NBN Rollout Scrapped

[medicowallet]

Yes, somebody does have to pay for it. And it will be the users. Most particularly the "tech heads" who pay for the biggest, fastest NBN plans and therefore make the biggest contribution to paying for the project.

And it's not a $50bn project. It's a $37bn project (capex), requiring a peak of $39bn (inc opex) of external funding either through Govt or NBN Co's own debt raising. The $11bn in opex to Telstra does not add to the funding required for the project, as it is paid progressively and therefore mostly comes from operating revenue.

But (for argument's sake) if you want to include that $11bn and call the NBN a ~$50bn project, then you must also include that $11bn (plus another $4-9bn to buy the copper) in the Coalition's "$19bn" FTTN proposal.

So that takes their policy to $34-39bn for a technology considered obsolete around the World, that will require upgrading in another 10 years.


So the broadband policy choice is:

Spend ~$50bn (inc Telstra) for an FTTP network that can already do 1000Mbps, which will probably last 50 years without requiring substantial upgrading.​

OR

Spend ~$34-39bn (inc Telstra) for an FTTN network that will deliver 18-50Mbps, which will probably require an FTTP upgrade within a decade of completion, at a further cost of at least $20bn.​

Which represents better value, would you say?

Oh NBNmyths and your naive belief that the NBN will come in on time and budget.

But hey, lets take your rolleyes comment and have a think about it with what is, in my world, a realistic view:

$15 billion less for a service that delivers speeds sufficient for ALL personal use, and a vast majority of business use.

then $20 billion in 10 years time to go to FTTP

What is the cost in interest of $15 billion over 10 years mate?


What is the opportunity cost of say $15 billion into ports, or rail, or other methods of industry?


Oh, has the cat got your tongue?

You must live in a different world where money taken from the taxpayer is not able to be directed to alternative projects of which are proven benefit to the economy.. I stand by the belief that NBN speeds will do little to improve export earnings, and may in fact increase imports - ie be a negative for our economy, but I guess you will disagree (and, with your expertise, please show me some examples of how it will improve exports)
MW

 

[Smurf1976]

You must live in a different world where money taken from the taxpayer is not able to be directed to alternative projects of which are proven benefit to the economy.. I stand by the belief that NBN speeds will do little to improve export earnings, and may in fact increase imports - ie be a negative for our economy

Agree with your point but would government actually invest in something else instead?

Apart from roads and the occasional rail line, the Australian Government doesn't really do anything much with infrastructure these days.

Gas - mostly privately owned. Liquid fuels - all privately owned. Electricity - last involvement of the Australian Government actually building something of significance was 38 years ago. Water - that's in the too hard basket given the political need to keep the Greens happy. Ports - mostly run by the states or private.

The NBN is somewhat unique in that it represents actual investment in real infrastructure which has at least some lasting benefit. That's the main thing I see going for it - if it doesn't happen then they'll just blow the money on something silly instead.

Something that's missing in this debate is that the NBN is effectively a Telstra bail-out due to chronic underinvestment in the copper network. FTTN has limited viability for that reason. If the government had any balls then they'd build FTTN now and force (literally force) Telstra to fund the maintenance backlog (which at a rough guess would pay the difference between FTTN and FTTP anyway). Trouble is, governments have a tendency of privatising the profits and socialising the costs and that's exactly what's driving much of this. By building FTTP they are basically allowing Telstra to simply get away with it....

 

[NBNMyths]

I think you need therapy mate.

To get so wound up over something that is going to be scrapped in October 2013, in which you have no interest.

gg

You mean like it was going to be scrapped when you started this thread, and again about half way through?

 

[Calliope]

The NBN is somewhat unique in that it represents actual investment in real infrastructure which has at least some lasting benefit.

You mean like the $16.2 billion blown on the BER?

 

[NBNMyths]

Oh NBNmyths and your naive belief that the NBN will come in on time and budget.

But hey, lets take your rolleyes comment and have a think about it with what is, in my world, a realistic view:

$15 billion less for a service that delivers speeds sufficient for ALL personal use, and a vast majority of business use.

then $20 billion in 10 years time to go to FTTP

What is the cost in interest of $15 billion over 10 years mate?


What is the opportunity cost of say $15 billion into ports, or rail, or other methods of industry?


Oh, has the cat got your tongue?

You must live in a different world where money taken from the taxpayer is not able to be directed to alternative projects of which are proven benefit to the economy.. I stand by the belief that NBN speeds will do little to improve export earnings, and may in fact increase imports - ie be a negative for our economy, but I guess you will disagree (and, with your expertise, please show me some examples of how it will improve exports)
MW

Although I wrote $20bn, it would actually be considerably more than that. If it's $20bn extra today for FTTP, it would probably be $40bn extra in 15 years, given that most of the expense is in labour.

That aside, your "it won't be on budget" argument applies just as much to the Coalition's policy as the NBN, meaning the cost difference between the policies would be similar even if blowouts occur.


Whether ports, rail, roads etc are of benefit to the economy is a moot point. Spending on those items would not earn a positive return, and therefore would have to be found in the budget from tax revenue. Unlike the NBN money, since subscribers must pay to use it, returning those funds to the Govt.

Who are you to say that FTTN would be sufficient for all personal use? 15 years ago, 56k dialup was "sufficient for all personal use". Do you seriously expect that we have reached the end of development for broadband uses, and that nothing will arrive requiring better-than-30Mbps in the near future? Hell, it's already here. 4kTV is already retailing, and 8k is ratified. 150Mbps data rates for a single compressed 3D stream.

Subscriptions to the NBN to date also disagree with your claim that fast speeds are not wanted/required. Almost 50% of NBN customers so far have chosen the top 100Mbps speed.

The other point I didn't make earlier is that for the NBN to break even, it depends on the revenue from those high speed plans. It requires an ARPU of $33 per user, but it's not until you hit 50Mbps that they get that level. Essentially, they lose money on the 12 and 25Mbps fibre, wireless and satellite plans. They need the 50/100/250/1000 tiers to get their money back, and particularly pay for the rural wireless/sat segments. Because FTTN will only offer maybe the 12 and 25 plans to most users, with a few able to get 50, it will be very difficult to earn a return, even with a lower capex, unless they increase pricing.

It's a lose-lose situation. We get a lower capability network, but it won't cost us any less to use it. And the ~60% of customers who have show they are willing to pay more for a fast NBN plan (50 and 100) would have that option taken from them.

 

[So_Cynical]

Nothing to do with the NBN (according to the article) but found this interesting.

Ultra-fast deal for all federal MPs

All federal politicians will have ultra-fast internet cables installed in their electorate office within weeks as part of a new $23 million telecommunications contract. The upgrade comes after widespread complaints from politicians and their staff about broadband speeds in suburban offices. This will give politicians access to the same download speeds as the national broadband network, but years before it is widely available to all Australians.

Read more: http://www.smh.com.au/opinion/polit...federal-mps-20130219-2epm3.html#ixzz2LiPgRomm

 

[NBNMyths]

You mean like the $16.2 billion blown on the BER?

You don't think that having 23,000 new school buildings will have a lasting benefit? It may have cost 10% too much, but that doesn't mean the $16bn was blown. Arguably $1.6bn was, although that's a debate for another thread.

 

[drsmith]

You don't think that having 23,000 new school buildings will have a lasting benefit?

How much more benefit could have been provided by an analysis of how best to spend the money ?

In the context of schools alone, there's libraries, classroom upgrades, aircons, sport facilities, the list is endless.

That's the fundamental problem with Labor. Just spend and spend hard and and leave the consequences to someone else. The waste goes well beyond the 10% you refer to.

 

[Smurf1976]

You mean like the $16.2 billion blown on the BER?

No.

If we build the NBN then it is highly likely that it will still be in use for quite some time. It thus delivers at least some benefits, the unanswered question being in regard to their extent. Assuming there aren't streets where literally nobody connects (possible but in general that wouldn't be the case), there will be at least some practical use of everything that gets built.

In contrast, the BER was essentially a make work scheme. It possibly built some things that were actually useful, but much of it wasn't. At least a portion of the "investment" produces zero actual benefits. In contrast, I don't think that anyone could honestly say that there is zero benefit in the NBN.

So far as the cost of the NBN is concerned, a fair analysis can not be done based on $37 billion, $50 billion or any other "total construction cost" figure. Since we'll have to invest heavily in the copper network anyway, a fairer analysis of the cost of fibre would be (Cost of NBN) - (Cost of keeping copper network going) and the end result of that is likely to be a long way short of the figures generally being discussed here.

 

[drsmith]

A key question for the NBN will be blowouts, both in terms of time and cost.

 

[NBNMyths]

A key question for the NBN will be blowouts, both in terms of time and cost.

No more of a question than it will be if scaled back to FTTN.

 

[Aussiejeff]

Nothing to do with the NBN (according to the article) but found this interesting.

Ultra-fast deal for all federal MPs

Just think how much more pr0n they will be able to download.....

 

[medicowallet]

Although I wrote $20bn, it would actually be considerably more than that. If it's $20bn extra today for FTTP, it would probably be $40bn extra in 15 years, given that most of the expense is in labour.

That aside, your "it won't be on budget" argument applies just as much to the Coalition's policy as the NBN, meaning the cost difference between the policies would be similar even if blowouts occur.


Whether ports, rail, roads etc are of benefit to the economy is a moot point. Spending on those items would not earn a positive return, and therefore would have to be found in the budget from tax revenue. Unlike the NBN money, since subscribers must pay to use it, returning those funds to the Govt.

Who are you to say that FTTN would be sufficient for all personal use? 15 years ago, 56k dialup was "sufficient for all personal use". Do you seriously expect that we have reached the end of development for broadband uses, and that nothing will arrive requiring better-than-30Mbps in the near future? Hell, it's already here. 4kTV is already retailing, and 8k is ratified. 150Mbps data rates for a single compressed 3D stream.

Subscriptions to the NBN to date also disagree with your claim that fast speeds are not wanted/required. Almost 50% of NBN customers so far have chosen the top 100Mbps speed.

The other point I didn't make earlier is that for the NBN to break even, it depends on the revenue from those high speed plans. It requires an ARPU of $33 per user, but it's not until you hit 50Mbps that they get that level. Essentially, they lose money on the 12 and 25Mbps fibre, wireless and satellite plans. They need the 50/100/250/1000 tiers to get their money back, and particularly pay for the rural wireless/sat segments. Because FTTN will only offer maybe the 12 and 25 plans to most users, with a few able to get 50, it will be very difficult to earn a return, even with a lower capex, unless they increase pricing.

It's a lose-lose situation. We get a lower capability network, but it won't cost us any less to use it. And the ~60% of customers who have show they are willing to pay more for a fast NBN plan (50 and 100) would have that option taken from them.

Just like a politician.. So, is it 10 years or 15 years?

A change of goalposts hey?

Here is an idea,

Why not go for a 10000 speed network, that costs $1 trillion, it won't cost the government anything, and in 100 years time it will be needed just to send the equivalent of an e-mail. The minimum speed allowed will be 3000 and this will cover the break even.

Everyone is a winner because the govnuts won't have to front up with any money, and the monopoly will be mandated to provide services at a cost determined by the efficiency of the investment that was made WITHOUT analysis of it.

Sounds interesting... in fact the only problem at the moment is Howard's Liberals stuffed up the sale of Telstra, therefore decreasing the ability of third parties to compete efficiently... this is being replaced by Rudd's alternative monopoly which will also stifle competition.

But the important question is:

How does 4k TV allow for increased exports for the country to effectively fund the $50 billion stripped out of the economy for the NBN?

Oh, cat got your tongue?

MW

 

[sydboy007]

Just like a politician.. So, is it 10 years or 15 years?

A change of goalposts hey?

Here is an idea,

Why not go for a 10000 speed network, that costs $1 trillion, it won't cost the government anything, and in 100 years time it will be needed just to send the equivalent of an e-mail. The minimum speed allowed will be 3000 and this will cover the break even.

Everyone is a winner because the govnuts won't have to front up with any money, and the monopoly will be mandated to provide services at a cost determined by the efficiency of the investment that was made WITHOUT analysis of it.

Sounds interesting... in fact the only problem at the moment is Howard's Liberals stuffed up the sale of Telstra, therefore decreasing the ability of third parties to compete efficiently... this is being replaced by Rudd's alternative monopoly which will also stifle competition.

But the important question is:

How does 4k TV allow for increased exports for the country to effectively fund the $50 billion stripped out of the economy for the NBN?

Oh, cat got your tongue?

MW

Let me give you a little homework.

Ring around and find out how much it would cost to get a 100/40 Mbs internet access for business outside a capital city and major regional city in Australia.

If you can find a non NBN offering at less than $150 / month I'll gladly rescind my support for the NBN and start to view it as a huge white elephant that businesses in this country have no need for. Actually if you can find anyone but Telstra willing to provide that to you I will be greatly surprised.

Also let us know what the installation cost will be - usually that's quite a few hundred dollars, depending on how long you are willing to sign up for. My company is usually a 3 year minimum, and I can assure you that currently a 2Mbs SHDSL service costs a LOT more than $150 a month!

While I like what the NBN will offer the general public, for me the major benefit will be the huge reduction to businesses for their telecommunication costs. High speed internet will provide a major competitive advantage to Australian companies, especially the SME and against foreign competitors.

As for replacing a private monopoly with a public owned one, I'm not sure which is worse, but at least a Govt owned monopoly can in theory be easier to control than the private one. As you say, Howard got us into this situation and the ALP have done their best to try and get around it. The wonderful private sector - AKA Telstra - has taken the short term view of reducing OPEX and maintenance on the copper network to improve the short term profit. Without the NBN what's going to happen? The LNP want to buy a copper network that's about 5 minutes to midnight, and pay top dollar for it. That to me is a far bigger waste of money than the current NBN will ever be.

 

[Calliope]

A key question for the NBN will be blowouts, both in terms of time and cost.

Like in any Labor Government enterprise* the contractors will fleece the taxpayer for millions. This is especially so when there is no cost-benefit analysis carried out. All the government says is ''here is the money... spend it''. Like with the BER, value for money plays second fiddle to ribbon-cutting opportunities.

*''Labor Government enterprise'' is of course, an oxymoron.

 

[medicowallet]

Let me give you a little homework.

Ring around and find out how much it would cost to get a 100/40 Mbs internet access for business outside a capital city and major regional city in Australia.

If you can find a non NBN offering at less than $150 / month I'll gladly rescind my support for the NBN and start to view it as a huge white elephant that businesses in this country have no need for. Actually if you can find anyone but Telstra willing to provide that to you I will be greatly surprised.

Also let us know what the installation cost will be - usually that's quite a few hundred dollars, depending on how long you are willing to sign up for. My company is usually a 3 year minimum, and I can assure you that currently a 2Mbs SHDSL service costs a LOT more than $150 a month!

While I like what the NBN will offer the general public, for me the major benefit will be the huge reduction to businesses for their telecommunication costs. High speed internet will provide a major competitive advantage to Australian companies, especially the SME and against foreign competitors.

As for replacing a private monopoly with a public owned one, I'm not sure which is worse, but at least a Govt owned monopoly can in theory be easier to control than the private one. As you say, Howard got us into this situation and the ALP have done their best to try and get around it. The wonderful private sector - AKA Telstra - has taken the short term view of reducing OPEX and maintenance on the copper network to improve the short term profit. Without the NBN what's going to happen? The LNP want to buy a copper network that's about 5 minutes to midnight, and pay top dollar for it. That to me is a far bigger waste of money than the current NBN will ever be.

I have nothing against competitive high speed broadband for businesses. A vast majority of small businesses have speeds via ADSL2 which are more than sufficient, and businesses that require more can, as you have inferred, access higher speeds, albiet at a higher cost... also, what is the cost of a business grade 100/40 connection on the NBN?

The vast majority of use will be for private consumption for the general user, and I think if anyone out there with the means to do a study, were to do so, then they would likely find that there is either a net loss to the country with high speed broadband, or at least less of a benefit than expected, and a cost-benefit analysis would be a great place to start as we have other, proven avenues to invest $50 billion into to make money.


We are going to disagree, as I have owned and run a tech heavy business with very large turnovers (talking 8 figures plus) on ADSL2, no problems. Considering most small businesses around the country are not to that kind of level, I can assure you that ADSL or ADSL2 would be sufficient for years to come.

We are also going to see over the next 10 years what kinds of innovations that add to *exports* are generated, as even though the NBN has been around for years, I am yet to hear of the massive benefit derived from its introduction, and I am sure that if there was a benefit, the spruiking would be heard across the country.

MW

 

[NBNMyths]

Just like a politician.. So, is it 10 years or 15 years?

A change of goalposts hey?

Here is an idea,

Why not go for a 10000 speed network, that costs $1 trillion, it won't cost the government anything, and in 100 years time it will be needed just to send the equivalent of an e-mail. The minimum speed allowed will be 3000 and this will cover the break even.

Everyone is a winner because the govnuts won't have to front up with any money, and the monopoly will be mandated to provide services at a cost determined by the efficiency of the investment that was made WITHOUT analysis of it.

Sounds interesting... in fact the only problem at the moment is Howard's Liberals stuffed up the sale of Telstra, therefore decreasing the ability of third parties to compete efficiently... this is being replaced by Rudd's alternative monopoly which will also stifle competition.

But the important question is:

How does 4k TV allow for increased exports for the country to effectively fund the $50 billion stripped out of the economy for the NBN?

Oh, cat got your tongue?

MW

Have you ever known the cat to have my tongue? Why would a few poor arguments suddenly cause it to happen?

I haven't moved any goalposts. You'll note that I previously wrote "10 years after completion" (of FTTN), which would be about 15 years from now (if they're lucky).

Funny that you facetiously say they should build a network capable of 10,000Mbps, since that's exactly what the NBN will be able to do in 5 or 10 years time. Such is the beauty of building a fibre network, where the only thing required for a speed increase is an upgrade of the equipment at the ends of the cables. The NBN uses GPON (gigabit passive optical network), and the next standard (already ratified) is 10GPON, which does indeed offer 10Gbps (10,000Mbps). By replacing some minor components, the NBN can become a 10GPON network, and it's likely that before the rollout is complete, they will start using 10GPON as the component costs come down. There are further improvements already being researched.

There is a massive difference between Telstra and NBN Co. The former is a vertically-integrated monopoly, the latter is a wholesale-only, open access monopoly with prices regulated by the ACCC.

Communications is a natural monopoly, just like power lines and water pipes. It makes absolutely no sense to roll out competing cable infrastructure any more than rolling out multiple sets of power lines to each house. To do so would be a waste of time, money and resources. Telstra and Optus blew a billion trying, and no-one would be that stupid again.

However if someone were silly enough, there is nothing in the NBN legislation preventing it. Companies are free to roll out competing wired networks to the NBN, but they must do so on a wholesale-only, open access basis. Just like the NBN. There are no restrictions at all on wireless networks.

Why does the NBN have to earn export income? Are we supposed to deny access to tech such as 4kTV simply because it doesn't earn export dollars? What a top idea. Perhaps we should also stop spending on healthcare, since it also doesn't add to export earnings?

 

[Smurf1976]

Like in any Labor Government enterprise* the contractors will fleece the taxpayer for millions.

Agreed although it makes no difference who is in government. It is outsourcing itself that brings about the taxpayer rip offs, not which party oversees it.

All governments are easy money and most contractors have worked this out. When is the last time you heard of a government actually taking legal action against a contractor in a meaningful way for poor quality work? It's probably happened sometime, but 95% of it just gets accepted "as is" due to the political (and public) pressure to complete the project.

 

[medicowallet]

Have you ever known the cat to have my tongue? Why would a few poor arguments suddenly cause it to happen?

I haven't moved any goalposts. You'll note that I previously wrote "10 years after completion" (of FTTN), which would be about 15 years from now (if they're lucky).

Funny that you facetiously say they should build a network capable of 10,000Mbps, since that's exactly what the NBN will be able to do in 5 or 10 years time. Such is the beauty of building a fibre network, where the only thing required for a speed increase is an upgrade of the equipment at the ends of the cables. The NBN uses GPON (gigabit passive optical network), and the next standard (already ratified) is 10GPON, which does indeed offer 10Gbps (10,000Mbps). By replacing some minor components, the NBN can become a 10GPON network, and it's likely that before the rollout is complete, they will start using 10GPON as the component costs come down. There are further improvements already being researched.

There is a massive difference between Telstra and NBN Co. The former is a vertically-integrated monopoly, the latter is a wholesale-only, open access monopoly with prices regulated by the ACCC.

Communications is a natural monopoly, just like power lines and water pipes. It makes absolutely no sense to roll out competing cable infrastructure any more than rolling out multiple sets of power lines to each house. To do so would be a waste of time, money and resources. Telstra and Optus blew a billion trying, and no-one would be that stupid again.

However if someone were silly enough, there is nothing in the NBN legislation preventing it. Companies are free to roll out competing wired networks to the NBN, but they must do so on a wholesale-only, open access basis. Just like the NBN. There are no restrictions at all on wireless networks.

Why does the NBN have to earn export income? Are we supposed to deny access to tech such as 4kTV simply because it doesn't earn export dollars? What a top idea. Perhaps we should also stop spending on healthcare, since it also doesn't add to export earnings?

What is the cost of $15 billion over 15 years?

If the NBN rollout is completed in 5 years, I will buy you a bottle of Moet, if it is not will you buy me a bottle of Moet?

I would hazard to guess the a FTTN rollout would be much faster than a FTTP rollout, where the revenue received will come in faster (yes some fixed costs like fat cat salaries and coffee will benefit from a faster rollout) and the FTTP can be rolled out at a later date when it is needed.

I also love that you believe that the ACCC is anything but incompetent, or that there is incentive for the NBN to be run as anything but a fat cat organisation of gold plated un-necessary in the majority infrastructure project.. I mean at Telstra or optus or iinet, there is incentive to be super efficient.. where is the incentive at NBN?

Why not go 10000 NOW, I mean we will need it in the future, and it won't cost the govnut anything, so why not just put it in now? Just charge more for it.

MW

EDIT : oh, don't get me started on the waste in the healthcare system, it is appalling.

but on a side note to that, on the way to the hospital the other day, I saw a NBN Co vehicle, and thought to myself, well even though I have only returned to work after a long break, these NBN people might only have another 12 months of work left.... so I guess we'll see who finishes up in their role first.

 

[NBNMyths]

What is the cost of $15 billion over 15 years?

If the NBN rollout is completed in 5 years, I will buy you a bottle of Moet, if it is not will you buy me a bottle of Moet?

I would hazard to guess the a FTTN rollout would be much faster than a FTTP rollout, where the revenue received will come in faster (yes some fixed costs like fat cat salaries and coffee will benefit from a faster rollout) and the FTTP can be rolled out at a later date when it is needed.

I also love that you believe that the ACCC is anything but incompetent, or that there is incentive for the NBN to be run as anything but a fat cat organisation of gold plated un-necessary in the majority infrastructure project.. I mean at Telstra or optus or iinet, there is incentive to be super efficient.. where is the incentive at NBN?

Why not go 10000 NOW, I mean we will need it in the future, and it won't cost the govnut anything, so why not just put it in now? Just charge more for it.

MW

You seem to have a comprehension issue, or are simply being deliberately obtuse.

I am not saying the NBN will be finished in 5 years. The statement was that 10 years after an FTTN network would be completed, we'd have to pay to upgrade to FTTP anyway. The estimate for FTTN is 5 years from now which, depending on how close they decide to put the nodes is a plausible timeframe. Hence, ~15 years from now.

Yep, at 8c a cup (or 16c including machines and maintenance), the NBN Coffee bill is absolutely ridiculous. How much was the coffee bill at your "8 figure tech company"?

When the NBN Bus case was done, 10GPON was not available. It's still not available at reasonable prices, which is probably why they are not installing it yet.

Two more points:

ADSL2+... There are two major problems with it.

The first is upload speeds. At a maximum of 1Mbps, it's totally inadequate for any business that transfers large volumes of data, such as high resolution photos or video. It's also useless for decent video conferencing or the delivery side of video education/training. Possibly most importantly with regards to emerging applications, it's totally impractical for any business that is trying to move to the cloud for either applications or backup.

The second major problem is that it's distance-dependent. You're right that 20Mbps is not bad for many uses currently. However, most people don't get anything like that. The average ADSL2+ in Australia is 9Mbps, which means 50% of people can't even get that.

You're right that businesses can get and pay for fibre. But such a concept is totally out of reach for suburban small businesses. What small business can justify $5-10k for a connection, then $1k per month? Particularly when you could get that on the NBN for zero connection charge and $100/month for 1TB at 100/40.​

"We have better things to spend $50bn on..."

This is another logical fallacy, because you ignore the fact that the choice we face isn't between a "$50bn" NBN and nothing. It is a choice between a "$50bn" FTTP and a ~$35bn FTTN.​