Two of Australia’s highest-profile business executives have taken an axe to the Federal Government’s National Broadband Network policy. This time it’s BHP chairman Jac Nasser and CommBank chief executive Ralph Norris, according to The Australian:
Mr Nasser said although he was not completely familiar with the details of the NBN, the $36bn to be spent on the project was not an appropriate allocation of that level of capital in Australia … Mr Norris said “… as for the NBN, there is a lot of infrastructure being made redundant and you have to ask yourself if that is cost-effective.”
My immediate impression of the executives’ comments is that they have a point. However, it’s a point that has been made many, many times before, in more detail than either Norris or Nasser have made it. The NBN policy is more complex than just throwing down a wad of money on fibre — it aims to achieve a number of outcomes, including industry restructuring, addressing broadband blackspots, a perceived lack of industry willingness to invest in its own infrastructure, and so on. I’d like to see some more complex discussion of the issue from top-level executives such as these — if they are serious about engaging in the debate.
Image credit: engindeniz, royalty free
In particular, I find Norris’ comments interesting – given that his organisation is – (and will continue to be) – one of the largest consumers of telecommunications services in the country, you’d certainly think he would be interested in the network management cost efficiencies alone as a substantial benefit to CBA, not to mention other potential benefits.
Hmm you have a good point!
However essentially Telstra already provides a telco managed service as such to CBA, to my knowledge. I’m not sure the NBN will actually change the way CBA buys telco services, or how it manages its network. It will still be outsourcing it to someone like Telstra. Sure, it will get improved bandwidth … but does it really need that bandwidth? Most of its branch offices probably wouldn’t use it that much — and of course its larger headquarter-type offices in every city already have fibre etc.
I kinda view the CBA’s situation a little like the ‘schools and hospitals’ argument re the NBN — they already have most of what they need.
Of course, the question then becomes: What will they need in 10 years’ time?
Good points also.
I’m also thinking along the lines of potential reach.
One example might be with a piece of fibre in every premises within the 93rd percentile of the population, there are many potential ATM locations that would have been considered not feasible in the past – (due to cost of communications connections / adequate security) – that will become viable.
The NAB – (different bank, I know) – have redone the entire backend of their ATM network in the last couple of years, and would be well placed to take advantage.
ATMs requiring fibre? Let’s be serious here unless the banks intend to start streaming HD video I doubt they need fibre to run an ATM. I suspect you could run an ATM perfectly fine on wireless.
Most people use an ATM to access cash. Having to watch a 30 second ad while waiting will be more annoying than being asked at the servo if you want 2 for $5 with your petrol. Watching the person at the front of the queue watch several ads even more annoying.
*snicker*
ATM’s usually run on IDSN on copper line, they in no hell require a fiber connection to work, and practically all of Australia is already wired up with copper
It’s a long time since I used a ATM, the “would you like cash with that” at all the EFTPOS terminals at the likes of Coles and Woolworths etc and all Australia Post outlets there is no need.
I am sure ATM traffic both people and data has gone down drastically from its heyday when it was the only cash outlet other than having to queue up at a bank counter.
Banks have pretty basic long range telco needs. What banks don’t like is removal of regional inequity – there’s where their profit margins are. I’ve visited some non-tier 1 banks and they have less megabits/sec bandwidth interstate than my house (hint much less than 100mbits/sec).
Miners don’t like it either – ie removing entry barriers to competitors. Although you’d think they’d love NBN as mining truck drivers could tele-commute to work – ie drive their trunks from their crappy Sydney apartment.
With an NBN in place to 93% of the population, CBA could probably subsidise the cost of providing internet access to their customers, assume thereafter that all their customers have a sufficient connection to use NetBank only, close 93% of their branches entirely, and make a profit doing so.
I’m only half joking too… :-)
I suggest we block all CBA IP addresses from accessing Delimiter – one doesn’t want to put that idea in their heads!
Yes, ask yourself if that is cost of effective, but there are people and organised far more qualified (like Google) that have stated they support it.
Are you saying that a mining company and bank executives know what is best for telecommunications? That’s almost as laughable as relying on an arrogant, bigoted politician to protect the portals.
*Yes, ask yourself if that is cost of effective, but there are people and organised far more qualified (like Google) that have stated they support it.*
Google will “support” any taxpayer-funded initiative that benefits their business model. no surprise there.
*Are you saying that a mining company and bank executives know what is best for telecommunications?*
experienced business executives at the level of Jac Nasser and Ralph Norris know a white elephant when they see one. especially an uncosted white elephant with no real business case.
Google will “support” any taxpayer-funded initiative that benefits their business model. no surprise there.
What possible benefits can Google gleam from the NBN? No seriously, what services can they offer to consumers? Google’s current service portfolio is does not include anything that would require high speed broadband to everyone in Australia.
experienced business executives at the level of Jac Nasser and Ralph Norris know a white elephant when they see one. especially an uncosted white elephant with no real business case
It is still outside of their field of expertise.
*What possible benefits can Google gleam from the NBN? No seriously, what services can they offer to consumers? Google’s current service portfolio is does not include anything that would require high speed broadband to everyone in Australia.*
http://www.analysysmason.com/about-us/news/Insight/Just-Google-it–the-new-new-business-model-for-FTTH-roll-out/
“While there is undoubtedly an element of publicity-seeking in Google’s decision to pursue the initiative, we believe it has two primary goals: to gain a clearer view on how access to very high-speed broadband will shape user behaviour, and to increase the pressure on US network owners to open up their own networks.”
“Google’s project is unlikely to set a broader trend for private investment-led FTTH roll-outs by non-network operators. It helps the company to promote its net-neutrality agenda, and echoes Google’s efforts to drive openness in the mobile market during the US 700MHz spectrum auction several years ago. Google is unusually positioned: its objectives and primary business model mean that it shares the public sector’s goal of increasing broadband service availability and take-up, and ensuring competitiveness in the market. These factors help to create the conditions required for continued growth in Google’s core business.”
*It is still outside of their field of expertise.*
not at all. “business sense” in evaluating the sanity of investment proposals, whether it be in mining, banking or car manufacturing is no different than the telco arena. this is why a life-long car executive like Jac Nasser is now chairman of a mining company.
Umm. So. Their core business benefits from increased Broadband availability. How is that a unique property of the NBN?
Part of the “business sense” is the ability to listen to experts in the field. What experts did these executives consult?
*Umm. So. Their core business benefits from increased Broadband availability. How is that a unique property of the NBN?*
hmm….? Google’s sponsoring trial FTTH roll-out…. NBN is FTTH….
*Part of the “business sense” is the ability to listen to experts in the field. What experts did these executives consult?*
certainly not Alcatel, Cisco, Silcar or VoIP solutions vendors ;)
Why don’t you read the reasons cited that benefit Google’s core business. Those benefits are increasing broadband availability and take-up. Not increasing speeds. Those things are not unique to the NBN.
Their support for the NBN is not related to supporting their core business model. It supports their research efforts and net-neutrality agenda.
Your original statement, the one to which I am refuting, is about Google supporting it because it supports their business model. It doesn’t. In fact net-neutrality as a concept is actually of detriment to their ability to make a profit.
*Why don’t you read the reasons cited that benefit Google’s core business. Those benefits are increasing broadband availability and take-up. Not increasing speeds.*
implicit in the meaning of the term “broadband availability” is better, faster broadband.
also, read alain’s perceptive observation below:
http://delimiter.com.au/2011/08/11/nbn-its-too-expensive-say-bhp-cba-execs/#comment-125115
*Their support for the NBN is not related to supporting their core business model. It supports their research efforts and net-neutrality agenda. Your original statement, the one to which I am refuting, is about Google supporting it because it supports their business model. It doesn’t.*
their research efforts are directed towards designing, updating and improving their business model.
implicit in the meaning of the term “broadband availability” is better, faster broadband.
That is by far the biggest logical stretch you have ever tried to make here on Delimiter.
also, read alain’s perceptive observation below:
You mean the observation where I told him how Chrome OS is not a product that will benefit from the NBN? As stated by Matthew, the only product that can possibly benefit from the NBN is YouTube.
their research efforts are directed towards designing, updating and improving their business model
No shit. Really? But I have yet to see an application that explicitly requires the NBN to come out of their labs, have you?
okay, time to put an end to this nonsense…..
http://www.smh.com.au/technology/biz-tech/google-boss-weighs-in-to-nbn-debate-20110317-1byqj.html
“Mr Schmidt admitted that megabit-speed broadband was also in Google’s interests. Faster networks correlate to more business for Google, which derives more than 90 per cent of its revenue from online advertising.”
“We’re completely guilty of that charge,” Mr Schmidt said. “As a result of this broadband infrastructure, Australian citizens will be able to get information faster, and they will be able to watch even more YouTube movies and waste their time.”
“He said that, while Google would benefit from the roll-out of the NBN network, so would all other internet companies.”
now, i hope you’re not going to start arguing that you know better than the (former) Google CEO.
that’s done and dusted.
now, i hope you’re not going to start arguing that you know better than the (former) Google CEO.
Right back at you Tosh. This whole debate started because you stated that Google support the NBN because it’s in their business interests, isn’t that correct? Well, from that article he seems to think there are other reasons for supporting it.
So apparently I’m not allowed to know better than an ex Google CEO, but you are, because it’s obviously not going to benefit internet businesses, it’s not going to result in an “…an explosion of new and unanticipated uses.”
So they do benefit from the NBN, are you denying that improvements Broadband infrastructure in general won’t also provide benefits, which was in fact my point, that the NBN isn’t anything special in that regard?
http://delimiter.com.au/2011/08/11/nbn-its-too-expensive-say-bhp-cba-execs/#comment-125005
Quote:
NightKhaos: “What possible benefits can Google gleam from the NBN?”
*COUGH*
Which you answered. Then I replied with this:
Umm. So. Their core business benefits from increased Broadband availability. How is that a unique property of the NBN?
So I’m not allowed to conceded a point then?
I don’t know what you are trying to claim here
Google even admitted the NBN helps their business
I’m trying to prove that Google do not benefit explicitly from the NBN, but from investment in Broadband infrastructure in general.
……………………………………………………………
Oh right, so, investment in HFC and FTTN is bad for Google?
And need I remind you and Tosh that Google is only one industry player with support for the NBN. Do you really want to troll through all of them? Because according to Tosh they all obviously have no business sense and want a free lunch for some reason or other.
Let’s start with Microsoft and Intel?
That’s not the point, such support is totally objective is it?
@NightKhaos
“No seriously, what services can they offer to consumers? Google’s current service portfolio is does not include anything that would require high speed broadband to everyone in Australia.”
Seriously you need to read up on the Chromebook, based on the Chrome OS, where the only OS is the browser itself, it boots to the browser, everything else is obtained from the Google cloud computing service, which increasingly will require a high bandwidth infrastructure.
Google is counting on this to be the way of the future for those that increasingly spend more and more of their computing time on the web anyway.
“It is still outside of their field of expertise.”
But of course if they both supported the NBN 100% you would say that they ‘know their stuff’.
Seriously you need to read up on the Chromebook, based on the Chrome OS, where the only OS is the browser itself, it boots to the browser, everything else is obtained from the Google cloud computing service, which increasingly will require a high bandwidth infrastructure.
Google is counting on this to be the way of the future for those that increasingly spend more and more of their computing time on the web anyway.
Wrong. That is not an application for the NBN, nor will it ever be. That product is designed for low power net books with minimal resources.
If that product is supported by any infrastructure improvements it will be the deployment of mobile LTE based services.
There is nothing in that product that explicitly will benefit from high speed broadband.
We both know, and you have constantly argued, that browser based traffic will not be improved by the NBN and most users of this niche will likely happily use a mobile broadband service instead considering their minimal usage requirements.
But of course if they both supported the NBN 100% you would say that they ‘know their stuff’
If they supported it obviously it would be of direct benefit to them, and thus increase the perceived viability of the project by industry, meaning even you might be supportive of the idea.
Of course they don’t, so being big executives with lots of money, people listen. Ignoring the fact they are people with no relevant experience in the industry. Just because you have money doesn’t mean you don’t have to back up your position.
@Nightkhaos
“There is nothing in that product that explicitly will benefit from high speed broadband.
We both know, and you have constantly argued, that browser based traffic will not be improved by the NBN and most users of this niche will likely happily use a mobile broadband service instead considering their minimal usage requirements.”
I think you need to read up on what Chromebook is all about, and it’s certainly not just about browser traffic, the Chromebook boots up to the Chrome OS and the browser, hence its appeal in its virtual instant boot, the solid state drive holds the Chrome OS system files only so you don’t save anything to the drive EVERYTHING ELSE is obtained from your broadband link including all the applications and everything that needs to be saved is saved on your Cloud site not on the internal drive.
That’s certainly not what my browser does, and all my application software, the majority of which have been installed from CD or DVD’s and all the saved files are on my hard drive.
To say Google Chromebook is just about ‘browser based traffic’ is a total distortion and downplay of how it works.
“Of course they don’t, so being big executives with lots of money, people listen. Ignoring the fact they are people with no relevant experience in the industry. Just because you have money doesn’t mean you don’t have to back up your position.”
Forget about whether it is the NBN or not, they are looking at it as a pure multi billion dollar investment, and the expected ROI from that and the fact that before it has even has a chance of being able to pay its way the existing infrastructure must be shut down and the respective owners given billions to do so.
I still say if they both had come out and supported the NBN 100% you and others criticising them in this blog would not have said a word.
And had they praised the NBN a few who are praising would be here dissing them, instead.
Funny the way it works when you have a small number of antagonists, who come here to argue, come what may and are unwilling to give even a mm.
Even in circumstances where they make clams, rater than simple opinions, which are factually wrong.
What’s factually wrong RS?
I know exactly how the Chromebook works. Probably better than you. Stop telling me to “read up on it” and provide nonsense responses that again show no explicit benefits from the NBN.
Oh so if they want to play a game on their Chromebook while at home they can download Angry Birds just that little bit faster? I really think you should study the expected usage niche a little better.
Also if they need such high bandwidth why are they considered light weight portable devices with 3G antennas built in?
There is an argument I had about desktop games in Browsers with a friend. Imagine say the latest games available in your browser, and you know what that argument came down to? Just because you can doesn’t mean you should.
The same applies here. The use case for the Chromebook will never require the NBN explicitly to operate. I’d put money on it always being a mobile device.
No doubt people will develop these high definition gaming and video “thin clients” for the home, there is already “OnLive” in the US, but I assure you, those thin clients won’t be Google Chromebooks.
That isn’t to say Google won’t develop a product for this purpose, but as yet, they haven’t.
You can’t forget about the fact it’s a government investment, not a private one, which means lower expected ROI. That is implicit in the project justification. As is the requirements for cooperation from the incumbent. These and other points have been hashed to death. Why don’t you look at one of the other hundred or so threads you started with this ruse?
Also, calling this a blog. If Delimiter is just a “blog” why do you care so much?
And if they supported it 100% you’d be up in arms about it, maybe even accusing them of selfish self interest. So what’s your point?
@Nightkhaos
“I know exactly how the Chromebook works.”
Really?
” and provide nonsense responses that again show no explicit benefits from the NBN.”
I have just outlined a product that totally depends on BB traffic for its existence, disconnect from the internet and it is useless, and it’s all nonsense?
“Oh so if they want to play a game on their Chromebook while at home they can download Angry Birds just that little bit faster? I really think you should study the expected usage niche a little better.
Chromebook = Angry Birds does it? – and you have the gall to say you know more about it than me.
“Also if they need such high bandwidth why are they considered light weight portable devices with 3G antennas built in?’
Oh come on NK, why can you put a 3G modem into the USB port of a PC or have one hung off a router if you have fixed line, that sort of argument it’s got 3G so therefore that what it will always be used for is disingenuous.
There are two Chromebooks available so far, the Samsung Series 5 with Wi-Fi and 3G and the Acer Chroma with Wi-Fi only.
I assume you think Acer is not going to sell any.
“There is an argument I had about desktop games in Browsers with a friend. Imagine say the latest games available in your browser, and you know what that argument came down to? Just because you can doesn’t mean you should.”
err what?
“The same applies here. The use case for the Chromebook will never require the NBN explicitly to operate. I’d put money on it always being a mobile device.”
Well it’s mobile in the sense you would call a bog standard laptop or a iPad mobile, doesn’t mean users will only connect using 3G in the same way users with laptops that have 3G, Wi-Fi and ethernet do not connect ONLY using 3G.
“No doubt people will develop these high definition gaming and video “thin clients” for the home, there is already “OnLive” in the US, but I assure you, those thin clients won’t be Google Chromebooks.”
Yes and what’s that got to do with what we are talking about?
“You can’t forget about the fact it’s a government investment, not a private one, which means lower expected ROI.”
No it doesn’t, Gillard and Conroy said they expected a 7% return with the full intention to sell it all to private investors, if the ROI is lower than predicated or there is no return that won’t be able to sell it, I don’t know what you think that figure should be if it was a private investment from day one.
” As is the requirements for cooperation from the incumbent. These and other points have been hashed to death.”
huh what? I never mentioned Telstra????
” Why don’t you look at one of the other hundred or so threads you started with this ruse?”
What ruse? – sorry you are going off onto weird off topic tangents, I don’t know what you are on about.
“Also, calling this a blog. If Delimiter is just a “blog” why do you care so much?”
umm what? we are discussing a Google product and you want a discussion on the use of the term blog?
“And if they supported it 100% you’d be up in arms about it, maybe even accusing them of selfish self interest. So what’s your point?”
The point has been made.
Are you unable read or being argumentative?
Alain, I am a geek, interested in technology, it is my business to know about the Chromebook. In fact if it wasn’t for the fact that I require certain things of my laptop I would have brought one because it is an exciting device.
I have just outlined a product that totally depends on BB traffic for its existence, disconnect from the internet and it is useless, and it’s all nonsense?
It helps to read what you are replying to Alain:
and provide nonsense responses that again show no explicit benefits from the NBN.
Let’s go over that… explicit benefits from the NBN, or if you’d like it worded better benefits unique to the NBN. Now this goes hand an hand with one of my original points I made:
Umm. So. Their core business benefits from increased Broadband availability. How is that a unique property of the NBN?
So what unique property of the NBN does the Chromebook exploit?
Chromebook = Angry Birds does it? – and you have the gall to say you know more about it than me.
I cite one example of the use case for ChromeOS that might actually benefit from the NBN, and make a logical leap that I think that is the only use case for a Chromebook? Really?
Oh come on NK, why can you put a 3G modem into the USB port of a PC or have one hung off a router if you have fixed line, that sort of argument it’s got 3G so therefore that what it will always be used for is disingenuous.
Taking it back to my original point, if the device can be used comfortably over 3G and existing fixed-line infrastructure, what unique property of the NBN does it exploit?
Well it’s mobile in the sense you would call a bog standard laptop or a iPad mobile, doesn’t mean users will only connect using 3G in the same way users with laptops that have 3G, Wi-Fi and ethernet do not connect ONLY using 3G.
So, you agree, there is no unique property of the NBN that it exploits?
Yes and what’s that got to do with what we are talking about? :: re OnLive
Everything, the high bandwidth low latency connection that the NBN provides has properties that are beneficial to the OnLive, properties that are either hard to find or don’t exist in existing infrastructure.
The point has been made.
Well it’s an obvious point which is not unique to NBN supporters. If someone agrees with your world view you’re just as likely to defend them as I someone who supports mine, if someone disagrees you’re just as likely to condone them and question their judgement as I am someone who disagrees with mine. So again, what precisely is your point? You don’t have one, you’re stating something obvious that anyone with half a brain is capable of working out.
And the rest… well… that is probably the most terrible retorts you’ve made to date. We have argued about the viability of the NBN for months and now you’re playing dumb? Please, don’t insult my, and all the other regulars intelligence.
The simple fact is that the NBN would benefit them more then then the coalitions plan, because the faster universal speeds that are available to google, the more content google can deliver down to people’s homes
They have explicitly stated this, so for this reason (and also the same reason why the apple guy supported the NBN), and so they would obviously put their full support behind the NBN, in much the same way rally race car drivers would put their full support behind a government which would give them rebates on high performance cars
And this is a bad thing? A company exploiting the infrastructure? Wasn’t that the entire point of the project, to drive innovation?
The fact is Google are going to make money no matter what little wee Australia does. Unless they have an ace up their sleeve that can exploit the high bandwidth nature of the NBN they stand to benefit almost as much from the coalitions plan.
Are you trying to tell me they want the faster network out of just pure greed? Because I don’t buy it.
Yeah and they would make more money under the NBN versus an alternative plan
Of course, and also as google have admitted, that money comes from people spending more and more of their time doing stuff like watching youtube.
Whether or not you think that is beneficial is a question to answer, but I believe (and many people agree) that there are far more pressing concerns (hospitals, roads, cost of living issues etc etc)
“Of course, and also as google have admitted, that money comes from people spending more and more of their time doing stuff like watching youtube.”
But Nightkhaos argues that is a exception, one of the most popular if not the most popular high traffic video websites in the world is a ‘exception’ and cannot be counted.
It’s only a exception because it shreds his argument.
LOL
Read what I said again. It’s expensive for them to run YouTube. If YouTube as it is today was run without Google’s support it would probably be run at a loss because of the insane storage and bandwidth requirements.
Google want people to use the Internet more, and for new people to start using it. The NBN is not the only way this is going to happen for them.
It’s a fairly simple argument, stop twisting it to suit your own agenda by selecting statements that help you and ignoring ones that don’t.
As deteego points out they would be slightly better off under the NBN, I concede this, but that marginal benefit doesn’t explain their support fully. Australian’s will still waste more time on their services with the coalitions plan won’t they?
No company is purely motivated by greed, we like to think they are because it simplifies economic models, but it simply isn’t the case. Remember a company as big as Google is also capable of looking at the risks associated with the NBN.
are you trying to argue that Google would prefer less people to watch Youtube and upload less content?
why are you so argumentative?
NightKhaos, unless you work at Google, I would recommend you stop making assumptions about what is expensive for google and what is not
I am basing what I am saying purely on what Google has said themselves, you are making assumptions on how you think Google is run
are you trying to argue that Google would prefer less people to watch Youtube and upload less content?
What? No. I’m saying that as YouTube is the only service they offer that will directly benefit from the NBN, and that service is implicitly expensive to run, and all other services they run benefit more from an increase in users rather than average bandwidth, than a general increase in Broadband infrastructure will likely provide similar benefits, at less risk.
I would recommend you stop making assumptions about what is expensive for google and what is not
I’m not. Read this.
All this bandwidth costs Google $360 million a year, the analysts estimate. Then there’s the cost of the videos themselves: Even though many of the site’s most popular content is uploaded for free from users, Credit Suisse says YouTube spends about $250 million a year to acquire licenses to broadcast professionally produced videos. Add in all other expenses, and the cost of running YouTube for one year exceeds $700 million. But the company makes only a fraction of that back in advertising—about $240 million in revenues for 2009, according to the report.
ever considered the fact that they are hoping for an increase in avg bandwidth so they can start marketing bandwidth-intensive services at a profit that leverages off their existing client base, apps and brandname?
Of course. But if that were the case they would already be offering these services in areas where higher bandwidth connections can be more reliably obtained. Right now, in 2011, Google has none of these products, and if they do they’re being very quiet on them.
this is how NBNs all around the world will help drive Youtube into the black (profitability):
based on the figures in the article, half of the operating costs of Youtube are fixed ($340mln/$700mln). right now, only (the equivalent of) 6% of the world’s pop watches Youtube (375mln/6bln). if more people watch Youtube videos, ad revenues wlll rise. net profit will rise by a greater proportion because only half of the (bandwidth) costs are variable ($360mln/$700mln). there will be a positive operating leverage effect over fixed costs (i.e. $250mln of paid content can be amortised over a greater viewership resulting in lower unit costs).
this is why the NBN is good for Google.
:)
that’s done and dusted.
Tosh, your argument is flawed in that they are currently not making enough advertising revenue to support their variable expenses by a rather large deficit of around $250 million.
that’s done and dusted.
Stop saying that when it clearly isn’t.
which is why higher revenue from greater video views will close that gap.
done and dusted.
Greater video views that require more bandwidth.
you just don’t get it. so let me explain it to you in greater detail:
first line of attack:
1/ global roll-outs of fibre access networks will result in higher volumes of IP transit, allowing IP transit rates to fall. so, for the same amount of money ($360mln), Google can acquire even more bandwidth. so, site traffic increases, ad revenue increases, bandwidth costs increase by less, positive operating leverage boost to profits;
second line of attack:
2/ that analysis assumes that Google has to pay for the bandwidth cost of every packet of data like a small company paying for their website to be hosted. in reality, Google owns an extensive backbone network which is peered with other backbone operators. the cost of operating this backbone is fixed. it doesn’t cost Google any extra to send an extra squillion videos through their pipes (in the same way that it doesn’t cost Pipe Network anymore to operate their transit links at 30% of capacity or 90% of capacity). Google doesn’t pay market-rate IP transit.
if anything, slow access networks (global fibre penetration is very tiny because it’s too expensive) are a bottleneck for internet companies like Google that do not face the same constraints due to their heavy investment in superfast backbone networks.
third line of attack:
3/ that article was written in early 2009. well, Youtube is still around almost 3 years later…. suggests that the analysts’ guesses was not very accurate (for reasons already explained above). also, the article talks about Facebook not making any money because they don’t serve many ads on their website. guess what? a couple of months ago, the Facebook explanatory memo which was circulated to Goldman Sachs investors revealed that Facebook is actually making billions of dollars in profit already ;)
done, dusted, polished, boxed, shelved, locked, key in the bin.
:)
you just been served…
;)
you just don’t get it. so let me explain it to you in greater detail:
Oh for Christ sake. Seriously?
1/ global roll-outs of fibre access networks will result in higher volumes of IP transit, allowing IP transit rates to fall. so, for the same amount of money ($360mln), Google can acquire even more bandwidth. so, site traffic increases, ad revenue increases, bandwidth costs increase by less, positive operating leverage boost to profits;
Okay, and in another argument you just inferred it will cost millions of dollars to provision high bandwidth international links. So which is it, acquiring more bandwidth will cost more money, or acquiring more bandwidth will cause prices to fall?
Bandwidth can prices can only fall provided there is enough over-capacity to allow for it. In domestic dark-fibre networks, and across the Atlantic, this may be the case, but unfortunately this argument doesn’t apply all over the rest of the world. It is therefore reasonable to assume that, especially in Australia, that acquiring more bandwidth will require the provision of more equipment and dark fibre across the Pacific, or a considerable investment in a local dark-centre for mirroring purposes.
that analysis assumes that Google has to pay for the bandwidth cost of every packet of data like a small company paying for their website to be hosted. in reality, Google owns an extensive backbone network which is peered with other backbone operators. the cost of operating this backbone is fixed. it doesn’t cost Google any extra to send an extra squillion videos through their pipes (in the same way that it doesn’t cost Pipe Network anymore to operate their transit links at 30% of capacity or 90% of capacity). Google doesn’t pay market-rate IP transit.
First off, unless I much mistaken, Google’s private backbone does not yet expand to Australia, meaning they have to provision capacity on the international fibre links like everyone else, and provision capacity with dark fibre providers like PIPE, like everyone else, while in Australia. In fact most of this private backbone is limited to the United States. Would it interest you know that 70% of YouTube traffic is from outside of the United States?
Secondly, if you start providing very high bandwidth traffic over your peers they will start to charge you more because they have to expand their network to fit your ever increasing traffic requirements. Remember the case with Comcast and Netflix recently? If Google’s YouTube usage increases, it is likely to assume they will have to pay more for their pairing agreements.
Google needing more bandwidth will cost them more money. Period.
that article was written in early 2009. well, Youtube is still around almost 3 years later…. suggests that the analysts’ guesses was not very accurate (for reasons already explained above). also, the article talks about Facebook not making any money because they don’t serve many ads on their website. guess what? a couple of months ago, the Facebook explanatory memo which was circulated to Goldman Sachs investors revealed that Facebook is actually making billions of dollars in profit already ;)
About Facebook I concede, but Facebook’s load requirements are much less compared to YouTube remember. When you consider this it more than likely that Google are operating YouTube in good faith rather than at a profit because closing it down would undoubtedly be a bad PR move that will tarnish Google’s image. Until Google starts releasing concrete operating costs for YouTube we can only speculate, however I am of the opinion, that, especially in the Australian market, they are making a loss of that product.
Unfortunately unless you happen to have access to these figures, we can’t exactly prove it one way or the other can we? I will say this:
If the NBN goes ahead, Google will have incentive to invest in better infrastructure in Australia to bring their operating costs down, especially if they start to develop products apart from YouTube that take advantage of the high bandwidth the NBN provides. But that isn’t a free lunch for them.
done, dusted, polished, boxed, shelved, locked, key in the bin.
:)
you just been served…
;)
Putting this at the end of your post is just pure arrogance and serves nothing to help your argument.
*Okay, and in another argument you just inferred it will cost millions of dollars to provision high bandwidth international links.*
the rate ($/Mbit) will fall as it has done historically, but still be highly costly to provide uncontended throughput anywhere close to the PIR that fibre access networks are capable of.
*So which is it, acquiring more bandwidth will cost more money, or acquiring more bandwidth will cause prices to fall?*
learn to differentiate btw micro and macro. if a small ISP rang up an IP broker tomorrow and purchased additional capacity at the same unit IP cost, his total costs will increase. if governments rolled-out fibre access networks globally and made fibre access networks really cheap to access, it will potentially trigger greater investments in IP backbone in response to greater (volume) utilisation of transit links resulting in a fall in the price of IP. the cost for a small ISP of acquiring a fixed amount of capacity will fall.
*First off, unless I much mistaken*
you are.
*Google needing more bandwidth will cost them more money. Period.*
you’re wrong. Period.
*When you consider this it more than likely that Google are operating YouTube in good faith*
what are they? a religion?
*rather than at a profit because closing it down would undoubtedly be a bad PR move that will tarnish Google’s image.*
wow…. i never heard of a business running a division at a loss just because closing it down would be a “bad PR move”….
*however I am of the opinion, that………they are making a loss of that product.*
your “opinion”? ….. how’s THIS for an “opinion” that i just stumbled upon:
http://www.ramprate.com/services/request-benchmark/youtube-whitepaper/
“Google is no doubt thrilled to let YouTube be known as a financial folly. In the dangerous waters of online content, a whiff of potential profit is an irresistible lure for predators such as copyright lawyers circling user generated content monetization and content partners that are all too ready to turn on their distributors in a feeding frenzy.”
“The big driver in the lower estimate is in the $360.4M bandwidth cost. As Brough Turner pointed out [6] soon after the initial report broke, no bandwidth cost analysis for Google is credible without including peering [7]. While using a peering approach has its own costs, such as connecting to a peering hub, managing complex and often contentious peer relationships, dealing with SLA-less best efforts service, and even occasional payment to powerful peers, the bulk of these costs are fixed – that is, you hire the same team and run the same fiber whether you are pushing 1 Gbps or 100 Gbps. According to Renesys, nearly 3/4 of Google’s traffic is delivered via peers – and it is probably higher considering that YouTube is known to have some peers such as AT&T [8] that Renesys does not list for its corporate parent.”
“Dark fiber costs are roughly the same whether you push 100 Mbps or 40 Gbps over each strand. Capital intensive expenditure projects such as distant data center build-outs require significant critical mass to make them worthwhile. The marginal cost tied to a property like YouTube can be negligible compared to the fixed costs that would be incurred regardless of its presence in Google’s portfolio.”
“If the YouTube strategy can be seen in this much more favorable light, why is Google not responding to Credit Suisse? The key is its lack of leverage with premium content partners, and the thousands of copyright holders whose content is posted by users onto YouTube without the owner’s permission. Any appearance of profits leads to more draconian revenue share demands from partners and additional lawsuits from owners of unlicensed content. An apparent loss deters this behavior, making it eminently advisable for Google to let the rumors of YouTube’s losses grow and compound. This perception of a loss-making business is one of the factors that contributed to ASCAP collecting only $1.6M instead of $12M from YouTube in a recent court judgment”
“Regardless of what you may hear, YouTube costs are a fraction of any other company running similar operations. Most of Google’s bandwidth is free or near-free; its hardware is cost-optimized; and its data center costs are mostly committed or sunk.”
“So why not monetize? There are many reasons: Why pay more taxes if one is already profitable? Why get dragged into rights management issues now when one could wait until the industry is so desperate to work with YouTube that they will cave on demands? WHY NOT WAIT UNTIL A CERTAIN THRESHOLD OF BROADBAND PENETRATION?” (MY CAPS)
whooooops……. ;)
my arguments yesterday were so prescient ;)
http://www.southparkstudios.com/clips/154479/served
ces to fall?* learn to differentiate btw micro and macro. if a small ISP rang up an IP broker tomorrow and purchased additional capacity at the same unit IP cost, his total costs will increase. if governments rolled-out fibre access networks globally and made fibre access networks really cheap to access, it will potentially trigger greater investments in IP backbone in response to greater (volume) utilisation of transit links resulting in a fall in the price of IP. the cost for a small ISP of acquiring a fixed amount of capacity will fall.
So, the cost will fall, thus invalidating your argument on the other thread that the NBN bandwidth requirements will be unsustainable, because the NBN is a macro level project. How about you be consistent across arguments? NBNCo’s business case even states they will drop the CVC costs over time to take advantage of the affect you’re talking about.
you are.
So when exactly did they invest in dark fibre assets in Australia? It seems to me that they are still renting of PIPE.
you’re wrong. Period.
Be it investment in more dark fibre, more equipment or even just new peering terms, any acquisition of new bandwidth will incur a cost. Either they have purchased the bandwidth capacity previously or they didn’t. You can’t magically acquire more bandwidth.
What are they? a religion?
Now that you mention it: http://www.thechurchofgoogle.com
ow…. i never heard of a business running a division at a loss just because closing it down would be a “bad PR move”….
Actually happens all the time. Businesses will run unprofitable products at a loss supporting them by highly profitable areas so that they will be more attractive to customers. Do you really think it costs your phone company 20c to send a text and only $10 to givu hhuhhundreds of megabytes of get use data?
our “opinion”? ….. how’s THIS for an “opinion” that i just stumbled upon:
Pretty good, problem is they’re both just that, opinions. Until Google is kind enough to explain their position we are none the wiser.
arguments yesterday were so prescient ;) http://www.southparkstudios.com/clips/154479/ served
How is insulting me with that video actually helping you? Even if you are correct., you’re still being an arsehole.
*So, the cost will fall, thus invalidating your argument on the other thread that the NBN bandwidth requirements will be unsustainable, because the NBN is a macro level project. How about you be consistent across arguments? NBNCo’s business case even states they will drop the CVC costs over time to take advantage of the affect you’re talking about.*
hmmm….. trying to haul you out of your confusion only results in you sinking deeper into more profound confusion. i better stop.
.
.
.
couldn’t be bothered replying to your other pointless and erroneous rebuttals… go read the study
.
.
.
*Pretty good, problem is they’re both just that, opinions. Until Google is kind enough to explain their position we are none the wiser.*
oh, the good old “that’s just an opinion” argumentative tack….. you NBN proponents are really scraping the barrel……. my commiserations.
Dropping the vial entirety now Tosh? Next post will consist of just calling me an idiot and a YouTube link to a video with a custom made song about how my eyes are a particular colour of poop.
*Even if you are correct., you’re still being an arsehole.*
don’t worry… i’m thinking of retiring from delimiter when Disqus is introduced.
*Dropping the vial entirety now Tosh?*
hey, don’t blame me… you’re the one deliberately making an ass of yourself trying to argue that “Google won’t benefit from a Gbit fibre access network” and “Google can’t afford bandwidth”.
Last time I checked Google owns YouTube, which could benefit from faster connections, both to deliver higher quality video and enable faster uploads of content.
The NBN is primarily not about very fast connections it is about everyone having 12/1Mbps. The NBNCo Business Plan supports this through estimate that 50% will connect at 12/1Mbps. Google’s entire business model is built on the internet and more solid connections are definitely a benefit.
YouTube is an isolated case, and very expensive for them to run to boot. Consider the storage requirements. They won’t profit from 10 million households being able to upload videos faster.
You seem to be making a case that we don’t need the FTTH NBN, is that what you intend?
No. I’m making the case that Google don’t, not in their current form, yet they support the plan anyway.
the issue is not whether Google needs the NBN, it’s whether it benefits or hurts them. it clearly benefits them a lot as Google’s own CEO pointed out, which is why they support it.
why are you so argumentative?
Why? Oh I don’t know because I said Google support the NBN and you decided to rip into me because obviously they’re only doing this for their own selfish agenda and are incapable of evaluating the risks associated with the project because they are blinded by dollar signs.
Do you not see how short sighted the point of view you present on Google is?
Apparently vote of confidence for a project doesn’t count because said company is biased. Or at least that’s the impression I get from the 50 or so posts on the subject.
of course, they will support any taxpayer funded project that spurs their business. Eric Schmidt practically spelled it out.
Okay then Tosh.
Since you obviously don’t understand my argument properly let me point it out another way.
Let’s say you sell seat covers for Toyota’s. You depend completely on Toyota sales to survive.
Toyota releases a controversial policy in that they will now only produce hybrids. This policy will have lots of positive effects, reduce greenhouse gas and increase MPG, and according to Toyota will cause customers to folk to their doors in order to produce these new fuel efficient vehicles, allowing you get more sales. However it has the potential, because of the high cost of Lithium Batteries, of increasing the cost of purchasing Toyota’s, thus you could also lose a significant portion of your customer base.
Would you not evaluate the proposal in full before providing endorsement to it?
why would my seat cover business only supply Toyota? it would also supply Mitsubishi, Honda, Suzuki, Subaru and Mazda. diversification reduces risk. why would my business strategy be as silly as you suggest?
are you trolling me?
No Tosh. I’m not. I am aware that my hypothetical business wouldn’t be foolish enough to only supply to one entity and thus diversify. Even if they did diversify, they would still assess the risk would they not?
The point is, although the NBN does between Google, that benefit is likely marginal compared to other Broadband investments the Australian Government could make as they have no services, bar YouTube, that explicitly take advantage of the high bandwidth the NBN provides, and Google will know this. They aren’t stupid. Just like my hypothetical company, they would assess the proposal and examine the risk before endorsing it.
again, you’re substituting your judgment for Messr Eric Schmidt, CEO-emeritus of Google.
So you think that an intelligent individual like Eric isn’t going to do his research before commenting on a highly controversial political issue?
research? lol. Google’s not blowing a cent on the NBN.
I tell you what let Google bankroll the FTTH rollout in Australia, and I’ll consider buying it.
:)
“Google will “support” any taxpayer-funded initiative that benefits their business model. no surprise there.”
“experienced business executives at the level of Jac Nasser and Ralph Norris know a white elephant when they see one.”
These two arguments are contradictory. For the NBN to benefit Google, it cannot be a white elephant. For Google to benefit, the NBN must not only be used, but also be used more than the existing network.
Aside from that, what about the far more successful “experienced business executives” who back the NBN? Not to mention the IT/Telco professionals? Maybe you should take a read of:
http://nbnmyths.wordpress.com/what-do-the-experts-say/
“especially an uncosted white elephant with no real business case.”
The NBN is not uncosted.
The NBN has a business case. Quite a substantial one, actually.
Any more unsupported statements you’d like to make?
*These two arguments are contradictory. For the NBN to benefit Google, it cannot be a white elephant.*
they are not contradictory. a white elephant network doesn’t mean it’s not being used at all.
*For Google to benefit, the NBN must not only be used, but also be used more than the existing network.*
“used more”…. used in what way? by how much more exactly?
*Aside from that, what about the far more successful “experienced business executives” who back the NBN?*
who? how much more successful? by what metric?
*Not to mention the IT/Telco professionals?*
two words: vested interest.
*Maybe you should take a read of: http://nbnmyths.wordpress.com/what-do-the-experts-say/*
oh, please…. not that website. it’s full of “disposables”. (i’m trying to be polite ;))
*The NBN is not uncosted.*
until the Government stops shielding NBNco from FOI laws and releases all the relevant “secret costing documents” for public scrutiny, it’s not properly costed. i don’t believe in UFOs until i see one.
*The NBN has a business case. Quite a substantial one, actually.*
well, i wish NBNco would release it.
@HazTechDad
“The NBN is not uncosted.
The NBN has a business case. Quite a substantial one, actually.”
You mean this NBN?
‘PREVIOUSLY secret documents show the federal government was warned that the national broadband network would expose taxpayers to ”considerable financial risks”, only weeks after the ambitious high-speed internet plan was unveiled.
Treasury told the government it would have to consider shielding the network from private-sector rivals to help it be viable.’
http://www.theage.com.au/national/treasury-warned-of-risk-to-taxpayers-on-broadband-20110812-1ir23.html
The shielding is going to happen, Telstra and Optus are being given taxpayer billions to shut down their networks.
“especially an uncosted white elephant with no real business case.”
LOL, did Tony Abbott tell you to say that… actually it sounds more like Joe Hockey or Barnaby Joyce.
http://www.thesun.co.uk/sol/homepage/news/3745711/Another-chance-to-shop-a-moron.html
is that you?
No its not, its many years since ive had my picture in the paper.
I dont even live in the UK, i live in Aus which is why i like this site, it covers local news.
:p
Mr Nasser said although he was not completely familiar with the details of the NBN.
Say no more, Mr Nasser
Well he did actually say more RS.
“the $36bn to be spent on the project was not an appropriate allocation of that level of capital in Australia.
“When you try and marry large capital expenditures with a fast-moving pace of technology change, I think that is fraught with risk,” he told an American Chamber of Commerce in Australia event.”
RS?
I can’t be RS, because I clearly recall reading alain, you, giving his solemn word so help him god, that he would never correspond with RS ever again, didn’t you, but here you are corresponding with me, so!
Regardless, that’s all he needed to say, he doesn’t understand the NBN, nuff said.
As someone living in WA I’m confused as to how anyone can suggest building infrastructure in a region nearly the size of Victoria, with <50,000 population, is a 'better' investment than getting 100% of the country connected with world class connectivity, providing small businesses with previously unheard of pricing.
It's also no surprise the CEO of a mining company wants money poured into the Pilbara region, it's technically his back yard, obvious self-interest here.
As to the CBA, I'm surprised any big business that relies heavily on communications would be against the NBN – yes, ATM's and EFTPOS machines do not need fiber, but you'd think they would be happy with decreased operating costs of operating their internal services – or are they simply making too much money to care? They use Telstra exclusively to operate, pricey :)
How the hell would this decrease operating costs, if anything it would increase them due to the fact that every ATM would require an ONT like device in order to utilize the fiber at all (they are all currently connected with copper), let alone all the other issues that arise from this
How would it increase operating costs even for the ATM’s – currently you need $30 for line rental alone then whatever ontop of that for broadband.
Exetel start services at $34,50.
Even if you got shaped it’s fast enough for the ATM.
ATM’s dont need line rental, they are not a god damn telephone
In fact, ATMS run on ISDN, which is a completely different systems to how xDSL/Phone services are run
Do you even know what you are talking about?
@Gav
“currently you need $30 for line rental alone then whatever ontop of that for broadband.”
Not that it’s got anything to do with how ATM’s work as deteego pointed out, but Telstra’s cheapest PSTN rental is $22.95, also if you can get Naked DSL the ULL/ADSL2+ combination is even cheaper.
Deteego.. you do realise that an ISDN service actually costs more than a PSTN service to provision an run dont you??
*as someone living in WA I’m confused as to how anyone can suggest building infrastructure in a region nearly the size of Victoria, with <50,000 population, is a 'better' investment than getting 100% of the country connected with world class connectivity*
revenue from mining exports pay for our imports (practically all the stuff you see in Big-W, DSE, Bunnings, Harvey Norman, etc). investing in productive infrastructure increases our "competitiveness" in a true sense. spending $50bln pushing fibre to residential premises merely improves our "consumption capacity". the vast majority of household residences do not "produce" any GDP (income). all the NBN does is allow us to watch more TV and movies. bear in mind, most of the popular media we consume is imported — we run a deficit in terms of our "cultural balance of trade".
*providing small businesses with previously unheard of pricing.*
that initial NBN pricing to lure subscribers onto the fibre platform before shutting down all other fixed-line alternatives is not sustainable. also, the quotas are no more generous than ADSL. the higher speed ports are artificially cheap because of NBNco's deliberate strategy to maintain a relatively flat AVC pricing curve and attempt to recover revenue from CVC charges instead. many small businesses may well prefer slower ports but higher data allowances. however, NBNco's one-size-fits-all pricing strategy and the shutting down of all other fixed-line providers will leave small businesses stranded with no alternative.
*It's also no surprise the CEO of a mining company wants money poured into the Pilbara region, it's technically his back yard, obvious self-interest here.*
Jac Nasser is not the CEO of BHP, he's the chairman. also, prior to "retirement", his entire corporate career was spent in the automotive industry. also, he's not suggesting that the Government should spend $50bln on mining. he's saying there's more productive ways of spending taxpayers' money, including promoting "centres of excellence" which help train and skill the workers required to accelerate the expansion of our mining exports which prop up our entire economy.
*As to the CBA, I'm surprised any big business that relies heavily on communications would be against the NBN – yes, ATM's and EFTPOS machines do not need fiber, but you'd think they would be happy with decreased operating costs of operating their internal services – or are they simply making too much money to care? They use Telstra exclusively to operate, pricey :)*
large enterprises will not pay $20,000/Gbit for their large data transfer requirements. there's a cherry-picking exemption in NBN legislation for private PtP networks which will service big financial institutions like CBA at cheaper rates than NBNco's CVC charges.
“revenue from mining exports pay for our imports”
Actually about half would be closer to the truth.
‘investing in productive infrastructure increases our “competitiveness” in a true sense.’
Indeed thats why the NBN is so important to our industries.
‘spending $50bln pushing fibre to residential premises merely improves our “consumption capacity”. the vast majority of household residences do not “produce” any GDP (income).’
Incorrect, its not $50 billion, its less then what we got from selling Telstra, so there has been no net long term investment in telecommunications from the government.
There is no such thing as consumption without production, increasing our consumption capacity also boosts production potential.
The vast majority of houshold residences consume services, NBN makes those services more fficient and open the door to new types of services.
‘all the NBN does is allow us to watch more TV and movies.’
The internet is for porn ?
Even Liberal senator Richard ‘The Ludite’ Alston recognised that its also for computer games, for your information, the internet is used a lot in the finance industry, transportation, health, IT, its actually rather interactive, unlike TV and video machines.
It also allows people to upload quality video rather than just download, also makes up less dependent on hosting our content offshore, which means we dont import services from overseas.
‘most of the popular media we consume is imported — we run a deficit in terms of our “cultural balance of trade”.’
OMG, get a grip, first its the ‘boat people’ now the right is concerned about all the foreign movies invading our shores ???
I give up.
*There is no such thing as consumption without production, increasing our consumption capacity also boosts production potential.*
firstly, when you talk about “competitiveness”, you have to distinguish between “domestic trade” and “international trade”.
in terms of “domestic trade”, sure, by plonking billion dollars of taxpayers’ money into one form of expensive infrastructure, you’re artificially distorting the relative costs of providing certain services in favour of one medium over another medium (e.g. downloading movies vs pick-up from video rental store). it actually results in net economic loss (or inefficiencies) because you’re intervening to artificially tilt the relative economic attractiveness of one means of doing business vs another, as opposed to letting the market self-organise to reflect underlying, real relative costs (ex-distortionary subsidies).
in terms of “international trade”, how does pushing fibre to every residential premise allow us to be more productive in terms of earning higher export income from products or services? (please don’t confuse fibre access for business with fibre for household recreational use.) the vast majority of Australians do not work from home. conversely, universal fibre access at residential premises actually creates a domestic market for international service suppliers (e.g. financial advice, etc). you’re using taxpayers’ money to subside foreign productive potential.
*also makes up less dependent on hosting our content offshore, which means we dont import services from overseas.*
that makes no sense at all. so we’re hosting more content offshore because we have slower domestic links now? firstly, don’t confuse the NBN fibre access network with IP transit. secondly, domestic IP transit is much cheaper than international IP transit.
There is no influx of “taxpayers dollars”, the government is putting in $28 bil in equity which it expects to get back by 2040.
The government got $ 38 bill from selling Telstra, not counting the 17% that went to the future fund.
So even if NBN dont repay any of the 28 bil, the government hes still taken $10 billion out of our teleco network.
*There is no influx of “taxpayers dollars”, the government is putting in $28 bil in equity which it expects to get back by 2040.*
the billions of dollars that NBNco has spent already comes straight from the Federal Budget. most of that $27bln equity investment in the NBN will never be recovered.
*So even if NBN dont repay any of the 28 bil, the government hes still taken $10 billion out of our teleco network.*
that’s not how it works. that $38bln or whatever has already been spent. the Federal Government is in debt and the budget is in deficit.
Your thinking of cashflow, that not important in the long term.
Long term there is no cost to the Australians Govenrment
*Your thinking of cashflow, that not important in the long term.*
forget about long term – you won’t survive the short term without cashflow or liquidity ;)
*Long term there is no cost to the Australians Govenrment*
consider Singapore:
i/ third highest population density in the world;
ii/ 600 times more dense than Australia (after adjusting for uninhabited territory).
http://en.wikipedia.org/wiki/List_of_countries_by_population_density
if you take an average of the retail cost of residential fibre provision, you’re looking at a median ARPU of ~A$90/mth (assuming long-term AUD/USD of 0.80).
http://info.singtel.com/personal/communication/internet/exstream/price-plans
compare to NBNco (Australia):
median NBN retail pricing of A$70/mth:
http://www.exetel.com.au/residential-fibre-pricing-mainland.php
1/ total area of Singapore island is 694 sq km. the total area of (urban) Sydney is 1,687 sq km, or two and a half times the area of Singapore island;
2/ NBNco is pushing fibre beyond urban areas of Australian capital cities all the way to Whoop Whoop;
3/ commonsense tells you that the average cost of fibre per premise for NBNco will be MULTIPLES that of Singtel’s tiny, compact and dense footprint which services a majority of multi-dwelling (multi-storey apartment) units;
4/ current NBN pricing is clearly UNSUSTAINABLE and UNVIABLE — private industry suggestions of median retail costs of AT LEAST A$200/mth if you roll fibre out to 93% are highly credible (probably still gross underestimate when you factor in Singapore’s lower labour costs and other factors such as building type, etc);
5/ NBNco will definitely go bankrupt and require a taxpayer bail-out.
private industry suggestions of median retail costs of AT LEAST A$200/mth if you roll fibre out to 93% are highly credible
Source? Context? Your whole argument hangs on this figure and unsurprisingly I cannot verify it.
also, note the Singtel cap on international links of “up to 15Mbit”. do you know how much it costs to provision international transit for 12.5Mbit uncontended? you’re looking at a monthly 5-figure bill. let alone, 25Mbit… 50Mbit… 100Mbit.. 1Gbit… you guys are deluded.
And until you can verify that figure dear Tosh you have quite literally pulled it out of your arse with speculative analysis.
I agree that rolling out fibre will be more expensive, we already know this from the fact it is projected is costed to over $30 billion dollars. That much is obvious.
The problem is, dear Tosh, is you further attempted to solidify this idea with a figure that demonstrates an unsustainable pricing model. This figure cannot be verified, so where is it, where is the proof that it’ll require a medium retail pricing of $200/m to sustain the NBN? Where did you get this figure from? If it was your figure what calculations did you make? What assumptions did you make?
I can pull a figure out of my arse too you know Tosh. For example if I said the NBN medium retail pricing will only need to be $5/m to sustain the NBN, you would now be ripping that figure apart with evidence that shows it needs to be higher than that, or in depth analysis of my assumptions that lead to this figure. Note: I did actually pull this figure out of my arse for argument, which should be obvious considering how lowball it is, I actually believe the sustainable pricing medium will be higher than this by at least an order of magnitude.
Well dear Tosh, it goes both way, so cough up evidence, or retract that figure.
*And until you can verify that figure dear Tosh you have quite literally pulled it out of your arse with speculative analysis.*
my reasoning doesn’t hang on private industry comments — it EXPLAINS it.
*I can pull a figure out of my arse*
frankly, i don’t want to know what functions you perform with your back orifice…
*cough up evidence, or retract that figure.*
why? i really couldn’t be bothered googling the article which reported the “private comment” by an industry player. you’re just trolling me ‘coz you got owned hard yesterday ;)
http://www.southparkstudios.com/clips/154479/served
I didn’t get owned hard, I went out for a very nice dinner and a show, and came back to some bullshit about how bandwidth costs are static. You’ll note the reply I provided in the interim.
If the private industry comments you refer to have no bearing on your argument, what is the harm in providing them? You see, I’ve actually been Googling for the past hour and I have yet to find one of these so called private industry comments you refer to.
“forget about long term – you won’t survive the short term without cashflow or liquidity ;)”
There is a saying in investment circles, “A short term position is a long term position gone wrong.”
Your saying, dont even try and have a long term plan, you are planning to fail.
Its the governments job to look after the nations long term interests, you cant just take private industry ethics and apply it to the government, they have different purposes.
You are failing hard by applying arguments that are out of context.
Damnit, i fail at arguing… The saying actually goes “A _long_ term position is a _short_ term position gone wrong”
But my view is still that government should plan for the long term, and you are wanting to apply short term business objectives to government programs.
The government is not a business, and should never be, government is about people, business is about dollars. Clear distinction.
The NBN is about providing services to people that business cant because they fail at long term planning. People who care more about money than people dont want the government money spent on people so they object to the NBN. They dont trust it as an investment (that earns interest) because of who runs it.
We clearly have no common ground on our differing views.
@NightKhaos
*You see, I’ve actually been Googling for the past hour and I have yet to find one of these so called private industry comments you refer to.*
your Google-fu needs some polishing up:
http://www.austlii.edu.au/au/legis/cth/bill_em/iaabnaopb2009787.txt/cgi-bin/download.cgi/download/au/legis/cth/bill_em/iaabnaopb2009787.pdf
;)
The usual comments, tied in with the economic bias of groups like Business Council of Australia. Gee, I wonder where Mr Nasser would prefer public funds going… broadband… or ports, roads, railways, airports and other infrastructure to support his mining businesses?
Where is the link with the Business Council of Australia in that report?
Maybe its one our journalist friends might care to investigate. Nah, too much like work.
err what?
If you are going to make accusations, then back them up, else you are just spreading FUD
The funny thing is the NBN is paid for entirely through bonds. It won’t affect any other government projects. Even if it weren’t completely off-budget, the annual outlay for the NBN is miniscule compared to the overall infrastructure budget, let alone defense spending.
If Verizon in the US can manage to make their FTTH network profitable after just a few years despite having to compete with cable ISPs, it’s virtually guaranteed an FTTH monopoly government provider who requires a modest 7% annual return will be able to financially succeed.
*If Verizon in the US can manage to make their FTTH network profitable after just a few years despite having to compete with cable ISPs……*
Verizon only built FTTH to ~5% of the population, there was only 30% take-up and little consumer interest in paying more for faster broadband, so Verizon halted the FTTH roll-out altogether. same experience in France with initial very limited roll-out of fibre subsequently halted because of lack of consumer interest.
Maybe it’s just me but I think 30% take up is pretty good.
For comparison – our third largest ISP, TPG, only has about 5% market share – iiNet, #2, has about 7% – Telstra likely has less than 20%.
Would you suggest noone has a interest in cheap, large quota services, because TPG only has 5% market share ? Of course not, Teoh is laughing all the way to the bank and is operating the most profitable telco in Asia Pacific.
*Telstra likely has less than 20%.*
in terms of retail fixed broadband, Bigpond has 50% market share (2.5mln SIOs out of 5mln). more broadly, 70% of households have some form of fixed internet (either dial-up or ADSL). once you factor in revenue from households with phone lines only, you’re looking at more than 80%. that is, the current network which was mostly built decades ago (but continually replaced in piecemeal fashion via routine maintenance and expanded via greenfield estates) has at least 80% take-up rate.
in comparison, when Verizon laid a new fibre network over the most attractive markets in its region of the US, it only had 30% utilisation. 80% vs 30% is a huge revenue gap. the reason why it subsequently halted the roll-out was because if it continued rolling-out to the less prosperous markets, the overall utilisation rate of 30% would most probably fall BELOW 30%. this is the same reason why Telstra and Optus halted their fibre roll-outs. marginal extensions of the network footprint would result in higher average cost per premise and lower ARPU.
*Would you suggest noone has a interest in cheap, large quota services, because TPG only has 5% market share ?*
you’re confusing the overall utilisation of a new or old piece of infrastructure with how that “aggregate utlisation” is divided up between various access seekers at the retail level. Verizon’s fibre network isn’t open access – that 30% is “aggregate utilisation”, not the market share of a single retail operator reselling Verizon fibre amongst many others.
Just so you know, Verizon is a vertically integrated local monopoly, they are not open access (most US telcos work that way)
@Merlinish
“The funny thing is the NBN is paid for entirely through bonds.”
Here we go again, what bonds?
“he was not completely familiar with the details of the NBN”
Sums up most of the debate really.
Only if you want it to, much much more was said of course, but you will cut around all of that.
Seems like Delimiter could post a page of known knowns and known unknowns for the NBN, and then a set of arguements for and against, it would save a lot of server space, than many argueing the same thing in most forums.
*There is a saying in investment circles, “A short term position is a long term position gone wrong.”*
yes, an “investment” is a “speculation” gone wrong. if NBNco was an investment holding company with diversified positions in TransACT, BigAir, Optus HFC, Opticomm, iiNet, etc, then even if one of those companies goes bankrupt, they are still relatively safe. NBNco has all of its eggs in one basket (93% FTTP).
*Your saying, dont even try and have a long term plan, you are planning to fail.*
bullshit. where’s NBNco’s “long term plan”? Malcolm Turnbull sponsored a private member’s bill requesting that NBNco release a detailed 10-year business plan…. all we got after much hand-wringing was a “3-year Corporate Plan” (until the 2013 election) with very little detail on costing and revenue forecasting.
*Its the governments job to look after the nations long term interests, you cant just take private industry ethics and apply it to the government, they have different purposes.*
it’s the government’s job not to SQUANDER taxpayers’ hard-earned income on white elephant projects.
*But my view is still that Government should plan for the long term, and you are wanting to apply short term business objectives to government programs.*
NBNco is a “business” with government-guaranteed financing. (‘coz no sane investor would lend money to NBNco based purely on the “strength” of its balance sheet or infrastructure investment programme. NBNco is basically junk-rated.)
*The NBN is about providing services to people that business cant because they fail at long term planning.*
rubbish. certain vested-interests cry “market failure” ‘coz they want something they can’t afford and then expect the Government to subsidise it from taxpayers’ revenue. the VAST MAJORITY of Australians do not need or want residential fibre access.
don’t blame me… you’re the one deliberately making an ass of yourself trying to argue that “Google won’t benefit from a Gbit fibre access network” and “Google can’t afford bandwidth”
Actually my argument is that they will only marginally benefit from Gigabit fibre and that running YouTube is an expensive endeavour. But don’t let that get in the way of a good insult eh Tosh?
YouTube might be in profitability, that doesn’t magically make it cheap for Google to run.
Also, I thought you were going to retire come DisqUs, I’m disappointed. XD
an internet company will only “marginally benefit” from an expansion of the internet.
LOL
#barrelbottomscrape
When compared to general investment and improvements like the Coalition propose, yes. I have covered this in detail, it’s not my fault you’ve decided to ignore everything I said previously.
You know what tosh, I’m done. Enjoy your hollow victory. A toast to Tosh everybody!
awww… Renai… Disqus… is YUCK…. the flow of the arguments is totally destroyed… plus the pagination… ewwwwww
Give it a try tosh, it’s worth it :)
*raises glass* ;)
cheers everybody
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