[AusNOG] ACCC pushes for consumer internet speed test, telcos aren't keen on the idea

[Bevan Slattery]

Let's not hypothesise, let's clearly understand how we got here.

NBN v2.0 FttP had a financial model that had 14 PoI's and needed $20/m to rhetorically break even.  I say theoretical because the financial model was floored.

As part of the process for approval the ACCC went to market for consultation.  The major intercap owners with assets that are in the back half of their asset life argued that to do so would stifle investment in regional backhaul.

Others (PIPE included) argued that BOTH 121 PoI's *and* aggregation should be offered.  This way if there is not competitive backhaul at any given PoI then the NBN could be a provider of last resort @ $20/Mbps for CVC + backhaul included.  However this also meant that the with backhaul or even just local providers can tap into the local PoI for both a lower latency and lower CVC charge.  This would provide competition, choice and also reward those who have invested.

The ACCC went the path of 121 PoIs and the NBN then had to comply.  BUT the NBN still needed $20/Mpbs on aggregation otherwise their financial model would no longer work and they would have to take a write down.  So they agreed to the ACCC the 121 PoI model and kept the $20/Mpbs despite no longer being able to provide state based backhaul, no longer able to be a provider of last resort.  The ACCC said "fantastic" and here we are.

So a more competent regular understanding how competition works would have gone with the BOTH model.  Instead they not only went with 121 PoI's but didn't seek NBN to reduce the CVC charge considering backhaul was no longer provided.

[b]

> On 13 Sep 2015, at 8:52 pm, Paul Brooks <pbrooks-ausnog at layer10.com.au> wrote:
> 
> Right -
> Lets say the ACCC had ruled to do what everyone here wants, to aggregate all Australia
> to two redundant super-POIs in each major capital city, just like Telstra wholesale ADSL.
> Every end-user tail circuit, residential and corporate, is migrated to the NBN.
> 
> Lets take it a step further - NBN link the PoIs together, so any ISP can hook up to
> just a single POI and achieve blanket national coverage. Two or three POIs provides
> redundancy against POI failure.
> 
> The AVC and CVC charges are higher, as NBNCo now has to pay for all the long-haul
> transmission all over the country, and recover that in extra service charges. Probably
> not as much as the extra costs of backhaul ISPs currently incur to reach 121 POIs,
> since NBN would have ultimate economy of scale carrying every bit of traffic.
> 
> Who wins?
> Who loses?
> Who goes out of business in 5 years? 10 years?
> 
> 
>> On 13/09/2015 7:59 PM, Matt Perkins wrote:
>> I think the whole DOD idea is a bit far fetched and with respect I think the model was put tougher a bit quick to take things into account  like network resilience.  The plane facts here are that to shrink the number of POI's would allow Joe blogs ISP. China telecom or whomever to compete with Telstra. Now Telstra has many mum and dad investors. But worse still it has many super funds investing in it.  For a government to devalue Telstra in such a way is not only political  suicide it would also require them to prop up some people in retirement due to their ailing funds and their reliant on people like Telstra. 
>> 
>> The large number of POI models favours the incumbent carrier that happens to have most of their exchanges co-located. 
>> 
>> Matt.
> 
> 
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