Thursday, 9 May 2013

NBN: Decoding Turnbull - We're building this to throw away in 2022.

The ZDnet Comms Debate on Monday (transcript) led by the inestimable Josh Taylor yielded for me two policy points and a separate tirade another:

  • The ADSL/VDSL FTTN is PPPoE not direct "layer 2 bitstream" using VLANs and Multicast, important for two reasons:
    • While it allows "no visit" conversion, it quite cynically and brutishly pushes a bunch of costs onto the householder: Install VDSL Central Line-splitter (certified cabler), upgrade modem (DIY).
    • It denies householders access to the most powerful and interesting NBN feature: Multicast. Necessary for cheap and ubiquitous broadcast Video. If you want that feature that comes included with GPON,Wireless and Satellite, it'll cost you, direct or indirectly, another $400-$1,000 to have the device supplied and installed by a certified cabler, not DIY. Not in a mass, lowest-cost rollout, but the highest-cost alternative: one-off full price retail. 
  • The node distance rule is 800m, or close to it, meaning around 68,000 nodes.
  • The Coalition NBN Plan is to fully replace the Copper C.A.N. and the FTTN by 2022.
    • "But even if you assumed that you needed to upgrade in 10 years time, what you are saving in that intervening 10 years is all of that capital which you’re not going to get a return on. 
If you understand "PollieSpeak", the "doublespeak" variant of English used by Politicians, then Turnbull's deliberate, multiple use of "10 years" has unequivocally signalled they "intend to review" the FTTN by then, which can only mean to replace it within 10 years from now, not from when it is supposed to be rolled out, 2016/2019.

"PollieSpeak" is easily decoded: nothing is said that won't be relied on later, quite exactly. Anything unsaid will not happen, even if a reasonable person might infer it was meant. "10 years" and "need to upgrade" are specifically mentioned because they are integral to the Coalition plan.

And who'll pay for that upgrade?
Anyone but the Coalition.
This is their party trick: sifting costs onto everybody else. Very cynical and underhanded in my opinion.
That and "cooking the books": they trade away up-front costs for higher long-term payments, "rent not buy". Anyone who's been bitten by Hire Purchase knows this is a false economy. But with the Voo-Doo Economics apparently practiced by the Coalition, the cost of renting something is zero! This is their Big Con in Costing, how they "saved" $17 billion. That and just leaving out another $10 billion.

This is why Turnbull always raises "upgrade" along with it Net Present Value (NPV) and repeatedly uses his dodgy NPV calculation over 4 years.

In that calculation he magically changes a $900 Capital cost and 50% higher maintenance cost ($90/year) from a cost into a saving: by inexplicably reducing the cost to install fibre 10% from $3600 to $3260.

The real per-premise install cost projected by NBN Co, and Turnbull has always known it, is $1350 (another $850 goes to Telstra). And of those costs, half are labour/machinery. Of the materials and consumables, only a fraction, not even half, is subject to volume production savings or Moore's Law.

Allowing a 20% drop in the cost of electronics, that's a $50 saving by waiting, not $360!

His dodgy NPV over 4 years is really:
FTTP: $1350 + $60 + $60 + $60 = $1570
FTTN: $900 + $90 +90 + $1300 = $2380

Onto both, add $850 average payments to Telstra for access to ducts and lead-ins. More for the copper, but that's not yet contracted.

It's a great misuse of numbers...
But then, he just wants to convince suckers to sign-up. They'll get to pay and pay and pay, but as long as it not on his books, he's laughing!

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