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

David Napier ausnog at khetanna.com
Sun Apr 12 22:04:03 EST 2009

Hi All,
Interesting point....
Anybody know what the highest margin product is that power utilities sell?
Poles space.

If the power utility is leasing space to provider 'x', it maintains
particular SLAs with respect to the service. If the loading on the pole is
excessive (and HFC is heavy - each node alone weighs 20KG) that's the
power utility's responsibility. Only the physical strand, anchors,
sheath...etc are the responsibility of the provider.

So - whilst the points below are valid technically - it often comes does
to a commerical decision. Aerial deployments are cheaper (note: upfront
only, opex is actually higher due to OHS requirements) and may make an
workable business case viable.

And in response to OP energy company last mile. Power systems are bad at
transmitting any higher order modulation. 100Mb at 5 m, 1Mb at 200m :|.



On Sat, April 11, 2009 11:26 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]
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