Who’s to blame for the NBN clusterf*ck?

The National Broadband Network should have been one of the most successful and popular infrastructure projects in Australian history. Instead it has been plagued with drama; the construction has taken considerably longer than planned, and the technology has been significantly downgraded.

As for the delivery of “super fast” broadband, the experience of many is slower internet speeds and higher prices. In 2013, Australia ranked 30th in world for internet connection speeds. Despite billions spent on the NBN, Australia is now ranked 50th.

How did it come to this?

In April 2009, then prime minister Kevin Rudd and communications minister Stephen Conroy announced the NBN project and the publicly funded NBN Co to construct it. The plan was to rip up the outdated copper network owned by Telstra and replace it with high speed optical fibre.

This fibre would go directly to people’s homes (fibre to the premises or FTTP), delivering internet speeds of up to 100 megabits per second (Mbps), which could later be upgraded to 1,000 Mbps or faster. By comparison, the median speed for people on ADSL2+ internet plans over copper is around 12 Mbps.

The Abbott government, elected in 2013, with Malcolm Turnbull as communications minister, completely overhauled the roll-out for the NBN. Citing concerns about the cost of the NBN, it scrapped fibre to the premises in favour of a slower fibre to the node (FTTN) plan. FTTN involves the construction of nodes (washing machine-sized green boxes in the street) to which high speed internet access is delivered through fibre, before the old, slow copper wires deliver it the rest of the way to your house. It’s the equivalent of a job half done, but passed off as complete and dressed up with a fancy acronym.

These nodes are outdated technology and ensure that the NBN will be slower than it should be for millions of people. Laurie Patton, the executive director of Internet Australia, pointed out in June, “NBN won’t admit their use of ageing copper is a mistake that will cost billions to replace … It’s not really an upgrade anyway because they’ll have to rip out all the copper wiring and the so-called ‘nodes’ will be redundant”.

Only around 22 percent of Australian premises had FTTP installed under the original plan. Now the remaining 78 percent will get the inferior FTTN or some combination of HFC (hybrid fibre coaxial), wireless or satellite technology – usually known as MTM (multi-technology mix, but known better as Malcolm Turnbull’s mess).

From a technical perspective, it is easy to see that Labor’s initial plan for the NBN was superior to that of the Liberals. But the broader issues that plague the NBN today were there in the beginning.

(As an aside, it should be remembered that while Stephen Conroy planned faster internet access, he also campaigned, unsuccessfully, for the government’s right to block websites deemed inappropriate. Two months after announcing the NBN, Conroy earned the title of “internet villain of the year”, bestowed by the 11th Internet Industry Awards in the UK. The award is given annually to “individuals or organisations that have upset the internet industry and hampered its development – those whom the industry loves to hate”. But I digress.)

The biggest problem with the NBN has been the focus that it must be profitable. Despite being publicly funded, NBN Co is planned for privatisation within five years of construction being completed. Both Liberal and Labor accept the view that government expenditure is not about social good, but more an investment so that a small handful of people now and in the future can enrich themselves.

The NBN created a fantastic opportunity to renationalise a large section of Telstra by decommissioning the old copper wires without compensation. NBN Co instead struck a deal with Telstra to pay the company $11 billion over 30 years; $5b of that was just to gain access to the exchanges and duct networks.

If that weren’t bad enough, the deal was renegotiated under Turnbull. It is now estimated that, over 55 years, NBN Co could pay Telstra up to $98 billion – primarily for access to its infrastructure. FTTN maintains Telstra’s monopoly over the copper wire infrastructure.

It hasn’t been golden handouts only for Telstra. Turnbull also oversaw the appointment of former Vodafone Australia boss Bill Morrow to lead NBN Co. He is currently the highest paid public servant in the country, “earning” $3.6 million last year.

For all these faults, though, at least people who were lucky enough to get FTTP connected are all getting fast internet, right? Wrong. The pricing scheme that the NBN has introduced has encouraged internet service providers to deliver slower speeds to end users.

The NBN charges a per-megabit amount to ISPs, which then on-sell it. This is known as the connectivity virtual circuit (CVC) charge. An ISP might purchase 1,000 Mbps capacity, and then sign up 100 people on an “up to 25 Mbps” plan. If only 40 of those 100 people are using it at the same time, then they’ll all get their top speed. But if all 100 are using it, it could be fast for some and painfully slow for others. This model makes it profitable for ISPs to sign up as many people to the slowest plans, and purchase as little CVC capacity as possible.

This on-selling and underselling ensure that NBN Co makes a profit and the ISPs make a profit. But the end user pays for a service that is likely more expensive and unreliable than their previous ADSL2+ connection.

If the purpose of the NBN was not primarily to make a profit, the CVC charge could be reduced significantly and the faster speeds that the NBN is capable of could be delivered. Just as health care and education shouldn’t be seen as profitable enterprises but vital social services, internet access should be the same.

The NBN should be fully funded and fibre rolled out to every building in the country. If the government is after some suggestions of where to find the money, the exorbitant pay packets of the NBN executives and Turnbull’s investments in the Cayman Islands would be a good place to start.