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The NBN (National Broadband Network)

Discussion in 'Politics' started by RugbyReg, Aug 25, 2010.

  1. Ruggo Mark Ella (57)

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    Turnbull faces some tough times at the moment. I can see carbon reduction putting him in a spot of bother. We all know where he sits and the door is open on the discussion. Whether he has the conviction to defy the party line will not go un noticed by the public. Labor would be foolish not to use this to nullify him.
    The_Brown_Hornet likes this.
  2. Scotty David Codey (61)

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    Reading through that transcript it appears that Tony Jones tried to put more pressure on Turnbull than Conroy, and turned him away from any good point he made. The ABC seems to have slanted a bit further left than usual on this one.
  3. The_Brown_Hornet Michael Lynagh (62)

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    The worry for the Libs is that they should easily be able to deal with a moron like Conroy, but they keep dropping the ball. Conroy is one of those people whose ambition far outweighs their ability, but somehow he managed to scrape at least a draw out of it. Don't get me started on that smug prick Tony Jones.
  4. Scotty David Codey (61)

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    A cut out of the transcript:

    I read this and I think to myself - surely the roll out of the country before the city also collapses the business model?
  5. Moses Simon Poidevin (60)

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    The very low takeup in Tasmania is a concern, particularly as I believe it's price fixed to ADSL2 costs for a year..
  6. Groucho Greg Davis (50)

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    NBNCo will provide the wholesale network. The competition will be in retail services.
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  7. Groucho Greg Davis (50)

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    I think that what is happening on Whirlpool is that most (although not all) technology people accept the need for a fast broadband network. I'm strongly in that category, and not for political reasons. It is ridiculous that this important infrastructure proposal has become a political choice for so many Australians. My own company is building products now that will depend upon a network like NBN. Our market will over time separate into two tiers: domains where customers have fast broadband, and domains where they don't. There are hundreds of technology companies developing thousands of products in this category. Domains without will become a have-not tier for all manner of products and services.
    boyo likes this.
  8. The_Brown_Hornet Michael Lynagh (62)

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    I accept that it is desirable. I run IT for the company at which I work, so I get that. To me, the biggest problem with the NBN is that it was proposed for political reasons and the economic analysis was done in a very cavalier fashion. The cost of this thing is probably the single biggest CAPEX in Australia's history. I would have thought that you'd want to be pretty sure that the numbers stack up before embarking on a project so large. A scaled back FTTH project, with the option of FTTN later I think would have made a lot more sense. There have been very few broadband projects of this size done anywhere else in the world and certainly not on the geographic scale of our country.

    Had I been in Lindsay Tanner's position, I would have been urging caution, particularly in light of the other economic stimulus measures that had also cost substantial measures.

    My prediction is that we will be 10 years down the track with the NBN and it will be over budget, over built and over time. I am happy to own up to being wrong if those things don't end up eventuating.
  9. Groucho Greg Davis (50)

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    The_Brown_Hornet, I think the cost benefit analysis debate is a red herring.

    I'm a big fan of Turnbull, and indeed a Turnbull voter when given the chance, but his background in technology is as an investor. Nation building projects don't need to be shown to be profitable at an ROI level to be done. Take roads: they are very rarely a directly profitable investment, but nonetheless they must be built, so that a market for all other goods and services can exist, and to stop our country from being like Africa.

    The question is whether a fast broadband network is necessary at a nation building level. Like many, I believe it is. My desire for NBN is purely economic. I don't believe Australia can be competitive over the coming decades without this infrastructure: infrastructure that our competitors will have.

    $4xb is a relatively small spend for a $t economy.
    boyo likes this.
  10. The_Brown_Hornet Michael Lynagh (62)

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    Our road system was built up over a long time Groucho and has had numerous new routes and upgrades to existing ones added. The cost has been spread out over many, many years. What the current government is proposing to do is do the same thing with broadband over an extremely compressed time line (comparatively speaking). If we were to build our telecoms network in the same manner as the roads, I actually wouldn't be too unhappy. The fact is that's not how it is being done at all. Our road system takes into account where the traffic is, how much of it and where it leads to. The government are trying create a system where the cost and provisioning of the broadband network is uniform nearly everywhere. I think that's insane. If I look at our own private network where I work, we don't run identical services everywhere. It's dependent on demand and what technology is available in a particular area. That's what I mean when I talk about overbuild. Not everyone will take it up, which harms the ROI even more.

    If the government are going to put the taxpayers on the hook for a project like this, I think we are entitled to press our representatives for cost/benefit analysis.
  11. Groucho Greg Davis (50)

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    Well, as I previously said, I think cost to benefit is the wrong argument here.

    And this isn't such a big project, compared to the road system. A single major highway can cost $10b. The cost of building the entire road network would be astronomical, so it's not really a valid comparison, except from the point of view of necessity.

    I guess my line of work makes the cost seem much less frightening than for some others. My company sells systems to big mining, where projects of this size are not unusual. Spending that amount just doesn't seem like such a big deal. It is just that we are doing it in one go, instead of spread over many smaller investments.

    I guess the bottom line is that I think fast broadband is imperative for financial competitiveness, and I don't see any valid argument for not doing it in this way, in one go. We know where the fiber has to go, so lets put it there. I know from experience that it would cost a lot more to do piecemeal.
    boyo likes this.
  12. Scotty David Codey (61)

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    Retail competition, but no network competition. Doesn't that just make it Telstra No. 2?

    The fact that they are requiring the other fixed networks to be decommissioned says a lot about its real viability to me. Afterall, if they thought that the NBN was going to be so viable, so amazing and so future proof, then why would you both with turning the switch off the other networks? I'd like to see Conroy lie away an answer to that question.
  13. Scotty David Codey (61)

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    A few points here:

    1. A cost benefit analysis doesn't just have to undertaken in terms of $$$. There are a lot more factors, and they have not been explained satisfactorily by the crook, Conroy (who has already used his position to give jobs to disgraced former pollies that just happen to be mates). He can easily commission an analysis to look at all the factors instead of just treating the public like idiots, and ram it down our throat (just like they tried on the ETS and Mining Tax).

    2. Why does it have to be built to everyone's front door? Particularly when there is a very real likelihood of only a small amount of people going to take it up. Why can't it just go FTTH as Hornet says, plus to every school, hospital and university? Connections from the hub to the premises can then be done over a longer time period when a) we have more money to spend and b) it is more viable.

    3. Your arguments for the NBN seem to be a little self serving. If the government came to you and asked for $4k to build this, then likely you would say yes. However, how many of your friends and family would be happy to fork that out? I'm sure many would say 'improve health services' or 'stick it in education' first.

    4. I agree that this will future proof this country, and ultimately we will need this. However I question the timing of this large spend. In light of the GFC and a large deficit (and creaking or stationary economies around the world), the government should act responsibly, rather than stubbornly and scale it back to a FTTH, with extensions in certain areas, and save additional spend to guard against a further financial downturn. (If there is another financial downturn the likelihood of more than 5% of the population taking up this service is remote to say the least).

    The IMF came out on the weekend and warned that we need to have a higher surplus in the good times, and that the governments current forecasts of return to surplus in 12/13 are extremely dependant on current commodity price levels (ie the forecasts aren't conservative - which the treasury is meant to be). They warned that the government has to tighten spending further to ensure this surplus can be met.

    So we need to ask ourselves, and our government, 'is this really the time to be spending this absurd amount of money on something that will not give a short-medium term financial return'?
  14. The_Brown_Hornet Michael Lynagh (62)

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    I do have an understanding of the costs of these things and the size of the projects. One of my previous employers had the second largest private communications network in the world (after the US DoD) and we still didn't build it all in one hit. We built it out to places as required and didn't guarantee the same level of access and performance to every location. We were in the oil and gas industry, which presented some technical challenges that most other organisations don't face. I guess that's the difference when you are using company money, you have to be more careful with it. The government can only spend other peoples money and aren't really connected to the consequences (at least not right away). This isn't a particular criticism of the ALP, the Liberals have been just as good at it (middle class welfare anyone?).
  15. Scotty David Codey (61)

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    Middle class welfare is probably not the best analogy, since it was just giving the tax money back to the biggest tax base.
  16. Moses Simon Poidevin (60)

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    The FTTN plan formerly proposed by Labor in 2008 seemed a real cracker, but was let down by an unrealistic and terribly managed application process.

    As I recall, they put it out to tender and specified the cost must be $4.7bn. When none of the proposals met their unrealistic guidelines they said "bugger it, we'll build it ourselves. Only we'll spend 10 times the amount and deliver FTTH"

    I reckon the Libs missed a great opportunity here, when broadband heated up for the '10 election they could have just proposed we go with FTTN, the very plan that Labor considered great in the first place.
  17. Groucho Greg Davis (50)

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    Brown_Hornet, I didn't mean to suggest you didn't have an understanding of the costs. :)

    I've also worked primarily in oil and gas. I ran the consultancy division of one of the big engineering conglomerates and managed the roll out of environments on the Karachaganak oilfield project, essentially building whole towns.

    We took as our model the construction of the Interstate system in the United States, which was the project that essentially changed the face of construction, using military models and adopting the principle of continuous development. The lesson of that program was that the top and tail costs (starting and stopping) can use more that 50% of a budget and in some cases, much more.

    I guess we'll just have to agree to disagree on this one. If I was running the project and accepted the requirement as final (which is obviously a question on which disagreements start to occur) then I'd argue strongly for a single sequential rollout, to reduce the ultimate costs. In terms of engineering estimating theory I'd be on strong ground there.

    The principal risk is that the delivery team won't have the horsepower (in terms of experience and organisational clout) to do the job near the ideal price, and that's a real risk. That's one of the things the regional trials are intended to determine.
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  18. Scotty David Codey (61)

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    Of course it would cost less overall to roll it out at the same time, but that is only looking at it from a narrow perspective. Dare I say it, but you are picking only a few arguments to respond to (and ignoring the ones you can't). When assessing the costs there are, of course, several factors:

    1. Overall costs
    2. Ability to actually achieve a single roll out
    3. Amount of debt and ability to service it
    4. The current economic position (poor)
    5. Potential to drive inflation
    6. Reduction in value for money (see BER program) due to large roll out (with little capacity to do so)
  19. Groucho Greg Davis (50)

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    I'm only responding to a few points because of lack of time and space, Scotty. I've not got the time to write a five page defence of NBN. :)

    I believe the economic argument (which I perceive to be a strategic, nation building argument) justifies $43b. I believe generally in projects such as these, not as a big-spending lefty (I'm not - I'm an habitual coalition voter) but because well judged infrastructure projects result in growth and advance the interests of the nation. I consider the Americans as the ideal example of a nation that takes these kinds of projects on and succeeds. My particular desire for NBN is that I believe it is an essential piece of infrastructure for Australia.

    In macroeconomic terms I disagree that Australia is in a poor position to build this network. Now is perhaps the best chance we'll have, economically, to undertake large projects.

    Whilst I do agree that large public works can drive wage inflation, we are going to have a much larger problem with wage inflation as a result of the resources boom, the turnover of which will be orders of magnitude greater than NBN.

    I disagree on debt. Australia has low levels of public debt and this project will make little or no difference to it. In fact, projects such as these provide options for managing debt. For example, large public works provide an opportunity to sink revenues from resources that would otherwise have inflationary effects, as an alternative to (for example) putting them in a sovereign wealth fund. In an inflationary economy, the option to put $4xb in a sovereign wealth fund and then borrow the same amount externally to invest in infrastructure can be a very useful monetary policy option to have.

    The point you make that I do find interesting is the one about the BER. The main risk of this project, in my opinion, is low performance on the delivery. That is where I would be very hard-nosed with government. NBNCo must develop the capability to deliver this efficiently or it shouldn't be done.
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  20. Scotty David Codey (61)

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    Australia may have low levels of public debt in comparison to many other developed nations, but we don't have low levels of public debt per say.

    I'm afraid you've lost me with the remainder of this paragraph though - how does it relate to this NBN proposal?

    Interesting also that you mention the US. My understanding is that our NBN will cost multiple times their fast broadband per capita. Surely this is an argument against the size/extent of the NBN, not for it?

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