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

[Matthew Moyle-Croft]

As I've pointed out - the other stimulus package (the $900 one and other 
things) was $42b, that didn't have the expectation of "commercial 
return" etc.

At least with this we get faster pr0n ...

MMC

Rick Jones wrote:
>
> I think that this is a great idea, and I don't think it has anything 
> to do with being commercial or otherwise.  Giving out billions of 
> dollars in payments to the public didn't have a financial return 
> either.  It was an incentive package designed to achieve non-monetary 
> goals.  This has a component of this too.  Forget the spin.  Part of 
> this is about spending a portion of public monies in order to kick 
> start a decent fibre infrastructure in Australia.  At some point in 
> the future, the government of the day will get out of it and leave it 
> to the industry to take it forward.
>
>  
>
> So, if we are going to do some sums, do it with a consideration that 
> part of the money will never be repaid, not in the commercial sense 
> anyway.  The taxpayers will pay it back in the future.  Now, I doubt 
> that this will be sold this way, not so close to a federal election 
> anyway.   But nonetheless there is an element of nation-building here, 
> doing something because someone thinks that it is in the country's 
> long term interests.
>
>  
>
>  
>
> *From:* ausnog-bounces at lists.ausnog.net 
> [mailto:ausnog-bounces at lists.ausnog.net] *On Behalf Of *Matthew 
> Moyle-Croft
> *Sent:* Saturday, 11 April 2009 11:40 PM
> *To:* Bevan Slattery
> *Cc:* ausnog at ausnog.net
> *Subject:* Re: [AusNOG] Aust Govt will build National Broadband 
> Network, no company will be awarded the tender.
>
>  
>
> So,
>
> What do you propose as a valid alternative?
>
>  
>
> - FTTN is a crap idea (so crap that even Krudd and Conroy could see it).
>
> - The current Cu CAN is starting to near end of life and is straining 
> to provide broadband at the speeds they want to everyone.  Even fixing 
> this would require something looking much like FTTN anyway (eg. nodes 
> to fill in black spots etc).
>
> - It's only going to get more expensive to do (inflation etc).
>
>  
>
> I'm not convinced this is commercially infeasible, but it's a close 
> call I'll admit (and mostly hinges on take up rates).
>
>  
>
> But if the government wants to do something game changing then what's 
> the real problem in doing so?
>
>  
>
> Many people seem to be saying this is a bad idea and yet propose no 
> alternative which has any real consideration.
>
>  
>
> MMC
>
>  
>
> On 11/04/2009, at 10:56 PM, Bevan Slattery wrote:
>
>
>
> MMC,
>
>
> HFC, Telstra PSTN are run in the telecommunication height.  
>
>     Electrical is above that.  Not sure why anything on the poles
>
>     would stop the electricity being upgraded.
>
>
> Because pole infrastructure is designed with certain 'weight' loading
> ratings and wind loading ratings.  You start adding cables to poles that
> were designed for a purpose and in particular at perpendicular
> directions without a counter cable (such as a road crossing) you
> starting increasing the load and things can get past their designed
> limits at least with a certain margin for safety.  From my discussions
> with the guys here at Energex HFC cables put more stress on poles due to
> their size and weight that an ordinary local distribution cable.  I have
> had it known that Optus has had to upgrade quite a number of poles in
> Brisbane metro to run it's HFC back in the day.  Also that
> 'telecommunications height you mentioned will get squeezed when there
> are three and possibly four cables in that space.  I understand the
> power companies will 'beat it up' quite a lot, but the day poles start
> 'leaning' like they do in the US; my god the Local Authorities will go
> off their brain and the power companies will say I told you so.  I can
> also say that FttP fibre technology has come quite a long way in terms
> of fitting down existing conduits and lead-ins and this should not be
> ignored.
>
>
> Ha!  The energy providers should have had the sense to run
>
>     their own last-mile, but failed big time here in Oz.
>
>
> I disagree entirely.  I think the smart ones did the business case and
> it didn't stack up.  There was never a business case for it.  Heard of
> Transact?  What a disaster.  I remember the Commonwealth Bank had
> something like $50M in debt to the vehicle and was trying to figure how
> to get out.  Why?  Because the debt was worth more than the company.
> That could very well be the case with the new FttP/NBN.  Anyway, I'll
> leave that to others to discuss.
>
> I mean even when they had the duct and the rights of way (substations
> etc.) the power companies still sucked at it.  UeComm, Powertel, and
> ETSA all succeeded in blowing vast amounts of money against the
> proverbial wall.  UeComm was literally within months if not weeks of
> hitting the wall and racked up a $40M+ loss 2 months after it said it
> would have a $20M+ profit.  I even think there was an ASIC investigation
> to boot.  It wasn't until new management came in (and I think the
> interest free loan) that it was able to turn-around.  Powertel was a
> basket case having deployed $250k Cisco equipment in every basement that
> someone bought an E1.  It was only when they became a real telco got new
> management (and major shareholders), DTU sold out, went to a direct
> fibre/ethernet in the local and started migrating products to be
> delivered by copper they actually got somewhere.  ETSA really didn't
> make any money outside it's selling services to it's owners despite
> having access to the fibre too.  Aurora FttP? Western Power FttP?  They
> all showed that as carriers these companies were good at distributing
> electricity.
>            
>
>             It's going to be a hard road.  I sincerely hope that at
>
>     the very least a
>
>                 new national backhaul infrastructure is created by
>     amalgamating
>
>                 infrastructure from existing providers and new
>
>     construction.  To me that
>
>                 would have made this whole mess worthwhile.
>
>                  
>
>      
>
>     My understanding is that this is the plan.   Let's see what
>
>     happens if Telstra decide to tip in some of their
>
>     infrastructure - that might drive the cost down.
>
>
> Doubt that one too.  On the back of my envelope numbers that might save
> you a few billion here and there, but the cost is without question in
> the last mile access to the premises.  If the inverse were true then
> Telstra would not have paid Foxtel a lazy billion or so back in the late
> 90's to stop the HFC rollout to the juicy and easier inner metro areas
> of our capital cities.  The agreement even included not forcing Telstra
> to connect any home even when it had a cable going past the front door!
> Maybe they'd change their mind.
>
> There is one other point about that statement, and those by many others
> which I find intriguing.  It is also important to note that if someone
> puts in asset for equity, then they will be expecting a return on that
> equity.  There is a cost for this.  By way of example.  If the
> Government puts in $22B and the remaining $22B comes from a combination
> of assets and debt (no-cash) then the projects total cost ISN'T $22B.
> It still is $44B.  All those organisations who put in assets for equity
> will require a return.  All those who put in debt will require a return
> (and guarantee).  There may be a delta between selling off spare
> capacity versus building, but the clever corporate types also know the
> replacement cost and will push the valuation of their assets closer to
> replacement.  In fact some may even push it to the replacement cost as
> there may be a premium for the certainty of the asset being in place and
> implied timing benefits. By way of example, do you think PIPE would
> simply vend in assets for equity because of our civic duty and not
> expect a return (even if not guaranteed, but implied?)  I was
> dumbfounded when I heard an interview the other evening when on the ABC
> Lateline the interviewer asked Sen Conroy "how do you get a return on
> $43B".  The answer was along the lines of "it's not that much it's only
> $22B we expect the rest to come in via network assets being vended in
> for equity and debt".  I'm sorry, but I respectfully disagree.  The
> amount you need a return on is $43B whether it be debt or shareholder
> equity (government or those who have vended in assets).
>
> Let's hope there is much, much, much more disclosure on the business
> case on how to get a return on the $43B.  We were promised it last time,
> but were dreadfully let down and dare I say mislead (or even worse).  My
> calculator says "No straight out commercial business case", but I am
> hopeful that there is another game afoot here and that new backhaul
> network can at least come into life.  I am also aware that there are
> broader social implications/benefits which could also be included in the
> business case for justification.  At this point I am just saying I
> cannot see anyway you can build this today and expect a purely
> commercial return.  No way possible.
>
> Cheers
>
> [b]
>
>  
>
> -- 
> Matthew Moyle-Croft 
>
> Networks, Internode/Agile
> Level 5, 162 Grenfell Street, Adelaide, SA 5000 Australia
> Email: mmc at internode.com.au <mailto:mmc at internode.com.au>   
>  Web: http://www.on.net <http://www.on.net/>
> Direct: +61-8-8228-2909                        Mobile: +61-419-900-366
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>
>  
>
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