Time for the catastrophists to admit they were wrong on the NBN Co’s MTM plan

Let me start by making an admission. I want fibre into my house. I also want to make sure public discussion is done using facts, first and foremost. The NBN debate has been hijacked by so many people who are not giving insight into the reality of this huge project and they are leading the conversation into unhelpful and dishonest directions.

Based on the media’s portrayal of the NBN so far, how many people do you think would agree with this statement? The FTTP fixed line based NBN would be 8 years slower for more than double the cost to taxpayers compared to the current plan.
From NBN Corporate Plan 2017, page 11

I think very few, so let’s take a look at an example of NBN reporting and then look at some of the data that gives us this insight.

Renai LeMay correctly notes that different countries have done broadband in different ways. Well done.

He incorrectly concludes, however, that the problem is the MTM plan (multi technology mix, using the best technology for service speed, cost and roll out speed) and not the fact that we created a new monolithic monopoly in NBN Co and that is in fact the real problem with this whole endeavour. This is perplexing because even if the MTM plan was the problem, the evidence given to support this claim is that Singapore and New Zealand did FTTP via government dictate and that the UK, France and Germany did MTM style (FTTN is very prevalent) in a more competitive scenario. This does not support an argument against MTM unless you think Australia is more like Singapore and New Zealand than it is like the UK, France or Germany. Granted the NBN Co isn’t competitive (although it is actually, well done Labor). However, surely anyone can see that it was much easier to change NBN Co’s plan to at least use the right technologies in the right places compared to say dissolving NBN Co and then going back to the private sector and getting them to pick-up the mantle; 4 years had already been wasted with NBN v1, no need to add even more time to the project.

Back to Renai, clearly this author hasn’t been to Singapore. The entire country is smaller than Greater Sydney. These examples actually support the argument for MTM as it is best suited for a country the size and density of Australia. Clearly this author just wants FTTP and to hell with reason.

What does the evidence say?

Talk about cherry picking, which is what this author accuses MTM supporters of doing. Let’s look at some real numbers shall we? The NBN started in 2009, where is it at?

FTTP is at 1.4m premises RFS (ready for service meaning you can order NBN from a retail service provider) as of 30 June 2016. That’s over roughly 6 years, an average rate of 233k/year. In the final year of FTTP, roughly 500k premises RFS were added, so max rate was 500k/year.

This data isn’t a surprise, the first 3 years of FTTP saw around 30% of premises at service class zero (fibre in front of the house, but not connected meaning no service), meaning additional work was required between the fibre running down the street and the premise. This was FTTPs major problem, the work between the street and the house was hugely underestimated and why using the existing copper allowed this risk to cost and time to be greatly reduced.

FTTN is at 663k premises RFS as of 30 June 2016. It started in September 2015. That’s less than a year, but let’s make it a year to keep it simple, a rate of 663k/year. That’s almost 3 times faster than the FTTP average and still faster than FTTP max.

HFC started in June this year, it will add almost 1m users in the coming year. FTTN will add 1.4m in that same time. So the rate of FTTN + HFC until 30 June 2017 is expected to be a staggering 2.4m premises RFS per year.

Let me say that again. FTTN + HFC will have a rollout rate 10 times that of the FTTP average this coming year. Even if you use the FTTP max rate of 500k/year it’s still 5 times faster.

Total NBN coverage this year will go from 25% of Australia 30 June 2016 to 47% of Australia 30 June 2017. In one year NBN will do roughly the same number of premises RFS compared to the previous 8 years!

Using the numbers we now have, sticking to FTTP would have risen the government's equity funding from the current max $29.5B to $63B. Why? It would have added an additional $15B in capex, increased the time to complete rollout by an additional 8 years (2028), removed the ability of NBN Co to raise private funding (currently planned to be $19B). That means the cost per household/premise would go from $2,500 to a staggering $5,300.

So the net is: FTTP would be 8 years slower for more than double the cost to taxpayers. Where in the world is this a great idea?

People argue that MTM isn’t providing the speeds people want, but this is false. The majority (80%) of customers are choosing the slower offers <25Mbps (ADSL2+ has a theoretical max speed of 24Mbps).

Those who understand the cost of debt and how revenue is used to pay that cost will clearly see the superior business model that the MTM is compared to the FTTP only approach. And as the NBN increases its income, that income will be used to upgrade the network in sensible and technology advantageous ways. Like the HFC + copper lead in technology that NBN is patenting. Talk about innovation, you know what creates it? Hint: it’s not blank cheques.

Now can we all stop the complaining? In fact how about the naysayers actually admit they were wrong? Wishful thinking?