Where are we? Where should we head?
The shameful state of Australia's
telecommunications network
Last update: 04 October 2018
The state of Australia's National
Broadband
Network (NBN) is a shame. Literally. The
culpable should be ashamed.
Should we even need a project to build the NBN? I'm old enough to
remember overhead 'phone lines in the Southern Highlands of NSW. A party
line that rang in Morse code, to signal which subscriber should pick up.
Real, flesh & blood telephone operators at the exchange. In the
decades that followed, our telecommunications system advanced rapidly.
Underground cables replaced overhead wires, party lines gave way to
individual numbers and exchanges were automated. I reckon we'd have
optical fibre to most premises by now, if it weren't for some pretty
spectacular blunders. If we'd continued as we were, then the 'phone system
would already be what we now refer to as The
NBN (or getting there).
How did it come to this?
From my perspective, things went well enough until the late 1980s. In
1989, the Australian
Telecommunications
Commission was restructured into a corporation. The Australian
Telecommunications Corporation didn't last long enough to make much
of an impression, but it seemed to perform comparatively poorly. None of
its successors has done any better. I conclude that corporate structures
don't work as well as statutory Commissions in providing essential
infrastructure. Why that might be, I'll leave as an exercise for the
reader. ;)
In December of 1993, our government called for the establishment of the Broadband Services Expert Group (BSEG).
If
the telecommunications network had kept pace with the nation's needs,
would any such enquiry have been needed? Less than half a decade after the
corporatisation of our infrastructure provider, the cracks were showing.
The final
report
of the BSEG (Networking
Australia's Future) was presented a year later. In March of 1995,
speaking
at
the launch of that report, Prime Minister Paul Keating said:
“We have to decide, as from now,
that access to the national information infrastructure will be no less a
general right than access to water, or public transport or electricity.”
Paradoxically, funds for the Networking
the
Nation program came from the partial privatisation
of Telstra, which accelerated the general decline in Australia's
telecommunications infrastructure. In completing the privatisation of
Telstra, while leaving the network under Telstra's ownership, John
Howard gifted essential natural-monopoly infrastructure to the
private sector.
The outcome was predictable. Private corporations are judged by their
profits. Maintenance is a cost. Neglect maximises short-term profit.
Sadly, that which is not adequately maintained tends to fall
apart.
Paul Keating saw that we have a race to run. John Howard shot us in the
feet. Kevin Rudd began tending to the injuries. Malcolm Turnbull stomped
on the wounds.
For a good overview of Australia's broadband history, see Reckoner.
It should come as no surprise that there's been a great deal of talk and
very little effective action.
The mobile network
There was a time when Telstra (or was it Telecom?) advertised how lucky
Australia was to have a single, coordinated mobile 'phone network. If you
had a mobile, then it just worked - or not. We didn't suffer the
inefficiencies of multiple competing networks. Somewhere along the line,
we stuffed that up.
As Kenneth Davidson wrote
in
2002:
“Optus has spent $14 billion
duplicating the Telstra network ... There are four mobile phone
networks, each with their own towers, billing systems and shrill
advertisements.
As a result, Australia's relative efficiency in telephony has declined.
...
Competition means black spots in the
country and a “choice" between four mobile phone networks in the
city.”
The mobile network, it seems, is no less a natural
monopoly than land lines.
Whither optical fibre?
The plan that Labor took to the 2007 election was largely Fibre
to
the Node (FTTN). The National Party's Fiona Nash coined
the
term “fraudband” in response. Comically, the Coalition
was later moved to protest vigorously when that term was used as a Twitter hastag for
their own plan. The confusion is summed up in a 2013 passage from
Delimiter:
“... Why does the LNP now see FTTN
as the panacea of the catastrophe that rural broadband is? Who knows,
all we can do is look at what the Liberal Party said in 2007 & what
they are saying now about FTTN to see gross misrepresentations of
technology that, even back in 2007, they saw as a furphy in rural areas.
The amusing thing is, the Nationals were pushing for FTTN in regional
areas, but just 24hrs later, Nash posted her blog post in opposition to
FTTN.”
For connecting to premises, FTTN uses existing copper wires. Those wires
belonged to Telstra. At the time, the CEO of Telstra was Sol Trujillo. Sol
wouldn't cooperate. To get around the obstruction, Prime Minister Kevin Rudd adopted a
plan to build over Telstra's infrastructure. Most of the cost of any such
project is not in materiel; it's in planning, labour, machinery and
transport. Building over Telstra's copper with more copper would not have
been cost-effective. The plan for a Fibre
to
the Premises (FTTP) NBN was born.
The saddest part is that the government now (2016) sees FTTN as a panacea
for the vast majority of connections. Premises have been transferred to
less capable technologies. Urban
individuals and entire
rural
communities that would have been served by FTTP under the plan that
Labor took to the 2013 election have even been relegated to satellite,
adding further loads to the satellites' limited capacity. The plan
originally was to dedicate the satellites to serve rural, regional and
remote premises. Short-sighted, parsimonious load-shifting has made the
situation for those premises far worse.
In opposition and in government, the Coalition has objected that FTTP
will be ruinously expensive. How true is that?
Gigabit per second/kilometre (for a given capacity over a given
distance), optical fibre is a fraction of the cost of copper. An optical
fibre network requires less maintenance and consumes less power than a
comparable copper network. Optical fibre is more robust than copper (for
example, not affected by moisture or electromagnetic pulses from lightning
ground strikes). Experience shows that the performance of copper generally
degrades markedly after about three decades; optical fibre that has been
in service for about four decades in the United States is reportedly
showing no signs of deterioration.
In 2010, NBNCo CEO Mike
Quigley testified to the Senate
Estimates
Commitrtee:
“We speak to the manufacturers of
fibre. They simply do not know how long the fibre will last because they
can see no mechanism by which it would degrade-unlike copper ...”
We know that the effective life of copper is about three decades (much of
the copper in service in Australia is older than that - and it shows). We
know that optical fibre lasts far longer. Nobody really knows the ultimate
service life of fibre but, for the sake of argument, many
commentators go with a century. In all probability the limits lie,
not in the glass fibre, but the coatings, ductwork and other ancillaries.
Inexpensive and durable. I'd be very surprised if we can't implement
fibre for less than a dollar per week, on average for each premises on the
mainland, over that long service life. For a whole dollar per week, I
reckon we could probably implement fibre to every premises on the
mainland, Tasmania and a good many smaller islands as well. Hardly cause
for panic.
Where do we need to head?
ABS
data show demand (the blue line) rising exponentially:
At that rate of increase, no technology (available or probable) except
optical fibre will meet foreseeable demand. I don't know how far we can
push optical fibre in the century or so that it should serve. Our duty is
to find out. The
cost is not as terrifying as some timid souls would have us fear.
Given its undeniable value, the network will more than pay for itself,
though it should not be run for profit. In the short term, the cost will
be a function of how quickly we want the benefits. In the longer term, the
net cost (price minus value) will be less than nothing. The greatest costs
lie in delay.
It will take a bit of effort, but we
stand upon the shoulders of giants. Our story can be traced back to
a single
iron
wire across the continent. That project began with picks, shovels
and horses. Our task is nowhere near as onerous. We'll be following
well-worn paths, not venturing into untracked lands. We have equipment and
technologies that make the job relatively easy. Will we disgrace our
forebears?
To quote Kenneth
Davidson again:
“Are we so stupid that we can't learn the lessons of the past
decade or so? Are we so degenerate that in the 2000s we can't match the
performance and commitment of Australia's early generation of nation
builders?”
That was 2002. It's now 2016. Sadly, the answer so far seems to be in the
affirmative on both counts.
What do we need to do?
Learn from the past
Avoid repeating the mistakes that got us into this mess. For one;
whatever comes of the NBN, retain it in public ownership.
Remedy past mistakes
Return infrastructure to public ownership.
Separate Telstra into retail and
wholesale/infrastructure arms. The best mechanism I've been able to come
up with takes the form of a de-merger. Telstra is split into two
companies, with shareholders given shares in each proportional to
their current Telstra shareholding. Government then acquires all shares in
the wholesale/infrastructure company, at value.
Return radio frequency spectrum to public
control. The easiest way would probably be to not renew spectrum licences
as they expire. Associated assets of providers other than Telstra could be
acquired at value, where economically and operationally rational.
Establish a statutory Commission to provide telecommunications
infrastructure and wholesale services. Vest in the Commission all
infrastructure and wholesale assets formerly held by Telstra and
nbn™.
[Edit 10 May 2016]
When John Howard completed the privatisation of Telstra, while leaving the
network under Telstra's ownership, he created a monster. The optimum for
effective retail-sector competition is not to have the majority of the
infrastructure owned by the dominant retailer. That beast must be
neutered.
The broader issue is conflict of interest arising from association of a
retailer of services with a wholesaler of such services and/or an owner of
relevant infrastructure. One obvious remedy is legislation against such
associations.
The effect of separating wholesalers and infrastructure owners from their
retail arms would be to open up the retail sector. Deprived of in-house
retailers, wholesalers and infrastructure providers would have little
option but to provide product to any retailer. Sadly, history has shown
that it would probably be necessary to legislate that this be done on fair
& equitable terms. It would also open avenues for resuming public
ownership of infrastructure assets.
[Edit ends]
Build into the future
Optical fibre will evidently serve for at least a century. We therefore
need to plan on that time-scale. Clearly, the Telecommunications
Commission will need statutory protections from the short-term opportunism
characteristic of Australian politics in the 21st Century.
Our forebears were not afraid of the future. For the telecommunications
network, they lay copper with no end in sight. The rational limit was the
length of cable that could be replaced within the service life of copper.
That limit increased as muscle gave way to internal combustion and pen
& paper to computer processing, accelerating the speed at which lines
could be replaced. As we've seen, the service
life of optical fibre is several times that of copper. I believe
that, with so much time to work in, we could feasibly implement fibre to
every premises on the mainland, Tasmania and many other islands.
It won't happen overnight; stop-gaps will be needed. Satellite is the
ultimate stop-gap; there's not much of the face of the Earth that's out of
view of a satellite. Sadly, as the draconian “fair
use
policy” attests, ill-advised penny-pinching such as relegating
entire
communities to satellite has overloaded currently-provisioned
capacity, but rapid deployment of terrestrial infrastructure might
mitigate the need for more. Fixed
wireless is of limited capacity, has a relatively short service life
and is costly to run so the less we rely on it the better, but it is
useful in the short term. I doubt there are any premises that are within
range of fixed wireless that can't eventually be reached by fibre.
Long-term, the role of fixed wireless is little to none.
The resources of government are not infinite. Much can be accomplished,
but it takes time. Members of communities such as BIRRR have repeatedly
shown a willingness to do it themselves. As one of those involved in
England's B4RN
commented,
basic skills for working with optical fibre are not difficult to master.
The Commission should encourage and facilitate. It should not
unnecessarily obstruct those who seek to help themselves, but instead
assist in any way possible.
What of mobiles? The mobile system relies on the fixed-line network to
connect to the rest of the world. As fixed-line infrastructure advances,
so can the mobile network. With a sufficiently comprehensive fixed-line
network, there's no reason why the mobile network couldn't cover well over
95% of Australia's landmass. If, however, the job of providing mobile
coverage is left to the private sector, experience shows that the most
profitable areas will be served to excess, while others are under-served
or not served at all. The private sector cherry-picks profitable markets,
then demands public sector subsidies to cover the rest. Paying for the
unprofitable with revenue from the more lucrative would be far less
indecent.
The network should not be run for profit. All income generated must be
dedicated to maintenance & expansion of the network and associated
research & development. The Commission must have statutory protections
from becoming a cash-cow for general revenue. Government will benefit
enough from increased productivity and well-being flowing from enhanced
communications.
[Edit 27 January 2017]
Wrecking the foundations
At the 2016 Annual General Meeting of the Internet Association of Australia,
Dr
Mark Gregory gave
a talk in which he pointed out that, among changes wrought by the
Abbott/Turnbull government was a fundamental change to the architecture of
the NBN. Originally, the network was to be based around a ring topology.
That has been changed to a star or hub-and-spoke architecture. A 2015
blog
post by Kenneth Tsang gives some details. A ring topology provides
at least two paths between any two points in the network. The star
arrangement has multiple single-points-of-failure. It's far less robust
and reliable, not substantially cheaper and no quicker to implement.
Cost-saving was the excuse for this change, but any saving is unlikely to
cover the cost of implementing the change. The only reason for the change
appears to be that it's different to what was originally planned.
Fixing the consequences will probably cost far more than doing it well in
the first place. Costs to the nation will continue to accrue until the
damage is repaired.
[Edit ends]
[Edit 19 March 2017]
Pricing model
I've been assuming that our telecommunications infrastructure must pay
for itself directly. That may well be the only politically-viable model,
but is it the way to optimise the value of our investment? Would we net
more value if the cost was paid indirectly; if access & usage were
effectively free to the user?
In an interview broadcast
on
ABC radio Brisbane in February 2017, entrepreneur Steve Baxter
compared monopoly telecommunications infrastructure to the road network,
describing it as a public good. He went on to point out that the
cost to operate the network at 100% of its capacity is no greater than
operating at 1%. If nobody uses the network, he said, it will cost the
same as if everyone uses it to capacity.
Imagine if every household in Australia could connect to every other
household &/or business in Australia at maximum speed with no
incremental cost. As Steve Baxter said: “People will find a use for
that and it won't be only downloading 4k Netflix. It will be for things
that you and I can't fathom.” “People would find uses for that
bandwidth”. I think the term he was looking for is
“innovation”.
Baxter asks: “What's the least possible cost we can charge the end
user?” At the nbn™ half-yearly results announcement earlier
that month, chief executive Bill Morrow reportedly raised the prospect of
providing
wholesale
services “for free”. That strikes me as a very clever
suggestion.
As I've pointed out before, the cost of
implementing optical fibre to every premises would be trivial. We could
easily afford to write it off entirely over the network's service life. Of
course, we'd still have to pay for the network, but the financial load
would be insignificant.
What of operating costs? Whatever the network costs to run, the source of
funding will be the same: the people of Australia. Either as customers or
as taxpayers, we will pay for it. It's in our interests, therefore, to
minimise the cost of running the network and optimise its value.
In a user-pays system, much of the cost lies in administration; measuring
what each user uses, accounting for it, billing each user and managing
payments from each user. If the user doesn't pay directly, then those
costs are eliminated. Baxter said that Australia has the most expensive
Internet access charges in the world. I don't know how true that is, but
can we try for the least expensive? All we need to do is think like a
nation.
If the network earns enough to pay for itself, then it doesn't show up in
the budget, so our politicians like to pretend. A well-built and well-run
telecommunications network could easily pay for itself. Sadly, neither is
true of the NBN in its current mutilated form, nor of the
tragically-neglected legacy network. Parts of the latter are quite
lucrative; Telstra has left
the
rest to decay. According to Baxter, the NBN as currently envisioned
is not commercially viable in the long term. One way or another, we're
going to pay. Privatising the NBN might allow the politicians to keep
pretending, but it won't reduce the costs to the users (quite the
opposite, in fact). As Baxter commented, it would take courage to relegate
the expense to the budget bottom line (retain the infrastructure in public
ownership, which is likely to reduce net costs, but those costs would show
up as government expenditure). Is there an Australian politician with the
cojones?
Providing the infrastructure at no cost to the user would be a trivial
expense. Providing free access & usage would be more costly, but the
payers are the same whichever way the cost is paid: we, the people.
Against those costs must be set the benefits:
What is the value of lives saved?
What is the value of lives enhanced?
What is the value of business facilitated?
What is the value of innovations generated?
All that stands in the way is politics. Funding from general revenue
would put the infrastructure at the mercy of politicians. Our politicians
have shown quite comprehensively that they're not to be trusted. There's
always someone ready to degrade and destroy, if only because they're too
fearful to be fit for government. If we rule out user-pays and general
revenue, then what? By what mechanism could the infrastructure be funded,
on an ongoing basis, that can be made invulnerable to politicians?
Conclusion
As a pricing model, user-pays is unlikely to optimise the value of our
investment in telecommunications infrastructure. As as funding model, none
other can be as well protected from the depredations of politicians.
[Edit ends]
