Friday, 31 August 2012

NBN: Questions for Mr Turnbull on the FTTN agreement

I've commented previously on Malcolm Turnbull's plan for an FTTN-NBN and mentioned Alan Kohler's 'conversation' with him on the topic. This is a follow-up.

Just what is implied by Turnbull's announcement:
  1. For Turnbull to have a costed plan (== 'savings of $20B') then he must have generated, or had access to, a detailed plan and
  2. He must know that he can execute his plan or he's spouting rubbish.
Which means he's cleared all roadblocks with the owners of the copper network that will be used:
Turnbull, Thodey and Telstra (the Board) have reached an in-principle agreement.
If he hasn't done 1) or 2), then he's not the through, informed person I think he is, and deserves to be pilloried for a half-arsed effort.

If he has consulted/negotiated with Telstra and reached an "in-principle" agreement with them, including being given full/partial access to the 2008 Telstra FTTN plans, then isn't that germane and shouldn't we be informed of the terms of the deal?

It will be taxpayer dollars being poured into this scheme, all backroom deals needs to be made public well before the election.

Doing a quick google search, ZDnet reported the Feb 2008 tender for up to $4.7B was because "a solution mooted by Telstra was unacceptable to the ACCC" [and the "G9" proposal wasn't viable either]. Was that the end of 2007?

Knowing Sol and Telstra, they would've said in their 1-page response:
We own the copper distribution network. We're going to own and control any network based on it. Anything less is unacceptable.
Which would've been unacceptable to the ACCC, as anti-competitive and monopolistic.

So the public needs to be informed of any deal that Turnbull has already reached with Telstra...

What is different now?
Will the Leopard that is Telstra have changed its spots?

No.... It has a long, long history of pursuing monopolies.

The SSU [Structural Separation Undertaking legislation] doesn't mandate a transfer of assets, rather a relinquishing of their use [but not their removal?] when an alternative (FTTP NBN) is made available.

We are only at the very beginning of the transition, Telstra still has many options.

In this context, it is in Telstra's interest to be engaged in an FTTN - they will have the Government fund the actual build in exchange for them contributing an impaired asset, most of which is most likely ready
fully depreciated...

Is that double or triple dipping?

In return, I'd expect them to be given 49-50% ownership of the wholesale FTTN-NBN company.
Because of the politics and Telstra's commercial interests, it only makes sense for Turnbull to not fold the FTTN into NBN Co, but to create another company, possibly "related" so that it comes under the SSU legislation.

Not only do they screw Quigley, Gillard/Conroy and NBN Co, they setup a firesale with themselves as the only viable purchaser... All we have to do is look to the HFC Cable-TV rollout attempted by Optus for proof that Telstra not only think this way, they are quite prepared to write off tens of billions and sacrifice profitable new businesses to protect their monopolies.

It just gets better and better for both Telstra and the Libs, and worse and worse for the rest of us, retail customers and their competitors.

If I had access to the ABC, these are questions I've wish presenters like Leigh Sales, Emma Alberici or Steve Cannane might ask Mr Turnbull about his FTTN-NBN.
  • How is he going to get access to the Telstra copper distribution network?
    • that was a stumbling block for Rudd/Conroy, so how he's overcome it or pay the $20B for it?
    • has he already approached the Telstra Board and CEO about how this would work and what would work for them?
  • Just who is going to own the company that will do the FTTN-NBN roll-out?
    • will he be giving the contract to Telstra? What then of the SSU?
    • give the contract to NBN Co? How will that integrate with their work?
    • create a new entity for the FTTN-NBN?
    • would such an entity be wholly Govt owned for shared with Telstra? Taking this as their capital contribution.
  • Where is he going to get the detailed FTTN deployment plans?
    • Will he acquire them from Telstra, or rely on Telstra to give up in-confidence commercial and IP?
  • Will he make any guarantees about the service provided?
    • eg. "No person would be worse off than the FTTP-NBN".
    • Will ASIC or the ACCC regard those promises are mere political puffery or commercial statements, misleading if false.
  • How can he guarantee "$20B savings" if they don't appear on the FedGovt Balance sheet?
    • It seems like "smoke and mirrors" accounting and wouldn't satisfy the standard accounting principles.

Saturday, 25 August 2012

NBN: Politics trumps Economics, Business, Technical and Social needs.

In a previous piece, I commented on a set of posts on the Business Spectator site, centred around Alan Kohler and Malcolm Turnbull 'debating' the Liberal plan for a National Broadband Network (NBN).

Politics is The Art of The Possible, where Perception is Everything.
The NBN is first and foremost in the Political realm, not in the Business, Economics, Social or Technical.

For the last two years, we've had Tony Abbot leading, arguably, the world's Best Opposition Ever, loudly proclaiming Gillard's government is "The Worst Government Ever".

Well, no its not. On every economic measure, it is outstanding.
Post-GFC, we have an economy that's the envy of everyone in the G20...
Not something a "Worst Government Ever" could do, yet the ALP and Gillard trail in the polls.

The Perception of an incompetent leader and government has become the accepted 'Reality' in the Electorate and Media.

Why can't Gillard and her Government get "cut through" when they have actually done remarkably well and in the most difficult circumstances achieved an enviable legislative programme??

Because they can't easily achieve their legislative agenda.
With a minority Government, "The Art of the Possible", really bites.

Abbot can play "Dr No" and deny the ALP every rational move, forcing them into back-flips at every corner, even passing legislation against their party platform/policy (off-shore processing) and most egregiously, making the Prime Minister an unintentional liar, being forced into a single option, a Carbon Price that got labelled a "Carbon Tax" when she'd specifically ruled this out, in just one speech on the election trail, almost as an aside...

The Greens blocked reasonable Carbon Pricing legislation under Rudd, forcing Gillard to be at the mercy of "Dr No": giving her Government just one option, that dictated by The Opposition.

Unsurprisingly, Abbot and his Opposition don't mention this, but beat the drum on Gillard "being a liar", which, following the well-known rules of FUD, gets traction in these uncertain economic times.

I think it's a testament to her grit and perseverance that Gillard has continued to govern at all, and she cannot be praised highly enough for both pursuing her reforms and for achieving them. Due in large part to her personal capability as a negotiator. Not in the same league as Bob Hawke's Master Consensus Maker talent, but in the daily grind of governing, without peer.

John Howard didn't have to work this hard, against such odds nor for so long.
Howard got Meg Lees to flip on the GST and eventually implode the Australian Democrats, but that's minor compared to the multiple epic battles fought and won by Gillard.

She's won all the Battles and abjectly lost the War.

Surprisingly, I think she's performed better than anyone else could have.

But its a shame that a Best Performance can only result in Massive Electoral Loss.
Let's hope for the ALP Federally, its less of a landslide in 2013 than Anna Bligh's 2012 rout in Queensland. "The Minivan Opposition": includes an empty seat for a hired driver.

So back to the main game, the NBN...

What do we know:
  • The NBN Plan/Policy of Turnbull is solely about winning the next election.
    • The Libs have to create as many points of difference between them and the ALP: the NBN is just one of them.
      • Turnbull is emphasising "savings" of $20B, that has to be significant.
      • The Libs are reported to need $70B in cuts to fund their promises, and with a No New Taxes policy, they need to find a whole tranche of savings.
      • The Libs won't submit their costings/finances to Treasury, but will have an accounting firm check them. Presumably in elections, you only ask questions to which you know the answer...
      • These Electioneering Economic Estimates aren't about good Accounting or following the rules you'd use in Government, but creating a perception.
      • Political Promises are not enforceable. Whatever is said beforehand can be abandoned with lines like "that wasn't a core promise" and the classic, "things were much worse than we could've imagined". Expenditure promises aren't safe.
      • The Libs may well drop less affordable and more expendable parts of their election promises. But they won't be able to abandon declared savings:
        • Turnbull and the Libs are locked into this "saving" of $20B on the NBN.
    • The Abbot and the Libs have a long-running strategy of labelling Gillard and the ALP as:
      • "Worst Ever"
      • "incompetent"
      • "mismanagers"
      • "Great Big Expensive New Taxes/XXX"
      • "liars", and by inference lacking in integrity, not to be trusted, even 'slippery'.
    • An Abbot government will do everything it can to reinforce these mantras, even to the point of deliberately undermining and sabotaging any and all ALP initiatives it can to create failures. National Interest is irrelevant: this is a pretty personal political fight.
      • We've no reason to expect Abbot, if elected as Prime Minister, would ever resile from this style of constant attack. Putting the boot into an already defeated ALP would be seen as both justification and strategic attack: weakening the ALP brand nationally now and for the future. Racking up a lead in the polls...
      • Abbot proving his current claims, if he achieves office, this might be very important to him personally and strategically.
      • I suspect that discrediting the Gillard, Rudd and the current ALP government will be very high on his agenda. With Abbot's No Holds Barred style, every tool at his disposal would be used and he'd possibly prioritise "hurt the ALP" over anything else.
  • Gillard has to call an election before the end of 2013.
    • She controls the timing, though everyone expects her to hold on for as long as she can.
    • The time for Turnbull to challenge Abbot for leadership has passed. If he challenges now, Gillard calls a snap election before he can get this ducks in a row.
      • Into the foreseeable future, a serving Prime Minister can't be challenged for leadership following the Rudd/Gillard spill.
      • If Abbot becomes Prime Minister, Turnbull can't challenge.
      • Abbot is such a ferocious competitor, I can't image him ever standing aside as Prime Minister. Howard, much less obsessed with winning at any cost, couldn't do so.
    • Plus we know Abbot is a formidable campaigner, seemingly much more effective than Turnbull. The Libs party room would be loathe to change now.
    • We know that Abbot is fiercely competitive, to the point of being obsessed with winning, and if we rely on Tony Windsor, isn't just pragmatic, but exceptionally expedient.
      • Abbot is reported as saying he would do and say anything to have power.
    • We know that Turnbull has very different views than Abbot as shown by Abbot tearing up the Carbon Pricing legislation agreement Turnbull had negotiated.
      • Turnbull might even have a cohesive vision of the future, underpinned by some sound principles and ideologies. We know nothing of Abbot's "vision", its never been aired in public.
    • Turnbull has played the good party member and publicly toed the party line.
      • We know that he has different personal views to the Party Line [Carbon Price]
      • And know that he can subsume his personal views in public.
      • What we don't know is what he personally believes is the best NBN solution, Economically, Technically and Socially. Unless Turnbull becomes Prime Minister, we can never know.
      • What we do know is the financial interests he declares on the Register. This could give us insight into his personal views - where he's prepared to bet his money. France Telecom is making an FttP play, while BT is making an FttN play. Turnbull has invested in France Telecom because they were undervalued...
  • We know from the last 15 years of poor Internet access in one of the most compact, affluent and tech-savvy parts of the country, Gungahlin, ACT, that both Telstra and Politicians care exceedingly little about the pain poor Internet access causes their constituents:
    • In 1995, Telstra announced it would spend $20-$30MM on laying fibre-to-the-kerb in Gungahlin, a first for Australia. Important because it was an "everything underground" development.
      • The older parts of Canberra have "poles and wires" for phone and electricity through backyards. Cheap to install and reasonable to maintain.
    • What happened instead was they didn't even provide direct exchange lines, but the much inferior "pair-gain" services with roadside cabinets (RIM's: remote integrated multiplexors).
      • RIM's are owned by Telstra and can only work with their exchanges, not part of the ULL deal for direct exchange lines. The decision has the feel of a strategic, not technical basis.
    • Firstly customers couldn't get any broadband, ISDN or ADSL, over the RIM's.
      •  After years of very active campaigning, the got a upgraded RIM with a very limited numbers of ADSL connections.
      • Then quad-density cards, more ADSL connections. Enough for everyone? Don't think so. Were they limited to 1.5Mbps? not sure.
      • Then, the backhaul crunch. Telstra, after a decade, had provided an access network with better speeds and more connections, but failed to dimension the backhaul network from the RIM's and exchange to Interconnection Points to handle Busy Hour...
      • A notionally fast service that's unusable when you want it: ticks all the boxes for Telstra and the Pollies, but not the clients.
    • Where was the ACCC for all those years?
      • They couldn't demand Telstra either keep it's original Fibre-to-the-Kerb promise, nor fix the pair-gain debacle more swiftly.
      • What's changed??
  • On the SSU: Structural Separation Undertaking.
    • This involves no transfer of assets, only a requirement to disconnect the existing copper network when the NBN has installed optical fibre.
      • This isn't a deal set in stone, it can probably be trivially circumvented.
      • But it does have some constraints, namely the ACCC is involved in these 'regulated sevices' and the Libs/Turnbull may not want to disassemble that.
    • I can think of at least 3 ways to circumvent the SSU:
      • Repeal the laws.
        • Not ideal, but allows Telstra to do a BT Openreach public/private roll-out and hangs NB Co out to dry...
        • An expensive option, but buys great Political Capital ["Worst Ever ..."]
      • Use the Ministers' discretionary powers to vary both the end-date [1-Jul-2018] and exclude services/areas from the SSU.
      • Create a new Company, 'related' to NBN Co, owned by both Telstra and the Government to roll-out the FttN. Already allowed for in the Act.
        • Telstra has already created and costed a detailed FttN plan for the Rudd/Conroy submission.
        • They have the technology (RIM's), free access to the copper pairs (what stopped FttN mark 1), the network design and roll-out competence and resources, and probably good commercial contracts already in place.
        • Get sign-off by the ACCC if Telstra doesn't wholly control the service.
In 1988, Turnbull took on the might of the British Government and their "Official Secrets Act", and won "The Spycatcher Case". He's a good deal older and wiser, why won't he be able to take apart the SSU/NBN legislation?

The legislation, to my untrained eye, seems to be based on the assumption of a pro-FttP-NBN Government, not one hostile to a FttP-NBN. That's immediately broken by an Abbot/Turnbull government, and if the FttP-NBN isn't far enough advanced, it will be scuppered.

Turnbull is on record as having spent this last year consulting with a lot of people on how to build a FttN, I'd presume that would include David Thodey and Telstra. I haven't seen whether Thodey was pro-FttN Mark 1 or not: did he support Sol's repulse of Rudd/Conroy that led us to the NBN?

The most convincing argument for the Turnbull's FttN-NBN is simple:
  • Q: Will we lose this election or the next on this issue?
  • A: It's important only in a few regional seats.
    • And in the 2017 election, they can claim "Great Success at killing the ALP's Great Big Expensive White Elephant" and proudly point to some B/S figures on how good their FttN-NBN is, how many people it serves and how quickly it was done...
Addressing the very competent and insightful remarks of Paul Budde on Business Spectator ("why the BT model won't work for the NBN") using this "It's a Political not Rational Decision" lens:
  • " lack of vision and clear strategies, compounded by unclear targets, there has been little progress on whatever plans there are."
    • Telstra, we must assume, already has detailed plans and the means and experience to execute them.
    • Vision and Strategy are irrelevant in this Irrational model :-(
    • Telstra and the Libs will be triply motivated to roll-out their FttN post-hate:
      • Telstra gets to (part) own the distribution network and control the roll-out, causing maximum commercial damage to others.
      • The Libs get to block the NBN Co rollout and when the company flounders and can't meet its goals, loudly boast about how good they are and how bad the current mob were...
      • I believe it's in Telstra's strategic interests for NBN Co to be forced into a firesale. As the largest single customer, perhaps their only customer, they can dictate the price and terms of a sale. And if they have FttN-NBN Co as an alternate, they can block any other prospective buyer from being able to realise value from the FttP-NBN assets.
    • All along, one of the major problems for the Government with FttP-NBN has been preventing an overbuild spoiler from Telstra. Turnbull's FttN-NBN puts that back on the agenda, maybe via a partly-owned body.
  • Competitors will bristle...
    • Telstra, even under Thodey, seems irrevocably wedded to achieving monopolies where it can.
    • They own the copper distribution network, which means they have to be part of the FttN-NBN.
    • If Telstra, even structurally separated and without full ownership of FttN Co can't create an advantage for itself, they are not half as capable as I give them credit.
  • "no cost benefit study"
    • The FttP-NBN went ahead without a Cost-benefit study, so in this Irrational "Logic Does Not Apply" scenario, the Libs won't have to supply one.
    • But they can, legitimately, say:
      •  "We're going to save $20B over the ALP."
      • "So our NBN is better than their NBN. So there, we win."
      • It's politics, nothing better than schoolyard arguments are needed :-(
  • "provide evidence of a serious lack of cohesive national policies, regulatory difficulties, inadequate broadband delivery and undeliverable targets."
    • Do Abbot, Turnbull and the Libs care about any of those things?
      • More importantly, will they lose the election because of them? [NO]
  • "It would condemn Australia to the same outdated physical infrastructure which the UK is to be lumbered with"
    • And who would really care?
      • Not the Libs, not Telstra and not the ACCC because they have to act within their legislation.
      • The Gungahlin, ACT experience over 15 years shows all manner of promises can be made and broken and the Politicians and incumbent Telcos can just ignore it.
    • Public Opinion has to be translated into the currency that matters to Politicians: Votes.
      • With the amount of FUD that Abbot et al can generate on a huge number of issues, something 'theoretical' about our future broadband speeds won't rate for most voters.
  • "UK’s flawed NBN program lacks vision: it is short-term, and by being largely dependent on the commercial deployment of a single telco it has been hampered from the start."
    • Politics, especially as played by Abbot, is quintessentially short-term, in fact overwhelmingly myopic.
      • The only time-frame that matters is The Next Election...
      • Abbot, Turnbull and the Libs cannot be held to account for broken promises, under-delivering or putting either Party Political concerns ahead of the National Interest.
      • The only weapon against them is the very blunt instrument of the ballot box, and then it is always "after the fact".
    • Turnbull, Abbot and the Libs just need to "tick the box" on "we're creating an NBN", and they can make any claim they want about it: for campaigning Politicians, the future is a Fire Free Zone.
      • This isn't how I would like Politics to work, but perhaps we do have the Politicians we deserve... Self-serving, short-sighted and wilfully ignorant and unconcerned about the social impact of their ranting and poor legislation and actions.
  • " the government has opted to build a cheaper network without focussing on the broadband needs of the digital economy, e-health, smart grids, e-education, e-government, M2M and so on."
    • Yep, Political expediency trumps all other concerns.
      • Unless, you can impact the ballot box, or their proxy, the opinion polls, This is an Area That Logic Does Not Apply.
      • be clear, I don't support this view and would want a world where Politicians were required to show a Fiduciary Duty to the Public, individually and collectively, on pain of severe penalties...
        • Not going to happen, because the people who pass the Laws on Government are the ones that will be at effect of them. The system is Just Fine as it is, for them.
  • "an inappropriate regulatory regime which risks recreating a private monopoly provider in much of the country"
    • Not going to affect the next election, not an issue.
  • "leave large areas of the country with only the most basic service, which will retard consumer use of all but low-end services"
    • Not going to affect the next election, not an issue.
    • Can selectively promise the noisier "squeaking wheels" The Real Deal for Them, FttP-NBN.
      • Note: they don't have to deliver, only promise. Don't even have to properly explain why not, or fall back on the classic excuses "things were worse than we thought".
      • And another candidate, next election can trot out the same empty promises...
  • "dependence on last century’s copper network dramatically reduces available data rates"
    • This is a good argument in a rational world, but not for a Political decision.
      • Can the electors when they vote, know this?
      • Turnbull and the Libs are promising "cheaper, better, faster-to-deploy".
        • Who's to say, on election day, they won't keep that promise?
      • For the average mug punter, the Turnbull promise is understandable and probably believable. Most people don't know and don't care about the intricacies of the underlying networks...
  • "There has been no ‘cost benefit’ study, something the Coalition has been so adamant about."
    • As above, they can say:
      •  "We're going to save $20B. How do we know this? We've had one of the best commercial minds (Turnbull) in the country create this detailed plan. It's going to have an ROI five, ten or a hundred times that of the FttP-NBN. We've done the hard slog on the fine detail. It is cost-justified."
      • Note they never say they've done a cost-benefit study, but you may leave thinking they done it or something better. Politics, all about Perception.
  • "In the Australian market, FttN poses considerably greater burdens, and additional costs, given the need to deploy a far greater number of nodes to serve customers (70,000+). "
    • yes, and will that affect votes this election or next?
      • No? Don't care...
    • Will retail costs of the FttN-NBN be higher than FttP-NBN?
      • Absolutely, but you won't be able to know that, because the FttP-NBN will be sabotaged and probably sold-off as a dismal failure... (Great Big Expensive White Elephant)
    • Can the ACCC stop this scenario and force some sanity?
      • If Turnbull and his advisors are good, as I think they are, the new legislation will enable Telstra and their FttN-NBN to be completely free of ACCC interference.
  • "When KPN in the Netherlands began building out FttN it found that the network was not as cheap as originally envisaged."
    • Which will only happen after the next election and, Politically, the problem will be laid at the feet of the Gillard/Conroy government:
      • "The Worst Ever were so incompetent and mismanaged this so badly that...."  - add your own sad ending.
    • Telstra and its FttN-NBN only has to prevent FttP-NBN from achieving its mission to win. It only has to start enough of their roll-out, not actually spend all the money needed, to roadblock FttP-NBN.
      • This will be an exact rerun of the Optus/Telstra Cable-TV roll-out, with exactly the same tactics/strategies and same consequences and outcomes... Telstra can spoil the game for anyone else, if allowed. It doesn't actually have to build anything much itself. And the Board and management has shown a commercial willingness to throw away Billions in shareholders money to achieve their agenda.
        • So what's changed??? Nothing I can see.
      • Turnbull can adapt the legislation to allow only one of the two networks into a region.
      • FttN-NBN can always be rolled-out faster, because they get to leverage the installed copper distribution network. They've installed a lot of RIM's as well, have the process, contracts and crews to do it.
      • The FttN-NBN doesn't have to be connected to anyone, it doesn't have to achieve good access speeds nor does it have to have sufficient backhaul to be usable. It just needs to be installed for Turnbull and Thodey to win.
    • The whole point of the Turnbull proposal is that "FttN is but a stepping stone to FttP". If you don't look closely at the detail or understand the engineering and construction side, this is eminently reasonable and trivially obvious [and completely wrong, like most simplistic arguments!]
      • When Telstra's FttN-NBN is deployed, they will, rightfully, make the same claim they did with the pair-gain RIM's: These can and will be upgraded to the super-duper new standards as they come along.
      • Which, prime face, they were... Those poor souls in Gungahlin did get ADSL via RIM's. After considerable delays, to very limited numbers and at very low speeds, with ofttimes unusable service due to (avoidable, planned) network congestion...
        • The Telstra FttN-NBN RIM's will be upgradable to full FttP, "if demand requires".
        • Good luck for any customer getting a reasonable outcome under that regime.
  • "Another fundamental reason why Australia should avoid emulating the UK is that the latter’s broadband strategy is unambitious."
    • yes, and will that affect votes this election or next?
      • No? Don't care...
  • "It [BT Openreach] aims to deliver a base-level universal service complemented by broadband at up to 24Mb/s to 90 per cent of the population."
    • Which suggests that V 1.0 of the Telstra FttN-NBN will be ADSL2+, not VDSL.
      • We have the technology, why not use what we've got today?
      • And that buys us time to design good VDSL2 cards for our RIM's, alongside GPON bays for the FttP-NBN. 
        • delay, delay, delay. Poison the commercial environment and spoil others attempts...
        • Great strategy for a near-monopoly incumbent.
        • Do a little and let the others fail, seemingly "on their own merits".
  • " This is poor policy making, for rather than being guided by its own assessment of the long-term socio-economic benefits to be derived from the country’s broadband infrastructure, the government is limiting itself to the commercial priorities of a single telco."
    • yep, exactly.
    • And Would you expect it to be any other way?
      • Politics trumps everything: Commercial, Technical and Economic and Social interests.
  • "FttN may make sense in a copper-only environment, but the prime reason it makes sense is from the perspective of an investor who wants to slow down capex for a few years."
    • This is actually the reason for the Libs FttN-NBN. Can't emphasise it too much.
      • The interests of both Abbot and Telstra co-incide here.
      • For a modest outlay, Telstra's FttN-NBN can kill the FttP-NBN simply by delaying it.
  • "Also, by relying on copper for the last mile, FttN will rapidly run out of capacity."
    • yes, and will that affect votes this election or next?
      • No? Don't care...
    • Sadly, all of Pauls' arguments are exactly right and in the context of our Political environment, irrelevant unless they can be converted into a demonstrable hip-pocket result for voters.
      • Remember that voting is compulsory in Australia. We still have a sizeable "donkey vote" (straight down the page). This says we have a substantial segment of voters that are completely unengaged...
      • How do you make these voters care? Find out what they care about...
        • Which is why FUD and promises of Dollars in your pocket work. :-(
  • "Regulatory measures in place in the UK also risk recreating in the fibre age the same monopoly which BT for long enjoyed in the copper age."
    • Voters won't care about this.
    • Telstra shareholders, on the other hand, will be very, very happy.
    • And if Telstra does well, then Abbot/Turnbull can crow about how well they've turned around the "Great Big Expensive White Elephant" and brought real value to all those Mom and Pop investors who bought into the Telstra float...
      • Rational, no.
      • Self-serving by the Pollies and their mates in Big Business? Absolutely!
  • "No plan, and a lack of long-term vision"
    • Exactly, not alas, not a vote winner or of interest to Abbot and Turnbull.
      • Their mission is only to "get the job done", ie. get into Power.
      • And then it's "devil keeps the hindmost".
  • "The key, then, it to prepare national infrastructure for what cannot be anticipated, in the knowledge – from past and current experience – that it is preferable to have a capable network in the first instance than an inadequate one which entails additional cost, patches and delays as that network comes under increasing strain."
    • This is a superbly strong closing from Paul.
    • It is exactly right if this were a rational debate in any of the Realms but Political.
    • But there's no way that Abbot/Turnbull need to look further than their current FttN-NBN plan and still get into power at the next election.
This is a very discouraging and disillusioning analysis.

Hopefully at a later time I can address some ways this outcome could be changed.
In the meantime, we'll only know after the next election who's version of the future was broadly acceptable to the electorate.

NBN: Kohler v Turnbull - A third option?

Business Spectator has published a more pieces in the Kohler/Turnbull conversation on the Liberal's National Broadband Network policy...

Today I've written two comments there, reproduced below.

I suspect that underestimating Turnbull is not a good idea, perhaps we're missing something that's in plain sight?

  • My best guess: Turnbull/Thodey have figured out how to give Telstra the right to build their original FTTN network.
  • My understanding is that Telstra still owns the copper reticulation network and ducts/pits, it's $11B deal with NBN is to stop using or remove it when the NBN is co-deployed.
  • Which, if the Libs get into power Federally, might just make Telstra a hugely undervalued stock.
    • Mr Thodey is probably very thankful for all the infrastructure and alternate transit backhauls that NBN has created, but they can do very nicely without it.
    • It'd be delicious irony if the NBN failed economically because of this competition and was forced into a firesale of its assets and network... With the only reasonable buyer being Telstra.
      • Locking Australia into another century of single-Telco dominance, an operational monopoly, would be a very bad outcome for the country.
What I didn't have space for in my second comment is the obvious Political Reality:
  • The $20B savings in the NBN project can't be taken in isolation.
  • The Libs are said to have a $70B hole in their funding promises:
    • And look at that, it's just been chopped down to $50B.
    • Joe Hockey, shadow Treasurer and Andrew Robb, shadow Finance Minister, must be very relieved.
An idle question, will Turnbull ever challenge again for Liberal Party leadership??
I think that's only possible if Mr Abbot shoots himself in the foot badly enough, but whatever mistakes he's made in the last 2 years, the ALP has not yet shown any ability to take him down.

Why the BT model won't work for the NBN, Paul Budde. 2:30 PM, 22 Aug 2012

A tour de force addressing the technical, economic and social issues at play.

Turnbull to Kohler: Node, node, node, Malcolm Turnbull. 6:30 AM, 22 Aug 2012

Links to NBN Explained, The FttN First Debate.
A 2009 piece that attempts to make a case that is you're going to do a full FttP fibre roll-out, you're better off skipping FttN, as it doesn't take you there, only costs more money.

To me, that's Engineers arguing about Business and Politics.
It doesn't fly for me:
  • It's the exception, not the rule, that technically superior solutions win in the marketplace. We had VHS tapes, Intel CPU's and Microsoft Operating Systems win over far better alternatives.
  • The Telco business is especially ruled by incumbents and pursuing their interests, usually about monopolies.
    • It's an area where Logic Does Not Apply.
    • It's why we had to have Optus, it had to buy AusSat, why we got two incomplete Cable TV networks (not full-coverage) and why we have multiple overbuilt mobile phone networks and no inter-Telco roaming (but they can do International Roaming).
    • Politics dominates decisions with Telcos and national infrastructure. Privatising Telstra and not structurally separating it in the last sell-down from 51% show the point.
We are going to get the Network that the Telco's can't veto and that Politicians can allow.

I fear that NBN Co has, like Ansett in September 2001, had the clock run-out on it by its competitor.
Telstra took a very long time to negotiate its deal and NBN Co hasn't been able to lock down reasonable contracts for its deployment with the same vendors that Telstra uses.

Who'd have thought delays would happen?

It's played pretty well so far for Libs/Turnbull...
Another plank in the "Worst Government Ever" rhetoric.

But more importantly, by the time the next election comes around, NBN Co will be disastrously behind in this deployment.
Why disastrously? Below a critical threshold, the Libs can cancel or slow-down the roll-out and (seemingly) legitimately call for "faster, better, cheaper" alternatives that can be done "on time".

And there's Telstra's cue to finally show us its FttN plans withheld from Rudd/Conroy in 2008.
Which aren't going to be that different to BT's "Openreach" programme, but will use a variant of the Telstra RIM.

Alan Kohler's NBN fantasy, Malcolm Turnbull. 12:52 PM, 20 Aug 2012

@Lindsay Cole: There are some new classes of applications that will thrive on low-latency, high-bandwidth connections. [LC had a dig at 'geeks coming out to play', suggesting they were mainly interested in faster Porn.]

Apps that use geospatial data, especially if they combine high-resolution imaging data from multiple sources.

Think of a live-feed 3-D imaging game/App with multiple overlays: Google Earth on steroids.  Like on-line directories, it might just become 'a thing we expect to use'.

As for Porn vs Everything else: see the song "The Internet is for Porn" by Avenue Q.

Since the birth of modern mass media (printed word + images), Porn has been the vehicle used to explore and expand all new technologies...

And when the technology is mature and ubiquitous  and infrastructure is paid for by the Early Adopters, everyone benefits... Like in glossy magazines, Porn doesn't extinguish, it just fades into the background.

Like it or not, Sex and Money are powerful drives at the root of much of our behaviour and societal pressures/movements. The research shows that both men and women are aroused when watching pornography, but commercially, men are almost universally the buyers.

You, like me, may personally be repulsed by pornography, but its not going away anytime soon.
If it drives men to be early adopters and they pay for high quality services for the rest of us, I thank them for the free ride.

Sorry Malcolm, it's still crazy, Alan Kohler.  7:30 AM, 21 Aug 2012

I think we all might be missing something...

Turnbull is smart, brave and persistent/dedicated to have done what's he's done and now is motivated to get back into (political) power. He's not playing this game for the pay, and he's unlikely to make rookie errors.

As a very successful lawyer, he knows the importance of words and will carefully construct what he writes and says.

As a successful Investment Banker and IT/Internet investor, he knows the Devil is in the Detail, and just what it takes to take "A good idea" to a successful execution.

If he says he's got a detailed plan and reckons he can shave $20B off the NBN deployment, I'd NOT gainsay that. The evidence we have says he'll be able to pull it off.

Which leads to this incisive quote from above:

>> Carl jackson: The NBN just doesnt have the depth of an incumbent Telco and will not get close to their targets.

So what are we missing, especially as Turnbull has cited BT's "Openreach" project as his model?

I'm thinking he's figured out how to give Telstra a way to follow BT and roll-out an FTTN network with partial Govt funding.

Sol may have given Rudd/Conroy a 1-page response to the FTTN tender, triggering the structural separation and NBN project.

Telstra must have done all the detailed work in designing and costing an FTTN...

David Thodey has shown he's a far more capable  manager than Sol and his buddies. Not nearly so wedded to the "Traditional Telco Model" of monopoly plays and pricing.

My guess is that Thodey and Turnbull are on the same page and have collaborated in creating a fully-costed, reasonably scheduled FTTN roll-out plan: with all resources to execute.

It fits the facts and accounts for the confidence that Mr Turnbull forecasts times, budget and savings...

Is it the long-term solution Thodey, Turnbull or I would want for a converged network?

Nope, that's clearly pure fibre + wireless in-fill.

If Telstra can own the last mile again, that's strategically brilliant for them.

Thursday, 23 August 2012

NBN: The Turnbull Guarantee we'll never see...

Technology Spectator has written some recent pieces on Turnbull's NBN proposal I've commented on (below):
If Mr Turnbull owned the NBN he's proposing, would he offer an effective bandwidth guarantee (or your money back)? I wonder...

As far as I can see, he's proposing VDSL2 with as few Cabinets and as little backhaul as he can get away with.

Saves $$$
But, if that's his solution, in busyhour, most people won't see 5Mbps.

Will Mr Turnbull offer a meaningful guarantee of minimum performance?
Could that have

Because NBN Co is not notionally a Govt service, but a commercial Co, the ACCC might have something to say about election promises, guarantees and misleading or deceptive comments.

So, will Mr Turnbull and the Coalition offer customers a performance guarantee for the their NBN?
If they do, will he/they be liable for commercial statement under the Trade Practice Act/Competition and Consumer Act?

That would make Political history in a way nobody would want to see.

"The Coalition's NBN collision course" - Comment

I'm concerned about the "50Mbps" speeds being quoted... It's in the G.993.2 standard, but not the BT network Turnbull was talking about.

BT Openreach are currently only talking about offering 40/10Mbps, and they've tested a higher frequency version at 80/20Mbps.

BUT, the Distance-Bandwidth Product applies. Increase the frequency, increase impedance, effective throughput declines much more rapidly at higher freq.

e.g. ADLS1 is preferable to ADSL2+ at extreme distance.

BBC report of "Ofcom" findings is the 40Mbps will really deliver 36Mbps. And with some ISP's, you might expect to realise only 1/3 of the theoretical bandwidth.
Turnbull knows all these subtleties, he invests in this area.

He won't go on record as saying: "We're offering access rates of 10 to 36Mbps, depending on your luck, and don't care about the backhaul congestion".

Also, BT are promoting Openreach as a superfast *Fibre* network. FttN is kinda "fibre"... but not "not as we know it, Jim".

BT's Big Build is only of the access network. Nothing is said about the backhaul, which is a big part of NBN Co's budget and schedule.

Backhaul congestion is a 'drop-dead' problem for residential broadband - which is why NBN Co is addressing it first. Gungahlin, ACT with ADSL-equipped RIM's learnt all about these problems.

"Why the BT model won't work" - Comment 1

On Lateline last night, Turnbull specifically mentioned 50Mbps to 80Mbps, implying it was the speed of BT's FttN.

Your piece, a lot more believable, say 24Mbps, which sounds like ADSL2+. I know that TransAct went VDSL and it's a low-volume product/standard. Doesn't make sense to anything but Really Popular chipsets/standards. [Openreach does offer 40/10Mbps with VDSL2]

MALCOLM TURNBULL: "Well our broadband policy is to
  • complete the national broadband network,
  • but to do so
  • sooner,
  • cheaper - less cost to the taxpayer - and
  • much more affordably for consumers
and that is our plan."

"So we will
  • complete the NBN,
  • all Australians will have access to
  • very fast broadband,
  • but because we'll use a mix of technologies and
  • use the most cost-effective ones where appropriate,
we will be able to do it sooner, cheaper and more affordably."

Q: What's "appropriate" FttP when he has to, FttN when he can and ADSL2+ elsewise?

Turnbull specifically says:
a lot of fibre to businesses and hospitals and schools and universities - I mean many of them have fibre now, so there will be plenty of fibre in the backbone of the network.
Hasn't the bulk of the NBN Co work until now been putting in place exactly that backbone network? And importantly, the Points of Interconnect and competitive Transit Backhaul.

"Why the BT model won't work" - Comment 2

Alan Kohler wrote a scathing piece on this 2 days ago [20'th] which I haven't seen you reference. "The Coalition’s NBN policy is madness"

He lays out a convincing set of reasons:

- Negotiating a deal to lease/buy Telstra copper couldn't be done as equals.
Imagine trying to negotiate that deal having made an unbreakable election promise that you would.
- reneging on the existing contract, is going to involve penalties
Replacing the NBN with a FTTN network would mean tearing up the existing $11 billion deal between NBN Co and Telstra
- Why we got a FttP not a FttN in the first place was Telstra's non-response to the Rudd/Conroy tender and the cost to buy the copper needed: $20B.

Because they are in an incredibly weak negotiating position with a very aggressive and opportunistic player (Telstra), the price is going to be considerably higher.
that a FTTN would require compensation to Telstra of more than $20 billion.
- Sunk Costs.
Also the NBN will be simply too far advanced.
- Planning permission for 'Node Cabinets'. Just how big as these remote DSLAM's? [RIM cabinet size?]
FTTN would require cabinets the size of big wardrobes on nature strips;" + building approvals
- Subsidies for regional/rural broadband: How's that going to be done?
And the final problem is that the NBN is a mechanism for subsidising regional and rural broadband,..
Is the Liberal National Party really going to end that subsidy and tell country towns that their fibre can’t be afforded ....
Kohler ends with succinct advice:
Don’t do it Malcolm. More importantly, don’t go into an election having promised to do it – you will soon find yourself in quicksand and eventually go down as the worst Communications Minister ever.
Announce, grumpily, that the NBN will be too far advanced to stop and that the Coalition will simply work to ensure that the project is delivered on time and on budget. And then get on board the fibre broadband wagon.

Sources and Notes:

VDSL2: ITU-T G.993.2. 2005
Starting from 1.6 km (1 mi) its performance is equal to ADSL2+
100 Mbit/s at 0.5 km (1,600 ft) and 50 Mbit/s at 1 km (3,300 ft)

May 2010: BT announce £2.5billion plans to roll-out a mixture of VDSL2 FTTC (75%) & GPON FTTP (25%) to 66% of the UK by 2015 with VDSL2 speeds starting at 40Mbit/s down 10Mbit/s up potentially rising to 60Mbit/s down 15Mbit/s up.[

The key stages, from planning to go live

From the moment you see your exchange appear on the rollout plans, it could be up to 15 months before it's ready to supply superfast fibre broadband. Why? Well, here's what we have to do...

Months 1-9: prepare the exchange
Months 3-9: Planning the network
Months 10-15: Installation

Openreach will be using the £2.5billion committed by BT to make superfast fibre broadband available to two- thirds of the homes in Britain by 2014.

Superfast fibre broadband comes in two flavours:
  • A part fibre, part copper infrastructure (Fibre to the Cabinet) capable of delivering download speeds of up to 40Mbit/s now – and up to 80Mbit/s during 2012 – and upload speeds of up to 15Mbit/s
  • A pure fibre infrastructure (Fibre to the Premises) capable of delivering download speeds of 100Mbit/s now – with 300Mbit/s coming in the future – and upload speeds of 30Mbit/s.
Openreach is solely responsible for providing, maintaining and improving the network that connects your home or office to the telephone exchange that serves you. We don’t sell the communications services like broadband that run over the network. Only a communications provider can do that. There are 450 of them around the country. So there’s plenty of choice.

We’re installing a pure fibre optic network at the greenfield development at Ebbsfleet in Kent, where the first occupants are already able to download information at a blistering 100Mbit/s! When completed, Ebbsfleet will be the UK’s first mass scale pure fibre optic network, serving 10,000 homes and businesses.

We're currently upgrading 2,400-3,000 cabinets a quarter and connecting between 100,000 and 150,000 premises with fibre every week. That means we're increasing the reach of superfast fibre to as many premises as there are in the whole of Singapore – every three months.

The local access network covers 30 million customers and 8 million broadband lines from approximately 5,500 local exchanges. 300 million telephone calls and 350 million internet connections are made across this network every day.

We're investing £2.5 billion to upgrade the local access network, bringing superfast fibre broadband within reach of two-thirds of UK homes and businesses by 2014.

But it's not easy. We have to lay 3 million km of fibre across the UK and install 50,000 new cabinets serving 3 million distribution points.

Why is everyone talking about fibre?

The current communications network has been built on copper and it'll continue to play an important role for some time to come. It's still the gold standard for voice, connecting around 23 million lines in the UK. And it can carry information at speeds of up to 20Mbit/s in a digital format. So it's no slouch itself.

Connecting the final third

Fibre, of one type or another, will connect at least two-thirds of homes and business in the UK in the next few years. But there are some areas – often more rural places – where it just isn't viable to introduce fibre.

Current broadband coverage in UK is 99.6 per cent. But about 160,000 lines have no access to broadband due to line length and 310,000 have limited access (up to 0.5Mbit/s only). So we're working to develop solutions that will help us achieve the government's Digital Britain target of a minimum broadband speed of 2Mbit/s for everyone in the UK.

One of the solutions we've been testing is Broadband Enabling Technology (BET) solution. BET can provide broadband services on long lines. It provides up to 1Mbit/s over a single pair of copper wires which can be boosted to 2Mbit/s with the addition of a second copper pair.

Our network spans the length and breadth of the country, and is connected to 26 million premises across the UK. We've over 21,000 field engineers out and about every day developing, monitoring, maintaining and – when needed – repairing it. And with £2.5 billion being invested in it, we're busier than ever.

Tue Jun 26:
Over 10 million homes already have access to fibre broadband and today’s news brings us another step closer to our goal of making it available to two-thirds of the UK by the end of 2014. And hopefully we won’t stop there. We’re working with BDUK and local government and communities to try and give as many people as possible access to the benefits of fibre broadband.

It has led to the creation of the firm's Infinity offer which promises "up to" 40Mbps. The service was found to provide an average speed of 36Mbps.

Orange's "up to" 20Mbps ADSL service fared worst out of the maximum-speed offers surveyed. It was found to provide average download speeds of 7.2Mbps.

22 March 2012

More than eight million homes and businesses now have access to fibre and we’re aiming to make it available to around two-thirds of UK premises by the end of 2014.

With 80/20 available from early April, you’ll have a chance to start selling the service from mid April onwards. It comes with an £80 connection charge and £9.95 monthly rental. Of course the current up to 40Mbit/s service will still be available so you can choose whether or not to offer the enhanced speeds.