Wednesday, 19 June 2013
Matters of Public Importance
National Broadband Network
I have received letters from the honourable member for Lyne and the honourable member for Cook proposing that definite matters of public importance be submitted to the House for discussion. In accordance with the provisions of standing order 46, I have given priority to the matter proposed by Mr Oakeshott, namely:
The urgency for Australia's deep fibre infrastructure build, given that global internet traffic is forecast to break the zettabyte barrier by 2013.
I call upon those members who approve of the proposed discussion to rise in their places.
More than the number of members required by the standing orders having risen in their places—
I thank the shadow minister for communications, as well as colleagues within the government, for allowing this nation to go ahead, and you, Speaker, for allowing this most urgent debate to happen.
There is a view and mythology that loiters in Australia and in the corridors of this place, that the National Broadband Network build is some sort of expensive luxury spend. The urgency of this debate today, proved by a laugh received from a parliamentary colleague, is that this is an urgent, essential item and an investment with a rate of return for the Australian taxpayer. I raise it as a matter of public importance today, not just to make that point again but based on the most respected and most accurate report that comes out on a triennial basis, known as the Cisco Visual Networking Index. That is the global guidance for all governments around the world on global intranet traffic and what is happening with regard to the uptake and movement of data.
This is the most respected and the most accurate index that we have internationally. It normally errs on the conservative side, and it is indicating in its most recent report that we in Australia, regardless of the policy options on the table, have a problem of congestion that will emerge in the next five years. There is no question that by 2016 our network, if we continue to rely on copper, will be overwhelmed. The idea, the analogy, of pushing a pumpkin down a hosepipe has to start being the driver of policy solutions from all parties in this chamber. That is why this is urgent. This is not some long-term vision splendid and splash of money; there is an urgency about building this now to deal with the exponential growth in data that has been exposed by the most respected and accurate global index that we can get our hands on.
I am not lining up just one side of this parliament. This is going to be an issue for all policy. We should have addressed a failed, redundant, waterlogged, asbestos-riddled network a long time ago. By rolling out the NBN as per the corporate plan and the shareholder minister's letter we are going to have transition issues on the back end of a 10-year deal, as exposed by this VNI—this virtual networking index from Cisco, the most respected index that we can get our hands on. We will have issues with transition on the back half of the current corporate plan and of congestion in communities which are not yet on the rollout list. That should not be denied and there should be a consideration from the existing corporate plan and NBN Co., right now, on those issues of transition and congestion.
The answer is not to go backwards. The answer is not to continue to rely on copper in any form. That is why this most recent information from the global index really is a call for the Liberal and National parties to reconsider their position on this last-mile copper-to-the-node policy; to look at the exponential growth that is happening in global internet traffic and reconsider relying on copper. That is quote after quote, evidence after evidence, that that policy simply will not work.
The vice president of Cisco global technology, a gentleman called Dr Robert Pepper, currently sits on the board of the Federal Communications Commission of the USA and its UK equivalent, Ofcom. In these roles, he briefs governments and network operators from around the world on infrastructure and what to expect from future data requirements and modes of broadband usage based on the reality of traffic statistics and growth curves. He is an American; he has no dealings in Australia or with Australian politics whatsoever. This is what he said when releasing these most recent Cisco VNI figures. There are about eight items.
He has said that all roads point to the requirement of optic fibre being implemented deep into both wired and wireless networks. He does say the future is indeed wireless but it will be mostly wi-fi and not 4G, and he emphasises that this is complementary to a fixed-fibre network as the skeleton of the communications network in any country. He says that Australian mobile networks will soon have to join the US and the UK in the concept of offloading data onto local wi-fi networks in order to avoid congestion, which is the emerging issue of our failing communications network. He said that, as an example, a 4G mobile user—and there are many in this room—uses 28 times more data than a 3G user. That is part of the lead-in to this exponential growth in data demand. He says that the new wireless spectrum needs to be opened up as quickly as possible. I would say that is urgent to cope with the growth that we are seeing. He says that as much wireless traffic as possible needs to be seamlessly offloaded onto the wired networks to avoid congestion. Again, this is the emerging issue of this moment. He also says there is a huge increase in requirement for low-latency data transfer and high upload speeds. People have been listening to this issue of download speeds.
The issue that has been identified by the experts on global internet traffic is not download speeds; it is upload speeds that are the political and policy issue of the moment. He also said—again, not knowing anything much about Australian politics—that fibre needs to be very nearby every internet connection, whether wired or wireless. Here is the killer blow. Again, talking about internet trends generally—not just in Australia, but really making this point about last-mile copper—he has said that fibre-to-the-node infrastructure which relies on a last-mile premises connection using Australia's current copper infrastructure—its current HFC networks—or fixed 4G-like wireless will not have the symmetry, the contention ratio, the bandwidth or the latency to keep up with demand by 2016. He makes that point, but under the coalition's policy within four years the network will be overwhelmed. He makes the point that it will be overwhelmed before it is complete.
That is why this is urgent before this chamber. We have three months before a very significant decision will be made at the ballot box, on a policy difference in how we build our communications technology for this country. There is a corporate plan in place and a shareholder minister's letter that is currently delivering the rollout. It has a rate of return of over seven per cent. It delivers on telecommunications industry separation, which is long overdue in Australia. It drives an upgrade of the pits and pipes that were identified only a fortnight ago as being absolutely rubbish. This corporate plan actually drives an upgrade of this network of pits and pipes that was not necessarily built by Telstra and maybe not by Telecom, but maybe even by PMG—a long, long time ago. It is rubbish infrastructure that needs to be upgraded before we get into the issues of speed, reliability, pricing and rate of return to the taxpayer.
It absolutely does my head in when I hear members of parliament, who should know better, in conversations with their communities trying to spread the fib that this is a $90 billion spend or even a spend at all. This has a rate of return on investment to the taxpayer. It is an investment, not a spend. It is not a luxury item; it is an essential service for the future of this country. If we do not do it, we are going to have congestion on our internet in this country like we have never seen before. And it is going to be an enormous problem in business and in all forms of communication: health, education, personal, entertainment, whatever. Congestion is going to be our issue from 2016 and beyond.
The current government plan at least tackles it on the back-end of its 10-year rollout. If we allow this last mile of copper to be the winner of the day we are going to set ourselves up as the country that wants to put pumpkins down a hosepipe, that wants to build a one-lane Sydney Harbour Bridge and all the analogies you can think of. What are we doing even having a policy debate on this when the most respected, the most accurate global indices are saying we are going to have exponential growth and are going to hit a zettabyte by 2016? I am scared someone is going to ask me what a zettabyte is. My only response is that it is a lot. And it is a lot more than what is happening now.
A zettabyte, I am told, is over 11 times more than all the internet traffic globally in 2008. That is the type of exponential growth we are seeing. I am told that in 2016 or 2017 alone—depending on who you want to listen to—the NBN will deliver as much if not more global internet traffic than all the years of internet traffic before it. That is the exponential growth. We are becoming more and more reliant on and are grabbing the opportunities that are provided by the internet in all aspects of our personal and business lives.
The best we have got is saying we need to build fibre as deep as we possibly can into the infrastructure. Why are we arguing the toss on what is as deep as we possibly can when we get a rate of return by building it to the home? It just does not make sense that we are still stuck in the bog of a political debate when this is the opportunity for some really good visionary nation building.
I know everyone in every pub talks about what this country should do and what this parliament should do. Why are we blinking? Why are we falling for some sort of argument of max speed of download below what will be the international average speed? Why do we choose to set ourselves up so that by 2016 we will only just be ahead of Africa on the average speeds that are being offered by the Liberal and Nationals parties? We will just be ahead of the Middle East and Africa. We will be rivalling South America but we will be blown out of the water by the US and Europe. Why as a first world country can we not demand better than that? Why are we choosing the African model of fibre to a node that is going to be overwhelmed before it is complete?
Yes, many think this is a waste of money. Yes, many think this is a luxury item that we plucked off some top shelf of luxury items of policy and do not understand why we are delivering an upgrade to a 60-year-old redundant network that is going to blow its lid in the next four years unless we upgrade it. I urge the government to consider all those issues of transition that in my view are not as explicitly dealt with in their corporate plan and by NBN Co. on the back-end of their 10-year rollout. Post-2016 is going to be a problem if the policy settings stay as they are.
I urge my friend at the table, the shadow minister, to really do more to drag your side from blowing up this NBN network, and I give you credit for doing that, but to drag it that last mile of copper and get it to the home. That is what delivers ubiquity, delivers the rate of return and delivers on the issue of congestion that is emerging quickly.
The honourable member for Lyne has been chairman of the committee on the NBN, which I have been a member of over the term of this parliament, and I am disappointed by his remarks. After all this time and after familiarising himself with the NBN, he still shows himself to be so terribly confused about the nature of internet bandwidth and the requirements of a network. He quotes from a recent report published by Cisco called The zettabyte era. The zettabyte is, as I recall, 10 to the power of 21. It comes before a yottabyte, which is not to be confused with the Nepalese concept of a yeti bite. He refers to this report which talks about a massive increase in data being transmitted over the internet. Of course that is well understood. There is nothing new in that and it is described extensively in our own policy. This is being driven, as the Cisco paper discloses, by a massive increase in video entertainment or video traffic being carried over the internet. This is the growth of IP TV and more and more movies and television shows being carried over the internet, to the point where one-third of all of the bandwidth in the United States is being consumed by one company, Netflix, which is a movie and television entertainment download business. That is well understood.
But the issue about the NBN is not whether there will be more bandwidth required in the network and not whether there will need to be more fibre capacity in the big cables in the core of the internet linking exchanges and linking countries and so forth. It is: what is the nature of the connection from the local exchange to the customer's premises—what is the size of the pipe in that last mile to the customer's premises? What the honourable member is confusing is an exponential growth in bandwidth across the network and assuming that that means you need to have a similar growth in the size of the pipe to the customer's home. If I can give honourable members an example that might make this clearer, it is a bit like this. If everybody in Sydney, for example, were to decide to have three one-hour-long showers every day, it would mean that Sydney Water would have to provide a lot more water. It may have to build another dam or another desalination plant. But it would not mean that every house had to have a bigger water pipe going into that house. You see, we will consume much more data through our internet connection but the size of the pipe—which is described misleadingly as talking about speed when it is really a question of capacity—whether it is 10 megabits per second or 25 or 30 or 40 or 100, does not necessarily need to grow. For example, if you want to watch a high-definition video, which is the biggest file that is typically transmitted over the internet to residential users, you need, we have assumed in our policy, about six megabits per second. Netflix know a bit more about this than any of us here, and their own publications say you need four megabits per second. So if you had, for example, a 25 megabit per second connection to the internet you could stream simultaneously four, or more than four—five or six—high-definition video streams. And so you could, as a household, be watching much more video, consuming much more data—hundreds and hundreds of gigabytes a month—but nonetheless not require that larger pipe. The issue, therefore, is: what is the utility of provisioning the larger pipe? We all understand that the utility of increased bandwidth, increased size of the pipe into your house, diminishes as it grows. To go from dial-up to five megabits per second, that is a big increase in utility. You can watch videos; there are a whole bunch of things that you can do that you could not do before. To go from five to 25 is another increase in utility, because if you have got a family with three or four people in it, they can all do that simultaneously. To go from 25 to 50, that may not be so much of an increase in utility. It is certainly not twice as useful. It may be a little bit better. To go from 50 to 100—it is very, very questionable how much of an increase in utility that is. The point is that it does not progress in a linear fashion.
The problem, however, is that because in order to reliably give everybody 100 megabits per second and more you would need to take, with current technology, fibre into every premise, the cost of taking everyone to 100 or better is enormous. Just as the marginal utility of higher speed starts to flatten out and become zero, that is when the cost of provisioning it goes through the roof. If you think about it in this context, if you can give everybody in a given area very high speeds, no one less than 25 and most people with 50 or better, for an investment of $1 million and meet all of their requirements—that is fibre to the node, that is the approach that we are talking about. If it costs you $5 million to take fibre to the premise so that they can have 100 or more, but with no incremental benefit to the customers, with no applications that they can use and value with that additional speed, then what you have got is $4 million of investment, enormous trouble and expense, enormous delay, and no return on it. Inevitably, you have a higher cost of connectivity.
The fundamental problem that the honourable member overlooks is this: he says that the NBN has a seven per cent rate of return. That is the most extraordinary nonsense! I cannot believe that he could seriously say that the one thing—if we have learnt anything on the NBN joint committee, we have learnt that their financial forecasts are completely discredited. The contractors are going broke; we all know that. The project is failing. It will be lucky to make 15 per cent of its forecast build by 30 June, and we are taking their financial forecasts seriously? Come on, Deputy Speaker. The NBN Co. is a financial disgrace. It is the largest blank cheque ever written in the country's history. The government does not know how long it will take to complete, and they do not know how much it will cost. That, regrettably, is the truth.
We get back to this fundamental question of fibre to the premise. What is the additional benefit of taking fibre to the premise, and does it justify the investment? That is the key question. We could have had a very reliable, very considered, thoughtful, well-informed answer to that question if the government had lived up to its pledge in 2007 and had a cost-benefit analysis into this project. If the honourable member for Lyne had supported us consistently on this matter—
Well, he was not able to get his friends on the crossbench to do that, but the fact is that without that cost-benefit analysis, we simply end up having an argument about this rather than having some very hard numbers.
If the proposition is that we should have fibre-optic cables deep into the network, we agree. The question is: how deep, how far? Alcatel-Lucent, the big telecom vendor, have got a good summary of this. They say that fibre should go to the furthest economically viable point. We agree with that. If you can achieve the bandwidth requirements that people need, as quickly as possible and at a lower cost, thereby making it more affordable, without taking the fibre right into the house, that makes sense.
As for the honourable member saying that fibre to the node is an African model, I did not know that the United States was in Africa; I did not know that Britain was in Africa; I did not know that Germany was in Africa. What an extraordinary statement, notwithstanding the rather unpleasant slur against Africa. The fact of the matter is that the approach that we are proposing it is one that is consistent with the practices of the major telcos around the world. By that I mean the honourable member down the back has never heard of Deutsche Telekom or British Telecom or AT&T or Bell Canada.
Government members interjecting—
The Labor members are shouting because they know this project is failing. But the fact is that the honourable member does not know remotely what he is talking about. British Telecom have passed 19 million premises in their broadband upgrade, 10 per cent with fibre to the premises and the balance with fibre to the node.
Mr Mitchell interjecting—
If the honourable member wants to doubt that he should get in touch with Mike Galvin, who is heading the rollout. They cannot cope with the truth.
The honourable member for Lyne said that the Cisco report says by 2016 our network in Australia will be overwhelmed. It says nothing of the sort. What it actually says is that by 2016 it expects average speeds on fixed line broadband in the Asia-Pacific to be 41 megabits per second, and that is very achievable under our policy. Indeed, we see most of the premises under our policy having 50 megabits per second or better. The report sees the speeds for handsets being on average 3.9 megabits per second. The proposition that the network is going to be overwhelmed has no basis of fact in that report.
The real issue of congestion in the future is not going to lie in the last mile to the home. If we get into office that will be addressed within a few years and by the end of the next parliament everyone in the fixed line footprint will have at least 25 megabits per second, most will have 50 or better. We expect to build plenty of fibre to the premises, and wherever it can be done cost-effectively we will do so—greenfield sites and others that appropriately qualify. But the real congestion is going to lie further back in the network. This, I regret to say, is what the honourable member for Lyne simply does not understand. The NBN is not a complete telecom network. It is a customer-access network. It connects an exchange, called a point of interconnect, to the customer's premises.
I ask every member and anyone listening to this speech to check their line speed when you get an opportunity and then seek to download something from iTunes or some other service of that kind. I would be very surprised if you do not find that your rate of download is a lot less than your line speed. The reason for that is that in a telecom network the rate at which data is transmitted, at which signals propagate over the network, depends on the slowest link and the rate of the server to which you are connected. You may have 50 megabits per second between your house and the local exchange, but how much congestion is there behind your exchange back into the core of the network? How much congestion is there on the international cable? What is the rate that the server you are connecting with in the United States or wherever is delivering data? If it is very popular, you may be getting a very low rate of download.
If the honourable member is trying to say that we need to have more capacity in the core of the network and the backbone of the internet then he is absolutely right, although it is a penetrating glimpse of the obvious. But it is not a problem that the NBN will address, because the NBN is a last-mile customer-access network. So, yes—the NBN, under our approach, will certainly eliminate the last-mile bottleneck, but the questions of congestion will then be further back in the network. It will depend on how much capacity your retail service provider has bought, back into the core of the network, and all of the factors I mentioned.
So we do need more fibre. We do need it to the furthest economical point. But it is a great pity that the member for Lyne, after all these years, is still so confused on this important issue.
It is with a great deal of pleasure that I speak on what is a very important matter for regional communities, and I commend the member for Lyne for putting up this matter. In particular, I am disappointed that the shadow minister is leaving the chamber, because I wanted to take up a number of the points that he just raised in his contribution—but he is, of course, a very important man! And he is leaving the chamber in the middle of the debate on his core policy area.
I turn to the base assumption behind what the shadow minister has just said. The coalition's plan is based on an assumption that no-one will ever want or need more than 25 megabits. That is exactly what their policy is based on, and that is the base assumption. If the shadow minister's policy is so great, and if it is the best possible high-speed broadband policy for this country, why is it that everybody—everybody who knows anything about high-speed broadband—who is involved in this sector says that their policy is a lemon? I am going to quote some of those people.
Mark Gregory from RMIT in an interview on Triple J's Hack said: 'What the coalition are offering us, the Australian public, is, in real terms, an improvement on the one megabit per second for $30 billion, but it is the greatest lemon in Australian history.' Rod Tucker of the University of Melbourne said:
On balance, I think Labor's policy is superior because it provides the best long-term strategy for delivering the kind of high-speed broadband that Australia is going to need in the future …
Guy Cranswick, the analyst with IBRS, said:
It's crazy to say that the average family only needs 'this much' because we don't know what the future holds and have already seen the more familiar the technology, the larger the files we use …
… quite frankly, 25Mbps in 10 years' time—that speed is going to look like what a [dial-up] modem looks like to us today. Too little, too slow, too backwards.
It is an apt description for the coalition's so-called high speed broadband policy.
What we hear about constantly from the coalition is the downloading of movies on iTunes. What we do not hear about are the other uses people are putting the internet to. People are uploading substantial files, and increasing the amount of data that they are uploading. I have an example from my own constituency. I have people who are working from home who are composers working internationally. They are uploading large files, of music that they have composed, and their speeds—at the moment they are on dial-up—are atrocious. They will give you the example that they can, from their small country town, start to upload their file, drive to Melbourne, log into their system in Melbourne, and find that this file has still not arrived—and they are an hour and a half to two hours down the road from Melbourne. So from the coalition we hear all about the downloading by families of a few movies from iTunes but they have failed to understand what uses people are putting and will put high-speed broadband to.
Since the Leader of the Opposition and the member for Wentworth were last in government, there have been a few changes. I do not know if anyone has noticed that. We have not just been frozen in time—much as the opposition would like to think that we are—with the world staying exactly the same. There has been an exponential change in the way people use high-speed broadband and the internet. Since the Leader of the Opposition and the member for Wentworth were last in government the amount of data downloaded by Australians over the internet has grown fifteenfold, and it is expected that that growth will continue exponentially. In the five years to 2012, broadband internet subscriptions alone doubled, to 11.6 million subscriptions. And, with the amount of information being stored online, the demand on broadband infrastructure is going to continue to grow. The Asia-Pacific, our region, will see more traffic generated than anywhere else in the world. If we are to deal with this growing demand, our nation needs appropriate infrastructure.
We heard about cloud based systems. I recognise the member for Lyne's contribution on this in particular. We are seeing more and more cloud based systems being used nationally and internationally that again will see greater need for high-speed broadband. Frankly, it is growth that the coalition's inadequate copper-to-the-home broadband plan is going to be absolutely incapable of dealing with. There is a reason that people have started up the website 'savethenbn'—because it is an incredibly important policy for this country. And it is about time the coalition realised that what they have put up is a dud. It is going to dud regional Australians. It is dudding people in metropolitan areas. We will see people left behind.
Whether it is broadband infrastructure or our roads, ports, rail or regional development, I am very proud that this government has delivered record investment in nation building. It is a government that has a very long-term plan for the country's future. The NBN is going to fundamentally change and improve the way Australia does business both domestically and internationally. It is infrastructure that will be especially important for Australia's regional communities.
The government has been trying to ensure that Australians have access to the best quality services and employment opportunities regardless of where they live. The NBN for regional communities is a game changer, not just in access to services but in the economic opportunities available to them. Whether you are in the most remote part of the country, whether you are in the regional or provincial cities such as where I live or whether you are in rural communities, it is a game changer for the economic opportunities. The NBN will improve the competitiveness of our regions, significantly improving regional Australia's businesses and our service delivery capacity.
Last month I visited a new business in the small town of Clunes in my own community run by somebody who has moved from Melbourne. There are a lot of tree-changers moving into that town. It is a town with just over 1,000 households. This business owner designed a very innovative gardening edging product which is a fantastic product. He has customers domestically, within our own region and nationally, and internationally. He trades exclusively online. He has no shopfront; he only trades online. The landscaping system that he has developed requires huge amounts of information transfer. It is being developed by an entrepreneur in a very small community, who we are delighted to have had move to a regional community and who will provide jobs and growth in that region. He has absolutely welcomed the National Broadband Network because he knows it allows him and his family to move to a country area but still to expand, develop and grow a business and an economic opportunity in the township of Clunes.
By contrast, the Leader of the Opposition wants to spend some $20 billion on a plan that will leave millions of Australians with no discernible difference in their broadband speeds—none whatsoever. Why would you do such a stupid thing? Indeed, the opposition voted against the National Broadband Network legislation in this place and in the other place no less than 16 times. What were you thinking? Those opposite have a plan that will see Australian taxpayers' money spent on rolling out broadband, with all of the costs but none of the benefits and certainly none of the benefits to regional Australians. Under Labor's plans, all homes and businesses will be able to access the NBN at no connection cost so that everyone can enjoy the benefits of fast broadband.
By contrast, under the policy that the coalition has put forward—and again the member for Wentworth did not talk about this—if it were to be implemented, regional Australians would be left behind with none of the opportunities presented by the NBN. Regional Australians would have no access to the modern infrastructure investment that will ensure our competitiveness in the future, not just domestically but internationally. For example, the coalition policy leaves families that are the last house on their block with slower speeds. If you are the last house on the block remaining on the copper wiring and you decide that you absolutely, because of both your needs and your employment opportunities, want to get more than that 25 megabits that is offered by them, and you need to do that—and we know that in the future that is going to be the case—you will need $5,000 for a connection. That is the reality we have under the coalition's plan.
The other issue that is incredibly important to regional communities, which was not talked about by the shadow minister, is uniform pricing. The coalition will abandon uniform pricing and force people outside of the cities to pay more for their internet. This means that people in Ballarat, my own community in regional Australia, will pay more for internet than those living in our capital cities. The absolute disgrace of this is in how the National Party have folded on this. Frankly, as a regional member I cannot understand it; it is a complete anathema to regional communities, and I condemn them for it. (Time expired)
I welcome the opportunity to speak on what is an important debate. As a member of the Joint Committee on the National Broadband Network, I have observed the progress of the project over some time, as has the member for Lyne, who is the chair of that committee. As a committee of the parliament, the role that we serve on that committee is very similar to that of a board of directors for a company. In our responsibility to report back to the parliament on the progress of the project, we have an obligation to report the facts as we see them. But we also have an obligation to examine and test the propositions that are put before us by NBN Co. and the shareholder ministers. That is our responsibility to the parliament: to ensure that we are getting a rate of return on the project as has been promised, to ensure that the funds are spent wisely, to ensure that the committee is able to report the truth of what is happening on the ground with regard to the NBN project.
It concerns me that the member for Lyne has been quoting the rate of return of seven per cent. I know that he has some justification for that; in the business plan it clearly states that the internal rate of return is seven per cent. But there are a number of problems with that calculation, because as we all know the internal rate of return is a rate that discounts future cash flows back to zero; that is the way the internal rate of return works. The problem here is that we are seeing significant and systemic problems with the project. We are seeing very significant delays to the project; we are seeing massive capital costs upfront. And they are necessarily massive, because that is the way big infrastructure projects work: you have big capital outlays in early years, and they may continue for a period of time, and the income comes at a later time. The problem we see with this project is that we are having massive cash outflows, but the project is being delayed and delayed and delayed. That has major repercussions for the rate of return of the project. If the rate of return of seven per cent as originally promised is to be achieved, what needs to occur is a massive acceleration of the project in later years—and we have seen no evidence of an acceleration in the rate so far; in fact we continue to see significant problems occurring at every turn.
We see significant problems being encountered with regard to the fixed line rollout—not necessarily at the technology end but certainly at the civil works end where you are dealing with the difficulties of operating in confined metropolitan and regional environments, where you have to work around the built environment, something engineers have been dealing with throughout civilisation, working with what is already there. With the wireless network we see very significant delays. In fact the wireless network will not achieve half of the forecast rate of rollout that has been put forward.
So we have seen NBN Co. making a range of forecasts—we had business plan No. 1; we had the revised business plan and substantially downward revisions in expectations with regard to the rollout—and what that means for the returns of the project is that, to keep and maintain that rate of return, you have to see a massive acceleration in the cash flows in later years. You have to see much later, much larger, increases in income to compensate for the slow rollout. I see no evidence of that being likely to occur. With regard to the risk of the project, when you are relying on very big increases in income in later years, there is a substantial increase in the risk. The costs going out now we know: they are certain; the cheques have been written for those amounts. But the revenues we are going to receive in years 7, 8, 9, 10, into the out-years, are unknown and they attract a higher risk premium, if you are looking at this as a particular investment decision. So there is real concern, and when the member for Lyne accepts the fact that there is a seven per cent return, I think he should question that point, because nothing has occurred to date to give us any confidence that the rate of return is going to achieve anything like seven per cent. And in fact it is likely to be less than half of that, the way this project is going where there is a delay at every turn. And that is going to be at massive cost to the taxpayer.
The next issue goes beyond the rate of return and that is the digital divide. What we are seeing through these delays to the project is that people in regional areas are being denied access to high-speed broadband. What the coalition's proposal does is attempt to get high-speed broadband to all Australians by 2016. I think that is an important objective. The increase in speeds from very slow dial-up speeds to a reasonable level of service is where you get from a national perspective the greatest productivity gains. The member for Wentworth noted this in his contribution and I am sure that the member for Lyne would agree.
Unfortunately what we have with NBN Co. is a rollout that is so slow that many people in regional areas are being denied access to high-speed broadband. So, rather than being a project that delivers for people in rural and regional areas, it is perversely starting to become a project that will deny people access to high-speed broadband. We can have very little reliance, we know, on the forecast for NBN because each forecast revision is less successful than the one before. We do not see NBN Co. advising this House: 'We have taken remedial action and as a result of that we have increased the speed of the rollout in areas A, B and C.' What we see is endless downward revisions in the rate of progress and an attempt to conceal that. That is of great concern; information that is vitally important for the parliament to know is being concealed. And that is a real concern for us.
Government members interjecting—
It is being concealed. We never get frank advice. We never get frank information on the progress of the rollout. We never get a report across the sites as to how the various sites are progressing. What problems are being incurred. What remedial actions are being taken to return to program. It is a real concern. It is a failure of reporting. It is a failure by the shareholder minister. It is a failure by the committee to hold NBN Co. to account for the problems with the rollout.
Really the coalition will address this because, if we have the honour of being elected on 14 September, we will address the issue of the digital divide directly by requiring NBN Co. to attend to those areas with the worst broadband services first. That is a major distinction. The Labor Party is quite happy to roll along, rolling out broadband wherever it is politically expedient, ignoring the needs of so many people in the bush. What we will be doing is: within 90 days of being elected we will have a report on the worst areas of broadband service and we will be directing NBN Co. not to duplicate services in Ballarat and not to duplicate services in metropolitan areas. We will be requiring them to address areas where there are problems with broadband—be they regional areas or metropolitan areas—not just addressing political problems for this Prime Minister and her beleaguered government. I think that is an important difference. Increasing the speeds where broadband must be most urgently improved will have the greatest productivity gains and the greatest enhancement in attending to the digital divide.
The coalition is focused not only on fixed line broadband. We are very mindful of the problems with regard to mobile. This government has dropped the ball on mobile communications. It has not spent one dollar on mobile communications since coming to office, and that is a major problem. If you have not noticed, I say to members opposite, since this project was mooted, we have had the release of the iPhone and the iPad—have you heard about the iPhone or the iPad? They have come along. There is a massive demand for mobile service as well as for increasing demand in fixed line service.
I would say to you: focus on the entire digital situation, do not just blindly follow along this very narrowly focused NBN project with a single technology. The coalition will be addressing the issue of mobile communications if we are elected to government. The coalition will be delivering broadband services where they are needed most. We will be doing that first. The coalition will guarantee acceptable speeds for broadband for all Australians by 2016, unlike what the current government is going to do which will see people in regional areas perhaps waiting decades for their service to be connected because this government cannot manage major projects. This government cannot bring projects in on budget. We have seen pink batts and school halls being repeated again and again.
Mr Deputy Speaker, through you, the member for Cowper, like all the Nationals in here, is an absolute sell-out when it comes to the issue of looking after communities by providing broadband and mobile infrastructure. Yet they are saying how terrible we are for what we are doing to change and transform the network, when they are prepared to see people in rural areas pay more under their plan.
They say they will get rid of uniform pricing. They say that it is okay to charge rural and regional areas more and dismantle uniform pricing. The member for Cowper, the member for Gippsland and all those Nationals just sit there. If they win office in September, don't you think the Liberals will call all the shots at the expense of National members? They will not care one jot about your regional—
Mr Tehan interjecting—
Don't you dare distract me, member for Wannon, by throwing NBA scores in the middle of my rant. But they know deep in their hearts that the Liberal Party will completely roll over them, especially when it comes to telecommunications.
The NBN is spearheading economic transformation in this country. It will promote what is going on right now and will accelerate it even further. What is happening now in the business world and in the broader community is people are moving from an analog world to a digital one. This has major ramifications for the way that we will operate as a country and the way our economy will transform itself. This will be off the back of these hair-thin fibres delivering data at 300,000 kilometres a second, hands down the best technology for getting data to the end point and helping our economy's future growth.
What is this going to do? It will free up the nation from capacity constraint that those opposite were unable to fix when they tried nearly 20 times but failed. As much as they will say to people that we do not do this, they tried 19 times and failed 19 times to fix broadband in this nation. It was par for the course for those opposite who, whenever it came to a capacity constraint and whenever the Reserve Bank said that their inability to deal with infrastructure in this country was creating a capacity constraint and holding back the economy, never did anything about it. We are in the process of investing to free people from the digital divide, and those people stuck in a dial-up era will be able to get superfast broadband.
I welcome the member for Lyne's comments, because he is absolutely right to say this is an investment in our economy. This will see, through an investment of just over $30 billion, the spread of economic benefit through a technology that is already delivering, according to Deloitte, $50 billion in economic value right now with $70 billion expected to be delivered in the future. It is going to see us change the way that we operate. That value can be seen in a range of areas. I am a member of the Joint Committee on the National Broadband Network, which the member for Lyne chairs. We have looked at the benefits of the NBN for healthcare, education, telework and all the things that have been done through the work of rolling out the NBN. Again, this is revolutionising our economy and helping us deliver a digital economy. On top of that, in the last few weeks we released our updated National Digital Economy Strategy. We updated the strategy that was released in May last year. For example, this will see us potentially becoming one of the world-leading digital economies by 2020.
So the economic value is undoubted, but what is the challenge? The big challenge is data growth. This is a point that was touched on by the member for Lyne. The statistics for where we are headed are amazing. CSC have quoted that they expect a 4,300 per cent increase in annual data generation by 2020. That is phenomenal. The drivers of this include a switch from analog to digital technologies and a rapid increase in data generation by individuals and corporations alike.
There is always a sneaky attempt by the coalition to undermine the rationale for the NBN. The member for Wentworth did it today at the dispatch box. He talked about Netflix, video and IPTV. Talking about the NBN and being able to meet the needs of people wanting to download Netflix, movies or iTunes is their way of undermining the project. This is their way of saying that that is all the NBN is about—downloading movies and films. You have CSC saying that there will be a 4,300 per cent increase in data growth between now and 2020. They say it is being driven by a changeover from analog to digital technology, by corporations changing the way they are doing business and by the way we are living our lives. Those opposite are always looking down their noses to make it seem like the NBN is only about delivering movies and IPTV. It is more than that.
The opposition have wrestled with this for quite some time. They started on the basis that they would destroy the NBN. They then said that optic fibre would be outdated. This is a ridiculous argument. They said that this technology would be outgrown because of the pace of new technology yet they never pointed to what that might be. Then some relented and said: 'It is because of wireless. It is the rollout of mobile broadband. It is the rollout of 4G networks.' Most people know—and you can experience this in the most simple way—that if I am watching the Wanderers at Parramatta Stadium with all the other fans I cannot get onto social media and tweet something. Just try to tweet something using a mobile network in a stadium that holds 25,000 people. What do you get? Congestion, slower speeds and the inability to download. That is exactly the principle that is applied when you try to have a lot of people using a wireless network at the same time. It is incapable of dealing with demand.
Now those opposite have given up on that and they have gone to fibre to the node. At the same time they have been suggesting that this would be a much more efficient way and it will bring in a much better rate of return. I wish they would just land on one rate of return. We say that it will deliver seven per cent. They have not been able to undermine that whatsoever. The member for Wentworth said at the dispatch box that it will deliver no rate of return and then the member for Cowper said it is going to deliver three per cent. They are just plucking figures like they are plucking technologies. They are just trying to find a way to undermine this project and do not really care if it relies on fact or not. They have wrapped themselves up in copper. They think this is the way of the future, but it is a technology only ever designed to deliver voice and has limited capacity in terms of the data delivery we are going to need in the future when there has been a 4,300 percentage point increase in data.
They say no-one else is doing this. What is Google doing in Utah? What is it doing in Kansas? Google is rolling out a network that it expects to make a profit off in all these parts of the world. Verizon are doing it in five states. We have all these other people out there doing this type of rollout. They have seen what we are doing right here in places like Gungahlin, Toowoomba, Bacchus Marsh, Hobart, Gosford, Townsville and my own neighbourhood of Blacktown, where we just turned on the NBN. This is seeing communities taken out of the dial-up world into one of superfast broadband.
The opposition are all here bagging it and trashing it, but when they get off the plane or get out of their car it is a different story. They become NBN cheerleaders. You have just witnessed them bagging it. What are the member for Mitchell, the member for Flynn, the member for Farrer, the member for Hume—the Deputy Speaker has also weighed in on this—the member for McPherson, the member for Stirling, the member for Swan and the member for Leichhardt saying? We have the member for McPherson saying that it was very disappointing that the NBN was not coming her way. The member for Farrer, Susan Ley, has said:
Broken Hill's residents are disappointed, as am I, but even more so the local business community which would have benefited from higher broadband speeds isn't getting the NBN.
There is another one. I am not going to quote the Deputy Speaker, but I will quote one of his colleagues. The member for Stirling said:
Without the NBN many families and businesses will have to continue to rely on slower connection speeds.
Michael Keenan is another NBN cheerleader. They bag it here, but when they get home they know what we know: this is a great technology— (Time expired)
I am very pleased to rise to speak in this matter of public importance debate. The premise of this is that internet traffic is growing at a very sharp rate and therefore we urgently need the current deep fibre infrastructure build. That is the premise of the matter before the House this afternoon. In using the term 'deep fibre' we presume the member for Lyne is referring to a network architecture in which fibre goes all the way to the premises rather than to an intermediate point, such as the node. As the member for Lyne has made clear, the premise draws upon the forecasts that are provided regularly by Cisco. They most recently said that world internet traffic is expected to reach 1.4 zettabytes by the end of 2017.
I want to make three points in the time available to me. The first is that this matter for discussion draws too long a bow from what is contained in the Cisco forecast. The second is that, even if you accept the logic of this, it is predicated upon the assumption that the current build is going to be delivered on time so as to achieve this magnificent increase in capacity by 2017, when all the evidence demonstrates that that is a hopelessly unrealistic expectation. Thirdly, I want to make the point that the coalition's proposal to build out a national broadband network using fibre to the node and, to around 20 per cent of premises, fibre to the premises will deliver the necessary increases more quickly and more cost effectively.
Let us start with the proposition that the matter of public importance draws too long a bow from the Cisco forecast. I note that Mr Boal, of Cisco, a local executive, is quoted as saying quite specifically:
… we're agnostic on the access technology but clearly significant increase in capacity is required—
So any direct connection between the Cisco forecast and fibre to the premises or fibre to the node or any other technology, any other network architecture, is drawing too long a bow.
More interestingly, what Cisco says is that the average broadband residential speed in Australia today is nine megabits per second and by 2017 it will be 39 megabits per second globally and therefore, by implication, a very serious problem, we need to get our skates on et cetera. The point, when you dig into the data, is that the world speed is assumed to grow very, very sharply. Today the world speed, according to Cisco, on average is 11.3 megabits per second, not much higher than Australia's, and it is to reach that global target of 39 megabits per second by 2017. So the implication that Australia is in some way significantly behind the rest of the world does not follow from the Cisco analysis. In fact, what the Cisco analysis shows is that this is a set of forecasts which assume a very sharp growth in traffic volumes predicated in turn on an assumption that the average bandwidth and the average speed available, not just in Australia but also around the world, is going to rise very sharply.
Despite the sense of looming crisis that the member for Lyne was keen to generate, if you look carefully at what Cisco says, one of its points is that the rate of growth of internet traffic is slowing. It notes that global internet traffic increased fourfold in the last five years and in the next five years it will increase threefold. No dispute: these are still spectacular rates of growth, but the actual point is that you are seeing a slight reduction in the rates of growth.
But let us talk specifically about methodologies used in the Cisco forecast. What the Cisco paper says is:
… assumptions are tied to fundamental enablers such as broadband speed and computing speed.
Indeed, if you dig into the detail their methodology is to start with a number of users that they assume will be in place by 2017, then a number of minutes of video that the average user is assumed to watch, and then an assumed number of kilobits per second, which it is assumed that watching video will require. The point is that the video that you will watch will depend upon the infrastructure that is available. If you plug into a forecast a set of assumptions about bandwidth available not just in Australia but also around the world, then that will generate a set of forecasts about traffic volumes. But the traffic volumes here are the dependent variable, so I am afraid the member for Lyne has got his logic the wrong way around. This MPI is flawed in logic. It is saying we will have a problem because the volumes will be too big for the pipes. In fact, the volumes depend upon the pipes. That is quite clear from looking at the methodology that Cisco used.
One of the assumptions behind the MPI is that an increase in usage will follow when the speed that is available increases. Another Cisco paper notes that there are significant qualifications on that assumption. It says:
… there is often a delay between the increase in speed and the increased usage, which can range from a few months to several years.
Now the other thing that is significant in what the member for Lyne had to say was that he again gave us this article of faith from supporters of NBN Co. that one of the key reasons that we apparently must have two-way fibre is because upload speeds are jumping and jumping and jumping and there will be a need for symmetrical services. Nobody contests that the upload proportion of data is growing. But what is very interesting is that the Cisco report says:
With the exception of short-form video and video calling, most forms of Internet video do not have a large upstream component.
As a result, traffic is not becoming more symmetric as many expected when user-generated content first became popular.
That is a really critical point because that goes to one of the premises that we are constantly told underpins the fibre-to-the-premises model of the current government—that is, traffic is becoming symmetrical and we are hopelessly in the Stone Age if we do not immediately introduce fibre everywhere to respond to that. What Cisco is saying is that is not right; the assumption that data is increasingly symmetrical is actually not proved out by the data. But, unfortunately, so often in this debate about broadband we hear wafty assumptions that are not backed up by the data.
Let us be clear: the coalition are strong supporters of an improved broadband infrastructure. We are strong believers in the social and economic benefits that follow. Personally, I have worked in policy and in the private sector in this area since the mid-90s. I am a passionate believer in broadband and I am a passionate opponent of the wasteful, ill-conceived, poorly constructed broadband plan that the present government is pursuing, and I am deeply grateful that the coalition is pursuing a rational, cost-effective plan that will deliver broadband more quickly to most Australians.
One of the problems with the current government's plan, and this is turning to the second point I wanted to make, is that the implementation is absolutely hopeless. Despite the broad and wafty aspirations that the member for Lyne is articulating, let us look at the numbers. The first corporate plan of NBN Co. said that by 30 June this year there would be 1.3 million premises passed by fibre. That was then wound back just a little bit, with the second corporate plan that came out midway through last year saying the number would be 341,000. That was then wound back again, earlier this year, when the company issued a revised forecast that said: 'Whoops! Sorry, we're not going to make either the first number of the second number. We are now going to make a third, much lower, number, which will be somewhere between 180,000 and 220,000—but don't hold us to the numbers because we're visionaries.' And then we have the actual number, as at May this year, which is about 104,000. Members of the House: when we put aside the wafty aspirations and look at the hard numbers on what is actually being delivered, this government's plan is not advancing Australia towards where we need to be—even if we accept the premise from the member for Lyne that we have a bandwidth crisis and we must immediately respond with pressing urgency.
Let me turn, thirdly and finally, to the merits of the coalition's plan which will deliver speeds to all Australians of between 25 and 100 megabits per second by 2016 and 50 and 100 megabits per second by 2019. The coalition's fibre-to-the-node proposal will be rolled out more quickly and with less variability and in a more reliable fashion than the chaotic mess we have seen from a Labor Party which jumped into an over-ambitious plan driven by political motivations without properly analysing what they were getting into. Is it any surprise that when you had a network that was contrived for political reasons the actual execution of it turned out to be completely woeful? So if our policy objective is to build a broadband network which bests supports our prospects of meeting the agreed growth of data that will occur by 2017, the coalition's broadband plan is far and away the best and most reliable way to do it.
Very briefly, I rise to speak. What we have basically heard today in this MPI debate is how the coalition's plan will rob 74 per cent of Australians of fibre to the home, and that their plan for copper to the home, which is what they are making claims about, will actually mean that people will get slow speeds and they will not be brought into the 21st century. That is why what the member for Lyne is saying is exactly right when he says that fibre to the home will actually mean a better future for all Australians no matter where they live.