[LINK] Why the NBN business model is deeply flawed

Glen Turner gdt at gdt.id.au
Fri Feb 17 01:00:52 AEDT 2012

Karl wrote:
> Nope - the answer is fibre. A shitload more of it than it seems anyone
> is willing to pay for, hence the desperate attempts to convince us all
> that wireless is acceptable.

If I were to criticise the NBN business *model* rather than the business
*figures* it would be around the lack of engagement of important
infrastructure providers such as local councils and working within the
timeframes that those organisations have. Such engagement strikes me as
the only realistic way to provide fiber infrastructure into rural
Australia in the long run.

People seem to have forgotten that the NBN exists because of a policy
failure -- the sale of Telstra as one entity -- which started with the
Keating government and continued through the Howard government.

With that in mind, looking for a commercial outcome to judge the success
or failure of the NBN doesn't tell the whole story. If the NBN were a
commercial success but failed to provide a infrastructure which provided
IP telecommunications at a reasonable price with fair access to all then
the NBN would still be a failure.

Going back to the business *model* the NBN's focus on ISPs as the
providers of telecommunications is deeply worrying. There are plenty of
large businesses which are as capable of ISPs which could make use of
the NBN for their own purposes. The promotion by the oligopoly telcos of
a large number of Points of Interconnection to the NBN is as much an
attempt to discourage their existing customers from cutting out the
middleman as it is to discourage smaller ISPs. It was disappointing to
see the ACCC fail to recognise that the market for IP communications
transmission is wider than just ISPs. The result is that even after
rolling out the NBN Australian telecommunications will not be as cheap
as it should be. And since telecommunications is a infrastructure item,
that increased cost effects the competitiveness of everything else made
in Australia.

People seem to have their knickers in a twist about wireless. Wireless
isn't a competitor to the NBN -- it is a complementary technology. The
big issues when building a wireless network are poles and backhaul. The
NBN is an obvious backhaul provider. I have no idea why part of their
business model isn't to provide poles as well, that would allow decent
competition in mobile phone/smartphone communications.

As you can see there is a lot to consider about the NBN's business
model. And I would encourage you to take these up at the ACS meeting, as
the current focus of Her Majesty's Loyal Opposition on the business
*finance* and *technology* of the NBN runs the risk of entirely missing
important issues in the NBN's *model*.

If I may make one comment on the *finance* and *technology* it would be
to consider the period at which you evaluate the cost. The point of the
NBN is to pay once: fiber to the home is the end game and let's not
stuff about wasting money on anything else. So we have this situation
where the Government plan is more economic on a 10-30 year timeframe and
the opposition plan is more economic on a 5-10 year timeframe. The
simple question is can we afford the cheaper-in-the-long-run scheme or
do we have to pay more in the long run because we need to pay less now.

 Glen Turner <http://www.gdt.id.au/~gdt/>

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