[Linux-aus] Political Recognition for Technology in Australia - was Re: Seeking feedback - EFA Citizens Not Suspects campaign

[Russell Stuart]

On Fri, 2013-06-28 at 17:24 +1000, Russell Coker wrote:
> If there's $2 billion returned to the government then there will probably be 
> at least $2.5 billion in revenue.  If we divide that by 7600000 households 
> then that's $329 per household as NBN REVENUE.  But no-one at all will ever 
> pay just for NBN, they pay NBN fees as part of an ISP subscription, the ISP 
> provides data access, services such as a mail server, a help desk, and makes a 
> profit.  So if every single household in Australia signs up for the NBN then 
> they would each be paying $500+ per annum for ISP service unless there were a 
> small portion of the population paying significantly higher rates.  
> 
> My parents pay $600 per annum for home phone service and Internet.  I don't 
> think that model would allow for a $329 NBNco revenue from them even if they 
> wanted to switch.

You aren't comparing apples with apples.  In this case you are comparing
what your parents are paying now with what the NBN must charge in 2030.
If you assume a very modest 3% inflation rate, your parents $600 will be
paying $1000 in 2030.  The same thing applies for the 7.6 million
connections figure you are using.  That is expected to rise, and indeed
it has already - Telstra has 8.1 fixed line connections now.  Allowing
for a 1.5% growth rate in our population (which is well under the 2012
1.8% figure), that 7.6 million figure can be expected to rise to 10.2
million in 2030.

Or to put it another way, last year Telstra earned $5.2 billion in
revenue, and paid $3.5 billion of that to shareholders.  If that $5.2
billion is again scaled for inflation, it becomes $9.1 billion in 2030.
Scale that again for population growth, and it becomes $12B.

> Kogan offers a nice 3G connection with 6G of data per month for $300
> per annum, that would cover the Internet needs of a good portion of
> the population.  If some portion of the population choose not to use
> the NBN then that means  either the government gets less revenue than
> they would like or the other customers pay more.

Indeed.  But it's a big if.  These data plans have been available for
some time now, and yet year in year out the number of fixed lines keeps
growing roughly in line with population growth, and the amount data
those fixed lines keeps growing exponentially.  That exponential growth
is the prime justification for the NBN.

> But the NBN price model only supports paying 4* the base rate from
> what they've told me (4 ports on the router) so that won't work.

I am not sure where you got that from, but it's wrong.  Last I looked
the NBN charges your ISP $23/month ex GST for basic 12MB/sec access,
plus an additional increment for each additional 12MB/sec increment,
plus CVC data charges.  On top of that they have the 4 router ports as
you say.  They will be rolling out a 1Gb/sec access presumably with
1Gb/sec pricing in the time frame you are talking about.  So just in the
internet connection alone there is considerable scope for earnings
growth.

They have ignored the the current cable systems for now, but it seems
very unlikely to me the cable network will be maintained if the is a
another network servicing the same neighbourhood with several orders of
magnitude times the capacity.

> The numbers just don't add up for the NBN as a commercial venture, we need to 
> stop considering it as such before the government starts treating it like a 
> toll road and cuts off competition.

That's a bit of an odd statement, given the Auditor General and the
opposition have gone over it with a find tooth comb haven't found any of
the "holes" you list here.  I recall being struck by the how
conservative the assumptions were in the initial NBN planning documents,
and so far that has borne out to be true in every area except one.  Take
up rates, average household spend - they are all well above what the NBN
needs to deliver on its financial promises.

That one area is whether they could actually pull off what is the
biggest engineering challenge since the Snowy Mountains scheme.  The
Snowy was smaller in absolute terms than the NBN of course, but as a
percentage of GDP it's about the same scale.  This is in effect what the
opposition is targeting when they say it will really cost $90B.  They
are just blowing smoke of course - they don't have a clue what it will
cost.  On the down side I not  convinced anybody else does either, and
unlike their revenue per house passed projections their rollout
projections looked downright aggressive. Still, if they pull it off it I
suspect it will have another thing in common with the Snowy - the NBN
will join it in Australian's hall of fame of nation building exercises.