Hi everyone,

this afternoon Communications Minister Stephen Conroy and Finance Minister Penny Wong issued the media release below with respect to the Government’s release today of the National Broadband Network’s new corporate plan (which we will conduct analysis on in a separate article).

In the interest of maintaining a level of objective truth in the ongoing National Broadband Network debate, early next week Delimiter will be publishing a fact-check analysis of these comments by Conroy and Wong. We will also be sending this fact-check analysis to Conroy’s office to invite him to respond.

With this in mind, I invite the Delimiter community to help fact-check this Labor media release. Please read the media release carefully, and post in the comments below this article your view on which statements are accurate and which not. This will help us greatly in responding to this article. Please keep in mind our comments policy when doing so, and bear in mind that off-topic comments will be deleted, with no exceptions. Unfortunately no comments will be accepted from representatives of politicians or political parties at this time.

Note that we are seeking your views strictly on whether Conroy’s comments are accurate: Not whether you agree with them or not.

Thank you for your help with this important exercise; your assistance is greatly appreciated. We have conducted a similar fact-checking exercise with respect to Shadow Communications Minister Malcolm Turnbull in the past and expect to do conduct similar exercises in future with respect to major technology-related policy statements by all parties.

Kind regards,

Renai LeMay
Editor + Publisher, Delimiter

NBN Co Corporate Plan 2012-2015 released

Minister for Broadband, Communications and the Digital Economy, Senator Stephen Conroy, and Minister for Finance and Deregulation, Senator Penny Wong, today released NBN Co’s Corporate Plan 2012-15, which confirms that the National Broadband Network is on track to be delivered to all Australians.

The Corporate Plan 2012-15 confirms:

• The NBN is a sound investment that will pay its own way and generate a 7% return for the taxpayer
• The Government is on track to meet its target of having work for 758,000 fibre premises commenced or completed by the end of 2012
• Wholesale broadband prices are projected to fall over time in both real and nominal terms
• The capital cost of the NBN build has increased by 3.9%, but remains significantly less than the $43 billion originally announced
• The construction time for the NBN has only been extended by six months, despite a nine month delay in the completion of the Telstra deal.

“The Gillard Government is delivering on our commitment to provide all Australians with fast, reliable and affordable broadband. The assumptions and estimates in the 2010 business case have been reinforced or replaced with signed supply contracts, firm agreements, operational experience, and regulatory certainty,” Senator Conroy said. “It is the forecasts in this plan against which the progress of the NBN should be measured.”

The 2012-15 Corporate Plan reflects a number of important developments since the release of NBN Co’s 2011-13 Corporate Plan in December 2010, including:

• Finalisation of the $11 billion Definitive Agreements with Telstra
• Completion of the Optus transaction and approval by the Australian Competition and Consumer Commission
• Execution of construction contracts for every state and territory across Australia and across all three technologies – fibre, next generation fixed wireless and satellite
• A number of changes to Government policies, including the fibre in new developments (greenfields) policy and battery backup for fibre installations
• The impact of implementing the ACCC’s decision on Points of Interconnect, which led to a substantial redesign of the network.

“These developments give greater certainty to NBN Co in delivering the Government’s commitment to provide all Australians with fast and reliable broadband. For example, now that the deal with Optus has been finalised and approved by the ACCC, NBN Co can factor it in. As Optus customers are migrated to the NBN, this will result in increased revenue to NBN Co, as well as higher operating expenses,” Senator Wong said.

“The Gillard Government considers high speed broadband to be an essential utility for the 21st century, like water and electricity. This operational Corporate plan is the foundation on which this vision will be achieved,” Senator Conroy said. “For Australia to fully embrace the digital age across our entire economy – in healthcare, in education, in small business, and in agriculture – all Australians need access to fast, reliable and affordable broadband.

“The NBN will boost productivity and provide the foundation for an efficient and future ready economy,” Senator Wong said.

Image credit: NBN Co

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1. JT
   Posted 08/08/2012 at 4:04 pm | Permalink | Reply

   From my quick read of the corporate plan I don’t see any obvious inaccuracies with this statement.
   Basically it says we got delayed with some deals but considering were still on track to have NBN completed and making a return though a little later than the initial plan.

2. Ferretzor
   Posted 08/08/2012 at 4:20 pm | Permalink | Reply

   I enjoy these exercises for the reader, they help reinforce how little anyone in politics actually says. However…

   >> “which confirms that the National Broadband Network is on track to be delivered to all Australians.”
   Ok sure, whatever, I mean that was kind of the point wasnt it?

   >> “The Government is on track to meet its target of having work for 758,000 fibre premises commenced or completed by the end of 2012″
   Commenced leaves an awful lot to interpretation. Would like to have figures on completed alone thanks very much. And… its NBNCo that is on track, not the Govt?

   >> “The capital cost of the NBN build has increased by 3.9%, but remains significantly less than the $43 billion originally announced
   The construction time for the NBN has only been extended by six months, despite a nine month delay in the completion of the Telstra deal.”
   This is actually (I think) pretty good, though its still “projections” and black magic at this stage. Extending a rough guess by another rough guess on duration and coming out within 3 months has to be a pluck.

   >> “The assumptions and estimates in the 2010 business case have been reinforced or replaced with signed supply contracts, firm agreements, operational experience, and regulatory certainty”
   Yep all the risks have been dealt with I’m sure. Conroy can cut a cheque now and his interwebs will be delivered with no further need for adjustment.

   >> “It is the forecasts in this plan against which the progress of the NBN should be measured.”
   Partly true, partly false. I would think we should pay a fair bit of attention to how things have gone against previous plans as well rather than just periodically re-write the rules.

   TBH, I give up at this point. Weasel words and motherhoods as you would expect, but precious little explanation or real facts. But then this is just a press release, hardly unexpected.

   • Chas
     Posted 08/08/2012 at 4:54 pm | Permalink | Reply

     “Would like to have figures on completed alone thanks very much”

     In the plan on page 36…premises passed is exhibit 5-1. The definition of premises passed is:

     “Premises are passed / covered when the shared network and service elements are installed, accepted, commissioned and ready for service”

     Existing homes (Brownfields) for fibre:
     FY2013 (June 2013) – 286,000
     FY2014 – 1,129,000
     FY2015 – 2,499,000
     FY2016 – 3,862,000

     • Ferretzor
       Posted 08/08/2012 at 5:44 pm | Permalink | Reply

       @Chas

       FY2012 – 29,000

       Yeah I looked at that and can only assume that the 750k is tilted fairly heavily toward the “we’ve thought about putting some fibre in” end of the scale. Which is fine of course, but it does sound a teensy bit like hes saying there will be somewhere near 3/4 million homes on fibre by the end of the year. That was my only point.

       • GongGav
         Posted 09/08/2012 at 9:09 am | Permalink | Reply

         No, the 750k is about how many builds have started by that point. My exchange is scheduled to start “within the next 12 months”, so if it starts at any time before June 2013 it would go towards that 750k benchmark, regardless of whether I can actually connect or not. Which I doubt I will at that point in time, regardless of whether it starts today or next June.

         They need benchmarks to gauge how they are going. And that 750k mark (or its equivalent) has always included builds in progress. Once an exchange starts being built for FTTH, it stays being built for FTTH.

3. Steve Dalby (iiNet)
   Posted 08/08/2012 at 4:41 pm | Permalink | Reply

   It seems to be almost “Move along here, nothing to see”.

   My concern is that the acceleration of the roll-out is still uncertain. We’d say ‘pedal-to-the-metal’ – lets get on with it! We go from a few thousand today to 2.5m live connections by 2016. It’d be nice to see something of that order a couple of years earlier.

   I like the build-drop approach, that should increase the efficiency of take-up and I really like the fact that back-up batteries will be optional. I hate to think that millions of lead acid batteries could have been going into land-fill every few years.

   • Ferretzor
     Posted 08/08/2012 at 5:49 pm | Permalink | Reply

     +1 for battery optional, but will be interesting to see what the actual uptake is (50% guesstimate has 50% chance of being correct, in that it either will be or it wont be).

     I can see the huddled masses gathering around the laptop as they surf the net during a power outage..

4. Paul Grenfell
   Posted 08/08/2012 at 4:46 pm | Permalink | Reply

   All looks fine to me.. Costs are up, but so is revenue and overall RIO increases.
   There appears to be a Tax to be paid by NBNco which will provide revenue to the Govt besides the Normal RIO. I havent read all the report yet, but so far , it seems above board.. Certainly cant be near as bad as the NOBN.

5. Paul Grenfell
   Posted 08/08/2012 at 4:48 pm | Permalink | Reply

   Yeah, thats a plus Steve.. Optional battery backup… Saves millions too.

6. Chas
   Posted 08/08/2012 at 4:56 pm | Permalink | Reply

   I did note that they expect 1000/400 wholesale plans go online in 2014…(page 56)

   • tom
     Posted 08/08/2012 at 5:14 pm | Permalink | Reply

     +1

     Imagine having only FTTN in 2016 with a measly 12mbit connection, instead of the planned 1000mbit from FTTP.

     • GongGav
       Posted 09/08/2012 at 9:26 am | Permalink | Reply

       Hold that thought. There is a minor price increase from 50 Mps to 100 Mps, but a massive price jump up to 1 Gps connection – scale isnt good. $38/month (from memory – could be $34) for 100 Mps vs $150/month for a 1 Gps. Not sure all that many people will be paying that $150/month for the highest speeds just yet – the 100 Mps prices look like the sweet spot.

       Its one of the FUDfears I expect to be parroted by the various FUDdites over this actually. 1 Gps wont be cheaper than current ISP rate’s, blah blah blah.

       Prices quoted are wholesale prices as well, begs an interesting question about what the ISP’s will charge. Do they add a little more to the $38 priced 100 Mps so its a smaller gap to the $150 (plus markup) 1 Gps, or do they keep a constant profit per connection mentalty – lets call it $20 per person – so $58 for 100 Mps and $170 for the 1 Gps.

       • Ully
         Posted 09/08/2012 at 11:36 am | Permalink | Reply

         Surely >1Gbps will be taken up by mainly SMBs, LBs and Corporates. Even $200/m is better than $1000+/m? (or whatever it is for a big pipe). Everyone seems caught on the FttHome part and forget that it is FttPremise, which is all the shops and offices in the CBDs., who are the main users of bandwidth.

         • seven_tech
           Posted 09/08/2012 at 1:07 pm | Permalink | Reply

           That’s the one Ully. Right now, I believe it costs in EXCESS of $3500 a month for a 1gbps pipe from Telstra. This will cost, what, $800 a month on the NBN?

           SMB’s and even corporations are laughing ALL the way to the bank with how much money the NBN will save on pipe costs….and it just happens the rest of us get affordable broadband too! :-)

       • SMEMatt
         Posted 09/08/2012 at 12:57 pm | Permalink | Reply

         Based on what currently gets paid for services I think there are plenty of SMEs willing to pay a couple of hundred dollars for a 1 gig service.

         • GongGav
           Posted 09/08/2012 at 3:35 pm | Permalink | Reply

           @Ully & SMEMatt – all true, I was just pointing out that for the FUDsters out there, the ‘cost’ of that 1 Gps connection is NOT cheaper than current ISP’s, and with their blinkered approach to the subject, its easy to spin into being a massive massive problem with the NBN.

           I regularly remind people that its not just the 10m homes getting the NBN, but 2m businesses as well, plenty of which rely on the net to run their business. So for them, yeah, a few hundred is a godsend when they are regularly tightening their corporate belts, but for others its not necessarily a cost effective option.

           Having said that, group connections could use it to be a winner. 10 connections sharing that 1 Gps pipe will probably end up paying less than 10 x 100 Mps connections. Think dorms, MDU’s, duplexes, etc.

           • Goresh
             Posted 17/01/2013 at 7:06 pm | Permalink | Reply

             “the ‘cost’ of that 1 Gps connection is NOT cheaper than current ISP’”

             But that was seven_tech’s point, it is CONSIDERABLY cheaper than any other current 1gb/s service.

7. CMOTDibbler
   Posted 08/08/2012 at 4:58 pm | Permalink | Reply

   “The Corporate Plan 2012-15 confirms:”

   The corporate plan doesn’t “confirm” anything. It forecasts …

   “The Government is on track to meet its target of having work for 758,000 fibre premises commenced or completed by the end of 2012 ”

   That’s a revised target. The key numbers are 286,000 brownfields passed and 44,000 connected at end of FY2013 which is just before the next election. Has Turnbull exploded yet?

   “Wholesale broadband prices are projected to fall over time in both real and nominal terms ”

   But ARPU is still forecast to increase. As far as I can tell ARPU has not increased over the last 10 years (happy to be corrected).

   “The capital cost of the NBN build has increased by 3.9%, but remains significantly less than the $43 billion originally announced ”

   The $43bn was not announced as the capital cost. The total funding requirement is now $44bn.

   “It is the forecasts in this plan against which the progress of the NBN should be measured.”

   More or less true. A revised corporate plan does not wipe the slate clean but at this stage of the project it’s fair enough.

   “As Optus customers are migrated to the NBN, this will result in increased revenue to NBN Co, as well as higher operating expenses,”

   How long will it take for the NBNCo to break even on Optus HFC customers?

   • NBNAccuracy
     Posted 08/08/2012 at 5:49 pm | Permalink | Reply

     Mine has. When I first took up ADSL, then ADSL2+ and as usage increased. Initially my monthly spend was around $50 dollars for broadband and phone. Over the years speeds and quota have gone up, plus the price of phone plans. Now I am at about $90 a month. All those years I believe I chose the most popular value for money plans with the same or similarly placed ISPs. (Not Telstra). So I imagine in 10 years if the current inflation and rate of income increases in a similar fashion for $140-150 to be comfortable. I felt the increase from $50-$90 was lower than the change in income over the period.

     • CMOTDibbler
       Posted 08/08/2012 at 6:54 pm | Permalink | Reply

       When I first got my Optus HFC service I paid $30pm for phone and $70 for internet. There was no set limit on downloads back then (it was based on average use) but it soon became 3GB. I’m now paying $80 for both phone and internet with 120GB and local, national and calls to Optus mobiles included.

       I’m downloading a lot more but the amount I’m paying is quite a bit less.

       • seven_tech
         Posted 08/08/2012 at 7:02 pm | Permalink | Reply

         @CMOT

         You just missed the point.

         You’re comparing ARPU TOTAL (Phone + broadband), with ARPU on ONLY BROADBAND.

         Telstra’s ARPU on phone calls has dived over the past 5 years….not surprising with all the mobile caps around.

         Their broadband ARPU however, has increased by about 2% a year, other than last year due to competitive pressures…..

         You can’t compare apples+oranges with only other apples…..

         • CMOTDibbler
           Posted 09/08/2012 at 12:03 am | Permalink | Reply

           I’m comparing ARPU on the services I will be migrating to the NBN.

           • seven_tech
             Posted 09/08/2012 at 12:08 am | Permalink | Reply

             Fine. And do you know the ACTUAL split between what it costs for the Telco to provision you now with ‘lower’ ARPU between phone service and broadband? We know what the split was before, 70/30. But what is it now?

             Secondly, are you everyone? Do you use your phone a lot compared with your internet? Or vice versa? There are many permutations to ARPU for bundles and you fit but one of them which MAY result in a slightly lower ARPU. There will be many that won’t.

             • CMOTDibbler
               Posted 09/08/2012 at 12:26 am | Permalink | Reply

               Why does it matter what the split is. ARPU is per user not per service. Optus used to get ~$100pm from me, now they get $79pm from me (both excluding calls). If I move to the closest Optus NBN plan they’ll be getting $65pm.

               No, I’m not everyone. I never claimed to be. NBNAccuracy shared her/his experience. I shared mine.

               My point, really, is that there’s no proven link (imo) between increased data consumption and increased ARPU. Would people have consumed as much additional data in the last 10 years if they had had to pay extra to do it? Maybe. Maybe not.

               Commercial video services on the NBN is another thing I don’t understand. Mutlicast appears to be designed for the content to be delivered by the customer’s ISP. On demand raises questions about CVC costs. Then … where will the content come from? I’ll live and learn.

               • seven_tech
                 Posted 09/08/2012 at 12:44 am | Permalink | Reply

                 Actually CMOT if you look at any Telco who offers multiple services (phone, broadband, business services, cloud services) the ARPU IS split between services. That was exactly my point.

                 In my case, I currently pay $109.90 for line rental + broadband + VOIP. When/if I get the NBN I will go on a plan for around what my broadband costs ($70) plus VOIP ($10). You would say NBNCo. has reduced my average ARPU….except it hasn’t because NBNCo. don’t charge $30 for their ‘voice only’ service. It would EXPECT me to pay for the same level of service I have (ADSL2 supposedly) for less and save money….except I won’t. So NBNCo has GAONED ARPU on me. And many people I’ve spoken to would be doing the same thing.

                 ARPU is relative per service. Not absolute.

   • seven_tech
     Posted 08/08/2012 at 6:34 pm | Permalink | Reply

     @CMOT

     But ARPU is still forecast to increase. As far as I can tell ARPU has not increased over the last 10 years (happy to be corrected).

     Have a look at the 2011-2013 Corporate Plan under ARPU. It shows a graph of Telstra, Optus and iinet ARPU increasing by about 2% a year over 5 years….and NBNCo. got that data direct from the company reports…

     The $43bn was not announced as the capital cost. The total funding requirement is now $44bn.

     No, it wasn’t announced as capital cost. Neither was it announced as total funding. The ACTUAL announcement was:

     This company jointly owned by the Government and the private sector will invest up to $43 billion over 8 years to build the national broadband network.

     +

     The preliminary estimate is that the enhanced NBN network will cost up to $43 billion, which has been developed taking into account advice from specialist technical advisers.

     http://www.minister.dbcde.gov.au/media/media_releases/2009/022/

     However, seeing as the words “cost” are used, one could assume that is “cost to build the network” which is, by definition, CAPEX. Other funding requirements are OPEX and cannot be counted in the “cost to build the network” as they are, by definition “costs to RUN the network and the business.”

     However, we have no way to confirm whether this initial $43 Billion was indeed total funding or actual CAPEX, other than Conroy’s word…..and he’s a politician so it’s swings and Roundabouts as to whether it is the truth or not.

     But simply stating the $43 Billion was total funding cost, which is you are comparing the $44 Billion total funding now, is disingenuous.

     • Karl
       Posted 08/08/2012 at 7:10 pm | Permalink | Reply

       “$43 billion over 8 years to build the national broadband network.”

       It says build right there. It doesn’t say run anywhere. Seems pretty clear to me.

     • CMOTDibbler
       Posted 08/08/2012 at 11:31 pm | Permalink | Reply

       In 2009 the government and the private sector were to invest $43bn to build the NBN.

       Leaving aside the interest on commercial debt, which wouldn’t exist if the NBNCo was funded entirely by equity, and just taking the numbers in the new corporate plan for simplicities sake … how much would the government and the private sector have to invest to build the NBN now?

       imo it’s $44bn.

       • seven_tech
         Posted 08/08/2012 at 11:39 pm | Permalink | Reply

         @CMOT

         It may very well be your opinion. But unless you have a document that states that $43 Billion was total funding or just CAPEX we won’t know will we….

         • CMOTDibbler
           Posted 08/08/2012 at 11:56 pm | Permalink | Reply

           From your quote … “This company jointly owned by the Government and the private sector will invest up to $43 billion over 8 years to build the national broadband network.”

           I simply asked how much they would have to invest to build the NBN now, based on the numbers in the new corporate plan.

           How much would they have to invest?

           • seven_tech
             Posted 09/08/2012 at 12:04 am | Permalink | Reply

             Ah, but see CMOT THAT is not the question here. The question is WAS that $43 billion CAPEX or funding?

             ‘Invest’ is a word people can take differently. Even in NBNs case we have 2 different ‘investments’- the governments equity investment (no interest paid, dividends paid back as payments against equity) and debt investment (private sector ‘loans’ money to NBNCo at a set rate of interest that is paid by NBNCo as WELL as a minimum repayment).

             You cannot remove the door frame and expect the door to continue working. The question of if the $43 billion was total funding or CAPEX is the one that must be answered.

             • CMOTDibbler
               Posted 09/08/2012 at 12:14 am | Permalink | Reply

               It was the amount that had to be invested. You can take “build” to mean whatever you like. The amount to be invested is the amount to be invested. It is the total amount of money available to complete the NBN. I don’t recall the government ever even hinting more than $43bn would have to be invested. $43bn was all there was.

               The amount that would have to be invested now, based on the numbers in the new corporate plan, is …?

               For me it has to be $44bn or they run out of money in FY2019.

               • seven_tech
                 Posted 09/08/2012 at 1:01 am | Permalink | Reply

                 I dont need to have it explained over and over. I understand what you are saying and IF the $43 billion was a costed total funding I would agree with you. But it wasn’t. The first costing we had of total funding was the McKinsey report and it was $40.4 Billion. It has grown to $44 billion. Which is exactly what the corporate plan says and explains why.

                 Now, there IS a case that Conroy may be being disingenuous when he uses the $43 billion ‘build’ cost as CAPEX only. However, the media reported after the McKinsey report that ‘the NBN will cost $36 billion, not the $43 billion Labor originally stated’. By this yardstick, Conroy is correct in saying the $37.4 billion is STILL less than they originally said. Whether this is ACTUALLY true is largely lost in time and dozens of media releases. IF it was ever stated. The media treated the ‘total cost’ of the original unanalysed NBN as $43 billion. They treated the analysed ‘total cost’ as $36 billion. They are the ones that set the benchmark here and Conroy has followed that. Whethere that is right or not is up for debate.

                 Factually, we don’t have enough evidence to say whether that $43 billion original ‘costing’ was real or not and whether it can be treated as such….because, as is famously quoted it was ‘done on the back of a napkin’.

                 Conroy may have gotten away with…..shall we say media vaguery here. Is it factually incorrect? Possibly. Is it publicly correct? Yes, by the media benchmark. And seeing as the media have been utterly reticent at providing facts on the NBN themselves, it would serve them right if they have no one but themselves to blame in this case.

                 Frankly, when all is said and done, the TOTAL cost to taxpayers will be around $10 billion from the budget to pay for interest on the loans, over 15-20 years. However, this will be paid back anyway…..so all of this is entirely academic….

8. Tim
   Posted 08/08/2012 at 5:03 pm | Permalink | Reply

   I am disappointed that 1000/400 plans are projected for 2014. Other than this I can see no ‘obvious’ factual errors.

   Only fair when I get time to apply the same notice I do to Turnbull.

   • Hubert Cumberdale
     Posted 08/08/2012 at 5:27 pm | Permalink | Reply

     I remember Quigley said the 1gbps plans would be released this year. The change is probably due to the time wasted negotiating with Telstra.

9. Paul Grenfell
   Posted 08/08/2012 at 5:07 pm | Permalink | Reply

   COMT – How long will it take for the NBNCo to break even on Optus HFC customers?
   About the same as Telstra i guess.. These will be premium customers with higher than normal plans, and will no doubt adopt even higher plans.. Its an investment, so NBNco would have done their sums. Note RIO increases from 7.0 to 7.1

10. garfield
    Posted 08/08/2012 at 5:34 pm | Permalink | Reply

    The forecasts in this latest Corporate Plan is a classic case of GIGO (garbage in, garbage out) spreadsheet modelling.

    $7bn of operational cashflow by 2028 (hefty 75% profit margin) based on average wholesale charges of $80 per user (as compared to current ~$33 for copper and falling).

    Apparently, trees do grow to the skies.

    l guess Labor politicians figure this kind of extreme Pollyanna optimism is good enough for sucker taxpayers.

    Simple questions to Mike Quigley:

    Why hasn’t past exponential growth in data traffic resulted in exponential growth in telco ARPU?

    Why is this assumed to change in the future?

    If falling wholesale costs facilitated the surge in data traffic in recent years, won’t rising wholesale charges in the future kill data growth?

    • Steve Dalby (iiNet)
      Posted 08/08/2012 at 5:44 pm | Permalink | Reply

      >> based on average wholesale charges of $80 per user (as compared to current ~$33 for copper and falling

      I think you are comparing geese and gooseberries there. Where do you get those numbers and perhaps you can break down the components of the averages?

      >>Why hasn’t past exponential growth in data traffic resulted in exponential growth in telco ARPU?

      Simple. The growth has been helped by reducing costs, especially in bandwidth (compare the cost of a 54kbps service versus a 12Mbps service), but also in international traffic costs (down from $000s to $tens per MB).

      These reduced costs have been passing through to retail prices – ARPU isn’t going to increase if the savings flow through.

      >> won’t rising wholesale charges in the future kill data growth?

      But wholesale costs aren’t forecast to rise, so you are way off-beam here.

      • garfield
        Posted 08/08/2012 at 6:14 pm | Permalink | Reply

        There’s a chart of fibre ARPU in the CP required to generate the 7.1%. Median (copper) network access of $28.69 in Market Clarity survey.

        True, it’s not pure apples-apples given different topology and equipment setup. But, useful ballpark. Look at the fibre ARPU trajectory for coming decades. Compare that to ACCC determination trajectory for copper over past decade.

        <<<The growth has been helped by reducing costs, especially in bandwidth (compare the cost of a 54kbps service versus a 12Mbps service),

        Exactly. In general terms, the cost of accessing the CAN has become cheaper and this makes up the lion's share of total network costs (incl. IP transit).

        <<>>>But wholesale costs aren’t forecast to rise, so you are way off-beam here.

        More data, more CVC provisioning, higher average user charges. The rest is semantics.

        • seven_tech
          Posted 08/08/2012 at 6:44 pm | Permalink | Reply

          @Garfield

          True, it’s not pure apples-apples given different topology and equipment setup. But, useful ballpark. Look at the fibre ARPU trajectory for coming decades. Compare that to ACCC determination trajectory for copper over past decade.

          The ACCC has ARTIFICIALLY been forcing ARPU down because Telstra were artificially holding it UP until 2001-2003 through no ULL access. The ARPU on the NBN represents REAL WORLD figures rather than artificially regulated ones. ie, the chart on page 69 shows us ARPU will double between 2015 and 2035 (20 years) so that’s 100% in 23 years or ~5% per year…..a little above what Telstra, Optus and iinet have, overall, been growing over the past 5 years…..Check their company plans.

          Exactly. In general terms, the cost of accessing the CAN has become cheaper and this makes up the lion’s share of total network costs (incl. IP transit).

          Again, because the ACCC have regulated for it to be such to curb Telstra’s dominance in retail.

          More data, more CVC provisioning, higher average user charges. The rest is semantics.

          More Data = More CVC provisioning at LOWER costs, meaning largely unchanged CVC costs. Higher Average User charges because of increased functionality like streamed HD TV and interactive 3D games between friends. Not semantics, ACTUAL USAGE PREDICTIONS, as predictions were made for ADSL and proved largely conservative.

      • garfield
        Posted 08/08/2012 at 6:16 pm | Permalink | Reply

        <<<These reduced costs have been passing through to retail prices – ARPU isn’t going to increase if the savings flow through.

        and what happens with rising costs in an environment of higher (costly) bandwidth provisioning over the fibre access network?

        • Dean
          Posted 08/08/2012 at 7:23 pm | Permalink | Reply

          Cost to provision isn’t going to increase. ARPU increases because customers will be buying faster plans with higher data caps.

          • seven_tech
            Posted 08/08/2012 at 7:29 pm | Permalink | Reply

            @Dean

            No….that’s not quite true.

            If your customers buy higher plans (higher ARPU) you have to provision more bandwidth (CVC) and that costs more. However, that CVC will come DOWN in price with the more you provision, hence the cost savings.

            The costs are saved, but it’s misleading to say there aren’t any cost increases from consumers taking up higher tier plans.

            • Dean
              Posted 08/08/2012 at 7:38 pm | Permalink | Reply

              Yeah, that’s what I mean. Customers on a higher plan pay more, and that flows through the ISP to NBNCo as a higher ARPU.

              Garfield is implying that ARPU increases to $80 for the same service as you get for $33 today, which is obviously not the case.

    • Alex
      Posted 08/08/2012 at 5:44 pm | Permalink | Reply

      http://delimiter.com.au/2012/08/08/nbn-corporate-plan-lands-2pm-today/#comment-485637

    • Hubert Cumberdale
      Posted 08/08/2012 at 5:53 pm | Permalink | Reply

      “l guess Labor politicians figure this kind of extreme Pollyanna optimism is good enough ”

      Speaking of “extreme Pollyanna optimism”. Take notes next time Turnbull starts talking about his FttN patchwork plan.

11. Gwyntaglaw
    Posted 08/08/2012 at 6:08 pm | Permalink | Reply

    Renai, you clearly stated above “bear in mind that off-topic comments will be deleted, with no exceptions”.

    GG’s comment is not only off-topic, it is gratuitously offensive and absurd. I know you’re probably busy right now, but hey – can we clear this one out of the way?

    • Renai LeMay
      Posted 08/08/2012 at 6:12 pm | Permalink | Reply

      Done.

12. Paul Jones
    Posted 08/08/2012 at 6:33 pm | Permalink | Reply

    Apart from what CMOTDibbler has already mentioned, I can’t find anything obviously amiss either.

13. seven_tech
    Posted 08/08/2012 at 6:46 pm | Permalink | Reply

    I can’t find any obvious misinformation or “miscommunication of facts.”

    The only real hand wobbler is whether the NBN IS in fact under its’ originally estimated $43 Billion, as we don’t actually know whether that was peak funding OR build cost. Being simplistic, it was likely build cost, but we have no confirmation of that.

14. Mark S
    Posted 08/08/2012 at 8:15 pm | Permalink | Reply

    “The NBN is a sound investment that will pay its own way and generate a 7% return for the taxpayer”

    So Conroy can guarantee an ROI of 7% that NBNco won’t (see “Forward Looking Statements” on page 2)?

    The only way Conroy can guarantee a 7% return will be to make NBNco a monopoly supplier (…), and *force* Australians to spend their money on enough suitable NBN based services to make the 7% return. Or rather, the government would be better off buying all Australians NBN Internet services whether they want them or not. In other words, the government can only control how Australians can spend their money on goods and services is to do it for them, without giving them a choice in the matter.

    • seven_tech
      Posted 08/08/2012 at 8:19 pm | Permalink | Reply

      @Mark S

      Where did Conroy say in that statement he “guaranteed” 7% ROI?

      He said it is a sound investment. And later he says it is “on track” to return 7% to the taxpayer.

      Oh, and the NBN WILL be a monopoly supplier until 2023….so yeah…..

      The ARPU growth is based on the previous 10 years of ARPU growth on broadband. There are significant applications to come for super-fast broadband to see that ARPU climb at the same if not a higher rate. It is likely Australians will CONTINUE to up their spend on telecommunications as a proportion of income as it will become even MORE integral. They have done so over the past 30 years. Why would that change?

      • Mark S
        Posted 08/08/2012 at 8:28 pm | Permalink | Reply

        http://dictionary.cambridge.org/dictionary/british/will_1?q=will

        “will – modal verb ( FUTURE ) – used to talk about what is going to happen in the future, especially things that you are certain about or things that are planned”

        • Dean
          Posted 08/08/2012 at 8:40 pm | Permalink | Reply

          Really? You’re hung up on the dictionary definition of the word “will”?

          http://delimiter.com.au/2012/08/08/nbn-corporate-plan-lands-2pm-today/#comment-485637

          • Alex
            Posted 09/08/2012 at 8:59 am | Permalink | Reply

            Sadly…Aalready preempted 4 days ago Dean

            http://delimiter.com.au/2012/08/03/delimiters-curious-response-to-uk-superfast-report/#comment-485099

        • seven_tech
          Posted 08/08/2012 at 8:47 pm | Permalink | Reply

          @Mark S

          I’m not going to bother. If you wish to debate serious differences in figures or facts, feel free. I’m not going to be drawn into nit picking and semantics.

          • Mark S
            Posted 10/08/2012 at 9:36 am | Permalink | Reply

            Being hung up on semantics is what both Renai gets up to and commenter such as yourself get up to when commenting on articles about Malcolm Turnball. The technique is easy – choose to slight misinterpretation what was said, or perhaps place a slightly different interpretation on it, and then attack that interpretation.

            Still, politicians learn to choose their words very, very carefully, as any misinterpretation provides opportunities for their opponents to criticise them. Consequently, if Conroy said “will” rather than “may”, “possibly” or “probably”, then I will interpret it literally. He and his PR minders will be, or should be, far to smart to fall into the trap of making statements that can be taken literally and are absolute, when they shouldn’t be. When a politician says “will”, they aren’t providing themselves any room to weasel out of it at a later date.

            However, I don’t think there is much point contributing to this website any further. I think both it’s owner and the commenters are suffering from a pro-innovation bias when it comes to the NBN, and therefore aren’t going to be objective about pros and cons of the NBN.

            • Renai LeMay
              Posted 10/08/2012 at 9:48 am | Permalink | Reply

              “therefore aren’t going to be objective about pros and cons of the NBN”

              Come again?? I think I’ve been very objective about it.

            • NBNAccuracy
              Posted 10/08/2012 at 10:47 am | Permalink | Reply

              “Being hung up on semantics is what both Renai gets up to and commenter such as yourself get up to when commenting on articles about Malcolm Turnball. The technique is easy – choose to slight misinterpretation what was said, or perhaps place a slightly different interpretation on it, and then attack that interpretation.”

              Sorry, but WTF?

      • Mathew
        Posted 08/08/2012 at 11:08 pm | Permalink | Reply

        I’m not sure that Australians have continued to up their spend on telecommunications. I’d suggest it is more likely that more has been delivered for the same price. That is definitely true in my case.

        • seven_tech
          Posted 08/08/2012 at 11:22 pm | Permalink | Reply

          Which is a problem…..why?

          NBNCo will reduce prices as people take up higher tiers….meaning they’ll essentially pay the same amount for getting more….one leads to the other…

    • Alex
      Posted 08/08/2012 at 8:26 pm | Permalink | Reply

      Force… no choice…

      What like now, with Telstra or with the alternative to the NBN… err Telstra.

      Seriously, aren’t we passed such infantile rubbish?

      • Mark S
        Posted 08/08/2012 at 8:31 pm | Permalink | Reply

        Renai, the above post violates your AUP, as it is an insult towards me. Thankyou.

        • seven_tech
          Posted 08/08/2012 at 8:49 pm | Permalink | Reply

          @Mark S

          While I agree Alex should keep his emotions in check, you need to understand you are goading such behaviour in the way you are acting.

          Also, we are not in grade 1. How about we all harden up a bit. I’ve been called much worse on Delimiter and not asked for Renai to moderate. If you demean the debate by nit-picking you can hardly be surprised when people get frustrated.

          • Renai LeMay
            Posted 08/08/2012 at 8:57 pm | Permalink | Reply

            “If you demean the debate by nit-picking you can hardly be surprised when people get frustrated.”

            That’s pretty much how I feel about it.

        • Alex
          Posted 09/08/2012 at 8:56 am | Permalink | Reply

          That wasn’t a personal attack aimed at you at all Mark :/

          It was aimed at the words “forced and no choice”, where some people state this in relation to the NBN whilst bluntly refusing to accept (if such logic is sound) that ergo the same MUST be said for copper, asphalt roads, digital wireless,etc.

          I find such strange NBN bias form everyone who make such claims… infantile.

15. garfield
    Posted 08/08/2012 at 11:47 pm | Permalink | Reply

    Labor’s NBN will be the only piece of infrastructure asset in the history of the world that generates an ever rising revenue yield the older the network gets.

    The polar opposite of real world commercial experience where yields fall naturally as the network infrastructure ages. That’s like Usain Bolt running faster at age 60 than 30. That’s like a steam-powered passenger train generating higher ticket yield in 2012 than during the Industrial Revolution.

    Plain absurdity.

    Messrs. Conroy and Quigley should stop insulting the taxpaying public’s intelligence.

    • seven_tech
      Posted 08/08/2012 at 11:59 pm | Permalink | Reply

      @Garfield

      That is only if the infrastructure is not upgradable. Which in this case, it is. Fibre in the ground WILL last 20-30 year’s with little maintenance and possibly 60+. Many tests by both the manufacturers and Telcos have shown thus.

      To get MORE service (bandwidth) out of the fibre, all you do is change the hardware at either end….and look at the total network equipment cost compared with fibre and labour costs….its all of around 7%.

      So, in short, yes, the NBN CAN continue increasing revenue IF it can increase service value….which it can for a low CAPEX outlay…

      Compared to copper which needs billions spent on it to even bring it within HALF what consumers currently get on fibre AND fibres current technical limits are some 1000 times higher than copper…

      • garfield
        Posted 09/08/2012 at 7:34 am | Permalink | Reply

        The UK House of Lords report on NBN infrastructure labels GPON technology disparagingly as an “evolutionary cul-de-sac”.

        • Alex
          Posted 09/08/2012 at 8:37 am | Permalink | Reply

          And FTTN?

        • Gwyntaglaw
          Posted 09/08/2012 at 10:13 am | Permalink | Reply

          cul-de-sac = dead end

          GPON is demonstrably NOT a dead end. Comment here from an NBN Co representative: http://www.youtube.com/watch?v=M6Eeno6yWPQ

          Estimates of the savings from choosing GPON over P2P for a very large scale deployment (like the NBN) vary – but they are considerable savings. Since the media has already been blowing its collective stack over a fairly modest 3.9% cost increase, imagine what they would say about a 50-100% cost increase (which could result from using P2P throughout instead of GPON).

          • garfield
            Posted 09/08/2012 at 11:17 am | Permalink | Reply

            http://www.publications.parliament.uk/pa/ld201213/ldselect/ldcomuni/41/41.pdf

            Another unfavourable, consequence of the use of PON technology relates to its
            ‘upgrade path.’ PON is not—technically speaking—an interim step towards full
            point-to-point fibre; in fact, it is something of an evolutionary cul-de-sac. If a
            future Government were to have as a policy goal the achievement of full point-topoint
            fibre, much equipment and fibre, once PON is already installed, will simply
            have to be replaced, conceivably with further public outlay.

            Any commercial GPON network built today would experience falling user costs over time as capital recovery is front-loaded and, in the normal course of events, would subsequently be replaced by PtP on an economical basis.

            Labor’s NBN locks us into GPON for many many decades to come at ever rising wholesale costs because

            a) it is massively overcapitalised and
            b) it’s artificially priced low initially to meet ADSL market prices.

            • seven_tech
              Posted 09/08/2012 at 1:04 pm | Permalink | Reply

              Wait….so let me get this straight Garfield

              You are ADVOCATING a P2P fibre system OVER a GPON network….and you are saying that because a GPON system, which simply through changing out equipment at either end, AUTOMATICALLY becomes a P2P system, you think we should build FTTN instead….

              Forgive me for a moment but *laughs so hard head pops off and right arm goes walkabout*

              You DO understand that by saying GPON has no upgrade path and is, by analogy, a cul-de-sac, that by that SAME analogy, FTTN is…..a driveway….?

              NBNCo will pay off their debt by 2035, around 15 years AFTER construction. IF P2Pis needed in the meantime IT IS BUILT INTO THE CORPORATE PLAN to upgrade those businesses/consumers on a per user, subsidised user pays system….WHICH CAN’T BE DONE VIA FTTN…..

              *looks back, laughs some more, picks up head and arm and walks off*

              • Alex
                Posted 09/08/2012 at 1:33 pm | Permalink | Reply

                Exactly my point 7T

                http://delimiter.com.au/2012/08/08/help-us-fact-check-conroys-nbn-comments/#comment-485806

    • Chas
      Posted 09/08/2012 at 9:20 am | Permalink | Reply

      “Labor’s NBN will be the only piece of infrastructure asset in the history of the world that generates an ever rising revenue yield the older the network gets”

      Sorry, but that is disingenuous at best…
      1. the NBN will continue to grow in size as the population does.
      2. Obviously it will hit a peak efficiency level at some point (maybe in 20 years or so), but until that time both the quantity and quality of the users will continue to grow…hence an increase in revenue.

    • Brett Haydon
      Posted 09/08/2012 at 10:06 am | Permalink | Reply

      Uhhm it generates more revenue because people download more data per household over time, and the ratio of household income to internet plan cost falls – so they buy more expensive plans rising to 1Gbps over time.

      “The plain absurdity” is exactly what has already happened with mobile. 6 years ago when Telstra’s NextG service was rolled out I was paying 29.95 for a dumb phone and now I’m paying double that to have a 2GB+ data plan on essentially the same service.

      It doesn’t take a rocket scientist to realise that video on demand and pay tv at HD level requires a lot of data, and that demand for these services is rising as they become more affordable.

      • garfield
        Posted 09/08/2012 at 11:55 am | Permalink | Reply

        <<<6 years ago when Telstra’s NextG service was rolled out

        Telstra has poured plenty of money since then to upgrade its mobile network capabilities.

        You won't see similar/proportionate capex spend by NBNco in its fixed line network after build completion in 2021. The cost of the initial GPON fibre build is so ridiculously extravagant relative to revenue flow that it will take NBNco many many decades to pay off this initial debt. There will be no money left over to perform major network rebuilds aside from changing little electronic boxes.

        Also:
        http://delimiter.com.au/2012/08/08/help-us-fact-check-conroys-nbn-comments/#comment-485837

        <<<It doesn’t take a rocket scientist to realise that video on demand and pay tv at HD level requires a lot of data, and that demand for these services is rising as they become more affordable.

        Even a rocket scientist can't make all these shiny new fandangled super HD services "more affordable" if NBNco's wholesale charges are positively correlated with bandwidth provisioning.

        • Alex
          Posted 09/08/2012 at 1:35 pm | Permalink | Reply

          Possibly garfield…

          But the same goes for FttN…!

          I’d prefer to be “stuck” with FttP which will suffice for many years, than FttN which is obsolete before we even begin.

    • Dean
      Posted 09/08/2012 at 2:53 pm | Permalink | Reply

      So the copper network that’s in place now is returning a lower revenue today than when it was installed in the 70′s? Fascinating!

16. garfield
    Posted 09/08/2012 at 6:24 pm | Permalink | Reply

    “The NBN is a sound investment that will pay its own way and generate a 7% return for the taxpayer”

    Do the maths.

    Cumulative equity injection (2010-21): $30,400m

    Cum. equity injection + 7% capitalised interest (2021): $46,847m

    Debt balance (2021): $13,653m

    Gross funding (2021): $60,500m

    Annual interest charge at 7% on $60,500mn: $4,235m

    Levered free cash flow: -$1,391m in 2021 rising to $3,911m in 2028

    Even at 2028 LFCF run rate of ~$4b, NBNco would barely be able to service the interest charge, let alone pay down the debt.

    There’s clearly an interest subsidy on the Govt’s equity funding amounting to billions of dollars.

    Tell the truth, Senator Conroy.

    • seven_tech
      Posted 09/08/2012 at 6:31 pm | Permalink | Reply

      This is becoming SPAM now.

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