back to article nbn™ blames cheap-ass telcos for grumpy users, absolves CVC pricing

nbn™, the entity building and operating Australia's national broadband network (NBN), has hit back at critics of its network and business plan in a pair of missives attributed to CEO Bill Morrow. The company has faced increasing criticism in recent weeks as users complain that their services are either unreliable, …

  1. Denarius Silver badge

    rest assured

    that as soon as enough backbone gets built to an area, the download any and everything mob will ensure service returns to the usual slow levels. Or the local ISPs will sign up way to many Netflicks subscribers. Bring back 7 bit ASCII !!

    1. Pompous Git Silver badge
      Unhappy

      Re: rest assured

      "the download any and everything mob will ensure service returns to the usual slow levels."
      Sounds about right. While we initially only had 3 Mb/s on our "up to 12 Mb/s" FW link, it eventually reached 10 Mb/s. These days it rarely gets to 6 Mb/s and is more often half that. Even streaming ABC RN has dropouts.

    2. Colin Tree

      Re: rest assured

      so your backbone is spineless and also lacks failover.

  2. eldakka Silver badge

    “Even if we reach our planned 70%+ take up rate, nbn’s current revenue per user coming from the RSPs [retailers] will not generate enough total revenue to produce a positive return on the investment made to build the network as it is planned,” he writes.

    As a government-initiated infrastructure project, no positive ROI is expected nor required.

    If that were the case, the government would never have to levy taxes for anything ever again, as each project (healthcare, roads, defense) would be expected to pay for itself and return a profit.

    1. mathew42
      Facepalm

      Balancing community benefit with cost

      Healthcare and roads are frequently evaluated based on financial models of questionable accuracy. A few examples:

      - A preventative treatment (e.g. vaccine, diabetes monitoring) is evaluated based on cost versus the reduction in cost of future treatment

      - Surgery for soft tissue injuries is evaluated on the cost of surgery now, versus potential that the body with help from physiotherapy will heal itself.

      - Part of the decision set for road funding is economic contribution (e.g. If a new freeway saves a truck driver 10 minutes and the truck driver uses the road 6 times a day, then the improvement in productivity means one extra delivery a day)

      - Roads can also be funded based on reducing the cost of accidents to communities (e.g. replacing level crossings for trains).

      Labor chose to put the NBN off-budget, that it should deliver a 7% ROI and that once the risky build was complete that privatisation should occur. For the NBN to be subsidised by the government community benefit would need to be shown. Labor promoted the NBN as delivering community benefits in areas such as health and education.

      The NBNCo Corporate Plan (2010) guidelines for required speeds for tele-medicine and remote education at 100Mbps and preferrably 1Gbps. In the same plan Labor estimated that today 30% would meet that criteria. The reality is 14% and falling. 70% takeup * 14% on 100Mbps = 10% who received the promised benefits.

      Now when you consider that this 14% are on the most expensive plans, I consider it reasonable to label this as middle-class welfare and delivering little benefit to the disadvantaged. This means that the NBN should deliver a subsidy and the government should limit it's exposure to providing funding at a discount to the commercial rate. To change this, the NBN financial model requires restructuring to deliver community benefits to the disadvantaged.

      1. Jasonk

        Re: Balancing community benefit with cost

        LOl Mathew BSing again

        "10% who received the promised benefits."

        When every would have the option of those benefits not like the lotto we have now

        1. mathew42
          FAIL

          Re: Balancing community benefit with cost

          > When every would have the option of those benefits not like the lotto we have now

          In exactly the same way that everyone has the option of purchasing a Tesla S?

          Hypothetically everyone within the FTTP rollout can connect at 1Gbps. The reality is that only 14% have decided that they can afford the cost of the 100Mbps NBN plans. The ACCC reports that on 31 March 2017 of the 1,080,761 connections only 77 where 250Mbps.

          There is absolutely nothing in the data that indicates demand for 100Mbps and faster plans is likely to grow in the future. By waxing lyically about uber fast FTTP while ignoring this reality of speeds that people are selecting fibre fanbois are becoming increasingly irrelevant in the discussion.

  3. mathew42

    This is the exact quote from Morrow:

    nbn has responded to industry concern over the cost of the CVC by reducing the charge on three separate occasions – from $20 per megabit per second per month to the current average across the industry of $14.40/Mbps per month and as low as $8/Mbps a month if they buy sufficient quantity.

    Indeed, the average CVC being purchased across the industry works out to about 1Mbps for each end user – under our pricing model that could be doubled to 2Mbps for each end user for around an extra $5 per month.

    *Key Poiints*

    1. Average is ~1Mbps = $14.40 (down from $20).

    2. Lowest cost is $8/Mbps

    3. Extra $5 would result in ~2Mbps per user.

    *Analysis*

    1. ~2Mbps per user would require an RSP to spend $20, therefore average CVC would be $10 for 1 Mbps. This is very close to lower limit of $8 for CVC pricing.

    2. Average speed on NBN is ~32Mbps, which means a contention ratio of 1:32 which is not too bad for those on 12 & 25Mbps speeds.

    3. Packets are not prioritised based on AVC speeds, so for 50Mbps & 100Mbps the impact of congestion are significantly worse.

    1. Colin Tree

      virtually

      1:32 doesn't get close to working for streaming services. The CVC has to be averaged over a month and allow real peak usage.

      It's a virtual circuit not a fixed bandwidth circuit. They just have to provision for a LOT more bandwidth to cover peak requirements.

  4. mathew42
    Happy

    CVC funds future investment in NBN

    The CVC Primer (pdf) contains this statementon page 3 in the 'Key takeaway":

    Furthermore, networks are constructed with shared bandwidth and a finite amount of capacity. As end-users require more data or speed that exceeds this limit, more investment will be needed to expand the network.

    The brilliance of CVC pricing being the source of revenue is that it encourages NBNCo to run a congestion free internal network, because:

    - RSPs will not order additional CVC if that is not the bottleneck

    - The cost of upgrades (e.g. GPON2.5 to GPON10, backhaul, etc.) will deliver a fast ROI from adidtional CVC

    Labor designed it this way, but the Coalition by reducing CVC pricing more quickly than planned could well be sneakily gutting NBNCo's future revenue.

  5. JJKing Bronze badge
    Mushroom

    Oh FFS

    @mathew42

    You continually seem to fail to realise that the nbnTM rollout was supposed to be a NATIONAL infrastructure project, you know like the electricity grid and the phone system was last century. It was supposed to make Australia a WORLD LEADER with the best broadband network on this planet and propel this country and their people into the 22nd century and beyond. Instead, to use your 10 minute saved road analogy, we have a mixture of overgrown pathways, dirt, gravel and sealed roads plus a few, a very limited few, really nice freeways. This fantastic infrastructure project was fucked up not due to financial considerations but for political considerations. Political reasons were used to deny Australians prosperity and wealth. Political lies were used to distort the true costs but I guess that is ok because they weren’t Core Lies but these lies are still being told and obfuscated behind the bullshit of the “Commercial in Confidence” cloak of invisibility. Yes, Labor may have gotten the prices wrong by a couple of billion dollars but in the end Australia would have had a world beating network. Instead we have a piece of crap that we still don’t know the price of OR how many tens of billions of dollars that it is going to take to fix it, if that even ever happens.

    It’s NATIONAL infrastructure. It doesn’t need to produce a ROI. That payback would have happened over time due to the increased productivity and resulting increased taxes that those 93% on FTTP and 7% Wi-Fi and satellite connected would have paid. But don't forget that the plan was to sell off this network so I would imagine a fair whack of the outlay would have been returned to the government anyway and those increased taxes I mentioned would have quickly made up for anything that may have been lacking. Who knows, with the eventual gigabit upgrade it may even have sold with a surplus over and above the initial outlay but we shall never know now thanks to the wreckers. Now because of political pettiness, Australians are denied real superfast, futureproofed Internet speeds and the government coffers are denied the extra taxes that this real superfast network would have provided. The actions that have produced this result amount to sabotage of this country. Politicians should be held accountable and brought before the court on charges of treason but unfortunately that won’t happen. They will retire, collect their overly generous taxpayer subsided pension and then go off to top up their $2, 3, 4,000 or more weekly pension payments (indexed against the CPI) with a nice six figure private sector lobbying job.

    I am not annoyed that I am going to be stuck with this clusterfuck of a technological mish-mash and slow speeds. I am annoyed and devastated that our children and their children are lumbered with this present white elephant when they could have had something that was beyond "top of the range". Australia the Lucky Country; lucky because it could have been so much worse if the onion eater had initiated this nation building enterprise.

    Actually surprised you haven't copy 'n pasted you usual 78% on the 12/1 plan bullshit.

    1. mathew42
      FAIL

      Re: Oh FFS

      > It was supposed to make Australia a WORLD LEADER with the best broadband network on this planet and propel this country and their people into the 22nd century and beyond.

      This is what the Labor spin doctors wanted you to believe.

      - 1Gbps has to be the minimum speed for a world leading. >80% on 25Mbps or slower should be considered mediocure.

      - The best broadband networks are direct fibre not GPON.

      Charts that Labor included in the NBNCo Corporate Plan (2010) showed that Australia would fall further behind on the curve.

      > It’s NATIONAL infrastructure. It doesn’t need to produce a ROI.

      Labor chose to make the NBN off budget and set a 7% ROI target. Labor could have easily cherry picked some think tank reports showing that for every 1Mbps increase in internet speed, GDP was boosted by X% to justify the NBN being on budget.

      > This fantastic infrastructure project was fucked up not due to financial considerations but for political considerations. Political reasons were used to deny Australians prosperity and wealth.

      Labor promised a string of community benefits (eHealth, eLearning, etc.) but then chose to setup a finanical model which denied those benefits to current >80% of the population. Realistically less than 5% have been impacted by MTM because FTTN is ~30% of rollout and only a shrinking 14% are choosing 100Mbps.

      If you accept that a technology change is less than a kitchen renovation or moving house then it is not that significant for owners. Renters have the simpler option of moving to a location with FTTP / HFC.

      > I am not annoyed that I am going to be stuck with this clusterfuck of a technological mish-mash and slow speeds.

      By slow speeds you meant the <25Mbps speeds that >80% of Australians are ordering. This is entirely due to Labor's policy decisions not MTM.

      > Actually surprised you haven't copy 'n pasted you usual 78% on the 12/1 plan bullshit.

      By bullshit, do you mean the reality that >80% are odering 25Mbps or less and the percentage on 100Mbps is shrinking? If so it is time to face reality and suggest what policy changes need to be made to resolve the mess. Switching from FTTN to FTTP won't change the >80% on 25Mbps or slower.

      1. julianh72

        Re: Oh FFS

        ">80% on 25Mbps or slower should be considered mediocure."

        You won't get any argument from me on that one (although "mediocre" is probably overselling this polished turd) - but that is all the MTM is delivering for a lot of people.

        "If you accept that a technology change is less than a kitchen renovation or moving house then it is not that significant for owners. "

        That is a joke, right? Are you seriously arguing that something in the order of $10,000 - $20,000 (or more) "is not significant" for a home owner who would like to upgrade to FTTP to get a decent internet connection?! Or that moving house "is not significant"? I assure you - that would be a VERY significant cost impost for everybody that I know. Where do you live - Kirribilli House?

        "This is entirely due to Labor's policy decisions not MTM."

        I'm not sure whether you've noticed - but the LNP has been in power since 2013. They own the current MTM _AND_ the funding arrangements. If they can change the technology, they can also change the funding model. (Indeed - it can be argued that a different technology, which was promised on the basis of "sooner, cheaper and more affordably" HAS to have a different funding model!)

        1. mathew42
          FAIL

          Re: Oh FFS

          > You won't get any argument from me on that one (although "mediocre" is probably overselling this polished turd) - but that is all the MTM is delivering for a lot of people.

          FTTP also has >80% on 25Mbps slower. Does that mean it is also a polished turd?

          > That is a joke, right?

          No. I'm very serious.

          > Are you seriously arguing that something in the order of $10,000 - $20,000 (or more) "is not significant" for a home owner who would like to upgrade to FTTP to get a decent internet connection?!

          I'm not saying that is an insignificant sum of money, but that when included as part of the purchase of a house it is not that expensive. People move house for a number of reasons. For a small minority NBN speeds will figure in that decision. A house down the road sold recently. Prior to moving in the new owners have renovated extensively, replacing new carpet with wood, replaced all the applicances and more. Adding a technology change would be less than 10% of the cost of the revovations.

          This might sound expensive to the average Australian, but remember Labor's plan was for <1% to have 1Gbps connections in 2026. For the top 1% in Australia, $10,000 is small change, especially when it is tax deductable.

          > If they can change the technology, they can also change the funding model.

          Fair call. My proposal is that speed tiers should be removed because this would highlight the differences between technologies. However the herd are campaigning for slashing the price of CVC gutting NBNCo's future revenue. Do you have a different position?

      2. Hazmoid

        Re: Oh FFS

        To address your point regarding 80% subscribing at 25Mbps or less, I suspect that is because many of the customers on FTTN realise that they are still going to have trouble with the copper connection from their house to the node and that paying extra for the higher bandwidth is a waste of money. I have heard a number of people complaining that when they complained to their ISP regarding the substandard speed when paying for the higher bandwidth, the ISP came back with the excuse that they provide "up to" the maximum speed and therefore were not required to provide the consistent high speed expected. Also the majority of people subscribing are not told that they can have a higher bandwidth service, and therefore are used to taking whatever the ISP provides. They are bombarded with advertising saying that they need to be on the NBN and so take the cheapest plan that they can get.

        1. mathew42
          FAIL

          Re: Oh FFS

          > To address your point regarding 80% subscribing at 25Mbps or less, I suspect that is because many of the customers on FTTN realise that they are still going to have trouble with the copper connection from their house to the node and that paying extra for the higher bandwidth is a waste of money.

          How about instead of wild speculation you look at the data provided by ACCC in the NBN Wholesale Market Indicators Report. It shows that speed tier take up is relatively similar across all forms of fixed connection. It is the ignorance of fibre fanbois that has lead to the current situation.

          > They are bombarded with advertising saying that they need to be on the NBN and so take the cheapest plan that they can get.

          So you are suggesting that most of the >80% on 25Mbps or faster don't care about their internet connection?

    2. david 12 Bronze badge

      Re: Oh FFS

      This "fantastic infrastructure plan" was bullshit from moment it was announced. It was specifically exempted from any kind of economic evaluation, and it was justified on the basis of "education" and "tele-medicine"

      The initial pricing promises from the government were wildly inaccurate: they went to tender and nobody was interested. The "education" idea was predictably just as realistic as the previous ideas that TV, Film, Radio, Telephone and Telegraph would revolutionise education. And the idea that you would use the high speed internet to get medical interventions in your own home was sheer fantasy.

      Yet that was the justification offered, and for years their supporters believed that BS. At least most people have now come around to the realization that was obvious even then: the high speed internet was going to replace Free To Air TV, and the bandwidth would be released for mobile data.

  6. DownUndaRob
    FAIL

    There is no N in NBN

    This was originally a plan for 7 diffferent large redundant networks (14 POI plan) but the ACCC stuck its nose in and dictated a 121 POI plan (no redundancy).

    This will NOT be an NBN until traffic can get from Perth to Sydney without leaving the NBN network.

    Right now its 121 RBNs.

    1. GrumpyOldBloke

      Re: There is no N in NBN

      >ACCC Chair Rod Sims in which he said Australia can probably sustain five major broadband providers

      The ACCC has a lot to answer for.

    2. mathew42
      FAIL

      Re: There is no N in NBN

      ACCC was acting in accordance with the legislation. At the time Conroy could have stepped in, but he refused to acknowledge that there was even a problem,even when the NBN Points of Interconnect and the future of competition blog post by Simon Hackett clearly identified the issue.

      Fibre fanbois ignored the evidence and acted as cheer squad for Conroy.

      > This will NOT be an NBN until traffic can get from Perth to Sydney without leaving the NBN network.

      The NBN uses virtual circuits to deliver traffic from the end point direct to the RSP. If you are connecting to your neighbour's computer and you are on the same RSP, the packets will still travel to the RSP via the PoI and back again.

  7. -tim
    FAIL

    CVC pricing is still insane

    CVC pricing should be in 8 to 20 cents per megabit, not 8 to 20 dollars.

    Every peering point in the world is in the cents per megabit range, and the NBN CVCs are simply locally backhauled peering exchanges. Australia IX charges 4.5 cents per megabit of peering and $3 / megabit for intercity peering fabric that cover major cities on the continent.

    1. mathew42
      FAIL

      Re: CVC pricing is still insane

      If you cut CVC revenue to 1%, the AVC revenue has to rise to compensate. Effectively this means that high speeds will become even more expensive and less obtainable.

      The NBN financial model is based on a few princples as documented in the NBNCo Corporate Plan:

      - AVC being low to encourage people to connect and CVC is higher to cover costs.

      - Cross subsidisation between high density fixed, low density fixed, wireless and satellite services.

      In NBN: Internet providers say controversial CVC charge for bandwidth is too expensive appears this statement:

      Independent telecommunications analyst Paul Budde said politicians were going to have to admit they made a mistake, and write off half of the cost of the NBN.

      The fibre fanbois are still claiming that Labor's plan was perfect, so I don't expect this to happen.

      Effectively most RSPs are offering discounted unlimited plans with hgh congestion because this is what the marketplace demands. If RSPs implemented reasonable prices and quotas the congestion problem would disappear. Instead the RSPs are pressuring the Government into subsidise their operations. Telstra wholesale pricing for AGVC (similar to CVC) is $65/Mbps. At $14.40 NBNCo CVC is cheap. Government subsidies should be for people on low incomes not big business.

      In the same article there is also the clueless customer blaming FTTN for slow speeds:

      When she checked her speed at around 6pm on Monday night she was getting 16.4 megabits, but she said that was the fastest she had seen it in a while. Ms Wray said her average download speed was just 7 megabits, slower than when she was on ADSL.

      If the problem was FTTN then speeds would be consistently slow. Speeds fluctuating indicates congestion. What is the bet she is on an unlimited plan.

  8. Winkypop Silver badge

    NBN and other mythical creatures

    I've given up waiting.

    No longer any network plans where I am.

    I'm now at the stage where I no longer believe the NBN is real.

    Dragons however, beware people!

  9. mathew42
    Holmes

    Aussie Broadband support NBN CVC position

    In Telcos are putting NBN customers on a voice-only speed, Morrow tells committee this statement appears:

    But, chief executive of Aussie Broadband, Phillip Britt, rejected the claims from larger telcos that NBN's wholesale pricing makes it too expensive to maintain fast speeds during peak periods.

    "That's just bullshit," he said.

    "If we can do it as a small internet service provider, they can certainly do it as well. They're just trying to deflect attention from their strategic choices not to provision more bandwidth."

    Interesting Morrow describes 12Mbps as a voice quality product and that it could be removed:

    Mr Morrow said it was possible NBN Co would remove the 12 Mbps product so consumers are forced onto a speed higher than today's internet, but it did not want to be "too prescriptive".

    Based on the reports of congestion caused by inadequate CVC purchase for unlimted plans, I'm not sure this will improve the performance for most people during peak times.

    1. julian.smith

      Re: Aussie Broadband support NBN CVC position

      I'm a new, happy Aussie BB customer

      Fixed Wireless 25/5 - speed has never been below 23

      I switched from SkyMesh [who used to be good before they were sold]

      I have a speedtest showing 0.9!!!

      If Aussie BB can do it .....

      Vote with your feet

      1. mathew42
        Unhappy

        Re: Aussie Broadband support NBN CVC position

        Totally agree, but most people have voted with their wallets for slow speeds and unlimited quotas.

  10. Phil Kingston Silver badge

    "Internet Australia continues a long campaign in which it insists that copper has no future, other than in short runs as part of a fibre-to-the-distribution-point build that could see twisted pairs used for longer distances than is the case for fibre-to-the-node connections."

    Longer? Surely, shorter?

    1. mathew42

      I would assume they are talking about Cat5 and better copper cables support 1Gbps upto 100 metres.using 1000BASE-T standard.

      It is the direct buried copper from the 1930s that has been cut and repaired multiple times that will be the most challenging for FTTN deployment.

    2. david 12 Bronze badge

      Yes, it's a mistake. The NBN is talking about using FTTDp to replace "longer twisted pair runs" required by.FTTN where the node is too far away...

  11. JJKing Bronze badge
    Mushroom

    mathew42, why do you hate this great country so much?

    Why do you hate Australia so much mathew42? 556 posts with approximately 96% supporting the mess the libs have made of the nbnTM rollout. You don't think that having FTTP to 93% of Australian homes and businesses would make this country a world leader in the broadband stakes? Does one not realise that all that is needed to increase the network speed is to change the gear in the phone exchanges and the other end of the fibre connection? Sure looks like a world leading setup to me but then your Labrador and white cane will likely disagree with that and you will sprout the glorious achievements of abbott and turnbullshit in lumbering us with FTTN, MTM that will waste even more billions of dollars to replace so we can then catch up with the rest of the third world countries. If you had been around early last century when the phone network was being deployed, I think we would all still be on party lines. Oh weren't they fun (and I still remember our morse identifier, - -).

    I also find it curious that we never see you or bill morrow together at any time sooo, I have to conclude that based on that plus your one sided and broken record (copy 'n paste) posts that you are indeed one of the NBN saboteurs. So bill, do you feel better now that this weight of anonymity has been removed from your shoulders?

    A question if I might bill, why were you quoted in the paper 3 days ago saying that 12mbps was more than sufficient for video streaming? Did you know that according to the definition of Fast Broadband in the country of which you are a citizen, the minimum speed is 25mbps and they are thinking of revising that number upwards.

    Bill, I have one of your green boxes 2 metres from my back fence but will still not be able to get a 100/40 connection or even a 50/20 due to the copper needing to run 305mts to the outside of my house. My ISP has told me that 25/5 is the best they can commit to. Copper isn't that old either bill, just 19 years and no joins but the crap is still.4. Also, after receiving an email stating that the node went live on June 2, we still can't connect as of this date. Are you responsible for yet more sabotage bill?

    Lastly bill, when you reapply for your 457 visa next year, I sincerely and with all my heart, fervently hope it is declined!

    I remain your most humble and obedient servant,

    J Joseph King

  12. rtb61

    Which Customers are Happy

    15% of customers being pissed off is OK, seriously WTF. Lets make a guess, the majority of customers on FTTP are blooyd happy, some customers are happy on FTTN (depending on distance and quality of copper and most customers are unhappy on HFC (sharing a fibre optic connections between hundreds of others, that can never ever deliver the CVC they pretend to sell). Yeah, uh huh, screw you NBN.

    When I am forced too, I will take the slowest speed, not because that is what I want but because I know that is all I will get a peak, so why would I be stupid enough to pay for what the HFC will not deliver, it would be stupid, why the hell would you pay for 100 when you know at peak you will be lucky to get 5 and more likely to get 2. A giant strangleband ripoff.

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