The NBN Debate and some Common Sense

· Government policy, NBN
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Lets want to talk about two issues relating to the NBN . The first is the Liberals demand for a business plan. The second is the difference between the NBN (Fibre to the Home) and the Liberal proposal of FTTN (Fibre to the Node).

Forget about the NBN for a moment, and think about the Internet 10 years ago. Most of us had dial-up modems. Monthly plans were about 1GB and that did very nicely. YouTube was still a concept (started 2005), and Facebook was still a year away(2004).

  • Who would have believed we would need modems that did not share the household telephone line?
  • Who would believe we would use that 1GB monthly allowance in a day?
  • Who would believe that there would be things called tablets, and mobiles that would also demand Internet connection?

So if you were a telco, can you conceive what a business plan to expand their Internet offerings would look like then?

“We expect unknown household demand for Internet capacity from things that have not been invented yet. In fact we have no idea what these things might be, and less idea of how much capacity will be required.”

All we knew for sure then, and know for sure now, is that the demand for more capacity will increase. People will want more bandwidth and faster speeds in coming years to meet the demands for services that are yet to be invented. We know those services will be there but there is no way they can be quantified. You can’t count what does not yet exist.

It is not just households that will want to use that additional capacity. Business will have additional demands as well. It may be that as cloud services develop, some companies will not spend money on maintaining their own internal network. You can already have many programs, including Microsoft Office, delivered over the Internet.

All this ads to the productivity of business. It means:

  • Less money spent on building and maintaining IT systems
  • Access to more sophisticated software to help run a business.

Productivity improvements make businesses more competitive here, and internationally.

I have heard people say they don’t need to be competitive internationally as they only sell in Australia. I tell them to think about online retailing. If you cannot be competitive in Australia, you might find your customers are buying from overseas. Some Australian retailers are now playing catch-up because they ignored the fact that people can buy cheaply and conveniently from anywhere in the world.

There may be some instant gratification from going to your local Westfield and buying over the counter. If you can get the same product online, delivered in a week, and at a significantly reduced price, many people will forgo that ‘instant’ gratification. They will wait a week for the product.

The way for Australian retailers to compete is to be more productive. That is what the NBN is all about. Providing the connection to every shop, factory and household that enables them the opportunity to reduce their costs. On day one, they might not see an immediate cost savings but you can be sure that within a few months, if they look, they will find significant opportunities to cut their overheads using the NBN .

The Liberals want to see a business case. Maybe they have a crystal ball that can see the next Facebook or YouTube. Maybe it is all a load of bovine excreta. Nobody can do an accurate (or even rough) business case for things that have not been invented.

Now the Liberals have a plan for a broadband network. Fibre to the Node. What this means is that instead of fibre connecting super speed broadband to almost every home and business in Australia, the pipeline ends down the road. From down the road, it is delivered via the existing copper network.

Think a fire hose with a nozzle the size of a straw.

Another issue is the age of the copper network. It is reaching it’s use by date. It is cheaper to install fibre to the node, but there is the upkeep of the copper network to be considered. Eventually the copper will have to be replaced anyway. If you do want to run fibre from the node to your home or business you can do that …. for about five thousand dollars.

The Liberals want to only do half the job and highlight how cheap it is compared to our NBN solution. Half the speed at a lesser cost. Do they really think people are so stupid they cannot see through that proposition? If they really were concerned about the long term future of Australia, they would be supporting a long term solution. It is obvious it is all about being negative. All about feeding the media Polliwood that they think will get them elected.

There is a clear choice for Australians on this issue.

  • Labor is for a long term 100Mb solution to providing fast Internet and help businesses and households.
  • Liberal is for the cheap 25Mb speed option that will not even last a decade.