news National broadband provider iiNet has published an extensive list of questions it still has regarding the Coalition’s plans to alter Labor’s National Broadband Network strategy, noting that details ranging from points of interconnect to who would build the network are still unknown, a month after the Federal Election.
Under Labor’s NBN policy, some 93 percent of Australian premises were to have received fibre directly to the premise, delivering maximum download speeds of up to 1Gbps and maximum upload speeds of 400Mbps. The remainder of the population was to have been served by a combination of satellite and wireless broadband, delivering speeds of up to 25Mbps.
Originally, the Coalition’s policy was to have seen fibre to the premises deployed to a significantly lesser proportion of the population — 22 percent — with 71 percent covered by fibre to the node technology, where fibre is extended to neighbourhood ‘nodes’ and the remainder of the distance to premises covered by Telstra’s existing copper network. The Coalition’s policy was also continue to use the HFC cable network operated by Telstra and will also target the remaining 7 percent of premises with satellite and wireless.
However, the possibility of a different style of rollout has been raised by new Communications Minister Malcolm Turnbull in the several weeks since the Liberal MP became Communications Minister. In late September, Turnbull appeared to have drastically modified the Coalition’s policy stance on the NBN just weeks after the Federal Election, declaring the Coalition was not wedded to its fibre to the node model and was “thoroughly open-minded” about the technology to be used in the network. NBN Co is currently conducting a strategic review into its operations and model that will inform Turnbull’s decisions regarding the project’s future.
The Coalition’s overall policy is based on the core pledge that a Coalition Government would deliver download speeds of between 25Mbps and 100Mbps by the end of 2016 — effectively the end of its first term in power — and 50Mbps to 100Mbps by the end of 2019, effectively the end of its second term. The 25Mbps to 100Mbps pledge applies to “all premises”, while the higher pledge by 2019 applies to “90 percent of fixed line users”.
However, in documents associated with a presentation to Macquarie Bank’s WA investor conference this week (PDF), iiNet — one of Australia’s largest ISPs — pointed out that there were still many unknowns surrounding the Coalition’s plans.
The ISP pointed out that the Coalition had not yet announced key details of its plans, such as who would build its infrastructure (with candidates including the current outsourced construction industry model, in-sourcing the construction to NBN Co or even handing a large portion of the construction work to Telstra), whether a FTTN network would use the same points of interconnect model, or more or less PoIs, and whether the anti-cherry-picking rules enacted under the previous Labor Government to prevent competition with the NBN would be repealed.
“Will we be allowed to extend our fibre networks?” the presentation documents questioned. “Who is responsible for greenfield connections?”
In addition, iiNet also questioned how the implementation of the VDSL2 and vectoring standards would take place, and whether NBN Co would be required to meet the Customer Service Guarantee rules, which normally constrain Telstra, for 100 percent of connections.
“Will FTTN look like wholesale ‘bitstream’ ADSL with obligatory PSTN [telephony] or like NBN UNI-D + UNI-V? Or something else together?” asked the ISP, comparing the old model of ADSL broadband, which requires a traditional telephone line, with the new NBN Fibre to the Premises model, which does not. FTTN solutions sit in between these two infrastructure models, so it’s not yet clear how they would technically be offered to retail players like iiNet.
iiNet also questioned whether NBN Co would revise its FTTP product set and pricing, and even the technical infrastructure connecting customers to the NBN, questioning whether all of the devices currently used (a ‘premises connection device’, a power supply unit, a network termination device and a fibre wall outlet) were actually needed.
iiNet’s presentation also alleged that the current pricing on NBN Co’s ‘connectivity virtual circuit’ — the mechanism through which NBN Co charges for actual traffic to customers’ premises — was “not sustainable”, a criticism which Internode founder Simon Hackett has made repeatedly of the NBN model over the past several years.
“We have built new networks with abundant capacity and them, as a result of the NBN Co CVC pricing framework, are at risk of limiting access to them and creating an artificial scarcity,” wrote iiNet. “There is real customer pull for usable, affordable and reliable broadband. The CVC pricing mechanism should be revisited.”
“Why have bandwidth-based CVC charges?” the ISP asked. “We have built the scale networks so why can’t we use them? The $20 per megabit CVC charges represent a significant increase on today’s prices and will choke the future growth of broadband services in Australia.”
iiNet pointed out that the costs were prohibitive for new ISP entrants under the current model, with the ISP estimating it would take between $30 million and $35 million to establish a national NBN network presence to 121 points of interconnect, and a further $30 million to $40 million annually to manage a small national customer base of approximately 200,000.
iiNet is one of the most qualified experts to comment on the NBN. The company has signed up over 20,000 customers to the infrastructure, representing about a fifth of the NBN’s total customer base. 70 percent of those customers have bought higher speeds than the 12Mbps entry level NBN product, the company said this week, with more than 50 percent of customers bundling voice and data plans.
Some of iiNet’s questions are likely to be answered in several months when NBN Co releases the results of the Strategic Review which it is currently undertaking. However, others — such as the PoI question, which was set independently by the Australian Consumer and Competition Commission — may need direct Ministerial intervention if there is to be any change.
opinion/analysis
I published this story because I think it goes some way towards illustrating just how uncertain things are right now for the retail ISP industry in terms of the NBN rollout. These are the companies which are supposed to be on-selling NBN Co’s wholesale offerings — no matter whether a Coalition or Labor Government is in power, no matter whether a Fibre to the Premises or a Fibre to the Node model is followed — and yet right now they have no real idea what or how they’re supposed to be selling whatever the Government is planning.
This is the definition of chaos for commercial companies. They can’t invest, they hardly have any visibility on the future road map for the NBN. They are trying to show the Government the way they would prefer it to go, but with the NBN Strategic Review being held behind closed doors, they are reduced to making these kinds of statements in public in order to try and influence things.
Opposition Leader Tony Abbott came into Government promising stability and a steady hand after the Labor years. Let’s hope Malcolm Turnbull can bring a little of that stability to the way the NBN works. Because right now, it’s just pure chaos. Nobody quite knows what is going to happen, and that situation is getting in the way of progress on so many fronts.
> “Why have bandwidth-based CVC charges?” the ISP asked. “We have built the scale networks so why can’t we use them? The $20 per megabit CVC charges represent a significant increase on today’s prices and will choke the future growth of broadband services in Australia.”
Because offering, wholesale, a binary model like Google Fiber does – pay very little or very much – is not going to be politically feasible and that’s the only alternative you have for paying back the capital expenditure. Nor is it politically feasible to let it stay at $20 per Mbps anyway.
I really don’t get why iiNet is complaining about CVC at this point. 50 GB a month, something like an average usage, amounts to $3 a month. You’ve still got a cost roughly equivalent to your current on-net margin, and the CVC equation for multicasting is different too. There’ll be space to worry about it later on and I’m sure the ACCC or the political powers that be are not going to let NBN Co gouge too much through the CVC. In real terms, it’s also going to be dropping to 2040, but with usage likely to increase as much as it is, that point might be a bit naught. The latest round of the SAU is committing NBN Co to more frequent price reviews too. I think they should look at the AVC as an amount independent of the specific Mbps of the day but instead as a charge at a certain percentile describing the profile of the connections out there.
What’s the alternative supposed to be anyway? Charging more for AVC? That’ll go over probably even worse. What’s another alternative? Reduce the capex? Yep, but at some point you’re going to reach diminishing returns and just be pushing costs onto the RSP. Although, that might not be a bad thing. iiNet and their subsidiaries are really stuck between a rock and a hard place at the moment, and this “strategic review” (whatever that means), the most revealing part of which is apparently Ergas meeting with Switkowski, has not been helping.
“I really don’t get why iiNet is complaining about CVC at this point. 50 GB a month, something like an average usage, amounts to $3 a month”
You don’t get it because I’m not sure you understand the CVC charging. It’s not a quota based charge it’s a bits per second based charge and helps RSP’s to manage their congestion ratios.
These scenarios are made up, both ratios are unrealistic but better for the math and the example.
For example a heavily congested RSP may choose to run 1000 customers with 100Mbps services on 100Mbps of CVC. That means if they all use the service at the same time the customers would have a maximum throughput of 100Kbps each.
A less congested RSP may only run 10 customers with 100Mbps services on 100Mbps of CVC. That means if they all use the service at the same time the customers would have a maximum throughput of 10Mbps each.
Running a 1:1 congestion ratio for a 100Mbps service would cost the RSP monthly fee for the 100Mbps AVC plus a monthly fee of $2000 for the 100Mbps CVC charge. Obviously no one is paying $2000 a month for a 100Mbps service so that means all RSP’s are congesting their CVC’s.
I also agree with iinets sentiment here, the price for the CVC’s is crazy high!
If you’d like to read more about the CVC charge to fully understand it all the documentation is available here
http://nbnco.com.au/industry/service-providers.html
specifically this document
http://nbnco.com.au/content/dam/nbnco/documents/product-and-pricing-overview-dec-11.pdf
50 GB a month is directly convertible to a bits per second measurement. I never said or implied it was a quota based charge, but after a contention ratio and pricing in a download limit it amounts to the same thing. 50 (gigabytes / month) = 0.155756616 Mbps
Sure you have to account for peak periods and all, but given enough users, peak pricing and managing contention ratios it all near enough averages out.
If you want to, instead of looking at the CVC charge in Mbps, just imagine that NBN Co would like to recoup something between let’s say $2 and $8 through CVC for a near enough average connection and denominating that in Mbps is just a convenient way of pricing users using more data more.
I don’t much care for the concept of CVC either, but what other charging models are going to pay this off with heavier users being charged more that’s politically tangible?
> Obviously no one is paying $2000 a month for a 100Mbps service so that means all RSP’s are congesting their CVC’s.
Yes, and that relevance when, for example, HFC providers or a provider like Dodo might have (this just being a hypothetical example) a contention ratio of 1:200 or 1:300 is precious little.
iiNet ask “why have CVC charges?” whilst charging their TransACT resellers for AGVC:
http://www.transact.com.au/~/media/Files/wholesale/reference-offer-schedule-1a-network-services-vdsl-v1.pdf
I think they need to make up their minds about whether AGVC/CVC is a good model or not!
It’s not that hard. It’s a good model if they’re getting paid. It’s a bad model if they’re paying it.
Speaking of which, say ditto for Telstra…
http://delimiter.com.au/2013/01/30/the-irony-it-burns-telstras-nbn-price-complaints/
“Obviously no one is paying $2000 a month for a 100Mbps service”
This is where business grade services come in.
“so that means all RSP’s are congesting their CVC’s.”
Google the difference between ‘congesting’ and ‘contention’.
I think Malcolm may well find it easier to reach Dublin by first doing lots of extensive backtracking of Conroy’s laundry list of policy missteps (which will displease some vested interests), rather than trying to stumble his way to Blackpool from the mythical Irish pub.
Some context regarding the Irish pub metaphor:
http://www.malcolmturnbull.com.au/media/transcript-2gb-4-april-2013
http://www.malcolmturnbull.com.au/media/transcript-radio-2gb-15-july-2013
http://www.malcolmturnbull.com.au/media/interview-with-ray-hadley-on-the-nbn-board-and-strategic-review
And they say 2GB is an echo chamber.
Edit: Found another one: http://mt.tbone.com.au/media/transcripts/transcript-2gb-radio-22-oct-2012/
Edit 2: And yet another one: http://mt.tbone.com.au/media/transcripts/transcript-2gb-5-march-2013/
Sheesh.
That picture is very deceiving as you still need the box on the outside no matter what and you currently do not need to have the PSU the only real difference is whether you have an NBNCo NTD or another NTD
You do need the PSU to convert the voltage, battery or no battery.
These look nice… imagine them with built-in WiFi: http://www.tellabs.com/news/2012/index.cfm/nr/200.cfm
everything needs a PSU but I thought if you had no battery they just used a smaller box
AJ, correct, they use a “brick” power supply that fits into the new NTD housing.
here’s a video of the new installation arrangements…
http://www.youtube.com/watch?v=DRuFl393b9k&feature=youtu.be
Plus a modem or modem combo.
“Opposition Leader Tony Abbott came into Government promising stability and a steady hand after the Labor years.”
you left out transparency, but so have the LNP now they have gained power.
” with the ISP estimating it would take between $30 million and $35 million to establish a national NBN network presence to 121 points of interconnect, and a further $30 million to $40 million annually to manage a small national customer base of approximately 200,000.”
yes its a big upfront cost to become a national rsp – but come on, do iinet really expect us to believe that theres no actual profit in it??? costs are just one side of the equation.
plus, you dont have to be national, you can be regional, very very regional, if you wanted to.
Please, please, no on the single Ethernet port.
Also, that’s such a misleading image – you STILL need a PCD (the outside bit), and you STILL need a NTU!
The battery backup is becoming optional (hooray!), so all having a NTD with a single port does is 1) makes it harder for the user to move services (at the moment, a NBN user can switch services with no interruption by having another service activated on another port a few days before cancelling the first service – with one port you will likely have downtime. Skymesh even give free trials on second ports which is awesome), and locks them out of third-party VoIP/Multicast TV/VPN/Point to Point services they could have on other ports.
It’s a very anti-consumer idea, that achieves nothing more than locking a user into a single provider.
Yes, there are some issues with the AVC/CVC pricing, but that can easily change later on – what we can’t do is easily add more ports to crippled NTDs.
Also, the cost of designing/building a single port NTU would eclipse the few cents of savings per unit you get from not having those extra ports (at the economy of scale the NBN is rolling out at, parts are ridiculously cheap – it’s design expertise, setting up production lines, etc. which is expensive – there is literally almost no cost saving to be had by switching to a single port NTU).
I think the picture should actually be a single fibre port in the Hacket view of the world.
That would be a bad way to go too. There’s a reason that no big fibre rollouts around the world let you plug in your own NTD… Just the instructions for cleaning the fibre optic cables [1] before mating them is far beyond what a home user would be able to do (anyone got their fibrescope handy? This isn’t like a phone socket that you can just blow the dust off – particles too small to see with the naked eye can stop the fibre working at all!).
And you just throw away a lot of functionally, and the ability for the network to be managed effectively. I guess we have to ask ourselves – do we want a high quality managed network, or just something a bit better than DSL, where it usually works but if you have an issue you have to call up someone and wait two months like we do with Telstra now..
1. http://www.cisco.com/en/US/tech/tk482/tk876/technologies_white_paper09186a0080254eba.shtml
“Please, please, no on the single Ethernet port”
100% agree.
It is interesting that a number of ISPs have come out with suggestions and plans that have the potential to reduce consumer choice such as the 1-port model, the ISP rented NTD or the removal of cherry-picking laws.
The beauty of the original NBN was that consumers were all-powerful. This is an extreme rarity in the Telco/ISP world and there will be many attempts to reclaim that power by the incumbents. Watch this space.
Simon Hackett who made the original proposal suggested that a four port NTU could be supplied where the customer requested it. The point is that it would be cheaper for a single port NTU.
The reality is that very few people will order a second connection when that additional money could provide either a significantly greater increase in quota or speed.
Renai,
I’m interested in how the CVC “affects” the NBN discussion. Perhaps you can do a story on this aspect of NBN, as it certainly gets plenty of attention?
Sadly, either I have missed the initial discussion, or it is just a “vibe” that is being hinted at.
1. Why is the NBN provided in such a manner
2. What are the alternatives?
3. How will these “alternatives” affect NBN’s RoR?
4. Will these various changes be “better” for customer’s, iiNet, or both.
One aspect I don’t like about iiNet’s proposal relates to the SDP. NBN’s current delivery gives maximum flexibility – i.e. up to 4 different networks are capable of being delivered. IiNet’s proposal locks the customer into only 1 network – conveniently – and greatly reducing customer choice.
It also allows for the easy (and very seamless) migration between RSP’s, which is probably why iiNet don’t like it!
By all means remove some components – and NBN has already done that by combining the FWO with the NTD bracket AND giving customers the option of not having the power supply/battery housing – but the model is actually pretty good for delivering multiple service platforms.
I’m interested in how the CVC “affects” the NBN discussion. Perhaps you can do a story on this aspect of NBN, as it certainly gets plenty of attention?
I wouldn’t mind reading an article like that, the whole CVC thing is more confusing than the POI issue really.
+1 to this. CVC has been the most confusing part of it all to understand for myself too.
Renai,
I believe that drawing is misleading, the socket on the right is the fibre wall socket on the left I believe and both will need a power supply backup, and a premises connection device, so the only thing in contention is the Network Termination Device. When it comes down to it, who do you trust more Mike Quigley or Simon Hackett, personally I wouldn’t trust Hacket as far as I could throw him.
I thing ( not positive ) that one of the reasons for the Network Termination Device could be used for monitoring the elderly, monitoring there vital observations, you wouldn’t want to leave that up to an ISP just incase they forgot ( normal for the elderly ) to pay there bills. You know my ISP killed my parents because my 90 year old parents forgot to pay to there internet connection and no ambulance received there emergency warning.
To add to last comment, if you are implying that the drawing on the right is less costly your right but only at the added cost of confusion, not for us who are familiar with tech equipment but for the majority of Australians who aren’t .
Reap what you sow iinet.
You and other isps remained silent before the election, and now you pay…
Personally, I see it that if they did speak up they would be burning the bridge before they crossed it.
New NBNCo: “No we aren’t allowing you to use our network as you negative against our new masters plans”…..
Nope, doesn’t work. You make no sense.
iinet when it brought out other isps only interested in one thing
Profit before consumers
“This is the definition of chaos for commercial companies. They can’t invest, they hardly have any visibility on the future road map for the NBN.”
Is this really a surprise? This is what happens when people vote for a party that doesn’t have a detailed policy. Had the coalition spend less time demonising Labor’s plan and more time developing a detailed, carefully thought through policy, ISP and the rest of us would be clear about what is likely to happen. Had they not been looking for product differentiation but continued Labor’s plan with necessary modifications and additions, the roll out would have proceeded smoothly. Instead now, everything is up for revision. Perhaps, 2016 is going to come too quickly for MT.
iiNet in 2006:
* If the current copper based CAN can support speeds up to 24Mbps with current technology, why do we need a FTTN network?
* If ADSL2+ can deliver in excess of 6Mbps today, why do we need a FTTN network?
* If services like IPTV need a network that is capable of 4.5Mbps, why do we need a FTTN network?
* If a FTTN network is going to reduce competition, why do we need a FTTN network?
* If a FTTN network is going to strand existing infrastructure and investment, why do we need a FTTN network?
And so Australia seems poised to start rolling out FTTN in 2014. Seems like none of these questions still have an answer despite having had 8 years to answer them, but that’s apparently just a minor detail that’s of no big concern.
lol… sucked in.. you actually take iiNet’s Parl Committee presentation seriously? If reverting to dial-up boosts the iiNet share price, I betcha they would be out there arguing that we should do exactly that.
@haha yeah,
“If reverting to dial-up boosts the iiNet share price, I betcha they would be out there arguing that we should do exactly that.”
Yes indeed and you can replace iinet with any comms company (yes even precious Telstra too)… because that’s what these companies do.
Which explains why the government ‘had’ to step in to provide a future network (you know, err, better than your stated dial-up) now spoilt by another government who simply are unable to admit the others could ever get anything right and will fuck it all up, because, well they must :/
In fact I challenge you to find another telco company in THE WORLD that would argue to its Govt that the country SHOULDN’T upgrade the network to FTTN!!!!! (i.e. do nothing – FTTH wasn’t on the table back then.) Do you realise how BIZZARE the situation was? This is how extreme the regulatory gaming in Aust is… no other copper incumbent in the world is hampered to the extent of TLS.
You actually believe Telstra is hampered more than any other incumbent?
Seriously?
This explains a lot.
TLS had decades to upgrade, perhaps if they had reinvested some of those profits, like most companies would, government wouldn’t have had to step in.
> TLS had decades to upgrade, perhaps if they had reinvested some of those profits, like most companies would, government wouldn’t have had to step in.
The problem is not the reinvestment of profits it is that investment would deliver significantly greater returns than maintaining the copper network to outweigh the risks of the investment. Telstra were happy to build FTTN in 2005, because their proposal was to secure their monopoly by making the investment by competitors in DSLAMs at exchanges wasted.
We face the same issues with NBNCo, unless the wholesale pricing is structured such that NBNCo are financially rewarded for providing faster services and more data.
If your saying that Telstra should only have to pay maintenance costs, and not update their network, then I can’t agree. If any business stops updating/upgrading, they get left behind or die.
> If your saying that Telstra should only have to pay maintenance costs, and not update their network, then I can’t agree. If any business stops updating/upgrading, they get left behind or die.
Telstra / NBNCo are the dominant monopoly provider. Telstra could have easily sold 8/1Mbps plans but that would have had an impact on their FoxTel business. Telstra only started offering faster ADSL plans long after other ISPs were offering ADSL2+ plans without speed tiers. Under Labor’s NBN, the only way to compete is wireless and I don’t think the majority of posters would like that. According to Quigley NBNCo didn’t have plans to introduce 1Gbps plans until Google Fibre was announced. The incentives for NBNCo to innovate are marginal compared to the risks. The lack of innovation is very clear from the NBNCo Corporate Plan.
And one operates with the intent of making profit, the other operates under the terms of it’s mandate.
The ACCC or government could have modified the USO or introduced new legislation, as it attempted to with the ABG, in order to push the uncooperative entity, in this case Telstra, in the direction that is favourable to the country. They choose not too. Competition was the push that happened, it was not the only option.
Wrong. There was provisions for building networks, provided they were OANs. This provisions, in fact, remain unchanged under the Coalition, the only difference is the incentive for doing so is increased because the proposed solution the Coalition presents not competitive.
Yes that wasn’t a typo, not competitive. A competitive entity with a monopoly position is something you don’t take on lightly, because they will quite easily undercut your services. However, if the monoploy entity isn’t competitive, you can exploit an advantage. As TPG have.
Wrong again, there was always plans to introduce 1Gbps plans, however Quigley and the rest of team, rightly, thought that such plans would not be marketable for some time. Google’s Fibre existence hasn’t changed this, all it has changed is people like yourself who wonder “Why 100Mbps? Google Fibre can do 1Gbps!”
I’m sorry, but you clearly know nothing about companies. Innovation is a buzzword. It isn’t something big companies actually do. Apple isn’t innovative, it doesn’t push the edge of what’s possible. It provides a marketable product. The same with Google. They have culled so many products, and done so much to marginalise their existing staples that they’re a shadow of the former cool and hip company they once were.
Innovation is the realm of the small, and innovators take risks. Innovators therefore tend to die, because by and large, they get it wrong.
NBNCo is a multi billion dollar entity, it doesn’t exist to innovate. And no sensible person will want it too. Why? Because it might fail, and it’ll give us many billions of debt to deal with. You know, exactly the reason most people don’t like the NBN in the first place? The risk. You’re suggesting we increase it, because you want 1Gbps.
If you want NBNCo to improve things, you don’t give it room to innovate, you give it room to iterate. And you provide means, like competition, like government/ACCC oversight, to control it if it goes astray.
I’ve posted this quotation about 1Gbps services before http://www.zdnet.com/1gbps-nbn-a-response-to-google-quigley-1339314096/
> “The reason we announced one gigabit was simply because when the government said you’ve got to provide at least 100Mbps, Google at the time made an announcement that they were providing 1 gigabit in the US. And suddenly we went from a situation facing [those] in the media saying ‘what on earth does anyone need 100 megs for?’ to saying ‘this is already redundant, it is already out of date, you can’t do one gig’,” he told a Parliamentary inquiry into the benefits of the NBN in Sydney this morning.
>
> “So we went out immediately with a press release that said, ‘in fact we can do one gig, we were planning to do one gig, we just hadn’t spoken about it yet but here it is, this technology can do one gig. It will come in a later product release’.”
>
> Quigley said that the 1Gbps product release will be outed within six or twelve months of the release of the basic packages on the NBN.
Release of 1Gbps products is yet another milestone that NBNCo have missed.
Thus proving my point.
As that very quote says : 1gbps was always planned.
> I’m sorry, but you clearly know nothing about companies. Innovation is a buzzword. It isn’t something big companies actually do. Apple isn’t innovative, it doesn’t push the edge of what’s possible. It provides a marketable product. The same with Google. They have culled so many products, and done so much to marginalise their existing staples that they’re a shadow of the former cool and hip company they once were.
Apple don’t innovate? Google don’t innovate? Google with a share price north of US$1000 are a shadow of their former selves? Are you aware of projects being worked on by Google X?
> Innovation is the realm of the small, and innovators take risks. Innovators therefore tend to die, because by and large, they get it wrong.
Governments being large can afford to take risks. The government could easily have provided 1Gbps to everyone. The capital costs would have barely changed as the build is being constracted
> NBNCo is a multi billion dollar entity, it doesn’t exist to innovate. And no sensible person will want it too. Why? Because it might fail, and it’ll give us many billions of debt to deal with. You know, exactly the reason most people don’t like the NBN in the first place? The risk. You’re suggesting we increase it, because you want 1Gbps.
I’m suggesting we increase it because the potential benefits are so much greater than a network where 50% of connections on fibre are 12Mbps.
> If you want NBNCo to improve things, you don’t give it room to innovate, you give it room to iterate. And you provide means, like competition, like government/ACCC oversight, to control it if it goes astray.
Iteration is rarely game changing and the fact that after 3 years NBNCo & ACCC are still in discussions suggests that inertia will make any changes very unlikely.
> Innovation is the realm of the small, and innovators take risks. Innovators therefore tend to die, because by and large, they get it wrong.
Governments being large can afford to take risks. The government could easily have provided 1Gbps to everyone. The capital costs would have barely changed as the build is being constracted
Providing “1Gbps to everyone” is not innovation.
Noun: Innovation – A creation (a new device or process) resulting from study and experimentation
Telstra / NBNCo are the dominant monopoly provider. Telstra could have easily sold 8/1Mbps plans but that would have had an impact on their FoxTel business. Telstra only started offering faster ADSL plans long after other ISPs were offering ADSL2+ plans without speed tiers. Under Labor’s NBN, the only way to compete is wireless and I don’t think the majority of posters would like that. According to Quigley NBNCo didn’t have plans to introduce 1Gbps plans until Google Fibre was announced. The incentives for NBNCo to innovate are marginal compared to the risks. The lack of innovation is very clear from the NBNCo Corporate Plan.
You’re ignoring the point that NBNCo is a wholesaler only, while Telstra is both a wholesaler AND retailer. That fact alone pretty much makes your argument a “straw man”. ( http://en.wikipedia.org/wiki/Straw_man )
Last time I checked Nbnco wasn’t a private company so why are you placing assumptions that apply almost exclusively to private enterprise to it?
> Last time I checked Nbnco wasn’t a private company so why are you placing assumptions that apply almost exclusively to private enterprise to it?
Labor’s plan for NBNCo was to privitise it as soon as the risky part of the network build was complete.
Telstra’s poor behaviour towards customers and abuse of monopoly powers was entrenched well before it was privatised.
A plan that is opposed by the Greens and a consider amount of the electorate. A plan that hasn’t happened yet.
Until it happens, discussing options to ensure that the network operates in the best interests of the nation is prudent. Do you have any suggestions that can be practically implemented on how to do this?
Further too that: are you willing to discuss them at length in this forum (or another, if you prefer) when others attempt to critique them? Because I am listening, and believe it or not, I have an open mind.
The ACCC have already split the network into 121 separate networks. The government could call for tenders to build and run each of the networks on a purely wholesale basis. In some areas companies would pay for the rights, while in other areas the government would provide a subsidy. Companies would have minimum standards and maximum prices but would be free to innovate.
POI’s are separate networks? And here I was thinking they were just access points for the RSP’s…
Telstra’s poor behaviour towards customers and abuse of monopoly powers was entrenched well before it was privatised.
The big difference between them, is that Telstra has/had tight vertical integration, they were a wholesaler and retailer. NBNCo is/was banned from retailing.
The network needs to generate revenue. The two principal sources of revenue are connection (AVC) and usage (CVC) charges. If we make the assumption that changes should be revenue neutral then reducing one cost will lead to increacing the other cost.
– If the AVC is reduced then more people connect, which leads to more CVC revenue.
– If the CVC is reduced then, AVC has to rise, meaning less people will connect
The second aspect to consider is the impact of network performance. If a connection is idle then it places neglible load on the system. If a connection is transfering data constantly then it places a significant load on the system.
NBNCo should be permitted to charge for data as this is how they plan to fund future growth and it is appropriate in a user pays system. If necessary the government can balance this with subsidies for traffic to government sites.
That assumption relies on perfect product substitution, which does not, and practically cannot exist on a network of the scale of the NBN. The NBN has traffic classes and other products like multicast which means recovery from a CVC drop is not as simple as rasing AVC.
The assumption that NBNCo makes in it’s Corporate Plan is that as speeds increase data usage will also increase. iiNet’s statement that NBN customers use 60% more data demonstrates that this is true in reality.
> The NBN has traffic classes and other products like multicast which means recovery from a CVC drop is not as simple as raising AVC.
Revenue from multicast is predicted by NBNCo to be 9% in 2021. In a world where more and more content is provided on demand, it is challenging to see that 9% of revenue will be multicast.
Adding a new customer, costs NBNCo very little, because the fibre has already been run down the street. It is therefore in NBNCo’s best interests to connect as many customers as possible. The alternative is to target the high value customers to subsidise the cost of unused fibre.
You addressed one aspect of my statement, multicast, in isolation, presented a weak argument, and then expected that week argument to extend to the other parts of my statement?
Yes and no, it is in NBNCo’s best interests to get the ARPU and update numbers as high as possible. It is in NBNCo’s best interest to monetise as much as possible.
And playing with the mix, which was my point, isn’t as simple as dropping one number and raising another to compensate.
> Yes and no, it is in NBNCo’s best interests to get the ARPU and update numbers as high as possible. It is in NBNCo’s best interest to monetise as much as possible.
Wrong. When you consider that the bulk of NBNCo’s costs are incurred building the infrastructure, total revenue is the more important target for NBNCo. If NBNCo only sold 100Mbps and faster services at current pricing the ARPU would go up, but total revenue would go down because the majority of the customers on 12Mbps plans would disconnect and these comprise 50% of NBNCo’s customer base.
How many of the 47% (April 2013) of customers on 12Mbps value their internet connection highly? When it costs $5/month more to double the speed I would argue not very many. How many would value their mobile as more important? A 4G mobile in many areas will outperform a 12Mbps fibre connection. For $70/month one could buy unlimited calls, SMS and 8GB of data. For a casual user that is almost certainly ample. If they aren’t a casual user then it is likely they would have chosen a faster NBNCo Plan.
If the mobile operators can increase the wireless only percentage (predicted to be 16%) then they will have reduced NBNCo’s revenue, but barely changed NBNCo’s costs.
So what you want is for everyone to get 1Gbps, and just charge for the data downloaded?
What do you expect a person to pay/get under such a system? Someone with say, $30 a month to spend? Also, how do you deal with them blowing their cap?
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