Paddy Manning: You might have seen these ads on television:

TV ad: Imagine the questions it could answer, the ideas it could inspire. Switch to NBN's broadband network and help your kids unlock their true potential.

Paddy Manning: It's the promise of super-fast broadband, streaming live to every phone and tablet, TV and computer, and soon connecting literally billions of devices at home and work, from the car you drive, to the pills you swallow. But after six years of talking about the NBN, most Australians are still waiting.

Speaker: The member for Blaxland.

Jason Clare: Thank you Mr Speaker. My question is to the Prime Minister. Before the last election the now Prime Minister promised that all Australians would have access to internet speeds of 25 megabits per second by the end of 2016. Does the Prime Minister admit that this is another broken promise?

Paddy Manning: The Prime Minister admitted his original deadline was too optimistic, but insisted his decision to dump Labor's fibre-optic NBN and replace it with a mix of old and new technologies, was right on the money.

Malcolm Turnbull: A mixed technology model is cheaper and faster and more efficient. That is beyond question.

Paddy Manning: But is it beyond question?

Hi, I'm Paddy Manning and today on Background Briefing we look at Malcolm Turnbull's decision to dump Labor's NBN and switch to a 'multi-technology mix' of fibre, pay-TV cables, and upgraded copper phone lines. Billed as being 'fast, affordable, and sooner', it was meant to save taxpayers billions. It hasn't.

Paul Budde: Up till recently I thought the NBN perhaps could be the one, the only good story that this government could take into the election, but I think the majority of people have now said sorry Malcolm Turnbull. You know, if you look at the shambles of what we have now, then obviously he doesn't know what he is doing.

Paddy Manning: That's communications analyst Paul Budde. Back in August, before Malcom Turnbull became Prime Minister, Budde wrote in a blog that the government was telling lies about the NBN, the project was going from bad to worse and the Communications Minister had no clue what he was doing.

Paul Budde: He phoned me of course, you know, and he wasn't happy. You know, I didn't write the article to make him happy, so I told him that. I said, listen, I'm an independent consultant and that's what my views are and you made comments in the election and after the election and before the election and I honestly believe that what you said at that point in time was not correct.

And then he obviously comes up with arguments like 'I did not say in six months time we're going to roll fibre-to-the-node.' I said, 'No, no, but you made an announcement that things would turn around.' I mean, he is good in words, yeah, he will twist the words in the way that you want it. I mean, there's no way to have a conversation with him on that, there is absolutely no way. I've tried it many times and it's just not possible.

Paddy Manning: Labor's Shadow Communications Minister Jason Clare says Malcolm Turnbull has been quite successful in avoiding scrutiny.

Jason Clare: This myth that has been perpetuated by Malcolm Turnbull and by other people that he's somehow fixed the NBN, is just that, it is a myth. It's blown out in cost, it's blown out in time.

Paddy Manning: If we are to be an innovative, agile economy, it's hard to think of a more critical piece of infrastructure than high-speed broadband. Yet Australia is slipping further behind in international broadband rankings; we are now comparable with Greece.

Malcolm Turnbull: Good afternoon everybody. Today I'm announcing a 21st century government.

Paddy Manning: And he went on to say:

Malcolm Turnbull: We're not seeking to proof ourselves against the future. We are seeking to embrace it.

Paddy Manning: Just three months ago, Malcolm Turnbull revealed that the NBN had blown out by another $15 billion. It's the second blowout since the coalition took office. Originally, it was meant to cost $29.5 billion. Then it became $41 billion. Now it's going to cost up to $56 billion.

Malcolm Turnbull argues it is not really a blowout; the NBN was in a mess when the Coalition took office and it took time to work out what the true costs were.

Malcolm Turnbull: For the first time in the NBN Co's history, all of us can have real confidence in the numbers that are being presented.

Paddy Manning: The NBN chief executive Bill Morrow backs up the Prime Minister.

Bill Morrow: First of all I would say it's not an increase in cost, in fact it's probably a more accurate reflection of the cost.

Paddy Manning: Isn't that just spin just to say it's not a blowout, it's a more accurate reflection of cost?

Bill Morrow: That's the way we look at it Paddy, yes.

Paddy Manning: That's not how everyone sees it, though. In an exclusive interview with Background Briefing, Morrow's predecessor Mike Quigley has spoken out for the first time since he retired in 2013. He says the government has no one to blame but itself.

Mike Quigley: If you recall back in April 2013, there were commitments made that all premises in Australia were going to have the NBN by the end of December 2016. That is now December 2020, and the costs have gone up very substantially. Now, you could argue that's not very surprising, but what is a little surprising is that there's been an ongoing attempt to blame all of those delays and all those increased costs on the previous plan, on the fibre-to-the-premise base plan. That's simply wrong.

Paddy Manning: Quigley says it's wrong because the cost of upgrading old pay-TV and copper networks to deliver the 'multi-technology mix' is rising.

Mike Quigley: What's also clear now is the Multi-Technology Mix using these old cable infrastructures is going to be much more expensive than was originally anticipated. I think they're facts now, they're indisputable facts.

Paddy Manning: And that's not the end of it. If the US is any guide, large telcos like AT&T are moving away from copper networks altogether because they are not fast enough.

Mike Quigley: And you've also got to remember that ultimately it's going to have to be upgraded, for the same reasons that AT&T have decided to abandon their fibre-to-the-node, and start doing fibre-to-the-premise because sooner or later you run out of capacity. It doesn't really matter whether people think that 15 megabits per second is enough or 25 or 50, the market speaks, and in the US what AT&T are saying is the market is saying they need very high speeds. Not 50 megabits per second but multiples of hundreds of megabits per second into the future.

Paddy Manning: Bill Morrow from NBN says AT&T is responding to the American market and there just isn't the same willingness to pay for superfast broadband in Australia yet.

Bill Morrow: The reality when you look at what people would actually be willing to pay, Paddy, this is the whole point, that consumers aren't ready to pay for that. Just to give you a highlight for our country and what we have right now, this is so telling to me, we have a million homes and businesses right now today that have fibre going up to them. Therefore they have access to a gigabit-per-second speed service that we can offer. Less than 30 have taken it, even though they can have it. The reason they don't want it is because they don't need it and they're not willing to pay for something that they don't need.

Paddy Manning: As we will see, that may be partly because the NBN has often been rolled out in the wrong places. When I hit the road last week I found small businesses crying out for faster and more reliable connections, in some cases forking out well over $1,000 a month for download speeds that, in 2015, can only be described as ordinary.

Alexandria, just six kilometres from the Sydney CBD, is a part of the fastest-growing residential precinct in Australia, and unlucky enough to be a few kilometres from the three nearest telephone exchanges at Redfern, Mascot and Kensington. Going by the NBN's latest schedule, Alexandria is due to get either fibre-to-the-node, or a Hybrid Fibre Coaxial cable rollout, using the same cables that deliver pay-TV now, in the second half of 2017 or the first half of 2018.

Furniture retailer Cosh Living pays $80 a month for ADSL which it can't upgrade. Manager Guy March says it's a joke.

Guy March: The internet here is pathetic. In the morning it is at its best. But come after lunchtime, it drops down to a point where it's not even worth operating. It is pathetic. You can't search the web. Typing emails, you watch the letters appear on the screen after you've already typed. So, very frustrating.

Paddy Manning: And what kind of speeds?

Guy March: It should be superfast, 3 meg. Are we getting it? Not in the afternoon we're not.

Paddy Manning: Exit Films is an independent studio in nearby Erskineville that makes television commercials and music videos. Exit moves lots of data around and relies on fast broadband. Given they are only a kilometre from the Newtown exchange, Telstra told the company ADSL should be fast enough. But Samantha Lombardo told Background Briefing:

Samantha Lombardo: It was crap, yes.

Paddy Manning: And literally impossible to run your business?

Samantha Lombardo: It wasn't impossible but it was frustrating, because we do a lot of uploading of videos and things for presentations, so if you needed to make a change on a clip then it would take like two hours to upload a tiny clip and it just was impossible to get anything done properly. We'd have to come into work like three hours early if we had a presentation knowing that it might take an hour to upload.

Paddy Manning: Exit had to come up with their own fix. They borrowed spare phone lines from a neighbouring business and used them to build an ethernet-over-copper solution that allowed speeds of 20 megabits per second, down and up, at around $400 a month.

Samantha Lombardo: So then we upgraded to this copper system and I think we did a few trials of different routers and things to make it work better for us, but since then the internet has been much better. The wifi is still not the best but if you plug in from the wall with an ethernet cable it's lightning…well, not lightning but it's fast.

Paddy Manning: You can't get fibre down here?

Samantha Lombardo: So no, we definitely looked into getting fibre because our Melbourne office has fibre and it's just the best thing ever. Everyone still complains about the internet here, constantly, because people are just impatient but it is a lot better than it was. We could get fibre but it was going to cost thousands and thousands of dollars to install, and then it was going to be thousands of dollars to run every month.

Paddy Manning: A couple of kilometres away in Marrickville, online wine retailers United were stuck on similarly woeful ADSL, and are now paying more than $500 a month for a line-of-sight, fixed wireless service that is still pretty slow and is often affected by bad weather. United is not moving big files around, just one-page orders, but it does need a reliable service. The old ADSL connection with all its down-time was untenable.

Peter: We lose…I think it worked out an average of maybe around 20 man-hours a week to slow internet, which is pretty high. We're getting about 3.8…when we do a speed test we're getting 3.8, we were getting about 1.8 before. It was so slow that our PCs would think there was nothing coming.

Paddy Manning: Right next door, Con Christodoulou has a fashion wholesaling and logistics business called Aphrodite, buying in garments from suppliers in China, India and Bangladesh and delivering them to major national retailers such as Big W and Katies. Every item is tracked through a cloud-based electronic data interface. Again, ADSL was simply not good enough and local copper was stretched, so Con went all the way and installed his own fibre, using a connection wrangled from Optus.

Con Christodoulou: We've decided to go with fibre optic network with Exetel, fibre optic network 20/20, guaranteed speeds, guaranteed downloads and uploads, and that's what we've used ever since.

Paddy Manning: Can you say how much that cost you?

Con Christodoulou: That's costing $1,100 a month including GST and that's on a 36-month plan.

Paddy Manning: All these businesses are paying through the nose for mediocre broadband. When the NBN finally comes, their internet will be significantly faster, and cheaper. But when will it come? Even the Communications Minister Mitch Fifield (who declined to be interviewed for this program) has admitted the NBN roll-out schedule is ambitious. NBN chairman Ziggy Switkowski told one newspaper the targets were 'heroic'. Bill Morrow says his chairman has often described the company as heroic.

Bill Morrow: I believe he uses the word in the context of great leaders, great managers, great employees together working hard, they can achieve great things that in his eyes are heroic in nature. It's going to be that kind of behaviour, that kind of performance going forward to be able to meet the targets that are on hand.

Paddy Manning: The NBN was conceived by Labor in 2009, with a plan to shut down the copper and HFC networks, and connect more than 90% of homes and businesses across Australia with fibre-optic cable offering download speeds of 100 megabits per second or higher. The other 10% of premises, mostly in remote and regional locations, would be served by new satellites (the first has just been launched), or so-called fixed wireless technology, which works by a line of sight to a receiver, much like a mobile phone tower. The whole project was meant to cost $43 billion.

Tony Abbott, when he took over as opposition leader, wanted to scrap it.

Tony Abbott: The coalition won't go ahead with the National Broadband Network, avoiding the creation of a $43 billion white elephant.

Paddy Manning: But once Labor signed a multi-billion dollar deal with Telstra, scrapping the entire project was no longer possible. It opposition, Malcolm Turnbull spent two years preparing an alternative policy, to deliver a cheaper network using fibre-to-the-node technology. It was launched in April 2013 by Tony Abbott:

Tony Abbott: But there is one person who I particularly want to mention. We have a strong and credible broadband policy because the man who has devised it, the man who will implement it virtually invented the internet in this country, thank you so much Malcolm Turnbull.

Malcolm Turnbull: This review must be an exercise in truth-telling.

Paddy Manning: A month after Tony Abbott won the election, Malcolm Turnbull commissioned a strategic review of the NBN. As he told the NBN Rebooted conference:

Malcolm Turnbull: We want hand-on-heart true, realistic and achievable options, prudently costed and scoped, on which we the government will make weighty decisions. There is no longer any room at the NBN Co for spin or for telling the minister what people imagine he wants to hear. In short, I expect the team, the management, the board at the NBN Co to regard every forecast, every decision, as something they would be prepared to defend in a prospectus for a public listed company. It is critical for the health of that company that it has forecasts and goals which it can meet. I can only imagine how debilitating it must have been over the last three years to be constantly setting and missing and setting and missing one forecast after another.

Paddy Manning: The review, by Malcolm Turnbull's hand-picked consultants, came back within ten weeks to deliver the Minister his first bad news: the coalition's policy would not cost $29.5 billion, it would cost $41 billion, and the promise of 25 megabits per second by 2016 was simply unachievable. Malcolm Turnbull lay the blame squarely on Labor and the previous management of the NBN.

Journalist: It's about blowouts and broken promises.

Malcolm Turnbull: We failed to recognise how big a mess the Labor Party had left the NBN in.

Paddy Manning: Renegotiating the Telstra deal cost the government plenty, and took more than a year. The new deal was worse for taxpayers and unquestionably better for Telstra shareholders. By August the cost had blown out again, to somewhere between $46 billion and $56 billion, for a network that only delivers fibre to 20% of premises.

Mike Quigley says the unexpected cost of the Coalition's Multi-Technology Mix is the only possible explanation for the blowout.

Mike Quigley: I think it was simply an ongoing underestimate, and a quite tragic underestimate of the costs of introducing these technologies, that's fibre-to-the-node, that's cabinets out in the street, and upgrading a HFC network using those old cables, the copper cables and the pay-TV cables.

What you can demonstrate on NBN Co's own numbers, NBN Co's numbers together with a strategic review, you can absolutely prove that the $15 billion has nothing to do with the fibre-to-the-premise or the fixed wireless or the satellite, the original technologies. It's nothing to do with that. In fact, those costs came down between the strategic review and the latest corporate plan, which means the actual costs of the other parts, the newer MTM parts, have gone up more than $15 billion.

Paddy Manning: Malcolm Turnbull continually asserts the NBN had become a shambles under Quigley's management and had no idea what its costs were. Here he is in Parliament a fortnight ago:

Malcolm Turnbull: They were clueless, absolutely clueless, clueless and wasting billions of dollars. What we do know now, we actually now know what the project is costing, and we know what the alternatives are and the facts are, that if we were to proceed with the Labor Party's alternative it would take six to eight years longer and cost up to $30 billion more.

Paddy Manning: Mike Quigley rejects the criticism outright.

Mike Quigley: That simply isn't factual. It wasn't a complete shambles at all. We had four years of being reviewed on a very regular basis by a number of auditors, the Australian National Audit Office, PwC, you name it. Never, ever once did we get any significant problems. Our measurements of our costs, they were different, by the way, to how NBN Co is choosing to measure today, but they were absolutely valid, and the audit reports prove that.

Paddy Manning: Mike Quigley says Turnbull's mixed-technology NBN may be cheaper up-front, but it's going to be far more expensive to run. That's because the old copper network has to be maintained, and the cost of powering the nodes is huge.

Mike Quigley: The long-going operating costs are higher for the Multi-Technology Mix because you're using old copper which has maintenance, and that maintenance, by the way, the costs of that maintenance is now with NBN Co. We made sure all the ducts, pits and exchange buildings we were using were Telstra's responsibility to make sure they work properly. NBN Co's got that responsibility now, so the maintenance costs are going to be higher on MTM.

This is not easy. It's not easy to keep messing around with a big, complex network like this. What people often forget is the IT systems that have to support all of this and that's been, I think, a big surprise in the Multi-Technology Mix, just how expensive it is to upgrade the IT systems.

Paddy Manning: Labor's NBN was far from perfect. You might think the NBN would be rolled out so as to capture as much revenue as quickly as possible, to offset the expense and save taxpayers' money. Unfortunately not. It seems to be the luck of the draw who gets fibre and who doesn't.

The NSW central coast, north of Sydney, did get lucky, it was one of the first parts of the country to get fibre-to-the-premise four years ago. At the individual suburb level however, the picture is confusing. Gosford, where the council chambers and local court are located, has lightning-fast fibre despite a relatively stagnant economy and high vacancy on the main street. Nearby Erina, the commercial hub of the region, is still waiting.

Take Nathan Edwards at Central Coast Home Loans, which has to interface with the big banks, and is stuck on ADSL1.

Nathan Edwards: There's no ADSL2 ports available in Erina, which is a bit strange considering it is a commercial hub, but the NBN is available in Springfield, which is only 500 metres away, which is all residential.

Paddy Manning: A few streets away, Leah Knight runs the Karalta Connect serviced office business with a dozen tenants. She pays $364 a month for a fixed wireless service that offers a tiny 4 megs up and down.

Leah Knight: I actually couldn't fill some of my suites because we couldn't get internet here. There was no copper left in the street, and we could only get ADSL1, and I had businesses that would not come into my building, So I had vacancies here for months because I couldn't get internet.

Paddy Manning: Meanwhile the NBN has rolled out in Gosford…

Leah Knight: Yeah and they get ADSL2 in Gosford.

Paddy Manning: So you're saying it's frustrating. You go for a drive or you play golf at Magenta…

Leah Knight: I play golf at Magenta and we drive through part of the central coast that has a lot of government housing, a lot of unemployment, a lot of people on Centrelink, through Long Jetty, and they got NBN and have access to NBN now, most of them can't afford to pay for it, so they don't use it, so they're not utilising the technology. Yet somewhere in Erina where everyone comes to work and there are businesses and banks and everything, we are screaming for it and can't get it.

Paddy Manning: Over in Gosford however, those businesses lucky enough to be hooked up to NBN through fibre get fantastic internet costing no more than the ADSL it replaced. Deborah Parry from the local Ford dealership, which has been on the NBN since last November, is paying just $125 a month for their service.

So 100 down, 40 up, and it's costing you…

Deborah Parry: $125 a month including GST. It's pretty cheap, isn't it. I pay more at home for an ADSL that works absolutely shithouse.

Paddy Manning: Could you rephrase that?

Deborah Parry: Absolutely terrible!

Paddy Manning: What's more, Parry's dealership is now making huge savings by ditching Telstra altogether and transferring their phone service over to the internet.

So if you look at it combined, your cost of internet and phone has gone down by three quarters?

Deborah Parry: Oh, easy, probably $1,500 a month at least...at least.

Paddy Manning: It's a bonanza. Parry says it's unfair, and thinks everyone should get fibre. NBN chief Bill Morrow, who has family in Gosford and knows the area well, agrees there was no commercial rationale for the original rollout.

Bill Morrow: Indeed. And again, that's preceded my time and the current government's time in this as to when those locations were chosen and how that rollout map existed. Again, it wasn't taken from a logical business commercial point of view as to where the initial rollout started. Unfortunately or fortunately because those started in those areas, in order to keep the cost down for taxpayer investment, we are growing out from those areas. But I'll remind you Paddy, and I think you're aware of this, I also have a mandate from the government that says I have to focus and prioritise on unserved areas.

Paddy Manning: Former NBN chief Mike Quigley admits that return on investment was not the criteria.

Mike Quigley: No, I'd have to say that trying to look at short-term return on investment wasn't what we were trying to do when we were trying to roll out that network. We were trying to get it built as fast…because remember our intention was to roll it out everywhere. There were demands from everybody to have this network built as fast as possible. So I can't give you an explanation, Paddy, for why some places were done and others weren't, but I can tell you it wasn't done on just purely how do you maximise returns. That's the difference, I think, between a government business enterprise and a commercial entity. If you were just trying to maximise returns, you'd do all the easiest places first, such as was done with the original HFC. You'd do all the cities, you'd do all of those places, but they were often not the places that were really desperate for broadband.

Paddy Manning: The rollout was not the only questionable aspect of Labor's NBN. Quigley concedes that it was crazy to try and rewire multi-unit buildings with fibre, and much more sensible to install fibre to the basement, as the Coalition is now doing.

Mike Quigley: I think one sensible change that could have made is to put fibre into the basement, and then just use the copper or what's called Cat-5 Ethernet cable that are up the risers as they exist. I think that's a sensible thing to do. I don't think too many people would argue with that.

Paddy Manning: Quigley also says the upgrade of the HFC or pay-TV cable network is not dead money.

Mike Quigley: If that's done well and properly, it's a very capable technology, the HFC technology, it's been used in the US as well. So the two technologies that can carry high bandwidths are fibre-to-the-premise and HFC. The money that's spent on HFC, you could say it's not been wasted.

Paddy Manning: By far the most contentious investment is the billions which NBN will invest in upgrading the copper network by installing thousands of new nodes which may soon be redundant.

Mike Quigley: The money putting remote cabinets out all over the metropolitan areas and putting electronics and power to those, I'd say you would really have to think twice about doing that.

Paddy Manning: Do we risk investing in a stranded asset there?

Mike Quigley: Absolutely, we risk investing in a stranded asset, and I think at some point, it's going to be bypassed by fibre, and it is simply not the case that what you're putting down there for fibre-to-the-node can be upgraded to fibre-to-the-premise. Even if you use these new technologies such as vectoring or G.fast, you have to move the equipment much, much closer to the end user, so the cabinets are redundant.

Paddy Manning: The government maintains it is necessary to switch to the multi-technology mix because connecting fibre all the way to the premise—digging up driveways and gardens—was going to cost too much. As the costs of the multi-technology mix keep rising, the government's main response has been to keep saying that Labor's all-fibre network would have cost even more. But this argument can only last so long.

Malcolm Turnbull says that the Labor NBN that you were responsible for, the cost was going to blow out perhaps as high as $94 billion.

Mike Quigley: Yeah, those…I have no idea, Paddy, where those numbers came from and we've heard all sorts of numbers. We've heard $94 billion. We've heard $73 billion in the strategic review. We've heard $64 billion in the strategic review.

Paddy Manning: Why is he saying it then?

Mike Quigley: Well, obviously as the costs of the latest NBN, the MTM, have risen, have gone from $29.5 billion up to $41 billion and then up to somewhere between $49 billion and $56 billion, it's absolutely essential I guess for him to try to demonstrate that the original NBN would have also been much more expensive.

Paddy Manning: Mike Quigley.

Communications analyst Paul Budde says the government's figures are inconsistent.

Paul Budde: If you stand up and say the national network that Labor puts in place is going to cost $90 billion, and then when you're six months into government you say, oh sorry, we made a mistake, it's only $56 billion. And then you come back and say it's now going to be $70 billion dollars, or whatever. Now, okay, I think you're lying! What's the truth now? Who knows the truth? And there were quite a few statements. You know, he said, when they went into the elections, 'It won't take us more than six months to turn around.' We're now two years later and we still don't have the multi-mix technology going. Okay, is that a lie or not, what is it? In any case, when he mentioned a six-month turnaround, that's not true.

Paddy Manning: Labor maintains they could have built the all-fibre NBN for $45 billion. Communications spokesman Jason Clare disputes the government claim that Labor's network would have cost $30 billion more than the multi-technology mix, and taken another six to eight years to build.

Jason Clare: They're being a bit mischievous here. Don't be misled. What their analysis actually shows is if you were to stop building Labor's NBN, then spend the next few years building Malcolm Turnbull's copper NBN, and then start again and continue to build Labor's NBN, then it would cost all of this extra money and all of this extra time.

Paddy Manning: The truth is, nobody knows what Labor's NBN would have cost, had it been allowed to continue. Bill Morrow admits all the NBN's costings of a future fibre-to-the-premise rollout assume that the current mixed-technology rollout was commenced first.

Bill Morrow: We've done no analysis to say what if we never stop, what if 2013 election issue had a different result on it to see, therefore, what were the peak funding cost? We've not yet analysed that.

Paddy Manning: We don't know?

Bill Morrow: No, we don't know.

Paddy Manning: But Morrow is adamant that building Labor's network for $40-odd billion was not possible.

Bill Morrow: The average cost per premise to deploy fibre-to-the-prem all the way up to the side of the home into the first plate of the wall inside the home is very easily seen as somewhere between $4,300 and $4,600 per household. When you look at the weighted average to build out using the two new technologies and the portion that will still be fibre-to-the-prem, still considering satellite and fixed wireless, it's on average of about $2,700. You can just see clearly the difference of nearly $2,000 per household and business. We talk about it in terms of premises. There's roughly 11 million of those that are around the country today. So you can already see a $22 billion difference in terms of the cost to build out to reach everybody's house.

Paddy Manning: There's no way it could have been built for $45 billion?

Bill Morrow: Well, again, it depends on the cost. If it's an issue around the peak funding envelope, no way. If you take that 10 million homes using the $4,400, obviously now you're looking at $45 billion to be able to do that just on the capex portion there. You have to remember there's all sorts of other costs. You've got IT costs. You've got the cost of putting the satellites up in the sky, the fixed wireless cost components. You have the operating cost which is paying the salaries and the wages and the rents and the buildings, the leases on the buildings. All of those and you match that against the revenue curve that you're building a business against, and that difference is how much money you're going to drain or 'burn', we call it in a start-up notion, and that is no way that that could be capped at $45 billion. That's where it is further up in the $70 billion plus range.

Paddy Manning: Morrow says the key is to be able to upgrade the infrastructure as you need to, but he's coy about the cost of future upgrades.

Bill Morrow: In my mind, as a taxpayer here in the country, I would rather pay as I go or pay as I need in terms of demand rather than betting all the demand will be there and pay this extra money that's required. That's just not something most of us would do in our personal bank accounts, in our personal investment decisions, so why would we do it based on representing taxpayer money as well?

Paddy Manning: Well, you would do it if you expected that the future cost of upgrading would be significant.

Bill Morrow: But we have evaluated that as well. It's very interesting…

Paddy Manning: Do you have numbers actually on that, on what the future cost of upgrading from fibre-to-the-node to fibre-to-the-prem would be?

Bill Morrow: We've looked at it and I don't remember what the exact number was, Paddy, but I can also say that it is still spending less than the incremental amount that it would take to be able to go forward.

Paddy Manning: NBN declined to provide the figures to Background Briefing.

The NBN is aware of the limitations of fibre-to-the-node. Simon Hackett, a director of NBN appointed by Malcolm Turnbull, even admitted to an industry conference earlier this year that the technology 'sucks'.

What's looming is another big change, an evolution of fibre-to-the-node which brings fibre closer to the home. Industry sources think that's where the NBN is headed. So does Jason Clare:

Jason Clare: I suspect that the government will announce before the next election that they're going to abandon fibre-to-the-node and go to something called fibre to the curb, fibre to the distribution point. NBN has already been trailing rolling fibre out all the way to the pit near your home and testing that with VDSL. They're also running trials of a new technology called G.fast, and I wouldn't be surprised if, before the next election, they say they're going to roll this out, roll fibre, effectively, almost to the home, a bit like fibre to the basement of an apartment block. And what I got to make very clear here, is if they do that it won't be proof that their model is right, it'll be proof that they got it wrong on fibre-to-the-node, and fibre-to-the-node is just not up to it, that you've got to get fibre as close to the home as you possibly can.

Paddy Manning: Bringing fibre to the distribution point, Morrow admits, will be more expensive than fibre-to-the-node. By how much, he doesn't know. If that happens, the cost of the government's broadband could go up again.

Bill Morrow: It's too early to tell. They haven't been fully commercialised yet so we haven't had prices from the vendors. We haven't gone that far with them in terms of reaching out for competitive bids.

Paddy Manning: Are they going to be cheaper than fibre?

Bill Morrow: If you looked on a per megabit capable, hopefully it's going to be cheaper. If you looked on a per unit basis, it's going to be more than what the current FTTN is because obviously it's a new technology, it could cost a little bit more. But ultimately in practice it should still be far cheaper than what fibre-to-the-prem is.

Paddy Manning: One thing is clear; there's no going back. Labour has effectively ruled out a return to fibre-to-the-premise.

Mike Quigley: Given all the decisions that have been made, the rollouts that are happening, the deals being renegotiated with Telstra, you just can't unscramble that omelette. Decisions have been made, so going back to a full fibre-to-the-premise rollout, I just don't think is possible, Paddy.

Paddy Manning: Do you accept now, Jason, that you can't go back, you can't go back to a fibre-to-the-premise model, you can't renegotiate your agreements with Telstra, or we'll get the same delay again?

Jason Clare: There are serious lessons to be learned from the mistakes that Malcolm Turnbull has made. You try and unpick those agreements and you get serious delays, and if anybody thinks that if we win the next election I can just click my fingers and you can go back to a full fibre network, they're wrong. If you think that you can suddenly stop the project and pull out nodes without causing more problems and a lot of wasted, sunk investment, they're wrong. The mess that Malcolm Turnbull has made here is serious. I think, and I've said it publicly, that more fibre should be rolled out and can be rolled out, but if people think that you can just click your fingers and go back to an all-fibre network, you're wrong, you can't.

Paddy Manning: Jason Clare.

We're left with a mixed up network with winners and losers. The costs are still rising. It will require more upgrading, and when it comes time to be sold it will be worth less. For Mike Quigley, the man who built the network and was its founding CEO for four years, it's just sad.

Mike Quigley: The difference is the existing network is carrying current, it's copper, but the network that was going to be built, a fully fibre network, is all glass. There's no metal, it's not carrying power, it would have lasted for a very, very long time, decades and decades, if not centuries. So it is just such a pity that it is no longer being built. It would have been a great national asset.

Paddy Manning: Background Briefing's coordinating producer is Linda McGinness, research Anna Whitfeld, technical production Marty Peralta, executive producer is Wendy Carlisle, and I'm Paddy Manning.