EMMA ALBERICI, PRESENTER: The Opposition is seeking to make a virtue out of underbidding the Government in one key policy area in the run up to next year's election: the rollout of the national broadband network.

Communications spokesman Malcolm Turnbull says he will soon release a plan that will drastically undercut the cost of the Government's $37 billion network.

But how fast and how effective would it be? Malcolm Turnbull joined me a short time ago from our Parliament House studio.

Malcolm Turnbull, thanks very much for being with us.

MALCOLM TURNBULL, OPPOSITION COMMUNICATIONS SPOKESMAN: Great to be with you.

EMMA ALBERICI: It's said that you've got a fully costed broadband policy, tell us about it?

MALCOLM TURNBULL: Well our broadband policy is to complete the national broadband network, but to do so sooner, cheaper - less cost to the taxpayer - and much more affordably for consumers and that is our plan.

So we will complete the NBN, all Australians will have access to very fast broadband, but because we'll use a mix of technologies and use the most cost-effective ones where appropriate, we will be able to do it sooner, cheaper and more affordably.

EMMA ALBERICI: But not at the very highest possible speeds?

MALCOLM TURNBULL: Well, some connections - there will be some fibre to the premises, and a lot of fibre to businesses and hospitals and schools and universities - I mean many of them have fibre now, so there will be plenty of fibre in the backbone of the network.

There will be plenty of fibre going to the locations that need it, but for the bulk of the addresses in Australia, the premises in Australia, which are residential customers, the very high speeds that are ... that fibre to the premises can deliver are far in excess of what residential users either need, let alone will pay for.

But more importantly, the problem with fibre to the premises in this residential environment is that it costs four times as much to build, or thereabouts, and takes two, three times, four times as long to build in terms of time. It's a very slow process, as we've seen with the NBN. The NBN's been going ... they connected their first fibre customer two years ago and they've now connected, we think, somewhere around 4,000 customers at the moment, and they claim that a year from now they will have 54,000 connected. So it's proceeding at a snail's pace.

EMMA ALBERICI: But infrastructure, big scale infrastructure all over the world, it's well known that it takes a long time to build. That's certainly no argument for not doing it at all, is it?

MALCOLM TURNBULL: No, it's an argument for doing it smarter. You see, if you have inadequate broadband now, and that is holding you back or holding your kids back, holding your business back, you want it upgraded quickly.

Now what we can do - particularly in the areas where we can do fibre to the node - we can bring people up to very high speeds that are more than adequate for all of the applications that are available now or forseeably available, and we can do that very quickly.

I give you the example of Britain. BT, in the last year, just one year has passed, 7 million households with fibre to the node, and most of those people in that footprint - if they sought to be connected - would have speeds of at least 50 megabits per second, and many of them would have the highest speed of 80 megabits per second. Now that's very fast broadband, and much faster than current applications and, you know, would require, particularly for residential users.

EMMA ALBERICI: Let's take the UK as an example, where the Minister, the Communications Minister equivalent over there, Jeremy Hunt, has recently described fibre to the node, which is your proposal, as a mere stepping stone; that the British ambition is indeed to have ultimately fibre to every home? The fastest possible broadband speeds?

MALCOLM TURNBULL: Well, that may well be the Minister's ambition, if you like, but the Government in Britain is not funding the building of a fibre to the premises network at all.

EMMA ALBERICI: If I can just halt you there, one of the reasons that might be is because they're absolutely swamped in debt - much more so than Australia is - and certainly not in a position to be funding their current ambitions, so that's why, in his words, they can only at the moment achieve a "stepping stone" towards it.

MALCOLM TURNBULL: Well, you've got to be ... Emma, I've spent quite a bit of time talking to the telecom companies in Britain and indeed to the Minister. I can tell you what they're doing. They will get most of them fibre to the node - what the Brits call fibre to the cabinet - but in some very remote areas they will get combination of wireless and perhaps satellite. So there is government money going in there, but it's nothing like the scale in Australia.

EMMA ALBERICI: Now if we just look at your proposal, which is this what's known as fibre to the node - in other words, fibre is the fast broadband you want to take it to the street corner and Stephen Conroy wants to take it all the way to the home, if we just simplify it a bit.

If you're just taking it to the street corner, you of course need to piggyback on to Telstra's copper network to take it all the way into the home. What I'm curious to know is, under your proposal, will you be buying the copper from Telstra to get it into the home, or will you be leasing it; what sort of arrangement do you propose there, and what will the cost be?

MALCOLM TURNBULL: Well I'm very confident we can secure access to it from Telstra. I think it's most likely that NBN Co would acquire it. The reason why it's manifestly in Telstra's interests to do this is that at the moment the NBN rollout, the fibre to the premises rollout, is going very, very slowly - and of course that means, Emma, that some people who have got inadequate broadband now might have to wait a decade to get an improvement. That's a very long time in technology.

EMMA ALBERICI: Most of those people have wireless.

MALCOLM TURNBULL: Well, they do, they do but wireless is not adequate in some circumstances, and of course it's certainly not economic if you want to be downloading a lot of video, for example. So, wireless is a great technology but fixed line broadband is mostly used for video - that is the overwhelming application - and wireless is ... you know, wireless is a very expensive way of distributing that.

But if I can just come back to the Telstra point. Telstra gets paid by the NBN Co as premises that are currently connected to their network are switched over to the NBN Co network. So those payments come at the pace the NBN grows. The slower the NBN grows, the slower Telstra gets the money.

If you take the approach we're talking about, because we will be able to upgrade Australian premises much, much more quickly, it will mean that Telstra will get its payments much more quickly as well, and that means the net present value of those payments - that's to say their value in today's money - will be considerably greater.

EMMA ALBERICI: Now, the parliamentary register, we now know shows that you have personally made an investment in France Telecom - a company which is stating its ambition to have 15 million homes in France on fibre to the home by 2020, and in the words ...

MALCOLM TURNBULL: That's a very ambitious ambition, I might say. They've got a long way to go but anyway, go on.

EMMA ALBERICI: Why have you made that investment? Obviously you think their strategy is a good idea, and yet you don't think the Government's same strategy in Australia is a good idea? It's curious.

MALCOLM TURNBULL: France Telecom is a private company - well it's a public-listed company - and they're making commercial decisions in a very different market. Whether they achieve that ambition remains to be seen but if ... I regret to tell you that my reasons for buying France Telecom was because I don't invest, obviously, in telcos in Australia because of my position, so I don't have any conflict with France Telecom, and I thought their shares were good value so that's why I bought them. But please, I don't want anyone to take that as advice to buy them.

EMMA ALBERICI: But you haven't equally bought shares in British Telecom, which is the company you've just been telling us is doing the right thing in not taking fibre to the home?

MALCOLM TURNBULL: You've got to understand, as an investor I'm focused on investment returns; I'm not making political statements every time I make an investment. So, the ...

EMMA ALBERICI: The Government is considering investment returns, isn't it, by taking fibre to the home and owning the infrastructure company, or owning the majority of shares in the infrastructure company, that achieves that?

MALCOLM TURNBULL: Well, let me give you a better example. In the United States there are two ... two of the big telcos are Verizon and AT&T. Verizon did a selective fibre to the premises roll out; AT&T did effective fibre to the node.

The Verizon ... Verizon acknowledges that it will never be able to get a financial return from its investment within any, you know, reasonable timeframe, and AT&T gets very similar revenues from its customers on their product - notwithstanding that it costs between a third and a quarter of the capex to build.

So ... but the point, Emma, is this. I'm not suggesting that fibre to the premises will never be economically viable. I mean, I don't have a crystal ball. Stephen Conroy can talk about "future-proofing"; I've been involved in technology too long to know that you can't future proof against anything. We don't know what will be available in 10 years time. So what I'm saying ...

EMMA ALBERICI: What is wrong with having the highest possible ambition for Australia for broadband? What's wrong with leading the world and having the highest possible speeds?

MALCOLM TURNBULL: If it costs you four times as much and takes you three times as long to get essentially the same result, it's not a very good deal. I mean this is not ...

EMMA ALBERICI: But it's not the same result, is it?

MALCOLM TURNBULL: It is, you see bandwidth ...

EMMA ALBERICI: Fibre to the node won't give one gigabyte, will it?

MALCOLM TURNBULL: It's true, it won't, at least currently it won't. But can I just say, Emma, before you interrupt me again, the point is this: bandwidth is only of use to you insofar as you have applications that require it. If I were to ... if you were to connect your home in Sydney to one gigabit symmetrical broadband at vast expense, it would be of absolutely no use to you unless you dig out your backyard and build an enormous data centre there.

The point is if the applications that you want are high-definition video streaming, you know, all of the social media and commercial applications that you use - if they can be accommodated within bandwidth that can be provided at a quarter of the cost and, say, a third of the time, then that is a much more sensible deal, and that ... now, you may say in 20 years time things will be different. Well, if they're different in 20 years time, we'll make some further investments in 20 years time.

EMMA ALBERICI: But then in 20 years time won't it take another 10 years then to potentially build it, by which stage we would have already built it; doesn't that make sense?

MALCOLM TURNBULL: No, not at all. The fact is that all of these networks, generally, when they're built by rational people - as opposed to governments with no budget and who don't care about expense - networks are built incrementally and they're built in advance of demand, but it's very unwise to build any telecommunications network on the basis of "build it and they will come". It's been done before and tens and tens of billions of dollars have been lost. There's a lot of money lost in the late 90s doing just that with sub-sea cable investment.

So it is quite possible to lose tens of billions of dollars, and that's why commercial companies are much more discriminating. So, where they do fibre to the premises they do it in areas where it is cheaper to build - it might be because there is a lot of good underground ducting that they can very cheaply pull the fibre through. It may be that they can run the fibre along electricity poles and drop into the premises aerially.

Or it might be in areas where they think there will be a lot of demand for video services and they can get a return on it. But they make economic decisions.

The problem with the NBN is that it is essentially a political decision. It has no budget, there has never been a budget put on it. What the Government did was decide to build fibre to the premises to 93 per cent of the population. They've told Mr Quigley to do that, and every now and then he gives them an update as to what he thinks it will cost. He's never had any financial limit put on him at all. They've never said, "Michael, you've got $20 billion to spend", or "$30 billion to spend". It's like you or me going to a builder and saying, "Build me this house, I don't care what it costs, you just tell me ... just give me a rough estimate of how you're going from time to time".

That's a way, obviously, to lose a lot of money. That's exactly what will happen if the NBN continues to be run on this basis. It is going too slow and too expensively - and what we can do, as I said, is complete the job. All Australians will have access to very fast broadband under our proposal that will enable them to do all the things they need to do online and they will have it sooner, cheaper and more affordably.

EMMA ALBERICI: Thank you very much. We'll have to leave it there.

MALCOLM TURNBULL: Thanks, Emma.