NBN Chairman admits $41 Billion is no guarantee of 25Mbps

Image credit: Flickr - RickyWoodman

During a Senate Committee meeting on NBN today, Senator Stephen Conroy grilled the new Chairman of NBNCo, Ziggy Switkowski on the revised NBN plan. In a stunning turn of events, Switkowski admitted the promised minimum 25Mbps is not actually guaranteed. While the promise came from Communications Minister Malcolm Turnbull and Prime Minister Tony Abbott, the mix of technologies in the new plan, which leverages large sections of copper cannot guarantee the minimum.

Last week we seen the strategic review from the Government push the minimum 25Mbps out by 4 years to reach 98-100% of Australians in 2020. It’s one thing to spend billions of Australian tax payer dollars to substantially increase the internet connection speeds and raise our place in a globally competitive market. It’s another entirely to spend billions to barely move the needle.

It was confirmed that Telstra have read the censored report which includes estimates on revised costs for deals with Telstra and Optus to use their infrastructure. The revised contacts are in very early stages of negations, yet the Coalition has published their review of which one of the biggest project costs is the deals with the telcos.

Senator Scott Ludlum asked what happens if Telstra come back with a price double that of expectations, and would NBNCo characterise their negotiating position as strong? The answer was no. Basically Telstra and in a lesser part, Optus with their HFC network, have the government over a barrel in what it can charge for access to their existing infrastructure. If we remember back to when the NBN project started, the deal with Telstra took almost 2 years and the outcome was a deal worth $11.5 Billion.

When Ludlum enquired about the upload, yes upload speeds, he was told that those connected by FTTN could potentially get 50mbps down and 20mbps up. If those numbers sound wrong, Ludlum thought so as well. He went on to ask if there’s anywhere in the world getting those upload speeds on a large scale over copper. The response was laughable, with “somewhere overseas is doing it” being only the evidence provided.

Probably the most amazing part of questioning was when the new Chairman of NBNCo seriously questioned Australia’s need for 50Mps speeds. Some poor maths suggested even a 4K stream would require just 20Mbps. The problem with figures like this is that they’re made up, there is currently not 4K streaming services available. Sony will launch one in the US next year, as well as Netflix sometime during 2014.

Next on the stand was Telstra who also declined to comment about what their infrastructure would cost the government, understandable if negotiations are starting over. To deliver the kitchen sink of technologies in the Coalition’s new NBN plan, they actually need access to around 90% of Telstra infrastructure. At a guess, the final bill from Telstra is going to be far more than the $11 Billion negotiated last time. While the Coalition have a number in their budget, Telstra current don’t have an accurate estimate of what their infrastructure is worth given some of it degrades over time.

“Sounds like a made up number”

Senator Ludlum suggests the number in the Coalition’s latest report isn’t based on evidence and is basically made up given even Telstra themselves don’t currently know the value of the infrastructure. The Telstra representative too questions on network faults and indicated that he believed voice quality was a good proxy for data capability and speeds. Conroy highlighted that he has never heard of this despite his long history in the industry, Mark Newton agrees.

He was also questioned on the visual appearance and dimensions of Fibre-to-the-node cabinets that are scheduled to be placed on street corners. He was unable to do so and admitted he’s only seen them in photos and they come in a variety of sizes. Given there’s tens of thousands to be installed as part of the Coalition’s Mixed-mode network, this “Street Furniture” will be important to the aesthetics of neighbourhoods.

You can listen to the afternoon of the Senate Committee here – http://aph.gov.au/live, if only we had a NBN, we could get the video version.

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This post is authored by techAU staffers. Used rarely and sparingly when the source decided to keep their identity secret, or a guest author who isn't seeking credit.

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