[AusNOG] NBNCo releases its response to industry consultation

[Bevan Slattery]

> -----Original Message-----
> From: ausnog-bounces at lists.ausnog.net 
> [mailto:ausnog-bounces at lists.ausnog.net] On Behalf Of lists
> Sent: Monday, March 29, 2010 1:15 PM
> To: ausnog at lists.ausnog.net
> Subject: Re: [AusNOG] NBNCo releases its response to industry 
> consultation
> 
> Hi Bevan and John,
>  
> With respect, I think your comments regards the small fibre 
> to the home operator are a little off the mark.  I suspect I 
> know who you are referring to, however you comments fail to 
> acknowledge that,  if it was not for some of the small 
> operators (even in the dialup days and the early ADSL days)  
> then it is highly unlikely Telstra would have even started 
> doing fibre to the home or offerring other services.   Some 
> of the catalyst for devlopers using the small operators was 
> to pull telstra into line and force them to offer such 
> services.  The issues some operators didn't recognise in the 
> early days was that they would need to achieve substantial 
> deployment densities to enable them to upgrade their backhaul 
> links, or in one case an operator was told a planned fibre 
> deployment was going to happen which he could connect to,  
> which didn't and he had no plan B.  Personally I wouldn't use 
> unlicensed radio for such a backhaul service, but many do 
> successfully.
> 
>  
> 
> While some of the comments have merit they ignore the reality 
> that NBN may not have even been on the table if some of the 
> small operators hadn't dragged Telstra into that space which 
> has then dragged other operators into the space.  

I think you are mistaken on how NBN actually got on the agenda here.  It
was because Telstra had to 'share' their copper network and the efforts
of companies like Optus, iiNet, Primus, Internode, TPG, AAPT started
'competing' with Telstra on an equal cost footing.  Telstra needed to
create a new access monopoly to stop competing carriers from eroding
market share.  Fibre to the node was the least expensive way to get the
infrastructure monopoly back and hence NBN 0.1 being Telstra's FttN
proposal of 2005 was brought forward.  I think it's a little wishful to
think it was because of the few FttH players operating at the time.

> The issues associated with backhaul were in some cases over 
> looked, which was a bad mistake.

It sure was/is.  And it's a mistake that the FttH industry has to this
day failed to commit to resolving.

> It is a mistake that can be 
> addressed and fixed.  

That should read "it's a mistake that the FttH Council MUST fix".

>  The last mile that NBN is going to address is 
> not where the bottleneck is.  Most consumer space customers 
> are after the cheapest price, not the fastest service, which 
> really questions the need for the NBN at all. 

Most, if not all consumers want choice and some want value.  Being able
to pick a 'retailer' to me isn't what we should be striving for here.
That's like picking an energy retailer.  At the end of the day, apart
from a few changes around the edges they all offer the basically the
same thing which is what the distribution company provides.


> What really amazes me is that those screaming the loudest are 
> not prepared to invest in competitive infrastructure, other 
> than DSLAMS or commercial high margin services.  If it is so 
> easy why haven't they done it?  Why aren't the same companies 
> deploying DSLAMS in "all" the same exchanges as Telstra?.  
> Which brings me back to the willingness to criticise a small 
> FTTH operator.  You really owe them an apology.

Many of the FttH players are 100% subsidised by the developer.  They get
anywhere between $2,000 to $3,000 per home they connect.  They get the
duct for free and install whatever network necessary to connect up the
homes and make a profit on top.  This is where most of them make their
money.  I have found few circumstances where the FttH operator actually
"invests" significant money in building out the FttH network.  There are
a few I know that had and that was a painful lesson in brownfield
deployments back in 2004.  Then the monthly connection fees they charge
the end users (residents) pays for the running costs (including
backhaul).  The smaller the development, the less money for backhaul.
Also, the smaller (cheaper) backhaul the higher the profit.  Most of the
earlier entrants (up until the last few years) were working on the basis
that they actually HAD a monopoly over their end users.  I have numerous
business plans/offers to invest from FttH operators dating as far back
to 2005 proudly proclaiming same.

It has only been in the past few years some operators have embraced an
"open access" network approach which is a direct result of people
complaining about having no choice.  Generally, the FttH industry now
accepts this and has at moved towards this approach.  However, the fact
is they are still access monopolies with people only being able to
select a 'retailer' of sorts.

Maybe you have missed the mark on having an attack at those DSLAM
operators "screaming the loudest" who are not prepared to invest in
competitive infrastructure other than DSLAM's.  These guys just haven't
invested in DSLAM's, they've actually invested in DSLAM's with BACKHAUL
(dark fibre) so they can differentiate their products by not just
offering an ADSL 2+ line speed, but offer an ADSL2+ internet experience
along with multicast, along with uncontended backhaul.  They have
invested many tens of millions of dollars directly (or indirectly)
building out dark fibre backhaul and aren't relying on developers
contributions for same.  It's even ironic that you are attacking these
DSLAM operators who are actually starting to come to the market and
provide retail channels for these same networks.

> My point however is that many companies start off as small, 
> and in same cases the revenue streams allow some to grow into 
> larger companies, particularly where government departments 
> put their business with such companies.  I therefore find it 
> a little hard to criticise any operator that has had a go, 
> whether successful or not.  

I think the consumer in these estates sitting in a broadband monopoly
which are now even denied access to Telstra's copper network and further
choice would disagree with you.  No access to broadband plans for $49.95
for 100GB+ etc. with speeds of up to 20Mb/s.  My point is that many
operators that work in this area love the fact they have an access
monopoly and their customers don't have any choice.

> What worries me the most though, is that you both have 
> influence with governments and yet you may be behaving in 
> exactly the same manner as Telstra and are probably simply 
> pushing your own agenda in the policy space while at the same 
> time criticising Telstra.  Your comments would seem to 
> suggest that you have forgotten where your businesses have 
> come from.  Both started off as small operators.

Those that know me, know I don't have an agenda, but a reputation for
delivering competitive infrastructure and a decent amount of experience
in actually deploying fibre businesses (with a business plan).  If you
think I am playing games here, then it's time for you to put up.

> My apologies for being so blunt, 

Don't be.  It's the only tool I use :)

> -----Original Message-----
> From: Paul Brooks [mailto:pbrooks-ausnog at layer10.com.au] 
> All the material I've seen doesn't support the notion that 
> NBNCo can or will connect homes whether or not they actually 
> want the service.

And that's the biggest problem with this process.  We are all working in
the dark here looking at media reports, Sen Conroy's comments at
functions and trying to piece it together.  There is a desperate lack of
structured public documentation about this.  I suspect that is because
NBN2.0 is like the T1000 of the telecommunications industry :)

> I haven't seen anything to suggest NBNCo will have greater or 
> lesser powers than any other licensed carrier - have you? I 
> know the prospect of dealing/negotiating with body-corporates 
> in MDU situations is still an issue, as always.

Come on Paul, you can't be serious.  So when the Minister (owners rep
for NBN Co.) sends me a notice to produce my entire network information
(and everyone else's for that matter) within 3 business days or face
legislative penalty you think I have this power?  When NBN Co. is
looking to deploy fibre overhead, am I going to be able to be able to do
the same (not currently a low impact facility).  When NBN Co. uses it's
might and political clout to gain access to underground duct or poles
from the power company it will do so on behalf of all carriers?  Will I
be able to access the energy duct networks on the same price and
non-price terms?  I noticed that NBN Co. is now a licensed carrier.
I'll push something across the desk of NBN Co. in the next couple of
days let's see how it goes.  Should be interesting.

> Not at all Grahame  - SOMEONE - or collection of someone's - 
> will be doing a lot of advertising and awareness raising, but 
> it need not be NBN Co itself. NBNCo is just a servant of its 
> RSP customers - its the RSPs that have the relationship with 
> end-users, its the RSPs, backed by a pile of government 
> general awareness raising (think digital TV
> switchover) - messages from RSPs on their customers bills for 
> the next 2 years, trumpeting of RSP availability of NBN 
> services on Whirlpool, etc etc.

Has anyone realised that most of these companies are delivering ADSL2+
services to consumers for about $14/user/month (including backhaul)?
How vocal do you think they will be about forcing consumers to upgrade
to a more expensive plan on NBN Co. with a smaller profit margin?
 
> NBNCo can stay mercifully mute on the matter to the general 
> public, as long as they make sure the RSPs have up-to-date 
> dates for connection availability  around the country, and 
> manage to stick to the notified schedule.

What's the expected take up rate?

Actually, I just find it plain disturbing we are now so far down this
track and there is still no business plan for this thing...

Cheers

[b]