Reading Dr Riemer's piece describing the technical difference between Fibre to the Premise (FTTP) and Fibre to the Node (FTTN), I realised there's a simple and short answer to one of the most controversial questions asked in the NBN debate:
Q: What can a direct Fibre connection do that can't be done with Copper? [bits are bits are bits]Turnbull is asking us, as investors, to stump up $30 billion to pay for his "cheaper, sooner, more affordable" NBN proposal, but without providing a full Business Plan.
A: Make a profit!
Here's the simplest of tests:
On the public documents available, which NBN Plan would serious investors, such as banks, even consider?For the current NBN Co project, there's a rather detailed Business Plan on public record and a lot of progress data. I've heard of no merchant bankers criticising the NBN Co plan. I'd expect quite a few long-term investors, like Super-Funds, would be itching to put a few billion into such a good thing.
Turnbull, an experienced Merchant Banker and independent investor, has created a full Business Plan out to 2040, but has failed to make it public. In his Policy Background document [pg 31], we get figures for just 5 years of a 30 year investment, 2014-2019. The only statement Turnbull makes on his "Return on Investment" is 'must be cashflow positive', a rather low investment hurdle that allows massive losses.
If this document were given to you by a friend or relative as their pitch for an expensive investment by you, would you consider it enough? You'd immediately ask "and what about the next 25 years, what aren't you telling me?"
In Politics, there's a simple rule: leave out the Bad News, do everything you can to hide the Really Bad News and work exceptionally hard to disguise Disasters. That's what the Coalition Plan is, an unprecedented Financial Disaster.
That's the deal here:
The difference isn't "how fast/good is Fibre compared to Copper", but "can Copper ever make a Profit, let alone pay for itself?".In the full Fibre project currently underway and already returning spectacular financial results well ahead of forecasts, the Business Model ensures social equity and profitability:
Exactly why the Coalition sold Telstra and its poorly performing copper network at the end of 2006: since 2001, copper hasn't made good profits even if you own it, and can only make a loss if, like NBN Co, you don't. A judgement underlined by the sharemarket since. Telstra shares fell from $3.60 to $2.60 before the NBN Co deal and have risen to $5.10 since. This is not speculation.
The top 25% of consumers contribute all the profit and the rest of us get a free-ride, getting NBN services at cost or less.The technicalities of why aren't complex: offer customers a range of 'models' from $24 to $150 and let them decide what they'll pay for. But this seems to have completely eluded Turnbull and the Coalition, self-styled great Economic Managers and Business supremos.
The "one size fits all" charging model and "random Bandwidth Lottery", where those few who want & will pay for high-bandwidth can't be supplied with it, means 75% of us aren't subsidised and get charged more, or the whole thing makes a whopping loss.
If you look to the current NBN Co charges, you'll notice they drop access charges by 20%-25% by 2021 and up to 80% off by 2040. A 100Mbps service will cost $11.75 then, compared to the starting price of $16 for a copper service from Turnbull. That's a direct benefit to all consumers, especially those without the means to pay for high-speed access now.
So, while there may be few technical benefits in Fibre to the Premises (guaranteed speeds, fast upload, low error rates, many business upgrade options, zero-cost 1Gbps, infinitely cheap upgrades, immunity to noise and lightning, 10-20km range, zero-congestion, minimum latency/high-throughput, multi-service access, ...) there is an overwhelming financial difference:
Fibre can pay for itself and make a profit, while upgrading somebody else's copper can only bring tears.The political question now is: Just how much of a loss are Turnbull & friends hiding.