Senators' Dissenting Report
Coalition Senators find
the Chair’s report to be grossly misleading and untruthful in its portrayal of
the evidence provided to the Senate Select Committee.
additionally find that the process of preparing this interim report of the
Senate Select Committee, including the provision of a deliberately falsified
version of the majority report to the Coalition, to constitute an abuse of
process. The 140-page majority report – which is replete with
misrepresentations – and its self-serving recommendations were provided to
Coalition senators one hour before the deadline for publication. This can only
have been to deliberately limit Government members’ ability to respond to the
falsehoods and self-serving distortions littered throughout the report.
Anyone with a cursory
understanding of the development of the National Broadband Network, the
behaviour of the former Minister for Communications, Senator Stephen Conroy,
and the performance of NBN Co will surely be gobsmacked by the assertions made
in the Chair’s report.
possessed neither the competence nor capabilities to successfully build the
NBN, and the interim report he and his colleagues have made underscores his
financial illiteracy and their wilful ignorance of the true state of the
project. But the interim report process exemplifies the Labor Party’s
dedication and proficiency when it comes to political game-playing and point-scoring.
The 97 per cent of
Australians who Senator Conroy abjectly failed to deliver the NBN to surely
wish he had displayed a similar commitment to improving their broadband.
During the Committee’s
work it has become abundantly clear that Labor Senators have no interest in
examining or learning from the systemic and material failures of NBN Co, which
by September 2013 had reached 3 per cent of Australian premises at a cost to
taxpayers of $6.5 billion, and was on a course that would have resulted in every
Australian household and business paying $43 per month more for broadband on
Instead, the Committee
has degenerated into a highly politicised and at times farcical face-saving
exercise where Senator Conroy, has sought to distort the history of the NBN and
deny or disguise his direct personal culpability for massive economic damage to
a crucial input industry and the destruction of taxpayers’ money on an
The majority interim
report seeks to discredit the various independent analyses of the NBN
undertaken since the September 2013 election. Instead it asks the public to
believe that the NBN was on track and just around the corner – after six years
where Labor’s walk never once matched its talk. The plausibility of this narrative
is a matter for the Australian public to judge for themselves.
But according to all of
the evidence available, the NBN represents the single largest destruction of
value for taxpayers in the history of the Commonwealth – and, it must be
repeated, Senator Conroy bears direct personal responsibility for this
dissenting report will outline the reality of the situation at NBN Co, detail
the appalling and undignified conduct of the Committee (which in the view of
Coalition Senators is causing the Parliament significant reputational damage in
the community) and challenge the baffling and illogical conclusions of the
majority interim report.
It is the sincere hope
of Coalition Senators that this Committee can more effectively focus its work
and lift its standards of conduct going forward.
There are important
questions for the Committee to examine – including those around how fast
broadband can be delivered to Australians sooner, at lesser cost to Government
and at prices which are affordable for consumers, and a separate set of
questions about why the NBN project under Labor’s oversight failed so
Background to the
Senate Select Committee
To provide additional
context to this Committee’s operation, Government Senators note that the former
Labor Government was not in favour of establishing the Joint Select Committee
on the NBN in the 43rd Parliament. It was only established as part of negotiations
with cross-bench MPs over the Telecommunications (Structural Separation –
Networks and Services Exemption) Instrument (no 1) 2011 when Senator
Xenophon, in exchange for supporting the legislation, sought release of a
redacted copy of the NBN Co Corporate Plan and establishment of the Joint
Until this negotiation
in November and December 2010, Senator Conroy and the Government of which he
was a part adamantly refused to disclose the NBN Co’s business plan to the
Australian taxpaying public, despite the latter being compelled to provide at
least (on the Labor government’s estimate of the time) at least $43 billion of
debt and equity capital to the project.
likewise note that this Senate Select Committee was established only after the
shadow Defence spokesman and former Minister for Communications, Senator
Conroy, overruled the current shadow Communications spokesman, the Hon. Jason
Clare MP on the appropriate model for oversight of the NBN in the current Parliament.
The Hon. Jason Clare MP
had previously verbally agreed with the Coalition to re-establish a Joint
Standing Committee on the NBN, drawing a broad membership from both houses of
Parliament and all parties. This Committee would have continued for the
duration of the current Parliament.
It was the view of both
the Government and Labor’s spokesman on Communications that this Committee
structure would have provided the most effective opportunities for constructive
scrutiny of the NBN by the Parliament.
Senator Conroy – whose
period as Minister was marked by a recurrent preference for opacity and secrecy
over transparency and accountability – instead insisted on a small Senate
Select Committee, to ensure voting numbers that favoured Labor and the Greens.
He thereby excluded his own party’s spokesman on Communications and assistant
spokesman on Communications from participation in the key Parliamentary body
performing oversight of the NBN.
Conduct of the
Government members of
the Senate Select Committee regrettably must highlight the conduct of Labor and
Green members of the Committee, with particular reference to: serial refusal to
allocate equal time to Government members to question witnesses; serial failure
to call witnesses requested by Government members; serial refusal to allow
questions of witnesses present at hearings; frequent bullying and hectoring of
witnesses; numerous unsubstantiated and bellicose accusations that witnesses
were ‘lying’; and many other instances of conduct that was unparliamentary and
detrimental to public perceptions of the Senate.
insistence, as the former Minister for Communications, on temporarily chairing
a committee charged with investigating a bungled and disastrously over-budget
project for which he bears direct personal responsibility shows an
extraordinary inability to separate crude self-interest from the obligations to
community and party that normally fall upon elected representatives.
hearings, the Chair (whether Senator Lundy or Senator Conroy) has refused to
allocate equal or sufficient time to Government Senators to question witnesses.
This is conduct of such a crudely partisan and self-serving character that it
brings the entire Committee process into disrepute.
This was no better
highlighted than during a public hearing held in Sydney on 12 March 2014. A
cursory examination of Hansard clearly shows that Opposition members – in
particular Senator Conroy – were given disproportionate time to question
witnesses compared to Government members.
point out that at this hearing, the Opposition had more than three hours to
question representatives of NBN Co while the Government was allocated
considerably less than one hour. For example, Hansard from 12 March 2014 shows
that from when proceedings commenced at 0829 hours until a break at 1027,
almost every question was asked by Senator Conroy. Hansard shows proceedings
recommencing at 1036, at which Government members asked questions – however,
Senators Conroy and O’Neill nevertheless accounted for the bulk of questioning
in this period as well.
The Chair has failed to
call witnesses requested by Government members. On 13 February 2014 the
Committee was advised of a number of witnesses who Senator Seselja requested to
appear at a public hearing. But at a private meeting held on 20 March
Government members of the committee were advised these witnesses had not even
been contacted. Again, this is crudely self-serving conduct deeply at odds
with Westminster-derived governance, and more akin to the parodies of democracy
common in the Eastern Bloc prior to the fall of the Soviet Union.
The Chair has also
arbitrarily disallowed questions of witnesses present at hearings – yet again,
conduct hardly likely to contribute positive to community perceptions of the
Senate as a place where issues are considered objectively and the truth sought
without fear or favour.
Senator Conroy, during
his temporary role as Chair of the Committee, denied Government members the
opportunity to ask questions of a witness present and further denied a witness
the right to augment their contribution by seeking more detailed information
from another witness, as per usual practice:
Dr Switkowski: This might be an opportunity to invite
one of our advisers to comment on that, because it was an independent
assessment. Their views are well worth listening to. Mr Korda—
CHAIR: Sorry; we will ask questions of Mr
Senator SESELJA: I have asked a question of Dr
Switkowski. He is seeking further advice. I would be very pleased to hear the
additional information from Mr Korda.
CHAIR: And you will be able to, at the
appropriate time in the committee hearing.
Senator SESELJA: Sure. But it seems that you want to
limit the ability of questions to be answered. You have had 50 minutes. We have
just started some questioning—
CHAIR: The committee has set out the agenda.
The witness is—
Senator SESELJA: But there is nothing to stop
additional information from coming forth.
CHAIR: The witnesses will be called this
Senator SESELJA: There is no principle of the
committee that we cannot have additional information.
CHAIR: The witnesses will be called this
afternoon. You will be able to get all the information you need if you are
Senator SESELJA: But I am going down a line of
questioning which is no different to where you started in terms of the review.
Dr Switkowski has said that he can provide additional information to that
questioning, and I would like to get those answers. If Mr Korda can assist—
CHAIR: Mr Korda is listed to appear at 3.45
this afternoon, and you can put the questions to him—
Senator SESELJA: That is fine, but you have had 50
CHAIR: If you do not have any more questions
for the witnesses at the table—
Senator SESELJA: I do have questions for the
CHAIR: Well, then, please ask them.
Senator SESELJA: And if Mr Korda can assist the
witness, I am not sure why we as a committee would be prevented from getting
CHAIR: We have a separate entire period
where we will be calling those witnesses, as agreed by you earlier today and—
Senator SESELJA: The witness at the
table has said he can provide additional information through an additional
CHAIR: last week. Would you
like to ask Dr Switkowski some questions?
Senator RUSTON: Could I ask a
procedural question, Chair? Is there anything preventing Mr Korda answering
this question from a procedural perspective—
CHAIR: If you have finished
your questions to Dr Switkowski, I have got lots more, so I can take up the
Senator SESELJA: I am actually asking
Dr Switkowski a question. I agree with Senator Ruston. Perhaps you can answer
that question: is there anything preventing a witness coming to the table—
CHAIR: The committee have
already agreed, and now what you are trying to do is change the order—
Senator SESELJA: No, I am not.
CHAIR: of the witnesses
appearing before the committee in mid flight. We have already agreed on the
Senator SESELJA: It is regular
practice, and in fact I think we saw it in the hearings last week—
CHAIR: It is already agreed
in the program.
Senator SESELJA: where additional
witnesses were called from the back of the room where they could assist.
CHAIR: If you do not want
to ask Dr Switkowski any more questions—
Senator SESELJA: I am asking him questions,
but you seem desperate—
CHAIR: I will see if
Senator SESELJA: to stop Mr Korda
from coming and assisting—
CHAIR: I am very excited
for Mr Korda to appear, when he is called this afternoon. If you have no more
Senator SESELJA: I have plenty.
CHAIR: I will take the
questions and I will keep going.
Senator SESELJA: Can I ask the
question, though: what is the problem with him providing additional
CHAIR: He will provide it
at 3.45, when he has been called.
Senator SESELJA: What is the problem
with him providing—
CHAIR: Stop trying to run
the committee from over there.
Senator SESELJA: I am not trying to
run the committee. I am dealing with our witness at the table, who has
requested another witness come and assist with answering the question.
Conroy has himself on several occasions called witnesses present in the room to
give evidence prior to their scheduled time to suit his line of questioning,
Government Senators believe the exchange above exemplifies the misconduct, lack
of impartiality and disrespect for the Committee process all too common in the
proceedings of this particular Committee.
Bullying and Hectoring
Coalition Senators are
concerned that Senator Conroy has bullied and hectored witnesses in a manner
that degrades community respect for the Committee process and the Senate, and
is utterly inappropriate and unbecoming of a Senator: 
CHAIR: Mr Adcock's salary? What is Mr
Dr Switkowski: It is disclosed in the annual report.
CHAIR: So you are refusing to—
Dr Switkowski: No, I am going to make those numbers
CHAIR: You know full well what they are. You
are refusing to disclose them.
Dr Switkowski: The numbers will be available in the
Senator RUSTON: Senator, I think you are badgering
the witness here.
CHAIR: I am just getting a demonstration of
the arrogance of the witness.
Senator RUSTON: Dr Switkowski has said he will make
them available at the appropriate time.
CHAIR: The appropriate time is when the
committee asks for them or decides it wants to insist on them.
Senator RUSTON: He may need to take it on notice. He
may not actually have the exact figures.
The contempt displayed
by Senator Conroy towards Dr. Switkowski spilled over into Senate Estimates
hearings with Senator Conroy directly accusing Dr Switkowski of lying
(without providing any substantiating evidence whatsoever for the most serious allegation
that can be levelled against a sworn witness): 
Senator CONROY: Quite a lot are
putting in claims. I am not saying you have acknowledged them. I will use
'acknowledge' as an affirmative stance towards resolving the dispute, rather
than a complete try-on just because they have been incompetent in what they
were contracted to do. That is probably it.
Dr Switkowski: I will accept that
language. I do not know how many other of our contracting partners are in the
process of lodging major claims against us, but we know Visionstream is one of
Senator CONROY: Well, there is
almost no-one left, from the sound of it! When they see a soft touch, they know
to stick in a big claim.
Dr Switkowski: Now, now. Do not go
there. You keep saying that. It is inflammatory and it is wrong.
Senator CONROY: The actual numbers
will prove whether I am right or you are right.
Dr Switkowski: They will prove
whether we are right or you are right—exactly.
Senator CONROY: Yes. When the
inflated numbers you forecast that you would be paying come to bear, you will
Senator Fifield: Chair, I raise a
point of order. Comments like 'you will be exposed' are clearly a reflection on
CHAIR: Exactly. Senator
Conroy, can you stick to your—
Senator CONROY: What? I am allowed
to reflect on witnesses. I cannot call them a liar, but reflecting on the
CHAIR: Stick to your
Senator CONROY: Let me be clear: I
CHAIR: Can you stick to
your questioning and refrain from any comments, please.
Senator Fifield: It is an
Senator CONROY: Thanks for your
A member of the
community casually observing the conduct of the Senate upon either occasion and
taking note of Senator Conroy’s callous treatment of Dr Switkowski would be
forgiven for mistakenly assuming it was Dr Switkowski who was the former union
official responsible for squandering almost $7 billion on a network reaching 3
per cent of Australian premises, and Senator Conroy who in fact was one of the
nation’s most respected business leaders and a former CEO of both major private
view Senator Conroy’s rudeness and lack of self-restraint as unacceptable. The
disrespect shown to witnesses brings dishonour upon the Committee, and on the
Senate as a whole.
Additional incidents of
poor conduct or conduct unbecoming of the Committee include:
Lundy’s resignation as chair of the Committee on 6 December 2013 and her
re-appointment as chair on 20 December (with Senator Conroy appointed to the
role in the interim). It is our understanding Senator Lundy was simply
unavailable to attend scheduled hearings in December because of other
commitments. Usual practice on such occasions is for the responsibilities of
chair devolving to the deputy chair, or for hearings not to be held. Neither
course of action was taken – instead, Senator Conroy chaired public hearings on
11 and 17 December 2013.
demands for the repeated attendance at public hearings of senior executives of
NBN Co. Representatives of NBN Co have appeared before public hearings of the
Senate Select Committee more often since October than they appeared before the
previous Joint Committee and Senate Estimates process during the entirety of
Opposition’s insistence on numerous public hearings being held at extremely
short notice (necessitating the expenditure of significant resources by NBN
Co), without any reasonable justification. It must be stated that this has
materially affected the work of NBN Co’s new leadership team to turn around the
financial and operational disaster left by Senator Conroy’s oversight of the
Opposition’s refusal to allow representatives of NBN Co to appear by video,
despite allowing Senator Ludlam to do so at the hearing on 29 November 2013.
members’ insistence that representatives of NBN Co appear in person while the
Company was preparing an extremely important and complex document – the NBN
Strategic Review. Prima facie, this conduct was a calculated attempt to run
interference in the legitimate work of NBN Co and the Company’s efforts to get
the project back onto a sustainable footing. Government Senators note that an
offer of an alternate hearing the following week was refused. This caused
significant and unwarranted inconvenience to NBN Co. It is difficult to avoid
the conclusion that this episode reflects Senator Conroy’s determination to
deliberately continue destroying value for taxpayers in Opposition, just as he
unwittingly did through his incompetence and mismanagement in Government.
The sorry record of
Committee conduct set out above makes it abundantly clear the bipartisan
integrity of Committee process was seriously compromised, if not abused, by
It is the view of
Government Senators that the failures of the Committee’s integrity outlined
above damages the Committee and undermines the legitimacy of this inquiry.
The State of the NBN
Coalition Senators are
astonished that so little focus has been given to examining the abject state of
the National Broadband Network fibre rollout, which is intended to provide very
fast broadband to 93 per cent of all Australian households and businesses. NBN
Co is yet to meet a single fibre rollout target.
The Company has
repeatedly fallen short of its publicly stated rollout targets by wide margins,
Premises Passed by Fibre –Greenfields & Brownfields (‘000)
Plan, December 2010
Plan, August 2012
Premises With Active Service on Fibre –Greenfields & Brownfields (‘000)
Plan, December 2010
Plan, August 2012
announced the current version of the NBN in April 2009, Prime Minister Rudd and
Minister Conroy stated the rollout would be completed by 2018 and would have a
net cost to Government of no more than $26 billion (a forecast which was
described as a ‘conservative estimate’). 
September 2013 election, NBN Co had passed just 258,129 premises with fibre (2
per cent of the total needed to complete the network.
The rollout has been
marred by serial delays, financial impairment of contractors, commercial
disputes between contractors and NBN Co, and consistent failure to deliver.
underperformance has been notably worse in South Australia, Western Australia
and the Northern Territory – under Senator Conroy, it appears there was
virtually no interest in providing the 4 million Australians in these
jurisdictions with very fast broadband and access to the opportunities of the
At the election just
1714 premises in these States had service over the NBN fibre.
Responsibility for the
welcome sporadic remarks from Senator Conroy belatedly admitting there were
problems with the NBN project:
“We clearly underestimated and I
think it’s fair to say the construction model could be legitimately criticised
... We wouldn’t have been so aggressive if we’d known how tough it was for the
company. So that was an area where we were overly ambitious ... I can understand
and indeed empathise with those who are disappointed with the progress on the
fibre roll-out.” 
Senators cannot reconcile this admission with Senator Conroy’s repeated
declarations over many years that the rollout was on time and within budget,
“The [corporate] plan being
released today confirms the project is on track.” 
It is also difficult to
reconcile the disastrous outcomes from Senator Conroy’s oversight of the
project with his claims that he is focused on improving broadband for
Australians living in regional and remote areas. These Australians are among
those who would benefit most from timely provision of improved access to very
fast broadband, and the services and opportunities to participate in the
digital economy that it provides.
But the facts show that
the former government’s mismanagement of the NBN has had a particularly adverse
impact on citizens in regional and remote areas, by deterring private sector
investment in broadband in these areas over the course of many years, yet
failing to deliver NBN services on the timetable promised.
The NBN Co Strategic Review
On 3 October 2013 the
Government issued terms of reference for a Strategic Review of the National
Broadband Network and asked NBN Co under a new Board and management team (with
experience in the telecommunications sector) to carry out this work. This
first phase of the Strategic Review was directed to assess:
progress and cost of the NBN rollout to date.
estimated time and cost to complete the network if it proceeded unchanged.
estimated time and cost to complete the network under various alternative
the impact of these alternatives on broadband prices and NBN Co’s commercial
The Strategic Review
report was received by the Government in draft form on 2 December 2013, and
approved in final form by the NBN Co Board and tabled in Parliament on 12
December 2013. 
The report found
Labor’s fibre-to-the-premises NBN was roughly two years behind schedule, on
track to cost $32 billion more than forecast, and unable to be finished for at
least a decade.
On the other hand,
universal access to high speed broadband could be delivered sooner and at lower
cost under alternative approaches to the design of the network.
The key findings set
out in the 12 December 2013 report included:
the end of September 2013, four years into the rollout and after $6.5 billion
of funding, the NBN reached 3 per cent of Australian premises and had fewer
than 100,000 users. 
rollout had achieved only 45 per cent of its target as of September (even
though NBN Co’s targets were drastically pared in August 2012 in its revised
Corporate Plan). 
Labor fibre-to-the-premises NBN would cost at least $73 billion to complete –
66 per cent more than claimed by the former government prior to the 2013
Labor fibre-to-the-premises NBN would not be finished until at least 2024. 
When Kevin Rudd announced the FTTP network in April 2009, he said it would be
finished by 2018. 
completed Labor NBN would drive up broadband prices by at least 50 to 80 per
cent – equivalent to an increase of $43 per month in a typical household’s
NBN Co sufficient commercial and technical flexibility to roll out a
multi-technology NBN could save $32 billion, deliver very fast broadband to
virtually all Australians by 2019, and leave retail prices unchanged in real
Due to time constraints
– the analysis in the December 2013 report was carried out in five weeks – this
phase of the Strategic Review primarily focused on the fixed line NBN (which
will serve 93 per cent of Australian premises).
In February 2014 a
second phase of the Strategic Review started, this time focused on the NBN
fixed wireless and satellite networks (which jointly serve 1 million premises
in regional and remote areas of Australia). It will provide the Government
with a report on these at the end of March 2014.
Progress on the
report was silent on the swift progress made by the NBN Co in transitioning
towards the Strategic Review’s recommended multi technology mix.
NBN Co has
advised the Government that to deliver fast broadband sooner, at less cost to
taxpayers and more affordably for consumers, the NBN should be completed using
a multi-technology mix (MTM).
technologies include fibre to the node, fibre to the building, hybrid fibre
coaxial cable (HFC), fibre to the premises as well as fixed wireless and satellite
approach aims to minimise costs by selecting the appropriate technology to
maximise use of existing infrastructure, to make the right investment at the
This is predicted
to save taxpayers $32 billion, get the NBN finished four years sooner and
deliver download speeds of 50 megabits per second to premises in 90 percent of
the fixed line footprint by 2019.
Strategic Review, delivered to Government on 12 December 2013, has identified
that with the use of a multi-technology mix the NBN will cost $41 billion, a
saving of $32 billion compared to the $73 billion Labor’s NBN would have cost.
use of a mix of technologies and existing infrastructure will speed up the NBN
It will get the
NBN finished four years sooner and deliver download speeds of 50 megabits per
second to premises in 90 percent of the fixed line footprint by 2019.
NBN Co will establish 121 points of interconnect: 80 in
metropolitan Australia and 41 in regional Australia. In
the view of the Australian Competition and Consumer Commission (ACCC), this
semi-distributed network design, where the NBN will reach but not overbuild
competitive backhaul routes, is the best long-term outcome for customers.
concluded that this arrangement would best promote retail and wholesale
competition across all geographic markets. The government has accepted the
ACCC’s advice and industry generally supports the design.
of VDSL Deployments
19 November 2013, NBN Co announced they are going to run a pilot program to
examine new ways to accelerate the rollout of the NBN.
FTTB pilot will test the rollout of high speed VDSL broadband to end users in
ten apartment complexes and office blocks in Carlton, Brunswick and Parkville
in Melbourne. These buildings will comprise up to 1000 individual homes and
pilot will run for a period of approximately three months.
telcos have signed up to participate in the FTTB pilot: iiNet, M2, Optus and
is a technology that helps make copper broadband networks faster. Vectored
Very-high-bit-rate digital subscriber line (VDSL) has not been deployed in
Australia until now. However, experience from Europe (adjusted for Australian
gauge copper) suggests that a very high proportion of vectored VDSL premises
can receive download speeds of approximately 50 megabits per second or more.
first results for this technology in the FTTB trials have been very
encouraging. In one apartment building in Melbourne, over 150 metres of
internal copper wiring has been delivering download speeds of more than 100
mbps, with upload speeds of more than 40 mbps.
NBN Co is also conducting a series of trials before it moves to a full-scale
rollout. The trials allow NBN Co to test different planning processes and
construction methods, and to work with telecommunications companies on how
services will be activated and assured.
on the FTTN build pilots has commenced in Umina, near Woy Woy on the NSW
Central Coast and Epping in Melbourne’s northern suburbs.
Co will construct two small scale Copper Serving Area Modules, erecting
kerbside node cabinets which will connect NBN Co fibre to spare copper pairs in
the Telstra pillar. The company will use equipment provided by Alcatel-Lucent.
active, NBN Co will invite service providers to participate in a FTTN end user
trial to test the delivery of high speed broadband to up to 100 premises at
Coalition recognises that Australian households are continuing to consume more
data every month.
data shows that over the previous three years the growth of household monthly
downloads has been around 50 per cent per year.
Chair’s report states: “The committee disputes the
assumption that consumers are only interested in using bandwidth for video
to say that video is a major driver of bandwidth consumption is not even
remotely a controversial claim in the industry. Video continues to be a prime
driver of this increased bandwidth demand. Cisco predicts that video traffic
will be 73 per cent of all IP traffic by 2017, up from 60 per cent in 2012.
Chair’s report also states: “The committee considers
that the government's policy does not reflect the service being sought by
Australian consumers. Because the policy is based on an incorrect assessment of
the needs of consumers, the key elements of the policy – implementing MTM in
the rollout and relying on the Telstra copper network – will deliver an NBN
which cannot supply the demands of business and communities, particularly those
situated in rural and regional Australia”.
However, this is at odds with industry
demand forecasts. For instance, a study by the Broadband Stakeholders Group in
the U.K. found that most applications today do not require line speeds beyond
25Mbps - 50 Mbps for optimal performance.
The report found that less than 20 per cent of homes will need download speeds
of 25mbps by 2018 and 40 per cent of homes will need those speeds as of 2013.
NBN’s demand forecasts paint a similar picture, showing that by 2018, less than
40 per cent of premises will require speeds of greater than 25mbps and that by
2023 around 50 per cent of houses will still be accessing speeds of 25mbps or
High definition video conferencing
requires between 2Mbps and 8Mbps of symmetrical bandwidth for optimal
Advances in video compression technology
mean that less bandwidth is required to consume higher quality video and these
advances will continue each year.
The full range of broadband applications
including telehealth, multicast video, high definition video conferencing,
tele-education services, business services requiring quality of service will be
available over a FTTN network.
Failure on the NBN Interim Satellite Service
of the most regrettable episodes in the development of the NBN brought to the
attention of the Committee was the NBN Interim Satellite Service (ISS), a
temporary internet access service for Australians in regional and remote areas
who have no other way of getting broadband.
In December 2013 the ISS reached its capacity limit of 48,000
customers, and registrations for new service were closed.
This has triggered understandable outrage in regional
Australia, because as late as July 2013 Labor told 250,000 households and
businesses (many with other options for getting broadband) that they were
eligible for the ISS. Tens of thousands of families who want a service and
genuinely have no other option now can’t get one.
The ISS is costing NBN Co (and therefore taxpayers) $351
million – a staggering $7300 per user.
a fraction is recovered because consumers pay similar prices ($50-60/month for
a typical plan, $24 of which goes to NBN Co.) as in populated areas – even
though costs are up to 20 times higher. Yet despite this huge subsidy, users
often have worse service than on the old Australian Broadband Guarantee – a
Coalition scheme for broadband in remote areas, which averaged $2500/user in
Users were promised download speeds
of 6 megabits per second. What they are getting is dial-up speeds, especially
during peak hours (between when kids come home from school and late evening).
This is because of incompetence under Labor, which allowed a few irresponsible
retail service providers to ignore the NBN ‘fair use policy’ (which limited
monthly downloads per user to 9GB) and sell plans with download caps up to
A small number of heavy users take up
most ISS capacity, and use it so heavily for streaming video and file sharing
that performance has been degraded for all 48,000 users. As a result kids in
the outback can’t get online to do their homework, families can’t Skype, and
farmers can’t access real time market prices or weather.
Originally 165,000 households and
businesses were told they were eligible. In theory these were premises without
access to any other type of broadband (4G mobile, ADSL or fixed wireless). In
early 2013 this was lifted to 250,000 by Labor. As a result, tens of thousands
of users who were told they were eligible can’t get a service, the 48,000
current users now get terrible service, and thousands of people are being
subsidised $7300 by taxpayers even though they have other types of internet
Under Labor’s ISS, NBN Co and its
retail providers wasted $351 million of taxpayers funds.
Senators welcome the development of the Broadband Quality Project. The
Broadband Quality Project maps the likely available broadband services and
speeds in local areas. The Department of Communications Secretary Drew Clarke
“I alluded at the estimates hearing to
the fact that there were several further developments of the MyBroadband
website. Ms Grainger has already alluded to the fact that we are trying to
update the underlying data because the status of broadband will continue to
evolve. Second, just in the last few days, we have published the underlying
data for the 78,000 regions that are mapped in broadband. To support that, we
have published as open data the data that you could get if you scraped or
interrogated all 78,000 and wrote it all down, because we encourage people to
get into it, understand it and critique it.... Third, it is our goal to add a speed test capability
directly on the website ourselves, and we are currently going through the
analysis of that.”
is expected that underserved areas will, on average, receive fast broadband
services 2 years sooner than they would have under Labor. This is a significant
benefit to those living in areas where fast broadband services are not
Senators believe that those with no or limited services have the most to gain
from the rollout of fast broadband. Coalition Senators therefore strongly
support the Government’s commitment to prioritise underserved areas in the
forward rollout plan.
New NBN Board
The new Government have put in place four new board members at the
NBN Co with extensive industry knowledge and experience – particularly in
deploying linear infrastructure – to increase the level of oversight they are
able to provide on this project.
Ziggy Switkowski: Appointed as executive chairman, Dr Switkowski
is one of Australia’s most respected executives in telecommunications. He is a
former CEO of Telstra and Optus, at times when they were rolling out and
upgrading their networks.
- Patrick Flannigan: Former Head of Construction at the NBN Co and founder of the
Utility Services Group, which employs approximately 2,000 people nationally,
servicing linear infrastructure in the electricity, gas, water and
- Justin Milne: Former
Managing Director of MSN, Microsoft’s first entry into the internet portal
business, a former CEO of OzEmail Managing Director of Telstra BigPond and
later Group Managing Director, responsible for Bigpond and Telstra Media.
- Simon Hackett: Founder of
Internode and sister company Agile Pty Ltd, a licensed telecommunications
carrier. He has deployed networks to deliver ADSL2+, Optical Fibre, Microwave,
and Fixed Computer Society. Simon will resign his position on the board of
iiNet Limited at the end of this month to focus on his role with NBNCo.
Recent comments by members of the previous board suggest that they
were frequently ignored and hampered in their role of providing oversight by
the previous Government (see comments below, in ‘Culture of the NBN Co’).
The previous board also had a long and protracted disputes with
senior members of the NBN Co executive. Former Chairwoman Siobhan McKenna
sought the replacement of CEO Mike Quigley
and reportedly intervened to prevent the Minister meeting with the CEO without
her being present.
The Coalition members note that the new Board has acted
professionally and harmoniously and welcome the new level of oversight
introduced to this important project.
Culture of NBN Co
Strategic Review has identified that NBN Co currently has some very significant
limitations in terms of performance, capabilities and culture. The building of
a national broadband network is a huge, complex undertaking. In order to
achieve its objectives, a major transformation of NBN Co is required.
Between the widespread deployment of
fibre to the cabinet plus VDSL2, the emergence of vectoring and bonding, the
initial commercial trialing of fibre to the distribution point, and emerging
protocols such as g.fast, the past five years has seen significant
technological advancements in the way copper is used.
A more nimble approach to designing (and
imagining) the NBN can preserve this technological optionality.
If investment decisions can be deferred
until demand either materializes or can reasonably be foreseen, savings arising
from the time value of money are not the only economic value generated.
In plain terms this means keeping the
option open of doing something different than what might seem at a certain
point in time to be the answer – of responding to changing technology and
changing market conditions.
Review found that changing the culture and re-directing and re-focusing the
organisation will take several months, so while there may be some short-term
uncertainty, transforming the organisation will be critical to its success.
Review recommends this transformation address: reinforcing and aligning the
leadership and governance; investing to lift and leverage capabilities in key
areas such as dealing with partners, project management and capabilities in
copper and HFC; and defining an operating model with clear accountabilities and
performance metrics overall and by function.
Independent Assessment identified areas requiring improvement in relation to
the culture and leadership of NBN Co:
cite many examples of inaccurate information, lack of robust challenge, fear of
contradicting senior staff, and mistrust in the motives of some leaders.
of roles across some functions has impeded collaboration, confused roles, and
number of examples exist of the professional staff of the NBN being unable to
tell their political superiors news they didn’t want to hear:
CEO Mike Quigley recently told an industry conference: “You do think, should I
have been more conservative? But the timescales are already set for you, the
time frames are already put out there for you so there’s not much you can do.”
when former Board Member Diane Smith-Gander was asked whether the former board
had asked the Government to conduct a cost-benefit analysis into the NBN, she
said: “Think about the notion of suggesting anything to Minister Conroy.”
Co Executive Chairman, Dr Switkowski has suggested the culture at NBN Co has
not been conducive to producing accurate information about the NBN. Dr
“I think this followed a line of
questioning that suggested that there was a lot of data being published
routinely by NBN in the past and that that data is now of a different form and
less voluminous than it used to be. That, broadly stated, is correct. But as we
have said in this forum and in the subcommittee forums, what was very, very
clear as it changed over in the September-October period was that within NBN there
was this culture of acquiescing or even supporting quite unreasonable
forecasts—unreasonably optimistic—and not recognising that the actual
performance and the trend was moving sufficiently far away from those forecasts
as to make the gap unable to be closed under any set of reasonable
interventions. The information that was out there, aside from the headlines
that generated it in the media, in business and in households as to the
imminence of access to the NBN was uneven in its accuracy. There were colours
on maps that said NBN is in your area and you will be able to connect within
whatever the number was—12 months. Twelve months later, that was still the case
and it was still 12 months out. I do not for a moment criticise the original
intent—I think the intent was good; it was to be complete in the disclosure of
the information—but it was not kept accurate or current. Then as the pressure
increased on NBN, in terms of our failure to hit targets, those maps were not
adjusted and those forecasts were not adjusted finely enough. In the end, I
thought—others did too—that they were misleading. So we have cut back on the
maps, indicating only those areas where we know construction has commenced and
where we are confident that a person reading those maps can reasonably conclude
that they will be connected in a reasonable period of time”.
Chair’s report stressed the importance of transparency in the NBN project.
Coalition members note the Chair has not lost her sense of irony. The shortfalls
of the previous Labor Government when it comes to transparency were legend:
Labor cabinet was briefed ahead of the election that delays had increased
funding costs on the project by $1.4 billion and that consultants
KPMG had warned the Government the rollout targets were “presenting a
significant risk to the project” and that this “has not been achieved in any
Yet Communications Minister Anthony Albanese told the ABC ahead of the
election, “the corporate plan was considered by KPMG. They found that it was,
in terms of the timelines and the costings, that all the assumptions were
Labor cabinet was briefed by its own bankers, Lazard, that the project would
have a negative net present value of $31 billion.
not publicly disclose that many houses being passed were could not be serviced
and were classed ‘Service Class 0’ – rather, it was leaked to media, which
reported that up to 91 per cent of some ‘Ready for Service’ sites were so
of rollout progress was sporadic and was timed to minimise embarrassment for
the then Government. For instance, write downs for the company’s June 30, 2013
targets were announced under the cover of the Labor leadership challenge on
March 21, 2013.
contrast, the current Government have introduced a number of important
transparency measures, including:
The undertaking on an independent
Strategic Review, which for the first time gave the public a real insight into
the true costs of the project – in time and dollars.
NBN Co has begun publishing rollout progress and uptake on a week-by-week
basis; these statistics provide a state-by-state breakdown of the rollout and
cover service class ‘0’ premises.
NBN recently held a quarterly analyst briefing, where senior NBN executives
took questions from analysts, journalists and senior
Chair’s report was also critical of redactions in the NBN Strategic Review.
For instance, the Chair’s report stated: “Further,
some redactions create a mockery of the report. For example, the committee is
of the view that the following graph reproduced from page 64 of the strategic
review is rendered completely useless in its redacted form.”
previous Government regularly redacted material that contained commercially
sensitive material. In one extreme case, Labor attempted to force senators to
pass crucial NBN legislation without seeing its Corporate
Plan; independent senators were asked to sign a seven-year non-disclosure
agreement in exchange for viewing the plan – and then released a heavily
redacted version of the plan.
The previous Government also had a habit of presenting material to
NBN committees and hearings with no financial information included. For
instance, in February 2013, the NBN Co gave a presentation to estimates on the
costs of the project, which included no actual costs of the project, as the
The Chair’s report and Opposition members also referred repeatedly
to draft 2013-16 Corporate Plans. This was given to the Government prior to
the caretaker period and it was rejected by the Government because further
downward revisions needed to be made, to take into account the failing
contractor model and stoppages due to asbestos.
questioning about its release, then Minister Anthony Albanese claimed it
couldn’t have been accepted by the Government (and hence released publicly) in
the election campaign: “Well, if we receive it, it's gotta be gone through the
cabinet process. Of course we are now in caretaker mode.”
after the election, the plan was leaked to the Australian Financial Review.
Consumers and Stakeholders
NBN has suffered significant reputational damage as a result of significant
construction delays and the promotion of unrealistic rollout schedules.
failure of NBN Co under Labor to honestly report what was happening on the
ground and keep its promised rollout commitments caused significant uncertainty
and angst for the communities being misled.
Co stated that:
is estimated that the average time from construction commencing to NBN services
being available is 12 months.”
a range of factors – both within the NBN Co’s control and external to its
control – meant that the true construction timeframe was much less predictable.
residents have been frustrated at the apparent delays. For example NBN Co told
residents that construction had commenced Ascot in September 2012, and would be
complete in late 2013. And yet, construction contracts had not been issued by
the time of the election. These contracts have now been issued and work is
timeframes Labor gave communities often did not reflect reality and in many
cases were extremely misleading.
Government is committed to providing communities with accurate information
about the rollout. In order to achieve this NBN Co has begun using common sense
language and definitions.
instance, NBN Co no longer uses the phrase ‘construction commenced’ which under
Labor may have merely reflected that high level design work had commenced, but
instead now uses the term ‘build commenced’ when construction contracts were
actually signed. These terms provide communities with a much clearer
understanding of where the rollout is up to in their community.
part of this commitment to be honest with Australians NBN Co now provides
realistic maps detailing where the build has commenced and where services are
available. As a result of this change some areas have been temporarily been
removed from the rollout maps as no actual construction work was underway.
Accurate information about the rollout in these areas will be made available
Senators also note that several severe write-downs in the targets for the FTTP
rollout to 30 June 2013 occurred under Labor, including a cut of about a third
from 341,000 premises to between just 190,000 and 220,000.
Further, the Government was aware ahead of the election that the 2012-15
corporate plan forecast for June 2014 would be written down.
Despite this significant cut no alteration was made to NBN Co’s forward rollout
maps to reflect that a significant number of premises had been delayed and
would not be ready for service within the promised 12 month window.
is ironic that the Chair’s report cites ‘confusion’ caused by the changes to a
multi-technology mix model when the previous Government’s rollout schedules
left communities waiting, in some cases for years on end, with no accurate
information about the rollout of the NBN.
Labor MPs actively exaggerated the progress of the rollout in their own
communities. The Member for Adelaide, the Hon Kate
Ellis MP stated in November 2011 that :
“Prospect was first
announced by the Federal Government as one of the first sites in Australia to
be connected to the NBN in June 2010. I have been advocating for Adelaide
residents to be able to access high speed and affordable broadband for many
years and am thrilled that we are among the first in the country to be
connected to the network."
Ellis has been telling her community for years that they will soon have the
NBN. It speaks volumes for the failure of the project to date that after 4
years she is still correct in stating that Prospect will be one of the first
areas in the country to be connected.
Senators note that a significant source of uncertainty for communities results
for Labor MPs’ claims to their constituents. For instance Labor’s Shadow
Assistant Minister for Communications, Michelle Rowland MP, told her
constituents that "They (the Liberals) will rip the NBN out of the
Labor MPs false claims have created the uncertainty they now criticise.
NBN Co Chief Operating Officer Greg Adcock mentioned at a recent half yearly
results hearing, the changes have been designed to reduce uncertainty in
the rollout. As ongoing
“One of the reasons
for this and one of the key reasons for this was to give communities and
commentators, the main users of the maps, a predictable indicator of the status
of the rollout. As mentioned previously, the lifecycle of an FSAMs construction
varies wildly, mainly during the design phase. We therefore now show when the
actual instruction for construction has been issued following acceptance of a
Wrongful Claims that
the Rollout Has Slowed
Chair’s report asserts that the rollout of the NBN has slowed.
a claim is bizarre. While it is true that the rollout of the NBN ground to a
virtual halt under Labor in mid-2013, due to asbestos stoppages, since the
change of Government the Coalition has overseen the remobilisation of
contractors and significant progress in the rollout.
Chair’s report highlights comments from officials of the former Tasmanian State
Labor Government stating that while they had no actual evidence, anecdotally
they felt it had slowed.
The Tasmanian State Labor Government officials were not able to provide
evidence because it is a patently false assertion.
actual fact NBN Co rollout figures demonstrate that the Coalition Government is
on track to pass more premises in Tasmania this year than in the entirety of
the project under Labor.
Premises Passed by fibre in Tasmania – Both Greenfields and Brownfields
at Sept 2 2013
from slowing the rollout these figures demonstrate that the Coalition has
released significant volumes of work for Tasmanian contractors this year. Under
the Coalition the pace of the rollout in many instances has actually increased,
including in Tasmania.
Co is also progressing the rollout around the country:
Premises Passed by fibre– Brownfields
at Service Class Zero
just over 6 months since the election of the Coalition NBN Co clearly has
significantly improved NBN Co’s rollout performance. The disingenuous
assertions made by Opposition Senators that the rollout has slowed is simply
not back up by the facts.
the myNBN site shows, there only evidence of a slowdown is the number of
‘Service Class 0’ premises:
Coalition notes the irony of Labor MPs accusing the Government of slowing down
the rollout. In six years of Government, they managed to upgrade only 2 per
cent of households in Australia.
previous Government was well aware that significant write-downs would have to
be made to the NBN rollout, well before the change of Government. This was
made clear in evidence provided to the Committee:
Senator RUSTON: As for the revision down from the 1.2 million to the 600,000—and
this may not be a question to you Mr Adcock because you were not around at the
time—what was the basis for that downsizing or that reducing of the target?
CHAIR: Now you wouldn't answer any questions from me about version 13—
Senator RUSTON: I am not asking about any versions—
CHAIR: The 600,000 is from version 13, just so you are very clear.
Mr Adcock: It was the number that was presented to me.
Senator RUSTON: Okay. I don't care which version this is in, to be perfectly
CHAIR: That's very funny.
Senator RUSTON: Well, I'm glad you find it amusing.
Mr Adcock: It was the public number when I arrived there.
CHAIR: I agree, because that was what the version 13 number was. But I am
happy to ask questions about version 13. If you want to answer questions about
version 13, I have got about 50 you have taken on notice and we can go back and
Senator RUSTON: Let's go back to version 12, because we all accept that version 12
is a legitimate document. Let's go back to whatever document that currently has
full status. Could you—whoever—please run me through what were the main reasons
in your opinion for the need to look at a lower number in projections? What—and
just as an example if you want to be really specific—was the impact of the
asbestos find on these numbers?
Mr Brown: Let me have a go first. There were three particular influences in
terms of our ability to achieve any number we set ourselves. The first one was
the mobilisation of the construction companies themselves. It is on the record
that they were struggling with getting the sequencing of work right and their
subcontractor base mobilised to do the job. So it was one of the drivers. The second
one relates to the design approval process and expediting the designs back out
of the hand-offs between ourselves, Telstra and the construction companies that
were involved in that.
- The third one was delays due to asbestos out of Telstra. However,
I would note that these were the smallest of the three categories of reasons
for why we were forecasting down the numbers.
sentiments expressed in the Chair’s report are at odds with the admission by
the former Minister Stephen Conroy that the contractor model put in place by
the NBN Co has failed:
“What we found was that the
construction industry were unable to deliver on their contractual obligations.
And back in March-April, the NBN Co actually sacked Syntheo in the Northern
Territory, have now effectively sacked Syntheo in South Australia, and have
already brought in other providers before the election to begin work on the
ground in Western Australia because Syntheo had failed to meet by not just a
small margin, but an extraordinary margin their contractual obligations ... So
ultimately - and I think I said this on Friday - I think the construction model
that NBN Co put in place hasn't delivered.”
Conroy’s True Legacy - $38 billion of Costs for ANY version of the NBN
NBN Strategic Review estimates a mixed technology NBN will require $41 billion,
a vast sum. To Telstra’s costs for a similar upgrade were put at $15 billion
by its then-CEO Sol Trujillo in May 2008. 
Senators note some factors driving up the price of the NBN are outside
government’s control. Labour and materials are more expensive in Australia
than comparable countries.
Telstra, NBN Co doesn’t own an existing network it can leverage, and must pay
for access if it is to take advantage of legacy infrastructure.
prudence in forecasting is also a factor. All but one of the cost estimates in
the Strategic Review reflect the new management’s view that NBN Co should hold
a ‘contingency’ budget (reserved against cost overruns) of 20 per cent of capex,
given the project’s risks. The exception is the Review’s revised outlook for
the Labor NBN, where total costs for Labor’s NBN, where the contingency is 10
per cent of capex, as in the NBN Corporate Plan.
that on a ‘like-for-like’ basis where both plans are costed using a 20 per cent
contingency, total projected funding required for Labor’s NBN rises from $73
billion to $78 billion.)
the real drivers of the NBN’s final price tag are vast financial obligations
entered into under Labor that the network must now bear:
June 2011 NBN Co agreed to pay Telstra and Optus to gradually migrate customers
to the NBN and decommission their rival networks. It also agreed to 35-year
leases over Telstra dark fibre, ducts and exchange space. The current
Corporate Plan forecasts the resulting payments will account for 90 per cent of
direct opex and total about $17 billion from 2011 to 2021. 
deliver the network promised by Labor, NBN Co has committed to far more costly
investments in satellite, wireless, its transit network and its IT systems than
first thought. The Strategic Review estimates capital expenditure on these
(and network design) will total $12.8 billion from 2011 to 2021 – $3.6 billion
or 40 per cent more than estimated in the current Corporate Plan. 
Co has ramped up overhead expenses (salaries, travel, legal advice,
consultants, office space, recruitment and advertising) far ahead of both its
revenues and network rollout, to about $700 million per year. 
The current Corporate Plan forecasts ‘other’ (overhead) operating expenses will
total a staggering $7.9 billion from 2011 to 2021. That is more than double
the estimate offered to the public by the Labor Government and NBN Co in the
original Corporate Plan in 2010. 
these three areas amount to $35-38 billion of spending commitments between 2011
and 2021 locked in under Labor’s watch.
overwhelming majority of these obligations must be met in full if the NBN is to
be completed. This is true regardless of choices about network design or
Senators note it is true under Labor’s NBN, and under the five alternative
scenarios modelled in the Strategic Review – all confront $35-38 billion of
financial commitments if the NBN’s fixed, wireless and satellite networks are
rolled out to all Australian premises.
is important to realize this is BEFORE a single cent is spent upgrading the
fixed network that 93 per cent of Australian premises will rely on for very
costs of $35-38 billion for any NBN, before spending anything on the fixed
network, are Senator Conroy’s true legacy.
Zed Seselja (Deputy Chair)
Senator for ACT
Senator for SA
Senator for WA
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