Saturday, 15 September 2012

NBN: Comparing competing proposals

At some point before the next election, both Political Parties will have to release detailed, costed plans for their policy on the National Broadband Network.

I believe the essence, for the dual roles of electors and subscribers/customers, is captured by:
  • What's it going to cost now and for the next 10-15 years?
    • Ideally a single current-day dollar figure, such as Total Cost of Ownership (TCO) or Net Present Value (NPV).
  • What am I going to get for my money? (A value-for-money calculation of price/performance.)
    • As an owner of the Network.
    • As a user of the Network
    • Are parts of it a dead-end or upgradeable during its lifetime?
  • How long is it going to last me?
    • Is it built as a "throw-away"?
    • Will it's operational lifetime be significantly less than its replacement period?
Note: I regard network performance as something to be selected. We need to discover what people value, not choose it for them nor declare an intrinsic feature as "fast enough". The market determines the value it places on different aspects of an offered service.

Similarly, I don't regard "what are other countries" to be relevant or useful. We have to make decisions about what we, as a Nation and consumers, want and are prepared to pay for. We have a different collective value system than every other nation: what works for us is our only concern.

The NBN Policies will be long, complex documents heavy with technical content and many assumptions related to finance, economic environment, customer needs and demand, take-up rates and final market penetration.

Australian residents have dual roles in this debate, each role needing different answers:
  • As electors and taxpayers, they are guaranteeing the Government debt if the investment turns sour, and they are deciding which plan to accept.
  • As consumers/subscribers, they will be paying retail prices for the services delivered.
So two those complex plans have to be reworked to be on the same basis, using the same assumptions, and to report figures for both roles of residents.

What are the minimum figures that electors and consumers can judge the Turnbull "sooner,
cheaper and more affordably for users" versus the Conroy "Full Fibre to 93% of population by 2020" plan?

There are already various sets of good questions related to policy and technical matters out there.
I'm not intending to compete with them, but hope I might provide input to comparisons when the time comes. Now, well before the event, is a good time to discuss what we need to know and how to make comparisons.
Some simple questions for Malcolm Turnbull:
  1. How much will your plan cost to the nearest estimated $bn?
  2. What proportion of users will be able to get 12Mbps, 20Mbps, 50Mbps, 100Mbps and speeds above under your plan?
  3. by what year will the majority of households be connected under your plan?
  4. You claim that your plan will deliver fast enough speeds, how fast is fast enough?
An initial set of comparative data:
  • What is the technology mix proposed, with included percentage of premises served?
    • What are the relevant descriptors of each service? e.g. Node Count, DSL type, maximum cable run, ...
    • What is the minimum guaranteed link speed? Download/Upload.
    • What is the guaranteed Busy Hour Throughput by area?
  • (Owner) Profitability of each technology, by area.
    • Projected Time to break-even or profitability, whole technology.
    • Funding sources and Internal Rate of Return. e.g. Govt. Debt, bonds or by revenue.
  • (Owner) For each technology, the Total Cost of Ownership for 10 and 15 years.
    • Telstra/other lease payments or CapEx to acquire existing assets.
    • Lead time for project start for each technology: contractual, supply and install.
    • Estimated project completion time for each technology.
    • Expected ACCC approval time/process.
    • Are these services in use here or overseas?
  • (Owner) For each technology, Planned Operational Life to 50% and 95% replacement.
  • (User) When will it be connected to my house?
  • (User) For each technology, the costs: Access Rental costs, Data Cost ($/Gb), Link Sharing number, Shared Uplink bottlenecks, guaranteed Busy Hour rate, CPE Costs
  • (ISP/RSP/WSP) Restrictions on Access, Costs of Access , Costs of Interconnection, ...
I'm sure this list will evolve considerably over time.

My first cut at enumerating the areas of comparison started with the NBN Glossary of Terms.
I expect this to be more of checklist than anything. i.e. "Do they both address this the same?"

Contractual and Regulatory elements
  • Australian Broadband Guarantee (ABG) - especially guaranteed connection speeds
    • Rural, Regional, Remote access arrangements
    • Rural, Regional, Remote subsidy scheme or single pricing transparency
  • Domestic, Small Business, Business services and obligations.
  • Fault response times, non-compliance penalties
  • Wholesale Broadband Agreement (WBA)
  • Layer 1-3 Network/ Wholesale Services
  • Retail Service Provider (RSP) - Telstra, phones/PSTN, ULL leasing
  • Internet Service Provider (ISP)
  • Wholesale Service Provider (WSP)
Characteristics of Service Offerings
  • Average Busy Hour Throughput (ABHT)
  • Committed Information Rate (CIR)
  • Peak Information Rate (PIR)
  • Cost per Gb, per time
  • Quality of Service (QoS)
Internal Financial elements
  • Capital Expenditure (Capex)
  • Operating Expenditure (Opex)
  • Average Revenue Per User (ARPU)
  • Compound Annual Growth Rate (CAGR) [underlying model of demand growth]
  • Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA)
  • Internal Rate of Return (IRR)
  • Payback period
  • Weighted Average Cost of Capital (WACC)
Endpoint types
  • Greenfield vs Brownfield
  • Commercial, Business, Residential/Small Business
  • Multiple Dwelling Unit (MDU)
  • Single Dwelling Unit (SDU)
  • Geographical Area
    • CBD, Inner Metro
    • Urban
    • peri-Urban
    • Regional
    • Rural
    • Remote
    • Maritime, Territories
Service Delivery Means
  • Customer Premises Equipment (CPE) [extra cost for a LAN/WLAN, ATA + UPS's]
  • Hybrid Fibre Coaxial (HFC) Network
  • Digital Subscriber Line (DSL)
  • Digital Subscriber Line Access Multiplexers (DSLAMs)
  • microwave; Local Multipoint Distribution Services (LMDS)
  • 4G. Long Term Evolution (LTE)
  • NBN Co Satellite Access Service (NSAS)
  • Public Switched Telephone Network (PSTN) [and ONT's battery]
  • Unconditioned Local Loop Service (ULLS)
  • Worldwide Interoperability for Microwave Access (WiMAX)
  • OPEL - 802.11 WLANs
Services offered
  • Telephony Services
  • Internet Protocol Services
  • Video-on-Demand (VoD)
  • Voice Over Internet Protocol (VOIP)
  • Internet Protocol Television (IPTV)
Network Design Related
  • Network Topology, eg Home Run Topology
  • Regional Backhaul Blackspots Program
  • Shared Topology
  • Transit Backhaul
and more...

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