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Labor’s $40bn NBN V Libs $30bn FttN – Who Wins?

The Federal Coalition’s $30 billion plan for an alternative, slower but cheaper National Broadband Network – announced yesterday by Malcolm Turnbull and Tony Abbott at a joint press conference – has won both applause and brickbats from industry figures and bodies.

But one aspect has brought near-universal approval across the spectrum of industry opinion: the Coalition’s decision to go along with the Government in keeping Telstra structurally separated and effectively sidelined from competing head-on with the NBN.

The Coalition may well seek to renegotiate the deal under which Telstra was to dismantle its HFC cable network in major capitals, but the basic deal under which the Government is to progressively pay Telstra $11 billion for its copper wire networks and access to its pits and ducts will remain largely untouched.

Telstra has made it plain that, whatever happens, it wants its $11 billion, and won’t be letting go easily, despite the Coalition’s plan to move from a fibre-to-the-premises NBN to fibre-to-the-node, which uses the copper lines to connect the final runs to premises.

The carrier would negotiate from a position of strength, with the $11 billion contract already sealed, delivered, and approved by its shareholders – who will want nothing less.

A spokesperson for Telstra said the company would work “constructively with the government of the day” – but added: “We will sit down with the Government to re-negotiate if that is needed. Our position is that we must maintain the value of the current deal for our shareholders.”

Some observers and industry players are highly critical of the slower speeds that would be offered to most Australian homes and businesses under the Coalition FttN plan.

While the minimum speed to be offered is put at 25Mbps under the Coalition plan, compared with 12MBps under Labor, Turnbull’s plan offers a maximum of 50Mbps, half the Labor plan’s 100Mbps current top rate.

And for many users the 50MBps rate would not be reached until 2019, he revealed.

By that time, some observers say, under Labor’s plan FttP customers could well be offered up to 1000Mbps, or one terabyte of data per second.

Internode CEO Simon Hackett was one player highly critical of the Coalition plan, predicting that it could wind up costing more money while delivering “inadequate” Internet speeds.

He raised doubts about the Coalition’s timetable for a 2019 completion date and said its plan would create a digital divide between those with fibre in their homes and the majority of Australians depending on copper connections.

“[Greenfield developments] will be the ones getting fibre to the home … so you’ll get this incredible divide between what you’ll get in McMansions and what you’ll get in established suburbs,” he said.

“If we live in a world where 100 megabits per second isn’t enough, all the investment gets thrown away and you have to build the network twice.”

The Coalition plan sets a target of 2.8 million premises, or 22 percent, to be FttP fibre-enabled by 2019, with 8.9 million or 71 percent depending on FttN copper connections.

The remaining 7 percent would mainly be regional or remote premises on fixed wireless or satellite connections.

The Australian Information Industry Association and the Internet Industry Association issued statements “welcoming” the Coalition policy.

“Our industry is delighted that the Opposition recognises the importance of ubiquitous broadband infrastructure to drive a modern, digital economy,” said AIIA CEO Suzanne Campbell.

But she warned: ” Guaranteed speeds of 25 to 50Mbps fall far short of the promised 100 megabits per second to be delivered by the current NBN model. While these speeds may be adequate for now, with rapid advances and continuous innovation in ICT capability, there is a very real risk that the needs of business and households will not be met in the future.”

IIA CEO Peter Lee said that, while increasing the speed of an end-user’s broadband connection was desirable, it did not necessarily address the issues of affordability, adoption and usage.

He urged the Coalition to ensure a wholesale-only owned and operated NBN remains an important part of the its plan, and also called for early establishment of a “continuity plan” to ensure industry, businesses and consumers aren’t left in the dark.