Mal’s Myths

Given his tasking by opposition leader Tony Abbott to demolish the NBN, it should come as no surprise that Malcolm Turnbull is one of the largest sources of mistruth and FUD relating to the network. So much so, that he has now earned a dedicated page on this blog.

Speed

There are a number of myths Malcolm has presented in relation to the “need for speed”. In 2010 he infamously announced that “12Mbps is enough for any application”, which quickly drew ridicule from assorted commentators.

More recently, Malcolm was caught out fudging the figures on the takeup of 100Mbps services in Korea. He posted a blog entry claiming that Korea had lost its appetite for 100Mbps and that subscribers had declined by some 70,000. He used this information as a source of FUD against our NBN, claiming it demonstrated there would be no desire for the NBN’s superfast speeds in Australia. It didn’t take long before the truth came out though, when The Register revealed that far from declining, the total market for 100Mbps connections in Korea grew by an impressive 850,000 connections (14%) over the preceding 12 months. Turns out Turnbull had based his blog on the data from a single carrier, which had simply lost 100Mbps customers to its competitors. Further evidence came from the USA, where data showed 100Mbps connections grew 144% between 2010 to 2011, following an incredible increase of 868% between 2009 and 2010.

Wireless

The next great fallacy that turnbull constantly promotes -iPad in hand- is that the internet is “going wireless”.

The worst part about this one is that he knows it’s not true that mobile broadband is replacing fixed broadband, or that there is any prospect of it doing so. In an apparent attempt to take advantage of the general misunderstanding between WiFi and cellular mobile broadband, Turnbull regularly makes statements such as “the future of the internet is undoubtedly wireless”, the clear implication being mobile broadband. He only only admits that most “wireless” data is actually provided over fixed-networks (ie: WiFi) when pushed on the subject. The entire point of this line then, is to capitalise on the lack of technical knowledge and encourage the misinformation being propagated by some in the media that mobile broadband (AKA 3G, 4G etc) is a plausible replacement for fixed networks, despite the physical impossibility and the horrendous costs. The NBN will allow WiFi networks to boom, and deliver far greater “wireless” speeds than those currently available via the copper network.

The latest figures from the Australian Bureau of Statistics show that total monthly data downloads over ADSL and Cable networks in Australia grew by an enormous 61,000 Terabytes (TB) between December 2009 and December 2010, to a total of over 174,000TB. Over that same period, downloads over mobile broadband only grew 2,000TB to a total of 16,000TB. The same statistics showed that the number of ADSL connections in Australia grew by 300,000 over the 12 month period, even though only 160,000 new premises were constructed. Australians are certainly adding mobile broadband connections at a rapid rate, but they are not coming at the expense of fixed line connections.

Perhaps the most damning evidence against Turnbull’s wireless FUD, given his iPad attachment, is the recent revelation that almost 92% of data downloaded to iPads comes via WiFi over the fixed network, not via mobile broadband. In other words, 92% of iPad data would come via the NBN. I’ll bet you won’t hear him admit that in a press conference!

Fibre To The Node

Out of the blue, in June 2011, Malcolm began promoting a Fibre To The Node network in lieu of the NBN. I’ve already dealt with FTTN in detail here, so I’ll concentrate on the biggest myths surrounding his FTTN proposals:

Speed. After telling us last year that 12Mbps was enough, all of a sudden Malcolm declared that 60Mbps was not only enough, but also possible with FTTN. However, if we look at historic internet speeds, it’s quite clear that even 60Mbps won’t last very long:

Cost. Malcolm’s second big myth surrounding FTTN is that it’s a cheaper option. In fact, he claims it’s more than 50% cheaper than the NBN. As evidence, he’s regularly cited a 2007 Alcatel-Lucent report entitled Deploying Fibre to the Most Economic Point. While the report does indeed claim that a 25Mbps FTTN network deployed to existing premises could be half the price of a 75Mbps FTTP, it assumes that the FTTN network would be rolled out by the incumbent carrier. ie, the owner of the existing copper network. In Australia’s case, that means Telstra. Since Telstra refused to roll out such a wholesale-only network in 2007, the cost to “cut in” to their last mile of copper (required for FTTN) would be another $15-20bn, according to former Telstra executive Phil Burgess.

On top of this, even Alcatel-Lucent (the authors of the report Malcolm references) expect FTTN to have a limited life and likely require replacement with Fibre To The Premises (FTTP) within 15-20 years. So having spent $15bn on FTTN, plus another $15-20bn paying out Telstra, Australia would need to spend another $30bn in 15-20 years to replace the network again. So much for the cost saving myth.

Monopoly/taking telecommunications reform backwards

Another of Malcom’s oft-quoted myths is that the NBN is a “great big new monopoly”, set to turn back the clock on decades of communications reform.

Bollocks.

Let’s get something absolutely clear: The NBN is nothing like the vertical monopoly that currently exists in Australian telecommunications. Right now (with very few exceptions), Australia’s fixed line telecommunications are provided by the Telstra monopoly network. And not only do they have a near-monopoly on the network itself, they also offer retail services over that network. This situation is known as a vertical monopoly, and is the worst possible outcome for consumers and competition. This is because Telstra’s retail competitors must buy access to Telstra’s own network. This puts Telstra in an immensely powerful position, where they can sell wholesale access to their competitors while protecting the income from their retail division.

While the NBN will be a near-monopoly of fixed line infrastructure, it will not be a vertical monopoly. NBN Co will not have a retail business and must sell wholesale access to every retailer under the same terms, at the same pricing, overseen by the ACCC. As part of the NBN supporting legislation, the vertical monopoly of Telstra is broken, finally delivering the telecommunications reform that should have been done before Telstra was sold.

47 Responses to Mal’s Myths

  1. Paul says:

    That’s a great summary of facts. Keep up the good work.

  2. ssagar says:

    Agree with some of your points:
    – 12Mbps is nowhere near enough.
    – Great confusion/misunderstanding by most (including clueless media) about wireless and 3G/4G mobile broadband.
    I have two big gripes about the NBN, these being the HUGE cost and the long time-frame. Not only that, if it is likely most other large government infrastructure projects, there will be cost and time blowouts.

  3. TBone 62 says:

    Yes just cannot wait for this must have technology to roll. Love this site no barrow to push here1 Next these Gillard and Conroy goons will have you believing you will be transporting thru it next. Kevin Lemon 07 coming to a street near you……

    • NBN Myths says:

      Would you care to make a constructive commentary Tony? You know, like presenting some factual information to support your position? Or do you prefer to use throwaway lines with no substance to argue your “point”?

  4. spazmanaught says:

    Great article. It’s pretty clear now that the NBN is popular with the majority of people ( excluding those who have been brain washed ). Problem is the Libs and Labour have lost sight of Governing and now just look at 3 year terms in power. They are so bogged down with just disagreeing with each other that Australia is in for some very bad times ahead as no ‘ national ‘ projects that might take 10 years plus ever get done. Imagine if we never did the Snowy Mountains Scheme or the Harbour Bridge, we would still be debating the outcomes. Look past the small minded politics and see what this could bring the country in the years to come!

    • Nathan says:

      Your right!! I am still angry at our forefathers for;
      – A telephone network which put a phone in our homes
      – A Sewerage network which put sanitation in our homes
      – A road network which connects to our homes
      – A power grid which brings power into our homes
      – A plumbing network which brings fresh water into our homes

      All of these started off as government initiated projects because of the large capital expenditure.

      But I’m P@#$ed

      😛

      • wdferj says:

        Unless you can cite a government initiated project that put a Rolls-Royce in your garage, there’s no comparison.

        How about listing the things in your home that are the result of private enterprise. e.g. Did the government put groceries in your home, you think setting up a supermarket chain does not have large capital expenditure? How about the car in your garage or the flat screen HD TV? Government initiated project put them there? Or the large capital expenditure invoved in your ADSL connection? Government initiated project?

        And don’t forget the one recent government initiated project that you may have – the pink batts in your roof.

        • NBN Myths says:

          How about you list the utility infrastructure provided to your home that was provided by private enterprise and without any Government subsidy. You know, like electricity, water, sewer, gas or telephone. I think you’ll have a pretty short list. Even the ADSL example you attempt to cite was a) Only possible because of the existing 100% Govt-funded rollout of copper; and b) Was conducted when Telstra was still 51% Government-owned.

          • wdferj says:

            I asked you to list the things in your home that are the result of private enterprise, You didn’t, because practically everything in your home is the result of private enterprise. Fail.

            I asked you to name one country, just one, that is wholly funding and deploying FTTH to 93% of households in a sprawling country with low urban densities like Australia. In fact there is not a single country, even those with 400% higher urban densities that would contemplate this.

            Do you really think that without Government subsidy your home would be in the dark, without electricity, water, sewer, gas or telephone? That nobody in a country of entrepreneurs like Australia would be enterprising enough to put together the capital and organisation required to provide these services to people willing to pay a fair price for those services?

            The government knocked back multiple bids by Telstra and other private sector consortiums to build broadband networks as far back as 2003. Telstra’s equivalent, Telecom NZ commenced deployment of FTTN in 2008 and it was completed like clockwork in 2010. A subsequent rollout of subsidised FTTH to major urban areas in NZ is in financial trouble because the take-up rate is less than 3% – FTTN is more than enough for most people. Menawhile Telecom NZ has deployed VDSL2 to up speeds to 40Mbps and no doubt, with vectoring, G.fast and advances in mobile technology are in a position to upgrade services to 100-500Mbps for those who need them and are willing to pay.

            Meanwhile, 10 years after Telstra’s proposal was knocked back, and the private sector locked out, the Governmnent has spent $10bn with nothing to show for it.

            Ultimately what you really want is for other taxpayers to pay for the Rolls Royce you demand but are unwilling to pay for yourself.

          • NBN Myths says:

            My, aren’t we the cranky conservative! A thousand apologies for not keeping up with your gish-gallop of falsehood-filled comments. Although I see other commenters are doing a nice job of correcting you. I’ll cover a few too….

            No, we wouldn’t be without those things. But we’d be paying much more for them, especially outside urban areas. Australia, over the decades, has made the decision to implement a Government-funded, cross-subsidy model to most of our utility infrastructure. Socialisation, if you will. Clearly you disagree with that approach, but you’re apparently in the minority because very few people complain about it.

            The Govt have not spent $10bn on the NBN so far, and they don’t have ‘nothing to show’ for what they have spent. You do your credibility no favours by inserting such demonstrably false information into your posts.

            You said “None of the countries above Australia … ran a taxpayer-funded program trying to deliver broadband”. Rubbish. For a start, the NBN isn’t “taxpayer funded”, it’s a Government Business Enterprise, which receives equity from taxpayers, and is designed to provide a return to them from user revenue. Exactly the same as Australia Post and thousands of similar Govt corporations here and overseas. Without being exhaustive (there are a LOT of countries above us), many countries above us in the list have broadband rolled out by a company that is fully or majority Govt-owned, just like NBN Co… Austria’s is 22% Govt-owned; Denmark’s is 100% Govt-owned; Finland’s is 37% Govt-owned (Swedish Govt); Germany’s is 32% Govt-owned; Iceland’s is 100%-govt owned (and their population density is about the same as ours); Israel’s is Govt-owned (through the power company); Japan’s is 1/3 Govt-owned (NTT); The Netherlands is a public-private partnership (1/3 Govt); Norway’s is 100% Govt-owned; Singapore’s is majority Govt-owned (through Temasek); South Korea…While KT is now privatised, it was a Govt company when it began rolling out FTTP/B 14 years ago; Much of Sweden’s is Govt-owned (Stokab); Switzerland’s is 56% Govt owned….. Sorry, I gave up looking when I reached Austria and I didn’t look at the tiny and obscure countries above that. Clearly though, there is no shortage of countries where the Government is funding broadband networks, both FTTP and FTTN.

            Telstra’s “proposals” were knocked back because they were only designed to restore their monopoly by denying their competitors access to the fibre connecting the nodes. That would have meant any competitor would have to overbuild Telstra’s fibre to 50,000-odd nodes to deliver retail competition. The Government(s) were right to reject such a ridiculous proposal.

            Your fixation with SK as an example is misleading. Yes, they have widespread FTTB. But not the same FTTB as being proposed here. They often have cat5 (or better) from the basement to the apartments, not an ancient twisted pair. That said, I have no issue with FTTB/VDSL2 for frustrated MDUs. An obstructive body corporate should not stand in the way of improved broadband. But that is not the same as endorsing FTTN, both because there is no legal impediment to installation and because the performance of VDSL2 over 40m of copper in a wall cavity is not the same as performance over 600m of copper in a regularly-water-filled trench.

            Your description of the various take-up rates as ‘poor’ shows how little you understand technology. Here’s some perspective: The takeup of ADSL in Australia was 3% after 18 months. I suggest you research “technology adoption curve” and educate yourself. If you were running Apple, there would never have been a 2nd-generation iPod.

            “What is average peak speed”? My, your lack of knowledge on the topic is really showing…. Peak speed is the maximum practical speed a user can obtain. For example, an NZ FTTN user close to a node might be able to get 30Mbps on occasion. Average speed is the typical speed that same user gets over time, allowing for congestion etc. Let’s say around 20Mbps. Average peak speed is a term used across a network, as user speeds vary due to copper length and quality, amongst other things. For example, if one user could get 25Mbps, one could get 10Mbps and one could get 5Mbps, then the “average peak speed” would be 13.3Mbps. Got it?

            Any other falsehoods you’d like fixed up, or is that it?

    • wdferj says:

      Exactly. If Kevin Rudd was PM, instead of the Harbour Bridge we’d still be crossing the Harbour in ferries while Kevin tried to drain the harbour for the next hundred years. The analogy to Kevin’s NBN isn’t the Harbour Bridge, it’s trying to drain the harbour at each low tide.

      As for the Snowy Mountain Scheme, if the Labor-Greens alliance was in charge, what chance would there be of building a single dam, let alone a hydro scheme? We’d still be waiting for environmental approval because the endangered red-necked grasshopper had decided to graze in the mountains.

      • Clive says:

        It might be worth your while to look at who was in charge when both those schemes you mention were built. Wasn’t it Jack Lang standing there ready to cut the ribbon on the bridge when Degroot rode through and slashed it with his sword.

  5. cabidas says:

    Great summary.
    References (ABS etc) would make it Gold.
    Cheers.

  6. cabidas says:

    lol. scratch that..

  7. Daniel says:

    This page sounds like an ad for non stick fry pans! Are you saying there are no bad points with the NBN, you have no issues with such major infrustructure spending without cost benifit analysis, other developed nations commenting on the lack of REAL benifit for the outlay, etc, etc. Unfortunatley this boulder has already been pushed into the water and Australia is chained to it. Hope our kids forgive us when their kids are still paying for it!

    • Sebbs says:

      There are of course bad points, few but the most blind will deny that, though they lie more in the execution than the idea. This page is not for discussing them though, but rather the misconceptions that “inventor of the internet in Australia” Malcolm Turnbull is spreading.

      A cost benefit analysis isn’t possible, or at best would be extremely limited, as much of the benefits have yet to be imagined and created (that is not to say they don’t exist).

      If a cost benefit analysis was done before the electrical grid was first rolled out, the only benefit it would have seen is for street lighting, as that is all electricity was used for at the time. The idea of electrical appliances (refrigerators, microwave ovens, washing machines, TVs, even computers) did not exist and were barely even a dream of the more foresighted people.

      Similarly, the killer applications that will come about from a superfast broadband network being available to almost all Australians are still to be dreamt, designed and created. But they will come, and like with microwave ovens and other appliances now, we’ll wonder how we did without them for so long.

      How soon depends on when our fibre network is completed, be it 2021 or 5-15yrs after a FTTN rollout.

    • Nathan says:

      There is another point as to why only a limited cost benefit analysis was completed on the project. For anyone who has written one you will know that it either starts or ends with the assumptions that have been made as no one has a crystal ball handy when doing all the projections.

      Now I’m sure you can understand that the bigger the project the bigger the assumptions and with one as politically charged as this project it would never have gotten off the floor of parliament. ever little legitimate assumption would be used by the liberals as an illegitimate reason to halt the project.

      This is not to say that this hasn’t been done as it was part of the reason the Labour party changed their initial FTTN plan (yes I did say FTTN was the Labour plan initially) to FTTP. Cost analysis has been completed as well being independent review.

      More than I can say for the sooner, cheaper Liberal plan which has no firm rollout schedule or budget and most certainly has not been independently reviewed. So I don’t know how we can say it will be sooner or cheaper.

  8. dedalus says:

    The big hole in Malcolm’s vdsl2 speed figures is the proximity of the node cabinets to the user’s copper. As you mention, the cabinet’s have to be placed every few hundred metres along the street to achieve the maximum 100mbps. That fact has to be highlighted.
    Overall a great job you’ve done.

  9. aquillatnbn says:

    Yeah the Howard/LNP con job reason for selling Telstra in the first place was to break the monopoly. We know how that turned out – no maintenance – no service and a IT service centre helpdesk now outsourced to the Phillipines along with many other Australian jobs lost. Not many people would have guessed that the telephone records of the entire country would be sold to telemarketing centres in India and elsewhere. Now Abbott/Turnbull/LNP have the hide to try and deceive the people again with half truths and misinformation. How many more Australian jobs will be lost if they get their hands on the NBN?

  10. Grumpy Pedant says:

    I have been living overseas and was thinking … what’s all the NBN fuss about ?

    So I looked at the LNP website…
    http://www.liberal.org.au/fast-affordable-sooner-coalitions-plan-better-nbn

    I am truly flabbergasted, with all the filibuster from Turnbull and Abbott I was thinking – yeah well $44b is rather a lot… so you can imagine my surprise when I see that the LNP want to deliver 10 to 100 times slower broadband, for about 30% less cost.

    30%

    Only 30% !?? …maybe there is a decimal point in the wrong place …

    AND AND – they plan on a paltry 50-100mbps by 2019;

    Let me repeat that – Abbot and Turnbull plan on spending almost $30b on achieving a crap service with a 2019 mbps target which already lags behind the most advanced countries.

    Now there is a great big fat new waste of money.

    Does this remind anyone of the Optus cable fisaco ?

    The ONLY reason I can think of for such bloody mindedness is profit. Turnbull made most of his money at Ozemail. For an ISP the underlying broadband cost is all important and there is a natural limit to what people will pay.

    In Japan that’s about $50 a month
    In Australia I guess it also about $50 a month
    and in Thailand it’s about $15 a month

    Australia level pegs for speed with Thailand not Japan.

    http://www.netindex.com/download/allcountries/

    The people who would care about $30b versus $44b are the business people trying to squeeze as much short term profit as they can from the $50 or so a month people are willing to pay.

    This is not about business, and should not be about business; not everything is about business Malcolm, you are rich, good luck to you but it’s past time you gave something back to the community that made you rich, you stingy boofhead.

    …and will our children forgive us ? (for spending $44b rather than $30b ?) Oh please – how pathetic is that post. Do I really need to say that our kids wont give a toss about wether we spend $44b or $30b or even $60b.

    They will certainly care about the quality of the infrastructure rolled out and if its crap, they will ask why we were so miserable as to balk at the cost difference and leave them with less than 100mbps in 2020.

    • wdferj says:

      You don’t get it do you? None of the countries above Australia in http://www.netindex.com/download/allcountries/ ran a taxpayer-funded program trying to deliver broadband, let alone FTTP. None have a FTTP penetration anywhere near 93%. None have the suburban sprawl and low population densities as Australia.The countries above Australia just let the private sector get on with it.

      Hong Kong tops the index. Hong Kong has FTTP to just 11% of households, the remaining 35% of its broadband is FTTN. Total Broadband coverage (FTTP+FTTN) is 45% of households and the user pays for the connection.

      P.S. Hong Kong also has hardly any expenditure on social welfare and healthcare is user pays.

      In Australia one in four households are dependent on welfare payments and everybody’s healthcare is taxpayer funded. You want Hong Kong speeds, let’s follow the Hong Kong example to get there, eh?

  11. Grumpy Pedant says:

    Sorry I am not sure what point you are trying to make here…

    Is your point that:

    Australia – in spite of the lack of urban density – should just let the private sector get on with it ?

    Or

    That Australia should target something less than 93% ?

    Or

    FTTH will come at the cost of Medicare ?

    It’s pretty obvious that the NBN would have made a profit, albeit taking a lot of years to recoup the cost, so I fail to grasp the connection with Social Welfare or as someone else commented a Rolls Royce. While I have never considered buying a Rolls Royce – I would certainly do so if it were merely 30% more expensive than a Corolla, even if it took 7 years to build rather than 5 or 6.

    • wdferj says:

      My point is that there needs to be a mix of flexible technologies, the appropriate technology for each category being determined by competition, cost-benefit analysis and economic viability, with an eye on fast-moving changes in the sector. The government picking, mandating and borrowing to fund a single technology in a fast-moving sector was always going to be a disaster. For example, FTTP may be competitive, viable and have a positive cost-benefit in certain areas with the right urban densities and adequate user demand. FTTB/FTTN makes more sense in dense cities, FTTN in sprawling suburbs, wireless and satellite in rural and regional areas. Mandating 93% FTTP makes no sense.

      No other government in the world is involved in FTTP deployment to 93% of households, this includes countries with a similar mix to Australia like the US, UK, Germany, New Zealand. The world leaders in broadband penetration are South Korea, Japan, Taiwan, Hong Kong and none of these, despite much larger and denser urban populations have anything near 93% broadband penetration or FTTP penetration, and the broadband was deployed by the private-sector.

      South Korea – 58% broadband, 17% FTTP, 41% FTTB/FTTN
      Japan – 42% broadband, 26% FTTP, 16% FTTB/FTTN
      Taiwan – 29% broadband, 0% FTTP, 29% FTTB/FTTN
      Hong Kong – 45% broadband, 10% FTTP, 35% FTTB/FTTN

      USA has 6% FTTP, Germany 0.51%, UK 0.06%.

      How is it obvious that the NBN would have made a profit? If it was so obvious, the private sector would be jumping all over themselves to build it and paying us for the privilege. But they’re not. The government knocked back multiple bids by Telstra and other private sector consortiums to build broadband networks as far back as 2003. Telstra’s equivalent, Telecom NZ commenced deployment of FTTN in 2008 and it was completed like clockwork in 2010. A subsequent rollout of subsidised FTTH to major urban areas is in financial trouble because the take-up rate is less than 3%. FTTN is more than enough for most people. Meanwhile, 10 years after Telstra’s proposal was knocked back, and the private sector locked out, the Governmnent has spent $10bn with nothing to show for it.

      Your last paragraph basically says that you want a Rolls Royce for 30% more than a Corolla, with other taxpayers borrowing to pay the remaining 1000% cost. Sir, your sense of entitlement to other people’s money is breath-taking.

  12. Grumpy Pedant says:

    $44b for the mostly FTTH ‘Rolls Royce’ NBN
    $29b for the FTTN ‘Corolla’

    …and you start talking Rolls Royce & 1000%.

    Of course it would have made a huge profit if the penetration was 93%.

  13. wdferj says:

    The $44bn estimate from the same government that blew out their estimate on deploying pink batts, killing Australians in the process? the $44bn estimate from the same government that blew out their estimate on the BER school halls? from the same government that committed “no-ifs-no-buts” as late as 2013 to delivering a surplus in 2013, but instead delivered a massive deficit? from the same government that forecast a $18bn deficit in May 2013 only to revise it up to $30bn four months later? That $44bn estimate?

    Let’s see what happened in the UK.
    In the UK just 0.06% of households subscribe to a direct fiber connection.
    http://www.ispreview.co.uk/index.php/2013/04/bt-abandons-native-uk-fttp-broadband-rollout-for-fttpod-and-fttc.html
    “BT has unsurprisingly abandoned their original 2009 commitment to make ultrafast fibre optic FTTP broadband ISP services available to 2.5 million premises in the United Kingdom and will instead focus on the more economical FTTC solution. In reality it’s somewhat well known that the FTTP project didn’t go quite according to plan, which is reflected by the fact that, at the end of 2012, the service had passed just 100,000 premises. Several 2011 trials showed that it could take 7 hours and two engineers to install the service (here), or sometimes longer, into a single home (the target was supposedly around 2 hours).”

    Germany? In 2013, with over 30 million DSL customers, Germany is one of the top DSL countries in the European Union. Germany has 0.51% penetration of FTTH/B. Deutsche Telekom has stated it would invest EUR 6 billion for broadband roll-out in Germany using FTTN + VDSL2 vectoring and has in fact slowed its deployment of FTTH, stating it that will only deploy FTTH in markets where it is profitable.

    New Zealand? Telecom NZ commenced deployment of FTTN in 2008 and it was completed like clockwork in 2010. A subsequent rollout of subsidised FTTH to major urban areas is in financial trouble because the take-up rate is less than 3%. FTTN is more than enough for most people.

    Australia? Four years after commencement of roll-out, the NBN has spent close to $10bn but has connected 5 households in the NT, a handful in Tasmania and a smattering elsewhere. Rollout targets have been revised down multiple times, actual costs were being overrun constantly, yet somehow NBN Co. was confident “she’d be right.”

    FTTH costs are almost impossible to estimate because of the need to get inside every home. Industry figures of actual deployments show that a FTTH deployment costs at least 10 times of FTTN.

    “Of course it would have made a huge profit if the penetration was 93%.”
    Profit is not determined by penetration. It is determined by the actual cost, demand, take-up and competition. The actual cost of the NBN was guaranteed to blow out a few times. The private sector has deployed speeds upto 100Mbps in South Korea, but the vast majority of the plans sold are below 25Mbps. New Zealand’s subsidised FTTH roll-out to major urban areas is in financial trouble because the take-up rate is below 3% – people are happy to stay on FTTN speeds. This situation has been repeated in the UK – BT is now only offering FTTH on-demand i.e. user pays.

    When the NBN roll-out was initiated, FTTN was limited to 12Mbps. Nobody considered anything faster was possible over copper. But Telecom NZ have since deployed VDSL2 to up average speeds to 40Mbps. The G.vector standard raises average speeds to 100Mbps. G.Fast ups speeds to 1Gbps. So in four years, standardised FTTN speeds have jumped from 12Mbps to 100Mbps, with the 1Gbps undergoing standardisation for 2015 release. See the problem with governments mandating a single fixed one-size-fits-all point-in-time technology? At the same time, fixed wireless technologies have also jumped in speed to over 400Mbps.

    When the NBN roll-out was initiated to provide 100Mpbs average speeds, the competing technologies were not able to deliver anywhere near this speed, Four years later, competing technologies can easily deliver 10 times this speed at a tenth of the deployment cost.

    With high costs, low demand, super-low take-up and competition – competition not just from competing companies but from competing technologies, the NBN had zero chance of ever breaking even. Even the NBN co plan has always aimed just to break even before selling itself off, yet you are confident of a huge profit.

  14. Nathan says:

    Whats your real name …. with the level of 1/2 truths in this post I feel like I’m reading Mals Blog..

    One small point because I really cant be bothered answering the bull above (as this website has already done a great job of answering most of them).

    I am from NZ, the reason why NZ is moving from FTTN to FTTP to 75% of households is because they realize after such a large rollout heavily subsidized by the government that it just isn’t going to cut it.

    Your comments about demand are cherry picked otherwise Malcolm Turnbull is one of the worse investment bankers in history having invested in two EU companies currently undertaking huge HTTP projects in France and Spain.

    BT FTTN rollout is behind schedule and over budget with thier ex CTO providing evidence to the house of lords enquiry into the British digital economy slamming BT and its FTTN project. his evidence is completely inline with what this website and others have stated about Mals FTTN plan. Feel free to search for House of Lords British Telecom: http://www.parliamentlive.tv/Main/Player.aspx?meetingId=10560

    Take your half truths elsewhere

    • wdferj says:

      Nathan says: “I am from NZ, the reason why NZ is moving from FTTN to FTTP to 75% of households is because they realize after such a large rollout heavily subsidized by the government that it just isn’t going to cut it.”

      1. Isn’t going to cut it for whom? The fact of the matter is that the take-up rate is 3%, the majority of these being schools, hospitals and businesses. If FTTN wasn’t cutting it, shouldn’t the uptake rate be more like 97% instead of 3%? With such a low take-up rate, the 3% of businesses, schools and hospitals are being subsidised by 97% of taxpayers.
      http://ufb.org.nz/wp-content/uploads/2013/08/Year_two_broadband_deployment_update.pdf

      2. The NZ$1.35bn subsidy for 1.35 million NZ households is a far cry from the A$43bn subsidy for 8.5 million households. The NZ taxpayer is subsidising the rollout at $892 per household. The Australian taxpayer was subsidising the NBN at $5,058 per household. At the NZ rate of subsidy the NBN would cost the Australian taxpayer $7.6bn instead of $43bn. So why is Australia paying 5.6 times more than NZ for the same service? Because the remainder of the cost is being borne by private enterprises including Chorus, which has committed $3bn to the project and is going broke as a result
      http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11152942

      3. You’re from NZ? Smart move coming to Oz where we Australian taxpayers had been suckered into paying 5.6 times the NZ taxpayer for the same service.

      http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10891805
      “At the end of March, Communications and Information Technology Minister Amy Adams said fibre had reached nearly 172,000 premises, but just over 5000 users had taken the plunge and connected. And to some extent the numbers are deceiving. Businesses, with schools and hospitals, are being given higher priority for connection than residential areas. And businesses are taking up fibre at a faster rate than residential users. Northpower, for instance says more than a third of early adopters are businesses.”

      Nathan says: “BT FTTN rollout is behind schedule and over budget”

      1. So is the NBN.
      2. Perhaps, but the critical fact is that the BT FTTP has been completely abandoned after 2 years.
      In the UK just 0.06% of households subscribe to a direct fiber connection.
      http://www.ispreview.co.uk/index.php/2013/04/bt-abandons-native-uk-fttp-broadband-rollout-for-fttpod-and-fttc.html
      “BT has unsurprisingly abandoned their original 2009 commitment to make ultrafast fibre optic FTTP broadband ISP services available to 2.5 million premises in the United Kingdom and will instead focus on the more economical FTTC solution. In reality it’s somewhat well known that the FTTP project didn’t go quite according to plan, which is reflected by the fact that, at the end of 2012, the service had passed just 100,000 premises. Several 2011 trials showed that it could take 7 hours and two engineers to install the service (here), or sometimes longer, into a single home (the target was supposedly around 2 hours).”

      I’ve addressed your substantive points, the rest of your post consist of rants and smears. As the moderator of this blog urged earlier, “would you care to make a constructive commentary Nathan? You know, like presenting some factual information to support your position? Or do you prefer to use throwaway lines with no substance to argue your “point”?

      • Nathan says:

        Without wasting time here I propose two simple questions then:

        1. If FTTP is such a disaster why has the NZ government, other governments around the world, private industry and guys like Malcolm chosen to invest billions in its construction?

        2. What do you know that they don’t which has caused them to waste billions?

        Also a clarification I will make abundantly clear here I am defending Australia’s need for NBN.

        As for your other points

        1. Look at take up rates of new technology for an 18 month period, Just a few things that will get in the way of a consumer immediately picking up FTTP.
        * FTTP plans have to wait for existing contracts to expire,
        * permission from property owners needs to be achieved (in Armidale that’s about 33% of homes with owners who are not local.
        * The publics understanding of the technology and its benefits needs to be understood.

        2. And what did they pay for their FTTN rollout?? I think that needs to be added factored in. Also NZ is a country about one third the size of NSW but hey lets ignore apples and oranges as the government has still seen the advantage it gives their citizens.

        3. Thank you for your sarcasm but I was born here but grew up in NZ.

        Please read your article again as those rolling out the fiber are happy with the results so far, maybe your cherry picking again.

        4. BT FTTP has been completely abandoned after 2 years. BT has no economic motivation to dismantle their government subsidized FTTN network so it makes sense that they have stopped their FTTP project. Again please watch this video made by BT exCTO to the house of lords in their investigation into the future of Britain’s digital economy: http://www.parliamentlive.tv/Main/Player.aspx?meetingId=10560

        The reason why BT is obstructing FTTP is the same reason why Telstra has bleed its copper network for all its worth with ADSL.

        • wdferj says:

          1. FTTP is not a disaster, it is world;s best infrastructure – currently. The disaster is committing 100% taxpayer funding to a program rolling out a non-essential service to 93% of households, more than half of which are not financially able to acces or are not interested in speeds equivalent to 5-50 concurrent HD video streams
          NZ government has committed a subsidy of NZ$1.35 million for 1 million households, it has committed approximately 17% of the total cost, the rest of the investment (and risk) is from the private sector. This is a far cry from committing 100% taxpayer funds and 100% taxpayer risk.
          Name one government anywhere in the world that has committed 100% taxpayer funds to rolling out FTTP to 93% of households in a country with a urban population density similar to Australia.

          2. Investing in a technology company does not mean expecting taxpayer funds to generate a return on your investment.

          1. My point was that if FTTN really “just wasn’t cutting it”, wouldn’t the uptake rate be much higher than 3%? From a user perspective, moving from FTTN to FTTH is hardly a brand new paradigm-shift technology meriting a technology adoption curve. It’s transparent to the end-user, there’s no UI,.

          By the way, the 2010 NBN corporate plan forecast revenue based on a 40% take-up rates after 18 months. http://www.nbnco.com.au/assets/documents/nbn-co-3-year-gbe-corporate-plan-final-17-dec-10.pdf Can’t see any posts on the blog debunking this NBN myth. So I guess a 3% take-up rate in NZ moving from FTTN to FTTH is as expected, but the NBN forecasting revenue based on 40% take-up rates in 18 months moving from ADSL to FTTP? – nothing to see here, look away, no technology adoption curve applies….?

          Do you think the 3% takeup rate in NZ vs. the ~20% take-up rate in Australia may have something to do with the fact that the NZ taxpayer is subsidizing FTTH at $889 per household while the Australian taxpayer is subsiding the NBN at $5058 per household for the same service? Just a coincidence? As far as I remember the technology adoption curve does not factor in the effect of taxpayer-subsidies.

          3. Sorry for the sarcasm. Not usually my preferred style.

          4. Okay, say BT is as bad as Telstra. Has the British government responded by committing 100% taxpayer funds to a rollout of FTTP to 93% of households?

          • Nathan says:

            Your not listening as you are repeating things over and over like a broken record. I am no longer going to waste my time responding as I have answered ALL of your questions/statements in other posts.

            Enjoy your fraudband as the world will show us over the next 6 years how wrong we were .

  15. Nathan says:

    To keep it short wdferj:

    My point has always been that governments should get involved in providing essential services where the barrier to entry is too large for private enterprise. The method the government chooses to enable private enterprise to enter a market depends on the specific circumstances.

    Your Point 1: California Energy Crisis …. ENRON (feel free to look it up)

    You are also upholding the US as a pure capitalist country where the government is not involved in providing essential services to its citizens.

    Well your wrong, as in Australia the US government has a long history of doing exactly what I have described above and what the NBN is designed to do. While now their utilities are primarily “privatized” they didn’t start out that way in much the same way the NBN has started as a government enterprise and will end up 100% privatized.

    From Wikipedia regarding the US governments involvement in energy. “From civilian nuclear power to hydro, wind, solar, and shale gas, the United States federal government has played a central role in the development of new energy industries.”
    http://en.wikipedia.org/wiki/Energy_subsidies#United_States_government_role_in_the_development_of_new_energy_industries

    BUT we are on a tangent here wdferj as you are keen to do (and what makes me thing you work for Malcolm Turnbull as its one of his favorite tactics. Our energy costs are much more complex than the simplicity you provide above.

    Countries around the work are moving to FTTP BECAUSE they have seen the benefits it will provide in the long term. How each country chooses to implement this is up to each countries particular circumstances but I would be surprised if we looked at each rollout and found that there was no level of government input.

    • Grumpy Pedant says:

      Nathan, very well said, but I can never agree with privatising a natural monopoly, ..while it remains a natural monopoly.

      • Nathan says:

        I understand your point and I would be concerned if it was sold as one entity as well, but at the end of the day as long as retail and wholesale were structurally separate achieving the aims of breaking Telstra’s monopoly on the market I would be partially happy. bugger I forgot to mention that conflict of interest in my other posts.

  16. Grumpy Pedant says:

    My quick calculation based on 8m households and 11m taxpayers

    FTTH
    $5500 per household or $3826 per taxpayer

    FTTN
    $3625 per household or $2522 per taxpayer
    …not including the cost of the inevitable need to upgrade to FTTH

    Australia could have had a worlds best infrastructure(for a time); now we will get a load of old cobblers for a miserly saving who’s only point was grabbing a few more votes.

      • wdferj says:

        1. According to the ABS, 4.4 million Australian households are dependent on welfare payments and/or live below the poverty line. These households are unlikely to be able to afford the laptops, iPads, iPhones and HD TVs required to take advantage of the multiple concurrent HD video streams available with world’s best infrastructure, let alone the monthly subscription fee to world’s best infrstructure download speeds. Small matter of choosing between meals or the rent.

        2. Deducting these households from the 8m households in your quick calculation, and a further say 1 million households with no interest in IT other than email, web browsing, Facebook and standard definition videos leaves 2.6 million households financially able or interested in participating in world’s best infrastructure.

        3. Let’s say of these, the takeup rates for ultra-fast speeds (>100Mbps – 100Mbps is sufficient for 5 concurrent HD video streams) is 40% or 1.04 million households

        4. These 1.04 million households with the financial means to access speeds equivalent to more than 5 concurrent HD video streams are more than likely to be in higher income brackets.

        5. According to industry figures, “FTTH is 3 times more expensive than FTTN with VDSL. Most of this cost can be attributed to civil works; digging up every street and going into every home to install new fiber infrastructure.” http://www2.alcatel-lucent.com/techzine/the-numbers-are-in-vectoring-2-0-makes-g-fast-faster/

        a. If $29bn is the cost of the FTTx hybrid, then the cost of FTTH is likely to be $87bn. If $44bn is the cost of FTTH, then the cost of FTTN with VDSL is likely to be $14.6bn.

        b. The 2010 Corporate Plan FY2013 forecast 511,000 fibre connections for $8.675bn in taxpayer funding ($16,976 per connection). The 2013 Corporate Plan FY2013 has 54,000 fibre connections for $7.5bn in taxpayer funding ($138,888 per connection). This represents a 718% deviation between the two forecasts, which goes to the heart of the credibility of NBN Co.’s forecasting ability.

        6. $44bn/1.04 million households is a $42,307 taxpayer subsidy per high income household. $87bn/1.04 million households is a $83,654 taxpayer subsidy per high income household.

        6. The only good thing about the NBN is that it is/was a scheme for the transfer of taxpayer funds to high income households. As a high income individual, I personally love it. As an responsible Australian, it is nothing more than middle-upper class welfare.

        7. Personally I’d prefer to pay for worlds best infrastructure myself, leaving taxpayer funds for more deserving objectives. I’d sleep better at night. How about you?

        • Nathan says:

          You are definitely not listening, each argument moves to the next, how about you stick with one.

          I am not defending Labor but the need for FTTH, so throw out your Labor rubbish and move on, I want Turnbull to fix the NBN rollout.

          1. In the same way that they cant afford the internet, mobile phones, TV’s….. they have all those so your point is bull.

          2. Your playing the stats game of carry on. as pointed out above you cant write off anyone who lives in a house when it comes to potential subscribers.

          3. As above

          4. I HAVE 100/40 and pay 70 a month, similar to what I paid on ADSL but now I don’t have the crazy 30 a month line rental and excessive Telstra phone charges. so I’m WAY better off financially, same goes for the other poor folk. again your numbers need some revision.

          5. I cant be bothered reading it but considering your last attempts at referencing (which proved the opposite) I’m happy to think yourve misread this one as well.

          6. Yes I see the Labor party acting like the Liberal party in regards to that one, sarcasm intended (almost 🙂 ). As highlighted above under the NBN myself and all of my friends here in Armidale have enjoyed DECREASED costs in phone and internet charges AFTER moving to the NBN. So its not a rich persons game.

          7. Your not listening to anyone here, ITS NOT A TAX PAYER FUNDED PROJECT! Like others I know I can keep telling you this and you’ll just keep ignoring it.

  17. Grumpy Pedant says:

    I am about 4 hours drive from Tokyo right now; in a very small community, but one where there is Fibre To This Hotel, and its been here available for many years and was connected 2 years ago.

    http://www.speedtest.net/my-result/3121316664

    Results are from an old apple wifi network

    • wdferj says:

      1. FTTH is not Fibre to the Hotel. .
      2. Fibre to the Hotel is likely Fibre to the Basement (FTTB) or FTTN
      3. Under the NBN, a hotel in a very small remote community would be connected by Wireless or Satellite, not fibre.
      4. Japan has FTTH penetration to 26% of households, not 93%
      5. Japan’s FTTH was deployed by NTT, a privately listed telco with 33% government ownership
      6. Japan’s urban population density is about as far removed from Australia’s as can be
      7. The Japanese taxpayer did not wear the cost of the FTTH rollout. Under the NBN, the taxpayers would bear the entire cost of the rollout including to 5 star hotels
      8. Whether Australian taxpayers should wear the cost of FTTH to hotels is a question worthy of a referendum. According to the ABS 4.4 million Australian households are dependent on welfare payments and/or live below the poverty line

  18. Nathan says:

    @NBN Myths

    This guys just trolling, I’m sure keymasher practiced his numbers and false assumptions with a whole range of others who have confirmed his mental superiority.

    Regarding FTTH in rural areas my 100/40 is $20 more expensive than my equivalent ADSL plan BUT I save 25-30 in line rental and 200 in land line phone bills replaced with a 20 voip bill.

    VOIP something next to impossible over ADSL copper here in the bush but wonderful with fiber. but hey Telstra with their pay TV, Copper network, archaic phone pricing have nothing to fear from the NBN and so obviously did not obstruct the rollout in any way while Turnbull negotiated board seats and decrementing of Telstra’s monopoly in the back ground.

    Another point on yours “it’s a taxpayer guaranteed project.” …. like NTT in Japan where the government under wrote all loans taken by the company through thier government owned bank in relation to upgrading their Fibre services ….. contrary to what keymasher has stated over and over again.

  19. Anthony says:

    Regarding speed some parts of America and Singapore are starting to offer 10gig per sec internet. Current developments and research indicate speeds going to 100 gig per sec. That is going to make the nbn seem like dial up.

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