In this post by Shadow Treasurer Joe Hockey, the Liberal MP describes as “inaccurate and misleading” an article published by Delimiter yesterday which highlighted claims Hockey had made that 4G mobile broadband had the potential to be “far superior” than the NBN, claiming his comments were taken out of context.

opinion Your article 4G “far superior” to the NBN, claims Joe Hockey is both inaccurate and misleading. It takes my comments out of context and does not take into account the facts.

Issue 1: Your article asserts that my claim regarding wireless technology being ‘far superior’ to the NBN is wrong.

Your article states: “I simply cannot believe that our democracy allows senior politicians such as Joe Hockey to make factually inaccurate claims such as the idea that 4G mobile broadband has the potential to exceed the capacity of fibre …” The transcript shows that this is a deliberate distortion of my use of the word ‘capacity’. I made no claim whatsoever about the ‘capacity’ of either fibre or 4G wireless in terms of bandwidth. Rather I stated – and absolutely stand by my view that – wireless technology such as 4G has the capacity to be far superior to a fixed broadband service such as Labor’s NBN. For simplicity, the relevant extract of my conversation with Leon Compton is below:

“We want broadband for the nation, but we want to make sure it is sustainable broadband for the nation and there is a great deal of irony in the fact that when the Government did a deal with Telstra for the National Broadband network I understand part of that deal identified that Telstra was not allowed to sell its new 4G technology as a competitor to the NBN because 4G has the capacity to be far superior to the NBN. So what does the Government do? It says well you are not allowed to market it as a competitor, I don’t know about you, but I use an iPad – the iPad I carry around in the car. I don’t have a cable dragging be hind the car. I use wireless technology and I think that is the way functionality is going.” (Source: Joe Hockey, Interview with Leon Compton, ABC Tasmania, 8 June 2012)

For many households, wireless broadband has the capacity to be superior to fibre to the premises (FTTP) in the broader sense of value for money, convenience, nearness of availability/deployment and many of the numerous other attributes that a consumer might consider when weighing these alternatives.

If this was not the case, why would NBN Co have sought Telstra’s agreement to an anti-competitive ban on advertising of 4G when its customers migrate from copper to NBN? It is an undeniable fact that the initial contract signed in June 2011 between Telstra and NBN Co restricted Telstra’s marketing of its wireless services to such customers for fear 4G availability would compromise NBN Co’s target of achieving 70 per cent market penetration. NBN Co only agreed to revise this when Rod Simms, the ACCC Chairman, emphatically stated “We couldn’t live with it”.

Superiority does not simply denote speed. Millions of Australian households will be waiting for years (some for up to a decade) for connectivity to the NBN, whereas Telstra’s 4G technology is available right here and right now in major cities. The 4G network will be rolled out to the rest of the nation and upgraded to higher speeds well before the NBN is finished. Other operators will also be in a position to roll out 4G wireless, offering both fixed and mobile services. VividWireless for example – now a subsidiary of Optus – has a 4G wireless network in Perth and owns spectrum suit able for such a service in Australia’s major cities.

Wireless technology additionally offers mobility, portability and convenience for the end user. Many Australian consumers (such as tenants or others not willing to sign long contracts and pay installation costs) may for these reasons choose wireless broadband ahead of fixed line technology. While take up rates for fixed broadband have been relatively flat for the past year or two, the booming take up rates of wireless technology suggest that Australians see utility in portability and mobility. Furthermore, the capabilities of wireless are increasing rapidly, and will increase further before the NBN reaches all Australians.

What the Coalition cares about – and any rational person should care about – is the benefits the technology will deliver to end users. As the customer take-up data shows, speed is far from the only attribute valued by end users. In the Coalition’s view, what matters is the overall combination of benefits for end users – and this is why in my view wireless has the capacity to be superior.

Issue 2: Your article asserts that it will not cost $1,000 to install the NBN to a household.

Your article states: “I simply cannot believe that our democracy allows senior politicians such as Joe Hockey to make factually inaccurate claims such as the idea that 4G mobile broadband has the potential to exceed the capacity of fibre, or that connecting to the NBN will cost Australians up to $1,000.”

This above statement is misleading. Hard data from FTTP installations such as Verizon’s rollout to 17 million households in the US suggest that in-the-home costs (that is costs above and beyond the ONT, such as connecting and testing existing CPE and set-top boxes) account for up to 20% of the costs of the rollout (see, for instance, Appendix B of the Analysys Mason Final Report for the Broadband Stakeholder Group: The Costs of Deploying Fibre-based Next-generation Broadband Infrastructure, 8 Sep 2008). This is verified by industry reports of Telstra’s experience in South Brisbane, which suggest it is taking two technicians half a day to finalise the cutover from copper to fibre.

If these costs are going to be covered by NBN Co, then supporters should point to exactly where they are covered in its $28 billion capex estimate for the FTTP part of the rollout. NBN Co has never clarified whether or not this is the case. If these costs are not in the December 2010 version of the NBN Co business plan, as appears likely, then they will have to be paid for by the Retail Service Providers – and will therefore ultimately be passed on to customers.

In my comments I was highlighting the reality that for consumers to make use of the claimed capacity of the network, in many cases they will need to pay for internal wiring inside the home. For example, if the ONT is at the front of the house but the office or lounge room is at the back of the house, then to take advantage of the speeds that fibre offers it will often be necessary to install new internal wiring in the home (depending on how old the home is and what standard of internal wiring it currently has).

Issue 3: Your article falsely asserts that Tasmanian towns will not be ‘to the back of the list’ for NBN rollout.

Last month, at Budget estimates NBN Co officials confirmed that around 700 NEC boxes in Tasmanian premises would have to be replaced with new Alcatel equipment. Over 300 boxes in Midway Point, 200 in Smithton and 150 in Sco ttsdale will have to be replaced in order to standardise the NBN technology platform with the FTTP rollout elsewhere. Until this change takes place, Telstra has said that it cannot offer a commercial service to customers in the three trial towns (Disclosure: In the interview I referred to the town of Sorell; I had been misinformed).

Issue 4: Your article falsely implies that the Coalition backs a ‘wireless only’ model of broadband for Australia.

Your article states: “Hockey spoke extensively about the potential of wireless technologies to serve the nation’s future broadband needs.” Neither I nor my colleagues have ever supported a ‘wireless only’ model of fast broadband for Australia. The only place this model exists is in the fevered imaginations and distortions of Coalition statements about broadband we see among some supporters of Labor’s NBN.

If you had listened carefully to the interview you would have heard me state: “We have said we are going to have a mix of technologies rather than rolling out cable outside everyone’s home. We are going to have a mix of technologies, including wireless and satellite and cable that is going to be much ch eaper but it going to give people the functionality that they want.” (Source: Joe Hockey, Interview with Leon Compton, ABC Tasmania, 8 June 2012)

The Coalition has long recognised that no single broadband technology suits all consumers and all areas of the nation. We also recognise that for many consumers broadband and wireless will be complementary (whereas for others they may well be direct substitutes, as noted above). This is why the Coalition advocates a technology-agnostic approach to upgrading broadband. Our broadband policy will rely on a mix of technologies to provide broadband to Australian households and businesses as soon as possible, at affordable prices, and at the lowest possible cost to taxpayers.

The sense of entitlement that we see among some of the most fervent supporters of Labor’s NBN is well-captured by the first commenter on your story on Delimiter. His/her response to the possibility that the Coalition might seek to spend less on the NBN? “My gaming days are numbered. The apocolypse approaches. Might as well end it now.”

I have absolutely no issue with the use of fast broadband for gaming, video-on-demand or the delivery of hundreds of channels of television (Cisco in June 2011 forecast that video in its various forms will account for 91 per cent of all consumer use of bandwidth in 2015). But it should be recognised that much use of a FTTP NBN will not contribute to economic productivity, and that running fibre into every one of 12.2 million homes and businesses is not the only way to achieve what we assume was Labor’s implicit – but never publicly stated – policy objective: to provide all Australians with fast broadband.

The Coalition policy on broadband at the next election will have that as its explicit objective, but will ensure it is achieved sooner and at a less exorbitant cost to taxpayers.

The following is an extract of Hockey’s conversation with Leon Compton on ABC Radio Tasmania on 8 June (only the portions relevant to the NBN):

PRESENTER: One of the issues raised out of the review into why you did so badly in Tasmania at the last federal election suggested that you didn’t have a suite of policies that were directed at Tasmanians. On the mainland you were talking about pulling out the National Broadband Network or changing tack on it. In Tasmania it was already being installed. Have you worked out your policies on the NBN?

JOE HOCKEY: Yes we have and Malcolm Turnbull has spoken at length about it.

PRESENTER: In Tasmania where it’s going to be very seriously installed by the time of the next election

JOE HOCKEY: Yeah but people aren’t taking it up Leon. People aren’t taking it up. In fact in Sorell I understand where it has been laid out the technology is obsolete at the moment and I understand this came out in senate estimates recently because it was installed before the deal was done between the NBN and Telstra. Which means the NBN in Sorell is certainly not going to be its going to be at the back of the list not at the front of the list in relation to the NBN.

PRESENTER: So what are you going to do about it?

JOE HOCKEY: Which means that the NBN in Sorell is certainly not going to be – it’s going to be at the back of the list, not at the front of the list, in relation to the NBN …

PRESENTER: But the infrastructure has been installed.

JOE HOCKEY: But people have to connect, people have to connect. And this is the thing. What we have said we are going to have a mix of technologies rather than rolling out cable outside everyone’s home. We are going to have a mix of technologies, including wireless and satellite and cable that is going to be much cheaper but it going to give people the functionality that they want. At the moment to connect from your home to the NBN and wire your home and go through the process can cost a $1,000, can cost a lot more and people haven’t got that discretionary sum available.

So what we say is we want to have a mix of technologies and we have advocated that. We want broadband for the nation, but we want to make sure it is sustainable broadband for the nation and there is a great deal of irony in the fact that when the Government did a deal with Telstra for the National Broadband Network I understand part of that deal identified that Telstra was not allowed to sell its new 4G technology as a competitor to the NBN because 4g has the capacity to be far superior to the NBN. So what does the Government do? It says well you are not allowed to market it as a competitor, I don’t know about you, but I use an iPad – the iPad I carry around in the car. I don’t have a cable dragging behind the car. I use wireless technology and I think that is the way functionality is going.

PRESENTER: Why do you think you didn’t win any Lower House seats at the last federal election?

JOE HOCKEY: Well, in Tasmania?

PRESENTER: In Tasmania.

JOE HOCKEY: We won a few everywhere else. Look, I don’t know. All I know is we have to spend a bit more time here and we have been doing that. I think the Government misled people during the course of the last campaign. I think there’s no doubt about that. You saw the Prime Minister say there would be no carbon tax in any government she’d lead, and there is one now.

So I think people were misled about the benefits of the NBN. And if you look at the connection rates in Tasmania, that would be confirmed. So, overall I think we’ve got to give people a message of hope. We want to show people that there is a path to a more prosperous Australia where everyone shares in the benefits and everyone, most importantly, has an opportunity. If they don’t want to participate,

Delimiter will respond to Hockey’s comments in a separate article on Friday morning. Image credit: Office of Joe Hockey.