Dan Warne15 April 2008, 12:47 PM
“Unless someone has a flux capacitor handy, we’re in deep shit,” says Bevan Slattery, CEO of Pipe Networks, about the tender for Australia’s fibre network.
Slattery says there is “no comprehensible way anyone can put
together a proposal in 90 days or even two years [for the national broadband network] without the
information” because none of the tenderers have been provided any
information about where the Telstra pillars are located – a critical
piece of information for designing a broadband network.
“Doc Brown said ‘the Flux capacitor is what makes time
travel possible…’ and unless someone has a flux capacitor handy, we’re
in deep shit,” said Slattery.
“The lack of time is almost criminal. The federal government
allows more time for supply tenders for its photocopiers. They are
seriously asking companies to design a $16billion network in 90 days,”
he said.
Speaking at the CommsDay Summit broadband conference this morning, Slattery also reviewed what the government promised before the election, and what they are now promising post-election.
“Before the election, I asked the Minister a number of times, whether he seriously wanted to deliver 12 megabits per second symmetrical over a Fibre to the Node network, and his answer was yes -- and anything else would be fraudband,” said Slattery.
Labor promised before the election: national fibre to the node, coverage of 98% of all Australians, 12MBit/s symmetrical, at a cost of $8.7bn.
Post election, the government subtly but significantly changed its promise, according to Slattery.
It is now promising national FTTN “and/or wireless” with a speed of 12Mbit/s or equivalent (but not necessarily symmetrical.) The coverage is still promised to be 98% population and the cost is still to be $8.7billion.
“The network proposed is now very similar to an ADSL network,” said Slattery.
“And I don’t think the $8.7bn number stacks up… as Darryl Kerrigan once told, ‘tell him he’s dreaming.’“
Slattery said for the last eight per cent of people, telcos would need to cover 40 per cent of the land mass of Australia – 1,079,000 kilometres, and to deliver a 12Mbit/s symmetrical broadband service using VDSL2+ technology, using conservative estimates, nodes would need to be no more than 2KM apart.
“Let’s assume we have magical thick copper that goes directly from the node to the home and it’s never more than 1KM from the node,” said Slattery. So, nodes are no more than 2KM apart. We’re assuming that there’s conveniently no-one living in blank spots between the nodes (because of the circular coverage patterns of the nodes). And let’s assume backhaul costs to these nodes is $30 per metre. “
“Using that basic assumption, to deliver fibre to the node to 90% of the country, you’ll need at least 49000 nodes and 98000 KM of fibre (though in reality, a lot more of that.) The cost just to roll out the fibre alone is $2.9bn.”
“To reach 98% of the population, you’d need 343,000 nodes (a third of which will be servicing just one home), 680,000 KM of fibre, and it all comes out a cost of $20bn.”
“Obviously there is a problem with that plan,” said Slattery. “$20bn does not go into $8.7bn.”
“So how does the government get out of its pre-election promise? You make it an asymmetrical service. The nodes can now be 4KM apart because you can get 12Mbit/s asymmetrical 2KM from the exchange using VDSL technology. But the fibre cost alone in that scenario would still be over $10billion,” Slattery said.
Is anyone asking the customers?
Slattery said the government had made consultation “merely a checkbox in the process.” For example, the public comment period on the FTTN network tender was only open for eight days, and this was during the Easter public holiday break.
He said there appeared to have been no consultation with the public whatsoever about what they would be prepared to pay for a 12Mbit/s service.
“For people who already have metro competitive prices -- $49.95 for my phone line and 10GB of internet – what happens when the fibre to the node network comes out? Will people be told, “sorry, now that’s $89.95 a month?” Slattery asked.
“The retail price, damn it, is about the most important thing that matters – and the tender doesn’t touch on it. It’s awful – it’s a trainwreck,” agreed Internode CEO Simon Hackett.
“People have no idea that this is about to happen to them. They don’t know that the price of the shiny new network will be the loss of their existing ADSL2+ services, including the good price points.
“They will be very unhappy when I start calling them and say, “you know that good deal you had? I can’t offer it to you any more – the government made me take it away. Consumers are going to be pissed,” said Hackett.
Has a dirty deal been reached?
Anyone who wants to participate in the fibre tender is not allowed do discuss anything about it with the public, because of a “draconian gag clause” that has been built into the tender document.
“It’s difficult to think the government could be so ignorant to the feedback of telcos and consumers unless a dirty backroom deal has already been reached,” Slattery said.
“What will the market look like in 10 years? Picture your eight year old son going to university and using technology that is half the speed of the best broadband available today?”
Simon Hackett agreed: “Picture a world where the dialtone is back to being Telstra only. It’s a government mandated voice and data monopoly. How are we standing for this? It’s madness – just madness. We are literally doing the timewarp to 1989 – when the only network in Australia is owned by the only fully operated incumbent there is. “
Simon Hackett said the biggest myth in the whole process was that building a fibre network required “full cutover” from the existing exchange-based copper network to fibre. “Ask any of the network hardware vendors and they will tell you it is completely unnecessary,” he said, showing a Huawei sales brochure that showed a fibre network design that allowed ADSL2+ and Fibre/VDSL2 to be run through the same set of lines.
He said it was essential that existing ADSL2+ services be allowed to continue operating to preserve competitive tension in the marketplace. Without it, “it means higher retail prices, reduced innovation, no incentive to “make the road better”, reduced international competitiveness and legal action from industry and consumers,” he said.
PIPE’s Bevan Slattery closed his presentation by asserting that Telstra is the only company that has the information necessary to respond. “Any company such as the G9 will only be using the national broadband network to raise their profile.”
He called for the Federal Government to halt the request for tenders process until the information is provided and at least six months allowed for networks to be designed, but conceded that was unlikely to happen.
“I think the reality is: it’s either Telstra, or it’s no-one,” Slattery said.