Dr Dennis Jensen MP

The last federal election was won by Labor using the National Broadband Network to gain the key votes of the independents. Both Tony Windsor and Rob Oakeshott listed broadband high on their agenda, when giving reasons for selecting the Labor Party to form government.

Unfortunately for taxpayers, the NBN will be a $43 billion dollar black hole and will fail to deliver on the capabilities it has proposed. The reality is the Coalition failed to explain to the Australian people why the NBN was problematic and prosecute the case for an effective alternative; attractive to consumers and the market.

The NBN is intended to be more than just high speed broadband. The scheme is supposed to deliver a range of new technology, options such as Smart grid capability and open access Internet Protocol TV. Despite the massive cost to taxpayers, it will fail to deliver on these key capabilities.

You would hope, given the massive cost to the taxpayer that as much of the technology would be sourced in Australia, to retain as much of the $43b as possible. We were promised the NBN would create tens of thousands of new jobs for Australia. However, media outlets have highlighted Australian companies sidelined in their dealings with NBNco. Their preference to deal with International organisations has already cost Australian jobs.

The fibre optic cable proposed to be used in the network is to be sourced from Corning, meaning it will be manufactured predominately in Mexico. Why use a technology which is designed and manufactured overseas, when there are Australian manufacturers of Fibre Optic cable which is both cheaper and better designed.

The decision to go Alcatel for the Gigabit passive optical network (GPON) directly cost 50 jobs at NEC, who was designing their GPON solution here in Australia for the global market.

The Operational Support Systems/Business Support Systems solution vendor, while still to be decided is most likely to go to an overseas organisation to the detriment of local company Clarity. This firm already has their solution installed into a number of carriers in Australia and are winning bids overseas. A decision such as this could mean Clarity pack up in Australia and heads overseas.

I believe NBNco would have been better placed having Australian businesses design and develop our own system, ensuring a better transfer of information technology to the wider community.

The cost of the scheme is also of great concern, effectively $5000 for every home in Australia. In terms of interest alone, this will be around $350 - $400 per annum per household, assuming 100% take up. Worse still, this is just the cost of servicing the loan, never mind depreciation, providing service, making a profit etc. In reality the current commercial price of a fibre to the home connection is less than $2000, both internationally and in Australia. Why the Australian taxpayer should pay more than 250% above the odds is beyond me.

So why is it so much more expensive? Well, it comes down to the inefficient design of the network architecture. Within the NBN, there are in effect three fibres for each home. One could argue “do it once, do it right” and the cost of the extra fibre is insignificant in the scheme of things. However the cost to physically install, terminate and manage the fibre is the expensive part.

It would appear there is a basic misunderstanding of access network design and the fundamental physics of the transmission of data using fibre. Today we can already transmit 10Gbps on a single fibre, with 40 and 100Gbps also coming. So why do we need to have three fibres for every home, with two of those fibres completely redundant?

Easy enough to criticise, I hear you say, but if you want to criticise, propose an alternative.

One such solution would be to replace copper with fibre backhaul. This would supply about 70-75% of homes with fibre to the home with speeds of up to 1Gbps. Another 20-odd percent could be serviced with fibre to the node, where a service is provided to the exchange in fibre and the remainder a mixture of wireless or satellite technology, with about 12 Mbps.

This would cost around $13-15 billion (opposed to the NBN’s minimum of $43 billion, about 5 times the cost of the Snowy Scheme in real terms). $13-15 billion, would be extremely attractive to the market and we would not have to pay Telstra $10 billion for their copper network. As such, the majority of the $13-15 billion would be paid for by private industry. In this light it is difficult to see a business case for the NBN (hence the lack of a public business plan).

This is clearly a policy that needs to be fixed, it is far too important to be left in the hands of incompetent bureaucrats and government ministers- especially those of Rudd government fame.