Tuesday, December 21. 2010
.......but ours are an economic work of art compared to the drivel released yesterday purporting to be the 'NBN2' business plan for the next 9 plus years.
I wasted part of my life yesterday reading the newly released NBNCo business plan - or more correctly described - the NBNCo draft outline of some ideas for possibly constructing an unbudgeted infrastructure with no underpinning facts to show why it would be a good thing to invest an unknown (because there was no factual basis for almost all of the assumptions) amount of money in. As a 'business' document it lacked any credibility to any sensible investor - but then the investors, you and I and every other tax payer, were never consulted before this Krudd failure attempted cover up was foisted on us.
Doubtless much more financially credentialed commentators will assess the contents of that document over the coming days:
so I will merely comment on the most obvious aspect of it, at least as it would affect any wholesaler to end user. The proposed $24.00 (ex gst) monthly cost of a 12 mbps data service (and I don't understand whether this price is expressed in NPV dollars, as the document covers a decade, or today's dollars but I am going to assume they are today's dollars) is around 30% more than Exetel, as a small wholesale customer, currently pays for an ADSL2 service from the most sensible of our carrier suppliers if you don't count the need to also pay for a telephone line (which is also not included in the NBN proposed costing and it's not clear how/if telephone call services are to be provided in the document). There doesn't appear to be any mention of a connection/activation price so it's not possible to compare that to the current situation with the three carriers that Exetel currently use whose charges vary from time to time but for much of any of the past three years are zero for two of them with only Telstra insisting on a substantial activation charge (in line with their very high monthly charges).
So, give or take, the 'NBN2' proposed pricing remains a mystery but a sensible commentator would say that is likely to be 'in the current ball park' in terms of Optus and almost certainly lower cost than Telstra assuming the telephone call service charges and/or equipment required are sensibly priced. However I couldn't see how any of the scant pricing details had been arrived at and the base assumption that there would be a 70% take up across the service areas appears to have no justification whatsoever other than that's the figure needed to allow the other figures to be derived. No-one, least of all me, is capable of determining that figure so I will let it go - you have to make some estimate and, despite the increasing use of wireless broadband maybe 70% is achievable if you rip up all the copper and therefore make current ADSL2 and telephone call services unavailable. However there appears to be no basis, other than necessity, for making 70% a realistic figure.
So, is anyone any further forward in understanding when and how and at what price a replacement service is going to be available for the current PSTN? I can't see how but perhaps smarter people are. My summary from reading the document is that for the majority of end users they will get no faster services than they have today (or are planned for tomorrow without the 'NBN2') nor will they get them at lower prices than they get them today. They will either have to use their mobile for telephone calls or will need to buy VoIP equipment which will not be any lower cost than today's methods of making telephone calls. Depending on the cost of back haul from the points of interconnect the overall service is not going to be able to offer any cost advantages at all over the current networks and there are several downsides not the least of which is that Australia's communications network is back in the hands of a government monopoly which is the very worst scenario in terms of any other option.
The words "back to the future" inevitably echo in my mind.
Copyright © Exetel Pty Ltd 2010
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It's always refreshing to read something written by someone who understands government and business (I'll admit my understanding of both is limited. However, I beleive I can see BS clear as day). It is so rare particularly on the subject of the NBN.
If the NBN can't seem to offer a genuinely competitive price today it's only just going to get worse. If the artificially set minimum is bad now it's going to feel a whole lot worse in 2,3 and 5 years time.
John is there any wireless technology around the corner that could offer serious competition to current ADSL2 pricing and speed? If there is, then you are right 70% will be difficult in the immediate future if it can't compete on price.
Also, I think that $24 included a phone line of sorts.
Have ISPs received pricing for South Brisbane yet?
Wireless broadband technology continues to develop and has a 'road map out to 2018 agreed by the majority of major carriers and manufacturers that takes it to well past 100 mbps.
What individual carriers will deliver in terms of price is unknown but observationally prices continue to fall and speeds continue to increase.
If you look 2 - 3 years in to the future you would expect to see price per gbps downloaded equal to today's ADSL2 with faster speeds.
This is not new - the development of wireless broadband has followed its agreed 'road map' for the past 5 years with very little deviation, if anything it's 'mile stones' have been delivered faster than predicted.
John I see the NBN as only being a positive for Exetel. With the Govts proposal of uniform wholesale prices and Exetels low overheads you seem to be in a box seat.
Your only problem is not owning an internet backbone with the resulting cheap data costs but since you keep mentioning how these costs are crashing in price that seems less of an issue.
Or am I missing something?
I agree - NBN seems to accelerating internet provision into the realms of 'Big Dumb Pipes', unless ISPs start to go down content plays.
A perfect opportunity for Exetel, at least to capture the consumers who just care about efficient internet.
I see it exactly the same way - for Exetel as a commercial business.
While I wouldn't rely on any information given by NBN to this point, I'll share some things I've heard or read.
NBN will provide a layer 2 / data link layer service and it will use the ethernet protocol. It is up to retail providers to package things on that protocol. It means anything that can be packaged into ethernet can be carried. Don't assume it will be 100% IP.
From the NBN End User's Handbook (http://www.commsalliance.com.au/__data/assets/pdf_file/0008/23957/NBN-End-User-Premises-Handbook---Release-2-Jun10.pdf), the NTU (Network Termination Unit - the box at the premises) will have "one or more" Service Delivery Points (SDPs). From what I've heard this is likely to be 4 ethernet ports and a PSTN port.
Technically it looks like it is will be possible to have multiple "service delivery points" per provider. So for example a provider could provide PSTN and Internet on one NBN2 connection.
It also looks like it is possible to have two providers, each delivering to different SDPs on the same NTU.
So the choice for providers (Exetel, Telstra, Optus etc) is HOW to deliver services. For example the phone service could be delivered different ways. They could for instance only provide IP and require users to have an ATA. Or they may provide both IP to an ethernet SDP and PSTN to the PSTN SDP on the one NBN2 connection. It even ought to be possible for an ISP to use the PSTN SDP to connect to their VOIP system.
My take is that at the bottom of the market, any provider that doesn't provide both IP and PSTN (even if it is only a front end to their VOIP system) over the one connection will be on the back foot.
...but there will be no PSTN as a condition of the deal between NBNCo and Telstra is that Telstra decommissions the PSTN as NBN becomes available.
Sad for TPG but fine for everyone else.
Ok, replace "PSTN" in my above comment with "Telephone Interface". That interface could be linked by ethernet into the PSTN just like copper is at the exchange. No need for VOIP.
So my point really was that a "replacement service" for PSTN does not have to be VOIP and the customer doesn't need VOIP equipment. It seems possible for a provider to route ethernet from the "Telehpone Interface" to the backbone of the current PSTN network. That could be done on the same 12 Mbs link as IP if a provider decided to do that. So combined PSTN and IP will cost roughly the same as it is now.
It is those without internet and with a PSTN only line that are going to find things very EXPENSIVE under the current release of information. It will also be more expensive than some of the current phone + broadband deals around.
By the way, ultimately it seems the differentiation of product on the NBN is going to be provisioning and contention over the "CVC" - the link between the "Connectivity Serving Area" and the Point of Interconnect. Seeing how providers market that (if they do at all) is going to be interesting.
The parts I thought were of note were all their assumptions that have no basis to reality.
Assumes 13% of total residential occupied premises being wireless-only today, increasing to 16.3% by FY2025 and 16.4% by FY2040. Dream on.
NBN Co will install a Power Supply Unit (PSU) including a suitable battery at End-User premises to all Fibre Network Termination Units (NTUs).
Maintenance of the battery including replacement will be the responsibility of the End-User or RSP.
The Battery Backup solution will deliver power to the Analogue Telephone Adapter (ATA) within the NBN Co Network Termination Unit (NTU).
Page 118, thinks by 2028, 35% users still on 12MB/1MB connection. Surely by then the amazing new applications will make it pointless on that.
Simiarly page 119, 50% business subscribers on 12MB. These seem to go goes against the trend of 2001-2010 for the ADSL market, who is on 256/512kbps these days?
Interesting assumptions on page 126, that image suggests to me the cutting edge power users expect maybe 300kbit/s (logarithmic scales are hard to read).
But Exetel's HSPA service consistently see 2Mbp/s in 2010, that's within their trailing edge for fixed broadband. Go figure.
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