[LINK] Congestion (was Re: NBN to cost 24 times South Korea's faster network, says research body)

Tom Koltai tomk at unwired.com.au
Mon Feb 14 17:22:33 AEDT 2011

> -----Original Message-----
> From: link-bounces at mailman.anu.edu.au 
> [mailto:link-bounces at mailman.anu.edu.au] On Behalf Of David Boxall
> Sent: Monday, 14 February 2011 3:16 PM
> To: Link at mailman.anu.edu.au
> Subject: Re: [LINK] Congestion (was Re: NBN to cost 24 times 
> South Korea's faster network, says research body)
> On 14/02/2011 12:18 PM, Tom Koltai wrote:
> > ...it has been claimed that the NBN will require around 
> $200 per month 
> > from every Australian to break even. ...
> Not by any credible source.

You're right David, it was Henry Ergas who claimed in his report in 2009
that at 90% takeup by Australians, the NBN would need to charge $215.00
per month to offer standard commercial returns on the investment.

No credibility at all, after all, the day after Henry as Chairman of
Concept Economics issued his report, Concept Economics went into

But then for some inexplicable reason, the NBN made the guy that
assisted him on that report the boss of it's pricing policy... go


Ergas advisor now NBN pricing chief
By Liam Tung, ZDNet.com.au on January 19th, 2010

The National Broadband Network Company has hired as its general manager
of pricing an analyst who contributed to a report claiming the company
would need to charge retail prices of $215 per month to achieve
commercial returns.

Dieter Schadt, one of the pricing architects who had contributed to a
report commissioned by industry telecoms newsletter Communications Day
was hired by NBN Co in November last year as its general manager of
pricing, according to his LinkedIn profile. The report was published by
Henry Ergas' controversial firm Concept Economics, which has since gone

The costing exercise, which Schadt had a hand in, looked at the likely
retail prices necessary for the NBN Co to provide an acceptable return
on its investment of up to $43 billion. Concept Economics estimated at a
90 per cent take up of the NBN Co, its retail prices would need to be
$215 per month to pay standard capital returns. At 40 per cent it would
need to charge $380 per month.

Concept Economics' credibility was buttressed by its past as a provider
of pricing analysis to Telstra. Schadt also came to Concept Economics
with deep knowledge of likely NBN Co pricing, having been a Telstra
director of wholesale pricing between 2002 and 2005.

The Concept Economic study also estimated that the real cost of the NBN,
if it accounted for operating costs over its eight-year construction
phase, would rise to between $60-70 billion, a good $20 billion over the
current estimate of $43 billion.

Schadt was joined by another former Telstra pricing architect, Tony
Nielson, in December. Nielson, now a senior pricing architect at NBN Co,
had held a similar role with Telstra between 2006 and 2008. On LinkedIn
he described his role as "developing pricing models for wholesale
products to be delivered over NBN's FTTH network".


> -- 
> David Boxall                    |  My figures are just as good
>                                 |  as any other figures.
> http://david.boxall.id.au       |  I make them up myself, and they
>                                 |  always give me innocent pleasure.
>                                 |                     --HL Mencken
> _______________________________________________
> Link mailing list
> Link at mailman.anu.edu.au
> http://mailman.anu.edu.au/mailman/listinfo/link

More information about the Link mailing list