[LINK] NBN retail cost

Tom Koltai tomk at unwired.com.au
Fri Mar 11 15:05:29 AEDT 2011

> -----Original Message-----
> From: link-bounces at mailman.anu.edu.au 
> [mailto:link-bounces at mailman.anu.edu.au] On Behalf Of Michael 
> Skeggs mike at bystander.net
> Sent: Friday, 11 March 2011 1:30 PM
> To: Link list
> Subject: Re: [LINK] NBN retail cost
> > On 2011/Mar/11, at 12:40 PM, stephen at melbpc.org.au wrote:
> >> Thanks Marg. But imho a 7% NBN markup might be remarkable. For 
> >> example:
> >>
> >> 
> <www.zdnet.com.au/50mbps-500gb-on-nbn-may->
> >> m>
> >>
> >> "The details were revealed in the NBN Co three-year corporate plan 
> >> released by the Federal Government earlier today .. the 
> document did 
> >> estimate that a basic 12Mbps downlink/1Mbps uplink plan on the NBN 
> >> with a 50GB download limit would cost around $56 (and $24 
> wholesale) 
> >> while a customer on a 50Mbps downlink/20Mbps uplink service would 
> >> expect to pay around $81 (and $34 wholesale) for 500GB of 
> downloads 
> >> per month."
> >>
> >> So NBN Co plan markups still seem like provider-cash-cow 
> territory to 
> >> me.
> >
> Bear in mind that a retail ADSL2+ link with a sensible data 
> allowance runs from $30 (TPG) to $69 (Telstra) and they both 
> require a PSTN line rental ($30). The prices above include 
> everything required. And since SIP VoIP is widely available 
> for $0 (just call costs) it is a reasonable comparison. I 
> stand to be corrected, but I think a current shared spectrum 
> ADSL wholesale service is still $20+ and wholesale line 
> rental is over $15, so the wholesale rate for a basic service 
> is considerably cheaper for a basic service under an NBN 
> model (of course ULL based service is cheaper, but requires 
> significant infrastructure for an ISP). I would also 
> anticipate that players like TPG would be operating on much 
> thinner margins than NBN's average projection, so I think the 
> projected $56 & $81 are more likely to be projected Telstra 
> price points than rock bottom ISP rates.
> Regards,
> Michael Skeggs
> (speaking soley for myself, not my telco employer) 

Competition alters this Michael,

Greenstein, 2008 successfully argues that as competition and access
speeds increase, monthly capacities and data download limitations are
gradually removed.
Below I quote from his table 1 which shows how many isp's limited their
customers access by year reducing from 53% in 1993 to 10% by 1999.

Year      11/93 1/95 5/96 8/96 3/97 1/98 1/99
% Limited 52%   47%  24%  35%  27%  20%  10%

Pricing in the Shadow of Firm Turnover: ISPs during the 1990s.

In other words, the current TPG model which is unlimited at $79.95 needs
to be the new start up model for the NBN.
For the NBN to deliver a boon to Australia, it needs to at least equal
the most successful model in the marketplace.
That model according to any consumer that is asked would appear to be

Then again, many consumers don't move to better plans because of
laziness or technical incompetency.
That consumer lethargy is what is delaying the digital Television
adoption and is what will stuff up the NBN adoption unless Canberra :

1.	Matches the TPG offering as the baseline.

And encourages ISPs to offer:

2.	High quality educational content for Ages 3 to 25. (I would
suggest the ABC are given a priority in this regard... Possibly in
conjunction with several schools and universities.)
3.	Overseas language IPTV 
4.	Streams the entire content of the Australian Film Archive as in
"This is the Australian Channel"
5.	Rents Fibre entry points (think Transponders) to "come one, come
all... Deliver your content to Australians here..... (No movies or
sitcoms allowed... Except that which is in the Public Domain and
pertains to Oz)

Essentially, the NBN has no choice but to deliver a basic level of
content along with the services.

E.g.: Several Webcams in every city around Australia... Wow, what a
Tourist drawcard.
Traffic cams - I think the RTA already have that covered...
Australia wide Weather channel...
The Senators channel where each senator gets half an hour per month to
talk to their constituents. (SenatorTube...)

This is the opportunity for Government to engage with it's constituents
in a meaningful manner.
It should take the opportunity by electing to connect everyone at a low
entry price (FREE) and add services. Oh you wanted a pots service,
please select a carrier and we will connect you to them for $5.00 per

Oh, you would like Cable TV? Please select a Cable TV supplier and we
will connect you for $5.00 per month.

Oh, you want Home to home Video Conferencing to discuss the upcoming
cake bake-off... we will connect you to other persons Teleconference
direct for $1 per hour of video conference per party. Max ten persons
per video conference only available to non business subscribers.

The Government needs to set the standards encouraging competition
amongst the other service providers otherwise all we get is an
overpriced Telstra Model II.

What's worse, is that every Australian knows it.
Unless there is a clear separation of Corporate and Government
(consumer) interests in the roll out of the NBN, the NBN will fail.

Come on Canberra, let's turn the NBN into something that we can all be
proud of and that the rest of the world will envy.

Let's create an NBN for the People... Not the corporations that have big
Business plans that are built on innovation work!
Business plans that are built merely on the numbers, invariably fail.


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