Truth: Simon Hackett proven right on “insane” NBN pricing, POIs


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  1. Pricing not likely to recover costs (MTM, forget FTTH). The idea to extend this inefficient blob further into the network is hilarious.

    Policy failing apart everywhere. If only it could’ve been foreseen;-)

    • Rubbish Richard, the numbers clearly show show FTTP delivering ROI, it’s your toxic right-wing mates MtM Charlie Foxtrot that will never deliver ROI!

    • Sorry Richard … not sure what relevance this comment has to the article concerned. I remind you of Delimiter’s comments policy:

      “Comments on Delimiter must not harm the discussion … it may cover, but not be limited to, the following examples: “Obvious and repetitive trolling to get a reaction”.”

      I hope you can show with future comments that you can focus on the issues being debated.

      • @renai I read the article as being about the pricing and PoI model of the NBN, pointing out current pricing not likely to recover costs (reduction not possible with expanding govt subsidy) and reducing the number of PoI would further reduce competition (ACCC warned against from the beginning) which would negatively affect consumers.

        I see now how this harms the delimiter discussion.

        Sorry also for the detail analysis analysis the other day, not the appropriate forum. Also sorry for introducing Terry R for your book, sure ALP correspondence a waste of time. Often difficult to match the quality of other commenters, I’ll continue to work on it. Thankfully they’re very supportive and helpful.

          • The only competition it would harm is the Dark Fibre owners, who would lose some value out of their fibre backbone. ISPs/RSPs wouldn’t be as affected, if at all, as they would have less POIs to contend with.

          • It would be a huge boon to the small RSP’s as the CVC “buy” would cover a much larger potential market in each POI. The “death valley” was caused by RSPs potentially having to buy CVC at 113 EXTRA POI’s and then pay for longer backhaul links from all of those extra POI’s. ACCC deemed that the interests of the backhaul operators overrided the interests of the consumers and the small RSPs…The 800lb Gorilla already had backhaul waiting and available at all of the POI’s, and a sizeable marketshare at each POI, so no net loss to itself…

          • @c RSPs (and consumers thru cost recovery) are affect by the high cost of last mile connections and the transit network. The CVC costs already an area of dispute – higher than competitive backhaul charges (required for NBNs cost recovery and cross-subsidy model).

            Pre-NBN a very competive backhaul market existed (pointed out by ACCC), a govt subsidy available for regional areas not competively serviced. NBNCo has identified the high CVC as an issue (new mgmt reduced it once), called for industry comment, and likely to recommend all non-NBN data service be subjected to an additional levy.

            @s the ACCC position has historically been pro-competition, reflecting the undeniable efficiencies of a competitive market underwritten with private capital and operators. Pre-Rudd such a policy had bipartisan support (much of the competition policy initiated by Hawke as part of his govt’s long delayed market reforms).

            NBN performance to date confirming all the previous evidence.

            My post echoing Hackets 2011 concerns from a consumers viewpoint, not small operators perspective.

            The monopoly wholesale last mile provider has diminished RSP product differentiation, focus now on price. In IT economies of scale a large cost factor. With last milecosts same for all operators (infrastructure competition dead) it’s difficult to identify other savings that aren’t dependent on scale (eg backhaul, licensed content). This reality reflected in the RSP’s near homogenous consumer offerings.

            All entirely foreseeable (posted at the time). The idea extending such a poor performer further into competive markets would help consumers is bizarre.

            Renai could ask for last mile & backhaul figures from Hackett pre-NBN from one of the smaller RSPs own ADSL2+ and publish a comparison. It will be very instructive.

  2. Other than Telstra and Optus I don’t know of any other ISP which had their own fibre to those locations (very few ISP owned their back end networks back then). I recall SH saying he thought an ISP breakeven point was around 250k customers if they wanted to do anything other than just resell someone else’s products (and at 190k subs it would have been a long hard slog all over again).

    There’s basically 3 ISP’s now that can possibly run an aggregator service.

    Telstra has just professed to wanting a larger market share (so good luck with it wanting more competition)

    Optus keeps saying it will then saying its not then saying it will so who knows what they will and won’t do with fixed line broadband in Australia.

    I doubt TPG is going to want to open things up to more market competition which such a large debt ceiling too!

  3. I Don’t Understand Simon at all, did he believe he could change the NBN from the inside or was he just offered the job to keep his mouth shut? He is part of this MTM monstrosity left to me and my childrens children to pay for!

      • I have absolutely no idea what Simon has done with the NBN at all. I follow his Twitter, follow his blog. It all seems to be dicking about in the US with cars and planes. Not sure when he has reported doing anything NBN related or how he fitted it between his seemingly constant other activities.

        • Agreed, from the outside his silence gives one the impression that he has traded his reputation for money (as in boosting NBN’s rep by having him there) despite his pre-existing wealth. :-(

          • 1. Simon Hackett doesn’t need money. It probably actually costs him money to be a NBN board member, in terms of flying his plane to Sydney for the meetings.

            2. He is not able to discuss what things he has done/had influence on at the NBN company, due to the rules of being on the board.

          • @Renai I wasn’t suggesting he needed the money, hence my reference to his “re-existing wealth”.

          • @Renai, iirc his plane costs are fully tax deductible if he’s using it for business purposes (and that includes the servicing)…I’m sure that one way or another the whole mess will get a public airing, and I’ve no doubt that Simon will want to give his side of the story if it looks like the brown will hit the rotary. I’m hoping it’s more in the form of a tell all book rather than from the witness stand at a RC…

    • I would only trust what Simon said as he doesn’t have any other vested interest since he sold his iiNet shares before joining. As most of the board still has large Telstra shares.

      • That certainly does count in his favour compared to all the other “Execs” NBN got stacked with.

    • >> did he believe he could change the NBN from the inside<<

      The NBN we are getting is at the instruction of the shareholders. The board are employed to direct the company within those constraints.

      If anybody wants to change those instructions then it becomes a political debate which is outside the remit of company employees and directors.

      What directors can do is get a grip of; project management, supply contracts, migration plans, and, company morale / productivity. Whatever you think of the shareholder instructions these are good things that can be done.

  4. “…appeared to believe the NBN company itself could do no wrong.” Pardon? My recollection is there wre no shortage of commentators finding fault about nearly everything…e.g., asbestos in pits seemed to be at least partly NBN’s fault. Now NBN has bought said unsatisfactory pits and is required to pay for their being dealt with.

    • I think Renai was speaking about the technology sector in general…

      Not the well informed “business/political” news reporters and their “opinion” pieces

    • The asbestos in the pits is hardly NBNCo’s fault. They are merely leasing the pits and pipes, not actually purchasing them, therefore the blame for the asbestos firmly lies with Telstra, the owner of the pits and pipes. Yes NBNCo could have asked if there was any asbestos in the pits and pipes, but by the same token, if you don’t know it’s there, how do you know to ask about it?

      • Yes Chris but as RichardU has put it. Before the new not a cent more $11B deal the cost was on Telstra to fix the pits and ducts including the asbestos. Now under the new $11B dean not a cent more that cost has now fallen on the NBN.

  5. I am in two minds when it comes to Simon Hackett.
    I respect the man as a pioneer and innovator during the AARNet and Internode years that helped so many Australians.
    I also understand he is tired and burned out from the “bang your head against the wall” mentality that is telecommunications in Australia since privatisation.
    But I am sceptical of his NBN appointment. Maybe I am bitter and twisted but there is no free lunch so that makes me wonder.

  6. I feel this article completely misses the actual reasoning for the “insane” model. The CVC model that the NBN Co would have worked fine, if it weren’t for the ACCC ruling forcing them to shift from their initial 2 PoI per state, to the many hundreds we have now. Managing oversubscription over so many PoIs is an extremely expensive and difficult process, only really achievable by the larger ISPs, who are ironically the ones who started the action with the ACC in the first place.

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