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  • News, Telecommunications - Written by on Tuesday, September 11, 2012 12:59 - 76 Comments

    Turnbull ignores FTTN cost issue

    news Shadow Communications Minister Malcolm Turnbull has avoided responding directly to a claim by NBN Co chairman Harrison Young yesterday that the Coalition’s fibre to the node-based broadband policy could end up costing more than the current fibre to the home-based NBN.

    The Federal Government’s NBN project currently focuses on a so-called fibre to the home rollout style, which will see Telstra’s copper network decommissioned and fibre deployed all the way to homes and business premises. However, the Coalition has proposed to acquire portions of Telstra’s copper network and deploy fibre only part of the way to premises. This is a style which is popular in some countries internationally, such as the United Kingdom.

    In a speech yesterday to a lunch held by the Committee for the Economic Development of Australia, Young claimed that the Coalition’s policy of delivering NBN cost savings by using fibre to the node technology wouldn’t necessarily save money, and wouldn’t actually meet the objective of structurally separating Telstra either.

    “… the prospective cost savings of fibre to the node depend on what time frame you look at,” he said. “Maintaining the copper that connects node to premise is expensive. Coping with legacy IT is expensive. The total system cost of fibre to the node is higher than its front-end cost. The same is true of fibre to the premise, but less so. The apparent cost advantage of fibre to the node decreases as you lengthen the time frame you look at. In the long run, as Keynes famously said, we are all dead. Estimating costs is an engineering problem. Deciding on the relevant time frame is a policy question.”

    Most media outlets which reported Young’s speech yesterday chose to focus directly on the cost issue as it was the most controversial aspect of the speech, and Young’s comments ran against traditional thinking in the telecommunications industry. Up until now, most telecommunications industry commentators have consistently stated that FTTN-based broadband deployments would in general soak up less costs in general than similar FTTH-based builds, although some have highlighted a potential higher long-term maintenance cost associated with the copper portions of a FTTN network.

    Following the speech, Turnbull published an extensive reply to Young’s comments on his website. However, in the reply Turnbull did not respond to Young’s claim with regard to the cost of a FTTN-based NBN build, as opposed to a FTTH build.

    Instead, Turnbull chose to focus exclusively on other aspects of Young’s speech, such as the issue of whether last mile telecommunications infrastructure was a natural monopoly, and whether a fibre to the node-style rollout would meet the goal of structurally separating Telstra’s wholesale and retail operations. Turnbull also discussed the issue of cross-subsidisation of broadband between city and rural areas.

    The issue of the cost of the NBN project continues to be one of the most contentious issues associated with the project.

    Turnbull and other senior Coalition figures have consistently referred to what they see as an unreasonable cost associated with the NBN. For example, Turnbull yesterday said: “Our criticism of the NBN is focused on the vast expense of its solution and the decade or more that it will take for the NBN to be provided in all parts of Australia. That cost and delay is in large measure due to the decision to deploy FTTP to 93 per cent of premises, although it also increasingly appears to reflect NBN Co’s sheer incompetence and inability to deliver such a huge project in a timely manner.”

    In a separate interview published by The Beast magazine last week, Turnbull said with respect to the Coalition’s rival NBN policy:

    “What we will do is we will complete the build of the NBN and we will do it sooner and we’ll do it cheaper and it will be more affordable. In large part the reason we’ll do it that way is because we won’t do fibre to every house, we will bring the fibre further into the field and hook it up to the legacy copper so that the length of the copper is short enough to enable you to run very high speeds — 50, 80 megabits per second — more than sufficient for domestic purposes. The bulk of the cost of this network is in the last mile, as it were, and it’s all in the civil works, not in the gear. It’s just in the labour. So we would save an enormous amount of money.”

    However, many commentators consider it to be misleading for Turnbull to focus only on the cost of the FTTH NBN build alone, and not its return. The cost of building the NBN is not an expense as generally understood, but is actually an investment expected to generate (according to NBN Co’s corporate plan) a modest return of 7.1 percent on the Government’s investment, over the period through to 2030.

    In comparison, there is currently no publicly available evidence that Turnbull is correct in his ongoing claims that the Coalition’s rival NBN policy would save the Federal Government billions of dollars in investment when it comes to its funding of the NBN project. For the Coalition’s rival FTTN plan to save the Government money, it would either need to make similar revenues as the existing FTTH plan, but with lower costs, or make higher revenues than the current FTTH-based NBN plan.

    The Coalition has not yet released the monetary details of its own rival NBN policy, although Turnbull stated recently that the policy had been costed. An analysis by Citigroup published in November found that the Coalition’s policy would cost $16.7 billion. The Citigroup report didn’t mention what financial return, if any, the Coalition’s proposal was slated to bring in on its own investment.

    Turnbull’s comments do not reflect the first time that the Coalition has referred to the inaccurate possibility of saving government money by cutting or substantially modifying the NBN project. In February, for example, opposition Leader Tony Abbott stated in a high-profile speech at the National Press Club in Canberra that cutting Labor’s National Broadband Network project would free up Federal Government money to be spent in other areas such as transport.

    The news also comes as Turnbull’s office has not responded to a list of questions regarding the Coalition’s FTTN plans forwarded to it last month, following a fact-checking exercise conducted by Delimiter into an article Turnbull published in July strongly pushing for the potential for the NBN project to be modified to focus on fibre to the node technology instead of its current fibre to the home rollout.

    At the time, a consensus had appeared to develop amongst those commenting on the National Broadband Network project on Delimiter that Turnbull needed to provide more evidence that Fibre to the Node is the best style of broadband infrastructure rollout for Australia’s long-term telecommunications needs. The questions were:

    • What international examples of FTTN-style broadband deployments do you consider most pertinent to the Australian situation, and why?
    • How long do you estimate it would take, if the Coalition wins the next Federal Election, to deploy FTTN to more than 90 percent of the Australian population?
    • What, specifically, do you estimate would be the cost difference between deploying FTTN and FTTH as part of the NBN rollout?
    • Do you consider it possible to re-work the current Telstra/NBN contract to focus on FTTN instead of FTTH, and how long do you estimate this would take?
    • What broad details of this contract would need to change, and how long do you anticipate the ACCC would take to approve a modified version?
    • Do you have a long-term plan to upgrade a FTTN-style network to a FTTH-style network, or a medium-term plan to allow ad-hoc upgrades of this network to FTTH?
    • What do you consider to be the time frame on which a FTTN-style network would continue to be used without an upgrade to FTTH? Will there, in fact, be a need to upgrade in the long-term to FTTH? On what evidence do you have these beliefs?
    • How would you address the claim that FTTN is a short to medium-term technology that will be superceded over the next several decades by FTTH, and that Australia should only be investing for the long-term when it comes to this kind of telecommunications infrastructure? On what evidence do you feel this way?

    Image credit: Delimiter

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    1. Dean
      Posted 11/09/2012 at 1:14 pm | Permalink |

      This is really just a matter of “he said, she said”. Turnbull is saying they can do it cheaper, NBNCo is saying they can’t, but nobody is providing any evidence or data to back up their claims. It’s really quite depressing.

      • Dominique M.
        Posted 11/09/2012 at 1:23 pm | Permalink |

        Actually, in the long term, it’s quite obvious that the FTTH solution is the way to go. And the burden of proof isn’t on NBN Co. What Malcolm Turnbull is saying is that “the coalition can do it cheaper” without anything to back it up. All he has been saying is that the capital expenditure of FTTN is a third or a half or a quarter cheaper (his statements on this constantly change). That’s all that Malcolm Turnbull has said so far.

        NBN Co and, for that matter, is perfectly allowed to say “we don’t think so”. And unless the coalition answers some questions and do so well before the next election, then there’s no reason to believe them.

        And furthermore, Malcolm Turnbull has just a few days ago that the ultimate capital expenditure for the NBN will be $80 billion to $100 billion, so he would be basing his statements of “our plan is cheaper” based on this extremely questionable assumption.

        • Dominique M.
          Posted 11/09/2012 at 2:29 pm | Permalink |

          And just the quick summary, just in case anyone has joined the discussion late:

          NBN Co: “We’ve got bonds to sell you at about $4000, with a 7% return. We’ll have this running until about 2034. We’re pretty confident about both the cost and return and it’s backed up with lots of evidence. We plan to finance this by offering a quality product with no compromises.”

          Malcolm Turnbull: “Don’t buy from them. I’ve heard rumours from some random very experienced people somewhere that they’ll need to charge you $8000 or even $10,000 to break even, and you won’t get a 7% return. Meanwhile, I’ve got something that’s cheaper I’m trying to sell that you can invest in. It won’t be as good, but I’ll also have it delivered sooner! Just don’t ask me about the returns or costs of my plan, at least not until late 2013, just vote me in and let’s see what happens.”

          • TT Boy
            Posted 11/09/2012 at 4:31 pm | Permalink |

            I can do some breakdowns for you for FTTN

            FTTN Capex – using Telstra’s estiamte from its inital 2005-7 estimate as an “internal company project” was around 4.7Bn. This includes only the cities. That means the Govt would contribute another $4.7Bn to expand it nationwide. This means the cost to taxpayers is around $4.7Bn.

            FTTN Risk – the risk for cost over-run is quite low as FTTN and DSL is a proven technology, it has been deployed by Telstra in the form of ISAM/CMUX for many years, and the existing workforce is trainined in doing this, in addition to materials and practices.

            FTTN Return on Investment – if this investment’s operational window is narrowed to 15yrs it would generate the returns sooner, factoring a build time of 4 years. If one considers current Internet and IT products and services out there, the specifications of FTTN actually suffice. Considering that NBNCo expects 50% of its customers to be on 12mbps, it means little difference for the technologies in the medium term. Fibre networks have an operational life of 20-30 years, so only at the second part of the half life of FTTP will it prove advantageous over FTTN, and that assumes that there is a great leap in internet based applications that require high bandwidth.

            FTTN Regulation & Access – would be simpler as NBNCo would not require the acquistion of the entire Telstra network. Retaining the last mile copper actually has similarities to the current ULL access regime. Telstra could continue to lease the local loop as it does today at a regulated price.

            • Dominique M.
              Posted 11/09/2012 at 4:57 pm | Permalink |

              There was no pla

              FTTN Capex – there was no plan along these lines. There was a plan in August 2005, with Telstra funding of $3.1 billion and government funding of $2.6 billion, so actually less money, and it would have provided services to 99% of urban and 94% of rural properties. If it had been done by anyone other than Telstra at that time, such as the G9 consortium, in a way that would have worked around the Telstra Wholesale monopoly, it would have been a very good idea to do this at that time. But check this out:

              http://www.optus.com.au/dafiles/OCA/AboutOptus/MediaCentre/SharedStaticFiles/SharedDocuments/06.06.28%20FTTNWorking%20Paper%20Final.pdf

              And consider that the wholesale cost would have been $85 for providers for anything approaching a “fast” speed by 2012 standards, resulting in end-user prices of over $100.

              FTTN Risk – “the risk for cost over-run is quite low as FTTN and DSL is a proven technology”. The same is true for fibre.

              FTTN Return on Investment –

              “if this investment’s operational window is narrowed to 15yrs it would generate the returns sooner, factoring a build time of 4 years.” That would imply that FTTN would last everyone, and keeping in mind that many people on FTTN will only get about 10 Mbps, will be sufficient until at least 2030.

              “Considering that NBNCo expects 50% of its customers to be on 12mbps, it means little difference for the technologies in the medium term.” Here is the thing. NBN Co is hooking up its fibre 12 Mbps customers basically below cost. It’s the customers on 100 Mbps and 1 Gbps that pay for this. If you remove these customers, as you would under the FTTN proposal, then the whole funding model falls down and no one will get faster speeds and the guaranteed quality of service drops.

              “Fibre networks have an operational life of 20-30 years, so only at the second part of the half life of FTTP will it prove advantageous over FTTN, and that assumes that there is a great leap in internet based applications that require high bandwidth.” The fibre NBN Co is putting in is guaranteed to last for 60 years, and will likely last longer. The equipment itself, however, would have a much shorter life. But there is no fundamental reason to assume why fibre per se can’t last as long as copper.

              FTTN Regulation & Access – I’ll just use Optus’ words from 2006: “As discussed above, the effect of Telstra’s proposal will be that Telstra remonopolises broadband services in Australia. But, many commentators have reasoned that this may be Telstra’s purpose, as well.” This would be the effect of the FTTN proposal. “Retaining the last mile copper actually has similarities to the current ULL access regime.” Yes, and the current ULL access regime is not working. The pricing of naked DSL plans from other providers is just one consequence of this. There is a Telstra tax of $20 that every provider is being charged, which would mean billions of dollars in extra profit for Telstra from any FTTN customer on any provider that they wouldn’t have to pay under the FTTH plan. And considering the SAU before the ACCC I’ll take NBN over Telstra any time.

              • TT Boy
                Posted 11/09/2012 at 5:23 pm | Permalink |

                Of course I was talking purely as capex and construction.

                Who owns the network is up to the courts. If FTTN is to be built in the spirit of NBNCo, then the actual cost of per unit ADSL service should fall significantly compared to current rates.

                The risk of FTTP in a brownfield national build is VERY different to FTTN, so to the complexity in terms of construction and regulatory nature of it, which NBNCo is beginning to find out, and explains why it is falling behind its theoretical schedule, and I would add eventually theoretical cost.

                FTTN does not have the same product structure as what NBNCo is currently proposing. Since the Capex for FTTN is low, it delivers what is the same DSL product at a much lower price per unit, this is just bascially iinvesting to improve efficiency and ultimately reducing cost per unit. This is why Telstra initially planned this upgrade because from a private company, it saw the benefits from a relatively small capex.

                FTTP is a completely different kettle of fish. It needs to work hard at justifying its ROI, and its assumptions must be true for its ROI to be true. The fact that it expects 50% of its customers to be on 12mpbs is an obvious risk, it mustve guaged the market uptake, and figured for the cost per unit, it would struggle to make a return on many customers, this is different for FTTN as the capex is small, and it can sell at 12-24Mbps or less and still be viable, as is currently in todays broadband market. NBNCo and FTTP introduces a completely different market and accounting dynamic which is much more exposed to risk.

                Again, I am using Telstra’s inital “internal” FTTN project as an example of a feasbility estimate done by the company that was intending to do it anyway, because it saw the obvious economic benefits. It did its own CBA. Now we are not talking about Telstra trying to remonopolise the industry, we are talking about FTTN under the spirit of NBN. By narrowing the scope, and going for FTTN, you have lower risk and capex, while being able to satisfy the demand for broadband, and significantly reducing prices – without exposing yourself to more risk and business cases and cost studies that probably dont hold up in reality.

                • James Q
                  Posted 11/09/2012 at 7:18 pm | Permalink |

                  >The risk of FTTP in a brownfield national build is VERY different to FTTN, so to the complexity in terms of construction and regulatory nature of it, which NBNCo is beginning to find out, and explains why it is falling behind its theoretical schedule

                  Did you even read the corporate plan?

                  It is behind schedule largely due to the Telstra deal taking a long time to negotiate. This is nothing to do with the “complexity”, and everything to do with Telstra trying to squeeze every last drop out of the deal.

                  >Since the Capex for FTTN is low, it delivers what is the same DSL product at a much lower price per unit

                  Actually, the cheapest way to deliver the same product is not to invest more in delivering the same product.

                  Hold on a second…

                  >same DSL product

                  Wait, what? Why build an “NBN” if it is just delivering the same product? What is the point of that?

                  >The fact that it expects 50% of its customers to be on 12mpbs is an obvious risk, it mustve guaged the market uptake, and figured for the cost per unit, it would struggle to make a return on many customers

                  Their figures are conservative.

                  Also, keep in mind that 50% on 12mbps also means 50% not on 12mbps.

                  Right now, the higher speed tiers are actually much more popular, and Telstra isn’t even bothering to sell 12mbps….

                  >By narrowing the scope, and going for FTTN, you have lower risk and capex

                  …and higher opex.

                  >while being able to satisfy the demand for broadband

                  For how long? FTTH can easily satisfy it out to 2040 with a couple modest equipment upgrades, even if growth remains very high.

                  FTTN can only satisfy it long term if growth is zero or negative.

                  >and significantly reducing prices

                  How?

                  >without exposing yourself to more risk and business cases and cost studies that probably dont hold up in reality.

                  Is this a gut feeling?

                  The problem, still, is that there are no actual, hard numbers on the FTTN plan.

                  It’s always “it will be cheaper, honest!” or “it will be faster, honest!” and whenever someone tries to get more detail, Turnbull either repeats the vague claim, or builds up a straw man where the inquirer is somehow suggesting it *wont* be cheaper, even though all they are doing is (quite reasonably) asking for more detail about a policy they might want to vote for.

                  His conduct in these matters is disappointing.

                  • TT Boy
                    Posted 13/09/2012 at 1:11 pm | Permalink |

                    Corporate plans are read with a grain of salt.

                    I agree in the respect that speed and data limited plans are archaic. Developed countries have had unlimited and uncapped broadband plans for years.

                    The fact that NBNCo have rather austere plans and rigid and in some cases unnecessary restrictions in the overall service looks mroe like a throwback than a leap forward. I am talking about NBNCo’s speed limiting, especially the 12mbp entry point, and its rather stingly data quotas, which are not particularly an improvement value and price wise over the current broadband market.

                    I did not mention speed or data quotas in my proposal of FTTN built by NBNCo, mainly because I am implying that speed and data rate limiting will be completely expunged. It actually benefits a carrier to remove these restrictions because it actually simplifies the delivery and support of services. In addition it actually opens or frees up the channels and allows for new products like online streaming.

                    This is where the pros and cons are weighed up, you do put all your eggs in one basket and build fibre to every house and then impose caps and restrictions everywhere on the network; or, do you spend a much smaller amount, and because of the smaller cost allow for cheaper services and free up the network.

                    • James Q
                      Posted 14/09/2012 at 7:05 am | Permalink |

                      The data quotas do not come from NBNCo, and the quotas we see today have nothing to do with the limits of ADSL.

                      The 12mbps tier is there to provide low-income users with a service sold below cost.

            • Austcc
              Posted 11/09/2012 at 5:38 pm | Permalink |

              FTTN Capex – The Telstra estimate does not include the cost to acquire the copper network. That was not necessary for the Telstra estimate because Telstra remained the owner and operator of the new network. However, since the new network is no longer owned by Telstra (structural separation, remember?), you need to add another $10B to that cost. In addition, the cost quoted was for 2005-7. We are now talking about a time period 10 years later. Inflation alone almost doubles your initial costs. ie, total cost to government for the FTTN network is around $20B based on the inital Telstra estimate.

              FTTN Risk – The risk of FTTN is not cost overrun during the construction phase. It is that the technology becomes outmoded and a millstone around the neck of the Australian economy in 10-15 years time.

              FTTN Return on Investment – Who owns the network in the FTTN world? In all the examples from other countries that rolled out FTTN, the network is owned by the incumbent telco – ie Telstra in our case. So it is Telstra that gets the Return on Investment that the taxpayers paid. Also, where did you get your figures for the operational life of a FTTH network? If fibre only lasts 20-30 years, then that is as much a problem that the FTTN network, which also has fibre in it. In fact, if fibre only lasts for such a short time, isn’t it strange that all Telcos around the world have been investing in such a short-lived medium for the most important part of their network?

              FTTN Regulation & Access – As I said before, who owns the last mile, and who is reaping the return on investment?

              • TT Boy
                Posted 12/09/2012 at 9:30 am | Permalink |

                This is where the FTTN model significiantly differs from the FTTP model, something politicans cannot grasp. If you go back to Telstra’s initial plan for FTTN it was an INTERNAL project, ie. the company saw that it was feasible to upgrade its copper network to FTTN, this is as simple as it gets, an infrastructure supplier realises that cost savings could be made by introducing new technology and to leverage that to re-model its business and practices to reduce cost, and increase revenue. Incidentially, this upgrade would introduce triple play services and offest fall in PSTN revenue from dwindling legacy product offerings. In addition, it will signfiicantly reduce its workforce and maintenance costs, which for a company is a large part of its opex.

                Now to the point, if Telstra was to build its FTTN network, the current ACCC arrangement with the declared copper local loop ie ULL would still apply. This loop is now from the Node to the premises, as opposed to from the exchange. So the model of Third Party access does not change significantly. Because NBNCo decided it wanted to replace the entire network with fibre, it will be required to lease the entire Telstra network for 30yrs (I believe that was the deal), instead of the current ULL model where Telstra owns the network and Service Providers lease only the local loop it requires and pays the monthly lease on a pair of copper.

                We came close with the G9 Consortium of creating an open access FTTN network, although I knew it would never work because in that case the government decided to not compensate Telstra for the Consortium to build into Telstra’s network by supplying its own nodes; whereas with NBNCo, Telstra’s network is leased, that is where the $11Bn has gone. So was G9 ever a serious proposal? I doubt it, it was more to pressure Telstra into Structural Separation. In Rudd’s RFP it also required Telstra to sign into conditions that was detrimental to its business and shareholders, and thus Telstra submitted a non-conforming submission.

                Now on the subject of structural separation; this would be applied to Telstra if NBNCo decides to build a FTTN network instead and negotiates a similar agreement with Telstra to compensate it to structurally separate its business and infrastructure, this is something Telstra wants. This means Telstra is compensated for the government taking over parts of its network ie. the building of the NBN network ie. nodes and transport network, while Telstra continues to own the distribution copper network. Because the distribution network is under the ULL regime, it is a regulated wholesale price. If Telstra does not make a loss from maintence of the distribution network, it can move its business to that of being a service provider.

                This means that NBNCo needs only the parts of the Telstra network it requires to build its wholesale network, and the cost of this lease with Telstra would be significantly less than the current FTTP agreement where NBNCo wants to lease the entire network.

                By this method the telecoms infrastructure monopoly is broken, and there are no bottlenecks end to end. The business model and ROI is feasible. The risk to the project are known and limited. And importantly the cost of broadband will drop significantly, in addition to creating a model that more closely mimicks a free market. This means that users get lower price broadband and the infrastructure will guarantee a 18-24mbps uniform service. All this at a reasonable price.

                • Russell Stuart
                  Posted 12/09/2012 at 10:12 am | Permalink |

                  That all sounds mostly reasonable. But there are a couple of downsides. One is it still leaves fibre outside of ACCC ULL arrangements which means fibre remain far more expensive than it should be. Once you’ve paid for it to be laid, fibre should be cheaper than copper. Right now you can add a nought on the end. The second is it will probably leave the current POTS infrastructure in place. Replacing POTS with Voip as the NBN does means land lines will start providing some real competition to mobile voice.

                  Reasonable or not, it’s a pity won’t don’t have a clue if this is what Turnbull is actually planning. The assumption has to be if he had a good story like this one to to tell, he would be telling it. Since he isn’t telling it he must be planning something different.

                  • TT Boy
                    Posted 12/09/2012 at 12:06 pm | Permalink |

                    That is true, Telstra will still have its fibre network. But remember this is a national BROADBAND network, its aim is to rethink broadband which affects every Australian. This is why narrowing the objective significantly simplifies the project and also the cost and time to deliver. FTTP has its own problems with delivering fibre to commerical customers which is another matter all together.

                • Dominique M.
                  Posted 12/09/2012 at 10:30 am | Permalink |

                  > Now to the point, if Telstra was to build its FTTN network, the current ACCC arrangement with the declared copper local loop ie ULL would still apply. This loop is now from the Node to the premises, as opposed to from the exchange. So the model of Third Party access does not change significantly.

                  Actually, it would. Currently, many providers have DSLAMs in local exchanges. If we change from this to nodes, two things happen. One is that there is no more room for other DSLAMs, and even if there was it would be commercially not viable. And two, one of the big selling features of VDSL2+ is that it can do vectoring. Which doesn’t work with ULL. And you don’t have bonding for many many premises either.

                  So that means, that the main reasons we’d want to go from ADSL2+ to VDSL2 go out the door if ULL would still apply. VDSL2 implies that ULL is dead. It turns every ISP into a Telstra Wholesale reseller only.

                  > Because NBNCo decided it wanted to replace the entire network with fibre, it will be required to lease the entire Telstra network for 30yrs (I believe that was the deal), instead of the current ULL model where Telstra owns the network and Service Providers lease only the local loop it requires and pays the monthly lease on a pair of copper.

                  No, NBN Co isn’t leasing the Telstra network at all. The only things that are happening are TUSMA and paying Telstra to transition customers across, with the understanding that the copper network is shut down 2 years after transition in each area. The only way NBN Co would have to use Telstra’s copper is under the coalition plan, which would make the copper instantly extremely valuable and puts Telstra in a position to demand whatever they want. Which will likely imply the same copper access regime we’ve got at the moment, with the above caveat.

                  • TT Boy
                    Posted 12/09/2012 at 12:11 pm | Permalink |

                    ULL is simply the leasing of the copper pair infrastructure, it has little to do with what what technology is delivered over it, hence its unbundled nature.

                    If the payment was only for the transition of Telstra customers, then please tell me whose pits and pipes do NBNCo intend to lay their fibre in? Are you saying they are doing to dig their own along side Telstra’s? Would you think that if they are putting their cables in Telstra’s ducts that they would pay a leasing fee?

                    • Dominique M.
                      Posted 12/09/2012 at 1:17 pm | Permalink |

                      > ULL is simply the leasing of the copper pair infrastructure, it has little to do with what what technology is delivered over it, hence its unbundled nature.

                      Not with VDSL2, due to vectoring. This was part of Telstra’s submission for the NBN tender back in 2008:

                      http://www.telstra.com.au/abouttelstra/download/document/tls652-NBNtechnologybriefing.pdf

                      Note the “Collective Interference Management”, which is just another phrase for vectoring? Without this, VDSL2 rolling out is pretty much pointless. And it’s not compatible with unbundling. That’s why Telstra was so keen to do FTTN back in 2005 and would have done it with government support. But it would have implied getting rid of all ULL and kicking out every competitor DSLAM.

                      > If the payment was only for the transition of Telstra customers, then please tell me whose pits and pipes do NBNCo intend to lay their fibre in?

                      I was talking about the payment as it relates to copper. Part of it is to keep the copper active in some areas (TUSMA), part of it is to move customers off copper. Of course there’s also the pits and ducts, but I thought you were just interested in the copper aspect of things. Anyway.

                      • TT Boy
                        Posted 12/09/2012 at 2:33 pm | Permalink |

                        I’ll clarify. With a FTTN NBNCo build, there is only a single DSLAM network, ie. existing ADSL DSLAMs that are part of TEBA will be decomissioned. NBNCo will provide the entire single and whole of network active infastrcture, this is as expected, and a Service Provider will request a wholesale port from NBNCo.

                        The ULL component is the leasing of the copper loop pair. So a service from the access side of things will consist of a Telstra copper pair which is wholesaled via Telstra, and an active port and network link which is via NBNCo. So essentially the network has only two components. All existing ADSL infrastructure is to be phased out.

                        Individual customer Virtual Circuits and aggregated by NBNCo and handed off to the Service Provider’s Network Clould, that interconnects with NBNCo’s newtork.

                      • TT Boy
                        Posted 12/09/2012 at 2:36 pm | Permalink |

                        I think you are thinking of the ULL regime as currently implemented to be hybridised with FTTN, which it wont be. The idea is the same but with FTTN it will refer only to the copper pair connected to an NBNCo DSLAM or Node. Third Parties do not install their own equipment as per current TEBA, as it is wholesaled via NBNCo

                      • Dominique M.
                        Posted 12/09/2012 at 3:32 pm | Permalink |

                        OK, back to basics.

                        > This means that NBNCo needs only the parts of the Telstra network it requires to build its wholesale network

                        AKA leasing every single copper connection in the whole country forever.

                        > and the cost of this lease with Telstra would be significantly less than the current FTTP agreement where NBNCo wants to lease the entire network.

                        NBN Co is not leasing all of Telstra’s network. It’s not.

                        > And importantly the cost of broadband will drop significantly, in addition to creating a model that more closely mimicks a free market. This means that users get lower price broadband and the infrastructure will guarantee a 18-24mbps uniform service. All this at a reasonable price.

                        So, NBN Co would pay Telstra, a for-profit company, $20 a month for every connection forever (on top of which who knows what NBN Co would need to charge to install all the VDSL and pay Telstra to decomission exchanges and do much of the capital work) regardless of which provider the customer is actually with, basically for keeping a few hundred metres of copper in the ground?

                        And what incentive does Telstra have to provide the best possible quality for those $20 a month? None. You can see it with naked DSL services right now, where Telstra basically doesn’t care if the line quality is unusable.

                        When NBN Co could just run the whole thing, fibre all the way to the customer for about $20 a month wholesale cost?

                        How is this in any way reasonable or a free market?

            • Hubert Cumberdale
              Posted 11/09/2012 at 7:19 pm | Permalink |

              “FTTN Risk – the risk for cost over-run is quite low as FTTN and DSL is a proven technology,”

              Irrelevant. Dial-up is a proven technology. HFC is a proven technology. Guess what fibre is also a proven technology.

              “If one considers current Internet and IT products and services out there, the specifications of FTTN actually suffice.”

              Flawed logic. When you talk about something that relies on the length and condition of the copper you can only build and plan for the lowest common denominator. With fibre that problem disappears and what you can plan for is 100/40mbps and beyond. Fibre wins.

              “Considering that NBNCo expects 50% of its customers to be on 12mbps”

              False. NBNco are not ‘expecting’ that at all, NBNco are considering that in the unlikely case that most people would chose that plan they can still make ROI. Real world figures show already most people are choosing 100/40mbps plans and the 12/1mbps plans are actually the least popular. Good news, seems the NBN will be more successful than they anticipated. +1000 NBNco.

              • BuildFTTP
                Posted 12/09/2012 at 2:41 am | Permalink |

                ‘Flawed logic. When you talk about something that relies on the length and condition of the copper you can only build and plan for the lowest common denominator. With fibre that problem disappears and what you can plan for is 100/40mbps and beyond. Fibre wins.’

                He might need a picture painted for him.

                http://dl.dropbox.com/u/8678167/FTTH_Compare_SpeedvsDistance.png

      • Posted 11/09/2012 at 1:28 pm | Permalink |

        “nobody is providing any evidence or data to back up their claims”

        Except when it comes to costs, we do know the cost and ROI of the FTTH NBN — whereas Turnbull continues to refuse to release the Coalition’s FTTN costing and ROI.

        • Dean
          Posted 11/09/2012 at 1:37 pm | Permalink |

          Well I mean, there’s no proof that FTTN would cost more. I do agree that the onus is on the Coalition to release their data, though, since they’re the only ones holding back.

          In reality, I see the NBN making a return, so it seems pretty clear it’s the way to go. Maybe you can do FTTN for a smaller initial outlay. Maybe you can do FTTN a few years sooner. But ten years isn’t all that long to wait and because you’re going to make your money back either way, what’s the advantage of going with the lesser technology?

          • NBNAccuracy
            Posted 11/09/2012 at 2:30 pm | Permalink |

            “Well I mean, there’s no proof that FTTN would cost more”

            I would say there is no evidence to the contrary. Turnbull needs to show that in the long term having FTTN as part way solution to eventual FTTH won’t cost more. He admits FTTH will eventually be needed. Why won’t a the FTTN, whose capacity is only large enough to provide needed bandwidth out to about 2016 according to projections not a waste of money?

          • Francis Young
            Posted 11/09/2012 at 3:13 pm | Permalink |

            Dean, on the question of comparing equivalent footprints of FTTH and FTTN and the timeframe to completion.

            The NBN is prioritising the fibre to leave the best-served areas to last. The HFC is all due for decommissioning in just six years (2018), so the only premises not fibred by then must already have better service than cable, or are at the tail for technical reasons.

            So, when will all of Mr Turnbull’s 70,000 large,air-conditioned FTTN cabinets be gracing our residential streets? If the contract negotiations take a year (end 2014), this leaves him only 2015, 2016 and 2017 to build them all and beat the FTTH timeline. He’ll be lucky to even get them approved by councils.

            It is obvious to any reasonable observer that those few developed countries who dabbled in FTTN last decade have since moved away from it, including the desperate attempts by the UK House of Lords to circumvent British Telecom’s FTTN, with its high costs to end users. Australia’s unique situation having the copper to premises privately owned by Telstra imposes a punitive surcharge on FTTN construction cost here. At a minimum, Telstra will want compensation equivalent to the $9 billion it is expecting from the NBN. Added to construction costs of around $11 billion (2007 figures), the FTTN footprint would cost more, not less, than the $12 billion fibre build of the NBN. FTTN could easily be double the cost of FTTH, but will certainly not cost less.

            The longer the coalition takes to adopt the NBN, the closer we get to an election where Labor, Greens and Independents all have exclusivity to the correct policy on broadband, a natural publicly owned wholesale monopoly of fibre to premises, with a level retail playing field. In 2013, as in 2010, this policy failure will leak coalition votes to Labor and the crossbenches, and could see another hung result from what should have been an unloseable election.

          • Mr.B
            Posted 12/09/2012 at 10:23 pm | Permalink |

            Well considering FTTH is expected to have a ROI of ~7% – as in pay for itself and actually cost nothing – then any tax money spent on the FTTN rollout is going to cost tax payers more then a FTTH rollout that will in effect cost nothing to the tax payers in the long run.

            Since Mr. Turnbull has not shown that his FTTN rollout will have a ROI of any kind, it will obviously cost tax payers more money, even if the build cost is lower.

        • nonny-moose
          Posted 11/09/2012 at 3:44 pm | Permalink |

          particularly WRT costs.. Malcolm wrote

          “The key words here are “without making the subsidies explicit and transparent.” And therein lies a very big difference in philosophy. Not only do we prefer competition to government monopoly, but we believe that subsidies should be explicit and transparent.”

          except if you ask for details on the policy in which case things are anything but transparent, and so far the policy for subsidies has been anything but explicit. Despite Malcolms apparent beliefs his actions have told a different story, which i feel detracts from his argument somewhat.

          i also very much disagree wih the example Malcolm floats of the overseas cables to serve Australia – that is NOT a natural monopoly and was the wrong analogy to reach for.

          the comment about ‘too much capital invested’ also sounds suspiciously like he is still using a (completely anecdotal) $60-80-100 bn figure for the network to justify the argument re monopolies.

          i was also under the impression that excess cashflow was already an answered question – it will be rolled back in to reduce its prices, AFAIK? i have the feeling Quigley was asked the question either in a committee appearance or in one of his interviews.

          • Alex
            Posted 11/09/2012 at 5:34 pm | Permalink |

            +1

    2. Mr Creosote
      Posted 11/09/2012 at 1:29 pm | Permalink |

      Its ok, Turnbull will be able to show us the cost benefit analysis he used to come up with his fully costed policy, and it will no doubt explain why FTTN is a better all around proposition than the current NBN. He must have one right? A CBA is supposed to be the be all and end all in determining the best policy, and ensuring the taxpayer isnt duped! Malcolm told us so – many times!
      So Malcolm, it should be very easy to answer your critics and explain why your option is the best. Just wave your CBA proudly in the air, and all these awkward quesions should just disappear! ;)

    3. Tinman_au
      Posted 11/09/2012 at 1:37 pm | Permalink |

      We need to see the CBA of your plan to believe in it Malcolm, you taught us that!!!1

      • Posted 11/09/2012 at 1:49 pm | Permalink |

        +1

        • Mr Creosote
          Posted 11/09/2012 at 2:17 pm | Permalink |

          Renai,
          Why is it that to date, and especially since Turnbull announced that he has a fully costed policy ready to go, we havent seen any commentators, yourself included, ask Turnbull about his promised CBA? It seems to be a very glaring anomoly, given Turnbulls long history of saying how important they are, and something that be important for journalists to press him on. The whole credibility of his policy and costings shouldl hinge on a CBA, or so he would have had us believe.

          • Steven
            Posted 11/09/2012 at 5:31 pm | Permalink |

            +1

          • Posted 11/09/2012 at 9:20 pm | Permalink |

            I asked Turnbull many months ago to front up and do a CBA on his own plan.

            He answered that (paraphrased) “because we are in opposition, we don’t have access to the Productivity Commission to have a CBA done on the plan”.

            Of course, the fact that the Productivity Commission isn’t the only organisation in the known universe that can do a CBA was completely lost on him.

            Don’t worry, he’s been asked. He just wriggles out of that too.

            • OliphanT
              Posted 12/09/2012 at 7:43 am | Permalink |

              Hey Gillard Gov’t,

              We know you are reading… offer Malcolm access to the productivity commission so he can cost his alternative… go on.

              Let him fall on his own sword.

    4. Tim
      Posted 11/09/2012 at 1:43 pm | Permalink |

      Unless Malcolm Turnbull rejects future FTTP as an upgrade option he needs to provide evidence of how the following will not increased both CAPEX and reduce revenue regardless of how funded.

      How will purchasing short lived copper decrease the cost of FTTP considering that eventually this asset will become a dead cost. The asset will eventually fail to be needed and thus produce no revenue while still costing billions to purchase compared to an immediate FTTP build.

      With direct subsidies how does Malcolm suggest that revenue will not be decreased, with a cross subsidy no taxpayer funds are used, rather more profitable users cross subsidise the cost, still leading to a net gain from the user base. From this perspective red tape is also reduced in that users do not need to apply for tax rebates or government subsides, this is automatically reflected in usage bills.

      Furthermore how much efficiency loss does Malcolm estimate from a fractured rollout. In regards to this you have to consider wasted FTTP costs thus far, the costs to modify rollout plans and the extra cost associated with only multiple shorter term plans rather than gaining the economies of scale from a single long term plan.

    5. Geoff U
      Posted 11/09/2012 at 1:50 pm | Permalink |

      Why do I have this feeling in my gut that this article feels wholly incomplete without Renai’s Analysis/Opinion section…

    6. Kevin Cobley
      Posted 11/09/2012 at 1:54 pm | Permalink |

      Turnbull’s plan is only cheaper if fibre is “NEVER” deployed to the home, the eventual deployment to the home at some time in the future must cost and also must be done as the copper fails (copper pair wire just ain’t being made anymore). Then there is the cost of the “node boxes” that become stranded assets/losses when the fibre is eventually deployed.

      Why build a hundreds of thousands of expensive node boxes that will eventually be deleted at great cost?

      What Tunbull’s plan is to backend the high cost onto a future Government meanwhile the whole exsisting network collapses because of the high demand for services. It’s just moving the cost to the future and making it more expensive in the long run.

      Abbott needs to learn that Roads are finished, it’s very clear that falling Oil production is going to lead to the collapse of road transport within the decade to try and raise money for roads by taking it from boadband is insan.

      • Hubert Cumberdale
        Posted 11/09/2012 at 2:07 pm | Permalink |

        “Turnbull’s plan is only cheaper if fibre is “NEVER” deployed to the home”

        That is what is so ‘genius’ about his plan. If he can fool enough people with FttN now he doesn’t have to worry about that inevitable fibre roll-out at all. He’s only planning on being around long enough to roll out his obsolete FttN patchwork, the FttH part is someone else’s problem. Fuck the people. FttN zealotry and fragile political egos are for more important.

        • MikeK
          Posted 12/09/2012 at 11:43 am | Permalink |

          +100, he only wants to roll out the cheap part FTTN with a very short life span and ignore the most expensive part FTTH which has a far greater life span. Cheap solution and cheaper politics.

      • WhatsNew
        Posted 11/09/2012 at 7:20 pm | Permalink |

        “Turnbull’s plan is only cheaper if fibre is “NEVER” deployed to the home.”

        Unfortunately I think the Coalition is quite happy to underestimate Australia’s future internet needs and lock in a dead end technology, even with the real risk that it will hold back the economy longer term.

        “What Tunbull’s plan is to backend the high cost onto a future Government meanwhile the whole exsisting network collapses because of the high demand for services. It’s just moving the cost to the future and making it more expensive in the long run.”

        I think it’s actually worse than that. As Renai has pointed out several times now, the government is not actually paying for this in the long run, fixed line users will be. All the government is doing is to borrow money at special government rates in order to build it.

        Now Turnbull is quite happy to compare the capital expenditure required for building FTTN vs FTTH, but seems less willing to talk about the differences in operating expenditure, which of course will add up over time and only end if/when FTTN is replaced. With FTTN, there will still be significant maintenance costs for the already failing copper, but there is also the issue of having to supply power to all the cabinets that will be required since they have to have active equipment inside. According to this: http://www.youtube.com/watch?v=akKjo0e8V3k the power requirements *per user* for FTTN vs FTTH is roughly doubled, and FTTN would likely require the equivalent of 2 to 3 additional small power stations be made available to meet this demand. If you think about it, the upfront savings on capital expenditure will partly go towards extended copper maintenance and wasting energy, and you’ll be compromising on the last mile connection speed to boot. Doesn’t sound all that inspiring to me.

        “Abbott needs to learn that Roads are finished, it’s very clear that falling Oil production is going to lead to the collapse of road transport within the decade to try and raise money for roads by taking it from boadband is insan.”

        He can’t actually use the money saved from investing in FTTH for roads anyway, since roads are an expense not an investment and they won’t generate any direct return for the government. Thats why spending on roads is included in the budget. Turnbull has already admitted the difference even if Abbott is still playing(?) dumb about it.

    7. Posted 11/09/2012 at 1:55 pm | Permalink |

      Turnbull can tell us his whole plan will cost $5.00 and a six pack of Corona’s, and tell us it will be “cheaper” than the NBN.

      But his “fully costed” policy is invisible. He won’t release it, and we can see it, so we can’t compare it.

      It’s like going to a car dealer, finding the car that is the perfect solution to your current and future needs, and having the dodgy used car salesman in a Turnbull suit from the lot next door trying to sell you a different car that you can’t see and for which he can’t give you a price.

      Laugh all you like, but that’s what he’s asking us to do.

      • Mr Creosote
        Posted 11/09/2012 at 2:21 pm | Permalink |

        More importantly, the guy in the Turnbull suit is promising you a car just as good, cheaper, even with the same name, but will only deliver a push bike. ;)

        • Simon Reidy
          Posted 11/09/2012 at 4:01 pm | Permalink |

          I tend to think of Turbull’s plan as more of an old Datsun 180B with only 3 cylinders running and a broken speedo (but with a brand new paint job and tyres to fool the layman into thinking it’s new and reliable).

          The NBN by comparison is a shiny new bullet train. It may be running a bit late, but in the long run it’ll get you where you need to go faster, and have more than enough seats for everyone.

    8. Kevin Cobley
      Posted 11/09/2012 at 2:03 pm | Permalink |

      Good Question “where’s your cost benefit analysisTunbull”

    9. Gwyntaglaw
      Posted 11/09/2012 at 2:17 pm | Permalink |

      All things being equal, FTTN might be cheaper (in the short term) and a bit quicker to roll out.

      But of course, all things are not equal. Not by a long shot.

      For example: on the FTTP side, we have the NBN Co plan, including agreements with Telstra, innumerable contracts with suppliers, and millions of person-hours already undertaken in detailed planning, costing and problem-solving on a grand scale. Also, detailed financial forecasts and costings.

      But on the FTTN side, we have, what exactly? Plans that were last visited five years ago, no deal with Telstra to use (and fix up) the decaying copper, no suppliers, no contractors, and no plans. And certainly no costings.

      And thereby we see the false comparison – if one owned the copper tail, could throw a switch to convert the network planning to FTTN, and simply expect the suppliers turn on a dime to produce the cabinet infrastructure which is completely different to anything being used now, then yes, FTTN may well be “quicker” to reach certain heavily modified targets.

      But none of that is remotely realistic; and neither are Mr Turnbull’s claims of being able to magically speed up the rollout.

    10. jwbam
      Posted 11/09/2012 at 2:18 pm | Permalink |

      Turnbull says “we will bring the fibre further into the field and hook it up to the legacy copper so that the length of the copper is short enough to enable you to run very high speeds — 50, 80 megabits per second — more than sufficient for domestic purposes.”

      But omits that only a VERY small (5 or 10%) minority of buildings in an FTTN area will get those speeds if he spaces the nodes around 1 km or so apart.

      If you’re in the 90%, then tough luck.

      http://www.thinkbroadband.com/guide/fibre-broadband.html

      • Hubert Cumberdale
        Posted 11/09/2012 at 2:53 pm | Permalink |

        How wonderful. Looking out my window under such a plan theoretically I would be in that 5% getting 100mbps. Great (and fuck the rest of the population in the process). So if I want to move I have to look for a house the same distance from a node to receive the same service I was getting at my previous adresss.

        Also it’s such a small incremental for the majority one wonders why anyone would bother with such a plan. Data requirements are growing exponentially and these clowns want to continue in a linear fashion.

      • skywake
        Posted 11/09/2012 at 4:34 pm | Permalink |

        I think it’s strange that Turnbull is talking about cost when he seems to have no idea what sort of FTTN network he’ll build. One day he’s talking about how he’ll do FTTN to the bush over 1km (20Mbps) and the next he’s talking about speeds of around 50-80Mbps (100-300m).

        He either has no plan, has discovered some new tech that magicly improves VDSL performance or he’s being very deceptive with the numbers he’s using.

    11. Mike
      Posted 11/09/2012 at 2:20 pm | Permalink |

      “…it also increasingly appears to reflect NBN Co’s sheer incompetence and inability to deliver such a huge project in a timely manner.”

      [http://www.malcolmturnbull.com.au/blogs/malcolms-blog/a-response-to-mr-harrison-youngs-speech-today-on-the-nbn/]

      To me, the most disgraceful and odious part of Turnbull’s answer to the speech was this slight on the professionalism and work ethics of NBN Co and its employees. If I worked for NBN Co., I’d be seriously thinking about what my future holds with the unfortunate possibility of having this duplicitous clown as my effective boss in the future. There again, perhaps this is what he intends? Destroy NBN Co. Create a total lack of employee morale – and then, of course, he can blame all the resultant woes on the inability of a destroyed business.

      Any lingering thoughts that this man has an iota of scruples whatsoever were flushed down the toilet with this latest snide and pathetic outburst.

    12. Observer
      Posted 11/09/2012 at 2:55 pm | Permalink |

      And this is from the man who yearns for more truth and less spin in politics.

    13. Observer
      Posted 11/09/2012 at 2:58 pm | Permalink |

      With a fully costed policy, there is no longer a place for estimates. So, the simple questions to Turnbull should be exactly:

      How much cheaper?
      How much quicker?
      How much more affordable?

      • Posted 11/09/2012 at 3:37 pm | Permalink |

        He’s been asked these exact questions many times, by many people – and he flatly refuses to answer.

        • Observer
          Posted 11/09/2012 at 4:10 pm | Permalink |

          Then the next question should be:

          Why aren’t you answering these questions?

          • Posted 11/09/2012 at 9:22 pm | Permalink |

            Like most other people, I current don’t have access to Turnbull’s plan, so I can hardly comment on the numbers in it, can I?

          • Posted 11/09/2012 at 9:23 pm | Permalink |

            And on the off chance I read that wrong – (suspect I did) – we have been asking why he won’t answer the questions. He ignores those questions also.

    14. Bern
      Posted 11/09/2012 at 3:16 pm | Permalink |

      “the issue of whether last mile telecommunications infrastructure was a natural monopoly”

      It seems to me, upon reading Turnbull’s “response”, that he didn’t actually address that point whatsoever. What he instead argued was that having regulated monopolies can result in higher end-user costs if the regulation allows the monopoly to over-capitalise (which is, of course, the situation we’re seeing with electricity transmission networks in Australia). He provided no argument as to why running two network links to every single premises in the country was a good idea.

      I’d say his argument regarding the overseas link is inappropriate, as the cost (in $$ and time) of laying an international link (~$200million for PPC-1) is far lower than that of rolling out the NBN’s last mile network (what’s the latest figure for that, $35billion?), and the rates charged in that market by the incumbents were obscenely profitable, so even cutting the prices by 50% would result in healthy profits.

      We still don’t have two separate roads, two separate power lines, two separate gas lines, two separate phone cables going to every single house in the country.
      The only one that comes close is the HFC cable, where Telstra deliberately over-built Optus’ network in order to reduce its market share and destroy its profitability. I don’t know how much that cost Telstra, in dollar terms, but they retained their last-mile monopoly over most of the country as a result. It certainly didn’t result in a net benefit to consumers…

      • nonny-moose
        Posted 11/09/2012 at 4:13 pm | Permalink |

        absolutely.

        “The problem with this thesis is that it basically denies the dynamic, creative forces which only competition can deliver.”

        you wouldnt know it looking at the HFC market, would you? i personally wonder that with ~1/5 of each network in use, the initial build cost, maintenance costs, Docsis upgrade costs and power or any other costs – whether either network has actually paid itself back. its something ive wished to know for a long time.

        in any case ‘dynamic, creative forces’ are not the terms id apply to the HFC market, and the fact the rollout stopped some 15 years ago (when free market Liberals were running things no less) and has not budged since certainly doesnt suggest that any more than the 2.7 million passed have seen any ‘net benefit’. it doesnt really seem that reality has matched the way that Malcolms (free market) ideology expects things to go?

        • James Q
          Posted 12/09/2012 at 12:35 am | Permalink |

          >The problem with this thesis is that it basically denies the dynamic, creative forces which only competition can deliver.

          Yeah, it was incredibly creative when the Telstra cable rollout followed Optus down every street, installing stock-standard coax with stock-standard amplifiers and stock-standard splitters and running stock-standard DOCSIS over it.

      • James Q
        Posted 12/09/2012 at 12:32 am | Permalink |

        I think he got stuck on the word “natural” and skipped straight to “monopoly”.

        Throw on some blind ideology goggles, and that crazy NBN guy is defending monopolies! Monopolies are evil! Quick, provide an example of monopolies over charging, or situations where there actually should be competition (which is every situation, duh!) and/or regulation but there is neither. That’ll shut them up. FREE MARKET POWAH!

        I hear all-or-nothing-land is good this time of year.

    15. Bob.H
      Posted 11/09/2012 at 4:05 pm | Permalink |

      Judging by Mr Turnbull’s blog post, several previous posts and interviews I am now convinced that there is no Coalition broadband plan.

      If a real plan did exist then Turnbull would he been able to answer the questions put to him by Delimiter. The fact that no answers have been forthcoming indicate that there is no NBN plan FTTN or otherwise in actual existence. Answering the questions from Delimiter would not reveal in it entirety any so called plan that is being held back for the next election. All that answering the questions would do is affirm that the Coalition has a serious plan in place that has looked at all the possibilities.

      Sorry, Mr Turnbull, but I for one think you are trying to bullshit me!

    16. Tim
      Posted 11/09/2012 at 4:06 pm | Permalink |

      Furthermore in regards to the 2 US links if we currently had a single link simply would not work, the data requirement necessitated a second. Recently a third link was proposed although the funding could not be found.

      The other reason to have a secondary link is redundancy, most ISP’s have some contracted data throughput on both links for redundancy and load balancing.

      Furthermore international links are improved by data demand, the situation cannot be duplicated in the last mile of a network, while one customer may use one international link and another customer another one both links run at a sufficient load to justify the cost and the need for secondary link. With FTTP consumers can decide on what they get and pay appropriately, for consumers it does not matter if it is HFC or FTTP delivering the service. It does not make sense with having two distinct networks with their associated overheads, the kind of thinking where it does while it may be possible to defend economically cannot be justified from a sustainability point of view. The resource wastage from duplicating everything is incredibly wasteful. The economic model also assumes sometimes erroneously that competitive pressure are the only source of efficiencies. While often true history tells us corporations are often prone to mistakes, it often depends on the management of the unit.

      • nonny-moose
        Posted 11/09/2012 at 4:30 pm | Permalink |

        i think he said links to the ‘rest of the world’ not just to the US…. dont forget the links hanging off the West coast :)

        as an aside, the overseas links from wiki (ive left out decommissioned links): Southern Cross, PPC1, SEAMEWE, AJC, APCN, APNG2, Gondwana1, JASURAUS, TASMAN2.

        http://en.wikipedia.org/wiki/List_of_international_submarine_communications_cables

        • Tim
          Posted 12/09/2012 at 10:43 am | Permalink |

          My point still stand, these extra links would not exist if there was only enough demand to justify a smaller number of links. I used the US links as an example and because they are the main ones in use as the US is reponsible for a disportportionate of international link use. But to talk about your point Australia does have quite a few other international links to other countries

    17. Graham
      Posted 11/09/2012 at 4:33 pm | Permalink |

      As I see it, the real argument from the Coalition is not between FTTN and FTTP, rather it’s over who should profit from the natural monopoly which is the last mile.

      The Coalition wants that profit to go into private hands. Its FTTN policy is just a tool to ensure that end.

      The quality of the network is largely irrelevant to them. What is relevant is the direction in which the money flows.

      They don’t care what replaces their FTTN solution, so long as it is in the hands of the private sector.

      From the Coalition point of view it is NBNCo that is the problem not FTTP. FTTN is simply a way of wrecking NBNCo.

      The future that they prefer is one of private monopoly extracting rent as hard as the monopoly market will alllow. The prefered telecommunications future of the Coalition is already here, it’s called South Brisbane.

      • Bern
        Posted 12/09/2012 at 9:48 am | Permalink |

        Bingo!

        The conservative ideology here in Australia (and the US, and many other western countries) is that private profit is preferable to public benefit.

    18. Richard Ure
      Posted 11/09/2012 at 4:59 pm | Permalink |

      “we won’t do fibre to every house, we will bring the fibre further into the field and hook it up to the legacy copper so that the length of the copper is short enough to enable you to run very high speeds — 50, 80 megabits per second — more than sufficient for domestic purposes”

      Three questions:

      How short is “short enough”?
      How much of the “short” lengths of copper has to be replaced to deliver the promised 50, 80 megabits per second?
      What is Malcolm’s answer and what is the experts’ answer?

      • jwbam
        Posted 12/09/2012 at 4:50 pm | Permalink |

        You forgot one – what about those premises who really do need faster-than-average-domestic speeds? How much do they then need to pay to get what they need? $$$$$

        NBN FTTH will let those who want to pay for faster speeds to get them without relocating or paying for a custom fibre link. The income from that will help pay for the whole network.

        • Richard Ure
          Posted 12/09/2012 at 5:57 pm | Permalink |

          Has Malcolm suggested at any stage that his promised 50 to 80 meg is not universal for ALL wired connections? That certainly is not the impression he has given along with all his other impressions.

          • Russell Stuart
            Posted 12/09/2012 at 6:03 pm | Permalink |

            @Richard Ure: Has Malcolm suggested at any stage that his promised 50 to 80 meg is not universal for ALL wired connections?

            He has said that he wants to re-use the existing HFC network. It isn’t always able to deliver those speeds.

            • Richard Ure
              Posted 12/09/2012 at 6:19 pm | Permalink |

              “we will bring the fibre further into the field and hook it up to the legacy copper so that the length of the copper” So the “copper” in HFC isn’t “copper” within the meaning of the 50 to 80M promise? If not, Malcolm should make that clear. Along with all the other overdue clarifications we are entitled to.

    19. Russell Stuart
      Posted 11/09/2012 at 6:10 pm | Permalink |

      I have more questions for Turnbull. It is very easy to deliver something faster and cheaper if it is not the same “it”. So I would like to know what he is promising to deliver.

      1. What percentage of the people who will be getting an NBN fibre connection will be getting this new wired NBN connection?

      2. What is the fastest speeds (upload and download) every consumer will be guaranteed they can purchase without having to pay to replace/upgrade equipment on this new wired NBN? (With the current NBN it is 100Mbit/sec.)

      3. The current NBN offers price guarantees – ie everybody pays the same amount for the same service, up to the maximum bandwidth a retail customer can purchase off the NBN. Will that be the same under the coalitions NBN, or will it depend on who is providing the service (eg, Telstra HFC, Optus HFC, VHDSL, …).

      4. Under the current NBN people who don’t get wired will get a guaranteed 12Mbps for the same price as wired. Will this be true under the coalitions NBN proposal?

      5. Currently I have a building serviced by fibre and copper. If I get 6Mbps supplied by SHDSL using multiple bonded pairs, the charge is around $400/mo. If I get that same 6Mbps supplied over the existing fibre, the cost is $1500/mo. I presume that has something to do a privatised monopoly, Telstra Wholesale, owning fibre and it not being regulated in any way, so it is free to charge what the market will bear. The restructuring of the industry under the NBN will address this issue. Does the coalition also undertake to fix this mess with their proposal?

      • Richard Ure
        Posted 12/09/2012 at 6:11 pm | Permalink |

        “The current NBN offers price guarantees – ie everybody pays the same amount for the same service”

        Allow me to split a(n) hair. Presumably “everybody” means every RSP being charged the same. RSPs can charge their customers what competitive pressures let them charge.

    20. Steven
      Posted 12/09/2012 at 9:40 am | Permalink |

      We should also be posting our comments on Turnbull’s blog where the luddites read.

    21. Daniel
      Posted 12/09/2012 at 11:45 am | Permalink |

      Malcom is investing in FTTP Technologies from Telcos rolling out FTTP.

      This should be enough to convince everyone on every single sight, that:

      That FTTP DOES indeed support itself, and is for the long term.

    22. Abel Adamski
      Posted 12/09/2012 at 4:55 pm | Permalink |

      Let us not forget the cheaper, quicker and cheaper relates to the provision to the Premises ONLY. The NBN costed the fibre to the premises at approx $12Bill. That is the amount that is being reduced, depends on how handled, if copper and tails left as Telstra property and responsibility there will have to be a negotiated rduction in lease of those pits and ducts, but then what will Telstra charge for use and maintenance of that copper, pits and ducts. Plus cancelled contracts etc, so actual $ savings will be in the order of 10% overall for a far inferior product for the long term that will not have the high value business products and only achieve very little of the actual goals of the NBN. If they recind the HFC agreements, and promote private sector cherry picking it is guaranteed to fail to pay for itself or earn a profit. It will be a massive Financial disaster due not to the Labor Plan and Business case or implementation, bot entirely due to the Coalition and certain Vested interests intentional destruction of Labors NBN
      We will end up with a Mickey Mouse Play School NBN and no one will ever try to upgrade and a massive slug to the Taxpayer




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