Sunday, May 24. 2009Good To Be With You Again....John Linton ...as John Clark famously says when sending up politicians in mock interviews. (the Labor politicians who are now interviewed by the usual left wing running dogs on commercial TV now UNFAILINGLY use this insincere phrase at both the beginning and end of evey such intrview sending themselves up better than John Clark ever could! We returned to Sydney last night and began to catch up on things of a general Australian nature this cold and blustery Sydney morning. Exetel's Australian business was very strong last week and from what I read while I was away no new depressing news about the economy or the communications industry reared it's head. As we get closer to establishing a Hobart PoP I was interested in this 'non-news': http://www.itnews.com.au/News/103835,conroy-reveals-tassie-fibre-network-close-to-launch.aspx and particularly by this comment: "Conroy confirmed that some 250,000 Tasmanian homes and businesses would be connected via the FTTH rollout" Now I realise that Conroy ranks third behind Krudd and the Whiner for making more ludicrous and untrue statements per mouth opening than anyone who has ever been in Federal Politics but I am wonding how he could possibly back down from this one...I don't see how he could. Of course "signing an agreement" is meaningless in terms of time frame for a delivered service and I understand the need for some sort of action before the next election but isn't this statement a little 'cart before the horsish'? Unless I missed something while I was in Sri Lanka I thought it was still some time away that Labor was going to appoint a NEW 'committee' to investigate how a FTTN should be built (and presumably what it might cost) and that such a 'report' was some six months away - so I'm not sure I understand how a part of a national network can be built before the overall network is designed and costed. However the Kruddster is always long on wild promises and forever short on facts and details so I am guessing the answer to that conundrum is that Tassie will be a massive standalone pork barrel exercise to 'sweep' the five Tassie federal electorates come the end of next year. So, let's assume that Stupid Stephen signs a deal to give the Tasmanian Government one of 'his' 43 billions to deploy a FTTH to 250,000 Tasmanian homes - because that is headline material and is easily enough done (a billion dollars isn't very much money in these days of the Kruddster's hand outs - the way Labor defines a billion dollars these days it isn't even 'real money'). You'd have to think that this subset of the NBN2 FTTH service can be done fairly quickly in at least Hobart and Launceston using the electricity conduits already in place, So this becomes interesting. Who gets to define the pricing to the wholesalers who will be providing the end customer service and on what basis will that pricing be set? For Labor to survive politically at the next election they have to have two things: 1) Some sort of example that an NBN2 is actually buildable in some acceptabe time frame 2) The pricing will be acceptable to the end user and give some sort of return to the infrastructure owner The Macro math (and I know it isn't real) gives you a basis for working out the cost per end user of laying the cable and lighting it up is of the order of $A4,000 per end user and the cost of operating such an infrastructure is somewhere around 12% of the build cost plus, say, another 6% for the interest on the build cost giving a per month 'port' cost (before any profit to the infrastructure owner) of something like $60.00 per month operating cost. As, you would think, the infrastructure owner would want a profit from this investment (Telstra said 18% - Optus said 12%) add something like $A7.00 to reach a wholesale all up cost. So, let's assume the Tasmanian government sells the TFTTH to selected (I wonder what the selection process will actually be?) ISPs at $A70.00 a month. Pretty expensive huh?...compared with ADSL2 that costs something like $15.00 a month for a naked service. Never mind. A competent ISP's COST of bandwidth (bearing in mind there is still the need to cross Bass Strait and I'm not sure that that cost has been worked out by the Tassie government yet but I doubt it will be too different to the current BassLink pricing) is unlikely to be less than $A1.50 per gb. So a 10 gb download service on the FTTH is unlikey to sell for less than $A110.00 per month (inc GST) Now that's a bit better than the $A180.00 a month being bandied about by various parties before I left Australia but it still is unlikely to thrill too many people who might be looking forward to the Kruddster's "Australia will lead the world in communications infrastructure" arrant nonsense. Short answer is such pricing can't possibly 'fly' and Labor's NBN2 may as well be called Dodo if it ever gets built. Now anyone can nickel and dime me to death on the pricing assumptions I've used - don't bother - the costs will be known in a relatively short time and no speculation will be needed. But if you really think the 'back of a bus ticket costs' I've thrown together above are very far off the mark just work your own figures out based on whatever bases you wish to use. I would be delighted if through a combination of political expediency and the usual electioning smoke and mirrors Labor decides to make the Tasmanian FTTH an election winner and price it close to (non-Telstra) ADSL2 - and I think that's a possibility - but only to win an election. I don't think "main land" pricing, which they don't have to deliver prior to the next election, will be less than $110.00 a month. It would be ironical if Tasmania got lower cost internet than the rest of Australia this time around though. Then again....based on Labor's track record to date it could just be that they've set the Tasmanian Labor governemnt up as the fall guy for any 'non-delivery' in structure, and more importantly pricing, that may occur between now and October of next year. Trackbacks
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If your FTTH pricing is correct John, and it makes more sense than any figure I can come up with, then HSPA wireless is still looking good for Hobart, providing Optus "pull their collective fingers out" and fix the capacity issues that anecdotally are starting to show up at an ever increasing pace.
They also need to roll out 3G service to other major centres in Tasmania. It's unforgivable that they haven't even bothered to offer it in Launceston, and then there is the coastal area of Devonport and Burnie. Some Tasmanian electorates have a lot of "voting power" in federal elections. But these grandiose FTTH promises and likely a high price that very few will buy could turn around and bite the federal government very deeply on the bum if they mess up. Comment (1)
I think the kindest view is that the deman for Optus HSPA has exceeded their planning expectations.
I'm old enough to remember the roblems Optus had in coverage and capacity when they first introduced mobile voice back in pre-history. So, while both annoying and disappointing I take the view that it will improve over time just as the voice network did. As you may have gathered from my various comments - we would like to believe that HSPA will continue to improve in both consistency of delivery and speed. Comments (3)
How do Swedish/Norwegian companies deliver 60-100Mbit for
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I don't know - perhaps they don't.
But a 100 mpbps network would be easier to deploy in smaller countries than Australia. Comments (3)
The countries mentioned do deliver such speeds, but tales of such speeds being available everywhere are rarely true.
Muncipalities build fibre networks and sell access to ISPs. Such countries tend to have a taxation and welfare system that much of the west would call "socialist" - massive public investment in health care, transport, higher education and the sciences. Opinions on the way government is run aren't really relevant to the current Government proposed network. Comment (1)
I cannot see how the NBN can be priced anywhere near the current ADSL2 connections and still be a commercial enterprise.
For a start, the current ADSL2 network is already built and paid for and the access price kept artificially low by the ACCC. The NBN will cost at least $20 billion if they manage to shanghai Telstra to hand over it's network and take some equity. That $20 Billion has to be funded and some sort of profit made by the builder as you said. It can't be cheap (less then $100) and still be commercial in my opinion. Luckily the Labor Party is just the Government to build a huge non commercial network and worry about pricing later. Comment (1)
John,
Can you provide your reasoning for the $4,000 per house connection cost? Version initial price per connection in 2004 was USD3000 and is now close to USD700. http://blogs.zdnet.com/Ou/?p=571 This would bring the per connection cost down from your quoted $4000 to $900. That brings your wholesale cost down from $60 to $13.50. Comment (1)
Divide 800 million dollars of federal pork barrel money by 200,000 'homes'.
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