SUBJECT: Malcolm Turnbull’s NBN mess   

MICHELLE ROWLAND, SHADOW MINISTER FOR COMMUNICATIONS: We see Malcolm Turnbull out today calling the NBN “a train wreck”. Here is the reality: Malcolm Turnbull was the driver of that train and the driver of the train at the behest of Tony Abbott. We only had last week the Communications Minister calling the NBN “the envy of the world”. We have Malcolm Turnbull repeatedly saying that the NBN is “the biggest corporate turnaround in Australian history”. He only told us a few weeks ago that the NBN was all “in hand”. What has changed in that time? Well, now we see the head of NBN Co basically questioning whether Malcolm Turnbull's multi-technology mix is commercially viable and he's calling for increased protections and new taxes to fix up Malcolm Turnbull's mess. There is a frenzied state of panic going on in Malcolm Turnbull's office. And you have to ask yourself, what is the reason for all this? What has changed? Well I can tell you one thing that that hasn't changed and it’s the reality that it's Australian consumers who are suffering, its Australian consumers who are bearing the brunt of Malcolm Turnbull's decision to give them a second-rate dud copper network.

JOURNALIST: The issue though that Bill Morrow has raised in terms of concerns with the NBN is more to do with the competition or prospect of increased competition from wireless networks, not so much the multi-technology mix. Would Labor support imposing some kind of levy or fee on wireless broadband users to help support the NBN?

ROWLAND: We are very concerned by these reports about putting increased taxes, and new taxes indeed, on wireless broadband users and look, if this is what the government is contemplating, they should just come out and say it and be upfront with the Australian people. 

JOURNALIST: Do you accept that when Labor rolled out the original plan, the government is suggesting that that would've now cost $30 billion more the budget bottom line?

ROWLAND: Well, this is absolute rubbish coming from a government that said that they would deliver the NBN by 2016 for $29.5 billion. It's now blown out to $50 billion and 2016 came and went. We know that this government has failed to deliver on every single measure, whether it be on increased speed, rolling it out faster and greater reliability. All those factors have failed. So we don't accept for one minute that this government's botched copper-based NBN is actually going to provide dividends for the economy and is actually what we need in the 21st century.

JOURNALIST: But do you think there were deficiencies in the original plan that Labor put out?

ROWLAND: The reality is this: when Labor came to office in 2007, Australia was a broadband backwater. This country had something like a dozen failed broadband plans under the Liberal National Government up until that time. We needed to do something because we knew that if we didn't, then the market would continue to fail. And the market had failed. The whole reason why the NBN was envisaged was to enable that digital divide between regional and metropolitan areas, and also high and lower income earners, to enable that to be fixed. Now Malcolm Turnbull, I see him out there today saying that it was a mistake. Well, every single person living in rural and regional Australia should know that Malcolm Turnbull thinks it’s a mistake for you to participate in the digital economy.

JOURNALIST: What would Labor do differently? Would you upgrade the copper to fibre then, and how much would that cost? 

ROWLAND: We had a plan and we lost the election in 2013. 

JOURNALIST: What's your current policy that you take to the next election?

ROWLAND: There will need to be some difficult decisions made, especially in terms of the economics of the NBN, because, as we find out each day, it gets more and more dire. Now, we have processes by which we can examine that sort of information, both on the public record and getting it out through processes like Senate Estimates which we continue to do. I’ll tell you the one thing we've done in the last few months. We've always believed the fibre to the premises model was far superior. In the absence of that, we called in April this year for the government to consider taking fibre as deep as possible to the network which is fibre to the kerb and doing that for premises that are currently not in a design or construction phase to deliver copper. We see NBNCo making yet another re-announcement of the fact that they took that up and are now doing more trials in that area. So that's one thing that the government can do immediately. But the reality is this: we will need to be informed by the facts on the ground if and when the election is called in the next couple of years or if it's called earlier than that time.

JOURNALIST: So Labor doesn't have a policy at the moment? 

ROWLAND: We are developing our policy based on one core element and that is that consumers need to be at the centre. We are examining both the economics and the technology but above all the consumer experience. 

JOURNALIST: One of the biggest economic factors according to Bill Morrow is this $1000 per premises that he has to pay Telstra so collects $15 from every user which puts the consumer behind the eight ball. Would you change that?

ROWLAND: We are very open to looking at some of these issues but let's remember, you can’t just blame the retail service providers for what’s been going on in terms of the consumer experience. There is indeed a dynamic between the NBN and Telstra as a retail service provider, and Telstra as the owner of part of that network which is now part of the NBN. So we would be open to looking at all these issues but they need to be informed by what is going to deliver the best outcome for the consumer.  

JOURNALIST: Would you look at mandating it so that retail service providers have to buy more bandwidth from the NBN, because that's one of the major complaints at the moment, there isn't enough bandwidth.

ROWLAND: That is one of the major complaints but that question is quite vexed in terms of what sort of regulation do you put at the retail level, because the NBN was designed as being a wholesale provider so you regulate at the wholesale level and leave that retail level largely for the market to sort out. Now, that was the original design of the NBN. If we've got a situation where you're actually compelling retail service providers to purchase certain amounts of bandwidth, you have to question the validity of that. You have to look at whether or not surely it should be in the interests of RSPs to be able to deliver for their customers, because the retail provider is the one that has that contractual relationship.

JOURNALIST: So you're saying, maybe you'd require NBN to sell bandwidth at a cheaper price. Is that something Labor is looking at?

ROWLAND: Look, the whole issue of CVC pricing is one that's been looked at a few times but I can tell you this: the CVC design worked for a fibre-based network. It doesn't work for Malcolm Turnbull's multi-technology mess. 

JOURNALIST: Which that then brings be back to my question. What is Labor's policy, would you revert back to fibre if you win the next election?

ROWLAND: Well, we're looking at all these issues at the moment. It has always been our imperative that wherever possible we would be rolling out fibre. We also appreciate that for some consumers, and in fact a lot of consumers if you look at the statistics last week, a lot of consumers have had a very poor migration experience. The fact that it would cost even more in billions of dollars to upgrade certainly is something that needs to be taken into account. We even had the chief engineer of NBNCo some time ago saying “look we're building a network that's essentially not fit for purpose and we're going to have to look at upgrades further down the track”. Now we don't know how much is already in the NBN's budget to be able to do that, so these are all issues we'll need to examine in the event that we take office.

JOURNALIST: There's an estimate that upgrading from copper to fibre for the people who have copper NBN would cost around $10 billion. Is that money Labor would be prepared to spend?

ROWLAND: We would be open to looking at all of these issues because we believe in a first grade network, but all of this as I said would need to be informed by the realities on the ground and we are assessing all these issues at the moment, and we are formulating our policies in this area and it's one in which we will continue to make consumers the focus.

JOURNALIST: How important is it that the NBN makes a commercial rate of return?

ROWLAND: It was always designed to make a commercial rate of the return.

JOURNALIST: It's making about 3% at the moment. The PM says it may never make money. Is that a concern?

ROWLAND: It's an absolute concern because it was actually designed to be able to generate that rate of return and those figures actually made sense for a full fibre model. You had things like consumers having trust in the network, you had increased demands for more speeds because it was a better network model, so he should be very concerned about what he has inflicted, not only in terms of consumers but also in terms of the commercial viability. And it’s not only me that's saying we should be concerned. Quite clearly Bill Morrow was saying there's a great cause for concern. 

JOURNALIST: Labor was the one that came up with the model of the user pays spinning NBN out, unlike what Bill Morrow has described is happening in Germany, UK, US. Are you going to go back to the fundamentals of that model, whether it’s an entirely user pays cost recovery model. 

ROWLAND: Look we will be examining this. Firstly, you start at what you want to achieve. Now we want to achieve universal broadband - 

JOURNALIST: So that's even on the table, a whole redesign of that model?

ROWLAND: We're not looking at redesigning any model. What we're looking at is the outcome that we want. We want the outcome to be every Australian has access to high quality broadband. That will be our starting point, looking at where we want to end up and how we get there will be something that we'll be looking at in the next couple of years until the next election. But certainly, I think it's important to remember this one point: when we came to office in 2007, something radical needed to happen and it's not only me that's saying that. We lost the election in 2013 but it wasn't because of our NBN policy. And you even look today at the popularity of the NBN and Labor's fibre-based NBN, it clearly outstrips what the government is doing at the moment. It clearly outstrips them on every count. So, I think when you approach the issue of 'well what is Labor going to take to the next election' we are keeping consumers at the centre but we are also very focused on where we want to be in terms of digital inclusion and that’s not being achieved under the train wreck that Malcolm Turnbull has created for himself. 

JOURNALIST: But Michelle, we're no clearer after all of these questions about what your actual NBN policy is, what Labor's policy is. 

ROWLAND: Well, we're formulating it at the moment. As you will appreciate, it's only been something like 12 months since the last election. The more information that we get from things like the Corporate Plan, from Senate Estimates and so forth, then we can devise that as we go. But as I explained, we had been looking for some time the issue of fibre to the kerb. That's one example. That's something we believe the government should be doing straight away and it's pleasing to see that NBNCo at least has picked that up.