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<DIV>----- Original Message ----- </DIV>
<BLOCKQUOTE
style="PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black"><B>From:</B>
<A title=mmc@internode.com.au href="mailto:mmc@internode.com.au">Matthew
Moyle-Croft</A> </DIV>
<DIV style="FONT: 10pt arial"><B>To:</B> <A title=rick@toplevel.net.au
href="mailto:rick@toplevel.net.au">Rick Jones</A> </DIV>
<DIV style="FONT: 10pt arial"><B>Cc:</B> <A title=ausnog@ausnog.net
href="mailto:ausnog@ausnog.net">ausnog@ausnog.net</A> ; <A
title=Bevan.Slattery@staff.pipenetworks.com
href="mailto:Bevan.Slattery@staff.pipenetworks.com">'Bevan Slattery'</A>
</DIV>
<DIV style="FONT: 10pt arial"><B>Sent:</B> Saturday, April 11, 2009 11:52
PM</DIV>
<DIV style="FONT: 10pt arial"><B>Subject:</B> Re: [AusNOG] Aust Govt will
build National Broadband Network, no company will be awarded the tender.</DIV>
<DIV><BR></DIV>
<DIV>As I've pointed out - the other stimulus package (the $900 one and other
things) was $42b, that didn't have the expectation of "commercial return"
etc.<BR></DIV>
<DIV><FONT face=Arial color=#0000ff size=2>So on that basis, should the
government build a new shopping centre in every town so that the taxpayer can
subsidise cheaper groceries?</FONT></DIV>
<DIV><FONT face=Arial color=#0000ff size=2>That would be dumb</FONT></DIV>
<DIV><FONT face=Arial color=#0000ff size=2></FONT> </DIV>
<DIV><FONT face=Arial color=#0000ff size=2>And it ignores the fact that
taxpayers are going to be taxed to the hilt to pay for it and the competition
for investment funds will mean interest rates will go through the roof at some
stage. There will be a major hangover from all of his spending because
it is not based on sustainable principles</FONT></DIV><FONT face=Arial
size=2></FONT></BLOCKQUOTE>
<BLOCKQUOTE
style="PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV>Regards<BR> <BR>Tim</DIV>
<DIV><FONT face=Arial size=2></FONT> </DIV>
<DIV><BR>At least with this we get faster pr0n ...<BR><BR>MMC<BR><BR>Rick
Jones wrote: </DIV>
<BLOCKQUOTE cite=mid:004701c9baab$f7f36ff0$e7da4fd0$@net.au type="cite">
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<DIV class=Section1>
<P class=MsoNormal><SPAN
style="FONT-SIZE: 11pt; COLOR: rgb(31,73,125); FONT-FAMILY: 'Calibri','sans-serif'">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.<O:P></O:P></SPAN></P>
<P class=MsoNormal><SPAN
style="FONT-SIZE: 11pt; COLOR: rgb(31,73,125); FONT-FAMILY: 'Calibri','sans-serif'"><O:P></O:P></SPAN></P>
<P class=MsoNormal><SPAN
style="FONT-SIZE: 11pt; COLOR: rgb(31,73,125); FONT-FAMILY: 'Calibri','sans-serif'">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.<O:P></O:P></SPAN></P>
<P class=MsoNormal><SPAN
style="FONT-SIZE: 11pt; COLOR: rgb(31,73,125); FONT-FAMILY: 'Calibri','sans-serif'"><O:P></O:P></SPAN></P>
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style="FONT-SIZE: 11pt; COLOR: rgb(31,73,125); FONT-FAMILY: 'Calibri','sans-serif'"><O:P></O:P></SPAN></P>
<DIV>
<DIV
style="BORDER-RIGHT: medium none; PADDING-RIGHT: 0cm; BORDER-TOP: rgb(181,196,223) 1pt solid; PADDING-LEFT: 0cm; PADDING-BOTTOM: 0cm; BORDER-LEFT: medium none; PADDING-TOP: 3pt; BORDER-BOTTOM: medium none">
<P class=MsoNormal><B><SPAN lang=EN-US
style="FONT-SIZE: 10pt; FONT-FAMILY: 'Tahoma','sans-serif'">From:</SPAN></B><SPAN
lang=EN-US style="FONT-SIZE: 10pt; FONT-FAMILY: 'Tahoma','sans-serif'"> <A
class=moz-txt-link-abbreviated
href="mailto:ausnog-bounces@lists.ausnog.net">ausnog-bounces@lists.ausnog.net</A>
[<A class=moz-txt-link-freetext
href="mailto:ausnog-bounces@lists.ausnog.net">mailto:ausnog-bounces@lists.ausnog.net</A>]
<B>On Behalf Of </B>Matthew Moyle-Croft<BR><B>Sent:</B> Saturday, 11 April
2009 11:40 PM<BR><B>To:</B> Bevan Slattery<BR><B>Cc:</B> <A
class=moz-txt-link-abbreviated
href="mailto:ausnog@ausnog.net">ausnog@ausnog.net</A><BR><B>Subject:</B> Re:
[AusNOG] Aust Govt will build National Broadband Network, no company will be
awarded the tender.<O:P></O:P></SPAN></P></DIV></DIV>
<P class=MsoNormal><O:P></O:P></P>
<P class=MsoNormal>So,<O:P></O:P></P>
<DIV>
<P class=MsoNormal>What do you propose as a valid
alternative?<O:P></O:P></P></DIV>
<DIV>
<P class=MsoNormal><O:P></O:P></P></DIV>
<DIV>
<P class=MsoNormal>- FTTN is a crap idea (so crap that even Krudd and Conroy
could see it).<O:P></O:P></P></DIV>
<DIV>
<P class=MsoNormal>- 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).<O:P></O:P></P></DIV>
<DIV>
<P class=MsoNormal>- It's only going to get more expensive to do (inflation
etc).<O:P></O:P></P></DIV>
<DIV>
<P class=MsoNormal><O:P></O:P></P></DIV>
<DIV>
<P class=MsoNormal>I'm not convinced this is commercially infeasible, but
it's a close call I'll admit (and mostly hinges on take up
rates).<O:P></O:P></P></DIV>
<DIV>
<P class=MsoNormal><O:P></O:P></P></DIV>
<DIV>
<P class=MsoNormal>But if the government wants to do something game changing
then what's the real problem in doing so?<O:P></O:P></P></DIV>
<DIV>
<P class=MsoNormal><O:P></O:P></P></DIV>
<DIV>
<P class=MsoNormal>Many people seem to be saying this is a bad idea and yet
propose no alternative which has any real
consideration.<O:P></O:P></P></DIV>
<DIV>
<P class=MsoNormal><O:P></O:P></P></DIV>
<DIV>
<P class=MsoNormal>MMC<O:P></O:P></P></DIV>
<DIV>
<P class=MsoNormal><O:P></O:P></P>
<DIV>
<DIV>
<P class=MsoNormal>On 11/04/2009, at 10:56 PM, Bevan Slattery
wrote:<O:P></O:P></P></DIV>
<P class=MsoNormal><BR><BR><O:P></O:P></P>
<DIV>
<P class=MsoNormal>MMC, <BR><BR><BR><O:P></O:P></P>
<P class=MsoNormal>HFC, Telstra PSTN are run in the telecommunication
height. <O:P></O:P></P>
<BLOCKQUOTE style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 5pt">
<P class=MsoNormal>Electrical is above that. Not sure why anything
on the poles <O:P></O:P></P></BLOCKQUOTE>
<BLOCKQUOTE style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 5pt">
<P class=MsoNormal>would stop the electricity being upgraded.
<O:P></O:P></P></BLOCKQUOTE>
<P class=MsoNormal><BR>Because pole infrastructure is designed with certain
'weight' loading<BR>ratings and wind loading ratings. You start adding
cables to poles that<BR>were designed for a purpose and in particular at
perpendicular<BR>directions without a counter cable (such as a road
crossing) you<BR>starting increasing the load and things can get past their
designed<BR>limits at least with a certain margin for safety. From my
discussions<BR>with the guys here at Energex HFC cables put more stress on
poles due to<BR>their size and weight that an ordinary local distribution
cable. I have<BR>had it known that Optus has had to upgrade quite a
number of poles in<BR>Brisbane metro to run it's HFC back in the day.
Also that<BR>'telecommunications height you mentioned will get
squeezed when there<BR>are three and possibly four cables in that space.
I understand the<BR>power companies will 'beat it up' quite a lot, but
the day poles start<BR>'leaning' like they do in the US; my god the Local
Authorities will go<BR>off their brain and the power companies will say I
told you so. I can<BR>also say that FttP fibre technology has come
quite a long way in terms<BR>of fitting down existing conduits and lead-ins
and this should not be<BR>ignored.<BR><BR><BR><O:P></O:P></P>
<P class=MsoNormal>Ha! The energy providers should have had the sense
to run <O:P></O:P></P>
<BLOCKQUOTE style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 5pt">
<P class=MsoNormal>their own last-mile, but failed big time here in
Oz.<O:P></O:P></P></BLOCKQUOTE>
<P class=MsoNormal><BR>I disagree entirely. I think the smart ones did
the business case and<BR>it didn't stack up. There was never a
business case for it. Heard of<BR>Transact? What a disaster.
I remember the Commonwealth Bank had<BR>something like $50M in debt to
the vehicle and was trying to figure how<BR>to get out. Why?
Because the debt was worth more than the company.<BR>That could very
well be the case with the new FttP/NBN. Anyway, I'll<BR>leave that to
others to discuss.<BR><BR>I mean even when they had the duct and the rights
of way (substations<BR>etc.) the power companies still sucked at it.
UeComm, Powertel, and<BR>ETSA all succeeded in blowing vast amounts of
money against the<BR>proverbial wall. UeComm was literally within
months if not weeks of<BR>hitting the wall and racked up a $40M+ loss 2
months after it said it<BR>would have a $20M+ profit. I even think
there was an ASIC investigation<BR>to boot. It wasn't until new
management came in (and I think the<BR>interest free loan) that it was able
to turn-around. Powertel was a<BR>basket case having deployed $250k
Cisco equipment in every basement that<BR>someone bought an E1. It was
only when they became a real telco got new<BR>management (and major
shareholders), DTU sold out, went to a direct<BR>fibre/ethernet in the local
and started migrating products to be<BR>delivered by copper they actually
got somewhere. ETSA really didn't<BR>make any money outside it's
selling services to it's owners despite<BR>having access to the fibre too.
Aurora FttP? Western Power FttP? They<BR>all showed that as
carriers these companies were good at distributing<BR>electricity.<BR><SPAN
class=apple-tab-span>
</SPAN><BR><BR><O:P></O:P></P>
<P class=MsoNormal><SPAN
class=apple-tab-span>
</SPAN>It's going to be a hard road. I sincerely hope that at
<O:P></O:P></P>
<BLOCKQUOTE style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 5pt">
<P class=MsoNormal>the very least a<O:P></O:P></P></BLOCKQUOTE>
<BLOCKQUOTE style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 5pt">
<P class=MsoNormal><SPAN
class=apple-tab-span>
</SPAN>new national backhaul infrastructure is created by
amalgamating<O:P></O:P></P></BLOCKQUOTE>
<BLOCKQUOTE style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 5pt">
<P class=MsoNormal><SPAN
class=apple-tab-span>
</SPAN>infrastructure from existing providers and new
<O:P></O:P></P></BLOCKQUOTE>
<BLOCKQUOTE style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 5pt">
<P class=MsoNormal>construction. To me
that<O:P></O:P></P></BLOCKQUOTE>
<BLOCKQUOTE style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 5pt">
<P class=MsoNormal><SPAN
class=apple-tab-span>
</SPAN>would have made this whole mess
worthwhile.<O:P></O:P></P></BLOCKQUOTE>
<BLOCKQUOTE style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 5pt">
<P class=MsoNormal><SPAN
class=apple-tab-span>
</SPAN> <O:P></O:P></P></BLOCKQUOTE>
<BLOCKQUOTE style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 5pt">
<P class=MsoNormal><O:P></O:P></P></BLOCKQUOTE>
<BLOCKQUOTE style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 5pt">
<P class=MsoNormal>My understanding is that this is the plan.
Let's see what <O:P></O:P></P></BLOCKQUOTE>
<BLOCKQUOTE style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 5pt">
<P class=MsoNormal>happens if Telstra decide to tip in some of their
<O:P></O:P></P></BLOCKQUOTE>
<BLOCKQUOTE style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 5pt">
<P class=MsoNormal>infrastructure - that might drive the cost
down.<O:P></O:P></P></BLOCKQUOTE>
<P class=MsoNormal style="MARGIN-BOTTOM: 12pt"><BR>Doubt that one too.
On the back of my envelope numbers that might save<BR>you a few
billion here and there, but the cost is without question in<BR>the last mile
access to the premises. If the inverse were true then<BR>Telstra would
not have paid Foxtel a lazy billion or so back in the late<BR>90's to stop
the HFC rollout to the juicy and easier inner metro areas<BR>of our capital
cities. The agreement even included not forcing Telstra<BR>to connect
any home even when it had a cable going past the front door!<BR>Maybe they'd
change their mind.<BR><BR>There is one other point about that statement, and
those by many others<BR>which I find intriguing. It is also important
to note that if someone<BR>puts in asset for equity, then they will be
expecting a return on that<BR>equity. There is a cost for this.
By way of example. If the<BR>Government puts in $22B and the
remaining $22B comes from a combination<BR>of assets and debt (no-cash) then
the projects total cost ISN'T $22B.<BR>It still is $44B. All those
organisations who put in assets for equity<BR>will require a return.
All those who put in debt will require a return<BR>(and guarantee).
There may be a delta between selling off spare<BR>capacity versus
building, but the clever corporate types also know the<BR>replacement cost
and will push the valuation of their assets closer to<BR>replacement.
In fact some may even push it to the replacement cost as<BR>there may
be a premium for the certainty of the asset being in place and<BR>implied
timing benefits. By way of example, do you think PIPE would<BR>simply vend
in assets for equity because of our civic duty and not<BR>expect a return
(even if not guaranteed, but implied?) I was<BR>dumbfounded when I
heard an interview the other evening when on the ABC<BR>Lateline the
interviewer asked Sen Conroy "how do you get a return on<BR>$43B". The
answer was along the lines of "it's not that much it's only<BR>$22B we
expect the rest to come in via network assets being vended in<BR>for equity
and debt". I'm sorry, but I respectfully disagree. The<BR>amount
you need a return on is $43B whether it be debt or shareholder<BR>equity
(government or those who have vended in assets).<BR><BR>Let's hope there is
much, much, much more disclosure on the business<BR>case on how to get a
return on the $43B. We were promised it last time,<BR>but were
dreadfully let down and dare I say mislead (or even worse).
My<BR>calculator says "No straight out commercial business case", but
I am<BR>hopeful that there is another game afoot here and that new
backhaul<BR>network can at least come into life. I am also aware that
there are<BR>broader social implications/benefits which could also be
included in the<BR>business case for justification. At this point I am
just saying I<BR>cannot see anyway you can build this today and expect a
purely<BR>commercial return. No way
possible.<BR><BR>Cheers<BR><BR>[b]<O:P></O:P></P></DIV></DIV>
<P class=MsoNormal><O:P></O:P></P>
<DIV>
<DIV>
<DIV>
<DIV>
<DIV>
<P class=MsoNormal><SPAN
style="FONT-SIZE: 9pt; COLOR: black; FONT-FAMILY: 'Helvetica','sans-serif'">-- <BR>Matthew
Moyle-Croft <O:P></O:P></SPAN></P></DIV>
<DIV>
<P class=MsoNormal><SPAN
style="FONT-SIZE: 9pt; COLOR: black; FONT-FAMILY: 'Helvetica','sans-serif'">Networks,
Internode/Agile<BR>Level 5, 162 Grenfell Street, Adelaide, SA 5000
Australia<BR>Email: <A href="mailto:mmc@internode.com.au"
moz-do-not-send="true">mmc@internode.com.au</A> Web: <A
href="http://www.on.net/"
moz-do-not-send="true">http://www.on.net</A><BR>Direct: +61-8-8228-2909<SPAN
class=apple-tab-span>
</SPAN> Mobile: +61-419-900-366<BR>Reception:
+61-8-8228-2999 Fax:
+61-8-8235-6909<O:P></O:P></SPAN></P></DIV></DIV></DIV></DIV></DIV>
<P class=MsoNormal><O:P></O:P></P></DIV></DIV></BLOCKQUOTE>
<P>
<HR>
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