an affordable price—that should be the object—achieved much sooner. It is very cold comfort indeed for Australians who have been waiting to have their broadband services upgraded to be told by the NBN, 'Oh, we will get to you sometime in the next decade or perhaps the decade after it,' and then, as they lament the leisurely timetable in the NBN's corporate plan, discover that even on the basis of that timetable, which is slow enough, the NBN is barely able to reach 10 per cent of its targets. In some cases, as I have noted earlier, it is only achieving about five per cent of its target. This is an incompetently managed company, owned by and directed by an incompetent government. It is a lose-lose-lose situation. Australians will be waiting much longer than they need to to get better broadband. Taxpayers will pay much more than they ought to to achieve this broadband upgrade. At the end of the day, as a consequence of this gigantic overinvestment, the services will be more expensive and therefore less affordable.