12 March 2013


On the ABC's MediaWatch programme on Monday 11 March 2013 Jonathan Holmes devoted most of the programme's very limited 15 minutes to analysing and commenting on an article which an ABC tech-head Nick Ross wrote comparing the NBN's technical advantages as against the Opposition Coalition's ideas of a different system.

The analysis is comprehensive and long and requires a great deal of concentration to absorb the import of what Nick Ross has written about, but in the end the reader is repaid a thousand times by producing a document which, in abbreviated form ought to be the publicity the Federal government should be using to sell the NBN system to a very gullible public who are absorbing everything the main stream media (MSM) and the ABC are busy telling them. Shame on them all!

Here is most of the article with many links which I have yet to provide, but even without them, you will get enough of the picture!

The vast differences between the NBN and the Coalition's alternative

Nick Ross ABC Technology and Games 21 Feb 2013
If there is a white elephant in the room, where is it?

The Coalition's broadband policy slogan states that they will "Complete the current NBN cheaper and faster." This simply isn't true.

We'll continue to cover the sketchy claims of being 'faster' and 'cheaper' in other articles but for now we'll focus on the supposed similarities and differences.

The Coalition's NBN alternative is different by almost every measure. It uses different technologies to connect the bulk of the country; it has different uses and applications; it affects Australia's health service differently; it provides different levels of support in emergencies and natural disasters; it requires a different amount of power to operate; the cost of maintenance is different; the overall cost, the return on investment and the re-sale value are different; the management, ownership, governance, competition and monopoly factors will be different; it has a different life-span and upgradability issues; the effect on businesses (of all sizes) and GDP is different; the effects on television are different; the effect on Senior Citizens is different; the viability and potential for cost blowouts is different; the costs of buying broadband will be different; the reliability is different; the effect on property prices will be different; the timescale is different; the legacy is different. Ultimately, it has completely different aims.

In just about every case the Coalition's alternative compares unfavourably to the current plans - and usually in dramatic fashion. That's based upon the facts and the information currently available in the public domain.

There are few similarities: it appears that the Coalition's plans for Fixed Wireless technology and Satellite technology in rural areas may be similar (there's an near-total lack of detail in the Coalition's plans and much information is gathered through 'reading between the lines') but there are big questions regarding the differences in funding. Ultimately, the only obvious similarity is that people should be able to download web pages and videos a bit faster.

Here follows each facet listed in detail. In the spirit of crowdsourcing, and with the phenomenal success of it in terms of NBN research, if you can add any more information one way or the other, please contact us or leave the details in the comments.

Different technologies

The current NBN plans serve 93 per cent of the population with optic fibre. That means the current NBN will eventually provide absolute certainty that 93 per cent of the Australian population will have access to broadband that can operate at a known minimum speed and this speed will be future-proofed for at least the remainder of the century.

In contrast, the Coalition wants to use technology which relies upon Australia's existing copper networks. Consequently, all premises will have different connection speeds based upon their location and the haphazard quality of the copper line(s) that connects to each house. In premises with new(ish) copper that is in good condition and is near to an exchange/node cabinet, one might expect the claimed download speeds of 80Mb/s. However, over 80 per cent of the nation's copper network is over 30-years old and copper expires after 30 years - Telstra is currently in the process of ripping it up to make way for NBN fibre. Consequently most people won't get near such speeds (more on this here).

A standalone reason for the NBN is that it replaces the expired 'rotting' copper network. While we might be in one of the driest continents on earth, it can get very wet in our most popular settlements and water ingress is a perpetual problem. This manifests itself as low broadband speeds plus poor quality and unreliable phone calls. The Coalition has not addressed copper's age and need for refresh with its choice of technology.

Different uses and applications

There's a more-detailed list of the main applications of fibre-based broadband here. In short it will revolutionise healthcare for everyone especially the elderly and those living in remote communities. It will revolutionise all levels of education (more here). It will revolutionise power distribution through the ability to micro-manage peak electricity demand (more here) plus assist in getting power back online quicker in times of emergency and disaster.

As Tasmania is discovering, it opens up a world of monitoring possibilities which can even help farmers. Fibre also offers revolution to television with every household being able to access the bulk of the developed world's TV channels as well as a plethora of on-demand and other services. Potentially, more importantly, fibre is the only medium capable of broadcasting to the new Ultra High Definition "4K" TVs. These might be new now, but in 10 years' time they'll be common (more on this below).

Fibre also means an end to paying phone line rental and expensive phone calls. It also means ubiquitous crystal-clear, high-definition sound quality on phones which will please people whose technology requirements don't stray far from an old-fashioned telephone.

Telecommuting means many more people won't have to commute to work anymore and nor will they need to live in cities.

Other nascent technologies include 3D printing - an amazing thing which resonates with Star Trek's replicators. It's very real and happening, but should blossom with fibre.

Another potentially-innovative boost could come from Government services. For instance, if people could communicate with CentreLink by talking to their TVs instead of spending time travelling to offices, hardly any offices would be required - everything could be outsourced to a low-cost regional location. There are over 900 offices in Australia.

This isn't even scratching the surface. See here for more.

The Coalition's alternative does away with just about all of this. Those fortunate enough to have the country's very best copper connections should be able to access some of the above services. However, without everyone having access to such speeds, services are significantly less likely to develop. Ultimately, the Coalition has, thus far, said little about the uses of broadband beyond its ability to download web pages and YouTube-like video quicker.

Effect on Australia's health service

We've mentioned the prime benefits to education and power distribution above but it's worth dwelling on healthcare. The 'telehealth' (more here, here, here,here here, here, here, here and here) opportunities afforded by fibre are so dramatic that the savings to the vast $120bn (and rising) annual health budget will pay for the entire rollout on their own, while simultaneously revolutionising healthcare for all Australians, particularly the elderly and those living in rural areas. More on this, here.

In the US, the savings of have been rated at almost $80bn per year.

In New Zealand, it's NZ$5.9bn ($4.8bn) over 20 years. The larger size and GDP of Australia should amplify that figure dramatically.

The prime reasons for this involve the reliability, low latencies, ubiquitous coverage plus the fast download AND upload speeds of fibre. It means people can turn on their TV and talk face-to-face with a doctor. There are numerous cost saving and efficiency (and health) benefits here but primary examples include reducing ambulance journeys which take the old and infirm to their regular doctor's appointments (at a potential cost of up to several thousand dollars per trip). The elderly and infirm can also be monitored easily in their own homes without requiring expensive healthcare visits or housing in expensive care homes while hospitals can save $1000 per patient per night simply monitoring patients (while freeing up staff and beds). The potential benefits for rapid diagnosis and triage are self-evident.

Conversely, the 'VDSL' technologies which underpin the coalition's copper-based policy are the most unreliable in the industry. Much more so on old, rotting copper. Most of the above benefits won't exist.

(Quick note: Cisco's imminent standard on medical-grade broadband requires reliability, low latency, plus 5Mb/s upstream, 5Mb/s downstream plus at least 7 Mb/s of bandwidth 'overhead' to ensure stability. This is counter to a Cisco stat on Malcolm Turnbull's Blog, (here) where high-quality video was claimed possible at under 2Mb/s (720p, 15fps). Cisco now admits this is a mistake.)

Support in emergencies and natural disasters

National emergencies, whether fire or flooding, are becoming a part of Australian life. Consequently, the benefits of a fibre-based NBN are becoming increasingly important. Chattanooga is a global-example of a fibre-connected city. It's also been devastated with tornados. The city found:

"With a fiber network deployed, [we] can now get near-real-time information when a catastrophe like that occurs. Faster info means faster recovery, and faster recovery means less time without the power needed to support emergency response efforts." More here.

Meanwhile, Hurricane Sandy recently caused "catastrophic failure" to the New York copper network with flooding while the fibre-based network was up and running very quickly:

"unlike copper, fiber optics aren't damaged by the water. As part of this process, crews have already pulled fiber up the major corridors." More here.

Fibre is far more resilient and has even survived frozen mudslides with aplomb. It's also more resilient to lightning strikes (since glass doesn't conduct electricity).

The Coalition has not mentioned broadband-related plans in this area.

Amount of power required to operate

Fibre-based broadband requires very little power to transmit a full-speed signal over many kilometres. Conversely, a network based upon VDSL and wireless technologies require so much power that, according to Rod Tucker at Melbourne University, Australia will need to build two-to-three small new power stations to make it work:

VDSL requires double the amount of power to transmit at peak speed and also eight large batteries per node (of which there would be some 50,000 to 70,000, all of which would regularly need to be replaced at enormous expense.

A counter to this is that fibre-based phones can go dead in power cuts. However, any wireless home phone will do too, so it's an only an issue for those still using very-basic, traditional telephones.

The Coalition has not yet addressed this.

The cost of maintenance

The current copper network costs over $1bn each year to maintain. Over 80 per cent of it is over 30 years old and copper expires after 30 years. Increasing anecdotal evidence suggests Telstra has all but given up on regular maintenance and fixes issues only when broken (if at all) - what's the point in paying to maintain a network that is on its way to the scrap heap?

This is the self-same network that the Coalition plans to use as the basis of its broadband infrastructure. What also comes with this is increased maintenance work for some 50,000 to 70,000 'nodes' (large roadside cabinets).

Water is the enemy to copper. However, glass fibres are chemically stable and, by comparison, incredibly robust. They hardly suffer at all from rain or deluge. Fibre maintenance is much cheaper than that of copper.

The overall cost, the return on investment and the re-sale value

The NBN has been fully costed thanks to the $25 million KPMG-McKinsey Implementation Study and recently had its renewed corporate plan verified by Analysis Mason (an analysis firm which is often cited by the Coalition). Twice.

The net cost is zero and it will pay for itself in at least four different ways. Rather than using tax-payer's money that could be used on other things (a common myth) it sees Australia borrowing $27bn using its Triple-A credit rating (Australia is currently one of only seven countries in the world to have this. It provides us with the cheapest form of borrowing) to use in addition to another $11bn of private investment. This money ultimately comes back to the government with a seven per cent profit.

In addition, the cost savings to existing infrastructures, particularly health and power generation are such that the money saved from their annual bills will pay for the network on their own.

The cost of the Coalition's alternative hasn't been released but we have a rough idea. We are continually told that the Coalition won't release costings because it doesn't know what contracts have been entered into by the government and NBNco. The government disagrees with this but, for the sake of argument (and to avoid politics); let's say this area costs the Coalition nothing.

The basic build is generally agreed to cost around $15bn (likely the root of the Coalition's 'cheaper' claims). Next we add $3bn for Fixed Wireless and Satellite to rural and remote Australia. Then we must add the cost of obtaining a copper network.

Alan Kohler and Malcolm Turnbull recently discussed the matter here, here and here.

In truth, anyone reading this will have as good an idea of what that costs. Here's the premise: all of the Coalition claims about its 'FttN-based technology being around one-third or one-quarter of the cost of the current NBN' are based on overseas examples where an incumbent telco already owns a copper network (which presumably is well-maintained and in good condition). But neither the government nor NBNco own a copper network and that means it must obtain one. A new one would cost around $40bn and is subsequently non-viable. That means enacting an election promise to buy or lease Telstra's copper network.

How much do you think Telstra will charge? There are a few things to consider.

Firstly, Telstra has never, in its commercial history, done anything at its shareholders' expense.

Telstra itself said its copper network was "at five minutes to midnight" long ago:

Former manager of regulatory strategy, Tony Warren, gave the Senate broadband inquiry details of the company's problems with its ageing copper network. He said ADSL, the high-speed internet service that runs over copper wires, was the bridging broadband technology Telstra was using until it replaced the network. He described ADSL as the "last sweat" of revenue Telstra could wring out of the 100-year-old copper wire network.

That quote was from 2003.

Since the NBN came knocking there is substantial anecdotal evidence from technicians and customers that subsequent maintenance practices have become 'fix only when broken' policies and as such the network is said to be in a sorry state and is barely fit for purpose.

So if Telstra sells cheap, does that mean the network is worth buying in the first place? If it is fit for purpose, and the government had no alternative but to buy or lease it, then bear in mind that Telstra recently charged NBNco $9bn just to lease the ducts which house the copper (many of which are collapsed, flooded and filled with crud).

When NBNco did a deal to migrate Telstra's customers over to the NBN it took more than 120 Telstra lawyers and over 30 NBNco lawyers two years to come to an arrangement.

With all this in mind, what do you think Telstra would charge? The Coalition says around $4bn - $5bn. Other commentators say it could be $20bn. That puts the cost of the Coalition's policy anywhere from a highly-optimistic $22bn to a possible $38bn. Until Telstra decides, there's no way of knowing. The amount being borrowed on the public's behalf by the government is currently $27bn for the NBN. Is $22bn (the very best case scenario) really significantly cheaper than $27bn?

Next there's the question of where the money would come from. It's difficult to envisage private companies investing in a copper-based network which is already moribund, literally on its way to the scrap heap and comes with enormous power bills, maintenance costs, no premium applications and no obvious return on investment. Could the Coalition be planning to spend tax-payers' money (capital expense) on the build? They've slammed the government repeatedly for doing that even though the claim is not true.

It's not clear why the Australian public would, en masse, subscribe to the new network. Do people really need extra speed for web pages and YouTube? We don't know what the Coalition's broadband is for. It hasn't mentioned any applications or benefits. What would the take up rate be?

Malcolm Turnbull recently and bizarrely said of the fibre-based NBN:

"There is no evidence whatsoever that the massive increase in speeds delivered by fibre-the-home will deliver any extra value or benefit to Australian households."

One can't help but wonder what the reaction would be if that statement was read out at an international broadband conference. Nonetheless, pretending it's true for a moment, what are the benefits of the Coalition's alternative? Where's the value? How does it make its money back?

As we've seen, almost all of the cost savings to existing infrastructures would vanish. There's no visible or obvious business plan and leaving the market to its own devices (as stated) won't see a net return on government investment via subscriptions. Non-ubiquitous fibre adoption would significantly-curtail innovation or any boosts to GDP. That leaves resale value as the last vestige of the network being able to pay for itself.

But the question is then raised; who would buy a network that was declared moribund over a decade before it was started, that uses obsolete technology and comes with enormous liabilities in terms of power costs and maintenance?

Finally, once built, from what we can gather, the Coalition plans to upgrade the network to one similar to the current plans but it won't say how much extra that will cost. There are also big technological issues with this which we'll cover in a future article.

At present, without further information from the Coalition with regards to its costings, the available evidence strongly suggests that the Coalition's alternative will cost anywhere from $22bn to $40bn (plus power bills, maintenance and upgrade costs) with no obvious return on investment and it's not clear where the initial capital expense or investment will come from (another recent attempt at costing can be found here).

As such, without extraordinary detailing from a costings plan it appears that the Coalition's broadband alternative will be colossally more expensive than the current NBN and not cheaper by any reasonable definition.

The management, ownership, governance, competition and monopoly factors

The NBN will initially be operated by NBNco using a fixed wholesale price. Throughout this time it will make around a seven per cent profit. After completion it will likely be sold but the government will remain in control of maintenance (a good idea). The wholesale price drops over time (Page 67 of NBNco's coporate plan) and, once sold, will be subject to market forces - the initial requirement of them being artificially high (to subsidise the rollout to rural and remote Australia) will no longer exist.

This has been ignored by the Coalition which has said repeatedly that government-owned monopolies with fixed prices are traditionally more expensive because the wholesale price has little reason to drop long-term.

An enormous problem with the current system (and with networks around the world) is that incumbent operators are in charge of everything. Telstra both sells access to its network to resellers and is a reseller itself - one of the worst kinds of monopoly. However, in its deal last year, NBNco managed to structurally separate Telstra meaning no more monopoly. This came at the expense of an 11-month delay (for which NBNco was remorselessly criticized) but meant that several billion dollars were shaved off the overall build costs and the overall rollout duration was shortened. On balance, that's an extraordinary achievement for NBNco.

The new landscape generally sees NBNco selling access to the NBN at a fixed price regardless of the size of a service provider. As such many companies can go up against Goliaths like Telstra knowing that they're paying the same price. This is a near-ideal competitive platform. That said, a potential problem is that some smaller-scale players won't be able to afford the minimum AVC (Access Virtual Circuit) from NBNco. Their option will be to buy rolled-up NBN wholesale from the likes of Nextgen and AAPT. There will be a margin for those wholesale services.

At present customers are stuck with whoever can offer service in their area and, without a detailed explanation from the Coalition, their NBN-equivalent looks set to continue down this track. However, there are bigger concerns.

When Telstra last looked at implementing FttN in 2008 it said that sharing access to its cabinets with other service providers using all manner of different contractors would cause all manner of problems, that

"In practice it would be a disaster for customers."

The whole document is essentially a testament to how the only way FttN can work is if it is owned and serviced by a monopoly.

Furthermore, there are big problems with technologies like Alcatel-Lucent's 'Vectoring' which is a FttN technology that has been promoted by the Coalition.

Thanks to Richard Chirgwin for the following explanation, but skip a few paragraphs if tech jargon makes you feel unwell:-

1. Alcatel-Lucent Zero-Touch vectoring is a single-vendor solution. Without vendor competition, you have a monopoly supplier.

2. Vectoring is incompatible with "local loop unbundling" [a term which means giving competing companies access to the copper connected to houses - a further explanation, with diagram can be seen here]. Vectoring needs all the lines to be driven from the same DSLAM [the technology which connects the premises to an individual ISP]. This is because every line needs to be tested, analysed, and optimised, constantly and on-the-fly, for vectoring to work. This means, if you have TWO DSLAMs running vectoring in the same local area, you'd end up with an "arms race". DSLAM-1 will try to optimise all of the lines under its control; this appears as noise to DSLAM-2, which adjusts its behaviour accordingly. This increases the noise on DSLAM-1, and so on. [More complications are discussed, here.]

3. Low-density, long-loop areas are non-viable because you'd have a DSLAM serving fewer than 100 customers, because most cable fanouts today serve fewer than 100 customers. In other words - VDSL2 plus vectoring would serve more like 50 per cent of the country than 93 per cent (a rough estimate; significant time and resources would need to be spent turning that into hard data).

He continues:

In the absence of wide adoption of the Vectoring standard, No telco will deploy a technology like vectoring on a wide scale.Experience suggests it would take at least 3-5 years. In other words "VDSL2 with Vectoring" deployment would be unlikely to start until 2017 or so. This puts it somewhat behind the NBN! You can't create a competitive tender with a single vendor to bid.

In addition to this, FttN cabinets creates so much noise on the network that you can only have one internet provider. The current exchange-based ADSL services from Australia's ISPs will no longer be available because their signals get drowned out.

It's not clear whether even the Coalition is aware of all of this. However, a first inkling made the public domain recently when Malcolm Turnbull said that areas with HFC coverage (one-third of the country) won't get a look in (troubling as many people in HFC areas can't get HFC connections), or will be at the back of the of any rollout. This means those areas will likely continue to be forced to continue to pay the highest broadband prices and lumbered with low upload speeds even on the best packages. More importantly, Multi Dwelling Units won't get a look in as Telstra does not connect cable to them unless the entire block pays to get connected. This also brought on the ire of some of Australia's major telcos who recognised that they'd be forced into negotiating with a monopoly provider and they weren't happy. We'll be examining how other countries have managed FttN in another article. For now though, it's also worth noting the inconsistency of the Coalition's argument. On the one hand it recently stated that it wants to keep the HFC network - but only if Telstra chooses to give all the money back that it's in the process of receiving for selling it.

Any suggestion that an NBN monopoly inflates prices is already disproved as nonsense. There are many plans available right now and they are practically all better value and/or cheaper than existing alternatives. Lifehacker has a great list here.

A final consideration is for existing government-owned monopolies. The Governments already own public infrastructure like the electricity network and the road and railway networks. It does this to facilitate economic growth and social benefits.

Where that infrastructure has been privatised, the results have been mixed. Regulatory intervention is frequently required to maintain services and competition, and prices (for example in the electricity sector) have risen in spite of the expected efficiencies of private ownership.

The question is raised, why should the communications network be any different? This is exacerbated by recent Australian history which illustrates conclusively that our private companies can't achieve similar goals on their own even though Telstra spent enough money on its own network, in the past decade, to build the NBN on its own. Optus was a close second in spend.

Ultimately, it's easy to dismiss NBNco as a monopoly that causes inflated prices - that's actually what it says on paper. However, the net result is an ultra-competitive, level playing field with low prices. Unless a detailed alternative is released by the Coalition we're forced to assume that its "market-driven" plans will only cause local monopolies, duopolies and inflated prices because that's what all of the available information and overseas examples (such as the United States, Canada and New Zealand), currently point towards.

Different life-span and upgradability

The durable, chemically-unreactive nature of fibre means it has aced advanced aging tests which show it works flawlessly after 65-years. Even an advanced field "test" - where a cable washed out of a frozen Oregon mountain in a mudslide - showed "no degradation in fibre/cable performance" after a battery of tests.

There's currently no reason to think it won't last into the next century. Upgrading performance at this time doesn't require removing the fibre - just simply upgrading the electronics at the ends. The current long-distance data speed world record over fibre is "one petabit per second over 50 km" and in the lab, 100 petabit per second speeds have been achieved. Improvements are constant.

The bandwidth of light is the theoretical limit - and right now, we're only held back by the speed of the devices we attach to each end of the fibre. An uninterrupted FttH network can reach into the Terabits/second without replacing the glass. In short, once built, you won't need to rebuild a fibre network for generations.

The Coalition's alternative is based upon Australia's copper network. Copper reacts badly to water and performance degrades when corroded. Telstra itself said this needed replacing within the next 15 years - ten years ago.

The Coalition has suggested that once built, it will look into upgrading and that this cost-spreading method is more efficient. Slogans that have been used against this are, "Do it once, do it right" and "Buy cheap. Buy Twice."

Basically, the Coalition has two choices: One, to rip up its own FttN infrastructure and build exactly what we're building right now. Two, perform a more-elaborate upgrade which converts FttN cabinets into NBN-like FttP. This would need to happen as soon as the initial build was completed (possibly even sooner) according to traffic-usage forecasts.

We'll be examining the realities and worldwide existing examples in a separate article.

For now, though, it's worth noting that the current Coalition plan requires spending tens of billions of dollars on an infrastructure that we already know needs to be replaced/upgraded. If there are efficiency gains in doing this, it's not clear where they are.

The effect on businesses (of all sizes) and GDP

The boost to business has been measured (by IBM) at $1 trillion over the next few decades while last year a Deloitte study stated that the digital economy will increase from $50bn to $70bn per year in the next five years due to expectations from the NBN. Also a Nielsen study found that 93 per cent "of Australian businesses believe that participation in the digital economy is important to their on-going business strategy" and 75 per cent said "National broadband infrastructure will increase their ability to engage in the digital economy."

Meanwhile the OECD (and others) believe that the NBN will increase GDP by at least one per cent ($15bn per year). That's before cost savings and revenue from the system itself. As such the NBN would cover the cost of capital in just two years.

There are also huge benefits through general telework, telepresence, telecommuting. And backup.

Much is made of Australia's falling productivity and reliance on mining. However, innovation and growth in the services sector afforded by the NBN can provide a welcome fillip.

Technology companies, large business and small business leaders alike literally haven't shut up about 'The Cloud' for two years. Why? Because of its propensity to balloon productivity and slash costs. Business owners of all sizes, for instance will no longer need to buy computer and communications hardware in one expensive blow any more - they can switch from Capital Expense to Operating Expense - paying monthly fees to use only the services they need.

The savings are enormous. Why spend a fortune on a new server that has a short life expectancy and requires expensive support when you can rent one in the cloud? For further reading on business and the cloud see the Parallels studies here plus the many Business Blogs on ABC Tech.

Global business and governments at all levels are talking about the move into the cloud and Australia becoming the first nation to provide ubiquitous fibre presents many opportunities.

Fibre is best because it offers reliability, high bandwidth in both directions and low-latencies. Only the very best copper networks in the world can come close to offering this.

The alternative is to pay for specialised services at inflated prices. Telstra's NAS is a successful example, but the basic lesson here is that everyone could have access to such services with a fibre-based NBN.

The Coalition might just be the only government entity not to even refer to the importance of the cloud or broadband benefits to business in general. It is the future of the digital economy and that represents a significant-and-growing part of the global economy. The Coalition dearly needs to address its support for the cloud and describe how its copper-based policy ties into it.

The effects on Television

One of the new industries that NBN will bring is called Multicast. This allows things like live events to be broadcast more-easily and cheaply - think Group Nine rugby Grand Final plus concerts. It also has the potential to revolutionise traditional sports coverage - the AFL's Andrew Demetriou is on the record as wanting to sell direct to the public as is happening with US sports. While NBNco's current tariff model lacks a direct-to-content-owner option, it would be unlikely to ignore a revenue opportunity if it became clear that all the major sports want in.

Ultra High Definition "4K" TVs are now on sale in Australia. While the initial price is high ($16,000 for the first 84-inch models) the price will drop rapidly. In ten years' time they will be common. However, the only way to broadcast a native signal is to use fibre optic cable as the data requirement is so high.

Video on demand is flourishing globally with the likes of Sony now focusing on building TVs that will primarily display 'internet-based' rather than 'broadcast TV'. With ever-larger TVs appearing on the Australian market and with High Definition proving to be increasingly popular and with multiple televisions residing in homes, the strain on the internet infrastructure will be enormous. As long-term licensing agreements expire in Australia, more and more premium content will become available over the next decade and we'll see US-like traffic usage where one-third of ALL internet download traffic comes from video distribution service, Netflix.

For people who struggle to get good-quality access to Australia's main broadcast channels, having the choice of almost any channel in the developed world will be transformative.

However, sticking with the copper network means that multicast is ruled out and that video downloading will depend upon the connection to which each premises has plus how many people within the premises are using the connection at once - traffic can easily stack up.

The Coalition has not mentioned this area.

The effect on senior citizens

A common myth of the NBN is that it doesn't benefit the elderly - primarily those that don't use computers. It's hard to understate how wrong this is. At the most basic level, there'll be no more phone line rental, most calls will be free (globally) and those that do cost will cost very little.

The real benefit is telehealth. A minor example is that senior falls cost Australia $500,000,000 each year. NBN allows doctors to monitor patients doing their daily exercises and track mobility degeneration. Being able to talk directly to a doctor, just by turning on a television, potentially saves the country so much money in transport via ambulance (up to and over several thousand dollars per journey - not to mention the sometimes, hundreds of kilometres of travelling each month) that it would be well-worth buying seniors High Definition TVs just for the savings. Innovative solutions are also appearing which use Microsoft's Kinect Sensor to check whether people are getting out of bed in the morning, moving round the house and even doing their exercises. This can save a fortune by delaying admittance to expensive residential care homes. And it means seniors can stay in their homes for longer.

Another class of patient that would benefit from telehealth is those whose immune systems are suppressed, either by disease (AIDS is only the most famous, not the only immune-suppressing disorder) or by treatment either with steroids or a large number of chemotherapy drugs. Wherever possible, such patients need to avoid hospital, both for their benefit and so they don't become "Typhoid Mary" carriers of resistant bacteria to others.

The potential cost savings from not having to touch infectious patients are also substantial.

There are many other benefits to seniors. This is particularly important with so many baby boomers hitting retirement age - apparently there are over 800,000 65th birthday's every month. The cost of senior care is escalating and NBN can dramatically reduce the costs while improving the life of everyone involved.

While some of this may be possible with the Coalition's alternative, coverage will be haphazard, dramatically reduced and fewer services will be developed due to a lack of broadband ubiquity. We'll be covering more on the effects on seniors in future articles.

The viability and potential for cost blowouts

The current NBN plans have been well documented and verified. It's now just a case of getting on with it and following them. There will doubtless be delays - at present the state of Telstra's ducts is a concern. Wireless towers in the country are another.

But the pitfalls facing a FttN implementation are enormous.

The bad state of the ducts is a double problem for the Coalition because the technology also relies upon the quality of the copper within those ducts and most of it is over 30 years old. In NBNco's case, where the Telstra duct is declared unusable, it makes its own new one. For the Coalition to do this would involve rolling out new copper - a ridiculous notion.

Indeed, much of the justification for the Coalition's alternative is that FttN is cheaper in overseas countries. However, this doesn't take into account the realities and challenges that overseas markets are facing or deal with the fact that Australia's geography, population density and, most-importantly, the standard of copper is not comparable to anywhere else.

1. Over 80 per cent of Australia's copper network is thirty years old and copper expires after thirty years. There are frequently reports of people who can't make phone calls when it's raining. One even reported that they can't get a dial tone when the wind blows such is the decrepitude of an overhead line. The copper network is an expired asset and if a government wants to literally spend tens of billions of tax payer's dollars acquiring it, a substantial condition report simply must be performed.

2. The Coalition's FttN technology node requires mains electricity power being connected to every single cabinet in the street. NBN contractors have already queried how this could possibly be achieved as local power companies are the only ones who can install power to infrastructure. The notion of coordinating electrical engineers with NBN engineers without massive delays, across 50,000 to 70,000 nodes drew very cynical comments from leading NBN contractors.

One reason that was brought up by NBN engineers was that many turrets aren't near power lines and so the cost of power connection explodes due to having to dig up whole streets. This has been seen in the UK where the standard cost of connecting a node to power has frequently ballooned from 2000 UK Pounds to 25,000 UK Pounds.

Such areas are then considered 'not economically viable.' Each cabinet has to be assessed on an individual basis. Any implementation study for FttN needs to factor in this cost and add an enormous contingency fund for the potential 1200+ per cent blowouts. In the UK, where such blowouts occur, the public don't get upgraded broadband. Geography means this problem is exacerbated in Australia.

Andrew Ferguson of the UK's ThinkBroadband says of his country's rollout:

"The install cost varies because sometimes the power is available a metre or two away, and other times a new trench across a road with all the associated costs is needed, and worst case there may be extra upgrades to the power capacity in the area to support the powered cabinet. So it is not a simple city versus rural issue, but down to specifics of each cabinet, e.g. rural cabinet with a street light nearby should be pretty cheap, but a city cabinet may need a busy pavement to be crossed which costs money to put back to an acceptable standard."

3. Citigroup performed an analysis of the Coalition's alternative, for the purpose of analysing future Telstra share performance. It states:

"While the Coalition policy represents the low cost alternative, it does little to reform the telecom industry, it effectively winds the reform process back three years and it still faces significant budgetary, political and legislative hurdles. We believe a major policy change will be difficult to achieve for the Coalition."

There's an entire section titled, 'Significant Hurdles' on page 8 which is worth reading. An interesting point says,

"We understand the Coalition will need to re-draft and pass new legislation, to enforce functional and structural separation under a revised broadband policy. This could take up to 18 months to prepare and pass. The Greens Control the Senate: Any new legislation will be subject to Senate approval, currently controlled by the Greens, a strong supporter of the NBN. This poses a major obstacle given the current state of the Senate."

4. According to one senior technician, Telstra's convoluted maintenance system has made FttN all but unviable. By using third-party technicians for repairs, maintenance and installations over the years, and through expecting them to "spend 30 minutes on hold to Telstra HQ" in order to inform them of the work carried out, there is now substantial anecdotal evidence to say that normal procedure is to fix the job in any way possible and leave without documenting what happened. This has been going on for many years. An audit which preceded Telstra's last FttN attempt found that one-third of the lines connecting to turrets do not go where they are supposed to. That means, that every single copper line in every single turret has to be tested with one engineer at the turret and another in someone's home in order to document which line is connected where. As such, the supposed, great-cost-saving, "FttN is simply a case of replacing turrets with cabinets", that happens in other countries, is not possible in Australia.

Performing such an audit on every single copper strand left in the network would prove enormously costly and time consuming. By all accounts, since the NBN came knocking, there has been little-to-no enforcement of many maintenance procedures meaning that the situation is now substantially worse than before.

This all means that audits of line quality, proximity to mains power and of accuracy of documentation, need to be performed in Australia whereas it hasn't (apparently) been necessary (at least to the same extent) in other countries. The potential for cost blowouts and delays is astronomical and it is for these reasons that many have said, it's better to rip it all up and start again.

But that's not all.

One of the cornerstones of the Coalition's broadband policy is to get superfast broadband to people who don't already have decent broadband. A survey is being used to identify them:

"A key element in our approach is to enable us to identify and prioritise those areas with the least adequate services."

But many such people don't already have broadband because they are either too far from an exchange or are connected to poor-quality copper FttN technology won't fix all of these issues.

There's also the question of expecting the general public to know about their broadband needs and opportunities. How can the uninformed make a decision?

The survey continues; "This information will enable us to ensure that if we are elected to Government the roll out of the NBN can be accelerated and targeted at the communities which need upgrades most."

The question that needs to be answered is, "How?" It's not obvious how a copper-based solution would work in Australia and any notion of moving to wireless is untenable.

More questions can be found, here.

As this graph from European FttN-provider, Asotel, illustrates. If you're more than 2KM from the node right now, FttN isn't going to help you at all.

At 2km from the node, ADSL speeds are similar to VDSL speeds.

Ultimately, how does the coalition's policy provide good copper-based broadband to people who don't already have it when a major reason they don't have it already is because of the copper-based network?

Could the Coalition's plan really be as unsophisticated as spending tens of billions of dollars on incredibly-elaborate and complex processes (with a very-low likelihood of success) on amp'ing up the copper in the hope that it might squeeze a few more megabits down the pipes?

The costs of buying broadband

We've already seen the costs of NBN broadband plans. Generally speaking, they offer better performance and better value than anything that's come before. Here's Lifehacker's extensive list.

In addition to this, there will no longer be a requirement of paying phone line rental to Telstra - an off-the-bat saving of $23 to $90 per month - and all phone call prices will be slashed if not free altogether - worldwide.

However, the Coalition's alternative, without details as to the contrary, appear to reinstate local monopolies and duopolies which usually ensure higher prices. For instance, in an area where Telstra charges $110 per month for cable internet access (the top, mainstream copper-based internet access in the country) and the only other option is Telstra NBN which gives better performance - would Telstra charge more or less for the 'NBN' connection?

The monopoly situation is dealt with individually above. However, it's worth noting that Canada suffers from horribly-high prices in this regard. So does the US and its patchwork quilt of corporate territories and so did New Zealand although it's now following Australia's lead with the fibre-based NBN.

A telling example is described here: MP George Christensen asked why NBN was building wireless in Mackay when it already had it. He also said that the speeds and prices of NBN were inferior.

However, a quick look at the cited prices showed that NBN plans offered ubiquitous coverage at a lower cost with higher speeds and superior data caps.

This needs to be addressed by the Coalition as its claims of prices being driven down through market-driven competition sound reasonable on paper, but in reality - as experienced within Australia and around the world - it invariably (to the best of our knowledge) means higher prices.

The reliability

Fibre offers the best reliability of any broadband connection that you can get. This is particularly important if you are hooked up to hospital monitoring, need to contact a doctor urgently or are running a business.

The lack of reliability in FttN also means that many of the applications, which can pay for the rollout, will be unavailable. It's also worth considering that in times of emergency, it's far easier to return power to emergency services and communities when they are using fibre. See Emergencies and natural disasters.

Effect on property value

NBN connections are already appearing in property listings on Domain and RealEstate.com.au along with proximity to schools and parking. There are plenty of conversations among online communities to show that early adopters are consulting NBNco's roll-out map to gain insight in where to live. It's already having an effect on NBN-ready Tasmania.

It's fair to say that of two neighbouring, identical properties - one with NBN and one without - the one WITH will command a premium.

Conversely, there have been mutterings from uninformed members of the public about refusing their NBN connection despite it being free. It's fair to say that doing so will lose value as connecting back to it will cost thousands of dollars and not happen straight away.

Interesting discussion is surrounding NBNco's Network Extension Program which lets people in Fixed Wireless zones upgrade to fibre if they pay a 'not-for-profit' price. The problem is that the price is very high - there have been few enquiries but one house was quoted at $150,000. (Another alternative is connecting your own fibre which some farmers have been doing in the UK.)

One wonders, however, would paying this money add $150,000 (at least) to the house's value? Does this represent a trifling expense for a business setting up in an area of low property value?

In Kansas City, USA, where Google fibre is being deployed, property is becoming more attractive and attracting start-up businesses because of the top-notch broadband. Data centre operators are also looking at cheap Australian real estate to set up shop.

The effects of the Coalition's policy are less clear cut. Some have said that having the large fridge-sized FttN cabinets outside your house will lower value. It probably depends on the premises' outlook. Some won't care, but as Selling Houses Australia tells us repeatedly, they are likely to polarise buyers and reduce the market - some will view them as monstrous carbuncles some will recognise the potential for really fast internet.

Are the large, fridge-sized cabinets a comforting reminder of man's ability to generate broadband? Or a Monstrous Carbuncle on the face of a much-loved, elegant friend... that lowers property value?

Crowdsourcing has been an integral part of this article. Add your views and experiences to the discussion.

Different Timescale

The bulk of the current NBN is scheduled to finish in 2021. Thus far it's on track but we'll know much more in the next few months.

The Coalition says it will complete its rollout much quicker. This appears to be based upon timeframes seen in countries like the UK where the process for upgrading to VDSL basically involves adding FttN cabinets to the street. In a standing start, this is definitely the faster option (ar least for suitable areas). But in Australia, and with several years already passed, the race is not nearly so simple: NBNco has a big head start and the Coaltion has much-bigger and unpredictable hurdles (see The Viability) to navigate.

Furthermore, as Richard Chirgwin points out:

"Since 2009, BT has rolled out FttN (in BT parlance, fibre-to-the-cabinet) services in 1376 exchange areas. At around 340 exchange areas per year, it would take eight years for Australia to put VDSL2 into all the areas now covered by ADSL2+."

(In the linked article, Chirgwin also points out that the UK is not ahead of us and that it's slow-starting rollout, is also scheduled to ramp up quickly.)

The government and NBNco has spent years planning the rollout, negotiating with the incumbents, negotiating with contractors and building trial sites.

If elected later this year, what's the earliest the Coalition could start building? Let's be optimistic and say 2015. How long to build FttN in ideal circumstances? The number that gets bandied about is five years (although, as Chirgwin says above, it's lilkely eight). Straight away, that puts the finish date at 2020. Is that really significantly quicker? Is 2019 or 2018 'much quicker' for that matter? These are incredibly-optimistic figures.

At present, and without a very detailed implementation study it's frankly impossible to see how the Coalition could implement its policy significantly quicker than the current plans. According to the facts and available information, it could just as easily take much longer.

The legacy

A traditional justification of spending billions on national infrastructure is that it lasts for generations. Australia has many prominent examples including The Overland Telegraph, The Snowy Mountains Scheme, The Sydney Harbour Bridge, all of which got panned by public and politicians at the time and all of which are still famous around the world. All of them were built with an eye on future requirements.

Australia will be the first country in the world to have ubiquitous Fibre-to-the-Premises, we already know what many of the revolutionary benefits will be and we know it will operate happily up to the next century.

In contrast the Coalition's alternative already needs to have its subsequent upgrade factored into its building plans. We also know that data requirements and speed will outstrip its capabilities by 2017 (see below) - when it might not have even started to be built yet (see The Viability).

Sydney's Harbour Bridge only needed one lane when it was built. Now, after being assisted by the Harbour Tunnel there is talk of adding extra layers to boost capacity. It's unlikely that even the visionaries predicted that. However, the data forecasts for global broadband are clear - broadband requirements will outstrip the performance of copper-based solutions within the next several years. We're already being held back by the copper-based constraints.

It raises the question that if the Coalition wants to build a network for Australians that is "sufficient for their needs" which needs are those? The ones of the general public in 2013 or of the nation in 2020?

Source: Cisco VNI

According to Cisco's world-leading VNI index (which is what governments and businesses around the world use to base infrastructure decisions upon), the amount of data moving over the internet has doubled since 2011. It will double again well before 2020. The trend is for it to keep rising.

The level of growth has driven discussion about the internet reaching its limits and how only fibre deployment can stop that happening.

This raises the following questions; are Cisco's forecasts wrong? Should expensive new infrastructure last generations? The Coalition's plans are to spend $20bn-to-$40bn of tax payer's money on infrastructure that can barely cope with today's requirements and certainly won't in the next several years.

The following graph was put forward by members of Australia's technology community to illustrate the long term, future-proof benefit of choosing fibre now.

In 10-to-20 years' time what will we think when looking at this graph? Source: Cabidas

Ultimately, the Coalition has only mentioned current needs. It needs to address the specifics of Australia's future requirements and the compatibility of its policies with Cisco's world-leading VNI forecast.

Other countries

It's fair to say that the Coalition is basing most, if not all, of its policy based on rollouts in other countries. We've demonstrated why Australia is largely incomparable above. Nonetheless, Malcolm Turnbull has criticized the ABC for not examining what's happening overseas.

In truth, we have been. The problem is: finding relevant positive role-models is challenging. The broad situations in countries like the USA (interesting, slightly-related-to-Australia debate, here) and Canada are only good if you like the thought of monopolies and duopolies exploiting the public by offering inferior services at inflated prices. Canada is stuck with some of the worst data charges in the Western World. The corporate and patchwork nature of America means most people rail against internet access. A few hot spots, like Seattle, Kansas City (and here), and Chattanooga (see also here and here), which are independently-deploying NBN-like FttP, are seeing enormous benefits from doing so. The US government is pushing for fibre across the whole country.

Also note, an Atlanta city rival recently said, "Having a fiber-optic broadband system like Chattanooga's in 2013 is like having an airport like ours was in 1963."

But the main issue is that every country in the world is moving to fibre and it's not hard to find political leaders in each and every country saying why - Angela Merkel, at last year's CeBit exhibition (the largest tech show in the world) said in her keynote that fibre was the future. This was echoed by the conference partner, Brazil, through President Dilma Rousseff. (Incidentally 2013's theme is "Shareconomy" based upon the cloud.)

Indeed, countries moving to fibre include Israel, China, America, France, Korea, Singapore, UAE and Korea.

Japan is too, but the Japanese cultural attitude to infrastructure construction makes it incomparable to other countries - they build things for the future and barely think twice about the cost. It already had one of the best copper networks on the planet.

There's a full list here.

But we'll focus on two that are particularly-relevant just briefly(ish). The Coalition constantly refers to the UK as a model for its alternative deployment. The UK's broadband policies have led to wildly-varying services. FttN works quite well in a limited number of areas. However, the underlying policy of getting a downright-laughable minimum 2Mb/s connection to the whole country has spent years of failing very hard.

Nonetheless, fibre is appearing from some providers.

Having recently returned from spending three weeks there, a common theme was to get fibre to avoid being left behind by the French. The overriding problem they have, however, is a total lack of money, (they're facing a triple-dip recession). Some comments are telling, none more so than from the country's Secretary of State for Culture, Olympics, Media and Sport, Jeremy Hunt.

From Delimiter:

"[He] said the impact of the Internet on modern economies was "now well-documented by a number of studies", accounting for a major proportion of growth in gross domestic product...

"My nightmare is that when it comes to broadband we could make the same mistake as we made with high speed rail. When our high speed rail network opens from London to Birmingham in 2026 it will be 45 years after the French opened theirs, and 62 years after the Japanese opened theirs. Just think how much our economy has been held back by lower productivity for over half a century. We must not make the same short-sighted mistake..."

"We simply will not have a competitive broadband network unless we recognise the massive growth in demand for higher and higher speeds," he said. Consequently, Hunt said he viewed fibre to the node/cabinet as only a short to medium term solution, referring to an earlier report by the UK's House of Lords into the matter.

"Whilst I am talking about the House of Lords report, let me address a further misunderstanding," he said. "They suggest that fibre to the cabinet is the sum of the government's ambitions. They are wrong. Where fibre to the cabinet is the chosen solution it is most likely to be a temporary stepping stone to fibre to the home - indeed by 2016 fibre to the home will be available on demand to over two thirds of the population."

The House of Lords report said that broadband was a, "fundamental strategic asset."

Meanwhile, BT's former CTO said;

"Fibre to the cabinet is one of the biggest mistakes humanity has made," he said. "It ties a knot in the cable in terms of bandwidth and imposes huge unreliability risks... It is a shame...

"What are the leaders doing? There is Sweden in greater Europe, and in the Far East you have Korea, Japan and China. They have a minimum level of 100 Mbps. That is where they start," Cochrane said.

"They are rolling out 1Gbps, but they are planning for the next phase of 10Gbps. To return to an earlier point, if you have got fibre to the cabinet and you are relying on copper, I can tell you that the network is going to collapse on copper when you get to 1Gbps. It will collapse much earlier."

There's more glowing praise and comparisons here plus some more recent developments, here and here.

Some have noted how the UK squandered its Natural resources (North Sea Oil) wealth without investing it for the future. Could that be a warning to Australia?

Meanwhile, in New Zealand...

New Zealand is probably the most relevant example. The Coalition used to cite New Zealand as an example for broadband implementation. This seems to have died down since New Zealand started copying Australia's NBN.

Of particular interest is that while no Cost Benefit Analysis has been performed for Australia, it has for New Zealand. Interestingly, the associated pecuniary benefits of New Zealand's benefits are so high that they would pay for Australia's NBN. That's impressive for a country whose GDP is almost 90 per cent smaller than Australia's. One wonders, what would the benefits to Australia amount to?

"[The report] uses a 'grass-roots' analysis to quantify the likely end-user economic benefits, called consumer surplus gains by economists, of a sample of high-speed broadband applications across the healthcare, education, business and agriculture sectors. The broadband applications considered include online doctor consultations, remote learning, teleworking and online farm management tools among a number of others. It calculates that the economic benefits to New Zealand end-users of the high-speed broadband applications considered will amount to NZ$32.8 billion ($26.8 billion) over 20 years."

The subsequent diagram "shows how this is calculated across the four sectors."

The NZ Cost Benefit Analysis illustrates the potential of an Australian Cost Benefit Analysis.

In the healthcare domain, the savings considered as part of the analysis included lower hospital admission and test costs, fewer emergency room visits, lower travel-related costs, lower long-term prescription drug costs, faster access to physicians and faster care delivery leading to savings in government expenditure on healthcare. The result was a NZ$5.9 billion [$4.8 billion] consumer surplus over 20 years.

In the education domain, the savings considered are those that result from lower costs of skill enhancement, as well as reduced cost of course materials and savings on field trips. The result was a NZ$3.6 billion [$2.9 billion] consumer surplus over 20 years.

Business services-related savings are achieved through improved productivity, lower travel-related costs, lower network and communication expenses, and savings (as well as new revenues) from the cloud-enablement of applications. The result in this domain was the largest - NZ$14.2 billion [$11.6 billion].

Economic gains in the dairy industry relate to increased dairy farm productivity and were calculated at NZ$9.1 billion [$7.4 billion] over 20 years. Annually the combined GDP impact of the build, and the consumer surplus from the applications, are worth about the same to New Zealand as the money we earn every year from our wine exports.

Once again, if the efficiency gains are worth this much money for New Zealand, what would they be worth for Australia?

Why is this so long?

Firstly, balance: if you're not thorough, you get swept away in the sea of opinions. Secondly, it's a resource for others in the media to help with groundwork and research. Thirdly as a resource for myself - future articles needn't be so long if I can link back to articles like this. Fourthly, it aims to answer any counter that someone puts towards an individual element.

This has all worked successfully before (video games and the Oslo massacre, the internet filter and the NBN a few times.

Furthermore, and this echoes Malcolm Turnbull himself, I too am sick of 'one-line sound bites' and the public being uninformed.

Too long; didn't read? Click here.


Comments like the following appear all over mainstream media, almost completely unchallenged, and they may even be ramping up:

"The approach we will take - we plan to take is about a quarter of the cost and a quarter of the time to provide an upgraded broadband service than the approach of fibre-to-the-premises that that Government is insisting the NBN Co take."

"There is no evidence whatsoever that the massive increase in speeds delivered by fibre-the-home will deliver any extra value or benefit to Australian households."

"There is not one contractor in Australia that believes the Government is going to roll out its National Broadband Network for $32 billion. Expectations are as high as $60 billion, $70 billion or even $100 billion for the National Broadband Network.

These statements are demonstrably untrue and some border on the ridiculous. This naturally raises questions about media and politics in Australia. Feel free to discuss them below, but I'm sticking with the technology debate.

We'd like to discuss the technical details, but this rarely happens and discussions increasingly descend into resembling shambolic accusation fests like this and, sadly, this.

What's most important, however, is that the fundamental aims of the Coalition's policy don't appear to be possible. The technology and governance minefield ahead of it needs a detailed map that navigates all the hurdles mentioned above in order for the following statement to ring true:

"Our broadband policy is to complete the national broadband network, but to do so sooner, cheaper - less cost to the taxpayer - and much more affordably for consumers and that is our plan."

It's not 100 per cent impossible, but based on the available information, it seems like it.


  1. "Our broadband policy is to complete the national broadband network, but to do so sooner, cheaper - less cost to the taxpayer - and much more affordably for consumers and that is our plan."

    If you deal into this? expect that internet is cheaper and slow also. We need to deal into better and reliable connection. It's better to be expensive as long as the service and the connection are reliable and fast.

  2. Let's wait until the new Satellite launch. Once it was launch, try to monitor the speed and reliability of your NBN broadband.



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90 years old, political gay activist, hosting two web sites, one personal: http://www.red-jos.net one shared with my partner, 94-year-old Ken Lovett: http://www.josken.net and also this blog. The blog now has an alphabetical index: http://www.red-jos.net/alpha3.htm