The news that NBN Co has found a way to move forward from the crucial cost-of-construction issue must have surely lifted the Gillard Government’s spirits.
NBN Co, the government-owned corporation in charge of the National Broadband Network rollout, announced the appointment of Silcar, a Leighton Thiess-Siemens joint venture, to lead a $1.1 billion build of the project through Queensland, New South Wales, and the ACT.
It also appointed Ericsson to take charge of 4G wireless broadband connections in rural areas. NBN is apparently deep in negotiations with a select group of other companies in a controlled bidding process for the remainder of the work, aiming to seal the deal by the end of August.
These deals will steady the government’s nerve on the project in the short term, especially on the threat of a labour-cost blowout. But too many questions around the $43 billion project remain unresolved.
Ever since NBN Co unexpectedly suspended its tender process on April Fool’s Day this year, the once-in-a-lifetime infrastructure project has been embroiled in deepening criticism and controversy.
NBN Co said at the time that judged the cost of contractor bids as being far too high.
The controversy intensified when the NBN’s construction chief, Patrick Flannigan, suddenly resigned a few days after the tender suspension.
Since then, the Federal Opposition and other critics have not missed an opportunity to raise these concerns about cost blowouts.
Not to mention muddying the water with other issues, like the controversy around NBN Co chief Mike Quigley’s disclosure of bribery allegations against Alcatel-Lucent America – a company he used to run (although there was never any suggestion of impropriety on Quigley’s part).
Ever since it was dreamt up on the back on an envelope by then-opposition leader Kevin Rudd and aspirant shadow communications minister Stephen Conroy, the NBN has been something of a grand illusion.
The NBN has had the rare distinction, in these jaded political times, of being twice-endorsed by an electorate still keen on big ideas – even if they never had many of them to choose from.
The NBN was the shining star in the lowly firmament of Gillard’s shaky 2010 victory, remarkable for the endorsement it attracted, rather spontaneously avowed, by so many dubious citizens.
So what’s the hold-up? When is the NBN coming to a plug in the wall, or wireless device, near you?
Well, that’s the problem with big ideas, especially when we are talking technology, and next-generation networks in particular. Unlike the shiny, super-modern, chic design we might associate with an Apple store or an off-the-shelf widget from the electronic entertainment megastore of your choice, building networks across a country as large as Australia is a messy affair.
It’s not just the curse of our geography that makes it messy. It’s also because the path of technology infrastructure is messy at the best of times, especially when it’s a network as big, wide, and complex as the NBN.
As we discovered with the rollout of pay television infrastructure by Telstra and Optus, and partners, in the mid-1990s, the “stuff” of broadband internet might be merrily uploaded and downloaded by users — but someone has to get down and dirty, and actually dig the holes, lay the cables, and put the kit together.
The crucial construction element of the NBN is a whopping part of the cost, as the McKinsey feasibility study clearly showed two years ago.
The government is vulnerable to attacks on the inflation of the NBN’s costs. It faces a classic problem of getting the best value for money, while ensuring speedy rollout of the infrastructure.
In a strong economy running at near capacity, skilled workers come at a premium. A colossal project such as the NBN requires an unprecedented scale of expertise.
However, this is a practical problem that can be solved with a different approach, such as direct negotiation with contractors and unions.
While revelling in NBN’s discomfiture, the Coalition’s most convincing line of attack lies in opposition communications spokesman Malcolm Turnbull’s cogent arguments that the project’s $43 billion is better spent on technology-agnostic enhancements.
Turnbull competently argues that we should not tie ourselves ourselves to a predominantly fibre-based network.
There is a direct line to be drawn from the policies of the Coalition when in government to its recipe for government involvement in broadband today.
The Coalition specialised in piecemeal additions and fixes to address market failure in telecommunications. That approach, taken as a whole, had merit, but were often poorly integrated, and often came in response to the parliamentary balance of power at the time (when the Democrats and Tasmanian Senator Brian Harradine were in the ascendancy).
The result was not entirely of their making, but by the time they left office, there was a widespread dissatisfaction with Australian broadband availability.
Burnishing its nation-building credentials, Labor promised to lay the foundations for the digital economy of the 21st century, with fibre to the home. It had two demons to slay.
The ghost of Telstra’s dominance, still very much haunting future internet in Australia, has been exorcised with a heady amalgam of structural separation (latest drafts of which have been just released) and the prospective agreement on migration of Telstra’s customers to the NBN.
The other ghost in the machine has been the immense cost of the NBN, once Labor decided to build it (after their first tender failed).
Here Labor fashioned a public-private partnership, in the arms-length form of NBN. NBN is a vehicle to build the wholesale networks, carry and recoup the costs, until it could be privatised. This left the taxpayer as the guarantor of first, and last, resort. Hence this latest agreement to sustain NBN’s momentum, this time with a ‘value-for-money’ fibre rollout.
Again, the problem is that wedging between the government’s desire to oversell the NBN — now the quest of 20 hand-picked network ‘champions’, and the opposition’s lack of a genuine alternative for an assured national digital platform, is the hapless taxpayer and ultimate user of the service.
Citizens are underwriting the build, and not really being consulted on what they’ll get. Little wonder that users are flocking to available mobile media and wireless technologies, where the broadband action is here today.