THE HARD LESSONS of the 2009 defeat were not lost on Malcolm Turnbull, who proceeded to reinvent himself over the next few years. It was the full makeover: physical and emotional. Turnbull had always been heavy-set but now went on a crash diet, fasting for two weeks, consuming nothing but smelly herbal potions concocted by Chinese doctor Shuquan Liu, who runs his business out of a nondescript shop in Bondi Junction and charges all kinds of eastern suburbs A-listers a small fortune for his programs.1 The detox is tough—Bruce Gyngell described it as the hardest thing he’s ever done—but seems to work: Turnbull lost 13 kilograms and has kept it off. Lucy did it too and lost more than 10 kilos. Weight loss is not the only aim—the program gives you energy, and Turnbull survives on five hours’ sleep a night; more profound was Turnbull’s psychological transformation. Lucy now described her husband as ‘zen’2—a description that would never have fitted Turnbull before—and close friends and family agreed, he had calmed down a lot.
Uncomfortably for him, Turnbull was sidelined in the run-up to the August 2010 federal election. His talents were missed: the broadband policy in particular was botched. Drawn up by rookie backbencher Paul Fletcher, a former Optus executive who knew the industry backwards, it was uninspiring compared with the Labor government’s bold plan for an all-new national broadband network, and was badly sold by the opposition’s shadow communications minister, Tony Smith.3 A disinterested Liberal leader in the form of Tony Abbott didn’t help—he famously joked during the campaign: ‘I’m not Bill Gates here, and I don’t claim to be any kind of tech-head.’4
Broadband actually mattered in the dead-heat election of 2010. Former federal minister Peter Reith, who did the post-mortem for the party, reckoned it was one of two key issues that counted against the Coalition in the electorate, alongside industrial relations. Crucially, when independent country MP Tony Windsor chose to throw his lot in with Labor, helping it to form a minority government, one of the reasons he gave for his decision was the party’s national broadband network—the NBN—and the impact it would have in the bush.
Abbott kept Turnbull off the frontbench throughout 2010, promising him a senior role after the election. Reporters, used to thinking of Turnbull as part of the A-team, occasionally made the mistake of calling him a frontbencher even when he had no portfolio. At least Turnbull won Wentworth handsomely this time. The Labor vote plummeted in the wake of the coup that removed Kevin Rudd and installed Julia Gillard as prime minister, turning Wentworth back into a safe seat with a swing to the Liberals of almost 10 per cent.
After it was clear the Coalition was staying in opposition, Abbott made Turnbull the shadow communications minister, declaring he had ‘the technical expertise and business experience to entirely demolish the government on this issue’. Turnbull’s brief was not to demolish the NBN itself, although many people saw it that way, particularly as Abbott thought the whole project was ‘wacko’ and had been gunning for it from the time he took over the leadership. Ahead of the election, Abbott had promised the NBN would be the ‘first thing to go’ if he won.5
Turnbull’s appointment was a stroke of Abbott genius: he was seen to be doing the right thing, but there was a political sting. Turnbull was uniquely qualified for the portfolio, having worked for the Packer, Murdoch and Fairfax media empires at various points in his career, along with his illustrious background as an internet pioneer with OzEmail and Webcentral. (There was also Turnbull’s years on the board of Reach, a disastrous deep-sea cabling joint venture between Telstra and Hong Kong billionaire Richard Li’s PCCW, which ended with billion-dollar writedowns.)
Australia has probably never had a more experienced, better-connected person in the portfolio. What’s more, although you would never describe him as a nerd, Turnbull just loves technology. He is a chronic early adopter: from lugging a big old laptop down to Tassie in his Spycatcher days, to whipping out a Palm Pilot in the nineties, to marrying his iPad, conspiring on secret-squirrel messaging app Wickr, or staring into his iWatch on the floor of the House. The appointment was politically smart for Abbott because it quarantined his old rival: the NBN represented government largesse, and Turnbull had the unpopular task of taking something away from the voters. Much later, when in government, Turnbull would be blamed for slow internet speeds from one end of the country to the other. He would stew in the portfolio for exactly five years.
Labor’s NBN had been announced by then prime minister Kevin Rudd and communications minister Stephen Conroy on 7 April 2009, while the government was still in stimulus-spending mode in the wake of the global financial crisis, and Turnbull was still opposition leader. It was a game changer. The federal government would spend $43 billion connecting 93 per cent of Australian homes with super-fast fibre-optic cable, ‘future-proofing’ the country’s telecommunications infrastructure. As Tony Windsor said when he announced that he would support Labor: ‘Do it once, do it right, do it with fibre.’6 The NBN would also fix, once and for all, the structural problem that had bedevilled Australia’s telecommunications industry since the creation of Telstra in 1992: the incumbent telco was too dominant, sitting lazily on its fixed-line monopoly, and had starved the country of new infrastructure, stranding Australia with uncompetitive internet speeds. Telstra, which had been put under the control of former US West boss Sol Trujillo and his supremely arrogant troika, who all treated the government with contempt, would not invest in new infrastructure it would have to share with all comers under an open access regime overseen by the competition regulator. Telstra wanted an exemption, which the Howard government rightly refused, leading to a stand-off. Conroy’s NBN would create a new, majority-publicly-owned corporation to own and operate the physical network infrastructure—a natural monopoly if ever there was one—as a wholesale business and then make it available to internet retailers on equal terms, creating a level playing field. Once the NBN was built, it could be fully or partly privatised to pension funds and other long-term investors hungry for steady income streams. As the largest player by far, Telstra would still be well placed to compete, but it would no longer have such an unfair advantage.
If the idea for the NBN was inspiring, the process used to arrive at it was haphazard. The broadband policy the ALP had taken to the 2007 federal election was based on Telstra’s own stillborn 2005 proposal to the Howard government and assumed use of fibre to the node (FTTN) technology, which brought fibre to powered street cabinets roughly the size of a fridge, and relied on existing copper wire to make the final connection to the home. But the call for tenders explicitly left open the possibility of fibre to the premises (FTTP), where the fibre would run all the way to the end user. In 2008, Labor had tendered for private partners to develop its initial version of the NBN and had received six bids, including a derisory proposal from Telstra, which was submitted at the last minute and failed to address one of the key selection criteria, a plan for small business. Labor’s expert panel rejected Telstra’s bid, but it also found the other proposals were undeveloped and, in a bit of advice that surprised Conroy, that rolling out a FTTN network could be a waste of money because much of the equipment would not be needed if there was a decision to later build a FTTP network—there was no ‘efficient-upgrade path’ from one to the other.7 The expert panel in turn relied on advice from the Australian Competition and Consumer Commission, that ‘a large proportion of the capital costs of fibre to the node would be effectively obsolete if the government, over time, moved to the superior form of delivery of fibre to the premises’.8 The government should consider leapfrogging straight to FTTP, the panel found, avoiding the need to pay compensation to Telstra, estimated at up to $20 billion, to make use of the ‘last mile’ of copper to connect homes to the FTTN network.
This bombshell recommendation was given to Conroy on 20 January. He needed to discuss it with the prime minister, but Rudd was in crisis mode and bypassing Cabinet, running the country through the four-man Strategic Priorities and Budget Committee that did not include Conroy. The only way Conroy could get face-time with Rudd was to jump onto the PM’s VIP jet for a hop from Sydney to Melbourne. According to legend, the two men sketched out the new FTTP network on the back of a napkin, mid-flight. The trip was too short to complete the discussion, so the next morning Conroy joined Rudd on another RAAF plane, up to Brisbane. By the time he got there, Conroy had the PM’s in-principle support for the guts of an NBN plan that could be worked up and taken to Cabinet.9 It was announced three months later, blindsiding Telstra.
Turnbull was opposition leader at this point and the NBN offended his small-government instincts. When it was unveiled, Turnbull said Rudd was in ‘la la land’10 and the network would be a white elephant: ‘The government has not provided any evidence of the economic viability of this project. What return will be needed for the $43 billion investment? All Mr Rudd has said is that it must be commercial.’11 Within a week, Turnbull was calling it ‘RuddNet’ and calculating that if half of all households took up the service, they would have to each pay up to $200 a month for the NBN to make a return on investment. Turnbull continued to attack the government on the absence of a business case for such a massive investment: How many customers did they expect? How much did they think people would pay? Where had the cost estimate come from, anyway? Had it been plucked from the air? Why should the new NBN be taken at face value when the first tender had collapsed in a farce? All good questions. Underlying Turnbull’s NBN critique was the same philosophical difference that had informed his critique of all Rudd’s spending during the global financial crisis: ‘It is a story too good to be true, told by a prime minister with no experience of business, happy to denounce the corporate world but not prepared to abide by the rules that apply to mere mortals.’12 Governments had spent the past thirty years getting out of operating businesses, and now Labor was creating a brand new public monopoly that would only be made viable by regulating to kill off private competition. Turnbull seemed to think the whole thing was a Soviet-era throwback.13
There was another problem for the Coalition. The NBN was a threat to Telstra, many of whose 1.4 million shareholders were Coalition supporters. Nick Minchin, Turnbull’s communications spokesman and formerly finance minister when the third and final tranche of Telstra shares was sold, felt this keenly. The government wanted Telstra to agree to separate its wholesale and retail arms voluntarily, and it took a carrot-and-stick approach. The carrot was payments for an orderly migration of Telstra’s voice and broadband traffic over to the new NBN. The stick was a threat to block Telstra from bidding for new wireless spectrum, which was absolutely crucial to its ability to offer 4G services over its mobile network, the source of billions in revenue and the telco’s real engine of profit growth. The government also threatened to force Telstra to sell off its hybrid fibre-coaxial (HFC) cable network (the pay TV cables) and its 50 per cent share of Foxtel. Telstra’s new conciliatory chief, David Thodey, supported the government’s NBN vision but complained loudly about the threats. Turnbull and Minchin did not fundamentally object to a structural separation of Telstra, but they did argue the government was forcing Telstra to negotiate with a gun to its head.
In reality, there was a complicated arm-wrestle going on between the government and Telstra over the NBN, and the opposition was a bit player. The government needed Telstra: the $43 billion construction cost could be brought down considerably if the NBN got access to Telstra’s extensive underground network of pits and ducts, otherwise the fibre-optic cable would need to be strung aerially. Telstra needed the government: this was a last chance to prise some value out of an ageing copper network worth somewhere between $8 billion and $33 billion, according to sensitive valuations tabled unwittingly in parliament by Conroy, but which was deteriorating and faced with rising maintenance costs. It was ‘five minutes to midnight’ for copper, Telstra executives admitted privately. By June 2010, NBN Co and Telstra had signed an $11 billion in-principle deal under which the telco would be paid progressively to disconnect customers from its copper and HFC networks, and for access to its ducts so the new fibre could be rolled out. It took more than a year to finalise the deal with NBN, agree on a 300-page structural separation with the ACCC, and put the whole proposition to Telstra shareholders for a vote, which passed with unanimous support in October 2011. The delay with the deal put the whole NBN project back by nine months.
When Turnbull was given the communications portfolio in September 2010, he threw himself into it. There was no argument about the goal of providing Australia with faster internet. ‘I am passionately in favour of broadband. I am a notorious internet junkie, and I love it,’ he said.14 He was also quick to clarify that the Coalition would not be destroying the NBN, ripping cables out of the ground:
I’m not interested in demolishing the NBN. I’m interested in exposing the hollowness of the government’s justification for the NBN, and that, I suppose, will demolish their shabby and empty argument. But as far as the infrastructure is concerned, whatever has been built, if we come into government, we will obviously have to make the very best possible use of it.15
For all his industry experience, some of Turnbull’s early steps were amateurish. At first he appeared to line up with his leader, believing that the whole world was going wireless and this could make FTTP redundant. As Turnbull wrote in one op-ed: ‘Wireless broadband has been growing at nearly ten times the rate of fixed-line broadband, whose penetration has remained fairly static. The convenience and flexibility of wireless is compelling and likely to become more so. It will be a fierce competitor with the new network.’16 The truth, however, was that the explosive growth in wireless was dependent on fixed-line technology, and price-sensitive consumers were going to be careful to avoid heavy use of data over 4G mobile networks that would be far more expensive, per megabyte.
Another early mistake was to pooh-pooh the need for the two satellites Conroy planned to launch in 2015 to deliver fast broadband to about 200 000 homes in the most remote communities, where fixed-line broadband or fixed wireless were uneconomic. Turnbull argued there was enough spare satellite capacity that could be leased at far less cost than the launch of two dedicated NBN satellites, which was another extravagant solution. ‘Don’t buy yourself a Camry, a Falcon—buy yourself a Rolls-Royce, a Bentley. Nothing but the best will do, nothing but the most expensive will do,’ he complained.17 Turnbull backflipped in government, realising the depth of frustration with torturously slow internet in the outback, and that demand was tracking much higher than expected—he even admitted that a third or fourth satellite might need to be launched.18
As he continued to hammer the government over the lack of a business plan and a thorough cost–benefit analysis of the NBN, Turnbull started to make inroads against Conroy, one of Victorian Labor’s right-wing factional warriors and a favourite whipping boy for News Ltd’s papers—particularly after Conroy intervened to stop Sky News winning a competitive tender to provide the government’s Australia Network overseas news service, and after the Finkelstein inquiry he established in the wake of the UK phone-hacking scandal proposed a new media licensing framework that was immediately denounced as an attack on press freedom. Many observers speculated that there was an agenda underlying coverage of the NBN in the Murdoch press: a perception that faster broadband was a threat to Foxtel, owned half-half by News Ltd and Telstra. The main theory, articulated by conservative columnist Paul Sheehan, was that News hated the NBN because it would enable video-streaming services like Netflix, competing with Foxtel. In a blog post that has since been removed, Turnbull claimed it was a ‘conspiracy theory’ that made no sense because the Coalition’s NBN would deliver fast-enough broadband sooner, bringing forward the day of reckoning for Foxtel.19 Another theory was that retaining Foxtel’s HFC network for use in the Coalition’s mixed NBN would suit News.20 Kim Williams, former Foxtel and News Ltd chief executive—who is adamantly opposed to the NBN on public policy grounds—says the whole conspiracy theory was misguided:
There was no written agenda, no call from on high. The NBN is good for Foxtel. Always was. You can’t stop people coming in and competing. Foxtel has never once advocated a protectionist policy position against competitors, ever. They have, properly in my view, argued that Netflix should pay GST for transactions that are done within Australia for Australian consumers, and that’s an issue of commonsense competitive balance.
In fact, when the NBN was going ahead lickety-split, and was run by Mike Quigley, when I was at Foxtel, I set up a regular session between NBN and Foxtel to have transparent understanding of network build, of interconnect, of all of the application that Foxtel could make towards the NBN, in a spirit of being an engaged customer. When I went to News, I rang Mike and I said, ‘Mike, you keep on complaining about media coverage of the NBN, why don’t we get everybody in the same room, and you do a pitch? Talk about the NBN.’ … I set up a session and I invited nine or ten editors to sit round the table and there were about seven or eight NBN people and you could have cut the air with a knife. I valiantly said, ‘Right, so we’re all here to talk’, and Mike welcomed that, and he’s a decent bloke, and he sang for his supper! I said, ‘Right, you should all swap notes and swap cards’, trying to get it back into separation between policy and NBN Co. It’s on the record that I wasn’t very successful in changing minds.21
Rupert Murdoch himself did not provide much clarity as when, in August 2013, he responded to Sheehan’s article with a Delphic tweet: ‘Oz politics! We all like ideal of NBN, especially perfect for Foxtel. But first how can it be financed in present situation?’22 Later Murdoch would say the NBN a ‘was a ridiculous idea. Still is.’23 Much clearer was the editorial direction from one of Murdoch’s favourite editors, expat Australian Col Allan, sent out to stiffen up the coverage of the 2013 election—in effect, Sheehan argued, to bring down Rudd over the NBN.24
Every time the NBN missed a deadline or somebody claimed its costs had blown out, News Ltd gave the story a great run and Turnbull made mileage out of what a debacle the project had become under Labor.
When NBN Co released a rollout schedule covering three million homes that seemed to favour key Labor seats in Queensland, Turnbull was quick to pounce: ‘It does seem a remarkable coincidence. Why has the rollout almost perfectly followed the boundaries of the federal electorates? The reality is Labor is most vulnerable to a big swing in the federal election in Queensland.’25 As it turned out, the same NBN rollout plan was so politically blind it had missed the western Melbourne suburb of Williamstown, where Conroy lived, and taken in Turnbull’s home in Point Piper.26
Conroy, for his part, didn’t mind playing the wealth card, attacking Turnbull for being insulated from the real world, in which two-thirds of Australians couldn’t get download speeds of more than 12 megabits per second: ‘He is living in a fantasy world about the state of broadband in this country … This fantasy that Malcolm lives in his little bubble in Potts Point [sic] and that everybody can get it.’27
Turnbull showed he was not above playing the bureaucrat, zeroing in on Mike Quigley, the chief executive of NBN Co who had been appointed by Conroy in mid 2009. Quigley was a telecommunications engineer who had spent thirty-six years at French giant Alcatel-Lucent, rising to the position of chief operating officer and overseeing 60 000 staff around the world. Quigley, fifty-eight, had had a bone-marrow transplant in his thirties to survive leukaemia, and donated his entire $2 million-a-year salary to medical research. When Quigley was lured out of retirement to join the NBN, he quickly hired former colleague Jean-Pascal Beaufret as his chief finance officer. In early 2011, The Australian broke the news that Alcatel-Lucent had been fined US$137 million by the US Securities and Exchange Commission over a bribery scandal that had taken place while Quigley and Beaufret were at the company, involving attempts between 2001 and 2006 to win business in Asia and Latin America. Neither Quigley nor Beaufret had any adverse findings made against them, but it was not a good look, partly because the government had to admit it had no idea about the investigation when it hired the men. Asked for comment, Turnbull said rather mischievously that it was remarkable that Quigley and Beaufret ‘apparently did not consider a bribery scandal involving their previous employer was a matter they should raise with their future employer’, before asking: ‘Exactly what roles did senator Conroy and former prime minister Rudd play in this utter failure of due process?’28 To cap it all off, Alcatel had since been selected as an equipment supplier to the NBN, with a contract worth $1.5 billion—although the company insisted neither Quigley nor Beaufret had been part of the selection process.
Questioned in parliament before a joint select committee on broadband, Quigley explained that at the time the bribes were paid, he was preoccupied with the tech wreck: ‘It was for me, frankly, a particularly difficult time. That’s clearly where my attention was. That is no excuse.’ Turnbull was a member of the committee and used it as a forum to grill Quigley with all his barrister’s skill, claiming it was quite clear that at Alcatel ‘there was a systemic global practice of corrupt activities’.29 Turnbull told reporters: ‘There’s no effort to impugn his [Quigley’s] integrity, but as representatives of the people whose taxes are paying for this NBN, we are entitled to ask questions and try to get to the facts.’30
Beaufret retired in August 2011, and Turnbull, who smelled blood, pursued Quigley doggedly. The chief executive could take it—he once told a reporter that ‘Once you’ve stared death in the face, every day is a good day’31—and Conroy was staunch in his defence. But by October, after Quigley admitted in a television interview that NBN Co had not spoken to the Coalition about its plans, Turnbull was flagging that he had lost confidence in him:
My concern is that sometimes he says he is doing fibre to the home because that is what the government has instructed him to do, which is strictly accurate. But on other occasions he tries to rationalise that and suggest fibre to the home is the most economically rational approach. That’s where he steps into a world of complete unreality.32
Quigley had dared to disagree with Turnbull, publicly, and he didn’t appreciate it. After a joint committee hearing the next day, things got a bit heated when Turnbull got stuck into Quigley in an exchange not recorded in Hansard but which forced department chief Peter Harris to intervene, reminding Turnbull there were protocols to be followed when the head of a government business enterprise meets with a shadow minister, and accusing him of ‘trying to create an incident’.33
In early 2013, Quigley tried to reboot the debate, calling for a review of the technological options for the NBN rollout. It was an attempt to settle debate about FTTN versus FTTP, but it backfired: the truth was that by mid 2013, four years after the all-fibre NBN was first announced, the cable would pass only 341 000 premises, with some 54 000 of those connected.34 Rightly or wrongly, even supporters were saying the project had gone off the rails, with one commentator suggesting the army should be sent in to take charge.35 As the September 2013 election approached, with Labor done for, Turnbull was openly deriding Quigley as the ‘wrong choice’, and NBN chairman Siobhan McKenna, closely linked to Lachlan Murdoch, had begun a search for a replacement. When Quigley resigned in July, Turnbull was ungracious: ‘Mr Quigley was not pushed out because he’s been doing a good job. He’s been pushed out of this company because it has not succeeded in meeting its targets … This is a project that is a classic exercise in Labor mismanagement … It is a massive fail.’36 It wasn’t a massive fail, actually; the truth was somewhere in the middle. There had been the inevitable teething problems with an unprecedented project of such scale, ramping up quickly as the NBN Co grew from nothing to 3000 staff within four years. The Telstra deal had set everything back, but by 2013 the backbone of the NBN—the transit network—was on track and the rollout was set to go. In fact, there were rumours that Turnbull was a secret admirer of FTTP and the NBN. Turnbull’s demolition of Quigley was purely political and mercenary. He needed to claim the scalp, and he knew that history would be written by the victors.
Three months earlier, Turnbull had launched the Coalition’s ‘Fast—Affordable—Sooner’ broadband policy, a persuasive, thoroughly researched document that had been over two years in preparation.37 It began by documenting a litany of failure under Labor, contrasting the figures in the NBN’s first (2011–13) and second (2012–15) corporate plans: revenue was supposed to be $205 million by June 2013 but would now be $20 million; operational expenditure was supposed to be $771 million in the same timeframe but had blown out to $1.5 billion; the number of premises passed with fibre was supposed to be 1.3 million but instead was 341 000; and the premises with an active service were meant to number 511 000 but would actually number 54 000, a tenth of the forecast. Turnbull also calculated what would happen to the cost of the NBN if four bearish assumptions proved accurate: if revenue per user grew at 3.5 per cent per annum, rather than at 9.2 per cent, and if about one in four households went wireless-only, and if FTTP rollout costs were 40 per cent higher at $3600 per premise, and if the rollout took twelve years rather than eight. It was a catalogue of horrors, and it became the basis of Turnbull’s mantra that the cost of Labor’s NBN would blow out to $94 billion, more than twice the budget. Turnbull’s own strategic review, commissioned after the Coalition won office, plumped for a figure of $73 billion for Labor’s FTTP rollout—bad, admittedly, but it would come to look like a bargain compared with the disaster that Turnbull would inflict.38
Internet junkie or not, Turnbull clearly remained deeply sceptical about FTTP. The Coalition policy accepted that operating costs would be lower with fibre, but it argued that most of the reductions were ‘minuscule compared to the interest payments on the extra investment required to construct them’. Bandwidth tended to be discussed as though it was intrinsically valuable—more is more—but the truth was that, as the plan admitted, ‘value to the user doesn’t increase linearly … for most individuals or families a 50 megabit per second broadband connection is nowhere near twice as valuable as a 25 megabit per second broadband connection’. User returns diminished as bandwidth increased. Nobody knew what applications might emerge to use the bandwidth that fibre provided, or what value consumers might place on them. ‘At the moment the only answer to this quest for a “killer app” for fibre is more and better television,’ the plan said.39 Which was not so far from Tony Abbott’s description of the NBN as essentially a giant ‘video entertainment system’.40
The competing arguments for and against the Labor and Coalition NBNs were tested in a brilliant pre-election debate on the ABC’s Lateline, hosted by Emma Alberici, between Turnbull and Anthony Albanese, then deputy prime minister and communications minister under the newly revived Rudd government. Two more different politicians would be harder to imagine—Turnbull the Oxford-educated plutocrat versus Albanese the lefty scrapper from the housing commission in Sydney’s inner west. The two ripped into each other: Albanese accused Turnbull of getting his inflated cost projections for Labor’s NBN out of a Coco Pops packet; Turnbull accused Albanese of sitting on a ticking time-bomb, in the form of the NBN’s latest business plan—‘a confession from the company that they’re failing and you don’t want to let the public know’. Shuffling constantly through a folder full of facts, Turnbull’s arrogance rubbed Albanese up the wrong way. There was obviously a bit of history between them:
Turnbull: ‘… see, Anthony doesn’t understand how the thing is priced. Let me explain.’
Albanese: ‘No-one’s as smart as you, Malcolm.’
Turnbull: ‘No, no—that is certainly not true.’41
Turnbull got in some good points—asking whether Australia was ‘so rich that we can blast away billions of dollars without worrying about the cost?’—and pulled off the particularly clever trick of getting more words in than Albanese, while conveying the impression he was constantly being shut down and treated unfairly.42
Albanese, who had been in the portfolio for a matter of weeks (although he understood the NBN, having represented Conroy in the House while infrastructure minister under Gillard), recalls the debate well and believes Turnbull’s attitude was revealing:
After the interview with Emma Alberici he went over to the whiteboard and tried to explain to her like she didn’t understand what she was talking about. It was unbelievably patronising and the fact is that she did understand and I think she’s a very smart and talented interviewer. She didn’t take sides but she didn’t allow him to get away with this nonsense that an inferior product was somehow better, that it was all just about price. Fibre to the premises is essentially about equity. If you believe that high-speed broadband in 2015 is as fundamental as access to water and electricity then you do come out supporting fibre to the premises, as the New Zealand conservatives did and as our competitors do. But Malcolm I think has never … he doesn’t have empathy with people who aren’t well off. He just didn’t get the equity component of the difference between the two schemes. To him, if you can afford to pay for it and get access to high-speed broadband, that’s fine, because people who can afford it will get it. He equates that with people who need it, will pay for it and get it. Whereas for people [to have access to high-speed broadband] regardless of income—students, for example—is an incredible empowerment. The great thing about internet technology is it can be a creator of opportunity. He has never got that aspect. He’s an individualist, rather than a collectivist, and the NBN’s a good example. He comes at it from the frame that an individual who will benefit from it will pay for it, and the market will sort it out. The truth is the market hadn’t sorted out broadband delivery in this country before Labor undertook the NBN process.43
The merits of the different NBNs could be argued in theory until the cows come home. Ultimately the real test of Turnbull’s arguments lay in delivery of the Coalition’s NBN, which would use a mix of FTTP and FTTN that was supposed to be between one-fifth and a third of the cost of FTTP alone. It would retain and upgrade the HFC networks rather than paying Telstra and Optus to shut them down. Wholesale competition would be allowed. Turnbull made one big promise: by late 2016, everyone in Australia would have download speeds of between 25 and 100 megabits per second (mbps). Furthermore, by 2019, more than 90 per cent of premises in the fixed-line footprint would have download speeds of more than 50 mbps. Cushioned in a bunch of reasonable caveats, because the opposition did not know what obligations NBN had under all its existing contracts, Turnbull promised that the cost would not exceed $29.5 billion. Within twelve weeks of taking office, however, on the release of his strategic review, Turnbull ditched his ‘25 mbps by 2016’ objective—he would achieve maybe half that—and acknowledged that the projected cost of his preferred mixed-technology NBN would blow out to $41 billion.44
Since then, Turnbull’s multi-technology mix version of the NBN has failed on almost every measure. Renegotiating the definitive agreements with Telstra took longer than expected, costing about a year in delays, as it had done under Labor. The deal was worse for taxpayers and, as Telstra chief David Thodey crowed, ‘unquestionably better for shareholders’.45 The extra complexity associated with running a mixed-technology network led to a blowout in the NBN’s IT costs. By August 2015, when the NBN released its 2016 corporate plan, the company was forecasting the network would now cost up to $56 billion—a $15 billion blowout on the cost estimated in the December 2013 strategic review, and almost double the $29 billion the original Coalition plan had estimated. Instead of costing a third of Labor’s fibre-optic NBN, it would now cost two-thirds—and that was assuming the Coalition was right about the higher cost of Labor’s network. It was a huge jump in price, and raised the question of whether the taxpayer was really saving anything, given that Turnbull’s NBN would deliver fibre to only 20 per cent of homes (as opposed to Labor’s planned 90 per cent), would be more expensive to operate, would have to be upgraded again later, would generate less revenue and would be worth less when it was eventually privatised. As for rolling out sooner, the Coalition’s NBN was now predicting only about 15 per cent of the connected premises it had forecast in 2013—the full rollout would not be finished until 2020, only a year earlier than Labor’s forecast completion date. It’s hard to place much store in these timelines, though, given that neither party hit their rollout schedules.
Watching the disaster unfold, Mike Quigley’s frustration is evident—he clearly believes taxpayers’ money is being wasted on Turnbull’s NBN and the opportunity to build a world-class broadband network for Australia is now being squandered. In an unpublished paper based completely on publicly available information, Quigley methodically compared Turnbull’s promises over the years with the actual performance. Crucially, Quigley pointed the finger at the expected cost of the HFC upgrade and FFTN rollout as the only possible cause for Turnbull’s cost blowout. Although forecast cost-per-premises figures were not broken out for HFC and FTTN, it was possible by a process of elimination to work out that it was these two mixed-technology components of the NBN that were proving to be more expensive than expected. Everything else, including greenfields and brownfields FTTP, fixed wireless and satellite, had been tracking at or below the costs forecast at the time of the strategic review. It was a long-established pattern, Quigley said: ‘Mr Turnbull has consistently talked up the cost and time taken to roll out an FTTP network, and talked down the costs and time taken to roll out FTTN and HFC. And now the chickens are coming home to roost.’46
For almost two years, Turnbull had been given the benefit of the doubt. The NBN debate suffered from a schism between the technology press, which was pro-fibre, and the mainstream media, which found it hard to sustain interest in the network and was quickly lost in the detail of nodes and mbps. Turnbull had waged pitched battles against so-called ‘fibre zealots’ in the tech media for years, defending his network’s reliance on copper on economy grounds, and occasionally these erupted into the mainstream. For example, in early 2013, the ABC’s technology and gaming editor Nick Ross published an 11 000-word demolition of the Coalition’s mixed-technology NBN. In one of their many subsequent exchanges, Turnbull tweeted that Ross’s ‘relentless NBN propaganda is an embarrassment to the ABC’. Someone raised it with the ABC’s head of current affairs, Bruce Belsham, who had a quiet talk to Ross. Then someone leaked to The Australian that Ross had been disciplined by the ABC. The whole episode wound up on the ABC’s Media Watch program.47 Turnbull had pulled off his usual trick, going above the journalist’s head, straight to management.
Early adopting Australians, so long subject to the tyranny of distance, did not need much persuading about the promise of broadband. No matter how hackneyed was Kevin Rudd’s original pitch, it spoke to many. Rudd talked of nation-building, comparing superfast broadband to a Snowy Mountains Scheme for the twenty-first century:
It is time for government to step in and take the lead … That’s what this government is on about. Just imagine, if you had had this kind of narrow conservative view of what governments should do, where would the railway network have got to in the nineteenth century? How far would the electricity [grid] have got in the twentieth century?48
Telehealth, distance education, smart grids, cloud computing, 4KTV, Oculus Rift virtual reality gaming, the internet of things, the untold applications that hadn’t been invented yet—the NBN stood for all these things, and Turnbull’s cheap and nasty NBN was standing in the way of it all. By contrast, it was hard to get excited about Turnbull’s scepticism: ‘If time and money were no object, you would run fibre into every home, but you’d also probably have a subway station underneath every house.’49 In the end, Turnbull’s scepticism was not only uninspiring, it was ill-founded.
In the two years since the Coalition took office, the argument has moved against Turnbull, and the rest of the world has moved further towards fibre. When Turnbull’s hand-picked Vertigan review predicted that a 15 mbps download speed would be enough for most Australians in 2023, even the NBN’s new chief executive, Bill Morrow, described the forecast as ‘curious’, given the data tsunami headed our way.50 AT&T, the largest telco in the United States, whose example was cited in the Coalition’s original plan when it was investing in FTTN, announced in April 2015 it was expanding its FTTP rollout: ‘Demand is growing for faster broadband speeds than AT&T, or anyone else for that matter, can deliver with FTTN, which cannot match the highest-speed tiers offered by … rivals in the marketplace’.51 In March, the Australian launch of video-streaming service Netflix caused a spike in demand—six to twelve months’ growth in six weeks—that wreaked havoc on networks and prompted calls for an NBN rethink.52 All the while, Australia slipped down the OECD broadband rankings, from twelfth in 2007 to twenty-first in 2014, in terms of number of subscribers, while the proportion of the country’s population with speeds over 15 mbps was around 7 per cent, comparable with Greece and well below the 20–25 per cent in the United States, United Kingdom and Canada.53
Reality bit in August 2015. Reaction to the $15 billion cost blowout revealed in NBN Co’s 2016 corporate plan was scathing. Respected telecommunications industry executive Paul Budde, co-author of the original submission that proposed FTTP back in 2008, blogged:
It appears to me that the communications minister, Malcolm Turnbull, has totally underestimated the consequences of changing the fundamentals of such a large national infrastructure building project midway through the process. In my opinion he simply didn’t have a clue what he was doing.54
University of Melbourne professor Rod Tucker, a member of the original expert panel that recommended FTTP, described Turnbull’s NBN as slow, expensive and obsolete: ‘It will not provide adequate bandwidth, will be no more affordable than Labor’s FTTP network, and will take almost as long to roll out’. FTTN would cement Australia as an internet backwater.55
Turnbull’s arguments were perfectly defensible, but the proof of the pudding has been in the eating. The NBN is Australia’s biggest infrastructure project, and under Turnbull it has turned into a rolled-gold disaster that will be extremely difficult to fix. Mike Quigley says:
The NBN is not—and never was—about providing enough bandwidth for people to stream Netflix at home. It’s about providing the vital infrastructure that Australia needs to stay competitive in the twenty-first century. And that should have meant a ubiquitous FTTP network, not a mishmash of technologies using old cables with higher ongoing operating costs … As long as Australia’s broadband future is tied to an ageing copper network, we will fall further and further behind our competitors and trading partners. At a cost of $56 billion and counting, that will be Mr Turnbull’s legacy.56
The NBN was not all that Turnbull oversaw as communications minister. In January 2014 he announced the Lewis review into the efficiency of the ABC and SBS, which paved for the way for funding cuts to both public broadcasters in the wake of the Coalition’s harsh 2014 federal Budget—a broken promise given that before the 2013 election, Tony Abbott had insisted there would be ‘no cuts to education, no cuts to health, no change to pensions, no change to the GST and no cuts to the ABC or SBS’.57 In the end, the ABC and SBS collectively lost $254 million, including the cancellation of the Australia Network. Turnbull also embarked on a perilous journey to reform media ownership laws, setting out to abolish the anachronistic cross-media and reach rules that had been brought in by Paul Keating back in 1991. The reforms had the support of Channel Nine and Fairfax, and regional TV stations like WIN and Prime that stood to benefit from a wave of consolidation, but they foundered on opposition from media moguls Rupert Murdoch and Kerry Stokes.
As communications minister Turnbull tarnished his free speech credentials by intervening in a series of high-profile media spats in 2015. On the hundredth anniversary of Anzac Day, SBS sports broadcaster Scott McIntyre decided to hit send on five provocative, anti-jingoist tweets, including one which decried ‘rape and theft’ by the Anzacs. Turnbull, a social media junkie, was quick to slam the tweets but raised eyebrows when he got in touch with SBS chairman Michael Ebeid, and McIntyre was sacked the next day. He is now suing. In June, the ABC’s Q&A program allowed a serial self-promoter with form as a terrorist sympathiser, Zaky Mallah, into the audience to pose a question on the foreign fighters laws. Tony Abbott boycotted ministers from appearing on the program, Turnbull became the first communications minister to send bureaucrats in to review the broadcaster, and the government made it clear the program should be run within the news division. Defenders of the ABC saw this as a direct infringement of editorial independence.58 Turnbull got into a fierce slanging match with Insiders host Barrie Cassidy, who he said had ‘lost the plot’ if he thought Mallah was an appropriate studio guest, given the risk he posed to the rest of the audience. Outgoing managing director Mark Scott went to the barricades belatedly with a passionate defence of the organisation, spelling out the difference between a public broadcaster and a state broadcaster.59
Turnbull also wound up shepherding contentious ‘data retention’ laws requiring telcos and internet sites to store customer metadata for two years, ostensibly to assist in counterterrorism efforts. The net-savvy Turnbull had to wade in to help floundering attorney-general George Brandis, who proved unable to describe what metadata even was. Turnbull explained it was not the browsing history but only the log of websites visited by the IP address temporarily assigned to each customer, likening it to the telephone billing data of old, which was always retained. The debate raised more questions than it answered, and media organisations campaigned for a carve-out to ensure journalists’ sources were protected and a warrant would need to be obtained from a judge before their metadata could be accessed by authorities—the general public would be fair game.60 Telcos arced up at the cost of storing it all. Turnbull also embarked on what had the potential to become a quite profound digital transformation in the delivery of government services—dubbed ‘eGovernment’—but this immediately sparked fears of tens of thousands of job losses in the public service.
If Turnbull’s time as communications minister was contentious, however, his messaging was superb. Specialists aside, few journalists could match his detailed understanding of the portfolio. The same media that bashed Labor over every fault in the NBN, lost interest altogether when Turnbull took over. He got a dream run. Paradoxically, however, Turnbull’s knowledge was a mixed blessing, leading one technology writer to dub him ‘Australia’s worst ever communications minister’, because he knew enough to back his own judgement over that of others, becoming ‘that most dreaded of policy animals: a fervent pursuer of misguided ideas’. After five years in the portfolio, Turnbull was ready to move on.61