First off, I don't like getting involved in political tittle tattle which is why I've waited a full week to post this response. But after deliberation and a bit of peer-reviewing, it's now become clear that the response needs to be made and for questions to be asked.

Last week, Malcolm Turnbull released a statement in which he pointed out that the Coalition's NBN plan was cheaper and easier to deploy than Labor's NBN and that Stephen Conroy agreed. Initially I was all set to agree too. I was simply going to analyse whether cheap equated to value. However, more digging is suggesting that there's nothing cheap about the Coalition's plans. In fact they could well be monstrously more expensive.

Uses of the NBN

It's an oft-mentioned fallacy that the NBN is all about providing fast internet access to people. That's almost the least important part. Amongst other things, it will form a major backbone of the health service, revolutionizing healthcare for all Australians - especially the elderly and those in rural areas - while at the same time saving the $100bn annual health budget so much money that these benefits alone will pay for the entire rollout. (Edit: more here)

The NBN will also provide Australia with a "smart grid" which allows for wildly superior and more-efficient energy distribution around the country. The NBN's ability to micromanage energy distribution (by pinpointing more-precisely where and when energy is required) has saved so much money in areas where similar deployments have occurred that it too should pay for the entire rollout on its own. In a world of dramatically-rising power bills the NBN promises major cost savings - if it can't actively reduce the bills it will certainly stop them rising as much. (Edit: more here)

The NBN will also revolutionise education - especially for those in rural areas - with kids being able to access the best lessons in the world and interact with teachers who could be thousands of kilometres away. It will also act as a platform for Australian businesses, small or large, to innovate and reach a much-wider customer base. (Edit: more here)

Turnbull's cheaper suggestion does away with virtually all of that. In pecuniary terms alone, the massive, annual multibillion dollar cost savings to health and power won't be there.

Infrastructure overhaul

Then there's the existing copper network. Much of it is old and rotting. The oldest parts may date back to World War II, and if you're in a suburb that was first developed in the 1960s, the chances are that the copper is the same age. It costs Telstra over one billion dollars every year just to maintain it and that cost is going up.

Therefore, one of the prime requirements of the NBN is to simply replace the copper with fibre. Fibre costs less than 10 per cent of copper to maintain and operate, offers future-proof signal transmission and is much more robust. It has maxed out accelerated aging tests and should work optimally into the next century. It can also carry a signal hundreds of kilometres as opposed to copper which can carry a broadband signal barely five kilometres from an exchange, and that's with the aid of turrets which also require an enormous amount of (expensive) electricity to boost their signal (which fibre doesn't need). Even if we ignore all of the service and innovation benefits of the NBN, then its arguable that fibre-replacing-old-copper is the only justification that's needed to build it.

This begs the following questions: does the Coalition want to buy the copper network back from Telstra or use taxpayer money to keep the copper network alive even longer? Also, does the Coalition believe that the copper doesn't need replacing at some point in the future or has it left out the figures for doing so? It's either one or the other.

Selling the NBN

15 years after the NBN is completed it will be sold. This fact is often overlooked when accusations of a government monopoly are being made. Subsequently, the $27bn taxpayer investment will likely come back to the taxpayer with a profit. As a result, it has a net cost of zero or less to the tax payer if you look at the big picture. As a value proposition it's similar to Sydney's Harbour Bridge - expensive at first but it has easily paid for itself in related benefits to North Shore business centres (not to mention toll fees).

Problems appearing

Turnbull's vision is far less certain. Sure it will be cheaper in the first place and it will get more people up and running who don't have any broadband internet access. But the business model seems to fundamentally rely upon obtaining revenue from customers signing up for basic broadband internet access. The Coalition itself has spent the last few years (rightly) questioning the demand for that.

Furthermore, the expense to the tax payer might be less in the very short term, but it's not much of a stretch to see potentially huge costs overall. The Coalition's NBN would likely cost well over $10bn (probably much more) assuming that, if elected, it adjusted Labor's vision rather than scrapped it. But what would the return be? A few new internet signups can't hope to make that money back anytime soon. What's the attraction for businesses to buy into it? How does it not become the monopoly that the Coalition has been complaining about all along?

The techie term for what the Coalition is pushing is Fibre To The Node rather than Fibre To The Premises. The upshot here is that the Coalition does not connect every house (or business) to the NBN unless that house wants to pay for it. As such the business opportunities, infrastructure revolution, social benefits are unlikely to develop because only a fraction of the population would pay to connect if given the opportunity.

Industry Analyst, Paul Budde, sums up the situation thus, "to save costs the Coalition favours an FTTN solution, which eventually would also need to be upgraded to FTTH but which would be cheaper as an interim solution."

Questions

Yes the Coalition's plans are cheaper and faster to implement but that's an over simplification. The alternative will still cost well over $10bn, but the main beneficiaries will be limited to those currently without broadband and geeks who want faster internet access. It would likely generate minimal additional revenue and there's little obvious attraction for investors to buy into it should the government sell it off down the line. Virtually all of the medical, power distribution, innovation and social benefits would be done away with and this would deny the Australian economy countless billions of dollars - probably more considering that the Harbour Bridge alone has generated many trillions in dollars through its opening up of Sydney's North Shore.

Where's the value in the Coalition's proposals? What's the business case behind a policy which appears to focus on providing mediocre broadband to people who don't already have it? Is it enough to justify spending billions of tax payer's dollars on? Why would private companies buy into it and stop it becoming a monopoly? Labor's plan's (irrespective of whether it can deliver on them) revolve around tax payer's money being used as an investment. To what degree is that true of the Coalition's "cheaper" alternative: how does the money return to the public purse?

Then there's the business of replacing the copper at some point in the future. Is offsetting the massive cost, so that it's some future government's problem, a fair method of balancing a budget and criticizing a government? When does the Coalition think it should be replaced?

Labor's abject failure to promote its NBN policy through actually informing the public about the health, power, education, business opportunities and other benefits - the things that represent the overwhelming value of the build - is now being rivalled by the Coalition's failure to acknowledge those benefits even exist. The information black hole, from all sides, is staggering and puts the entire revolutionary infrastructure at risk from ignorance and politics.

The information gaps need to be filled, as has previously been described here. But ultimately, cheap shouldn't be confused with value, otherwise you're left with false economy.