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Government praises NBN rollout report, Labor deems it "tainted"

Malcolm Turnbull says the cost-benefit analysis of the NBN shows the Government is on the right track, but the opposition says it endorses a "second-rate" rollout plan.

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NBN Co

The Federal Government has welcomed a cost-benefit analysis on the ongoing rollout of the country's National Broadband Network, saying Australia is $16 billion better off under the Coalition's Multi-Technology Mix scenario.

However, both the report and the Government's approach to the NBN rollout have come under fire from the opposition's communications spokesperson, who says the Government's plan is "second rate"

The report, commissioned by the Government, follows a strategic review released on the NBN in December 2013 and the confirmation in April this year by Communications Minister Malcolm Turnbull that the Government and NBN Co would use a mix of technologies to deliver the NBN. This includes a combination of fibre to the node, fibre to the premises, hybrid fibre coaxial, and fixed wireless and satellite services for regional areas.

In their findings, the authors of the report vindicated this move, finding that the Government's mixed technology approach will bring the NBN to Australians more quickly and at a lower cost than the previous Labor Government's FTTP rollout. The report found the Government's mixed technology approach will deliver almost $18 billion in net benefits to Australia, compared to just under $2 billion with FTTP.

These two scenarios are compared to a test case that examines the financial implications of no further rollout of the NBN, purely for illustrative purposes, as well as a scenario that looks at the cost and benefits of an unsubsidised rollout.

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A Government-commissioned cost-benefit analysis has found that Australia will see more benefit with the Coalition's rollout plan. Screen shot by Claire Reilly

Speaking to the ABC, Malcolm Turnbull heralded the findings of the report.

It certainly confirms the decision by the Government to proceed with a multi-technology mix and not persevere with Labor's plan to take fibre into 93 percent of premises. On a...purely financial basis, that saves over $30 billion.

And when you do the cost-benefit analysis...which takes into account all of the social benefits to the whole society -- e-health, education the works -- even on that basis...Australians are $16 billion better off by taking the approach we're taking.

While the above chart shows that the bottom line is improved when the cost of fixed wireless and satellite services are taken out of the mix, Turnbull defended the move to provide broadband connectivity to the whole of Australia -- a move that brings with it a $5 billion government subsidy for rollout in regional and rural areas.

"The nation can afford it...but it's undoubtedly true: the cost of providing telecommunications to regional and rural areas is dramatically higher than people's capacity or willingness to pay," he said.

"[An entirely unsubsidised rollout] would result in people in those areas having very poor telecommunications and that's not acceptable in Australia...Broadband is a very, very fundamental need for people living in a modern society."

However, despite the findings that Australia is better off under the Coalition's MTM rollout (rather than Labor's FTTP plan), Opposition Communications Spokesperson Jason Clare slammed the report, telling the ABC it was written by "some of the most vociferous critics of the NBN" and was biased towards the Government's agenda.

"Surprise surprise -- Malcolm Turnbull's got some of his former staff and some of his former advisors to write a report for him and the report says he's right...It's tainted by their involvement."

Clare said the financial modelling of any cost-benefit analysis depends on the "assumptions" that go into it, including the time taken to build the NBN, expected revenue and demand for broadband speeds.

This report says that they expect in a decade that only 5 percent of Australia will want 45Mbps or more.

What we've found is we've already got 28 percent of people that are on the NBN that are ordering 50Mbps or 100Mbps. Now a couple of years ago, Malcolm Turnbull said 3mbps is going to be okay. Last year Tony Abbott said 25 is okay. And I think this is the problem.

When you build a network like this, you need to make sure that you build for today and for tomorrow. And what we are getting from this Government is a second-rate network based on the old 20th-century copper network.

After locking in a mixed technology approach in April, the first Australian users of FTTN technology were connected last week, with NBN Co CEO Bill Morrow saying that "real customer experiences" were proving that the existing copper network was "capable of playing a vital role" in the NBN rollout.