[AusNOG] Long live the NBN. The NBN is dead?! [personal]

[Tim McCullagh]

----- Original Message ----- 
  From: Paul Brooks 

    Are you personally prepared to pay for the real cost of that service since you experience a private benefit or productivity gain? Or should the cost of that be partly borne by others who don't necessarily share the productivity gain? That seems to be the nub of the issue here - most people will pay $40-50 a month for broadband but they wouldn't pay the implied $3,000-5,000 per household connection and activation cost of the NBN budget directly if asked to...in strict economic terms, it is a transfer from non-high speed broadband users to high speed broadband users where costs are very hazily proportioned between public and private interest criteria....

  I'm prepared to pay a market-based price - what I don't accept is the assumption that that market-based price is necessarily going to be so much higher than what I pay now.

  You are assuming that the market based price will be the same as it is now. In which case you are dreaming

  The *price* of a current new copper landline connection is around $300 

  When a new phone line is connected in many areas it uses copper that has potentially been in the ground for many years and at a time when the cost of installation was a lot lower than today     or was contributed to by a developer whan the estate was developed.  Either way the costs are sunk cost.  In the case of ftth not only does the leadin need to be built but the backbone the head end a new gateway etc.   To the network operator the cost of connecting a copper leadin may be something like less than the $300 remembering that the trench is paid for by the customer or is provided when the power is connected etc therefore3 or 4 lengths of pvc pipe, 2 or 3 bends and 30 meters of cable plus minimal labour.  In the case of ftth, a new lead in is required in many cases a gateway additional after the building is built building wiring etc etc etc.   There would be little left out of $2000 for the leadin alone which has to be recovered.    But I think you know this 



  - if the *cost* to the network provider is higher than this, they will be collecting the extra as a component of my monthly service rental.

  They sure will.  Ask the people of south east Queensland what happened to their water charges

   Fibre cable doesn't cost that much more than copper cable - a fibre connection need not be priced so much higher.

  Absolute rubbish and I suspect you know that as well.   Stop misrepresenting the situation.
  A copper cable cost about $0.30 per meter and fibre costs $1.77.  The labour on copper is 10 to 15 minutes to install a couple of connectors worth about 15 cents.  The labour on fibre is much longer splicing fibres is not a 5 minute job.  Splice trays are about $7.50 splice protectors enclosures I could go on.  If you use connectorised solutions a 20 meter connectorised leadin cable is about $75 to $80 

  Yes I have done it and I do know the costs

  I don't accept that a household connection *cost* needs to be $3000 - $5000, especially if - like the current network - the common costs are amortised over a period of many decades,

  What is the currrent cost in Tasmania per house connected.  I am sure it is more than that including fibre back to the head ends etc and some of it is on power poles.
  Over many decade you must be kidding.  The fibre infrastructure may have a lifespan of decades however the electronics will be about 7 to 10 years.  This is a business with technical obsolecense how on earth can you amortise it over decades.?  If you work out the repayments returns at 10  or 20 years there is little difference.  

   which is something that a government entity can do,

  WHAT was the point of deregulations and selling Telstra now that we're heading back 25 years?
  Maybe they rename NBN to PMG or have all the kiddies on here forgotten about the PMG

   but a purely commercial organisation perhaps cannot. 

  I guess you are saying that there is not a business case for a commercial organisation in which case you are saying that there is no business case for the government which means the taxpayer will need to subsidise the network capital and or opex costs.  That is different to what conroy said.  He said it was viable. I guess he doesn't know what he is talking about



  It also comes down to the huge economies of scale that can be generated when building this infrastructure on a massive scale - tens of thousands of houses, not tens of houses.

  That may be true for some of the hardware but we are talking about $50 to 100 per customer for hardware.  But on a large scale the administration and overhead costsa are much larger.  Look at BER for the answer.  Where the schools negotiated with their builder they got there per sq meter rate 30 to 50% below the public schools.  The same will apply for NBN.  A lot of waste, graft and kickbacks, and we will all have to pay for it.  It is much better to let a commercial operator make sure they get bang for their buck.   We don't need to go back to the PMG days

  Most estimates of efficient rollout *cost* come to around the $2000 - $2500 per house mark. 

  I still believe in the fairy god mother and the easter bunny too

  If I had to pay that upfront (and add a margin, as the provider presumably needs a small but positive profit) I would probably baulk - but if it is amortised over two decades by the provider it would be $11 per month, which I will gladly pay.

  $2000 over 20 years will require a payment of $16.73 plus gst plus administration charges plus profit margin...  need I say any more and that is just for the customer install, no opex costs etc

  If I'm going to pay for the infrastructure establishment all up front with a  $5000 charge - or even $2500 - then I'd better be getting it with no ongoing charges, or enough to cover maintenance only - a couple of dollars at most per month. And then when I move out to another place in 5 years I would want to recover a portion of that connection fee from the new occupiers of the house. I'm renting the network connection, not buying it.

  Yes but someone else is taking the risk on getting a return from the money they invest to enable you to rent it

  Since I don't have to pay $5000 for a connection to the current ubiquitious access network, and that seems to be reasonably profitable, 

  "Are you serious", do you not understand that the current network was built over many decades and much of it is paid for which means the business owner does not need to get a return on it in the same way as a network operator would if they were building from scratch today. 

  I can't see why the new network would be any different - unless we thining so short-term that we vastly reduce the payback period where the monthly fees cease paying for the cost and start becoming cream.

  Your kidding aren't you.  You must have a better understanding than that

  regards


  Tim
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