National Broadband Network

Australia has a national broadband network operated by Telstra. A previous federal government decided Telstra was not servicing remote country areas and increased competition by letting people set up a company named Optus. Optus ignored the parts of Australia already ignored by Telstra and went after the profitable cities where Telstra was already doing a good job. The latest federal government is spending $43 billion dollars duplicating parts of Telstra on the pretence of providing broadband to the people currently missing out but there is absolutely no public review of new National Broadband Network, NBN. NBN looks like another massive waste of money by the current federal government. Now major industry leaders are calling for cost transparency but the federal government continues to do nothing.

I wrote the original article on this topic a long while ago. Now a lot of other people are asking similar questions and industry leaders are demanding transparency so Australians can see what is really happening.

The NBN is supposed to be commercially responsible but they have never published a business plan. The NBN are supposed to be working for the benefit of Australians but Australians are not allowed to know what the NBN are doing or plan to do. The federal government is supposed to represent Australians but refuses to say anything about plans for the NBN or invite anyone from the public to discuss anything.

In August 2009, KPMG and McKinsey were appointed as advisors to NBN.
KPMG, McKinsey take NBN advisory role

KPMG and McKinsey were then paid $25 million dollars to write a report about NBN. If you are receiving massive fees to advise a company, would you write a report saying the company plans are rubbish? No, you would not, making the report useless.
NBN study finally revealed

Why are broadband networks more successful overseas?

Collective purchasing

When you create a real estate development overseas, you can connect all the premises, the houses, apartments, offices, and shops with the latest optical fibre then negotiate a bulk connection to whichever carrier provides the most speed for a reasonable price. That is illegal in Australia. In Australia Telstra and Optus have exclusive access to a government monopoly on connections between premises. NBN will not change that. NBN will simply be another company cashing in on the monopoly. If the members of the current federal government actually wanted to do something good for somebody other than themselves and a few mates, they would give Australians the right to negotiate broadband connections. If the government truly wanted to do what they claim, to improve our Internet access, they would remove the monopoly.

NBN will cost us $43 billion and do nothing. A slight change to the law would cost nothing and help millions of Australians get better broadband service.

Fibre to Where?

Every new network promises fibre optic cable then uses only a little bit of token fibre optic cable. All the rest is copper or wireless and fails at the slightest hint of rain, lightning, or anything else difficult. Overseas people get fibre optic cable into their house because it is so cheap and reliable. In Australia the federal government let all the fibre optic cable manufacturers go broke or move overseas.

How cheap is fibre? Fibre does not conduct lightning. Lightning destroyed my cable modem several times in just a few years. $150 for the modem. $200 for the service cost. That is $350 per year wasted because the cable into my house is copper instead of glass. Fibre optic cable is about a dollar per metre dearer than copper. The cable from the street to my house is less than 15 metres. The initial installation cost was less then $15 more for fibre optic and it would save $350 per year for 20 or more years.

The NBN has made the same claim about fibre optic as Telstra and everybody else. Like all their predecessors, NBN keeps the actual network secret and refuses to make any plans public. The government said everyone will get fibre with massive speed. Then reports emerged that only 90% of Australians would get fibre. The latest report mentions 93% of Australians will get fibre to the premises and the rest of Australia, the people in remote areas who really need good access, will get ordinary access, exactly what the previous government promised for less than 10% of the NBN cost.

Why all the fraud by secrecy?

Surely the NBN could simple set up a web site and publish their plans the way open source software projects publish plans. There could be discussion forums, public feedback, and the Web site could be made accessible to everyone by publishing the content as Web pages not as Flash or PDF or any other proprietary rubbish. A couple of Web developers with Drupal

experience could have the site up in a month.

Michael Malone, CEO of iiNet, one of Australia's largest Internet service providers, demands transparency. He, like many other Australians, is realising that NBN is tackling only the easy profitable parts of Australia, not the parts that really need help.
iiNet chief executive demands NBN cost-benefit analysis

Julia Gillard's contribution

Julia Gillard is the new leader of the Labor Party and, as part of her grabbing power is more important than good leadership role, purchased the position of the current Australian federal government by bribing several independent representatives. One of the bribes was to throw out the current NBN plans and focus running broadband into rural areas. This was supposed to be part of the original $43 billion dollar cost but now people are talking us through a massive cost explosion caused by the change of priorities. Clearly the previous $43 billion dollar estimate was just a typical political misrepresentation of the true cost.

Will the cable be underground?

One of the biggest problems with the current system is the use of wires in the air that fail the instant there is wind or a storm or a bushfire. The report on the massive loss of life in the recent Victorian bushfires said all services have to be underground. NBN talks about fibre underground but does not guarantee it and the occasional hint about costs suggests the $43 billion budget does not include underground services to all homes.

World class?

One of the justifications for the NBN was to give us world class Internet access but the KPMG McKinsey report says our current ADSL2 speed is better than world class. That means we could get the desired result, world class access, for the $6 billion or less originally proposed by the previous government. $37 billion dollars is just wasted.

What is all the extra speed for?

Given that we are wasting $37 billion dollars to provide speed we do not need, what will it be used for? The Labor federal government spent a lot of our taxpayers money running advertisements to convince us the $43 billion fast access would be worth it. What did they show in the adverts? People watching television. Yes, people using all that Internet access speed to watch the same television already provided free via wireless transmission, wireless transmission from towers built 50 years ago and still good for another 50 years. All the brains in the Labor government and a whole heap of expensive marketing people could not think of a single use for the extra speed.

Some newspaper reports suggested the extra speed could be used for medical diagnostics but medical diagnostics are already running on our current networks at their current speed. The only thing needed is to extend the current speed out to remote areas and the KPMG McKinsey report on the NBN states that the NBN are not going to do that, the NBN are just going to let people in remote areas adopt current technology. The only thing the NBN will offer is an installation subsidy and that was offered before the NBN existed. As far as medical use goes, the $43 billion NBN will provide clerks to process some applications for existing subsidies to buy existing technology.

Who will pay for the NBN?

About 7 million Australians pay a useful amount of tax, as in paying more than they consume. Every taxpayer will subsidise the NBN by over $6000 dollars. Then there will be the interest costs and the cost blowouts. When we finally receive the NBN connection, we then have to pay to use the connection. The speed and cost quoted in the KPMG McKinsey report is about the same as an average ADSL2+ connection in our area. My household will pay $12000 in subsidies to receive a service that is the same speed, same cost, and will fail in exactly the same way due to the use of above ground cable instead of underground cable.

Telstra already offer a faster speed than the example speed mentioned in the KPMG McKinsey report and Telstra are regularly increasing the speed through their cable system at minimal cost. Telstra cable will be up to the maximum quoted NBN speed many years before the NBN rollout is complete. Clearly the NBN should be scrapped and the government broadband rollout reverted back to what was proposed before the NBN, for just $6 billion dollars.

If the NBN was changed to give us what is really needed and the telecommunications monopoly was scrapped, taxpayers would have to pay only a $1000 to subsidise better service to remote areas instead of $6000 to duplicate the existing system.

What will happen with our $6000? The government will sell NBN to foreign investors. My $6000 and your $6000 will be handed to foreign investors as a subsidy then the foreign investors will use the telecommunications monopoly to charge us for access to the network we paid for. We will pay double until the NBN is sold then we will pay triple because all that money going out of the country will reduce employment in Australia and we will have to subsidise all the unemployed.

Gigabit to how many houses?

The fine print in the NBN plan says they will use Gigabit fibre to your house but the Gigabit will be shared and there is no mention of how many houses will share the connection. This is the way current cable works and is different to ADSL. In ADSL, your connection is unique back to a device called a DSLAM and the number of DSLAMs is proportional to the number of connections. In shared cable, and the shared Gigabit fibre, you get good speeds when you are first connected then everything slows down when everyone else connects. To provide you with the 100 Megabit connection promised by NBN, they would have to limit connections to ten houses. NBN do not offer a guarantee to limit the number of houses connected to one Gigabit fibre.

In fact a Gigabit Ethernet connection has a shared throughput, when busy, of only about 400 megabits due to collisions. To guarantee a 100 megabit connection, they will have to limit a Gigabit fibre cable to less than 10 houses to ensure the connection is not saturated with collisions. I bet they are planning to grossly over connect to keep down costs and free up money for corporate trips overseas.

Conclusion

Looking at the NBN project, you would have to conclude the current federal government are criminals or insane or absolutely stupid or greedy power grabbing bastards and Australians are doomed to massive debt for the rest of our lives. Even George W Bush looks a great leader compared to the people forcing Australians to suffer the NBN disaster.