<html><head></head><body style="word-wrap: break-word; -webkit-nbsp-mode: space; -webkit-line-break: after-white-space; "><br><div><div>On 12/08/2010, at 2:39 AM, Paul Brooks wrote:</div><div><br></div><blockquote type="cite"><div bgcolor="#ffffff" text="#000000">International experience seems to indicate this is a reasonable
outcome. I can't find the actual presentation anywhere else, but if you
look at </div><div bgcolor="#ffffff" text="#000000">
<a class="moz-txt-link-freetext" href="http://www.bloobble.com/broadband-presentations/presentations?itemid=1894">http://www.bloobble.com/broadband-presentations/presentations?itemid=1894</a>,
slides
10 and 11, you'll see several countries where FTTH connections
are priced lower than ADSL2+ connections, and most countries have FTTH
connections in the 30 - 40 Euro range.<br>
Yes, this is Europe, we are here, population densities differ, and we
don't know if these services are available to 97% of the population or
20%. But it does show that the expectation is not entirely unreasonable.<br></div></blockquote></div><div><br></div>Look, we know that already because we see it in Australia:<div><br></div><div>If we cherry-pick builds so that they only occur in the cheapest places to do </div><div>them (i.e., greenfields sites that aren't far away from somewhere that's well-</div><div>connected) then it can be cheap.</div><div><br></div><div>Quigley testified in the May Estimates session about why NBN retail services</div><div>are so cheap in Tasmania: Customers got a free ONT, and NBNCo charges</div><div>ISPs $0 setup/install and $0 per month for access.</div><div><br></div><div>Now, that's great for customers but terrible for NBNCo's viability, and they</div><div>clearly won't sustain that past the Tassie trial.</div><div><br></div><div>So whether or not FTTH services in Australia will be cheaper for consumers</div><div>than ADSL services comes down to a pretty simple question: Will renting</div><div>end-user-access from NBNCo be cheaper than building and operating an</div><div>ADSL port? </div><div><br></div><div>If the answer is, "Yes," then one can start doing some calcs to estimate the</div><div>revenue NBNCo is capable of earning per annum, and an upper bound on</div><div>what they're allowed to spend if that revenue is suppose to cover their operational</div><div>expenses and deliver the commercial return they need to demonstrate in order</div><div>to justify the 50% private investment they're supposed to be getting, and for</div><div>privatisation to happen in 15 years. I'm guessing that NBNCo has been </div><div>spending rather a lot of time wrestling with those numbers over the last year...</div><div><br></div><div>The other thing the Tassie trial will do in due course is provide takeup numbers.</div><div>We've already seen that only 50% of houses opted for an ONT even though it</div><div>was free. IMHO one of the important datapoints that'll be available in due </div><div>course will be the number of end user access services NBNCo has actually</div><div>sold, i.e., the number of people who want the NBN badly enough to order</div><div>a service on it.</div><div><br></div><div>With only 50% of the 3000 houses in the trial areas taking up an ONT, I</div><div>reckon the upper bound for that number is 50% of households (!). </div><div><br></div><div>The Govt will need to hope that the actual takeup is somewhere in the </div><div>vicinity of that upper bound, to avoid taking their policy into "What if they</div><div>declared a war and nobody came," territory? They won't want to be in </div><div>a place where they've rolled out the network to 3000 households and</div><div>only a handful of people want to play with it.</div><div><br></div><div>Ultimately I find MMC's cost justifications compelling-ish, but the thing that</div><div>puts a stake in its heart is the Government's requirement for a commercial</div><div>return and private sale. If they removed that requirement then that'd give</div><div>them a lot more freedom to play with the access fees, so that all the public</div><div>benefits everyone talks about would be deliverable without pushing everyone's</div><div>internet access prices into the stratosphere.</div><div><br></div><div>The other thing it'd do is make this whole debate a lot more like the width-of-</div><div>the-road argument you think it should be, Paul. It isn't at the moment,</div><div>because the Government has never proposed selling highway-1 to private</div><div>investors 5 years after they've finished building it, and highway-1 has no</div><div>revenue source that'd ever allow it to make a financial return.</div><div><br></div><div>But, using MMC-style justifications we build it anyway -- Without pie-in-the-sky</div><div>unmitigated bullshit about innovative new road-use applications, because</div><div>we all know that at the end of the day road use is pretty boring and utilitarian.</div><div><br></div><div>That's basically where the Greens are on this: Build it, keep it in public</div><div>hands forever.</div><div><br></div><div> - mark</div><div><br></div><div><div>
<span class="Apple-style-span" style="border-collapse: separate; color: rgb(0, 0, 0); font-family: Helvetica; font-size: 12px; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: 2; text-align: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-border-horizontal-spacing: 0px; -webkit-border-vertical-spacing: 0px; -webkit-text-decorations-in-effect: none; -webkit-text-size-adjust: auto; -webkit-text-stroke-width: 0; "><span class="Apple-style-span" style="border-collapse: separate; color: rgb(0, 0, 0); font-family: Helvetica; font-size: 12px; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-border-horizontal-spacing: 0px; -webkit-border-vertical-spacing: 0px; -webkit-text-decorations-in-effect: none; -webkit-text-size-adjust: auto; -webkit-text-stroke-width: 0px; "><span class="Apple-style-span" style="border-collapse: separate; color: rgb(0, 0, 0); font-family: Helvetica; font-size: 12px; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-border-horizontal-spacing: 0px; -webkit-border-vertical-spacing: 0px; -webkit-text-decorations-in-effect: none; -webkit-text-size-adjust: auto; -webkit-text-stroke-width: 0px; "><div style="word-wrap: break-word; -webkit-nbsp-mode: space; -webkit-line-break: after-white-space; "><span class="Apple-style-span" style="border-collapse: separate; color: rgb(0, 0, 0); font-family: Helvetica; font-size: 12px; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-border-horizontal-spacing: 0px; -webkit-border-vertical-spacing: 0px; -webkit-text-decorations-in-effect: none; -webkit-text-size-adjust: auto; -webkit-text-stroke-width: 0px; "><div style="word-wrap: break-word; -webkit-nbsp-mode: space; -webkit-line-break: after-white-space; "><div><div><font class="Apple-style-span" face="'Andale Mono'" size="1"><span class="Apple-style-span" style="font-size: 9px; "><br class="Apple-interchange-newline">--</span></font></div><div><font class="Apple-style-span" color="#000000"><font class="Apple-style-span" face="'Andale Mono'"><font class="Apple-style-span" size="1"><span class="Apple-style-span" style="font-size: 9px; ">Mark Newton Email: <a href="mailto:newton@internode.com.au">newton@internode.com.au</a> (W)</span></font></font></font></div><div><font class="Apple-style-span" color="#000000"><font class="Apple-style-span" face="'Andale Mono'"><font class="Apple-style-span" size="1"><span class="Apple-style-span" style="font-size: 9px; ">Network Engineer Email: <a href="mailto:newton@atdot.dotat.org">newton@atdot.dotat.org</a> (H)</span></font></font></font></div><div><font class="Apple-style-span" color="#000000"><font class="Apple-style-span" face="'Andale Mono'"><font class="Apple-style-span" size="1"><span class="Apple-style-span" style="font-size: 9px; ">Internode Pty Ltd Desk: +61-8-82282999</span></font></font></font></div><div><font class="Apple-style-span" color="#000000"><font class="Apple-style-span" face="'Andale Mono'"><font class="Apple-style-span" size="1"><span class="Apple-style-span" style="font-size: 9px; ">"Network Man" - Anagram of "Mark Newton" Mobile: +61-416-202-223</span></font></font></font></div><div><font class="Apple-style-span" color="#000000"><font class="Apple-style-span" face="'Andale Mono'"><font class="Apple-style-span" size="1"><span class="Apple-style-span" style="font-size: 9px; "><br class="webkit-block-placeholder"></span></font></font></font></div></div></div></span><br class="Apple-interchange-newline"></div></span><br class="Apple-interchange-newline"></span><br class="Apple-interchange-newline"></span>
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