Response to Former ACCC Chairman Graeme Samuel
Mr Graeme Samuel’s remarks supporting Labor’s NBN are neither surprising nor accurate.
Despite his business experience both while at the ACCC and subsequently, Mr Samuel has been a cheerleader for the NBN and vehemently opposed to any cost benefit analysis being undertaken.
Australian taxpayers and consumers will pay the price for his enthusiasm.
But Mr Samuel’s latest comments show that he’s out of touch with new technologies, and with successful upgrades to broadband in a number of other countries. Multi Service Access Nodes – which can provide broadband over either copper (VDSL) or fibre (GPON) from a single cabinet – are deployed in the USA, UK, New Zealand and many other places.
They are available from multiple vendors. Carriers around the world are increasingly offering fibre connectivity on a customer-by-customer basis where this makes economic sense.
Mr Samuels would appear to be unfamiliar with all of this. Yet he is willing to claim, without any apparent evidence, that a Coalition NBN which relies on FTTN or FTTC in many areas (instead of running fibre optic cable to every single one of 12.2 million homes and businesses) will cost more than Labor’s NBN.
This is at odds with the first hand evidence I have received from the executives who are actually responsible for building new generation broadband networks in the USA, Canada, Germany, United Kingdom, Malaysia, Spain, France and New Zealand not to speak of the advice from experienced network engineers here in Australia.
Perhaps he is not aware that after almost four years, $3.4 billion in funds from taxpayers, $923 million in losses, and the resignation of five of the eight executives and three of the nine directors originally hired to run it, Labor’s NBN has so far run its fibre past only 42,000 households and has just 6,400 customers using it. While two million Australian households are still waiting for better broadband.
In truth Mr Samuel has no idea what Labor’s NBN will ultimately cost (any more than the Government does). If he wants to actually contribute to a higher-quality broadband debate and properly protect the interests of consumers, he should be encouraging Senator Conroy to release detailed, audited, accurate quarterly information on what exactly the rollout is achieving and costing. How much is the NBN Co’s fully allocated capex per FTTP premise so far?
And Mr Samuel, if he cares about taxpayers and consumers, should be pressing his former employer, the ACCC, to explicitly and publicly explain what the pricing ‘constraints’ and formulas in the NBN Co’s proposed Special Access Undertaking actually mean for broadband prices in the long term.
Because by any calculation, the NBN Co proposals made so far do NOT mean typical prices in real terms will stay the same, as Senator Conroy claims – prices will rise in real terms for decades to come, as NBN Co recovers every cent of its losses on the vast and undisciplined investment it is making in its network (all of it uplifted at an interest rate of 9 per cent each year) from consumers.
As far as Telstra is concerned, Mr Samuel’s claim that a revision to the contracts to use part of the Telstra copper network will cost additional tens of billions of dollars is without any basis in fact.
Under Labor’s NBN, Telstra is being paid to progressively shut its copper network so it has no commercial value. I have indicated that our policy will leave Telstra shareholders at least as well off in economic terms, and I am very confident a win-win outcome will be attainable if we are elected.
The Coalition remains committed to a broadband policy which will deliver all Australians very fast broadband sooner, cheaper and more affordably.
35 Responses to “Response to Former ACCC Chairman Graeme Samuel”
“Mr Samuels would appear to be unfamiliar with all of this. Yet he is willing to claim, without any apparent evidence, that a Coalition NBN which relies on FTTN or FTTC in many areas (instead of running fibre optic cable to every single one of 12.2 million homes and businesses) will cost more than Labor’s NBN.”
I believe Mr. Samuel actually made the point that the Coalition’s estimates for constructing a FTTN or FTTC network are unrealistically low. NOT that they will cost of than the NBN. An important distinction.
Give it up malcolm
coalition had opel which they lied about, it never ever started
I wish people like Abbott and Turnbull would be held accountable for deliberately misleading people
It seems the only one unfamiliar with anything is Malcolm Turnbull. Far from rolling out a vastly inferior product cheaper (wrong) and faster (wrong) his dear leader Tony “I’m no tech head” Abbott wants to pause the NBN to save money when in fact this will actually cost way more in cancelled contracts and loss of revenue from not connecting anyone.
..
Hellow Malcolm.
Have you got Tony to believe we need a broadband network yet?
Cheers
Anthony Wasiukiewicz
Actually it’s simple to say the non existent Coalition policy will be cheaper and faster to build when NOTHING WILL BE DONE.
Mr. Abbott wants to pause (i.e. cancel) the NBN and clearly doesn’t understand the need for it. There will be no new broadband network under a coalition government.
Hi Malcom,
How about you release your Broadband policy with costings and any stipulations required, so we can compare the COST of your plan.
Oh and if you could get the rest of the party to start signing off the same hymn sheet it would be appreciated.
Daniel
“as NBN Co recovers every cent of its losses on the vast and undisciplined investment it is making in its network from consumers.”
Maybe you should point this out to your fellow party members…..
The Liberals could get so many more votes if they accept the NBN as it is. I fear the Liberals will lose another election because of the NBN. I guess we’ll find out soon enough.
LNP Cabinet meeting
Tony Abbott:
Malcolm I told you to kill the NBN. That half baked FTTN scheme that nobody not even me thinks will work actually resembles a policy. I couldn’t have a policy on my watch so I have decided to “pause” the great white elephant. That Malcolm is how you kill an NBN by doing nothing. Anything to add Malcolm?
Malcolm Turnbull:
No Tony (inaudible swearing)
Very audible thud is Joe Hockey fainting and hitting the floor having realised there now will be no new revenue to pay for the NBN until Tony Abbott de pauses it or hell freezes over. Not to mention paying out all those now cancelled contracts.
Oh Malcolm Malcolm Malcolm. So wrong and so misleading in so many ways.
Perhaps you could tell me how much it will cost, using your network plan, to run fibre to my individual premise? Just my place. Do you think I’ll be able to afford it? Or will I have to wait until there is enough demand to make it worthwhile. Not that I’ll mind being held back. Just wondering.
And when you do your costing for your FTTN policy, will you include the cost of the eventual upgrade to FTTP? Because it will have to be done eventually. Maybe 5, 10, 15 yrs in the future, but it WILL have to be done. So that cost should be included in estimations.
As for your anonymous telco execs, they suffer from the same short sightedness that you are. Of course building a FTTN network will be cheaper – in the short term. But it won’t last 50-60+ years will it. And when the time comes, then the waste will become obvious.
Your policy of FTTN is nothing more than a cheap and nasty, short term, half measure which will ultimately cost more in the long run, create barriers to the full productivity benefits of BB and the digital economy, and cost end users and consumers considerably more than it should.
Your spin and half truths do you nor your credibility any favours.
If Graham Samuel is an “NBN Cheerleader”, I guess that makes you an “FTTN Cheerleader” Malcolm.
What’s the difference?
The difference is, there are more people that support Samuel’s position than do yours.
44% of current NBN subscribers are on the 100Mbps speed tier – a speed that your FTTN plan will not achieve.
44%…yes, almost HALF.
And you say people neither want nor need this speed.
Proof is in the pudding.
[...] a blog post published today, Turnbull fired back, saying that Samuel was a “cheerleader for the NBN” who was out of [...]
By “out of touch” MT means that the new FTTN equipment can now be upgraded to FTTH simply by swapping a line-interface card.
http://afr.com/p/technology/coalition_nbn_is_obsolete_says_graeme_9NkLG77FSNeFmEdAbtqfaK
“Ovum research director David Kennedy said that advances in technology meant Mr Samuel was incorrect and that modern nodes could be upgraded to act like broadband sub-stations.”
“Regarding the point about fibre to the node being very expensive to upgrade, that was certainly true two or three years ago,” he said.
“But it’s less true now because vendors are building FTTN equipment that is better optimised for the future now. Now you can remove the copper cable and attach a [fibre] connection and swap a card.”
Maybe this now makes it easier to upgrade to FTTH, but that still leaves you with upgraded FTTN nodes at “up to 1 km” distance that are completely unnecessary under FTTH (which can deliver full speeds as far as 30 20 km). XX,XXX nodes that could have been avoided if we go straight to FTTH.
And this also brings up the point that even FTTN manufacturers accept that you will be upgrading within the life of the FTTN node, a fact that the Coalition refuses to address.
Sure the exchangeable cards reduces the costs of FTTN, but it doesn’t eliminate the cost of installing all those extra nodes.
“Mr Kennedy also said that Telstra had already agreed to stop using its copper network in exchange for $4.7 billion, well below the $20 billion minimum figure mooted by Mr Samuel.”
The extra money is to rent Telstra’s copper lines from the node to the premises. This cost is not required if NBNco builds fibre all the way. Switching to FTTN actually MAKES the copper more valuable to Telstra and the FTTN plan, and they have a DUTY to their shareholders to extract extra $billions from the government.
Name these execs Mr Turnbull. provide documentation as well. I would like to see your argument in the fullest context…. No, not would like but demand! You want my money then you tell me the truth!
It is incredible how governments (on both sides) can mismanage situations: 5 out of 8 executives and 3 out of 9 directors (I guess the most knowledgeable of the situation) have abandoned ship after pocketing their bonuses. Something IS WRONG in this venture.
On the other hand remember how the LNP (as majority shareholder) sanctioned the appointments of the THREE AMIGOS at telstra.
Thanks god there is OPTUS so that I can get wireless broadband at reasonable speed CHEAP!
As far as the % of uptake of the 100Mbs service: if it is cheap enough in relation to the other choices, why not – irrespective whether one NEEDS it or not.
The question is is such a pricing structure going to be sustainable in future for the NBN not to operate at a loss?
I am not sure if the NBN business Plan covers this detail
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Paul Hahn (October 23, 2012 at 5:24 pm) says it all:
“Perhaps you could tell me how much it will cost, using your network plan, to run fibre to my individual premise? Just my place. Do you think I’ll be able to afford it? Or will I have to wait until there is enough demand to make it worthwhile.”
Here in one paragraph is the entire case for the Rudd-Conroy NBN.
I want it, but not enough to pay for it. I know that other people want it, but not enough to pay for it. I can have it if it’s forced on us all, but only if we can be led to believe we won’t pay for it.
So we’ll borrow the $30-something billion cost on the taxpayer account, then pay it back in “user charges” instead of “taxes”, thus pretending that it generates a “commercial rate of return”, which will in turn prove that it’s good value for money.
Of course, any publicly owned monopoly can generate a profit, for example the Sydney Cross-City Tunnel could easily become profitable if the NSW government just closed all the surface-roads that bypass it.
So we have to rely on Graeme Samual from the Australian Cut Winners Off at the Knees Commission to give NBN the thumbs up. This will ensure that a large number of voters never see the flaw in the logic of monopoly.
James.
“I want it, but not enough to pay for it. I know that other people want it, but not enough to pay for it. I can have it if it’s forced on us all, but only if we can be led to believe we won’t pay for it.”
Either does not understand or is being intentionally deceptive.
We knFTTN VDSL is inadequate for your needs, you can have fibre run to your premises, highly inefficient and VERY expensive as a one off, usually many $thousands.
Wealthy Liberals of course will pay that just so they can be smugly superior over those scum peasants and deny their kids educational opportunities
Malcolm, FTTH is the way to go for the long term good of Oz. However, it does need to be re-prioritised. I need fibre to my business now! I will pay extra. Home can wait a little while.
[...] Shadow Communications Minister Malcolm Turnbull pointed out this week, the development of Multi Service Access Nodes by networking vendors over the past few years has [...]
Surely by now Malcolm, you must be beginning to wonder why there are so many “NBN cheerleaders” from so many diverse backgrounds.
We have the founder of Apple Computer;
The inventor of the internet;
The CEO of Google;
Australia’s foremost communications expert and recipient of John Howard’s PM award;
The former chairman of the ACCC;
Some of Australia’s foremost educators.
It’s a big and very impressive list of “cheerleaders”. At what point do you begin to wonder if all these people are right, and you are wrong?
http://nbnmyths.wordpress.com/what-do-the-experts-say/
I agree with most of the comments here: FTTH is the only way to go and the Liberal Party’s continued opposition to the NBN will cost them dear at the next election. I have been a ” welded on” Liberal voter all my life but this one issue has made me a swing voter. I am lucky enough to already get around 115mbs to my home via Telstra cable and realize what a huge boon this speed is. In only a few years we will all be needing Gigabit speeds or beyond and FTTN just won’t do this.
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Even though it is technically possible to upgrade from FTTN to FTTH does not mean it is in anyway economically or logistically a good idea.
So we get 50000 to 70000 nodes rolled out by 20xx. From day one any of the poor miserable sods stuck at 25mbs or even people on higher speeds who NEED to upgrade to fibre would have to pay for the upgrade themselves. So I am 900m from a node no one else in my street has the cash to help with the cost so I now have to pay NBNco (or more likely Telstra) to open up all the ducts and pits and run a fibre just for me and install a conversion card in the node. What would this cost? $5000, $10000 who knows. Then 6 months later my new neighbour has to repeat the process for how much you say. Well at least as much as I paid. The definition of insanity is doing the same things over and over and expecting a different result. The whole idea of FTTN is insane and will be proved so if god help us Malcolm actually gets to implement his “policy”.
Even if after 30 years of having to put up with a maximum of 80mbs some benevolent telco upgrades all nodes to fibre we now have at least 50000 powered, air conditioned nodes that would not have been required under the current NBN FTTH rollout.
So the idea of upgrading is so ludicrous that technical feasibility doesn’t matter a toss.
@james, lol… Who would think user pays is a good way to acheive payback on borrowings! You are clearly a socialist/labour voter! Wait….
Hi…
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The entire NBN investment is already obsolete.
Really? And what, pray tell, has suddenly made optical fibre obsolete?
Whatever it is, you’d better rush out and tell all those telcos around the World who are rolling out NBN-like fibre networks.
Google too. They obviously have no idea about this new fan-dangled interwebs thingy…
http://www.youtube.com/watch?v=ffHLIZh0PHg
Politicians that clearly do not understand that technological changes occur not just incrementally but also as fundamental paradigm shifts should not be tasked with investment policies with a ten year plus delivery schedule.
I also note that you have not comprehended my one sentence statement correctly and then resort to sarcastic idioms viz “pray tell”. As for your attempted argument… incumbent carriers that deploy fiber do so because it literally entrenches their monopolies, the ROI is positive in the short term and they write off their investments quickly so as to upgrade when demand exceeds supply or new technology is justified. Likewise Google’s relatively small investments have short term goals. They are hardly comparable nor do they argue for a re-nationalized telecoms monopoly with unprecedented market power and a per capita investment and time horizon that is vastly greater…and is today already obsolete technology.
The onus of proof is upon those claiming “future proof” investments..and I contend this is a notion that is not provable. Those who do not know, do not know that they do not know.
Onward and over the cliff Lemmings..
Interesting posts Paris.
Guess you overlooked that we have had that which you propose for decades, it was a failure.
Why?, work it out for yourself.
That is why we realistically had no practical choice without eternal massive taxpayer subsides but to take on the FTTH GBE NBN.
The US of course is a real world example of your option. Pity the US Government is having to pay $1,000 for every man woman and child to incentivise and subsidise the private sector to try and provide a basic National Broadband network, that is in addiction to the many Billions from States, Counties and Cities.
Pity it is not working, but then what can you expect, the private sector has but one concern, ROI and dividends. The National interest is the Governments problem
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As valid as so many comments may be, the key point, which is the challenge to Graeme Samuels viewpoint.
Graeme Samuel as the head of the ACCC had a primary criteria, what is best for the Nation and the economy, this in most cases had to do with competition and fair dealings.
He has much experience evaluating and assessing relevant factors pursuant to those criteria.
This expertise has been applied to the NBN and the alternative as much as we know about it.
Nothing to do with being an NBN fanboy, rather an Australian fanboy
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