The NBN (National Broadband Network)

[Groucho]

True, but the changing of laws to get around ACCC requirements (as the case may be) is the start of a slippery slope. It is basically saying that the government can do whatever they want, and force us into whatever they think is best for us.

Scotty, I think that is an overreaction. The current laws are intended to prevent private monopolies. The parliament has the power to change laws to implement policy. It happens every time a new law is passed.

 

[Groucho]

No one has actually made this direct link yet, however essentially the answer is yes. If you want to have access to broadband through a fixed line service, you will have to go with the new network, at likely a higher costs, as the other networks are being decommissioned.

This is a clear issue with the government's business case for the NBN. If they truly believed that it would be very successful and is worth this extravagant spend, then they wouldn't have required the other fixed line systems to be decommissioned. The government is running what is equivalent to dictatorship on this one, by creating a monopoly and forcing it on us, when they didn't need to.

I can't believe that people can be comfortable with this.

Mate, the other fixed line systems are not being decommissioned. The Optus and Telstra fiber networks will be incorporated into NBN. The Telstra copper network will be decommissioned.

 

[Moses]

Will fixed line phones be moved to the NBN?

 

[Groucho]

Will fixed line phones be moved to the NBN?

If you're on the Telstra CAN, yes. Otherwise there will be no change.

 

[Scotty]

Mate, the other fixed line systems are not being decommissioned. The Optus and Telstra fiber networks will be incorporated into NBN. The Telstra copper network will be decommissioned.

So, everything that is fixed, but not fibre (copper and HFC) is being decommissioned, correct? And everything that is fibre is being put under the same banner, correct?

 

[Scotty]

Mate, the other fixed line systems are not being decommissioned. The Optus and Telstra fiber networks will be incorporated into NBN. The Telstra copper network will be decommissioned.

What would your response to Turnbull be?

Mr Turnbull was scathing of the plan to bar competition between the NBN and HFC networks.

“It (Labor) should certainly not contract to prevent Telstra and Optus from offering competitive broadband services on their HFC networks which are capable of offering 100mbps broadband to around 2.7 million homes, and can do so right now, not in eight years' time and at a cost which is a tiny fraction of fibre-to-the-home,” he said.

Mr Turnbull said the two major parties still agreed on the proposed legislative reforms to the Trade Practices Act which would regulate the behaviour of the dominant telco in the market, Telstra.

But he warned that the NBN would not lead to lower prices, as the government had argued, because it would not foster competition in the marketplace.

“But NBN will be a fixed line monopoly and with competition only from wireless broadband it will be able to charge every year higher and higher rates for access, as the McKinsey Implentation Study proposes,” he said.

http://www.theaustralian.com.au/aus...-says-its-viable/story-fn4iyzsr-1225938240366

 

[Scotty]

Scotty, I think that is an overreaction. The current laws are intended to prevent private monopolies. The parliament has the power to change laws to implement policy. It happens every time a new law is passed.

Maybe. Only if a government doesn't fall off that slope though. Personally, I don't think they should be messing with the ACCC.

Role and activities

The Australian Competition and Consumer Commission is an independent statutory authority. It was formed in 1995 to administer the Trade Practices Act 1974 and other acts.

The ACCC promotes competition and fair trade in the market place to benefit consumers, business and the community. It also regulates national infrastructure industries. Its primary responsibility is to ensure that individuals and businesses comply with the Commonwealth's competition, fair trading and consumer protection laws.

The ACCC is the only national agency dealing generally with competition matters and the only agency with responsibility for enforcing the Trade Practices Act and the state/territory application legislation.

 

[Groucho]

So, everything that is fixed, but not fibre (copper and HFC) is being decommissioned, correct? And everything that is fibre is being put under the same banner, correct?

Telstra's copper network will be phased out. Telsta themselves had detailed plans to do precisely that, had NBN not appeared on the scene.

Optus can compete with NBN. Optus is under no obligation to decommission its HFC cable services.

 

[Groucho]

Maybe. Only if a government doesn't fall off that slope though. Personally, I don't think they should be messing with the ACCC.

Well, the Howard government messed with the ACCC to enable Telstra to have vertically integrated wholesale and retail services within its network. I thought that was okay too. The government needs to be able to enact policy.

Scotty, I really don't see how the ACCC can apply to government-provided services. Of course governments have infrastructure monopolies. How can they not? The law as it stands fails to recognise the nature of government-owned companies like NBNCo, as it did with Telstra in the past. This has caused several governments problems. Time to fix it.

 

[Groucho]

What would your response to Turnbull be?

Mr Turnbull was scathing of the plan to bar competition between the NBN and HFC networks.

http://www.theaustralian.com.au/aus...-says-its-viable/story-fn4iyzsr-1225938240366

I'm a Turnbull fan, and have been a campaign contributor of his, but I disagree with him on this one. Or at least, I disagree with what he is saying, because I'm sure he knows he is playing fast and loose with telco concepts.

NBN is intended to promote competition for retail services by providing a national wholesale network. There has never been meaningful competition for wholesale broadband in Australia.

There was never even competition for retail services until the ACCC made the market available by declaring access to Telstra’s copper loops (the ULL) in 1999.

He is wrong on (or is spinning) the idea that Optus is somehow 'barred' from competing with NBN. Optus can do as it pleases. But there is an offer on the table from NBNCo that Optus may accept.

 

[Scotty]

I'm a Turnbull fan, and have even been a campaign contributor of his, but I disagree with him on this one. Or at least, I disagree with what he is saying, because I'm sure he knows he is playing fast and loose with telco concepts here.

NBN is intended to promote competition for retail services by providing a national network. There has never been meaningful competition for wholesale broadband in Australia.

There was never even competition for retail services until the ACCC made the market available by declaring access to Telstra’s copper loops (the ULL) in 1999.

So hand on your heart, you don't think that if the NBN was built and the HFC network remained in place, that there wouldn't be any competition between them? At least for the next 10-15 years?

That's right. Older technologies will be phased out. Telsta themselves had detailed plans to do precisely that, had NBN not appeared on the scene.

I have no doubt that they were planning on phasing out copper networks, but I think you might also be playing a bit fast and loose if you are implying they were going to phase out the HFC network. In fact, my understanding is that before the government threw the $10+B at them they were planning on increasing the network to compete with the NBN.

 

[Groucho]

So hand on your heart, you don't think that if the NBN was built and the HFC network remained in place, that there wouldn't be any competition between them? At least for the next 10-15 years?



I have no doubt that they were planning on phasing out copper networks, but I think you might also be playing a bit fast and loose if you are implying they were going to phase out the HFC network. In fact, my understanding is that before the government threw the $10+B at them they were planning on increasing the network to compete with the NBN.

Hand on my heart, I have serious doubts about this project. I have doubts about this government's ability to deliver, and I have doubts about the capabilities of NBNCo. It is a big risk.

However, I honestly believe it is the best result. There should be a monopolistic fiber network because that is the way to deliver FTTH across the nation, which I believe is a phenomenal win for the country. I had no hope that Australia would be able to participate from the outset in the global fast network until this project was announced.

I didn't mean to imply that Optus were going to phase out their HFC network. Telstra plans to phase out their CAN, and have done for some time. Optus have announced plans to compete with NBN using HFC - I edited my post to try to make this clear.

It is a labyrinth of deals.

 

[Scotty]

Didn't quite answer the question there, however thanks for the information.

My understanding is that with the NBN deal, Telstra are required to phase out there CAN and HFC?

 

[Groucho]

Didn't quite answer the question there, however thanks for the information.

My understanding is that with the NBN deal, Telstra are required to phase out there CAN and HFC?

There are two HFCs, Telstra's and Optus'. Telsta have agreed to phase out their HFC network and Optus have not.

Neither are 'required' to do so. Telstra made a commercial decision to do so.

 

[Groucho]

I have to say, Scotty, your negativity depresses me. There is really nothing about this business initiative that could possibly please you. A crucial nation building initiative such as this should not be the subject of such patently partisan game playing.

 

[Scotty]

I have to say, Scotty, your negativity depresses me. There is really nothing about this business initiative that could possibly please you. A crucial nation building initiative such as this should not be the subject of such patently partisan game playing.

Groucho (and I see naza has agreed), don't you think you are a little pro-NBN due to the business that you carry out? So while you may call me negative (you may not believe it, but I would also oppose it if the Coalition had the same plan), I can't see how you can independently and without prejudice analyse the benefits or costs of this project. I can throw the same thing straight back at you from the other end. Surely you see that?

However, just to clear a few things up (and until further information becomes available I will stay away from this discussion):

1. I'm pretty sure I have clearly stated that I see a long term benefit for the NBN. The result will ultimately (some time in the future) be beneficial for this country.

2. I question the timing of the implementation. The timing on the back of the GFC and large budget deficit that pushes us past the edge of a further downturn occurs.

3. I question the ability of the government to deliver this on budget. I question the integrity of the communications minister in charge (500k jobs for mates). I question their political motivation behind pushing this project faster and more extensively than required. Particularly in light of the selling of their soul (and our money) to the bush independents. I'd like to see that implementation study updated now in regards to the opt out model and bush first roll out.

4. You mention it is a 'business initiative', however nothing has convinced me that the government is truly treating it like this. They resist all calls for cost benefit analysis (because the know the result). I'm not sure how you treat your business initiatives, but that isn't how I treat mine. All they have to do is start acting with more integrity, more honesty and more efficiency and they will start to win me over.

http://www.businessspectator.com.au...-vision-pd20101013-A73QW?OpenDocument&src=kgb

What is the quantum of net additional benefit the NBN creates above and beyond the existing infrastructure and reasonable expectations of how it might develop over the next few years?

Is duplicating, displacing and destroying existing sunk private capital with new public spending the most efficient use of national capital and can that be justified on the basis of the higher speeds and ubiquity of the NBN? It might be, but without a proper cost-benefit analysis we can’t come to any conclusions.

The timeframes involved are irrelevant. Making investments in response to demand rather than in hopeful anticipation of it (the "build it and they will come" philosophy) creates very valuable option value and reduces the risk of over-investment or misguided investment.

If we don’t know how the network will be used in 40 or 50 years’ time we shouldn’t be making an investment today predicated on demand in 40 or 50 year’s time. Advances in technology over the next few decades could justify the investment – or turn the network into an horrendously costly white elephant.

The Snowy Mountains scheme analogy has been thrown around loosely as an example of a visionary nation-building project built without a cost-benefit analysis. Malcolm Turnbull has argued forcefully that while there may not have been a formal cost-benefit analysis there were a number of reports, over a number of years, produced by a state and federal commission that investigated the financial viability of the project, as well as substantial public debate.

Today we are having the debate without any proper analysis of the measurable costs and benefits. Given the vast amounts of taxpayer funds being committed to the project, the forced redundancy of functioning infrastructure and the government’s claim (to keep NBN Co off-budget) that the project is commercially viable, that represents a major failure of good governance.

http://www.smh.com.au/business/labor-wins-more-support-for-nbn-20101013-16jpy.html

5. This project went from <$5B to >$40B in a few years. I supported the initial plan, and I can't see why they didn't start with this type of roll out, and then upgrade to the premises over a longer period of time and as demand required. Would this not have constituted a more responsible policy?

http://www.businessspectator.com.au...oys-NBN-pd20101006-9XRNF?opendocument&src=rss

"As the McKinsey [implementation] reports shows, the cost of roll-out of FTTP rises steadily as you move into less-dense areas, pushing up average costs. The average cost difference you have noted is the consequence of pushing FTTP to 93 per cent of the market, instead of only 50 per cent. The last 43 per cent is expensive!"

Well put. It is beginning to look as though FTTP is being "pushed" on Australian tax payers whether they want it or not. Conroy made much last week of the fact that this is a "40 year investment", which in some senses makes a normal business case less relevant.

But this time horizon is also front-of-mind in other nations. BuddeComm notes in its analysis of the Cornish project that "[the French regulator ARCEP] has stated directly that equipment invested in must be able to be reused for FTTH [ie. to the premises] when conditions allow". Presumably by that the French mean 'when there is demand for it' or 'when the benefits justify the costs'.

I'd like to hear your thoughts on point 5, but I can't see how you (objectively) can disagree with the remainder of the points.

 

[Scotty]

I said I wasn't going to post on this until new information came to light, well this one is interesting:

http://www.couriermail.com.au/news/...ithin-four-years/story-e6freonf-1225938613953

BRISBANE residents will have super-fast broadband within four years under a deal which will be announced by Lord Mayor Campbell Newman today.

The deal, which Cr Newman says will be rolled out at no cost to ratepayers, will see fibre optic cable run through the city's sewers to allow residents access to high-speed internet.

Cr Newman said fibre optic cable capable of a download speed of 100 megabits per second, would be installed from early next year, after a successful trial by Brisbane-based company i3 Asia Pacific.

This seems like a very strange thing for the council to do. Spending their own money, when the federal government is going to do the same thing only a few years later. I wonder what the extent of the rollout is, and I also wonder at the cost (since council is able to fund it, you would think the costs are relatively low).

 

[Nusadan]

"will see fibre optic cable run through the city's sewers to allow residents access to high-speed internet."

Two hours later, and no one here's biting? Thought there'd be slew of schoolboy jokes here about that....

 

[Moses]

I read about this a few months ago, apparently the sewer is quite a harsh environment with heavy cutting equipment used to clear roots away. At the time they proposed it, Conroy came out and said it's a stupid idea.

http://www.zdnet.com.au/conroy-cuts-the-crap-on-sewer-broadband-339304386.htm

 

[Bowside]

Interesting article Scotty, I hadnt heard about that before. I have my doubts about Can-Do, but I'm interested to see whether this works.

If the council plan is tax payer funded, I dont understand the logic in trying to compete with the NBN.