[AusNOG] Screw the NBN, says TPG: We'll do our own FTTB

[Bevan Slattery]

**NOT FOR PUBLICATION OR REPORTERS**

> But take a look at the HFC rollout maps, and tell me just how successful
market forces have been in providing decent infrastructure to everyone.

Do you care to provide an understanding of the history of how this occurred?
(read below)
> Take a look at the inequality of access to decent telecommunications
infrastructure provided by an organisation who are legally obligated to provide
fair access for all (and still fail miserably to do so).

It seems you are arguing that where there is no competition the standard of
service often fails to keep pace/be inferior (which I agree with).  So I'm
not sure what your argument is.
> How well has the model you propose worked so far? Really?

Bandwidth to Australia in 2000 cost $6,000/mbps.  TCNZ, Optus and Verizon
risked $1.1B to build Southern Cross.  Competition ensued.  Bandwidth
dropped to $2,000 in 12 months and some 8 years later to $250/mbps in a
comfy duopoly.  PPC-1 was built and bandwidth dropped to $60/Mbps within 24
months.  Wholesale for big bandwidth is now (close) to sub $10/Mbps.  I
expect that with the new submarine cable systems coming online in the next 3
years transit/bandwidth will be around $1/Mbps within 5 years.

It's important to note the previous NBN Co CVC fee was $20/Mbps from the
house to the POI and increasing.  That is 2000% more than international
bandwidth costs before half the network is deployedŠ

There was a Government owned monopoly.  Then there were entrepreneurs who
committed to invest in infrastructure where they could afford to in order to
improve the value for you, the punter.  Names like Malone, Teoh, Hackett,
Marburg, Preen, Baxter, Bhartia, Ashton, Kestelman and companies like AAPT,
Powertel, Primus, Internode, iiNet, Vodafone, 3, RequestDSL, Eftel, BigAir,
Optus, TPG, Netspace, Westnet, IP1, Amcom, Comindico, PIPE Networks, Nextgen
Networks have all invested money to deliver greater value and competition to
the public.

If it wasn't for Optus committing Billion$ to build the original HFC network
to bypass the last mile monopoly then there would probably be no HFC network
at all.  Sadly at the time the Government owned telecommunication company
engaged in "van following" to overbuild the competing carrier (Optus) and
halt their progress.  It worked.

And Telstra's commitment and build out of NEXTG was remarkable and leading.

It was competition from carriers committed to building DSLAM's that saw the
HFC networks reduce their pricing as ADSL became more available and more
importantly more AFFORDABLE.  It took Internode, iiNet, TPG, Primus,
Netspace, Eftel etc. to offer auto-trained ADSL2+ before others provided
same and they ended up providing that nationally.  For a shareholder based
company to invest they have a higher standard and level of return to
achieve, because for said companies the risks are higher and the Directors
could go to jail if they get it wrong.

> And again - the NBN does *not* cost us (the nation) $37b. Or even $90b if you
choose to believe Turnbull's build costs.

Sorry but it does "cost" money.  However, what determines whether this cost
is an expense or an investment is the realistic and real prospect of
returns.  Now I personally believe that the cost to construct is
substantially higher than the $37B.  But hey what would I know?  I also
think the commercial "return" would not be commercial.  My guess would be
somewhere around 3%-4% with the CVC fee at the current $20/Mbps levels.  I'm
not saying that this is not acceptable (or acceptable), I'm just saying that
this is realistic.  I also acknowledge there is a cost to maintain the
copper.  I'm not sure what that is, but there is also a cost to maintain the
fibre (considerably less though).
> It costs us the interest on those amounts, but only until the loans are paid
back/bonds mature (and the rates are stupidly low)- and then the country owns a
modern, high tech infrastructure that will drive the nation forward.

There are numerous examples of government investment in infrastructure with
the expectations of commercial returns ­ returns that never eventuated and
investments that were written down or written off (Aussat?).  It is only an
investment until it proves to not yield a return.  Some pop and some don¹t.
The deployment time for a FttP will take at least 9 years so it will be
sometime to do so.  Also a CVC fee of $20/Mbps is counter productive and a
direct imposition to reduce the economic benefit of the FttP investment.
Again I'm not saying it shouldn't be done, I'm just saying people need to be
realistic and the CVC needs to either go , or be drastically reduced ­ that
will impact yield (by how much?).  Let's not get started on the PoI'sŠ

As for the FttN NBN the reality is that Telstra is the most logical
candidate to roll it out.  So TPG either have to wait for the (almost)
inevitable mid-span copper cut or take much of the risk out of play for many
of their subscribers.  They chose the later.  It's not "cherry picking" it's
common sense.

I'm not going to advocate loudly it should be one technology or another, but
those on this list not paying $79/month for an ADSL1 256kbps/64kbps
connection with a 300MB monthly download quota should perhaps respect what
competitive infrastructure investment delivers.  The whole "government owned
telecommunications infrastructure monopoly protected by legislation" has
been done before it was called the Post Master General and it sucked...  Big
time.

[b]




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