Wednesday, April 10, 2013

The Great Australian Broadband debate - Analysed

There is much conjecture around the coalition's broadband plan vs labour's original plan. Confusion is rife and emotions high with politics of all colours and parties with vested interest fight it out. Lets try to cut through the confusion and get some facts on the table sooner than later.

NBN Co deserves the wide criticism it has reaped for its poor handling of the broadband roll out. Execution of labour's grand vision, Australia's most expensive public works program ever, has been stymied by poor execution. Not just the NBN but the government needs to be held accountable for the cost over runs on the original estimates, which in it self was a huge drain on the public purse. The delays and size of cost over runs are inexcusable and should have been catered for.

The coalition plan on the other hand is unimpressive and lacks vision. Especially if the plan that has been articulated by opposition communications spokesman,  Malcolm Turnbull is its final plan as opposed to a phase 1 of a larger vision delivering fibre to the home. Most analyst have discounted it, and through the eyes of a strategist at first pass the coalition strategy looks fundamentally flawed.

So lets try to cut through the turbid waters of rash critique,  political argument and counter argument and get some clarity.

Fibre to the home is a noble idea, but extremely expensive particularly in a country the size of Australia.  Implementing an ambitious plan of this nature and scale is often plagued with the realities of cost blow outs and huge practical difficulty in execution. All these we have now experienced. Courage need to be admired, yet naivety of the exercise is not lost on most.

Labour plan provides 100 mbps to 93% of homes
Coalition 50-100mbps to 73% of homes and min 25mbps to 100% of homes
Labour will spend of $37.4B while the Coalition will spend $20.4B
Coalition will complete the plan 2 years sooner than labour in 2019.

Coalition plan needs to be fleshed out in particular to understand cost and timing impact of a next phase of delivery to ensure a larger percentage has fibre to the home/premises.
Current coalition plan has dependencies of cost and timing based on negotiation with Telstra on use of its copper infrastructure from the node to the home. More importantly costs incurred in the maintenance and performance related issues of the aging copper infrastructure needs to be researched.

Benefit of the coalition plan is that 100% of Australian public will not use the 100mbps broadband as its installed and by the time the need and demand is created a second phase will be able to be switched on fairly efficiently using newer technologies available. This will save the nation valuable capital at the outset.

Labour's grand plan is grand in it's design but like most other policies of this government eg: ETS, Mining tax,  unfortunately are hard to implement to fruition and will cost the tax payer infinitely more than its original estimates.

The broadband take up will not be 100% at the outset, in fact far lower and return on investment (ROI) will therefore be questionable and will most likely not meet original estimates. Considering cost over runs it's best our nations treasury prepares for a final bill exceeding $50+ billion on the labour plan.

My broadband vote: Labour plan is conceptually excellent, ticks all the boxes, too expensive, not implementable by current government. Coalition plan is implementable, and more prudent financially but must be phased to achieve FTTP to min 73% of premises with strong take up and 93% if take up justifies investment.

Dinesh De Silva is CEO of Nexgroup Asia Pacific, he and his team are available to speak to media /  organisations or groups as a keynote / guest speaker on the above. Contact him +612 8003 3342, via twitter @dineshdesilva or 

NexGroup Asia Pacific, is a World Class Business Process Solutions business, providing Software, & Accounting, Finance and Legal BPO Services. 

1 comment:

  1. I think politicians are just using the nbn issue to get the sympathy of Australian voters. I hope both parties do their best for the future.