<html><head><meta http-equiv="content-type" content="text/html; charset=utf-8"></head><body dir="auto"><div>That'd do it.</div><div id="AppleMailSignature"><br></div><div id="AppleMailSignature"> - mark <br><br>--<div>Tiny screen, imaginary keyboard.</div><div><br></div></div><div><br>On 18 Nov. 2016, at 18:13, Grahame Lynch <<a href="mailto:grahamelynch@commsdaymail.com">grahamelynch@commsdaymail.com</a>> wrote:<br><br></div><blockquote type="cite"><div><div dir="ltr">I think you will find the ARPU was for a month and the revenue was for a quarter. Adds up fine</div><div class="gmail_extra"><br><div class="gmail_quote">On 18 November 2016 at 14:11, Mark Smith <span dir="ltr"><<a href="mailto:markzzzsmith@gmail.com" target="_blank">markzzzsmith@gmail.com</a>></span> wrote:<br><blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex"><span class=""><p dir="ltr"></p>
<p dir="ltr">On 18 Nov. 2016 15:28, "Mark Newton" <<a href="mailto:newton@atdot.dotat.org" target="_blank">newton@atdot.dotat.org</a>> wrote:<br>
><br>
> In Sep 2015, when NBN released its Corporate Plan, I did some number crunching based on the Government’s commitment to fund them no further than $29.5 billion, and their cash burn rate, and predicted that the money would run out some time during 2017q1.<br>
><br>
> The Government at the time was completely insistent on that $29.5 billion limit, and said they expected NBNco to seek private investment to cover any shortfall between that and their total build cost. <br>
><br>
> At the time, I predicted that they would be unable to do that, because their rate of return (also in the Corporate Plan) was hovering around 4%, so a private investor would yield lower risks and bigger guaranteed returns by putting their money in AMP’s listed property trust. If someone in the private sector had $20 billion to invest, why on earth would they invest it with NBNco, given the large range of better possibilities?<br>
><br>
> Based on that, I predicted two possible outcomes:<br>
><br>
> Either the Government would write the whole thing off and deed it to Telstra, or they’d use their post-election grace period to totally forget all about their pre-election commitment to hold their stake at $29.5 billion, and say, “Y’know what? We’re almost done. Just a little bit more, and it’ll be finished. Great success.”<br>
><br>
> <insert Iraqi Information Minister GIF><br>
><br>
> Turns out they picked the second option, at pretty much bang-on when I said they would :-)<br>
><br>
> <a href="http://www.canberratimes.com.au/business/government-loaning-nbn-20-billion-to-finish-rollout-20161118-gssbag.html" target="_blank">http://www.canberratimes.com.<wbr>au/business/government-<wbr>loaning-nbn-20-billion-to-<wbr>finish-rollout-20161118-<wbr>gssbag.html</a><br>
><br>
> The Government is about to loan NBNCo an extra $20 billion to finish the job, taking the total Government contribution to about $50 billion (which is at the low end of what they think they need to complete the build)<br>
><br>
> They say they’re doing it at “commercial rates.” Unless NBNco’s corporate plan has changed significantly, they don’t make enough money to afford commercial rates, so they’re unlikely to ever be able to pay it back.<br>
><br>
> So when you see “loan,” substitute, “grant,” because the Government will be writing it off.<br>
><br>
> My guess is that they’ll carry it on their books ’til after the next election, and the NEXT government will write it off, and if that’s Labor the Liberal Party will claim that pissing $20 billion up the wall is another example of ALP spending profligacy. <br>
><br>
> (oh look, another prediction. Get back to me in 3 years, yo?)<br>
></p>
</span><p dir="ltr">So another recent fudging is the recent NBNco financial results.</p>
<p dir="ltr">They said they have 1.4M active services and a revenue of $181M. Simplistic maths i.e. $181M/1.4M says ARPU of $129, well above what most ISPs are charging retail for NBN plans. Revenue for a supplier is a cost to the purchaser.</p>
<p dir="ltr">If you then look at their presentation, they claim an ARPU of $43. </p>
<p dir="ltr">So how can the simple maths of $129 ARPU turn into a claimed $43 ARPU? Where'd the other $86 go?</p>
<p dir="ltr">Looking into the presentation (briefly at the time, I was in a hurry) they claimed $12M revenue from other sources, and the rest from either tails, broken down by type or CVC.</p>
<p dir="ltr">An RSP cannot successfully buy a tail without also buying some useful amount of CVC. So NBN ARPU should also include CVC (because ARPU is wholesale cost for RSP.). (181M-12M)/1.4M is an average wholesale cost per user to the RSP of $172.42. How is an RSP going to cover a $172 average cost per user with a retail plan costing <$120/m?</p>
<p dir="ltr">NBNco might claim that CVC is not individual per user revenue, it is aggregate user revenue, so it shouldn't be included in ARPU. </p>
<p dir="ltr">Ok. So let's include RSPs in your user counts because they use the CVC. The number of RSPs (no more than 1000 I'd think, and probably way less) added to NBNco's 1.4M tail users is insignificant. ARPU and therefore average wholesale cost per user to the RSP is still $172.</p>
<p dir="ltr">If NBNco give away CVC for (literally) free, then this might all work. Until then ...</p>
<p dir="ltr">> - mark<br>
><br>
><br>
><br>
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