A response to Mr Harrison Young’s speech today on the NBN
Harrison Young, the Chairman of the NBN Co, gave a speech today in which he defended the NBN’s monopoly status and its decision to deploy near universal fibre to the premises.
Now just to recap the Coalition’s position.
We support all Australians having access to very fast broadband, but would prefer it be delivered by the private sector in a competitive environment as far as practicable, instead of by a government owned monopoly provider.
However (with the NBN Co already established and having committed to significant contractual arrangements) we have to deal with the facts on the ground. Therefore our criticism of the NBN is focused on the vast expense of its solution and the decade or more that it will take for the NBN to be provided in all parts of Australia
That cost and delay is in large measure due to the decision to deploy FTTP to 93 per cent of premises, although it also increasingly appears to reflect NBN Co’s sheer incompetence and inability to deliver such a huge project in a timely manner.
One consequence is that thousands of Australians are waiting far too long for broadband upgrades. Even worse, other Australians in greenfield housing estates have no wireline telecommunications at all – as I saw in Queensland and Western Australia last week. Telstra no longer has an obligation to provide wireline connections in estates of more than 100 lots. And as for the NBN Co – well all too often they just haven’t turned up yet and don’t look like doing so any time soon.
But to return to Mr Young’s speech.
Mr Young argues that telecommunications is a natural monopoly which he defines like this:
“[a natural monopoly] is when one supplier can serve the entire market at a lower total cost than two or more suppliers can. Having multiple suppliers of natural monopoly services is socially wasteful. They make inefficient use of an economy’s resources.
This is why you don’t build two bridges next to each other, expecting that competition will force them to charge lower tolls. With equivalent costs and only a portion of total traffic, each of them will need to charge higher tolls than a single bridge-owner would require.”
The problem with this thesis is that it basically denies the dynamic, creative forces which only competition can deliver. A monopoly is always likely to be complacent – there is nothing to stir it to innovate, to improve its efficiency.
And while he then goes on to say that this is why monopolies need to be regulated, the reality is that regulated utilities, while not free to charge WHATEVER they like, nonetheless have a very comfortable existence because they are allowed to charge prices which deliver to them a regulated return on their capital. This is true even if they have too much capital invested.
If Mr Young’s defence of monopolies was taken seriously then there would be only one sub-sea cable connecting Australia to the rest of the world, or at least only one company providing those services. And where would prices be then? Well we know, actually, the introduction of competition in any telecoms network, sub-sea, or terrestrial brings prices down.
And that is why, no doubt, that in every other comparable country a central telecoms policy objective is to promote facilities based competition where this is possible (typically built-up areas). I am not aware of one other country where the policy is to actively stamp it out.
Mr Young goes on to criticise ‘fibre to the node’ on the basis that it would not result in the structural separation of Telstra from its retail business which is a key policy objective of the NBN (and one we broadly agree with).
However if, as he notes, the last mile of copper is acquired (or leased) by NBN Co then it is part of an NBN wholesale network – separate and distinct from Telstra’s retail business. This does not undermine the structural separation objective anymore than does the NBN leasing Telstra’s ducts.
On FTTN, it should be noted that our approach is not FTTN – good; FTTP – bad. Rather we believe a network upgrade like this should be effected in a manner which delivers the objective as quickly and as cost effectively as possible. So one should be technology agnostic – and use FTTN, FTTB, FTTP were each makes the most sense both in terms of time and dollars.
He justifies the NBN Co paying Telstra and Optus not to use their HFC networks on the basis that he says the HFC networks serve the most affluent communities and that if NBN Co did not build into those areas it would lose valuable revenue opportunities. In addition, if the HFC were allowed to compete, its owners could “cherry pick” – charge lower prices in the most attractive HFC areas and undermine the NBN Co’s ability to charge a uniform national price regardless of the cost of serving particular areas.
In conclusion he writes:
“If the national broadband network – even if entirely owned and operated by NBN Co – is a patchwork of fibre-to-the-premise, fibre-to-the-node and upgraded HFC, with different end-users getting different levels of service, avoiding cherry-picking could become much harder. This in turn could drive NBN Co to pricing its services with more reference to the cost to serve particular geographies. That would represent a major policy change which could make it impossible to serve the most expensive geographies on a price-equivalent basis without making the subsidies explicit and transparent.”
The key words here are “without making the subsidies explicit and transparent.” And therein lies a very big difference in philosophy. Not only do we prefer competition to government monopoly, but we believe that subsidies should be explicit and transparent. We are thoroughly committed to providing access to broadband to regional and remote Australia at city prices – so there is no discrimination by reason of geography – but the cost of doing so should be transparent. And there is plenty of precedent for that. What, after all, is the USO?
Mr Young ends his speech with a discussion of what the NBN Co should do when it earns mega-profits – pay higher dividends, or cut its prices? Since he acknowledges this particular conundrum is “perhaps far-fetched” I will refrain from commenting other than to say, the challenge of how to deal with NBN Co’s massive cashflow surpluses is one that is not causing me to lose any sleep.
Mr Young’s speech for reference is below:-
CHECK AGAINST DELIVERY
Policy Choices in Project NBN
By Harrison Young
NBN Co Chairman
Monday, 10 September 2012
Thank you to CEDA for inviting me to speak. The economic development of Australia is NBN Co’s raison d’être. I’m very happy to be here.
As you may have noticed, NBN Co gets a lot of mention in the media. Many people have opinions about the project. This is good. We are spending a lot of the public’s money. There ought to be scrutiny of our plans and performance.
What I’d like to do today – and this feels like the right audience for it – is to sharpen that scrutiny by clarifying some of the policy choices that have to be made.
Please note that by “choices” I mean options, not conclusions. Policy conclusions are matters for Government. Our job at NBN Co is to implement policy, as laid out for us by the Government of the day. But from our position at the mine face we confront interdependencies that are important for the public to understand.
Project NBN has three interwoven elements or sets of issues. The first has to do with market structure, the second with infrastructure, the third with applications and benefits.
Much public discussion of the NBN focuses on infrastructure. This is not surprising. Fibre and satellites and poles and trenches are tangible. They are what most of the public’s money is being spent on. Infrastructure seems easy to talk about.
There is also increasing discussion of applications and benefits. My fellow panellists are primarily focused on that aspect of Project NBN. Again, this is not surprising. Futurology is fun. Apps are what make the NBN exciting. Apps will make the NBN increasingly valuable. We’ve all seen what the iPhone engendered. What will ubiquitous high-speed broadband spawn?
For the most part, the Government has outsourced applications. This isn’t a long-term solution. Or to be more precise, it isn’t a sufficient solution. Capturing the benefits of eHeath and eEducation will require NBN Co and the industry to engage with schools and hospitals, with state and Commonwealth government departments. Within the constraints of our wholesale mandate, we’re starting to do that, but I’ll leave that topic for another time.
What I want to talk about today is the other two sets of issues. The Government has elected to tackle market structure and infrastructure on a combined basis. It is entirely reasonable to question the policy choices the Government has made. That’s what democracy is about. But you need to keep the whole picture in view. If you want to make different infrastructure choices, you may need to accept different market structure outcomes.
The infrastructure issue is that too few Australians have access to reliable high-speed broadband. In terms of fixed broadband penetration at the end of last year, Australia ranked 21st out of 34 nations, as measured by the OECD. That doesn’t win any medals.
The market structure issue is that Telstra is vertically integrated. It is both the dominant supplier of wholesale services to smaller retail providers and also their largest retail competitor. It has been able to use its position in one market to give itself an advantage in an adjacent market.
The fact that Telstra has monopoly-like dominance at the wholesale level is not the issue. Or to be precise, it is not the issue Project NBN is addressing.
Telstra’s fixed-line copper network is a natural monopoly. A natural monopoly exists when one supplier can serve the entire market at a lower total cost than two or more suppliers can. Having multiple suppliers of natural monopoly services is socially wasteful. They make inefficient use of an economy’s resources.
This is why you don’t build two bridges next to each other, expecting that competition will force them to charge lower tolls. With equivalent costs and only a portion of total traffic, each of them will need to charge higher tolls than a single bridge-owner would require.
The problem with monopolies of all kinds is that, unless they are properly supervised, they can use their market power to charge prices that have little relation to their costs and earn “monopoly rents.” That’s why we regulate them. Telstra is regulated by the ACCC. NBN Co is regulated by the ACCC. The problem with Telstra is not that it is a regulated monopoly supplier of wholesale services but that it has been able to behave like a monopolist in the provision of retail services, which is not a natural monopoly.
There were several approaches Government might have adopted to address the problem of Telstra’s vertical integration and retail dominance. It did in fact pass legislation that allowed customers to object to Telstra’s behaviour, but that didn’t work. The so-called “negotiate and arbitrate” model for Telstra’s wholesale customers took far too long to deliver relief. This is a very complicated subject, to which I cannot do justice if you want to have lunch.
The Government might have required Telstra to split itself into two companies. There were several ways this might have been accomplished, but I won’t try to describe them.
In the event, what the Government has chosen to do is (1) create NBN Co, (2) instruct it to build a national broadband network to which all retail providers would have access on a non-discriminatory basis, (3) prohibit NBN Co from competing at the retail level, and (4) permit NBN Co to negotiate an agreement whereby Telstra is paid to disconnect its copper network and cease delivery of retail voice and broadband services over its copper and HFC networks.
Now, some might suggest that spending $44 billion dollars on a national broadband network is an expensive way to address a problem that further regulatory reform might have solved. But to the extent you accept that Australia needs a high-speed broadband network, and that private sector capital would not be available to undertake a project of this scale and character, then taking Telstra out of a large part of its wholesale business by replacing its aging copper network with fibre is an elegant solution.
Not everyone agrees that Australia needs a national broadband network quite as wonderful as the one we are constructing.
I might pause here to remind those of you who don’t follow Project NBN closely that the Government instructed us to build a fibre to the premise network to achieve speeds up to 100 megabits per second on fibre, with target coverage of 93% of premises and a minimum of 90%. The remaining premises are to get fixed wireless or satellite coverage with speeds up to 12 megabits per second. Our task has been to find the least-cost engineering solution for that brief.
Our deal with Telstra includes long-term lease or purchase of their pits, pipes and conduits to run our fibre through. We concluded that this would be more cost-efficient than digging our own trenches. We didn’t buy Telstra’s copper wires because our instructions were to use fibre.
There has been a lively debate, here and abroad, about the relative merits of fibre to the premise and fibre to the node. It has been suggested that running fibre strands to every house is unnecessary – that fibre-to-the-node would be a lot cheaper, and importantly “good enough.” This would mean terminating the fibre in a cabinet out on the nature strip, and using the existing Telstra copper from each cabinet to some number of homes.
That’s not a debate I want to enter. The point I want to make is that if you retain Telstra infrastructure as part of the national broadband network, even just the last bit, you will not have accomplished the separation of wholesale from retail that was a major objective of Project NBN.
You might address that issue by having NBN Co buy Telstra’s copper, or lease it, or whatever. You might find that negotiating such an arrangement slowed the project down more than you were willing to accept. You might find you were still tangled up in Telstra’s legacy IT, which could only be navigated with Telstra’s help, turning code into bottleneck infrastructure and giving Telstra ineradicable advantages. When you set the engineers to work on the subject, you might discover both problems and solutions you hadn’t imagined. I’m just recommending you bear in mind that an engineering solution does not automatically provide a market structure solution.
As I said earlier, there are always trade-offs to be made. Some of them live inside the engineering task, while some live in the realm of policy. And from time to time, they will change their spots. For example, the prospective cost savings of fibre to the node depend on what time frame you look at. Maintaining the copper that connects node to premise is expensive. Coping with legacy IT is expensive. The total system cost of fibre to the node is higher than its front-end cost. The same is true of fibre to the premise, but less so. The apparent cost advantage of fibre to the node decreases as you lengthen the time frame you look at. In the long run, as Keynes famously said, we are all dead. Estimating costs is an engineering problem. Deciding on the relevant time frame is a policy question.
Another suggestion has been that we not overbuild the HFC networks Telstra and Optus laid down twenty years ago. Scrapping those networks, it is argued, would be socially wasteful. Those networks could and therefore should be modified to provide “good-enough” broadband service to the 800 thousand households they already reach. New infrastructure would serve the balance of the nation’s premises.
Again there would be the question of who should own the piece of infrastructure we were trying not to waste. But for the moment let’s assume NBN Co did not buy or lease the HFC cable. That would affect market structure.
When Telstra and Optus installed their HFC networks, they went after the most attractive geographies, concentrating on wealthy suburbs and skipping areas where construction costs would be high. So if you create an NBN Co that doesn’t serve the homes and neighbourhoods served with HFC, you will have a less profitable NBN Co.
Because NBN Co is mandated to provide its wholesale services at a nationally uniform price, it will be subsidizing exactly those end-users that the HFC networks avoided. And if it doesn’t have access to the profitable customers the HFC networks already serve, it will find it harder to provide those subsidies.
I haven’t done the math. But this is an issue any Government would have to wrestle with if it elected to leave the HFC networks alone.
So what happens if you decide to make NBN Co the owner of those HFC networks and instruct it not to overbuild them? Depending on technical issues I am not competent to discuss, you could have the ironic situation that the wealthiest suburbs have the lowest-quality broadband in the country.
This brings us to the interesting issue of “cherry-picking.” If the richest people in the country have broadband that is only “good enough,” someone – Telstra, Optus, a new entrant? – someone is likely to offer those households a “superior” service, overbuilding the now NBN Co-owned HFC footprint with fibre, again sucking profits out of NBN Co, and undermining NBN Co’s ability to offer uniform national wholesale prices.
“Cherry-picking” is already an issue under existing plans. In providing wholesale service at a nationally uniform price, NBN Co is indirectly subsidizing hard-to-serve end-users at the expense of the most attractive end-users. Existing Government policy and telecoms law are designed to make it difficult for a cherry-picking competitor to underprice NBN Co in serving those most attractive end-users. Policy and law require a level playing field.
If the national broadband network – even if entirely owned and operated by NBN Co – is a patchwork of fibre-to-the-premise, fibre-to-the-node and upgraded HFC, with different end-users getting different levels of service, avoiding cherry-picking could become much harder. This in turn could drive NBN Co to pricing its services with more reference to the cost to serve particular geographies. That would represent a major policy change which could make it impossible to serve the most expensive geographies on a price-equivalent basis without making the subsidies explicit and transparent.
But to summarize the point, incorporating the existing HFC networks into the national broadband network is not just a question of engineering feasibility.
The final issue I want to touch on has less to do with infrastructure choices, but it deserves discussion: what to do with NBN Co’s profits.
What if take-up and usage of the broadband network are far greater than we expect? Because NBN Co’s fibre to the premise infrastructure can handle increased volume with little increase in costs, NBN Co’s profits would rise. We are regulated by the ACCC, of course, so there would be a ceiling. Monopoly rents won’t be tolerated. But within a range of acceptable regulated outcomes, and for a while, we might earn more than we planned.
As a Government Business Enterprise, we’d have three choices: reinvest more in the business, pay bigger dividends or lower our prices.
Reinvesting in the business has natural attraction for all companies. They’re proud of what they’ve achieved. They want to do more. Historically, government-owned enterprises around the world have had a particular tendency to hang onto their cash, assigning a higher priority to excellence than to efficiency, redefining their mission to include adjacent activities, arguing that investment spending is really a form of dividend because the entire population will benefit from the service enhancements achieved – implicitly asserting that they know best what the public should do with its money.
NBN Co’s enabling legislation requires us to stick to our knitting. And the rollout task at hand is a sufficient challenge. We’re just doing what we’ve been instructed to do, in accordance with a Corporate Plan the company has submitted to the Government and which the Government has made public.
But the issue is lurking in the weeds. It is there in the definition of “good enough.” As the interlinked markets for content and carriage evolve, does NBN Co’s mission – and the way it accomplishes it – also need to evolve?
The answer will involve engineering issues. NBN Co’s technical expertise will be relevant. The answer will involve business judgments, which is why a corporation with a board of directors was created to build and operate the NBN. But the answer will also involve policy issues, which are the province of Government. One of the responsibilities of NBN Co’s Board will be to be clear about these differences.
So no pet projects. No covert mission creep.
Paying bigger dividends – to return to the high-class problem of profitability – returning cash to our owner the Commonwealth would deliver any “surplus” profits to taxpayers as a whole. And it allows the Government of the day to think afresh about priorities. The Treasury would like that, same as investors in private sector companies do.
Lowering our prices is another way to return capital – by giving it to taxpayers in their capacity as end-users of a ubiquitous broadband network. We have said that would be our preferred approach. That of course assumes that competition induces our direct customers, Telstra and the other retail service providers, to pass on the benefit of lower wholesale prices.
Project NBN makes the crucial assumption that there will be vigorous competition at the retail level, which will drive down prices and deliver value to end-users. But what if that doesn’t happen? I’ve asked that question of a lot of friends and colleagues. Most of them answer that of course there will be competition. Look how many retail service providers there are, they say. Telecom is a sexy industry, full of entrepreneurs. I tend to agree.
But economist friends have suggested to me that it is impossible to predict what will happen. Telstra has a very large market share. Its customers could prove loyal. It might for some years retain sufficient retail market dominance that it can behave like a classic monopolist, finding by trial and error the spot on the end-user demand curve where price and quantity yield the highest profit. In that scenario, lowering our prices will have little effect on what Australians pay for broadband. To the extent that’s how the market evolves, the better course for NBN Co could be to pay higher dividends.
I raise these matters – some perhaps far-fetched – to try to set us thinking about the market structure issues and related policy choices the country will be wrestling with as Project NBN unfolds. It’s a debate we must continue to have.
Thank you for your attention.
- ends -
98 Responses to “A response to Mr Harrison Young’s speech today on the NBN”
“The problem with this thesis is that it basically denies the dynamic, creative forces which only competition can deliver.”
Which is why I’m stuck with crappy ADSL and not cable already? Sorry but your party have delivered little to further the broadband communications of Australia so I have no faith in your ability to do so now.
“And that is why, no doubt, that in every other comparable country a central telecoms policy objective is to promote facilities based competition where this is possible (typically built-up areas). I am not aware of one other country where the policy is to actively stamp it out.”
I am not aware of one other country that feels that FTTN is a viable future facing solution for a national broadband solution.
“Rather we believe a network upgrade like this should be effected in a manner which delivers the objective as quickly and as cost effectively as possible.”
Quick + Cheap != (does not equal) good quality. You can’t have all three there. Your party are clearly not taking the long view as ripping up FTTN cabinets and laying fibre cable to replace copper will be an even more expensive folly that laying fibre in the first place as most of the NBN costs are labour based. I can’t believe you can lie to yourself and Australia so badly.
If you want to give us cheap and quick broadband then just throw a few million at Telstra to build some more ports and DSLAMs otherwise don’t bother with your half arsed patchwork plan to subvert a very forward thinking plan to move Australia into the forefront of digital thinking.
Malcolm was a very good lawyer, and his skills serve him well in trying to muddy the debate.
Unfortunately, most of his counter argument is not based on fact, but questionable economic theory and conservative political argument.
All in all, not very convincing Malcolm.
Without doubt you are right on the money. You’re an asset to Australian politics and a crucial team player.
C’mon Tony, your joking right???
>>”Without doubt you are right on the money.”
HAHA, he hasn’t quoted any monetary figures so how can he be right on it??
>>”You’re an asset to Australian politics and a crucial team player.”
That is becoming more and more debatable as each day passes, if he is playing for a team it certainly isn’t (my team) the Australian Public team, more than likely playing for the Big Business team that the Libs are so used to playing for.
All that Malcolm has shown here is that he cant answer the questions that so many of us want him to answer so all of this is just piss’n'wind until he answers calls for a CBA on his NoBN.
Malcolm, Answer the questions or get out of the way, retire or resign but dont stand in our way.
Sounds like private enterprise is indeed embracing the NBN but in a different way that you imagine… – http://www.itnews.com.au/News/314734,nbn-retail-service-provider-sign-ups-boom.aspx
“we believe a network upgrade like this should be effected in a manner which delivers the objective as quickly and as cost effectively as possible. So one should be technology agnostic – and use FTTN, FTTB, FTTP were each makes the most sense both in terms of time and dollars.”
Translated – No fibre services for anyone outside a metro area/major city.
But what is the objective”, FTTN is more a Domestic service , so more suited to movies and Porn, Shame on you Malcolm
“That cost and delay is in large measure due to the decision to deploy FTTP to 93 per cent of premises, although it also increasingly appears to reflect NBN Co’s sheer incompetence and inability to deliver such a huge project in a timely manner.”
So what timeframe is fair to complete FTTH to 93% of the country? Tone is similar to Sol Trujilo with the governments of the day. Looks like you are out to create spin and burn bridges.
Any respect for you is rapidly disappearing. If you are forced by Abbott to perpetuate this farce I feel sorry for you. Personally I’d resign before wasting so much of Australian’s money on a solution that is short term cheaper, long term expensive and a set back for Australian communications simply to play politics. Your continued flogging of the FTTN dead horse is becoming disgusting.
Totally agree with MT’s comments, but for one issue. Regulators here are generally way too light handed. RPI-x [to force efficiency] and tight control of eligible expenditure = utilities really have to work for their money and end up get an appropriate risk adjusted rate of return [not a monopoly/no risk one!] for delivery.
Precisely what would be the cost of upgrading the HFC. No excuses, it is existing and in Situ, To be useable for business, and installed to business premises and MDU’s able to provide the option of Business grade services to all 1.4 Million premises not just the 450,000 subscribers and ALL the occupants (Commercial Buildings and MDU’s ). I would suggest that including Backhaul, operating sytems etc it would be far more than the original install cost.
That info should be readily available
Why did Telstra and Optus stop their HFC rollout.
Everyone says that Telstra followed Optus down the street and overbuilt them.
So what. That is precisely what Malcolm and the Libs suggest – INFRASTRUCTURE COMPETITION.
Such a wonderful solution how come HFC is not ubiquitous, the HFC has never been physically upgraded and Optus only too glad to be rid of it
I thought that tells you that there is no insatiable demand for speed. Why dont people buy the much faster cable? Why do we then build even faster ftth?
So much support arguments for ftth are based on the speed, perhaps it is appropriate to put things in perspective. I am a senior technologist with years of experience in network applications. Fttn will give the household years of spare capacity for videostreaming and various applications. The ftth proponents cannot nominate any reasonable application that cannot run on fttn. By the time truly bandwidth hungary applications arrive, we would have recouped the investment of fttn. Plus all the benefit of having fttn rather than waiting for ftth. Everyone knows the cost of nbn is in the connection into the house. Fttn has the advantage of avoiding that, hence much faster to deploy. Why cant we see the facts straight?
James
Here is the rub
Many are Technologists with many years of experience in both IT and Transmission systems and Networks. I began my career it Transmission systems and networks in the 60’s , so big deal. Do you remember that article where the leading Computer experts stated tahat by about 2000 there would be the first home computers, it would fill a room, have teletype output, punch tape input, with a CRT screen. So technology experts are far from infallible.
You present the NBN as a domestic Consumer grade service, I agree it would be an enormous waste of money if that is all it is.
But it is far far more than that. It is ubiquitous, scalable, BUSINESS CAPABLE network, the major beneficiaries will be the SMBE’s and also the Big end of the Business sector. Not to overlook that so many Businesses started in the home or the Garage, also Students who use AARNET and School 100Mb+ networks, now subject to the broadband lottery with no choice of what they get. (Unless they are the privileged Elite who can afford the many $Thousands to have fibre installed)
You misdirect the purpose to being just a Domestic service , Why?.
What about cloud computing? Businesses are moving in different directions. Your own argument is a perfect case of failed predictions, though. Besides, if we only do ftth for business, i might agree with you. But then you are also agreeing with Malcolm for a mixed network.
Optus stopped rolling-out HFC, because everywhere they went Telstra was one step behind them. This meant that Optus’s investment was compromised.
Telstra stopped rolling out HFC as soon as Optus stopped, because they had accomplished their tgoal of spoiling Optus’s HFC investment, and making it non-profitable.
Competition at work.? not.
Benefitting the nation??? NOT!
Well Malcolm
I note you are now attacking the competence of NBN Co and the team, whereas previously you were indicating they would support your Mickey Mouse Playschool disaster.
You obviously took note of my comment on the previous item and asked some questions rather than arrogantly assuming,you realise you will be forced to bring in your second rate Mercenary ego tripping Seagull “experts” to do your bidding and blame their mess on the current NBN Co team.
Poor Form old chap
Typical Libs, absolutely love having the private sector and the rural sector permanently sucking off the taxpayer teat.
“Transparent Subsidies”, Bull, the major component will be hidden in Healthcare and Education funding other special subsidies ticketed as regional assistance of some form, but Not identified as Communications or broadband subsidies. along with Council Rates with a token direct to provider component exhibited for public scrutiny.
Lib/NP specialty
I know you keep telling us what a disaster our NBN is and how BT and the UK solution is so far superior.
Interesting
http://www.bbc.com/news/technology-11325452
“Pigeon flies past broadband in data speed race”
The UK National Broadband infrastructure is a glowing success
It’s disingenuous to compare facilities based competition to long-haul fibre competition. What we’re talking with FTTH or FTTN or whatever is a utility in the same way that the power or water “pipes” going into a house are. Backhaul is more like the dams and the generators where multiple companies compete to serve millions via the infrastructure monopoly of pipes, glass, copper and steel. There is something to gain from competition at that scale because with those sort of numbers extra capacity and redundancy matter.
To single users? They’ll only use one link anyway so you don’t gain anything. The fact is two networks cost more to run than one network. There is nothing to gain for the end user in having the ability to pick which *one* network they’ll use that’ll deliver them 20-100Mbps+ over that last 1km or so. The only thing they’ll get is higher costs, it’s not rocket science Malcolm.
@Sky
Very Valid, with Wireless it is just a numbers game, the cost of building the tower is fixed and not that much in comparison to the cost of providing physical infrastructure which may not be used but yet must still be maintained and provided. Someone has to pay the ROI, operating expenses and profit margin. I wonder who that will be ?
Just a small comparison would be the Sydney Harbour Bridge, started in 1923/24 finished 1932 paid off in 1988, 65 years later. anybody want to replace it with a dual lane crossing.
[...] costs of his policy, stating that it will be announced closer to the 2013 federal election. In a blog post published this afternoon, Turnbull said the coalition’s approach wasn’t “FttN — [...]
“The problem with this thesis is that it basically denies the dynamic, creative forces which only competition can deliver.”
What does this mean in actual real-world terms?
A natural monopoly in actual real-world terms means high efficiency through reduced duplication.
I’d prefer an efficiently delivered GOOD service over a “dynamic, creative” but mediocre service.
“A monopoly is always likely to be complacent – there is nothing to stir it to innovate, to improve its efficiency.”
…But it’s already more efficient to start with! Competing providers would forever be trying to approach the efficiency that NBNCo had from day one, and yet they would never reach it without merging their operations.
Besides, you are forgetting retail competition, which will be strengthened under the NBN.
“If Mr Young’s defence of monopolies was taken seriously”
He isn’t blindly defending monopolies. He is defining a special case where a regulated monopoly can deliver better outcomes, which is taken very seriously indeed by economics experts.
In this case, your example does not fit the criteria.
I would recommend some research into natural monopolies.
[...] costs of his policy, stating that it will be announced closer to the 2013 federal election. In a blog post published this afternoon, Turnbull said the coalition’s approach wasn’t “FttN — [...]
Morning Malcolm.
Can you say ‘Cheaper and Faster’?
http://www.flickr.com/photos/81769364@N03/7859729182/in/pool-2105921@N22
We await your actual numbers.
FYI, we want ‘ubiquity’
And we want Fibre to the Home, so we can get a jump on other counties in the digital world.
Can you say ‘3D eBay product listings’?
Sincerely and in good faith.
aw
Touting FTTP is all very well but what are the implications and true costs of this? I don’t think it’s as practical or cost effective as you think. Have a look at this xDSL engineering summary from Ericsson – they know what they are doing.
http://www.ericsson.com/ericsson/corpinfo/publications/review/technology_update/archive/2009/issue_2/articles/vsdl2.shtml
The implications of FTTP really means installing many new street side cabinets across cities and towns in order to keep the copper lengths to the premises under 500m. Existing copper pairs probably won’t suffice and have to be replaced and some VDSL modes need TWO pairs to work effectively. Let’s not forget to mention all the upgrading of all the other hardware between a premises and cabinet such as pillars, pits, rotten gel bonds and MDFs. The VDSL Transact network in place in Canberra requires CAT5 cable be strung from the cabinet direct and uninterrupted to the premises in order to provide a uniform service to customers.
Replacing copper seems redundant if the same task has to be done with fibre anyway. And unlike a FTTP solution fibre cabinets will be less numerous and the runs to premises work for many 10’s of km without signal degradation, unlike copper.
I’ll paraphrase Richard Feynman in his Challenger disaster findings with respect to the FTTP solution and it’s engineering issues: “For a successful technology, reality must take precedence over public relations, for nature cannot be fooled.”
@Jim
With respect I think you mean FTTN (Fibre To The Node) in your comment, which is Malcolms preferred option for much of Australia rather than FTTP (Fibre to the Premises) which is what the NBN is
Otherwise spot on, why so many countries moving away from FTTN installs to FTTP installs
False economies, penny wise and pound foolish
Oh dear, I can’t edit my post. Drat’s, yes I do mean Fibre to the Node (FTTN) *not* Fibre to the Premises (FTTP) as I have written. I was a bit too quick to submit before a proper proofread and coffee.
Malcolm,
You keep on top of the debate and are continually moving it forward. Excellent work as both a Shadow Minister and prospective Minister.
I’m impressed with your criticisms of the NBN Co rollout. Informed and useful.
Here is not the place to nitpick the Coalition policy. You have one, have made promises that can be evaluated and have publicly committed to continuing a National Broadband Network.
Thanks for being so active in this debate and not allowing the incumbents to be complacent or go unchallenged. Well done.
regards
steve jenkin
Still no facts about the coalition’s broadband plan. Of course, that’s predictable by now.
What’s less predictable, however, is that this time there is literally not a single number in this latest thing.
Sydney Opera House cost estimate, 1957: $7 million.
Sydney Opera House total cost, 1973: $102 million.
Chance of Malcolm Turnbull saying he would have cancelled the project if he had been around, in 2012? 0%.
Snowy Mountains Scheme?
Check here: http://www.gizmodo.com.au/2012/08/retromodo-the-snowy-mountain-hydro-scheme-sounded-a-lot-like-the-nbn/
Chance of Malcolm Turnbull saying he would have cancelled the project if he had been around, in 2012? 0%.
Medibank, established by a Labor government, 1975.
Medibank, cancelled by a Liberal government, 1981.
Medicare, established by a Labor government, 1984.
Chance of Malcolm Turnbull saying he would have cancelled the project if he had been around, in 2012? 0%.
NBN cost estimate, 2010: $43 billion.
NBN cost estimate, 2011: $35.9 billion.
NBN cost estimate, 2012: $37.4 billion (a 4% capital expenditure “blowout”, but also includes HFC agreement, PoI, higher greenfields cost, TUSMA, Telstra delay, Build drop strategy and 10% more fibre).
Chance of Malcolm Turnbull cancelling it in about 2013? 100% of cancelling about 85% of it.
> We support all Australians having access to very fast broadband, but would prefer it be delivered by the private sector in a competitive environment as far as practicable, instead of by a government owned monopoly provider.
Telstra’s proposal for FTTN in 2007, as listed on http://www.theaustralian.com.au/optus-vows-to-halve-broadband-bill/story-fna7dq6e-1111115074768
What would a Telstra FTTN wholesale price have been? $85 a month.
Telstra ownership of telephone exchanges in Australia? 100%.
ACCC under 15 years under a Liberal government regulating Telstra Wholesale prices when privatising it? Never.
Last major action of either Telstra or Optus in the HFC rollout? 1997.
What did Harrison Young write? “This is why you don’t build two bridges next to each other, expecting that competition will force them to charge lower tolls. With equivalent costs and only a portion of total traffic, each of them will need to charge higher tolls than a single bridge-owner would require.”
And what did Malcolm Turnbull answer? “The problem with this thesis is that it basically denies the dynamic, creative forces which only competition can deliver. A monopoly is always likely to be complacent – there is nothing to stir it to innovate, to improve its efficiency.”
Ignoring the anti-competitive HFC standoff that has not brought any substantial improvements to the monopoly situation since 1997. Sometimes, Malcolm, a horizontal monopoly is preferrable to two very vertical oligopolists, one of which is much more advantaged.
There is no reason to believe that with Telstra around as the coalition created it, that there is any way that we’ll have a truly competitive environment, especially while Telstra still owns all the exchanges and will, even under your plan, still own all the copper.
> However (with the NBN Co already established and having committed to significant contractual arrangements) we have to deal with the facts on the ground. Therefore our criticism of the NBN is focused on the vast expense of its solution and the decade or more that it will take for the NBN to be provided in all parts of Australia
From the 2012 Corporate Plan: “End of Fibre Network Construction” – “June 2021″. That’s less than nine years, not a “decade or more”. Furthermore, it is only likely that towards the middle and end of the rollout, NBN Co is better able to target black holes.
From Malcolm Turnbull, on Lateline: “All Australians [...] very fast broadband under our proposal [...] sooner [...]“. That’s an unknown period, estimated by Citigroup to be at the end of 2018. So, it’s about two and a half years faster. However, no actual dates or any kind of a plan are provided by Malcolm Turnbull, so that claim is dubious.
Also, again, it’s not an expense, it’s an investment. Here’s what Delimiter said five days ago after you finally acknowledged it wasn’t an expense: “It is heartening to see Turnbull finally acknowledge this point in public. We can only hope that other senior Liberal politicians pay attention and take the same approach. The NBN funding is not an expense, it is an investment. It is immensely gratifying to see Turnbull acknowledge this objective fact, and I hope we can now lay this particular micro-debate to rest and move on to more fruitful and subjective ground.”
Looks like we’re back to this idiotic discussion again.
> That cost and delay is in large measure due to the decision to deploy FTTP to 93 per cent of premises, although it also increasingly appears to reflect NBN Co’s sheer incompetence and inability to deliver such a huge project in a timely manner.
I’ll just repeat it here:
NBN cost estimate, 2012: $37.4 billion (a 4% cost “blowout”, but also includes HFC agreement, PoI, higher greenfields cost, TUSMA, Telstra delay, Build drop strategy and 10% more fibre).
How is a very justified 4% capital expenditure “blowout” sheer incompetence and an inability to deliver other than by a redefinition of the dictionary?
> And as for the NBN Co – well all too often they just haven’t turned up yet and don’t look like doing so any time soon.
Yes, because it was an obligation placed upon it before it was ready to do so. That is more reflective of Telstra though. Furthermore, developers shouldn’t go with NBN Co yet, they are intended to still go with Opticomm, Telstra Velocity or any other number of fibre providers. Notice how nowhere in this you mentioned the phrase “provider of last resort”? Because that’s what NBN Co is. Not “monopoly provider of first resort”. It’s the “provider of last resort”.
> The problem with this thesis is that it basically denies the dynamic, creative forces which only competition can deliver. A monopoly is always likely to be complacent – there is nothing to stir it to innovate, to improve its efficiency.
I’ll just repeat this here: Last major action of either Telstra or Optus in the HFC rollout? 1997.
Looks like a horizontal monopoly is preferrable to the vertical monopolies we have at the moment.
> If Mr Young’s defence of monopolies was taken seriously then there would be only one sub-sea cable connecting Australia to the rest of the world, or at least only one company providing those services.
Except that we’ve had two HFC networks and a copper network in some urban areas, but no hint of any real competition between anything. The only place where competition is at least pretending to exist is the copper network, but Telstra is extorting and getting money from all its competitors.
> And that is why, no doubt, that in every other comparable country a central telecoms policy objective is to promote facilities based competition where this is possible (typically built-up areas). I am not aware of one other country where the policy is to actively stamp it out.
Except that none of those other countries have had a telco privatisation go so spectacularly wrong as Telstra. If the same SAU that NBN Co is putting before the ACCC had been applied to Telstra in 1997, we wouldn’t be in this mess.
> use FTTN, FTTB, FTTP were each makes the most sense both in terms of time and dollars.
I agree that in some areas it may make financial sense over a medium-term period to roll out FTTN and bump them towards the end of the FTTH. But this threatens the commercial viability of NBN Co, which relies on people who want fast FTTH and are willing to pay for 1 Gbps to finance it more than those on 12 Mbps, who may well be connected at a lower than cost basis.
> He justifies the NBN Co paying Telstra and Optus not to use their HFC networks on the basis that he says the HFC networks serve the most affluent communities and that if NBN Co did not build into those areas it would lose valuable revenue opportunities. In addition, if the HFC were allowed to compete, its owners could “cherry pick” – charge lower prices in the most attractive HFC areas and undermine the NBN Co’s ability to charge a uniform national price regardless of the cost of serving particular areas.
Exactly, and that’s a good thing. NBN Co should be able to provide services to those who would pay $150 a month for 1 Gbps, because each one of them might put 20 premises on 12 Mbps above the below-cost line. And since Telstra and Optus are able to compete on this without wasting more money on their HFC rollout (and it’s a massive waste of money) or even hooking up a single customer to it (which they’re highly reluctant to do, not least of all because of upload contention), then why not?
NBN Co should be able to charge urbanites more, because we need to subsidise rural Australia’s broadband access. If we’re not going to believe in things like that, then that undermines one of the very reasons this nation-state exists, which is to subsidise the outback into a higher standard of living. It has been the ground for some spectacular policy failures, but when you consider that the eastern states had subsidised Western Australia for so long, then the mining boom is a massive vindication of that policy.
> Mr Young ends his speech with a discussion of what the NBN Co should do when it earns mega-profits – pay higher dividends, or cut its prices? Since he acknowledges this particular conundrum is “perhaps far-fetched” I will refrain from commenting other than to say, the challenge of how to deal with NBN Co’s massive cashflow surpluses is one that is not causing me to lose any sleep.
This is a hypothetical discussion that runs after 2040, when the ACCC SAU is likely to expire. And those mega-profits are actually a good thing. Higher dividends means more money to the government (unless a Liberal government screws up a sell-off in about 2035 as it did with Telstra’s) to build hospitals and roads and such. Lower prices means more equity of access to broadband for everyone. If neither of these happens, it’s still OK, the NBN is still paid off, and looking at the SAU, would imply that we would already have lower prices.
Malcolm, you have lost the support of the Australian people with your half assed attempt at bringing us into the 21st century you should resign and resign today.
Your spin doctoring is ludicrous and a blatant mis-representation of the facts, you are a disgrace and you SHOULD resign.
FTTN is a very sensible option. It allows us to get very fast broadband now, much sooner than FTTH, and to upgrade later when required. I would much prefer to have fttn now than some promise in the future. I have waited more than 5 years already. I have to wait at least another 3 years to get nbn, if there are no delays.
We may all prefer a Rolls Royce. But I would rather get moving today with a Toyota than staying without a car while waiting for the Rolls.
Given the election is over a year away it will take a lot of work to rejig the NBNCo to go with FTTN. Current plans will be halted, the company reorganised and new studies, plans and tenders will have to be actioned. Either way FTTN or FTTP/H you will be waiting 3+ years from today for an improvement on the current systems. Might as well stick with the Rolls Royce.
Sorry, we were promised a Toyota 5 years ago. That wasnt delivered. Now we were promised a Rolls. The plan is already late, again. When will i get a car, any car? FTTN can be built so quickly, i am confident i can get it within a year of project starting.
> Sorry, we were promised a Toyota 5 years ago.
No you weren’t. And that was after 15 years of nothing being done at all after a screwed up privatisation that created this mess in the first place. You’re proposing we put the people who created the mess back in charge.
> That wasnt delivered.
Because the bunch of people most able to do this didn’t hand in a compliant offer to the tender and wanted to charge a crazy amount wholesale and get a complete DSLAM monopoly and be able to charge higher wholesale prices. Thank god it wasn’t delivered.
> Now we were promised a Rolls. The plan is already late, again.
When you say it is late, it may serve you well to consider both how late it is, in perspective to the whole length of time, and why it is late.
> When will i get a car, any car?
That’s not a reason to go from nothing to Toyota to Rolls to Toyota to Rolls. Switching government policy four times all up is not a good way to get this done.
> FTTN can be built so quickly, i am confident i can get it within a year of project starting.
That statement is so completely ludicrous and unfounded in any reality, I don’t even know where to start.
What makes you so confident?
Other countries have implemented Fttn, it was low cost and quick. You are too biased against private companies. Telstra wanted to build fttn long ago, i was really looking forward to it. If we had chosen fttn even back in 2008 we would all have it now.
I am quite afraid that a massive cost overrun is going to kill nbn halfway, or it is going to be another myki project. If the internet had aimed so ambitiously, it might not even exist. But 300 BPS acoustic coupler was much better than nothing.
> Other countries have implemented Fttn, it was low cost and quick.
Pretty sure that none of them finished it in a year, as you claim is likely to happen here.
> Telstra wanted to build fttn long ago, i was really looking forward to it. If we had chosen fttn even back in 2008 we would all have it now.
The reason they wanted to build it was to remonopolise the DSLAM situation and have a convenient excuse for it. And then charge, I think another set of numbers that was floating around, $70 for 1.5M/256k. Sure, it would have been possible to do FTTN back then, but it the plan was so extortive by Telstra that bothe the Howard and Rudd governments rejected it. Both of them. On multiple occasions. Each.
> I am quite afraid that a massive cost overrun is going to kill nbn halfway
And I’m afraid a massive cost overrun and Telstra being able to dictate all the terms will kill FTTN. Except, you know, that NBN Co actually has both a corporate plan and a very interesting implementation study, while the coalition has nothing.
> If the internet had aimed so ambitiously, it might not even exist. But 300 BPS acoustic coupler was much better than nothing.
When you have a can and string network, the solution isn’t to make the strings shorter, it’s to replace it with something that works. And the FTTH rollout isn’t a single massive project, it’s a collection of 121 (and some others), and there is no big reason why each of them wouldn’t be viable on its own, unless in regional areas especially.
> FTTN is a very sensible option. It allows us to get very fast broadband now, much sooner than FTTH, and to upgrade later when required.
Citigroup estimates 2.5 years sooner, late 2018. Which may or may not be right, depending on whatever plans Malcolm Turnbull has. They also estimate that only 40% will be on FTTN and the rest will mostly stay on ADSL2+ and HFC, so if anything it’s lowballing. Note however, that the peak rollout will happen at almost the same time under either plan, FTTH may be about 1 year later.
Note also that the total cost of the FTTN coalition plan, according to Citigroup, has been pegged at about $6.1 billion, and that even according to Malcolm Turnbull that “understanding that FTTN or FTTC costs only a third to a half as much as FTTP, but up to half of this outlay will have to be written off if there is a later switch to FTTP”.
So, that means that we’re spending about $3 billion to be done with it all 2.5 years sooner, 1 or 2 years typically for someone getting FTTN instead of FTTH. However, on top of that come the impacts from being on FTTN instead of FTTH.
For one, it is likely that, because this whole plan is reliant on Telstra copper, that people would pay about $20 a month extra. Let’s go with $10 for now. That’s about 3 million premises on FTTN. That’s $3-ish billion a year, going straight into Telstra’s pocket. The Citigroup report backs this up.
Assuming that after 10 years of FTTN we would upgrade to FTTH… there are also maintenance costs. If we assume that this affects, again, only 40% of the copper network, we’re at about $400 million a year, or $4 billion all up.
So, $3 billion wasted here, $4 billion wasted there and god knows how much extra profit Telstra gets in being the wholesaler for HFC (if they’ll be forced to do that under the coalition plan) and the gatekeeper for everything else.
This FTTN plan has a lot of money down the drain that isn’t being discussed by Malcolm Turnbull.
> I would much prefer to have fttn now than some promise in the future. I have waited more than 5 years already. I have to wait at least another 3 years to get nbn, if there are no delays.
You would have to wait at least another 3 years for FTTN too, so right now, there’s no evidence that FTTN will be done any time much sooner in your case than FTTH would.
If i understand correctly, telstra has sold the copper connection and duct into the premise to nbn. On that basis, nbnco can built fttn without telstra. Besides, when we upgrade to ftth, the investment in fttn would have been recouped already. Why take unnecessary risk when there is no real demand for some time? We can use the money to address more urgent needs.
Actually NBN is leasing the ducts and pits etc. NOT buying and the copper and HFC remains the property of Telstra.
In fact Telstra will continue using the HFC for Pay TV as they are shareholders in Foxtel and also can provide their own media product cheaply. They have just agreed to migrate their Broadband customers as with the copper
OPTUS was only a reseller of Pay TV so once broadband customers migrated no value in keeping it operational, they want rid of it, too expensive to keep operational and too much hassle
Yes, telstra is keeping the ducts, but they are in the streets. The last 100 meter or so may have been sold to nbnco, as i remember.
Your example of optus cable’s failure is a perfect example of why we shouldnt take on the risk of ftth. The higher speed on cable remains unwanted, mostly. Why should we spend even more to build ftth? If 50% only wants a phone line, then fttn doesnt waste any money, but ftth would be a massive overkill.
> The higher speed on cable remains unwanted, mostly. Why should we spend even more to build ftth? If 50% only wants a phone line, then fttn doesnt waste any money, but ftth would be a massive overkill.
Actually, it is very much wanted. The reason Optus is reluctant to sign up new customers on HFC and isn’t accepting business customers on it is because the upload is over saturated and the contention ratio is poor. If you go out and ask people on HFC if they’d be willing to pay a bit more to have better upload speeds and no congestion during evenings as caused by HFC congestion and poor contention ratios, then a relatively large number of people might say yes.
If it comes down to actually having to pay less and getting an easy choice between service providers and the ability to switch on a whim, then it becomes a no-brainer.
James,
“We can use the money to address more urgent needs.”
McFly pay attention
Even Malcolm now admits the funding model is correct. The Money is borroed on the basis of it being paid back with interest by NBN Co and as such is off budget.
So the”Money” is only available for ONE purpose, that which it is borrowed for. The Funds CANNOT be used elsewhere, besides the Coaltions version will be unable to repay the borrowings let alone return a profit apart from being an expensive waste of money just for consumer downloads as not truly Business capable , the current NBN will make much of it’s money from the business sector, but I guess you know that which is why you are trying to protect your turf
Not quite. NBNCo can’t borrow the money if it was a private company. It is the government balance sheet that supports the borrowing.
The argument about Telstra monopolizing FTTN and being able to charge whatever is entirely false. Today we have wireless broadband at far superior speeds for much less money. In the market, there is like-for-like competition, and there is also substitue competition.
[...] the speech, Turnbull published an extensive reply to Young’s comments on his website. However, in the reply Turnbull did not respond to Young’s claim with regard to the cost of a [...]
I see google is going to cover kansas in 1 gigabit fibre. The discussion in the link below is interesting.
http://www.theregister.co.uk/2012/09/10/google_kansas_city_fiber/
The NBN will take time and money to build. But from what I’ve seen NBN co has the right staff to make it happen. Give them the time they need to roll out such a large project properly please. If we dont we will be so far behind the rest of the first world it’ll be stupid! We’ll have an allready obsolete network the day its built. We need then NBN as it is planned now to stay internationally competitive in the digital market.
[...] the speech, Turnbull published an extensive reply to Young’s comments on his website. However, in the reply Turnbull did not respond to Young’s claim with regard to the cost of a [...]
Also, here’s Steve Jenkin’s latest post:
http://technologyspectator.com.au/counting-cost-coalitions-hybrid-nbn?utm_source=Technology+Spectator+List&utm_
Malcom the only way of building FTTN will be on telstras terms or you will have nothing to build. so after caving in to telstras demands you will get your wish to build FTTN, But that will not stop telstra building FTTH right next to it with the many billions of tax payers money that you give them thus stranding FTTN before it even goes live.
TLDR; You lost me at “NBN Co’s sheer incompetence…” if anything they have shown themselves to me more than competent in their work regarding the NBN. You know this so I find attacking NBNCo in this way is disgraceful. It makes a mockery of your recent call for more integrity in politicians when you can calmly insult a commercial company with no factual basis. Given *your* integrity and the un-costed FTTN proposal (since you clearly cannot answer any questions on costs) the opposition will lose the next election on this issue. People quite clearly want the NBN as promised by NBNCo yet the opposition have their collective heads buried in the sand.
Flip-Flop much MT?
One minute we should follow xzy countries plans and then that country says FFTN is a waste of money lets go directly to FTTH so then you go and find another country to set up as example.
Guess what Australia is where we live and is where we need the work done, so why go on about what other countries are doing!!!!!
Wake up to yourself and do it once and do it right with fibre.
Stop trying to waste our taxpayers money on giving it to Telstra etc. because that’s what your lot did last time and look where it has got use, nowhere.
Hey Mr Turnbull,
http://community.secondlife.com/t5/image/serverpage/image-id/21161i18A255DCE485562B/image-size/original?v=mpbl-1&px=-1
Perspective please
FTTN is instead of FTTH for the last local run. THAT IS ALL.
The cost for FTTH to 93% of premises is $12 Billion. That is approx 1/3 the Total cost.
The cost of the FTTN replacement will depend on whatever can be negotiated with Telstra, the Renegotiations of other contracts, the cost of cancelling equipment orders.
Plus the condition of the copper and the ongoing maintenance costs for the next 30 years.
Cancellation of Migration Payments to Optus and Telstra so that HFC can compete with their FTTN NBN.
Considering never been physically upgraded, and OPTUS don’t want to spend the Dollars, @450,000 customer limit(they discourage new HFC customers due to contention ) work out what is needed which is why my question earlier. I estimate $4-6 Bill for Optus HFC upgrade, similar for Telstra HFC so they could compete for all the 1.4 mill plus business plus multiple dwelling units with a Business capable model.
If they won’t pay for it, guess who will have to , right on, either the NBN or the Taxpayer subsidising the private sector so they can compete in the high value areas. I wonder why?
Malcolm has stated he wants more private sector competition, which is being provided by the NBN, where the customer has the only choice they care about, choice of product and price. Infrastructure competition removes that choice. What you have is the choice of whatever your infrastructure provider has on offer, that is it.
How would the Greenfield operators handle it if the NBN overbuilt their sites (they generally operate through wholesalers for their core systems and infrastructure and as a result are a little dearer )possibly reducing their paying customer base by 1/2.
That competition, the competition from the taxpayer subsidised – Oh sorry incentivised to greatly reduce the NBN’s income, as will the lack of business capable 1G products and the limitations on high capacity and high revenue services.
Looking at the Total Package the actual Reduction that could happen would mean a drastic reduction in standard of service for at the most a $10Bill savings, but the loss of revenue would ensure it could never be viable and would not pay off the loans or ever have a hope of returning a profit. So the total cost which is guaranteed to blow out will end up being paid by the taxpayer.
It will be a massive disaster of the Coalitions making, Why? IMO to maintain and extend a Pay TV monopoly. If Labor had promised to subsidise the extension and upgrade of the HFC (built for Pay TV), I am sure News Ltd would be their greatest supporters regardless of what they will now claim
Your reasoning is dominated by hypotheticals. How do we really know that we want a standard of service of 100 Mbit and 1 Gbit, or is it even economically necessary? It may be true eventually, or it may not be. For example, if cloud computing is the preferred business solution, which now appears increasingly likely, and mobility is the preference of consumers, which is also more and more apparent, then FTTH/FTTP could be a white elephant. Should we waste massive amounts of resources when we have clear alternatives that can satisfy us for the forseeable future?
If viedo application is what dominates your thinking, why should the government need to build a competing network for other PayTV operators when there are laws allowing ACCC do declare a piece of infrastructure to become a shared service?
James, Hypotheticals?, we have nothing else, but vague statements with no detail, we have on the NBN side a clear plan that is progressing with signed negotiated contracts that will have to handled.
Clear statements of Wanting to retain the HFC which is already handling as many customers as it can and is incapable of providing business services. The upload capacity is rubbish. Very major fibre,backhaul,node,B/OSS upgrades will be needed especially to be able to service 1.4 Mill premises it passes, considering Business premises may have several businesses, MDU’s will have many discrete premises.
The current take up rates are 80% over ADSL2+ with 38% opting for 100Mb, that may change, but is indicative. Telstra’s lowest plan is 25Mb.
Mobile is very important, but expensive for volume and even in the US caps are being introduced, as in Singapore and many other countries to lower contention and maintain the standard. Standard practice is to encourage load shedding via WiFi hotspots and home or business WiFi off the fixed Broadband which is also far cheaper with far greater capacity.
Even Malcolm and the Coalition are following expert advice that wireless alone wont do the trick, even 4G. 5G is just a tidy up of 4G not a speed lift
One needs to take technology evolution into account. Wireless capacity can be improved. If we use wireless most of the time, then the requirement for fixed will be lower.
To give you a good example, silicon was though to reach its performance limit back in 1990, and GaAs was thought to be the next inevitable step. Well, it still hasnt happened. It is unwise for us to create a massive sunk cost now and limit our choices when dont clearly know what other options will be available. A big lesson to be learned is that japan poured its national resources on a gamble that robotics would be the future technology. Well, the world has gone the other way, and japan has lost much of its technology lead in the intervening years. Malcolm is very wise to leave more options open and let the market decide which way it wants to go.
> Wireless capacity can be improved.
Can it be even remotely as fast as fibre while guaranteeing the same reliability? No.
> It is unwise for us to create a massive sunk cost now and limit our choices when dont clearly know what other options will be available.
We know fibre can do terabits per second, and most any breakthrough in wireless is either directly applicable to fibre as well, or a workaround for drawbacks of wireless that fibre doesn’t have.
> Malcolm is very wise to leave more options open and let the market decide which way it wants to go.
There is no free and open telecommunications market in this country.
James
The design and implementation of the HFC does not readily allow multiple providers, it is a shared medium and TV takes up a designated percentage of the bandwidth.
However as News Ltd stated the HFC is by far the cheapest delivery mechanism for them and is a practical monopoly. They could use the NBN, but more expensive delivery mechanism and it is competitive.
Note the current Aust head honcho of News Ltd. was the Boss of Foxtel and Rupert is shifting his focus from Print Media to his video/movie/news media, in fact there was talk of splitting the News Ltd. Empire and flogging off the Print business
Hi adam, of course one would say ones asset is not for sharing. Nor am i advocating such. Pipelines were said to be unshareable. Railways the same. It is not true. But the real point is elsewhere. There is competition already. But if optus doesnt sell paytv on their own sunk cost hfc, why should we build nbn to encourage them? The logic doesnt stack up.
> Hi adam, of course one would say ones asset is not for sharing. Nor am i advocating such. Pipelines were said to be unshareable. Railways the same. It is not true. But the real point is elsewhere. There is competition already.
HFC is dead for the future. There’s a very simple reason for it.
What HFC was designed for was cable TV. That’s a frequency spectrum from 5 to 1000 MHz, which coax carries fairly well. Each channel might take 7 (or
MHz, so there’s about 100 channels all up. And you could hook up many households on the same cable and they’d share all the channels. That’s how it was architectured. One headend, lots and lots of splitters and all the connections are basically on the same piece of copper.
When it was first put in, there was no reason not to do it this way. Then came the thought of putting Internet on it. Then the problem starts. Because it’s shared.
A single broadcast channel could carry a DOCSIS channel, with QAM modulation of everything. Along also came DVB-C, and it freed up a lot of space and it used QAM (or QPSK) as well. Now, you can fit in an amazing amount of data into DOCSIS 3.0, up to about 50-ish Mbps per channel. By the time you take away the stuff that’s occupied by DVB-C, that might still be about 4 Gbps. In theory. There are a number of reasons why the bandwidth is not that wide as deployed by either Optus or Telstra, but let’s skip past that.
When the network was first rolled out, it had about 1000 premises per node. That means about 4 Mbps per household, and with a contention ratio of about 30, that’ll near enough 100 Mbps, even assuming this physically ideal scenario.
Now, you can double your cost, and roll out twice as many nodes, and get 500 premises per node. And then you get up to 200 Mbps. The more you try to improve HFC, the exponentially more expensive it becomes.
Those two numbers above are actually much less than 100 or 200 Mbps, those were just hypothetical examples if DOCSIS 3.0 was everywhere.
If you want to roll out a ten times faster speed, you have to spend ten times more on nodes and on backhaul and on construction and on maintenance.
HFC is shared by design, and that’s why it becomes either unusable or crazy expensive as bandwidth requirements go up, and they’re going up with every year.
What you can do with ADSL2+ is, because each connection is separate, you can just increase the bandwidth for the backhaul and not worry. But every person on HFC affects every other person. The only thing you can do about contention is to rearchitecture or price customers out of using their connection as much.
What you can do with fibre is that you can just do, in effect the same thing, with optical splitters. But the speed of fibre is so much higher that it doesn’t matter if you share it. It’s also a lot easier to put in a lot of dark fibre, especially compared to coax, which means that if you do need to upgrade, you can just plug in and switch on. Instead of having to relay and rewire everything and install a new node.
In the long run, HFC is dead.
> But if optus doesnt sell paytv on their own sunk cost hfc, why should we build nbn to encourage them? The logic doesnt stack up.
The ACCC decision for the FOXTEL/Austar merger had only one big condition, and that was to stop exclusivity of some channels to FOXTEL. An FTTH network as NBN Co is building it is the only way competitors can compete against them. Right now, the choices are trying to do triple-play and about $20 of what a provider would have to charge goes straight back into Telstra’s pocket. Or to keep rolling out HFC, but then Telstra would overbuild it.
One item worthy of note
The current NBN is business capable to 93% of premises, allowing for the next 30 years.
The 1G will be turned on in 2014 for business. NBN anticipates a large element of its income allowing it to lowr wholesale prices will be from the income from those high value high volume customers, who will be saving a fortune and taking advantage of opportunities that would not otherwise be available.
Neither the Coalition or News Ltd. ever address that fact, instead give the false impression that the NBN is largely for domestic consumption in which case it would be inappropriate and too expensive, but it is not, the major beneficiaries will in fact be the business sector, both large and small.
As such they will over the 20 odd years they will largely fund the Nationwide Fibre Network and the domestic customer will as a result also benefit.
Like the PPSR, created by Labor for Small Business and the Finance industry, the private citizen also benefits. Check it out http://www.ppsr.gov.au – heard about it?
Hi abel, apologies for getting your name wrong in the other response. But this is a new twist in your argument. If nbn is indeed more about business, then it is completely unnecessary.
There is already lively competition in providing fibre to business premises. I am afraid you are losing your own arguments here.
If you prefer the private sector to deliver our broadband infrastructure, you’ll need to fill us in on two things –
1. How much are the end user prices going to be. Are they higher than NBN plans?
2. How are you going to get structural separation of Telstra?
You surely realise that the initial plan by Labor was for FTTN. Telstra told us they either wanted a monopoly, or we pay for the copper. In the case of us paying out the copper, they said they’d use the money to cherry pick FTTP.
Is that in your plans?
Look, 1. nbn doesnt set end user prices. The competitive retailers will. 2. Please note i am not against nbn per se. I am arguing against the fixation with ftth/fttp and the attempts to discredit Malcolm’s plan on that basis.
What i was saying is that Abel’s arguments are self defeating through his latest twist that nbn is mainly for business and business needs fttp. With Malcolm’s plan Telstra will be structurally separated.
James
I have always argued the business case where appropriate, it is a key aspect of the NBN.
So Many people have Home Offices and run small businesses from home. Many major enmterprises started from the home or garage, because of economic considerations.
Dominique didn’t dig deep enough
The reason why Telstra FTTH has such limited uploads, to force those that need better to go to Telstra Wholesale for a Business service, enter the Bandit personified.
6/6Mb Symmetrical DSL 2 bonded pairs required , $1,000+ install and $400/month. Fibre friend was quoted Thousands for install and $1,500/Month for a 6/Mb service.
a 50/20 Plan on the NBN is looking pretty good.
You wouldn’t be an employee of Telstra wholesale would you ?
Hi James…
It’s not just about medium and large businesses. There are plenty of small businesses and residential premises who would be happy to get 1 Gbps. Even if it’s a relatively small percentage, they would serve to pay off a fairly large share of the NBN build cost.
Let’s assume I’m a small business and want some fibre. I’ll go to the Internode website. And I get information about NBN, Greenfields or South Brisbane. Hmmm. No luck. I’ll just go to the OptiComm website. Greenfields/MDU/Retirement Villages/Shopping Centres/Business Parks…
Nope. Then I look at OPENetworks. Nope, only new developments and apartments and gated communities. OK, I’ll go to TPG.
$599 a month. Oh, and a 24-month contract. Oh, and there’s GST. That’s about $17,000 over two years. Oh, and it’s “Available only in limited TPG on-net buildings.” in three CBDs. And I’m about ten minutes from the CBD.
OK. Here’s what I’ll do. I’m going to move my small at-home-business. And so I’m paying $80 extra in rent, but I’m still way way ahead.
If you calling needing to move to get a fibre connection at a reasonable cost an example of “lively competition”, then you’re hating on every single home and business that’s already in this country, and that’s just not good politics.
Dom
I responded to James above.
Thgere was a poster I think on Whirlpool or Delimiter about a year ago that was in relation to cost of Broadband for business as provided by the competitive private sector.
I guess much of this is quoted commercial in confidence.
The point he raised was his Employer an organisation in the Medical Sector looking forward to even just a NBN 100/40 Plan. They knew as did we all that the up to 1G plans were coming, but even the 100/40 would save a packet.
Currently paying OVER $200,000 p/a for a 20/20Mb service
The difference will pay for extra staff or the lease on new equipment
Private sector and competition has not benefited the SMBE’s
My original response gone to the wrong spot below. You are effectively asking taxpayers to provide a subsidy, if only a few can make full use of fttp. Nothing particularly wrong and has to be assessed on its own merit. But let us call that a subsidy clearly.
James,
It is not a taxpayer subsidy. Even Malcolm admits that the taxpayer is not funding the network per se.
What it is is equalising communications access and services
The old supply and demand, in this case intentionally manipulated to rip off the Small Business sector. (Telstra FTTH plans)
A consequence of ubiquitous FTTH and Broadband along with the resultant change in dynamic of competitive pressure.
Thee is no taxpayer subsidy, just a change occurring where High Capacity Broadband has been been a commodity with Limited availability to an essential ubiquitous utility.
No point playing King Canute , ride the wave, adjust or sink
James NBNCo most certainly do set prices. They set the wholesale prices, which in turn sets the retail prices.
I know what retail prices look like with FTTP. I want to know what they’ll look like under FTTN.
They better be a lot cheaper, because we’ll have a worse connection, one that can’t be upgraded. NBN will be offering gigabit soon.
BTW, no one mentioned Malcolm’s investment in Telefonica, yet another European telco rolling out FTTH? Anyway.
Here’s something else Mr Turnbull said yesterday. This is in the context of the NBN withdrawing it’s SAU proposal. It had a proposal before the ACCC that didn’t really include much of a mechanism for price oversight.
Now, the prices are, in a nutshell: Much lower than Telstra Wholesale to start with, no increase for the next 5 years, half of CPI on everything after that until about 2040, and ACCC approval required if NBN Co wants to go above that. Not so bad in the whole scheme of things.
“The suspension was made in the expectation the NBN Co would soon lodge a revised undertaking. But after months of consultations between the NBN Co and the telecommunications industry, the NBN Co was unable to submit a new plan in time for the ACCC’s deadline.”
NBN Co has a draft agreement with the ISPs that will last until November. That’s when this needs to be finalised. The were expecting to be finished by September, but saying that they’ll take a few more weeks. Given that this is of seemingly such crucial importance, even in Malcolm Turnbull’s estimation, and that this thing will be a fairly important contract with the public that will last for 30 years. And that the vast majority of it was already finalised in about December 2011 and now needs to incorporate some changes that have happened, I feel compelled to ask two questions.
One, what’s the big deal? And two, so what?
“The goal of any government should not solely be to maximise financial returns on infrastructure, but to also maximise its utility to the public.”
Seeing that since Malcolm Turnbull is phrasing this as if it were a trade-off, and as it’s not maximising its financial returns, but going for a low 7.1% return, much lower than one could expect from any private company, it seems that it’s maximising its utility to the public.
Maybe the truth lies somewhere between what NBN Co has had to say: “These discussions have been of considerable assistance to NBN Co as we have progressed the detailed drafting of the revised SAU, and we anticipate lodging the revised SAU with the ACCC for assessment very shortly.”
And Malcolm Turnbull: “NBN Co’s inability to propose long-term regulatory constraints that the ACCC can support should raise red flags for everyone.”
And lastly, the actual people affected, the carriers. Says arnnet:
“iiNet, Internode and TransACT’s are also concerned by the fact a WBA’s terms can override that of the SAU and ACCC access determinations. This is in accordance with Part XIC of the Competition and Consumer Act 2012.”
And truth is that the WBA being able to override the SAU is of concern in the plan as it was filed. However, dozens of the biggest telco in the country, including some that complained about the possibility of the WBA getting worse without SAU oversight, have signed the temporary WBA. But NBN Co knows that the SAU will need to be able to affect the WBA if the ACCC is going to approve this. The main concern with the WBA is not in the near future, but the fact that the SAU will have to last 30 years. That’s the big problem. And that really should have an SAU.
Furthermore, regarding the SAU in the first place, here’s the Joint Committee on the NBN: ” While the NBN Co is not required to submit an SAU to the ACCC, the ACCC stated that it is in the NBN Co’s interest to do so. The ACCC explained: we have a legislative scheme that sets precedents in order of conditions and terms of access first of all being set by commercial agreement, secondly under an SAU, as you described, and thirdly under determinations that we make or binding rules of conduct that we make.”
And I’ve never seen no SAU from the Telstra privatisation, Mr. Turnbull. The only thing I’ve seen is that when a Labor government finally came along, they managed to work out a plan to fix the Telstra mess, and the one thing that we now have that was never done under a Liberal government was an IAD and soonish, FAD.
Valid scenario. But do we need to spend massively only to support a few? Wouldnt that be called a waste? Arent you better off receiving directed subsidy? As a business, have you considered other more cost effective options, such as cloud computing? It is unfair to ask the taxpayer to pick up such a large tab for your business without even acknowledging you are receiving one.
Ended up in the wrong spot. Referring to business use of fttp by Dominique
> But do we need to spend massively only to support a few?
Again, no government money is being spent on the NBN. No taxpayer is subsidising anyone on the NBN.
> Valid scenario. But do we need to spend massively only to support a few?
Because some few will spend massively on the NBN (i.e. about $100 a month or whatnot), thereby financing the project, and the rest of Australia, on satellite and wireless will be better off, and people who are getting bad ADSL from Telstra Wholesale only at slow-as-molasses speeds are better off too.
> Wouldnt that be called a waste?
So, connecting a household that doesn’t explicitly need FTTH is a waste of money? Well, if a certain percentage of households in an area that have fixed line, Optus HFC and Telstra HFC, really would like FTTH and are willing to pay for it, then shutting down these three and replacing it with something that works consistently and provides better value and lower prices to all households in an area… then it’s more cost-effective to do FTTH exclusively instead of overlaying a fourth network that would likely be required eventually anyway.
And many households will not even realise that they’re benefitting from the NBN. If a household has two TVs with a product by FOXTEL that will do streaming and nothing but a land-line… even if they don’t have Internet… They’re benefitting from the NBN. And they’ll have this at the most cost-effective way possible to do this by connecting through the NBN.
> Arent you better off receiving directed subsidy?
Is paying Telstra forever and forever really a better use of money?
> As a business, have you considered other more cost effective options, such as cloud computing?
Huh? Are you saying that cloud computing is an alternative to the NBN? Oooooohhhhhkay.
> It is unfair to ask the taxpayer to pick up such a large tab for your business without even acknowledging you are receiving one.
Again, no tab. None. Business pays for its own connection through being charged more for wanting higher speeds. No tab. None.
That is not a fair response.
A. Without government borrowing, nbnco cant borrow.
B. You can buy fibre from multiple vendors. Not just telstra.
C. If vast majority of users do not require more than what fttn provides, ftth is a waste
D. Cloud computing can help, if your business is in serving content. It is probably the most effective solution. It is not so good if you need to watch high def tv, but fttn will be good enough for that.
F. If other users who do not need ftth are forced to pay for it, then those who actually need ftth but paying less than a standalone service are receiving a hidden subsidy
> A. Without government borrowing, nbnco cant borrow.
Actually, yes it could. It’s just that no one will want to invest in a commercial business with just a 7% return. As a public good however, its funding model is very appropriate.
> B. You can buy fibre from multiple vendors. Not just telstra.
What? I know that… I’m not sure what you’re trying to say. Can you at least point out to me what aspect of what I was saying you’re reploying to here?
> C. If vast majority of users do not require more than what fttn provides, ftth is a waste
What’s a waste is running Optus HFC, Telstra HFC, POTS and NBN VDSL in the same area, on top of several wireless providers. Also, this is like saying “if people don’t require more than what water provides, then juice is a waste”, or “if people don’t require more than what sandals provide, then closed shoes are a waste”.
And this completely disregards the fact that FTTN costs $700 million more in maintenance every year than FTTH would. Surely throwing money down the drain maintaining copper at an increasingly expensive rate every year is more of a waste, right? Surely NBN Co paying $10, or $15 or $20 to Telstra every single month for the next 15 or twenty years in order to get access to copper to its customers is more of a waste?
> D. Cloud computing can help, if your business is in serving content. It is probably the most effective solution. It is not so good if you need to watch high def tv, but fttn will be good enough for that.
OK, how do you get it to the cloud in the first place?
> F. If other users who do not need ftth are forced to pay for it, then those who actually need ftth but paying less than a standalone service are receiving a hidden subsidy
You may be shocked to find this out, but people who don’t need FTTH aren’t forced to pay for it. They’ll get a free ONT on the wall and can use wireless all they want forever, without paying a cent to NBN Co. If they hook up, and they hook up at the lowest tier, 12 Mbps, then odds are quite good that their ISP will use a wholesale product from NBN Co that NBN Co provides below cost or very much near cost. It is them who are receiving a subsidy.
There is no one using the NBN service paying a subsidy to anyone except for: i) those who aren’t using the NBN but have an ONT on the wall, ii) satellite and, to a far lesser extent wireless users and iii) those who are choosing an even lesser grade of service compared to themselves.
A. Hmmm. Many investors would be over the moon for 7% return, if it were true and risk contained. Just issue 6.5% bonds to mums and dads who are falling over themselves to buy term deposits, or funds who buy bank bonds at lower returns than that. People are not buying because they don’t think the risk is right.
B. Optus, TPG, Amcom, Macquarie Telecom, as I understand all offer fibre.
C. So we need to build another one to add to the waste?
Now I can’t be bothered to go on. We have different logic here.
> A. Hmmm. Many investors would be over the moon for 7% return, if it were true and risk contained. Just issue 6.5% bonds to mums and dads who are falling over themselves to buy term deposits, or funds who buy bank bonds at lower returns than that. People are not buying because they don’t think the risk is right.
I think that the thought of a AAA-rated nation issuing a bonds at 350 basis points above their normal rate and basically no increased risk has, if not “mums and dads”, sovereign wealth funds very interested. Many of which countries that are rolling out FTTH. Apart from the fact that Australian bonds are already selling extremely well.
> B. Optus, TPG, Amcom, Macquarie Telecom, as I understand all offer fibre.
Optus Fibre is $1800 a month, 10M/10M, and offered in very few areas only. I’m not going to go on, as this is not all that brilliant value even for most medium-sized businesses.
> C. So we need to build another one to add to the waste?
So, your argument is… that on top of Optus HFC, Telstra HFC, POTS and ADSL from different providers… we should build another network to replace ADSL from different providers only. But building one that actually replaces them all is “building another one to add to the waste”?
How about assuming that not having broadband with an upload speed that can at least beat the world average is a waste of a perfectly good first world nation?
> Now I can’t be bothered to go on. We have different logic here.
Oh, undoubtedly.
These italics are getting annoying. BTW, it’s caused by the Twitter plugin up the top right.
The current average upload speed in Australia is 1.66 Mbps according to Ookla.
The current average upload speed across the world is 4.37 Mbps.
Using the source data, we can make some calculations.
The fit for an exponential regression has an R-squared of 0.9933 and extends to well above 30 Mbps by late 2018. The fit for a linear regression has an R-squared of 0.9625 and extends to about 8 Mbps by late 2018. The fit for a polynomial has an R-squared of 0.9909 and extends to about 16 Mbps by late 2018.
Citigroup estimates that the completion date of the coalition NBN plan is by the end of 2018.
If we use the lowest of these simple projections, will the coalition plan beat the average world upload speed by late 2018, i.e. will FTTN as rolled out by the coalition guarantee that Australia’s Internet will have an average speed of 8 Mbps upload? If this is the case, will we still be well below countries like Russia, Romania and Canada and rank right in the middle of all nations, well below most advanced economies and ahead of mostly third world countries?
>The current average upload speed in Australia is 1.66 Mbps according to Ookla.
>The current average upload speed across the world is 4.37 Mbps.
Would love to know why my Bigpond upload speed is only 0.86 Mbps when my download speed is around 9 Mbps. Changing modems makes no difference.
It’s because you’re about 3 kilometres away from the exchange. It’s either that or because your copper has enough loss to basically be equivalent to 3 kilometres. Because VDSL2+ doesn’t do much over these kinds of distances, you’ll be lucky if it goes up to 1 Mbps, so the coalition plan will do exactly nothing for you. Unless…
Unless they build a node closer to you and, if necessary, relay the copper. If you’re very lucky, your upload speeds might quadruple, if they build the node about a kilometre away, getting you up to about 3 Mbps. So there’s some good news. Odds are that you’ll get it, on average, in about 2016.
Meanwhile, with NBN Co’s FTTH, you’d be guaranteed about 400 Mbps. At a very likely lower end-user cost, by about $10 to $15. You’ll have to wait an extra year, on average, maybe.
Whoops, I should add, “a connection with speeds upgradeable up to 400 Mbps”, and guaranteed 5 Mbps for probably about $10 less than would be the case with the coalition plan.
If you’re happy to pay $65 a month, you’ll get 50 Mbps/20 Mbps and 30 GB with Internode, who are actually a fairly premium provider. There is/there will be cheaper on the NBN than Internode. They’re just my provider of choice.
James, after a while we can generally deduce where the posters are coming from.
I understand your position, but business circumstances and employment circumstances always change.
We have a choice, protect a relatively few Private fibre providers, copper people at the expense of handicapping the whole economy , or go for benefit the whole economy.
Adapt or go under. Many Rural communities that won’t be fibred wants fibre, as the perception is lack of fibre discourages the tree and country or sea changers. Backhaul is a major part of the issue, but there may be ways and means. Investigate.
To say those that don’t want what FTTH can offer is naive.
A) That is dictatorially telling us what we want or need in the way of a service, lets face it who really cares about the medium.
B) Even those who may only want dial up or don’t have any need for Broadband will not be living in that residence for the next 50 years, what about the needs of the next occupant, but then their choice of property will be influenced by whether the broadband capability meets their needs.
B) Needs change over time. No point in intentionally Limiting our future options being Penny Wise and Pound Foolish
Hi Abel, here you are losing your own arguments again. A) can’t agree more, so why do you have an issue with FTTN versus FTTP?
B) In 50 years FTTP may be the right option or may be not. But in 10 years we may know better. Hence we need to keep the options open and not be burdened with a very large sunk cost. Hence FTTN as a stepping stone is a reasonable choice.
C) Needs indeed change, that is precisely why we shouldn’t gamble a very large investment. Why should we build a very expensive network which then potentially turns out just to be a payTV network? Especially by the government on behalf of taxpayers?
50 years? All projections by the major networking companies show FTTN will have its maximum capacity as a limiting factor within 4. Then FTTH will need to start rolling out. FTTN will be barely rolled out and it will inadequate and obsolete.
James
A) Why issues with FTTN against FTTH.
Simple 10 Years ago , optimum, now too late we would be either upgrading or looking to upgrade to FTTH about now.
We will have to be looking at upgrading within 10 – 15 years and basically throw away a large component of the cost – fiscal idiocy.
It will not be able to provide the high capacity high value business grade services now let alone the greater needs of 10 years. Those high value services are what will subsidise the loss making 12Mb, wireless and satellite and lift the ARPU.
B) FTTN as a stepping stone because we have no idea of what is Needed???? – Duhhh Fear Uncertainty and Doubt – FUD.
There is no doubt among the experts’
That stepping stone will waste Billions, handicap the economy and end up with that Movie and Porn network you seem to love?
Pay TV ?
I mentioned as it is the monopoly product on HFC and News Ltd and the Coalition seem obsessed with maintaining , upgrading and extending that HFC when OPTUS wants to be rid of it. So why should we taxpayers pay for that,(the coalition NBN will cost the taxpayer) so incentivisation will be needed to achieve that from the taxpayer teat (not the NBN)
Jamie.
What we need.
Cars, we should be happy with a Commodore or Falcon or Magna or Camry. So why should we import sports cars and other luxury and sports vehicles ?
It is fine for a Business to outsource functions and manufacturing overseas for efficiency and the bottom line, putting people out of work.
But it is so wrong when a Government invests to create a Strategic and economic asset for the Nations current and future economic benefit?
Abel, did I say I didnt want the government to invest? We want the government to make the right investments. Just because the investor is the government doesn’t make it right on its own. The real issue is whether this is the right investment or not and whether there are better alternatives. Muddying water with the underlying argument doesn’t help.
James.
So you want the Government to “invest” in a plan that will be a constant drain on the taxpayer and sacrifice the opportunity to provide a first class National Communications network, limiting the Nations economy.
Why?
Muddying the waters with underlying arguments?
If you can’t see the wood for the trees, your problem.
FTTN a solution that much of the world is discarding for an FTTP solution.
So why should we choose that solution when we have one that ticks all the boxes for the NATIONAL INTEREST, Business and citizens, and wont end up costing the taxpayer any money unlike the Coalitions model which only ticks a couple of boxes, the NBN will in fact return a dividend to the budget plus continue building the network out of profits
Considering the interesting times ahead with climate and weather unknowns, exposed active, powered metal FTTN cabinets is a very bold and brave move.
Previous record Minimum Arctic sea ice was 4.25Mill SqKm in 2007
Currently
3,585,781 km2 (September 12, 2012)
and still falling
Check out how the Arctic Both land and sea ice and ocean temp affects the worlds weather.
http://www.ijis.iarc.uaf.edu/en/home/seaice_extent.htm
As I said a bold and risky move.
> Considering the interesting times ahead with climate and weather unknowns, exposed active, powered metal FTTN cabinets is a very bold and brave move.
Abel, I don’t think that climate change will have that much of an impact on the nodes that the weather without climate change wouldn’t have anyway, and that any impact is offset by regular maintenance anyway. It might cause some additional costs, at worst, but nothing too dramatic that would threaten the viability of FTTN.
Because FTTN isn’t viable in the long run anyway.
And the second point I’d like to make is that if the leader of the opposition has called climate science “absolute crap”, then this kind of argument isn’t going to get very far with one of his ministers. It’s obvious that, just from Renai’s latest editorial, Malcolm Turnbull delegates to Tony Abbott and the general concensus of the coalition for broadband and we might as well assume that that includes climate change by now.
> The real issue is whether this is the right investment or not and whether there are better alternatives.
FTTN is a better alternative in that it may deliver somewhat adequate results sooner. However, there are so many drawbacks with this solution beyond the fact that over a time period of more than 5-10 years FTTH is undeniably superior, even without the bandwidth requirement increases that are happening, that it makes no sense to go with FTTN.
> “Muddying water with the underlying argument doesn’t help.”
I have no words.
Right… so this was a reply left in the previous blog post of Malcolm’s and addressed towards me.
> DOMINIQUE TO QUOTE YOU “STOP TALKING CRAP’.
I assure you, I’m not talking crap.
> You are not a qualified expert
Actually, I’d like to think I am.
> so stop parroting simple formulas that are 60 years behind the state of the art.
First of all, I used this formula rather than anything else to specifically impress the maximum capacity that wireless can have. It is the most fundamental law concerning communications channels, and has not been superseded. Just because Shannon-Hartley’s theorem is 90 years old doesn’t make it “behind the state of the art”. No more so than Newton’s theorem being “behind the state of the art” in explaining gravity. It falls down when it comes to relativity, sure, but Shannon’s limit is a very very simple proposition that isn’t outdated. Imagine it like this.
If there’s no wind, I can speak at a certain rate and you can hear me quite well. If there’s a lot of wind, I need to slow down or shout louder.
That’s it. That’s all that Shannon’s law is saying. Now assume that instead of shouting, I’m using a light bulb, and the trouble might be fog or whatever. Or assume that I’m using an electrical signal and the trouble is attenuation in copper. Or I’m using wireless signals and the trouble is water vapour in the atmosphere causing attenuation.
If you can find a solution for any of these, what you have found isn’t a way around Shannon’s Law, you’ve just maximised the ability to work within Shannon’s law to increase your information throughput. And once you’ve done that, odds are that you’re using a fibre-optic cable.
> You really don’t want to duel capacity formulas with me I can assure you. You clearly have ignored my detailed replies addressing your previous misinformed statements.
But I’d like to. Please explain how wireless can be faster than fibre, using nothing but Shannon’s theorem and assuming users with a bandwidth requirement of greater than 50 Mbps. With distribution infrastructure (FDH or towers or whatnot) built at any cost-effective spacing, and an end-user cost of less than $100 per user per month while allowing for 100 GB. Go.
I’ll be more than happy with very rough slightly-better-than-orders-of-magnitude and back-of-the-envelope calculations. Just really rough figures.
> You and the other NBN koolaid drinking religious fundamentalists just can’t imagine the damage the policies and philosophy of this Labor government is setting us up for now and for many decades.
So, fundamentalism is now looking ahead 15, 20, 30 years instead of 5 years and figuring out what infrastructure this country should have by then, instead of making a pretty large short-term investment that won’t last?
> Put this in the context of media censorhip, internet filters and ubiquitous monitoring of citizens.
The NBN is a layer 2 network. Internet filters and such would have to be implemented at an ISP level. As such, the NBN doesn’t enable media censorship and ubiquitous monitoring any more than a privately owned FTTH rollout would, and such statements always ignore the fact that alternatives to the FTTH rollout will still exist.
> This is a government that espouses criticisms of free speech. Who are these historically illiterate technocrats that are running this country and forging these dangerous regressive policies?
I agree, I’m not up for this whole Internet filter thing either. But it started at the Daily Telegraph, this time, and Malcolm Turnbull has voiced no opposition to it. You can bet that the people that did actually implement a completely ineffective attempt at an Internet filter, NetAlert, rather than the one’s who ultimately didn’t, are sitting on the same side in this debate. One that quite a lot of supposed technocrats, and let’s face it, people like Warren Truss and Joe Hockey who couldn’t tell a potato from a router are sitting on.
> Did we sacrifice 60M souls last century and absolutely learned nothing?
OK, so the Attorney General (or NBN Co doing the FTTH rollout, whoever you were referring to here) didn’t learn the lessons of Hitler and Stalin and will repeat their mistakes?
http://delimiter.com.au/2012/09/13/nbn-irony-as-turnbull-takes-the-high-ground/
More for you Malcolm, we deserve answers! ANSWER OR RESIGN!!!
Of course a Government employee at the NBN will sing the praises, cause its their job and they dont want to loose ot. Same with climate scientists who are paid to sing the Pipers tune. Same with stock brokers. Need I go on?