Reporting the Real Issues About the NBN or Why Lateline Missed the Point

November 29, 2012
Communications & Broadband
Media Releases

The National Broadband Network is a complicated issue. But that is no excuse for superficial, misleading or unbalanced reporting of it.

Yet on Tuesday November 27 ABC’s Lateline ran a segment about the NBN ahead of a discussion between myself and Senator Conroy that was all of the above. Lateline missed the point of the debate over broadband policy, preferring to reinforce the Government’s false but seductively simple claim: Labor is ushering us into the digital future, while the Coalition is holding us back.

There is one key question in the Australian broadband infrastructure debate: are the vast costs and long waits associated with running fibre into 93 per cent of homes and businesses justified by the speeds it can deliver? If we can provide Australians with very fast broadband capable of supporting applications used by consumers sooner and at a much lower cost, isn’t that a better approach?

In this light, the questions the ABC should have been exploring are threefold.

First, what are the time and cost differences between Labor’s fibre to the premises (or FTTP) NBN and the Coalition’s alternative (often termed FTTN) that pushes fibre much closer to end users, but not all the way to their home or business? Which is faster and cheaper to build?

The answers are that in comparable North American and European markets both the cost and time to build FTTN is between a third and quarter of building FTTP. This information is easily obtained from telecommunications firms who actually build these networks – and if Australian engineers and executives are camera shy out of concern not to offend Senator Conroy, available from their counterparts in North America, Europe or our region. The ABC has a world-wide news gathering capacity – but has never stirred itself to deploy it to investigate this issue.

The reason it is cheaper and faster to build is very simple. The most expensive and time consuming part of building an FTTP network is the last mile and especially taking the fibre into existing premises. FTTN takes the fibre out to the street cabinet and then uses the existing copper line to the customer’s premises for the last part of the network. As a consequence there is no disturbance of the customer’s premise and a massive savings in civil works and labour costs. In a relatively high wage economy like Australia, the savings of FTTN will be even greater.

Given the importance of this issue – the relative cost and time to build of FTTN and FTTP – and the amount of generally uninformed commentary about it in the media it is, frankly, incredible that no effort is made to report on the actual experience and actual investment decisions of real live telcos and governments in other countries who are grappling with this issue. My comments on relative costs on the other hand are based on first hand advice from executives who are directly responsible for building new generation networks.

Second, what speeds do FTTP and FTTN can deliver? Again there is plenty of evidence. In the UK, BT is using FTTN for 90 per cent of its network upgrade, and delivering up to 80 Megabits per second. The Brits speak English and the ABC has an office in London so given the salience of this issue in the Australian debate it is hard to understand why the ABC hasn’t bothered to interview the folk at BT and report on their experience. Likewise, AT&T has used FTTN for its US wireline upgrade – passing 30 million households. Verizon on the other hard did build an FTTP network, but has stopped expanding it because of the huge costs. An interesting and highly relevant contrast worth some journalistic investigation. Americans, too, speak English and the ABC has an office in Washington – so these facts wouldn’t be hard to find out. AT&T for example offers over its FTTN network voice, broadband and pay television with four concurrent high definition TV streams available.

And across the border in Canada, the cable company, Rogers, has expanded its HFC network (originally built to deliver pay television) so that it can deliver 100 mbps broadband as well as voice and TV. Thats pretty interesting given the regular assertions in the Australian technical media that HFC is out of date and fit only for the technology dustbin. They speak English in Canada too, so that might be a good place to check out.

Indeed, recently the NBN’s own vendor Alcatel announced trials of new FTTN technology showing very fast speeds, often well in excess of 50mbps, from 600m and beyond from the node:

Source: Peeters, M., (2012), “Zero Touch Vectoring: From Innovation to Deployment”, p.11
Third, what speeds are required to deliver applications consumers want to use and are prepared to pay for? If FTTN, while not providing the highest speeds FTTP can deliver, nonetheless meets most customer demands now and in the foreseeable future, the savings in cost and time make it a better approach in most established or brownfield areas.

It is important to note there that it is NOT the Coalition’s policy to do no FTTP at all. Plainly in new developments it should be used and there will be other locations where for one reason or another it is more cost effective or their bandwidth requirements demand it. Our approach will be technology agnostic – like most telcos in the world, we would use the technologies which deliver the service levels needed at the least cost and in the shortest time.

In truth under Labor’s NBN, everybody will pay more, regardless of whether they need high speeds or not. Page 69 of the 2012-2015 NBN Corporate Plan reveals the average revenue NBN Co expects to obtain from each user will rise from $22 to $62 over the next nine years.

Source: NBN Co, (2012), “Corporate Plan”, p.69
Not even Senator Conroy can suspend the laws of economics. A less costly network can charge less to recoup its investment. As NBN Co has told the ACCC it plans to charge enough to get a 7% return on the invested capital.

Rather than these facts, however, we heard claims such as this regarding two-way video:

“It’s that sort of two-way high speed home connection that initially most won’t get under Coalition policy.”

This is wrong and the ABC should correct it.

Respected analysts Analysys Mason (recently employed by NBN Co) advise the downstream/upstream bandwidth needed for high quality videoconferencing is less than 2 Megabits per second, symmetrical.

Source: Analysys Mason, (2012), “Policy Orientations to Reach European Digital Agenda Targets”, p.12, available online here.
Last year in Korea I was shown Cisco’s latest videoconferencing system and was told it required 1.5 mbps symmetrical bandwidth.

The speeds available under an FTTN deployment are more than sufficient to deliver videoconferencing.

For all the ABC’s claims about what people will miss out on under the Coalition, there was no acknowledgement of a key weakness of FTTP upgrades –lengthy construction times. Labor has been in office for five years, yet only 8,613 premises are currently connected to the NBN fibre network.

By way of contrast, the FTTN broadband network Labor promised in April 2007 was scheduled to be finished by 2013!

Ironically, the case study Lateline used was at Wangaratta Hospital – but the report neglected to mention that town is not even on the NBN Co’s three-year rollout plan. No residents of Wangaratta will be connected to fibre until the Parliament after next. And in any event there is no controversy about the need to connect institutions like hospitals, schools, universities and medical centres to fibre optic networks.

The Lateline segment noted that an FTTN deployment would require the installation of street cabinets – the nodes – which connect the fibre to the “last mile” of the copper network. But a balanced report would have recognised that the NBN Co’s FTTP deployment will require over 60,000 fibre distribution hubs which are roughly metre high street cabinets. They are smaller than those required for FTTN and are not powered, but they will be there. Here is a picture of one in Brunswick.

And if the size of the FTTN street cabinets is a negative, a balanced report would have noted the considerable trouble, expense and disruption of taking fibre into every premise – digging up driveways, drilling holes in walls all of which is avoided by FTTN.

No industry leaders or experts supporting the Coalition case were interviewed – yet the CEOs of two Australian telcos recently made public comments supporting our claims. According to the CEO of iiNet, Michael Malone: “The Coalition says they’ll deliver the same outcomes but for lower spend – if you end up with the result that the Coalition has delivered the NBN but at a lower cost I think that’s going to be good for us.”

Source: Edwards, D., (2012), “iiNet feels out NBN Co on HFC network deal” in CommsDay, November 21.
And the CEO of AAPT, David Yuile, said: “Normally what you do is you build closer and closer to your customers with fibre, and fibre-to-the-node is normally the first step.”

Source: McDonald, S., (2012), “FTTN Makes Sense to AAPT” in Computer World, available online here.
Instead we heard from Paul Budde who said 116 countries have a national broadband network. The impression created was that 116 countries were pursuing policies akin to our NBN – but that is false. In fact Australia’s NBN is unique: unique in its cost, its creation of a government monopoly and elimination of competition, and its lack of rigorous analysis prior to such a huge commitment of public resources.

Many areas of public policy are complex, and the media’s task of explaining them simply and clearly is not easy. But that is no excuse for a lack of basic research and balance. And most puzzling of all, why does our national broadcaster, with its global network of reporters and bureaus, have so little curiosity in what other comparable countries are doing with their broadband upgrade programs.

[Note: an edited shorter version of this blog was published in The Australian today 29 November 2012]

Recommended Posts