Statement from Robert Hudson, President of IT Professionals Association (ITPA) re. NBN

There has been a flurry of news stories over the last few days following frankly absurd statements about the NBN from its CEO, Bill Morrow.

In delivering half-year financial results for NBN, Morrow contended that even if NBN offered 1Gbps services "they [consumers] wouldn’t use it anyway". This started a debate that has at least served to highlight the farcical waste of money and the unforgivable lost opportunity that is the current state of play in Australia’s most significant public infrastructure project in recent times.

The messaging from NBN in recent days has been alarmingly inconsistent. After Morrow’s initial claim that no-one in Australia would be interested in speeds of 1Gbps even if it were available and free, he then compounded the insult by suggesting in an op-ed piece that currently, there are no retail 1Gbps speed plans on offer from the retailers”.

This stupendously ignorant and arrogant set of statements was then further contradicted by his suggestion that NBN doesn’t promote 1Gbps services because it's more important to get 25/50Mbps to everyone because "this is what the bulk of customers are opting for”.

Is there really no demand?

Newly launched retail service provider (RSP) MyRepublic made a mockery of the claim no-one is interested by claiming to have signed up 10,000 customers to high speed plans in 12 weeks since launching.

In response, firstly, when I conducted a survey of ITPA members over the last few days, 96 per cent of respondents indicated they would be willing to pay more money for faster internet speeds (nominally over 100Mbps).

Sure, they are digitally literate IT workers with a need for speed but they are also the people that are most likely to be aware of the potential for economic benefit that comes from the combination of digital technology and high speed broadband.

If the price is right

To offer acceptable pricing of high-speed connections to their customers, probably the biggest issue is the cost structures that RSPs pay to offer NBN services to their customers.

Currently RSPs pay an Access Virtual Circuit (AVC) charge for each customer they connect to the network. They also pay a one-off charge to connect to each of the 121 nation-wide Points of Interconnect (POI) in addition to their own backhaul costs from each POI back to their networks, Further, there is also a Connectivity Virtual Circuit (CVC) charge for bandwidth between the NBN and their own networks, which is calculated on a per Mbps per month basis.

The CVC price structure has actively discouraged ISPs from selling higher-speed connections. Rather than nobody buying fast connections because they are unwanted (as suggested by Morrow), the reality is that fast connections aren't popular because they're too expensive.

nbn has finally (partially) acknowledged this fact of late - last year proposing a tiered CVC charging scheme based on industry-wide calculations, and today, after continued pressure from RSPs, agreeing to offer tiered CVC pricing on a per-RSP basis (despite only days ago blaming lack of consumer demand and insufficient RSP investment in their own infrastructure for the lack of uptake of higher-speed connections).

Nation building

If the NBN delivered near-universal 1Gbps connectivity across the country and it drove even a tiny increase to our USD$1.56 trillion GDP, the investment in building a truly national network that offered 1Gbps to every home and business would pay for itself very quickly in tax revenue rises and economic growth.

Reduced costs of medical services would pay for it alone not to mention that the ensuing better health outcomes would reduce the volume of services required. Education is another key issue and represents another major benefactor from digital speed.

We should be building the best, most reliable and future-proof national broadband network possible to give Australian public and private organisations the opportunity take advantage of efficiencies and improvements in service delivery and global competitiveness afforded by the digital revolution.

If the Sydney Harbour Bridge was designed and built using the same processes as the NBN, it would be made of a random mix of wood, stone and steel pieces, and would vary in width from one end to the other.

Thankfully John Bradfield recognised that the Harbour Bridge needed to serve Sydney for years to come, and we still use it successfully 85 years later. Large portions of the NBN will be lucky to last a tenth of that before being completely worthless.

Surely Australian taxpayers are not paying billions upon billions of dollars to build a network that cannot meet demand and that is ultimately constrained (in terms of internet speeds) by an ageing copper infrastructure that will be fraught with breakdowns in 10 years’ time?

It shouldn’t be about the bottom line

It is wrong for anyone to imply that the ROI from a publicly-funded project such as NBN can only be measured by the money that crosses nbn’s own books. The treatment of nbn as an entity which should be independently profitable and judging its worth/success on balance sheet is absurd.

It’s common politicking for the powers-that-be to espouse the virtues of jobs and growth or highlight the need to become a smart economy based on innovation and efficiency as well as decentralisation. So, why wouldn’t they prioritise and adequately fund the very tool that will most facilitate this?

On the private enterprise front, Australian companies need to be connected to high speed services to remain competitive in a global marketplace. Australia’s telecommunications infrastructure is lagging way behind most developed nations and many developing economies - a situation that’s only getting worse and not better over time, with Australian Internet speeds slipping from 30th in the world in the three years directly following the LNP government taking office in 2013.

Imagine the scenario where a global IT company is looking at setting up their APAC HQ in Sydney which will result in the creation of an estimated 450 IT jobs. Said company is looking to have 50 per cent of staff teleworking. They need super high speed internet access to make it work but when the bean-counters do the sums and sees the NBN shemozzle, suddenly setting up in Singapore looks a better option.

It also means that in an environment where Governments are desperately trying to sustain regional/rural communities, opportunities to work in the IT sector are largely not available there because existing infrastructure is inadequate to support teleworking.

I believe that the biggest single factor holding back the fast tracking of an “innovation economy” in Australia based on science, research and development, start-ups and services - and particularly IT - is the lack of ubiquitous high speed internet.

This NBN should always have been treated as a nation-building project, delivering long-term future capability to prosper from the digital revolution. It should have allowed Australia to be a focal point of global collaboration, innovation and telecommunications excellence.

There should have been the opportunity for the next Amazon, Google, Facebook or Microsoft to emerge from a good idea in Whyalla, Geraldton, Swan Hill or Gulargambone. Instead, we are stuck with a millstone around our necks that - let’s face it - is going to require significant additional investment within 10 years before being anywhere near approaching world’s best.

Poor resale value

Then there is the fact that the current plan seems to be to privatise the infrastructure once it’s completed so the key motivation in the build is stand-alone financial viability at the lowest cost and in the shortest possible time. This has meant that the solution delivered is inferior and cobbled together from a diverse array of technologies that are inevitably going to present complex network management issues in the future.

Even if it was a good idea to sell nbn once the build is completed, when the NBN it is put on the market, it will be worth a fraction of what it could and should have been.

It is sad that this now rat-nest network project did not have more input from technical and business experts in the IT and Telecommunications industry because we could have told them from the start that the current project direction has been conceived, designed and delivered badly.

Instead, we have seen the NBN treated as a political football transformed from a good idea to one that is ultimately supporting the interests of corporate donors instead of the people of Australia who are paying for it.

Put simply, the network being built and the services being sold now barely meets current-day demand and is recklessly inadequate to facilitate an innovative future for the nation. It has no chance of delivering the requirements of tomorrow without significant replacement costs added in.

It has left Australia’s telecommunications wallowing in a swamp that would embarrass a third world nation and which can only be fixed by ripping out large percentages of the last three years’ work and starting again.

Is there any hope?

So, what can we do to fix it? It is frightening to think but here is a start.

● The number of POIs really never should have been as high as it is (NBNCo themselves petitioned for 14, but the ACCC over-ruled them) - but this horse may have bolted. A lot of investment in connecting to many of the POIs has already been undertaken by existing service providers, and reducing the number would involve writing off massive investments from current providers, creating competitive advantage for new players.
● The charging model needs substantial rework. Even with the new CVC charge scaling, it still discourages RSPs from offering the higher-speed plans because of the costs involved to offer higher speed access.
● We must stop treating nbn as needing to be commercially viable as a stand-alone entity so it can be sold to private enterprise down the track. We need to invest in the NBN as a nation, AND retain ownership
.

A proper national broadband network potentially reduces cost of government services and helps to decentralise the national workforce. It supports the innovation narrative, promotes international investment and encourages local start-ups to stay in Australia. It will promote economic growth and the subsequent increased tax revenue.

As the President of ITPA, I despair that what should have been the nation’s greatest - and most important - infrastructure project since the building of the Snowy Mountain power scheme, has become such a farce.

However, I am happy to finally see that the absolute disaster that the NBN has become is finally being exposed for what it is - the term “fraudband” has been used a lot, and it’s not without merit.

I’m not happy because I like to see failure or wish ill on those who have been involved in the mistakes of the past, but because I know that only through recognising and admitting to the NBN’s faults can we begin to adequately address the issues involved.

Only then can we deliver a truly world-leading network infrastructure project that will provide Australia with a competitive edge as we move further into and beyond the 21st century.

Let’s hope that sanity prevails and that we can arrest the decline of the project before it is too late and turn the NBN into infrastructure that enables the future competitiveness of the nation in a global economy.

Consultation and collaboration with the IT industry would be a good start.

For more information or comment, contact: Robert Hudson, President ITPA – 0408 860 595 – president@itpa.org.au

ABOUT ITPA:
The Information Technology Professionals Association (ITPA) was founded in 2016 to lend additional voice to over 620,000 IT professionals who work in Australia. Since launching ITPA has grown to now include over 8,000 members. Led and populated by IT professionals who are currently working in the industry, ITPA aims to be a trusted source of advice, knowledge and information about the IT industry for enterprise, government, media and society. It is in tune with the latest industry developments, focused on growing career opportunities for Australian IT professionals and willing to challenge government policy that inhibits the growth of the Australian IT Industry.
www.itpa.org.au

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