Turnbull's NBN French KISS is right, but so wrong
Summary:Malcolm Turnbull has been caught
investing in a telco that's rolling out fibre to the home, despite
opposing such a move in Australia.
investing in a telco that's rolling out fibre to the home, despite
opposing such a move in Australia.
The usual intellectual sparring between Malcolm
Turnbull and Australia's technology media took on a different tone this
week, after the shadow spokesman on communications told The Australian Financial Review
that "too many [tech journalists] ... have become zealots" in what he
sees as one-sided promotion of the National Broadband Network (NBN).
The confusion that Turnbull and like-minded Liberal pollies have
perpetuated around this debate has been truly mind-boggling. So if that the Tony Abbott-led Coalition has so far failed to
elucidate a realistic alternative to Labor's fibre-based NBN makes me a
zealot, well, slap on those cuffs and take me away.
also claimed that the technology media should look at "what is going on
around the world" with relation to next-generation broadband roll-outs.
I know he meant that we are supposed to look at the raging successes of
fibre to the node (FttN) in places like the UK — a roll-out that
Turnbull conceded cannot be replicated here — but he inadvertently
focused our attention on a completely different project after it was
revealed (by rival Stephen Conroy, of course) that he had bought personal shares in France Telecom.
This investment — detailed right there in documents lodged with parliament's Register of Members' Interests
— effectively meant that Turnbull, a vocal proponent of FttN, had
chosen to invest his own money not in an overseas FttN roll-out, but in a
dominant French telco that is spending over €2 billion to put itself at
the vanguard of fibre-to-the-premises (FttP) roll-outs.
That's right; France Telecom has been rolling out FttP since 2007 in
major French cities, and is aiming to have 10 million homes online with
100Mbps fibre by 2015. By 2020 — two years before our own NBN roll-out
will be complete — France Telecom expects to have 15 million homes
connected. This represents just over 60 per cent of the approximately 23
million homes in France.
When I asked Turnbull about his investment — and whether it signifies
that he believes an FttP roll-out promises better commercial returns
than FttN — he replied that the France Telecom roll-out is "pretty modest", and that he "thought the shares were good value".
Modest? In the immortal words of Inigo Montoya: "You keep using that word. I do not think it means what you think it means."
Just so I get this straight: France's incumbent telco is investing
heavily to push fibre out to 15 million premises by the end of this
decade, and Turnbull calls it a "modest roll-out" and "good value". Our
own NBN Co is investing heavily to push fibre out to 12.2 million
premises in around the same timeframe, and he has variously called it " ", " " and loads of other adjectives that don't merit repeating here.
Turnbull has even called the NBN an
historical leanings in this regard. Turnbull's position on socialism is
now clear: Australian socialism is evil, but French socialism is a great
investment., which is laugh-out-loud ridiculous, given France's
Saving graceIt's not all bad for Turnbull, however; he does have a point, and
it's a good one — if you gloss over some devil-is-in-the-detail
showstoppers that make it irrelevant in Australia.
The thing about France Telecom's FttP roll-out is that it's not only
based on running fibre all the way to your house or apartment; in many
cases, the roll-out will bring fibre to the building and span the last
few metres with existing cable infrastructure — long ago installed in a
significant percentage of French houses and apartments.
France Telecom is also reselling access to that fibre to partners like French ISPs Free, SFR and Bouygues Telecom, which are free to install their own last-mile fibre technology (such as G-PON) or piggyback on existing cable.
The operating parameters of the French NBN are so far removed from our own that comparisons are meaningless.From an infrastructure point of view, it's an entirely sane approach,
and has been feted by French regulator ARCEP as a way of ensuring
competitive access to customers; ARCEP's latest annual report notes that
39 per cent of France Telecom's 1.475 million FttH premises are
currently "passed by at least two operators".
Here's another interesting point: to prevent lock-in, ARCEP mandates a
three-month waiting period between when fibre is installed to a
particular premise and when the operator can actually market that
service. This is to ensure that competitors have the opportunity to
install their own last-metre infrastructure, so that customers have as
many choices as possible when it comes time to switch on the actual
This is all good and well, and it supports Turnbull's contention
that the France Telecom model is "utterly unlike Conrovian Australia —
no universal FTTP, and facilities-based competition encouraged, not
Yet, here is where Turnbull's comparisons with France fall flat on
their proverbials. If you dig a bit deeper, you find that France
Telecom's contract with Free will only see that operator service around
1300 municipalities, with 5 million homes, by 2020.
In other words, the "facilities-based competition" that Turnbull so
heartily applauds is actually allowing competitive operators to cherry
pick the most profitable areas of France's broadband population, and
ignore the rest — presumably because the areas are too expensive to
Indeed, figures from ARCEP's very interesting annual report (PDF)
confirm that 88.2 per cent of FttP in 2011 and 2010 covered French
municipalities "located in very high-density areas". If you look at a
heat map of France's current FttP roll-out, it includes one dense spot
in Paris, a large area around second city Lyon and a few spots around
For the rest of France's population, broadband appears to be the same
as it ever was — whatever it ever was. ARCEP figures suggest that only
11.8 per cent of FttH and 29 per cent of cable services reach homes
outside of France's most heavily populated areas. Everyone else,
presumably, gets ADSL. Or dial-up. Or sits watching flames licking in
This is why Turnbull's statements about France are both right and
wrong. They are right because France's FttP strategy will bring
facilities competition to residents in the country's most heavily
populated areas, which are already well serviced with cable
If Turnbull wants to be takenBut they are wrong, because the operating parameters of the French
seriously by our media "zealots", he must stop arguing speeds and feeds,
and kick off a new wave of competition in an industry that has no
interest in it.
NBN are so far removed from our own that comparisons are meaningless.
Australia experimented with facilities-based competition in the 1990s,
and it got us two now-stranded HFC networks running down the same
street, with no compulsion for Telstra or Optus to allow any other
operator to share their services.
Were a company like iiNet allowed to lease Optus HFC to a customer's
premises at competitive rates, and then install its own head-end
connection, this sort of facilities-based competition might work here.
But the Howard government's complete failure to mandate any kind of
access provisions on HFC operators preserved them as outdated monuments
to 1990s-era competition optimism.
Fixing that disaster is a major, and often glossed-over, goal of
Labor's NBN. If Turnbull wants to be taken seriously by our media
"zealots", he must stop arguing speeds and feeds, and explain how he
will implement regulatory change to force the opening of closed HFC
networks, open access to Telstra copper and fibre, effect swift and
effective separation of Telstra and combat private-sector malaise to
kick off a new wave of competitive infrastructure investment in an
industry that has almost no interest in it.
In the absence of such substantive policy declarations, Turnbull's
rhetoric about speeds, feeds, foreign roll-outs and promises of cheaper
broadband are utterly and totally irrelevant to the current discussion.
Another distinctive feature of France's roll-out is, by my reading,
what appears to be a complete lack of retail competition. I am happy to
be corrected here if my research has missed some fundamental point, but I
don't see any mention of pure retail competition in France.
Little wonder why; the market is extraordinarily top heavy. If Wikipedia figures are to be believed,
France Telecom, Free and SFR account for 90 per cent of internet
subscribers. Those are the same operators that are deploying
infrastructure that all but eliminates the possibility of French
customers accessing internet plans from small, niche, specialist or
Turnbull has called the NBN anAustralia's NBN model is totally different, because NBN Co has taken
artefact of Julia Gillard's "socialist paradise", which is
laugh-out-loud ridiculous, given France's historical leanings.
lessons from the past failure of facilities-based competition and
shifted competition to the retail sector. Mandating a consistent price
for all serviced premises not only ensures that robust retail
competition is available to sparsely populated areas where Telstra
copper is woeful and HFC unavailable, but it also fuels cross-subsidies
that ensure the NBN can reach all Australians, rather than only those
whose location makes them commercially attractive to French operators
that return profits to Turnbull's pockets.
Labor's NBN may indeed be a socialist paradise — but it's the only
rational, actionable model for next-generation broadband that's
available to us without massive fundamental market restructuring that
Turnbull has so far yet to outline. And as long as he refuses to detail
how he would whip Australia's infrastructure into an open, workable
shape, Turnbull's French dalliance is just another inconsistency in a
policy platform riddled with them.
What do you think? Is France doing FttP better than Australia?
Have I missed any important facets of France's telecoms market? Is
Turnbull right to crow about the merits of overseas models, or do they
simply not apply here? And what would Turnbull have to do to get his
policy taken more seriously?