Monday, February 16, 2015

Follow-up: Why we should've had Full Fibre NBN by now if the LNP hadn't actively quashed it

Yesterday's updated post (on 2013) with the actual text from Telstra ASX reports in April 2012 mentioned a 1995 Strategy Paper to replace the PSTN by 2010. It amazed me is that it was retweeted.

Perhaps the ALP can acquire and publish a copy of Frank Blount’s Strategy Paper, if it doesn’t already have one from the Keating era.

It’d make interesting reading and, if tabled, poses a rather embarrassing question for the Party of Small Business:
This deliberate and perverse ignoring of sound commercial advice, not once but twice, happened on their watch, costing the T2 investors (they'd suckered?) two-thirds of their money.
It’s not like Howard/Costello were strapped for Cash, they had $300+ billion in unanticipated revenue from the Chinese Mining Boom sloshing around looking for a way to be spent.



Here are the facts:

  • In 1995, 2-3 years into his term as GM/CEO, Frank Blount produced a Strategy Paper that predicted nil PSTN [Public Switched Telephone Network, a.k.a. "Copper"] revenue by 2010.
    • The same year, the GM Strategic Marketing in Canberra announced $20-$30MM spending on “Fibre to the Kerb” in Gungahlin
    • We know from history the plan wasn’t executed, even if it was for “RIM’s” in a Fibre to the Node design.
    • I believe there are ~8,000 RIM’s in service, with 100-200 services each, or 10%-20% of the customer network.


  • In 2005, Sol Trujillo told Howard et al:
    • Telstra had to vigorously embrace broadband and pitched three investment levels ($1.8, $4.7 & $10.5B) for the Govt and coined the term NBN.
    • PSTN revenue had peaked in 2000/1 and was in terminal decline. Action was necessary, not optional, and urgently required.
    • There had been, under Ziggy, billions in under-investment in the PSTN asset, both CapEx and OpEx (maintenance).


  • The TLS share price peaked at T2 ($7.40, 1999) and collapsed to a low of $2.56 in Nov-2010, prior to the NBN Agreements.
    • It’s since recovered to $6.60, with no signs of slowing its recovery. David Thodey is impressive as a CEO.
    • That’s $50+ billion of increased wealth just TLS to owners, with at least 50% again to other major Telco’s, ISP’s and new Digital Space players.

Both Frank and Sol weren’t merely right, but devastatingly so, making me wonder at the agenda and competence of the CEO between them, Ziggy, who wasted many billions on “Dot Boom” investments that collapsed. Why would a twice failed CEO of a Telco be appointed as Chair of NBN Co? It's not Rocket Science, but perhaps that how "Nuclear Science" works.

Maybe Frank planned a rollout without any Government co-investment, it’d be there in the Strategy Paper.

Might we infer that Blount, correctly, predicted the rise of the Internet and the collapse of PSTN revenue in 1995? I can think of no other reason he’d setup a 15-yr plan to replace their dominant revenue & profit stream.

Because the plan was over 15 years, was the change-over going to be fully funded from turnover? I think that’s a reasonable inference.

I’ve never saw anything in the press about additional Government funding. Replacing old, high maintenance ‘plant’ with new, becomes self-funding in time from the lowered maintenance expenses. We saw in 2012 after Hurricane Irene in NYC 100% replacement of damaged copper with Fibre.  Replacing 5% of the TLS network every year wouldn’t strain internal or contractor resources.

I suspect that a network-wide RIM upgrade, then ADSL FTTN built over it (like current ‘TopHat’ project), would’ve been completed long before 2010 because of continued high customer demand for Internet.

Even if this new Fibre-to-the-Kerb network was going to be only FTTN as, it was under _both_ Frank and Sol, both planned completion before 2010.
Sol wanted the Government to kick the can for between $1.8 and $10 billion and to give them sole access rights.

The Gungahlin RIM’s weren’t perfect, it took a decade of work by Senator Lundy to get even PSTN-grades services for them.
Only since TransACT, now NBN, Fibre was rolled out was their situation truly fixed.
If either of the FTTx plans had been executed, upgrade to Full Fibre would be well under way right now, everywhere.

If we’d had a competent and rational investment plan executed within Telstra, there would never had been the need for an NBN Co and a Big Bang rollout of Fibre and Fixed Wireless. High-bandwidth Satellite is an uncertain business. Bob Hawke had a go at it circa 1990 with AusSat, losing $500MM+ making acquisition a requirement for bidders on the 2nd Telco license, eventually won by Optus Ltd. Notably, Optus has continued to launch new Satellites: they were able to make it pay, even if AusSat couldn't.

So why did Howard, Alston & Coonan quash both these well-founded commercial proposals?

It never made financial sense to prolong the life of the old PSTN and less so to actively oppose the more profitable new generation replacements.
PSTN Copper services are truly 1925 technology, given a few “mid-life kickers”, like ISDN & ADSL.

Why have Abbott and Turnbull been so keen to kill NBN Co?

Again, with a failing Copper PSTN Plant its not financially sound, while Full Fibre makes every service a Cable TV connection.

Every Australian voter and taxpayer, and all telecommunications users, deserve a concise, clear answer to this bizarre, very deliberate and long-held policy position of the Liberals.

How can preventing/withholding universal, internationally competitive broadband access from the Australian businesses and residences, for 15 years, be justified on any rational economic or financial basis?

It's not just economically illiterate and financial vandalism, but contra to our national interests at every level, doubly so since there's clear evidence that they knew broadband could be rolled at zero cost to the Government and that in doing so they almost destroyed the privatised Telstra. Exploring those propositions would make for a most interesting Royal Commission.