The number of people involved in Australia’s national broadband network (nbn) is set to double to about 9,000 after Communications Minister Malcolm Turnbull this week announced plans to recruit and train an extra 4,500 workers.
This will make it even faster to roll out the rest of the national broadband network, and no doubt symbolises the Coalition’s leaner, quicker-to-roll-out version of the original NBN – re-branded earlier this year as a lower-case nbn for a reported A$700,000.
But why the rush?
Let’s have a look at what has been achieved in the past six years.
In the beginning…
The Howard Government struggled with all things internet. Australia had “fraudband” because it was too expensive and slow.
Then Opposition leader, Kevin Rudd, said a national broadband networkwas “nation-building for the 21st century”. And after Labor’s election, NBN Co was born on April 9, 2009.
However, the NBN took a back seat due to Labor’s leadership turmoil. Except when the Coalition poked fun at the NBN for taking too long. NBN Co blamed its partners and then its boss quit.
Things were going downhill.
From NBN to nbn
The Coalition’s cost-benefit analysis, released almost a year ago, found Labor’s NBN was extravagant. NBN was stripped back by changing Labor’s fibre-to-the-home model to a multi-technology mix (MTM) model. Slower speeds but rolled out faster – that was the plan.
Now Turnbull is having a bob each way with the broadband network. Finish the bits already started with fibre, then finish the bits that haven’t been started yet using multiple and ultimately cheaper technologies. Makes sense.
Although he would probably prefer to let the market sort it all out. If people want broadband, then somebody will sell it to them. Except maybe in the bush. Then the government should help make it work. Kevin07 thought government could do it all better – that’s why he set up NBN.
So Turnbull had little choice but to continue with the contracts set up by Labor. That’s the trouble with building things: it’s expensive to change your mind once the building starts.
It’s also hard to tear up contracts once they’ve started. Do this too many times and big business might stop building things for you. And when you are a politician, this makes you look bad.
The whole point of NBN was to fix the “fraudband”. Now we have nbn with a MTM. Occasionally the Coalition still struggles with internet things, but not Turnbull. He wants to ensure Australia gets the nbn sooner rather than later.
How are we travelling?
Well, it depends. The whole point of spending billions of dollars on NBN (nbn) was to give Australians better access to faster broadband. Since last election, NBN was available to 1 in 50 households. Now nbn is available to 1 in 10. Things are looking up.
But how do we stack up against other countries?
I usually compare Australia with Canada, but it can be helpful to compare Australia with other countries in the OECD too. This is how Australia fared before Kevin07:
Then, just before NBN Co was born, Australians appear to have stopped subscribing while they waited patiently for better broadband. Compared with other OECD member countries, this meant that Australian broadband was worse than before the 2007 election:
The trouble is, after six years of NBN (nbn), things are still heading south:
Now let’s look at broadband speeds. To make it easier to read the graph, I have chosen to compare Australia with New Zealand, Canada, the United Kingdom, the United States and Greece. I chose the last one because Greece is having problems at the moment and it might help put things in perspective.
The graph below shows the fraction of subscribers with connection speeds of greater than 15mbps. Remember, NBN was meant to provide up to 100mbps and nbn at least 25mbps:
What does it all mean? I’ve argued for many years that government control of the market stifles industry. That’s not to say that smarter ways of privatising Telstra or deploying NBN couldn’t have made a difference. We can hypothesise until the cows come home.
But one of the richest OECD countries – Australia – has broadband speeds closer to one of the poorest – Greece.
Has it been worth it?
Streaming services such as Netflix should boost fixed-line broadband demand. This might prove to be a self-fulfilling prophecy for the Coalition.
But when the next new technology comes along, government shouldn’t try to second-guess the market. Indeed, where government wasn’t meddling, the market has worked. Australia is a world leader in mobile broadband, for example:
It’s getting harder to see the public value in nbn. But it’s too late to stop it now. Better to double the workforce and finish it quickly and quietly. That seems to be Turnbull’s way out of this mess.