An aside on Kohler: I'm starting to think he's "a fool or knave, or both".
He has never asked the most important, and obvious business questions of Turnbull, perhaps because he now works for News/Murdoch, perhaps because he's a dyed-in-the-wool Conservative:
- What's the on-budget cost, the interest on loans, over the full life of your Plan?
- What's the pay-back period and Rate of Return (IRR) of the Turnbull NBN Plan?
- Which should've led to "where's your full spreadsheet/model to 2040, not just 2014-2019?"
Ziggy does what he's told and is happy to do so, I've written about the differences between him and real Oz Telco CEO's with backbone: George Maltby, Sol Trujilo and Mike Quigley.
Somehow under the Turnbull Plan, all the cheap/easy work will be done privately (and NBN won't 'overbuild' because that's not 'cost-effective' when an area is already 'fully serviced') while NBN Co becomes "supplier of last resort" and gets ALL the most expensive and least profitable installs.
It is NOT possible for NBN Co to make a profit under these conditions, but Ziggy has already presided over the foreseeable and preventable meltdown of one Oz Telco, Telstra, and we know both what's coming and why he's been chosen.
My prediction for the "free competition" and "cost-effective" policies of Turnbull:
- Telstra will move quickly and offer a residential FTTN network in the cheap and profitable areas, with other players taking the MDU market (30% of services at just 4% of street addresses. Neatly clustered.)
- TPG, OpenNetworks and a very few other "well-connected" businesses will dominate the large apartment complex market, with a few smaller players taking a share of the mid-sized apartment market.
- This is because "management agents" used by Body Corporates are the gatekeepers to almost all apartment blocks.
- Telcos need only sign one management agent to control huge portions of the MDU market.
- In return for a sweet commission, the Telco's will get exclusive long-term access to the private wiring inside the building.
- The trouble for other Telcos is that access within the complex is privately owned. It is ONLY equal access to the network interconnection point.
- NBN Co will be left with the most expensive, least profitable crumbs, making it impossible for them to provide a single, low wholesale price or cross-subsidise the expensive services and service their debt.
Think about the 3 networks NBN Co is building and why they're building them - if the Operational rules are changed, NBN Co won't make a profit, no profit = can't pay bills = liquidation = "Told you so, worst Govt ever".
Which is really cynical, vindictive and an appallingly deliberate waste of taxpayer money, not to mention destroying the future productivity and competitiveness of the nation. What do they care, so long as their masters' agenda is met?
Costs of the 3 networks:
- 93% FTTP. - upper-limit set by cost of next technology, $300 - $2,400/premises (+$1,100 leadin)
- 3% Fixed Wireless - roughly constant price per premises ~$3,500/premises
- 4% Satellite. constant price for system + cost for dish, ground station and install. >$3,500
Allowing "competition" kills the economics of the 93%, which kills the cross-subsidies.
This is why LNP will push for different pricing "in the bush" and has promised to give out explicit (taxpayer funded) subsidies to them.
It's a really, really bad model:
- there's nothing to protect rural/remote subscribers from lowering/withdrawal of the subsidy.
- it's economically inefficient to give savings to one group, collect taxes from them, then redistribute the taxes to a small group.
History might show this one decision to be the worst economically, socially and politically that has ever been made in Australia. There is NO coming back from an eviscerated NBN Co. Once they are prevented from executing a universal roll-out of Fibre, it can never happen again. Like Banks and Insurance companies, the majority of customers never change Telcos, especially for fixed-line, it's just too hard for customers.
A rational, national wholesale network can never happen after the market is fragmented into a zillion pieces. Nobody will ever again be able to get sufficient coverage and market share to rollout a single network. Not even Telstra.
The Balkanisation of Telco access to premises, with areas controlled by just one provider, will create the worst possible commercial outcome with the highest possible prices for retail customers. Turnbull's "Competition" model is the exact opposite, it's a set of permanent monopolies handed to the favoured few.
The Liberals are the "party of business", but have an almost complete disregard for small, even medium business. They are the political wing of the IPA and the Sydney & Melbourne clubs: Abbott and Co are executing the wishes of their corporate masters, not providing the best outcomes for the populace.