[AusNOG] Rod Simms should resign [was] News: ACCC opening up Œsuperfast' broadband networks to competition

[Bevan Slattery]

Sorry ­ I¹ve watched this from afar for too long and have really had
enough.

The ACCC has absolutely have zero understanding as to the catastrophic
effect of their decisions/endorsements and the ³ghosts of Christmas past²
are now starting to come back to haunt them.  But instead of admitting
their incompetance and failure, they are trying to point that it is
Government¹s fault.  I¹m sorry Rod and Co. but you are the ACCC and your
absolute fundamental role is to protect consumers.  The ACCC had absolute
power to stop, alter, fix the SAU, block the sale of fixed line
infrastructure and even force price reductions in access charges.

Rod Simms Chairman of the ACCC for the past 5 years this week said that
³privatisations is severely damaging the economy"
 https://www.theguardian.com/australia-news/2016/jul/27/acccs-rod-sims-says
-privatisations-severely-damaging-economy

"He says governments have created private monopolies without sufficient
regulation to stop those monopolies overcharging users ­ and the public
knows it and has a right to be angry.²

2014 the same Rod Simms ³argues the benefits of privatisation"
http://www.abc.net.au/news/2014-01-06/accc-chairman-sims-floats-privatisati
on-of-power-post/5185970
"The Australian Competition and Consumer Commission chairman Rod Sims says
the root and branch review of competition policy by the Federal Government
should be as broad as possible, as privatisation and more competitive
markets offer the best possibility of productivity improvements.
Mr Sims says, for a start, state governments should privatise energy
companies, a move he believes will bring down electricity prices.
"When the private sector owns assets that does provide better incentives
for better performance," he told ABC's News Radio."


As for the NBN the single largest monopoly currently operating in
Australia - well it was completely created and reviewed under the ACCC¹s
watch.  In fact the ACCC green lighted every single piece of price-fixing,
monopoly creating, competition destroying piece of the puzzle, selling out
almost 20 years of delivering infrastructure based competition to ensure
that Australian consumers will by 2020 be HAVE THE MOST EXPENSIVE
BROADBAND SERVICE IN THE DEVELOPED WORLD.

Think this is an exaggeration?  Ok.  Let¹s do the dance:

1.  ACCC created the PoI mess themselves
<https://www.accc.gov.au/regulated-infrastructure/communications/national-b
roadband-network-nbn/nbn-points-of-interconnect-pois>

- NBN Co decides to overturn the proposed 14 PoI¹s and establish 121 PoI¹s
- Could have offered both with reduced CVC to collect from local FAN/PoI
locally for significantly reduced CVC rate
- Decided to push out to 121 only
- not change the CVC rate for local access (Yes $20 still)
- increased costs as now ISP¹s need to backhaul to PoI without any
reduction in CVC
- reduced competition as only ISP¹ with enough subscribers to each PoI can
justify access

2.  ACCC approves Access and CVC costs
 <https://www.accc.gov.au/system/files/ACCC%20Final%20Decision%20on%20the%2
0Special%20Access%20Undertaking%20lodged%20by%20NBN%20Co%20on%2019%20Novemb
er%202013.pdf>

- ACCC not only approved the entire mess including the two main costs
Access and CVC
- ACCC approved $20mbps CVC charge and tail access fees which are aligned
to 2002 access technologies (ADSL)

3.  ACCC was instrumental in dismantling any competition to the NBN
- 2012 ACCC approved the entire sale of Telstra¹s Copper and HFC network
to NBN Co. for $11B reducing competition
- 2012/2015 ACCC the entire sale of Optus¹ HFC network to NBN Co. for
$800m reducing competition
- ACCC therefore approved every existing ADSL/VDSL and HFC competition
from main capital cities (sorry Canberra)
- ACCC therefore approved the removal of almost any competitive tension
for the NBN to change its pricing
- ACCC declared new rates for Superfast Broadband services this week.
$27.50 access and $17.50/mbps for CVC charges

So now we have an ACCC that is asking providers to become ³more
transparent² as to how fast their broadband service is and how much they
are throttling the service.  Really?  Are the ACCC that ridiculously out
of touch and inept?  Well obviously - yes.

So to help the ACCC I¹m going to help you with this.

* All your customers have $60/month for a broadband service
* That¹s just over $54 EX gst (and a credit card charge)
* NBN Co charge $30 for a 25/5 tail
* that leaves ISP¹s with $24 to pay for:
- CVC
- backhaul + NBN PoI interconnection/colo
- national backhaul and international capacity
- tech support
- company overheads/costs/compliance
- profit

So assume the provider wants to make 10% profit on the service meaning
$5.40 that leaves $18.60 for
- CVC
- backhaul + NBN PoI interconnection/colo
- national backhaul and international capacity
- tech support
- company overheads/costs/compliance

So assume tech support is $5/sub/month average then that leaves
$13.60/month for:
- CVC
- backhaul + NBN PoI interconnection/colo
- national backhaul and international capacity




Assume national backhaul and international capacity is $5/mbps (assuming
quite a lot of peering) and $1/mbps average for NBN PoI backhaul along
with a CVC charge of is $17.50 then the average bandwidth cost per mbps
delivered is $23.50 (majority CVC)

So what you are left with is $13.60 worth of bandwidth/backhaul with an
average cost of $23.50/Mbps.
$13.60/month divided by $23.50/mbps/month = ~0.587Mbps average consumption
or 170GB/month

THIS IS THE REALITY OF THE ACCC¹s DECISION.
EVERY WAY YOU CUT IT THE BEST AVERAGE DOWNLOAD SPEED ACROSS THE GROUP FOR
A $60 USER ON THE NBN ISŠ.
0.580Mbps or 180GB per month

There is only two strategies a user can get more than this:

1.  Pay more.  If you paid ten dollars extra ($70/month) you can get an
extra average consumption of 0.38Mbps/month
2.  Hope.  They need to hope/rely on users using less and there being no
peaks (which is what traffic shaping is designed to help reduce)
3.  Competition.  They can access an alternate provider with a better
offering.  Like a HFC provider or another VDSL provider for them to access
or to force the NBN to change their pricing.

Oh wait.  That¹s right the ACCC approved the removal of all those
competitors.  So yeah.  Pay more or hope. Good luck with that.

Time to accept your role as being the Chairman of the ACCC and approving
the worst example of anti-competitive, price fixed, monopoly
infrastructure which will deliver the most expensive broadband in the
developed world.  Time for you to resign.

[b]







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