News & Discussion: National Broadband Network

[monotonehell]

There's three choices on offer;
1. Build the NBN properly, fibre to the home. HUGE cost over a decade, benefit long term.
2. Build a fibre to the node piggy backed on copper. Be no better off than now, no real improvement in service. Almost the same cost over a decade, plus another future cost when we have to replace copper as it degrades. No real benefit, continuing costs.
3. Do nothing. End up in the same situation as 2, but without the additional cost of building the FTTN infrastructure.

When weighed up, it's only a choice of 1 or 3. Do it or don't do it. Option 2 is a waste of resources for no real gain.

Almost the same cost over a decade - Your joking aren't you - the Lib plan is costed at 20 billion less than the ALP plan - and the ALP have a tried and true record of cost blow outs, poor execution of major projects, and massive time delays - think school halls, pink batts etc etc.

All government projects experience cost blowouts, no matter which party is in power at the time. It's often attributed to private sector gouging. In both of your examples this was the case. The current NBN is seeing it right now, private contractors are gouging.

I was going by the original costing that accompanied Tony Abbot's press release which showed a 20% saving and rolled out 2 years sooner. Since then there's been many rubbery figures thrown about. But if you look at the cost of infrastructure alone, the savings of not using fibre are eaten by the costs of the nodes (see the lecture by Simon Hackett I posted earlier). Then you need to add the costs associated with maintaining and replacing copper. AND THEN you need to add the estimated 20 billion that it will cost to upgrade to fibre. Abbot's option is not costed and will cost us more in the long run both in dollar terms as well as lost productivity.

Like I said you can either do nothing and have roughly the same outcome as spending billions on FTTN. Or you can spend billions on FTTH and do it properly. Pay now or pay later?

[Will]

What is the point of the average household having access to speed they will never use, or afford the technology to use it.

other similar quotes:
"This 'telephone' has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us." --Western Union internal memo, 1876.
"I think there is a world market for maybe five computers." --Thomas Watson, chairman of IBM, 1943
"640K ought to be enough for anybody." -- Bill Gates, 1981
"I have traveled the length and breadth of this country and talked with the best people, and I can assure you that data processing is a fad that won't last out the year." --The editor in charge of business books for Prentice Hall,1957
"There is no reason anyone would want a computer in their home." --Ken Olson, president, chairman and founder of Digital Equipment Corp., 1977
"The wireless music box has no imaginable commercial value. Who would pay for a message sent to nobody in particular?" --David Sarnoff's associates in response to his urgings for investment in the radio in the 1920s.
"Everything that can be invented has been invented." --Charles H. Duell, Commissioner, U.S. Office of Patents, 1899.

[monotonehell]

What is the point of the average household having access to speed they will never use, or afford the technology to use it.

other similar quotes:
"This 'telephone' has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us." --Western Union internal memo, 1876.
"I think there is a world market for maybe five computers." --Thomas Watson, chairman of IBM, 1943
"640K ought to be enough for anybody." -- Bill Gates, 1981
"I have traveled the length and breadth of this country and talked with the best people, and I can assure you that data processing is a fad that won't last out the year." --The editor in charge of business books for Prentice Hall,1957
"There is no reason anyone would want a computer in their home." --Ken Olson, president, chairman and founder of Digital Equipment Corp., 1977
"The wireless music box has no imaginable commercial value. Who would pay for a message sent to nobody in particular?" --David Sarnoff's associates in response to his urgings for investment in the radio in the 1920s.
"Everything that can be invented has been invented." --Charles H. Duell, Commissioner, U.S. Office of Patents, 1899.

http://en.wikipedia.org/wiki/Argument_from_analogy

[ynotsfables]

What is the point of the average household having access to speed they will never use, or afford the technology to use it.

other similar quotes:
"This 'telephone' has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us." --Western Union internal memo, 1876.
"I think there is a world market for maybe five computers." --Thomas Watson, chairman of IBM, 1943
"640K ought to be enough for anybody." -- Bill Gates, 1981
"I have traveled the length and breadth of this country and talked with the best people, and I can assure you that data processing is a fad that won't last out the year." --The editor in charge of business books for Prentice Hall,1957
"There is no reason anyone would want a computer in their home." --Ken Olson, president, chairman and founder of Digital Equipment Corp., 1977
"The wireless music box has no imaginable commercial value. Who would pay for a message sent to nobody in particular?" --David Sarnoff's associates in response to his urgings for investment in the radio in the 1920s.
"Everything that can be invented has been invented." --Charles H. Duell, Commissioner, U.S. Office of Patents, 1899.

http://en.wikipedia.org/wiki/Argument_from_analogy

One day when we are travelling warp speeds Claybro will be quoted along with the other famous quotes.
I love it this is gold, good posts guys.

[claybro]

Yes, laugh if you will, it may also surprise you all to know I realise the earth is not flat! However, what you must also acknowledge, is that the MAJORITY of Australians are more concerned at present with the rapidly deteriorating state of our economy and their own livelyhoods and rightly or wrongly are just not looking at this big picture stuff right now. It is this majority that will vote at the next election, and they will not be thinking about NBN on election day. They will be concerned about the ability of the government to pay a ballooning debt when the price of comodoties (the only thing that has kept us afloat) is dropping by the day. If these prices continue to crash, and we continue to spend on these large ticket items any discussion of 50BILLION DOLLARS on broadband so that the likes of Davoren Park can have every home connected will not be taken well. Reading some of the comments on here, one would believe that Australia will shut down next year if we are not connecting every dwelling to NBN. However it is just not what the average voters are concerned about. I for one am not really concerned about the lovely old university professor on the NBN add who simply cant get up in the morning without his 100MBPS.

[monotonehell]

Yes, laugh if you will, it may also surprise you all to know I realise the earth is not flat! However, what you must also acknowledge, is that the MAJORITY of Australians are more concerned at present with the rapidly deteriorating state of our economy and their own livelyhoods and rightly or wrongly are just not looking at this big picture stuff right now. It is this majority that will vote at the next election, and they will not be thinking about NBN on election day. They will be concerned about the ability of the government to pay a ballooning debt when the price of comodoties (the only thing that has kept us afloat) is dropping by the day. If these prices continue to crash, and we continue to spend on these large ticket items any discussion of 50BILLION DOLLARS on broadband so that the likes of Davoren Park can have every home connected will not be taken well. Reading some of the comments on here, one would believe that Australia will shut down next year if we are not connecting every dwelling to NBN. However it is just not what the average voters are concerned about. I for one am not really concerned about the lovely old university professor on the NBN add who simply cant get up in the morning without his 100MBPS.

So why do you support the Lib's plan? Its cost is approaching the existing NBN plan.

[Wayno]

Yes, laugh if you will.

not laughing claybro, just endeavoring to understand your logic.

Here's another interesting article, a bit dated i know, and the numbers have changed, but the principle remains. I particularly like the quote about the govt spending more on health every 3 months than the total NBN spend over 10 years. Puts it into stark perspective.

Another big misconception about the NBN is how it will be paid for. So, in simple terms, here is an explanation of the public funding:

The $27.5bn Government component of the NBN is funded by debt, through the issuing of Australian Government Bonds. That is, the Federal Government offers our AAA-rated bonds to investors, at an interest rate of about 4% (depending on the term).

The NBN however, will provide a return of about 7%. This means that (once the network is operational), the NBN will begin repaying those bonds at a higher rate than what Government is paying on the debt. By 2034, the entire Government investment (including the interest) will have been repaid by the users of the network, leaving the Government owning a valuable asset (the NBN network) and no associated debt. Big users of the network (those who choose the high speed and high volume plans) will contribute more towards repayment of the debt, and actually subsidise those on smaller plans.

Taxpayers don’t really have anything to do with NBN funding. It is users of the network who will pay to build it, whether they are taxpayers or not.

This is completely different to the majority of Government spending, which doesn’t earn any return. To borrow (and modify) an analogy I read on an internet forum:

Think of the NBN as an investment property: You are borrowing money to build the property at an interest rate of 4.9%pa. But the tenants will be paying you rent which is the equivalent of 7%pa. So once the house has been finished and the tenants have moved in, the mortgage won’t be costing you anything because you’re receiving more in rental income than you are paying in mortgage payments. Then, fourteen years after the house is finished, the tenants will have completely paid off the mortgage. You can then choose to sell the house for a very large amount of money, or keep it and continue to receive the rent as income.

Can the NBN money be redirected to flood relief or other spending?

The opposition’s Tony Abbott and Andrew Robb have begun calling for the NBN to be scrapped in order to help fund the rebuilding of Queensland following the floods. As both of them well know, such claims are non-sensical, and are simply an opportunistic (and rather offensive) political attempt to stop a network they have opposed from the outset.

Because the NBN is funded by debt, and it provides a return which is higher than the cost of that debt, there is no impact on the budget from its funding. If the Government diverted the debt slated for the NBN to flood relief, then the return would disappear and it just becomes debt with an interest bill. Financially, there is absolutely no benefit in doing this over simply borrowing more money and using that for the flood relief. The cost to Government would be identical, but there would be no NBN network at the end to show for it. A lose-lose situation.

Tony Abbott: “You don’t redo the bathroom when your roof’s just blown off”.

Ignoring the funding issue, let’s not forget that the “bathroom renovation” has already begun. Parts of it are finished. We have already purchased many of the materials for the renovation, and begun employing people to do the work. Our material suppliers have spent money upgrading their Australian factories and employing hundreds more staff to make the “tiles”, on the understanding that we will purchase them. If we stop now, then we’ll be left with about half of the total materials needed for the renovation, but no money to install them. We’ll also have to pay the suppliers compensation for their outlay upgrading their ‘tile’ factory, and explain to their employees why they will lose their jobs. We may well cause some of our suppliers to go bankrupt, because they have invested millions of dollars on their factories after we awarded them contracts.

Unlike most Government expenditure, the NBN is a project that will not only deliver improved infrastructure, but it will do so while providing a positive return on investment.

Shouldn’t we spend the money of better health or education?

In a similar vein to the above, there are often statements along the lines of “the NBN money would be better spent on health or education” etc.

Again, since the NBN returns its investment, one can’t simply redirect that money to health or education unless that spending also returned that investment. For example, if you built a hospital with the money, then you would have to charge people to use the hospital to the extent that every dollar spent was returned, plus 7% per annum. Of course, that would not tie in very well with our “free” medicare system!

But, for a moment let’s forget about the NBN’s return and assume that it does not generate any revenue at all, and the entire 10-year, $27bn Government investment is not returned. How does that compare to Government spending on health and education?

Well, over the same 10-year period, Australian Governments will spend over $1.2 Trillion dollars on public healthcare. They will spend over $500 Billion dollars on public education. They will spend over $200 Billion dollars on defence.

Put another way, the Government will spend more on public healthcare every three months than they invest in the NBN over ten years.

If it provides a return, why not let the Telcos build it?

Private sector companies demand a far higher return on investment that the 7% provided by the NBN. Typically, they demand 15-20% return. This means that any private sector alternative (even if they were willing to build it) would result in enormously more expensive monthly pricing than the NBN will provide. For an example, you only need to compare the Internode’s pricing on Telstra’s South Brisbane Fibre rollout to their pricing on the NBN.

[zippySA]

Claybro - I am in your court.

If I am not mistaken, every single one of those famous quotes was proved wrong (hence the reason to post them). But that is exactly my key point - these individuals and companies were proven wrong - and market demand, private sector risk taking and investment unlocked the potential and created some of the most significant technological changes in our world. I don't think a Government had any part to play in any of them aside from the correct role for a Government - to provide policy and legislation and essentially clear the path for private sector to progress.

And Wayno's piece on the funding - interesting reading but again, what the hell is a Government doing acting as the investor / developer (??) - it's core role is to legislate, provide social services and infrastructure, and let the private sector get on with business - they are there to steer the direction supposedly based upon the current wishes of society. The story is a bit sneaky in forgetting to mention that the magical 7% return on investment is purely a forecast - a business case developed by the Government for the Government - and as anyone in private sector knows, a plan is simply a plan - the reality is often rather different. What happens if Australia loses its AAA rating, our margins get squeezed as interest rates on borrowings rise - and if less people need / wish to take up plans with NBN, where is the revenue, and how many times has NBN Co revised their roll-out plans since they started (delays, cost over-runs etc) - why should we think this won't continue to erode the business case which is now likely 24 months old (Government cannot even predict 6 months in advance at the moment - just look at the news from mid-year budget update to now - ooops, $12B+ error in forecasts - gives me loads of confidence in their predictions).

We live in a wonderful society that has minimum standards that are covered by Government (yes - these could always be improved, but that is another debate) and the rest is user choice, user pays - so if the NBN is so brilliant, why not let the telco's roll it out at their risk, and receive 15-20% return - as per my previous posts - if the demand is there, it will work, and if not, the Telco's will go under and someone else will step in to pick up market demand with a solution that works for the time and needs of people / business.

[rubberman]

Yes, laugh if you will, it may also surprise you all to know I realise the earth is not flat! However, what you must also acknowledge, is that the MAJORITY of Australians are more concerned at present with the rapidly deteriorating state of our economy and their own livelyhoods and rightly or wrongly are just not looking at this big picture stuff right now. It is this majority that will vote at the next election, and they will not be thinking about NBN on election day. They will be concerned about the ability of the government to pay a ballooning debt when the price of comodoties (the only thing that has kept us afloat) is dropping by the day. If these prices continue to crash, and we continue to spend on these large ticket items any discussion of 50BILLION DOLLARS on broadband so that the likes of Davoren Park can have every home connected will not be taken well. Reading some of the comments on here, one would believe that Australia will shut down next year if we are not connecting every dwelling to NBN. However it is just not what the average voters are concerned about. I for one am not really concerned about the lovely old university professor on the NBN add who simply cant get up in the morning without his 100MBPS.

Claybro, during the second world war, the Australian debt ballooned to four or five times its present level. That money was spent on things that went 'boom' and did nothing at all to help productivity in the economy. That is a fact. So if we could afford then to spend money on things that were not productive, then we can afford to spend money on things that help boost productivity in the economy. This really happened, we were able to do it, and we did not collapse as a result of it. The evidence is there that we are nowhere near the levels of debt that we have had and managed to sail through. So, I would ask those who think we cannot afford it, to please explain how we managed to do it before?

Looking at the alternative of cutting spending. At the beginning of the Great Depression, it was the Bank of England that advised our Premiers to cut government spending. They did, and we then had almost a decade of misery with unemployment skyrocketing and men having to take to the roads to find work. That ended when, during the war, we expanded expenditure and spent it on nothing that was productive. Just think how much sooner people would have gotten their jobs back had we actually expanded expenditure and spent it on things that were productive at the beginning of the Depression. Just imagine if that in the thirties, Government had re-guaged the railways, relaid and expanded tramlines in major cities, built new trams, improved harbours, built the rail line to Darwin, improved power distribution networks and expanded the road network. Not only would we not have had anywhere near as much unemployment, paradoxically we would have had to spend less during the war, because we would have had good infrastructure to manufacture and transport materiel and move troops. Not to mention that with new trams, tracks and railways, we probably still would have a major tram network in Adelaide had the 1909 system been given a 20 year life extension.

So. What do you want? The bank of England solution? If so, why does anyone think that cutting spending like we did at the beginning of the Great Depression will have a different outcome now?

Might I suggest that the only thing that will get us out of the economic hole that is looming in front of us is investing in infrastructure and education to boost productivity and hence competitiveness with other economies. Productivity growth is the only hope we have, because cutting expenditure will give us a depression. If you think things are bad enough now at work. Wait until the economy crashes due to austerity. Unemployment in Spain is nearing 30%. The only thing that will save our jobs now is boosting productivity for all we are worth.

The NBN will do that, FTTN will not because it is MORE expensive (once you add the present value of $1Bn/year copper maintenance) and if you need to upload data, it sucks, and uploading data is one of the business advantages of FTTH.

Cutting back at the beginning of the Depression killed us economically for a decade. Are we so stupid that we will do that again?

Insanity: doing the same thing over and over again and expecting different results. Albert Einstein, (attributed)

[SAR526]

Hear, Hear Rubberman! It is the spending of public money on non-productive schemes which can broadly be classed as 'middle class welfare' that has wasted huge amounts of money that could have been spent on giving us a railway and road system that would benefit everyone in faster and safer transport of goods and people, making costs of living cheaper in the process. It is scandalous that this country hasn't had a first class double track railway from Brisbane to Adelaide via Sydney and Melbourne and cities en route for many years. They mightn't be the high speed railway which we MAY get in twenty years time, but the ability for trains to move at 120-160 kph would be a vast improvement on what we have now, and bring this 'advanced' nation to only twenty or thirty years or so behind what Europeans and others have already. Ballarat and Bendigo, for example, offer much cheaper housing costs and a more leisurely life-style with all necessary amenities than does Melbourne because faster and more frequent rail communication has made this possible, even though the provision of heavy double track is still necessary.

Similarly, for the fibre broadband network. It will not be necessary for businesses to set up in the already bloated capital cities, with all of the concomitant costs and disadvantages associated with servicing the overpopulation, if they have high speed communications with the world while living in smaller, more pleasant, towns and cities or even on farms hundreds of miles from a capital city. Education and entertainment, medical consultations with specialists and other services at present available only in large cities will be possible wherever people need them. In short, isolation will be very much less of a problem to those who choose or are forced to live a long way from the coast.

This alone should be enough for voters to be very careful indeed when they cast their ballots in September.

[monotonehell]

Claybro - I am in your court.

If I am not mistaken, every single one of those famous quotes was proved wrong (hence the reason to post them). But that is exactly my key point - these individuals and companies were proven wrong - and market demand, private sector risk taking and investment unlocked the potential and created some of the most significant technological changes in our world. I don't think a Government had any part to play in any of them aside from the correct role for a Government - to provide policy and legislation and essentially clear the path for private sector to progress.

And Wayno's piece on the funding - interesting reading but again, what the hell is a Government doing acting as the investor / developer (??) - it's core role is to legislate, provide social services and infrastructure, and let the private sector get on with business - they are there to steer the direction supposedly based upon the current wishes of society. The story is a bit sneaky in forgetting to mention that the magical 7% return on investment is purely a forecast - a business case developed by the Government for the Government - and as anyone in private sector knows, a plan is simply a plan - the reality is often rather different. What happens if Australia loses its AAA rating, our margins get squeezed as interest rates on borrowings rise - and if less people need / wish to take up plans with NBN, where is the revenue, and how many times has NBN Co revised their roll-out plans since they started (delays, cost over-runs etc) - why should we think this won't continue to erode the business case which is now likely 24 months old (Government cannot even predict 6 months in advance at the moment - just look at the news from mid-year budget update to now - ooops, $12B+ error in forecasts - gives me loads of confidence in their predictions).

We live in a wonderful society that has minimum standards that are covered by Government (yes - these could always be improved, but that is another debate) and the rest is user choice, user pays - so if the NBN is so brilliant, why not let the telco's roll it out at their risk, and receive 15-20% return - as per my previous posts - if the demand is there, it will work, and if not, the Telco's will go under and someone else will step in to pick up market demand with a solution that works for the time and needs of people / business.

And who should build the roads?

Like roads the NBN is infrastructure.

[zippySA]

Heh heh - I could see that one coming after I posted my last and you've got me on that aspect me-thinks.....Guess my only reply on that one is $27B (or whatever it will end up costing) builds a heck of a lot of roads, and these are free access to business and private users - so (and I lean a liitle to my core profession now) these make sense to me. I won't start my view on toll roads here - that's a whole other debate!

[monotonehell]

Heh heh - I could see that one coming after I posted my last and you've got me on that aspect me-thinks.....Guess my only reply on that one is $27B (or whatever it will end up costing) builds a heck of a lot of roads, and these are free access to business and private users - so (and I lean a liitle to my core profession now) these make sense to me. I won't start my view on toll roads here - that's a whole other debate!

The Internet is just as free as a road. You still need a vehicle and fuel etc etc.

The point is: In the physical part of the economy you need to ship your goods. Everyone has reasonably level access to road infrastructure (except for the tyranny of distance). They need to provide their own vehicle and fuel to cart their goods. Customers need to be able to get to the shops to buy the goods etc. If a road is not up to muster, people complain that the Government must fix it. (See all the discussions on South Road.)

In the digital part of economy you need to send and receive data. Everyone should have reasonably level access to the Internet. They need to provide their own workstations, servers and bandwidth (ISP) to send and receive that data. Customers need to be able to get to the business's website to place orders etc. If the current copper carried ADSL network is not up to muster, people complain there's no market for it as the telcos aren't willing to provide it.

The NBN is the roads of the Internet. Not the services on it. The Government builds the roads. ISPs provide the services.

[Vee]

100,000 extra SA properties to be connected to FTTH / FTTP NBN in SA.
Warning of a 'digital divide' between connected towns, regions, suburbs if the Coalition wins govt and scraps the NBN in favour of slower FTTN, which includes the ageing copper mix with high maintenance costs.

If the NBN is scrapped, some will need to pay ($5000?) to get a fibre all the way connection and others will be left disconnected to the super fast broadband. Properties connected to the NBN will be more highly sought after and more valuable.

I'm not sure how this 'upgrade' scenario could/would even work - how can those left out shift from FTTN to FTTH eg do your neighbouring properties all have to agree to get fibre up your street? Do trailblazers pay more?

Broadband speed requirements are increasing every year. Telehealth, business, education, farmers/producers, new entertainment options etc are examples where increasingly faster and, importantly, reliable bandwidth are required.
Internet-connected TV, second screening, alternatives to Foxtel, Google fibre in the USA

The NBN will provide opportunities for rural areas, smaller states like SA and cities to compete in a global environment, providing jobs and opportunities for innovation. The creative industries, health and higher education are examples.

http://www.adelaidenow.com.au/news/sout ... 6635294576

I support the 'do it once do it right and do it with fibre' argument.
http://nbnexplained.org/wordpress/techn ... st-debate/

Whirlpool forum has a new "Save the FTTP NBN" group.
http://whrl.pl/TkNjc

The NBN is nation building infrastructure, vital to Australia's future. It pains me to see it become a political football.

[claybro]

Broadband speed requirements are increasing every year. Telehealth, business, education, farmers/producers, new entertainment options etc are examples where increasingly faster and, importantly, reliable bandwidth are required.Internet-connected TV, second screening, alternatives to Foxtel, Google fibre in the USA

Vee, the reason it has become a political football, is contained in your post here. Very many people are concerned at the goverernment borrowing billions of dollars in this climate to enable every home to be connected to fibre for non essential things like internet connected TV "new entertainment options" and alternatives to Foxtel etc. As for businesses that will not thrive wihtout fibre connection, many poeple including myself think they should be prepared to stump up the $5k if NBN proves to be such a vital part of their operation. Its not as if the oposition plan prevents business conecting to fibre if and when required.