[LINK] Detailed analysis of NBN Co’s finances shows FTTP better value than FTTN

[Frank O'Connor]

I’d guess the operating costs of the MTM model NBN are blown out by:

1. Power requirements at the node. It costs to power up all that copper and all those nodes … not an issue with fibre.

2. Maintenance costs at the node/aboveground box. Hey all these above ground, complex, exposed to the elements, mixed composite (with fibre, copper, power wiring - of various qualities), exposed to motor vehicle traffic and other collision/accident probabilities, connected to up and down the line nodes - with all the networking error possibilities that entails, and 80,000 additional possible points of failure through said nodes means the MTM NBN have a few service and repair overheads. Of course floods and bushfires will create absolute chaos (how do you splice melted fibre?) o the above ground nodes, and any number of other natural disasters will achieve maximum disruptive network effect … but hey, ‘Mr Broadband’ knows better.

3. The maintenance and repair of the copper or HFC wiring to the premises from the node that Tom refers to. Rumour has it that a lot of the copper, and a large amount of the HFC network, is not, as they say’ ‘fit for purpose’ … but hey, what’s a few tens of billions of taxpayer dollars between friends. And we can simply pay the ‘friends’ more taxpayer money to fix what they should have been required to fix before we contracted with them … but hey, that’s the ‘Mr Broadband’ way (and if that’s not innovative, what is?)

4. The likelihood of the need to upgrade the physical connections from the node to the premises as consumers elect to dramatically upgrade their bandwidth through a fibre connection over the next few years - although that cost will fall on the consumer rather than the NBN I’d still argue that it means a ‘tax’ in no uncertain terms - because it should have been done right in the first place.

5. Batteries at the consumer end to provide back-up power to the copper and HFC connections. Personally I think they could do away with these and simply let consumers rely on mobiles, but I suppose a sizeable proportion of the public still doesn’t have cell phones, or may not live close to a tower, and I don’t know anything about the node design or circuitry which allows for back-ending line based phone calls, so I guess it may still need to be offered as an option.

6. The need to replace a hell of a lot of copper and HFC after they get to the node build stage in various locations … when they realise that what they thought was good networking material was in fact garbage.

7. The difficulty of diagnosing network problems and connectivity causes on such a complex mixed technology model. Now we have to wait a few weeks for Telstra or Optus or whoever to properly diagnose and fix network problems, in this MTM environment you can look at that blowing out by a factor of at least 5. And expenses for correctly diagnosing (probably necessitating multiple physical call outs to the same address) will be similarly higher.

On top of that you can run little numbers like Opportunity Cost (of the now nearly $60 billion the government is wasting on this turkey). How much could it have made, or saved, on the $60 billion if put to more constructive use?

And the project was commenced on the basis that after the build, the NBN would be privatised to redeem the capital costs and put the network in private hands.

Possible purchasers of the NBN - via a public float or whatever - are seriously unlikely to view it’s value as even close to the build cost incurred (hey, the amount of money to be spent on operating costs, upgrading the network (and personally I reckon they’d be better off just starting from scratch and doing it right) to offer the bandwidth that consumers will need and demand in 10 years time, and indeed it’s ‘fitness for purpose’ when completed mean they’ll be up for serious amounts of capital expenditure just to meet said needs and demand. I’m guessing that’s gonna be another $40 billion down the tubes in todays dollars … but what the hell, it’s just taxpayer money.

Oh yeah … I think the NBN’s estimates, even if they do show FTTP being better value than FTTH, GROSSLY UNDERESTIMATE the difference between the two.

But as I said, ‘Mr Broadband’ has staked his reputation on the MTM model, and he knows best. And who are we of the peasantry to second guess him?

Just my 2 cents worth ...
----
> On 5 Jan 2016, at 9:12 AM, Tom Worthington <tom.worthington at tomw.net.au> wrote:
> 
> On 04/01/16 20:46, David Boxall wrote:
> 
>> ... FTTP was significantly cheaper to run on an ongoing basis ($220
>> less per connection per year ...
> 
> Because optical cable doesn't corrode like copper?
> 
>> ... more average revenue (close to $10 per month per ...
> 
> Is the higher revenue from charging more for higher speed or more download?
> 
> 
> -- 
> Tom Worthington FACS CP, TomW Communications Pty Ltd. t: 0419496150
> The Higher Education Whisperer http://blog.highereducationwhisperer.com/
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