[AusNOG] ALERT: Aust Govt will build National Broadband Network, no company will be awarded the tender.

lists technical at halenet.com.au
Wed Apr 8 13:14:08 EST 2009

> And then you have to factor in the fact that the government will be
> subsidising this to some extent.

It will be the taxpayer subsidising it and for a very long time.

>The country is looking for major
> nation-building infrastructure projects and we all knew that the NBN was
> high up on the labour party's agenda.
> Personally, as a taxpayer, I'd rather see the money go elsewhere.  Because
> we are going to be paying this debt off for some time.

Me too.  If the government is going to borrow money on behalf of all 
Australians then it should be spent to the benefit of all Australians.  I 
would have thought that a project such as the Bradfield scheme which would 
have provided environmentally friendly solutions to the countries water 
needs would have been a much more deserving project, after all we cannot 
survive without water, but many do without internet access.  I guess my main 
concern is that governments are not efficent builders of assets and as such 
the NBN will be subject to inflated construction costs which will lead to 
higher access prices.  As for the government owning a wholesale only network 
if the people running it are anything like DBCDE then we may all change our 
mind very quickly as to how easy it is to deal with Telstra.   I was 
involved in the upgrading of whole towns with new cables in the conversion 
from manual to automatic exchanges in the late 1970's early 80's and have 
seen how the bottomless bucket of money works.  I doubt this will be any 
different this time other than instead of the waste being at a local level 
there will be some companies who contract to perform the work who will 
inflate their prices/ profits.  Personally I think the government could have 
achieved many of the goals simply be reviewing industry regulation.  Another 
concern is having the governement as the regulator and as a network 
operator, this will raise issues as well.   I guess the question now will 
be, where is the detail of how it will work and the access pricing that is 
proposed.  The devil will surely be in the detail.  Also where does it leave 
companies as far as investing in providing solutions while it is built and 
will it result in little or no investment for the next 8 years or more.?

> But, from an industry perspective, isn't this what most of us wanted?

I don't know until I see the detail.  I hope it exists now and is not going 
to be made up along the way.   We have already had 18 months of promises and 
nothing delivered.  Now another grand scheme.

> Call it Telstra Mark II.  Call it what you like.  But anything that
> fast-tracks fibre rollout in Australia and does it purely at the wholesale
> level with open access for everyone at an equal level.  Sounds like
> Christmas to many of us.

The fact remains it will still be a monopoly / duopoly, built with taxpayers 
money which will need to be paid off.

> I do feel sorry for the participants in the RFP, who genuinely thought 
> that
> they had a chance of doing this themselves.  But, as I read the
> announcements, the government doesn't have the expertise to do this
> themselves and need the industry to do it.

I wonder how many snouts will be in the trough of yours and my tax money

> So I vote for optimism.

I vote for the devil in the detail to be released so that we can make 
informed decisions about whether to be hopefully optimistic.  If the devil 
in the detail has not been drafted then we should be very worried.  It 
brings back bad memories of a chap called Whitlam who nearly bankrupted 
Australia in 3 years in the early 1970's.  It is easy to spend money but 
paying it back is more painful.  Having debt repayments also reduces your 
standard of living, as those that have paid their houses off will know. It 
is no different in the national economy.   Given the global financial crisis 
was caused by to much (unviable) debt then spending more on unviable / 
unproductive assets can only make matters worse. Duplication not based on a 
business case is bad policy, especially when it will potentially lumber 
taxpayers with higher taxes into the future.   This will lead to lower 
investment and less jobs into the future, not to mention the effect it will 
have on interest rates when things do start to turn around.

Any stimulous project needs to be able to deliver a commercial return on 
investment in order not to lumber out children with massive debt to be 
repaid into the future.  I question whether this one will.

A final food for thought is, what will hapen to this NBN networks viability 
if Telstra decides to build FTTH ?  What happened when Optus rolled out its 
paytv network, Telstra built beside it, what happened to the customers 70% 
stayed on the Telstra network. Which is what has lead me to the observations 
above.  I guess we really need to see the business case and the access 
pricing structure this is built on to be able to decide whether it is good 
or bad policy



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