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The NBN is a farce

And back to my favourite subject the Not Bloody Needed network

What an unfortunate state of affairs when people believe the spiel about the NBN in the same as they did with man made Global Warming. Senator Conroy made this promise in a media release in 2007

There is a town named North Arm cove it is 204 kms North of Sydney

And 60.6km North of Newcastle.

This makes it a truly Regional and remote location right?

No? then how did this community manage to be one of this Government's 7% that will not get digital to their door? In fact the cables being rolled out along the highway will stop only 5kms from this community?

Somehow though they are one of these targeted 7%, it seems that we will see a far greater number than 7% using Satellite, and it will not be one of the high tech super fast satellite as seen overseas.

So what else can we believe, the NBN being the best technology available. No, it isn't this either... a report claimed the national broadband network would cost taxpayers 24 times more than South Korea's network for one-tenth the speed.

I wonder what else seems to be incorrect?

Government committed to FTTN national network

Senator Stephen Conroy, Minister for Broadband, Communications and the Digital Economy today said that Labor is committed to building a national high-speed broadband fibre‑to‑the‑node network.

The new network will deliver minimum broadband speeds, 40 times faster than current speeds to 98 per cent of Australians. The remaining two per cent of Australians will receive a standard of service that is as close as possible to that offered by the new network, and will be delivered by the best available wireless, microwave and satellite technologies.

“This new network will jump Australia into the 21^st century,” said Senator Conroy.

“It will be open access, promote competition and put downward pressure on consumer prices.

“We will hold an open and transparent process to determine who will build the network with our ambition being to complete the process by the end of June next year.

“We expect that there will be much public commentary, jockeying and lobbying from parties as they work to convince the Government that they are best placed to build the new network and seek the terms that are most favourable to them,” said Senator Conroy.

So just how fast is fast, at the moment I have a provider that i hit enter and if I blink the new page has arrived. yet they claim NBN will give me faster? Why and at what cost. I don't need a network that gives me the page I was thinking of opening, and I really don't want it at the cost of a Network monopoly nor by losing my analogue telephone service in favour of a digital one that means while there is electricity we will have a phone. This is a step back surely. If they added a feature where we could Taser the overseas cold caller who are forever offering us our fortune, then we might have a deal. But what we are going to be subject to is a network where a carefully planned terrorist attack will leave us with NO telecommunications, or at the mercy of whoever takes over the NBN whether it is for the purposes of ransom, or a terrorist attack, or someone or a Govt wishing to take control of this country, they can have control of all our services in one neat package of brittle fibre optics package.

Now of course, we hear that the cyclone has damaged cables rolled out already, most of the cables are finding their way into overhead cables. which as they claimed there would be 25% only above ground indicates a communication problem I think.

And with an election on the horizon, a budget surplus to deliver and the need to begin preparing a case to tap private markets for around $13 billion in the next phase of the NBN, the next few years are shaping up as crucial for the government.

Timing the release of the extended summary of the NBN business plan in the week before Christmas (after parliament had broken up for the year) probably resulted in minimal scrutiny of the plan. But given the business plan forms the basis for the project’s commercial viability – keeping it treated as an investment and therefore off budget – its detail probably deserved greater attention.

I can assert this time, there will be no excuses, for we cannot afford this NBN while there is still so much of Qld needs rebuilding, while we still have a Healthcare Crisis and while this Govt is determined to run us into the ground.

In a country as big as Australia there are many areas where it is not commercially attractive to build a network. The NBN will have national scale that will allow it to provide services to both profitable and high cost areas. NBN Co has developed a business case which indicates that it can build the network and still make an acceptable return on the government’s investment over the life of the network.

Now this Publicly owned NBNco and the PM won't provide us with a full business analysis, nor a cost benefit analysis. Why ?....easy says the PM it can't release the information due to Cabinet confidentiality!!

The issue of Cabinet confidentiality is contested and impacts on the ability of parliament to access certain information. Over recent years there has been some statutory reform and changing judicial interpretation concerning the accessibility of Cabinet documents. There have also been a number of parliamentary inquiries concerning, among other things, the power of parliament to order the production of Cabinet documents. This follows government decisions to withhold certain information from parliament on the grounds of Cabinet confidentiality. This paper focuses on the confidentiality of Cabinet documents covering the concept of Cabinet confidentiality, its origins and evolution and issues relating to cabinet confidentiality.

So this relates to documents held by Cabinet. But what about providing the 'PUBLIC' with a 'Cost Benefit Analysis' from the publicly owned company NBNco????? Or is it suggested any working or policy documents in regard to the NBN are kept confidential by the Cabinet even though it is our money being thrown at the NBN, it is a company owned by the taxpayer, and it is our Freedom of speech most under threat ?????

So what is it, report claimed the national broadband network would cost taxpayers 24 times more than South Korea's network for one-tenth the speed.

Well I guess the report says it all and below is the rest of this article

The $36 billion national broadband network yesterday came under attack in a global survey that ranked Australia below many of its peers because of the project's "exorbitant" price tag.

Despite promising very high speeds, the controversial network lagged behind the plans of eight other countries because of the cost imposed on taxpayers, the right-leaning Economist Intelligence Unit found.

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Replies to This Discussion

Permalink Reply by Jan Courtney on August 11, 2012 at 9:33pm

Max, what initiative have this Labor Government (starting with Rudd) NOT stuffed up ?

Why are the states tentative about the Feds running a National Disability Insurance Scheme ?

It's not because they don't like the scheme !!!!!

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Permalink Reply by Max Dench on August 11, 2012 at 9:45pm

Jan it probably has something to do with past performance.

There does seem to be one thing labor members have been good at though !!!

Check out the latest on www.pickeringpost.com

There is nearly a daily update

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Permalink Reply by Jan Courtney on August 11, 2012 at 9:51pm

I have been doing that Max - Andrew Bolt is on to it too, and Slater and Gordon are also trying to disassociate their current firm with the Slater and Gordon of the 1990's.

Max Dench said:

Jan it probably has something to do with past performance.

There does seem to be one thing labor members have been good at though !!!

Check out the latest on www.pickeringpost.com

There is nearly a daily update

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Permalink Reply by Phillip Watson on August 11, 2012 at 10:55pm

Max Dench said:

Also Phillip you say the NBN is not being funded from the budget but from bonds which are repaid from network revenue. Have a read of the below which is from a Terry McCrann article off The Bolt Report.

"Apart from the sheer dumb arrogance of presuming to know both the technological future and consumer and business preferences literally decades ahead....

In the 2018-19 year, NBNCo is projected to make a gross operating profit of a neat $1bn. It will want to. By the end of that year, total capex and operating expenditure will have aggregated to more than $50bn. Total revenues will have added up to just $12bn…

The Telstra numbers the following day showed how Telstra dominates the mobile broadband space. It has the customers, it has the cash, it has the best and most pervasive network.

It will be in the pre-eminent position to dominate NBN’s fibre and its own mobile broadband networks. Both to respond to customer choice and to mould it.

Plus it will still have its operating HFC cable, albeit one that it is prohibited from using for broadband."

From this it is looking to me very much like another massive government stuffup. If it was going to be so great for us and was going to make the monumental returns sprooked about, then private enterprise would have jumped at it when given the opportunity. THEY DIDN'T !!!

Let me say from the outset that I have very little time for Andrew Bolt, and not much more for Terry McCrann. However, when it comes to the NBN they even outdo themselves. Both have strong form of publishing absolute rubbish on the topic. Both, for example, have written (falsely) that the USA has decided on a national wireless network instead of cable/fibre. Since that has been debunked, Bolt has become quite silent on that particular facet of the NBN debate, but I notice that Terry is still implying that wireless is a realistic alternative to the NBN.

So let me deal with that one first. No matter how much money Telstra have, and how much they throw at their wireless network, it cannot hope to compete with the NBN for anything other that a tiny niche of users. It is too slow and too expensive to use, and the more people that use it the slower it becomes. And far from becoming cheaper, it's getting more expensive. Telstra increased their wireless prices by 10% last month. Let me compare a few NBN and Telstra 4G wireless plans and you tell me if it's a viable competitor:

Exetel NBN 12Mbps speed, 50GB download: $35 per month

Telstra 4G ~10Mbps speed, 1GB download: $40 per month

iiNet NBN 25Mbps speed, 200GB download: $65 per month

Telstra 4G ~10Mbps speed, 8GB download: $60 per month

iiNet NBN 50Mbps speed, 1000GB download: $95 per month

Telstra 4G ~10Mbps speed, 15GB download: $110 per month

iiNet NBN 100Mbps speed, 1000GB download: $100 per month

Telstra 4G ~10Mbps speed, 400GB download: $600 per month (!!!!!)

You don't have to be an accountant to work out which represents better value! Just to put the above into perspective, let me add a graph of current internet use in Australia:

As for the "dumb arrogance" of trying to predict future preferences.... The Aust Govt is not predicting anything that isn't acknowledged as the most likely future. As I wrote above, optical fibre rollouts are by far the norm in developed countries these days, be they by Governments or telecommunication companies. Google are throwing a few billion at it as well, and I think they probably know a bit more about technology and broadband than Terry McCrann or Andrew Bolt. Even the Coalition has a policy of fibre to all new homes now.

Why hasn't the private sector done it.....

The NBN is not forecast to make a "monumental return". It's forecast to make quite a modest return of about 7%, on a borrowing rate of about 3.5%. That is way, way below the sort of return the private sector expects on such an investment. They would want 15-20% on a borrowing rate of probably >10%.

It's quite easy to see what the private sector would deliver if left to them, because it's already happened. The "cable wars" of the 90s showed that the private sector would cover 20-30% of Australia, and do nothing elsewhere.

The other issue is the private sector would have to deal with is Telstra. Again, the cable wars provides a nice example of what happens when a new carrier comes in and tries to compete with Telstra. Optus ran out their own cable network to try to take market share from Telstra. So what did Telstra do? They ran out a "competing" cable network down all the same streets, wasting billions of dollars and destroying Optus' business case. What private company would try to do the same thing again, having seen what Telstra's reaction would be? Here's what Optus said about it.

The Govt overcame this issue with the NBN by essentially forcing Telstra to play ball by threatening to block them from buying wireless spectrum. So Telstra played ball and agreed to shut down the copper network and their vertical monopoly over it. The deal also saved NBN Co plenty of time and money, because they could use all of Telstra's ducts, exchanges and "dark fibre" (ie: fibre that's already laid, but not in use).

To summarise, the NBN has three major advantages over a competitive (with Telstra) private sector rollout:

1. Borrowing money through the Govt at 3.5% interest rates, allowing for a below-commercial return; and

2. Having essentially guaranteed takeup as all fixed line customers migrate quickly over to it; and

3. Saving the massive cost of laying ducts, erecting poles, building exchanges etc.

Now you might not like these things, but they do all-but guarantee the NBN will provide a return when it otherwise may take a long time before that happens.

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Permalink Reply by Phillip Watson on August 13, 2012 at 1:04pm

Beverley Prescott said:

Well what is the answer to this video and story, Phillip???

Amazing—Australian Government spends $50 billion on the NBN rest of the world moving towards LTE

Beverly,

LTE is also called 4G by Telstra etc, although technically 4G is LTE-advanced, which isn't available yet.

LTE networks are being rolled out all over the World, including in Australia by Telstra, Optus and Vodafone. It is the current best commercially available tech for cellular wireless. The price/speed comparisons I gave in the earlier post compare Telstra LTE (4G) to the NBN.

LTE networks are also being rolled out in many countries as a fixed line replacement in rural areas with low population densities, including in Australia by NBN Co. As part of the NBN, there will be about 3,000 LTE sites (towers) to provide coverage to 4% of Australian premises outside the optic fibre footprint of the NBN. Providing this 4% LTE component comprises about $2bn of the NBN's total $38bn capital cost.

But, there is nowhere in the World where LTE is being rolled out as a fixed line replacement in densely populated/urban/suburban areas. Like all wireless technologies, it cannot handle even a tiny fraction of the load required to do so due to physical limitations of wireless/radio/air and particularly a shortage of radio spectrum. Every active user added to an LTE network requires additional spectrum, and every speed/volume increase also requires additional spectrum. Spectrum is a finite resource which is already reaching capacity. See these links for a better explanation:

http://money.cnn.com/2012/02/21/technology/spectrum_crunch/index.htm

http://arstechnica.com/tech-policy/news/2009/10/fcc-boss-lack-of-sp...

http://arstechnica.com/telecom/news/2010/02/vodaphone-rim-sound-ala...

http://www.newscientist.com/article/mg21128255.400-4g-crunch-ultraf...

Alcatel-Lucent (the author of the LTE video above) are worldwide leaders in not only LTE but also fibre and copper fixed line technologies. Like everyone with knowledge about communications, they advocate the best technology for the circumstance, and like essentially everyone in the industry, in the case of urban/suburban areas they agree that the best technology is optical fibre to the premises, with the next best being DSL Fibre To The Node. You won't find them advocating LTE as a fixed line replacement in urban areas.

Alcatel Lucent actually have a video specifically about our NBN:

http://www.youtube.com/watch?v=yd5nfhZo57w

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Permalink Reply by Phillip Watson on August 13, 2012 at 1:34pm

alan mikkelsen said:

Phillip, in defending NBN Co above you made the following point, as one of their 3 key advantages over any alternative private sector funded program:

"1. Borrowing money through the Govt at 3.5% interest rates, allowing for a below-commercial return; and ...." That point was also made earlier in your comment, along with the statement that a private project would attract funding costs of more like (a commercial) 10%.

With due respect, that is straight our of the Socialism 101 handbook. Let the taxpayer fund it, and by the way, no one can look too hard at the real cost projections, or real progress reports, either. You mightn't have much time for Andrew Bolt (let's face it, many don't), but the points made today on The Bolt Report all related to cost hiding and obfuscation re the current state of the project, none to any argument as to whether wireless (be it LTE or some other whizz - bang 4G + type refinement) is in any way an alterntive. And have you caught up with Minister Conroy switching the hate mail target away from the Murdoch press (at least temporarily) to the normally friendly to the left, and bureaucracy, Fin Review??

Finally, a point re the usage of the old Telstra (copper wire) tunnels. I wonder how many are like those in our inner Melb suburb? For some months a lot of the layout has been underwater / waterlogged. It is old. I can see infrastructure costs skyrocketing, on this aspect alone. I appreciate that the coalition's FTTN option would use the same tunnels, but that is absolutely no excuse for the government to keep real costs under wraps. It's totally analagous to the way they had been happy to overlook the absolutely obvious issue of electricity distribution infrastructure 'gold plating' over the recent reigns of wall to wall Labor state governments. Now the PM discovers the situation, and she is outraged. Sheesh!!i What a gold medal performance in ham acting.

Cheers bro' al.

Hi Al, Sorry, hadn't noticed the friend thing. Have sorted that now!

I have no problem with the NBN being scrutinised, and I do believe it already is quite well. They have to report to both Senate Estimates and to the House of Reps NBN committee. They are also subject to FOI, unlike most GBEs.

That said, I think there are some legitimate reasons for not making all data publicly available, particularly surrounding expected costs of un-let contracts. If NBN Co were to reveal in advance what their budget is for individual segments of the network, then it would turn the tender process into a farce and undoubtedly increase the cost.

I think that there are some things that the Govt should fund. Transport, Utilities and Healthcare are probably my three best examples. All are items that benefit all (or most) of society, and all are rarely provided by the private sector at a reasonable cost and/or quality. Just like power, water and telephone, the NBN is a utility and I have no issue with the Govt taking the responsibility of building it for all of us.

I haven't been following closely what Conroy says, but I know he has a point when it comes to many of the NBN stories that have appeared in the Australian in particular. I think the FR has been pretty reasonable, although there has been the odd NBN article of dubious accuracy I have seen.

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Permalink Reply by Phillip Watson on August 13, 2012 at 4:46pm

Beverley,

It is perhaps true that not everybody needs the NBN at this stage. But then, not everybody needs freeways, railways or even a basic telephone line either, yet the Govt (through the PMG then Telecom then Telstra) funded the rollout of that network. The NBN generally replaces the copper network, and therefore becomes the telephone line alongside the broadband line.

Our lives depend more on an internet connection every day. A vast majority of people use a computer (and/or other connected devices) in their homes today, and that percentage will only increase in the future.

The information to answer the letter you attached is readily available, you only need to look or ask. There are over 30 internet service providers (including Telstra, Optus, iiNet etc) already selling NBN services, and with retail prices published on their websites. A phone call to any of these companies would also deliver the pricing information. I imagine, that had the author bothered to look, s/he could have obtained NBN retail pricing from a dozen companies in the time it took to write his letter.

Had he done so, he would most likely have made the pleasant discovery that a basic connection on the NBN can be had for about 30% cheaper than he is paying today for his phone+internet connection.

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Permalink Reply by Phillip Watson on August 20, 2012 at 10:48am

Beverley Prescott said:

Australia could have built 20 new hospitals for the cost of the NBN———–NBN COST $46 Billion to Tax Payer—-LTE— $1 billion and $2 billion (per operator)

NBN vs LTE (3.9G) vs LTE Advanced (4G) | technificent.net.

Apologies if this is too technical, but I think it deserves an accurate response. If there's anything you don't understand, please ask and I'll try to be clearer. I'll also post this response on Raj's blog.

Firstly, as I wrote about the last post you linked from Raj, the fact remains that there is not a single country anywhere in the World proposing to replace their urban fixed networks with wireless, be it LTE, LTE-advanced or anything else. For all the reasons given then, it is not a feasible proposal, which is why no-one is doing it.

Second, although this is a new post from Raj, it is linked to a blog written 2 years ago by an unknown author who hasn't written anything for over 12 months, hosted on a blog site that is now a front for pushing payday lending scams. Hardly a reputable source!

The headline:

The NBN earns a return, a hospital doesn't. So the ~$40bn being spent on the NBN could not be diverted to building hospitals, unless you are planning on charging patients to use those hospitals (just as NBN co charge customers to use the network). ie: The Govt NBN investment is repaid by users.

That aside, over the 10 years NBN build in which the Govt will invest $30bn into it, they will spend $1.2Trillion on health.

NBN Speeds:

The blog says that the peak downlink speed of the NBN is 100Mbps, and the actual (committed) rate is 30Mbps.

This is false. The correct figures are Peak 1000Mbps (1Gbps) and Committed 100Mbps. NBN users are already getting over 95Mbps in the real world, with the network currently limited to a theoretical 100Mbps (1Gbps starting in 2013).

LTE Speeds:

The blog says that LTE proposes a "minimum of 326Mbps" and LTE-A a "minimum peak of 1Gbps".

This is false and misleading. Peak speeds of LTE are a total speed available per tower, not per user. On average, there are about 1800 users per tower in Australia. Let's say there are just 10% of users active, or 180 per tower. That would mean a committed user speed of about 1.8Mbps for LTE or 5.5Mbps for LTE-A.

This ties pretty well with the real-world experience of LTE in Australia and overseas. Currently, Telstra LTE users are getting about 10Mbps even though there are only a few hundred thousand users across Australia. In the US where LTE has been in use for a couple of years, speeds for most users are down to 3Mbps:

Now, imagine if the 96% of current traffic was shifted off the fixed network onto wireless!

Further, like all wireless, LTE speeds are also limited by the amount of radio spectrum available. To get 1Gbps speed on a single tower LTE requires the carrier to have a contiguous block of 80MHz of radio spectrum. Currently (to my knowledge) there is no Australian carrier with such a block. Further, for a cellular deployment where the coverage of towers overlap (which is what is required), each carrier would probably need to have 5 or 6 contiguous 80MHz blocks. There is most definitely no Australian carrier with 5 blocks!

Uplink speeds:

The report says that the maximum NBN upload speed is 2Mbps.

This is false. Max is currently 40Mbps, with 400Mbps starting next year.

The uplink speeds given for LTE and LTE-A are just as fanciful as the download speeds for the same reasons. See speedtest results posted above for real-world figures.

Estimated setup costs - NBN

The post shows a misunderstanding of the funding. The $30bn govt portion is not from tax dollars, but from bond issues repaid from user revenue. The private portion is from debt raised by NBN Co, not from bond issues.

Estimated setup costs - LTE

The estimate grossly understates the cost of deploying LTE. Telstra alone are spending $1.2bn upgrading just 1/10th of their existing towers to LTE. This cost does not include buying additional radio spectrum. Even this massive investment could only cope with a tiny fraction of our internet traffic needs.

Cost per GB

Now this part of the table is absolute fantasy!

Let's look at a couple of real world figures for the NBN and LTE:

Exetel NBN: $35.00: 12Mbps, 50GB data: 0.70c per GB

iiNet NBN: $99.95: 100Mbps, 1000MB data: 0.10c per GB

Telstra LTE $39.95: ~10Mbps, 1GB data: $39.95 per GB

Telstra LTE $109.95: ~10Mbps, 15GB data: $7.33 per GB

The video:

Essentially as I've written above....The video demostrates a test of a 1Gbps network with a single user, achieving 950Mbps for that user. Again, if there were just 10 users, their speed would fall to 90Mbps. 100 users would get 9Mbps. Now, think for a moment what would happen in a heavily populated area where there might be 10000 people living in the range of a tower and you'll understand why there is no country in the World proposing to replace their fixed networks.

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Permalink Reply by Phillip Watson on September 8, 2012 at 8:19am

While I have no idea of the specifics behind the Mango Hill issue, there are two obvious factual issues with Malcolm's letter.

First, he speaks of "thousands of home owners" missing out. However, reading further into the article it turns out that there are only 39 homes currently occupied in the estate, and NBN Co plan to have the estate wired within 5 months.

Second, he falsely implies that developers must choose NBN Co to install the fibre in new estates. This is incorrect. The developer is free to choose any company to install the fibre network in new estates. NBN Co is simply legislated as the "provider of last resort", should the developer not want to use any of the other possible installers. If they choose another provider, then they pay that provider whatever they charge to do the install. If they choose NBN Co, then the developer must install the duct infrastructure themselves, then NBN Co run the wiring at no cost.

On a side note, it's ironic that the man who just last year was saying that wireless was the answer is now complaining that these residents only have access to wireless. Guess he's changed his tune on that one, huh?

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Permalink Reply by Bob Stewart on September 8, 2012 at 12:10pm

Deloitte Access Economics business outlook finds that SA's "resource-related pick-up" is under threat, and South Australia remains "on the wrong side" of the nation's two-speed economy” (AN July 23) Just another unbelievable throw away comment.

It was Access Economics who made the grand prophecy to justify their fat NBN fee that,"One of the implications of the NBN is that it will enable a more competitive economy,a more dynamic economy, throughout the whole economy." Another 3 throw away comments.

Put me in charge. Hell,I would want more than "implications" to spend $36 billion and then another $5b of other people's money. Another one for the ICAC.