Turnbull’s broadband policy: Incompetent and inconsistent

Quick quiz: who said this?

"We say that if broadband services are going to be provided in the bush - and they should be - and they cannot be provided on a commercial basis then the subsidy should be absolutely explicit, and it should come out of the budget. There is no reason to impose higher telecommunications charges on people in urban and metropolitan Australia to cross-subsidise the bush."

I’ll give you the answer in a moment.  But first, consider the latest policy bungling from the Minister for Communications, Malcolm Turnbull.

Following his quiet but thoughtful Christmas gift of a new $300 NBN connection charge and a $600 deployment charge for developers in greenfields (even higher in areas without backhaul access), Turnbull is front page news spruiking his new “broadband entrepreneur levy”.

He opens his heart on “the social cost of providing broadband to the bush”, and his deep desire to ensure NBN Co is not burdened with a “smaller and smaller revenue base out of which to subsidise the bush”.

The credibility problem with Turnbull’s new found concern with the city-country digital divide is threefold:

First, the primary broadband entrepreneur in question is TPG – a challenger network operator which announced shortly after the 2013 election that it would commence a fibre-to-the-basement (FTTB) rollout, specifically cherry picking low-cost, high value apartments in metro areas.  But the enormous impact of this cherry picking on the NBN Co business case soon became clear to all.  In April 2014, NBN Co CEO Bill Morrow advocated a levy on cherry picking rivals such as TPG to subsidise the provision of broadband services in unprofitable rural and remote areas.

Turnbull dithered for over a year, originally passing the buck to the ACCC and the Vertigan Review until he was finally compelled to issue a draft Carrier Licence Condition that targeted TPG and any other would-be challengers to comply with specific rules if they wished to continue their broadband offerings.  Such instruments are not made lightly – they effectively constitute the highest regulatory burden that can be imposed on an operator, namely to comply with all relevant Acts and Regulations.

It’s at this point that Turnbull’s incompetence was exposed as he put his name to possibly the sloppiest piece of drafting offered up so far under this Government.  Universally panned in its wording, the final version of the licence condition became effective on 1 January 2015 - and then went on to have the effect of driving TPG out of the FTTB market!

Just think about that: for three years, Turnbull was banging on about his hatred for the NBN and his commitment to opening up the market to competing carriers.  TPG was one of those.  It staked its FTTB business case on it and announced its cherry picking rollout only days after Turnbull became Minister, on the basis of his policy representations.  Two days after Turnbull issued the licence condition, TPG decided that it could not comply with the new rules and packed up its gear.

Which leads to Turnbull’s second credibility problem:  the TPG shambles exposes his policy vacuum when it comes to the digital divide.  Labor’s NBN had a solid policy foundation – disinfect the impact of vertical integration at the retail level by offering a wholesale-only product at a uniform price, irrespective of where all Australians live or work.  Uniform national wholesale pricing was the grail, delivering services and competition to areas where infrastructure-based competition had clearly failed.

As someone who championed (failed) infrastructure-based competition and didn’t think through the impact this would have on the rollout, Turnbull is now tying himself in knots with a convoluted mess of regulation. The “repugnant monopoly” as Turnbull once called the NBN has been replaced with the appearance of infrastructure-based competition, but in reality is heavily discouraged by the Carrier Licence Condition and the competition levy. Considering that TPG has called it quits, for now at least, how much is this “broadband entrepreneur levy” going to actually raise? Current balance: zero.

Third, Turnbull’s incompetence has manifested itself in other ways.  After burning so much energy on his thespian rants in the Parliament about how great he is, the facts show Turnbull is actually the biggest non-deliverer on the front bench.  And that’s saying something.  Take a rural centre like Dubbo, for example, and compare what Turnbull promised and what he has delivered:

  • April 2014: Local media reports “NBN rolled out to 1500 homes in Dubbo area”.
  • July 2014: “Rollout, rollout – the NBN’s in town”.  This story has a lovely photo of Malcolm and local MP Mark Coulton.
  • December 2014: “NBN announces suburbs to be fast-tracked for high speed internet rollout”. Dubbo is listed as one of the Central West suburbs to be “fast tracked” for the NBN.

But then we arrive at 15 January 2015 and the headline is: “There is no set timeframe NBN rollout”. As the Daily Liberal reports, the situation today is this:

"There is no set timeframe for Dubbo to receive the National Broadband Network (NBN) and no update on how build preparation for the high speed internet network is progressing, according to a spokesperson for NBN Co.

Six months after build preparation commenced for the majority of the city, there has been no date given for completion and residents are wondering when the city might be connected.

A spokesperson for NBNCo said it was unable to provide the Daily Liberal with any idea on when build construction might commence in Dubbo or a date when the service may be switched on."

This article also helpfully contrasts Turnbull’s impact on the NBN, noting that Dubbo was one of the first cities scheduled for completion:

"When the NBN was announced by the Labor government, Dubbo was scheduled to be one of the first cities to receive it and had it proceeded as initially planned, the rollout would have been underway, with the majority of the city due to receive NBN by mid-2015.

However the project was delayed when the Liberal-National Coalition came to power and work that had commenced in mid-2013 was placed on hold until its revival in July 2014."

It’s no wonder that Government backbenchers are seriously questioning the competence of their Ministers.  Turnbull probably thought he was immune from such criticism.  I wonder if Mark Coulton MP is still as eager to feature in a picture alongside his Minister in a future Dubbo newsletter.  It’s a story of utter non-delivery by a Minister who promised so much.

But back to my opening quote.

The individual who advocated subsidising rural broadband rollout from consolidated revenue and derided imposing a levy on metro cherry pickers was none other than Malcolm Turnbull.[1]  Not only is his policy incompetent, it’s inconsistent.  Hoisted by his own petard.

[1]               House of Representatives, Hansard, 1 March 2011, page 1919.