The Australian: Way to go to Reach Conroy's Broadband Nirvana

Labor has fallen far short of its lofty ambition.

IN March 2007, then shadow communications minister Stephen Conroy promised to build a fixed broadband network using "fibre to the node" to deliver a speed of 12 megabits per second to 98 per cent of Australian premises. The public investment would be a mere $4.7 billion and the job would be done in five years.

Five years on, far from reaching 98 per cent, Labor's broadband policy has delivered fixed broadband services to less than one tenth of 1 per cent of the targeted 10 million premises. On the most recent numbers disclosed by NBN Co, its fibre network has a mere 2315 services in operation. Labor's March 2007 promise was never going to be met.

For one thing, the true cost of the network was much higher than the $4.7bn figure used by Labor. Conroy's figure came from a 2005 Telstra proposal: for $4.7bn of government money plus its own money Telstra would upgrade its network to deliver 12Mbps to 98 per cent of premises. But Telstra's figure was a request for a subsidy; it certainly did not intend that in exchange for the $4.7bn government would get an ownership stake in the network as Conroy's policy assumed.

Nor did Telstra's 2005 proposal commit to build new fibre-to-the-node connections to 98 per cent of premises as Labor's policy assumed; instead it envisaged a (substantially cheaper) combination of existing and new networks and technologies.

The flaws in Conroy's plan were revealed once he tried to implement it. His intended private sector partner was Telstra, but Telstra refused to participate in a plan it saw as fundamentally uneconomic.

So in April 2009 Conroy abandoned his first plan and announced his second. Now it would be a fibre-to-the-premises network to 90 per cent of premises, with wireless and satellite to the rest, and the cost would be $43bn.

There would still be private sector participation, though. Within a year, any hope of private sector involvement disappeared after the $25 million "Implementation Plan" prepared by consultants McKinsey and KPMG concluded that the private sector had no appetite to invest in such an uneconomic venture.

Five years on, it is instructive to compare what Conroy promised and what he has delivered. He promised the new network would be substantially private sector funded, with public funding capped at $4.7bn.

 It is now to be 100 per cent taxpayer funded and government owned at a total cost that has already raced past $50bn. Far from public funding being capped, Conroy is shovelling taxpayers' money into the NBN Co furnace at an ever increasing rate. So far NBN Co has received $1.36bn in equity funded entirely by taxpayers and racked up losses of about $400 million. By 2015 a cumulative amount of almost $20bn will have gone to NBN Co.

Conroy promised a competitive selection process to find a private sector partner to build the NBN,

but this was abandoned in early 2009. He promised a fixed network to 98 per cent of the population, but NBN is now rolling out wireless and satellite in rural and remote areas, with only a smaller percentage to get a fixed connection.

Conroy claimed his plan would end Australia's "broadband backwater" status. In October 2006, for example, Conroy fulminated that "the latest OECD broadband statistics (June 2006) show Australia's ranking in the use of broadband remains mired at 17th out of 30 surveyed countries". Yet five years later Conroy has driven Australia not up the rankings but down. The most recent version of the survey, in June last year, ranks Australia 21st.

Conroy's 2007 policy document spoke of Labor's commitment "to turning around Australia's broadband performance and putting Australia back into the fast lane of the information superhighway". Five years on, Labor has fallen far short of this lofty ambition. The rollout achieved to date is tiny and the take-up numbers are derisory.

Conroy maintains his Orwellian insistence that Australia is proceeding smoothly towards broadband nirvana, but the facts tell a different story. In March 2007 Conroy promised a broadband outcome that he had no way of delivering. Five years on Australians can see that we have been conned.

Paul Fletcher is a Liberal MP. He serves on the parliament's NBN committee.