NBN Business Plan

The NBN business plan is here. The pricing section contains this table

The following table describes wholesale access pricing for NBN Co services.

Peak download speed (Mbps) Peak upload speed
(Mbps)
Fibre Wireless Satellite
12 1 $24 $24 $24
25 5 $27
25 10 $30
50 20 $34
100 40 $38
250 100 $70
500 200 $100
1000 400 $150

Table 1 – NBN Co monthly wholesale access pricing (source: NBN Co Corporate Plan, Dec 2010)

I don’t know what retail prices this will turn into, though I’ll bet there will be ISP bashing alleging “price gouging”

I pay (ADSL 2+ with TPG) $50 a month and get a speed of 10-15 mps. My guess is that the retail price under NBN will be higher than this.

The upload speeds are pretty much what they are now with ADSL2+. I believe that demand for higher uploads will increase as users do more in the cloud. I have a backup in the cloud – it took me about two weeks for the first one. Fortunately TPG does not charge for uploads.

The plan contemplates a total capital expenditure of  $35.9 billion (that excludes the $11 billion going to Telstra) with the government contribution at $27.5 billion. The balance will be borrowed. Does that really keep it off the government’s books?

Apologies in advance to those who believe that Catallaxy should stay away from all this nerdy stuff. I do find it fascinating.

This entry was posted in Technology & Telco and tagged . Bookmark the permalink.

92 Responses to NBN Business Plan

  1. JC

    If you borrow at the sovereign credit rating any thing looks good and the force everyone to take up the government’s deal it even looks better.

  2. New Gold Dream

    The NBN Corporate Plan actually says the IRR is 7 per cent while the WACC is 10 per cent. Quigley should turn in his badge.

  3. rog

    Apples with oranges ken, try paying Telstra bills. They want $40 for 7gb/month for wireless bundled, naked it’s $60 or $70. And they don’t guarantee 24/7 service, it is often down. Don’t talk to me about the wonders of telstra wireless.

  4. rog

    Plus they charge you bothways, upload and download. Not hard to hit your monthly limit.

    Look, like it or not the future lies with the Internet and to have it throttled back due to market forces….

  5. Ken Nielsen

    I tried Telstra rog but then shopped around for a better deal.

  6. Infidel Tiger

    There will be no shopping around in the future.

  7. Ken Nielsen

    I F you will have a choice of retail ISPs though it doesn’t look as if they will have much margin to negotiate with.
    Does anyone know what Telstra charges ISPs now?

  8. rog

    Yes but ken, you live in an area that has options. The point of the NBN is that everybody has the same deal.

  9. rog

    That’s crap IT, the NBN is a wholesaler.

  10. Infidel Tiger

    Yes but ken, you live in an area that has options. The point of the NBN is that everybody has the same deal.

    Just like Cuba.

  11. rog

    It’s a bit like farting, you win and I’ll leave you with your bad smell.

  12. Ken Nielsen

    Yes I T (I should have said) the bush will get priority in the rollout.
    rog – OK, I could accept subsidising those in the bush. So why not leave the cities and suburbs to Telstra Optus and all and give NBN the job of doing the bush?
    You and i know the reason – they want to hide the cross subsidy from the city to the bush. A tried and tested trick, used by politicians of all colours for many years.
    Many years ago, the main grocery wholesaler in Tasmania tried to get manufacturers to have the same price in Victoria and Tasmania although freight across the straight was very expensive.
    “You’ll only have to increase Vic/Tas prices by 2.3%” he said “The’ll never notice”.
    He failed but then he lacked the power of government.

  13. I have ADSL 2 too, but distance from the exchange is the speed killer. Allowing for $81 retail for the 50Mbps 500 G plan, as Znet is saying, it is clear that we will never need to walk to the car to drive to the DVD hire shop again. The future is stationary, but from where I’m sitting I find that appealing.

  14. Infidel Tiger

    It’d be far cheaper to relocate all the people who require warp factor 9 porn to one suburb than roll it out to everyone on the off chance that some of them need internet that fast.

  15. Samuel J

    When there is enough bandwidth to transport me to New York I’ll take notice. I’d be willing to shell out $40 billion of taxpayers’ money on that type of technology.

  16. JC

    You can do it in 20 hours for 2G Samuel No need to be spending that much.

  17. .

    “The NBN Corporate Plan actually says the IRR is 7 per cent while the WACC is 10 per cent. Quigley should turn in his badge.”

    HAHAHAHAHAHAHA!

    “Business plan is feasible”

    Okay mate, give me your 450k salary and I’ll give you back 436.5k. Well hey it’s feasible.

  18. conrad

    Ken,

    you can only get that deal because you are a business customer — I’ve got the home version from TPG and it’s $60 for a naked ADSL2+ 1MB line (I will have to set myself up as business!). However, I’m not sure whether it really is limited — I often go well over 1MB, so my bet is that there is possibly no limit except for the line speed and traffic and it’s just sold like that. Looking at the price and then adding some for the retail price (which was guestimated at around $50 on the TV), it looks like it will be a similar price, which I imagine is terrible given when the line will turn up in 5 years time.

  19. Big Dumb Fu

    Sounds pretty reasonable to me. Surely we should be able to stream 3D porn at warp speed in full 1080p? Who could possibly object to this? Just think of all the other benefits too. All those magical benefits that will make us all so much richer! Rich beyond our wild dreams! That evil HoWARd left us in the dark and now we are finally saved by glorious Labor! No price is to high for the amazing benefits! This is going to make such a good return, maybe we should try to sell the plan to other countries? We can roll this NBN out again and again across the world! We can be heroes!

  20. rog

    Yes, these so called capped plans are really minimum plans where they rip into you for exceeding the cap.

  21. ken n

    conrad, nup, it’s a home plan. Look at the second item here.

  22. ken n

    rog, mostly the “shape” you – that is slow you down when you reach your limit. Telstra charges on most of their plans which is another reason I left.

  23. rog

    Speaking of Howard, how was it that he gave tls shares to the politicians superfund at no cost? ie what was once owned by the taxpayer was transferred to the pollies for free. But that isn’t ‘rent seeking’ , it’s theft.

  24. Entropy

    One thing is clear that I am surprised no one is saying too much about. At retail most people are only going to afford the 12mbps service, which will be delivered either as fibre, wireless or satellite. This seems quite different to the 1gbps promitted before the election.

    What did the other mob promise again?

  25. ken n

    As I remember it rog, the shares went to Commonwealth Super covering all govt employees. The super plan (a promised benefit job than only public servants get anymore) was way underfunded.
    We were up for the money anyway. It made some sort of sense to use a government asset to reduce a government liability.

  26. Milton Von Smith

    Will NBN also charge $24 for wholesale telephony only services? If so, that is more than the current wholesale price – and Australians who don’t want broadband will pay more for using their telephones.

  27. Entropy

    By the way, I know it is traditional to bag out telstra, but I am Ctually switching over to telstra from iiNet.

    Nothing against iiNet. A very, very good ISP, especially if you get a lot of stuff from iTunes, which isn’t counted in the quota.

    But I am so far from the exchange that I can’t do better than 3.5mbps. And I have a foxtel cable right past our house. It is getting set up this week and should give 20-30mbps.

    And with phone and mobiles bundled, I am paying about $25 more a month for 100gb and free phone calls nationally including mobiles. It includes uploads, but not being a heavy user of channel BT that is not an issue.

    And telstra has been very pleasant to deal with over the phone. Hell has frozen over.

  28. JC

    Speaking of Howard, how was it that he gave tls shares to the politicians superfund at no cost?

    Yes he did the public sector superfund the balance of the shares, however they were basically held in the government accounts at zero cost because nearly all government accounting is done on a cash basis and those shares weren’t valued at market price. T
    They weren’t valued at any price.

    ie what was once owned by the taxpayer was transferred to the pollies for free. But that isn’t ‘rent seeking’ , it’s theft.

    No you moron. The public sector super fund was running with a huge future liability. HowardHitler basically closed that gap. They never taught you that at the joiners academy?

  29. Sinclair Davidson

    I too am in the process of moving to Telstra. Mrs D and I decided to combine all our electronic stuff into a single bundle. Overall paying a bit more for what we want, but getting more overall, so a very good deal. The only cock-up is that my old ISP swithed off the internet today and the earliest Telstra can switch on is tomorrow.
    So anyone stuck in moderation will have to wait and the long post on the value of PhDs will have to wait too.

  30. Samuel J

    From the ABC: “THE National Broadband Network business case proves taxpayers’ $27.5 billion investment in the plan will be repaid with interest, Julia Gillard has declared.”

    Proof – now here is a loose use of that word. The NBN business case will be proven or otherwise ex post. At the moment it is merely assertion. I wonder how many other business cases that were ‘proven’ ended up as failures?

    This from a Government that promised that it would ‘deliver’ the biggest surplus of all in the 2008-09 Budget.

  31. Ken Nielsen

    the long post on the value of PhDs will have to wait too.

    No need to hurry with that sinc.

  32. Peter Patton

    Sinc

    and the long post on the value of PhDs will have to wait too.

    Aaaaaarrrrggghhhhh!!!! NO! NO! NO! I need to read this, toot sweet. You know my current situation. This topic is all I think about at the moment. I will pay for a little man from the Punjabi region – who has an Australian PhD in Economics – to come and pick you up, and drop you off at the nearest Internet cafe, so you can post it now. I will even pay the tariff for him waiting outside until you have finished, and returning you home! 🙂

  33. Ken Nielsen

    With Foxtel, make sure you get a shaped plan and watch the uploads.

  34. Ken Nielsen

    Very good question MVS. And Foxtel TV as well.
    My guess is that they will make Foxtel look like they are a charity.

  35. Sinclair Davidson

    legaleagle graduates on wednesday – cl linked to an article in the Economist that I wanted to comment on.

  36. Peter Patton

    Ken

    No need to hurry with that sinc.

    Well, as I said, I disagree here. Do you have a PhD, Ken? I am currently seeking as much advice as I can on the subject.

  37. daddy dave

    Nothing against iiNet. A very, very good ISP, especially if you get a lot of stuff from iTunes, which isn’t counted in the quota.

    I’m with iinet and I agree. They’re excellent. And I don’t even have BOB!

  38. JC

    Interesting and related prediction from one of the I-banks going into 2011.

    Among our Growth themes, we think in 2011 we will see the first growth market for Technology in over a decade. The main drivers of this shift will be both secular and structural including Cloud and Bandwidth Consumption. If Technology once again grows faster than nominal GDP, then watch out for an upward re-rating of that sector’s valuation multiples

    If indeed there is growing consumptions starting next year in technology, we won’t be really participating will have to wait until 2018 to because the private players are not going to be spending a cent in terms of equipment for a temporary fix seeing that after the rollout they will essentially be agency operations.

    If the advance rate in the US is say 4% per year as a result of the added technology that eats up more bandwidth we don’t have, We will be behind at a compound rate of 36%, which is a rough and dirty way of looking at it.

    Between now and 2018, which is supposed to be the roll out date my bet is that these prices are are going to hit the freaking roof.

    labor is rooting everything up. Everything these morons touch turns to shit.

  39. Peter Patton

    I simply do not get why people are complaining. I have pre-paid mobile broadband for $29 per month, which gives me 2KB without any problems.

  40. TerjeP

    My wife has a PHd and a MBA hanging on the wall beside her degree. I’m not sure she is any happier for it. A bit more formidable at times I suppose.

  41. JC

    You will be complaining, Peter. If the I-bank prediction is any guide to Band width being chewed up prices are going up.

  42. JC

    Here’s the other problem with the NBN. If badnwidth gets eaten up quickly in particular geographic areas (cities obviously) what will be the response rate going forward if more is needed and no other player is allowed to enter the market to serve additional needs.

    This is going to turn into a freaking shambles, as we end up with a sovietized data highway that will end up producing feast or famine with the end result be a modern version of rationing.

    What happens if the government is strapped out and finds it hard to borrow to allow more capacity into the system?

    Everyone may be assuming the wrong thing. People may be assuming that the NBN will be much more expensive but the capacity will be adequate to satisfy our needs. The roll out date is a crock of shit because they have no idea how long it will take, but like any large project it will always take longer than the designated time.

    What if it took 5 years longer and we were so starved of bandwidth before and even after the roll out we needed more.

    They’ve ripped out the copper wires that would provide additional capacity.

    SO what happens in the interim and beyond the rollout date if more is needed and the NBN management is choked up working to get the rollout up and going. We’d be literally screwed.

  43. pete m

    The issue isn’t pricing.

    What is the takeup of adsl and cable combined? about 70% of homes. And this includes dirt cheap net plans. How is fibre going to change that? Its lowest price is above that of adsl and wireless.

    The simple point here is there is not the demand in 70% of all households and businesses for this connection speed and cost. Don’t forget householders will be up for extra wiring in the house or a wireless router. And going by all nbn plans in tas, where uploads are counted, you can expect a lot of people to balk at the added cost just to watch youtube funnies and dl grandmas 4gb photos of meeting penguins in phillip island.

    The big sell is they’ll get 70% takeup. Well the total houses with broadband in 09 was 62%:

    According to the 2008-09 MPHS, 72% of Australian households had home internet access and 78% of households had access to a computer. Between 1998 to 2008-09, household access to the internet at home has more than quadrupled from 16% to 72%, while access to computers has increased from 44% to 78%.

    The number of households with a broadband internet connection increased by 18% from the previous year, to an estimated 5.0 million households. Broadband is accessed by close to two-thirds (62%) of all households in Australia and 86% of all households with internet access. A small proportion of respondents (2%) did not know the type of their internet connection at home.

    source:

    So these guys are predicting that all broadband will go thru the nbn

    nice pipe you got there conroy

    patton- 2 Gb, not Kb.

    I’m on a T bundle plan which saves me about $20 – $30 per month and caps their connection fee and call costs as most of my calls are free. They don’t sell this bundle at my price anymore 🙂

  44. Ken Nielsen

    Do you have a PhD, Ken?

    Hell no.

  45. .

    BoB is a Godsend.

    Does anyone expect the NBN to engender this kind of new technolgy?

  46. daddy dave

    The simple point here is there is not the demand in 70% of all households and businesses for this connection speed and cost.

    Right. But the populace must have fast broadband, including my elderly pensioner aunt who lives in a small town and likes gardening. She’ll love the chance to get streaming video, play World of Warcraft, and watch all the latest youtube sensations.

  47. ken n

    The bet behind this is that consumers will want very fast internet access. I think that is probably true but I would not bet $50 billion (or whatever the figure is) on it.
    Predicting technology is much easier than predicting consumer behavior. As many have said, in the 70s is was believed that consumers wanted supersonic ait travel. In fact they wanted cheap airfares.
    I suspect that mobile will become more important than speed – but i don’t know that either so I won’t bet on it.
    If the bet about speed is wrong, we will have wasted money. Worse though, we will be locked into a technology we don’t need. The NBN business plan makes it clear that it will want legislative protection against “cherry picking” – competition from other wholesale providers.

  48. Sleetmute

    I haven’t read the business plan, but here is my quick Excel analysis. Australia has about 9m households, so assuming 70% take-up and an average wholesale monthly charge of $27, with a 7% discount rate I only get an NPV of $21.6b over a 20-year time horizon. If I increase to 10m households to account for population growth and $30 pcm, I get $26.7b. That’s close to the government’s direct contribution but a long way from the overall spend of $47b. So what am I missing?

    Incidentally, to get $47b at a more realistic 10% real pre-tax WACC with 10m households and 70% take-up requires a monthly wholesale charge of about $65.

  49. Sleetmute, I did the same thing yesterday and was utterly befuddled. I think an analyst spilt coffee into their supercomputer when it was crunching the numbers.

    You need to add in business premises as well – that takes the total to about 11 million possible connections.

    They are forecasting an ARPU (Average Revenue Per Unit, or household) of $34. Try recrunching with those numbers.

  50. A very big assumption is found in this paragraph on page 35:

    Recent fixed broadband average revenue per user (ARPU) growth has been driven by data downloads more than increased speeds. However, strong usage growth is expected to continue with real-time “on-demand” traffic increasing with Video-on-Demand (VoD), audio/video streaming, VoIP among the fastest growing services.

    What this says is that for the last few years, customers have been content with the speed of their plans, but have upgraded to bigger quotas. I’m one of them – we recently went from a 12GB plan to a 50GB plan, kept the speed the same, and saw our bill drop by $10 per month (due to bundling).

    Thanks to the likes of TPG, customers have been offered bigger and bigger (and huger) quotas over the last few years. TPG has done this because ADSL prices are falling – in order to protect their margins, they’ve had to upsell customers to bigger plans.

    However, TPG only has 7.5% of the market, which makes me think that a lot of people really don’t give a crap about VoD.

    All the interesting financial data starts on page 101 – have a good look at the tables and graphs from that point on.

    The graph on page 118 is really worth a look – it shows the split between the various plans from 2012 to 2028. They’re forecasting that most users will stick with the basic plan (12mb) for the next 20 years. At most, only 1-2% will be on 1gb by 2028.

    If half the users think 12mb is good enough, and we can get that now with ADSL, why on earth are we spending $43 billion on laying fibre?

  51. It’s worth looking at how they calculated an ARPU of $34 per month.

    There is a table on page 101 that sets out the prices for each plan

    12mb – $24 month
    25mb – $27-30 month
    50mb – $34
    100mb – $38

    There is a graph on page 118 that shows the subscriber split by speed.

    From eyeballing the graph, I get the following splits for 2014:

    12mb plan – 53% at $24 month
    25mb plan – 16% at $28.50 (splitting $27 and $30)
    50mb plan – 24% at $34 month
    100mb plan – 7% at $38 per month

    I calculate an ARPU of $28 per month ex GST.

    In 2020, you get:

    12mb plan – 45% at $24 month
    25mb plan – 5% at $28.50 (splitting $27 and $30)
    50mb plan – 15% at $34 month
    100mb plan – 25% at $38 per month
    250mb plan – 10% at $70 per month

    This gives an ARPU of $34, but it is driven by the truly heroic assumption that 10% of the population will be on a 250mb plan with a wholesale price of $70 per month.

    It then goes on to assume that by 2028, 40% of the population will be happy paying a wholesale price of between $70 and $150 per month.

    I call that “fantasy”.

  52. Andrew Reynolds

    Ken,
    I am with Telstra because the cable past my house is faster than the copper. They just changed my plan from a 25Gb one to a 200Gb for no additional charge.
    It means I am unlikely to ever get shaped again – but I will probably change the plan to a 100Gb one or so.

  53. Myrddin Seren

    Alan Kohler must be angling for a consultancy with the NBN ?

    He polishes a shine on the NBN that must make Conroy’s Hollowmen shamefaced with envy at their reticence:

    “This is a magnificent, awe-inspiring undertaking: there has never been anything like it, not in this country and probably not anywhere in the world.

    Not only will the NBN not be a white elephant it will almost certainly prove to be a great investment. In fact, without wishing to get carried away (too late do you think?) it could represent, on its own, a huge national savings plan. When it’s finished the asset will be worth several times the government’s investment of $27.5 billion.”

    http://www.businessspectator.com.au/bs.nsf/Article/NBNCo-NBN-broadband-pd20101221-CBS76?OpenDocument&src=kgb

    Goddamit – sell the gold reserves and buy fibre !

  54. Sleetmute

    Thanks BoaB. When I plug in $34 pcm and 11m customers over 30 years with a WACC of 7%, I still only get an NPV of $39b. At a 10% WACC, I get $30b.

    I agree the 2028 assumptions seem pretty out there. Further, if one assumes that 100 mb+ speeds will be so highly in demand within the next 10-18 years, one must have some idea of the uses that consumers will have for those speeds. On that basis, I don’t see why doing a CBA should be so hard.

  55. The assumption is right there in the paragraph from page 35 – the big driver of demand for high speed plans is going to be Video on Demand, or VoD. They are forecasting that we are going to move away from the current method of viewing TV to VoD. Mention of IPTV is also made in the business plan, and how they are going to cater for it.

    Right now, we have what I call “near VOD”, thanks to bittorrent. If you have a 1TB media server like we do, and you plan ahead a bit, you have virtual VOD.

    Of course they don’t mention the cost of subscribing to a VoD service.

    In essence, it’s manna for couch potatoes.

  56. JC

    Shit’s happening around the world, while our telcos sit around and do nothing and wait.

    http://www.nytimes.com/2010/12/21/technology/21spectrum.html?src=busln

  57. Sleetmute

    Bartho has a more sober analysis at Business Spectator.

  58. JC

    Seren

    It’s a low return, high cost piece of crap and even though they are setting the cost of capital at a very low rate they need to legislate anti-competition law to make sure it’s artificially viable.

    What a bunch of lowlife incompetents the Liars Party are.

  59. From the summary financials on page 134, I’ve calculated the wholesale ARPU through to 2020:

    2012 – $23
    2013 – $24
    2014 – $25
    2015 – $32
    2016 – $37
    2017 – $41
    2018 – $44
    2019 – $48
    2020 – $52
    2021 – $56
    2023 – $63
    2025 – $83
    2040 – $83

    It says nothing about whether this is calculated in constant dollars or not. I’m assuming they’re using constant dollars.

    So for the financials to add up, the only way to do it is to really start cranking up the ARPU from 2016 onwards.

  60. JC

    ARPU

    ?

    Average revenue per user?

    They’ll have to jack up the price at the bottom to have any meaningful effect on the averages as I would expect that’s where the real action will be.

  61. OK, on page 118 you have a graph showing the percentage of residents that will take up each plan. For 2020, I get this:

    12mb plan – 45% at $24 month
    25mb plan – 5% at $28.50 (splitting $27 and $30)
    50mb plan – 15% at $34 month
    100mb plan – 25% at $38 per month
    250mb plan – 10% at $70 per month

    Page 134 has a cashflow table going out to 2040. In 2020, it predicts:

    Total fibre connected premises – 7,623,000
    Total satellite – 222,000
    Total revenue – $4,914,000,000

    The thing is, if you take 7.623 million users and crunch the numbers from the graph on page 118, you get total revenue of only $3.184 billion – as opposed to $4.914 billion in the cashflow statement.

    Somehow, they have conjured $1.7 billion in revenue out of thin air. The only way I can see of doing that is to crank up wholesale prices by 55% between now and 2020.

    So a low cost $24 per month (wholesale) plan today will be $36 in 2020 (at constant dollars).

  62. Sleetmute

    I assume they’re in constant dollars.
    Assuming each HDTV channel requires 16 mb (at MPEG-2 compression, only 8 mb at MPEG-4), they are saying that by 2020, half of all households will be willing to pay for at least 3 simultaneous HD channels (there is presumably no need to record a program if it is available in the cloud and you can download it as fast as you can watch it). Given that average household size by 2020 will be about 2.3 persons, this does seem pretty heroic.

  63. JM

    Pete >

    Don’t forget householders will be up for extra wiring in the house or a wireless router.

    No they won’t Pete. This is an Fairfax/Oz furphy.

    The Alcatel household device has several ports on it – a normal phone plug, an “ADSL” port and a couple of Ethernet ports.

    It is already a “router” – it is designed and delivered to reduce the transition cost for households to zero, they can simply plug in their existing equipment regardless of what it it is:- telephone handset, modem, ADSL router, Ethernet router or WiFi router.

    The “rewire your house” meme is a complete nonsense.

  64. papachango

    so by 2020 we’ll have an average line speed of about 25 Mbps? (based on BoaB’s percentage take up above)

    Currently we’re on about 5 Mbps average, so thats a four fold increase in ten years at a cost to taxpayers of $36 to $(who knows) billion.

    Vonroy might think this is OK, but then consider that we’ve gone from 0.033 Mbps in 1997 to 5kpbs now, a 150-fold increase at a cost to taxpayers of…. $nil.

    We’ll laso have no choice in what fixed line service to use, and if wireless gets fater they’ll probably put the brakes on that too. Fabbo.

  65. JM

    Where is that Alcatel box going to be located? the entire unit seems to be fairly large, and it also looks like it is designed for external mounting.

    So if they screw it to the wall outside your front door, you’re up for wiring to wherever you require outlets. And unless your existing phone cabling terminates at that spot, you’ll need to get new phone cables run.

  66. Thomas Esmond Knox

    The NBN battery worries me.

    By the way, last night in the Dalby flood our mobiles went out but our copper lines stayed on.

    Are copper lines being pulled out in Tasmania?

  67. papachango

    Oh dear, must proofread my posts. That’d ‘also’ not ‘laso’, ‘faster’ not ‘fater’ and ‘Conroy’ not ‘Vonroy’.

    The latter is perhaps a Freudian slip like reference to Lord Voldemort?

  68. JC

    The “rewire your house” meme is a complete nonsense.

    No it isn’t, JM, you nincompoop. You wrecked the other thread with useless drivel and your’re about to here too.

    Nearly all Australian homes are not wired with fibre so by definition when fibre meets the copper wire the speed can’t be maintained to its highest level. You therefore will end up with slower connection.

  69. FDB

    Papachango – nobody on Earth ever suggested that the poxy dialup modems of the early ’90s made the best possible use of copper. Over time though, the maximum speeds available on the (now-degraded, and oringinally taxpayer-funded so you’re wrong anyway) copper network have been reached.

    Where to now then?

  70. papachango

    @Thomas Esmond Knox – I understand they’re going to decomission copper as it’s considered old technology.

    Trouble is fibre doesn’t conduct electricity, so the ability to have a landline when the power goes out might be a problem – currently they can run on low voltage power over the copper cables; the exchanges have battery and sometimes diesel gen backups that allow for 8hours or so of running the phones in the event of a major power outage.

    It might be possible to replicate this with pure fibre, but as well as batteries in the exchange to send the light signals down the fibre, you’ll need a decent size battery in each handset to decode the light signals and turn them into sound at the other end.

    As for the Alcatel box – I assume that’s what the NBN Co will be putting at the lead-in to each property? As I understand it, they’re not planning to do any work in people’s homes (and I don’t want them trespassing on my property) so you’ll be responsible for hooking it up to your existing router etc.

    It could be easy enough to use the existing internal phone wiring to hook it up to your wireless router at no extra cost, but if you want 50-100 Mbps plus, and your PC is not right at the front of your property, you’re going to have to pay for internal optical fibre wiring, or get in a newer fast wireless router that will cover your house.

  71. JC

    Where to now then?

    Oh my lord what a difficult question. There were three tenders in to build the fucking thing before Controy thought he could become the next Graham Bell, Chump.

    What exactly is your point.

  72. Infidel Tiger

    Conroy not ‘Vonroy’

    I prefer Vonroy. Makes him sound more like the fascist arse he is.

  73. papachango

    @FDB

    Where to now then?

    I don’t know, maybe FTTH in some places where there’s a market for it, maybe a faster wireless standard, maybe satellite. Maybe even someone will find a way to tweak copper more.

    Problem is the govt is assuming that FTTH will fix everything, is betting all our money on it, and legislating to prevent alternatives. Some people will be fine with ADSL or cable or value mobility more than speed, so NBN ain’t gonna be any use to them. Just look at all the people fiddling with their iphones on the train; they’ll only get the faster speeds at home connecting to wifi.

    The other point is we went from dial up modems to ISDN to multi channel ISDN to HFC to ADSL to ADSL 2+, not to mention Wireless Broadband, all with minimal government intervention. HFC and wireless needed completely new infrastucture, so even if copper is going to be obsolete why does whatever replaces it need to be nationalised?

    Someone like Conroy 13 years ago would have put billions aside to roll out the ‘National ISDN Network’ which maxes out at 64 kbps per pair of copper wires, and by the time he’d finished, 10 years too late and at6 triple the budget, everyone would have been forced onto 0.064 Mbps, while tthe rest of the world had 12 Mbps ADSL. He would then have made some law banning ADSL.

  74. papachango

    yes as I said, IT, a freudian slip! Von Roy.

  75. FDB

    Papachango – once more, you are mistaking infrastructure (copper vs fibre vs wireless vs hybrids) with transmission protocols.

    ISDN required infrastructure no different to ADSL or telephony. Incidentally, it could also reach double the speed you’ve quoted.

    You’re probably better off talking about things you know about already, or doing a little basic googling before posting comments.

  76. FDB

    “Just look at all the people fiddling with their iphones on the train; they’ll only get the faster speeds at home connecting to wifi.”

    Again, think about it a little…

    With FTTH (excessive to the 93% level quoted IMHO, but whatevs), there is also fibre to many many MANY more nodes than is currently the case. Each node can supply wireless to its local area, with enormously increased bandwidth above the copper currently running there.

    Better for everybody, everywhere.

    Serious NBN opponents long ago retreated to arguments about cost-benefit analyses, or (like me) suggestions to scale down the “to the home” part. I suggest you get on board.

  77. papachango

    FDB

    New infratsructure, namely HFC, wireless and fibre, has already come about without a grand government spend-a-thon, that’s my point.

    I don’t believe the NBN’s remit it to provide wifi infrastructure everywhere. In any case you’re arguing for fibre to the node there, which is the tnder they abandoned. Wifi everywhere would be competition to NBN as even if it piggybacks off their infrastructure it would cannibalise their FTTH take up rates, which their business case seems to be based on.

  78. FDB

    I take it you will be part of the supposed 10% willing to pay for a 250mb service, which will be $70 wholesale + the ISP charges + GST = maybe $130 a month?

    Just remember that it will cost 50% more in real terms in 10 years time.

  79. Myrddin Seren

    JC

    Thanks your comment on Kohler’s …… exultation ??

    Taking it back to first principles – where is the money trail ?

    ie how many people who purport a relationship to – ummmm – Conroy, as a hypothetical case – are running around Canberra yelling:

    “Mate ?…Mayate !?….MAAATE !!!!!”

    with flight guides to Zurich in their back pockets ???

    Regards
    ( Extremely Cynical Reader of ‘Packer’s Lunch’ )
    looking at billions of dollars of contestable spend.

  80. JC

    Oh fuck… I missed this bit… Monbiot is also resorting to the now totally discredited and laughed at

    So why wasn’t this predicted by climate scientists? Actually it was, and we missed it. Obsessed by possible changes to ocean circulation (the Gulf Stream grinding to a halt), we overlooked the effects on atmospheric circulation. A link between summer sea ice in the Arctic and winter temperatures in the northern hemisphere was first proposed in 1914. Close mapping of the relationship dates back to 1990, and has been strengthened by detailed modelling since 2006.

    The Atlantic gulf stream suddenly stopping.
    These loons are truly shameless. It’s even gone past a the cult stage.

  81. JM

    Since this has been a bit of an area of debate over the last couple of hours, I’ll address it in one hit.

    The Alcatel box is an external box fitted to the house at the point of entry, and the process will probably be the same as it has been since Telstra lost the monopoly on the internal plug.

    This is identical to the current practice with copper where the termination is a little fat circular plastic housing enclosing some wiring termination screwed to the outside of your house – have a walk around your house and check for yourself.

    When the NBN Corp person turns up they either install it at the same place where your existing connection is, or they might be nice enough to let you nominate a different location.

    They will then connect your existing lines – phone, ADSL – to the respective ports at the bottom of the box. Later on if you install internal fibre at your own cost, there is a fibre port you can have plugged in.

    (And can I emphasize there is no need for internal fibre for high speed internally – your existing router will give you 54M/100M/whatever and CAT 6 wiring will give you 1G – and if you’ve gone to the trouble of installing that you’ll have no problem hiring some technician to spend 5 minutes plugging it in.)

    This is exactly the same process used by Telstra and Optus to connect new services as it is at present. Stop wasting your time on this issue – the technicians are well versed in this and the concept is known as the “demarcation point”. It’s a non-issue. It happens now, it will happen in the future.

    What they do about the battery I don’t know. As far as the Alcatel device is concerned, it’s optional but I believe the government was forced by the Opposition to make it mandatory.

    Where do they put it? Who knows, but they’ll work out a standard practice and do that – there’s no need to get your knickers in a twist over it.

    And if you do, I’d suggest you’re focussing on trivia that will have no real difference to the outcome.

    As to the cost of the battery, it’s a 4Ah SLA thing that currently retails at between $15 and $20* NBN Corp will be able to get a volume discount lowering the price further and given that this rollout will vastly increase the demand I’d expect the price to get a lot lower over the next 3-5 years bringing replacement cost well under that of a packet of cigarettes and probably closer to that of a cheese sandwich.

    * The original McKinsey report estimated the cost at $150 with a discount to around $40 and is complete bollocks – check on shopping.com.au. They also assumed a very low lifetime for these things of 3 years which is based on continuous use rather than occasional during power failures.

    Secondly, since power failures are of fairly short duration in Australia you might choose to replace it with a lower capacity battery at cheaper cost.

    The objection is trivial nonsense.

  82. Sleetmute

    One question, JM, from a non-technical person: what about the wiring from the external box to the internal outlet where you plug in your wireless router? If that internal wiring is copper, will that limit the NBN’s speed to you?

  83. ken n

    Thanks for that JM.
    One other question – How widespread is the use of fibre among large businesses now?
    I see that NBN wants to prevent “cheery picking” which I guess will stop or penalize private networks.

  84. badm0f0

    “The Alcatel box is an external box fitted to the house at the point of entry, and the process will probably be the same as it has been since Telstra lost the monopoly on the internal plug.”

    Actually it can be fitted internally or externally. I think the business plan explicitly states an assumed 50/50 split between internal & external installations.

  85. greenwood

    all you ppl trying to work out the ARPU haven’t read the fine print…

    NBNco’s revenue stream from consumers consists of two parts

    Access virtual circuit – the wholesale price talked about in previous posts.

    Connectivity virtual circuit – a backhaul charge

    think of the CVC as a road toll

    at the moment, average data usage is quite low…. so the CVC component of ARPU is quite low… maybe a few dollars.

    but in 2025 they are estimating that average data usage will rise to 640 gigabytes….

    Retail service providers will have to requsite vast amounts of CVC backhaul to cater for this demand if the assumption holds true.

    this means in 2025, the CVC may make up 1/3 of NBNco’s revenues.

    Simon Hackett explains abit more about using his experience in the Tasmanian trials.

    http://blog.internode.on.net?/2010/12/19/nbn-points-of-in?terconnect-and-the-future-of-competition

  86. JM

    Sleetmute

    No. There’s no problem.

    The cable b/n the NTU (that’s the box on the external wall) and your internal wiring will not be a problem. The distance is short – probably under a meter – and the quality of the cable high – probably something like CAT5 at least which can handle 100Mbps at least and if better than that up to 1Gbps.

    The issue you’re alluding to is

    “how come copper isn’t good enough between the exchange and my home but is good enough between the outside wall and the inside wall of my house?”

    There are two things to consider here.

    1. The quality of the cable

    Network cable is high quality, it has good noise rejection because it is shielded and the pairs are twisted which adds more noise rejection – both of those considerations increase the frequency limit on what can travel on it.

    Phone cable is shit. It’s un-sheilded and un-twisted. Noise is a horrendous problem. Both of those considerations decrease the frequency limit of what can travel on it.

    2. Distance.

    When you’re talking about things like wire, the cross section becomes important which means that after a certain distance any given frequency becomes attenuated and starts to become unusable noise. For ADSL2+ this happens at about 2km, which is a lot less than the 1m (say) between the external NTU and your internal router.

    So if you want a higher bandwidth channel you have to accept a shorter transmission distance.

    1m is no problem at all, 2km is.

    This is the core point of the “last mile”. You can improve the performance of the last mile by using better cable – CAT5 instead of mid-20th Century untwisted pair – BUT you have to dig up and replace the old stuff.

    Which. Is. Very. Expensive.

    Once you’re committed to replacing the old stuff, replace it with the best stuff you can find.

    Which is fibre optic waveguide.

    Now just to explain “waveguide” a bit. The attenuation in copper caused by distance is a problem related to the nature of the material, the signal has to travel through a whole lot of atoms in the wire and at some point can’t “vibrate” any faster – that’s the frequency issue.

    The solution to this is to put the signal in a tube and use the material – the copper – as the “banks of the river”. This works really well and is called a “waveguide”, the signal travels in more or less free space but is bounded by the “banks”. At that point you have no problems with attenuation or distance (or very little anyway), and can go as far as you want.

    What’s the best waveguide we know of? Fibre optic.*

    And if we have to dig up and replace shitty copper, what should we replace it with? Fibre optic.

    Economically, you’d be stupid to do otherwise. The cost of fibre optic cable is not a lot more than better quality copper and is utterly trivial compared to the labor involved.

    Ken – The use of fibre among large businesses would be nearly universal, both within their data centers and for connection to the outside world.

    * And that’s been the case for 40 years – there is no magic new technology even mooted, and for certain reasons related to physical law entirely unlikely.

  87. JM

    Sorry Ken, you also mentioned private networks.

    The NBN Access Bill – which requires non-discriminatory access at Layer 2 and above – specifically excludes “corporate or private” networks from that requirement.

    So if you want to establish a private network, but not offer “common carriage” service then you can do whatever the hell you want. There’s no dictatorial prevention going on.

  88. ken n

    Ken – The use of fibre among large businesses would be nearly universal, both within their data centers and for connection to the outside world.

    So NBN expects the government to hobble that to stop “cherry picking”?

  89. daddy dave

    but in 2025 they are estimating that average data usage will rise to 640 gigabytes….

    Wow! In that case, they should have no problem attracting investors….

    (or releasing a shining CBA….)

  90. JM

    Ken:

    So NBN expects the government to hobble that to stop “cherry picking”?

    Read my follow up – private networks are not constrained.

    And if you’re fantasizing that the NBN restricts what I do within my own premises …. well, you’re fantasizing.

Comments are closed.