NBN Rollout Scrapped

[drsmith]

As for CBA, let me repeat (once more) the argument why it's utterly worthless:

The NBN is an enabling technology. It is impossible to value the benefits of building it, because we don't know what most of the benefits will be. One could only guess about developments for the next 5 or 10 years, let alone the next 50 years. Any CBA would therefore be completely inaccurate.


To illustrate my point, I suggest you do a CBA for the copper telephone network rollout, valuing only the uses/benefits that were known in (say) 1910.

Let me know if the per-capita cost (which is about the same as the NBN, adjusted) would be worth it, considering the only use would be basic person-person voice communications.


If you don't think that's a valid argument/analogy, please explain why not.

The difficulty I have with the above analogy is that it would be comparing something that is known (1910 to today) to something that is unknown. in that sence at least, there's an element of trust me and hence risk.

The best decisions are generally those that are weighed against tangable pros and cons. Beyond that, it's luck. It may be difficult to do a cost benefit analysis, but that doesn't justify not doing it.

If the project is completed, the government may well pay off the associated borrowings but then it is setting it up as a monolopy.

 

[Smurf1976]

I would argue that because the borrowings for the NBN wll be funded by the income of the network, that the construction in no way inhibits the Govt from funding other infrastructure. Also there would be little overlap on a lot of the staff for the NBN rollout compared to say building a hospital or road.

That comment plus this whole thread sounds incredibly like the arguments for setting up the state electricity authorities many years ago. They worked quite well until economists stuck their fingers in the pie and pushed costs through the roof via their failed ideologies.

Most things we now use electricity for were unforeseen back when it started. When Duck Reach power station was switched on in 1895 I'm pretty sure that nobody had thought of the need to provide power for computers. For that matter, even broadcast radio and household refrigerators were future technologies back then. Same with the internet. Even in the mid-1990's when people started to connect I don't recall anyone predicting the demise of video rentals due to online downloading.

On the other side of the debate however is wireless. Like many I remember when employers started worrying about employees use of the internet, both due to its' time wasting abilities and potential legal issues for the company associated with certain content. And so an assortment of filters, personal use time limits, monitoring and so on were introduced by many employers. It's all completely pointless now of course given that half the workforce has access to the internet sitting right there in their own pocket.

My personal expectation is that we're heading to a situation where bulk data goes via fibre. That's how movies will be downloaded etc for the foreseeable future. But in terms of time spent using devices, there's a readily apparent trend toward mobile devices for situations where the time versus data ratio is lots of time and little data. Facebook is a classic example of such a situation where mobiles leave fixed computers for dead.

 

[bellenuit]

What I find peculiar about this "it will pay for itself" argument is that it may not be the case that it will pay for itself.

It would imply that whether the overall cost is $20B, $40B or $100B, there will be no impact on government debt. But that is nonsense. Paying for itself implies certain assumptions regarding costs to build, service charges (to the wholesaler, which ultimately flow to the consumer) and take up rates by the consumer. If building costs grow substantially, then those costs will have to be passed on to the consumer, which will depress take up rates. It is possible that if building costs of the NBN reach a certain level, it may be impossible to pay off the service, as there will not be enough consumers willing to take up the service at the increased service charges. Demand is not inelastic, when there are alternative offerings (although trying to make the NBN a monopoly is an attempt to stifle others offering a competing service).

Increases in building costs of the NBN cannot simply be offset by assuming income to the NBN can be increased to compensate. There will be a point where the model breaks down and will require the government to provide assistance from consolidated revenue.

 

[sydboy007]

What I find peculiar about this "it will pay for itself" argument is that it may not be the case that it will pay for itself.

It would imply that whether the overall cost is $20B, $40B or $100B, there will be no impact on government debt. But that is nonsense. Paying for itself implies certain assumptions regarding costs to build, service charges (to the wholesaler, which ultimately flow to the consumer) and take up rates by the consumer. If building costs grow substantially, then those costs will have to be passed on to the consumer, which will depress take up rates. It is possible that if building costs of the NBN reach a certain level, it may be impossible to pay off the service, as there will not be enough consumers willing to take up the service at the increased service charges. Demand is not inelastic, when there are alternative offerings (although trying to make the NBN a monopoly is an attempt to stifle others offering a competing service).

Increases in building costs of the NBN cannot simply be offset by assuming income to the NBN can be increased to compensate. There will be a point where the model breaks down and will require the government to provide assistance from consolidated revenue.

18 months after the NBN goes live in an area the copper network is switched off if there is fiber in the area. Are you suggesting that when this occurs there will be less people using broadband than before the cut over?

So far I've not seen any evidence that there is a cost blowout in the construction of the project. Yes it's early days, but so far so good, and I'm sure Limited News would have been running front page articles should there be even the remotest hint of this.

So yes, in theory shoudl the costs blow out enough then it may be difficult to pay the debt off, but to use a what if that so far has no basis in reality is really grasping at straws. The Govt has appointed some competent senior management, and i can assure you that anyone applying for a job at NBN is doing so because they believe in the project and have the kind of commitment most companies can only dream of getting from their staff.

I'm looking forward to seeing what the naysayers have to say when the project is rolled out and the economic benefits are easy to see.

If the economy is slowing as badly as the LNP are making out, well I would argue the NBN is going to have an easy time playing off the various contracting firms against each other as there wont be much else on offer.

 

[So_Cynical]

So Cynical, there numerous examples of this government going of half cocked on a hair brained plan.
As DrSmith is suggesting, this could still be added to the list of failures.

The one big difference is that Labor did it, stopped talking, stopped trying to get something done for nothing, stopped blaming everyone else and just did it...took the bold steps, accepted the political risk and did it.

With regard to comparisons between the copper network and the NBN, the copper network to communication was like the development of motorised vehicles to transport whereas the NBN is an upgrade.

Seriously...light speed is not an upgrade.

 

[drsmith]

Seriously...light speed is not an upgrade.

It's not the industrial revolution either.

 

[DB008]

I'm looking forward to seeing what the naysayers have to say when the project is rolled out and the economic benefits are easy to see.

Interesting....

Kansas City has become the center of tech startups thanks to Google Fiber

The Associated Press is reporting that thanks to Google's Fiber service, it has turned Kansas City into a huge attraction for tech startups who want to jump onto the fastest Internet access in the US. The AP has reported that several startups have popped up in Kansas City, "working on their ideas for the next high-tech startup".

The AP cites one startup residence, which has been called the "Home for Hackers" that provides entrepreneurs "a deal that allows them to live rent-free for up to three months "while they develop their business plans". The Home for Hackers has three spots specifically reserved for entrepreneurs and an additional bedroom set up for "fiber tourists who want a place for a day or two where they can download anything faster than they could elsewhere."

http://www.tweaktown.com/news/27914/kansas_city_has_become_the_center_of_tech_startups_thanks_to_google_fiber/index.html#3j3VtzWDfvczXhPi.99

 

[sydboy007]

Interesting....

If the NBN rollout is canned by the LNP, I can assure you that properties that have fiber are going to gain in value to suburbs relegated to ADSL or wireless.

Oh, has anyone asked Mr Turnbull where he plans to set up the roughly double extra wireless base stations he is proposing? Considering the grief the NBN is getting in some areas I would expect the problem to magnify under the LNP

 

[Julia]

The Govt has appointed some competent senior management, and i can assure you that anyone applying for a job at NBN is doing so because they believe in the project and have the kind of commitment most companies can only dream of getting from their staff.

That will be why so many of their senior executives have abruptly resigned, I suppose? Commitment.

 

[sptrawler]

In the end the NBN won't cost anything, because the government of the day will sell it off (again)
Then they will charge gst on services provided.
Then the newly floated company, that has a monopoly on backbone infrastructure.
Will complain to the government, they can't make a profit at the current access prices.
The government will set up a committe to investigate pricing, they will recomend access prices need to be increased to allow the NBN company to make a reasonable return on capital. lol
Doesn't it just crack you up, the only winners are big business, that get bling speed internet to move mass data and mum and dad pay for it.lol
Nothing like a democracy, to tell people what they have to do.

 

[So_Cynical]

It's not the industrial revolution either.

Well you can only have one industrial revolution, the NBN is an enabler for the digital revolution, and that's a real revolution, a revolution that is still under way, some distance/time will be required to really appreciate the enormity of the digital revolution.

 

[drsmith]

Well you can only have one industrial revolution, the NBN is an enabler for the digital revolution, and that's a real revolution, a revolution that is still under way, some distance/time will be required to really appreciate the enormity of the digital revolution.

Perhaps it would stand up to a CBA then.

 

[So_Cynical]

Perhaps it would stand up to a CBA then.

And you measure the benefits how?

I was watching a program on tv the other night about power, the guy that invented the first mobile steam engine (truck) didn't get rich and didn't have a patent, the invention was maybe 20 or 30 years ahead of its time, a CBA at the time wouldn't of even considered this invention.

A CBA would of come to the conclusion that it was cheaper and easier to continue using horses, the infrastructure was all there, the skills all there and the cost of developing 1 million miles of road would of made the travelling steam engine uneconomic...the steam truck didn't stand a chance but we all know how that turned out.

 

[drsmith]

And you measure the benefits how?

I was watching a program on tv the other night about power, the guy that invented the first mobile steam engine (truck) didn't get rich and didn't have a patent, the invention was maybe 20 or 30 years ahead of its time, a CBA at the time wouldn't of even considered this invention.

A CBA would of come to the conclusion that it was cheaper and easier to continue using horses, the infrastructure was all there, the skills all there and the cost of developing 1 million miles of road would of made the travelling steam engine uneconomic...the steam truck didn't stand a chance but we all know how that turned out.

I'll take that as a no.

 

[sptrawler]

And you measure the benefits how?

I was watching a program on tv the other night about power, the guy that invented the first mobile steam engine (truck) didn't get rich and didn't have a patent, the invention was maybe 20 or 30 years ahead of its time, a CBA at the time wouldn't of even considered this invention.

A CBA would of come to the conclusion that it was cheaper and easier to continue using horses, the infrastructure was all there, the skills all there and the cost of developing 1 million miles of road would of made the travelling steam engine uneconomic...the steam truck didn't stand a chance but we all know how that turned out.

Yes and at the moment you are using up a lot of bandwidth, watching your free to air t.v and we all know how that is going to end up. Duh
There is an old saying " Be carefull what you wish for". lol

Talk about pay for the rod to beat your own back.

 

[sptrawler]

I was watching a program on tv the other night about power, the guy that invented the first mobile steam engine (truck) didn't get rich and didn't have a patent, the invention was maybe 20 or 30 years ahead of its time, a CBA at the time wouldn't of even considered this invention.
.

I love your wide eyed childlike enthusiasm.
However when the NBN is in place the free to air t.v you love watching, won't happen. It will be the first casualty.lol
Why, when the government has spent so much money putting in the NBN, would it not sell off the free to air spectrum?
There would be no vallid reason the t.v stations couldn't transmit over the optical system.
All of a sudden free to air t.v becomes a payg download, the funny thing is you paid to put it in.
Just another consumer tax.lol

As I have said before, i would have prefered to have seen the money spent on transporting water down from the north to irrigate and make a food bowl. But maybe I'm idealistic.

 

[So_Cynical]

I'll take that as a no.

So i guess your a horse and cart kinda guy and i like a little steam...good luck with the horse and cart.

 

[sydboy007]

That will be why so many of their senior executives have abruptly resigned, I suppose? Commitment.

Do you think the LNP have treated Mike Quigley with respect? Their hounding of him over his days at Alcatel was disgusting IMO.

As for the others leaving, I can't really blame them. The LNP have politicised the construction of the network to such a degree that anyone at the top level of management would have to feel under enormous pressure, over and above the usual level of pressure of managing such a HUGE project.

People don't realise, but this is a world first. Rolling out a FTTP network on this scale has NEVER been done before. It should be seen as a Habour Bridge or Snowy River project.

 

[sydboy007]

I love your wide eyed childlike enthusiasm.
However when the NBN is in place the free to air t.v you love watching, won't happen. It will be the first casualty.lol
Why, when the government has spent so much money putting in the NBN, would it not sell off the free to air spectrum?
There would be no vallid reason the t.v stations couldn't transmit over the optical system.
All of a sudden free to air t.v becomes a payg download, the funny thing is you paid to put it in.
Just another consumer tax.lol

As I have said before, i would have prefered to have seen the money spent on transporting water down from the north to irrigate and make a food bowl. But maybe I'm idealistic.

Channel 10 is nearly bankrupt. Channel 9 has to force a deal on its creditors to not go bankrupt. Channel 7 has question marks over its performance. I know I watch less TV these days than I used to because I've getting a lot more info on the internet.

Maybe all the FTA channels will end up being distributed over the NBN. Could be the smart thing to do. I would assume we're talking 20ish years in the future?? By then we'll be using IP V6, pretty much every electronic device will be internet enabled. I've got no problem deploying the scarce spectrum to mobile broadband applications.

As for moving water down from up north, not sure how viable that will be in the long term. Where are you going to create the food bowl? Please don't hold up the Ord River irrigation scheme as something to aspire to.

 

[drsmith]

Do you think the LNP have treated Mike Quigley with respect? Their hounding of him over his days at Alcatel was disgusting IMO.

As for the others leaving, I can't really blame them. The LNP have politicised the construction of the network to such a degree that anyone at the top level of management would have to feel under enormous pressure, over and above the usual level of pressure of managing such a HUGE project.

Why would the senior management be worried about the LNP ?

Their job after all is to build it and not concern themselves about partisan politics, from either side.

People don't realise, but this is a world first. Rolling out a FTTP network on this scale has NEVER been done before. It should be seen as a Habour Bridge or Snowy River project.

You've presented some good and thought provoking arguments supporting this project, but this to me is not one of them. In terms of scale, the Great Eastern was a world first as was the French attempt to build the Panama Canal.

Donning a bi-partisan hat for a moment, I hope Labor have got it right as I prefer not to see taxpayers money wasted. What ultimately worries me though is the balance between the vision and critical financial anlaysis.