Thursday, 29 November 2012

NBN: The Great Broadband Con

What did we learn from the GFC and its cause, the "sub-prime mortgage" scam?
If something seems too good to be true, it probably is.
It's not without good reason that Politicians are now regarded as less trustworthy than Used Car Salesmen. The majority of ordinary voters remember Meg Lees of the Democrats black-flipping and voting for the GST and they remember Graham Richardson's words: Politicians Lie.

If you're a consumer of any age, you will have experienced enough grief in small and large purchases to understand the consequences of "let the buyer beware", know that "the fine print" can be a killer and to be more than a little sceptical of bold, enticing claims.

I've personally lost $10,00's many ways: buying "lemons" (2nd-hand cars), paying Hire-Purchase agreements for years on something I can't use, cancelled contracts ('that was an ironclad agreement'), lost deposits and unpaid bills ('they've gone broke'), 'the fine print' on Insurance ('that wasn't covered'), bank loans/mortgages: fees, penalties and interest-rate 'surprises', not to mention the far too many minor scams, rip-offs, con jobs, shoddy work and tools, broken promises and the classic: If you don't like it, sue me (legal action is more expensive than the goods and outcome uncertain, delays incredible).

That's The Free Market in action.

Both the ALP with its NBN and the Coalition, with its "Coalition Broadband Aspirational Plan" (CBAP) have questions to answer.

As Malcolm Turnbull points out, the Government and NBN Co are less than forthcoming in being transparent and accountable:
  • What are the actual customer numbers for the NBN?
    • There needs to be a clear, unambiguous and transparent reporting of them.
    • We need to distinguish between:
      • Active connections (paying customers)
        • If possible, aggregates for services (voice, TV, ISP)
        • and connection line speed, connection download volume.
        • ARPU to NBN Co, to compare against Plan.
      • Near-active connections (internal work/test in progress)
      • Service requests (customers signing on, not yet active)
      • Premises connected (a working/tested fibre external to premises)
      • Premises passed (a service-drop fibre could be attached, on in progress)
      • Premises connections in construction or under contract to be built.
    • NBN Co accounts, like all Telco accounts I've seen, don't allow outsiders to compare inputs and outputs.
      • As a publicly owned company, there is an increased expectation of transparency and accountability. The 'shareholders' are electors, and they'd like to know:
        • Where is our money going?
      • If that question cannot be answered in any detail because of Commercial-In-Confidence, it'd be useful for the limits to be written up and the nature of the confidential data to be documented. [e.g. cost per premise installed, cost per metre of trenching, cost per metre of laying and supplying fibre, ...]
The Coalition has far more questions to answer about their apparently extravagant claims:
How can Mr Turnbull be so assured he can deliver "Cheaper, Sooner and more Affordably" on a solution that the 2009 Expert Panel deemed as unimplementable economically and when no formal tender (1,000 pages of detail each) had sufficient costing details to be really credible?

How can the Coalition be so confident it can quickly deliver broadband to everyone currently in a blackspot?
Can the Coalition, in 12-18 months, deliver on their promise to prioritise (eradicate?) broadband blackspots and to do it all for three to four times less than the NBN?
Absolutely! Without directly lying or misleading as well.
You have to understand the fine print of what they're selling.
It's "Buyer Beware!" writ large.
The CBAP, Coalition Broadband Aspirational Plan, is not a promise to deliver A Great Big Expensive Network to everyone, everywhere: it is for something far, far more limited.

The Coalition can allocate $2-5B to patching up and papering over problems, rollout a few thousand nodes and, like George W. Bush pronounced in 2003 "Mission Accomplished" ~1year into the decade long War in Iraq, declare "We are Done!". Anyone else who wants an upgraded ADSL/VDSL or even fibre optic connection can have it, as long as they pay for it themselves.

This is 'responsible government' and 'how the Free Market works', at least in the eyes of the Economic 'Drys' in the Coalition.

What's the right number of nodes needed to build a full-coverage FTTN for the CBA?
Is it 30,000, 70,000, 90,000, 180,000 or 350,000? [I have justifications for each.]

What is the minimum number that the Coalition can get away with politically, with right now?
2,000? 5,000? 10,000?
The Coalition are not promising a full-coverage FTTN, now, or anytime. Where in their Policy have they ever said that? Where in their Policy have they ever said they'll match the ALP and fund a full-coverage CBAP?

Mr Turnbull and others, assiduously use the term "economic", as in "we'll do things if they are economic", meaning: "make a profit right a way". If consumers want to pay for a service that is uneconomic, then they are most welcome to... That's "The Free Market in Operation".

Why will the CBAP FTTN be both cheaper to build and more affordable to use?

  • Because they will spend only 10-30% of the NBN budget and provide extremely limited coverage, and
  • the technology the are basing their CBAP on, is old and fully paid for.
    • Their investment will add no value, none, to the existing network: It is a throw-away, so as little as possible will be sunk into it.
    • Old and worn-out equipments, be it cars, planes or phone networks, are almost given away because they are so expensive to run and maintain and have passed their "economic life".
    • Building any new Telco network, copper or fibre, from scratch is hugely expensive, which is why prudent custodianship demands forward-thinking and continuous upgrades to avoid exactly this problem. For decades Telstra Management and previous Governments, Coalition or not, have known this and deliberately not invested. We are now reaping that harvest.

Under the Coalition, how will Australia ever get Universal, affordabe Fibre to the Home/Premises?
When it is profitable for Telcos to do that! That's how the Free Market operates.
As we've seen for the last 20 years, Telcos are some of the most rapacious and profit-driven businesses on the Planet. They will invest the absolute minimum, whilst extracting every cent they can from their hapless victims.

If the "Free Market" would've ever delivered Fibre to the Home/Premises in Australia, it would've happened already in the most profitable market niches. After being beaten-up comprehensively in the Cable TV wars of 1997, Optus won't ever take on Telstra again in new infrastructure in open competition. Telstra has no interest in competing against its own established network. As consumers, we're screwed: which is why the ALP had to invent NBN Co.

The failure of the HFC Cable TV rollout and business is exactly what "The Free Market" will deliver in Australia. If Telstra can't own it and dominate, then nobody else can.

This is why Mr Turnbull and his Coalition experts are so confident they can and will deliver on all their promises: What they are promising is not what most people are expecting. Read the Fine Print!

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