Analysts explains why some telcos don’t want an NBN
- 01 September, 2010 14:30
- Comments 14
Analysts have provided lukewarm responses to an open letter from senior telco executives that criticises the Government’s National Broadband Network.
The letter, which is signed by several telco bosses such as AAPT CEO, Paul Broad, and BigAir CEO, Jason Ashton, claims the Government “has failed to convince” Australian on the need for a national fibre-only NBN solution.
“For the short to medium term we see, globally, no demonstrated mass requirement for the “up to 1Gbps” speeds to homes and SOHO,” the letter said. “We believe… markets are better managers of capital and technology risk than government.
“In Australia, you might expect to cover 98% of our 22 million people… for $3 billion or less with a large part of this delivered by private investment.”
Ovum research director, David Kennedy, said the open letter made some very good points and that the division in the industry was in part caused by the lack of research-based analysis.
“I think the reason this is starting to happen is because the Government hasn’t clearly articulated a rationale for the NBN and the current implementation approach,” he said. “Because they haven’t adopted a research-based approach the NBN has now become a bit of a political football.
“The situation we’re now in is that because Labor has lost its majority in the Parliament the entire project is up in the air. This announcement today reflects that underlying lack of consensus about the way forward.”
Although Kennedy acknowledged the timing was good for the Coalition, he said he didn’t think it was a partisan statement at all and claimed the ideas expressed were “probably as good as anyone else’s.”
“We’re heading into what will be an extended debate about the NBN and how Australia’s future broadband needs will be met,” he said. “There are a lot of complexities underlying what’s proposed by the NBN that aren’t addressed by the current policy.
“Sophisticated thinking about how the market will work in the new arrangement and what the investment incentives are and so on has been absent from the debate so far,” Kennedy added. “There’s a lot of cost here, not just to the taxpayers but also to the industry in terms of disruption and writing off of old infrastructure.”
Telco analyst, Paul Budde, said he was happy to see the telco executives support the concept of a national broadband network. But he also claimed the telcos involved were not representative of the industry as a whole and that the major players all backed Labor’s NBN.
“The only real large scale operator [on the letter] is AAPT, which we know is also in disarray,” he said. “It’s not that these are the leading lights in the industry at the moment. They’re good people, but if [AAPT CEO] Paul Broad had it all right, why is his company in such a bad shape.”
“These are industry players so… they think about themselves,” he said. “Obviously, they have their own agenda regarding the future of their businesses and I think that’s part of it.”
Nominations for the 2012 ARN IT Industry Awards open on Tuesday, June 12.
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Comments
Tony
Isn't it obvious that the NBN should be rolled out as per customer request. I count about 2 people out of 20 in my street that even care about the Internet. The Libs and Labs have got it wrong in my opinion. You want it, call NBN, they come and install it, when your neigbour wants it easy to hook them coz NBN already put the infrastructure there, if they don't ask for it then great everyone saves money.
Jim
The third last paragraph should read "NBN advocate Paul Budde, ...". Too many people in the industry either see the NBN as a way to hurt Telstra or free government money and are supporting the NBN for their own self-interest.
Ian P
The whole argument of NBN is quite similar to and reminiscent of the rollout of the first railway tracks and the arguments then was narrow gauge or standard gauge. At the end of the day, there has to be proper research done and certainly not political bargaining to determine what is rolled out.
Edie Rolan
In comparison to the rest of the developed world, Australia's broadband networks are quite primitive and slow. Due to the monopoly that Telstra holds over the physical infrastructure there is no _real_ competition within the communications industry. The slow speeds coupled with the limited quotas and the amount of money we spend on these services is laughable. The NBN being rolled out in it's initial stages has caused many ISPs to lift their game and become _slightly_ more competitive, however we are still very far behind.
The wasted billions in lost business productivity simply waiting for data to be transferred over the internet is far greater than the proposed cost of rolling out the NBN. The past and present polices of the government and the lack of a NBN are also contributing to money being sent overseas due to the lack of high speed, low cost broadband infrastructure. Hosting popular online content in Australia is pointless, as we simply don't have the speeds necessary.
Without a reliable, high speed communications infrastructure in Australia, the next YouTube/Facebook/Google/etc startup means an Australian creator of such an idea would need to look overseas to find the resources required to kick off such a large project, we also fail miserably to attract overseas businesses at the same time. Polices such as these as well as making the hosting of certain types of content in Australia means we are also missing out on billions of dollars worth of revenue to other countries.
The argument that wireless technologies are better than fix cable technologies simply defies physics. Fixed cabled technologies will always be faster than the wireless counterparts and also ignores the fact that the backbone of these wireless towers rely on a fibre optic cable for long distance transmission. The current prohibitive cost of wireless broadband is also holding us back in certain industries which could be much more productive if it were less expensive.
The other side of the coin for wireless technologies is the redundancy they provide when a construction worker puts a backhoe through the fixed cables or there is a massive natural disaster such as was proven in the fairly recent earthquake in Chile.
Both Labour and the Coalition do not understand the modern communications landscape. One side seams to ignore scientific facts, spewing political spin in order to get into power and the other just seems to ignore expert advice in the face of pushing it's own narrow minded agenda which is doomed to fail by not meeting our communication needs and expectations.
The idea that the NBN is just for surfing the internet is a naive view that misses the greater picture. As technology marches forward, most of our telephone calls are now switched via high speed data networks rather than traditional telephone lines. The amount of space, equipment and (electronic and man) power required for these networks is much smaller as well.
George Piskor
Notwithstanding obvious self-interest of industry players, there's a lot of truth in their position, especially when an investment of $4B id compared against $40B in thte current economic climate.
100 Mbps access provides 16 simultaneous video feeds so it's hard to imagine 1 Gbps being a market requirement for quite some time. Also, the last-mile debate of FTTH vs wireless is a moot point as industry players will naturally adopt both to smooth out their capital requirements- i.e. it's a business more than a technology issue.
Ultimately, network provisioning from a customer perspective is about service levels- availability, throughput, latency, and customer MTTR defined against statistical confidence levels. Those are the national policy issues for the government, not debates on technology preferences.
Aaron
I am disgusted with the way we refer to Internet speeds. We talk about Kbps and Mbps, but in reality 1kb/s is around 7.6kbps. Not only does it seem like we are getting faster speeds, it is a misrepresentation.
The NBN is not the best idea, but it's better than any alternatives. The amount of usage I get for the amount I pay is extortion, and yet I'm still on the best budget plan for the bare minimum I download. The NBN would be one of the bestthings for the youth in this country because it would not only bring our speeds up to date with he rest of the world. And not only that, but the price of standard Internet would go down to affordable levels for even people who don't use the Internet all that often.
Chris
@Aaron,
Mate the statements you make are all baseless...
1) kb/s = kbps... kBps = 8 x kbps capital B denote Byte lower case denote bits
2) Show me the data that tells you that it will be cheap... The only data I have seen show the network connection costing over $30 then you need to add you internet connection to that. Don't think Fibre means cheap. The Inverse is true. This is the reason so many experts who don't have vested interests or can divest themselves from their interests are questioning the "investment" why do you think we haven't seen a cost benefit analysis as yet
scotty
@Tony ... you're wrong. The bulk of the cost of rolling out the NBN is in the labour of the people doing the digging etc. Whilst it is true that selectively rolling out to specific houses might save *some* money, the fibre will still have to be rolled out to every street. Then, in the future when the current occupants of a house that had previously opted out of receiving the service decide that they now want a service (or new occupants move in) then providing this will cost considerably more. It is much better and more cost effective to connect *every* house in one fell swoop, even if they don't actually want the service right now.
KZ
FTTH is proven to be the most efficient and future proof medium to deploy. Other nations have already started and are in the process of installing FTTH, yet here in Australia we are still arguing on why we need it. Face the facts this is the most logical solution and generation changing idea, it is a must for Australia's prosperity now and in the future. Wireless service will meet our demands for bandwidth, the technology is good for small usage while on the move, and yet it is still slow. Imagine when we have more wireless users, you think it's slow now, you will be wishing you had your dial up modem back.
Comrade
How can the NBN be financially viable when its plans are twice as much cost as comparable ADSL2+ plans?
For $51 (incl line rental) p/month you can get TPG 180GB ADSL2+. A comparable NBN plan from Internode is $110. That's an increase of 116%.
Hard working Australian families will have to pay more for their internet connections on the NBN & higher taxes to pay off the $43-80bn NBN debt.
Tom Brown
Thankyou David for this article.
May I trouble you, maybe in a future article to include links to "the letter", I would like to read it.
The letter refers in para 4 to 3 Billion to cover 98% of Australians, that seem a complete misrepresentation unless they are saying 3 billion to extend the current infrustructure without improving it.
The most important point in this article has been the inability of NBN proponents to properly explain and market what the NBN is doing re quote in Para 6-7 from David Kennedy.
The debate has been waylaid to arguments about home/small office users which is so totally misleading.
It seems to me that many in the above commentary are like rabbits with red filter glasses on, only looking at grass.
Bern
I think the most telling point is that the letter states their proposal is sufficient "For the short to medium term".
The FTTH proposal is good for the *long* term. 1Gpbs is far more speed than most customers need today (but, significantly, not all!). Wait 10 years (shortly after the NBN is scheduled to be finished construction) and see what you think then.
Yes, there are technologies available now that can provide the speed we need *while* the NBN is under construction. But beyond that point, we are hitting speed and capacity limits with wireless (due to physical bandwidth constraints), and fibre looks like the best technology to take us beyond that point.
Massive
The NBN isn't bout today people, it's about the future of broadband in Australia and today is only the transitional period.
Ted
lol....
A highly paid research company CEO analyses the NBN situation and finds that not enough highly paid research has been done.
Cos the highly paid research convinces people of what ias right and wrong.
People would naturally vote against their preferred party if a highly paid research company told them that the NBN was a good idea, according to their $100million analysis...
Cos obviously the initially spent $25million study was simply not detailed enough, not enough highly paid analysis work from an analysis company that have never analysed something this big before...
So let them spend 3-6 months learning about bigger than big national broadband networks, at $4000 per day per analyst wel paid thank you, in order to come up with their report.
Which will then be nitpicked, criticised, roundly abused, belittled, ostracised, discredited etc ad infinitum.
And by whom?
Well by the other side of course, depending on what their findings are. One side or the other will NEVER accept the results, they will never be good enough and will never be accepted by the opposition.
Cos they would not accept any form of proof as they would simply claim it is no proof, and decry the waste of money on the analysis.
Just like they do right now. It will not change and such an CB analysis would indeed be a waste of time and money.
Unless of course you are the CEO of a well paid analysis company, then there is ONLY benefit in that analysis...
And until you have done their analysis, you have naturallyt not convinced the market, nor Paul Broad, nor a slather of vested interest companies that will be commercially threatened by the NBN... lol...
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