The NBN: our generation’s flagship utility project – Part II

My first essay on this subject discussed the benefits of the NBN to Australia and why it’s important for us as a nation. In Part II of this essay series, I’d like to explore the details around its implementation and why it’s imperative we get this right.

The battle plans: Australian Labor Party vs Liberal National Party

The two major political parties in Australia have two very different policy approaches to the rollout of the NBN.

The ALP’s plan delivers fibre optic cable directly to residential and business premises for those premises located in an area equipped to receive cable. This approach is referred to as Fibre To The Premises or FTTP.

The ALP have already activated 123,467 premises (using the 3 combined delivery technologies: fibre optic cable, fixed wireless and satellite) under this plan as of 9th December, 2013.

The LNP’s plan (which is currently being revised since the commissioning of the Strategic Review by Malcolm Turnbull shortly after being sworn into government as Minister for Communications) proposes to deliver fibre optic cable to nodes located at the corner of every street and will use existing copper infrastructure running from the nodes to the premises. This approach is referred to as Fibre To The Node or FTTN.

There are some exceptions to this. According to the Liberal Party’s website, “Fibre generally should be deployed in new (‘greenfield’) housing estates and wherever copper has to be replaced (unless there are particular commercial reasons not to do so.) There will also be established areas where high maintenance costs or the condition of the copper renders FTTN unattractive and the best alternative is FTTP.”

For customers who want fibre delivered directly to their premises under the LNP plan, they will need to pay an additional fee (anywhere up to $5,000 though, the exact figure is yet to be confirmed.)

Speed limits

In terms of speed claims, the ALP’s FTTP plan will supply “93 per cent of Australian premises [with] speeds of up to 1Gbps. The remaining seven per cent of premises will have access to next-generation fixed wireless and satellite technologies providing peak speeds of 12Mbps.”

The scheduled completion for the ALP’s project was 2021 though certain delays had recently materialised which may have put this timeframe in jeopardy.

The LNP’s FTTN pre-election promise claimed, “…everyone in the nation should have access to broadband with download data rates of between 25 and 100Mbps by 2016, and between 50 and 100Mbps by the end of 2019 in 90 per cent of the fixed line footprint.”

This has since been made redundant by the Strategic Review and the LNP have now revised their speed offering, “43 percent of premises will have access to 25Mbps download speeds at the end of 2016, and 91 percent of premises will have access to 50Mbps by the end of 2019.”

It should be noted that when it comes to speed, the rates quoted are always wholesale rates (i.e. the speeds being sold by the Government to the NBN service providers such as Telstra or Optus not necessarily the rates end-customers will receive.) This is more of a concern for the LNP’s FTTN plan because it relies on copper wires between the node and the premises and copper speeds deteriorate rapidly beyond 100 meters of the node or an exchange.

So just by looking at these numbers, it’s obvious that the ALP’s 1Gbps (or 1000Mbps) is a damn side zippier than the LNP’s 100Mbps (at its absolute best.) 10 times zippier in fact.

The need for speed

Critics of the ALP’s plan have stated that 1Gbps is akin to having an 8-lane highway as a driveway. They claim there’s no need for such bandwidth capacity and the ALP is simply gold-plating this infrastructure project and not spending taxpayer money wisely.

What critics fail to understand is that when you build infrastructure — be it roads, rail or water pipelines — you’re building it for the future, not the present. You want to use the best technology available at the time and plan as far ahead into the future as feasibly and practically possible.

The second fact critics overlook is how data access rates in the telecommunications network have been growing exponentially since the 1850’s; the time of the telegraph.

Rodney S. Tucker, a University of Melbourne Professor, observes in a Telecommunications Journal article titled “Broadband facts, fiction and urban myths” that by 2020, we will need the capacity to consume 1Gbps if we are to continue accessing data at the rate we have been since 1985.

Historical evolution of access capacity (Source: NBN Co.)

Tucker further states, “Given the unbridled growth of new and emerging applications that use the Internet, one would have to be very brave or naive to suggest that this growth will suddenly stop.”

The technology

Let’s talk about why fibre optic cable is a superior technology to copper.

Fibre optic cables use pulses of light to transmit data across glass or plastic strands. Copper wires transmit electrical currents.

According to Robert Malaney from the University of New South Wales, School of Electrical Engineering and Telecommunications, “The throughput of the data is determined by the frequency range that a cable will carry — the higher the frequency range, the greater the bandwidth and the more data that can be put through per unit time. And this is the key difference — fibre optic cables have much higher bandwidths than copper cables. Optical fibre can carry much higher frequency ranges — note that light is a very high frequency signal — while copper wire attenuates or loses signal strength at higher frequencies.”

Fibre also has the advantage of not being subject to noise and signal interference like copper. Additionally, data over a fibre cable can travel more than 200kms without any real loss of quality. This would be practically impossible with copper. Even it when rains, the performance of copper wires are threatened.

There’s no point running fibre to the node if the copper component can’t lift its weight or buckles from a few hours of drizzle.

Maintenance and general upkeep for the existing copper network is another key concern. Shane Murphy, assistant secretary of the Communications, Electrical and Plumbing Union’s New South Wales branch, said Telstra’s copper-wire network was “nearly beyond repair” and an “absolute disgrace.” He went on to say, “Telstra would need to invest millions and millions of dollars to bring the copper network up to scratch to survive the next 20 years.” He’s also got photographic evidence to prove his point.

The headaches

Another fatal flaw I’d like to direct some light on are the niggly headaches associated with the FTTN solution.

The first and most obvious is the maintenance of the copper wires and the numerous installed nodes. NBN Co or Telstra (depending on the contract in place) will need to identify, prioritise and resolve issues in a timely manner across the country. I would imagine this would be rather costly and they’d be dealing with a large number of complaints based on what I spoke about earlier regarding the current state of the copper network.

Second, for those customers who’d like to pay to upgrade their setup to have fibre directly connected to their premises, NBN Co again will need to identify, prioritise and follow-through with each job. I’m assuming they’d prioritise requests based on a first come first served basis, which means they might have contractors running all over the place to carry out these jobs in order. Alternatively, they might cluster the jobs (e.g. if there’s a certain number within a particular region, they do all those upgrades at the same time.) But what if you’re in an area that hasn’t met the minimum job number yet? You might just have to wait a while.

Third, even the biggest supporters of the FTTN approach admit they will eventually need to do away with the copper component of the network and replace it with fibre. Taxpayers will be hit with yet another bill to carry out the project. What if we’re in further debt at the time? What if the Government of the day can’t get the proposal through cabinet? We could be stuck with an ailing infrastructure that we’ve already forked out billions for and isn’t even serving us as well as it could.

Putting cost into perspective

Prior to the Strategic Review, the LNP claimed the cost of their FTTN solution would be approximately AUD $30 billion and the ALP’s FTTH solution would be approximately AUD $45 billion.

These figures have been debated ad nauseam by both sides of politics, critics, supporters and the media alike. The LNP’s figures are still up in the air since the Strategic Review and the subsequent revision of their solution.

But let’s just work with these numbers for now because it’s all we’ve got at the time of writing.

My first point is this: do the FTTN headaches I mentioned above in their totality add up to $15 billion ($45 billion minus $30 billion)? If they exceed this amount (which I suspect they would), then how on Earth is FTTN a more feasible, cost-effective option?

Second, the real difference here between the two solutions is that the FTTN is treated and costed as though it’s just one project. It isn’t. It’s Phase I of II at best or more realistically, Phase I of n. With FTTH, you’re getting the complete solution and it’s costed accordingly (excluding any future maintenance.)

Third, since when has it become more cost-effective or financially savvy to pay for an incomplete, significantly less superior solution that costs 2/3 that of the better solution? This in my opinion, is a complete waste of money and reminds me of a quote from British author, poet and art critic John Ruskin:

“It’s unwise to pay too much, but it’s worse to pay too little. When you pay too much, you lose a little money — that’s all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do. The common law of business balance prohibits paying a little and getting a lot — it can’t be done. If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that you will have enough to pay for something better.”

Enough said.

Opportunity cost

If you thought everything mentioned thus far wasn’t bad enough, let’s have a brief look at what we could potentially miss out on if we were to proceed with a subpar NBN.

The biggest loss for consumers could be around digital services. I’m talking about services much like Netflix or Hulu. I’m aware these specific services currently face unique challenges (namely legal) when attempting to setup in Australia but I’m certain most foreign businesses — with something great to provide us in the digital realm — wouldn’t bother setting up or delivering their services here if we didn’t have an infrastructure (accessible to all Australians) that could support their offerings. Why would they bother?

The next potential loss for us could be the amount of foreign investment our companies receive and the overall competitiveness of Australian businesses on the International stage. If other countries are rolling out superior broadband networks it naturally places companies in those countries with an advantage. An advantage we would struggle to compete with. Foreign investors would much rather invest where the potential opportunities are greater and the invested companies had an unfair advantage.

To follow on from the previous point, if we don’t have the best infrastructure to stimulate companies and they fail to innovate in line with the rest of the developed world or they fail to keep up in general, it goes without saying that we’re simply not going to attract world-class talent to this country. This too makes us less competitive on the International stage. It’ll become a self-fulfilling prophecy.

Digital divide

Yet another shortcoming of the LNP’s FTTN plan is the fact that it maintains and further fragments the digital divide in this country. Only those who can afford it — where the circumstances are right — will be able to upgrade their connection to fibre. Those who are renting will likely miss out on an opportunity to upgrade for any number of reasons (e.g. they may not know how long they’ll be in a certain property, the landlord may prevent the upgrade even if the tenant volunteers to pay etc.)

Core infrastructure should not be something only accessible to those who have money; living in a certain location or living a certain lifestyle. It should be equally accessible to all Australians.

Innovation knows no bounds and doesn’t discriminate based on race, age, gender, income. Why should we give those with money better privileges? We’ve already got enough of an issue in this country when it comes to coaxial cable access and the inability for low-income earners to access the Internet. Why not take this opportunity to level the playing field especially with an infrastructure so critical to our future?

Conclusion

I hope the second part of this NBN essay series has shed some light on why it’s essential we get the implementation right.

Furthermore, I hope it’s clear that the LNP’s FTTN solution is the wrong solution for our country no matter which way you want to slice it: cost and potential money wasted, opportunity cost, equality for all Australians, inferior technology choice along with its limitations and the numerous headaches involved.

Finally, Turnbull mentions on his personal website that technology is not an ideological issue. He further claims, “We are technologically agnostic.”

I’d like to conclude on this note: the NBN is an infrastructure project. The chosen technology is of paramount importance. We owe it to ourselves and future generations to get this right the first time so we make best use of taxpayer funds and build something of quality that lasts us well into the future.