[AusNOG] Long live the NBN. The NBN is dead?! [personal]

[Paul Brooks]

On 11/08/2010 2:15 PM, Grahame Lynch wrote:
>
>
> On 11 August 2010 11:04, Paul Brooks <pbrooks-ausnog at layer10.com.au 
> <mailto:pbrooks-ausnog at layer10.com.au>> wrote:
>
>
>     Perhaps your need hasn't changed. Mine has, and over the next 10 - 30
>     years I suspect it will change more. I no longer have a single PC
>     shared
>     by all in the household - I have several, each capable of
>     saturating far
>     more capacity than thye one I had 10 years ago, along with several
>     people who all want to access network resources simultaneously. I'm
>     currently finding sub-1 Mbps upstream speeds quite limiting - and
>     economically and productively limiting - and others do too.
>
> Paul I accept all that but I ask a question.
> Are you personally prepared to pay for the real cost of that service 
> since you experience a private benefit or productivity gain? Or should 
> the cost of that be partly borne by others who don't necessarily share 
> the productivity gain? That seems to be the nub of the issue here - 
> most people will pay $40-50 a month for broadband but they wouldn't 
> pay the implied $3,000-5,000 per household connection and activation 
> cost of the NBN budget directly if asked to...in strict economic 
> terms, it is a transfer from non-high speed broadband users to high 
> speed broadband users where costs are very hazily proportioned between 
> public and private interest criteria....

I'm prepared to pay a market-based price - what I don't accept is the 
assumption that that market-based price is necessarily going to be so 
much higher than what I pay now.

The *price* of a current new copper landline connection is around $300 - 
if the *cost* to the network provider is higher than this, they will be 
collecting the extra as a component of my monthly service rental. Fibre 
cable doesn't cost that much more than copper cable - a fibre connection 
need not be priced so much higher.

I don't accept that a household connection *cost* needs to be $3000 - 
$5000, especially if - like the current network - the common costs are 
amortised over a period of many decades, which is something that a 
government entity can do, but a purely commercial organisation perhaps 
cannot. It also comes down to the huge economies of scale that can be 
generated when building this infrastructure on a massive scale - tens of 
thousands of houses, not tens of houses.

Most estimates of efficient rollout *cost* come to around the $2000 - 
$2500 per house mark.
If I had to pay that upfront (and add a margin, as the provider 
presumably needs a small but positive profit) I would probably baulk - 
but if it is amortised over two decades by the provider it would be $11 
per month, which I will gladly pay.

If I'm going to pay for the infrastructure establishment all up front 
with a  $5000 charge - or even $2500 - then I'd better be getting it 
with no ongoing charges, or enough to cover maintenance only - a couple 
of dollars at most per month. And then when I move out to another place 
in 5 years I would want to recover a portion of that connection fee from 
the new occupiers of the house. I'm renting the network connection, not 
buying it.

Since I don't have to pay $5000 for a connection to the current 
ubiquitious access network, and that seems to be reasonably profitable, 
I can't see why the new network would be any different - unless we 
thining so short-term that we vastly reduce the payback period where the 
monthly fees cease paying for the cost and start becoming cream.

-- 

Paul Brooks               |         Mob +61 414 366 605
Layer 10 Advisory         |         Ph  +61 2 9402 7355
-------------------------------------------------------
Layer 10 - telecommunications strategy&  network design

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