Friday, November 21, 2014

Fibre to the Farm: Co-Op purchase & install possible and affordable

I sent this email to Fairfax journalist, Andrew Crothers (andrea.crothers@fairfaxmedia.com.au) and copied to Senator Sullivan, mentioned in the article.
Update: 08-May-2015. Fibre to the Farm on Paul Budde's Blog.

Andrea,

I was interested in your story about Senator Sullivan calling for an NBN for the bush.
http://www.queenslandcountrylife.com.au/news/agriculture/general/news/mad-barrys-hotline-give-bush-its-nbn/2717778.aspx?storypage=1

There is a very strong project, that’s possible and surprisingly affordable that should be a major vote winner for the Nationals and hasn’t been discussed by any of the major parties.

I believe it should be self-funded and directly owned by those that benefit: rural subscribers.

Co-Ops have a very long tradition in Australia and have proved their economic value to regional industries time and time again.

I was born in Brisbane, around 3 years before the Senator. My father worked for the PMG for most of his career, spending from 1941-1945 doing Signals Intelligence in what became DSD.

I’ve worked in Networking & Computing since 1974, spending 7 years with O.T.C. and been involved with saving multiple large, high-profile Government I.T. projects in crisis over the last 20 years.

I’ve formally studied Economics, Accounting and Chemical Engineering besides Computer Science, and ran my own single-person consulting company for over 20 years.

My knowledge of Networking/Telcos, Economics and Business allows me to phrase questions and suggest solutions that others haven’t.

The National Library archived the 300+ pieces of mine on the NBN in the years leading up to the election.

I also had “5 minutes of press pack coverage” when I asked a Turnbull staffer a question about serious omissions in the LNP NBN election plan, no “ROI” or cost of DSL services, and was sworn at via email in response. These questions have never been addressed.

I’ve included links to a number of themes (“Fibre to the Farm”, “NBN is new Rivers of Gold”, various Myths), in what I hope is order-of-interest for you.

The primary point of difference between my view of broadband and current LNP policy is that Broadband is about Business, not domestic entertainment.

There is ample evidence that if, in 1999, Ziggy Switkowski had pursued the early 1990’s plan of “Fibre to the Kerb” by Telstra’s first CEO, Frank Blount, instead of wasting $10+B on failed investments, by 2005 we’d have had good broadband everywhere, it would’ve been entirely self-funded, not a dollar of Govt Funds needed, and the T3 float would’ve been closer to $7 than $3, and fully subscribed. Ziggy got forced out as CEO of both Optus and Telsta - not a stellar record.

I attribute he primary reason the NBN is a “government project we had to have” is directly attributable to the incompetence and lack of sound business management by Dr Switkowski during his term as Telstra CEO. The Australian public has lost three times at his hand: no early broadband services, low T3 price and now massive delays in achieving what was first floated around 10 years ago by Sol Trujillo.


Two things I didn’t highlight about “Fibre to the Farm”:

- there are two networks, and revenue streams, inside the one cable: Premises (FTTP) and long-distance Backhaul.
Same Fibre does both, doubling revenues.

- Every rural & regional village and township will also get full Fibre, not be forced to use the more expensive, less reliable, lower capacity Fixed Wireless service.
Some townships may wish to dig their own trenches and pull fibre, contributing “sweat equity” to allow NBN Co to more quickly provide FTTP, not Wireless.


If you’ve any questions, please don’t hesitate to contact me.

regards
steve jenkin



My special viewpoint/analysis led to Business Spectator publishing one of my pieces on alternate funding models for the NBN.
If the Coalition was serious about cutting costs, “letting the Market Speak" and providing good broadband to all the community, there are multiple additional funding models it could pursue:

http://www.businessspectator.com.au/article/2012/9/20/technology/taking-politics-out-nbn


With my limited access to hard data [Victorian + national data], I attempted to cost the extra cost “Fibre to the Farm”, and its surprisingly low ($2,500-$7,500), based on expensive deep burying of cable by large commercial firms: $10,000/km.
With 900mm-1200mm trenching and “sweat equity” installation by farmers themselves, this will be closer to $2,500/km.

These are my high-ball estimates of Fibre to the Farm, including a calculation of a payback period, well under a year without accounting for all savings:

http://stevej-on-bband.blogspot.com/2013/07/nbn-fibre-to-farm-splitting-cost-3-ways.html
http://stevej-on-bband.blogspot.com/2013/06/nbn-7500-for-fibre-connection-if-you.html


Based on 5 decades of the Overseas Telecommunications Commission (O.T.C.), NBN Co as FTTP offering up to 1Gbps, would provide “Rivers of Gold”:

http://stevej-on-bband.blogspot.com/2012/12/nbn-historical-financial-performance-of.html
http://stevej-on-bband.blogspot.com/2013/08/business-economics-of-fibre-vs-copper.html
http://stevej-on-bband.blogspot.com/2013/03/nbn-rivers-of-gold-scenario.html


The Vertigan/Ergas Economic Benefit/Cost Analysis stronly supports my case:
they estimate that 1Gbps (1000/400) services have an “elasticity” of -60 [the impact of price on demand]

For every dollar the price is reduced, income increases _sixty_ (60) times.
When it costs NBN Co exactly the same to provide an entry level service (12/1) as the 100-times faster 1000/400 service, this is a Royal Road to printing money _and_ following O.T.C. in reducing real costs significantly every year, paying down debt ahead of schedule and making “a motza” for the owners.

Before the Vertigan/Ergas CBA was released, I questioned if they’d account for the easiest, most accurate and readily measured “public benefit”: the increase in value to shareholders of the Telco sector. Ergas treated NBN Co as if it was fully-funded (like Roads), not the Private-Public Partnership that it is.

http://www.businessspectator.com.au/article/2013/4/4/technology/telstras-nbn-wow-factor
http://stevej-on-nbn.blogspot.com/2014/08/nbn-co-already-running-at-500-cost.html
http://stevej-on-bband.blogspot.com/2013/08/nbn-real-cost-benefit-analysis.html


Dispelling the Myth that the low-end subsidies High-end users: it’s the other way around.
The top 20% of subscribers generate ALL the profits of NBN Co, the rest of us get the service at cost or subsidised.
It is NOT “The City subsidies the Bush”, but “the High-End make ALL the profits”.

http://stevej-on-bband.blogspot.com/2013/08/myths-low-end-broadband-users-subsidise.html
http://stevej-on-bband.blogspot.com/2012/11/nbn-economics-of-ftth-vs-fttn.html


Alan Kohler went into print suggesting “Infrastructure Bonds” could be used to fund many important National Projects, not just the NBN.
That would give DIY Super Funds the chance to invest in good long-term, high-return, projects and for people who want these projects to put their money where their mouth is.

http://stevej-on-bband.blogspot.com/2012/12/nbn-funding-with-infrastructure-bonds.html


My analysis of Copper vs Fibre - Turnbull’s Copper Proposal was never a sound business plan.

http://stevej-on-nbn-er.blogspot.com/2013/08/nbn-numbers-from-turnbull-coppernode.html


--
Steve Jenkin, IT Systems and Design
0412 786 915 (+61 412 786 915)
PO Box 48, Kippax ACT 2615, AUSTRALIA


stevej098@gmail.com
http://members.tip.net.au/~sjenkin