Delimiter’s Curious Response to UK Superfast Report

August 3, 2012
Communications & Broadband

Delimiter has published a curious response to a UK House of Lords report on broadband policy released this week.

There are three key takeaways from the study, each an unwelcome truth for supporters of Labor’s NBN policy.

The Lords’ first point (pages 24-27) is that the overriding reason for policy intervention in the first place is to provide access to fast broadband in areas it won’t reach on purely commercial terms:

"Government policy on broadband should be driven, above all, by the social benefits it can unleash, and the need to arrest and ultimately reduce a damaging digital divide."

Yet in Australia, Labor denies public investment to upgrade broadband requires non-commercial economic or social ‘spillover’ benefits to add up, instead claiming the NBN is commercially viable (and its costs can therefore be kept off the Budget). It plans to overbuild commercial infrastructure capable of providing good broadband for years to come as well as upgrade non-commercial areas. And Labor has paid no attention to affordability – according to NBN Co, monthly revenue per user will double between 2012 and 2021, entrenching rather than reducing the digital divide.

The Lords’ second point (pages 31-34) is that broadband policy frequently falls into a “speed trap” – too much attention is paid to particular download or upload targets, and not enough to ensuring access is ubiquitous and affordable, or expanding the beneficial ways the network can be used:

"We recommend that future broadband policy should not be built around precise speed targets end-users can expect to receive in the short-term, however attractive these may be for sloganeers."

The Lords urged broadband policy to work to a horizon of at least ten years and include an upgrade path towards the eventual goal of FTTP. But lack of existing uses for the speeds offered by such a network pointed to a need to "set out an even bolder vision for broadband policy than is currently the case."

Again, the contrast with Australia is clear – our debate has focused intensely on the high speeds available over FTTP and their purported (but seldom demonstrated) benefits, and barely at all on the decade or longer many users must wait for adequate broadband.

Finally, the Lords’ recommended (referring to the UK’s specific circumstances) that government should for now focus on pushing open access fibre backhaul closer to users, and leave the private sector take care of the “last mile”.

"We recommend… the Government undertake to produce detailed costings of our proposal, not least because our proposal removes the final mile-the most expensive per capita component of the network—from the costs requiring public subsidy." (page 21).

This is the polar opposite to Australia’s NBN. The Lords provide three reasons for not offering public subsidies for the last mile:

  • It is incredibly expensive – up to 75 per cent of costs.
  • In the UK there is an emerging competitive private market in last mile infrastructure provision. Contrast this with Australia, where Labor’s NBN has been granted a statutory and contractual monopoly over the access network.
  • Governments shouldn’t dictate which technology suits each community – local authorities, residents and businesses should invest in whatever matches their needs.

The report anticipates the "emergence of a new industry of infrastructure providers in the final mile who will be able to respond to local demand and compete effectively with their national cousins," and points to an increasing number of such businesses "thriving in areas of the UK where open access to backhaul can be secured." (page 26).

The British press and industry analysts published straightforward accounts of the House of Lords report and its implications. Informa, for instance, blogged it was a wake-up for those claiming only slow and costly FTTP broadband rollouts should be considered:

"Politicians’ fears that the UK will somehow be ‘left behind’ by nations with networks capable of delivering speeds of 100Mbps or more, such as Japan and South Korea, have eclipsed the very real problem of those served poorly – or not at all – by the free market for broadband services. The major flaw in their thinking is that no one really knows exactly how superfast speeds will benefit nations and citizens. Despite the fact that well over a hundred million homes are now subscribed to next-generation services, no applications that truly require the speeds only these new networks can provide have emerged."

Yet in Australia, Delimiter managed to miss all of these points in what is an admirably clearly written report, and file a story headlined "UK Lords back universal fibre NBN".

In truth the House of Lords report did not say anything at all about Australia’s NBN. It did include the following very clear statement about FTTP:

"Given the impossibility, with current constraints on resources, of rolling out universal point-to-point FTTP, we recommend that Government policy should, as an intermediate step, aim to bring national fibre-optical connectivity…within the reach of every community."

Bizarrely, while the report urges a technology-agnostic approach to last mile networks and vigorously rejects public subsidies, Delimiter claims the Lords’ recommendations about UK broadband policy align almost perfectly with Labor’s NBN:

“The House of Lords’ conclusions mimic the Australian Labor Party’s NBN project in a number of areas; revolving around principles of wide-spread fibre connected as close to housing and business premises as possible, open access to that infrastructure and a focus on the long-term potential of telecommunications rather than on short to medium-term specific speeds.”

No less curiously, despite Delimiter’s avid reporting of ex-BT CTO Peter Cochrane’s claims that fibre-to-the-node was “one of the biggest mistakes humanity has made”, today’s story fails to note the report gave those comments absolutely no credence.

While the House of Lords report is focused on the particular circumstances of the UK, a rational observer might draw the conclusion that it also poses awkward questions for those arguing for the current NBN. But not Delimiter:

“This dynamic has implications for the Coalition’s rival NBN policy. One of the key questions which the Coalition in Australia has not answered yet is what its long-term plan is with respect to national telecommunications infrastructure — is it factoring in to its plan an eventual shift to FTTH and away from its FTTN plans? And if so, why not simply deploy FTTH straight away, given that the Government’s current NBN plan is currently projected to make a return on that investment? These are clearly the sorts of issues the UK Parliament has been grappling with; and they need to be addressed in Australia as well.”

Strange days indeed. Perhaps Delimiter read a different report to everyone else.

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