back to article Opposition leader raises ‘your Internet will cost you more’ spook

With opposition leader Tony Abbott declaring unchallenged that the NBN is going to “triple the costs” of access to broadband over the weekend, The Register decided to do some plan searching and come up with a comparison. The quote that got us busy can be found here: “Malcolm [Turnbull] is the Shadow Minister for Communications …

COMMENTS

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Stupid Abbot hasn't realised that at some point the copper has to be replaced with fiber and considered the bandwidth issues they are already having with wireless, putting in the wireless system Abbot wants is the white elephant.

The only disagreement with the NBN is using Telstra's ducts. If they just ran it overhead with the power, it would be cheaper and faster to install

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FAIL

You almost had me...

...until that last line. May I point out that a lot of places (say, your local CBD or any area that has been built in the last 10+ years) does not sport overhead wires? Everything is under the pavement.

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Re: You almost had me...

Indeed, in my street (where I have lived for 29 years) they'd have to install the overhead lines for the fibre, as our street (and most of the streets in my area) have underground power.

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Re: You almost had me...

"Everything is under the pavement."

Assuming you live in the city. I'm regional and the phone line is buried and power is overhead

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Re: You almost had me...

Still doesn't wash - my parents live in an old area just outside a small country town halfway between Brisbane and Gatton and their power and phone lines are underground. They're on water and septic tanks for the rest.

So "regional" does not necessarily equal to overhead lines either.

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above ground not an option everywhere

Overhead is not an option in all places, more recently built estates have power underground so they need to use the telstra ducts in those places.

and I do agree: the libs have no idea when it comes to a next gen network, wireless don't make me laugh

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Re: above ground not an option everywhere

"the libs have no idea when it comes to a next gen network, wireless don't make me laugh"

Considered the congestion problems already with 3g and 4g in the early evening, I'm sure adding a few million new wireless devices won't affect the service.

Then considered that currently the fastest wireless is 1/4 of the current limited fiber, why would you want to go that way?

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Meh

My understanding of "White Elephant"

is something that is gifted to another, with the ongoing costs effectively ruining them.

Fibre can hardly be more different, with up-front costs for infrastructure being high (but covered through subscriptions, not to mention any benefits to GDP that the network may bring as an added bonus) with ongoing maintenance being quite low.

Copper, on the other hand, may be cheaper in the short term, but needs ongoing replacement, maintenance, not to mention, in a FTTN setup, the need to negotiate with Telstra, who know full well that they've got the coalition by the balls. An upgrade from FTTN => FTTH (which will be crucial within the next decade, IMO) will then be more expensive than going straight to FTTH in the first place.

If the government's plan is a white elephant, the coalition's must be a Moby Dick...

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Unhappy

Re: My understanding of "White Elephant"

We can only hope he meets the same fate as Ahab.

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Anonymous Coward

Long term implications

Advances in technology usually mean dramatic decreases in costs as well as increase in performance. In the case of the NBN, we will get the increase in performance, but the cost to the consumer will not fall, as (1) the investment must be recouped over several years, and (2) there is no longer any competition in the wholesale market.

I suspect that the latter will result in steadily increasing prices and dwindling efficiency in service provision for the forseeable future.

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Re: Long term implications

The main cost of FTTH as opposed to FTTN is not in the fibre, but in the labour of putting it in the ground - unless that labour cost is eliminated, a FTTH upgrade will not cost considerably less in the future than it does now - and if nodes need to be upgraded to deal with fibre from the node to the home, the cost will possibly be even greater.

The cost to the consumer is dependent on uptake. Right now, the number of people opting for high speed NBN plans (100Mbps) is much greater than anticipated. The higher the uptake, the quicker the return, and the better the investment. Based on current trends (and admittedly it's still early days) the uptake is better than even the government predicted.

Whilst technology will undoubtedly improve, I doubt wireless will be a viable alternative to fibre on a cost/performance basis in any reasonable timeframe. That leaves fibre as the best option (and easily capable of upgrading to Gbps speeds without any extra cable needing to be laid).

Regarding no competition in the wholesale market - we already have a dearth of competition in the wholesale market. The difference is that under the current NBN, the wholesale market will be effectively government controlled, with prices for all ISP's guaranteed. Without the NBN, Telstra were effectively the biggest wholesaler by a massive margin, with shareholders to satisfy and profits to increase, the only thing restraining Telstra from having massive advantage in the industry was massive regulation. A government owned company isn't subject to the same shareholder pressure to return quick profits at the expense of subscribers.

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Anonymous Coward

@Esskay (Re: Long term implications)

Telstra used to be government owned, until the government of the day needed more money than it was raising in taxes. That this will in due course happen to the NBN is inevitable. That is why I don't like government monopolies.

Based on the rate at which homes are being passed, it will be many, many years before the infrastructure is fully paid for. In the meantime, current prices/caps will not improve.

As far as new uses for the internet are concerned, speed is only half the equation. As long as caps remain at current levels, watching even HDTV via the NBN on a regular basis will be prohibitively expensive. You can forget about seeing the introduction of 4K UHD TV via the NBN (and you certainly won't see it on free to air).

As implemented, FTTH will be great for people wanting sub 20 ms ping when playing Call of Duty, but it is arguable whether this constitutes a sufficiently popular use case to justify its advantages over FTTN, especially since FTTH does not preclude the subsequent introduction of FTTN, would cost a lot less, and would be completed much more quickly. I can only assume that's why so many more countries have chosen FTTN over FTTH. Certainly, if time and money were not issues, we would all rather have FTTH. However, time and money are always issues.

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Re: Long term implications

I think what you like a lot of other people forget, is that wholesale is a natural monopoly. Just like when Telstra followed Optus down the streets when it came to HFC.

If we take HFC as an example, a street of 50 houses.

If only Optus is in the area with HFC, it means Optus can expect between 0 and 50 people will sign up for it, so there is a good rate of return.

If Telstra however does what they did, and runs down that same street with HFC, the expected take up rate can never really be much more than 0-25 between the 2 of them.

Yes, it is true that everyone could still choose either Telstra or Optus, but it is more likely some will choose 1 and the rest will choose the other.

It becomes less of a return on investment at this point, which is why there is only 1 copper network in Australia which is owned by Telstra, because to have every Telco run a copper network down every street (lets say iiNet, TPG, Telstra, and Optus all decide to run a copper network) they will all have to share a piece of the housing pie for the streets they go down.

Just like Gas, Power, Water, Sewerage, and Roads are a natural monopoly, you don't have 10 different power cables running past your house, each one owned by a seperate company, you have 1 set of power cables owned by 1 company and the rest is all managed by the power meter as to which company you are with (unless you live here in Western Australia, in which case, Western Power is your only option).

Please don't forget that, you CANNOT have more than one wholesale network, it is not cost feasible.

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Re: Long term implications

> I think what you like a lot of other people forget, is that wholesale is a natural monopoly. Just like when Telstra followed Optus down the streets when it came to HFC.

We don't forget that, but every signal is that NBNCo will morph into Telstra especially once it is privatised.

> It becomes less of a return on investment at this point, which is why there is only 1 copper network in Australia which is owned by Telstra, because to have every Telco run a copper network down every street (lets say iiNet, TPG, Telstra, and Optus all decide to run a copper network) they will all have to share a piece of the housing pie for the streets they go down.

Actually the problem is that if someone else attempted to build a rival network, Telstra would discount access to the copper network making the new network unprofitable. Have a look at the cost of fibre backhaul to exchanges where Telstra is the only provider or pricing of backhaul to Tassie prior to BassLink.

This principle is well known as far back as railway competition in the US.

> Please don't forget that, you CANNOT have more than one wholesale network, it is not cost feasible.

But you can separate that wholesale network into multiple geographically separated networks and have companies tender to run the networks. Much the same happens with public transport networks now.

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Anonymous Coward

Oops

Accidentally switched FTTH and FTTN. My fault for posting at 2:16 AM.

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With the most expensive plans are you comparing ADSL2+ with 25mbps NBN plans? Or 100mbps? I bet comparing ADSL2+ with 25mbps plans makes the value looks a lot more enticing. On the other hand, getting at least 4X speed for 38% increase in price sounds like pretty good value to me.

What I'm getting at is that ADSL2+ should only really be compared to 25mbps NBN plans when looking at data value. In reality though, 12mbps would be closer to what most ADSL2+ users can reach.

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But what is it all for?

Let's not forget that we are (mostly) techies here and see value in fast Internet speeds. Many people and families simply *do not*. Many of my friends have lived perfectly happily with 2MB braodband for ages, and will continue to do so. They simply don't do anything which requires massive bandwidth. If you offered them a lower data service for less money, they'd probably take it.

Just a thought.

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Unhappy

Let's be clear about this

What seems to be so conveniently forgotten in all these arguments is that the NBN is NOT just about speed. Indeed, one of the biggest problems is that this has become the mantra by which it is judged. There is no doubt we are living with a telephone network that is at 2 minutes to midnight in terms of its useful life. And,

note my careful use of the word 'telephone' That's what the copper network was designed for, and by some marvellous and very clever technology, we have managed to overlay a data network on top of it. But, have no doubt - we are virtually at the end of technological development on copper as it exists in the telephone environment.

The NBN - itself an unfortunate choice of name, since it really is a National Communications Network - is designed to replace the dying copper network. It is a replacement program - replace the dying copper with fibre that will probably see three or four generations of use. To be effective and efficient, this needs to be done in a ubiquitous fashion. It will not be either effective nor efficient - and certainly will be far more costly - to do this in a piecemeal fashion. The value of the NBN comes from doing it once, and doing it with fibre. It is like taking the plunge to buy a new car when the old one is 20 years old. Sure, you can buy a new engine;

buy a new gearbox; buy new steering components because the old ones have worn out. You will keep it on the road, but at what price? And, when do you get to a point that it is more cost effective to buy a new one. Now that new one will almost certainly be 'faster' than the old - but was that really why you bought it? Probably not!

The lack of foresight; the petty politics and the sheer selfishness of the NBN detractors is staggering. This isn't about us - today's' generation. It is about tomorrow's, and the one after and the one after that. Our kids and grandkids will look back with despair if we don't do it - and Australia as a country will be so much the poorer as our Asian neighbours overtake us in the digital future.

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FAIL

Re: Let's be clear about this

> What seems to be so conveniently forgotten in all these arguments is that the NBN is NOT just about speed.

WRONG! The only justification for the NBN is speed, otherwise other technologies could be easily justifiable.

> There is no doubt we are living with a telephone network that is at 2 minutes to midnight in terms of its useful life.

Certain areas may need replacement, but much of the copper network is in good condition.

> Our kids and grandkids will look back with despair if we don't do it

With the current Labor plan our kids are going to wonder why they have a fibre network which provides speed in abundance but is sold as a scarce resource. It should be a national shame that NBNCo are predicting 50% of premises connected by fibre will connect at 12/1Mbps and less than 5% will connect at 1Gbps in 2028. Remember speed is purely a software setting - the installed hardware is capable of 1Gbps.

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Re: Let's be clear about this

"...our kids are going to wonder why they have a fibre network which provides speed in abundance but is sold as a scarce resource."

So this is a reason not to build it? Might I suggest from your comments, you have a very warped, obscure and hopelessly confused attitude to technology. Oh, and by the way, can you please advise all the readers what these other "justifiable" technologies might be? I'm sure we'd all like to buy shares in them.....and, BTW, I've a nice bridge in Sydney you might be interested in.

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Re: Let's be clear about this

> Might I suggest from your comments, you have a very warped, obscure and hopelessly confused attitude to technology.

Telstra had speed tiers on ADSL, people suffered and nobody was happy. That only changed when Internode installed their own DSLAMs in exchanges and provided uncapped speeds, cheaper that Telstra.

Have you been following Google Fibre in Kansas? 1Gbps and estimates suggest $120-$140 billion to connect the entire USA. Bloody cheap compared to what it is costing in Australia.

> Oh, and by the way, can you please advise all the readers what these other "justifiable" technologies might be?

Pay attention. I've never said FTTP is not best technology. However it is no point going to the expense of installing massive pipes if you then fit a restrictor at the end. With speed tiers, less than 5% will connect at 1Gbps and see the full benefits of fibre.

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Big Brother

Re: Let's be clear about this

mikeinnc, you said:

"The NBN - itself an unfortunate choice of name, since it really is a National Communications Network - is designed to replace the dying copper network."

Unfortunately, you as a highly competent tech-focused person have missed the political reality here.

The NBN is ultimately intended to replace the private networks (plural) with a re-monopolised government communications network. If you recall, not long ago - within the last about 12 months, NBN paid huge sums to Telstra, Optus, and the other network owners for the purchase of their assets, on the condition that they no longer compete with NBN. This condition is called by the legal eagles a "restraint of trade".

The seeds of this disaster lay in the flawed implementation of the Davidson(sp?) Report into separation of postal and telecoms services back in the 80s. Australia Post was established to handle the post, sharing but not owning the natural monopoly of the land/sea/air transport infrastructure.

Telecom was established to handle the electons, and the natural monoploy of the Customer Access Network and the exchange infrastructure was left in its hands.

Thus it operated as a monopoly provider to its own retail business as well as to competitors - a recipe for the disaster which has followed, despite the heroic but futile efforts of competitors to get around the monopoly by running their own netwoks.

There should have been a separate infrastructure entity (government owned) which operated ONLY the cables and exchanges, mobile towers, backbone etc., charging a transparently equal fee for access by service providers.

Now the whole exercise is being shown up for the dog's breakfast it has always been.

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Re: Let's be clear about this

> The NBN is ultimately intended to replace the private networks (plural) with a re-monopolised government communications network.

Except that as soon as NBNCo is shown to be profitable, the government's plan is to privatise the company. Socialise the risk and privatise the profits!

> If you recall, not long ago - within the last about 12 months, NBN paid huge sums to Telstra, Optus, and the other network owners for the purchase of their assets, on the condition that they no longer compete with NBN. This condition is called by the legal eagles a "restraint of trade".

Only those companies with significant infrastructure that could be used to compete were compensated. Watchers of the rollout would be well aware that NBNCo is overbuilding the HFC network first. If the plan was to improve average speeds the quickest, HFC areas should have been overbuilt last.

> There should have been a separate infrastructure entity (government owned) which operated ONLY the cables and exchanges, mobile towers, backbone etc., charging a transparently equal fee for access by service providers.

Totally agree. New Zealand have taken a much better approach by forcing the monopoly provider to separate into an infrastructure and retail company. The only challenge is that monopolies tend to be inefficient.

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Boffin

NBNCo plan is to grow ARPU steeply

I'm not sure that it is well understood that NBNCo's stated aim in the NBNCo Corporate Plan (http://www.nbnco.com.au/news-and-events/news/nbn-co-corporate-plan-released.html) is to increase Average Revenue Per User (ARPU). That is to on average they plan to have people pay more for their internet connection.

Prices for the same service will (almost certainly) decline, but at a rate significantly less than the uptake of faster services / downloading more. NBNCo have kindly provided sufficient information.

Plans for AVC pricing are outlined on page 67:

* 1000/400Mbps falls from $150 to $90, while the average speed grows from 30Mbps to 230Mbps.

* Price falls by 40% while average speed grows by 760%

Plans for CVC pricing are outlined on page 67:

* Starts at $20Mbps/Month when the average data usage is 30GB/Month and falls to $8Mbps/Month when the average data usage is 540GB/month.

* Price falls by 2.5 times, while the average data usage grows by 18 times = growth in revenue from CVC of 720% when accounting for price falls.

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