Thursday, 19 August 2010

You think you'd get something for $43b

You'd think if you spent $43,000,000,000 on something you'd actually get something from your money, even if the project delivery wasn't really spot on - but ironically, the $43b the Australian Labour Government is proposing to spend on Australia's Internet will leave all Australian's with lower speed broadband with higher monthly costs.

Don't get me wrong - just like everyone else, I want the fastest Internet I can get & I know that the best way for me to get that is to have a piece of dedicated fiber running into my home serving me, in Stephen Conroy's words, data at the speed of light "and you can't get faster than that".

Two things could happen with NBN: (a) it is fabulously successful, is delivered under budget and achieves everything it sets out to achieve and (b) it stuffs around for several years, provides lightning-fast Internet to a few pockets of people (particularly in the second quarter of 2010 and a similar timeframe in 2013), but eventually dies in a burning heap of flames and is bought up by Telstra for far less than the $50b+ that was spent on it.

I really hope (b) happens and not (a).

You see if (a) happens then it means:
  • The Government will have paid Telstra $11,000,000,000 to switch off the copper network that practically all Australian's are currently using to access the Internet (yes, even if you're not with Telstra as your ISP) and make their home phone calls. Yes, this network that is serving 20Mbps+ Internet to many Australians, or around 2-5Mbps to a vast majority of Australians, meeting their needs quite adequately, will be turned off. We will not wring every last bit out of this network, we will not transition off of it through a gradual rollout of new technologies - instead we'll pay Telstra, a public company, $11 billion dollars to just turn it off!
  • You will have NBN fiber connected to your house. The Government will have legislated to require you to allow them to enter and install it. You see, they can't afford to roll it out according to demand - instead, they'll need to install it in each and every house as they make their way down your street, they can't come back and do your house next month or next year, it's too expensive to do that.
  • You'll be paying about $100/month for your Internet access, which you'll get from someone like iiNet or Internode. The price will be so high because they're paying NBN Co not much less than that for the wholesale service. This will be the base service available.
  • You won't be able to get Internet from anyone other than NBN Co because the copper network you used to get your modest Internet from will have been shut down.
  • Pensioners and other welfare recipients will get a subsidy as otherwise they won't be able to afford to have the Internet which is, of course, a basic entitlement just like electricity or a phone line.
  • You'll be stuck with this model for a long, long, long time. With a Government owned Monopoly delivering your Internet, any competitor who actually tries to innovate and deliver new, cost-effective services in medium and high-density city and suburban areas will be actively discouraged by the Government - after all, a return is required on those Infrastructure Bonds that were issued to pay for half of it! NO NEW SERVICES WILL BE ABLE TO COMPETE.
  • NEW SERVICES WILL COMPETE. Inevitably, new services will compete in this uncompetitive market. They will be wireless, they won't make use of fiber, as there's not enough subscribers left to warrant rolling it out, and they won't be on copper as they aren't allowed to use that, even though it's still in the ground. The wireless will be faster than we have now, not as fast as the NBN network, but it will be sufficient. Most importantly, this new, cost effective Internet will be WELL BELOW THE CURVE - much slower than users in other countries get on their commercially-delivered & demand-driven fiber networks & much slower than we could have had under a similar model. USERS IN REGIONAL AREAS WILL HAVE NO OPTIONS - just like in the days of Telecom, they'll get the expensive Government service.
Of course, eventually the NBN mess will be mopped up. The Liberal party will be running the country, they'll blame it on Labour, sell the NBN off to Telstra and we'll start building our real Internet.

So I guess we'll get the mess of (b) after all... I just wish we could have had it sooner.

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