NBN: Demand Forecasts and Liberal Policies

The NBN started as an estimated $5B Rudd/Conroy project tender to deploy Fibre-to-the-Node, to which the owner of the copper network to the Nodes, Telstra, declined to respond beyond a single page.

The next iteration was the $43B Rudd/Conroy Fibre-to-the-Home (FttH) scheme as a tertiary-level Stimulus Package, addressing longer-term impacts of the GFC. It hadn't been ALP policy before then.

After Kevin '07 became Toast '10, Gillard/Conroy had the opportunity to walk away from the NBN, but the ALP became wedded to the NBN in the 2010 election.

In the spirit of the knife-edge Parliament, the Abbott/Turnbull Opposition stance on the NBN is "not what they said", with Turnbull initially charged by Abbott with "destroy the NBN" and now having morphed that into "we'll do it cheaper, with less waste".

The NBN is the most notable current place where Politics meets Engineering.

The tension in this project is between the lead-time for large infrastructure projects and the build-up of consumer demand at the offered price-point. It takes 5-10 years to deploy new technologies versus a 2-3 year doubling period for Internet demand.

NBN Co now seems to have a 3-year plan to roll-out services, starting this year and perhaps finished by 2015/16. Mike Quigley was appointed in mid-2009, suggesting 3 years to build-up the organisation, design and plan the network and arrange contracts, and another 3 years to roll-out a large fraction of services, with full deployment taking until 2020.

Six years from nothing to mostly done, with another 3-4 years to finish off, seems quite an achievement to me. But the only predictable thing with big projects is that there will be unpredictable delays and problems... So they are running behind plan and discovering problems in basic data they rely on. [ZDNet 25-May-2012]


The ZDNet article reports that sign-up rates of the ~3,500 current users is significantly different to their projections of early 2012.

Projections for download {12 : 25 : 50 : 100 Mbps}  [upload {1 : 5 : 20: 40 Mbps}] were:

• estimate { 52% : 17% : 23% :   8%} and
• actual     {18% : 35% : 10% : 37% }

Whilst generating more revenue, this suggests to me two things:

• there is significant pent-up demand by "early adopters" for higher speeds, and
• the NBN Co internal models are, at first blush, significantly at variance with customer sign-up.

What we can't know yet, and is commercially critical to NBN Co and ISP's, is:

• Are these first customers representative of the rest of the market? and
• Will they renew at these rates, or fall-back to cheaper plans?

Let's assume the data is a reasonable representative sample...

Mr Turnbull already has a problem with his Fibre-to-the-Node (FttN) deployment:

  around 80% of these people have opted for speeds faster than the ADSL 2+ (24Mbps) best possible speed (300-500m). Attempting to build a faster network is both more expensive and with our old, degraded copper network, "problematic". It won't deliver anything like the capacity "on paper".

Lets say that given the choice and a competitive price, half those 35% will go for a slower ADSL 2+ service, at best 40% of customers will be happy with FttN. 60% of customers, if they follow the initial sample, will be looking for a guaranteed 25Mbps download and higher.

If Abbott/Turnbull form government at the end of 2013 and direct NBN Co to scale-back its FttH roll-out and create plans to deploy an FttN and leverage the existing HFC cable networks, perhaps they could start work within 9 months [Jul-2014] and aim for a 2-year roll-out, the end of 2016.

Being generous, lets say it costs less than the Rudd/Conroy plan: $4B.

Now, in mid-2012, consumer demand for bandwidth is doubling every 2-3 years [data for this later].

In 4 years, bandwidth demand will be 3-4 times the current average ~4.5Mbps, or 12-20Mbps average.

If we already have 60% of the market paying for >20Mbps when they can get it, then at the end of 2016, that number will be significantly higher, perhaps 85% [guesstimate].

NBN Co will experience strong consumer pressure for fast Fibre, not Copper.

The $4B for an FttN network will be at best a stop-gap.

If it cannot pay for itself within 6 years (2 yr roll-out, 2yr use, 2yr replacement) then it isn't cost-effective. My rough guess is an IRR of 15-20% to achieve this.

Abbot/Turnbull will have to go to the 2017 election with major electoral concerns:

• Why can't most people get decent internet speeds? and
• Explaining why $4B was wasted on an FttN network, outdated before commissioned.

What seems missing in most traditional models of Internet demand, including it seems, Turnbull and the Liberal Party, is:

• Taking into account Rogers "Diffusion of Innovation" theory, and
• modelling demand as a constant percentage growth: exponential, not linear.

Rogers theorised 4 important groups commercially, accounting for 86% of the market (the remainder are "laggards" or "Never Adopt"):

• Innovators (2.5%)
• Early Adopters (13.5%)
• Early Majority (34%)
• Late Majority (34%)

Commercially, it's very difficult to spot Innovators. They are a small group and will put up with a lot to get high-status or high-performance goods and services.

The successive waves of Early Adopters and the Early/Late Majority are trackable and should be able to be modelled.

When a new technology has a 5% take-up rate, it is on the way to becoming a Big Hit.

Apple have this forecasting down to a fine art after the iPod, Macbook, iPhone and iPad.

After 5%, the only question is predicting the final market size, because the rate-of-doubling is well established.

Modelling things as a "constant percentage growth" is commonplace in finance and business.

Why does it work?

Because of "network effects" - the same driver behind "Diffusion of Innovation".

People get interested in new products/technologies when they've experienced it first-hand and have a 1st-order friend/acquaintance using it that can give them help and guidance. In business, the "Help Desk" does part of this.

People generally associate with like-minded people, their peers.

Innovators will search out other Innovators, Early Adopters will hang-out with their peers mostly and together they introduce the new "stuff" that Really Works to the Majority.

These are people that might use and appreciate new things, but whose time and focus is taken up with other Life Priorities, like families, jobs or their careers and businesses, be it Private Industry, Art, Performing or the Public Service.

There are very solid reasons that "network effects", also known as "word of mouth", see constant percentage growth, and many examples of it in the 15 year history of the Public/General Internet.

Where's the data to support this continuing fast doubling-time of demand for internet bandwidth?

Didn't all that end in 2001, when the Internet Bubble burst?

Akamai has a very good global measure of demand for Internet services, now over 4 years old, their Quarterly "State of the Internet" report. At the end of this are included screen-shots of the spreadsheets and graphs based on their data.

Evidence of Late Majority moving away from "old technology":

• Examine the "%-256kbps" charts.
• Even with the GFC, in 4.5 years, this has gone from 11% of total traffic, to 1.6%: ~7-fold decline, or 2.8 doublings: a halving-time of 1.6 years, even with a GFC-driven increase.
• This isn't a count of the number of narrowband connections, just a (relative) percentage of total connections.
• The total market is growing and the numbers of narrowband customers declining.
• Every Late Majority/Laggard consumer that upgrades from narrowband, substitutes it with a higher-speed plan. This gives us a pointer to rate-of-change.

Evidence of Early/Late Majority increasing bandwidth demand:

• Examine "Avg-Mbps" and "Peak-Mbps", for Post-GFC period
• "Avg-Mbps" is "average connection speed", or the mean of speed (MB/second) for all connections. It includes the limits imposed by the ISP networks and interconnects.
• "Peak-Mbps" is a better indication of the link-speed of clients. It is the average, across all observed IPv4 addresses, of the peak speed seen for that address.
• For Q4 of 2011, there is a 37% increase in the average connection speed and 25% in Peak. This could be an artefact of the sampling, or due to structural changes due to better "backhaul" networks or consolidation of ISP's.
• There are two sets of charts prepared with and without this datapoint, post-GFC:
• the doubling-period for the 7 Quarters is 3.81 yrs and  2.39 yrs (Avg, Peak)
• the doubling-period for the 8 Quarters is 2.19 yrs and 1.7 yrs  (Avg, Peak)

Summary:
There is hard, credible data that suggests the doubling period for customer Internet bandwidth demand is still in the 2-4 year range, most probably doubling 2-2.5 years.

Models that do not incorporate this "constant percentage" (exponential) growth will seriously underestimate demand.

Update [28-May-2012]: Dr Neil Gunther has analysed the Akamai data as a Time Series, albeit a small one, and initial results are that it is approximately exponential growth, but the simple scatterplot trendline underestimates the forecast. The 2014 (2 year) projections, expressed as logarithm (kbps) are around 3.9 ± 0.3 [95% CI] and ± 0.2 [80% CI].

Converting to Mbps, 2014 forecasts: 8.192Mbps,
   95%-CI: 4.46 - 15.85 Mbps, 80%-CI: 5.13 - 13.18 Mbps

The anomalous Q4/2011 datapoint still creates questions.

---

All years

Pre GFC

GFC (2009)

Post-GFC

Comparative Charts, pre/post GFC.

NBN: The Platform, App Store and Network are the "Killer App"

Synopsis: The Killer App is the new Ecosystem:
   small Apps, Platforms for Ordinary Folk and the Ubiquitous and Universal Network.

Reviewing notes for these posts:

• Lesson from History. Facebook is only 7-years old.
• L2 VPN's + turn-key Telco packages: Vertical Integration?
• How I'd restructure the NBN finances.

Led to a new insight:

Killer Apps aren't necessary or likely in the Post-PC era.
In 1995 it was: "The Network is the Computer" ,
in 2012 it's: "The Platform is the Application".

Just the steady take-up from "Early Adopter" to "Early/Late Majority" accounts for a 15-20 fold growth in demand... Facebook & Google started small and Just Kept Growing. Ditto the iPhone.

How big will they get?? Still more people on the planet who can connect to all of them, so "bigger".

I'm starting to form a view that the "Killer Apps" of the PC era were an aberration.

Once people have bought the enabling technology (passed the barrier-to-entry), the marginal cost of additional Apps/Functionality is extremely low and even the simplest of things can be 'cost justified'.

So much so, that even taking 30mins to cost-justify an App purchase would be more than
the goods are worth. Payback on a $5 App, only has to be 5 minutes of saved time, once.
[Which leads to the question: Who's counting the savings for business and individuals?]

The end-end platform is today's Killer App... One Network, One Platform, It All Just Works.
This is going to fuel growth for a decade or more. Look to the history of mobile (voice) phones and "The Internet" in households.
Once the pricing was right, almost the whole of the population has joined in - but in the staggered fashion you'd expect.

That's the point of these things, they're like Post-It Notes® from 3M.
Ordinary people look at them in use and "Get it" very quickly.
It explains why the iPad took-off faster than the iPhone that shot right past all iPods.

The usual Rogers "Diffusion of Innovation" and more lately Christensen's "Disruptive Innovation" models apply. People use the products or services more as they become more comfortable with them, understand them better and pricing is not a barrier. Network effects spread use, as more people get entrained, either because "its the new cool thing" or "hey, I could really use that".

This is the Secret Sauce that Apple understood technically: most users are not computer nerds, good systems must be very easy for Ordinary Folk to use and to accurately model in their heads.
[Apple have their own approach to marketing and controlling their Brand. Not my area of expertise.]

The real commercial question today is: What's the growth potential of this App/Site/Service?

Turnbull and the Libs questioning is based on a false premise: There are No More Killer Apps.

The apparent article of Faith that "faster, better networks will provide an economic and social benefit" can be easily supported with this view. Lowering barriers to adoption will hasten the spread of existing innovation and the quicker adoption of new innovation. I.T. and Communications are still the number 1 way to improve economic worker productivity. People intuitively understand this and apply the same tools, albeit for different purposes, in their personal lives.

There can be no great debate of "value to households versus the costs".
The only debate is: Just when and how much take-up will individual Apps and Service get?

NBN: What history tells us - Facebook's $100B "value creation" in 7 years.

Turnbull has a central criticism of the NBN, and it is astute and credible:

Is there any evidence it will provide Extra Value, or is that just an Article of Faith?

I watched the Mark Zuckerberg piece on ABC one night prior to their $100B float today, which triggered the thought:

The NBN Mk 1. won't be fully deployed for 7-10 years.
What might be different then?
Maybe looking 7-years back might give us some clues...

Zuck started in 2005 and isn't 30 yet and changed the world.
That's a Generation or two in Internet time, and only a fraction of the lead time for physical infrastructure and large scale change like upgrading servers and corporate technology.

NBN opponents assume "there has to be a Killer App" for the NBN.Microsoft is still insisting "Everything is PC" whilst looking for The Next Big Thing, and languishing economically. Meanwhile Apple, Google, Facebook and a host of hot new startups that build on the available infrastructure.

Sometimes just showing up is the Killer App in this the post-PC world. Some examples:

• cheap laptops
• 1+TB disks
• netbooks and ultrabooks
• smartphones and tablets
• The App Store redefined software writing, marketing and sales.

For the NBN to be an outrageous success, we don't need a Killer App.

• just watch/wait as everything being done now by Early Adopters washes through from them, to the Early Majority to the Late Majority. This is moving from the first 5%-ile to 85%-ile of the market, a 15-20 times growth.

Here's  my starter list of How it Was in 2005 [contributions, corrections, updates most welcome!]:

• No Facebook, no Social Media
• No twitter (?)
• Microsoft was gonna beat Google to a pulp and was sitting on a mountain of cash... Growing at 10%/yr still.
• Yahoo! was still worth buying
• BillyG still  at Microsoft, but Ballmer was on the Throne (CEO).
• Could you still buy an IBM PC or laptop?
• How many Hard Drive manufacturers did we have? was still IBM one?
• There are just 2 majors now (Seagate & Western Digital)
• you could still buy IDE/ATA drives,
• SATA @ 3Gbps was cool and
• Fibre Channel was for Major Grunt - now its well on its way to being a footnote of history. 10/40/100Gbps Ethernet are already standardised and being shipped.
• HP was still a major player and trumpeted its "innovation"
• Dell. Can't remember, but s very strong player.
• SUN was *the* strong Unix/workstation player. Had bought StorTech and going from strength to strength. ZFS was new and exciting and going to
• Had SGI gone under?

• Had netbooks arrived? The buzz around the first running Linux was so loud, Microsoft had to introduce a competitive priced 
• Laptops were yet to overtake desktop PC's in sales volume.
• We hadn't noticed yet that Intel had hit the power-wall and would get into multi-core.
• I can't remember the cost of Flash storage ($/Gb) nor the size.
• But it was pretty impressive. And what is it now? A flea-bite. [A$10 for 4Gb in the supermarket today. Not $75 for 1Gb]
• And the 1TB drive was years off. 15K drives were "really slick" vs today's $2-5/Gb for SSD.
• Bluetooth could've been a standard, but was top-of-the-line, bleeding edge and expensive.
• Were we calling it WiFi yet? Was 2.54Hz and 20Mbps the limit?
• Were folks still thinking of free municipal WiFi mesh networks.
• the last retail wireless network (Ricochet) ran until 2008 in Denver.
• Did we have Firefox? Thunerbird? Opera?
• had Internet Explorer got tabs yet?

• Apple Computer was yet to become Apple. (I think)
• The iPod was cool, but for kids and Macs were still marginal.
• which of the peer-peer sharing networks were 'King'?
• Song piracy was still a worry with peer-peer networks, not iTunes.
• The Kazaa filesharing court case was yet to start...
• The iPhone was 2 years away, Android further.
• Was Java storming along or muddling under SUN?
• Did we have 3G mobile?
• If you wanted the mobile business device, you'd buy a Blackberry and Palm wasn't yet a joke.
• Nokia would've been a major plank in your long-term Tech Stocks, it still generated 55% of sector profits.
• Did we still have Nortel or whatever Bay Networks etc became?

• Had "Software as a Service" been coined?
• How big was the largest Botnet? [Nothing compared to the millions now]
• Was Google doing AJAX? Was XML 'really cool' or just a thing?
• Were Massive Multi-Player Games (World Of Warcraft) going? Were they 'rocking' or just taking off?
• Where was the X-box? The Sony PS3 and Wii?

• Telstra were calling the shots here. Optus was still trying.
• Orange/3 and Vodafone weren't merged.
• How far was ADSL 2 rolled out? Was it available at all?
• And we were only 9 years into the domestic Internet Revolution.
• In 2005, lots of folk were still on dial-up and were happy with it!
• There were some Politicians thinking that Digital Watches were Pretty Cool! [from Douglas Adams]

• Howard was 2 years away from Kevin '07 and a massive rout.

So that's a start... I'm sure others can add much more/better stuff.

But my point is:

Turnbull and the Libs won't be finished their version of the NBN in 2018...
Not nearly!
Thinking "we can upgrade it later" is a very poor idea:

the rate-of-change of the two worlds is so very different, physical upgrades must be anticipated and acted upon years ahead of their expected need. When its obvious an upgrade is needed, you've missed the window of opportunity for a long margin.

  What will we be using the NBN-powered Aussie-Net for in 2018/9??
  We Just Don't Know! That's the only lesson we can draw from History.

It will be things we can't imagine, not nearly.
All we know is that it will stretch services & infrastructure in new ways and that it will infiltrate our lives so that we can't live without it.

There is some kid in a dorm room right now tinkering with some code....
Will we be ready for the transformation that'll be wrought in 7 years?
Are we preparing for it now, or just praying we can muddle through?

NBN: L2 VPN's and turn-key NSP Telco solutions

Tony Simmons recently wrote a piece suggesting that the Banks could be their own Telco using the NBN. Banks in Australia and New Zealand have run co-operative businesses for many years. A couple that spring to mind: the Australian Payments Clearing Association and Bankcard, Australia's first Credit Card in the 1970's, was run by "Charge Card Services".

There are many advantages, not just cost, but Security [protection against hacking/attacks], very strong Identification of source and destination, and strong independent logs and auditing of transactions.

In fact, the L2 VLAN abilities of the NBN allow a whole range of very interesting non-switching-provider networks.

• Federal Government is an obvious one.

There's already ICON around Canberra, but every Agency has different supplier agreements and the Telcos play "divide and conquer" with them. There only needs to be one "GovieNet".
Such a single network would allow employees, contractors and firms to have certified connections (even at home) to link their Certified Office Laptops - and at reasonable speed to FileServers etc!
[No "BYO" equipment allowed on a Secure network.]

• Voice, secure email and secure file/record sharing/transfer benefit hugely from this...

• Share the FedGov network with Local Govt, who have no clout and few resources, except for the biggest like Brisbane City Council.

• Banking, finance and news are obvious communities of interest that have large budgets and expensive information products.

• e-Health, especially between Hospitals, Labs, Imaging and GP's/super-clinics would greatly benefit. The slam-dunk applications for e-Health are:
•  backups and secure, trusted and logged data-sharing, and
•  communications: email, 'flash messages', booking/calendars (gotta trust others)

• community-of-interest VPN's (Closed User Groups in X.25 network parlance) could finally make EDI realise its potential!

All the smaller grocery shops, their suppliers, their transporters and their EFTPOS facility suppliers have a common interest. Especially when in the central network, IDS and IPS (intrusion detect/prevent) equipment can be coupled with 802.1X [port-based network access control]

I think when these existing Industry groups and associations realise how simple it will be to create their own closed/controlled networks that not only can they provide something of real value, but create for themselves an on-going revenue stream of real value to members (to support the admin and lobbying), there will be a very long queue.

But to enable this, there will have to be turn-key providers that offer complete 'NSP/VPN' packages, including the Telco registration/NBN interconnect forms, or to sign-up with an existing Telco...

Some orgs (Banks) will already have their own secure & high-quality hosting facilities.
Others will need to lease them as well.

The complete package is to add Voice+Data mobile for subscribers.

If Business realised the benefits, cost reductions, security benefits, (radically) improved productivity and control/flexibility L2-VPN's might offer them singularly and communally, they would be knocking down the doors for NBN connections.

But the critical enabler is those turn-key solutions...
People outside Telco's think there's a whole sea of Secret Sauce needed.
I think if it was as simple as a PABX, and the existing collective bodies understood this funding-freebie, there'd be a stampede.

Turnbull wants a reason.: There's one that goes to the heart of his Politics and Constituency.

NBN: restructure to answer marketplace questions

I think there are 3 actions the Gillard Government can undertake to improve the prospects of the NBN.


1. Reform NBN Co into a Co-operative owned by Telcos and ISP's.

Takes away the problem of the wholesaler being a monopoly and setting prices too high.
It's necessary to get the voting/Governance right so Optus/Telstra don't automatically control it, but still have some influence.

Funding? I don't know enough about the topic to know how the Govt can raise bonds for a Co-OP.
Perhaps they can be allowed to raise Govt Guaranteed Bonds like the old Telecomm/Telstra Bonds.


2. Let the market speak!!

Allow subs to prepay for service to bring forward their installation. This allows retail customers to put their money where mouth is, and is an additional source of cheap funds. There'd need to be several levels of pre-payment from ~$250 to $10,000, each with a different incentive/discount schedule. If whole street or communities pre-paid to $2,500/household, that should become a "Priority 1" install zone.

The central weakness that Turnbull exploits is "where's the demand?" [c.f. "where's the beef?"]

If you have a bunch of folk who've put varying amounts of money, not promises to pay, on the table, you've got an incontrovertible measure of "value to customer".


3. Go Big, Go Early and answer the underlying assumption "faster isn't just more of the same".

Are the 500 days left before a mandatory election enough to get a major deployment done?
A city of 500,000-1,000,000, in addition to moving on the "low hanging fruit" in the major markets (Capitals etc), would be a definitive economic testbed to show that the NBN is either "just a better ADSL" or something different and synergistic.

We then have an undeniable benchmark to answer the question:

Does the NBN provide extra social and/or economic value?

NBN: Turnbull and 'inside the house' costs. Nope!

Malcolm Turnbull trotted this out and it really needs to be highlighted and responded to in and of itself:

it's is so fundamentally flawed as to be inconceivable for an informed person, let alone the expert commentator he'd like to portray himself as

From Malcolm Turnbull's "Comms Day" 2012 speech:

Another takeaway is that ‘inside the house’ costs for FTTP can mount and become a serious economic factor. These costs tend to fall over time, and vary from place to place, but in the UK ‘inside the house’ expenses have been estimated to be 20 per cent of total FTTP costs. 

The Telstra fibre rollout in South Brisbane likewise indicates this expense is likely to be material – Telstra this week confirmed industry reports that it is using up to a day of technician labour at each residential premise, adding up to $1000 to the cost of the cutover. 

It is not clear NBN Co has budgeted for this expense anywhere. If it has, it would be instructive for someone from NBN Co to explain where and how.

No Telco has ever been responsible for 'inside the home costs'.

Always, responsibility ends with the distribution frame or "first point". NBN Co will install a ONT [optical network terminator] on the outside of the house or somewhere like that, and (typically) provide these connectors to the customer:

• 4-ethernet,
• 1 phone and
• 1 TV connector.

The ONT needs 240V provided to it and houses a battery that NBN Co pays for initially, then the customer pays for replacement batteries.

As well, 'inside the home', or LAN [local area network], is a common cost for ANY and ALL 'fast broadband' network solutions.

If you don't want to run cat 5/6, then put in a WiFi network or a Powerline network, or both. 

This is as daft as suggesting that Oil companies should've paid for the cost of converting old cars to ULP [unleaded petrol].

Or that a cable or satellite company should do more than provide a single socket inside the house.

I find it truly bizarre...

• Why does he raise a common cost item?
• It's an irrelevancy and a clear 'own goal' that reduces his credibility.

• Why does he challenge NBN to provide costings/buget for consumer-only costs?
• What the customer chooses to do/spend is irrelevant to any Telco, especially the NBN.

• Why did he even think this was a question?
• It seems no more than grasping at straws.

NBN: Why we need to run fibre into every home.

At 'Comms Day' 2012, Malcolm Turnbull asked: [more audio]

"Why do we need to run fibre into every home?"

We aren't building a network for 2010, but one able to easily handle the demands of 2020 and upgradeable as needed during its 25-30 year life.

There are 3 reasons we "need to run fibre into every home", beside the obvious [3G/4G networks are perfect for mobile devices and exactly wrong for fixed services]:

• Storage (Disk & Flash) drives demand for bandwidth, especially upload capacity.
• A Cyberwar will be won or lost in 3 minutes. Defences must be automatic and "full-coverage".
• Australian Telcos don't just not co-operate, they actively self-harm to attack competitors.

There is also a wild-card:

Just what will Apple come up with in 2013 to follow on from the iPhone in 2007 and iPad in 2010.

Will it be "TV done right" as Walter Isaacson implies, or something closer to the "Knowledge Navigator"? Either way, we're likely to see yet another bandwidth demand explosion driven by Apple.

For the Coalition to insist that "the market will build anything we need" is amazing in its ignorance, arrogance and self-delusion.

For Turnbull to suggest that a shared Fibre-to-the-Node solution is even possible with the incumbent Telcos is absurd and disingenuous, given his background owning an ISP.

---

Wireless networks aren't just a good, but perfect match for mobile devices, but worst-case for fixed-line.

The "single shared channel" of wireless networks:

• suffer congestion so are not for "heavy lifting", but are good for light, intermittent use.
• drop-outs, black-spots, link/equip failure (towers are lightning rods) cause outages and lower availability.

For this reason, wireless networks are 3-4 "nines" [1 in 1,000-10,000 availability] at best.

Compared to the 5-6 nines from PSTN and Fibre.

When you want it to absolutely work every time,  all the time and consistently "do what it says on the tin"  in terms of performance, you want a wireline service.

Fibre-to-the-Node is almost as reliable and available of Fibre-to-the-Premise because there is an extra interface in there: fibre to copper.

There's the extra xDSL equipment for copper, the extra terminations and cable patches, higher intra-cable interference and, more subtly, the additional damage and service outage risk to node and CPE (Customer Premises Equipment) from lightning strikes. 1 km long wires, even underground, are great aerials. They'll capture a nearby strike and zip a few thousand volts up to either end. Something optical fibre is immune from...

NBN and the impact of Australian Telco's Business Practices.

AUSTRALIAN TELCO BUSINESS PRACTICES

Australian Telcos aren't just uncooperative, their behaviours are pernicious, obstructive and often perversely self-injurious. This (and the GFC) is why Telstra's share price fell around three times pre-NBN, and has recovered over 10% in the short time since the NBN arrangement has been completed.

There are 4 incontestable examples of this:

• Telstra/Optus cable rollout.
• ISDN only as a 'premium service'.
• ADSL 1 (ACCC intervention), ADSL 2 turn-on and ADSL 2 DSLAMs & ULL (non) churning.
• Mobile roaming.

The massive and predictable waste of money caused by Telstra purposefully overbuilding the Optus network, even as they deployed, was sheer bloody-minded behaviour. When they'd beaten Optus to a standstill they proved that to "queer the pitch" (prevent others from 'scoring') was their only objective by never completing their own cable network.

Telstra had the resources and capability to finish their roll-out to 85-90% of the population, thereby laying the foundations for a viable Australian Cable TV Industry. Their bloody-mindedness destroyed a whole industry - we know what should have been from the businesses in the rest of the world. The critical enabler, sufficient penetration of a distribution network, was deliberately prevented by Telstra.

Presumably their interest in Foxtel was also along the same lines, deny competitors access to necessary resources rather than exploit those resources themselves. [Following part of the Accounting definition of 'control' - the ability to deny others access to a resource.]

ISDN was technically superior and cheaper/easier to deploy/operate and hence much more profitable. It also used existing customer cable-plant much more efficiently, avoiding massive, costly plant upgrades. But despite what even the USA did with residential ISDN, Telstra always priced ISDN as a 'premium service', denying themselves access to newer technologies solely to preserve PSTN profits and keep out competitors who might've used it to fuel a broadband Internet and a slew of new
services. Despite years of this "protectionism", revenues and profits from the PSTN network went into decline around 5 years ago.

It needed the intervention of the ACCC to set wholesale ADSL-1 pricing to sane levels. Then it's take-up exploded and fuelled the broadband Internet in Australia.
It took Telstra years to remove their arbitrary speed-cap of 1.5Mbps on ADSL-1, allowing those whose lines were good enough, up to 8Mbps. There was never a technical reason for this, and in economics terms, Telstra left a lot on money on the table by not providing higher speeds at a premium as soon as technically possible.

By then, Telstra had deployed/upgraded all its DSLAMs to be ADSL-2 capable, with a maximum speed of 16-24Mbps, again if you lived close to the exchange, not for those 8km away.
But Telstra would not turn it on, forcing competitors to deploy their own ADSL-2 DSLAMs, unnecessarily replicating the Telstra network, even though the same cable-plant and exchange buildings were used by everyone. Rolling out 4-5 parallel networks into ~1200 exchanges was slow, expensive and crippling for all but the largest operators. Not the least, causing intense competition for the services of installation contractors.

When competitors finally deployed their own ADSL-2 DSLAMs, Telstra would not make ADSL-2 available to customers on an exchange until competitors had rolled DSLAMs into those exchanges. Sheerly perverse economically and totally against the customer interests and wishes.

Having forced competitors to multiply overbuild an effective and efficient (and upgradeable!) ADSL network, Telstra then used the opportunity to deny customers "fast churn", using the fiction of the ULL. Customers could be transferred to another ISP's ADSL-2 network with a single phone call or email. Undoing this became onerous and extremely lengthy - simply because Telstra had refused to permit what had worked transparently and brilliantly for customers for years on ADSL-1.

Finally, our many times overbuilt Mobile networks.

There is no technical reason Australia doesn't still have a single, shared mobile phone infrastructure, especially for less used network areas, exactly as it started with the "Gen 1" (analogue) mobile phone
network in the late 1980's.

Since GSM/CDMA (G2 digital) Telstra and all the mobile switching carriers have overbuilt each other with completely parallel networks, often on the same towers. There is no way this is efficient or effective for the carriers and carries a huge economic cost for consumers and the country - and unnecessarily gives us all a maximum cost, worst-performance service with limited coverage.

In both the USA and Europe, a fundamental digital network feature, "roaming", is supported by carriers. It's acknowledged that no carrier has the resources or desire to build their network everywhere. Carriers willingly sign roaming agreements with each other. They cooperate, because it is in their own best interests, and possibly that of their customers too.

The Fibre-to-the-Node network was never going to happen while Telstra owned the last-mile.
The Rudd/Gillard gift to the opposition is buying back what Howard sold-off: the shared distribution network.

Given the long-term behaviour of all Australian Telcos, we were never going to get a Fibre-based consumer network, FttN or FttH, until Telstra could no longer avoid it.

In light of long entrenched and well-known business practices, selling Telstra as a vertically integrated company was massively unwise and exactly contrary to the National Interest.

With the perverse Business Practices of all Telcos, not technical or cost reasons, a single wholesale/backbone network is necessary in Australia.

This corporate behaviour wouldn't be accepted in a kindergarden and is far beyond the simple "doesn't play well with others".

Addenda 17-May-2012: Somewhere in late April 2011, just before the June-2011 agreement with the Federal Government, Telstra share prices broke away from the ASX200. The market is voting with their wallets that Telstra is now a competitive enterprise with a strong future, including real growth. Is that just the influence of the "structural separation", the selling/leasing of the residential copper network, or the new co-operative CEO, David Thodey, or both? I've no idea, but the shares are performing very well...

NBN Internet traffic drivers: STORAGE

STORAGE DRIVES DEMAND FOR INTERNET USE.

Since IBM introduced the first disk (5MB, RAMAC) in 1956, demand for storage has grown relentlessly, as demonstrated by yearly total disk sales. Disk Vendors have collapsed to 2+1 as we enter the end-game.

Storage drives demand for bandwidth, both for data exchange/transfer and backups. Bandwidth demand will track storage sold, lagged by 1-3 years.
The proliferation of smartphones with video has driven the explosion of content on social media, and You-tube's "60 hours of video uploaded every minute" is only set to get higher.

By 2020, the last 10-fold scale-up of disk drives will be complete with 3.5" drives maxxing at 20-40TB: 1-10,000 hrs video [or for 'action' HD, ~500 hours with MPEG-4 variable encoding/bitrates.]
Flash is also in its last 10-fold scale-up and starting to suffer the same scaling problems that began in 2004/5 for DRAM. There are at least 3 candidate technologies to replace Flash and fuel further growth.


The bandwidth driver for domestic Internet will be driven by upload speed (currently 1-40Mbps), not the quote headline rate of '100Mbps' for download.

This has 3 components:

• file backups,
• content sharing and
• real-time low-latency access (telephony, video calling and gaming, ...).

At the mid-range 5Mbps uplink, video uploads will only be 2-3 times faster than their record rate, but only if the link is not otherwise engaged in things like Skype and gaming.

As families realise they've moved to entirely digital records of their lives and that disks fail and/or lose data unpredictably, they will start to subscribe to Digital Preservation services:

every day they will automatically backup masses of documents, images and video to "the Cloud".

Because of the shared uplinks of the 'PON' [Passive Optical Network], even this promised line-access-rate will rarely be achieved. PON Congestion during busy hours will be considerable - exactly the same as the Cable TV (HFC) networks suffer now. This is on top of the ISP's 30-100 times over-subscription rates.

By 2020, there will be huge demand for Gigabit PON to be enabled. Not for the download speed, but for the 50-400Mbit/sec upload speed. As more people opt for the higher upload-rate plans, the "last mile" of the network, the most expensive part to change, will become more stressed.

Simplistic analyses based on "raw access speed" usually contain another two major flaws:

• latency (round-trip delay) and jitter are far more critical for real-time services than raw throughput.
• utility networks need to cater for peak demand, not average demand.

The lesson from the electricity networks is clear.
While homes on average consume under 1kW (20kW-hrs/day) during busy hour" demand rises to 3-5 times that, with instantaneous household consumption 10-20 times the average. Consumers will pay a premium for just 10-hours/week of higher-speed uploads.

For home "power users", Petabyte storage (1 Million Gigabytes) will be within reach well before 2020 - technically and financially. Their needs will drive the industry, just as Gamers and overclockers, not
businesses, have driven PC development since 2005.

This is without considering growth in low-latency interactive services like geo-data and mapping/overlay applications: grown-up versions of Google Earth. "Augmented Reality" devices and games are already being sold - they take latency and bandwidth needs to whole new levels.

The on-going revolutions in use and demand caused by the iPhone in 2007 and iPad in 2010 should alert any planners, especially those doing networks, to the inevitable:

What you don't see will hurt you.

The only constant we've seen in the Internet since the web arrived in 1991 is exponential growth, akin to Moore's Law for CPU's. There is still no sign of it stopping, just easing down to a mere 12-month
doubling period.

The NBN and defending against Cyber warfare attacks.

CYBER-WARFARE and the Australian NBN.

We know from "Stuxnet" that Nation States are actively building and deploying Cyber warfare tools, applying them to National Security concerns and running them as Military, not technical, operations. This includes accurate reconnaissance and network topology and vulnerability mapping. The worst case is that attackers will gain access to the network control tools and infrastructure.

Recent coverage suggests that Obama denied a US Military request to launch a cyber attack on Syria's infrastructure during the recent 'troubles'.

From the "slammer" worm, we know that any Cyber warfare attack will be fully developed within 3 minutes, and any attack will be launched at the worst possible time for defenders, possibly accompanied by physical distractions.

Recovery from "munitions grade" worm/malware compromise will be long and expensive. Experience is that malware infections is as damaging to businesses as a fire: Within 12 months of a fire, 80-90% of small businesses fail.


We've no idea of what the impact and cost will be if major Government I.T. infrastructure is compromised: ATO, Finance, Centrelink and Medicare (and with e-Health, the PCEHR).

Never mind State Govt. Education, Hospitals and Police.
Will Banks and the financial system, including Superannuation companies, be immune??? Obviously, some will go down.

If, like the destruction of all clients (4800!) data at "Distribute IT" in 2011, some "preparatory work" is done by the attackers, not only will "business as usual" not be possible for the week after an attack, many businesses will lose all their data - including backups.

Saying, "but nobody would attack us" is pure wishful thinking.
Nobody may ever intend to attack us, but as the Internet's first worm in 1988 showed (the "morris worm"), the Internet is a single thing and it's really easy to mess up your first attack, with no way back.

Morris had been raised with computers (at Bell Labs) with his father becoming the Computer Security advisor for the NSA. He had talent, experience and great knowledge - and even then his experiment escaped from his control. Australia will be most likely be "collateral damage", not a prime target unless there are real wars over resources and clean water.

DSD already has a Network Security monitoring facility and at some point, as a critical National Security measure, it will have to be upgraded to defend against a Cyber warfare attack, for Government and all other users.

This requires:

• fully automatic responses, opening us to disruption by false attack detection, and
• full coverage of the whole Australian Internet.
• The Internet is a single thing, protection is "all or nothing".

Fortunately, while detection might be a little difficult, first-response protection is fast and simple:

pull the plug and put known infected machines into quarantine.

Next, identify and clean up the damage piece by piece. Whilst some of this can be automated and be performed within the network, compromised systems will need to be scrapped or physically visited and rebuilt. The economics seems odd, but when low-end machines are ~$500 and casual hourly service rates from tier-1/2 companies are $150-$250/hr, it's cheaper to supply a new, clean machine and remove/destroy the compromised hard-drive. The alternative is for householders to take their machines to a "clean and restore" site that may take a month or two to fix their machine.

Without a single shared "wholesale" infrastructure, ie. in the current highly variable anarchic ISP arrangement, not only is this necessary protection a hard problem, it is impossible. The ability for the
authorised protection authority to, in real-time, disconnect or move any identified system into a quarantine area with a single system, is a critical feature only available on the NBN.

An attacker only needs one breach, just like a dam, dyke or flood-levy only needs to spring one leak to fail completely, often with devastating speed.

Careful, patient and capable attackers will construct their beachheads well ahead of time and be completely undetected. It's a given that our current "anything goes" Internet design is indefensible.

Patient, capable and determined attackers will still be able to wreak havoc on the Internet within Australia even with the NBN with long-running stealth attacks and multiple beachheads, but with a uniform, consistent, universal network monitoring, management and control system, DSD (or whomever) stands a chance of limiting an attack. Without a single, real-time and automatic detection/response system, we have no chance of defending ourselves.