Saturday, 24 August 2013

Business Case Copper/Node vs Fibre

First, an unrelated comment: To see how real industry experts talk and what they think on NBN policy issues, see this TJA article from June. When the preeminent Professional Journal in the field can choose anyone, who do they choose? All the people whom Turnbull says are inconsequential and irrelevant. These people have long experience, sound, independent views, tied to neither political party nor wed to any technology, so are obviously disqualified by Turnbull.

The Rudd v1.0 Government in 2008 called for private tenders to build the NBN that the Coalition were asked to build in 2005, and were prepared to tip in the same amount: $4.7 billion. The Coalition were bitterly opposed to an NBN then, just as they were in 2007 and later in 2010.

Telstra, with its army of lawyers, filed a non-compliant response and was removed from evaluation. It didn't provide a detailed submission in support of local business. Previously I've dealt with the process.

The rest of the contenders, those who didn't own the Copper and access assets, were deemed non-commercial. Prof. Reg Coutts, of the seven member Expert Panel observed in Computerworld, 2010 (quoted as well on "NBN Explained"):
Essentially to go down the FTTN road would mean something in the order of, greater than 50 per cent of the capital being put into digital cabinets in the suburbs,” he said. “They then become an obstacle to the final solution… fibre-to-the-premise. Fibre-to-the-node was not a stepping stone to fibre-to-the-premise. In fact, if anything it would put it backwards. [emphasis added] The second reason, of course, is in no other market have people proceeded with fibre-to-the-node other than an incumbent. It is a solution that is the right solution for an incumbent that has a copper infrastructure. [emphasis added]
Nothing has changed: what was a really bad, uneconomic idea in January 2009 is now a worse idea.

Telstra have a contract they'll need paid out and they'll also charge handsomely for the 200-250,000 kilometres of 10-pair cable from the nodes to premises that Turnbull needs. Unless of course, he decides to compulsorily acquire them. Nationalising private assets is normally reserved for extreme Socialist or Fascist governments. Perhaps that's another clue to how the Abbott government will work.

Even Turnbull in his wildly optimistic and fantastical projections acknowledges Prof Coutts point:
In building an FTTN, even if you own the copper & access, you're planning on wasting half your investment because you will throw the whole thing away. The meaning of  Turnbull's "CapEx Reuse: 50%" estimate.
Turnbull doesn't include this acknowledged planned wastage in his project costings, as he should.
If you do the Maths correctly, the FTTN saves nothing, just makes the people who have the needs and means to pay for higher bandwidth wait decades longer or seek alternatives and remove themselves as a customers the project, removing the 25% who generate all profits.

Right there is the Cost/Benefit Analysis justification of the FTTP, especially over a FTTN:
If, like the Australian Government, you don't own the copper & access, then if for Policy reasons you want to build an NBN, full Fibre is the only rational, economic course of action.
If Turnbull wins office, we're going to hear a lot about "costs", "waste" and "poor economic management" by Labor. We won't hear the truth from him, that he's planned to land the Australian taxpayer with a $30 billion writeoff, courtesy of his ill-advised and wasteful FTTN.

Proof is simple:
Look in the Coalition NBN Policy for an "ROI" or pay-back period: these most critical investment numbers are notably absent. Look at the "Summary Financials" in Turnbull's "Policy Background": they are only for 2014-2019, missing the next 25 years that matter most. For an investment of $30 billion, this makes Turnbull and the Coalition a laughing stock.
The Turnbull Copper/Node Plan can only land the Australian taxpayer with a $30 billion bill and give NBN Co's assets, for nothing, to their major creditor, Telstra. We lose three times over...


  1. All the talk of LNP budget shortfalls during this election never include this $30 billion black hole. It's not that our media is asleep or not paying attention, it's that they only pay attention to trivialities or meta-trivialities (lamenting the attention to trivialities by talking about the talking about trivialities). We are surrounded by fools.

    1. David,

      Know exactly where you're coming from.

      I saw Alan Kohler being routed by Turnbull when trying to interview him.
      Instead, he got 'debated' and throughly trounced.

      Kohler's no fool and not easily duped, but Turnbull bested him with ease.
      If the best and brightest can get done over so comprehensively, it says a lot about Turnbull's skills.

      It's taken me 5 months to understand the central ruse used by Turnbull.
      He's really, really good.

      So, while I'd like to agree and say "yeah, current media creates all the problems", Turnbull has taken manipulating the media to a whole new level.

      And that little act he put on at Woodford (27-dec-2012) calling for fewer glib one-liners and not telling lies... Sensational hypocrisy, especially in light of the trick he's since pulled.

      All the best


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