NBN concedes the point about paid editorial content

Last week I raised questions about editorial content regarding the NBN in both the North Shore Times and the Sydney Morning Herald which appeared to be associated with payment for advertising.

NBN Co has conceded that the glowing article about the NBN which appeared in the North Shore Times and other News Limited local newspapers was written as part of a deal in which NBN Co paid for advertising, releasing a statement in which it said: “The editorial space was negotiated after NBN Co took out advertisements in the titles to inform people of the rollout”.

NBN has sought to distance itself from the content of the article by claiming that it did not “…pay for or dictate the editorial content in the article in News Community newspapers… We were asked to contribute information and check facts. But the article was written by a News Limited journalist.”   

This statement strains credulity.  I invite NBN Co to disclose publicly the full record of its interactions with the journalist – including such matters as the form of the ‘information’ which was contributed, and how closely it resembles the final printed article.

But regardless of the process, the statement offers no response to the two key concerns I have raised and written to the ACCC about.  First, NBN’s approach is misleading, as readers may think the article, with its soothingly positive comments about the NBN, was written in accordance with the normal journalistic principles such as covering both sides of the story – when in fact it was an article written at NBN’s request under a deal in which NBN paid money to the newspaper in which it appeared.

Secondly there is the question of a misleading impression given by several specific statements in the article, and NBN’s responsibility for those statements.

I have highlighted the following statements to the ACCC:

Statement 1: “The project is expected to cost taxpayers $27.5 billion, with remainder to be raised in debt markets. Over time the network will pay for itself.”

• In fact there is no certainty that that taxpayers’ exposure is limited to the $27.5 billion of taxpayer funded equity to be injected into NBN Co, or that the network will generate sufficient revenue to “pay for itself.”
• For the statement to be accurate something extremely unlikely would have to happen, namely that NBN succeeds in issuing $13.4 billion of debt on terms that the lender has no recourse to the government if NBN does not generate sufficient revenue to repay the debt.

Statement 2: “The government has also flagged that it wants private companies to invest in NBN Co, but this hasn’t yet happened.”

• In fact the government has legislated that no private company may invest until the network build is completed in 2020 (National Broadband Network Companies Act 2011, section 45)

Statement 3: “Tasmania and test areas in South Australia and New South Wales are already using it…”

• This language, referring to ‘test areas’ in two states but not in Tasmania, is calculated to give the impression that the network is complete in Tasmania. In fact, only a small percentage of the planned network has been rolled out in Tasmania.

Statement 4: “The government’s most recent estimates say that the network will be finished by about 2021 and generate revenue of $5.8 billion in that year.”

• These figures are taken from NBN Co’s December 2010 Corporate Plan (p 134.) However, NBN’s CEO Mike Quigley conceded to a Parliamentary Committee in April 2012 that the rollout plans in the 2010 Corporate Plan are no longer valid: “We are now in the process of developing a new corporate plan based on current assumptions and we will provide this to government at the end of May. So it is neither reasonable nor valid to compare NBN Co.'s performance with the deployment forecasts that were included in the December 2010 corporate plan.” National Broadband Network Committee, Monday 16 April 2012, Hansard, p 46.

NBN Co’s statement also implies that it had no involvement with the editorial content in the Sydney Morning Herald’s recent ‘special report’ on the NBN, and distances itself on the grounds that the advertising was paid for by Optus.

This response fails to address the central issue: that editorial content of the Herald’s special report is seriously unbalanced. It’s uniformly positive depiction of the NBN is reminiscent of articles in the old Soviet Union’s Pravda, warmly welcoming the triumphant success of the latest five year plan to quadruple steel production. 

In reality, there is widespread public debate and controversy over the NBN including: its costs; the failure to prepare any cost benefit analysis; the prospect of higher broadband costs under the NBN; delays in NBN’s rollout schedule, and; the detrimental impact of NBN on the competition in the communication industry.

Yet the herald has made no attempt to provide balanced coverage of this intensely controversial topic.

I make no criticism of Optus – as a private sector company it is entitled to spend its money and advertise as it chooses.

But I certainly do question NBN’s enthusiasm for using paid advertorial – that is, what appears to be genuine editorial comment but in fact is linked to specific advertising – as part of advocacy in support of NBN.  In one instance NBN paid for it, in another instance NBN closely cooperated with it.  I also question the Herald’s decision to run such material without explicitly and specifically marking it as advertorial content in accordance with Australian Press Council guidelines.