[AusNOG] NBN Legislation

[Tim McCullagh]

----- Original Message ----- 
From: "Bevan Slattery" <Bevan.Slattery at nextdc.com.
>
> Regrettably unlike NBN Co. companies like PIPE, Nextgen, Optus, AAPT etc. 
> do not have unlimited funds and more importantly understand they need to 
> provide a greater return on their investment than their WACC.  NBN Co. has 
> already demonstrated that on an optimistic basis they may be able to 
> produce a 6% return on invested capital some 5% LESS than their WACC over 
> 30 YEARS.  In fact NBN Co. is estimating it's WACC is 25% per year for the 
> first 3 years.  So unlike all other carriers out there, NBN Co. does not 
> have company Directors who will be personally liable to shareholders for 
> their decisions, NBN Co. and the Government is prepared to wipe away 
> billions of dollars in investment dollars (the delta between its RoE and 
> the WACC).
>
> Sorry - the "market" hasn't been broken.  Just the structure of one player 
> in the industry and that is Telstra.  This legislation is about destroying 
> the competitive carrier infrastructure players.   It's not a "correction", 
> but a further abuse of market power by the shareholder of the new 
> monopoly.  Time for a few people to wake up and smell the coffee...
>
> [b]

Absolutely spot on Bevan.  I just wish more had an understanding of how 
business works and in particular the need to get a return on investment.

I just wonder how many people understand what a mess Australians may be in 
for over the next 9 years with little or no investment and a running down of 
the copper network.  I wonder how people are going to feel when Telstra 
starts to tell customers that they can no longer support their DSL service 
because the network will no longer support it. Then are told wait for NBN in 
1 to 9 years. Then again Telstra may simply encourage customers over to 
their NextG wireless (Higher margin service for Telstra).


Regards

Tim