blog Your writer has been pretty supportive of the controversial comments made by MyRepublic chief executive Malcolm Rodrigues about the Coalition’s version of the National Broadband Network. However, not everyone shares the same views. One very well-argued piece of detailed analysis comes from the founder of Communications Day, Grahame Lynch. Lynch writes (we recommend you click here for the full article):
“MyRepublic has a little secret: there is no way it can offer gigabit services for under S$50 without adopting the same very contention policies it criticises in others. A gigabit broadband service is very much like a red sports car that can do 250km/h in theory but is only driven in 60km/h zones … the idea that MyRepublic could barge into Australia and profitably offer low contention gigabit or even FTTH-derived 100Mbps plans for under $50 under any style of NBN tech mix— ALP or Coalition—can only be described in one word. Bulls**t.”
Lynch’s argument is essentially that MyRepublic is being disingenuous about its own broadband offering and ignoring geographical differences between Australia and Singapore, in order to pump up the hype around its Australian launch. And I agree — he’s completely right on this point. And I like his detailed analysis of how MyRepublic functions in Singapore.
Where we tend to differ is on our respective opinions regarding the merits of HFC, Fibre to the Node and Fibre to the Premises. Delimiter’s Statement of Principles states: “Where there is a choice of technologies to be implemented, we support the option that will be the best fit for purpose in the long-term.” The best technology — indeed, the only feasible technology — for Australia’s long-term telecommunications needs is Fibre to the Premises. That’s the overall point that MyRepublic was making yesterday — and the point at which I diverge from Lynch’s analysis.
“Singaporean *upstart* MyRepublic”
See, the problem here is that this writing is not just emotive, but it’s provocative from a commentator trying (albeit poorly given the history of CommsDay) to maintain a facade of impartiality.
His ending line to: “You can have pervasive FTTH. Or you can have affordable broadband. But you cannot have both.” seems to provide him with insights on the cost differential between the LNP’s mixed-mode and the original NBN’s vision for FTTH that no one else has. If “Everyone should be able to get a bare minimum of 25Mbps and generally 50Mbps in the lowest decile” why isn’t the LNP NBN committing to this as minimum service specifications? How does Grahame Lynch “know” all this, yet the risk management team in the LNP and at NBN aren’t willing to back?
The thing I dislike about this analysis, and indeed much of the writing Grahame Lynch is his tendency to adjust misrepresent data and things other people say. In this case”
“the idea that MyRepublic could barge into Australia and profitably offer low contention gigabit or even FTTH-derived 100Mbps plans for under $50 under any style of NBN tech mix— ALP or Coalition—can only be described in one word. Bulls**t”
Yes, you’re right Graham, it is bullshit. He never claimed $50 plans, he said $80-90. All the analysis in your article showed that even though $50 a month was a losing proposition, $80-$90 was quite possible.
He’s since updated the article to include the correct $80 price point for Australia, but I’m not sure it makes any difference to the analysis. His entire point is that MyRepublic’a entire business model in Singapore is based on offering sexy-sounding “gigabit” services with massive contention ratios. Which is entirely expected, given that a fully committed gigabit pipe wholesales for several thousand dollars in that market.
That wouldn’t be any different under an Australian fttp rollout. $50 vs $90 a month would barely shift the ratio.
Well, they’ll be in perfect company with Optus, the masters of high contention and low international link capacity
There is a huge difference between $50 and $90, TPG is currently offer 100Mb unlimited for $99 so $80-90 is not out of the realm of possibility.
I see he STILL cannot honestly quote what was said, he’s tacked on under $80. They didn’t say under $80, it was $80-90. Why misquote what was said unless you want to twist what was said for a political agenda?
I get 1000Mb for $93 p/m from Telstra so it cant be that hard to achieve.
“disingenuous”, actually feeding the chickens. Media receptive so over simplifications particularly in IT. Basic review of NBN RSP pricing (avc + cvc) enough for all to laugh at the proposition, rightly dismissed.
Perhaps adding financial responsibility to the site’s principles might change perspective.
NBN pricing can be changed, and financial responsibility is a flexible term when it comes to Government spending. Does the NBN need to make a profit? No. Does it need to make a positive return on its investment? That’s not clear either. We’re not talking about a private sector corporation here — we’re talking about a government business enterprise set up to implement policy.
Well, it depends if you want it to be an infinite drain on the budget or not. If it can at least break even long term, then the impact on tax payers is small to low, when users essentially pay for the new network. If income cannot hope to close the gap between expenses, interest and operating costs then it becomes an on-budget cost and an increasing burden on the state, which tax payers, conservatives, international trading partners and providers of foreign debt such as the IMF and the World Bank all look unfavourably upon. Importantly, it will give the LNP an excuse to try to offload the infrastructure to private enterprise ASAP, which will come with incentives to offset the debt.
So what we’ll have is a direct budget hit to tax payers, then a multi-billion dollar incentive payment (almost certainly to Telstra) to ‘sell’ non-income-producing infrastructure. It will be like paying for it twice, but it will be owned by a private company, who will then charge everyone a great deal more to use it.
Also remember that CVC cost was designed to be reduced over time as the ROI ramped up. That meant the more high revenue plans people (and particularly businesses) signed up for the faster CVC would drop and the more affordable all NBN access would be for everyone.
So yes, it might not be necessary for it to be revenue positive for it to achieve its objectives, but it’s the best chance we have of it remaining a government asset without shareholder profit making it unaffordable for thousands of Australians.
But I take your point – instead of messing about with loans and interest and offsetting the construction over decades, the government could fund the NBN like they would, say, military expenditure. They don’t try to make a business case for $22bn of fighter jets, they just buy them. Even if they’re a decade late. Heck, the government spent $45bn on upgrades to power grids that will never be needed because the utilities claimed increased capacity was needed despite consistent and continual lower annual demand, but we don’t keep hearing arguments about that, do we?
But if the NBN is going to be accepted as a written down cost then the whole funding model needs to be thrown out immediately – better to pay up front for something than take a loan and have to be bled for interest for decades – it will end up costing five times as much like that.
Not making a profit does not automatically mean making a loss.
If the revenue earned covers ongoing maintenance and ROI, then there is no “continuing drain” on the taxpayers.
This will of course require the ROI to be high enough to cover these things. Whether that is likely under the MTM is questionable.
That ‘if’ seems vanishingly unlikely.
Almost 10 years ago we told “$4.5b not a cent more”, a few chuckled yet the masses cheered. Several months later “peak funding $45b”, do it cried the mob the few now worried. As target after target was missed, they redefined the metrics and repeated their mantra “on schedule and budget”. The bewildered few pointing out the Orwellian disconnect were shouted down, a 50+ media team assembled to ensure message. A review calculates peak funding of over $70b. Continue they shriek, the few accepting of their new burden hoping a little can be saved.
Flexible isn’t the correct term, perhaps contortion?
The GBE you’re talking about promised more than break even, actually a large positive return (IRR over 7%). How we laughed.
“A review calculates peak funding of over $70b.”
Sorry, which review are you talking about here?
Hyperbole much Richard?
… and almost 10 years ago Richard, the very people who are now rolling out (well they might get around to a roll out – e v e n t u a l l y – speaking of complete mismanagement and schedule blow outs) the [quote] $70B MTM network including mucho FTTN… called their own network fraudband…
But unlike those who know everything (just ask them) we are not laughing, we are now sadly wallowing in fraudband mediocrity, when it could and should be so much better.
But, good thing these ultra-conservative (“libertarian/Libertarian”) types weren’t calling the shots way back when, or Australia ironically, wouldn’t have had the foresight to even have constructed the very copper network these self proclaimed “experts of everything” now so desperately cling to.
But what’s the bet that even back then, there were still a few (obviously completely bewildered, agree there) who also chuckled at this fandoogled new copper nonsense too, just as their backward thinking similitudes do today, relating to full fibre.
While it doesn’t need to make a profit, or a positive return on investment, I think it really does need a positive return to society and/or the economy.
IMHO I don’t think the MTM achieves that, the speeds Malcolm decided to lower the system to will leave Australia’s small business uncompetitive with the RotW. Just look at whats happening in the US and Europe. A lot of the 2nd gen dot-com stuff is starting off from start-ups out of a garage or Kickstarter…they need world class coms to get a leg up from there, not ADSL ver 2.
Our current government has less than a clue :/
“Basic review of NBN RSP pricing (avc + cvc) enough for all to laugh at the proposition, rightly dismissed”
Which proposition? The straw man proposition presented by Grahame or the real one?
Sorry – Did someone intelligent write something or express an opinion? I got to the ‘fanbois’ bit in the second par and stopped reading.
Indeed…
Ah yes, good ol’ Grahame and don’t forget Kevin too… the (IMHO of course) dynamic duo of insular, shortsighted comms commentary.
At this point I like to see Mr LeMay make a call to Chorus in New Zealand and seek comment on why they switched from FTTN to FTTP. It seems the next logical step.
+1
Having just read Lynch’s argument thoroughly, I’d reply that he is as full of bull**** as he claimed Rodriguez is. Rodriguez said they want to introduce a 100mbps unlimited product at AUD$80-90, not S$50. Grahame Lynch’s entire premise is flawed.
He talks about gigabit fibre plans as ‘red sports cars driven at 60km/hr’ – first of all, is he not aware that the colour of the vehicle has absolutely no measurable impact on performance? Colour is irrelevant. Importantly however, the sportscar stuck at low speed analogy is simply false – it depends very much on what you’re doing, what you can connect to, what services are available etc as to actual usable performance. If you have gigabit Internet and you’re accessing international servers, you’re probably not going to see more than about 5% of your possible bandwidth. But if you and your friends have gigabit connections you can communicate with high definition, smooth as butter video conferencing, you can use local cloud hosts for offsite backup, you can access high definition RDP servers, play demanding games with zero latency, watch local IPTV content in UHD or multiple FHD streams to different members of your household. Even something as simple as Australian Web content would load instantly – you’d never have to watch page elements load gradually ever again.
He also says the only way to reduce CVC is to reduce costs, but that is also false – you can also reduce CVC by increasing revenue, and you do that by selling high revenue plans. High revenue plans that would have been available under FTTP (100, 250, 500 & 1gbps) but don’t exist with FTTN. Probably why he’s ignoring it, because it’s an inconvenient fact. Mind you, his entire argument about FTTN is full of holes made by inconvenient facts, so that’s nothing new.
+1
+++
Grahame Lynch is indeed up to his old tricks here.
The ten year construction of universal broadband is cost-recovered from wholesale revenues. Wholesale revenues on FTTP are higher, about double in fact ($36 ARPU on FTTP, as consistently shown in Hansard). That means, if you are Malcolm Turnbull building and operating a Muddleheaded Technology Model for anything higher than half the cost of building and operating FTTP, then you are going backwards.
Like Grahame Lynch, yet again.
Grahame Lynch is a long time liberal party Comms policy supporter, so I’m not surprised he’s critical of myrepublic.
Frankly I’m only surprised that Turnbull didn’t give him a gig writing his fraudulent reports along with his other liberal mates.
Facts??! We don’t need no stinking facts!
Most of his “analysis” reads like a troll post…
We just can’t handle the truth! ;)
Graham blocked me on twitter for asking if FttP had a single advantage over FttN
I found it utterly galling to have someone sit there and refuse to say there was a single advantage to a FttP rollout.
I was always conceded there are positives and negatives on both sides he asks
In fact here is the response I received like a really really poor politician
Grahame Lynch @Commsday 14 Mar 2013
@ajbau and if I repeated something I have already written about BB would that change your mind? No. It’s a silly test. So why bother?
Why bother because it would have shown you understand the topic.
It would have shown he was not a puppet.
It may have proven he had integrity.
It has been 2 years and I still remember it.
If he had of admitted the FttP was faster or more reliable I would be here writing that today.
I searched his site and found nothing after pointing out there was nothing on his site he blocked me.
So all I want to say about Graham is this does not surprise me he will spin everything the Liberal Party’s way.
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