A modest proposal: dump the NBN mess on Telstra

Malcolm Turnbull can tick 'demolish the NBN' off his to-do list. He did it

Because Australia is now in an election campaign, various hopefuls are holding their breath in case (a) the NBN becomes A Serious Election Issue, and (b) the opposition Australian Labor Party (ALP) advances an alternative policy that brings fibre closer to the premises.

The depressing truth is this: (a1) because of the politics of the last six years, a "return to fibre" would lose as well as win votes, so it's not going to be proposed; and (b1) the structure of the NBN has been so thoroughly compromised that a return to an all-fibre network is probably impossible.

It's not a matter of logistical impossibility: there's no reason a place where no build has begun couldn't be reverted to fibre-to-the-premises(FTTP). The NBN architects still know which planned fibre areas would overlap with fibre-to-the-node (FTTN) exchange areas. Building them as FTTP is feasible, but not practical.

The problem is that in at least one very real sense, Malcolm Turnbull conceived a structure which matched Tony Abbott's hyperbolic “demolish the NBN”.

Two characteristics of the industry structure created by this government make a return to fibre unlikely.

The first is Telstra. The original plan would have seen the old copper decommissioned – the customers would be migrated to the NBN, not the network; the copper would be decommissioned after all customers were migrated.

There was a very pervasive misunderstanding about this – people persisted in believing that Telstra's network was being sold to the NBN in the original AU$11 billion memorandum of understanding (MOU) between Telstra and nbnTM.

That, I suspect, smoothed the political way for a key aspect of Malcolm Turnbull's multi-technology model (MTM). What people don't understand, they make a mess of criticising.

Voters who already believed nbnTM was buying Telstra's network hardly even noticed the change that means nbnTM is buying the network.

It's a progressive purchase, meaning nbnTM only pays for the copper once it's in service – but it's inconceivable that an incoming government would try to unravel the Telstra-nbnTM agreement.

This journalist said to Malcolm Turnbull in 2013 that Telstra is one of the largest law firms in Australia, and one reason Turnbull's model is running behind time is that renegotiating the MOU took nearly a year.

No incoming government of any political hue is going to try and rewrite the agreement a second time; so nbnTM is going to be saddled with the copper.

And that relates to the second, very fundamental, change that the current government imposed on the NBN: the financial model.

Previously, the NBN was structured so as it was not a charge against the federal budget. It was denounced as tricky accounting by the then-incoming Liberal government, even though it was given a pass mark by the all-powerful ratings agencies.

The Abbott government brought the NBN on-budget – adding considerably to its budget deficits – and just before the election, it made its last budget allocation to the network.

If there were an incoming Labor government, I suspect its hands are tied – not necessarily by law or administrative impossibility, but because revising the budget status would be politically impossible (and probably expensive and messy, but I may be wrong).

As we've previously noted, The Register's readers can probably forget fibre-to-the-distribution-point (FTTDP) for the time being. nbnTM's complained that it wouldn't fit into its IT systems integration anyhow (which is silly, because it's carrying out the much more difficult DOCSIS integration right now, and the DOCSIS IT model is entirely unlike that of either ADSL or FTTP – for example, in the matter of wholesale support).

The hoped-for-therefore-hyped intermediate point, fibre-to-the-distribution-point remains relatively unproven. There's no doubt that its problems will be solved, but probably not between 2016 and 2019 – the term of whichever government takes office after July 2.

The ALP's communications spokesperson Jason Clare has hinted at FTTDP, but we won't hear much about it in the coming campaign, because only a fool ties his own noose.

The other probably-inevitable outcome of the Turnbull MTM model is that Telstra's hands are wrapped around practically everything the NBN does: its remediation contracts over its own copper and HFC networks make sure of that (and let's not forget that nbnTM was persuaded to pay lavishly for an Optus HFC network that's turned out to be a bit of a disappointment).

Which leaves the NBN at a depressing juncture. It looks like there's almost nothing to be done but press ahead with the kind of mess that's best described in a neologism starting with the world “cluster”.

It's a fearful thing to say, but an outcome I find horrifying might actually be the best: to hand the whole mess to Telstra, give it an instruction – no ifs or buts – to deliver decent broadband as soon as possible and fibre to a timetable, and regulate the daylights out of its wholesale offerings.

Malcolm Turnbull fulfilled what was in his brief – from Tony Abbott – but never in any mandate. He demolished the NBN. ®

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