Our regular guest contributor James Glover (aka @zebra) returns today with a look at the numbers behind the National Broadband Network. He asks: do you think it would be value for money?
The Labor Government’s proposed National Broadband Network (NBN) has many things to recommend it, not least speeds of up to 1GB/s (currently I am on 10Mb/s for ADSL; theoretical speeds of 24MB/s on ADSL2+ and 100MB/s on VDSL are also soon to be widely available, though the reality is dependent on many variables such as distance from an exchange). It would revolutionise the way we communicate as the higher bandwidth would allow not just interactive entertainment and fast downloads, but genuinely accessible cloud applications that really felt like they sat on your computer…and of course dishwashers waking up at 3.00am to negotiate the best electricity price. I doubt whether anybody on either side of politics would disagree that, in a perfect world, this is all desirable. But like all utopias, it comes at a cost and that is where the real divergence between the Labor Party and the Coalition’s broadband policies exists. I hope to cast some light on this cost argument using the power of the Time Value of Money, in particular calculating the real cost to you on a monthly basis so you can compare it with your existing broadband cost.
Labor wants an all-connecting fibre optic network (with subsidised satellite to cover really remote areas) that will cost an estimated $46bn. The Coalition wants a more modest effort: a fibre optic “backbone” network that uses existing copper wiring in urban areas and relies on market competition to pay for further improvements. It is estimated to cost about $8bn plus later commercial costs. Both of these figures seem extraordinarily high. How to decide if it is really worth it? Well if I told you that Labor’s NBN would cost you $10 per month would that sound too high? After all that only includes the infrastructure cost, not the access cost via an ISP. But most of us don’t pay upfront for our broadband or mobile (cell) phone bills, we pay monthly. The Coalition’s figure of $8bn works out at less than $2/month each (for those so inclined, you can read the details behind these figures). But it doesn’t include any additional costs charged by commercial companies building additional infrastructure. It also only claims to provide “peak speeds” of 10Mb/s which I already get on my ADSL+.
Is $10/month a lot of money? Or $2/month for that matter? It obviously depends on what your income is and how much you are currently prepared to pay for broadband. My broadband plan costs $50 for 120GB/month. I also live in a one-person household. It doesn’t sound much to me, but all those $10/month costs add up to the thousands we pay in tax each year. There’s no point paying more for little for no benefit. Of course it’s not going to be charged directly, but through increased taxes (or decreased services). I estimate $10/month to represent an average increase in the tax rate of about 0.5%. This seems reasonable to me. After all, if in 2020 a businessperson (or BusinessBot2020) came to Australia and found our broadband to be the equivalent of dial-up today, they’d hardly be impressed enough to invest in a technology business. Of course, by 2020 with super-fast broadband we should really be able to do most business remotely, right? But we’ve been saying that since the invention of the telephone.
So I’m for the Government’s NBN plan…but what do you think?
Update: I have since writing this post changed my mind based on readers’ comments and some research. It appears that many of the benefits of the NBN are available already on ADSL2+, VDSL and 4G and the Coalition’s more modest plan to build a fibre-optic network backbone might be sufficient. There is also the question of whether a Government entity is best placed to oversee such a large scale project – it’s not like Peter Garrett is going to personally project manage the NBN but Governments in general are not (IMO) best placed to predict and respond to consumer demand. But I accept there are strong feelings on both sides. Sometimes that bright shiny thing in your vision is a light on a hill and sometimes it’s a white elephant blocking your view.
UPDATE: Let us know what you think by voting in this broadband poll.
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hell, NBN is less about consumer access as it is for enabling high volume high speed b2b processes; enabling “real” work from home; enabling accurate and timely health information etc.
The whole e-Health strategy is reliant on having the means to gigs of diagnostic imaging etc like STAT!
We sure as hell aren’t going to get that on ADSL2. Imagine how long it takes to zap a 2 – 5Gb hi definition MRI from a regional scan post to a cardio / ortho / neuro specialist radiologist in a capital city for a decent remote opinion?
We’re ALSO going to need this infrastructure for the real time numberplate recognition (for phase1) to protect us from criminal and terrorist elements; and once we have the entire nation’s mugshots and drivers licence photos digitised, we will need the fast BB to enable the cameras in the playgrounds to be linked in properly to protect our kiddies (real time) from the playground predators.
We have to have fibre so that we can keep the wireless 3g and future generation spectrums free to do the important stuff like tell us when we’re near a Maccas, or that some potentially compatible playmate is within 120m.
Isn’t the NBN going to be an asset? In which can its not just a cost, and there will be a return as ISPs are charged to use it.
Personally I think it will change education, health, business and many other areas of life in so many ways that it’ll be worth it even if the financial return to the government doesn’t meet its costs.
@Bernard Suggesting that NBN2 is needed for eHealth is ridiculous — you can put fibre into every hospital without a grandiose and expensive scheme to put fibre into every home.
And why do you say $10/month when that’s a per-person cost? There’s four of us in this household, two are too young to work, and one looks after them, so that’s $40/month for this household. Given a choice, I would not spend that when my ADSL2+ connection is rarely saturated.
I might pay for better latency to the US, or more backhaul bandwidth from the exchange, but the bandwidth between your house and the exchange is not the limiting factor 90% of the time.
What are the NBN2 backhaul arrangements?
I expect that wireless internet access (3G and its successors) will be the future for domestic internet use — people will consume more content via smart phones and tablets, and they will want to be able to do that wherever they are.
I’m not particularly convinced that the same money and resources couldn’t be better deployed in, say, the long-promised dental services on Medicare.
What really gets my goat though is how the country cousins keep insisting on (and being promised) metro-equivalent broadband services. This means they’ll be able to watch YouTube videos as fast as me here in the city while not have metro-equivalent hospitals. Priorities people!
BernardK – thanks for pointing out some of the benefits of the NBN beyond a certain “friend finding” application or where to get a hamburger at 4am though I suspect in the future people will take these things for granted just as much as we take for granted 24hr electricity and clean water
Tom – good point re who bears cost but I think I made it clear $10 per month was per person. It’s a figure to work out how much it costs compared to your current arrangement which you have done and you don’t like it. Fair enough. Better that $10 pppm figure than some nebulous $46bn which sounds like an awful lot but is on the wrong scale. You are correct to assume the costs will be borne by those who work, through higher taxes or access costs passed on by ISPs, hence my estimate of an expected increase of 0.5% on personal income tax rate, tho lower if company tax also contributes.
As far as eHealth you would still need to build some connecting infrastructure between cities/hospitals not just within a hospital so it seems wasteful not to build a single infrastructure for all applications. We don’t have an electricity grid or roads just for hospitals, though having been in an ambulance between hospitals stuck in traffic I wish we did!
As far as wireless I used wireless for 12 mths and not only was it expensive (about $10 per GB) but slow (less than 1mb/s). Okay for email and basic browsing or 10mb music file downloads but hopeless for GB sized files or streaming. Maybe the tech here will improve tho I think the basic problem here is interference of the signal requiring much more error correction hence higher bandwidth, which is minimal in fibre optic.
Simon – I think too much is made of the “entertainment” aspects of the NBN – it’s for more than being able to download 1.5GB movies in a few seconds. There are serious benefits as BernardK has pointed out in eHealth, b2b and telecommuting. While the Govt does have to make spending choices there is no reason the NBN can tbe financed through borrowing through bond issuance hence the $10 pppm figure representing the interest on such a loan or 0.5% increase if paid through increased income tax.
I also think you need to distinguish between regional towns which will indeed be hooked up by fibre to the NBN and really remote places which will still rely on satellite though I imagine it will be subsidised heavily
This is a very interesting topic and one of the drivers of the most passionate/hysterical commentary in the twitter-verse. Eventually, fibre to every home will be ideal and certainly all new housing should be equipped with it (preferably via trenches in the street and not by draping an additional fruit bat killing utensil from the power poles) and perhaps to houses that current don’t have pay TV cables or ADSL access (though for them FTTN would probably be sufficient as well).
The question is whether fibre needs to be laid to every home now or over the next ‘few’ years.
Considering the number of homes who already have access to speedy coaxial hybrid pay TV cables and ADSL/ADSL2+ connections – duplicating those technologies and then ‘turning them off’ to make the FTTH viable seems like a wasteful indulgence that is only being considered because fibre to everyhome makes good headlines and produces an emotional response ‘building a new snowy scheme’.
I have an older slow Optus Cable Link and spend a lot of time on the web using all sorts of Web 2.0 applications and services including Hi-Def video. I am struggling to come up with a reason that I would need 100M and trust me if I could I would. Currently when downloading files using bit-torrent I regularly hit about 1.6M per second which means a 700M file (2 hours of bearably compressed TV) is down within a few minutes.
Even something close to my heart – decent definition TV can easily be handled on my existing old technology link. Perfection would be a device (with storage) that can be plugged into my existing net connection and controlled from the lounge. If there is a program that I want to watch the device could easily download the program in a short time. Select a number of programs and queue them and the nights viewing would be ready in a short time.
By all means spend some money on improving the links to people who don’t have decent links but the FTTH is clearly overkill that seems to have more to do with making a ‘big bang’ announcement and giving a squirrel grip to Telstra.
Before we get to whether its (NBN) worth it, is the more fundamental question of whether the Government should be funding it in the form in which it is funding it.
A $5B progam grew to $43B and its not yet implemented. It seems to be a Telstra business plan masquerading as a Government policy driven by a Minister who demonstrates (based on compulsary filtering) a patchy understanding of the technology.
What could be achieved with different models if the Government was prepared to tip $43B in to encouraging a competive business delivery of broadband access?
I have worked from home for 5yrs and have survived on 2gb per month of wireless. I would suggest my productivity is far superior to those with faster connectors and more gb – simply because I don’t bother with all of the e-distractions (u-tube, facebook, etc etc).
Seriously, I challenge anyone to provide 5 substantiated benefits.
BernardK – seriously mate, so what if you can zap 2 mri’s real fast – do you honestly think a specialist is going to drop everything the second his email goes buzz. Wake up mate to the real world. We aint short bandwidth we are short doctors. Go to an emergency room with your kid- fast broadband ain’t going to get him treated faster.
The cost of access to the NBN is quite difficult to determine.
You can’t spread it over 23 million people as they won’t all be users.
There are about 6 million dwellings in Aust which would take the 10.00 to about 40.00, but not all dwellings will be users.
If we knew how many users were going to pay up monthly the figure would be easier to calculate.
If it were half the dwellings we are up to 80.00 pm, plus the additional supply costs.
Already I am uncomfortable with the additional amount required to get me that extra speed.
I should add, my income comes out of super that took a battering at the hands of GFC and todays US market news causes more, not less, concern there.
I suspect that NBN will be a very hard sell to the down valued baby boomers that will account for a sizable number of users.
Without that group on board, you younger users will have to pay even more.
One thing for sure, the interest on the 43 bill., and the capital itself ,will have to be paid by taxpayers (and you know who we are).
5 Substantial benefits
Access to cloud technology allowing businesses to be less reliant on their primary site
Offsite backup becomes financially feasible for any business, reducing in efficient pickups, reducing IP asset loss from fires etc.
Video conferencing allowing for widespread use both domestic and commercial. As everyone has adequate bandwidth and hopefully latency it reaches critical mass. More efficient than in person meetings in many situations, more effective than phone calls.
Multimedia access and fixed line phones become cheaper/more practical.
Businesses can mix local and remote data more efficiently, allowing for more integration.
Remote access to your own data becomes feasible from businesses right down to home users.
And there are probably hundreds of other areas, many not yet thought of .
I work with a number of organisations on their IT structure and I can see massive changes, efficiencies and opportunities from businesses one person and up.
@Robert while I agree that the benefits you list are real, I don’t believe that any of them need NBN2 speeds — accessing cloud apps and doing video conferencing certainly doesn’t need more than ADSL speeds. Offsite backups may, depending how incremental you are able to make them, but using cloud apps is a better way of securing yourself from data loss and providing remote access than running your own servers — it also takes care of your system administration.
@zebra Yes, you made it clear that the $10 was per person, I just think that that isn’t the relevant figure — perhaps $20/month per employed Australian would be a better way of putting it? On eHealth, I expect that much of the cost of NBN2 is laying fibre from the exchange to the home (I don’t know what other infrastructure is included in NBN2 — hence my backhaul question above) which is irrelevant to providing fast fibre to remote hospitals. 3G mobile is improving — you can expect to get 3Mb/s in an average location, more if you’re lucky, and Vodafone (for instance) sell 8GB/month at $40 — competitive with ADSL if you don’t want a wired telephone line.
People need to stop thinking of this in terms of what they do today. The applications that will take advantage of the bandwidth and (more important) ubiquity haven’t even been thought of yet. Your fridge will have an IP address. Your microwave will have an IP address. They’ll talk to each other. What they’ll have to say to each other, I have no idea, but it’ll be cool.
The $10/person will be recouped through slices of the wholesale pie. So if the electricity business wants a “smart grid” that relies on two-way comms with appliances (turn off your air con compressor during peak times), they’ll have to pay the NBN for access. Your TV will come down the pipe, so the supplier will pay for access. Your smart fridge service (linked to your supermarket?) will pay for access.
And before someone says “why the hell would I need…” just remember how that question will sound in ten years.
Ten years ago people were saying:
Why the hell would I need always-on Internet?
Why the hell would I need Internet anywhere in the house?
Why the hell would I need Internet on my TV?
Why the hell would I need Internet on my games console?
Why the hell would I need Internet on my radio?
Why the hell would I need Internet at work?
Normally I have a lot of sympathy with the build it and they will think of something to do with it line of thinking and yes the history of IT is full of claims that we have reached the limits of demand that now sound silly.
(Note: from the moment the internet switched on I never heard anyone saying the things Mr Rumble suggested. It has always been bigger download limits and bigger pipes. All I am saying is that 170G per month and a coax cable modem/ADSL2+ well and truly slakes the thirst of everyone I know other than Hi-Def vid specialists)
BUT – none of that is an argument in favour of the current NBN proposal including the wasteful way sufficiently technologies like pay TV cable and ADSL2+ will be shut down to ‘make’ the NBN viable.
By all means keep investing in back haul and as need requires replace existing technology with better technology but the FTTH proposal has more to do with Conroy’s battles with Telstra than a rational or efficient allocation of economic resources.
dont depend on ADSL technologies – too much variation in latency & jitter to make it suitable for HiDef VideoConferencing.
Mr Rumble – Somewhat ironically, almost to the day 10 years ago people were saying oh sh@t as the Tech crash took full flight in mid to late August of 2000. It was the time that so many technology spruikers finally bit the dirt on their cashflow sucking dreams….here we go again….
Optus must have been listening in as this email just arrived in my inbox.
Seems like I can have the NBN right now – along with all the millions of other households who have the cable running down their street.
And Conroy wants to switch this off to force me to use his shiny FTTH vision splendid?
At Optus, we’re always looking for exciting new ways to boost your cable broadband experience. And now we’re taking things up a notch with our new Supersonic Broadband offering our fastest download speeds ever!
A low price for loads of speed.
It’s just $20 extra per month to add a ‘Premium Speed’ pack to your current broadband plan, with a one-off $99 fee for your new WiFi high-speed modem. PLUS there are no long-term contracts to sign – just pay month-by-month.
From Whirpool forums
We don’t advertise theoretical maximum speeds as they are only theoretical speeds; the Premium Speed Pack will run at up to 4 times the current provisioned speed for our cable services.
From Whirpool forums
Is it a 100mbit service?
Its maximum speed is 100 mbps, yes.
@pfh007: You’re a bit behind the times. NBN is now a gigabit.
Very clever move from Conroy. All the techs have been scratching their heads wondering WTF is with the 100 meg fixation. Tories release their policy and bam, it’s all clear now.
Tom, to put in plainly, your wrong. ADSL is not adequate for many organisations right now. I deal with businesses every day that are limited by their Internet connection speed. Accessing the cloud isn’t just word on your browser, its legal, engineering, art, software etc, large databases, massive pdfs, printing and more.
The shift to the cloud will be gradual, we’ll need large interconnection speeds to link systems. Not to mention the reliability of fibre vs ADSL will make it much more practical to ship mission critical applications to a data centre.
For many businesses there will likely be a shift to a private cloud before a shift to a public one, which means its likely there will still be plenty of sysadmin for orgs before its all vendor driven.
And on pricing, I’m paying $30 a month for a phone line to get ADSL on, so if I get switched onto the NBN, is it possible that the combined ADSL + telstra tax is pretty close to the NBN asset purchase?
@Robert — OK, some businesses may need more than ADSL speeds, but residential households don’t. Why put fibre everywhere when a few percent of premises actually need it?
Robert – the simple fact is that this $46bn investment is NOT about it making sense for businesses – if this was the case the private sector could and would have quite easily dealt with this cost/benefit analysis. The fact is that the cost/benefit analysis doesn’t work from a pure business perspective, so the government needs to jam every tax payer for the benefit of the elite major corporations who needs all of this uber capacity BUT refuse to pay the actual cost.
Firstly, I’d say most business will need this within 6 months of them having access to it. The opportunities are huge.
As for home usage, its a muddier area for sure. I’m within 500m of my exchange so I’m doing ok for speed, but I’m fairly lucky in that regard.
I don’t have the numbers, so I won’t make exact claims, but from what I understand there are large number of people even in fairly metro areas where the distance is to great and or the copper to bad to get reasonable reliable services. So, the question in the long term is are we going to be ripping out copper to put in newer copper or are we going to do it by fibre. The impression I’m getting is that the areas with the worst access are getting priority with the NBN, which means they’ll show real value from the investment right away. More well serviced areas now will get it a bit later, at a point when DSL is really no longer cutting it.
Seems like a sensible long term investment to me.
The alternative is that we’ll reach a point where we’re being held back dramatically and then we’ll still have to wait years for the infrastructure to go in. Its not going to happen by private businesses.
Sometimes the economy of scale to get the price down is too great to have anything but a monopoly invest in the infrastructure. I don’t see any other way we are going to get the appropriate infrastructure, or even the refresh of existing infrastructure without substantial government intervention, and I can’t see the value in re-laying more copper.
Gary For the reasons of economy of scale as mentioned in my above post I don’t agree that the private sector can meet this need efficiently.
I also think you are wrong in that this is just to make some rich businesses richer. I mostly work with organisations from 5-100 staff and I’m confident pretty much every single one would benefit.
As for consumers see my response to Tom.
A Gigabit !!!!!
Now I am getting dizzy with excitement.
From a couple of meg with old coax cable to a gig – all in one afternoon!
But I keep coming back to $40B+ and comparing that to the Parramatta Railway link $2B (loose change)- Northwest rail link $XB and any number of other projects where there is a demonstrated urgent need right now rather than a vague need for applications that someone has not even thought of and certainly are not likely to be needed by the entire population for the foreseeable future.
But if they really want to make 1G NBN viable they should turn off all digital TV transmission (and analogue) and pump it all down the fibre. That would free up plenty of spectrum for wireless.
The only thing I ask is that if Labor win and get the chance to put this vision in place in every town and street across the nation that they take the time while they are at it to stick all the other cables, including power, in a trench rather than leave that 19th century mess for the 22nd century.
They should also as Robert points out start with everyone who doesn’t have access to broadband currently via coax or ADSL or wireless
Plus all that manual work should keep the buildings and construction unions and industry guys in clover when they finish building the schools.
Hey PF I suspect digital TV will get turned off in the next 15-20 years. Once the number of viewers via broadcast drops, there will surely be a point at which it is uneconomical to purchase/maintain broacasting equipment and spectrum rights.
Trenching of cables would be great. and with fibre at least there wouldn’t be interference issues. Costs I suspect would be very very high. Where it was feasible though, it’d be great. I wonder if it would be more or less efficient for power companies? The cables would be more protected, but harder to repair.
The other thing worth considering is that the _upstream_ capacity can be equal to the downstream. That means that me, at home, can have a server on the Internet at speeds as fast as one in a data centre. The possibilities for bootstrapping innovation from that kind of thing are huge.
@pfh007: Totally with you on switching off broadcast TV to free up spectrum. Won’t happen for a while though, as the government makes too much from the license fees and gets too much power from being able to regulate.
The disintermediation possibilities are also quite amazing. At the moment if I want to watch A-League football, I have to buy Fox Sports. Only way to get that is to buy a basic package Foxtel, then add Foxtel. That’s $70/month or more on a 24 month contract, all to watch football 26 games a year, and I go to the home games so only 13. That’s a lot of money for 13 games a year!
Now along comes NBN and why does the content provider (Football Federation Australia) need to only access customers through Fox Sports? I’d be quite happy to pay $10 a match for the 13 matches a year I want to watch. No middle man.
I think trenches have been used for all new subdivisions for the last 20 years – so the technology is probably quite good and reliable.
Come to think of it trenching and laying ducts would have been a much better method of stimulus. Faster to get going, less expensive skilled labor required and easier to turn off when not required (saying no to parents longing for a new COLA is just too hard)
In fact trenching the cables of Australia could be the ideal stimulus make work project for every period of recession or insufficient demand. It is enough to make a Keynesians mouth water.
The only problem and this is a huge problem that is not nearly sexy enough for the spin masters on either side of politics.
And at core is my concern about the NBN – its has some merit but mostly it is about spin, optics (groan!) and political gain.
PF, your last comment could be said about so much of politics. That, some work goals and a book by Tim Harford (timharford.com/undercovereconomist/) is what got me studying economics.
Main thing with trenching is that in a built up area you have to be so careful not to take out other services, but I like the idea.
James: well done on eliciting far more that the usual number of comments here on the Mule!
While your argument may support the idea that, despite the rather impressive total price tag, the cost of establishing the NBN may represent reasonable value. As some others have pointed out, fair value or not, the question remains as to whether the money would be better spent on other things (such as health, non-internet infrastructure, etc). I am internet aficionado, but I’m not sure that it holds as much appeal for the rest of the country (and Gary’s point that may even be valid, perhaps I am less productive as a result of my internet addition…at the very least I suspect I suffer now from Continuous Partial Attention).
I am sure that the internet will continue to be used in more and more ways and will become increasingly essential to many aspects of our lives in ways that we cannot yet predict. This will happen whether or not the Federal Government gives it a kick-along. Personally I’d be quite happy if they do, but I cannot pretend to be impartial.
Poll about the NBN now up: http://stubbornmule.net/2010/08/broadband-poll
Having thought about this a bit more I am not sure the Coalition’s idea isn’t better. A fibre optic backbone network that then allows for commercial development if the demand is there for business or private applications. Certainly $2 pppm sounds a lot more affordable especially as costs multiplied depending on size of household as a number of people have pointed out.
This really is a classic dilemma of centralised planning vs letting the free market fill demand where it genuinely exists rather than where some bureaucrat decides on our behalf. There is no reason, for example, that with a central fibre optic backbone in place that eHealth applications can’t be built at the taxpayers expense while leaving b2b add-ons to be paid for commercially – of course these will be passed on to the consumer but at least they will be the result of demand. Since everyone seems to love analogies this is like the Govt building the freeways and main roads while suburban roads are paid for by developers.
I think though that Labor has won the propaganda war on this one which as we know is no guarantee that the final product will be the best.
That’s interesting Zebra as I have drifted the other way but for the somewhat more prosaic reason that project time tables and policy objectives become much more flexible after elections. (perhaps that is just my status as a NSW resident showing)
Despite the bold claims by the government, there is a real risk that once re-elected the project will receive a new pragmatic ‘project-line’ and in practice what we will see is
* gradual construction of a new independent owned fibre back bone
* laying of fibre to the home for new housing estates or areas with little or no current broadband of any description
* the laying of fibre to the nodes in other areas.
* limited amounts of fibre to existing suburbs.
For the reasons that many have pointed out as to why this is an extravagant blue sky vision splendid we may find that it will be a long long long time before those large areas covered by coax or good ADSL2+ coverage get any coverage by the fibre.
I can hear the words now……’ we have taken the view that so few people have taken up 100M speeds that there is no harm in delaying the roll out to those areas for the next X years – although of course we remain committed to the concept..’
And if fibre is not laid then money is not spent and if money is not spent then the cost of the ALP policy may prove to be quite reasonable.
A few billion for a backbone and coverage for those people who can’t access ADSL2+ or cable.
Afterall, they are hardly going to lose an election because a few tech heads are whinging that 100M is simply not fast enough for their needs.
The result may be quite similar to the coalition policy.
Did somebody say it can be hard to tell the parties apart?
It would be depressing if one of the few areas of genuine policy difference turns out to be no different at all
Interesting idea PF, I hope you’re wrong. Where we have reasonable access, I wouldn’t be surprise if we weren’t the first priority, but I think there will be commercial reasons to get into some of these locations as I suspect the density of users in this area will result in increase take up and therefore good returns.
GaryJ – I’m not sure “quite easily” is the right term. It’s a pretty big project and the costs of failure either way are enormous – don’t build an all singing all dancing NBN and get left behind globally or build it at $46bn ( which in reality will be more like $100bn) and end up with a white elephant. It challenges all of us to get beyond day to day politics.
Yes Robert I hope I am wrong as well as judging from this morning’s polls the ALP looks like it will get the nod for another term and thus their policy is likely to be the one that will get a run.
However, at the risk of being doctor doom on the subject, another reason why we should perhaps take the blue sky vision of 1G connections with a large pinch of salt, is that there is a lot talk that optus and perhaps the foxtel mob will sell their cable networks into NBN co for a seat at the table. When you add this to the copper network NBN co will be buying from Telstra, NBN Co will be fully equipped to supply ‘broadband’ services via coax or ADSL2+. That means NBN Co will be making money from the old technology. When combined with a natural desire to maximise returns NBN Co might be tempted to slow additional capital expenditure as much as possible and just keep reaping cash from wholesaling old tech access.
In that circumstance all those people within decent ADSL2+ range and the coax network will rely on an NBN Co decision to lay fibre to their homes. I have a sinking feeling that might take a long long long time as NBN co will probably direct their attention first to those areas that have no, or very poor, coverage.
It seems possible, with politics being what it is, that at some point in the future that the vision for areas services by coax and decent ADSL2+ will be downgraded to fibre to the node at best.
That’s enough gloom! It is a beautiful day and it is time get outside and enjoy it.
Here’s to reasonably fast cheap broadband for all Australians.
Zebra – its quite difficult to get beyond day to day politics when they are massively distorting private markets constantly. If you remember correctly the private sector was initially given a long period in which to bid for the rights to the NBN. Both Telstra and the gang of 9 private sector entities (yes I know some pulled out) failed to make commercially viable alternatives. This is despite having direct customer access and fully understanding the commercial and technological landscape. If one of the bloggers on this site literally sees businesses everyday that struggle with internet speed, then I an sure that these 10 telco’s combined would no doubt see hundreds if not thousands of businesses daily that struggle with internet speeds. So what can we deduct? Yes there is a problem with speeds but the cost does not outweigh the commercial benefit. Otherwise you are suggesting the government has some greater insight into this market?
A viable private sector alternative is actually the best we have to offer to avoid day to day politics – as they are commercial reality. The NBN is pure and simple day to day politics. Rudd’s great Keynesian money blast.
How exactly are we going to be left behind globally – what does this mean? Ability to ignore economic reality leads to to the likes of UK, Spain, Greece and increasingly the US. The root cause – excessive consumption in lieu of sufficiently productive investment.
Gary J – if, as you say, you only use 2GB per month then you should be happy with NBN provided its cost are charged on a usage pro-rata basis. In 5 yrs you should already seen a drop in monthly cost as 2GB goes from the upper limit of download limited plans to somewhere near the bottom as cost/GB has been plummeting.
But I take your point – claiming this is the new Snowy Mtn scheme is irrelevant – I doubt whether many people could say what % of their electricity is actually generated by SMS? In addition both ADSL and ADSL2+ are the result of changes in the encoding algorithm for broadband signals in existing copper wires rather than major technological breakthroughs (Maths 1 Physics 0). As is VDSL which promises speeds up to 100 MB/s. Rushing in to spend $10’s of billions of fibre optic cables in urban areas seems a waste except to grab a headline.
IMHO Australia will never compete in the technology area in a major way while we have the cushion of mineral wealth to deaden the pain of underperformance. I doubt whether fibre optic broadband will change that (yes, I know we have some great technology businesses nonetheless). Ironically the place for fibre optic might be in rural areas where ADSL doesn’t work as too far from an exchange (300m is about the limit).
Thanks everyone for comments – it gave me a lot to think about, I hope you enjoyed it as well.
Frankly, I wouldn’t have a clue about any of these things: b2b, coaxial, fibre and g3, copper or tin.
The little I believe I understand is that there are probably other alternative uses for the money. Perhaps better alternative uses? I don’t see any big time pollie talking about them, and I don’t like it a bit.
Then, there is the subject of who will make money from a taxpayers’ investment.
I don’t know if any one has seen the monorail episode of The Simpsons? Without understanding the whole shebang, I’m still getting a feeling of deja vu.
An article that provides some perspective on the NBN:
Thanks for the link.
As I am a member of the technologically challenged side of the public, the article was useful. And the author at least appeared impartial.
Let’s see what happens now. Hopefully, this will not all be a moot point. I mean, with the Parliament hung and all.
In the latest guest post, @pfh007 argues that universal fibre to the home may not be such a great idea, at least not as it’s currently conceived in the NBN plan. http://stubbornmule.net/2010/09/nbn-140/
The NBN business plan has been partially released and the estimate for the wholesale cost of the NBN (which NBNCo provides) for 13mps is given as $24 per connection (ie household or business connected). The Australian bureau of statistics gives the average number of people per household at 2.4-2.5 and declining so that translates my estimate to $24-25 per household, surely a stunning proof of MuleStable Back of the Beercoaster technology!
@Zebra: yeah about right really. Telstra charge around $25/month for a piece of decrepit copper, whether through wholesale or retail.