Turnbull's NBN could 'cost the same' in the long-run

Does the Coalition's version of the NBN really save money?

Shadow communications minister Malcolm Turnbull said at a doorstop interview today that a fibre-to-the-node (FTTN) policy for the National Broadband Network (NBN) could possibly end up costing around the same as the current fibre to the premises (FTTP) policy in the long run.

When questioned whether the costs in maintaining and replacing parts of the ageing copper infrastructure for premises will end up costing more than the current NBN, where the copper will be replaced with fibre in one go, Turnbull said that “probably the prudent thing to do is say it’ll cost you the same.”

He said the Coalition’s $17 billion in savings compared to Labor’s cost for the NBN could eventually be spent over time once demand for faster broadband speeds is proven if fibre to the premises needs to be put in place.

“Let’s say we are talking about a house and we can today enable it with fibre to the node and we’re assuming [it’ll cost] $900, which is a very conservative estimate. Let’s say to go to fibre to the premises it [costs] $3600,” he said.

“If that extra $2700 is not going to generate any revenue for a decade then we keep that $2700 in our pocket for 10 years and spend it when there is a demand for it.

“It’s never a good idea to invest money years and years ahead before there is demand for it because you have got extra investment getting no return. If you assume you have got that extra $2700 in your pocket for 10 years and that’s earning you interest for 10 years and you invest it when you need to then that’s much better off than investing it now and getting no return on it for 10 years.”

Investing more money into the NBN over time as opposed to investing it all upfront also allows for more flexibility to make incremental changes to the network, Turnbull said.

“[The current NBN plan] is like a great, big, chunky piece of infrastructure that is hard to add to once it is built. Telecom network is something where [there’s] a piece of infrastructure where you can calibrate your investment so that you are ahead of – but not decades ahead of – demand. And thereby you use your capital more wisely.

“All the telco executives I’ve talked to around the world who are actually building these networks have said to me that you would never do fibre to the premises because of a saving in maintenance cost. It does cost more to maintain copper in general than fibre. But the difference is not material compared to the huge capital investment difference.”

Internode founder Simon Hackett told <i>Computerworld Australia</i> that it could cost more to turn the current FTTP broadband policy into a FTTN one. He said that relying on copper for the last mile creates greater maintenance costs compared to pure fibre and there are many places where it could fall apart over the life of the NBN.

Commenting on the Coalition’s promise to deliver NBN speeds of up to 50Mbps for the majority of households in 2019 as opposed to Labor’s faster speeds under FTTP, Turnbull said that there is a “lazy assumption” that the exponential growth in bandwidth is going to “mean a similar rapid ramp up in bandwidth requirements at the edge.”

“That’s simply not right because you might have 10 times as much data being hurdled around the Internet but that doesn’t mean everyone is going to need a pipe 10 times as big to their house…It’s a question of getting your investment to match the demands where the revenue is and then you have got the flexibility to expand it later if you want to.”

Turnbull says a cost benefit analysis of the Coalition's NBN will take place after the election if it wins government.

Follow Rebecca Merrett on Twitter: @Rebecca_Merrett

Follow Computerworld Australia on Twitter: @ComputerworldAU, or take part in the Computerworld conversation on LinkedIn: Computerworld Australia

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Tags Malcolm Turnbullcopper networkbroadband networkNational Broadband Network (NBN)broadband policyfibre to the nodecopperNBN costfibre to the premisefibre to the premises

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