Australian (ASX) Stock Market Forum

National Broadband Network

Jump to new
The conspiracy theorist cynic in me wonders if the gov has decided to go ahead with it so they can implement filtering at the base infrastructure level.... :cautious:
 
I don't think anyone can rule out that newer technologies that is capable of meeting the "broadband" needs of most individuals and businesses in 8-10 years MAY exist at a lower cost and efficient than current fibre-optical technology.

If anyone say so, then it's no different to saying it's impossible to construct a heavier-than-air flying machine back in the early 1800s.

The biggest problem with a broadband network infrastructure is the fact that Australia has a very unique geographic and demographic features in comparsion to other "highly broadband-advanced countries". That is, we have a small population living in a vast area.

It gives me the impression that trying to maintain the same level of broadband service provided by densely populated countries like Hong Kong / Japan / South Korea is unrealistic both from a practical and commercial sense. Obviously, they could do it because it's much simplier to install fibre-optical cables between high rise buildings than constructing hundred of kms between cities.

I don't know what technologies would be better suited for our type of environment, but spending $42 billion, and potentially more given the history of government's lack of efficiency in infrastructure spending, in this current climate is totally irresponsible.

It's no different to Japan who tried to get out of their depression by building roads and bridges to no where in order to "stimulate" their economy.

Someone should answer my question why the privte tender bids were REJECTED by the government? My initial source tells me it did not produce the "value" the government wants.

So what then? The government then a new company and confidently believe they would be able to do a MUCH BETTER job than what the private industry can offer? What make them believes they could better use the resource than those from the private industry?

The lack of private investors willing to put up for half of the $42 billion plan has clearly illustrated that the investment is simply not viable from an economic perspective.

And I don't agree that we should put up with something less efficient. Our tax money should be better spent elsewhere, but that's just me. I'm always against every government decision to intervene the free market. :D
 
prawn_86 said:
Normally im the last to defend any politician but I think some people here will dislike every gov decison, no matter what it is.

I think at least this decison is nation building and has actaul value. The least they can do is try and figure out if it will work and if not at least they tried (obviously it wont be as efficient as private industry, but thats something you have to put up with).

With some members here its damned if they do, damned if they dont...
Click to expand...

If the gov, labor , lib or bloody commi comes up with a plan to spend 40 BILLION dollars I want to see HOW its going to work and how they got to that plan. I want public discussion and ALL the pros and cons and costings. i want to see input from all sides. Not a friggin surprise announcement to cover a hastily put together election promise used as a tactic to one up the other party that has now shown to be not feasible.

In oz there is far too much power in a few hands (basically a couple of ministers) with far to few questions asked of there decisions.
 
Since the most obvious comparrison is the Snowy Hydro Scheme, how about some facts taken from wikipedia:
The Scheme was managed by the Snowy Mountains Hydro-Electric Authority, now called Snowy Hydro Limited, and took 25 years to build, from 1949 to 1974,[4] at the cost (at that time) of AUD$800 million; a dollar value equivalent in 1999 and 2004 to AUD$6 billion.[5] [6] It employed over 100,000.


The magic fact there is $6bil.

Close to 100% of the materials used in construction were Australian made.
Maybe a few things were imported from the USA. Like the actual generators.
There were no competitiors
There was no new technology to compete with
It was properly budgeted
It was built during an economic boom period, before the oil shocks.

The opportunity cost of $6bil, we could have just built 3 coal power stations for the same cost.

I think a better comparrison is not the Snowy scheme rather the Three Gorges Dam in China which cost US30bil.


hehe, just found this at the end of the wikipedia article:
Recent developments

In late 2005 there was a proposal by the NSW government that the federal and state governments should sell their shares in Snowy Hydro Limited. The proposal was abandoned in 2006 after the federal government refused to agree with the proposal.[15]

In 2007, due to the recent drought in Australia, water levels in the scheme were their lowest on record.[16] Credit rating agency Moodys downgraded Snowy Hydro's outlook from stable to negative within one month.


nuff said

I dont think anyone on this forum has a problem with super fast internet. We are all in agreement that this is something that we want. The only issue we are discussing is at what COST do we go ahead (thanks AussieJeff). Is the project even VIABLE. Regardless of who is in power, Labor or Liberal, can we afford this project?? What is the opportunity cost? What is the risk?
 
Cost can be kept to a realistic level if we only cover the big cities. But of course such a policy would be political suicide.
 
prawn_86 said:
The conspiracy theorist cynic in me wonders if the gov has decided to go ahead with it so they can implement filtering at the base infrastructure level.... :cautious:
Click to expand...


the conspiracy theorist in me, wonders what doubts they have over the future, or suitability of satellites.....?


.
 
Trembling Hand said:
Satellites are of no use for true broadband. You are better on ADSL.
Click to expand...


i wonder what sort of improvement in satellite tech 5 billion would make? add a few billion more (chicken feed eh..?) for the actual improved satellites, and it would be a quicker, easier exercise....and you could sell the tech...
 
metric said:
i wonder what sort of improvement in satellite tech 5 billion would make? add a few billion more (chicken feed eh..?) for the actual improved satellites, and it would be a quicker, easier exercise....and you could sell the tech...
Click to expand...

No you have latency problems that cannot be overcome. If you can get the speed of transmission to say 300 meg wireless then its always going to be faster to then transmit that to a local nodes 5 k's away rather than 200 k's in the sky and back.

Too slow.

But then again you never know what 10 years will bring in this sector which is I guess the biggest problem.
 
I've got absolutely no problem with the idealogy behind the project just the people who are presemtly charged with the implementation of it, I'm a swinging voter but have no faith in Rudd and company at all.

And $40B ???? did he just pull that out of a hat ?
 
im no elec engineer, but it doesnt seem too hard, just put in the pipes(fibre optic cable) to the main parts, hell all u do is trench a 50mill bit of tube or a few of em. then adsl(existing copper) the small parts or other technologies.
off the subject, the snowy hydro scheme was a awesome piece of eng, not like this simple project, just like manapouri etc in nz, but the three gorges dam is an acident waiting to happen and its crude.
 
most of it is manual labour too, elec engers for a little design, and a few tadies to fit a few things. done, simple. just give me 40 bill and i'll 'give it a red hot go'....
 
Hi Alphaman

The exisiting telcos already want to cover the areas such as cities where they can make a profit. As an example, in Sydney, most of the CDB and smaller CDB's such as Parramatta, Chatswood, North Ryde (i.e places with the density of Taiwan/Japan/Hong Kong) are already covered and will continue to be upgraded. Why?, because the private sector can make money from it.

Someone mentioned earlier:
Opticomm FTTH via Internode - (Minimum $50 per month, $99 setup cost)
Yes thats a nice price, however thats in the city where its economically viable. Thats not the country cost.

Another comparrison you can make on ambitious projects is the EuroTunnel between England and France. Below taken from Wikipedia:

Shares in Eurotunnel were issued at £3.50 per share on 9 December 1987. By mid-1989 the price had risen to £11.00. Delays and cost overruns led to the share price dropping; during demonstration runs in October 1994 the share price reached an all-time low value. Eurotunnel suspended payment on its debt in September 1995 to avoid bankruptcy.[37] In December 1997 the British and French governments extended Eurotunnel's operating concession by 34 years to 2086. Financial restructuring of Eurotunnel occurred in mid-1998, reducing debt and financial charges. Despite the restructuring The Economist reported in 1998 that to break even Eurotunnel would have to increase fares, traffic and market share for sustainability.[38] A cost benefit analysis of the Channel Tunnel indicated that the British economy would have been better off if the Tunnel had not been constructed.

The eurotunnel is like FTTH, its a pipe from central london to central Paris. Which allows trains to travel at a very high speed.
The alternative is to use existing airports on the edge of the city and fly onboard private planes between the two points. Market forces of supply and demand dictate the capacity between the two cities and provide a price where supply matches demand.

People who travel between London and Paris have a choice, not all of them are using the fancy new tunnel.
 
waz said:
PS. I do support high speed broadband, It would do wonders. My problem is that we have no idea if this proposal will make a profit. Without a profit, it would be hard to find a private partner, also, whats to say that there are willing buyers of these bonds, and who is going to purchase the wholesale network and for what price in a few years time.
Click to expand...

It'll have to make a profit.. if it doesn't they won't be able to 'privatise' it, like they did with Telecom/Telstra.. Wonderful money making machine that was for the taxpayers years ago, making 2Bil profits that presumably reduced our income tax and helped pay for infrastucture.. But sell it they did.

Surely 'they' (or the next government) would do the same with this venture eventually, then they can regulate the bejesus out of it, trash it's value (despite selling it to their very own constituents) and pump money into another country's economy in the name of competition..

Cynical I may be, but I've been around long enough to read between the lines..

I too BTW am in favour of the NBN, and also in doing it right from the get go, regardless of cost.. as others have pointed out there are massive benefits to future generations (that will simply take it for granted, and probably make 'Discovery TV' documentaries about the fuss surrounding the build.. :)) There is nothing more frustrating than paying good money to build something only to realise that it was half the required job upon its completion.

Those of us who live in Perth know what I mean, just consider the Kwinanna FWY, and those in NSW Paramatta Rd, two lane projects that by the time were completed required three..

Regards,
Buster
 
Waste of money digging holes and filling them back up again but its what they did in the depression to keep people busy.

Technology will make this obsolete by they time they get it in the ground. Much more efficient to build a good wireless network to tack onto the exisiting poles in the ground. The wireless technology will improve over time and it is much easier and faster to drive around to all the poles and replace the equipment on them than dig up all the holes again.

Most young people don't even have a landline anymore they rely entirely on mobile phones. This generation is also taking up mobile internet at a rapid pace.

The $43 billion they are spending on this is a waste of money and not the sort of project the government should be looking at.

KRudd you are so 1980's
 
Uncertain Times said:
Waste of money digging holes and filling them back up again but its what they did in the depression to keep people busy.

Technology will make this obsolete by they time they get it in the ground. Much more efficient to build a good wireless network to tack onto the exisiting poles in the ground. The wireless technology will improve over time and it is much easier and faster to drive around to all the poles and replace the equipment on them than dig up all the holes again.
Click to expand...

That's the wonderful thing about PON based fibre. You don't have to ever dig it up to do an upgrade. Just upgrade the exchange and the customer equipment. The fibre and the passive splitters will outlast you, and don't require the power, cooling and constant maintenance of a FTTN solution.

PON scales to 1Gbit with current equipment, and 10G with the next standard (later this year).
 
Here an extract from another excellent newsletter from Money Morning.

This is exactly how I feel about this as well.

It seems as though the Australian government has adopted a new theme song:

"Anything you can't do, we can't do better..."

It's the only reason we can come up with for the decision to build a publicly funded broadband network, providing fibre optic cable to 90% of Australian homes.

The original plan was for the government to stump up just under $5 billion, which would have funded about half of the projected cost. In that case though, the fibre was only going to stretch to the box at the end of the street.

Now, for just an extra $16 billion, you'll get fibre optic cabling right into your home.

What more could you ask for. The total cost is estimated to be somewhere around $43 billion. But how often to public sector projects come in under budget? In less than two years the estimated cost has increased four-fold - and they haven't even started building it yet.

Worse than that, the taxpayer won't get a return on the investment for at least 50 years - probably longer, but I'll get to that shortly...

In fact, our guess is that over the eight-year timeframe for this project you - the taxpayer - won't get much change from $100 billion. Where did we get that number from? Thin air. We made it up. But as a guess it's probably got as much value as the official estimates that tell us it will 'only' cost $43 billion.

It's often claimed that when the private sector can't provide something it is up to the government to step in and take over. We don't agree. The government claims that none of the proposals it received from the private sector were up to scratch and so it's going to build the thing itself.

Clearly, if there was a dollar to be made out of this the private sector would be in there building the network already.

And we also question just how keen the private sector will be to get into a long-term deal with any government at the moment. And that's partly of the government's own making.

The reason capitalism works so well is the ability of the buyer and seller to come to an agreement on price that is beneficial to both parties. If the seller is charging too much then it will deter buyers.

So can we really expect a government controlled entity to provide a service that is competitively priced so it is worthwhile for the company to operate while still offering good value to the customer? You only have to look at the public transport networks to see that it is not possible.

The only companies that will make any money out of the deal are those in the construction and telecommunications industry that will build it. The company or companies left to operate the network will have no choice but to run it either at a loss or at best on a very thin margin.

In terms of constructing the network, there will be plenty of takers. But actually running the network will be a different story.

So anyway, let's take a look at the numbers. To start with, as a taxpayer are you happy with being forced to contribute at least $1,000 towards getting super fast broadband? Because that's your taxpayer funded contribution.
And it's providing the exposure remains at $21 billion.

As nice as it may be to get internet access at 100Mbits per second, is there really a commercial demand for it? And what will the cost to the user be for the service?

We assume that under the original $10 billion costing, the service providers had established a pricing matrix that would make them a profit, and keep it attractive for consumers to buy. Now that the costs of the service will be four times greater, what impact will this have on the pricing?

Will it cost the consumer four times as much per month? Probably not. But it will add to the cost for the consumer.

Telstra have around a 50% market share for broadband, so we'll focus on their numbers. According to Telstra's 2008 annual review, it had an excellent year for its Bigpond Broadband service. Revenue increased by 49%. That's impressive by anyone's standards. Hats off to Sol and the team for that effort.

However, that still only took total broadband revenue to $1.8 billion.
An equally significant number is the ARPU - that means Average Revenue Per User. That stands at $53.02. We don't know what Telstra's profit is on the broadband segment, but Telstra's overall profit margin is around 15%.

So, at the moment, consumers of the Telstra Bigpond Broadband product are willing to pay - on average - $53.02 for current available internet speeds. And don't forget that the Telstra service is among the most expensive broadband services on the market.

So, for the sake of round numbers, let's assume that consumers across all broadband providers are currently prepared to pay $50 per month for internet access.

What will consumers be prepared to pay for a service offering speeds up to "100 times faster" than current services? We can guarantee they won't be prepared to pay 100 times the cost. In fact, our guess is any company will struggle to get the consumer to pay an extra $10 per month.

So if we assume there are about eight million households in Australia, each willing to pay $60 per month, that's total annual revenue of $5.7 billion. And if we use Telstra's 15% profit margin, the venture could expect to make profits of around $855 million per year.

At that rate, the project would need to bring in this level of revenue for fifty years before it paid back the costs of construction. And that's assuming the costs stay at $43 billion.

Even if users are happy to pay $100 per month that's still thirty years before the cost is paid back.

The upshot is. How is this going to make any money and is it a worthwhile use of taxpayer money? And to make things worse, the portion being funded by the taxpayer isn't going to come from cuts in the budget, it's going to come from increased debt.

Notice how easy it is for governments to go further into debt once they've crossed the threshold. Maybe the Future Fund will tip in a few billion as well
Click to expand...

That is why this is a total waste of taxpayer money. An investment with a break even return over close to fifty years! Unlike defense spending or public road / transport, a 100 Mbits broadband network is not a CRITICAL infrastructure over existing one.

Yes, we are definitely falling behind in terms of broadband connectively compared to the rest of the world. But like I said before, it's simply not fair to compare Australia (vast land, too little population) with others with better infrastructure.
 
Temjin said:
Yes, we are definitely falling behind in terms of broadband connectively compared to the rest of the world. But like I said before, it's simply not fair to compare Australia (vast land, too little population) with others with better infrastructure.
Click to expand...

For a population of 20 million, do we really need to stump up the costs now to be world leaders in a technology that will be redundant before the role out is complete.
The rule of "lowest Common Denominator" will still apply. Even if we have the latest whizz bang speed internet facility at our end, if we are accessing a site in Europe, Japan or the USA, our download/upload speed will be reduced to the speeds of the equipment at the other end.
Why not put the money where it could do something useful for the community like: Hospitals; Roads; Railways; and even education. Some money invested in education could uncover some bright spark with the nous to develop something even faster and cheaper.
 
heres a good one from the age,
http://www.theage.com.au/opinion/ot...-harebrained-scheme-20090408-a0y4.html?page=3

National broadband can be rolled out more cheaply using the existing network.

KEVIN Rudd is a political genius, but can the nation afford him as Prime Minister? Instead of announcing that Senator Stephen Conroy and whoever advises him on communications policy are duds who should be sacked, he has set off a $43 billion hare designed to last long enough to carry his Government through the next election.

If we can take Rudd seriously, this will be the biggest public-private partnership in the world, which will, if required, be fully financed by the Government and then sold back to the private sector after it is completed in eight years. So we have moved from a failed policy involving expenditure of $15 billion to $20 billion to bring optic fibre to the end of the street in favour of a more ambitious policy designed to bring fibre to the home through a wholesale only network for $43 billion.
Click to expand...

If the high-speed broadband is run out as part of the normal development of the network, beginning with the institutional and business customers who can benefit immediately, and the copper loops are gradually replaced with with fibre as they rot, the urgent high-speed network could be provided sooner.

This is better than persevering with Rudd's hare-brained scheme, and the rest of the network could be upgraded out of retained earnings and a moderate increase in telephone charges.

More importantly, there would be no "crowding out" of more urgent infrastructure investment such as saving the Murray-Darling Basin and its ability to produce 40 per cent of Australia's fruit and vegetables.

In Rome, the emperors offered the mob "bread and circuses". Our little emperor reckons he can get away with circuses alone.
Click to expand...


:D:D:(
 
Top