Wednesday, 5 September 2012

NBN History and Delays.....or prudence?

Ok, so it's been a while since my last post. I've been busy beavering away around forums and Tech sites trying to spread the word on the NBN (would you believe some people don't even know what it is?...). One thing I've noticed over these past few weeks is the argument from the Coalition and from supporters- "The NBN is drastically behind schedule- they were supposed to have 150 000 connections by now! This just shows how much of a waste it is and how much longer it is going to take."

Is this true? There's no question that it is indeed a long time, in anyones' book, since the NBN as we know it, was started. But why? For this, first I would suggest you read my new page NBN History. There is alot of backstory of the NBN and it is necessary to understand before we continue, where we came from.

Regulation- Bane and Saviour

Such as life in Australia that we have many, MANY, MANY regulations/laws for just about everything. NBNCo. needs legislation to make it exist and give it power, albeit funded by the government (those funding requirements need legislation too). The power OF NBNCo. must be regulated, to ensure it doesn't get above itself, even with the funding restrictions imposed by government. Regulations must be put into place surrounding how NBNCo. will offer services to RSP's (Retail Service Providers as they are in an NBN world) and how much they can charge for this- enter the ACCC. Legislation must also be passed to separate Telstra, seeing as the government can't just force a company to separate just because they use publicly bought infrastructure and have paid to use it (shareholders); the ACCC has to approve this too.

The upshot of all this boils down to- time. These agreements with Telstra took time. These regulation discussions and negotiations took time. This new legislation passing parliament (with a hostile Opposition too) took time. And add to that a hung parliament with the election of Gillard in mid-2010, meaning each and every piece of legislation must be gone over with a fine tooth comb before the Independents/Greens could force its' passage through parliament with the government, due to a completely hostile Coalition on the issue.

The discussions with Telstra started in late 2009, but they aren't completed until mid-2011 and they aren't signed into existence (with agreement from shareholders) until December 2011 or enacted until March 2012....only 6 months ago! The legislation to create, give power to and manage NBNCo. isn't passed and completed until 2010, well over a year after NBNCo's birth. And the regulations surrounding NBNCo's WBA (Wholesale Broadband Access) are still ongoing, due to constant objections from the big Telco's who are barging for more money, more restrictions on pricing and shorter contract terms.

The agreements with Telstra are crucial- they allow NBNCo. to sign a lease for accessing Telstra ducts, pits and exchange space for the next 35 years, at a cost of around $5.5 Billion. This is essential, so that NBNCo. DON'T have to dig holes and rip up driveways and paths (sound familiar....) and it saves them a bunch of money and time. They also allow NBNCo. to migrate customers off the Telstra copper and HFC (cable internet), 18 months after those areas are provided with live FTTH, ensuring the customer uptake is high without exception and maintaining NBNCo's business case which will allow it to service its' loans and thereby not costing the taxpayer by using bonds to borrow the capital. This part comes at a cost of $4 Billion over 8 years. The final piece is about USO (Universal Service Obligations) of Telstra to the government to maintain Payphones, Emergency (000) Services, traffic lights etc. This doesn't directly impact NBNCo, but will in the future. This amounts to about $1.5 Billion. Total agreement cost, $11 Billion. But, the agreement has a clause- If Telstra has to sign this agreement, Optus must also sign a binding agreement to migrate customers off their HFC (cable internet).....more on this next post....

That hurdle is overcome and, as stated, is finally signed and sealed in December 2011 and implemented in March 2012 by Telstra shareholders (99.5% agree in fact....). However, in the mean time, there is an interim agreement that allows NBNCo to use Telstra ducts etc. to enable it to start trials.

Now, this is where things start to get a bit dicey in terms of timing. Do we count the schedule, released by NBNCo. in mid-2010, as part of the original Corporate Plan, as the beginning of the construction of the NBN? After all, they're putting in fibre to premises, signing satellite contracts, running wireless backhaul and planning towers. Or do we count it AFTER the trials have finished? After all, you can't very well rollout infrastructure for millions of customers without first trialling it in real-world scenarios? What if something doesn't work properly, or takes longer than expected? This is the point of trials.

Trials and Timing- Subjective or Objective

And here I suppose is the crux of the issue. NBNCo. are a government company who has a duty to provide the Australian people with the best, most cost-effective and fastest build possible. To go ahead, full steam after nothing more than on paper planning would be extremely reckless- Australia is a vast country and many factors in geography, existing infrastructure, housing types and so on could effect the rollout. These need to be analysed in a real-world rollout. Hence the trials. The first FTTH trials started to rollout in Tasmania, where a State NBN had already been planned and given to Aurora Energy and NBNCo. had tied up a deal to incorporate that into the NBN at large. That saw the first fibre trials rolled out in 2010 by Aurora  and after legislation was passed in early 2010, saw that come under NBNCo. jurisdiction. The trials were completed and the first services tested in mid-2011, modest as they were (several thousand premises were connected, a few hundred used the service). Several thousand are now connected since commercial services have been turned on, with tens of thousands now passed.

The next fibre trials, on mainland Australia were in Armidale, Kiama, Townsville, Wilunga and Brunswick. These covered varying geographies and societal differences. They were conducted from September 2011. Again, initial takeups of the service were small, but have now risen to many tens of % in several of the sites after commercial service was turned on, including to nearly 35% in Kiama. While this seems small in the overall scheme of things, takeups of 15% overseas in similar rollouts are considered excellent. Don't forget too, takeup is largely irrelevant because of the Telstra deal- all those on Telstra copper (most people) will be migrated automatically to the NBN after 18 months of receiving fibre in their area and the FAN being active. Therefore even small takeups of 20% now, will still result regardless, in 70-80% takeups in 2 years time.

In the meantime, satellite deals for NBNCo's "Interim Satellite Services", which see 6/1 services supplied over existing commercial satellites, were signed in May 2011 with Optus and IPStar and offered from July 1 2011. These services have much cheaper prices than normal commercial services (see SkyMesh and compare NBN Satellite with IPStar satellite plans) and much higher speeds, with much higher downloads. And the contention is managed on these satellite slots, meaning these NBN customers continue to receive higher speeds when in peak times, on the same satellites. Once NBNCo. launch their own satellites, by 2015, there will be 90Gbps shared between 300 000 premises. This seems low; after all, if everyone were to download at full speed the entire time, it would result in 450Kbps maximum speed. However, the satellite area is so vast, the likelihood of even half these services downloading at full speed (12/1) at the same time is negligible. However, NBNCo. are also only predicting some 120 000 people to use these satellite services (see the new Corporate Plan), making contention even easier to manage.

The second mainland fibre trial sites partially skipped "trial" phase and instead switched on commercial services as soon as connected. These were done at 15 other locations and expanded 4 of the original locations in the trials, resulting in some 65 000 connections by April of 2012. However, reported takeup was only some 3700 actual services by then, on fibre.

Wireless trials were conducted from April this year, with a few hundred premises outside the fibre footprint of the trials in Armidale, being connected via NBNCo's fixed wireless LTE solution, for current speeds of 12/1. This was expanded to Toowoomba and Tamworth in June. There are a little over one thousand people on the NBNCo. wireless plans.

All these trials, as you can see, have been planeed, executed and spaced out according to the best ways to tackle the various geographies of Australia. The trials are now totally completed. Full commercial rollout of the NBN services, announced as part of the 3 Year Rollout plan in very late March this year (just after the Telstra agreement signed in December took effect in March), were to begin in July. Some 750 000 connections will be started or completed by the end of this year and 3.5 Million will be started or completed by 2015.

Why did I just go through, what may seem like, a giant advertisement for the work NBNCo. have done? Because it gives an indication of the sort of groundwork that has to be done for a rollout on this scale. It cannot be simply rolled out as soon as the numbers are crunched. Real-world numbers must be seen and compared to ensure the best outcome. And this is exactly what has happened as a result....

Blowout? or Blow hard?

So here we come to the point- is NBNCo. on time, on budget and prudent in their efficiency? Most of the mainstream media would have us think not- the term "blowout" was used in conjunction with the new Corporate Plan (2012-2015) announcement more times than I've seen it used in the 5 years previous....

The Australian: "Extra $3.2bn needed to fund NBN" (Google the Headline to get around the paywall..)

None of those are particularly positive for NBNCo. or the government. But let's have a look a bit more closely about what the new Corporate Plan actually says....

1- An extra 3.9% in Capex (Capital Expenditure) or $1.4 Billion
2- An extra $3.2 Billion in Opex (Operating Expenditure)
3- A slight dip in revenues of $0.6 Billion
4- Internal Rate of Return raising from 7% to 7.1%
5- 9 Month Start delay, compressing to 6 month end delay (Jun 2021 instead of Dec 2020)

Now, this all seems quite odd- NBNCo. appear to be spending more to build the network, more to operate the network, taking longer to build it AND receive less from customers, yet they will produce MORE return on investment?? Firstly, here's the mistake often overlooked by the media- the IRR of 7.1% is over 30 years. The Capex, Opex and Revenue forecasts are over 10 years. (till 2021)

Second, the start date was pushed back, but that doesn't actually mean it's taking longer to build. The total build time is actual 9 years 3 months (Mar 2012- Jun 2021) but it was supposed to begin in July 2011 and end in Dec 2020 (9.5 years). Primarily because of the Telstra Definitive agreement vote being pushed back to December 2011 and the agreement not becoming effective until March 2012, meaning NBNCo. could not access detailed information on ducting, current infrastructure condition and other detailed work offered through the Telstra deal, the start date for commercial (or volume) rollout was pushed back from Jul 2011 to Mar 2012.

3rd- let's have a closer look into that extra Capex and Opex:

Capex increases for 2 main separate reasons:

1- Build Drop- This is the method used by NBNCo. in predetermining and pre-building the lengths and connections of the fibre being rolled out through every street. Originally, NBNCo. were using a Demand Drop system, ie. The main local fibre would be run past all premises and then when the customer wanted (or was migrated to) an NBN connection, an NBN crew would then come out and connect the premises connection device (PCD) to the street fibre (the drop). Then the team would install the NTD and connect it to the PCD to have a full service operational by the end of the day for the customer to ring up an RSP and be connected.

Now however, NBNCo. have chosen the "Build Drop" method. This is where the drop to each premises and the PCD are installed AS the local fibre is rolled down the street past each premises. This means, when a customer wants an NBN service, 2 technicians simply come out with an NTD and connect it to the PCD and the customer is up and running. This technique saves on double work requirements (treading the same streets twice) and is expected to save NBNCo. money and time in the long run, while bringing forward some extra costs (speeding up customer connection time artificially with the Build Drop).

2- The Optus Agreement- This Agreement (which a clause built into the Telstra agreement required) was not assumed in the first Corporate Plan. This agreement has seen much debate, as it essentially pays Optus $800 Million to migrate its' internet customers off their HFC (cable internet) instead of letting NBNCo. slowly remove customers as natural speed improvements tempted customers to change to the NBN. It is a lot of money to pay Optus, especially when they are likely not to actually compete with the NBN anyway, however, the ACCC believed it was for the good of the NBN business case (and anything that increases the business case for the NBN increases the likelihood the NBN stays intact- the best outcome for the consumer) that this deal should be allowed. This requires NBNCo. to accelerate rollout in these areas to ensure it meets the guidelines of the agreement (all Optus HFC areas to be connected by 2018) thereby requiring NBNCo. to move forward Capex to cover this.

Several other increases in Capex included:

- Greenfields- NBNCo. must connect Greenfields even outside the current fibre footprint now, raising Capex costs to get fibre to these areas in the next few years.

- Network Distances- More accurate network data, available after the Telstra agreement came into affect, has caused the amount of fibre required to be increased after this data was analysed.

- MDU's (Multiple Dwelling Units)- NBNCo. had underestimated the Capex required to connect all MDU's with fibre

- Higher Labour costs.....don't think this needs much explanation.

Opex increased for several reasons:

1- Once again, the Optus deal, which will result in more customers being online on the NBN faster than originally planned, meaning higher Capex to deal with this (but also correspondingly higher Revenues).

2- The Telstra deal gave NBNCo. access to more dark fibre and exchanges than predicted, meaning Opex goes up for using these systems, but Capex goes down for not having to provision them separately.

3- Small extra requirements for IT and network interactions between NBNCo. and Telstra as well as with other RSP's.

Revenue decreases for 1 primary reason- The agreement NBNCo. made with RSP's in mid 2011 for a rebate on the first 150Mbps of CVC, before a POI reaches 30 000 connected customers. This erodes NBNCo's initial revenue takeup in each of the CSA's (Connectivity Serving Areas) until a critical limit is hit and all CVC has to be paid for. This can be seen on page 62 of the Corporate plan- you can see the CVC earnings are pushed back significantly, taking nearly 4 years to come back to initial predictions. This lowers overall revenue earned in the first 10 years (covered by the new Corporate Plan).

All this is pretty dry, but the point about all these things is, the major changes to the costs and thereby the explanation for the "blowout" (I don't like that word- I'd hardly call 4% or $900 Million a blowout when BHP just dumped $50 Billion on an investment a few weeks ago....) is quite clear and it is, primarily, due to changes in scope. Both the Optus deal (not part of the original Corporate Plan) and the New Developments requirements to connect all houses over 100 premises, rather than over 500, as NBNCo. originally budgeted for, soaks up 50% of the cost increases. Add the build drop for another 20-30% of the cost now, but less costs later. The 20-25% left (or 1% overall) in increased costs shows actually how close NBNCo. assumed and predicted many costs to be in its' original Plan. I don't know about you, but I think if my custom built house was to come in 1% over budget + 3% over budget for additions I made to it, I'd be pretty happy with that.... (remember that Opex increase is a move forward of costs from the Optus agreement. Those costs would always have been required, they're just required sooner rather than later when there is more Revenue to cover them)

NBNCo. appear to be doing a decent job of designing and rolling out a network over the past few years, that has constantly had its goal posts moved. Their original predictions about the costs within the scope they were given, was within about 2%. And the scope changes have added around 10% extra cost of 10 years, but much of that is clawed back through higher revenues and no longer required labour for the Demand Drop.

Is takeup relevant?

Well, I guess that depends on what you believe. Does it matter that people aren't jumping left, right and centre onto the NBN straight away? (although in some cases they are- see Kiama and Willunga takeups of 25% and 38% respectively) Not really- the Telstra deal, which the Coalition regularly overlook in explaining how uncaring people regard the NBN, requires that any FSA (Fibre Serving Area) that has full and active connections for its' coverage have ALL premises within its' footprint migrated to the NBN, off Telstra copper or HFC and now Optus HFC as well, within 18 months of commissioning.

This means, at an average of 12 months from beginning work on an FSA to completion (some will take 16 months, some will take 9 months) that within 2.5 years of a FSA being started, all ~40 000 premises connected in that FSA will be on the NBN. That's a 100% takeup rate of all fibre connected premises (a 70-80% total takeup rate once wireless only premises and vacant premises are taken into account, as they are in the Corporate Plan). There are dozens of FSA's finished each year during the rollout. This means, after an initial delay, there will be some 40 000 premises connected every few weeks. Regardless.

Don't agree with me about any of this? Comment away, or, come join me and others debating it over in the Whirlpool forums (Fighting the NBN FUD, 2012-2015 NBN Corporate Plan or the Coalition NBN Position are 3 threads many, including myself, frequent readily). Many analysts and tech journalists have said since the new Corporate Plan has emerged that now that NBNCo. is in full rollout mode, their predictions of takeup and spending should be judged from here on out. I think this is fairly reasonable- CEO of NBNCo. Mike Quigley said himself, along with Senator Stephen Conroy, that this is the first Operational Corporate Plan. The original was a Corporate Plan for a company starting up. But this new Corporate plan should be used to judge their performance over the next few years (new Plans will be released each year regardless).

So, NBNCo. have vaulted most of their hurdles and are now on the beginning of the 200m back straight. They're due to pickup speed over the next few months and years and we'll soon see, by June next year in fact, whether NBNCo. are capable of delivering. And if they are, what is going to happen at the next election in late 2013.....

Thursday, 28 June 2012

Direct, not the kind that saves the trees

As I have stated in my first post on this blog, I am largely pro-NBN. I still have issues with some aspects, but I truly believe this FTTH NBN is the future Australia needs in broadband. And that it is the ONLY solution that can deliver that quickly, relatively affordably and reliably to the largest portion of Australians possible. There are other solutions, like FTTN or wireless that are cheaper and faster, but they don't have the overreaching aim of providing ALL Australians with access to cheap, reliable, fast broadband. They are stop gaps. They do not ensure our ability to continually innovate in a digital world and be part of it at large.

I've been getting more and more frustrated with the ineptitude of Labor promoting the NBN. And conversely, more and more angry with the ability of the media, at large, and the Coalition to almost outright lie about the NBN and get away with it.

As a result, I've decided to start a....Pro-NBN action group I suppose you can call it, called NBN4Oz.

At the moment, this site is a temporary setup, to gauge reaction and support for such a group. I hope, with support, to extend it to a dedicated website based around information about the NBN, discussions, promotions of services, portals and links to other relevant sites and an overall aim to "fight the FUD" coming from the mainstream media and the Coalition at large.

I know some of you reading will probably disregard this, seeing as my aim with THIS blog was to provide unbiased and factual information on the NBN. But I cannot deny what I believe, which is that the NBN is the way forward for Australian broadband. Also, I am NOT discounting that the Coalition could come up with a better way to provide >90% of homes with FTTP....I just think it unlikely. However, one of the primary goals of NBN4Oz will hopefully be to try and engage the Coalition directly on the issue of no details around their policy. After all, how can Australians fairly decide UNLESS they have all the information from BOTH sides, unlike the current situation?

I will continue to try and provide factual, evidence based writings here. After all, the point of the new site, will be to conglomerate pro-NBN sentiment to allow the maximum exposure of factual, evidence based support for the NBN to the public, allowing them to make the most informed choices possible in a media full of false reporting and dubious political connections.

I simply believe that with so many dozens of individual blogs "busting the myths" and "fighting the FUD" surrounding the NBN, the point is being missed in a sea of small players, while the mainstream media is firing artillery that receives no answering fire. It needs focus and it needs goals. Otherwise, come the elections, the public at large will believe....whatever they're told to believe.

If you disagree with this sentiment, even after reading my and other peoples blogs such as  http://nbnexplained.org or various tech sites like Delimiter and ZDNet, then you are entitled to your opinion and I hope that you will continue to read widely in the hope of believing what I believe. For those of you who agree, I would ask you visit NBN4Oz and, even if nothing else, just put a tick on "Yes, I support this" in the poll to help me gauge the idea. If you would like to help, the site has details on contacting me and any comments or support in any form would be appreciated.

Saturday, 9 June 2012

Uploads- The silent destroyer of souls....

I realise my last post was, how do I put this..... RIDICULOUSLY long, so I figured we'd go for a (marginally) shorter one this time. This is a hazard of writing about the NBN though. The arguments are complex and often mired in both politics and marketing hype. This post, I'll be dealing with the issues of uploads in an NBN or non-NBN world. It's not exactly the most riveting subject, but, it is VITALLY important when it comes to business particularly and increasingly, personal use over the next few years. The NBN will give us ALL access to upload speeds starting at up to 40x what the majority of us on ADSL can get and 10-20x that of HFC. But why are uploads so important?

What's an Upload?...

Most of us, when we're hunting for the best deal in broadband, look at download speeds and quota. Downloads are the main way most of us interact with the web. It's the process of a server connecting to our computer and "downloading" the information to our browsers cache. There are varying degrees of downloading required depending on whether you're checking email, looking at Facebook, shopping in a virtual catalogue, watching a youTube clip, using HD Skype or streaming an HD movie. Download speeds are important. For many, the most importnat. But what about uploads?

Uploads are what happen usually BEFORE you download. After all, when we type in "funny cat videos" into Google, how does Google know we want results about "funny cat videos", rather than "appallingly inappropriate stuffed cat helicopters...."? This is where uploads come in. Each time we request a webpage or element ON a webpage for information, our computer is uploading; ie asking a server somewhere for access to a file it hosts, such as a webpage or video, or in the case of Google, results of a database query (the database being EVERYTHING on the web Google indexes for search). Uploads, in these cases, make up a tiny portion of our web traffic. They're generally less than 1% of traffic, as they are usually short requests to a server, followed by a much more complex download to display information.

Why do I NEED better Uploads?

In recent years, uploads have become increasingly important. Obviously, they have always been important to web companies; they host the servers all OUR uploads request from, so their servers are CONSTANTLY uploading from our perspective (downloading to us). However, video streaming requires constant, reliable upload speeds to maintain a position in a stream of video. Without it, youTube, Netflix, Bigpond and iTunes type content providers would simply not be able to serve us with content. And Skype video wouldn't exist. Nor Facetime. Certainly, these speeds are usually still a fraction of download speeds, say 200-500Kbps, but get a bunch of them're gonna have a bad time.

Most people in Australia have ADSL as their main broadband connection. ADSL has VERY poor relative upload speeds. Try some time going to and checking your uploads. On ADSL? Don't expect over 1Mbps 90% of the time. On cable/HFC? Don't expect over 2Mbps. Wireless is better, on 3G, up to 4Mbps (HSPA-DC) and on 4G, up to 25Mbps...but HIDEOUSLY expensive for heavy day-to-day use. Satellite? Forget it. IF you're lucky enough to already be on fibre, you'll have considerably higher uploads depending on your speed tier. Why is this so? It's fairly complicated largely involving bandwidth allocation and frequency splitting, but essentially it's explained in the name; Asynchronous Digital Subscriber Line (ADSL). It is Asynchronous meaning it is faster in one direction than another. In this case, downloading is much faster. It is the way the technology is based and so it has physical limits to upload speeds. SDSL or more likely SHDSL (Synchronous OR Single-Pair High Speed DSL) are available in Australia, to give similar upload speeds to download. SDSL is not much use for consumers, as it cannot be used with an analog phone service. SHDSL can and can also provide up to 5Mbps at up to 3km from the exchange. But at what price? Type SHDSL into Google and you'll get ads that pop up to show SHDSL lines from as low as....$300 a month....mmm....

Besides, your average consumer doesn't NEED these speeds do they? they?? Well, many don' Most of our applications require much higher downloads than uploads. But have you ever tried to upload a photo? Or worse, a video, particularly if it's HD, to youTube? Takes a while doesn't it.... And this is only the beginning. Many SMB's host their own websites and these servers need upload capacity. If they're popular, upload capacity in the 10's of Mbps may be required. That's NOT cheap, even if you ARE on fibre (as most fibre is a specially provided service outside of Greenfields and selected networks such as TransACT and iinet trials). But the biggest hog of uploads is yet to computing.

Right now, you may or may not be using Dropbox, or gDrive or SkyDrive or any other "cloud" storage solutions. But give it a few years and you'll find it INVALUABLE to have your files wherever and whenever you need them. This is ONLY possible with uploads. And the larger the files, the longer the upload takes....Ever tried streaming your own videos or recorded TV to a computer at a friends house? Don't bother. Unless both of you have HFC as a MINIMUM, it is an exercise in artifacts and blurry half formed video, because your computer simply can't upload the quality of video needed with the bottleneck of speed it has.

So what, the NBN won't help, will it?

Enter the NBN. The NBN, even on it's lower tiers, such as 25(down)/5(up) has, obviously, higher uploads than 90% of premises now. 5Mbps is a 5 fold increase MINIMUM on ADSL2+ (I don't even get 750Kbps). And it's usually a 2 or 3 fold increase on HFC, at around 2Mbps. And it costs just as much, if not less, than you pay now for ADSL2+ or HFC. I've covered this in my previous posts. So, get the NBN and already things are looking up for your daily video making or photo taking, as well ensuring your cloud sync of files doesn't prove an exercise in futility trying to upload a 75mb presentation for work. Go up  a tier and you get 50/20. NOW you've got uploads that rival the downloads you are likely to have now (if you're that lucky). Certainly no problems with MULTIPLE users doing all these things now. Video streaming and HD teleconferencing/Skype (particularly heavy on uploads due to your computer needing to transmit high bit-rate video of you) will be a breeze, even for multiple users. We can even go to 100/

This is great for consumers. But there are many people who NEED it for business. Not necessarily because they don't have it now, many do. But because it may cost THOUSANDS of dollars a month to get 20 or 30Mbps uploads for a business server. Now, with the NBN? Well, the business plans on iinet can give you 1TB of quota (shared between up and downloads) on 100/40 speeds for $130....THAT's a saving. And there will be new 500/200 and 1000/400 plans later in the NBN build too for proportionally more money a month. Not only will it save current businesses alot of money, but new small businesses based around your own home servers can spring up, because you don't have to pay through the nose for uploads anymore. Anyone with a decent 50/20 or even 25/5 (if it's a site with few images or videos) plan can host their own website and not get hundreds of complaints about poor access times, without having to hand over hundreds of dollars a month for an external company to handle it. (in this case too, you have to remotely upload everything....time consuming and painful if you need to make changes regularly)

WARNING- Tech Speak coming!

Is it possible to get higher uploads WITHOUT the NBN? Yes, definitely. There are technologies for HFC AND ADSL that will enable higher uploads, although they have their problems. I've discussed some of them in my posts about "FTTN vs FTTH....Fight!". The ADSL equivalent, VDSL and VDSL2, have MAJOR range issues, dropping to ADSL speeds even before 2km from the exchange, which, as I've said before, is largely useless considering more than 60% of Australians are more than 2km from their exchange. This is primarily because VDSL works on MUCH higher frequencies than ADSL and they don't propagate as far without degradation. HFC technologies upload increase's largely rely on similar technologies to copper such as QAM and DMT, which I won't go into here. Or on node-splitting ; expensive, unsightly and not guaranteed, depending on demand at the time, as HFC and copper are both shared systems, unlike fibre. This is basically because in HFC and copper, one cable shares multiple connections until the fibre node, whereas FTTH has a single, multi-mode fibre going to each home and back to a fibre node, where either technology combines.

This diagram from Wikipedia illustrates the problem with both HFC and, to some extent, plain copper (although this is specifically an HFC diagram) seeing as multiple hundreds of houses share the same line back to a central hub. This is where node-splitting helps HFC and FTTN, because it reduces the number of shared connections on a line, making more nodes. In FTTH though, each house has its' own single fibre cable, and where they DO combine, like HFC and copper at the node, technologies such as wavelength division-multiplexing enable vastly superior speeds for the main line connection. WDM is available to fibre, because it uses light, which has multiple carrying possibilities in the form of different wavelengths. All wavelengths are distinguishable in light by a detector, as they can simply be amplified at the other end, with no appreciable difference in signal-to-noise (SNR) ratio (seeing as little to nothing can interfere with light in a sealed cable). Whereas in copper and coaxial (HFC), the frequencies are ALL carried electrically and the more noise on the cable, the harder it becomes to amplify, until eventually, the signal has a SNR so low, the signal quality is lost. This happens at a much smaller distance than on fibre. (5km compared to 50km)

Uploads are becoming more and more important in todays web. It allows all of us to share what WE'VE been doing and share our thoughts, ideas and services from our own locations, rather than paying large companies to host for us. It decentralises information, making it harder for hackers AND making it easier to retrieve lost or damaged data, seeing as it's always in the cloud. The NBN will provide these upload speeds for both big and small business at a GREATLY reduced cost. And it will, for the first time, provide access to cheap, fast uploads for the majority of consumers, giving us more freedom in our digital lives.

Monday, 4 June 2012

A Coalition Broadband plan...maybe and FTTN vs FTTH....FIGHT!

So, we've covered some fairly broad information about the alternatives to the current FTTH NBN. But in this post, I want to discuss a little more in-depth, the differences of the major section of the network that may or may not get built, depending on currently, how the elections turn out in 2013. While wireless is likely to play an increasingly important role in our everyday lives, it will not do the heavy lifting required of businesses, Video-On-Demand (VOD) and Cloud storage. For these applications, we need fixed-line systems, such as we currently have with Telstra's CAN (predominantly copper), HFC networks (Optus and Telstra) and backhaul network (predominantly Telstra fibre).

The argument is, with a fixed-line network made up of FTTN, HFC and copper, as in the Coalition's current plan, we will have enough bandwidth to serve the majority of Australians for several years to come at a cheaper price. Whereas the FTTH network of NBNCo. and Labor will give us a network that is more expensive, but provide us with bandwidth to spare and to grow into. Note here I'm saying Coalition and Labor; unfortunately, this is where politics and the NBN clash directly. When I refer to "The Coalition" or "Labor" in this post, it is not an attempt to belittle or persuade, politically. It is simply a matter of fact that, as it stands right now, we have 2 competing ideas for a network, that span the 2 political ideals of our country. The NBN SHOULD be politically agnostic....but it isn't.

So, let's have a look a little more closely at FTTN.

FTTN and VDSL- Partners in crime

FTTN is a network architecture choice that many countries around the world have made- There are several in the US, including the big one AT&T's U-Verse (although we have to be careful, because some of it IS FTTH, but the majority is FTTN). Germany's Deutsche Telecom, under the subsidiary of T-Home (also offered in different countries). Bell Telecom Canada also, which offers its' services under the Fibe moniker and several others around the world. Finally, New Zealand, which has recently stalled its' FTTN rollout by TelecomNZ, the NZ incumbent. There is good reason they've stalled, and in fact decided to go with FTTH to 75% of premises, which will become clear. You'll note I've linked to Wikipedia's sites for these companies; it is significantly difficult to get information directly related to the FTTN architecture of a company, if you're not directly in the industry. It is usually sold under a moniker, such as in Australia, where HFC is sold under Telstra as Bigpond "Elite" Cable or BigPond "Ultimate" Cable, depending on your preference for speeds/price. For this reason I've linked to Wikipedia to give an overview, not a detailed analysis via this source.

These networks, depending on country, usually offer services on a "triple-play" basis; Voice, Internet, IPTV, all over one cable. The TV options vary (PayTV or VOD) as do Voice ("Analog" normal phone services or VOIP), but the Internet speeds can range from as low as 13 Mbps to as high as 200 Mbps. Now that is quite a range and, you might ask, why on earth is it such a big range? Is this speed tiered information? No, this is real-world data that has been received, such as this letter from the CEO of TelecomNZ, regardless of tier break down. So why then, if people are asking for 100Mbps, are they getting 13 in some cases? Such is the physics behind VDSL, the technology used to bring FTTN to the majority of premises.

VDSL (or Very-high-bit-rate Digital Subscriber Line) is a technology behind FTTN architecture. It is, essentially, running on a mix of copper to the premises, running back to a cabinet, where the signal is converted to fibre and sent on to the backhaul of the network. VDSL is HIGHLY dependent on premises' geography for its' speed:

This graphic, from Boundless, a "Rural Broadband company" in Britain, gives a good idea of the unfortunate reality of VDSL. If you live within, say, 300m of your fibre cabinet VDSL2 (the newest iteration) will give you better speeds than ADSL2+. Within 1km, VDSL1 will STILL give you better speeds than ADSL2+, but after that, you're better off sticking with good old copper all the way to your exchange (Note: other graphs go higher to 300Mbps for VDSL2; this is not possible for most Australians, as I will explain). Now, in a country like the US or UK, where there are small, densely populated areas and even the "rural" areas are only a couple of tens of km's away, VDSL can make a difference. But, as I've shown before, 60% of Australians are more than 2km from their exchange. Alcatel-Lucent are boosting that, to enable people within 2km to received higher than 24Mbps, but it drops below that after 2km....again, no good for the majority of Australians. Let's face it, we're a spread out country, even in the suburbs. Boundless themselves actually have a novel idea of "Wireless Fibre" or "Fi-Wi" (WARNING Copyright infringement likely over the "Wi-Fi" brand....) where the cabinets have high power, fixed wireless that enable MUCH faster connections to those beyond 2km, up to 100Mbps. But this is not currently what we're discussing, as I'll talk about below.

One of the problems when talking about FTTN arguments in this country is we don't actually have fine detail about the Coalition's plan for FTTN. For example, will FTTN cover...40%, 50%, 60%, higher? Lower? We don't know. We were only told "97 percent of premises are able to be served by high speed networks capable of delivering from 100 Mbps down to a minimum of 12 Mbps peak speed" and this comes from the Coalition policy on Broadband from 2010- it is NOT the idea of SPECIFICALLY FTTN that Turnbull has launched since mid last year and which Tony Abbott FINALLY mentioned in his Reply to the Budget speech a few weeks ago. It is in fact the original broadband policy that contributed to them losing the 2010 election, which was a mix of subsidies to increase HFC rollout by Optus and Telstra, wireless in the rural and regional areas and other "undisclosed" subsidies for improving FTTH rollout in Greenfields. I have explained this policy and its' disadvantages in my "What about the Alternatives" post. The Coalition seems to have realised this isn't a decent policy now and have gone to FTTN; but we still have no information about it.

So, in actual fact, we have NO details about FTTN in terms of how much of the Australian populace it would cover. There is good reason for that, as I will demonstrate. Note: I know I'm wading into politics here, but unfortunately, the Coalition are basing much of their policy around politics, not good ideas. Such is life, we now have to wade through the muck to get to the gold about the realities of the FTTN in Australia.

The Telstra Dog and Pony Show

Telstra offered up its' 2 cents several years ago in 2006 about FTTN to 60% of the population, although it was shown later that, in fact, it would be to 40% of Australians, in the most profitable areas....and it wouldn't really be available to competitors thanks to the non-ability of the cabinets required in FTTN to allow competitors DSLAMs (the hardware that connects a competitors fibre backhaul with the customer line) to fit in and use ULL's (Unbundled Local Loops), essentially re-establishing a full Telstra monopoly to these areas. Needless to say, the ACCC threw this one out.

Next was Labor's original NBN, or NBN-1.0 as some people like to call it, that would provide "broadband speeds of up to 12Mbps to 98% of the population".  Seeing as almost 50% of Australians can (with some reliability) already access these speeds, it was considered by many a waste of time and money, as it wouldn't actually substantially increase the speeds the majority of Australians could receive. And for those it wouldn't be by much (another 20% can get speeds up to 10Mbps). But this was not the worst of this plan; oh not by a long shot.

See, this "12Mbps to 98%" could only be achieved using FTTN. This, of course, meant rolling fibre to, presumably, 98% of exchanges, whereby cabinets would be installed to "splice" the last mile copper into the fibre network. These cabinets would be large, powered and managed by Telstra. The copper, was to remain an integral part and therefore, Telstra must be compensated for it, as it was essentially actually selling the copper, as it would now be in the FTTN system. Well, that's not something Telstra, particularly then with Sol Triullo at the head at the time, would've parted with lightly. This was THEIR infrastructure, bought by shareholders, they would want fair recompense. The government was told, confidentially, according to experts at the time, Telstra would accept nothing less than $15-20 BILLION dollars for the copper CAN. That would put the total spend, at the time believed to be around $5 Billion, to around $20 Billion MINIMUM, for essentially the same service the majority of Australians had already. Oh, and it got even worse- Telstra, who would be out for competition of this new network, would simply build over it with FTTH in profitable areas and wipe its' usefulness out entirely if their were no laws to prevent it (as there are in the NBN). Telstra's own advisor to Sol at the time admitted as much.

So, Labor came up with the new plan of FTTH to 93%- NBN-2.0. And then we have this unknown % rollout of FTTN by the Coalition. But WHY is it unknown? Is it because the Coalition have simply not fleshed out the policy being this far from the Election? Quite possibly. There is no reason to believe otherwise....but there is a reason to suspect why they MIGHT want to hold back on fleshing it out at all.

The FTTN Australian Dillema

Assuming the Coalition are serious about FTTN, and assuming they will stay with their mantra of fixed wireless/satellite to a large portion of remote, rural and remote regional areas, then it would follow then that approx. 40% of premises would be passed by this FTTN network (seeing as 35% are classed semi-urban (unprofitable for new networks) or regional/rural, ~25% are serviced by current HFC and rounded out 5% remote). So at 40% of premises passed (my assumption isn't bad, considering that's what Quigley has assumed too, once you take into account HFC networks), what would this cost? The Coalition are saying $7.6 Billion. We'll work on $8 Billion. So, $8 Billion to provide 40% of premises with....what? Again, we don't know. 12Mbps? 50Mbps? 100Mbps? More? Again, we're going to assume around 50Mbps. The explanation for this is that, because FTTN speed, using VDSL, is HIGHLY dependent on proximity of its' cabinets to a premises (ie. length of the copper between the premises and fibre splicing point) there has to be a point of economic efficiency. Let's face it, if you roll the fibre to within 100m of each premises to give maximum speeds to all, you're getting AWFULLY close to a FTTH network and most of the cost OF the FTTH network is fibre laying. So, shortening the fibre run by increasing the distance from premises to cabinet is cheaper, at the cost of speed. Hence, the middle ground of 50Mbps.

So, that's $8 Billion to provide 40% of Australians with average 50Mbps. Wait a minute "average"? Yes, that's right, average. Depending on copper line quality, whether you have a physical pair gain system (shared copper line between 2 houses, which to be fair, would probably be upgraded) AND, most importantly, if you have 2 copper lines run to your house, of which the majority of people, don't. Telstra's CAN, in many places, has a single bonded pair of copper running to homes, with no spares available. But for VDSL2 to work, requires 2 bonded that won't work unless you lay more copper....and that's getting a bit silly. Already that FTTN is on shaky ground for the majority then. Also, as I've pointed out before, the majority (60%) of Australians live more than 2km from their exchange, which means, seeing as only 40% of Australians are classed as semi-urban or regional/rural, there must be some portion of this 40% getting FTTN that will require cabinets considerably closer than their exchange.

This, then, means several hundred, if not a thousand or more cabinets will have to be installed for these 40% to get ANY benefit whatsoever above the 24 Mbps available via ADSL2+ to most premises. Also, to make it a reasonable investment, even those inside the 2km limit, will likely need that cut in half to achieve 50Mbps, partly, because without adding a bonded copper pair, VDSL2 speeds aren't available, so VDSL1 is all we have. Hence, likely, several thousand cabinets. All these will, possibly, be administered and installed by NBNCo., as the Coaliton have recently stated they will keep working with NBNCo. if elected and not scrap the company. (this seems logical, now they've realised, because it cost nearly $300 Million just to set everything up (see the Corporate Plan)).

So, the FTTN has become a FTTC (Fibre-to-the-Curb) network, running to approx. 40% of premises, mainly in city suburbs and large regional hubs. We've fleshed this out ourselves, because, as I've said, we have no details of the Coalition's actual policy, but this is in agreeance with most experts and it seems,  at least some of the Coalition now.(read the comments section). There will be ~25% of Australians covered by HFC networks (subsidised to increase competition). And that leaves 40% covered by the copper CAN, or, wireless. The Coalition have not yet said what % of this 40% will get wireless. Obviously, if wireless can only provide 12Mbps (as under the NBN) and some of that 40% can already get 8-10Mbps on copper, they're unlikely to get wireless. Let's say 10% of the last 40% would get wireless, at up to 12Mbps.

A Coalition Broadband Policy, finally....maybe....

So, here we are then, the Coalition's Broadband Policy, as produced (in copyright protection, of course) by me (backed up with help by Citigroup's analysis, if I need to be honest):

- FTTN upgrade to ~40% of premises in Urban, semi-Urban and high density Regional areas
- HFC to ~25% of premises in existence already, subsidies to make competition better and drive prices down
- Copper CAN continuation to ~25% of premises, able to receive speeds of up to 24Mbps (many less)
- Wireless to 10% of premises currently unable to get much over speed over the CAN, if at all

So, this then, is the Coalition's "mixed technologies" plan, or "alternative path of upgrade" as Turnbull calls it in his speech to the Broadband conference in Malaysia recently.

What speeds do we get from this? Now? (or when it is done rather) 25% of premises up to 100Mbps (HFC), 40% average 50Mbps (FTTN), 25% up to 24Mbps (CAN) and 10% up to 12 Mbps (Wireless). So, if you want fast broadband, under the Coalition, looks like you'll have to choose carefully where you move for work or play. Ultimately, this plays against the Coalition, because this fragments the market, making it difficult for consumers who move around (and there are alot of us, look at the rental market). And, as Citigroup notes, it will actually promote, even more than now, the geographic nature of wholesale, and subsequent retail prices of broadband, meaning the digital divide we already experience gets significantly worse as private companies refuse to invest in non-profitable areas.

Upgrading...or not

However, of course, even this last paragraph is assumption. Because of course, we haven't dealt with the "white Elephant in the room" yet; the NBN. If the Coalition do indeed win the 2013 election and opt to stop the NBN where it sits, that will still leave somewhere between 10-20% of people on the NBN ALL over Australia. (perhaps THIS is why NBNCo.'s rollout seems haphazard, makes it more difficult to stop...?)

So we need to modify our numbers again. Some people in Armidale will have access to 100Mbps on the NBN, while some people in Blacktown, Sydney, won't get above 24Mbps and that's if they're lucky enough to get that at all. This seems like a fairly farcical situation and indeed it would be. How would the Coalition deal with this? Part of the reason the NBN is going in is to "close the digital divide" of regional and urban Australians (or even semi-urban and urban Australians...). I don't have an answer for this. All I can assume is that they would choose to increase the amount of FTTN rolled out to deal with these areas that some have NBN and some don't. Otherwise, you'd be left with the East half of a town with 100Mbps and the West half with possibly little access to broadband at all!

So our policy price goes up. To what? This is pure conjecture here, but while it's clear from Citigroup's analysis it would indeed be more than the $8 Billion we've been working with, (they suggest $16.7 including all legislation) Citigroup work on the assumption of no NBN whatsoever, so we can't use those numbers. I would hesitate to put down a figure, but my guess would be.....$23-25 Billion, including all legislation and CBA, seeing as FTTN gets more and more expensive the further apart premises get. And much of the NBN would have stopped in regional areas, where FTTN may not have been slated under a "pure status quo" situation. Now, of course, we're in a situation where the % on copper has decreased, the % on wireless MAY have decreased and the % on FTTN increases, significantly. Possibly to as high as 55%, although likely hovering around 50%.

And there's the next question too, of where do we go from there? Paul Fletcher believes there is much technologically we can do yet with HFC, copper AND FTTN. Technologies like phantoming and DMM in FTTN can provide current bandwidth up to 300Mbps along last-mile copper, very true....but what he doesn't point out is that phantoming and DMM are VDSL2 technologies and, as I've said, many Australians don't have 2 bonded pairs going to their houses. Also, 300Mbps is PEAK speed at no more than 300m from the exchange. It drops rapidly after that.

Here's also an interesting tidbit from ospmag:

Due to the amount of calculations involved, vectoring will provide the best results in nodes with a limited number of lines (FTTN or FTTB deployments, for instance). The only requirement is that all lines are under full control of a single operator, meaning that there can be no sub-local loop unbundling. Indeed, if the lines belong to multiple operators and are terminated on different nodes, then there's no way to collect all the signal and crosstalk data.

Emphasis added; the vectoring here is talking about VDSL2 technology paths. Hmmm, single operator?....sounds awfully familiar...I seem to remember a certain incumbent telco back in 2006 presenting something like this....Of course, if NBNCo. was enabled to deal with the FTTN section, this would possibly be viable. But we, as yet, have no confirmation on any of this. Worrying nonetheless that FTTN higher bandwidth technologies simply do not ALLOW competitors to use the line if it was to be built by Telstra....

HFC? We could node split, much like FTTN where we put cabinets closer to the premises. But apart from many large and unsightly cabinets, the investment would be substantial. How much? Unknown, until it becomes clear what sort of bandwidth is being demanded.

Copper? VDSL2 straight from the exchange is all we have at the moment. But being useless beyond 2km, that makes it useless for 60% of Australians, probably many of whom are the ones with the WORST current broadband. And of course it depends on copper quality too, which, depending on which side of the NBN argument you're on, appears to be "really bloody awful in general" or "quite adequate for the most part" half full/empty anyone? comment....

Wireless? Well, there's no question LTE is greatly boosting bandwidth for both fixed wireless AND mobile solutions. I've already talked about wireless as a "competitor" to the NBN in my "What about the Alternatives?" post, so leaving that aside, what other wireless options are available? There's the "Fi-Wi" I mentioned earlier, where FTTN is run and instead of using the copper in the ground already, we could put high power LTE transceivers and hardware on nodes to provide coverage at anywhere from 3-20km depending on the frequency. The speeds would be in excess of 40Mbps (real-world) currently, and more in the future to many in the wireless serving areas, much higher than many have now. Obviously, this would be a secondary "internet only"connection as, to have reliable phone, copper connection would still be required. (VOIP would still be possible however)

There are problems surrounding this- contention, as has been explained before (think Sunday night, everyone's home, schoolwork, work work, watching youTube/iView...) and it applies here, as more people access it, the spectrum is shared, so it reduces throughput. Weather, although this is a minor factor unless high wind or lighting knock-out transceivers. Transmission power; this is because there would have to be several of these "Wireless nodes" to cover a decent number of premises and allow sufficient bandwidth for those premises, due to contention. The power would have to be enough to overcome interference from surrounding LTE transceivers AND domestic wireless devices. I won't go into this debate, but we're ALREADY seeing much argument surrounding actual affects of EM radiation with just mobile wireless towers. I for one, DON'T believe it has everlasting harm, but that's me....

The bottom line

So what IS the bottom line here? The bottom line is....there isn't one, at least for the Coalition plan currently. We don't have enough information. But I believe my analysis (with help) has shown that even with some of the best circumstances, the Coalition's plan would deliver little benefit for the similar cost of the NBN. There is several quotes that come to mind, one being the famous "Do it Once. Do it Right. Do it with Fibre" mantra that was thrown around years ago on the topic of FDDI networks in large corporations. Of course, then Gigabit copper came along and removed its' much less cost too, as a slap in the face. However, I believe this applies for FTTH, unlike for LAN FDDI, which is short range only (less than 1km, usually less than 500m), mainly because of this statement from ospmag's "Turning Copper into Gold" article by Stefaan Vanhastel and Wim Van Daele:

FTTH, with fiber running all the way from the central office to each home and every apartment, is the clear endgame. FTTH architectures are future-safe, enabling operators to deliver (more or less) unlimited bandwidth: 100 Mbps per household today, with technology evolutions set to increase this in the future. Their main drawback, however, is that (nationwide) FTTH deployments require a lot of time and money.

And also:

FTTH is the clear end-game, supporting the delivery of 100 Mbps per household today and technology evolutions set to further increase this in the future.

So, we KNOW the NBN is going to cost between $27 Billion and, somewhere around $30 Billion (to the Government, total cost likely to blowout to maybe $45 Billion) once inevitable blowouts and inefficiencies are taken into account. (such as NBNCo.'s recent revelation that 1/3 of their address data (NOT their own) is wrong and Telstra's delay of 8 months in signing the Telstra Financial Heads of Agreement on NBN). This is high, but I've shown it is not a taxpayer burden and our government debt levels are some of the best in the Western world, therefore the risk is minimised.

Seeing as it appears ALL telco's are moving towards the ultimate goal of FTTH, as it gives the most bandwidth capability and the only reason they don't ALL jump straight to it is cost and investment risk, and the government is backing FTTH investment mitigating the risk, why NOT "Do it Once. Do it Right. Do it with Fibre" all the way? It would be a world first. A massive boon to our digital and real economy. Social benefits also innumerable in a country as vast as ours would prevail.

Why NOT be the envy of the world? We do it so well elsewhere....

Sunday, 27 May 2012

NBN Pricing- The myths and the facts

There's almost constant furore surrounding the NBN in mainstream AND net media these days. My previous post covering how mainstream media seems to unfairly portray the NBN in a constantly negative light shows quite clearly publications such as The Australian and the Daily Telegraph seem to have a mandate to ensure Australians are against the NBN. Recently, there's been any number of statements from Tony Abbott, leader of the Opposition, about how the NBN will bring financial doom to the average Australian. The last post I made about the NBN and the budget was about how the NBN is funded, but this post, I'll be talking about what its' pricing will be like for us, the consumer and how it will change from the current pricing strategy of the industry.

During the Reply to the Budget speech Mr. Abbott made, he was quoted as saying why "spend $50(1) billion on a National Broadband Network so customers can subsequently spend almost three times their current monthly fee for speeds they might not need?"

(1) He and other opponents to the NBN get this $50 Billion amount from a rounded up figure including total cost of the NBN ($37 Billion) + payments to Telstra and Optus over the next 10 years ($11 Billion). These are from 2 different funding locations and that also doesn't take into account that the government will only spend $28 Billion total as I've previously showed

Is this true? Will your average Australian end up paying considerably more for their current telecommunications needs under the NBN? In a word; no. Will Australians telecommunications spending increase over the coming years? Most likely, yes. But these are 2 separate issues, which Mr. Abbott has conveniently bundled together. Let's have a look.

Lifehacker Australia have a constantly updated article of NBN plans available across the telecommunications industry. From Telstra to Optus and Iinet, Exetel, Internode, iPrimus, any telco that has currently signed to provides services over the, as yet small NBN. But how do these plans compare to available plans? Let's have a look at iinet first, Australia's 3rd largest and widely accepted as one of our best ISP's in terms of customer service. Note: it is more than possible to still have a phone at home, but not pay line rental, using Naked Broadband. This is where you have ONLY a broadband connection and can use a VOIP (Voice Over Internet Protocol) enabled phone that plugs into your router/modem. This is often considerably cheaper than home phone calls + line rental and can save you money over standard setups. However there are bundles available for phone calls, line rental and broadband on most providers. I'm sticking with mainly JUST Broadband here, as it'll simplify things a bit. But there's savings from the NBN available when you take into account line rental as with normal copper services.

Their current offerings on ADSL2+ have 2 parts- On iinet network or off. The vast majority of people outside of cities will be off their network (and many in the cities). Those lucky enough to be in a location where iinet have DSLAM's (hardware in the local Telstra exchange) have a price and quota advantage, because iinet use their own hardware rather than hiring Telstra's. So, let's take a mid range plan, Home-2: 100GB quota, untimed (iinet used to do peak/off-peak on all plans, now only on off-net) and, being ADSL2+, up to 24Mbps, for $59.95 a month (the majority of houses are more than 2km from an exchange and are therefore limited in speeds, as I've explained before)

Off-net, the same plan, Home-2, will only get you 20GB data, shared 10GB peak, 10GB off-peak. If you want ADSL2+ speeds (or as close as you can get to them outside iinet's network) it's an extra $10, otherwise you're stuck at 1.5Mbps. As an example, I'm using their turbo pack and I get a peak of 9Mbps during off-peak times (after 12am, before 8am) although I can sometimes get speeds lower than 1Mbps. So now, instead of $59.95, it is $69.95, for the same plan, same speed (sort of) and lower quota. To get the same quota, you'd have to go up to their Home-3 plan, for $79.95 a month, plus the $10 to get above 1.5Mbps. And of course with BOTH these plans, you save money by bundling your phone or VOIP or both. So the equivalent plan OFF the network would be $89.95. (note, you can double this quota and add line rental for $89.90 a month, much better deal)

Needless to say, this is just ONE combination of countless available JUST on iinet, not including Business ADSL. The array is bewildering and quite often telco's rely on this to sell you something you don't need. Always shop around for the best deal and bundling options.

Now, let's take a look at iinet's NBN plans. There's not a direct quota comparison- they have 3 tiers of light (40Gb), medium (200Gb) and Heavy(1Tb), but we'll choose the medium for mid-range clarity. Then we have to choose a speed. The most popular speed chosen, according to NBN themselves at the moment, is 25Mbps down/5Mbps up (I'll be discussing the importance of uploads and the NBN next post) so let's go with that(2) . It also compares well with our mid-range ADSL2+ plans, as the maximum speeds you'll achieve on these would be 24Mbps (though unlikely). It is also unlikely you would achieve 25Mbps on your NBN plan all the time, but at least with the NBN, distance makes no difference, and you would receive much closer to 25Mbps more of the time. It is only iinet's bandwidth and servers which make a difference, not distance. So, moving on.
(2)Not anymore, Quigley (CEO of NBNCo.) just released details that show the highest proportion of the plans chosen by active premises, at 37% is, in fact, the 100/40Mbps plan....and apparently we don't WANT these speeds??...)

So, a medium quota of 200Gb (100Gb peak/100Gb off-peak) and 25Mbps speed plan. This will set you back $64.95 a month. If you want a home phone as well, across the NBN, it will cost you $9.95 a month to rent BoB2, iinet's all-in-one modem that provides broadband, WiFi, home phone, VOIP and an answering machine (home phone). So that's a total of $79.90 for the bundle. That's regardless of where you are on the NBN. (Note: you can have a home phone WITHOUT broadband on the NBN, just like on copper, contrary to some comments made)

So, for broadband only, $59.95 a month for those on iinet's network, with 100Gb, $64.95 a month for those on the NBN for 200Gb and $69.95 for those off iinet's network with 100Gb and all with comparable speeds. Some of all these plans have a $79.95 setup fee depending on your choices.

So....smack in the middle then. Remember, there is a tier in NBN plans lower than this, 12/1, which starts at $49.95 a month, available with your choice of quota and is likely to get you speeds still higher than many of the people on ADSL2+ plans, even on iinet's network. So....not much really there about more expensive, let alone 3 times more....

Ok, then what about you guys who don't use the internet much, you say? Right, let's look at a budget offering from Exetel, widely known for cheap Broadband. So Exetel's cheapest ADSL1 option (low speed, up to 8Mbps) is $37.50 a month, 75Gb of quota. Exetel's cheapest NBN plan is $35.00 a month. That gets you 12/1 speeds, with 50Gb a month quota, with a $100 setup fee. (fairly normal for all cheaper plans) We're assuming here you're not too fussed about speeds, as you only use it to check email, browse news a bit and maybe watch a youTube clip now and again.....but again, not exactly 3 times more expensive. In fact it's slightly cheaper, but once you take into account the added quota from the ADSL1 plan, you could make a case for basically the same cost.

Alright, what about us guys who are power users? Those of us who stream all our music, watch catchup TV regularly, play regular online games via Xbox, Playstation or PC, download numerous (legal of course) BitTorrent files and even watch a streamed movie or 2. Let's go to Internode. They're widely used currently by many power users, as they have large quotas for the best price (although they are somewhat homogenising with iinet after their takeover).

Let's assume here you can get Internode's network for ADSL2+, as these are the highest speeds available to the majority of Australian power users (we'll check cable in a minute). Let's also assume, being a power user, you use VOIP as your phone, so you don't need a home line connection (Naked DSL). This is the best possible combination for power users as line rental for them is a waste. Internode has a partnership to use Optus' own HFC network, which significantly extends its' reach too. So, their "easy Naked" plans go up to 300Gb at up to 24Mbps (ADSL2+) for $89.95, or, if you're a REAL heavy consumer of data, you can get 600Gb for $119.95 of 1200(!!)Gb for $149.95....but only on Internode's part of the network. Optus stops at 300Gb.

And the NBN plans? Well, if you choose the top tier speeds, 100/40, it's $94.95 for 300Gb, $114.95 for 600Gb and $164.95 for 1000Gb. So, here, the NBN is, 2/3 times, more expensive, mainly because the NBN pricing strategy, as outlined in their corporate plan, uses the top tiers to subsidise the bottom tiers to a certain extent in wholesale pricing and this is passed on it retail (this is fair enough when you think- power users are usually happy to pay more to get the best available). But say, you don't need 100Mbps yet (and few residential clients would, as yet), if you jump down a tier to 50/20, the prices are $84.95, $104.95 and $154.95 respectively for 300, 600 and 1000Gb. So 2 are cheaper and one is slightly more expensive, but you still get TWICE the available theoretical speeds over ADSL2+. And again this is everywhere the NBN will be available.

And finally, if you're lucky enough to be on Telstra or Optus Cable (HFC or Hybrid Fibre-Coaxial), you have a few options. If you're on Telstra's "Ultimate" cable (13 Digit account number apparently) you can get 500Gb for $99.95 at up to 100Mbps- sneakily they DON'T say, unless you click through the comparison, this is only if you have a full Telstra home line service, something that costs minimum $29.95, AND a 24 Month plan. So that means it's ACTUALLY $129.90 minimum for JUST the broadband on a casual basis. There are contention issues on Telstra's HFC cable, like on copper, so you're unlikely to get above 80Mbps peak and probably less in real-world usage.

On Optus? Optus have the better deal, as they offer Naked DSL on their HFC cable (no line rental required). For 500Gb (250 peak/250 off-peak) it is $79.99. Or you can take advantage of Optus' bundling, which they've always pushed, and get home phone, Broadband, with 1000Gb data and a free wifi modem (Telstra costs $299 for the modem) on their "Fusion" $129 plan....however...

There is actually no mention of speed at all on these plans. In fact, there is no mention ANYWHERE on Optus' broadband pages about speed- only a "Premium Speed Broadband" pack which mentions DOCSIS 3.0 as their speed upgrade option (this is the technology behind the theoretical 100Mbps HFC speeds) but not the actual speed it gives.

I was flabbergasted by this. They actually don't list it at all on their website as far as I can see (if anyone finds it on there, let me know) and I actually had to go to Whirlpool to find the speeds. This suggests Optus believes its customers either a) Don't WANT to know their possible speeds (unlikely for the VAST majority of people who want to compare plans) b) Are too dumb to know what the speed means or c) Can't guarantee even close to their stated speeds (which seems indicated by the Whirlpool information). So, if you're willing to deal with this sort of company attitude....their normal speeds appear to be 20Mbps on "Optus Direct" which is Optus' own copper network or 100Mbps on "Optus Cable", but you're unlikely to see anything close to these speeds in real-world use. Both of these service a minority of Australia (between 30 and 45%) between the 2 networks and cover much of the same ground as Telstra's HFC cable. Optus choose not to wholesale from Telstra's copper network unlike every other ISP.

So, there we have just a SMALL cross-section of the plans available now and on the NBN. In the budget stakes, the NBN price is slightly less, but with slightly less quota and similar speeds. In the mid-range, it's pretty much bang on par for price, slightly cheaper some tiers, slightly more in others, but with higher speeds and similar quota. In the high end, NBN offers slightly more expensive plans, but with much greater speed and slightly lower quotas. But certainly none of them "3 times more."

Because of the NBN's pricing structure (which is complicated and I won't go into on this post), it wants to incentivise the mid-range users, the majority of users, to move up the tiers, as it makes a higher rate of return on these tiers, offsetting the users on lower tiers. The power user isn't that much concerned with price, as they aren't now, and also subsidise the lower tiers with their pricing. But the pricing is hardly exorbitant. In most circumstances no more than $5-15 more a month.

Now, will Australians use more data and need higher speeds as we move into the future? Definitely, particularly when you look at all the content moving online, from streamed music to HD movies and catchup TV (and eventually probably broadcast TV). This will mean going higher up tiers to get better speeds (quotas generally increase or price decreases with the same quota on any given tier), which will subsequently increase the proportion of the weekly budget Australians spend on telecommunications; I don't see a problem with this. We are in an increasingly connected digital world and it is paying a larger and larger role in our lives. It is bound to consume more of our budget over time as it increasingly affects more parts of our life. But apparently Mr Abbott doesn't believe this is right, hence his "for speeds we don't really need" comment. I'm not going to speculate on his thinking here, but needless to say, it seems more like conjecture to me.....

He's also states "Why dig up every street when fibre to the node could more swiftly and more affordably deliver 21st century broadband?” he added. “Why put so much into the NBN when the same investment could more than duplicate the Pacific Highway, Sydney’s M5 and the road between Hobart and Launceston; build Sydney’s M4 East, the Melbourne Metro, and Brisbane’s Cross City Rail; plus upgrade Perth Airport and still leave about $10 billion for faster broadband?" See this Delimiter article for more.

I don't want to go much into this as this is getting too far into politics (bleh), but:

1) Where this idea of digging up the streets comes from I'm totally at a loss to explain (and the idea that FTTN would do it any less). NBNCo. have brokered a deal with Telstra called the Telstra Financial Heads Agreement. This agreement allows NBNCo. to use as many of Telstra's cable ducts and boxes as is practical, even stretching to pulling unnecessary copper out to make room, so that NBNCo. doesn't HAVE to dig up streets. Where this is not possible (such as portions of where I live in the Southern Highlands) they will be running the cables on power poles.

This is a picture I took of the install on a street in Kiama Downs. I have a good friend there. This is a main junction point for individual fibres to/from houses. These are on about every 2 or 3 poles and the slightly thicker black wire you can see (running out top to bottom of pic) under the main cables above, is the actual NBN fibre...this is hardly obtrusive and NBNCo. have committed to using existing poles in communities and only these cables for aerial deployment if required.

2)While it is true the funding (government equity debt) could be used for other infrastructure projects....that's not likely. The reason the NBN is such a good plan is that it will make a return on its' investment, meaning after 35 years the government will be MAKING money off the NBN. If they were instead to use it to duplicate the Pacific Highway? The M5? Brisbane Cross City Rail? They're not likely to make money back on this. At best, if they put tolls on them, they might pay for 50% of the project. And we ALL want more tolls don't we....

I believe it is clear that the pricing structure of NBN retail plans available for Australians is competitive and will continue to be so. Statements like that of Mr. Abbott's in the Reply to the Budget Speech, televised nationwide, bring massive amounts of confusion, half-truths and just plain falsities to the NBN debate. At the risk of politicising slightly, this seems to be the aim of the Opposition- the harder the fact is to sift from fiction, the more likely people won't look into it...

Friday, 11 May 2012

The NBN and The Budget- Professional relationship or Hanky Panky in the Boardoom?

So, we're back around to that time of year again- The Budget.

A time of year when all those businessmen with Blackberries (well, iPhones these days, after RIM seems to be bleeding users) on your commute suddenly start scrabbling through last years forecasts, delving into their already stretched briefcases for that tax analysis- Was it based on last year's company tax, or next year's?.....

For the average commuter, The Budget most likely doesn't win over from NCIS or Biggest Loser, or it may be quietly in the background, while you await this years tax cuts/hikes and Family Benefit changes. Sometimes a quick glance at the paper the Wednesday morning following to confirm, yes, that $10.15 you save every week NOT buying a morning coffee now, has just been shunted in to the governments coffers, most likely to give a few extra dollars to that lazy burk over the back fence who only ever leaves the house to buy more pizza and coke and blinks uncertainly at the sun everytime he does. Lazy good-for-nothing.....mumble.....mumble........

The majority of Australians look on The Budget as something akin to your year 8 history class- Interesting during highlights at the beginning, BONE WRENCHINGLY dull during the majority of the explanation and with very few interesting questions asked at the end. And inevitable; it ALWAYS happens. (why couldn't Mr. Merz be sick today???)

This years Budget appears quite friendly in general- some shuffling of tax thresholds, company taxes and some putting off of some payment or another to sure up the small surplus we were "promised." By now most people have accepted the changes the Carbon Tax will bring, even if they still disagree, and the Budget showed little in the way of surprises, except that some of the compensation wasn't really compensation- it was anti-compensation, such as tax hikes being pushed back so we don't lose MORE money.

But more interesting this year, to us tech-heads anyway, has been the Budget's relationship with the NBN. Actually, to be fair, The Budget, as an expense, doesn't have a close relationship to the NBN- The Budget is about spending; the NBN is a capital expense and so it doesn't show up as spending in The Budget. Ah.....

And of course this is where it gets interesting. The NBN is not a Budget expense; it is considered a piece of infrastructure and an INVESTMENT and is destined to make a modest return, so it remains "Off-Budget", even though the government will spend $5.8 Billion dollars on it this year alone (broken up between payments to Telstra and funding to NBNCo directly). But wait! Does this not mean we actually have a....d.....dd...... DEFICIT.....shudders....

Enter the Coalition- This is the line they have been spruicking  for the past year or more. The NBN SHOULD NOT be Off-Budget, it is a government expense and should be treated as such.....oh and look (evil maniacal grin) it means we have a Deficit now, after Labor PROMISED you it would have a surplus!!

Leaving aside the "Deficit we were meant to have" is this a valid point? Have Labor "cooked-the-books" in removing the NBN from The Budget in order to make the garbage pile smell and look like potpourri? According to the Australian Parliamentary Library, no.

Study notes recently published found that, according to accepted international standard accounting measures, the NBN should NOT be counted as an expense in The Budget, as it is a government investment (it will eventually turn a profit and provide a modest return for The Government of the day). This seems logical- Should a company, such as Telstra, decide it wants to build a new fibre network in Brisbane (as it's recently done), any costs related to the planning, implementation and construction of the new fibre network would not appear on the Annual Statement as expenses. They would appear as capital expenditure, as Telstra is investing in an asset they have reasonably assumed will give them a revenue stream in the future. This is standard practice in business and is not at all "under the table" or "below the radar". Yes, the books appear healthier in terms of expenditure for the year, but the money has still been spent, it is just considered an investment, not a day-to-day expense. And before you argue, this IS a business case- NBNCo is a wholly owned company of the Australian Government, funded by the Government, so they are constrained by business ethics and laws.

Why then the brew-ha-ha? Well, as I've explained in a previous post the NBN is funded by government debt. The Government issues bonds, which entities buy and the Government pays interest on them as they mature. This money usually goes towards infrastructure such as roads, rail, ports etc. In this case, telecommunications infrastructure. This is very different to government expenses, such as Health, Welfare, Defence and so-on; these are yearly expenses, that are reshuffled and re-evaluated every year, sometimes multiple times. Their primary funding comes from taxes, both Income and Company taxes, as well as GST, Sales taxes, Import taxes, Stamp Duty etc. These taxes are fluid- the forecast GST intake dropped significantly this year to $50.4 Billion for 2012-2013, $3.8 Billion down on last year (WAToday) mainly due to customer spending reduction thanks to the European crisis and other instabilities, such as a slowdown in construction. As such, both Federal and State Budgets often have to be tweaked to allow for these changing revenue streams. It is unwise to allow this to happen to infrastructure spending, as changing amounts of spending at a critical point in the project can end up costing much more due to changes, contracts and inefficiencies. As such, infrastructure money is usually agreed on beforehand and funded from a location where it can have constant cash flow, such as government loans.

All in all, the NBN being funded by National Debt is sensible, normal, rational and reasonable- but this doesn't sit well with the Coalition. They see themselves as the best economic managers for the country (and by past records, they have a claim to that title) but their competing Broadband Initiative, as we've looked at, would be (almost certainly) On-Budget, mainly consisting of subsidies to private companies to increase their fibre rollouts and inferior besides. So the Coalition have been issuing constant streams of negativity and baffling condemnation of NBN spending and funding in the hope the average Australian will believe the NBN is another taxpayer waste, like The Insulation Scheme (poorly handled, but largely cause by greed, not government inefficiency) or the Carbon Tax (jury's still out).

Alot of the statements from Tony Abbot these days are bordering on propaganda when it comes to the NBN. I'm not a political analyst and I'm not really interested in discussing his political tactics here, but suffice to say, this is hurting Labor, but it's also hurting, more importantly, the NBN and the Coalition too. It is perfectly reasonable for the NBN to be funded in the way it is being funded; this should not be an issue politically. Any decent business analyst will tell you there are sound reasons behind the servicing of government debt and infrastructure, but the Coalition seems to have become deaf, blind (certainly not dumb- the stream from both parties is almost constant!) and immovable to the idea that the NBN is possibly a decent proposal that should have bi-partisan support.

Friday, 4 May 2012

....and after our break

Work keeps the best of us busy. Going overseas for work runs you off your feet. However, I plan on covering a number of topics shortly. I have some personal pics of the NBN install in Kiama Downs (for those who don't know what the installations will look like) and I plan on looking at the impact the NBN will have on our daily lives in detail. I'm also going to discuss the rise of "mobile broadband" and what it means in a world of the NBN.

As always, any comments about what you've read hear, or elsewhere, or questions and discussions are welcome. The more we talk about it, the more information is passed on, which has been a major problem for the NBN all along.

Saturday, 14 April 2012

So why is the NBN getting such a bad wrap?....

Note: This is largely an opinion based post, but it is interesting've been warned though...

We've taken a look at some of the arguments for and against the NBN.  And yet, almost every week we see another article in this newspaper or that news site or that news bite on TV that someone is once again decrying the uselessness/expense/inefficiency etc. of the NBN. Obviously the Coalition aren't simply going to lie down against sensible arguments, no party would if their policy disagreed.  But that doesn't necessarily explain the constant harassment of the NBN by the media:

  • The Australian recently ran a story about a school in South Australia entitled "School faces $200,000 bill to join NBN".  You'll notice the link takes you to Gizmodo AU....that's because The Australian pulled down the story after issuing a small retraction, noted here by Delimiter.  It appears the school in fact was always going to get the NBN for free, it just hadn't released the fibre rollout maps for that area, so options were being discussed if it wasn't.... Quite significantly different from the headline wouldn't you say...
  • The Daily Telegraph has issued numerous articles slamming the NBN and the Australian Press Council took exception to them late last year (see article).  In fact, many News Ltd. associated media outlets, including The Australian, the Daily Telegraph, Herald Sun, Courier Mail and Brisbane Times have issued constant and consistent negative streams of news about the NBN
  • These 2 (1, 2...) articles by The Australian paint a picture that the Wingecarribee Shire (That's MY SHIRE PEOPLE!!!!) residents are against the NBN.  It will threaten our way of life, our very reasons for continuing to live here.....except that they only spoke to elderly residents in Bowral who have little if any use for broadband.....oh and the little matter of the fact that they mention Kiama Downs, an important test site for the NBN to gauge customer reaction, in BOTH articles, being a part of the Wingecarribee Shire....I've lived here my entire life.  No part of Kiama is, has been or most likely ever WILL be in the Wingecarribee Shire.  That is simply a trick of Electoral boundaries, as some of us in the Wingecarribee Shire are part of the Kiama ELECTORATE.  This is, was and continues to be false reporting of the highest degree.  And it makes my blood boil as a young person who choses to continue to live in the beautiful Southern Highlands, even though poor technical jobs and outside communications are some of the reasons most young people LEAVE the Highlands. (sorry, ranted a bit there, but I actually never saw this article when it came out, I just found it on Delimiter here with a very good rebuttal.  If I had found it, I think I'd be in jail for grievous bodily harm against The Australian editor.  Oh and we're NOT "The Shire".....that's Sutherland....)

Media in Australia is a mixed bag.  Depending on your particular preference; political, medium or journalistic, you can receive wildly varying "truths" of news across various reporting media.  But one thing should never be done; false reporting.  Headlining and tabloid reporting are tolerable, sometimes; if you don't like them or aren't interested, don't read them.  But false reporting, like the last mentioned article is wrong, ethically, morally and democratically.  A strong Democracy relies on the media reporting the hard truth, unbiased and direct.  It's been said that "a person is smart; people are dumb" and media are one of the major influences on this.  The highest 3 circulating newspapers in Australia are the Herald Sun, the Daily Telegraph and the Courier Mail. ALL are News Ltd. publications.  What does this say about the information the vast majority of Australians are receiving....

When a media company shows it is not trustworthy in its' reporting, I usually stop reading or watching.  I'd be relegated to The Sydney Morning Herald here, which I occasionally buy, but usually find its' reporting on the tabloid side too.  This is my preference.  I tend to get my news from internet sources these days- NOT major media sites.  I find it much more relaxing and personalised.  I still find things I disagree with, sure, but I can usually tell if that is the person's opinion, or a genuine news article I don't like.  With newspapers, ALL articles are supposed to be news, except the Opinions sections, which I actually find refreshing, because at least you KNOW these peoples have an agenda and you can agree or disagree and have your say too.

My point in this?  It has become clear News Ltd. media is biased against the NBN.  Some will say this is from the top down (ie. the owner, Rupert Murdoch).  Some will say News Ltd. has always favoured the Conservative, Liberal side of politics (ie. The Coalition).  I say, ANY biased news is bad news.  This is regardless of media company.  Don't believe everything you read from major media outlets, or websites.  In fact, don't believe everything you read fullstop.  Look at its' sources, back it up, ask questions, read an opposing view, leave comments (the internet is a boon for sticky beaks and know-it-alls like me!), start your own Blog like me in an effort to try and open discussion and educate without forcing an opinion.  Yes, I'm pro-NBN, but not because it's a good political policy.  And not because it's going to give me better ping in Second Life (no, don't worry I don't).  Because it is going to reshape Australia, for the better.