Here's my analysis of Grahame Lynch's "50 problems". Commsday comments in this colour.
[18-Mar: Apologies to Grahame for misspelling his name]
For completeness, some disclosure: I don't work for, or hold shares in, a Telco, NBN Co or one of their suppliers or contractors, nor am I a member or supporter of any Political Party. Neither do I support the Labor NBN plan over the Coalition's unannounced NBN. I hold the position that either Policy with deliver better broadband access. My interest is for a clear and informed debate on what I consider the defining Technology of the 21st Century for national Business Productivity and Competitiveness.
“Over 80 per cent of the nation’s copper network is over 30-years old and copper expires after 30 years” - if the copper has truly expired how can it still be operational? Telstra reports fault-free performance of over 99% after all (98.7% for line faults, 99.98% for service availability).
Ross could've been clearer, he's talking about the economic or useful lifetime, a.k.a. design life .“A standalone reason for the NBN is that it replaces the expired ‘rotting’ copper network” and “The Coalition has not addressed copper’s age and need for refresh with its choice of technology” - actually, the FTTN topology replaces a substantial percentage of the copper line length with fibre, so presumably the potential for faults and diminished performance reduces accordingly. That’s actually the whole point of adding fibre.
Planes, trains and automobiles don't stop working suddenly on the day their residual value falls to zero. Like a clapped out old Gemini, it stills runs and can be still fixed, but it's no longer economic/profitable to do so. Replacing the old and worn out requiring high maintenance is cheaper in business. Accountants know it as Asset Depreciation, ending up with fully depreciated assets. They may or may not still work, but when you bought them, you decided it would be cheaper to replace them at this point than to keep maintaining, as maintenance costs explode and reliability/availability collapses around this point.
This is a nonsense.
The whole debate is about the "Customer Access Network" (CAN) a.k.a. "the last mile" - the final connection from the network to the edge devices. Lynch is asserting that all designs with some fibre in the network are identical. That's as fallacious as saying after a puncture "the tyre is only flat on the bottom, it will work fine". The network elements are in series, one part depends on the next. The highest speed and reliability possible for any subscriber is set by the worst element in the chain of parts. This is the copper. To get reasonable speed, FTTN places part of the current exchange in the field, with only 400-800m of copper, not 3-5km. The security, reliability and maintenance of field equipment is woeful compared to fully protected & accessible equipment in controlled exchange environments.
This also hides or avoids one of the biggest cons in the Coalition rhetoric: "you can upgrade links from nodes to fibre is you want". It is at very best a half-truth, at worst deliberately misleading and deceptive. Yes, the electronics can terminate copper or fibre links to households, but from what I've read, each home requires its own dedicated fibre. The major cost-saving for both installation and maintenance/operation of the GPON system is the sharing of fibres. I believe 15-50 premises can share a single fibre.
Because the ducts in the last 400-800m are the smallest in the system, they are also the most congested with copper. There is limited free space in the existing ducts. For an FTTN network with "optional" fibre, none of the copper can be removed while even one subscriber is using it, allowing only a very few fibres to be pulled. Once you pull in two extra cables, the only way to reliably remove the copper is to remove all cables in the whole line of ducting and reinstall new fibre.
You might try cutting and rejoining the cables one duct-segment at a time (between adjacent pits), but that's expensive in labour and NOT fault-free and introduces latent faults from dust & contamination. You get to pay and pay and pay for this approach. Fibre can be joined, but you want to install it in full lengths so it starts perfect. In 30-50 years of life, enough backhoes and other assaults on it will cause you problems, there is no reason to score "own goals" and intentionally reduce network reliability and performance.
We have seen exactly this misstatement before in Telecomms: Telstra upgraded their RIM's to support ADSL1. Not on all 240-480 lines, but only one in ten (1:10). Only a very few people will be able to upgrade from copper to fibre on the Coalition's FTTN proposal, but who knows, they haven't clarified what they are proposing yet, beyond "cheaper to the taxpayer, quicker, more affordably"...“In short (fibre) will revolutionise healthcare for everyone especially the elderly and those living in remote communities” – The NBN calls for lower speed wireless and satellite connections to remote communities. It is also quite likely that many elderly people will choose not to subscribe to NBN internet services if they lack digital literacy skills.
This is a nonsense and a gross misrepresentation. The people named will get around ten times their current service speed, guaranteed.
The NBN is a multi-service fixed-line rollout, upgrading just the Customer Access Network, nothing inside the network. The majority, 93%, of premises, businesses and residences, are targeted for fibre (GPON) service. This was the economic break-even distance where its cheaper to use the more expensive services, fixed (3/4G) wireless and satellite. These services are not just more expensive per subscriber, they are lower performance. Just as an 800m DSL-FTTN service is slower than a 400m service, but faster than ADSL2 at 1600m.
The NBN Co plan is to offer a guaranteed minimum access rate to subscribers no matter where they are and for the one price. This minimum speed, 12Mbps is not just faster than the average maximum rate available now, for the people in these service areas it will be more than 10 times faster than the best (1.5Mbps) they can get now. NBN Co will upgrade these slower services as technology improves. They've already doubled the rate to 25/5Mbps for Satellite contracted for 2015.
This is part of the sleight-of-hand in the Coalitions' discourse: they conflate maximum possible speed with sustained peak-hour throughput. They also ignore the related critical network performance figure, latency, the time for a packet to get from the subscriber premises to its destination. TCP, the mainstay of IP, declares packets 'lost' if the end-to-end latency is too high. There is already well documented large-scale congestion, with attendant high latency and collapse of throughput, in both ADSL services from RIM's and HFC segments.
The ACCC might take an interest in providers selling a service as "100Mbps" when it is unusable, i.e. Zero bits/sec, for significant and important periods of the day, such as the evening peak. For a Plain Old Telephone Service, this was called "Quality of Service" and expressed as a percentage, eg 99.99%. It meant that only 1 time in 10,000 when you picked up the handset to make a call, you didn't get "dial tone" or weren't able to reach the other party due to network congestion, usually on the links out of the local exchange.
Lynch is guilty of the same mischief here: Knowingly not comparing Apples with Apples. The NBN Co's 12Mbps guaranteed to all premises in Australia, with no congestion or poor latency on the local link is a world of difference to the "whatever you get" rate, high latency and peak-hour congestion already known for HFC and Telstra's RIM-based FTTN.
Rather than deliberately "calling for lower speed" services, the NBN is providing a guarantee of ten times the current speed possible and future speed increases. The reality of FTTN in the country is it just won't work or be economic, even in small towns. To get even 12Mbps, DSL-FTTN requires a maximum 800m distance from the node. That's a wire distance, not line-of-sight or road distance. Australia is one of the least densely populated industrialised countries (and the most highly urbanised, go figure!). Where is the sense in rolling out out a $50,000 node, with a 5-10km fibre backhaul to town, and ony serving 2-4 premises within 800m? That's economic madness. In this example, direct to premises fibre is cheaper, faster, better. Small towns have the same problem, their low density. Expect 2-4 premises per hectacre (half-acre blocks, wide streets, parks & reserves, longer than wider footprint) and a 400m rule will cover 25-33ha, or at the very best, 50-100 premises. That $2,000/premise is more than GPON FTTP.
Lynch is also guilty of applying double standards, blatantly favouring his preferred technology, the FTTN/HFC. He allows, even spruiks, the ability of DSL-FTTN to provide increased speed as technology advances, but denies or ignores the same possibly for his "evil alternative" (my words).“It will revolutionise power distribution through the ability to micro-manage peak electricity demand” - There are already substantial smart grid projects underway across Australia aimed at doing that and they almost all use wireless platforms which are superior at tracking spatially disparate assets. The NBN can be used for smart grids but it will not revolutionise them, mainly because FTTH will lack the granularity of wireless coverage. For example, http://www.ericsson.com/article/ausgrid_1595655399_c
The article says to me, Ausgrid have had to roll out a wireless (LTE) network to access the distribution equipment, because there isn't a fast, reliable, full-coverage fixed line network already in place. We don't get to hear what they'd have done if Fibre was already universally deployed. The real gains in managing peak demand is not monitoring the distribution network, but what Ross is talking about: controlling demand at source, both business and residential load.
A good example of the importance of being able to quickly and easily control consumer demand is a Climate Spectator article of 12-Mar-2012: After a 800MW facility failed, "On Saturday night, the wholesale electricity market price skyrocketed in Queensland from $63 per megawatt-hour at 10:10pm to $11,499 at 10:15pm". Prices came back to normal around an hour later, but it was a wild, and expensive, ride for some resellers for that hour. If they could've turned off high-power devices, like hot-water, for that hour, the event would've been less critical.
Queensland has ~$1Billion worth of generating plant that is used just 35 hours/year, because they have to cater with unconstrained peak-hour demand. This is not efficient! The cost to build an extra megawatt of capacity is many times higher than the cost of not using it: the principle of the 'negawatt'. This is part of the reason low-efficiency light-bulbs were withdrawn from general sale, and the point made that was entirely missed by Lynch: real-time, fine-grained control of electricity demand, both up and down is now possible and necessary in an electricity system with significant variable renewable energy.
Automatically matching demand to available supply will, not just might, reduce generation costs by 30-50% by removing most excess capacity investment. This is not a pipe-dream, its basic infrastructure economics: lower unused major capital equipment == lower costs.
Lynch may be somewhat right, that both NBN designs will both provide large-scale real-time control of the distribution system. What we do know is that NO Telco would allow copper lines, either FTTN or HFC, to connect to high-power, high-voltage installations. It has to be fibre or wireless, and in high-density areas, where the majority of power is consumed, the FTTN/HFC model hasn't been calling for a wireless overlay. That'd be inefficient.“Fibre also offers revolution to television with every household being able to access the bulk of the developed world’s TV channels” - right now using a DSL connection, I can watch many channels using third-party Justin.TV-style portals or original websites of the broadcasters. Fibre access in my last mile may help my experience a touch but probably won’t solve many of the issues of buffering and quality which come from the international side of the network. I can also quite easily watch many of the developed world’s TV channels using a satellite dish or other pay TV service.
This is a bogus argument: "If I can do it, then everyone can" ("right now" is implied).
The key word of Ross's is "every household", it's a question of handling scale with a guaranteed quality of service. This is what Google and Amazon understand: how to operate at Internet Scale while not spending yourself to death.
That's 8-10MM households at 8PM accessing at least 1, more likely an average of 2+, TV streams per premise. We can be generous and say they'll all be happy with Std Definition, 30fps feeds at 2Mbps, well within the capability of the majority of current DSL services. That's a total network demand, per hour, of 7,000-15,000TB (16-40Tbps), or 125-250Gbps through each PoI (Point of Interconnect). The GPON Fibre will easily handle that and 10 times more on the local link, ISP & backhaul congestion are another question. People all over the neighbourhood can download large files and watch TV, guaranteed.
Bringing that back to an FTTN design, every 250-line Node will have 1Gbps as it's base load, every night. Were the FTTN designs going to run the 20 times more expensive 10Gbps links to every node? If they don't, the laws of networking says, nobody will get good TV service over the Internet. The problem with all digital services, modems, TV, CD's/DVD's, is they work perfectly until they don't, then they're unusable. It's a binary cutoff, not graceful degradation like Analogue TV.
The other part of Lynch's argument is "or I can just get Satellite or another pay TV service" misses the whole point of the NBN: a single, affordable network, available everywhere. Right now, only a small part of Australia can get Pay TV over Cable, everyone else its satellite. You get to pay $35+/month just to watch TV, then pay extra for what's interesting and new. The point of the NBN is "one low monthly fee for phone, network and TV". We know from the difference in US & Australian Cable TV markets that local availability predicts penetration rate. If every household can stream TV for nothing extra, there is a new, high-value market in tailored programmes. You also get "interactive" and "real-time" feedback for free with programs streamed over the internet, plus, for advertisers, a gold-mine of information and flexibility: how many streams, exactly where, and highly-targeted advertising. None of that is trivially possible with satellite.“Fibre is the only medium capable of broadcasting to the new Ultra High Definition “4K” TVs” - Not at all. The world’s first 4K channel is actually available by satellite from Eutelsat and Qualcomm is developing mobile chips which support the standard. The first mass 4K broadcasts, of the next Soccer Asia Cup, will be broadcast by satellite in Japan. One suspects that future physical media formats will also support the new display standard. At the moment there is not much 4K content and the television sets cost $A10,000. Free-to-air HD is already stillborn in this country, not because of the limitations of terrestrial broadcasting, but because of a lack of content and business case.
This is technically correct, but irrelevant.
Ross didn't qualify his statement with "by doing nothing, buying nothing extra, not upgrading plans, needing nothing but the set".
Lynch does comment that Free-to-Air High Definition hasn't taken the Australian market by storm. Part of the reason is product substitution possible with BluRay and on-line downloads. I think Lynch makes the point well that universal high-speed networking will allow new technologies to be deployed frictionlessly, creating whole new markets that grow furiously. The iPad was released in 2010, there are now 20 major tablet players in the market and 2.4MM/year tablets sold just in Australia. The iPhone arrived mid-2007 and smartphones are now a huge market, still growing strongly. Apple's game-changers could only succeed in a world where the product was fast enough, could be built to an acceptable price-point, would attract sufficient sales volume to pay for R&D and sufficient infrastructure was available for a good enough User Experience. That's why the Newton failed circa 1997, but 10 years later, the iPhone took off.
Ross is making the unremarkable and entirely proven statement, "the evolution of commodity computing devices is far from over, and nowdays they rely on ubiquitous fast network connections". To counter that with "but you don't need the Internet and Bright Shiny New Things are Really Expensive" misses all lessons of the last last 30 years of the Computing Revolution, just as Microsoft has done by declaring "Everything is a PC", which is yet to see them recover any of their lost market share.“Fibre also means an end to paying phone line rental and expensive phone calls” - One of the more cutting edge NBN RSPs, iiNet, does offer a VoIP-based “no phone line” service over the NBN. But it requires a $9.95 monthly service charge and it does charge for calls: to mobiles which account for 2/3rds of all possible phone terminations in Australia and for all international calls. Phone calls will still have a cost under the NBN. VoIP is available over DSL and mobile; ever heard of Skype?
I can't make out what point Lynch is making. Skype and VoIP will be offered on both NBN variants. Nobody offers, or can offer, a Customer Premises Interface to separate Suppliers for Networking, Video and Phone.
Lynch misses the point of the NBN: end-to-end full Digital Convergence, a single bitstream carrying all services, supplier neutral and multiplexed
NEC started touting Converged Communications and Computing (C&C) in 1977. Since around 1995, LAN's based on ethernet over twisted pair have been the norm and carriers ran fully converged digital networks internally, albeit mostly ATM/SDH. Within 7-10 years, Telcos had moved to ethernet bitstreams internally and xDSL services provided permanent "fast" connection to LAN's. But phones, TV, and data services were not integrated.
The consumer advantage from either NBN solution is the same: one service, one bill, one supplier, minimum cost. Suppliers will have to work harder to differentiate their services, not rely on historical accident for customer lock-in. The usual Telco price structure is that the full cost of each service provided is a small fraction of the end-user price: 2-20%.
Combining all services into one commodity connection and one bill radically reduces these overheads: customer bills are structurally reduced, often radically. With either NBN solution because they both promise ethernet bitstreams.“Telecommuting means many more people won’t have to commute to work anymore and nor will they need to live in cities” - Telecommuting takes place now using today’s technology. The NBN may enhance the capabilities of telecommuting but it isn’t a pre-requisite. Personally I work with telecommuters everyday in Asia, Europe, North America and regional Australia and none of them are on the NBN.
This is another nonsense, again the point is about scaling up and universal access, not "it happens for an elite now, so what's the issue?"
The NBN, both versions, will enable more people, not just a favoured few, to telecommute when it works for them. One of the most powerful business propositions is to employ low-cost people in their homes in small increments of time. Amazingly, people in country areas have higher unemployment rates and accept lower hourly rates. If it were possible for them to do "call centre" work from home, I'm sure they'd jump at the opportunity.“For instance, if people could communicate with CentreLink by talking to their TVs instead of spending time travelling to offices, hardly any offices would be required – everything could be outsourced to a low-cost regional location. There are over 900 offices in Australia” - The very nature of social welfare suggests that the people most likely to be in need of CentreLink services are the ones most likely to not have an high speed NBN connection, either because of expense, their lack of permanent residence or their socio-economic or socio-educational level. A mobile-centric effort would be more meaningful. President Obama has identified this and acted accordingly in the US.
This another non-sequiter. Lynch is arguing for Digital Have's and Have Nots.
The Labor Party has, for more than a decade, discussed addressing "The Digital Divide", at providing exactly the people Lynch names on welfare, with broadband.
If they have an NBN phone service, either version, then Centrelink can configure one of the ports on their ONT (Optical Network Termination) to provide controlled internet services: Centrelink could easily become the largest ISP in Australia by count. That need cost the benefit recipient nothing or a nominal fee, deducted from their benefit. It applies to people on disability and Old Age pensions as well: subsidised IP (limited) connectivity.
Combine that with my previous comment on Telecommuting and it offers Centrelink a whole new business model and a way to radically cut costs and improve service: applied exactly at the point of most need. Saves money, improves service, helps detects fraud, costs the recipient nothing extra: what's not to like? Unlike mobile services, both versions of the NBN will be supplier neutral and multi-vendor. A "mobile-centric" effort would mean direct large subsidies to one of the three physical phone network operators, versus the much cheaper fixed-line service. Why would Lynch be advocating that?“The ‘telehealth’ opportunities afforded by fibre are so dramatic that the savings to the vast $120bn (and rising) annual health budget will pay for the entire rollout on their own, while simultaneously revolutionising healthcare for all Australians, particularly the elderly and those living in rural areas” - One big problem with this, the government has just abolished Medicare rebates for telehealth consultations in metro areas, the ones slated to get fibre. Sorry Nick, but your revolution is dead in the starting gates. http://www.medicalobserver.com.au/news/rebates-slashed-rural-gps-forced-to-cut-telehealth
Because one Government is squeezing costs, doesn't negate the argument, nor is it proof that with different cost-structures clinics won't embrace remote appointments.
Medical Healthcare in Australia is approaching 10% of GDP, well behind the 18% of GDP for Government, Insurance and Out-of-Pocket expenses in the USA. Controlling Medical costs is a major priority for any Government in the next 40 years: anything that works, especially that makes clinicians more productive, will be embraced by rational economic managers.
Reducing Healthcare costs in the face of an ageing population is a global problem. Dr Topol makes a convincing case on NBC's "Rock Centre" in January. Reducing Healthcare costs by 10%/year with better I.T., Apps and network access is entirely possible, producing a bottom line saving of $10B/year, around 30% of the whole expenditure on the NBN and near the total NPV cost of the Telstra payments. That sounds like a great deal to me, why does Lynch say "Not going to happen"? What does he know that the rest of us don't?“National emergencies, whether fire or flooding, are becoming a part of Australian life. Consequently, the benefits of a fibre-based NBN are becoming increasingly important” – Despite Nick’s belief that fibre is water proof, the NBN didn’t hold up too well in the recent Queensland floods. Like other tech platforms, it is a touch vulnerable itself to natural disaster. As always, wireless techs prove best in these situations. http://www.zdnet.com/au/nbn-co-telcos-continue-to-combat-qld-flood-outages-7000010466/
This is another piece of unresearched nonsense. Even in the context of the assertion, the question needs to be, "Would copper have fared better?". The problems reported were NOT with fibre failures in Customer Access Network, but the backhaul that is upstream of all Customer Services, copper, DSL or fibre: "NBN Co told ZDNet today that its biggest outage as a result of the floods came from backhaul services from a third-party provider". There was also an issue with batteries running out: the chief vulnerability of an FTTN.
- The Warrambool exchange fire caused havoc with all services, mobile included. It would've taken out the whole area of an FTN-NBN for an extended period. The GPON NBN is passive, there are many fewer powered sites likely to catch fire. The impact of fire on both copper and fibre is extreme. I've not researched NBN Co's redundancy designs. In backbone and metro-scale fibre networks, there are always multiple paths allowing for any single-point-of-failure to be automatically routed around. This is never done with pure copper or FTTN on the copper side.
- We know from the 2003 fires in Canberra that FTTN nodes are weak points: being exposed, they will burn. Even if the fibre and the copper links upstream and downstream are intact, replacement is a major expense whilst replacing kerbside fibre patch units is a cheap and relatively fast process.
- The Canberra fires also informs us that all locally powered services are prone to power failures after any natural disaster that takes out the electricity for an extending period. As are mobile phones: they need recharging. Huffington Post ran a story on this after Hurricane Sandy.
- The simplest explanation is to look to the largest recent urban disaster. What did Verizon do in NewYork after Hurricane Sandy when the Manhattan ducts were inundated? It replaced all the copper with fibre. The real problems were commercial issues with building owners demanding payments.
“Fibre-based broadband requires very little power to transmit a full-speed signal over many kilometres. Conversely, a network based upon VDSL and wireless technologies require so much power that, according to Rod Tucker at Melbourne University, Australia will need to build two-to-three small new power stations to make it work” – One loves the logic here. FTTH allows you do all these great new things not possible on VDSL: for example, home-based health care monitoring, giant 4K ultra HD televisions, 3D printers and so on but apparently these have zero impact on the power grid! FTTN by definition stops you from doing all these things but doubles the power requirement!
This is another nonsensical argument.
Yes, Lynch is right, Ross hasn't mentioned the extra power that may be drawn by the household devices. But that's conflating issues. Yes, increased average household power consumption matters as the State of California knows too well, it has the extra problem of powering the other end of Internet Services, servers. But both of these issues are independent of the issue at hand: the power used by the Customer Access Network.
Ross is very clear in his comment: between the two versions of the NBN, the DSL-FTTN will draw much more power. With 4-8M ADSL lines each requiring 4-10W, the total additional power over an FTTP, running 24 hours a day, is many MegaWatts. Lynch simply ignores this argument in favour of ridicule and pillorying Ross.“The Coalition has not yet addressed this” - Again, Nick is guilty of not performing basic research. Nearly a year ago at CommsDay Summit 2012 in Sydney, Malcolm Turnbull said “A key advantage often cited for FTTP over FTTC/VDSL2 is reduced energy usage, given GPON is not powered. But in practice this saving is minimal compared to the vast gap in capital costs. According to Verizon, annual central office power usage is 32 kWh for a DSL line and 12 kWh for a FIOS line. At 25 cents per kWh, a move from copper to FTTP therefore cuts annual energy costs per line from $8 to $3. Across the 8 million premises forecast to be connected to the fibre when the NBN Co rollout is complete, FTTP therefore saves $40 million a year in power costs.” http://www.malcolmturnbull.com.au/media/speeches/three-years-of-nbn-2-0-what-have-we-learnt/
I don't know what research Ross undertook. He seems across all of Turnbull's statements, so I'm not sure how Lynch can categorically say what research Ross did or did not do.
Turnbulls' is saying outright in the quote that Fibre will cost $40MM/year less in power bills than a DSL-FTTN. That was Ross's previous point, I presume he went on to say that Turnbull hadn't addressed this. Lynch responds with "oh yes he did! You were right".
Lets give Lynch the point, but in doing so he points out Turnbull himself has estimated the size of the difference in operational costs and makes the much larger point: the DSL-FTTN is both much costlier to run and more power-hungry. I wouldn't have made a major point for an opponent quite so forcefully.“Fibre maintenance is much cheaper than that of copper” - Again Nick seems to forget than FTTN network replaces much of the copper with fibre and that under the NBN, the most expensive part of the copper network – covering the most uneconomic and sparse 7% of the population – is retained!
This is a nonsense, deeply wrong at two levels, demonstrating Lynch himself hasn't done his research or doesn't understand the basics of the NBN Co plan.
Whilst 93% of premises, not houses alone, will be covered by GPON Fibre under the NBN Co plan, the other 7% won't be left on Copper, they will be connected by either Fixed Wireless or Satellite (also wireless), replacing all copper by around 2020. Calculating that break-even point, when the cost of connecting premises via FTTP exceeds using a wireless system, terrestrial or satellite, was a major initial task for NBN Co. That's why the initial forecast of 98% FTTP coverage was reduced to 93%. There was a Cost Benefit Analysis done, this was just one of the outcomes.
The other error is that an FTTN replaces some, but far from all copper in the Customer Access Network and includes active devices in an insecure, very hostile environment. This is a double-whammy: the FTTN retains the last 400m-800m old, corroded and sub-standard copper pushed well beyond its performance specification. This copper accounts for most of the $1B Telstra spends on Customer Line Maintenance. The FTTN adds a whole new maintenance burden: those 10,000's or 100,000's of nodes that will fail from vandalising, accident, water ingress, insects, frost/condensation or overheating. The "man in a van" will be very busy in this model, versus the secure, controlled environment of the centralised active GPON equipment. What a tech can do in an hour on GPON equipment might take most of a week driving around the countryside.“The net cost is zero and it will pay for itself in at least four different ways” – The net cost is not zero! The NBN is not forecast to recover its costs for between twenty years and twenty seven years, depending on the scenario. Fibre networks are commonly depreciated after 25 years!
This is a jumble strung together, meaning very little. Ross does confuse things by trying to treat income received for services by an entity, NBN Co, with three other types of National Benefit.
On Depreciation: it doesn't mean anything operationally or relate in any way to profitability or payback period. It's simply an accounting rule meant to inform the business of the current value of an asset and allow the consumed value of the asset to be claimed as an expense. If it was disposed of, what price might the item fetch. Current Cost Accounting, vs Accrual Accounting, changes this to "what does a new replacement cost?" You might buy a disk drive for $1,100 and expect it to last 5 years with a resale value of $100. Straight-line depreciation says that in 4 years time, the drive might fetch ~20% of its purchase price, or ($(1100-$100)/5)*(5-4) +$100 = $300. Current Cost accounting asks a different question: If drives in 4 years time are 15 times larger and only cost $600, what would the actual resale value of the drive be? The equivalent capacity now would cost ($600/15) or $40. So with 20% of useful anticipated life left, the old drive is worth 20% of equivalent current cost: ($40 * 0.2) = $8. That might be a whole lot more than the power bill. It makes business sense to buy a new drive well before 5 years and save $$$ in operating costs.
There is the opposite problem of appreciating Asset values, such as real estate, shares or collectables, where Current Cost Accounting and Accrual Accounting arrive at very different answers as well. For this discussion, prices and relative performance of fibre and electronic equipment are assumed to only drop. Site works, placing fibre underground, which accounts for 60-80% of the NBN Co plan, is dominated by Labour costs and so track Real Wages.
Lynch's very first criticism was "if something is fully depreciated, it doesn't stop working!". Yet now he is using the opposite argument for Fibre, "it only lasts 25 years". Which is it? We know that Fibre has an operational life considerably longer than 25 years, subject to breakage/damage, though the electronics driving them have more like a 25 year life, though are likely to be upgraded for high capacity well before they are end-of-life.
In strict Accounting terms, because NBN Co is an investment and "off-balance sheet" for the Government, it doesn't appear in its Profit and Loss Statement, but in NBN Co's. The Net Cost to the Government is the interest cost less dividends. The projections are for returns to quickly exceed interest and so NBN Co won't be a cost but a surplus. The whole investment is expected to return a modest Return on Investment over the life of the project, that is, the surplus will pay off the loans. The rules of Accounting are that Capital can't be counted as an Expense or Revenue: Capital, Loans and Investments, appears solely on the Balance Sheet. Revenues are available to pay down Loans and increase Owners Equity, the difference between Borrowings and Asset values. "Break-even" is the time it takes for a project to reach zero Equity, either the Loans, negative Equity, are paid off, or the Value of Assets increases past the Loans. The projections are the Governments' Loans for NBN Co will be paid off in 20-27 years, but well before that the value of NBN Co shares will far exceed the Loans.
Ross is correct: the Net Cost of the NBN Co project is forecast to be zero, in fact it makes a handsome profit. I suspect what both Ross and Lynch are trying to say is that the project has a reasonably quick "break-even" (2033), quickly (2021) giving a modest IRR of 7%, What they are both not counting is the increase in the value of NBN Co shares held by the Government. As a high cash-flow business, NBN Co will probably end up with a share price many multiples of the asset value. Price/Earnings ratios, P/E's, are typically 10-15 times for public companies, with 12.5 in Comms vs ~16 for Telstra. For technology businesses with good growth prospects like NBN Co, P/E's of 20-30 times are more likely. 2025 sales are projected at $7B with yearly net profits of $1-3B, valuing it, at a minimum at $16-$35B. If ARPU & take-up rates exceed forecasts, because variable costs are only ~5% (guess), Net Profits will be more like 40%. On $15B sales, $6B in Net Profit, giving a $180B valuation (P/E 30) if it were a high-growth company. This is far from the modest return of 7% projected in 2025, the Government might cash out NBN Co for a profit of $100B. I believe this to be a plausible scenario that I've might seen written up..
We also know from the many technology start-ups like Amazon and Apple, that paying dividends or even not making a profit for many years is tolerated by investors in high-performing technology companies.
Lynch may well end up with egg on his face. Will we get an apology if NBN Co turns out to be a spectacularly good investment? Why doesn't Lynch even raise this possibility: it's falls out of the figures quite naturally and is irrespective of operating profits or losses?“Rather than using tax-payer’s money that could be used on other things (a common myth) it sees Australia borrowing $27bn using its Triple-A credit rating (Australia is currently one of only seven countries in the world to have this. It provides us with the cheapest form of borrowing) to use in addition to another $11bn of private investment” - Actually 15 countries have AAA ratings and there is no planned private investment at all in the NBN. There is a plan for it to raise its own debt. That is a different thing.
From the quote, I can't understand what point either side is making. Lynch saying, without reference, there are 15 not 7 countries with AAA ratings. This is at best minor point scoring and does not affect Ross's argument. I haven't checked Ross's original piece to see if this came from a reference. The best Lynch can argue is "Ross isn't an economics expert and got this wrong". Yes, we know Ross is not claiming to be an economics expert.“This money ultimately comes back to the government with a seven per cent profit” - That is a projection, not a guarantee. Many business plans fail to come true.
First part true, second part an irrelevance. It's confused pseudo-logic of unrelated items with an incorrect inference implied: "All ferries leave from wharves. Many ferries sink." The implied inference of "Ferries that leave from wharves will sink" is a logical fallacy.
Lynch could have said, "The business plan of NBN is poorly costed, high risk and likely to fail - as shown in these expert analyses". Instead, the best he could do was a rather lame incorrect logical inference, with no references cited.
Ross might have more precisely worded his statement: "The money ultimately comes back to the government with a expected seven per cent Return on Investment per year."“In addition, the cost savings to existing infrastructures, particularly health and power generation are such that the money saved from their annual bills will pay for the network on their own” - How are these savings captured and quantified in order to pay for the network? I’m intrigued.
A question is not a rebuttal and it is not backed by any reference.
Lynch has posed one of the central questions around the NBN Co project: how do we count and report the savings and benefits that accrue? The Government has been silent on this issue, relying instead on the straight projected Cash Flows and RoI from the NBN Co plan. As pointed out above, the Capital Gain from selling NBN Co, if even it hasn't made great profits or met its plans, are likely to be massive. The Government is creating the infrastructure cash-cow that will be relied on for at least the next 50 years: that's incredibly valuable property.
Ross is attempting to highlight the indirect savings and benefits Australians will enjoy from with version of the NBN. I would have to refer to his original piece and look-up his links/references.“Here’s the premise: all of the Coalition claims about its ‘FttN-based technology being around one-third or one-quarter of the cost of the current NBN’ are based on overseas examples where an incumbent telco already owns a copper network (which presumably is well-maintained and in good condition). But neither the government nor NBNco own a copper network and that means it must obtain one. A new one would cost around $40bn and is subsequently non-viable. That means enacting an election promise to buy or lease Telstra’s copper network” - Telstra has already signed a deal with $11 billion of “net present value” – which means more than $15 billion in actual cost – to retire its copper network, lease its ducts and transfer customers to the NBN. The government already has declared Telstra’s network and has the legal power to appropriate it for third-party access. There is also legislation in place that allows the minister broad discretion to structurally separate and otherwise punish Telstra if it doesn’t co-operate with the NBN. In aggregate, this combination of legal powers and already agreed upon expropriation of the copper network suggests a deal can be done that will probably accelerate revenues to Telstra simply because FTTN can be built faster. Right now, Telstra can’t get full earning potential from leasing to the NBN until next decade.
Both Ross and Lynch are speculating about what the Coalition plans are and how access to the Telstra copper network might be obtained. Turnbull has released nothing on this topic.
Telstra commented on the Special Access Undertaking deal when it was made, that they were "spectacularly agnostic" about who wins power at the next election. Anyone planning to negotiate with them for additional access must either be very concerned about terms or have a very different strategy in mind, such as agreeing to a version of the original 2005 Telstra FTTN proposal with sole access. But this is all supposition and speculation because the Coalition won't reveal its NBN Policy.“It’s difficult to envisage private companies investing in a copper-based network which is already moribund, literally on its way to the scrap heap and comes with enormous power bills, maintenance costs, no premium applications and no obvious return on investment” – That’s exactly what Telstra and its access seekers do right now. It’s called the DSL market.
Yes, Telstra has been relentlessly milking their monopoly "cash cow" for decades. The Regulator, the ACCC has had to step in multiple times and direct them to change their prices. As Lynch says, it is the DSL market in Australia, but that doesn't make it efficient or forward looking. What marks Telstra's husbandry of its monopoly of the copper Customer Access Network is a lack of investment in it and upgrade, whilst their internal networks have been upgraded and expanded many fold.
Lynch doesn't disagree with, or refute, Ross, only says "that's how it is" implying that somehow it can only be that way. I don't understand the point he's trying to make.“It’s not clear why the Australian public would, en masse, subscribe to the new network” - Perhaps because they are already subscribers and they would simply be leased or sold new modems?
A question is not an answer to a question, especially when you are choosing the points to rebut.
Lynch roundly criticises Ross for a lack of research and pillories him for making minor mistakes. Here Lynch isn't citing sources or shows he's done any research. If he's handing out judgement, then he must be prepared to be both consistent and to live up to higher standards.
Stopped detailed responses here.
“Malcolm Turnbull recently and bizarrely said of the fibre-based NBN: “There is no evidence whatsoever that the massive increase in speeds delivered by fibre-the-home will deliver any extra value or benefit to Australian households.” One can’t help but wonder what the reaction would be if that statement was read out at an international broadband conference” - Indeed, Malcolm made a similar statement very recently at an international broadband conference in Europe held by Informa. Given he has been cordially tweeting with Informa analysts as recently as last week, everyone seemed calm about it. Again, Nick betrays his lack of research. http://www.malcolmturnbull.com.au/media/dont-suspend-the-laws-of-economics-malcolm-turnbull-speaks-to-broadband-world-forum-paris-27-september-2011/
Not an argument, tweet =/= public speech.
“It appears that the Coalition’s broadband alternative will be colossally more expensive than the current NBN and not cheaper by any reasonable definition” - It won’t be if the Coalition simply sets a finite budget for it, rather than the current approach of defining the network topology first and costing it later. I would really wait and see for the policy/CBA given that at $5000 per home the current NBN is much more expensive than the $350-600 per home figures cited across several vendors and carriers in Europe for FTTN. But if you don’t believe me I simply submit what Stephen Conroy said on April 20 last year: ““It would be quicker and will cost less to build a fibre-to-the-node network. That is just an unambiguous fact.” http://www.malcolmturnbull.com.au/media/conroy-coalition-alternative-%E2%80%98quicker-and-will-cost-less%E2%80%99/ and http://www.abc.net.au/radionational/programs/breakfast/stephen-conroy-on-telstra-and-nbn-co/3962212
Finite Budget == much less done == much lower coverage. Can't have it both way.
“After completion it will likely be sold but the government will remain in control of maintenance (a good idea)” - Why is it a good idea for the government to maintain a repair force for a privatised NBN? When has this been suggested?
Questions are not answers.
“The wholesale price drops over time (Page 67 of NBNco’s corporate plan) and, once sold, will be subject to market forces – the initial requirement of them being artificially high (to subsidise the rollout to rural and remote Australia) will no longer exist” - NBN Co’s actual corporate plan envisages a doubling of ARPU over a decade, this is hardly a fall in price. Why will there be no requirement to cross-subsidise rural and remote Australia in the future? Will the wireless, satellite and loss-making parts of the fibre network have no opex or replacement costs? Or is this going to be placed on the federal budget?
Rubbish. NBN Co is projecting decreasing price/Mbit and increasing APRU's. People love to talk (now communicate). Look to last 10 years of Mobile pricing & plans: exactly this increase of ARPU and decreasing unit price.
“An enormous problem with the current system (and with networks around the world) is that incumbent operators are in charge of everything” – No they are not in “charge of everything.” This is nonsensical. Is Telstra in charge of Optus? AT&T in charge of Comcast? They are heavily regulated in the first place.
Rubbish. Those who own the networks control them. Regulators have influence over limited things. Ross needs to be more precise.
“That said, a potential problem is that some smaller-scale players won’t be able to afford the minimum AVC (Access Virtual Circuit) from NBNco. Their option will be to buy rolled-up NBN wholesale from the likes of Nextgen and AAPT.” – Again Nick reveals he doesn’t understand how the NBN works. The AVC is the capacity sold on the end line eg the $24 12Mbps link. There is no way to get a cheaper version of it by buying it from a wholesaler. Nick is confusing this with the backhaul behind the POI where there is contestability and arguably the Network-to-Network Interface which potentially could be wholesaled or shared between smaller RSPs.
Rubbish. Exactly this problem was discussed at length by Simon Hackett of Internode. Each of the 121 PoI's has a minimum connection cost. ISP's/RSP's with under $30M turnover cannot afford to offer services Nationally and will need to buy from an aggregator as they do now with ADSL and backhaul.
“When Telstra last looked at implementing FttN in 2008 it said that sharing access to its cabinets with other service providers using all manner of different contractors would cause all manner of problems, that “In practice it would be a disaster for customers” - This is misleading. Telstra was still bidding in tenders to build FTTN the following year using a bitstream protocol, the same as the proposal put forward by Optus and other service providers under Terria at the same time. The NBN topology of bitstream with a network POI interface remains the same whether FTTH or FTTN is used.
Didn't answer the question, just asserted 'misleading'. Since 2005, Telstra has steadfastedly demanded sole access to an FTTN it builds. TLS wants to maintain a monopoly over its CAN. The NBN Co design is fully contestable and access is open and uniformly, transparently priced.
“Alcatel-Lucent Zero-Touch vectoring is a single-vendor solution. Without vendor competition, you have a monopoly supplier” - Again, where is the attempt at research? Huawei are selling a vector DSL solution to Swisscom, Adtran are also tendering for contracts for vectored DSL right now in the US and Europe. And as it so happens, Alcatel-Lucent is the lead supplier for the FTTH network right now!
Security status of Huawei? No idea on this topic.
“Vectoring is incompatible with “local loop unbundling” – So is GPON! So what! You use bitstream for both GPON and FTTN! There is no proposal for local unbundling on the NBN as it stands.
Nonsense and shouting. Vectoring is necessary to achieve Turnbull's stated FTTN speeds, it isn't necessary, needed or useful for GPON. Vectoring only works when all the active DSL lines interfering with one another connect to the one same equipment == single supplier == NO "ULL" (as we have now). The ACCC as Regulator will have something to say on this.
“Low-density, long-loop areas are non-viable because you’d have a DSLAM serving fewer than 100 customers, because most cable fanouts today serve fewer than 100 customers. In other words – VDSL2 plus vectoring would serve more like 50 per cent of the country than 93 per cent (a rough estimate; significant time and resources would need to be spent turning that into hard data)” – Indeed, between 2006 and 2009, Stephen Conroy proposed to serve 98% of the country with VDSL and there was not a peep of objection that he could only technically achieve it to half. Where was Nick then? Right now about 93% of the population can get DSL. To suggest only half of them can receive a capacity improvement from the deployment of what Nick himself suggests elsewhere in the article would be a 50,000 node network is fanciful. With no new nodes and simple exchange-based vectoring, about 50% would get an improvement already!
Irrelevant. The 98% to 93% change was from an aspiration to worked financial figures, albeit estimates. Lynch fails to address the central point: Just what is Turnbull offering? Nobody knows. Ross is speculating it is likely to be 50% coverage. Lynch mentions vectoring: that only works for single DSLAM's, it cannot work in our current multi-DSLAM and RIM/CMUX/ASAM. Research and knowledge lacking.
“In the absence of wide adoption of the Vectoring standard, No telco will deploy a technology like vectoring on a wide scale. Experience suggests it would take at least 3-5 years. In other words “VDSL2 with Vectoring” deployment would be unlikely to start until 2017 or so.” - As it so happens, Swisscom, Belgacom, Deutsche Telekom and Fastweb Italy are all planning multi-million line deployments beginning this year and reaching full scale in 2014. These are announced contracts.
No idea on the detail of this topic. I believe there is no Standard, announced contracts not withstanding. Lynch is suggesting locking FTTN-NBN into proprietary solutions. Not prudent commercial practice. All Telcos understand the importance of Standards: ignore them to your detriment. (unless you also build all your own gear, like the Old Bell)
“Any suggestion that an NBN monopoly inflates prices is already disproved as nonsense” - The experience of the last few years is that wholesale prices have been stable or declined (ULL has been priced at between $12 and $17 in Band 2, LSS nationally (DSL only) at just $2.50). The minimum NBN wholesale access price is $24 and wholesale ARPUs are envisaged to climb to $52 in seven years as customers climb speed tiers and RSPs order more connectivity circuits. The average price for a retail broadband service currently is around $50. In eight years the average wholesale price will exceed that under NBN forecasts ($52). This reverses the trend for more capacity for the same or less end user price.
Irrelevant. Doesn't answer the statement on "monopoly pricing". Lynch discusses the different pricing between pricing on mature technology/depreciated assets and new technology and new assets.
“There are many plans available right now and they are practically all better value and/or cheaper than existing alternatives”- Nick again seems unaware that initial NBN wholesale prices are designed to meet the DSL market with price rises to only come later through the CVC and speed tier bracket creep. The same higher speeds that are apparently so essential to realise NBN benefits.
Refer to the 2012 NBN Co plan. They are acutely aware of the retail and wholesale pricing of their competitors and are pricing competitively. NBN Co is the only service with offerings of guaranteed speeds above 12Mbps.
“The Governments already own public infrastructure like the electricity network and the road and railway networks. It does this to facilitate economic growth and social benefits” - Indeed, but the trend of late has been towards privatisation, deregulation or toll-compensated private investment in these fields.
Irrelevant non statement. What people do in other countries and other businesses doesn't affect the economics and underlying questions in this area. Labor responded to a 15-year long failure of the Free Market.
“Regulatory intervention is frequently required to maintain services and competition, and prices (for example in the electricity sector) have risen in spite of the expected efficiencies of private ownership. The question is raised, why should the communications network be any different?” - Is Nick unaware of the pervasive thousands of pages of regulation which cover telecommunications competition, incumbent obligations and other rules? Perhaps there is a clue here as to why there was an investment failure in the local loop in the first place, specifically dating back to 2001 when the ACCC first mandated local loop unbundling?
Rubbish. Telstra consistently has operated anti-competitively (HFC overlay, non-access to 2G & 3G networks, multiple ACCC directions on ADSL) and has been the subject of almost continuous ACCC actions, even as late as this week. The Telecomms Regulations were written assuming reasonable commercial practices, not the intransigence of a recalcitrant Telstra. Paul Fletcher, Liberal "MP for Broadband" & ex-OPTUS documents this in great detail.“Unless a detailed alternative is released by the Coalition we’re forced to assume that its “market-driven” plans will only cause local monopolies, duopolies and inflated prices because that’s what all of the available information and overseas examples (such as the United States, Canada and New Zealand), currently point towards.” – Malcolm has said on several occasions he will persist with a separated Telstra and a neutral wholesaler. Again, where is the attempt at research?
Rubbish. Turnbull is yet to release any more detail of his Policy than the vague claims of "cheaper to taxpayer, quicker to build, more affordable to customer". Lynch gives no reference.
“The boost to business has been measured (by IBM) at $1 trillion over the next few decades while last year a Deloitte study stated that the digital economy will increase from $50bn to $70bn per year in the next five years due to expectations from the NBN. Also a Nielsen study found that 93 per cent “of Australian businesses believe that participation in the digital economy is important to their on-going business strategy” and 75 per cent said “National broadband infrastructure will increase their ability to engage in the digital economy. Meanwhile the OECD (and others) believe that the NBN will increase GDP by at least one per cent ($15bn per year). That’s before cost savings and revenue from the system itself. As such the NBN would cover the cost of capital in just two years” - The digital economy is based on many things: use of ICTs, mobile technology and fixed networks of varying speeds. There is no evidence, as Nick implies, that economic gains from the digital economy can only be made through pervasive FTTH. Indeed, he has spent so much time telling us how the NBN allows us to avoid costs, one wonders if he has thought about the losses that might accrue to some quarters of the economy from it as well? His example of how we can all bypass retirement homes might not be seen as a positive in that industry. For example, he says “Why spend a fortune on a new server that has a short life expectancy and requires expensive support when you can rent one in the cloud?”
Rubbish. We know "price matters" from mobile take-up rates in countries like Canada, SMS in Japan and our own sluggish take-up of ADSL1 until the ACCC forced Telstra to lower its wholesale pricing so other ISP's could compete. Ross's arguments hold up for either version of the NBN, they are not tied to Fibre, but cheap, high-speed access. Lynch says economic gains can be made elsewise, then doesn't say how or quote sources.
“The Coalition might just be the only government entity not to even refer to the importance of the cloud or broadband benefits to business in general.” – The Coalition is a political party (two in fact) and not a government entity, but as it so happens its state equivalents in power in Victoria and NSW both have advanced digital economy strategies.
At best nitpicking, the sense is clear & unambiguous to an Ordinary Reasonable Reader. This discussion is about Federal Coalition under Abbot, represented in Comms by Turnbull. Other entities are not relevant, unless Lynch has special knowledge he's not sharing. The point Lynch has inadvertently made is the Coalition policy is uncoordinated and disparate across all its independent fiefdoms. Ross might correct "government" to "parliamentary".
“As long-term licensing agreements expire in Australia, more and more premium content will become available over the next decade and we’ll see US-like traffic usage where one-third of ALL internet download traffic comes from video distribution service, Netflix” – which begs the question, can we bill Netflix for a third of the cost in building the NBN? But I make a serious point here. Is this worthy of so much government mindshare if the main beneficiary is American movie distribution? Can they help build it, like cable TV companies do?
Rubbish. The NBN is solely a wholesaler with its Customer Access Network that has also arranged contestable backhaul from the Points of Interconnect. RSP's, ISP's and content providers will pay to use it, but first someone has to build it. Ross never states a US entity will be the main beneficiary of the NBN, of either version. Very clearly uses the US market as a model for how over broadband market might develop.
“There are many other benefits to seniors. This is particularly important with so many baby boomers hitting retirement age – apparently there are over 800,000 65th birthday’s every month” - So there are 9.6m Australians turning 65 every year?
Nitpicking and disingenuous, shows the petty nature of the attack. Ross quoted a global figure, Lynch could've spent two minutes finding the source, eg. an article from the UK, again they didn't state "globally". Ross can correct by adding "globally", perhaps find the figure for Australia (1.5-2% usually).
“The bad state of the ducts is a double problem for the Coalition because the technology also relies upon the quality of the copper within those ducts and most of it is over 30 years old. In NBNco’s case, where the Telstra duct is declared unusable, it makes its own new one. For the Coalition to do this would involve rolling out new copper – a ridiculous notion” - An FTTN rollout doesn’t rely on disturbing the ducts with last mile copper in them, it doesn’t touch them. It deploys fibre to replace the bundles of copper that feed exchanges.
Wildly misleading. The $11B Telstra deal was all about accessing their ducts to run Fibre (& remove the copper? don't know). It had a major impact on the 2010 NBN Co Corporate Plan, shown and discussed in the 2012 NBN Co plan. One of the key points is an accurate survey of the asset and its state of repair. This data gathering was part of the initial 9 month delay: there was no definite "premises address list" in Australia, it took a lot of time and money to create one. Similarly NBN Co, for the fibre rollout, needs (or did) an accurate asset survey + map of the Telstra ducts it will use. There will be a proportion that are unusable and NBN Co won't be charged for, as Ross correctly states.
The FTTN-NBN will also depend on that survey (will others get it for free? Not likely, its valuable Intellectual Property), but as well, they will have to accurately survey and test all copper in the last 400m-800m to determine if it will deliver the guaranteed speeds or not. The only solutions are to not offer FTTN in these areas (give them wireless or exchange-ADSL) or, as Ross asserts, dig-in new copper: a very expensive proposition.
Ross does seem to have leaped to a conclusion: all copper lines in unserviceable ducts won't support VDSL-FTTN. Some proportion will be within spec., presumably not nearly 100%.
Lynch does not address this point. He, incorrectly, assumes "all copper than is in spec for voice-grade phone services will carry VDSL to maximum capacity". Not on old and gnarly lines with poor insulation and water-ingress problems in collapsed and unserviceable ducts, they won't.
Lynch also doesn't go on to address the impact these fibre-unusable ducts will have on Turnbull's promised ability to upgrade any FTTN service from copper-to-customer to fibre-to-customer.
“The Coalition’s FttN technology node requires mains electricity power being connected to every single cabinet in the street. NBN contractors have already queried how this could possibly be achieved as local power companies are the only ones who can install power to infrastructure. The notion of coordinating electrical engineers with NBN engineers without massive delays, across 50,000 to 70,000 nodes drew very cynical comments from leading NBN contractors” - Yet mysteriously every telco which bid for the 2009 FTTN tender didn’t see this as a problem and somehow all those street lights, payphones and traffic signals manage to work!
Nonsense and a non-answer. Ross quotes a very low figure for nodes: for 90% coverage, I've estimated 300,000 for only a 800m rule.
Lynch doesn't address the problem laid out by Ross: what are the co-ordination delays and costs of installing new services? No power, no node, no service.Lynch's argument is facile at best, disingenuous at worst. Like the coper CAN, all those networks were installed and upgraded over many decades. That's an entirely different engineering problem to a brownfield mass upgrade. How does Lynch not know this?TBD
“In the UK the standard cost of connecting a node to power has frequently ballooned from 2000 UK Pounds to 25,000 UK Pounds” - The actual quote he links to says “sometimes” not “frequently”.
nitpicking. doesn't change the sense of the statement.
Ross needs to clarify what he means or an ancillary source.TBD
“But many such people don’t already have broadband because they are either too far from an exchange or are connected to poor-quality copper FttN technology won’t fix all of these issues” – the whole point of FTTN is to place the nodes closer to people far from the exchange. That is its underlying principle and purpose for existence as a platform.
Again, nonsense. Ross makes the point that people beyond 5-8km might get voice services now but can't get exchange-ADSL and there are others where the lines won't support ADSL, they are low-spec.
For the first group, "too far", FTTN will be deemed "uneconomic" for two reasons: they are in low-density areas, so total served by any shared fibre and shared nodes off it will be very low, and the cost of running many extra kms of fibre on top of the high cost of nodes makes it too expensive. For FTTP, those same premises might get served because of the very small incremental cost of connecting a single premise from a fibre changes the break-even (fibre vs wireless) to just the length of fibre run: a linear scaling factor. [constant cost/km] and one that can be lessened by running an aerial cable [25% install well be aerial].
For the second group, out-of-spec old cable plant, only an unknown, probably small, percentage will work at the higher VDSL speeds 400m-800m from a node when they don't work for exchange-ADSL. Is Lynch suggesting "line testing will be free or not required" or is he suggesting that the FTTN-NBN will not offer guaranteed service rates?
“Some have said that having the large fridge-sized FttN cabinets outside your house will lower value. It probably depends on the premises’ outlook. Some won’t care, but as Selling Houses Australia tells us repeatedly, they are likely to polarise buyers and reduce the market – some will view them as monstrous carbuncles” - Is Nick aware that the NBN requires tens of thousands of fibre distribution hubs in streets that look just like… bar fridges?
Telstra RIM's and CMUX's (480 line) are big and unsightly. What size nodes Turnbull is suggesting is as yet, unknown. Either they use 70,000 RIM's of 480 lines at 1600m (where ADSL2 is faster than VDSL), or 300,000 Nodes of 40-50 lines at 400m, the same size as deployed by the commercially challenged TransAct. This is the choice with FTTN: fewer big, obtrusive street boxes giving the cheapest, slowest service, or lots of little street boxes, in addition to the existing pillars, giving the most expensive, fastest service. They scale by area, not distance. To halve the distance and double the speed needs four-times the nodes. To give everyone 400m nodes, means 16-times the number proposed in 2005 (70,000) and that was for only 30-40% coverage! This is geometry and physics, it can't be beaten.
The FDH's mentioned by Lynch are illustrated on pg 11 of the NBN Guide [24pp pdf]. There are 192 connections per FDH. They are roughly equivalent to two small pillars together.
Between every pair of houses there will also be a "Local Network Pit" housing an MPT (Multiport Terminal) splitting off the customer services from the shared distribution fibre, fitted with the lid at ground level. Specification on pp 20 & 21 of NBN Guide.
OK enough is enough and I have made my point. Yes, there are legitimate questions to be asked about FTTN in Australia and in between the nonsense and inaccuracies, Nick manages to ask some good ones. Yes FTTH is a great, albeit expensive, technology that would appear to be future proofed for many decades.
I counted one real question by Lynch and zero significant errors by Ross.
Lynch ends with a final biased and undocumented barb "FTTP is expensive": compared to what? Lynch does not Fibre it is the only technology that can economically offer a guaranteed an initial 100Mbps in the suburbs, will have a service lifetime of 40+ years (based on fibre trunks) and is software upgradeable to 1Gbps and field upgradeable, now I believe, to 2.5-10Gbps.
The implicit assertion that Lynch is making, never stated, never justified, is that for the service or economic lifetime of the FTTN-NBN, no significant proportion of subscribers will need/demand more than the unknown guaranteed rate to be offered by an FTTN, as yet undetailed by the Coalition.