NBN: What an Abbott government will cost you

The NBN: What an Abbott government will cost you

(With contributions and editing from Vince and MikeP.)

What do Australians stand to lose on the NBN if Abbott takes over?  More than they can ever imagine. Its all about progress and the future.

Each of us stands to lose - forever - time, opportunity and the small matter of $30 billion that we have to pay that Mr Turnbull hasn't mentioned.

Nobody has spelt out that:

• The NBN is about increasingly 'adequate' speeds over the next 25 years. Only Fibre can offer that. Copper has technical limits and so Turnbull’s plan will be limited to the best technical application using copper. Optic fibre is only limited by the speed of light and reaching that speed is governed by new and developing technology which can be bolted on and replaced. Copper has reached its effective technological Zenith.

• The top 25% high-demand users generate ALL the profit in Labor's NBN.  The other 75%, get NBN services at cost or heavily subsidised. Spreadsheet Modelling done with colleagues affirms this proposition. If anything the NBN forecast revenue is modest. With Turnbull’s NBN there will be no flexibility to grow speed or applications.

Already the NBN is making 85% more ($29.62) on wholesale Fibre access than the Turnbull Copper/Node proposal can ever make with its $16 wholesale price. When the next three higher speeds, not just 1Gbps, are released later this year, our modelling says Fibre will make 145% more than Copper/Node. As demand goes up, the revenue gap between Copper/Node and full Fibre NBN increases.

All this is because for the first time ever, Australian Internet companies can offer a "range of models" to consumers, based on the application they want to run. In a word ‘Flexibility” is built into a totally optic fibre network, whereas a Turnbull network is stuck at one speed and hence limited applications. It is capped at a speed, resulting in higher entry-level and median prices.

In effect this is the difference between the Marketing principle of providing people what they want and the selling principle which is giving people what you think they need. The market wants these speeds and NBN Co have delivered them. The Liberals don’t want to offer a choice of speed “models” and have shown no cogent reason why not.

Turnbull isn't offering "NBN-Lite" but "NBN Not!" . He's created a deception of truly astounding proportions. Since April, he's not just duped ordinary voters, but the entire media, especially the normally rational and cautious elite of our business reporters. He's confused people like Alan Kohler, which we've never seen before.

How?

He's framed the debate as if the NBN were a normal Government program that is budgeted for annually, like Health or Education, programmes that spend money but don't make any.

Only it isn't.

The NBN is an investment designed to not only pay back our money invested by the Government, but to make a profit. The investment in the NBN is paid back with a premium of 7.1%/year. Can’t get those returns at the bank.

It's a very good business, albeit one that has a lot of value to the community and which will fuel Australia's business competitiveness for the next two to three decades.

For a business investment, the up-front cost is not the whole story.  At the very best, the Turnbull Copper/Node Plan can save only10% cost over the current full Fibre plan, bringing real broadband to 93% of us.  Technically it provides a much inferior service but that doesn't affect the faulty business model, designed to create enormous losses.

What business investors look for is profit , not just cost, which is generated by the difference between revenues and expenses.  “Cheaper” is not necessarily more profitable.  “More Affordable” is never more profitable.

The Turnbull Copper/Node Plan starts with revenues 60% lower than full Fibre and expenses 50% higher.  Ultimately, Turnbull admits his Copper/Node Plan will be thrown away, wasting half of the investment in it.  He says as much in his NBN Plan, but that deliberate waste is never counted in the cost of the Copper/Node Plan.

There are many other financial details that make up what will be a Government financial disaster of unprecedented proportions. Look up the Coalition NBN Plan to confirm these facts [link below].

Look in the Coalition NBN “Plan” for any of the business outcomes that you, as an investor of $30 billion , would like to see.

There is NO mention of:

• How long before the investment is paid back in full (the “break-even” period).

• Return on Investment (ROI: after your capital is returned, how much extra goes in your pocket?), and

• Maximum Downside Risk (If the investment goes sour, how much do you and I stand to lose?)

To reinforce this point, Turnbull presents "Summary Financials", just like the NBN Co Corporate Plan, in his Policy Background.

Only they aren't nearly like the NBN Co Plan he pillories and criticises.

He wants us , the taxpayer, to give him $30 billion over 30 years, but he will only tell us what it will earn in the first five years. Though he talks about later years, frequently, he never discloses the important information in his plan: what the profits or losses will be over the full period. If the copper network was out of date 20 years ago, in 30 years it will be 50 years out of date! By then, we would have had around 10 parliaments.

As investors, we do care about what happens in 30 years, because we’re not just burning this money, we’re investing it.  Turnbull will be long gone and we'll be stuck with his unprecedented debt, as well as the most expensive lemon ever conceived.

Politicians only hide facts and figures when they are bad for them. They only go to the extraordinary lengths of Turnbull's five months of selling his NBN if things are incredibly bad.

Our modelling suggests that the Turnbull Copper/Node Plan is designed to fail, and fail big .  It will lose the whole $30 billion investment and, yet again, the taxpayer will have to foot the bill.  This isn't just poor economic management, like selling Telstra without adequate controls on its monopoly, this is deliberate waste on a massive scale.

It will take decades for the Liberal NBN to bleed to death and run out of cash, as the withheld Turnbull Copper/Node Plan financial forecasts show. And what happens to NBN Co then?

We, the taxpayers, lose our entire $30 billion investment and Telstra, as NBN Co's major creditor, get to take it over for nothing . We lose twice.

What happens when you question Turnbull's office about any of this?

You don't just get stonewalled, you get abused, with me being sworn at in an on-record email.

This isn't imaginary like the Turnbull Copper/Node Plan figures, this is real and provable, right there in Turnbull’s complex and deliberately impenetrable documents. Documents that the Parliamentary Budget Office, the PBO, has refused to attempt to review because of their complexity.

Turnbull will fulfil his mission to "Destroy the NBN", but more subtly and more completely than in an previous Coalition plan since 2005 when Sol Trujillo first put it on the national agenda.

What does the average Australian stand to lose on the NBN if Abbott gets into the Lodge?

$30 billion dollars, two decades of being trapped in "Copper/Node Hell" with an inferior service and ending up again being held hostage commercially to Telstra’s failing copper.

We're being set-up by a truly cynical and opportunistic political machine.

The present Optic fibre NBN plan embraces the market, with benefits like competitive advantage, productivity growth, remote healthcare & monitoring, working from home so the costs to firms will reduce and a whole host of other tangible outcomes in health and education.   The Liberal plan hamstrings the speed of light and traps us in the past. It offers more of the same old copper with none of the optic fibre benefits of flexibility. It is a new age Dinosaur. And the Zoo keeper is one Malcolm Turnbull.

Update, from Francis Young:

Why is FTTP superior? Fibre has no bandwidth limit and lasts 60 to 100 years. Every broadband technology operates just under the speed of light, but a glass fibre can carry millions of distinct colours, each of which carries data. Only fibre offers limitless bandwidth with no appreciable signal loss, even between cities. No electrical components are required from exchange to premises, and the fibre is unaffected by floods or electrical noise. 

Copper lasts just 30 years, says Telstra, so most taxpayer-built copper is now on borrowed time, and copper costs Telstra $1.3 billion annually to maintain. Copper bandwidth drops sharply with distance as the high frequencies are drowned out by line noise, even with wires twisted into pairs. FTTN cabinets can shorten the copper distance to traverse, but cannot fix water-damaged cables. To get faster speed, you must lay new copper and build ever more closely-spaced cabinets. 

Likewise for the best wireless service, you deliver fibre to Wi-Fi access points, reducing data demanded of mobile phone towers. Fewer outdoor mobile towers are then needed and they are less congested.

Links :

Coalition Policy:
http://lpa.webcontent.s3.amazonaws.com/NBN/The%20Coalition\U2019s%20Plan%20for%20Fast%20Broadband%20and%20an%20Affordable%20NBN.pdf 


Coalition Policy Background:
http://www.malcolmturnbull.com.au/assets/Coalition_NBN_policy_-_Background_Paper.pdf 

Turnbull staffer, stonewalling and swearing on-record:
http://stevej-on-nbn.blogspot.com/2013/08/nbn-turnbull-staffers-not-just.html 


20 years of "Broadband Hell" in the Gungahlin Experiment:
http://stevej-on-nbn.blogspot.com/2012/11/nbn-fttn-in-australia-gungahlin.html 


The Need for Speed: the path to 1Gbps.
http://stevej-on-nbn.blogspot.com/2013/08/nbn-need-for-speed-i-path-to-1-gigabit.html