[AusNOG] FTTH - Dreaming?

[Colwell, Scott]

Tim is making a valid point here.  I'd like to just generalise this a
bit more
and talk about anybody in the local Telco business making a big
investment
in infrastructure.

(BTW, I do work for Nextgen but these opinions are mine and were formed
well before
I joined Nextgen.)

I saw this happen a number of times in the '90s (and later) where
someone
would put together the capital to build a piece of infrastructure that
competed against the incumbent's infrastructure.

The usual argument went:
1/ cheaper to build (than the incumbent's was)
2/ cheaper to operate than the incumbent's
3/ we have lower overheads than the incumbent
4/ Hence we must be able to make money.

This was predicated on pricing being at worst, cost+margin.
But often the plan went pear shaped.

Why?  Because the incumbent could always decide that the capital
invested in
their infrastructure was a sunk cost and hence "free".  (I'm not privy
to the
decision making process, so I can't comment on motive.)

Now, my contribution to the discussion:

There were some successes.  The landscape is littered with failures but
not
everybody who tried, failed.

There is some competition for long haul BW.  There is some competition
for
DSL tails.  There is some competition for international.

This has two consequences.

1/ We should understand why some succeeded.  Was it just luck?  Was the
incumbent
looking the other way at the critical moment?

2/ The existence of these successes makes it tougher to get regulatory
help.
Their existence supports a claim of "market forces are working normally
here."

Scott


-----Original Message-----
From: ausnog-bounces at lists.ausnog.net
[mailto:ausnog-bounces at lists.ausnog.net] On Behalf Of lists
Sent: Saturday, 30 August 2008 7:53 PM
To: ausnog at ausnog.net
Subject: Re: [AusNOG] FTTH - Dreaming?

Hi All

----- Original Message ----- 
From: "Damien Coxall" <klownism at gmail.com>

> 1. Curtis, congratulations on having the balls to stand up and say
> something (at least somewhat) positive about Telstra.

The discussion/ topic is not about Telstra.  It is about whether the 
deployment of fibre to the home is a dream.  As I said twice,  the
issues 
that needs to be addressed are the regulations that would allow
innovative 
telcos to be able to ensure that a much larger telco with deep pockets 
doesn't use its resources to stiffle competition.  I also gave an
example or 
2.   It is a pity that every time the issue of the structural reforms
that 
may be needed to allow for the deployment of infrastructure such as FTTH
we 
get replies like the one above.  It doesn't address the issue.
Personally I 
think the subject line should be changed, if the topic is to be changed
to 
"lets stick up for telstra"

>
> 2. I love how everyone is so happy to go on about Telstra's massive
> profits and government subsidies but conveniently ignores how much
they
> give back (even if it's not by choice)

Please don't insult the rest of the industry.  The whole industry gives
back 
in one form or another.  Many do it without advertising it.  As for my 
comments, if you read them,  I was pointing out that Telstra like others
was 
receiving subsidies to clarify the comments that had been made
previously
ie
>> Dear reporters: Telstra is here, they're the reason a number of rural
>> Australians have access to DSL/ISDN where it would never have been
>> profitable to do so.


>
> Scott so kindly pointed out the link to the financial results, here's
> what I found with a quick scan thru.
>
> Telstra has payed out a 14c dividend for the last 2 years, IIRC the
gov.
> still owns just under 50% or thereabouts,
>  making a dividend of around
> $3B, add to that the $1.4B or so they payed in taxes last year and
we're
> looking at nearly 4.5 Billy per year over the last 2 years.*
>
> Anyone wanna run the numbers on how much the gov. made while Telstra
was
> still a government dept. with a proper monopoly? I'm willing to wager
> that it would dwarf the figures above (taking into account inflation
and
> the like)

All totally irrelavent to the topic


> All that and we want to sit here and complain about a measley $800
mill
> over several years, c'mon guys, lets get real.

It was a statement to balance the following

>> Telstra is here, they're the reason a number of rural
>> Australians have access to DSL/ISDN where it would never have been
>> profitable to do so.

Now "lets get real" Telstra didn't and doesn't carry all the load for
this. 
There are subsidies and USO payments and very rarely do the companies
that 
pay the USO payments that end up at Telstra get recognised.  Telstra
would 
have everyone think they do it out of the goodness of their heart, and
some 
poor souls believe it.


> Anywho, that's just my 2.5c, take of it what you will (for the record,
I
> don't love Telstra,

If I didn't know better, I would say you are on the Telstra payroll from
the 
comments above

>  I just don't feel that they are entirely evil).

No they are not evil.  They are just very well balance sheet resourced
and 
they use those resources to stop competition getting established which
is 
what the reply was about.   Do some research on the optus cable roll
out, 
and what happened, then go and do a business case to deploy and go to a 
financial backer.  If you haven't got a water tight way of defending
your 
business from the same risks that were made evident in the optus
rollout, 
they will laugh you out of the place.  So far I don't believe anyone has

identified a way to overcome thise issues and so far no additional broad

scale infrastructure has been rolled out.   This is the issue

>
> * Please don't pick at my maths, I'm coming off the back of a long
night
> of dealing with a big Optus outage and should be in bed, not reading
> AusNOG posts.

We all do that and all carriers have outages.


Regards

Tim 

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