Bill Morrow on structural separation, political independence and Australia’s answer to the broadband conundrum
This is Part II of an exclusive interview with Bill Morrow, CEO of Australia’s National Broadband Network (NBN Co), and due to address next week’s Broadband World Forum, at EXCEL, London.In the first installment (see - How to get the digital party started: build it and they’ll come) Bill spoke about the conditions in Australia and why a massive government push was deemed necessary to bring the country up to speed. This time we talk about the history, the politics, the technical choices and how much of the NBN experience might be applied in other environments.
A yawning lack of telecoms infrastructure competition operating across a challenging geography had, by the first decade of the 21st century, left Australia badly placed in the global broadband stakes.
What then emerged in Australia was a consensus that a concerted national effort was required to ensure that all its citizens and businesses got access to broadband.
Clearly, leaving the necessary network transformation to telecoms operators and market forces alone hadn’t done the trick. Enter the idea of a national broadband network (NBN) which would tackle what was perceived to be the expensive infrastructure bottleneck using a mix of fibre, radio and satellite (where fibre was impractical).
The NBN was to provide wholesale broadband at a single price, country-wide. Service providers would run retail services over the top.
Except it wasn’t
For once the phrase ‘mired in controversy’ was appropriate. It became apparent four or five years ago that, as with any large-scale engineering project, delays and cost overruns were going to kick in, opening up the then Labor government’s flank to political attack on the ‘wasting money through mismanagement’ front.
As a result, the classic broadband question, being played out the world over, was fought at a national political level in Australia. That’s the one which asks: do you spend huge amounts of money to run fibre everywhere for a future-proof solution, or do you run fibre out close to the premise and use copper for the final drop. The second course may result in slower data speeds (although technology improvement will likely see these raised) but it will cost much less and, best of all, provide viable broadband for most of the population much sooner.
In the 2013 federal election the Labor (or fibre) party was ousted by the Liberal/National coalition (or copper) party which came up with a new plan under the then relevant minister (now Prime Minister) Malcolm Turnbull with a technology mix involving Fibre-to-the-Node (FTTN) and Fibre-to-the-Building (FTTB) architectures along with existing cable Hybrid Fibre Coaxial (HFC) networks satellite and fixed LTE.
That is the approach that Bill Morrow, NBN’s CEO, is currently implementing. He can probably make a good case for whatever hand he is dealt by Australia’s politicians because as a ‘recovering engineer’ pragmatism sits comfortably on his shoulders. The Turnbull technology mix, for instance, is clearly a ball that he can pick up and run with.
“The issue here is that if we can get the demand across the country to be as high as possible," he says, "then you’re going to get the digital supply emerging and this is where entrepreneurialism comes in and this is where innovation will start to be developed.
"So you want that as quick as you can get it, right? If you can say fibre-to-the-node can deliver up to 50Mbit/s for most everybody, isn’t that enough for the next 10 years to get this thing going and then, if there is more demand, then you just push fibre further down the street using the company’s profits rather than adding in more taxpayer money?” I think you can argue both cases but one of them is more prudent than the other and also, most important - and this is me talking for the people of Australia - if you ask them what they want they say they just want broadband now!”
But the story may not end there. This week the Labor opposition has made known that it’s still wedded to its fibre-rich approach and intends to make political capital out of it all the way to the next election. According to the Sydney Morning Herald, Labor spokesperson Jason Clare says that Labor will ramp up the number of FTTH homes if it wins the next federal election: "Fibre to the node will be gone. It's not a question of if this will happen, it's when it will happen and how it will be done. If you vote for the Labor Party at the next election you will be voting for more fibre." Clearly the technology fight continues.
Given the kerfuffle, how easy is it to make an organisation like the NBN gell and keep morale high when it’s in the public spotlight and often under attack?
You have give people a clear direction and a purpose for why we’re here, he points out, and that’s mostly about closing the various digital divides - city/bush, rich/poor,old/young and so on. “When we get success it builds and the political jousting becomes a just something minor. If people know we’re doing a good job it doesn’t matter."
“But really, I look at this as though I’m working in a joint venture - they’re complex and I’ve worked in a couple of them - and it’s my job to keep everybody focused on the delivery.”
How different is it to manage a company with the political dimension that the NBN has?
"Well the political aspect is clearly different and there’s a natural tension that comes back to me and my management team. Fortunately there are guidelines (in Australia) that stop one political party from using government investment to their advantage through the ‘Government business enterprise guidelines’ That allows me to toe the line straight down the middle. So even if Malcolm Turnbull, the current prime minister, wanted to push me down a certain way in the current party’s political favour, I’m actually restricted from doing that."
What can the rest of the world take from the Australian experience?
“You have to have competition and entrepreneurialism just to start with, but that can’t do everything it needs to from the social point of view. That alone won’t create that greater ecosystem. So countries need to think about how they supplement that to get the non-commercial people involved When you have the entire nation involved you get the secondary and tertiary benefits that kick in - economic, social benefits, social welfare and so on.
"You can’t, as Australia did, rely on just one company. And you can’t rely either on the government stepping in and saying ‘I’ll subsidise everybody else.”
So is structural separation a good idea for general application since it ostensively gets rid of the natural monopoly problem that wireline has while enabling a plethora of companies to operate at the retail level? A guarded ‘yes’ to that, but, Bill points out, “you still have the problem that the wholesaler (the NBN equivalent) is still somewhat of a monopoly and that ultimately has to be dealt with and the instrument today is the regulatory framework. That’s OK as an interim, but ultimately what you want is for there to be competition at the infrastructure level and that’s much harder to do.”
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