Sunday, 31 March 2013

NBN: Cost of FTTN node-to-premise fibre upgrade

One of the planks of the Coalition NBN plan Cost-Effective technology choices, not ideological. They've criticised Labor's process at arriving GPON Full-fibre network to be deployed by a Government Business Enterprise.

The Coalition assertion is that no "Cost Benefit Analysis" was done, whilst discounting the Expert Panel assessment and report as irrelevant. That's a valid political argument and one that Labor has to address sufficiently for the electorate, it's not a technical, economic or National Benefit argument.

The Coalition has to defend its own NBN proposals according to the benchmarks/requirements it places on Labor.
One question that follows is:
Is it Cost-Effective to upgrade an FTTN network to node-to-premise fibre? Where's the Cost Benefit Analysis?

Previously, I've costed the NBN Co GPON FTTP as:

  • $2 Billion in common infrastructure (Transit networks, PoI's, facilities), or $16.5M per multiple Fibre Serving Areas connected to Point of Interconnect (PoI).
  • $1,340 average per-premise connection cost, plus $845 (est) copper deconnection fee to Telstra.
My guesstimate of the connection cost is:
  • $300 upstream costs to FSA.
  • $300 Fibre Distribution Area loop. (12.1m per premise, $100 fibre, $200 labour+materials)
  • $300 Connection-to-Premise: drop-cable, pit/splitter, lead-in, external wall mount
  • $400 electronics: Internal (powered)  Optical Network Termination + head-end GPON electronics. Guess $250 CPE and $150 head-end.
A full-coverage FTTN is likely to cost $1,700 per premise passed, not connected, according to Telstra estimates. If implemented by Telstra, the common-infrastructure, $2 billion, would already be in place. 

The node install costs would cover upstream costs as well.
The 2005 minimum-cost estimate, $4 billion services for $4-5 billion, sets $1,000-$1,250/premise passed, not connected. Subscribers are responsible for their own Customer Premises Equipment, CPE.
This was for 6-12Mbps, ADSL2 160-lines/node @ 1500m, at the "pillar" or distribution area level.

From a statement by Prof. Reg Coutts, that over half the cost of an FTTN is in the node electronics, because as Mr Quigley of the NBN describes, "it needs as much processing as mobile phones", then we can estimate $600/line or $100,000/node.

If Multi-Service Nodes have been installed and the uplink and upstream network are properly dimensioned for upgrade, then only two costs will be different:
  • the upstream to FSA is zero-cost, modulo sufficient uplink speed and capacity.
  • the electronics. The CPE will be the same cost, but the node line-card may be more expensive (different technology, more hostile environment, smaller cards, low-volume production), say $250.
  • Summary: save $300, add $100 per premise
    • $1,340 - $300 + $100 = $1,140 full connection.
    • = $600 premise passed
    • for 12M premises, min-cost $7.25 billion.
    • + $540/premise connected
    • for 8M services, $4.25 billion connection
    • $12 billion total project.
There is more...

NBN: Cost per premise of FTTN

Sol Truijillo suggested in 2008 that full (98%) FTTN coverage (to an assumed 8.6M service addresses) would cost over $15 billion: $1,750/premise to the incumbent
vs $1,340 for NBN Co's current FTTP.

Presumably this was for 6-12Mbps: 1500m ADSL2 or VDSL2 quoted in 2005/6, 160 lines/node.
[Telstra swaps between 6Mbps and 12Mbps in their briefings, with multiple projects outlined.]
12-25Mbps, 800m VDSL2 as deployed in the UK would be much more as many more smaller nodes (40 lines/node).

Telstra have been coy about their FTTN design and costs, but in 2007, in a response to the G9/Terria proposal, claimed they could achieve 25Mbps with VDSL2 ISAM's from Alactel over 1500m. They also claimed a 40% reduction on nodes by re-architecting the copper network versus the G9/Terria "leave the copper as it was for phones" approach of G9/Terria.

Whilst Telstra did include VoIP cutover [tls385 doc], nothing in their briefing papers suggests they costed more than passing premises, as opposed to connecting and activating premises.

Telstra is charging NBN Co around $845/line disconnected, plus considerable rental charges for facilities access and pits-pipes-conduits (a 25% higher post-tax NPV ($5B vs $4B) over 30 years, vs 10 years, both with a 10% discount/interest rate).

Telstra never exactly describes the Customer Premises Equipment (CPE). The closest is "home gateway" mentioned by Jamie Chard on pg 16 of the TLS-389 briefing transcript. Mr Chard explicitly mentions "remote management" and "plug and play", in the context of customers purchasing "units" and self-installing.

From this absence of detail, I can only conclude that the Telstra FTTN, unlike NBN Co's FTTP, pushed the cost of the CPE/NTU (Network Termination Unit) onto the customer. This is a $150-$350 additional cost, further tipping the balance away from FTTN.

We know from the TransACT experiment in 2002, that the cheapest deployment of an FTTN will be $800/premise (55,000 premises, $40M): aerial with fibre transit and new copper cables, with overlaid PSTN and VDSL networks. VDSL nodes did not provide any telephony (VoIP) services.

Presumably, this was only for passing, not connecting premises. Also, in private correspondence, I've been told the nodes were not "fully populated". Although nodes could serve 32 connections, only a few VDSL line cards were initially installed, reducing deployment costs.

The TransACT PSTN network was separate with "super-nodes" of around 500 connections.
The Motorola VDSL premises devices were expensive and later replaced with low-power, smaller units. From (a single) personal experience, connection was a half-day by a team of three.

Looking at the Telstra & Terria/G9 docs, I can't find definitions of what they're counting in the install.

  • is it 'services passed' (and cutover to PSTN-via-the-Node)?
  • or 'services connected'?
My guess, it'd cost $250-$500 to install a Network Termination Unit in a premises. $150-$200 for the boxes and $100+ for the install.
It's easy to fudge FTTN costs by shifting the NTU cost to the subscriber, whereas NBN Co supplies the external fibre connection point and the NTU boxes, but does charge a separate fee for them.

There are 3 things that have been bothering me about the FTTN that on the public record but not mentioned by anyone:
  •  The cost of electronics was estimated at over 50% of the node costs in 2009 [Reg Coutts of the Expert Committee Report]. The 2005 TLS technology briefing docs cite a 20-year life. These are not just 'sunk' costs, but upgrades cost either for new line-cards, or removal of the Nodes and running GPON anyway.
  • Mr Quigley on Inside Business described FTTN as like Mobile Telephony, needs lots of electronics. it's more akin to a kind of a mobile network in terms of the amount of processing that you have to do to get the highest speeds.
  • Sol Truijillo was reported in 2008 that a full (98%) FTTN-NBN would cost $15+Billion.

Per-premises Fibre costs:

Telstra 2005/6 FTTN Links:

TLS385 Technology Briefing: Jim Moore, p8
All PSTN services in the footprint area will be migrated to a Multi-Service Access Network with an IP core.

Prof Reg Coutts, NBN Expert Review Committee:
“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. 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.”
“Telstra have made the point themselves; they cannot build a business case to reach 100 per cent of Australians [with a fibre-to-the-home network]," Conroy said. “The best they have said they will be able to do is to reach 60 per cent of Australians. That is five capital cities and a little bit up and down, north and south of Sydney.”

NBN: Cost per Premises of Fibre

What is the cost to NBN Co of building the PoI's and Transit Network (by 2014): A: ~$1950M
What is the average cost to NBN Co of deploying Fibre to a premise? A: ~$2,185
What does Telstra get for each disconnected copper line? A: ~$845

Average per-Premise Install cost: $1340 [$2185 - $845]

Per-Premise Install cost will include at least:
  • Planning, supervision
  • Transit, backhaul, shared hierarchy facilities/infrastructure and PoI's.
  • pits, pipes, ducts: new and existing.
    • Including new pipes under-street and between pits to accommodate the new network topology as well as remediating unusable pits, pipes and conduits.
  • lead-in pipe, existing or replacement + drop-cable
  • Fibre-loops in Fibre Distribution Area (200-300 premises).
  • On-street fibre-pit, shared between adjacent premises.
  • Premise External Fibre Connection point/box (termination of lead-in)
  • In-premises cabling, conduits, fibre termination point and powered ONT (Optical Network Termination)
From the 206,000km total Fibre distance, there is one premise per 17m of cable.
From the road distance, 12.1m between premises.
The average inter-property distance will be nearly twice this as "roads have two sides".

The difference, 58,000km, could be the length of Transit network, an average of 480km per PoI.
This would equate to 24 cables of 20km each in Fibre Distribution Areas. The Pirelli/Prysmian 6-core underground cables contain 864 fibres (144 per tube, as 12*12-fibre ribbons) and are built for this trunking.

I have no estimate for the length or cost of "drop" or "lead-in" cables, for which Corning has the contract. They also supply a 4-tube non-filled cable.

75% of Premises will be underground (and use full length of Telstra ducts & pits), for which a higher rental (OpEx) will be charged and will cost more to install (CapEx).

There will be some remedial work, in replacing full or unusable ducts. This could cost $55/m for trenching, add conduit, labour, hardware and planning/supervision.

Around 2002, TransACT passed 55,000 premises for $40M in the A.C.T. This was all aerial deployment (Electricity poles), with 32-port VDSL nodes @ 300m, or roughly $800/premise (passed).
This compromised both a fibre backhaul network and new "category 5" cable for the last 300m.

The topology allowed radial coverage vs the "along a single cable" of the PSTN/Copper C.A.N., considerably increasing the number of premises served per node.
The Telstra 2005/6 FTTN documents cite 160 premises/node for 1500m which scales to 40 premises/node per 800m and, at best, 20 premises/node @ 400m.

This provides a ballpark confirmation of the estimate:
  • $1500/premise underground
  • $900/premise aerial.

In 2002, there were ~72,000 "Distribution Areas" in the Telstra Copper C.A.N.
In 2005 FTTN docs, Telstra cites 8.6M "service addresses", suggesting DA's average 120 "service addresses", potentially 160 services (10M PSTN services have been cited).
I have no information on

NBN Co Corporate Plan, 6-Aug-2012. p37, 75
Telstra 2011 Definitive Agreement, p2
(2002) Connecting Regional Australia, data on DA's and Fault Rates.
The 2012-15 Corporate Plan projects that the FTTP network will be constructed by passing more than 206,000 kms of physical network distance (based on network configuration and covered road distances of 148,000 kms). 25% of the premises are expected to be passed aerially in the Local network, representing 35,000 kms of aerial deployment. [from p75 of NBN Co Corporate Plan]
The "Discounted Premises per Year" below is the Premises-per-Year divided by (1 + 0.10)where 0.10 is the 10% Discount Rate, and t is the year number.
This is summed into "Cumulative Discounted Premises per Year", right-most column.

This Discounted figure allows the known notional dollar cost to be converted to a fixed per-premise fee from the post-tax NPV figure provided by Telstra.

NBN Co Fibre Deployment Only




2014$1961.76MCommon Cost (raw)
...2021$2,173Inc cost/premise (raw)

2014$1950MCommon Cost (rounded)
...2021$2,185Inc cost/premise (rounded)

Telstra Discount rate = 10%,
Post-tax NPV of disconnection over 10 years = $4B
$4,000,000 / 6763.31 = $591.426/line Post-tax
$591.426 / 0.7 = $845 Pre-Tax [Tax Rate is 30%, from Reuters Financials via Google Finance.]

Telstra 2005/6 FTTN Links:

Optical Fibre Links:

Media Release on Fibre Contracts, 17-Jan-2011.

10 August 2012, "How Fibre Optic Cable is made"

 26 February 2013, Progress on the Pirelli/Prysmian contract.

Thursday, 28 March 2013

NBN: A last chance for sense

After the Rudd-Crean-Gillard "WTF circus" last week, the Liberals don't just look like winning in September, but possibly getting enough lower house seats to rule without a Coalition.

But we know that the Australian Electorate is a) very 'twitchy' and b) has a long memory (ask the Democrats about Meg Lees + GST).

If Abbot exhibits just one moment like the Mark Latham "handshake" with Howard, then they've lost and the electorate won't willing reinstall Gillard-Labor, but support everyone else. A Senate with Katter 's Australia Party getting 12% of the vote and a legitimate balance of power: does that strike hope or fear into the hearts of Voters and Politicians?

I've seen a poll quoted (sorry, unsure source) that said two-thirds (or 75%) of Australians/Voters (can't recall) wanted the NBN.

If someone cares to do that survey for Rural, Regional and Remote voters ("country") and ask specifically about "Fibre to the Home", I'd expect around 90%, but that's a guess.

As a country, we have just one chance to get built a sensible 21st Century Telco infrastructure: ubiquitous fibre to premises. Otherwise we'll be locked into whatever is delivered in the next five years by the economics of "The Wide Brown Land", our single dominant Telco and the "Traditional Telco Pricing" model favoured by all seemingly all Telco that can build infrastructure.

Just look at the railways and Sydney roads to know what our future will hold if we don't get ubiquitous Fibre to Premises now: you cannot design a more expensive & inefficient system for either. There is always money for "necessary" upgrades and small "improvements", but never enough to wipe the slate clean and do what was obvious, easy and cheap 50-60 years ago.

Just how 'dead' does Gillard-Labor need for Abbot to keep up the relentless rhetoric?
The Liberals can afford to lose a few of their votes to embrace some sensible economic reforms started by Rudd, Gillard and Swan in the interests of future economic productivity and competitiveness: with an FTTP NBN as the first.

Turnbull-Fletcher in my opinion, need to convince their Party, especially their leadership team that continuing the FTTP NBN won't be a cowardly backdown (75% of voters now want it continued), but can be spun as a very positive and far-sighted policy move.

The one Really Big Thing that the Liberals can now do with the NBN is debate the roll-out and financing and stop the niggardly, "mean and slippery" sniping about it:

  • Can we find better ways to finance the $1500/premise for the Fibre component?
  • Can a reasonable Public-Private Partnership be established which doesn't see Telstra continue to gouge the community for substandard services?

If the private sector is allowed to lock areas into Fibre to the Node, then for the foreseeable future, 50 years, those areas will never be able to "economically" justify Fibre to the Premises...

Gillard-Labor can't win this next election and the electorate really don't want to return them, but this one issue, especially in Country areas, can prevent Abbot gaining power. This is something Abbot didn't grasp last time around: taking down your opponent does NOT make you a winner.

For the sake of their Party and the future of this nation, I hope that Turnbull-Fletcher can sway Abbot and friends to understand, unlike 2010, that there are two sides to winning:

  • stopping the other side from getting in, and
  • ensuring you get in.

In my opinion, if the Liberals publicly commit to ubiquitous Fibre to the Premises, starting with Country regions and figuring out a sane, economic and efficient roll-out strategy that isn't solely driven by some long-lost ideological reason, then they'll go a long way to fulfilling both sides of the electoral equation.

Otherwise, we'll be seeing a lot of Bob Katter on our TV's.

Monday, 18 March 2013

NBN: What do we agree on? Disagree on?

I'm wondering if it's possible to document where Grahame Lynch and I agree and disagree.

There will be areas that we'll never agree and won't change the others opinion.
One area I think we are in furious agreement:
The basics {technologies, timeframes, guaranteed rates/latency, priority areas} have never been debated. This has to include a reasonable stab at a Cost-Benefit Analysis (CBA).
We probably disagree on needing a much larger view of CBA than solely the accounts of NBN Co and using a non-commercial Internal Rate of Return.

This was new to me and I thank Mr Lynch for it. I think the idea of modelling a reduced coverage of premises is good, as rollout can be delayed until the project is cash-flow positive. I have yet to understand the impact on the rollout of leaving slabs of brownfields copper around.

But unfortunately Jenkin also falls into the trap of assuming I am advocating a complete FTTN network and argues from that viewpoint. I don’t. His entire opus suffers from this misapprehension and assumes I am defending FTTN. 
I am very happy for there to be as much FTTH as is cost-effective. Greenfields, definitely. Places where the copper cannot be upgraded, certainly. Fibre to the kerb or basement and then VDSL2 to many of the 30-35% of Australians in multi dwelling units with existing Cat 5 or other internal cabling. I’m happy with that given the difficulties in getting fibre to their premises, a policy that was the orginal intention of NBN Co itself. 
Ditto, the prioritising of network remediation and investment in the places which cannot get +8Mbps ADSL now, which means that premises getting high speed Docsis 3.1 and other platforms are placed at the back of the queue. Suddenly we have a scenario where by reducing the extent of FTTH from 93% of premises to maybe just half overall, we still end up with most people getting 50Mbps to 100Mbps and everyone getting 25Mbps minimum.

Here's The List from Mr Lynch's article. (I've never met Grahame and don't presume to false closeness, hence the formalism that he has reciprocated with.)

1) Jenkin claims it is “a nonsense” to claim that an FTTN network replaces some of the copper with fibre
2) Jenkin claims that elderly people and the remote get ten times bandwidth increase guaranteed – thus meaning they can all access telehealth services over the nbn.
3) Jenkin claims that my point that we don’t need FTTH to see global TV channels is “bogus”
4) Ross claims the NBN will end phone call charges. Jenkin claims he doesn’t understand my objections to this.
5) Jenkin implies that only “an elite” can currently telecommute & the NBN’s universality changes this
6) Jenkin says that just because medicare won’t fund telehealth in metro/fibre areas doesn’t mean it won’t happen or cannot be counted as a potential nbn benefit
7) Jenkin argues that the failure of ftth networks in flooded areas was a backhaul problem common to all network access media & that FTTN is no better
8) Jenkin suggests that it is “nonsensical” to acknowledge the power usage impacts of customer devices on a FTTH network
10) Ross claims that the NBN's FTTH topology will be cheaper to maintain, ignoring that the most expensive part of the copper network – in the bush – is retained. Jenkin claims this is deeply wrong.
11) Jenkin agrees with Ross that the cost of the NBN is a net zero
16) Jenkin says “since 2005, telstra has steadfastedly demanded sole access to an FTTN it builds”.
18) Jenkin dismisses NBN Co’s obvious plan to increase arpus through speed tier and contention charging imposts as “confused”
19) Jenkin claims that the NBN is a response to the 15 year failure of the “free market”
20) Jenkin defends Ross’ claim that the coalition policy will lead to local monopolies and inflated prices

This is an important point. Telstra cannot remove the copper, or turn-off copper services, until a Fibre Service Area (?) is "declared".
It will not – they will coexist in those allegedly narrow ducts for 18 months and NBN Co bears the cost of any damage done to the copper by the installation of the fibre. The copper will not be decommissioned until 18 months after the fibre is laid. Any issues with ducts will be pronounced in an FTTH rollout that is forced to remediate the existing copper.

  • How does the NBN Fibre fit in those ducts alongside copper?
  • How does Telstra remove the copper without disturbing Fibre services?
I need someone who works in this field to tell me how that can be done. I know active LAN/server-room cabling well enough and these changes are tricky...

I won't be sold on the replacement of large cable bundles with Fibre (to Nodes) as significantly affecting performance/errors. Whilst the majority of ADSL faults occur in these bundles, it's not due to cable defects but interference and reflection issues. Yes, some small fraction of the Local Loop Copper is small cables that will be reused from Nodes. Telstra in 2005 (ADSL2, 12Mbps) cited remediation and replacement of these would be a major cost.

I still hold the Technology Optimist view on the potential impact of Telehealth on our 9+% of GDP spent on Healthcare. As Dr Eric Topol of Scripps Institute observes, "Clinicians have no incentive to reduce Healthcare costs". If the gatekeepers aren't behind any change, let alone Major Reform, then it cannot happen.

Turning Telehealth potentials into actual reform and savings is a much bigger debate and a problem than larger than "build it and they will come". Mr Lynch is right, the NBN will produce diddly squat unless someone assumes responsibility for, and drives, the realisation of outcomes.

On 10Gbps SFP's. $94 is not what CISCO charge for them, neither will it be that little from whomever supplies the Nodes. The last time I went looking seriously for retail pricing on SFP's was a year ago. The 40Gbps and 100Gbps SFP's may have brought the pricing down on 10Gbps. Great news if so.

On simultaneous use of networks: I've worked on the coal-face of Telcomms service delivery long enough to know that dimensioning for peak-loads is the biggest economic challenge. Determining "just enough" is both a moving target and very subtle. Too much and you die under a mountain of debt, too little and customers revolt and leave because of inadequate levels of service: an optimisation tightrope.

If you don't dimension a phone network to handle Christmas Day, although it works the other 364 days, people will drop you in a trice if they have the chance. Similarly, if your Broadband network doesn't survive a Grand Final event, it's a bust.

This point I get and agree with, modulo the the ONT's will provide a Telephony (POTS) connection and that "Type 1" VLAN traffic with high QoS is directed as carrying voice, for a significant premium. How RSP will pass that on, I don't know:
 Phone rentals as we know them today will end but not associated call charges.
I've lost track of the argument over resilience in natural/man-made disasters and war, revolution etc not covered by my household insurance. Active devices in the field lose resilience because of local power issues. We saw that with TransAct nodes in the 2003 fires. Are we arguing the same case? I suspect so.
Ross claimed FTTH would be better in a flood or a fire, I would argue it is one of several bad options given its power vulnerabilities.
On the total power-bill and the incremental cost of FTTN over FTTH. Mr Lynch makes a good point that the power-draw by new devices might outweigh all other concerns. I'm not sold... Consumers are demanding more power-efficient devices: Plasma displays are being replaced with LED illuminated LCD's.
I can see arguments both ways. I think we agree that total electricity demand will rise with both FTTN and FTTH. We differ in how we want to account for the costs and who wears the charges.

This next point matters to those already with the worst phone services and no ADSL. If our clever researchers can figure out a way to run Fibre underground for twice the price of the hardware, that would change the economics. Otherwise these folk get Fixed Wireless and Satellite:
The copper network in the last 7% of the country will be retained and it accounts for more than a third of the cost of maintaining the network today.
The confusion of IRR and Gross Margin, EBITBA and Net Profit (before and after Tax) is immense.
Mr Lynch is right in pointing out the incorrect usages and wrong inferences drawn.

On the various Telstra FTTN proposals: When I read the documents available on-line and Paul Fletchers detailed history, I read that Telstra wasn't offering open access like the NBN.

 If correct, this is an important point. My limited reading/research hadn't turned this up and I've no reason to think it's been fudged:
All FTTN and FTTH proposals since 2008 from all parties have called for bitstream to replace ULL. This is uncontroversial and supported by all and it is quite frankly disappointing that Jenkin would perpetuate this meme.
I have an optimistic view on ARPU's, rising traffic volumes, and increasing profits caused by Demand Elasticity. This isn't blind faith, I saw this up close and personal in 7 years at O.T.C.: it made them one of the most profitable and cheapest International Telco globally.
It's a topic that needs fuller analysis: it could be the surprise that really makes this project.

I think we agree on some basics.
This is Mr Lynch's closing and for me it goes to the heart of the matter:

It lies in a proper cost benefit study that dispassionately examines all the technologies and their likely cost/performance paths, the one that should have been done in 2009 as a follow-up to the heavily redacted advice of the expert panel and the back-of-the-napkin plane trip. The study that the government itself demands of all other major infrastructure projects. That the Productivity Commission wants. That the Opposition wants. And that NBN Co itself has recently canvassed. 
That is what is really required. And the bloggers and NBN fanbois/naysayers who argue their case 24/7 could actually then become participants in the digital economy rather than combatants in it.

NBN: the start of a real discourse?

Grahame Lynch rebutted 20 of my responses to his 50-points on the NBN.
I appreciate the civility and thoroughness of his reply. If the momentum can be kept up, maybe an informed debate will be possible.

This was my reply to him in the comments. [Corrected spelling of his name]


Thanks very much for real comments and real debate, not name-calling and the 'ignore inconvenient questions' both Conroy & Turnbull practice. What has been completely missing, IMO, since 2009 is an informed debate, which you've graciously entered into with me here.

I thought Quigley made an honest attempt at putting this on the Agenda recently and that fell spectacularly flat, very sad.
I seem to recall the Chair of NBN Co made a not dissimilar comment in the last 6 months as well.

We, the Australian people as Electors and Telecomms subs, are going to live with, and pay for, the results of the NBN policy for a *very* long time. Is it the biggest Infrastructure Investment this (21st) Century? Not nearly if you count Mining, not nearly the biggest Fed Govt expenditure if you count Defence expenditure.

But the most important Civil Works project, either as an enabling Technology/Productivity Multiplier OR as Massive OverExpenditure and waste/inefficiency we can't afford...

Thanks for not just trotting out Political Lines and seriously debating issues. That's a breathe of fresh air.

You've informed me of things I wasn't aware of and that will make me reconsider things - that's the essence of good public discourse.

I think FTTP everywhere was a Big, Hairy Audacious Goal, worthy of the likes of Apple and Google. Was it the only option possible? Not by a long shot. Was a Big Bang Implementation the only way to go? Maybe... The central question was: "How do we get Sol and Telstra to work with us, not against us"... Steam-rolling and side-lining them was ONE answer, but was it the best??? David Thodey seems like someone that will listen and talk, though he'll robustly represent the Telstra commercial position.

In the context of third-wave GFC stimulus package, the NBN was great economic support to the Nation and Aspirational like the Carbon Trading Scheme we never got.

Labor under Rudd and Gillard have, all too often, failed  to Execute well and even properly.
They've thrown away so many great opportunities and Snatched Defeat from the Jaws of Victory so frequently its unbearable. There should not have been a Hung Parliament if the polls at the start of 2010 could've been kept.
As a Hung Parliament, Gillard & Co have enacted a bunch of good legislation, shepherding it through a difficult group.

But as Political operatives, a complete Bust... [Whatever you think of the Howard Govt, he was a tactical Politician without peer. The contrast to Rudd then Gillard is stark.]

I'd like there to be an NBN debate, not mere political posturing.
As a country, we need to improve out Economic Competitiveness (Gina Rinehart may be extreme, but isn't all wrong) and address the falling Economic Productivity of the last decade [driven in part by lag-time investment-to-production in major mining projects].

Thanks for taking this seriously and kicking it off. Much appreciated.

steve jenkin.

Sunday, 17 March 2013

NBN: ReInventing Government Service Delivery in The Age of the Internet.

What impact might Universal fast broadband have on Government Service Delivery Costs?

Exactly none if there is no fast, ubiquitous network or if Government Agencies don't rethink their Service and Delivery models.

I suspect that Centrelink and FAHCSIA may become one of the largest RSP's in Oz, offering 'free'/cheap Internet access for job-searchers (web searches, video interviews and VoIP) and discounted Internet for pensioners to access banking, Government services, maybe more.

Moving to tele-access from physical offices would be a major cost saver for Government:
  • people can work from home [savings on accom & o'heads']
  • people can be contracted from country areas: cheaper hourly rates and with higher unemployment rates, a much more committed workforce.
  • on-demand in-bound call centre capacity. Possible to pay $20/day on-call, with 30min work segments.
  • but most of all, very detailed records of "work performed". Can have call centre staff work very 'efficiently'.
I think Centrelink & Fahcsia could shave 25-33%, even 50%, off their service delivery costs whilst improving their compliance monitoring and fraud detection. Random video calls and automatic face detection to find cheats and multiple-claimers.

If they have robust methods of quickly detecting fraud, the service culture might swing around from "guilty until proved innocent" to actually helpful, as they are with people moving into retirement, and because of simple, fast access, might remove or reduce assessment delays.

For anyone who's had to struggle through their process, this would be a real boon.

But is that possible? Would it work given our resistance to the Australia Card.

They might even be able to fly-in to disaster zones and setup temporary mobile networks (based on WiFi mesh and a Satellite or Fixed Wireless uplink), supply merchants with 3G/4G EFTPOS devices, handout cheap smartphones (they get pictures of the people and GPS co-ords for tracking them), and provide charging stations which can also include a guarded ATM.

Centrelink can transfer money into accounts, but if people can't access the Net to do their banking, or convert bits into cash or use EFTPOS, then it's useless. How you solve the "I don't know my bank account number" problem. Maybe "on-line secure vaults" are needed. Good freebie/cheapie for AusPost or Centrelink to get into. I like the idea of not just using passwords and questions, but a live video call to a real person to confirm ID against a stored photo or ten.

It's not unreasonable for people to register a picture with Centrelink & Fahcsia when they claim benefits.
When it's only a 2 minute task to update the picture (direct from a video-call at home) in a regularly scheduled contact (that'd be nice: "how are things going? What can we do for you? Are you working again?"), then people should be happy to comply.

As most people get into the system, if they turn up to an Aid Station without ID, wallet and phone [the majority case in a disaster], then they can get positive ID and be issued with a smartphone containing a certified ID + signature.
If you aren't already registered, then you only have to find 1 or 2 people in the system who can vouch for you, and afterwards you need to validate yourself properly.

NBN: The Rivers of Gold scenario.

In commenting on the CommsDay puff piece meant to rebut The ABC's Nick Ross "All Known Issues" [Part 2], I couldn't remember anyone floating an analysis of
What if NBN Co does really well?
All we've seen are the doom/gloom scenarios and assertions of "Many Projects Fail, the Govt/taxpayer will lose their shirts", but what if NBN does really well would that be interesting?

If NBN Co succeeds beyond their wildest dreams, like Apple, Google, Amazon, Facebook... or the railroads of 1890's, what will it look like.

First, the numbers.

NBN's 2012 forecasts for sales in 2021 are ~$6B on 8.5M premises passed. The 2010 sales forecast was $5.6B in 2021 and $7.1B in 2025. In 2025 they expect 10.5M premises, from memory.

ARPU/mth forecast for 2025 is $70+/mth ($900/yr?)
Cash Flow Positive projected for 2021, project Break-even date 2033 and IIR 7.1%.
2021 Gross Margin is around 75%.

Telstra has a Price-Earnings (P/E) ratio of 15.9 on Net Income of $3.5B, Sales of $25.5B, better than the industry average P/E of 12.5.

Telstra achieves: 75% Gross Margin, 40% EBITD Margin, 18-19% Operating Margin, 12.75% Net
profit margin, but is held back massively by under 1% growth on Sales. They can't grow their market, while NBN Co will experience nothing but high-rates of growth for the next 20+ years.

NBN sales of $7.5B  in 2025 with same Net margin as Telstra is $1B Net profit with a Market Capitalisation (Mkt Cap) of $12.5B-$16B, using the same P/E of 16 as Telstra. For a $30B investment, that's not a good valuation.

But within 5 years that Net income will double as both ARPU and take-up increase:
a $25-$32B Mkt Cap, starting to look OK as a valuation.
The market does value growth and market dominance (~100% of fixed-line Customer Access Network or CAN) highly.

It would make sense to value NBN Co on its future earnings potential as a high-growth stock, not as a 'mature' business with steady cash flows & margins. P/E's of 20-30 are more realistic:
Putting the 2025 valuation at a respectable $30B, rising to $60-$100B within 5-10 years. More if revenue has taken off.
I think there's a real possibility of both ARPU and take-up rates moving well ahead of projections and hence profitability to be much higher as Gross Margin will skyrocket because most of their Expenses are Interest and Fixed Costs while the marginal costs of increased bandwidth is very close to zero (they charge the RSP's, but might upgrade transit networks). The marginal (additional) revenue over 90% profit, increasing the Gross Margin well above 75% projected.

Because of their cost structure (mostly sunk fixed costs, low fixed operating costs, modest variable costs), NBN Co can stimulate demand by lowering line rental costs, especially for higher speeds and increase profits.

This is  driven by Demand Elasticity... Lower the price 10%, increase sales a lot more, say 20-30%, with a big boost to the bottom line, because costs increase maybe 1% and revenues 10+%.
If your variable costs are 2-5% of total costs, then you increase profits by a large fraction (>50%) of the demand increase. I suspect that the Elasticity is much more, but don't know where that is documented or if it has been researched.

This commercial understanding underpinned OTC's explosion in Sales and Profit in the new ear of Voice (cables & Satellites, then fibre) starting around 1975.
They understood "People love to talk" and even though they were a monopoly and could like Telstra, "doing nothing and charge whatever the market will bear", they actively encouraged new technologies and exploited them, driving profits with Demand Elasticity when possible.

There were 20+ years of steadily decreasing Overseas phone charges ending at the 'Telstra merger' with a cheap service from a US phone company that connected Sydney and Perth more cheaply than Telstra STD via two international calls. How could that be economical or efficient? It highlighted the difference in commercial approach between Telstra, the classic Telco model, and OTC, more insightful marketing-driven approach not unlike the current Internet Revolution.

In 1984 when Group 3 Facsimile (Fax) broke through on ordinary phone services, OTC created the "0015" access number to both address Circuit Multiplication Equipment (CME) problems and with dedicated links to Overseas partners, provide 10-12 fax calls on a single 64kbps digital circuit. Customers got a better, faster service with no errors, and OTC, for a very modest investment, decreased costs by 10-fold.
In 1986 brought their national e-mail service, Dialcom, on-shore. Telstra started an offering some time later. The two services were combined in the merger.

The other wild-card is:
The Internet, its content, uses and access devices is still rapidly evolving. You aint' seen nothing yet.
What could these surprise uses be? We just don't know, like Facebook, Twitter, the smartphone and Tablets, new services take off quickly but always come as a surprise. That's the nature of disruptive innovtaion: most people don't see it coming until its unstoppable, like a freight train. To argue "the Internet Revolution is Over", or, "unless you can show me accurate predictions, you're talking baloney" is to argue against the biggest, most productive Innovation Engine the world has ever seen: Silicon Valley. Hewlett-Packard started the revolution in the 1960's and it shows NO signs of letting up.

The only questions about The Next Big Thing are, not "if it will happen", but:

  • When?
  • Just how Big?

Something as simple as "Free WiFi in all shops & Malls" diverts traffic from mobile networks onto Fixed line networks, enabling tablets & "Augmented Reality" devices  like Google Glasses, to do their thing at multi-megabit rates and provide that effortless experience. On WiFi, 802.11n is 300Mbps, isn't
the next round up around 1Gbps? That will have to make a difference in what devices can do.

If there's free high-speed WiFi generally available, 3G/4G networks get freed up in Metro CBD's, Mobile Service Providers can deploy very cheap "pico-cells" to maintain high-margins, while the majority use of 3G/4G will become "access whilst mobile":
 Voice and Video calling, Content Access, Locality-aware Apps (Augmented Reality etc).
There will be three effects coming out of the high Demand Elasticity:

  • higher ARPU/customer
  • more customers
  • increasing Gross Profit Margins

Lead to exploding Sales Volumes, at more than mere 'exponential' rates.

That's a Gold Mine:

  • The break-even year will be well before 2033
  • the 2025-2030 Mkt Cap will be over $100B, maybe as high as $200B.
  • investors, large and small, will be scrambling for a piece of *That* pie!
  • the real question then comes, "When will it end?"

I'd like your feedback on this scenario possible? Is it probable? Can and will the NBN become future Governments' Rivers of Gold, the envy of the rest of the world?

We've already seen a sleepy, little, almost irrelevant Telco, OTC, that specialised in old technologies: Telegrams, Short-Wave long-distance voice and a little Telex, transform itself and continue a world-class evolution of service, profitability and affordability for 25 years.

The model is there and Australia has shown it is happy to fly in the face of conventional wisdom and back its homegrown innovation to great effect.

NBN: decoding Turnbull. [15-Mar-2013] Fairfax article.

I've stated my opinion on Turnbull plays "Barrister" when talking about the NBN and he disguises the lack of a Coalition Policy.

To this end, I thought publicly decoding his statements and interviews might illustrate my opinion, even help the debate.

Tim Lester in Fairfax media, wrote an article based on a video interview [09:54] ("Breaking Politics") on 15-March-2013. The NBN questions start around 5 minutes.

Summary: Turnbull made a single commitment, so unusual an act it caused specific comment. The rest is noise, FUD and hyperbole.

From the article:

Malcolm Turnbull has promised to release the Coalition's plans for a national broadband network ''months'' before the September 14 election to allow for scrutiny of the policy and its costings.
Turnbull has made a commitment to release something by July-14th. Unusually, a real statement.
Even Lister is moved to comment this is the first time Turnbull hasn't just used the weasel words: "in good time''.

''You can never criticise me for not providing a lot of detail,'' Mr Turnbull said ...
Wrong, that is all he's ever done. This is deliberately misleading and disingenuous at best.

''Australians will have more than adequate time to consider our policy and debate it.''
Noise... This sounds like a statement but contains NO information or commitment.

What's missing is the five fundamentals necessary in this debate:

  • The precise Demand Growth model used.
  • The precise Supply Side Growth model informing the limits of each technology, with the guaranteed service parameters, vs 'headline' or aspirational: entry-level sustained peak-hour bandwidth, maximum access rate and sustained throughput, minimum latency and commercial access arrangements and charges.
  • A geographic demand, need and roll-out model, including the percentage of premises each technology will cover. (vs NBN Co's 93% FTTP with max 25% aerial).
  • Firm costings, if not detailed, then with Expert opinions on the Risks, Relevance, Accuracy and Upgrades possible.
  • The user "affordability" and plan-pricing model.
Lister inserts this phrase in support of the Coalition position and devaluing the Government's commentary:
Minister Stephen Conroy has previously accused Mr Turnbull of having ''half-baked broadband thought bubbles'' rather than a plan.
I think it rather exactly, if colourfully, describes Mr Turnbull's statements and approach.

Lister continues by letting Turnbull reiterate the Coalition Playbook (unsubstantiated Speaking Points):
''The cost of this NBN, in reality, will shock people. If this NBN were to proceed with its construction on the basis of the government's plan, it would be likely in my view, and it's not an uninformed view, to take over 20 years to complete, and a hundred billion dollars,'' Mr Turnbull said. 
''This is the most reckless exercise in commonwealth investment . . . in our history.  To embark on a project like this with no budget, no cost benefit analysis. They have never said there is a limit to what you can spend.''
There is NO evidence or any plausible analysis outside the Coalition Playbook that supports any of these assertions, let alone demonstrates how the cautious NBN Co business plan might become an uncontrolled Defence Project. The Coalition has run a whole slew of irrelevant claims like these before.
This is a massive overstatement and only hyperbole: it's sole purpose is to engender doubt where NONE should exist. This is classic FUD (Fear, Uncertainty and Doubt) contributing nothing to the discourse.

Turnbull and Abbot should just claim: "The NBN will cost you a Trillion Billion Dollars and make your Grandchildren's Grandchildren live in poverty trying to pay it back." 
Mr Turnbull also said he doubted anything in the Coalition plan would surprise people.
''We will speed up the roll out. We will deliver the completion of the NBN sooner and at less cost to the Commonwealth and therefore of course, it will be more affordable to users,'' he said.
Empty claims, endlessly repeated. In the style, "We will pull a rabbit out of a hat and via magic and mystery prove We are Right and They are Wrong!".

How are Turnbull-Fletcher going to be quicker, cheaper and more affordable? Through Private Enterprise Magic, eliminating Waste, Inefficiency and 'extraordinarily' expensive technologies.

There are two things wrong with this Pulling a Rabbit Out of a Hat claim:
  •  NBN Co is employing the Private Sector to do the rollout. There are only a very small number of companies in Australia that do this work, and a limited pool of sub-contractors to use.
    • Are Turnbull-Fletcher thinking they'll import 100-200,000 workers on 457 Visas "to get it done, quickly, cheaply and efficiently"? That'd see an electoral backlash like none before!
    • The roll-out delays were due in the main with Regulatory and Third-party/contract issues and roll-out problems have been due to the private contractors not fulfilling contracts.
  • What happens when the Rudd-Conroy Expert Panel assessment of 2009 is proven correct?
This Overselling FUD approach might work in a courtroom with tight deadlines and a single event, but does NOT stand any analysis, critical or sympathetic when this is a lot of time for commentator to examine and break-down the "claims".

Friday, 15 March 2013

NBN: Turnbull's Barrister Tactics

Mediawatch recently got stuck into the ABC's own Nick Ross, including for an outburst recorded at 'Kickstart' conference. Turnbull had trotted out some B/S and Ross laid down a detailed and passionate rebuttal.

It (finally!) struck me that all along Turnbull has been playing Barrister: he doesn't answer questions or even acknowledge inconvenient facts. He's an expert at this game, and at Kickstart broke Nick Ross: he'd riled him for two years, long enough that he lost his cool and said something "stupid" in the heat of the moment. Which meant Turnbull "won".

As well, Turnbull & the the Coalition have released NO details of their policy: this is the root of most of the current noise & fury in the discourse, it's all speculation.

Turnbull has only made generic/motherhood statements about his NBN policy:

  • We will deliver "Cheaper to the taxpayer", "more quickly", and "more affordably to the customer". For a while I seem to recall claims of faster, too.
  • "we will prioritise those in most need"
  • "we will do it more efficiently"
  • "we will use existing technologies where available"
Barristers stock-in-trade is speaking without saying anything, but making the listener think they have.
This supports what they do: Make a convincing case for whomever hires them.

I wondered at the time, when Abbott tasked Turnbull with "kill the NBN", how he would cope with that, railing against Technology and Services he'd supported. It's just a job, it doesn't matter - this is the psychological adjustment that all Barristers have to make to cope with the cognitive dissonance of forcefully putting a position in which they might just not believe, but is antithetical to their personal views.

Barristers will take any side and strongly argue that case: it's what they do...
We don't actually know what Turnbull thinks, just what he says/writes, which I'm starting to give very little heed to.

Turnbull uses many tricks to not answer and sound like he's said something [and more, this is not my field of expertise]:
  • deflection, 
  • misdirection, 
  • conflating & confusing issues,
  • irrelevance, 
  • misleading, 
  • misquoting (half-truths, inapplicable models) and 
  • attack or "blame the questioner or victim".

Turnbull has succeeded brilliantly by having Nick Ross accused of poor journalism, when what's happened is:
a) there is NO policy detail and
 b) when questioned, he skilfully attacks the questioner and turns things against them. Just as he "took apart" witnesses in the courtroom.

So what we saw on Monday night was the result of 2 years of persistent stonewalling and unwarranted attacks taking its toll on an honest journalist. Nick Ross is not accused of asking the right questions and not giving up when he didn't get answers,  but when he was overcome with frustration, overstepping his employers guidelines.

Turnbull could have started his campaign by being truthful: "I will answer that when we release our detailed policy just before the next election. In the meantime, I can say ..."

The $37 Billion Question is: will Turnbull being "slippery and tricky" rebound on him and the Coalition? In a perfect world,, it might. But Politics is far from Perfect or Just.

Thursday, 14 March 2013

NBN: CommsDay vs ABC.

Media Watch pointed to the CommsDay "riposte" to the ABC's definitive article listing the issues around NBN. [Part 2 of article]. Written 14-march-2013.

Here's my analysis of Grahame Lynch's "50 problems". Commsday comments in this colour.
[18-Mar: Apologies to Grahame for misspelling his name]

For completeness, some disclosure: I don't work for, or hold shares in, a Telco, NBN Co or one of their suppliers or contractors, nor am I a member or supporter of any Political Party. Neither do I support the Labor NBN plan over the Coalition's unannounced NBN. I hold the position that either Policy with deliver better broadband access. My interest is for a clear and informed debate on what I consider the defining Technology of the 21st Century for national Business Productivity and Competitiveness.

“Over 80 per cent of the nation’s copper network is over 30-years old and copper expires after 30 years” - if the copper has truly expired how can it still be operational? Telstra reports fault-free performance of over 99% after all (98.7% for line faults, 99.98% for service availability).
Ross could've been clearer, he's talking about the economic or useful lifetime, a.k.a. design life .
Planes, trains and automobiles don't stop working suddenly on the day their residual value falls to zero. Like a clapped out old Gemini, it stills runs and can be still fixed, but it's no longer economic/profitable to do so. Replacing the old and worn out requiring high maintenance is cheaper in business. Accountants know it as Asset Depreciation, ending up with fully depreciated assets. They may or may not still work, but when you bought them, you decided it would be cheaper to replace them at this point than to keep maintaining, as maintenance costs explode and reliability/availability collapses around this point.
“A standalone reason for the NBN is that it replaces the expired ‘rotting’ copper network” and “The Coalition has not addressed copper’s age and need for refresh with its choice of technology” - actually, the FTTN topology replaces a substantial percentage of the copper line length with fibre, so presumably the potential for faults and diminished performance reduces accordingly. That’s actually the whole point of adding fibre.
This is a nonsense.
The whole debate is about the "Customer Access Network" (CAN) a.k.a. "the last mile" - the final connection from the network to the edge devices. Lynch is asserting that all designs with some fibre in the network are identical. That's as fallacious as saying after a puncture "the tyre is only flat on the bottom, it will work fine". The network elements are in series, one part depends on the next. The highest speed and reliability possible for any subscriber is set by the worst element in the chain of parts. This is the copper. To get reasonable speed, FTTN places part of the current exchange in the field, with only 400-800m of copper, not 3-5km. The security, reliability and maintenance of field equipment is woeful compared to fully protected & accessible equipment in controlled exchange environments.
This also hides or avoids one of the biggest cons in the Coalition rhetoric: "you can upgrade links from nodes to fibre is you want". It is at very best a half-truth, at worst deliberately misleading and deceptive. Yes, the electronics can terminate copper or fibre links to households, but from what I've read, each home requires its own dedicated fibre. The major cost-saving for both installation and maintenance/operation of the GPON system is the sharing of fibres. I believe 15-50 premises can share a single fibre. 
Because the ducts in the last 400-800m are the smallest in the system, they are also the most congested with copper. There is limited free space in the existing ducts. For an FTTN network with "optional" fibre, none of the copper can be removed while even one subscriber is using it, allowing only a very few fibres to be pulled. Once you pull in two extra cables, the only way to reliably remove the copper is to remove all cables in the whole line of ducting and reinstall new fibre.
You might try cutting and rejoining the cables one duct-segment at a time (between adjacent pits), but that's expensive in labour and NOT fault-free and introduces latent faults from dust & contamination. You get to pay and pay and pay for this approach. Fibre can be joined, but you want to install it in full lengths so it starts perfect. In 30-50 years of life, enough backhoes and other assaults on it will cause you problems, there is no reason to score "own goals" and intentionally reduce network reliability and performance.
We have seen exactly this misstatement before in Telecomms: Telstra upgraded their RIM's to support ADSL1. Not on all  240-480 lines, but only one in ten (1:10). Only a very few people will be able to upgrade from copper to fibre on the Coalition's FTTN proposal, but who knows, they haven't clarified what they are proposing yet, beyond "cheaper to the taxpayer, quicker, more affordably"...
“In short (fibre) will revolutionise healthcare for everyone especially the elderly and those living in remote communities” – The NBN calls for lower speed wireless and satellite connections to remote communities. It is also quite likely that many elderly people will choose not to subscribe to NBN internet services if they lack digital literacy skills.
This is a nonsense and a gross misrepresentation. The people named will get around ten times their current service speed, guaranteed.
The NBN is a multi-service fixed-line rollout, upgrading just the Customer Access Network, nothing inside the network. The majority, 93%, of premises, businesses and residences, are targeted for fibre (GPON) service. This  was the economic break-even distance where its cheaper to use the more expensive services, fixed (3/4G) wireless and satellite. These services are not just more expensive per subscriber, they are lower performance. Just as an 800m DSL-FTTN service is slower than a 400m service, but faster than ADSL2 at 1600m.
The NBN Co plan is to offer a guaranteed minimum access rate to subscribers no matter where they are and for the one price. This minimum speed, 12Mbps is not just faster than the average maximum rate available now, for the people in these service areas it will be more than 10 times faster than the best (1.5Mbps) they can get now. NBN Co will upgrade these slower services as technology improves. They've already doubled the rate to 25/5Mbps for Satellite contracted for 2015.
This is part of the sleight-of-hand in the Coalitions' discourse: they conflate maximum possible speed with sustained peak-hour throughput. They also ignore the related critical network performance figure, latency, the time for a packet to get from the subscriber premises to its destination. TCP, the mainstay of IP, declares packets 'lost' if the end-to-end latency is too high. There is already well documented large-scale congestion, with attendant high latency and collapse of throughput, in both ADSL services from RIM's and HFC segments.
The ACCC might take an interest in providers selling a service as "100Mbps" when it is unusable, i.e. Zero bits/sec, for significant and important periods of the day, such as the evening peak. For a Plain Old Telephone Service, this was called "Quality of Service" and expressed as a percentage, eg 99.99%. It meant that only 1 time in 10,000 when you picked up the handset to make a call, you didn't get "dial tone" or weren't able to reach the other party due to network congestion, usually on the links out of the local exchange.
Lynch is guilty of the same mischief here: Knowingly not comparing Apples with Apples. The NBN Co's 12Mbps guaranteed to all premises in Australia, with no congestion or poor latency on the local link is a world of difference to the "whatever you get" rate, high latency and peak-hour congestion already known for HFC and Telstra's RIM-based FTTN.
Rather than deliberately "calling for lower speed" services, the NBN is providing a guarantee of ten times the current speed possible and future speed increases. The reality of FTTN in the country is it just won't work or be economic, even in small towns. To get even 12Mbps, DSL-FTTN requires a maximum 800m distance from the node. That's a wire distance, not line-of-sight or road distance. Australia is one of the least densely populated industrialised countries (and the most highly urbanised, go figure!). Where is the sense in rolling out out a $50,000 node, with a 5-10km fibre backhaul to town, and ony serving 2-4 premises within 800m? That's economic madness. In this example, direct to premises fibre is cheaper, faster, better. Small towns have the same problem, their low density. Expect 2-4 premises per hectacre (half-acre blocks, wide streets, parks & reserves, longer than wider footprint) and a 400m rule will cover 25-33ha, or at the very best, 50-100 premises. That $2,000/premise is more than GPON FTTP.
Lynch is also guilty of applying double standards, blatantly favouring his preferred technology, the FTTN/HFC. He allows, even spruiks, the ability of DSL-FTTN to provide increased speed as technology advances, but denies or ignores the same possibly for his "evil alternative" (my words).
“It will revolutionise power distribution through the ability to micro-manage peak electricity demand” - There are already substantial smart grid projects underway across Australia aimed at doing that and they almost all use wireless platforms which are superior at tracking spatially disparate assets. The NBN can be used for smart grids but it will not revolutionise them, mainly because FTTH will lack the granularity of wireless coverage. For example,
The article says to me, Ausgrid have had to roll out a wireless (LTE) network to access the distribution equipment, because there isn't a fast, reliable, full-coverage fixed line network already in place. We don't get to hear what they'd have done if Fibre was already universally deployed. The real gains in managing peak demand is not monitoring the distribution network, but what Ross is talking about: controlling demand at source, both business and residential load.
A good example of the importance of being able to quickly and easily control consumer demand is a Climate Spectator article of 12-Mar-2012: After a 800MW facility failed, "On Saturday night, the wholesale electricity market price skyrocketed in Queensland from $63 per megawatt-hour at 10:10pm to $11,499 at 10:15pm". Prices came back to normal around an hour later, but it was a wild, and expensive, ride for some resellers for that hour. If they could've turned off high-power devices, like hot-water, for that hour, the event would've been less critical.
Queensland has ~$1Billion worth of generating plant that is used just 35 hours/year, because they have to cater with unconstrained peak-hour demand. This is not efficient! The cost to build an extra megawatt of capacity is many times higher than the cost of not using it: the principle of the 'negawatt'. This is part of the reason low-efficiency light-bulbs were withdrawn from general sale, and the point made that was entirely missed by Lynch: real-time, fine-grained control of electricity demand, both up and down is now possible and necessary in an electricity system with significant variable renewable energy.
Automatically matching demand to available supply will, not just might, reduce generation costs by 30-50% by removing most excess capacity investment. This is not a pipe-dream, its basic infrastructure economics: lower unused major capital equipment == lower costs.
Lynch may be somewhat right, that both NBN designs will both provide large-scale real-time control of the distribution system. What we do know is that NO Telco would allow copper lines, either FTTN or HFC, to connect to high-power, high-voltage installations. It has to be fibre or wireless, and in high-density areas, where the majority of power is consumed, the FTTN/HFC model hasn't been calling for a wireless overlay. That'd be inefficient.
“Fibre also offers revolution to television with every household being able to access the bulk of the developed world’s TV channels” - right now using a DSL connection, I can watch many channels using third-party Justin.TV-style portals or original websites of the broadcasters. Fibre access in my last mile may help my experience a touch but probably won’t solve many of the issues of buffering and quality which come from the international side of the network. I can also quite easily watch many of the developed world’s TV channels using a satellite dish or other pay TV service.
This is a bogus argument: "If I can do it, then everyone can" ("right now" is implied).
The key word of Ross's is "every household", it's a question of handling scale with a guaranteed quality of service. This is what Google and Amazon understand: how to operate at Internet Scale while not spending yourself to death.
That's 8-10MM households at 8PM accessing at least 1, more likely an average of 2+, TV streams per premise. We can be generous and say they'll all be happy with Std Definition, 30fps feeds at 2Mbps, well within the capability of the majority of current DSL services. That's a total network demand, per hour, of 7,000-15,000TB (16-40Tbps), or 125-250Gbps through each PoI (Point of Interconnect). The GPON Fibre will easily handle that and 10 times more on the local link, ISP & backhaul congestion are another question. People all over the neighbourhood can download large files and watch TV, guaranteed.
Bringing that back to an FTTN design, every 250-line Node will have 1Gbps as it's base load, every night. Were the FTTN designs going to run the 20 times more expensive 10Gbps links to every node? If they don't, the laws of networking says, nobody will get good TV service over the Internet. The problem with all digital services, modems, TV, CD's/DVD's, is they work perfectly until they don't, then they're unusable. It's a binary cutoff, not graceful degradation like Analogue TV.
The other part of Lynch's argument is "or I can just get Satellite or another pay TV service" misses the whole point of the NBN: a single, affordable network, available everywhere. Right now, only a small part of Australia can get Pay TV over Cable, everyone else its satellite. You get to pay $35+/month just to watch TV, then pay extra for what's interesting and new. The point of the NBN is "one low monthly fee for phone, network and TV". We know from the difference in US & Australian Cable TV markets that local availability predicts penetration rate. If every household can stream TV for nothing extra, there is a new, high-value market in tailored programmes. You also get "interactive" and "real-time" feedback for free with programs streamed over the internet, plus, for advertisers, a gold-mine of information and flexibility: how many streams, exactly where, and highly-targeted advertising. None of that is trivially possible with satellite.
“Fibre is the only medium capable of broadcasting to the new Ultra High Definition “4K” TVs” - Not at all. The world’s first 4K channel is actually available by satellite from Eutelsat and Qualcomm is developing mobile chips which support the standard. The first mass 4K broadcasts, of the next Soccer Asia Cup, will be broadcast by satellite in Japan. One suspects that future physical media formats will also support the new display standard. At the moment there is not much 4K content and the television sets cost $A10,000. Free-to-air HD is already stillborn in this country, not because of the limitations of terrestrial broadcasting, but because of a lack of content and business case.
This is technically correct, but irrelevant.
Ross didn't qualify his statement with "by doing nothing, buying nothing extra, not upgrading plans, needing nothing but the set".
Lynch does comment that Free-to-Air High Definition hasn't taken the Australian market by storm. Part of the reason is product substitution possible with BluRay and on-line downloads. I think Lynch makes the point well that universal high-speed networking will allow new technologies to be deployed frictionlessly, creating whole new markets that grow furiously.  The iPad was released in 2010, there are now 20 major tablet players in the market and 2.4MM/year tablets sold just in Australia. The iPhone arrived mid-2007 and smartphones are now a huge market, still growing strongly. Apple's game-changers could only succeed in a world where the product was fast enough, could be built to an acceptable price-point, would attract sufficient sales volume to pay for R&D and sufficient infrastructure was available for a good enough User Experience. That's why the Newton failed circa 1997, but 10 years later, the iPhone took off.
Ross is making the unremarkable and entirely proven statement, "the evolution of commodity computing devices is far from over, and nowdays they rely on ubiquitous fast network connections". To counter that with "but you don't need the Internet and Bright Shiny New Things are Really Expensive" misses all lessons of the last last 30 years of the Computing Revolution, just as Microsoft has done by declaring "Everything is a PC", which is yet to see them recover any of their lost market share.
“Fibre also means an end to paying phone line rental and expensive phone calls” - One of the more cutting edge NBN RSPs, iiNet, does offer a VoIP-based “no phone line” service over the NBN. But it requires a $9.95 monthly service charge and it does charge for calls: to mobiles which account for 2/3rds of all possible phone terminations in Australia and for all international calls. Phone calls will still have a cost under the NBN. VoIP is available over DSL and mobile; ever heard of Skype?
I can't make out what point Lynch is making. Skype and VoIP will be offered on both NBN variants. Nobody offers, or can offer, a Customer Premises Interface to separate Suppliers for Networking, Video and Phone.
Lynch misses the point of the NBN: end-to-end full Digital Convergence, a single bitstream carrying all services, supplier neutral and multiplexed
NEC started touting Converged Communications and Computing (C&C) in 1977. Since around 1995, LAN's based on ethernet over twisted pair have been the norm and carriers ran fully converged digital networks internally, albeit mostly ATM/SDH. Within 7-10 years, Telcos had moved to ethernet bitstreams internally and xDSL services provided permanent "fast" connection to LAN's. But phones, TV, and data services were not integrated.
The consumer advantage from either NBN solution is the same: one service, one bill, one supplier, minimum cost.  Suppliers will have to work harder to differentiate their services, not rely on historical accident for customer lock-in. The usual Telco price structure is that the full cost of each service provided is a small fraction of the end-user price: 2-20%.
Combining all services into one commodity connection and one bill radically reduces these overheads: customer bills are structurally reduced, often radically. With either NBN solution because they both promise ethernet bitstreams.
“Telecommuting means many more people won’t have to commute to work anymore and nor will they need to live in cities” - Telecommuting takes place now using today’s technology. The NBN may enhance the capabilities of telecommuting but it isn’t a pre-requisite. Personally I work with telecommuters everyday in Asia, Europe, North America and regional Australia and none of them are on the NBN.
This is another nonsense, again the point is about scaling up and universal access, not "it happens for an elite now, so what's the issue?"
The NBN, both versions, will enable more people, not just a favoured few, to telecommute when it works for them. One of the most powerful business propositions is to employ low-cost people in their homes in small increments of time. Amazingly, people in country areas have higher unemployment rates and accept lower hourly rates. If it were possible for them to do "call centre" work from home, I'm sure they'd jump at the opportunity.
“For instance, if people could communicate with CentreLink by talking to their TVs instead of spending time travelling to offices, hardly any offices would be required – everything could be outsourced to a low-cost regional location. There are over 900 offices in Australia” - The very nature of social welfare suggests that the people most likely to be in need of CentreLink services are the ones most likely to not have an high speed NBN connection, either because of expense, their lack of permanent residence or their socio-economic or socio-educational level. A mobile-centric effort would be more meaningful. President Obama has identified this and acted accordingly in the US.
This another non-sequiter. Lynch is arguing for Digital Have's and Have Nots.
The Labor Party has, for more than a decade, discussed addressing "The Digital Divide", at providing exactly the people Lynch names on welfare, with broadband.
If they have an NBN phone service, either version, then Centrelink can configure one of the ports on their ONT (Optical Network Termination) to provide controlled internet services: Centrelink could easily become the largest ISP in Australia by count. That need cost the benefit recipient nothing or a nominal fee, deducted from their benefit. It applies to people on disability and Old Age pensions as well: subsidised IP (limited) connectivity.
 Combine that with my previous comment on Telecommuting and it offers Centrelink a whole new business model and a way to radically cut costs and improve service: applied  exactly at the point of most need. Saves money, improves service, helps detects fraud, costs the recipient nothing extra: what's not to like? Unlike mobile services, both versions of the NBN will be supplier neutral and multi-vendor. A "mobile-centric" effort would mean direct large subsidies to one of the three physical phone network operators, versus the much cheaper fixed-line service. Why would Lynch be advocating that?
“The ‘telehealth’ opportunities afforded by fibre are so dramatic that the savings to the vast $120bn (and rising) annual health budget will pay for the entire rollout on their own, while simultaneously revolutionising healthcare for all Australians, particularly the elderly and those living in rural areas” - One big problem with this, the government has just abolished Medicare rebates for telehealth consultations in metro areas, the ones slated to get fibre. Sorry Nick, but your revolution is dead in the starting gates.
Because one Government is squeezing costs, doesn't negate the argument, nor is it proof that with different cost-structures clinics won't embrace remote appointments.
Medical Healthcare in Australia is approaching 10% of GDP, well behind the 18% of GDP for Government, Insurance and Out-of-Pocket expenses in the USA. Controlling Medical costs is a major priority for any Government in the next 40 years: anything that works, especially that makes clinicians more productive, will be embraced by rational economic managers.
 Reducing Healthcare costs in the face of an ageing population is a global problem. Dr Topol makes a convincing case on NBC's "Rock Centre" in January. Reducing Healthcare costs by 10%/year with better I.T., Apps and network access is entirely possible, producing a bottom line saving of $10B/year, around 30% of the whole expenditure on the NBN and near the total NPV cost of the Telstra payments. That sounds like a great deal to me, why does Lynch say "Not going to happen"? What does he know that the rest of us don't?
“National emergencies, whether fire or flooding, are becoming a part of Australian life. Consequently, the benefits of a fibre-based NBN are becoming increasingly important” – Despite Nick’s belief that fibre is water proof, the NBN didn’t hold up too well in the recent Queensland floods. Like other tech platforms, it is a touch vulnerable itself to natural disaster. As always, wireless techs prove best in these situations.
This is another piece of unresearched nonsense. Even in the context of the assertion, the question needs to be, "Would copper have fared better?". The problems reported were NOT with fibre failures in Customer Access Network, but the backhaul that is upstream of all Customer Services, copper, DSL or fibre: "NBN Co told ZDNet today that its biggest outage as a result of the floods came from backhaul services from a third-party provider". There was also an issue with batteries running out: the chief vulnerability of an FTTN.
  1. The Warrambool exchange fire caused havoc with all services, mobile included. It would've taken out the whole area of an FTN-NBN for an extended period. The GPON NBN is passive, there are many fewer powered sites likely to catch fire. The impact of fire on both  copper and fibre is extreme. I've not researched NBN Co's redundancy designs. In backbone and metro-scale fibre networks, there are always multiple paths allowing for any single-point-of-failure to be automatically routed around. This is never done with pure copper or FTTN on the copper side.
  2. We know from the 2003 fires in Canberra that FTTN nodes are weak points: being exposed, they will burn. Even if the fibre and the copper links upstream and downstream are intact, replacement is a major expense whilst replacing kerbside fibre patch units is a cheap and relatively fast process. 
  3. The  Canberra fires also informs us that all locally powered services are prone to power failures after any natural disaster that takes out the electricity for an extending period. As are mobile phones: they need recharging. Huffington Post ran a story on this after Hurricane Sandy.
  4. The simplest explanation is to look to the largest recent urban disaster. What did Verizon do in NewYork after Hurricane Sandy when the Manhattan ducts were inundated? It replaced all the copper with fibre. The real problems were commercial issues with building owners demanding payments.

“Fibre-based broadband requires very little power to transmit a full-speed signal over many kilometres. Conversely, a network based upon VDSL and wireless technologies require so much power that, according to Rod Tucker at Melbourne University, Australia will need to build two-to-three small new power stations to make it work” – One loves the logic here. FTTH allows you do all these great new things not possible on VDSL: for example, home-based health care monitoring, giant 4K ultra HD televisions, 3D printers and so on but apparently these have zero impact on the power grid! FTTN by definition stops you from doing all these things but doubles the power requirement!
This is another nonsensical argument.
Yes, Lynch is right, Ross hasn't mentioned the extra power that may be drawn by the household devices. But that's conflating issues. Yes, increased average household power consumption matters as the State of California knows too well, it has the extra problem of powering the other end of Internet Services, servers. But both of these issues are independent of the issue at hand: the power used by the Customer Access Network.
Ross is very clear in his comment: between the two versions of the NBN, the DSL-FTTN will draw much more power. With 4-8M ADSL lines each requiring 4-10W, the total additional power over an FTTP, running 24 hours a day, is many MegaWatts. Lynch simply ignores this argument in favour of ridicule and pillorying Ross.
“The Coalition has not yet addressed this” - Again, Nick is guilty of not performing basic research. Nearly a year ago at CommsDay Summit 2012 in Sydney, Malcolm Turnbull said “A key advantage often cited for FTTP over FTTC/VDSL2 is reduced energy usage, given GPON is not powered. But in practice this saving is minimal compared to the vast gap in capital costs. According to Verizon, annual central office power usage is 32 kWh for a DSL line and 12 kWh for a FIOS line. At 25 cents per kWh, a move from copper to FTTP therefore cuts annual energy costs per line from $8 to $3. Across the 8 million premises forecast to be connected to the fibre when the NBN Co rollout is complete, FTTP therefore saves $40 million a year in power costs.”
I don't know what research Ross undertook. He seems across all of Turnbull's statements, so I'm not sure how Lynch can categorically say what research Ross did or did not do.
Turnbulls' is saying outright in the quote that Fibre will cost $40MM/year less in power bills than a DSL-FTTN. That was Ross's previous point, I presume he went on to say that Turnbull hadn't addressed this. Lynch responds with "oh yes he did! You were right".
Lets give Lynch the point, but in doing so he points out Turnbull himself has estimated the size of the difference in operational costs and makes the much larger point: the DSL-FTTN is both much costlier to run and more power-hungry. I wouldn't have made a major point for an opponent quite so forcefully.
“Fibre maintenance is much cheaper than that of copper” - Again Nick seems to forget than FTTN network replaces much of the copper with fibre and that under the NBN, the most expensive part of the copper network – covering the most uneconomic and sparse 7% of the population – is retained!
This is a nonsense, deeply wrong at two levels, demonstrating Lynch himself hasn't done his research or doesn't understand the basics of the NBN Co plan. 
Whilst 93% of premises, not houses alone, will be covered by GPON Fibre under the NBN Co plan, the other 7% won't be left on Copper, they will be connected by either Fixed Wireless or Satellite (also wireless), replacing all copper by around 2020. Calculating that break-even point, when the cost of connecting premises via FTTP exceeds using a wireless system, terrestrial or satellite, was a major initial task for NBN Co. That's why the initial forecast of 98% FTTP coverage was reduced to 93%. There was a Cost Benefit Analysis done, this was just one of the outcomes.
The other error is that an FTTN replaces some, but far from all copper in the Customer Access Network and includes active devices in an insecure, very hostile environment. This is a double-whammy: the FTTN retains the last 400m-800m old, corroded and sub-standard copper pushed well beyond its performance specification. This copper accounts for most of the $1B Telstra spends on Customer Line Maintenance. The FTTN adds a whole new maintenance burden: those 10,000's or 100,000's of nodes that will fail from vandalising, accident, water ingress, insects, frost/condensation or overheating. The "man in a van" will be very busy in this model, versus the secure, controlled environment of the centralised active GPON equipment. What a tech can do in an hour on GPON equipment might take most of a week driving around the countryside.
“The net cost is zero and it will pay for itself in at least four different ways” – The net cost is not zero! The NBN is not forecast to recover its costs for between twenty years and twenty seven years, depending on the scenario. Fibre networks are commonly depreciated after 25 years!
This is a jumble strung together, meaning very little. Ross does confuse things by trying to treat income received for services by an entity, NBN Co, with three other types of National Benefit.
On Depreciation: it doesn't mean anything operationally or relate in any way to profitability or payback period. It's simply an accounting rule meant to inform the business of the current value of an asset and allow the consumed value of the asset to be claimed as an expense. If it was disposed of, what price might the item fetch. Current Cost Accounting, vs Accrual Accounting, changes this to "what does a new replacement cost?" You might buy a disk drive for $1,100 and expect it to last 5 years with a  resale value of $100. Straight-line depreciation says that in 4 years time, the drive might fetch ~20% of its purchase price, or ($(1100-$100)/5)*(5-4) +$100 = $300. Current Cost accounting asks a different question: If drives in 4 years time are 15 times larger and only cost $600, what would the actual resale value of the drive be? The equivalent capacity now would cost ($600/15) or $40. So with 20% of useful anticipated life left, the old drive is worth 20% of equivalent current cost: ($40 * 0.2) = $8. That might be a whole lot more than the power bill. It makes business sense to buy a new drive well before 5 years and save $$$ in operating costs.
There is the opposite problem of appreciating Asset values, such as real estate, shares or collectables, where Current Cost Accounting and Accrual Accounting arrive at very different answers as well. For this discussion, prices and relative performance of fibre and electronic equipment are assumed to only drop. Site works, placing fibre underground, which accounts for 60-80% of the NBN Co plan, is dominated by Labour costs and so track Real Wages.
Lynch's very first criticism was "if something is fully depreciated, it doesn't stop working!". Yet now he is using the opposite argument for Fibre, "it only lasts 25 years". Which is it? We know that Fibre has an operational life considerably longer than 25 years, subject to breakage/damage, though the electronics driving them have more like a 25 year life, though are likely to be upgraded for high capacity well before they are end-of-life.
In strict Accounting terms, because NBN Co is an investment and "off-balance sheet" for the Government, it doesn't appear in its Profit and Loss Statement, but in NBN Co's. The Net Cost to the Government is the interest cost less dividends. The projections are for returns to quickly exceed interest and so NBN Co won't be a cost but a surplus. The whole investment is expected to return a modest Return on Investment over the life of the project, that is, the surplus will pay off the loans. The rules of Accounting are that Capital can't be counted as an Expense or Revenue: Capital, Loans and Investments, appears solely on the Balance Sheet. Revenues are available to pay down Loans and increase Owners Equity, the difference between Borrowings and Asset values. "Break-even" is the time it takes for a project to reach zero Equity, either the Loans, negative Equity, are paid off, or the Value of Assets increases past the Loans. The projections are the Governments' Loans for NBN Co will be paid off in 20-27 years, but well before that the value of NBN Co shares will far exceed the Loans.
Ross is correct: the Net Cost of the NBN Co project is forecast to be zero, in fact it makes a handsome profit. I suspect what both Ross and Lynch are trying to say is that the project has a reasonably quick "break-even" (2033), quickly (2021) giving a modest IRR of 7%, What they are both not counting is the increase in the value of NBN Co shares held by the Government. As a high cash-flow business, NBN Co will probably end up with a share price many multiples of the asset value. Price/Earnings ratios, P/E's, are typically 10-15 times for public companies, with 12.5 in Comms vs ~16 for Telstra. For technology businesses with good growth prospects like NBN Co, P/E's of 20-30 times are more likely. 2025 sales are projected at $7B with yearly net profits of $1-3B, valuing it, at a minimum at  $16-$35B. If ARPU & take-up rates exceed forecasts, because variable costs are only ~5% (guess), Net Profits will be more like 40%. On $15B sales, $6B in Net Profit, giving a $180B valuation (P/E 30) if it were a high-growth company. This is far from the modest return of 7% projected in 2025, the Government might cash out NBN Co for a profit of $100B. I believe this to be a plausible scenario that I've might seen written up..
We also know from the many technology start-ups like Amazon and Apple, that paying dividends or even not making a profit for many years is tolerated by investors in high-performing technology companies.
Lynch may well end up with egg on his face. Will we get an apology if NBN Co turns out to be a spectacularly good investment? Why doesn't Lynch even raise this possibility: it's falls out of the figures quite naturally and is irrespective of operating profits or losses?
“Rather than using tax-payer’s money that could be used on other things (a common myth) it sees Australia borrowing $27bn using its Triple-A credit rating (Australia is currently one of only seven countries in the world to have this. It provides us with the cheapest form of borrowing) to use in addition to another $11bn of private investment” - Actually 15 countries have AAA ratings and there is no planned private investment at all in the NBN. There is a plan for it to raise its own debt. That is a different thing.
From the quote, I can't understand what point either side is making. Lynch saying, without reference, there are 15 not 7 countries with AAA ratings. This is at best minor point scoring and does not affect Ross's argument. I haven't checked Ross's original piece to see if this came from a reference. The best Lynch can argue is "Ross isn't an economics expert and got this wrong". Yes, we know Ross is not claiming to be an economics expert.
“This money ultimately comes back to the government with a seven per cent profit” - That is a projection, not a guarantee. Many business plans fail to come true.
First part true, second part an irrelevance. It's confused pseudo-logic of unrelated items with an incorrect inference implied: "All ferries leave from wharves. Many ferries sink." The implied inference of "Ferries that leave from wharves will sink" is a logical fallacy.
Lynch could have said, "The business plan of NBN is poorly costed, high risk and likely to fail - as shown in these expert analyses". Instead, the best he could do was a rather lame incorrect logical inference, with no references cited.
Ross might have more precisely worded his statement: "The money ultimately comes back to the government with a expected seven per cent Return on Investment per year."
“In addition, the cost savings to existing infrastructures, particularly health and power generation are such that the money saved from their annual bills will pay for the network on their own” - How are these savings captured and quantified in order to pay for the network? I’m intrigued.
A question is not a rebuttal and it is not backed by any reference.
Lynch has posed one of the central questions around the NBN Co project: how do we count and report the savings and benefits that accrue? The Government has been silent on this issue, relying instead on the straight projected Cash Flows and RoI from the NBN Co plan. As pointed out above, the Capital Gain from selling NBN Co, if even it hasn't made great profits or met its plans, are likely to be massive. The Government is creating the infrastructure cash-cow that will be relied on for at least the next 50 years: that's incredibly valuable property.
Ross is attempting to highlight the indirect savings and benefits Australians will enjoy from with version of the NBN. I would have to refer to his original piece and look-up his links/references.
“Here’s the premise: all of the Coalition claims about its ‘FttN-based technology being around one-third or one-quarter of the cost of the current NBN’ are based on overseas examples where an incumbent telco already owns a copper network (which presumably is well-maintained and in good condition). But neither the government nor NBNco own a copper network and that means it must obtain one. A new one would cost around $40bn and is subsequently non-viable. That means enacting an election promise to buy or lease Telstra’s copper network” - Telstra has already signed a deal with $11 billion of “net present value” – which means more than $15 billion in actual cost – to retire its copper network, lease its ducts and transfer customers to the NBN. The government already has declared Telstra’s network and has the legal power to appropriate it for third-party access. There is also legislation in place that allows the minister broad discretion to structurally separate and otherwise punish Telstra if it doesn’t co-operate with the NBN. In aggregate, this combination of legal powers and already agreed upon expropriation of the copper network suggests a deal can be done that will probably accelerate revenues to Telstra simply because FTTN can be built faster. Right now, Telstra can’t get full earning potential from leasing to the NBN until next decade.
Both Ross and Lynch are speculating about what the Coalition plans are and how access to the Telstra copper network might be obtained. Turnbull has released nothing on this topic. 
Telstra commented on the Special Access Undertaking deal when it was made, that they were "spectacularly agnostic" about who wins power at the next election. Anyone planning to negotiate with them for additional access must either be very concerned about terms or have a very different strategy in mind, such as agreeing to a version of the original 2005 Telstra FTTN proposal with sole access. But this is all supposition and speculation because the Coalition won't reveal its NBN Policy.
“It’s difficult to envisage private companies investing in a copper-based network which is already moribund, literally on its way to the scrap heap and comes with enormous power bills, maintenance costs, no premium applications and no obvious return on investment” – That’s exactly what Telstra and its access seekers do right now. It’s called the DSL market.
Yes, Telstra has been relentlessly milking their monopoly "cash cow" for decades. The Regulator, the ACCC has had to step in multiple times and direct them to change their prices. As Lynch says, it is the DSL market in Australia, but that doesn't make it efficient or forward looking. What marks Telstra's husbandry of its monopoly of the copper Customer Access Network is a lack of investment in it and upgrade, whilst their internal networks have been upgraded and expanded many fold.
Lynch doesn't disagree with, or refute, Ross, only says "that's how it is" implying that somehow it can only be that way. I don't understand the point he's trying to make.
“It’s not clear why the Australian public would, en masse, subscribe to the new network” - Perhaps because they are already subscribers and they would simply be leased or sold new modems?
A question is not an answer to a question, especially when you are choosing the points to rebut.
Lynch roundly criticises Ross for a lack of research and pillories him for making minor mistakes. Here Lynch isn't citing sources or shows he's done any research. If he's handing out judgement, then he must be prepared to be both consistent and to live up to higher standards.

Stopped detailed responses here.

“Malcolm Turnbull recently and bizarrely said of the fibre-based NBN: “There is no evidence whatsoever that the massive increase in speeds delivered by fibre-the-home will deliver any extra value or benefit to Australian households.” One can’t help but wonder what the reaction would be if that statement was read out at an international broadband conference” - Indeed, Malcolm made a similar statement very recently at an international broadband conference in Europe held by Informa. Given he has been cordially tweeting with Informa analysts as recently as last week, everyone seemed calm about it. Again, Nick betrays his lack of research.
Not an argument, tweet =/= public speech.

“It appears that the Coalition’s broadband alternative will be colossally more expensive than the current NBN and not cheaper by any reasonable definition” - It won’t be if the Coalition simply sets a finite budget for it, rather than the current approach of defining the network topology first and costing it later. I would really wait and see for the policy/CBA given that at $5000 per home the current NBN is much more expensive than the $350-600 per home figures cited across several vendors and carriers in Europe for FTTN. But if you don’t believe me I simply submit what Stephen Conroy said on April 20 last year: ““It would be quicker and will cost less to build a fibre-to-the-node network. That is just an unambiguous fact.” and
Finite Budget == much less done == much lower coverage. Can't have it both way.

“After completion it will likely be sold but the government will remain in control of maintenance (a good idea)” - Why is it a good idea for the government to maintain a repair force for a privatised NBN? When has this been suggested?
Questions are not answers.

“The wholesale price drops over time (Page 67 of NBNco’s corporate plan) and, once sold, will be subject to market forces – the initial requirement of them being artificially high (to subsidise the rollout to rural and remote Australia) will no longer exist” - NBN Co’s actual corporate plan envisages a doubling of ARPU over a decade, this is hardly a fall in price. Why will there be no requirement to cross-subsidise rural and remote Australia in the future? Will the wireless, satellite and loss-making parts of the fibre network have no opex or replacement costs? Or is this going to be placed on the federal budget?
Rubbish. NBN Co is projecting decreasing price/Mbit and increasing APRU's. People love to talk (now communicate). Look to last 10 years of Mobile pricing & plans: exactly this increase of ARPU and decreasing unit price.

“An enormous problem with the current system (and with networks around the world) is that incumbent operators are in charge of everything” – No they are not in “charge of everything.” This is nonsensical. Is Telstra in charge of Optus? AT&T in charge of Comcast? They are heavily regulated in the first place.
Rubbish. Those who own the networks control them. Regulators have influence over limited things. Ross needs to be more precise.

“That said, a potential problem is that some smaller-scale players won’t be able to afford the minimum AVC (Access Virtual Circuit) from NBNco. Their option will be to buy rolled-up NBN wholesale from the likes of Nextgen and AAPT.” – Again Nick reveals he doesn’t understand how the NBN works. The AVC is the capacity sold on the end line eg the $24 12Mbps link. There is no way to get a cheaper version of it by buying it from a wholesaler. Nick is confusing this with the backhaul behind the POI where there is contestability and arguably the Network-to-Network Interface which potentially could be wholesaled or shared between smaller RSPs.
Rubbish. Exactly this problem was discussed at length by Simon Hackett of Internode. Each of the 121 PoI's has a minimum connection cost. ISP's/RSP's with under $30M turnover cannot afford to offer services Nationally and will need to buy from an aggregator as they do now with ADSL and backhaul.

“When Telstra last looked at implementing FttN in 2008 it said that sharing access to its cabinets with other service providers using all manner of different contractors would cause all manner of problems, that “In practice it would be a disaster for customers” - This is misleading. Telstra was still bidding in tenders to build FTTN the following year using a bitstream protocol, the same as the proposal put forward by Optus and other service providers under Terria at the same time. The NBN topology of bitstream with a network POI interface remains the same whether FTTH or FTTN is used.
Didn't answer the question, just asserted 'misleading'. Since 2005, Telstra has steadfastedly demanded sole access to an FTTN it builds. TLS wants to maintain a monopoly over its CAN. The NBN Co design is fully contestable and access is open and uniformly, transparently priced.

“Alcatel-Lucent Zero-Touch vectoring is a single-vendor solution. Without vendor competition, you have a monopoly supplier” - Again, where is the attempt at research? Huawei are selling a vector DSL solution to Swisscom, Adtran are also tendering for contracts for vectored DSL right now in the US and Europe. And as it so happens, Alcatel-Lucent is the lead supplier for the FTTH network right now!
Security status of Huawei? No idea on this topic.

“Vectoring is incompatible with “local loop unbundling” – So is GPON! So what! You use bitstream for both GPON and FTTN! There is no proposal for local unbundling on the NBN as it stands.
Nonsense and shouting. Vectoring is necessary to achieve Turnbull's stated FTTN speeds, it isn't necessary, needed or useful for GPON. Vectoring only works when all the active DSL lines interfering with one another connect to the one same equipment == single supplier == NO  "ULL" (as we have now). The ACCC as Regulator will have something to say on this.

“Low-density, long-loop areas are non-viable because you’d have a DSLAM serving fewer than 100 customers, because most cable fanouts today serve fewer than 100 customers. In other words – VDSL2 plus vectoring would serve more like 50 per cent of the country than 93 per cent (a rough estimate; significant time and resources would need to be spent turning that into hard data)” – Indeed, between 2006 and 2009, Stephen Conroy proposed to serve 98% of the country with VDSL and there was not a peep of objection that he could only technically achieve it to half. Where was Nick then? Right now about 93% of the population can get DSL. To suggest only half of them can receive a capacity improvement from the deployment of what Nick himself suggests elsewhere in the article would be a 50,000 node network is fanciful. With no new nodes and simple exchange-based vectoring, about 50% would get an improvement already!
Irrelevant. The 98% to 93% change was from an aspiration to worked financial figures, albeit estimates. Lynch fails to address the central point: Just what is Turnbull offering? Nobody knows. Ross is speculating it is likely to be 50% coverage. Lynch mentions vectoring: that only works for single DSLAM's, it cannot work in our current multi-DSLAM and RIM/CMUX/ASAM. Research and knowledge lacking.

“In the absence of wide adoption of the Vectoring standard, No telco will deploy a technology like vectoring on a wide scale. Experience suggests it would take at least 3-5 years. In other words “VDSL2 with Vectoring” deployment would be unlikely to start until 2017 or so.” - As it so happens, Swisscom, Belgacom, Deutsche Telekom and Fastweb Italy are all planning multi-million line deployments beginning this year and reaching full scale in 2014. These are announced contracts.
No idea on the detail of this topic. I believe there is no Standard, announced contracts not withstanding. Lynch is suggesting locking FTTN-NBN into proprietary solutions. Not prudent commercial practice. All Telcos understand the importance of Standards: ignore them to your detriment. (unless you also build all your own gear, like the Old Bell)

“Any suggestion that an NBN monopoly inflates prices is already disproved as nonsense” - The experience of the last few years is that wholesale prices have been stable or declined (ULL has been priced at between $12 and $17 in Band 2, LSS nationally (DSL only) at just $2.50). The minimum NBN wholesale access price is $24 and wholesale ARPUs are envisaged to climb to $52 in seven years as customers climb speed tiers and RSPs order more connectivity circuits. The average price for a retail broadband service currently is around $50. In eight years the average wholesale price will exceed that under NBN forecasts ($52). This reverses the trend for more capacity for the same or less end user price.
Irrelevant. Doesn't answer the statement on "monopoly pricing". Lynch discusses the different pricing between pricing on mature technology/depreciated assets and new technology and new assets.

“There are many plans available right now and they are practically all better value and/or cheaper than existing alternatives”- Nick again seems unaware that initial NBN wholesale prices are designed to meet the DSL market with price rises to only come later through the CVC and speed tier bracket creep. The same higher speeds that are apparently so essential to realise NBN benefits.
Refer to the 2012 NBN Co plan. They are acutely aware of the retail and wholesale pricing of their competitors and are pricing competitively. NBN Co is the only service with offerings of guaranteed speeds above 12Mbps.

“The Governments already own public infrastructure like the electricity network and the road and railway networks. It does this to facilitate economic growth and social benefits” - Indeed, but the trend of late has been towards privatisation, deregulation or toll-compensated private investment in these fields.
Irrelevant non statement. What people do in other countries and other businesses doesn't affect the economics and underlying questions in this area. Labor responded to a 15-year long failure of the Free Market.

“Regulatory intervention is frequently required to maintain services and competition, and prices (for example in the electricity sector) have risen in spite of the expected efficiencies of private ownership. The question is raised, why should the communications network be any different?” - Is Nick unaware of the pervasive thousands of pages of regulation which cover telecommunications competition, incumbent obligations and other rules? Perhaps there is a clue here as to why there was an investment failure in the local loop in the first place, specifically dating back to 2001 when the ACCC first mandated local loop unbundling?
Rubbish. Telstra consistently has operated anti-competitively (HFC overlay, non-access to 2G & 3G networks, multiple ACCC directions on ADSL) and has been the subject of almost continuous ACCC actions, even as late as this week. The Telecomms Regulations were written assuming reasonable commercial practices, not the intransigence of a recalcitrant Telstra. Paul Fletcher, Liberal "MP for Broadband" & ex-OPTUS documents this in great detail.
“Unless a detailed alternative is released by the Coalition we’re forced to assume that its “market-driven” plans will only cause local monopolies, duopolies and inflated prices because that’s what all of the available information and overseas examples (such as the United States, Canada and New Zealand), currently point towards.” – Malcolm has said on several occasions he will persist with a separated Telstra and a neutral wholesaler. Again, where is the attempt at research?
Rubbish. Turnbull is yet to release any more detail of his Policy than the vague claims of "cheaper to taxpayer, quicker to build, more affordable to customer". Lynch gives no reference.

“The boost to business has been measured (by IBM) at $1 trillion over the next few decades while last year a Deloitte study stated that the digital economy will increase from $50bn to $70bn per year in the next five years due to expectations from the NBN. Also a Nielsen study found that 93 per cent “of Australian businesses believe that participation in the digital economy is important to their on-going business strategy” and 75 per cent said “National broadband infrastructure will increase their ability to engage in the digital economy. Meanwhile the OECD (and others) believe that the NBN will increase GDP by at least one per cent ($15bn per year). That’s before cost savings and revenue from the system itself. As such the NBN would cover the cost of capital in just two years” - The digital economy is based on many things: use of ICTs, mobile technology and fixed networks of varying speeds. There is no evidence, as Nick implies, that economic gains from the digital economy can only be made through pervasive FTTH. Indeed, he has spent so much time telling us how the NBN allows us to avoid costs, one wonders if he has thought about the losses that might accrue to some quarters of the economy from it as well? His example of how we can all bypass retirement homes might not be seen as a positive in that industry. For example, he says “Why spend a fortune on a new server that has a short life expectancy and requires expensive support when you can rent one in the cloud?”
Rubbish. We know "price matters" from mobile take-up rates in countries like Canada, SMS in Japan and our own sluggish take-up of ADSL1 until the ACCC forced Telstra to lower its wholesale pricing so other ISP's could compete. Ross's arguments hold up for either version of the NBN, they are not tied to Fibre, but cheap, high-speed access. Lynch says economic gains can be made elsewise, then doesn't say how or quote sources.

“The Coalition might just be the only government entity not to even refer to the importance of the cloud or broadband benefits to business in general.” – The Coalition is a political party (two in fact) and not a government entity, but as it so happens its state equivalents in power in Victoria and NSW both have advanced digital economy strategies.
At best nitpicking, the sense is clear & unambiguous to an Ordinary Reasonable Reader. This discussion is about Federal Coalition under Abbot, represented in Comms by Turnbull. Other entities are not relevant, unless Lynch has special knowledge he's not sharing. The point Lynch has inadvertently made is the Coalition policy is uncoordinated and disparate across all its independent fiefdoms. Ross might correct "government" to "parliamentary".

“As long-term licensing agreements expire in Australia, more and more premium content will become available over the next decade and we’ll see US-like traffic usage where one-third of ALL internet download traffic comes from video distribution service, Netflix” – which begs the question, can we bill Netflix for a third of the cost in building the NBN? But I make a serious point here. Is this worthy of so much government mindshare if the main beneficiary is American movie distribution? Can they help build it, like cable TV companies do?
Rubbish. The NBN is solely a wholesaler with its Customer Access Network that has also arranged contestable backhaul from the Points of Interconnect. RSP's, ISP's and content providers will pay to use it, but first someone has to build it. Ross never states a US entity will be the main beneficiary of the NBN, of either version. Very clearly uses the US market as a model for how over broadband market might develop.

“There are many other benefits to seniors. This is particularly important with so many baby boomers hitting retirement age – apparently there are over 800,000 65th birthday’s every month” - So there are 9.6m Australians turning 65 every year?
Nitpicking and disingenuous, shows the petty nature of the attack. Ross quoted a global figure, Lynch could've spent two minutes finding the source, eg. an article from the UK, again they didn't state "globally". Ross can correct by adding "globally", perhaps find the figure for Australia (1.5-2% usually).

“The bad state of the ducts is a double problem for the Coalition because the technology also relies upon the quality of the copper within those ducts and most of it is over 30 years old. In NBNco’s case, where the Telstra duct is declared unusable, it makes its own new one. For the Coalition to do this would involve rolling out new copper – a ridiculous notion” - An FTTN rollout doesn’t rely on disturbing the ducts with last mile copper in them, it doesn’t touch them. It deploys fibre to replace the bundles of copper that feed exchanges.
Wildly misleading. The $11B Telstra deal was all about accessing their ducts to run Fibre (& remove the copper? don't know). It had a major impact on the 2010 NBN Co Corporate Plan, shown and discussed in the 2012 NBN Co plan. One of the key points is an accurate survey of the asset and its state of repair. This data gathering was part of the initial 9 month delay: there was no definite "premises address list" in Australia, it took a lot of time and money to create one. Similarly NBN Co, for the fibre rollout, needs (or did) an accurate asset survey + map of the Telstra ducts it will use. There will be a proportion that are unusable and NBN Co won't be charged for, as Ross correctly states.
The FTTN-NBN will also depend on that survey (will others get it for free? Not likely, its valuable Intellectual Property), but as well, they will have to accurately survey and test all copper in the last 400m-800m to determine if it will deliver the guaranteed speeds or not. The only solutions are to not offer FTTN in these areas (give them wireless or exchange-ADSL) or, as Ross asserts, dig-in new copper: a very expensive proposition.
Ross does seem to have leaped to a conclusion: all copper lines in unserviceable ducts won't support VDSL-FTTN. Some proportion will be within spec., presumably not nearly 100%.
Lynch does not address this point. He, incorrectly, assumes "all copper than is in spec for voice-grade phone services will carry VDSL to maximum capacity". Not on old and gnarly lines with poor insulation and water-ingress problems in collapsed and unserviceable ducts, they won't.
Lynch also doesn't go on to address the impact these fibre-unusable ducts will have on Turnbull's promised ability to upgrade any FTTN service from copper-to-customer to fibre-to-customer.

“The Coalition’s FttN technology node requires mains electricity power being connected to every single cabinet in the street. NBN contractors have already queried how this could possibly be achieved as local power companies are the only ones who can install power to infrastructure. The notion of coordinating electrical engineers with NBN engineers without massive delays, across 50,000 to 70,000 nodes drew very cynical comments from leading NBN contractors” - Yet mysteriously every telco which bid for the 2009 FTTN tender didn’t see this as a problem and somehow all those street lights, payphones and traffic signals manage to work!
Nonsense and a non-answer.  Ross quotes a very low figure for nodes: for 90% coverage, I've estimated 300,000 for only a 800m rule.
Lynch doesn't address the problem laid out by Ross: what are the co-ordination delays and costs of installing new services? No power, no node, no service.
Lynch's argument is facile at best, disingenuous at worst. Like the coper CAN, all those networks were installed and upgraded over many decades. That's an entirely different engineering problem to a brownfield mass upgrade. How does Lynch not know this?

“In the UK the standard cost of connecting a node to power has frequently ballooned from 2000 UK Pounds to 25,000 UK Pounds” - The actual quote he links to says “sometimes” not “frequently”.
nitpicking. doesn't change the sense of the statement.
Ross needs to clarify what he means or an ancillary source.

“But many such people don’t already have broadband because they are either too far from an exchange or are connected to poor-quality copper FttN technology won’t fix all of these issues” – the whole point of FTTN is to place the nodes closer to people far from the exchange. That is its underlying principle and purpose for existence as a platform.
Again, nonsense. Ross makes the point that people beyond 5-8km might get voice services now but can't get exchange-ADSL and there are others where the lines won't support ADSL, they are low-spec.
For the first group, "too far", FTTN will be deemed "uneconomic" for two reasons: they are in low-density areas, so total served by any shared fibre and shared nodes off it will be very low, and the cost of running many extra kms of fibre on top of the high cost of nodes makes it too expensive. For FTTP, those same premises might get served because of the very small incremental cost of connecting a single premise from a fibre changes the break-even (fibre vs wireless) to just the length of fibre run: a linear scaling factor. [constant cost/km] and one that can be lessened by running an aerial cable [25% install well be aerial].
For the second group, out-of-spec old cable plant, only an unknown, probably small, percentage will work at the higher VDSL speeds 400m-800m from a node when they don't work for exchange-ADSL. Is Lynch suggesting "line testing will be free or not required" or is he suggesting that the FTTN-NBN will not offer guaranteed service rates?

“Some have said that having the large fridge-sized FttN cabinets outside your house will lower value. It probably depends on the premises’ outlook. Some won’t care, but as Selling Houses Australia tells us repeatedly, they are likely to polarise buyers and reduce the market – some will view them as monstrous carbuncles” - Is Nick aware that the NBN requires tens of thousands of fibre distribution hubs in streets that look just like… bar fridges?
Telstra RIM's and CMUX's (480 line) are big and unsightly. What size nodes Turnbull is suggesting is as yet, unknown. Either they use 70,000 RIM's of 480 lines at 1600m (where ADSL2  is faster than VDSL), or 300,000 Nodes of 40-50 lines at 400m, the same size as deployed by the commercially challenged TransAct. This is the choice with FTTN: fewer big, obtrusive street boxes giving the cheapest, slowest service, or lots of little street boxes, in addition to the existing pillars, giving the most expensive, fastest service. They scale by area, not distance. To halve the distance and double the speed needs four-times the nodes. To give everyone 400m nodes, means 16-times the number proposed in 2005 (70,000) and that was for only 30-40% coverage! This is geometry and physics, it can't be beaten.
The FDH's mentioned by Lynch are illustrated on pg 11 of the NBN Guide [24pp pdf]. There are 192 connections per FDH. They are roughly equivalent to two small pillars together.
Between every pair of houses there will also be a "Local Network Pit" housing an MPT (Multiport Terminal) splitting off the customer services from the shared distribution fibre, fitted with the lid at ground level. Specification on pp 20 & 21 of NBN Guide.

OK enough is enough and I have made my point. Yes, there are legitimate questions to be asked about FTTN in Australia and in between the nonsense and inaccuracies, Nick manages to ask some good ones. Yes FTTH is a great, albeit expensive, technology that would appear to be future proofed for many decades.
I counted one real question by Lynch and zero significant errors by Ross.
Lynch ends with a final biased and undocumented barb "FTTP is expensive": compared to what? Lynch does not Fibre it is the only technology that can economically offer a guaranteed an initial 100Mbps in the suburbs, will have a service lifetime of 40+ years (based on fibre trunks) and is software upgradeable to 1Gbps and field upgradeable, now I believe, to 2.5-10Gbps.
The implicit assertion that Lynch is making, never stated, never justified, is that for the service or economic lifetime of the FTTN-NBN, no significant proportion of subscribers will need/demand more than the unknown guaranteed rate to be offered by an FTTN, as yet undetailed by the Coalition.