John Linton So, following on from yesterday - at some time before mid 2010 Krudd will almost certainly have to publish the terms and conditions and wholesale pricing for Telstra on downwards to gain access to the Aurora Energy built Tasmanian 'NBN2'. It would seem to be much too difficult for Krudd to go to another election with the opposition letting him get away with another 'Alice In Wonderland'/back of a bus ticket pricing of this "most important infrastructure build in Australia's history" - though given there performance to date that isn't beyond the bounds of possibility. However, even if that were to be the case there will be a lot of other people between now and then who will produce/leak whatever figures are eventually put in place to allow the funding of this illusion to proceed via the laws that will have to be enacted.
So......ADSL's costs aren't going to change any time soon in terms of the non-Telstra DSLAM providers. Why? My guess would be that the clock is now, even be it ever so faintly, 'ticking' on some sort of date when some sort of attempt at an 'NBN2' will get delivered in Tasmania and what that will actually turn out to cost and therefore what will be charged for a residential connection. There are a couple of major plusses in using Tasmania for a 'test bed':
Firstly Aurora Energy has the ability, the already installed back bone infrastructure and the detailed knowledge of the terrain and topology to actually be able to string some wire and get some sort of a semblance of a network installed (as I said in an earlier rambling they are a construction company with a decade long track record of actually terminating wires in buildings and homes all over Tasmania so that is a long way ahead of setting up an "NBN2 Co".
Secondly they have an ideological 'twin' of Krudd to ram through whatever State legislation is needed to get rid of any 'road blocks' that may be encountered and who can also be relied upon, at least until the next election has passed, to keep the project's financial records far from independent scrutiny.
So this provides the two key circumstances required by Krudd - some sort of fibre data delivery actually in place or 'nearly' in place and the ability to have the actual costs of construction and future maintenance "under control" (known only to a select few Labor 'accountants'). This is good news for Krudd but really bad news for ADSL2 futures; Tasmanian and otherwise because in mid 2010 Krudd is going to have to go public with the wholesale ts ad cs and the wholesale pricing so that those wholesale customers of 'NBN2' can offer end user pricing whenever the fibre is turned on.
Now, because he will be the only one to know the actual costs and because he can use the "test bed", "early stages", "not final but firm for two years" scenarios his spin spivs can cook up, Krudd can pretty much announce whatever he thinks will get him re-elected. There can be no 'real figures' for an Australia wide roll out at that time and Krudd can protect any actuals of the Aurora roll out under 'c in c' and 'not audited as yet' crapulence. Krudd has to get the figure as low as possible (and it doesn't matter what it subsequently turns out to be) for the announcement but he is going to face intense scrutiny by people who have a much better understanding and far deeper knowledge of costing communications infrastructures - the carriers and the larger communications companies.
So the future of ADSL in Australia is going to be determined by the depth of untruth a politician not known for his high regard for differentiating fact from fiction is prepared to articulate. There is little/no doubt in my mind that Krudd will be pressured to come up with the number that Telstra tells him to and my guess as to what that number will be is something much higher than ADSL2 is provided for today. In fact if you want to start a sweep my pick of Telstra's number is $89.95 per month including 45 gbytes up/down....but that almost won't met Krudd's needs.
I realise my 'plucked out of the air' number is simply that. However by mid 2010 ADSL including a telephone line rental (naked or not) is going to cost something like $A28.00 to a competent DLSAM owner plus another ten or so dollars for the data and another five dollars for their on costs which means they will be charging around $A65.00 for their average user and making a profit before tax of something like 35%. Telstra's costs will be lower and their end user charges higher but the figures will be somewhere in that ball park.
So over the coming months, intensifying in the lead up to the announcement of the actual charges, there will be an enormous amount of self interested pushing and pulling of numbers between Labor and the possible wholesale customers of the 'NBN2' and none of it will have anything to do with arriving at a sensible price a properly costed infrastructure needs to be sold at.
My guess of what the price will turn out to be is based on the price that Telstra/Optus/AAPT etc are happy will not spell the end of their ADSL investments and my understanding of those numbers is that an 'NBN2' cannot be sold for less than that price without ending ADSL2 as a delivery infrastructure - hence my estimate of $A89.95.
However at that price it is difficult to see more than 10% or 20% of current broad band users taking it up and it also seems highly unlikely that any eventual owners of the "NBN2 Co" could even break even at the end user cost (which would have a wholesale cost of less than $A45.00 ex gst - a cost likely below the cost of provision).
So scrap all of those speculations - the arithmetic to get Krudd re-elected and to keep ADSL2 viable is mutually exclusive if you are going to deal with reality and the reality is that Krudd's re-election is his over riding factor in any decision.
You will therefore see the announcement of a Tasmanian 'NBN2' priced at $A50.00 for 50 gb and unlimited local and national telephone calls and a "Foxtel" service for an additional $9.95 per month in June 2010 and the end of any further investment in ADSL in Australia.
Anyone want to start the sweep?
....to be concluded tomorrow