NBN: Depoliticising the debate

Does anyone not think that:

• The Internet is a game-changer across the whole economy and its full impact is yet to be realised.
• That affordable, universal "fast" broadband availability is in our best national interest.
• That for all but a very few fixed connections, Optical Fibre is by far the best technically and economically.
• That what we want in the long term as Telecomms infrastructure is Full Fibre connectivity.

Does anyone think that:

• Ideologically driven Political solutions can ever deliver good, let alone the best solutions for complex infrastructure like Telecomms?
• That the current Political system can only deliver an expensive NBN full of compromise?.
• That the current Political debate will deliver the most efficient, effective and least costly version of the NBN?

I think the only thing that can be guaranteed with the NBN staying as a Political issue is that we, as electors and customers, will not get either good value-for-money nor what we want, individually or collectively.


We have two Political Parties trying to sell us competing versions of a product not yet built and which we'll consume and pay to use for a very long time. Since the Structural Separation Undertaking in April, for which there is never likely to be an alternative.

Every sale has two sides: the Vendor and the Buyer.
Both parties have an input into the sale and product specifications. As Buyers, we must have a say in what we get.

I'd like to suggest that the only way to get a decent National Broadband Network is for us, the consumers and electors, to take this debate away from the Politicians.

We can start a debate ourselves and say what we want and, most importantly, are prepared to pay for.

You get what you pay for and we are paying for the NBN and will continue paying for it for decades.
Currently, I don't know of anyone who is really happy with any of the solutions on offer.

The NBN is not being paid for by "The Government" nor by any Political Party. It's us, the Australian Public, who are footing the bill.

The NBN is not a Free Good or Gift, we are paying for it, we should have a direct say in how much we pay and just what we get.

I believe the way to get there, to depoliticise this debate, is to remove the core issue: Money.

Something that's never come up in the Political debate is NBN Funding.
Each Political Party has always assumed the Traditional Telco and Infrastructure model of "full central funding".

One of the reasons that the Internet became so popular, so quickly (growth rates of 100% every 3-6 months for years on end), was that it wasn't built or funded by the Telcos.
The ISP's drove the investment and deployment individually - and subscribers provided their own equipment and connection (modems and phone lines). Rethinking the NBN funding model might be the way to defuse the NBN as a political issue.

There's a very simple and straightforward solution that would give definitive information about just what the Australian Public, those paying for this, our largest single infrastructure investment so far, truly desire:

Allow individuals to:

• Directly purchase bonds or non-voting shares in NBN Co.
• Shares entail maximum risk for owners, but allow maximum returns. Individuals can invest any sum they like, or nothing at all. Being "non-voting", like News Ltd, shareholders can't change the Board, CEO nor directly affect policy and plans.
• Mostly Bonds are sold at a single interest rate. I'm suggesting a variation, multiple series of bonds at different interest rates, with the total bonds available in a series decreasing with the interest rate. Possibly offer 5 and 10 year terms on the bonds as well. Oversubscribing series would be distributed either by ballot or proportionally.
• 3.25% - $20B [start under the current RBA cash rate]
• 3.75% - $10B
• 4.25% - $5B
• 5.00% - $2.5B
• Investors who are comfortable with the long-term prospects of the NBN might first think of taking a lower interest rate.
• All these rates are lower than the 7.1% rate-of-return NBN is currently required to pay the Government. Moving the funding to Bonds means we, as subscribers/customers, pay less for our services because NBN Co can reduce profits, and we, as electors, lessen the debt the Government enters into for us.

• Allow NBN Subscribers to indicate their commitment now by entering into a binding agreement to take the service when available. These agreements must be rescindable or be varied every 12 months or in the event of force majure. They wouldn't bind NBN Co to install dates.
• Commit to attaching the service at low- (12 or 25Mbps) or high-speed (50 or 100Mbps), but prepay nothing.
• Commit to service, pay a fee as a 'refundable deposit' (with 3.25%pa interest till connection) or to purchase a discount plan, only available prior to connection.
• $500
• $1000
• $2000
• $5000
• Having customers pre-pay deposits gives NBN Co access to cheap working capital.
• A nice variation would be to apply the prepayment or deposit to the wholesale connection, buying some period of prepaid service. ISP's can still make their margin, but pay NBN Co nothing for that line for the prepaid period.
• When the prepayment has been consumed, it wouldn't be offered again.
• NBN Co can prioritise deployment based on committed connections, not guesswork or Political agendas.
• Individuals or groups with a strong desire for Fibre connections might be able to raise enough money to pay for early connection in their area.

These ideas, Bonds and pre-commitment are very close to what Bendigo Bank currently does with its highly successful Community Bank model.
Those Community Banks might be a good jumping off point for Community Networking.

• Another addition would be "sweat-equity" for small communities, currently not in the NBN plans as they'd be unprofitable, or for communities that might wish to speed up connection.
• The model is already popular in US schools: "Networking Parties".
• There's no reason a small town or community of 50-300 dwellings can't dig trenches and lay conduit if the installation is inspected by an NBN Co certified inspector.
• NBN Co could run, and charge for, these certification courses.
• Local communities might be able to find local approved contractors to pull fibre through their conduit.
• Not sure who'd pay for the fibre itself. It's the cheapest part of the installation and becomes a tangible asset of NBN Co.
• NBN Co must supply the NTD (Network Termination Device) and they must be connected by a properly trained and approved person, not necessarily NBN contractors.
• The ethernet switch and GPON equipment must be supplied and installed by NBN Co, though an approved enclosure might be supplied by the Community.
• The digital backhaul from these Community Networks to the nearest NBN fibre might have to be digital microwave, not long-distance fibre.
• A reasonable starting point is the rural electricity supply model: transformers and poles/wires are, like these backhaul links, are paid for by the customer, then ownership and maintenance/replacement responsibility transferred to the Operating company.

The best thing about this proposal is the "What if we thew a party and nobody came" outcome.

If all three of my proposals were implemented and public response was completely underwhelming, it rather makes the Coalition point that the NBN would be A Great Big Expensive Project That We Don't Need and would give them moral authority in the political debate.

If the Labor Party truly believes that a Full Fibre NBN is "what the people want", it can't object to testing that question.

If, however, we discover that Australians desperately want a Full Fibre NBN and are willing to put their wallets where their thoughts are, then it's a win-win for the Political Parties.

Both sides of politics can walk away from the issue without political fallout because they've both got won their argument and we, the customers and electors, get what we want into the bargain:

• Mr Conroy can say "we told you so" and "it's now going full-speed ahead, delivering what you want",
• Mr Turnbull can say "without us doing our job as an effective opposition and forcing the Government to reconsider its plans you wouldn't now have exactly what you want."

What do you think?

NBN: Why Mr Turnbull's plan leaves me uneasy

I finished a previous piece in this series uneasy about Mr Turnbull's plan and I'm now starting to understand why.

I've a dear friend who's idea of splitting the bill for a coffee or lunch is to work out her share to the cent. I'm happy to evenly split the total, even amongst large groups.
When I was at O.T.C., the 30 or so exchange programmers would "do lunch" once a fortnight, giving me 100 or more occasions to experience the reactions of many personality types in sharing bills.

For me, those lunches were all about socialising, the cost a minor issue. A few dollars either way wasn't important if I was enjoying myself. Once I got home at 1AM.
I was happy to divide the bill equally, give the secretaries (less well paid) a discount and leave a generous tip. Which meant rounding up to an easy number of whole dollars.

We had "Neville", who every time he came along would quibble about exactly what he'd ordered. So, like my dear friend, we had to respect his attitude to money and accomodate him. For both "Neville" and my friend, being forced to pay more than their share would've been anathema and they'd object in righteous indignation. Paying $1 too much would destroy the whole experience for them and it would continue to rankle for a very long time. They complain long and loud about injustice.

I learnt that for some people, price is the sole criteria of merit for a product or service.

And that's the whole trouble with offering anything for sale to the general public, there are many incompatible attitudes to money and criteria used to judge "merit":

• price is the only thing for some people.
• highest quality or latest functionality are what make people queue for hours waiting for Microsoft or Apple products.
• peer group conformance drives many: having the same gadgets and services as your friends.
• some people have specific affiliation, location, use, support or access and timing needs.
• but most people appreciate "value for money". This is why many products come in 3 price points: the very cheap "poverty pack", the expensive "Luxury Edition" with all bells and whistles and the mid-price, good value model that's 90% of the function for 70% of the cost.

My unease is with Mr Turnbull's value proposition.

This is a political policy that must be sold to the electorate, and all he's got to differentiate on is price.

The public is going to behave like purchasers: with no one common criteria and conflicting definitions of "best".

It's a tightrope, with a central question: Which purchaser attitude will predominate?

Labor has already taken the "high ground" with Fibre everywhere: the latest functionality and "best" quality. Leaving Mr Turnbull and the Coalition to look at price as their "product differentiator".

And there's the rub... The FTTN is an unknown amount cheaper, but significantly lower performance.

We already know a small percentage of the population are sold by 'cheaper' - probably cancelled out by the "Luxury Model" folk. Unless you live in the bush and have to use dial-up and satellite.

So it's likely that the central group, the "value for money" deciders, will swing this.

The question becomes: What value proposition will the middle group see?

And I'd like to deal with that via an analogy.

Imagine you bought a brand-new Holden Gemini in 1980. Went well, state-of-the-art, cheap to run, generally you're happy with "value for money" it gives.

Then Unleaded petrol came along in 1986 and after a few years you had to have the values and guides changed. A reasonable investment, much less than buying a new car.

By the late-90's, the car is near 20 years old and needs a major overhaul. The engine gets replaced, so you might upgrade the suspension, reupholster the back seats, add new front seats, redo the interior, add new 'sportier' rims and give it a nice paint job. It's expensive, but still less than a new car - and the car is a 'statement'.

Another 10-15 years on and the old car is tired.

You speak to the mechanic:

 A more powerful engine is going to need a new drivetrain, wider tyres with body and suspension work to support it. For another 20-25% you could buy a new car, with modern passive and active safety features, even all-wheel drive and importantly, at the beginning of its lifecycle.

For two of the three groups, the decision is obvious: either choose the cheapest or go for the best.

But how do the intermediate, "value for money" group decide?

For me, 80% of the price for 50% of the functionality is a bad deal.

I'd like to assert that the 1980's Gemini analogy is very accurate.

The phone system has been around for a century and tweaked, modified and pushed to new levels of performance. My home landline delivers 175 times the speed of the first modem I used 15+ years ago.

BUT, the FTTN is the last evolution possible with the copper network.

And Fibre Optic, commercially introduced here to Telco long-distance in 1988, is a solid technology at the beginning of its lifecycle.

For the mid-market consumers, the value-for-money equation decides.

Fibre starts with a guaranteed speed 2-5 times that possible with FTTN's VDSL for the majority of homes at more than 65% of the maximum distance.

At then in a couple of years, they'll upgrade it another 10-fold. guaranteed.

There is no way that the (guess) 70,000 new "nodes" needed to be rolled out for the FTTN will be 2-5 times cheaper than the Fibre-only network. The price of the network termination in the home will be roughly the same. The existing ~8500 RIM/CMUX units serve many times more than the ~100 lines that each VDSL node would serve, and the maximum cable distance is 2-3 times too far. Transact installed pretty much this technology (small VDSL nodes) but much better cable, "cat-5" around a decade ago.

But the best Mr Turnbull can say about the price of the FTTN is "we'll see":

I have been careful not to nominate a particular sum of money as the difference between what we would do and Labor’s current plan.

This was in relation to Alan Kohler's speculation that the FTTN might be $20 Billion cheaper than Full Fibre. A bit more than half the price for well less than half the performance and no upgrade path.

But Mr Turnbull, and the Coalition, seem to have made a very solid promise:

We will complete the NBN, there need be no anxiety or uncertainty about that, and we will do so sooner, cheaper and more affordably for users.

Which, after Labor and NBN Co managed to get Telstra to enter into the Structural Separation Undertaking after 3 years, is no longer a difficult or "courageous" decision.

As I've said before, I have a lot of respect for Mr Turnbull and his business acumen. He seems to do careful and through research on topics and has the "intellectual firepower" to grasp tricky technical, legal and financial questions.

So he must know that his only hope of selling the FTTN to the value-for-money group is to have detailed costings, which means detailed deployment plans. But he had no answer when I asked him about detailed deployment plans.

FTTN deployments, because they follow the pattern of the existing lay out...

So this is the Value Proposition I think Mr Turnbull is putting for his Hybrid-NBN of mainly FTTN with HFC, wireless and some Fibre:

• For 60% or more of the capital cost,
• we'll give you 20-50% of the performance,
• with no upgrade path,
• except complete replacement with Full Fibre
• with almost nothing being able to be reused,
• and it will be technically obsolete, and so valueless, long before its operational life is over.

The clincher for me is that while a VDSL-FTTN will be, as I've said previously, better than what I have now, it won't be value-for-money, especially because it's obsolete when built and will need full replacement in 2020-2030.

Building a VDSL-FTTN means all its costs have to be fully recovered in just 10-12 years. That makes depreciation the most expensive operational cost of this solution.

Who gets to pay to dig up all the copper and remove the nodes and their conduits etc?

That designed-in removal, disposal and conversion cost from VDSL-FTTN to Full Fibre has to be paid for, by the subscribers. Even if the cost of Fibre and necessary electronics falls 5-fold, the majority of the replacement network costs are planning, earthworks and labour related.

We can reasonably expect the cost of Fibre related equipment to fall by deferring a Full Fibre network, but those savings don't financially justify deferring building a Full Fibre network.

What's he not saying is that he's building the FTTN as a throw-away, it's purely a stop-gap measure and an expensive one at that.

I absolutely agree with Mr Turnbull that he'll be able to deliver a sort-of NBN "sooner and cheaper", but without detailed costings of this deployment and estimates of a full Fibre replacement, he cannot assert "more affordably".

He might hope this is true, but can't guarantee it, and his VDSL-FTTN won't be considered value-for-money by the majority of consumers.

NBN: Turbull's Response

Mr Turnbull kindly responded to my questions on Technology Spectator.
So it's easy to find, not buried in the comments section, I've included  that response here.


[By] Steve Jenkin

Mr Turnbull,

Thank you very much for taking my questions seriously and making time to address them.

My apologies if I came across as 'indignant', that wasn't my intent.

I couldn't figure out how Telstra would transfer its assets *and* control of its "birthright" at a price anyone could afford and quickly enough to make a difference.

I haven't seen/remembered that comment by the Telstra board or CEO. Will try to find it and understand it.

Addressing your responses.

1. I thought that there would have to be a new entity created. Thanks for the clarification, that NBNCo will own/do the FTTN.

2. If NBNCo gets the Telstra assets, then my question is nonsensical being based on a false premise. But thank you for attempting to answer it anyway.

and same response to 2 (i), (ii), (iii) and (iv). False Premise on my part :-(

3(i). Thanks for spelling this out. No Telstra IP/in-confidence needed.

4 (ii). This made sense if a third entity, not NBNCo, was getting the Telstra assets.

I would hope that as part of the Election Campaign, not now, you will be either able to make some firm commitments to prospective customers on the FTTN [eg on minimum speeds] or be able to set expectations of the technical specs most customers will achieve.
Having price as the sole (?) differentiator between Labor and Coalition FTTx proposals will cause much heat and little light. But I know that Politics is a rough game and this may not be possible for any number of reasons.

I'm not sure where I picked up the phrase “$20 billion in savings” for this FTTN proposal. Did I hear it when you talked to Leigh Sales? I can't recall.

Your explanation is good and I trust your recollection more than mine: that you have been careful to NOT make statements on savings.
Is there a way I can retract that phrase, to take it out of the debate as I don't have a good source to cite? Leaving it stand can only muddy the waters.

Finally, I was always very impressed by what you did with UUnet, took nerve and good judgement. These are some comments I made in the first of this series on questions about an FTTN:

[http://stevej-on-it.blogspot.com.au/2012/08/kohler-v-turnbull-on-nbn-third-option.html]

"Turnbull is smart, brave and persistent/dedicated to have done what's he's done and now is motivated to get back into (political) power. He's not playing this game for the pay, and he's unlikely to make rookie errors."

"As a very successful lawyer, he knows the importance of words and will carefully construct what he writes and says."

"As a successful Investment Banker and IT/Internet investor, he knows the Devil is in the Detail, and just what it takes to take "A good idea" to a successful execution."

"If he says he's got a detailed plan and reckons he can shave $20B off the NBN deployment, I'd NOT gainsay that. The evidence we have says he'll be able to pull it off. "

Lastly, thanks very much for the "Spycatcher" case. It meant that 40+ years after the war we finally found out what my Dad did and why he could stil read Katakana morse code.

NBN: Mr Turnbull's Hybrid-NBN

This discussion of the Coalitions' NBN policy is political, not technical. Different Rules apply.

Everyone else is asking for certainty and "guarantees", whilst the politician needs to avoid making any binding statements and clearly differentiate themselves "from the other guys" in the mind of the electors.

Yesterday Mr Turnbull graciously answered questions that I'd previously asked on-line.

His answers underline that the NBN is now part of Coalition Policy, perhaps even a "core promise". He finished an earlier piece responding to Alan Kohler with this unequivocal statement:

We will complete the NBN, there need be no anxiety or uncertainty about that, and we will do so sooner, cheaper and more affordably for users.

The headline, for me, was Turnbull removed a misconception of mine that had resulted in a false premise of many questions and outcomes. No additional entity is needed for Telstra to transfer its copper distribution network to build an FTTN. The SSU (Structural Separation Understanding) already covers this:

the network would continue to be owned by NBN Co and built by whatever contractors it selects.

I was wrong thinking there'd been Coalition talks and in-principle agreements with Telstra. Mr Turnbull said:

I anticipate a thoroughly constructive co-operation with Telstra on this, and their management has made public statements indicating that.

And that's correct: I'd forgotten what David Thodey, CEO Telstra, had said around 20 April: The Australian,  BRW, same piece on AFR, The Age, ComputerWorld and a slightly earlier AFR piece.

I hadn't appreciated until now just how good the 35-year, $11B deal was for Telstra:

we get the payout on that or we get the revenues as they flow,” Thodey said. [CWorld]

and

Indeed, Telstra is “spectacularly agnostic” about who holds power next year after the next election. [AFR/BRW]

Techworld has already flagged Turnbull would make (multiple?) legislative changes:

However we will remove as many of the barriers to competition with the NBN Co as possible – for example we would seek to reverse the arrangement whereby Telstra and Optus are obliged not to use their HFC to compete with NBN Co on broadband data and voice, the extent to which that is possible obviously depends on negotiation.

 I couldn't remember where I picked the phrase I attributed to Turnbull: "$20 billion in savings".
On this, he said:

I have been careful not to nominate a particular sum of money as the difference between what we would do and Labor’s current plan.

The origin was a piece by Alan Kohler, but also quoted by Mr Turnbull in reply:

Worse, the money saved – Turnbull estimates $20 billion – can’t be spent elsewhere or used to bring down taxes, because it is capital expenditure, not operating expenditure.

While Mr Turnbull is technically correct, he's been careful to not state any savings targets, he's left people like me, not quite the same critical thinkers as he, with the impression he'd said it.

I wasn't convinced by his reply to my question about "detailed FTTN deployment plans". I read it as "NBNCo won't have to do much design". While the digging plan might be substantially the same, the implementation details, materials/equipment sourcing and contractors are entirely different.

FTTN deployments, because they follow the pattern of the existing lay out...

The subtext there is I may have been quite wrong in inferring the Coalition has detailed deployment plans necessary for detailed costings and estimates.

As a politician, especially before the election campaign, Mr Turnbull cannot offer binding answers on a range of questions that are important to us as users of Internet access services:

• Will he offer any performance, availability or pricing guarantees on his Hybrid-NBN to the electorate?
• If I was living outside Tenterfield, I'd be wondering if I'd ever see a high-speed, low-latency Internet connection.
• Will his Hybrid-NBN have a lower total CapEx and OpEx over 25 years compared to a pure-play FTTP NBN?
• When will the network be substantially converted to Fibre?
• 25 years? 50 years? Never in the foreseeable future?

There are three elements to the Turnbull/Coalition NBN promise that, before the election, need to spelled-out in fine detail:

• sooner
• cheaper and
• more affordably for users

"Cheaper" is the classic "wriggle room" statement. These elements needs to be made specific:

• For what, whom, over what timeframe and accounted how?

I can only hope that others with better access than I to Mr Turnbull will ask at least these questions before the election.

The problem with Westminster-style Democracies is that change is slow and solutions are rarely Perfect, and never ideal for everyone.

Politics is The Art of the Possible, not The Art of Ideal Solutions. Individually, we have to not lose sight of this fact and attempt to get the Best Deal Possible, not hold-out for The One Ideal Solution.
I'd love a fibre connection and am convinced it would be affordable and others, when they understand it, will want it too.

While I might hope for "great", I must continue to advocate strongly for something better, more sane than the current mess we call our Telecommunications sector.
A VDSL FTTN with max 500m lead-ins is better than my curent 5Mpbs ADSL2 over 3.3km of old copper that the Canberran cockatoos destroy in places. Not my ideal, but better.

The single greatest reform I've seen in Telecommunications happened quietly in April this year with the finalisation of the SSU. The Telstra monopoly on the distribution network is over, albeit at a cost and with conditions that left Telstra very happy, making me nervous of how it will play out.

Mr Turnbull has recently granted us a great leap forward: the Coalition will complete some sort of NBN.

It's a start, but I'm left with a niggling feeling that I've missed something really important.

NBN: Questions for Mr Turnbull on the FTTN agreement

I've commented previously on Malcolm Turnbull's plan for an FTTN-NBN and mentioned Alan Kohler's 'conversation' with him on the topic. This is a follow-up.

Just what is implied by Turnbull's announcement:

1. For Turnbull to have a costed plan (== 'savings of $20B') then he must have generated, or had access to, a detailed plan and
2. He must know that he can execute his plan or he's spouting rubbish.

Which means he's cleared all roadblocks with the owners of the copper network that will be used:

Turnbull, Thodey and Telstra (the Board) have reached an in-principle agreement.

If he hasn't done 1) or 2), then he's not the through, informed person I think he is, and deserves to be pilloried for a half-arsed effort.

If he has consulted/negotiated with Telstra and reached an "in-principle" agreement with them, including being given full/partial access to the 2008 Telstra FTTN plans, then isn't that germane and shouldn't we be informed of the terms of the deal?

It will be taxpayer dollars being poured into this scheme, all backroom deals needs to be made public well before the election.

Doing a quick google search, ZDnet reported the Feb 2008 tender for up to $4.7B was because "a solution mooted by Telstra was unacceptable to the ACCC" [and the "G9" proposal wasn't viable either]. Was that the end of 2007?

Knowing Sol and Telstra, they would've said in their 1-page response:

We own the copper distribution network. We're going to own and control any network based on it. Anything less is unacceptable.

Which would've been unacceptable to the ACCC, as anti-competitive and monopolistic.

So the public needs to be informed of any deal that Turnbull has already reached with Telstra...

What is different now?
Will the Leopard that is Telstra have changed its spots?

No.... It has a long, long history of pursuing monopolies.

The SSU [Structural Separation Undertaking legislation] doesn't mandate a transfer of assets, rather a relinquishing of their use [but not their removal?] when an alternative (FTTP NBN) is made available.

We are only at the very beginning of the transition, Telstra still has many options.

In this context, it is in Telstra's interest to be engaged in an FTTN - they will have the Government fund the actual build in exchange for them contributing an impaired asset, most of which is most likely ready
fully depreciated...

Is that double or triple dipping?

In return, I'd expect them to be given 49-50% ownership of the wholesale FTTN-NBN company.
Because of the politics and Telstra's commercial interests, it only makes sense for Turnbull to not fold the FTTN into NBN Co, but to create another company, possibly "related" so that it comes under the SSU legislation.

Not only do they screw Quigley, Gillard/Conroy and NBN Co, they setup a firesale with themselves as the only viable purchaser... All we have to do is look to the HFC Cable-TV rollout attempted by Optus for proof that Telstra not only think this way, they are quite prepared to write off tens of billions and sacrifice profitable new businesses to protect their monopolies.

It just gets better and better for both Telstra and the Libs, and worse and worse for the rest of us, retail customers and their competitors.

If I had access to the ABC, these are questions I've wish presenters like Leigh Sales, Emma Alberici or Steve Cannane might ask Mr Turnbull about his FTTN-NBN.

• How is he going to get access to the Telstra copper distribution network?
• that was a stumbling block for Rudd/Conroy, so how he's overcome it or pay the $20B for it?
• has he already approached the Telstra Board and CEO about how this would work and what would work for them?

• Just who is going to own the company that will do the FTTN-NBN roll-out?
• will he be giving the contract to Telstra? What then of the SSU?
• give the contract to NBN Co? How will that integrate with their work?
• create a new entity for the FTTN-NBN?
• would such an entity be wholly Govt owned for shared with Telstra? Taking this as their capital contribution.

• Where is he going to get the detailed FTTN deployment plans?
• Will he acquire them from Telstra, or rely on Telstra to give up in-confidence commercial and IP?

• Will he make any guarantees about the service provided?
• eg. "No person would be worse off than the FTTP-NBN".
• Will ASIC or the ACCC regard those promises are mere political puffery or commercial statements, misleading if false.

• How can he guarantee "$20B savings" if they don't appear on the FedGovt Balance sheet?
• It seems like "smoke and mirrors" accounting and wouldn't satisfy the standard accounting principles.

NBN: Politics trumps Economics, Business, Technical and Social needs.

In a previous piece, I commented on a set of posts on the Business Spectator site, centred around Alan Kohler and Malcolm Turnbull 'debating' the Liberal plan for a National Broadband Network (NBN).

Politics is The Art of The Possible, where Perception is Everything.
The NBN is first and foremost in the Political realm, not in the Business, Economics, Social or Technical.

For the last two years, we've had Tony Abbot leading, arguably, the world's Best Opposition Ever, loudly proclaiming Gillard's government is "The Worst Government Ever".

Well, no its not. On every economic measure, it is outstanding.
Post-GFC, we have an economy that's the envy of everyone in the G20...
Not something a "Worst Government Ever" could do, yet the ALP and Gillard trail in the polls.

The Perception of an incompetent leader and government has become the accepted 'Reality' in the Electorate and Media.


Why can't Gillard and her Government get "cut through" when they have actually done remarkably well and in the most difficult circumstances achieved an enviable legislative programme??

Because they can't easily achieve their legislative agenda.
With a minority Government, "The Art of the Possible", really bites.

Abbot can play "Dr No" and deny the ALP every rational move, forcing them into back-flips at every corner, even passing legislation against their party platform/policy (off-shore processing) and most egregiously, making the Prime Minister an unintentional liar, being forced into a single option, a Carbon Price that got labelled a "Carbon Tax" when she'd specifically ruled this out, in just one speech on the election trail, almost as an aside...

The Greens blocked reasonable Carbon Pricing legislation under Rudd, forcing Gillard to be at the mercy of "Dr No": giving her Government just one option, that dictated by The Opposition.

Unsurprisingly, Abbot and his Opposition don't mention this, but beat the drum on Gillard "being a liar", which, following the well-known rules of FUD, gets traction in these uncertain economic times.

I think it's a testament to her grit and perseverance that Gillard has continued to govern at all, and she cannot be praised highly enough for both pursuing her reforms and for achieving them. Due in large part to her personal capability as a negotiator. Not in the same league as Bob Hawke's Master Consensus Maker talent, but in the daily grind of governing, without peer.

John Howard didn't have to work this hard, against such odds nor for so long.
Howard got Meg Lees to flip on the GST and eventually implode the Australian Democrats, but that's minor compared to the multiple epic battles fought and won by Gillard.

She's won all the Battles and abjectly lost the War.

Surprisingly, I think she's performed better than anyone else could have.

But its a shame that a Best Performance can only result in Massive Electoral Loss.
Let's hope for the ALP Federally, its less of a landslide in 2013 than Anna Bligh's 2012 rout in Queensland. "The Minivan Opposition": includes an empty seat for a hired driver.

So back to the main game, the NBN...

What do we know:

• The NBN Plan/Policy of Turnbull is solely about winning the next election.
• The Libs have to create as many points of difference between them and the ALP: the NBN is just one of them.
• Turnbull is emphasising "savings" of $20B, that has to be significant.
• The Libs are reported to need $70B in cuts to fund their promises, and with a No New Taxes policy, they need to find a whole tranche of savings.
• The Libs won't submit their costings/finances to Treasury, but will have an accounting firm check them. Presumably in elections, you only ask questions to which you know the answer...
• These Electioneering Economic Estimates aren't about good Accounting or following the rules you'd use in Government, but creating a perception.
• Political Promises are not enforceable. Whatever is said beforehand can be abandoned with lines like "that wasn't a core promise" and the classic, "things were much worse than we could've imagined". Expenditure promises aren't safe.
• The Libs may well drop less affordable and more expendable parts of their election promises. But they won't be able to abandon declared savings:
• Turnbull and the Libs are locked into this "saving" of $20B on the NBN.
• The Abbot and the Libs have a long-running strategy of labelling Gillard and the ALP as:
• "Worst Ever"
• "incompetent"
• "mismanagers"
• "Great Big Expensive New Taxes/XXX"
• "liars", and by inference lacking in integrity, not to be trusted, even 'slippery'.
• An Abbot government will do everything it can to reinforce these mantras, even to the point of deliberately undermining and sabotaging any and all ALP initiatives it can to create failures. National Interest is irrelevant: this is a pretty personal political fight.
• We've no reason to expect Abbot, if elected as Prime Minister, would ever resile from this style of constant attack. Putting the boot into an already defeated ALP would be seen as both justification and strategic attack: weakening the ALP brand nationally now and for the future. Racking up a lead in the polls...
• Abbot proving his current claims, if he achieves office, this might be very important to him personally and strategically.
• I suspect that discrediting the Gillard, Rudd and the current ALP government will be very high on his agenda. With Abbot's No Holds Barred style, every tool at his disposal would be used and he'd possibly prioritise "hurt the ALP" over anything else.

• Gillard has to call an election before the end of 2013.
• She controls the timing, though everyone expects her to hold on for as long as she can.
• The time for Turnbull to challenge Abbot for leadership has passed. If he challenges now, Gillard calls a snap election before he can get this ducks in a row.
• Into the foreseeable future, a serving Prime Minister can't be challenged for leadership following the Rudd/Gillard spill.
• If Abbot becomes Prime Minister, Turnbull can't challenge.
• Abbot is such a ferocious competitor, I can't image him ever standing aside as Prime Minister. Howard, much less obsessed with winning at any cost, couldn't do so.
• Plus we know Abbot is a formidable campaigner, seemingly much more effective than Turnbull. The Libs party room would be loathe to change now.
• We know that Abbot is fiercely competitive, to the point of being obsessed with winning, and if we rely on Tony Windsor, isn't just pragmatic, but exceptionally expedient.
• Abbot is reported as saying he would do and say anything to have power.
• We know that Turnbull has very different views than Abbot as shown by Abbot tearing up the Carbon Pricing legislation agreement Turnbull had negotiated.
• Turnbull might even have a cohesive vision of the future, underpinned by some sound principles and ideologies. We know nothing of Abbot's "vision", its never been aired in public.
• Turnbull has played the good party member and publicly toed the party line.
• We know that he has different personal views to the Party Line [Carbon Price]
• And know that he can subsume his personal views in public.
• What we don't know is what he personally believes is the best NBN solution, Economically, Technically and Socially. Unless Turnbull becomes Prime Minister, we can never know.
• What we do know is the financial interests he declares on the Register. This could give us insight into his personal views - where he's prepared to bet his money. France Telecom is making an FttP play, while BT is making an FttN play. Turnbull has invested in France Telecom because they were undervalued...

• We know from the last 15 years of poor Internet access in one of the most compact, affluent and tech-savvy parts of the country, Gungahlin, ACT, that both Telstra and Politicians care exceedingly little about the pain poor Internet access causes their constituents:
• In 1995, Telstra announced it would spend $20-$30MM on laying fibre-to-the-kerb in Gungahlin, a first for Australia. Important because it was an "everything underground" development.
• The older parts of Canberra have "poles and wires" for phone and electricity through backyards. Cheap to install and reasonable to maintain.
• What happened instead was they didn't even provide direct exchange lines, but the much inferior "pair-gain" services with roadside cabinets (RIM's: remote integrated multiplexors).
• RIM's are owned by Telstra and can only work with their exchanges, not part of the ULL deal for direct exchange lines. The decision has the feel of a strategic, not technical basis.
• Firstly customers couldn't get any broadband, ISDN or ADSL, over the RIM's.
•  After years of very active campaigning, the got a upgraded RIM with a very limited numbers of ADSL connections.
• Then quad-density cards, more ADSL connections. Enough for everyone? Don't think so. Were they limited to 1.5Mbps? not sure.
• Then, the backhaul crunch. Telstra, after a decade, had provided an access network with better speeds and more connections, but failed to dimension the backhaul network from the RIM's and exchange to Interconnection Points to handle Busy Hour...
• A notionally fast service that's unusable when you want it: ticks all the boxes for Telstra and the Pollies, but not the clients.
• Where was the ACCC for all those years?
• They couldn't demand Telstra either keep it's original Fibre-to-the-Kerb promise, nor fix the pair-gain debacle more swiftly.
• What's changed??

• On the SSU: Structural Separation Undertaking.
• This involves no transfer of assets, only a requirement to disconnect the existing copper network when the NBN has installed optical fibre.
• This isn't a deal set in stone, it can probably be trivially circumvented.
• But it does have some constraints, namely the ACCC is involved in these 'regulated sevices' and the Libs/Turnbull may not want to disassemble that.
• I can think of at least 3 ways to circumvent the SSU:
• Repeal the laws.
• Not ideal, but allows Telstra to do a BT Openreach public/private roll-out and hangs NB Co out to dry...
• An expensive option, but buys great Political Capital ["Worst Ever ..."]
• Use the Ministers' discretionary powers to vary both the end-date [1-Jul-2018] and exclude services/areas from the SSU.
• See Part 33, s577A, para 20.
• Create a new Company, 'related' to NBN Co, owned by both Telstra and the Government to roll-out the FttN. Already allowed for in the Act.
• Telstra has already created and costed a detailed FttN plan for the Rudd/Conroy submission.
• They have the technology (RIM's), free access to the copper pairs (what stopped FttN mark 1), the network design and roll-out competence and resources, and probably good commercial contracts already in place.
• Get sign-off by the ACCC if Telstra doesn't wholly control the service.

In 1988, Turnbull took on the might of the British Government and their "Official Secrets Act", and won "The Spycatcher Case". He's a good deal older and wiser, why won't he be able to take apart the SSU/NBN legislation?

The legislation, to my untrained eye, seems to be based on the assumption of a pro-FttP-NBN Government, not one hostile to a FttP-NBN. That's immediately broken by an Abbot/Turnbull government, and if the FttP-NBN isn't far enough advanced, it will be scuppered.

Turnbull is on record as having spent this last year consulting with a lot of people on how to build a FttN, I'd presume that would include David Thodey and Telstra. I haven't seen whether Thodey was pro-FttN Mark 1 or not: did he support Sol's repulse of Rudd/Conroy that led us to the NBN?

The most convincing argument for the Turnbull's FttN-NBN is simple:

• Q: Will we lose this election or the next on this issue?
• A: It's important only in a few regional seats.
• And in the 2017 election, they can claim "Great Success at killing the ALP's Great Big Expensive White Elephant" and proudly point to some B/S figures on how good their FttN-NBN is, how many people it serves and how quickly it was done...

Addressing the very competent and insightful remarks of Paul Budde on Business Spectator ("why the BT model won't work for the NBN") using this "It's a Political not Rational Decision" lens:

• " lack of vision and clear strategies, compounded by unclear targets, there has been little progress on whatever plans there are."
• Telstra, we must assume, already has detailed plans and the means and experience to execute them.
• Vision and Strategy are irrelevant in this Irrational model :-(
• Telstra and the Libs will be triply motivated to roll-out their FttN post-hate:
• Telstra gets to (part) own the distribution network and control the roll-out, causing maximum commercial damage to others.
• The Libs get to block the NBN Co rollout and when the company flounders and can't meet its goals, loudly boast about how good they are and how bad the current mob were...
• I believe it's in Telstra's strategic interests for NBN Co to be forced into a firesale. As the largest single customer, perhaps their only customer, they can dictate the price and terms of a sale. And if they have FttN-NBN Co as an alternate, they can block any other prospective buyer from being able to realise value from the FttP-NBN assets.
• All along, one of the major problems for the Government with FttP-NBN has been preventing an overbuild spoiler from Telstra. Turnbull's FttN-NBN puts that back on the agenda, maybe via a partly-owned body.
• Competitors will bristle...
• Telstra, even under Thodey, seems irrevocably wedded to achieving monopolies where it can.
• They own the copper distribution network, which means they have to be part of the FttN-NBN.
• If Telstra, even structurally separated and without full ownership of FttN Co can't create an advantage for itself, they are not half as capable as I give them credit.
• "no cost benefit study"
• The FttP-NBN went ahead without a Cost-benefit study, so in this Irrational "Logic Does Not Apply" scenario, the Libs won't have to supply one.
• But they can, legitimately, say:
•  "We're going to save $20B over the ALP."
• "So our NBN is better than their NBN. So there, we win."
• It's politics, nothing better than schoolyard arguments are needed :-(
• "provide evidence of a serious lack of cohesive national policies, regulatory difficulties, inadequate broadband delivery and undeliverable targets."
• Do Abbot, Turnbull and the Libs care about any of those things?
• More importantly, will they lose the election because of them? [NO]
• "It would condemn Australia to the same outdated physical infrastructure which the UK is to be lumbered with"
• And who would really care?
• Not the Libs, not Telstra and not the ACCC because they have to act within their legislation.
• The Gungahlin, ACT experience over 15 years shows all manner of promises can be made and broken and the Politicians and incumbent Telcos can just ignore it.
• Public Opinion has to be translated into the currency that matters to Politicians: Votes.
• With the amount of FUD that Abbot et al can generate on a huge number of issues, something 'theoretical' about our future broadband speeds won't rate for most voters.
• "UK’s flawed NBN program lacks vision: it is short-term, and by being largely dependent on the commercial deployment of a single telco it has been hampered from the start."
• Politics, especially as played by Abbot, is quintessentially short-term, in fact overwhelmingly myopic.
• The only time-frame that matters is The Next Election...
• Abbot, Turnbull and the Libs cannot be held to account for broken promises, under-delivering or putting either Party Political concerns ahead of the National Interest.
• The only weapon against them is the very blunt instrument of the ballot box, and then it is always "after the fact".
• Turnbull, Abbot and the Libs just need to "tick the box" on "we're creating an NBN", and they can make any claim they want about it: for campaigning Politicians, the future is a Fire Free Zone.
• This isn't how I would like Politics to work, but perhaps we do have the Politicians we deserve... Self-serving, short-sighted and wilfully ignorant and unconcerned about the social impact of their ranting and poor legislation and actions.
• " the government has opted to build a cheaper network without focussing on the broadband needs of the digital economy, e-health, smart grids, e-education, e-government, M2M and so on."
• Yep, Political expediency trumps all other concerns.
• Unless, you can impact the ballot box, or their proxy, the opinion polls, This is an Area That Logic Does Not Apply.
• be clear, I don't support this view and would want a world where Politicians were required to show a Fiduciary Duty to the Public, individually and collectively, on pain of severe penalties...
• Not going to happen, because the people who pass the Laws on Government are the ones that will be at effect of them. The system is Just Fine as it is, for them.
• "an inappropriate regulatory regime which risks recreating a private monopoly provider in much of the country"
• Not going to affect the next election, not an issue.
• "leave large areas of the country with only the most basic service, which will retard consumer use of all but low-end services"
• Not going to affect the next election, not an issue.
• Can selectively promise the noisier "squeaking wheels" The Real Deal for Them, FttP-NBN.
• Note: they don't have to deliver, only promise. Don't even have to properly explain why not, or fall back on the classic excuses "things were worse than we thought".
• And another candidate, next election can trot out the same empty promises...
• "dependence on last century’s copper network dramatically reduces available data rates"
• This is a good argument in a rational world, but not for a Political decision.
• Can the electors when they vote, know this?
• Turnbull and the Libs are promising "cheaper, better, faster-to-deploy".
• Who's to say, on election day, they won't keep that promise?
• For the average mug punter, the Turnbull promise is understandable and probably believable. Most people don't know and don't care about the intricacies of the underlying networks...
• "There has been no ‘cost benefit’ study, something the Coalition has been so adamant about."
• As above, they can say:
•  "We're going to save $20B. How do we know this? We've had one of the best commercial minds (Turnbull) in the country create this detailed plan. It's going to have an ROI five, ten or a hundred times that of the FttP-NBN. We've done the hard slog on the fine detail. It is cost-justified."
• Note they never say they've done a cost-benefit study, but you may leave thinking they done it or something better. Politics, all about Perception.
• "In the Australian market, FttN poses considerably greater burdens, and additional costs, given the need to deploy a far greater number of nodes to serve customers (70,000+). "
• yes, and will that affect votes this election or next?
• No? Don't care...
• Will retail costs of the FttN-NBN be higher than FttP-NBN?
• Absolutely, but you won't be able to know that, because the FttP-NBN will be sabotaged and probably sold-off as a dismal failure... (Great Big Expensive White Elephant)
• Can the ACCC stop this scenario and force some sanity?
• If Turnbull and his advisors are good, as I think they are, the new legislation will enable Telstra and their FttN-NBN to be completely free of ACCC interference.
• "When KPN in the Netherlands began building out FttN it found that the network was not as cheap as originally envisaged."
• Which will only happen after the next election and, Politically, the problem will be laid at the feet of the Gillard/Conroy government:
• "The Worst Ever were so incompetent and mismanaged this so badly that...."  - add your own sad ending.
• Telstra and its FttN-NBN only has to prevent FttP-NBN from achieving its mission to win. It only has to start enough of their roll-out, not actually spend all the money needed, to roadblock FttP-NBN.
• This will be an exact rerun of the Optus/Telstra Cable-TV roll-out, with exactly the same tactics/strategies and same consequences and outcomes... Telstra can spoil the game for anyone else, if allowed. It doesn't actually have to build anything much itself. And the Board and management has shown a commercial willingness to throw away Billions in shareholders money to achieve their agenda.
• So what's changed??? Nothing I can see.
• Turnbull can adapt the legislation to allow only one of the two networks into a region.
• FttN-NBN can always be rolled-out faster, because they get to leverage the installed copper distribution network. They've installed a lot of RIM's as well, have the process, contracts and crews to do it.
• The FttN-NBN doesn't have to be connected to anyone, it doesn't have to achieve good access speeds nor does it have to have sufficient backhaul to be usable. It just needs to be installed for Turnbull and Thodey to win.
• The whole point of the Turnbull proposal is that "FttN is but a stepping stone to FttP". If you don't look closely at the detail or understand the engineering and construction side, this is eminently reasonable and trivially obvious [and completely wrong, like most simplistic arguments!]
• When Telstra's FttN-NBN is deployed, they will, rightfully, make the same claim they did with the pair-gain RIM's: These can and will be upgraded to the super-duper new standards as they come along.
• Which, prime face, they were... Those poor souls in Gungahlin did get ADSL via RIM's. After considerable delays, to very limited numbers and at very low speeds, with ofttimes unusable service due to (avoidable, planned) network congestion...
• The Telstra FttN-NBN RIM's will be upgradable to full FttP, "if demand requires".
• Good luck for any customer getting a reasonable outcome under that regime.
• "Another fundamental reason why Australia should avoid emulating the UK is that the latter’s broadband strategy is unambitious."
• yes, and will that affect votes this election or next?
• No? Don't care...
• "It [BT Openreach] aims to deliver a base-level universal service complemented by broadband at up to 24Mb/s to 90 per cent of the population."
• Which suggests that V 1.0 of the Telstra FttN-NBN will be ADSL2+, not VDSL.
• We have the technology, why not use what we've got today?
• And that buys us time to design good VDSL2 cards for our RIM's, alongside GPON bays for the FttP-NBN. 
• delay, delay, delay. Poison the commercial environment and spoil others attempts...
• Great strategy for a near-monopoly incumbent.
• Do a little and let the others fail, seemingly "on their own merits".
• " This is poor policy making, for rather than being guided by its own assessment of the long-term socio-economic benefits to be derived from the country’s broadband infrastructure, the government is limiting itself to the commercial priorities of a single telco."
• yep, exactly.
• And Would you expect it to be any other way?
• Politics trumps everything: Commercial, Technical and Economic and Social interests.
• "FttN may make sense in a copper-only environment, but the prime reason it makes sense is from the perspective of an investor who wants to slow down capex for a few years."
• This is actually the reason for the Libs FttN-NBN. Can't emphasise it too much.
• The interests of both Abbot and Telstra co-incide here.
• For a modest outlay, Telstra's FttN-NBN can kill the FttP-NBN simply by delaying it.
• "Also, by relying on copper for the last mile, FttN will rapidly run out of capacity."
• yes, and will that affect votes this election or next?
• No? Don't care...
• Sadly, all of Pauls' arguments are exactly right and in the context of our Political environment, irrelevant unless they can be converted into a demonstrable hip-pocket result for voters.
• Remember that voting is compulsory in Australia. We still have a sizeable "donkey vote" (straight down the page). This says we have a substantial segment of voters that are completely unengaged...
• How do you make these voters care? Find out what they care about...
• Which is why FUD and promises of Dollars in your pocket work. :-(
• "Regulatory measures in place in the UK also risk recreating in the fibre age the same monopoly which BT for long enjoyed in the copper age."
• Voters won't care about this.
• Telstra shareholders, on the other hand, will be very, very happy.
• And if Telstra does well, then Abbot/Turnbull can crow about how well they've turned around the "Great Big Expensive White Elephant" and brought real value to all those Mom and Pop investors who bought into the Telstra float...
• Rational, no.
• Self-serving by the Pollies and their mates in Big Business? Absolutely!
• "No plan, and a lack of long-term vision"
• Exactly, not alas, not a vote winner or of interest to Abbot and Turnbull.
• Their mission is only to "get the job done", ie. get into Power.
• And then it's "devil keeps the hindmost".

• "The key, then, it to prepare national infrastructure for what cannot be anticipated, in the knowledge – from past and current experience – that it is preferable to have a capable network in the first instance than an inadequate one which entails additional cost, patches and delays as that network comes under increasing strain."
• This is a superbly strong closing from Paul.
• It is exactly right if this were a rational debate in any of the Realms but Political.
• But there's no way that Abbot/Turnbull need to look further than their current FttN-NBN plan and still get into power at the next election.

This is a very discouraging and disillusioning analysis.

Hopefully at a later time I can address some ways this outcome could be changed.
In the meantime, we'll only know after the next election who's version of the future was broadly acceptable to the electorate.

NBN: Kohler v Turnbull - A third option?

Business Spectator has published a more pieces in the Kohler/Turnbull conversation on the Liberal's National Broadband Network policy...

Today I've written two comments there, reproduced below.

I suspect that underestimating Turnbull is not a good idea, perhaps we're missing something that's in plain sight?

• My best guess: Turnbull/Thodey have figured out how to give Telstra the right to build their original FTTN network.

• My understanding is that Telstra still owns the copper reticulation network and ducts/pits, it's $11B deal with NBN is to stop using or remove it when the NBN is co-deployed.

• Which, if the Libs get into power Federally, might just make Telstra a hugely undervalued stock.
• Mr Thodey is probably very thankful for all the infrastructure and alternate transit backhauls that NBN has created, but they can do very nicely without it.
• It'd be delicious irony if the NBN failed economically because of this competition and was forced into a firesale of its assets and network... With the only reasonable buyer being Telstra.
• Locking Australia into another century of single-Telco dominance, an operational monopoly, would be a very bad outcome for the country.

What I didn't have space for in my second comment is the obvious Political Reality:

• The $20B savings in the NBN project can't be taken in isolation.

• The Libs are said to have a $70B hole in their funding promises:
• And look at that, it's just been chopped down to $50B.
• Joe Hockey, shadow Treasurer and Andrew Robb, shadow Finance Minister, must be very relieved.

An idle question, will Turnbull ever challenge again for Liberal Party leadership??
I think that's only possible if Mr Abbot shoots himself in the foot badly enough, but whatever mistakes he's made in the last 2 years, the ALP has not yet shown any ability to take him down.

---

Why the BT model won't work for the NBN, Paul Budde. 2:30 PM, 22 Aug 2012

A tour de force addressing the technical, economic and social issues at play.

---

Turnbull to Kohler: Node, node, node, Malcolm Turnbull. 6:30 AM, 22 Aug 2012

Links to NBN Explained, The FttN First Debate.
A 2009 piece that attempts to make a case that is you're going to do a full FttP fibre roll-out, you're better off skipping FttN, as it doesn't take you there, only costs more money.

To me, that's Engineers arguing about Business and Politics.
It doesn't fly for me:

• It's the exception, not the rule, that technically superior solutions win in the marketplace. We had VHS tapes, Intel CPU's and Microsoft Operating Systems win over far better alternatives.
• The Telco business is especially ruled by incumbents and pursuing their interests, usually about monopolies.
• It's an area where Logic Does Not Apply.
• It's why we had to have Optus, it had to buy AusSat, why we got two incomplete Cable TV networks (not full-coverage) and why we have multiple overbuilt mobile phone networks and no inter-Telco roaming (but they can do International Roaming).
• Politics dominates decisions with Telcos and national infrastructure. Privatising Telstra and not structurally separating it in the last sell-down from 51% show the point.

We are going to get the Network that the Telco's can't veto and that Politicians can allow.

I fear that NBN Co has, like Ansett in September 2001, had the clock run-out on it by its competitor.
Telstra took a very long time to negotiate its deal and NBN Co hasn't been able to lock down reasonable contracts for its deployment with the same vendors that Telstra uses.

Who'd have thought delays would happen?

It's played pretty well so far for Libs/Turnbull...
Another plank in the "Worst Government Ever" rhetoric.

But more importantly, by the time the next election comes around, NBN Co will be disastrously behind in this deployment.
Why disastrously? Below a critical threshold, the Libs can cancel or slow-down the roll-out and (seemingly) legitimately call for "faster, better, cheaper" alternatives that can be done "on time".

And there's Telstra's cue to finally show us its FttN plans withheld from Rudd/Conroy in 2008.
Which aren't going to be that different to BT's "Openreach" programme, but will use a variant of the Telstra RIM.

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Alan Kohler's NBN fantasy, Malcolm Turnbull. 12:52 PM, 20 Aug 2012

@Lindsay Cole: There are some new classes of applications that will thrive on low-latency, high-bandwidth connections. [LC had a dig at 'geeks coming out to play', suggesting they were mainly interested in faster Porn.]

Apps that use geospatial data, especially if they combine high-resolution imaging data from multiple sources.

Think of a live-feed 3-D imaging game/App with multiple overlays: Google Earth on steroids.  Like on-line directories, it might just become 'a thing we expect to use'.

As for Porn vs Everything else: see the song "The Internet is for Porn" by Avenue Q.

Since the birth of modern mass media (printed word + images), Porn has been the vehicle used to explore and expand all new technologies...

And when the technology is mature and ubiquitous  and infrastructure is paid for by the Early Adopters, everyone benefits... Like in glossy magazines, Porn doesn't extinguish, it just fades into the background.

Like it or not, Sex and Money are powerful drives at the root of much of our behaviour and societal pressures/movements. The research shows that both men and women are aroused when watching pornography, but commercially, men are almost universally the buyers.

You, like me, may personally be repulsed by pornography, but its not going away anytime soon.
If it drives men to be early adopters and they pay for high quality services for the rest of us, I thank them for the free ride.

---

Sorry Malcolm, it's still crazy, Alan Kohler.  7:30 AM, 21 Aug 2012

I think we all might be missing something...

Turnbull is smart, brave and persistent/dedicated to have done what's he's done and now is motivated to get back into (political) power. He's not playing this game for the pay, and he's unlikely to make rookie errors.

As a very successful lawyer, he knows the importance of words and will carefully construct what he writes and says.

As a successful Investment Banker and IT/Internet investor, he knows the Devil is in the Detail, and just what it takes to take "A good idea" to a successful execution.

If he says he's got a detailed plan and reckons he can shave $20B off the NBN deployment, I'd NOT gainsay that. The evidence we have says he'll be able to pull it off.

Which leads to this incisive quote from above:

>> Carl jackson: The NBN just doesnt have the depth of an incumbent Telco and will not get close to their targets.

So what are we missing, especially as Turnbull has cited BT's "Openreach" project as his model?

I'm thinking he's figured out how to give Telstra a way to follow BT and roll-out an FTTN network with partial Govt funding.

Sol may have given Rudd/Conroy a 1-page response to the FTTN tender, triggering the structural separation and NBN project.

Telstra must have done all the detailed work in designing and costing an FTTN...

David Thodey has shown he's a far more capable  manager than Sol and his buddies. Not nearly so wedded to the "Traditional Telco Model" of monopoly plays and pricing.

My guess is that Thodey and Turnbull are on the same page and have collaborated in creating a fully-costed, reasonably scheduled FTTN roll-out plan: with all resources to execute.

It fits the facts and accounts for the confidence that Mr Turnbull forecasts times, budget and savings...

Is it the long-term solution Thodey, Turnbull or I would want for a converged network?

Nope, that's clearly pure fibre + wireless in-fill.

If Telstra can own the last mile again, that's strategically brilliant for them.

NBN: The Turnbull Guarantee we'll never see...

Technology Spectator has written some recent pieces on Turnbull's NBN proposal I've commented on (below):

• "Why the BT model won't work"
• "The Coalition's NBN collision course"

If Mr Turnbull owned the NBN he's proposing, would he offer an effective bandwidth guarantee (or your money back)? I wonder...

As far as I can see, he's proposing VDSL2 with as few Cabinets and as little backhaul as he can get away with.

Saves $$$
But, if that's his solution, in busyhour, most people won't see 5Mbps.

Will Mr Turnbull offer a meaningful guarantee of minimum performance?
Could that have

Because NBN Co is not notionally a Govt service, but a commercial Co, the ACCC might have something to say about election promises, guarantees and misleading or deceptive comments.

So, will Mr Turnbull and the Coalition offer customers a performance guarantee for the their NBN?
If they do, will he/they be liable for commercial statement under the Trade Practice Act/Competition and Consumer Act?

That would make Political history in a way nobody would want to see.

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"The Coalition's NBN collision course" - Comment

I'm concerned about the "50Mbps" speeds being quoted... It's in the G.993.2 standard, but not the BT network Turnbull was talking about.

BT Openreach are currently only talking about offering 40/10Mbps, and they've tested a higher frequency version at 80/20Mbps.

BUT, the Distance-Bandwidth Product applies. Increase the frequency, increase impedance, effective throughput declines much more rapidly at higher freq.

e.g. ADLS1 is preferable to ADSL2+ at extreme distance.

BBC report of "Ofcom" findings is the 40Mbps will really deliver 36Mbps. And with some ISP's, you might expect to realise only 1/3 of the theoretical bandwidth.
Turnbull knows all these subtleties, he invests in this area.

He won't go on record as saying: "We're offering access rates of 10 to 36Mbps, depending on your luck, and don't care about the backhaul congestion".

Also, BT are promoting Openreach as a superfast *Fibre* network. FttN is kinda "fibre"... but not "not as we know it, Jim".

BT's Big Build is only of the access network. Nothing is said about the backhaul, which is a big part of NBN Co's budget and schedule.

Backhaul congestion is a 'drop-dead' problem for residential broadband - which is why NBN Co is addressing it first. Gungahlin, ACT with ADSL-equipped RIM's learnt all about these problems.

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"Why the BT model won't work" - Comment 1

On Lateline last night, Turnbull specifically mentioned 50Mbps to 80Mbps, implying it was the speed of BT's FttN. http://www.abc.net.au/lateline/content/2012/s3572973.htm

Your piece, a lot more believable, say 24Mbps, which sounds like ADSL2+. I know that TransAct went VDSL and it's a low-volume product/standard. Doesn't make sense to anything but Really Popular chipsets/standards. [Openreach does offer 40/10Mbps with VDSL2]

MALCOLM TURNBULL: "Well our broadband policy is to

• complete the national broadband network,
• but to do so
• sooner,
• cheaper - less cost to the taxpayer - and
• much more affordably for consumers

and that is our plan."

"So we will

• complete the NBN,
• all Australians will have access to
• very fast broadband,
• but because we'll use a mix of technologies and
• use the most cost-effective ones where appropriate,

we will be able to do it sooner, cheaper and more affordably."

Q: What's "appropriate" FttP when he has to, FttN when he can and ADSL2+ elsewise?

Turnbull specifically says:

a lot of fibre to businesses and hospitals and schools and universities - I mean many of them have fibre now, so there will be plenty of fibre in the backbone of the network.

Hasn't the bulk of the NBN Co work until now been putting in place exactly that backbone network? And importantly, the Points of Interconnect and competitive Transit Backhaul.

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"Why the BT model won't work" - Comment 2

Alan Kohler wrote a scathing piece on this 2 days ago [20'th] which I haven't seen you reference. "The Coalition’s NBN policy is madness"

He lays out a convincing set of reasons:

- Negotiating a deal to lease/buy Telstra copper couldn't be done as equals.

Imagine trying to negotiate that deal having made an unbreakable election promise that you would.

- reneging on the existing contract, is going to involve penalties

Replacing the NBN with a FTTN network would mean tearing up the existing $11 billion deal between NBN Co and Telstra

- Why we got a FttP not a FttN in the first place was Telstra's non-response to the Rudd/Conroy tender and the cost to buy the copper needed: $20B.

Because they are in an incredibly weak negotiating position with a very aggressive and opportunistic player (Telstra), the price is going to be considerably higher.

that a FTTN would require compensation to Telstra of more than $20 billion.

- Sunk Costs.

Also the NBN will be simply too far advanced.

- Planning permission for 'Node Cabinets'. Just how big as these remote DSLAM's? [RIM cabinet size?]

FTTN would require cabinets the size of big wardrobes on nature strips;" + building approvals

- Subsidies for regional/rural broadband: How's that going to be done?

And the final problem is that the NBN is a mechanism for subsidising regional and rural broadband,..

Is the Liberal National Party really going to end that subsidy and tell country towns that their fibre can’t be afforded ....

Kohler ends with succinct advice:

Don’t do it Malcolm. More importantly, don’t go into an election having promised to do it – you will soon find yourself in quicksand and eventually go down as the worst Communications Minister ever.

Announce, grumpily, that the NBN will be too far advanced to stop and that the Coalition will simply work to ensure that the project is delivered on time and on budget. And then get on board the fibre broadband wagon.

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Sources and Notes:

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http://en.wikipedia.org/wiki/Very_high_speed_digital_subscriber_line_2

VDSL2: ITU-T G.993.2. 2005
Starting from 1.6 km (1 mi) its performance is equal to ADSL2+
100 Mbit/s at 0.5 km (1,600 ft) and 50 Mbit/s at 1 km (3,300 ft)

May 2010: BT announce £2.5billion plans to roll-out a mixture of VDSL2 FTTC (75%) & GPON FTTP (25%) to 66% of the UK by 2015 with VDSL2 speeds starting at 40Mbit/s down 10Mbit/s up potentially rising to 60Mbit/s down 15Mbit/s up.[

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http://www.superfast-openreach.co.uk/the-big-build/building-a-new-network.aspx

The key stages, from planning to go live

From the moment you see your exchange appear on the rollout plans, it could be up to 15 months before it's ready to supply superfast fibre broadband. Why? Well, here's what we have to do...

Months 1-9: prepare the exchange
Months 3-9: Planning the network
Months 10-15: Installation

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http://www.superfast-openreach.co.uk/brochure/files/assets/downloads/publication.pdf

Openreach will be using the £2.5billion committed by BT to make superfast fibre broadband available to two- thirds of the homes in Britain by 2014.

Superfast fibre broadband comes in two flavours:

• A part fibre, part copper infrastructure (Fibre to the Cabinet) capable of delivering download speeds of up to 40Mbit/s now – and up to 80Mbit/s during 2012 – and upload speeds of up to 15Mbit/s
• A pure fibre infrastructure (Fibre to the Premises) capable of delivering download speeds of 100Mbit/s now – with 300Mbit/s coming in the future – and upload speeds of 30Mbit/s.

Openreach is solely responsible for providing, maintaining and improving the network that connects your home or office to the telephone exchange that serves you. We don’t sell the communications services like broadband that run over the network. Only a communications provider can do that. There are 450 of them around the country. So there’s plenty of choice.

We’re installing a pure fibre optic network at the greenfield development at Ebbsfleet in Kent, where the first occupants are already able to download information at a blistering 100Mbit/s! When completed, Ebbsfleet will be the UK’s first mass scale pure fibre optic network, serving 10,000 homes and businesses.

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http://www.superfast-openreach.co.uk/the-big-build/

We're currently upgrading 2,400-3,000 cabinets a quarter and connecting between 100,000 and 150,000 premises with fibre every week. That means we're increasing the reach of superfast fibre to as many premises as there are in the whole of Singapore – every three months.

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http://www.superfast-openreach.co.uk/the-big-build/the-numbers-game.aspx

The local access network covers 30 million customers and 8 million broadband lines from approximately 5,500 local exchanges. 300 million telephone calls and 350 million internet connections are made across this network every day.

We're investing £2.5 billion to upgrade the local access network, bringing superfast fibre broadband within reach of two-thirds of UK homes and businesses by 2014.

But it's not easy. We have to lay 3 million km of fibre across the UK and install 50,000 new cabinets serving 3 million distribution points.

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http://www.superfast-openreach.co.uk/the-big-build/the-power-of-fibre.aspx

Why is everyone talking about fibre?

The current communications network has been built on copper and it'll continue to play an important role for some time to come. It's still the gold standard for voice, connecting around 23 million lines in the UK. And it can carry information at speeds of up to 20Mbit/s in a digital format. So it's no slouch itself.

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http://www.superfast-openreach.co.uk/the-big-build/innovative-solutions.aspx

Connecting the final third

Fibre, of one type or another, will connect at least two-thirds of homes and business in the UK in the next few years. But there are some areas – often more rural places – where it just isn't viable to introduce fibre.

Current broadband coverage in UK is 99.6 per cent. But about 160,000 lines have no access to broadband due to line length and 310,000 have limited access (up to 0.5Mbit/s only). So we're working to develop solutions that will help us achieve the government's Digital Britain target of a minimum broadband speed of 2Mbit/s for everyone in the UK.

One of the solutions we've been testing is Broadband Enabling Technology (BET) solution. BET can provide broadband services on long lines. It provides up to 1Mbit/s over a single pair of copper wires which can be boosted to 2Mbit/s with the addition of a second copper pair.

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http://www.superfast-openreach.co.uk/the-big-build/big-build-diary.aspx

Our network spans the length and breadth of the country, and is connected to 26 million premises across the UK. We've over 21,000 field engineers out and about every day developing, monitoring, maintaining and – when needed – repairing it. And with £2.5 billion being invested in it, we're busier than ever.

Tue Jun 26:
Over 10 million homes already have access to fibre broadband and today’s news brings us another step closer to our goal of making it available to two-thirds of the UK by the end of 2014. And hopefully we won’t stop there. We’re working with BDUK and local government and communities to try and give as many people as possible access to the benefits of fibre broadband.

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http://www.bbc.com/news/technology-16842463

It has led to the creation of the firm's Infinity offer which promises "up to" 40Mbps. The service was found to provide an average speed of 36Mbps.

Orange's "up to" 20Mbps ADSL service fared worst out of the maximum-speed offers surveyed. It was found to provide average download speeds of 7.2Mbps.

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http://www.news-openreach.co.uk/news.aspx?newsid=47

22 March 2012

More than eight million homes and businesses now have access to fibre and we’re aiming to make it available to around two-thirds of UK premises by the end of 2014.

With 80/20 available from early April, you’ll have a chance to start selling the service from mid April onwards. It comes with an £80 connection charge and £9.95 monthly rental. Of course the current up to 40Mbit/s service will still be available so you can choose whether or not to offer the enhanced speeds.

NBN, stuxnet and Security: It's worse than you can believe

What  did US Intelligence tell the Australian Government about Real Network Security when a chinese vendor was vetoed  as supplier of NBN (central?) switches?
Now that we have O'bama admitting "we did Stuxnet, with a little help", we know that they aren't just capable and active, but aware of higher level attacks and defences: you never admit to your highest-level capability.

Yesterday I read two pieces that gave me pause: the first, the US Navy replacing Windows with Linux for an armed drone was hopeful, the other should frighten anyone who understands Security: there's now a market in Zero-Day vulnerabilities.

The things the new-world of the NBN has to protect us against just got a lot worse than you can imagine.

Links in that article:

• Google's responsible disclosure [and payments]
• “The Hackers Who Sell Spies The Tools To Crack Your PC (And Get Paid Six-Figure Fees)"
• “Shopping For Zero-Days: A Price List For Hackers’ Secret Software Exploits"
• a ZDNet interview with Christopher Sogholan
• Bruce Schneier Forbes article

Closing:

For once, I’m hoping Bruce Schneier is wrong. But, I doubt it. I’ve already read where high-level contestants who normally compete in Pwn2Own aren’t any more. They would rather keep what they found secret, and make the big bucks.

I've written previously that a Cyberwar will be won an lost in 3 minutes  and that the NBN is a central element in a National Security and Economic Security protection strategy for Australia.

Since the O'bama disclosure, Governments and essential Utilities and Businesses should be required to run multiple diverse systems, at least for desktops so they aren't susceptible to monoculture failures: think Irish Potato Famine but 10-100 times worse.

The US Navy announcing they'd needed to rehost a secure, armed platform (move from Windows to Linux) seems to suggest that even their operational/combat networks get compromised (remind you of Stuxnet? "air-gaps" are good but no defence against a determined, capable attacker).

That they've publicly stated "we chose linux when it absolutely had to be trusted" (my words) might be them hinting, none too subtly, that every other Government and Military should follow their lead: Move critical systems off Windows because even we can't keep them "ours".

The other news, that there are both providers and brokers for "zero-day" attacks ($50,000-$250,000 a go for significant platforms) says:

• there are people or services who can validate claims of "original zero-day exploits".
• this is far from new, we ("joe public") are just finding out about it now, and
• there will already be a whole stash of "zero-day" attacks in the hands of Governments and potentially others.
• Don't think this is just about National Security Espionage, it's also about Commercial Espionage and infiltration, targeted Financial System attacks, 'ransomware' and much more: its opens the way for Organised Criminal Activity way beyond simple Identity Theft in scale and returns. Would the Drug Cartels and Arms Traders be in on this? Who can say... Sophisticated Bad Guys with a ton of cash, no scruples and able to buy pretty much any technical talent they want. Not a bet I'd take.

But there's a subtlety that's not brought out in the article:

• many more "zero-day" exploits will be bought, than uniquely exist.
• This isn't just one vendor selling the same thing to multiple buyers. [A great scam until just hustle the wrong people with Big Military Weapons - and then you're dead.]

A wise Intelligence Agency will have its own crew finding "zero-day" exploits and will be wanting to identify all the people working in the area who might be as capable as themselves and also may just save themselves the cost of developing exploits that require lots of leg-work. We know that high-level Intelligence Agencies routinely attempted to recruit outstanding Mathematicians and Systems folk - like Alan Turing during WWII, good commanders will put them on tasks that need more intellectual horsepower and leave (relative) donkey-work to others.

If someone offers an Agency a "zero-day" exploit they've just found, for the Agency to refuse it means they've already developed or acquired it elsewhere: this gives away a bunch about what the Agency does and doesn't know. The Agency will always buy to hide its capability. But not before doing a little 'background check' on the seller/discovers to avoid the scam of "lets sell the same toy to everyone".

Also, if an Agency truly believes that a seller/discoverer is legit and will only pass on its work once, it's worth its while to acquire real and dangerous new exploits to prevent "others" from getting their hands on them. If those third-parties are accessible and like-minded, an Agency might attempt to "bring them into the fold" - to hire them and at least take them off the market.

You'd think that an Agency would harden its own systems against against its whole portfolio of "zero-day" exploits, would track the public registries and even create "honey-trap" systems for those exploits: systems that are just secure against the exploit, but allow the attacker into a fake environment containing false/misleading information (mis-information from highly 'reliable'/'credible' sources is a counter-espionage coup de grace) - or even initiate active counter-attacks or less invasive track-back and monitoring.

It is guaranteed that all the many Intelligence Agencies (if the US has a unit, so will everyone in the G20 and maybe beyond, especially those in Intelligence sharing partnerships) know the cost of finding zero-day exploits against many types of targets. As in, call tell you a dollar value. Part of the drivers for third-party purchases will be additional resource/capability, but also very pragmatic: it's cheaper. You'll always pay 3rd-parties less than it costs you :-)

How do I know this for sure? In 1998, Robert Morris (senior) talked at the AUUG Conference in Sydney. He'd 'retired' from the NSA, (and said "you never retire from them") and after lengthy service at senior levels, knew intimately what could be said publicly and what was never to be said.

He calmly talked about the US mis-placing nuclear weapons (more times than I remembered being widely reported), described a really neat hack that let them listen in on terrestrial phone conversation (put a satellite or plane in the line of a microwave link).

And he said unequivocally, "It's costs us $10MM for an 'intercept'". Not only did that imply they had the tools and techniques to break most or all codes, but did so at "industrial scale". It wasn't a little cottage industry like Bletchley Park had been, but large enough that they absolutely knew how to cost it and would bill-back those resources when requested. Generals and others would have to consider what certain information might be worth to them before blindly requesting it.

Things are much worse than you can imagine, now there are acknowledged Cyberattack Units and a market in "zero-day" exploits. We can only know after the event just how bad things have been - like the Cold War's Nuclear "incidents".

BTW, while its possible companies or individuals might deliberately insert backdoors or vulnerabilities into critical software, I find it highly unlikely. The next plodder that comes along to fix a bug in your code (you don't stay after scoring the jackpot) might just wreck it. If you're really good, people will never notice what you've done.

While there are some people that are that good, there are a huge number who only think they are. They will be caught and dealt with, either via the normal Law Enforcement and court system or by covert activities.

A far more plausible and probable occurrence is for a vendor of "proprietary systems" (closed source, not Open Source) to bow to pressure from Friendly Governments to allow controlled administrator access, a variation of the Ranum Conjecture, whereby undercover agents infiltrate critical work-teams and insert malicious code.

Whatever Intelligence Agencies are capable of, large Organised Crime is potentially capable of as well. The difference is, "can we make a buck off this". They will do different things and target different systems.

The NBN will become our first line of defence against Cyberattack: let's get everyone behind it both publicly and privately.