Saturday, 25 August 2012

NBN: Kohler v Turnbull - A third option?

Business Spectator has published a more pieces in the Kohler/Turnbull conversation on the Liberal's National Broadband Network policy...

Today I've written two comments there, reproduced below.

I suspect that underestimating Turnbull is not a good idea, perhaps we're missing something that's in plain sight?

  • My best guess: Turnbull/Thodey have figured out how to give Telstra the right to build their original FTTN network.
  • My understanding is that Telstra still owns the copper reticulation network and ducts/pits, it's $11B deal with NBN is to stop using or remove it when the NBN is co-deployed.
  • Which, if the Libs get into power Federally, might just make Telstra a hugely undervalued stock.
    • Mr Thodey is probably very thankful for all the infrastructure and alternate transit backhauls that NBN has created, but they can do very nicely without it.
    • It'd be delicious irony if the NBN failed economically because of this competition and was forced into a firesale of its assets and network... With the only reasonable buyer being Telstra.
      • Locking Australia into another century of single-Telco dominance, an operational monopoly, would be a very bad outcome for the country.
What I didn't have space for in my second comment is the obvious Political Reality:
  • The $20B savings in the NBN project can't be taken in isolation.
  • The Libs are said to have a $70B hole in their funding promises:
    • And look at that, it's just been chopped down to $50B.
    • Joe Hockey, shadow Treasurer and Andrew Robb, shadow Finance Minister, must be very relieved.
An idle question, will Turnbull ever challenge again for Liberal Party leadership??
I think that's only possible if Mr Abbot shoots himself in the foot badly enough, but whatever mistakes he's made in the last 2 years, the ALP has not yet shown any ability to take him down.

Why the BT model won't work for the NBN, Paul Budde. 2:30 PM, 22 Aug 2012

A tour de force addressing the technical, economic and social issues at play.

Turnbull to Kohler: Node, node, node, Malcolm Turnbull. 6:30 AM, 22 Aug 2012

Links to NBN Explained, The FttN First Debate.
A 2009 piece that attempts to make a case that is you're going to do a full FttP fibre roll-out, you're better off skipping FttN, as it doesn't take you there, only costs more money.

To me, that's Engineers arguing about Business and Politics.
It doesn't fly for me:
  • It's the exception, not the rule, that technically superior solutions win in the marketplace. We had VHS tapes, Intel CPU's and Microsoft Operating Systems win over far better alternatives.
  • The Telco business is especially ruled by incumbents and pursuing their interests, usually about monopolies.
    • It's an area where Logic Does Not Apply.
    • It's why we had to have Optus, it had to buy AusSat, why we got two incomplete Cable TV networks (not full-coverage) and why we have multiple overbuilt mobile phone networks and no inter-Telco roaming (but they can do International Roaming).
    • Politics dominates decisions with Telcos and national infrastructure. Privatising Telstra and not structurally separating it in the last sell-down from 51% show the point.
We are going to get the Network that the Telco's can't veto and that Politicians can allow.

I fear that NBN Co has, like Ansett in September 2001, had the clock run-out on it by its competitor.
Telstra took a very long time to negotiate its deal and NBN Co hasn't been able to lock down reasonable contracts for its deployment with the same vendors that Telstra uses.

Who'd have thought delays would happen?

It's played pretty well so far for Libs/Turnbull...
Another plank in the "Worst Government Ever" rhetoric.

But more importantly, by the time the next election comes around, NBN Co will be disastrously behind in this deployment.
Why disastrously? Below a critical threshold, the Libs can cancel or slow-down the roll-out and (seemingly) legitimately call for "faster, better, cheaper" alternatives that can be done "on time".

And there's Telstra's cue to finally show us its FttN plans withheld from Rudd/Conroy in 2008.
Which aren't going to be that different to BT's "Openreach" programme, but will use a variant of the Telstra RIM.

Alan Kohler's NBN fantasy, Malcolm Turnbull. 12:52 PM, 20 Aug 2012

@Lindsay Cole: There are some new classes of applications that will thrive on low-latency, high-bandwidth connections. [LC had a dig at 'geeks coming out to play', suggesting they were mainly interested in faster Porn.]

Apps that use geospatial data, especially if they combine high-resolution imaging data from multiple sources.

Think of a live-feed 3-D imaging game/App with multiple overlays: Google Earth on steroids.  Like on-line directories, it might just become 'a thing we expect to use'.

As for Porn vs Everything else: see the song "The Internet is for Porn" by Avenue Q.

Since the birth of modern mass media (printed word + images), Porn has been the vehicle used to explore and expand all new technologies...

And when the technology is mature and ubiquitous  and infrastructure is paid for by the Early Adopters, everyone benefits... Like in glossy magazines, Porn doesn't extinguish, it just fades into the background.

Like it or not, Sex and Money are powerful drives at the root of much of our behaviour and societal pressures/movements. The research shows that both men and women are aroused when watching pornography, but commercially, men are almost universally the buyers.

You, like me, may personally be repulsed by pornography, but its not going away anytime soon.
If it drives men to be early adopters and they pay for high quality services for the rest of us, I thank them for the free ride.

Sorry Malcolm, it's still crazy, Alan Kohler.  7:30 AM, 21 Aug 2012

I think we all might be missing something...

Turnbull is smart, brave and persistent/dedicated to have done what's he's done and now is motivated to get back into (political) power. He's not playing this game for the pay, and he's unlikely to make rookie errors.

As a very successful lawyer, he knows the importance of words and will carefully construct what he writes and says.

As a successful Investment Banker and IT/Internet investor, he knows the Devil is in the Detail, and just what it takes to take "A good idea" to a successful execution.

If he says he's got a detailed plan and reckons he can shave $20B off the NBN deployment, I'd NOT gainsay that. The evidence we have says he'll be able to pull it off.

Which leads to this incisive quote from above:

>> Carl jackson: The NBN just doesnt have the depth of an incumbent Telco and will not get close to their targets.

So what are we missing, especially as Turnbull has cited BT's "Openreach" project as his model?

I'm thinking he's figured out how to give Telstra a way to follow BT and roll-out an FTTN network with partial Govt funding.

Sol may have given Rudd/Conroy a 1-page response to the FTTN tender, triggering the structural separation and NBN project.

Telstra must have done all the detailed work in designing and costing an FTTN...

David Thodey has shown he's a far more capable  manager than Sol and his buddies. Not nearly so wedded to the "Traditional Telco Model" of monopoly plays and pricing.

My guess is that Thodey and Turnbull are on the same page and have collaborated in creating a fully-costed, reasonably scheduled FTTN roll-out plan: with all resources to execute.

It fits the facts and accounts for the confidence that Mr Turnbull forecasts times, budget and savings...

Is it the long-term solution Thodey, Turnbull or I would want for a converged network?

Nope, that's clearly pure fibre + wireless in-fill.

If Telstra can own the last mile again, that's strategically brilliant for them.

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