[AusNOG] NBN: "i want a pony! but can I afford it"

[Matthew Moyle-Croft]

On 13/08/2010, at 9:44 AM, Tim McCullagh wrote:

----- Original Message -----
From: Matthew Moyle-Croft<mailto:mmc at internode.com.au>

According to Quigley in Commsday today:

"NBN Co CEO Mike Quigley also told media that the project in Tasmania had come in at between 5- 10 percent under budget, with the total budget of the project reportedly around A$37 million."

That, for a fairly small set of builds (5000 houses in 3 sites) .

Ok lets take those figures.  $37 million / 5000  = $7400 per home passed
Now take it that only 50% have taken up connection to it  means $14800 if all of the 50% take it up which is unlikely
If the Telstra CAN is decommissioned then you expect take up to be 50%?

Do  you think that, as I said above, it was for a small build, that it's actually going to be the same cost for the whole thing?

I'd also ask -> you claim you were going to roll this out yourself in a brownfield?    Why do you object to others doing so? Or is this another "well, it's only good if it's me doing it thing"?



Now lets say that we want to get a 6% return as per conroys undertaking, assuming the 50% takeup over 40 years (not likely but I will humour those that talk this crap)

This equals a loan payment of $81.43 before GST and opex costs per month on a 12 payment a year basis for NBN to just pay back the cost  of their NBN build over 40 years.  I can see customers signing up for 40 year contracts NOT.  And we need to remember this is all borrowed money.  Even if we did it on an interest only basis we would need to repay $31 per month excluding gst opex and data charges.  As I understand it most lenders also what their money back at some point.

So what do you recon should be the charge to the RSP's and what do you recon will be the charge that has to be passed onto the customer including GST?
Then do "ALL" customers have the ability to pay that?
Now tell me I am wrong and back it up with your figures.

I disagree with the underlying cost assumptions, you seem to be the most pessimistic, so you get the absolute worst case,.




with obvious fixed costs which would be amortised over more houses in a larger set of builds

I think you are selectively adding costs.  NBNco has had far more than $37 million in funding and all that additional funding needs to be paid back to in the scheme of things which will make the fiigures above look worse again

It's only just been launched so the take up rate is a bit moot at the moment.

I grant that, but under an earlier tassy trial they got 17% takeup which was reportedly almost free,   The western Australian power company who's name escapes me at present closed their ftth brownfield network down because they couldn't get enough take up.   So what take up do you recon NBNco will get out of the 50%.  I will recalc the figures above for you, but the figures will only get worse.
Again, the deal on the table is to decommission Telstra Cu.



I am happy to be proved wrong here, but I doubt I will be unfortunately, which brings me back to my early question,

What makes people think that this lunacy will not result in much higher comms costs to ALL Australians in the same way as all other government utilites have like power water and rates??????  Please answer
Stuff goes up.  Wah.

You've taken a small, first trial site and extrapolated only worse case.   The NBNCo have done a fair bit of modeling to show it's a much better case than that.  I know you'll just go "I don't believe it", but hey, some people do know what they're doing.


This is not an argument about doing nothing.  It is an argument about doing what all Australians need and can afford.
On the question of need, how many customers are on the max ADSL1 or ADSL2 speeds now?  What is the real demand now?
How many can't even get ADSL2 or ADSL1?

You keep whining but offer NO alternate plan other than to do nothing.     Lots of people want better and that's right now, let alone in 10,20,30,40 years.

The current focus is on ftth is the areas where there are currently many competing solutions, while areas that have nothing are not even being discussed.
Really?   Where have you been?

Some on this list should go and sit on a 512/128 sat  service for a month with low download limits and high excess charges, then you would have an appreciation of how good your current solutions are.  Some also need to realise that much of the wealth of this country originates from the regions.  Without the regions the standard of living in the cities would be nothing like it is.   We can compared ourselves with Japan korea etc, but that is stupid as well,  look at the population desnities and land mass, or tell me you want to live in a large appartment block like caged chickens.   I think not.  Our lifestyle comes at a cost and higher comms costs is part of that due to the amount of investment per customer required.
So, your arguing that doing better broadband in regional areas is a good or bad thing?   Not clear Tim.

Better Satellite, better wireless coverage, a fair bit of regional fibre and I'll bet it's not something that stops in 8 years.


I have been around since the BBS days and seen many changes, not all of the changes were clear 2 years before they happened.  In the dial days you had only dial as an access methed.  Today we have mobile wireless wifi fixed dsl fixed wireless and so on all competing for a share of the market, which one is supreme only time will tell and I suspect will depend on whether it is business or residential use and    which part of the demographic consumers fit into.
I've been around a long time too.   I keep looking to the future with knowing what's happened.   I had a 2400bps modem once, I'm glad things keep getting better rather than just going "well that's it".


On the question of affordability how much can all australians afford per month.  I am seeing customers move to mobile services, speed is not their priority.  Cost and mobility are.  Which brings us back to what percentage of customers are really demanding a fast fixed service and what sort of take up should NBN co expect?   Telstra has lost a reasonable slice of their fixed phone market and it is accelerating, perhaps we can expect to and are seeing that with fixed broadband being substituted by mobile broadband now.   Is spending $43 billion on a ftth network more justified than other equally justifiable projects like inland rail, bradfield scheme on water, very fast trains etc etc.  Funding is finite and should be directed at the solutions that meet the needs of all australians.  I saw a dumb anology somewhere about not building hospitals in regional areas because we don't all need them there.  I can asure you every australian will visit a hospital at some time in their lifetime and some will be very glad there was a hospital available when they need it regardless of where they are, on the other hand some Australians will never use the NBN.  That is not to say they won't use the internet, they may just access it via mobile or other methods.  It comes down to priorities.  Lets take a straw pole in the community and ask how many would sign up for NBN at$100 per month because realistically that will be the minimum they will pay at some stage after all the suck me in pricing is abandoned in the same way as it was in water, electricity and rates.

See my earlier posts regarding what $43b represents.  I'd argue that spending a similar amount on some more submarines and a few fighter planes (piloted planes now? Really) over the same time period is going to add far less to the economy than an NBN.

But hey, let's all get scared of a big boogey man number and not do anything.


My apologies for the long response but some things need to be said to put some balance into the discussion
And yet you STILL OFFER NO LONGER TERM ALTERNATIVE.

No one has that objects to the NBN.   No one has articulated a plan as to how not doing NBN now is going to be better over the long term, over the next 10,20,30,40 years.

NBN has a concrete future, not doing it seems to be wishful, hopeful thinking that something "might happen" in the future if we do nothing now.

This is what's really frustrating.  A lot of people whining that "well, we don't want to spend a lot of money now, because, well, it's not me doing it and governents shouldn't do it because, well, I'm happy with what i've got now" and offering no future long term solution.

No solutions for even 10 years time.   No actual changes to the regulatory environment, nothing.

It's hard to take the "do a temporary patch job now" concept seriously when it's not combined with long term vision of what we'll need.

You say you've been around a long time in this industry, are you seriously saying that we've reached the end and we should not move forward?   What about your kids/grandkids will need?

We should be taking on these big projects to improve the future.  Imagine what'd happened if someone said "Snowy River project, too expensive, no point, we can do something later".

MMC
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