Coalition attacks “discount” NBN ISPs Exetel, Dodo

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news Coalition MP and former Optus executive Paul Fletcher has attacked early NBN pricing released by cut-rate ISPs Exetel and Dodo, claiming the pair’s commercial plans didn’t reflect the reality of what he said would be increased pricing on the NBN compared to today’s existing broadband options.

Exetel published its first commercial pricing for services on the NBN in late July, significantly undercutting previous prices published by rival Internode, with its cheapest option starting at $34.50 a month and the most expensive topping out at $99.50. At the time, Communications Minister Stephen Conroy seized on the plans — along with a “sub-$40” plan flagged publicly by fellow ISP Dodo — as evidence that NBN pricing would be affordable, with competition to drive lower prices.

However, on Monday in Federal Parliament this week (PDF transcript), Fletcher took aim squarely at the two ISPs, in comments first reported by the Financial Review.

“The key point I want to make is that to argue, as Senator Conroy has done, that because Internet service providers who are acknowledged to be discount operators at the discount end of the market are offering lower prices than Internode, that proves that NBN retail prices will be lower than today’s broadband prices is quite wrong,” said Fletcher. “It is a non-sequitur.”

“The reality is that Internode has a market share of nearly three percent, whereas Exetel has only about 0.9 percent market share. It is true that Dodo has a similar market share to Internode, but we have not seen any actual pricing from them yet — it has simply been ‘mooted’.”

Fletcher said he “simply made the point” that there was no evidence for claims by Conroy and Prime Minister Julia Gillard that the construction of the NBN would mean reduced prices for broadband services. “In fact, what the pricing that has been released demonstrates is that consumers can expect, at the very best, prices to flatline and in reality they are going to increase.”

The Coalition’s MP’s attack also broadened to Dodo’s customer service record. “I make the point that while there is nothing wrong with being discount operators, as Dodo and Exetel are, the Telecommunications Industry Ombudsman reports that over the period October 2010 to March 2011, 4.5 percent of its complaints concerned Dodo, although it had a market share of 2.9 percent,” he said.

Fletcher’s comments come as Shadow Communications Minister Malcolm Turnbull has recently embarked on a significant push to highlight the issue of pricing under the NBN, claiming that NBN Co’s special access undertaking will contain provisions allowing it the right to raise prices for most of its services by up to five percent per annum more than inflation for the next 30 years.

“The whole justification given by the Government for building the NBN is to provide most Australians with access to super fast broadband at 100 mbps,” Turnbull said earlier this week. “And yet it is now quite clear that the consequence of spending over $50 billion will be that speeds comparable to ADSL2 will be available at similar or somewhat higher prices, but that the super fast speeds will only be available at higher and, over time, even higher prices making access to broadband less affordable.”

opinion/analysis
Frankly, the Coalition is out on a limb here, and while neither Turnbull nor Fletcher appear to realise it, Conroy certainly does.

The fact is that the current affluence of the predominantly middle-class Australian population means that it is not really that concerned about broadband pricing. Yes, a number of Australians are attracted to cut-rate ISPs like TPG and cut-rate mobile providers such as Vodafone. That’s only natural.

But evidence of the shifting market share over the past decade points much more strongly towards an Australian preference for faster, more reliable and higher capacity telecommunications services, rather than a focus on pricing. Think about the extreme levels of growth currently seen within Telstra’s Next G mobile network, which is the best network in town and priced at the top-end. Think of the hundreds of thousands of customers currently deserting the cheapest mobile operator in town — Vodafone.

Think of the way that ISPs such as iiNet and Internode have been able to significantly grow their market share by rolling out competitive ADSL infrastructure in exchanges and providing a quality ADSL2+ service, with decent bolt-ons such as internet telephony lines. It remains true that iiNet and Internode are some of the higher-priced ISPs on the market — yet I don’t see a lot of people complaining — just like they won’t complain about pricing when they have fibre Internet rolled out to their door.

Normally, after Turnbull unveils a significant new attack on the NBN (and he is usually supported by Fletcher in doing so), the press leaps on his comments and trumpets them to the moon — and Conroy is forced to respond.

However, this week we’ve seen a different story played out. Much of the press hasn’t touched the Coalition’s NBN pricing tantrum with a bargepole — because journalists and commentators know that the issue of pricing is simply not one which causes Australian readers to lose much sleep. And Conroy has done the same. A solitary line caps off this morning’s Financial Review article on the subject: “Senator Conroy declined to comment on Mr Fletcher’s remarks.”

Because Conroy knows he simply doesn’t have to.

Image credit: Office of Malcolm Turnbull

97 COMMENTS

    • I agree, if it wasn’t for ISPs that come in at this price point, we would be paying significantly more for our broadband than we currently are. Internodes et al will only roll out where there is going to be significant return and then complain when their wholesaler of last resort charges what they charge.

      Personally, I will pay what I think is of the best value to me. At the moment, Internode is just priced too far out of the market.

      Back on topic, the coalition would complain about something like this because it shoots down one of their last remaining arguments. If we can get the productivity commission argument sorted then we should be able to have the NBN continued, no matter who is in government (but for some reason, there will be some other excuse not to continue it).

      • I’d hate all ISPs to follow these benchmarks though. There is a lot of savings in provision less backhaul than might be optimal for your customers. One ISP may have peak time slowdowns due to congestion where as another who provisioned more capacity is still reasonably quick.
        Let Internode be more expensive than Exetel and Dodo. Why should it bother anyone? If want your net cheaper go to Exectel or Dodo. If you want Internode for some reason over the other two, pay the price.
        (ps. Please don’t start posting, I am on Dodo and never have evening slow down, it was just an example that not all services are provided at the same level)

  1. I find it amazing that they think anyone will be fooled by this tactic. “Companies aren’t doing what we thought they’d do, therefore they’re doing it wrong and we’re right anyway” seems to have been the message (admittedly, this *is* at the lower end of the cost spectrum. But that does have implications further up).

    • I find it amazing that they think anyone will be fooled by this tactic.

      They’ll be posting in this thread sooner or later…

  2. it doesn’t seem right that MPs would use their positions to denigrate private companies solely because those companies don’t perpetuate their political arguments.

  3. I would nearly go as far as saying their comments are offensive, seriously is this the best they can do. So they go on the attack because two companies offer a cheaper alternative, denigrating private companies for political point scoring is a down right disgrace!!
    I honestly thought the NBN debate had bottomed out but it has now been dragged even lower. Pathetic!!

    • I don’t know why they just don’t accept it as a good idea and run with it to the next election. The government looses their only good policy, it would be an easy victory.

  4. NBN retail pricing will only be significant and have some actual meaning when the two biggest ISP’s BigPond and Optus who currently hold about 70% of the retail BB market share publish their plans, 193 ISP’s share what is left.

    Until then using Dodo, Exetel and Internode pricing as examples of how it is going to be is irrelevant.

    • Actually I’m more interested in iiNet’s plans, which are supposed to be imminent. Optus and Telstra are not known for their reasonable pricing …

      • Well depends on your view of ‘reasonable’,many of their total package plans are quite reasonable, irrespective of that the two biggies has the massive share that counts.

        Conroy is not giving them billions to shut down their networks and mass migrate their customers to the NBN because the $$ are burning a hole in his pocket!

        :)

        • alain, you showed yesterday that contrary to many people’s thought’s, you do actually have a conciliatory side. you admitted i was right and you wrong with the panel of experts. that’s because no one person is always right, and i will admit i’m certainly not, that’s for sure.

          so lets talk to and take conciliatory alain one step further.

          the government, any government of any colour, can’t get that handsome return you guys demand for the taxpayer, by subsidising the costly bush and relinquishing the lucrative cities to privately owned companies, i’m sure you’ll agree? it’s not possible. especially since you already criticised nbn co for their expensive cvc and later criticised them for lowering the very same cvc and thus increasing build time from 2018 to 2020. wasn’t that what you mentioned, if i’m wrong i stand corrected?

          but realistically, nbnco either migrate telstra and optus customers to maximise the return or they do not migrate and perhaps never receive a return.

          so which do you actually prefer, because you seem to be having a buck each way at the moment?

          :)

          • so which do you actually prefer, because you seem to be having a buck each way at the moment?

            You must be new here.

          • yeah stick around, placing a buck each way is standard practice for alian. You’ll get used to it and the question dodging.

      • What I expect to see from Optus and especially Telstra is a heavy emphasis on bundled/triple play services. While Foxtel will be linked to the Telstra cable (and satellite) for the foreseeable future, I think we’ll see heavy linking of T-Box to NBN based services – the two go together very well.

        As a result, it may be hard to compare vanilla internet services from Telstra with other providers – they will exist, probably at an inflated price, but the intention will be to direct customers towards more profitable extra services.

        • Indeed, the revenue is to be made on the add-ons that come with the packages like the T-Box etc, with 70% of the market BigPond and Optus could flog the NBN component at cost or less and still be laughing with high wireless data ARPU’s as part of that package.

    • agree alain.

      however it is interesting that when internode released their pricings first and a few regulars saw those prices as being expensive, they criticised both internode and nbnco,

      but look now

    • Agreed, it would be good to see the big ISP pricing. The pricing for Internode, Exetel and Dodo are not the mainstream. Internode is expensive because their priority is providing a no hassles always fast experience. Dodo and Exetel to offer the lowest price. Telstra and Optus goals to provide a middle of the road mass market product and have a large enough number of customers that problems like the cost of providing backhaul from the numerous POI should average out. I can imagine the pain of having to pay for bandwidth at a POI with a low number of customers.

  5. I will be interested to see how long til iinet and internode blame the nbn, for optus, telstra being cheaper and that is making iinet and internode losing customers

  6. If history is anything to go by, then this is a moot argument. Why?

    Cut-rate plans come and go. Terms change. Dodo and their ilk are in a desperate race to the bottom. Untill it becomes unsustainable and change tack. Again and again.

    Internode, as the example, have never faltered from raising prices if they feel so inclined. So will other ISPs.

    Others, in “the race” come and go. New ones arrive and others fold. It’s an endless cycle.

    The key thing, is choice. Choice is good. It helps drive pricing and competition. The NBN brings a slightly more level platform than the current abortive market. Telstra Retail coughs and the entire wholesale market shudders as a consequence.

    There’s a big difference in play, despite both being a monopoly. Everything else is symatics.

  7. I’m not surprised by this reaction from the Coalition. I’m impressed that finally however the press are actually rolling their collective eyes at this one.

    There is such a thing as trying to hard to find a problem with policy, and possibly the Coalition have just crossed that line.

  8. In what way is this an “attack”? All I can see in the article is Fletcher claiming prices on the NBN will be at best the same as today. How is that an attack on TPG and Dodo? He just seems to be stating reality.

    I don’t think we can take a lot from the retail prices until the NBNCo’s SAU has been approved. Anyone know when it’s being submitted to the ACCC?

  9. This article shows a definite improvement in the amount of anti NBN bias present. Keep it up Renai. You’ll make a jounalist out of you yet.

  10. The reason other media outlets didn’t report it is because they didn’t know it had been said. It was said late in an evening session, and only got picked up because the journo happened to be listening in!

    If it had happened in a more high profile session then everyone would have piled in as normal!

  11. Well the major difference is, all those cost savings from all those ISP’s that you are referencing came about because they were able to bypass Telstra’s wholesale, who used to offer the same style pricing as NBN is currently (aka AGVC)

    As to your comments regarding pricing not being that much of an issue, for the low end of the spectrum (which is the way that CVC was designed, all the light users got charged the least), you are correct, however its a completely different story at the end of the spectrum

    I am yet to see a plan offer anything like 12mbit unlimited for 59.95 a month (like what TPG offers). DODO can claim what they want, they however have a history of horrible customers service and do things like P2P shaping to deal with their network congestion

    Hell if you compare the ADSL2 prices to the NBN prices on exetel, you will find that exetel is offering almost double quota for equivalent prices on equivalent speed for ADSL2+ (and you must also remember that exetel is just a wholesaler, they barely own and DSLAM’s at all)

    • hey deteego.

      i’ve been reading your posts and can see you are quite intelligent and knowledgable. however you also seem very selective in what you say.

      surely if you are going to compare apples, in relation to nbn v adsl, you would wait until tpg have nbn plans and compare the two.

      plus why the criticisms of dodo? we all know dodo are a budget isp and you pay accordingly. it would therefore seem by the general gist of your comment, that dodo are indeed offering very competitive prices in comparison to adsl – although i must admit i have not done actual price comparisons, as the nbn is not available here and wont be for along time, if at all, following the next election.

      plus you mention exetel plans with equivalent speeds? we all know that nbn speeds will generally be far greater, even on similar speed plans, because the distance from the exchange is not generally a contributing factor, as it always is with adsl.

      so really not fair apples-apples comparisons from my perspective. all good though, everyone is entitled a view.

      :)

      • I am talking about the fact that ADSL2+ speeds range anywhere from 0-25mbps, which is the “equivalent” of the NBN’s 12mbit. Yes there are people quite far from the exchange, but they are in a minority, and equally there are as many people that are close to the exchange. So a value for ’12’ as an average for ADSL2 is more then adequate

        And as I said, the CVC is a charge that is directly proportionate to how much is being downloaded, hence why many ISP’s have said, it wouldn’t be financially feasible to offer unlimited services as is currently being done by certain ISP’s

        The matter of fact is, NBN is expected to pay off all of its capex, which are factors higher then the cost of ULL/LLS that companies pay (which is $16 per month + $2 for LLS) regardless of how much you want to download

        • well i think we can just agree to disagree and move on mate, because although i think the nbn would be great, i really have no absolute prejudices and would be happy, just not as happy, with the coalitions alternative. whereas it seems you are unusually hellbent on no nbn, full stop.

          now i don’t for one minute claim to be a techie, but 0-25mbps is the equivalent of 12mbit? sorry, but how can 0 be equivalent?

          but look around your neighbourhood and if it’s like mine, where incidentally 25mbps isn’t offered anyway, I bet there are many more people away from, rather than close to an exchange. my nearest exchange is, I would estimate 3k’s away. that being so, i’m guessing most like me and my neighbours, not mentioning those further away, would be well under 12 and it is not adequate i can assure you.

          but do you really believe legislated ull/lss and government regulation, policed by the accc is real business anyway? seems there will be government involvement one way or the other. cya.

          • At least its a lot cheaper then the 24+CVC complete minimum

            The only reason we have the prices currently with the bandwidth is because of the ULL+LLS. Before that, every ISP was forced to wholesale off a monopoly (Telstra) who had their own CVC, it was called AGVC (aggregated virtual circuit)

            Back then, you were paying like 80 bucks a month for 200 megs of data…

            NBN’s pricing model is a complete mimick of Telstra’s old model

          • ULL is $16 everywhere except for the exceptionally regional areas, and LSS is $2 ontop of that

        • I think you’ll find that more volume (people) is found at the outside of a circle (distance from exchange) than the inside rings. You might also find that the speed to distance graph for a DSL is not linear with distance and I fact drops off fairly quickly.

          Given both of those things I would be surprised to find the average adsl sync speed was over 8megabits. And thats just for the people that can even get adsl.

        • Actual average should be closer to 6-8meg not 12meg. ~6.8meg is you take the simplest model which is speed as a linear function of distance from the exchange(it isn’t but close enough for napkin maths) and exchange coverage area is circle and wire distance from the exchange is a straight line(it isn’t) but hey your pulling numbers out of your arse. I’m sure an ISP might have some actual statistics but they don’t seem to share those and speedtest is a highly biased sample. So to get equivalent ADSL on average I would have to have 2 services bonded.

        • CVC is nothing to do with how much is “downloaded”. It has to do with bandwidth and not usage. It would still be feasible for an ISP to offer unlimited “download” plans

          Please do not confuse bandwidth with data usage.

          • Downloads take up bandwidth, again its the exact same cost model that the Telstra AGVC wholesale uses, which is what ISP’s like internode and iinet are complaining about being “too expensive”

            The more people download/upload on the NBN, the greater contention it causes which increases CVC costs

        • “I am talking about the fact that ADSL2+ speeds range anywhere from 0-25mbps, which is the “equivalent” of the NBN’s 12mbit. Yes there are people quite far from the exchange, but they are in a minority, and equally there are as many people that are close to the exchange. So a value for ’12’ as an average for ADSL2 is more then adequate”

          That’s just saying that people living away from their exchange should be happy with what they’ve got and don’t deserve the NBN because other people who just happen to live closer to an exchange get faster speeds. On some exchanges though it’s not the minority who live far from their exchange. As a result, what might be a bad comparison in prices and packages for one person may be a good comparison for someone else on the same exchange.

          Don’t forget that one of the goals of the NBN is to provide universal minimum broadband speeds and reliability, something which cannot be provided over ADSL.

          • You can provide that on ADSL, you just do a FTTN

            As I said, i was making a comparison, ADSL2 is roughly equivalent to NBN’s 12mbit service, you can get higher or you can get lower.

        • How people who are far from exchange be minority?

          the area within 1km around the exchange is 3.14 sqr km
          the area between 1km and 2km around the exchange is 9.42 sqr km
          the area between 2km and 3km around the exchange is 15.7 sqr km

        • How people who are far from exchange be minority?

          the area within 1km around the exchange is 3.14 sqr km
          the area between 1km and 2km around the exchange is 9.42 sqr km
          the area between 2km and 3km around the exchange is 15.7 sqr km

          • That was a point a few post up but deteego seems to take the murdoch press approach to fact, say it enough times it must be true and ignore all descenting views and facts.

            The only people who could possibly give us the real numbers won’t or can’t. Basic modelling would put the average closer to the 6-8mb mark.

            Of course the base model is linear relationship between speed/distance which it isn’t but close enough. As it flattens out at the high end and slow end. A circular coverage area with speed determined by crow fly distance from the centre.

            50% of the population will be in the furthest 29% of the exchange.

          • Unfortunately what you say isn’t any more factually correct then what I say, you would have do a density/area distribution analysis of the exchanges to get the average distance from exchange per premise, which you haven’t done either

            You keep on claiming that the average is worse then 12mbit, yet provide no evidence yourself by also pulling figures out of thin air

            I am talking completely fair approach by cutting it down in the middle

            I would like to see a reference to your basic modelling

          • Sorry if 24/2=12 is the limit of your understanding of basic mathematical concepts. I could explain it using building blocks or legos if you like.

            I provided a basic model that reasonably represents what the basic exchange setup. NBN fibre is for urbanised areas which typically have exchange housing density. The relationship between speed and distance is nearly linear there is a flatting at the high speed close to the exchange and a flattening at the slow speed end furthest from the exchange. 6-8mbs was what a educated guess to the error on model.

            I looked at the set-up you decided that the fastest speed is 24mbs the slowest is 0(no service) so average speed is 24/2 using 2 data points that have very little relation to the real world set up.

            A lot more completed systems than ADSL speed are modelled with simple systems to get usable results.

  12. wow.

    i can’t believe there’s been no media reporting of this….. ?

    http://www.nbnco.com.au/assets/documents/nbn-co-sau-discussion-paper.pdf

    ref. pg. 36-37

    NBNco has thrown the “max 7% ROI only” completely out the window. they plan to recover costs or set returns (WACC) on a completely commercial basis.

    also (ref. pg 23),

    before passage of the NBN legislation, NBNco said prices of the higher speed ports will fall over time in nominal and real terms. instead, the SAU allows them to raise prices of faster ports annually by as much as 5% in real terms from initial levels.

    (no doubt, true to form, NBN proponents will find some way to downplay all this…. LOL)

    okay, i better shurrup before the fanbois get even more upset ;)

    sweet dreams! ^.-

    • Downplay? No.

      However I will ask you “So bloody what?”

      The government never said the 7% was a maximum, only that was the expected return.

      Further, isn’t the ability to recover the debt quicker if the market can bare it a good thing?

      • Actually this can be argued as being completely deceitful

        The reason why NBN is off budget (and hence completely bypassed any review from either the Productivity Commission and/or Infrastructure Australia) was because it was classed as a financial investment, and by definition a financial investment requires at least something like a 7% ROI (typically its around 15% at a minimum)

        The Labor party NEVER mentioned that the 7% figure was a maximum, you can go through every single press release and its blatantly obvious they used that figure as a certainty it was going to happen, and the sole reason the whole project is off budget

        And your statement about debt recovering market is irrelevant, the debt was meant to be paid by NBNCo, and the debt repayments are static (government bonds have a set rate when money is borrowed)

        Labor is in fact indirectly admitting (the blatantly obvious) that this project is not financially viable.

        • I don’t see how you are making the logical leap to how the project is not financially viable here. In fact if they go up to a higher ROI then it actually proves the opposite.

          If they can get a better return than what they have stated their goal is, then it increases the viability of the project, because it reduces the time it takes for the project to get into profitably.

          And are you forgetting deteego, that not all the debt is going to come from the government? If they have a high return on the project they can directly invest the surplus into the project, thus reducing the private debt contributions they require.

          • NBNCo getting a higher ROI is about as likely as pigs flying, the mere fact that NBN is admitting that the ROI of 7% is a maximum bound already implies this.

            An ROI of 7% is also basically scraping the barrel in terms of a financial investment. So in a best case its barely viable (in the same way that America’s Financial system is barely working), any in any other case its simply not classed as a financial investment

            Im telling you right now, that there is almost zero chance of the NBN being under budget. There is almost empirical evidence that every single government project goes over budget (or over time, or both) and there is nothing “special” about NBN that would dictate otherwise

            The major point you are however avoiding is that Labor used this excuse to avoid complete independent scrutiny of the NBN, even by the Labor’s own government bodies that they set up

          • NBNCo getting a higher ROI is about as likely as pigs flying, the mere fact that NBN is admitting that the ROI of 7% is a maximum bound already implies this.

            I think you might want to read Tosh’s original post again:

            NBNco has thrown the “max 7% ROI only” completely out the window. they plan to recover costs or set returns (WACC) on a completely commercial basis.

            They are not admitting, nor has the government ever stated, as you pointed out, implied that ROI is bounded to 7%.

            An ROI of 7% is also basically scraping the barrel in terms of a financial investment. So in a best case its barely viable (in the same way that America’s Financial system is barely working), any in any other case its simply not classed as a financial investment

            Which is why this is a government supported project and not a private enterprise one, for the majority of the project they do not have shareholders to cater, so they do not need to make massive ROI. Only sustainable ROI. People invest in households with less expected ROI than what NBNCo are doing.

            Im telling you right now, that there is almost zero chance of the NBN being under budget. There is almost empirical evidence that every single government project goes over budget (or over time, or both) and there is nothing “special” about NBN that would dictate otherwise

            Almost does not mean there is, further, projects in commercial space go over time and over budget as well. Don’t hold the government to a double standard.

            The major point you are however avoiding is that Labor used this excuse to avoid complete independent scrutiny of the NBN, even by the Labor’s own government bodies that they set up

            I’m not avoiding this point. I have stated before I would prefer it was on the books so they could directly sink government investment without required returns into the project in order to reduce the cost of access to consumers.

            This point has absolutely no context on the argument we are having here. I was merely addressing the foolish notion that they would cap the return at 7%, and the even more questionable notion that this information, that NBN Co can exceed the 7% return, somehow adds any new information to the project viability debate. It doesn’t.

          • “Which is why this is a government supported project and not a private enterprise one, for the majority of the project they do not have shareholders to cater, so they do not need to make massive ROI. Only sustainable ROI. People invest in households with less expected ROI than what NBNCo are doing.”

            The shareholders are the taxpayers, its our money they are using to pay for the project until it pays itself off

            If you read every single NBN headline about money being injected into NBNCo, its all done from either the contingency fund or the budget, all of this is taxpayers money

            It is no different from shareholders putting their money into a financial investment

            The private enterprise did not embark on such a project simply because it would never make money, its common sense. When NBN was out there was a tender for private investors, not a single person or company signed up

            “Almost does not mean there is, further, projects in commercial space go over time and over budget as well. Don’t hold the government to a double standard.”

            I’m not, commercial projects also go over budget, I never doubted that. The difference is that with $50 billion dollars, MUCH more is at stake if something goes wrong, compared with the much lower amount that would be FTTN ($10 – $15 billion)

            “I’m not avoiding this point. I have stated before I would prefer it was on the books so they could directly sink government investment without required returns into the project in order to reduce the cost of access to consumers.”

            It also wouldn’t be a 93% FTTH. The PC/Infrustructure Australia would scrutinize the NBN on every level, including the whole basis of it being a 93% FTTH (and also all the anticompetitive legislation that is being passed to protect it and whatnot)

            “This point has absolutely no context on the argument we are having here. I was merely addressing the foolish notion that they would cap the return at 7%, and the even more questionable notion that this information, that NBN Co can exceed the 7% return, somehow adds any new information to the project viability debate. It doesn’t.”

            Its not a physical cap, its an admission from NBNCo that its incredibly unlikely to get anything close to 7% in the real world, which is obvious and not surprising considering that
            1. They reduced their own CVC charges due to price concerns (which means they get less revenue)
            2. They completely underestimated the threat of wireless (which they also admitted in that other article)
            3. The SAU may mandate even lower prices that NBNCo needs for revenue
            4. NBNCo cannot put a ballpark figure on construction costs, and as Toshp300 pointed out, their figure used capital costs (relative to what FTTH cost to install overseas) is a completely optimistic and lower bound, and there is nothing “special” about Australia that would make FTTH here then overseas (hell people have been arguing the opposite)
            5. Last and not least, if the ROI was higher then 7%, a private company would have already embarked on this project. There are plenty of private companies with enough capital to fund an NBN, saying that only government has such funds is not accurate in the 21st century, when you have companies like BHB making more collective profit then 100 smaller countries combined

          • The shareholders are the taxpayers, its our money they are using to pay for the project until it pays itself off

            Yes. And? We’ve already established it is a high risk project. The money is being given via government bonds, remember, what did you say about government bonds:

            …the debt repayments are static (government bonds have a set rate when money is borrowed)

            The private enterprise did not embark on such a project simply because it would never make money, its common sense.

            Risk does not equate never making money. You may learn to differentiate the two. The only entity in Australia capable of undergoing a FTTH roll-out on the scale of the NBN is Telstra. This entity doesn’t even want to roll out FTTN without government support. The last time they went on an autonomous fixed infrastructure project was with HFC, and we all know how that turned out. Wasting billions going street for street with Optus.

            It also wouldn’t be a 93% FTTH. The PC/Infrustructure Australia would scrutinize the NBN on every level, including the whole basis of it being a 93% FTTH (and also all the anticompetitive legislation that is being passed to protect it and whatnot)

            Your assumption here that I think 93% FTTH is acceptable risk. The risk would be reduced considerably if we rounded that figure to, as New Zealand has, somewhere closer to 70%. That is beside the point. The point is, yes, I agree that NBNCo should be on the books. I don’t think, however, that the fact it isn’t doesn’t mean there isn’t some semblance of a good policy in there.

            I’m not, commercial projects also go over budget, I never doubted that. The difference is that with $50 billion dollars, MUCH more is at stake if something goes wrong, compared with the much lower amount that would be FTTN ($10 – $15 billion)

            I’m not trying to trivialise the risk, as you seem to be implying. I am merely saying your various assumptions here do not hold well in water namely:

            They reduced their own CVC charges due to price concerns (which means they get less revenue)

            They gave everyone a 150Mbit in order to equate for the imbalance presented by low subscriber numbers in a POI. Once people require over this threshold they will still be paying the $20/Mbit.

            The reasons behind it were simple, without this change they would have found ISPs unable to sustain running services through them because in order to maintain profit on sparsely used POIs they would need to charge their customers thousands of dollars.

            They actually stand to attract more customers with this change, which may make up for the deficit created by this lack of revenue.

            They completely underestimated the threat of wireless (which they also admitted in that other article)

            You can’t make that assumption. Just because they are now detailing that threat does not mean it has been underestimated. Would you prefer they painted a cherry on top everything will be fine picture for the ACCC, or be honest?

            The SAU may mandate even lower prices that NBNCo needs for revenue

            May doesn’t mean they will, further, if this happens, do you seriously think that NBNCo are just going to sit on this and not appeal the decision? They have a duty of care to make sure they can maintain and repay their debts to the government. If any action puts this duty of care under threat, do you seriously think they will just say “fuck it, the government will bail us out?”

            NBNCo cannot put a ballpark figure on construction costs, and as Toshp300 pointed out, their figure used capital costs (relative to what FTTH cost to install overseas) is a completely optimistic and lower bound, and there is nothing “special” about Australia that would make FTTH here then overseas (hell people have been arguing the opposite)

            Oh right, so $36 billion isn’t ballpack enough for you? Give me a break. Every project is subject to the changes Tosh decided to highlight.

            Last and not least, if the ROI was higher then 7%, a private company would have already embarked on this project. There are plenty of private companies with enough capital to fund an NBN

            As stated, the only company in Australia who is capable of rolling out this project is Telstra. The fact that other companies can afford to doesn’t mean shit because Telstra, under the current legislative framework have the potential to undercut any other network, which increases the risks to these other entities. The way the NBN is being rolled out, with the legislative changes, removes this risk almost completely.

            Your bias against the NBN is really showing, and this bias is affecting the assumptions you are making deteego.

          • “Yes. And? We’ve already established it is a high risk project. The money is being given via government bonds, remember, what did you say about government bonds:”

            You claimed there are no shareholders, there are, it happens to be anyone thats paying tax, don’t turn this around on me.

            In fact, its a more degraded version of shareholders, because normally shareholders have a choice about what to put their money into

            Don’t turn this around on me, you made that claim

            “Risk does not equate never making money. You may learn to differentiate the two. The only entity in Australia capable of undergoing a FTTH roll-out on the scale of the NBN is Telstra. This entity doesn’t even want to roll out FTTN without government support. The last time they went on an autonomous fixed infrastructure project was with HFC, and we all know how that turned out. Wasting billions going street for street with Optus.”

            Incorrect, any entity that has enough capital is able to build the FTTH to 93% of Australia, and there are PLENTY of companies with that amount of capital (energy and mining companies). If the idea of the 93% FTTH is so profitable, they would have embarked on such a journey by know, in fact many countries would have done it already

            “Your assumption here that I think 93% FTTH is acceptable risk. The risk would be reduced considerably if we rounded that figure to, as New Zealand has, somewhere closer to 70%. That is beside the point. The point is, yes, I agree that NBNCo should be on the books. I don’t think, however, that the fact it isn’t doesn’t mean there isn’t some semblance of a good policy in there.”

            I don’t care what NZ does, because the government contribution is a staggering 1 billion dollars, the rest is private funds.

            So even if there is a risk to what NZ is doing, it won’t effect on anything else apart from the telco sector. On the other hand with the NBN, because its government bonds, it does things like raise interest rates (something which the RBA head has already mentioned)

            “They gave everyone a 150Mbit in order to equate for the imbalance presented by low subscriber numbers in a POI. Once people require over this threshold they will still be paying the $20/Mbit.”

            Unless NBNCo can pull $$ out of their arse, if they are giving away CVC for free (which before the ISP’s would have to pay for), NBNCo is getting less revenue then originally planned

            end.of.story

            “Oh right, so $36 billion isn’t ballpack enough for you? Give me a break. Every project is subject to the changes Tosh decided to highlight.”

            No, their figure of $36 billion dollars, when equated to a figure per premise, is about 2x cheaper (on average) compared to FTTH installations anywhere else in the world

            So again, NBNCo must be doing some magic to make their CAPEX a lot less than anywhere else in the world

            “As stated, the only company in Australia who is capable of rolling out this project is Telstra. The fact that other companies can afford to doesn’t mean shit because Telstra, under the current legislative framework have the potential to undercut any other network, which increases the risks to these other entities. The way the NBN is being rolled out, with the legislative changes, removes this risk almost completely.”

            Unfortunately you have no idea what you are talking about

            A company like BHB billiton has enough capital to build 3 NBN’s at once if it wanted to. Hell the mining companies are basically building all the infrastructure themselves in states. They just received 27 billion dollars of profit in a year, thats more then what our entire government is getting currently

            Telstra is not the largest company from Australia in terms of capitalization on assets or capex, and since the NBN is being built from scratch, you do not need to be a Telco to build it (NBNCo was formed from scratch anyways)

            The only reason Telstra could build the original NBN MK1 is because it was an FTTN, which required an already in place copper network (and no company was going to rebuild the entire copper network around Australia)

            There is plenty of private capital in private companies to build an NBN, they just simply put won’t do it because its throwing away money”

            “Your bias against the NBN is really showing, and this bias is affecting the assumptions you are making deteego.”

            And so if the government had a policy to give everyone a car, and someone complained with rational debates, you would say they are “biased”?

            Get a reality check, I am against the NBN because its a shit pipe dream policy that was made in the clouds when Conroy met with Rudd on a plane after NBN MK1 failed

            So yes you are right, I am biased, about policies that I consider to be horrible. I don’t think thats a bad thing

            Everything you said, regarding economics/finances is typical top of the head talk that has no relevance to the real world.

        • consider a simplified example:

          Year 1 to 20 annual cost = $10

          prima facie, the ACCC will set revenue caps at $10 for each of Years 1 to 20.

          NBNco is saying they will only recoup $5 during the first decade of operation, and hence, incur an annual loss of $5 during Years 1 to 10.

          the $5 x 10 years = $50 of accumulated losses (or under-recovered costs) will be rolled over into an “revenue recovery pool” that will allow NBNco to charge over and above the normal $10 revenue cap during the second decade of operation.

          importantly, the $50 of accumulated losses will not be uplifted into the recovery pool on a dollar for dollar basis. rather, NBNco plans to uplift the initial operating losses at a certain required rate of interest.

          this rate isn’t the mooted 7% government cost of capital. rather, they plan to roll forward the accumulated losses at market rates of return (as high as 25% during the early years when the project is at its riskiest phase).

          basically, NBNco is “feathering its bed” and locking in the ability to raise access charges in the future to recover the losses incurred now by undercharging ISPs for access to the NBN.

          more broadly, all this goes against everything we have been told about how a government monopoly will be good for consumers because NBNco will demand a lower rate of return and how access charges will fall over time.

          instead, the demands outlined in NBNco’s SAU positions the statutory monopoly to raise access charges once the customer migration is completed and alternative networks shutdown and extract as much rent as possible from consumers at market rates of return.

    • of course they will tosh, just like those who fanatically oppose the nbn will again, find some way to blow this one issue completely out of proportion. pathetic really, but it has become the forum way.

      evident, particularly after last monday, where ‘one person’ felt the compulsion to reply to, and for no logical reason, ridicule absolutely everyone who disagreed with him. its us v them, with no quarter given nor received. the most basic facts are challenged, argued and even totally twisted and misconstrued.

      from my perspective, rather than being a place of mutual learning and friendly exchange, online forums have sadly become slanging matches, based upon disgraceful egocentric motives. contrary to what anyone may think, no one wins, because one’s obvious hatred of, and another’s obvious love of a topic, won’t make one iota of difference to the movers and shakers. this makes the slanging matches all the more pointless and those who take themselves so seriously, gullibly immature. if those who oppose the nbn are unwilling to ever admit it does have some advantages and those who support unwilling to admit any downside, it shows a strange level of mentality and extreme predilection. because both plusses and minuses must exist.

      it has gotten to the stage where most people who would like to correspond, simply refuse, which leaves particular sites with just a hand full of the same old tired antagonists, slugging out every new update, which invariably leads to the same people, again slugging out the same exhausted rhetoric. just look at the majority of comments this morning.

      but can I ask, do you sit there reading every nbn doc with a fine tooth comb, intentionally seeking something, anything, no matter how trivial, to criticize and create forum angst tosh? can’t find one supportive word?

      what ever floats your boat, dude. I now anticipate, the inevitable ‘more of the same’ in reply.

      • Interesting discourse but once again the pro-NBN biased point of view is put forward in support of the pro-NBN biased point of view.

        You accuse Tosh (and perhaps me) of only looking for the negative about the NBN and never have anything positive to say, but of course having a totally pro-NBN point of view and never saying anything negative about it is somehow ok because that is how it should be and the natural order of things.

        Other than that I assume you don’t like seeing those points highlighted about the NBN SAU and your post is the off topic equivalent of a ‘Detour This Way’ sign.

        • alain, save your grandstanding speeches for someone else.

          as I said to deteego last night, yes I support the nbn, but the oppositions continued improvements would also be welcomed if they are elected.

          i can’t be any more straight forward than that.

          but i can tell you something though, no matter what information is supplied by you or the pro nbn crowd, I will read it, consider it and if feasible and from a reputable source accept it.

          i will never go the refuse to accept come what may and disprove at all costs route, as you strangely always appear to do.

          seriously take a few deep breaths and a chill pill dude.

          • Well said Pepe. I completely agree with what you’re saying, reading the same posts on here article after article reminds me of the old saying, you can’t argue with fools… they will drag you down to their level and beat you with experience.

            While amusing at first it does become incredibly tiring going around in circles. It’s like how you can’t argue with logic on emotive issues (like the death penalty, gay marriage etc), which strangely the NBN seems to have become one such emotive issue to a number of people.

          • “alain, save your grandstanding speeches for someone else.”

            That’s rich, your speech was 26 lines my response was 8 lines and I’m the one making a ‘grandstanding speech’.

            “seriously take a few deep breaths and a chill pill dude.”

            Indeed.

          • my 22 line reply to toshp300 not 26, said once v your 8 lines, repeated many times per day 7 days a week.

            indeed

          • Alain, try to take things a bit less literally.

            I believe Pepe is saying that it is the same or very similar argument(s) that you repeatedly put forward in numerous articles on this site.

            Of course you don’t literally copy/paste the same 8 lines over and over, but I suspect you knew that anyway as you do have a grasp of the english language and the useage of hyperbole/sarcasm. You’re just looking to point score now.

          • hi trittium, thanks for attempting to retrieve sanity.

            perhaps this brief but bewildering conversation, is a clear example to both political parties.

            as not everyone is clearly not blessed with the ability to interpret what another says, spell it out.

            to hubertcumberdale256 who replied to me above. absolutely correct mate.

          • @Trittium

            I’m looking to point score?

            “my 22 line reply to toshp300 not 26,”

            Yeah ok if you say so.

          • @Trittium

            I’m looking to point score?

            “my 22 line reply to toshp300 not 26,”

            Yeah ok if you say so.

          • omg.

            ok, the 26 lines i wrote in reply to toshp300 were actually 22 lines, because you say so alain, happy?

            it’s a bit like having to let a child win for the sake of it here, isn’t it.

          • At the end of the day, I think you might be right Pepe. This is a good example of those cases where people will just simply have to agree to disagree.

            I truly believe there isn’t a right or a wrong answer to this whole NBN and Australian broadband debate. No matter what you do it has its pro’s and its con’s, but thats the same with just about anything you do in life. Personally you just gotta weigh them up and make the best decision based on the evidence infront of you at the time. If you do that, you can’t really have too many regrets.

            I tend to look at the NBN much the same way. There are good and bad. Overall, I think ending up with a world class fibre network that will last well into the foreseeable future is positive for the country. Heck, we can’t stay on copper forever. So we can built it now or in 20 years time, there is little difference. Healthy debate is good though, it assists in getting the right outcomes and fine tuning certain issues.

            What often happens here though is far from what I would call a healthy debate unfortunately :(

  13. So they state something as factual, then get upset because a commercial company proves them wrong?

  14. The coalition just doesn’t get it. They lost the last election because they didn’t support the NBN, and they’ll lose the next election because they still won’t support the NBN.

    I’m happy with the 12Mb speed I currently get as a regional adsl2 customer, and at the next election I’ll be voting for the party that’s NOT going to introduce an Internet filter.
    Although I suspect I’m in the minority and most people will be voting for the party that’s going to introduce a ftth NBN

    • “Although I suspect I’m in the minority and most people will be voting for the party that’s going to introduce a ftth NBN”

      No, on going polling indicates most people are going to vote for the Coalition because of other factors than having HD video conferencing to four points in the home, the Coalition could have as their BB policy two Milo cans and a piece of string and still get in.

  15. good morning :)

    oh, i just can’t help myself ;)

    NBNco is so mischievious. it’s incredible how much “fear, uncertainty and doubt” (FUD) they’re prepared to spread now that the NBN legislation has passed into law.

    try this random gem (on pg 8.) in their SAU:

    “the physical scale and complexity of the project means there is material construction cost uncertainty”

    hang on…. there’s “material uncertainty” over the cost of building the NBN? that can’t be! isn’t that “36,000,000,000” pronounced from MQ’s lips a magical number?

    don’t giant “nation-building” projects always come well under budget? i thought the entire project has been properly-costed, taxpayer risk well-scoped and those “greedy contractors” have been put in their place ;)

    why is NBNco spreading FUD?

    oh, and this gem (on pg. 9):

    “This commercial flexibility is also necessary because NBN Co is subject to considerable demand uncertainty. While the Telstra and Optus transactions will facilitate migration to the NBN and afford a higher degree of demand certainty than would otherwise be the case, demand uncertainty is more than a function of the number of customers who may be migrated to the NBN.”

    huh? you mean after spending billions shutting down all fixed-line competitors, NBNco might still run well short of their revenue targets?

    “demand uncertainty is more than a function of…. customers migrated”…. hang on, i thought NBNco is “bound to be profitable” because they have all the customers of the existing ISPs?

    you mean NBNco’s profitability doesn’t just depend on the “number of SIOs”, but also on “ARPU”? isn’t that what NBN critics have been saying all along? that makes it complete FUD!

    “Demand uncertainty remains in relation to issues such as the price payable by end-users for broadband services over time and the volume of higher value-added services that will be consumed by them over time.”

    huh? i thought there are plenty of “wealthy, middle-class, tech-loving, early-adopters” who will pay whatever price NBNco demands so they can get their long-overdue “fibre loving”. is NBNco actually suggesting that end-users may face “affordability constraints”?

    and what’s this nonsense about “uncertainty over volume consumed”? the future has already been reliably foretold by the clairvoyant geeks of delimiter: “we will need to upgrade to 40Gbit pipes by 2030 and 100Mbit will be the standard household connection by the time the fibre roll-out is completed!”

    is NBNco trying to tell us via their SAU: “money doesn’t grow on trees” and “trees don’t grow to the skies”?

    what happened to that magical Alcatel “bandwidth extrapolation chart” which “virtually guarantees” that NBNco will be a “great success”?

    outrageous FUD! enough of this “right-wing Liberal shit”! (some “astroturfer” must have hacked into NBNco’s website and altered their uploaded SAU.)

    LOL

    let the semantic games begin! ;)

    cue……..

    • “the new technological and bandwidth capabilities of the NBN give rise to a greater degree of demand uncertainty than exists for traditional networks and services;”

      Wow the NBN Co is saying we are not really sure Australia needs FTTH, and it faces ‘demand uncertainty, so if uptake is not as predicted don’t blame us!

      LOL

      • well-spotted!

        *cackle*

        who, in a million years, would have thought a boring old SAU would be such a great source of joy and amusement? ;)

        oh, and to tie it back to this article… as i have argued all along, current NBN wholesale pricing is “below cost” pricing designed to lure subscribers onto the fibre network before shutting down all other fixed-line (affordable) alternatives. it’s not reflective of the long-term wholesale cost of accessing the fibre network.

        ref pg. 8:

        “Similarly, in comparing anticipated actual revenues to the “allowed” regulatory revenues that reflect its asset base and operating costs, NBN Co anticipates that it will have initially unrecovered costs for approximately 10 years. These initially unrecovered costs will be carried forward for recovery in later years.”

        so, all these debates over whether current announced NBN retail pricing is cheaper or more expensive than existing ADSL is ultimately a complete furphy (unless you plan to go 100% wireless in 2020 before NBNco starts jacking prices up).

        this whole NBN project is truly amazing in its ongoing transformation from political rhetoric to economic reality:

        1/ before the NBNco corporate plan was released, the political spiel was that everyone would have access to 100Mbit — then, we discovered NBNco was planning on making the higher speed ports so expensive that most people will be stuck on 12Mbit;

        2/ before the NBN legislation was passed, NBNco was telling the public taxpayers that the prices of the faster ports would fall in nominal terms from the initial set levels — we now know from the SAU that NBNco is planning on raising the real price of these ports by up to 5% a year (even higher in nominal terms) putting them out of the reach of ordinary Australians;

        3/ when the Implementation Study was released, the political spiel was that we need a government-controlled monopoly to build the NBN because only the Government can build the fibre network at a “cheaper ROI of only 7%” — we now know that NBNco has ditched that intention completely and is planning to recover its costs and set prices akin to a fully-commercial entity.

        i must admit i’m totally stunned and flabbergasted — i thought they would carry on the charade for a bit longer but it looks like all political pretence has now been thrown out the window now that it’s time to “fess up” to the ACCC.

        slick political maneouvring by NBNco — intentionally mislead the public, get the draconian NBN legislation passed and then drop the bombshells — bait and switch par excellence.

        well, going forward, any bloke with even an ounce of commonsense should learn to take any “public commitment” or “utterance” by the giant, super-powerful legislated monopolist will five container loads of salt. MQ wouldn’t pass a lie detector test even amidst a 9-point Richter magnitude earthquake.

        ;)

        • “1/ before the NBNco corporate plan was released, the political spiel was that everyone would have access to 100Mbit ”

          Everyone will have access to 100Mbit unlike today where 12Mbit isn’t even an option for most of the population.

          “2/ 3/”

          Did you read SAU I would assume not as it wasn’t published in the Australian. The SAU is there to Restrict what both NBN co and the ACCC can do pricing wise to give some certainty to their customers.
          There is a revenue cap on NBNco which which will restrict it’s rate of return.
          The 5%+CPI price increase is a cap on price changes in any financial year. It does not mean the NBN co can put up prices 5%+CPI every year to make more money as they it mean NBN co won’t be able to put pricing up but more than 5%+CPI even if they have to, to remain cost neutral.

          On top of that the ACCC will still have pricing control the SAU is setting the guidelines to be followed so the industry has some certainty on cost and services offered by NBNco.

          • *Everyone will have access to 100Mbit unlike today where 12Mbit isn’t even an option for most of the population.*

            yes, oh God, i’m so lucky Ferrari SpA has opened a dealership in my local suburb! i feel so much better off already (even though i still can’t afford one)!

            *There is a revenue cap on NBNco which which will restrict it’s rate of return.*

            you got it the wrong way around.

            the “rate of return” (or WACC) is one of many inputs (incl. the eventual costs of constructing the fibre network) in the model which spits out an “allowable or allocable revenue pool”.

            derp!

            at least you didn’t try to argue that “NBNco isn’t allowed to make a profit” like some idiot from “nbnconcerns.wordpad” on Malcolm’s blog.

            double derp!

            ^.-

    • Thats it. The nbn co says not everything about the project is 100% certain.
      Lets cancel it.

      Thanks for convincing me Tosh.

      • It’s not you that needs convincing, it’s the ACCC when they receive the final draft of the NBN Co SAU.

      • I think you are missing what people in the position of Tosh find so hilarious, a lot of the NBN zeoluts were holding onto the business case like it was some bible, and if NBNCo said it, thats what would happen

        One of those things happened to be certainty, something that NBNCo is now stating the opposite

        • I think you have that around the wrong way, it was actually tosh that was holding onto the business case like it was a bible:

          http://delimiter.com.au/2011/06/28/pcrange-ceo-moved-suburbs-to-get-nbn-fibre/

          Did you forget this one?

          this is NBNco’s pricing policy

          Which I replied with:

          Which they can change if they choose.

          Guess who turned out to be right. Hint: Me.

          He’s not the only one, we also have a Mathew in this thread that uses the business case like a bible too:

          http://delimiter.com.au/2011/08/25/nbn-co-acknowledges-wireless-competition-threat/

          But only to present the information that favors his argument of course.

          • When I say holding onto a piece of text as a bible, I mean they believe anything they say in it is literally true, not that they use it as evidence or reference in their arguments

          • What is bleeding obvious is the deafening silence by the usually vocal pro-NBN lobby about the highlighted comments from the NBN SAU.

            Those special pro-NBN filtered glasses cut in quite regularly when needed.

          • I mean they believe anything they say in it is literally true, not that they use it as evidence or reference in their arguments

            yep tosh is the one you are thinking of. I rarely see anyone bring up NBNco docs unless tosh is quoting something from it to begin with. mathew does the same, do you really think I would have said anything unless he chose to misrepresent what was actually written in it? I dont even necessarily agree with NBNco predictions, I have my own predictions. I just think if you are going to use NBNco docs to support your argument then you should least get it right and in mathews case not omit data.

          • HC256 is better than that.

            “I dont even necessarily agree with NBNco predictions, I have my own predictions.”

            lol what a legend (in his own mind).

          • Are you honestly saying that when you quote someone it happens to be true?

            You said:

            I mean they believe anything they say in it is literally true

            Like I said, tosh is the one you are thinking of. He believes everything he reads in the docs, or rather what he reads with blinders on…

            “I dont even necessarily agree with NBNco predictions, I have my own predictions.”

            lol what a legend (in his own mind).

            What are you trying to say? That only anti-NBN crusaders and NBNco are allowed to make predictions? Remember the “prediction” tosh made? 50% on 12mbps in 2028 and then claimed it was in the NBNco docs? Turns out it was actually 36%. So either tosh is wrong about what is in the NBNco docs or he has made his own prediction for 2028, which one is it? Regardless remind us who has been consistently right about everything NBN related and remind us how many predictions you have made that have ever been right? The only thing you do here is whine and when it gets too tough dodge questions (deafening silence indeed) and then cry foul when someone disagrees with you.

  16. Huh?

    Since when was the NBN being built for the affluent middle class?!?!

    Australians just love being gouged.

  17. http://www.theaustralian.com.au/news/opinion/the-gouge-is-on-for-nbn-users/story-e6frg6zo-1226122392946

    quote:

    “Moreover, central to the government’s case for the NBN was that it “would not need to make the rate of return that the telco sector is used to”. “This project”, Stephen Conroy promised, only requires “a modest return of 6 to 7 per cent”. And no less an authority than Julia Gillard said a return a smidgen above the commonwealth bond rate would be “a viable rate of return” for the NBN, “recovering all its funding costs”.”

    the project was from the outset predicated on an implicit capping of the ROI at 7%.

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