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NBN fibre to the premises - what are the real costs and benefits?


#41

I (perhaps mistakenly) interpreted the thread title as in the context of a cost/benefit analysis. That means it is both a cost and a benefit (and you would hope that the benefit is higher than the cost).

That’s trickier though because the business may have avenues to benefit financially that are not applicable or not available to households.


#42

Be careful with terms like cost/benefit analysis. That one’s pretty comprehensively discredited, as is any mechanism that can be so readily manipulated.

Again, you’ll need to be more specific. Are you saying that there’s no discernible benefit from durable, high-capacity telecommunications? Are you judging from an individual perspective or from a national one?

From an individual perspective, the cost/benefit analysis of a road looks pretty poor. From a national and social one, it’s much better.


#43

In the bigger picture.
The NBN fixed line network will supposedly reach 91% of all premises. It could have been an all fibre network, or at least fibre up to the curb. Extension into the home for copper in the old system and now for fibre at green fields sites has always been at the home owners expense. The NBN Co decided for existing premises to include the lead-in costs for the project as an NBN cost, and not to off load it to the consumer directly. This added perhaps unrealistically to the FTTP costs compared with the other fixed line options.

The whole process of creating and rolling out the NBN was commercially compromised as others have noted, making it a more expensive solution than it needed to be. The previous privatisation of Telstra and a reluctance of both sides of the political spectrum to respond appropriately is just one significant factor. This has added more than $1B pa to the cost of running the NBN for no true benefit. Except to Telstra’s profits!

It is reasonable to expect a strong economic argument for the FTTP outcome across the current fixed line footprint has always been possible. More so if the economic case had been separated from the costs of the national fibre backbone (NBN Co - Transit - related Capex) and Fixed Wireless/satellite footprint.

Investment in a substantial nationwide fibre backbone, transit network was always going to be needed, even we had stayed with ADSL, cable and more mobile data.

The NBN has been asked by Government to provide a commercial rate of return on the total capital investment. This includes the nation building Transit interconnection costs and a cross subsidisation of the FW and Satellite services. The whole project is loaded with unrealistic expectations and costs that in the past would have been funded separately from the public purse. The same way the National Highway network is substantially funded.

Given suitable regulation, private equity may have delivered the full fat FTTP solution at a reasonable cost and rate of return on investment. Excluding the Transit Network, FW and Satellites. Government should have been in a position to do the same directly, at a similar cost?

The other approx 1.1 million customers in the Fixed Wireless and Satellite footprint present a complex economic case. There remains a lack of transparency in the design details and of costs to know the true level of subsidy that would be needed to support better solutions. It is perhaps also relevant to consider estimates of cost derived from current best practice, and not dated NBN Co past practice. The later were used to argue for less fibre and push more to FW or satellite.

It’s unlikely in the near future fibre would reach the more remote properties in Australia. The remote communities of Cape York are not even connected to the national electricity grid. A combination of satellite and or FW services would always require substantial subsidy, although perhaps less in total the fewer the premises to be covered? Including perpetual loss making investments in a supposedly profit making business defies economic rational. No analysis needed. Publically owned and subsidised.

There are several published articles that consider the economic return on investment for the NBN if sold. A common theme is that the government may need to write off the majority of the investment in the NBN to meet the market. There is some further discussion here -


#44

I don’t doubt that political manipulation of that kind of thing occurs - although you wonder where this thread can go in that case. Maybe there should be two separate threads - one for costs and one for benefits - which would discourage anyone from comparing the two.

A national one. It is a national investment (at the expense of the taxpayer - except in the cases of area switch or premises switch - and on behalf of the nation).


#45

Both @grahroll and @mark_m have commented on the benefits (and the politics). You’ll need to be more precise as to your difficulties.


#46

I’ve been pondering that.

I used “benefits”, because it seems to be better understood than “value”. I realise now that, for some, benefits assumes a particular context.

To the cynical, the term "cost/benefit analysis " refers to analysis based on assumptions calculated to return a predetermined outcome.

Should I change the title to refer to value, instead of or as well as, benefits?


#47

Where “market forces” fail:


Before fibre to the premises, we need an adequate backbone network. Telecommunications infrastructure is a Federal government responsibility. That too has evidently failed.

I smell election! :roll_eyes:


#48

Part of the answer to “what are the real costs” seems to be less and less as time goes by:

Telcos all around the world have been reporting major reductions in fibre rollout costs over the past several years, due to advances in technology and practices. A comparison close to home is that of the largest FTTP builder in New Zealand, Chorus, which reported a 44 per cent reduction in per-premises costs over the last few years to 2017.


#49

This has been occurring since the 1980s and is known in the trade as OPGW. It’s original purpose was for transmission line operational communications as it was more reliable and faster than the proceeding microwave link technologies. It also allowed remote network operations.

Virtually all transmission lines (>110kV) have OPGW installed and in many cases its spare capacity is already used by the telcos as part of their communication network either as a backup to their own fibres or as bandwidth to their own fibres.

Once OPGW is installed, the electricity network (note: the OPGW don’t conduct electricity but installed above the lines for lightning protection) and fibre network are separated usually at substation or other connection points (such as fibre joints along the lines) to ensure that personal are protected and removed from the electrical hazard which exists on the transmission lines. As glass fibre is a very good insulator, this is very easy to do.

The challenge is the distribution network (generally considered ≤66kV) usually aren’t protected with ground wires (for lightning protection) and as such most of the network is devoid of OPGW.

It is possible that all overhead/overground low voltage conductors (wires transmitting electricity) are replaced with a fibre cored wire, but the costs would be prohibitive compared to a fibre along solution. The costs would be prohibitive as the replacement would include the conductor as well(namely paying for the replacement of something that doesn’t need replacement).


#50

An interesting Facebook thread on “Technology Choice”:


Apparently, only 13.5% of applications have proceeded to construction:

Meanwhile, Telstra is quoting big bucks for 100/100 on their own fibre (locked in to a 3-year contract).

about $2,900 per month for 3 years for 100/100


#51

Coles evidently views the value as worth the price.

Optus Business and NBN Co will deploy an all-fibre network for supermarket chain Coles, in a deal that sees previous arrangements with Telstra reach their use-by date.

NBN Co will connect more than 2400 Coles stores and other sites with optic fibre cables,


#52

Worth the unstated price?

I have the feeling that the price would be too high for the average household. :slight_smile:


#53

You think Coles signed a blank cheque?

I’m reasonably confident that the contract states the price. Coles obviously values the infrastructure.


#54

Amortised over the anticipated service life of optical fibre, the median cost per premises is rapidly approaching 50¢ per week. If current trends continue, then we can anticipate a long-term median well below that.

Instead of trying to add up the benefits of optical fibre, I’d ask what are the disadvantages and costs of relying on alternatives.