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

[Mark Newton]

On 12/08/2010, at 2:39 AM, Paul Brooks wrote:

International experience seems to indicate this is a reasonable outcome. I can't find the actual presentation anywhere else, but if you look at
http://www.bloobble.com/broadband-presentations/presentations?itemid=1894, 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.
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.

Look, we know that already because we see it in Australia:

If we cherry-pick builds so that they only occur in the cheapest places to do
them (i.e., greenfields sites that aren't far away from somewhere that's well-
connected) then it can be cheap.

Quigley testified in the May Estimates session about why NBN retail services
are so cheap in Tasmania:  Customers got a free ONT, and NBNCo charges
ISPs $0 setup/install and $0 per month for access.

Now, that's great for customers but terrible for NBNCo's viability, and they
clearly won't sustain that past the Tassie trial.

So whether or not FTTH services in Australia will be cheaper for consumers
than ADSL services comes down to a pretty simple question:  Will renting
end-user-access from NBNCo be cheaper than building and operating an
ADSL port?

If the answer is, "Yes," then one can start doing some calcs to estimate the
revenue NBNCo is capable of earning per annum, and an upper bound on
what they're allowed to spend if that revenue is suppose to cover their operational
expenses and deliver the commercial return they need to demonstrate in order
to justify the 50% private investment they're supposed to be getting, and for
privatisation to happen in 15 years.  I'm guessing that NBNCo has been
spending rather a lot of time wrestling with those numbers over the last year...

The other thing the Tassie trial will do in due course is provide takeup numbers.
We've already seen that only 50% of houses opted for an ONT even though it
was free.  IMHO one of the important datapoints that'll be available in due
course will be the number of end user access services NBNCo has actually
sold, i.e., the number of people who want the NBN badly enough to order
a service on it.

With only 50% of the 3000 houses in the trial areas taking up an ONT, I
reckon the upper bound for that number is 50% of households (!).

The Govt will need to hope that the actual takeup is somewhere in the
vicinity of that upper bound, to avoid taking their policy into "What if they
declared a war and nobody came," territory?  They won't want to be in
a place where they've rolled out the network to 3000 households and
only a handful of people want to play with it.

Ultimately I find MMC's cost justifications compelling-ish, but the thing that
puts a stake in its heart is the Government's requirement for a commercial
return and private sale.  If they removed that requirement then that'd give
them a lot more freedom to play with the access fees, so that all the public
benefits everyone talks about would be deliverable without pushing everyone's
internet access prices into the stratosphere.

The other thing it'd do is make this whole debate a lot more like the width-of-
the-road argument you think it should be, Paul.  It isn't at the moment,
because the Government has never proposed selling highway-1 to private
investors 5 years after they've finished building it, and highway-1 has no
revenue source that'd ever allow it to make a financial return.

But, using MMC-style justifications we build it anyway -- Without pie-in-the-sky
unmitigated bullshit about innovative new road-use applications, because
we all know that at the end of the day road use is pretty boring and utilitarian.

That's basically where the Greens are on this: Build it, keep it in public
hands forever.

   - mark


--
Mark Newton                               Email:  newton at internode.com.au<mailto:newton at internode.com.au> (W)
Network Engineer                          Email:  newton at atdot.dotat.org<mailto:newton at atdot.dotat.org>  (H)
Internode Pty Ltd                         Desk:   +61-8-82282999
"Network Man" - Anagram of "Mark Newton"  Mobile: +61-416-202-223





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