news A Productivity Commission review of the National Broadband Network Company’s behaviour in greenfields fibre rollout environments has largely exonerated the company of any uncompetitive behaviour, following complaints made by existing service providers in such areas.
Throughout most of Australia, NBN Co will be replacing existing fixed broadband networks such as HFC cable and copper when it rolls its fibre network out around the nation over the next decade. However, in a small number of areas, predominantly new housing estates, it will be rolling out new fibre infrastructure where there was no previous broadband network. In these areas, the Government has stipulated that NBN Co will act as the provider of ‘last resort’; meaning that if no other service provider has already deployed high-speed broadband in these regions, NBN Co will move in to provide a service.
However, a number of small existing service providers — OPENetworks, Comverge Networks and Service Elements — had complained throughout April and June this year about NBN Co’s strategy, alleging that the company had actively sought business in areas where it was commercially viable for existing service providers to operate. The company’s government funding and its low expected rate of return meant it could abuse its position, the trio alleged at the time.
However, the Productivity Commission has largely exonerated NBN Co of any wrongdoing, in a detailed report published yesterday by the commission’s Australian Government Competitive Neutrality Complaints Office (AGCNCO) in response to the issues raised by the service providers.
In the report, the office addressed a wide range of issues relating to NBN Co decisions and operations. For example, it examined the decision by NBN Co to operate in greenfield developments as an alternative provider, the use of its profile to promote itself to the development industry, its long-term contract with Telstra, its tender process for establishing a panel of construction contractors to build fibre, its pricing model, the Government’s equity funding in NBN Co and the issue of ministerial determinations which may relate to the area.
In all of these areas, AGCNCO found that there was no breach of the Government’s competitive neutrality policy.
In two areas — relating to the absence of any quantification of the non-commercial benefits to be delivered by NBN Co, and the absence of a quantification of NBN Co’s community service obligations, the report stated that NBN Co might be in breach in future of the competitive neutrality policy — with relation to the rate of return the company plans to make on the Government’s investment and the expected timeframe for that return to be made.
AGNCNO referred to those potential breaches as ‘ex ante’, meaning the breaches could occur in future. As a consequence, the agency wrote:
“The Australian Government should arrange for an analysis of the nature and magnitude of the non-commercial benefits required to be delivered by NBN Co. On receipt of the analysis, the Australian Government should put in place accountable and transparent community service obligation funding.”
“To comply with competitive neutrality policy, NBN Co would need to adjust its pricing model by taking into account funding by the Australian Government for its community service obligations and would need to demonstrate that the adjusted pricing model is expected to achieve a commercial rate of return that reflects its risk profile.”
Turnbull and business fire up
Shadow Communications Minister Malcolm Turnbull immediately jumped on the report last night, claiming the document showed the NBN policy was “anti-competitive and uncommercial”, despite the Productivity Commission largely having cleared NBN Co of any wrong-doing. Turnbull has repeatedly called for the Commission to conduct a cost-benefit analysis into the NBN policy as a whole.
“The PC said NBN Co was using access to capital provided by taxpayers to tilt the playing field against private competitors, and warned projected returns on the project were so low they are in breach of ‘competitive neutrality’,” claimed Turnbull. This claim, as far as Delimiter can ascertain, is objectively incorrect, with the Commission in fact stating that NBN Co had not currently breached competitive neutrality.
“Good governance is something learnt over successive generations in Australia; the more policy-makers learned, the more they erected a legal scaffolding to protect the economic principles that have ensured our continuing prosperity,” Turnbull added in his statement, available in full here. “And yet, the NBN Co has secured extraordinary concessions from competition law, freedom-of-information law and Government oversight.”
“Now the Productivity Commission has revealed it breaches competitive neutrality policy as well. It is little wonder Senator Conroy was so eager not to have the Commission conduct a rigorous cost-benefit analysis.”
The Business Council of Australia has followed Turnbull in slamming the Government’s NBN policy as a result of the Commission’s report. BCA chief executive Jennifer Westacott said in a statement that the Commision had found NBN Co’s target rate of return of seven percent was below a commercial rate of return as required of all government businesses under competitive neutrality policy.
“The commission has recommended that the government assess the non-commercial benefits of the NBN investment to justify the network’s roll-out at a lower than a commercial rate of return,” Westacott wrote, adding that the best way for the government to comply with the recommendation was to conduct a full and transparent cost–benefit analysis of the NBN policy.
“It is not too late for the government to undertake a cost–benefit analysis to demonstrate whether this investment and its associated impacts on competition are the best way forward for developing the communications sector and lifting productivity growth,” the executive added.
Conroy’s response
Responding to the issue, Communications Minister Stephen Conroy pointed out in a statement (which is available in full here in PDF format) that in relation to NBN Co’s role in new developments, the report found that NBN Co was not in breach of policy.
He said the AGCNCO was misguided in its view that the government’s target rate of return for the NBN could be a potential ex ante breach of the competitive neutrality policy.
“The Australian Government has established NBN Co to build the NBN because the private sector was unable to do so,” Conroy said. “While the company is to operate as a commercial entity, it is not expected to earn a private sector rate of return. To expect it to earn a private sector rate of return would fail to recognise the reasons the government decided to make this intervention and would defeat the purpose of doing so.
“In order to earn the commercial rates of return that the report is recommending, higher prices or lesser services would be necessary in rural and regional Australia. The alternative of funding of rural subsidies from the Budget would create permanent uncertainty. These are not acceptable outcomes. The government does not agree with the AGCNCO’s findings in these areas and will not be adopting the related recommendations.”
Yes it’s funny how Conroy backs sections of a report when it suits but it will ignore any section when it doesn’t.
‘NBN Co’s public funding model is a potential breach of the government’s competitive neutrality policies, according to an investigation by an office of the Productivity Commission.
It has recommended the government analyse NBN Co’s non-commercial benefits and pay for those separately, and that NBN Co provide a higher rate of return to reflect the risks of the project.’
http://www.theage.com.au/business/nbn-co-funding-under-fire-20111208-1olax.html
all politicians do that alain.
you can’t trust any of them.
Well there is not much they can do about that. The whole project is designed to return a minimal ROI to make rolling out broadband to low density areas feasable. And the complaint is, only expecting 7% ROI gives them an advantage over companies wanting 20% ROI. Well duh! Isn’t that what competition is about triming costs and profit margins to get the business? I am sure if they NBN co rolls out to an area that they couldn’t get a high ROI they wouldn’t complain.
Who were the two guys complaining about ISPs cherry picking and poor Telstra having to service all the unprofitable areas? Sound a bit like hypocracy to me to complain about NBN Co having a lower ROI and therefore having an advantage.
Yeah – it’s hilarious. The point of competition is to drive prices lower, yet they’re complaining because they can’t drive prices higher..
*Yeah – it’s hilarious. The point of competition is to drive prices lower, yet they’re complaining because they can’t drive prices higher..*
the point of “market competition” is not to drive prices lower per se. if “low prices” is a policy end in itself, the ACCC should set WLR/LSS/ULL at $0/mth. also, those countries which are still enforcing laws against anti-dumping and predatory pricing should completely abandon these regulatory rules.
rather, the point of market competition is to ensure that prices reflect underlying costs, thereby, ensuring efficient allocation of resources. when the Government intervenes in the market and uses its fiscal powers to prop up a GBE which operates in an uncommercial manner, the Government’s actions are prima facie in breach of the rules of competitive neutrality.
in the case of the NBN, the DBCDE’s defence of its policy is that the deviation in NBNco’s projected 7% return below “commercial ROR” is attributable to NBNco achieving certain “non-commercial objectives” (or fulfilling an “implied CSO”). in reply, the AGCNCO report has essentially pointed out in very polite terms that it is absurd to justify the clear breach of competitive neutrality rules on this basis because the Government hasn’t even bothered to clearly delineate in concrete terms what these “social objectives” (specific CSOs) are in the first place in its policy formulation.
Yeah but tosh you are not embracing the all encompassing NBN objective, all Conroy/Gillard has to do is to utter that famous phrase over and over that justifies any cost, nulls out any negative argument about ROI, no matter how detailed and researched that analysis is.
The NBN is NATION BUILDING – cue video Australian Flag waving in the breeze and fade up the audio of Advance Australia Fair mixed with black and white historical images of workers building the Snowy Mountains scheme.
Never ever underestimate the power of political BS.
:)
*Never ever underestimate the power of political BS.*
political bullshit? you want to talk about political bullshit?
how about this completely RETARDED statement by the bureaucratic clowns at DBCDE:
http://delimiter.com.au/wp-content/uploads/2011/12/MR_111208-Competitive-Neutrality-Report_FINAL-1.pdf
“As the government has said many times, it is doubtful these benefits, which are so self-evident and pervasive, could be meaningfully quantified, and if even they could, whether there would be any particular merit in doing so.”
either the benefits of fibre are so metaphysical, so elusive, so subtle, so “fifth-dimension”, almost imperceptible… that they can only be comprehended by meditating in a yogic position on a giant lotus leaf floating in a tranquil pond high up in a holy mountain shrouded with magical mist…. or, the benefits are so APPARENT… so EVIDENT… so PERVASIVE…. that they should be susceptible to some form of quantification. f–k, if we can accurately pinpoint a price for carbon that will precisely reduce global temperatures by X centigrade in 100 years’ time, we can “quantify” the f–king orgasmic benefits of 100Mb/s downloads.
and the last bit: “and even if it’s possible to quantify the benefits, there would be no particular merit in doing so..” WTF? there’s no merit is assessing and comparing the quantum of benefits against the massive $50bln cost of delivering these supposed “benefits”?
who writes this nonsense?
“and even if it’s possible to quantify the benefits, there would be no particular merit in doing so..”
Yes I thought that was a classic, I thought I was reading something from a Monty Python script, perhaps that’s where they got it from.
To argue competitive neutrality you have to view telecommunications as a luxury good. Gas connection and electricity were once a luxury item, now the are an essential service. I think the same could be said of telecommunications (thus the garanteed access to a phone system). It is or is very close to broadband being an essential service. Have a gas pipe or power line (or phone line) running to your place is just the now, now it’s a pipe for braodband.
I don’t equate a fibre connection to each and every residence (many of whom only want a bog standard voice service that works just like PSTN) on the same level of ‘need’ as a essential service like gas and electricity.
If my PSTN service goes down I use my mobile, I assume when the NBN FTTH goes down I will still be able to use my mobile.
And if your gas goes out you can use an electric fry pan or bbq. If you loose electricity you can use torches or candles. If your fixed fibre connection is down you use wireless.
As I said it is borderline now, but it won’t be as time go on. Already there are things you can’t do without a connection. I couldn’t pay my mortgage for example. Banks charge you for using a teller now, only online is transaction fee free. Talk to most governement departments and many things can only be done online now. Or if there is a paper form to fill out they tell you to download it.
Yes, if you had some mobile broadband you could do this, and if not buy a 3G dongle. But over the next 50 years using wireless for some services, education, etc, will be like trying to access a modern web site via dialup. Wireless may be able to keep up with current NBN speed, but it does have physical limitations that will see it only provide fractions of the bandwidth available via fibre.
Yes you can argue why would people need more bandwidth and be as wrong as all the people who thought some new limit was rediculously high, wrong in very short periods of time.
Oh, the irony alain. It burns me.
Isn’t it just as “funny” when Turnbull and yourself also ignore any section that disagrees with your position? This report is a perfect example. The PC investigated 9 complaints, and found all but one were baseless, and the final one was only a “potential” breach.
Maybe I haven’t been watching closely enough, but I haven’t seen Mr Turnbull (or yourself) loudly proclaiming that the PC gave the NBN a tick on almost every point they checked….
Lulz…
@AustImages
I don’t have a position on the effect of the NBN on existing Greenfield rollouts, I know you and other pro-NBN pundits would prefer it if only the good stuff was constantly mentioned but the report is not certainly all good, and I was also emphasising Conroy’s ongoing attitude to anything he doesn’t like – ignore it:
‘Senator Conroy said the Government would not be adopting the related recommendations of the commission’s report.’
http://www.abc.net.au/news/2011-12-08/conroy-dismisses-nbn-anti-competitive-report/3721386/?site=sydney
.
*The PC investigated 9 complaints, and found all but one were baseless, and the final one was only a “potential” breach.*
you have completely mischaracterised the nature and significance of the AGCNCO’s findings.
the fundamental issue that AGCNCO had to address is: “does NBNco, in its current structure and manner of operation, violate the principles of competitive neutrality governing GBEs?” the answer to this question provided by the AGCNCO is a resolute: “yes”.
the finding was primarily based on the observation that NBNco is not projected to earn a “commercial ROR” commensurate with a company with NBNco’s risk profile. the AGCNCO report states that to comply with competitive neutrality, the Federal Government has to restructure the way the “social objectives” of its broadband policy are delivered so that NBNco as a stand-alone entity earns a “commercial ROR”.
the rejection of the applicants’ claims of CN breach on alternative grounds was a straightforward process because none of the other issues the applicants tried to raise had anything to do with “competitive neutrality”. for example, the question of whether NBNco should be acting as a provider of “last resort” or “alternative resort” is a valid policy question that has economic implications, but does not fall under the specific scope of “competitive neutrality”.
basically, the wide raft of complaints received by the AGCNCO reflects the extreme level of frustration with poor government policy amongst greenfield builders who see this CN complaints process as a public platform (or valve) to air (or vent) their overall grieviances with DBCDE’s entire policy approach.
to suggest that the AGCNCO “has largely exonerated NBNco from wrongdoing” is like a murder trial where the prosecution accuses the defendant of killing the victim by a series of methods: asphyxiation, stabbing, poisoning and battering with a blunt tool over many hours. if the pathologist’s report subsequently finds that there is no evidence of asphyxiation, stab wounds did not cause critical damage, no traces of poison detected in blood stream, however, severe head trauma caused by blunt weapon was a direct cause of death, does that mean the accused murderer is “largely exonerated of killing the victim” because most of the alleged actions that supposedly caused the victim’s death are completely refuted by medical evidence, and death by murder was only established under one of the claims the prosecution put forward?
this is patent nonsense.
trying to spin a report by an independent government agency that has effectively delivered a slap in the face of the Labor Government and endorsed the Coalition’s approach of achieving “social objectives” via explicit CSOs as a “win for NBNco” is pathetic and biased political cheerleading.
Will Turnbull ever stop telling porkies when it comes to the NBN? He is clearly misleading the public. His only goal is to destroy the NBN, not provide what is best for Australia. So sad that he keeps doing this sort of thing. Must be time for him to claim Quigley was bribed again isnt it?
Plain english translation:
Consumers would pay more if other commercial operators rolled out greenfields because they find 7% return unacceptable, and they don’t think they can undercut the NBN on costs.
The purpose of the NBN as Conroy says is to provide cheap ubiquitous broadband.
“Consumers would pay more if other commercial operators rolled out greenfields because they find 7% return unacceptable, and they don’t think they can undercut the NBN on costs.”
This is the crux, alain and co believe the ROI has to be considerably higher.
That reason is due to shareholders requiring dividends (never mind expectations of shares performing) thus you have to loot and pillage the entire populous to redistribute the income from many, to the pockets of few.
The government can look at a lower average return because (drum roll) we the tax payer are the investor; key there is “investor”. If you look at turnbull’s alternative it appears to use tax proceeds and there is no return to the tax payer as a consequence.
Doesn’t take a rocket scientist that the “cost” of Turnbull’s solution is actually higher because the tax payer won’t see any return. $48 billion that is offset by income to a point where it becomes a net gain due to network growth versus time.
But it’s ok, because we’ll ignore investor returns for the NBN, but consider them sacrosanct when considering Telstra, in order to paint the NBN as “more expensive” over the FTTN tax black hole. ;)
‘This is the crux, alain and co believe the ROI has to be considerably higher.’
Well it’s not the crux at all, I don’t think they will even get 7%, the two dream time ‘seven figures’, 7% return and 70% of residences passed using a active NBN BB Plan..
‘Doesn’t take a rocket scientist that the “cost” of Turnbull’s solution is actually higher because the tax payer won’t see any return. $48 billion that is offset by income to a point where it becomes a net gain due to network growth versus time.’
Well that’s interesting that you all by yourself reached that amazing conclusion because it has not been totally costed at all yet, but hey there are a few accounting terms chucked in there, that should do it eh?
@Brett Haydon
+1
I agree with Alain, there is no way the NBN will earn a 7% return when that figure assumed that most users would choose the cheaper 12/1 plan when the opposite is becoming true :)
http://i.imgur.com/Rb3mq.png
The caption should really read “The facts just hit you in the face” :-)
But what you and HC fail to say when commenting on that graph with unrestrained glee is that is based on the history of NBN pilot sites and plan sign-ups.
Do want a 12 Mbps plan for free or a 100Mbps plan for free?
Both of those options are a ROI of 0%.
“based on the history of NBN pilot sites and plan sign-ups.”
Got a source to back up that claim. The graph says “Early adopter indications” that is not in dispute at all but it doesn’t say anything about “history of NBN pilot sites”, that seems to be just an assumption you have made.
“Do want a 12 Mbps plan for free or a 100Mbps plan for free?”
So even though according to you both plans were free people still signed up for 12/1, 25/5 and 50/20mbps plans? Why is the 100/40mbps plan not at 100% and the rest at 0%?
Oh come on HC you know those statistics reflect the freebie pilot site residences, where are the ‘early adopter’ NBN sites, on the Moon?
You make a fair point why in that case are not all residences 100Mbps? – I suggest that many residences anticipated they would have to pay for it at some time and decided to have a slower speed plan because that’s all they needed anyway because they knew the honeymoon would be over at some point and perhaps the ISP’s were vague about them being able to change or just didn’t know from a 100Mbps at no cost after the pilot phase was over.
Irrespective of all that how about we get some more meat into the statistical sample and at least 12 months of NBN at full commercial rates before you brag about speed breakup percentages heavily skewed by 6-12 months of piloting.
I will believe the statistics produced around October 2012, independently audited.
“Oh come on HC you know those statistics reflect the freebie pilot site residences”
There is no information indicating that on the graph or the PDF it is extracted from, where are you getting this information from? In other words: Do you have a source to back up your claim?
“I suggest that many residences anticipated they would have to pay for it at some time and decided to have a slower speed plan because that’s all they needed”
So on the one hand you are saying this graph represents “Early adopter indications” and on the other it doesn’t represent “Early adopter indications”? Make up your mind.
“Irrespective of all that how about we get some more meat into the statistical sample and at least 12 months of NBN at full commercial rates”
Great. So you can’t claim any numbers given now as an indication the NBN is failing.
“before you brag about speed breakup percentages heavily skewed by 6-12 months of piloting.”
No one is bragging, it’s pretty clear and accepted that this graph is “Early adopter indications” it even says “Early adopter indications” on the graph, pretty hard to miss but I have no doubt about two things 1. The percentage 12/1mbps will rise but not as much as NBNco were predicting. 2. The 12/1mbps plan will always be the least popular plan.
Oh also there is one vital statistic missing, a voice only plan off the NBN ONT box voice port, they must still be working on it, look forward to the retail price equaling Telstra Homeline Budget aren’t you?
“look forward to the retail price equaling Telstra Homeline Budget aren’t you?”
Nope. Only fools waste money on Telstra products however what I do look forward to is you whining about if it’s even $1 more because it’ll mean you’ll simply have to go without a phone… btw you seem to be quite obsessed with this phone only thing, perhaps you could shed some light on it or at the every least explain why you think NBNco wont be able to match Telstra.
Well it’s quite simple really as you well know, $24 WHOLESALE for 12/1 Mbps doesn’t translate very well into $22 RETAIL for voice only PSTN
I checked over at Internode for voice ONLY plans because they seemed to be the most pro-active in trialling the voice port facility on the NBN box – nope nothing there either.
http://www.internode.on.net/residential/fibre_to_the_home/nbn_plans/
The nearest I can see to it is this statement:
‘Internode is also currently conducting extensive customer trials of a ‘traditional’ landline phone service, via the analogue phone jack on your NBN network termination device. We plan to offer you the choice to use that for your phone calls in the coming months, with access to the same great NodePhone calling rates.’
Hmm they deliberately avoided using the term ‘voice ONLY service’ there, it reads you can use the voice port as a substitute for VoIP if you want (.ie. use your existing PSTN handset), but I bet you have to take a data plan like you do currently, which isn’t anywhere near $22 retail.
Oh, I thought it was because the other prices were decided and very competative and it was the last bit of pricing FUD you had left.
“Well it’s quite simple really as you well know, $24 WHOLESALE for 12/1 Mbps doesn’t translate very well into $22 RETAIL for voice only PSTN”
http://www.nbn.gov.au/frequently-asked-questions/voice-services-over-the-nbn/will-my-landline-phone-cost-more-if-i-connect-to-the-national-broadband-network/
“Will my landline phone cost more if I connect to the NBN?
No. The government is committed to the continued availability of voice only services for those who need it, at no greater price than they pay now.”
Happy now?
LOL, you know he isn’t. He will not accept that. What will make him REALLY unhappy is if when the phone plans come out they are cheaper. Yes, his arguement goes that the NBN needs a comparable plan to the current cheapests one. But if there actually IS one that is one less thing to argue against. I am not sure what would need to happen. The NBN could be installed for zero dollars and everyone have free unlimited access and there would still be something.
‘Happy now?’
Where can I sign up HC?
The same place you can sign up for the NBN. Oh wait, it’s not been built yet…
So commercial NBN plans are NOT available from Internode ,iiNet, Primus,Extel etc into NBN release areas?
Can you get one from Telstra?
*Shadow Communications Minister Malcolm Turnbull immediately jumped on the report last night, claiming the document showed the NBN policy was “anti-competitive and uncommercial”, despite the Productivity Commission largely having cleared NBN Co of any wrong-doing.*
you completely misunderstand the nature and purpose of the policy of “competitive neutrality”.
this is not an “open and shut case” murder trial…. “guilty”, “not guilty”, “exonerated”, “case closed”, etc. the principles of “competitive neutrality” are a set of rules governing how GBEs should be evaluated, structured and operated.
this is the key paragraph in the report:
“To comply with competitive neutrality policy, NBN Co would need to adjust its pricing model by taking into account funding by the Australian Government for its community service obligations and would need to demonstrate that the adjusted pricing model is expected to achieve a commercial rate of return that reflects its risk profile.”
without delving into too much detail, the AGCNCO is basically saying that the Federal Government should not try to embed the “non-commercial objectives” of their broadband policy into NBNco in an opaque fashion. by doing so, it is impossible to ascertain to what extent the deviation in NBNco’s projected return below the “commercial ROR” is due to satisfying the “non-commercial objectives” imposed on NBNco, and to what extent NBNco is deliberately under-recovering costs (which breaches “competitive neutrality”).
so, in order to comply with competitive neutrality policy, the Federal Government has to make the NBN’s “social objectives” transparent and deliver them by quantifying the required “dollar amounts” to achieve these objectives and separately inject these subsidies into NBNco by structuring them as on-budget funding in the form of a “community service obligation” (CSO). only by following this process will the Government’s NBN policy be consistent with the policy of competitive neutrality.
it’s not a case of “oh, we can’t ascertain the impact of CSOs on NBNco’s bottomline, so we don’t know for sure that NBNco is under-recovering costs in a manner that is prohibited, hence, NBNco is not guilty of breaching competitive neutrality!” this is not a static murder trial. rather, the policy prescribes a set of “best practices” that should be complied with to satisfy the principles of competitive neutrality. failure to do so breaches “competitive neutrality”.
in other words, NBNco’s current setup where it is explicitly designated by the Federal Government under written departmental policy to operate as a “commercial entity” while simultaneously imposing “non-commercial objectives” upon it breaches competitive neutrality. the “social objectives” of Government’s NBN policy should be precisely delineated, quantified and funded on-budget as an altogether separate process to NBNco.
the AGNCNO report effectively endorses Coalition policy on NGN implementation.
*AGNCNO referred to those potential breaches as ‘ex ante’, meaning the breaches could occur in future.*
you completely misunderstand why the AGNCNO frames its assessment in terms of “potential, ex-ante” breaches of competitive neutrality, rather than “existing” breaches. perhaps you failed to read this paragraph on pg 17:
“This investigation is about a government business activity which is in its infancy and has yet to produce ‘business as usual’ costs and revenues…. As such, the AGCNCO has examined whether NBN Co is, ex ante, pursuing a business model which could place it in breach of competitive neutrality policy.”
if i was to devise a tax avoidance scheme and submit it to expert tax lawyers for evaluation of their legality, their assessment would be on the basis of whether the scheme if implemented would constitute a future “breach” of tax laws (i.e. an “ex-ante” assessment because the scheme has not yet been implemented). obviously, any “breach” is “potential” and refers to the “future”. surely, that requires no further elaboration.
the bottomline is the way NBNco is currently setup, in terms of its “social objectives” (which have not been explicitly defined and quantified) opaquely embedded within a supposedly “commercial enterprise”, breaches competitive neutrality. the AGNCNO report is clear and unambiguous on this issue.
*“The Australian Government has established NBN Co to build the NBN because the private sector was unable to do so,” Conroy said. “While the company is to operate as a commercial entity, it is not expected to earn a private sector rate of return. To expect it to earn a private sector rate of return would fail to recognise the reasons the government decided to make this intervention and would defeat the purpose of doing so.*
Conroy is deliberately obfuscating AGNCNO’s criticism here. if you deliver the desired “social objectives” in the form of a CSO and fund this directly via on-budget payments to NBNco, the newly-formed GBE would earn a “commercial ROR” and the Government’s “social objectives” would be met at the same time.
of course, the big problem for the Labor Government is that they would then have to actually sit down and assess what sort of “benefits” different forms of NGN infrastructure would bring, quantify the associated “costs” and balance the benefits against the costs to arrive at a properly researched and designed CSO.
proper (intelligent) government is too much hard work for Labor politicians! hence:
*”The government does not agree with the AGCNCO’s findings in these areas and will not be adopting the related recommendations.””
so, once more, this Labor Government trashes proper government procedure, principles of accountability, long-held institutions of policy, established conventions, best practices….
of course, this won’t stop the tech media from acting as an agent of DBCDE in spreading lies and misinformation to the public…. i guess “gaming latency” trumps everything else in life.
So little said using so many words.
Sumary. I could be seen as unfair for the NBN with a deliberate low ROI, that was setup that way to be a benefit to the community to compete with business who operate at commercial rates of return.
Noddy a tip for reading tosh posts: Skip the fluff and just read the last paragraph you’ll save a lot of time that way.
A tip for reading HC’s posts – don’t bother.
Tip for reading alain posts: Just more whining.
Also companies don’t operate at such low ROI due to risk and they don’t believe the NBn is operating at a high enough ROI to justify the risk. So in future if they fail to generate a return they could be seen to be undercutting other businesses relying on the fact they are government funded.
@Noddy
Of course the NBN return is totally dependent on working BB competitor infrastructure being shut down and the customer bases forced migrated onto the NBN.
That’s the sort of elimination of risk by eliminating all competitors any commercial firm rolling out new infrastructure would love to have Government legislative support of.
I had a laugh at this statement from Conroy in response to the above report.
“The Australian Government has established NBN Co to build the NBN because the private sector was unable to do so,” Conroy said’
Well yeah Conroy good one, I am sure Telstra, Optus or ‘G9 reborn’ would love to roll out FTTH if they knew the Government would shut down any competing infrastructure for them by gifting billions of taxpayer $$ to do so.
Oh and Telstra is not allowed to advertise their wireless product as a FTTH alternative.
I also had to laugh at this statement from Alain
“Well yeah Conroy good one, I am sure Telstra, Optus or ‘G9 reborn’ would love to roll out FTTH if they knew the Government would shut down any competing infrastructure for them by gifting billions of taxpayer $$ to do so.”
The Government would be interested in this idea as long as ALL SAID PROFITS went back to the Government as ongoing revenue, then sure go for it. And the fibre footprint remained the same of course (can’t have cherrypicking can we?)
“Oh and Telstra is not allowed to advertise their wireless product as a FTTH alternative.”
Because wireless is not a FTTH alternative as it isn’t fiber to the premises. Imagine all the misleading advertising if Telstra were allowed to advertise their wireless products as an “equal alternative” to FTTH, the ACCC would have a field day.
ie: Everything you can do on FTTH you can equally do on wireless broadband (which of course you can’t). That includes REAL Hi-definition streaming (not this pretend compressed rubbish that somehow passes off as HD), very fast upload capabilities and not this 1mbit stuff, very fast sustained download speeds, very low latency, much increased reliability of FTTH, multiple users in the house all using the one fiber link doing their whatever with little/no adverse effects on each others broadband experience, and many other advantages I can’t think off the top of my head.
@Avid Gamer
‘I also had to laugh at this statement from Alain’
That’s because you decided the best tactic was to totally misrepresent the thrust of the argument.
‘The Government would be interested in this idea as long as ALL SAID PROFITS went back to the Government as ongoing revenue, then sure go for it. And the fibre footprint remained the same of course (can’t have cherrypicking can we?’
The point I was making is that Conroy has stated that private industry were not interested in a FTTH build so that’s why the Government had to build it, putting aside the argument for the moment that a 93% FTTH build is what is ONLY required here and that is ONLY what the final solution is allowed to be which is a pure political decision, the goal posts post Labor RFP in 2007 were changed to accommodate the Labor rollout.
Any private consortium contemplating rolling out FTTN/ FTTH would love to know that if they are successful the Government will shut down all existing infrastructure paying off the owners to do so, and not only that as a bonus all existing Greenfield rollouts will automatically become their assets at no cost to them.
Any private consortium would also be interested to know that for any additional financial backing required the Government is prepared to market Infrastructure Bonds for them at a competitive market bond rate of interest that has no relationship whatever on NBN ROI, that is the Infrastructure Bond owners will get their interest guaranteed irrespective of NBN ROI.
‘Because wireless is not a FTTH alternative as it isn’t fiber to the premises. ‘
You missed or avoided yet another point, the point is about a private consortium having the Government on their behalf legislate so Telstra cannot advertise wireless BB that way.
It’s all well and good you saying the ‘ACCC will have a field day’, the point is Conroy and the NBN Co are only worried about Telstra NextG, it is them putting that clause in the Telstra agreement not the ACCC, and looking at NextG LTE field tests so far I can understand why they are worried.
Also the latest ABS statistics on Internet Activity show that wireless internet connections have passed DSL connections for the first time.
Wireless internet connections are going through the roof and DSL is at a almost imperceptible incline.
“Also the latest ABS statistics on Internet Activity show that wireless internet connections have passed DSL connections for the first time.”
But how many households are purely wireless internet connections only compared to households that have both landline and wireless (mobile broadband)?
How many households disconnected their landlined based internet connection and replaced it for a purely wireless only internet connection?
My household has one landlined based DSL connection and five wireless based internet connections (mobile) because my family including myself all use mobile when out and about.
But only for light browsing, checking e-mail etc, while the ONE ONLY landline does all the heavy/serious downloading for the WHOLE family.
Of course mobile connections (wireless) are going to surpass landline based connections because they compliment each other. You need both, not one or the other BUT BOTH
“Wireless internet connections are going through the roof and DSL is at a almost imperceptible incline.”
Maybe it’s because the vast majority (saturation) of households in Australia already have some sort of landline based connection where as now every second man, woman, child and pet cat/dog has a mobile connection. And sometimes multiple mobile subscriptions per customer.
“and looking at NextG LTE field tests so far I can understand why they are worried.”
Mobile performance will never ever match fibre because even though mobile is improving (which is great), so too is fibre performance which in the next decade is expected to go through the roof in orders of magnitude.
“the argument for the moment that a 93% FTTH build is what is ONLY required here and that is ONLY what the final solution is allowed to be which is a pure political decision, the goal posts post Labor RFP in 2007 were changed to accommodate the Labor rollout.”
I have absolutely no problem/concerns with Labor wanting to rollout fibre to 93% of the population period.
“The point I was making is that Conroy has stated that private industry were not interested in a FTTH build”
Because that still stands/true for a FTTH rollout to 93% of the population. All I know is that where I live, under Labor’s plan if completed I will be getting FTTH (no if’s no buts purely FTTH) the regional centre next to us is already on the list to be fibered commencing towards the end of 2012 and my town is just up the road, but under the Liberal’s current broadband policy I will not be getting FTTH in the near future (most likely never). In fact what I have read of the Lib’s policy, the most likely scenario for my area is a big fat nothing. In other words keeping the old copper line because it will be considered adequate. And I live in a regional centre of about 20000 people, but not large enough for private enterprise to consider coming here to install FTTH (there are suburbs in the capital cities with larger populations than my whole town)
“putting aside the argument for the moment that a 93% FTTH build is what is ONLY required here and that is ONLY what the final solution is allowed to be which is a pure political decision, the goal posts post Labor RFP in 2007 were changed to accommodate the Labor rollout.”
So they changed the goal and raised the standard for the greater good, so what? That’s a good thing. The goal is now 100/40mbps connections and 1000/400mbps connections is in the future for 93% of the population. Explain how you achieve that without using fibre and remember you need to be technology agnostic.
‘The goal is now 100/40mbps connections and 1000/400mbps connections is in the future for 93% of the population.’
WHY?
“WHY?”
Why not 93%? Is there a magic number to aim for that would make nationwide FTTH rollout more acceptable to you? The fact is 93% is a good goal to have, that is a majority, something doesn’t cover the majority would be a waste of time and create yet another digital divide.
Cause our good friend Hubes want the NBN to connect to his house. I say the sooner the better,in fact maybe we should petition parliament to have a special fibre pulled into his house and then he will bow his head in shame and go away.
Oh it’s all ‘magic numbers’ , I see where you got them from now, thanks for the explanation.
The magic number was 90%(original government plan before they actually looked into it). The 93% came from the KPMG implementation study.
Reminds me of Tarintino, Murphy Brown. I generally like his films. But a friend and I nearly walked out during that one. We got what happened when they showed it fromhe is person’s perspective. We hen had to sit there for an hour as h showed exactly he same thing over and over from everyone elses point of view… Nearly screamed every time it started again and again.
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