Firstly it is becoming increasingly clear that the senate wants to actually think about whether we spend 43- 100 billion on a NBN. Good for them. Conroy must be seething that he cant rush his deal through the upper house before christmas. It is becoming more and more obvious that they have not thought this NBN through at all.
"already a substantial amount of high-speed broadband available in Australian cities that was underutilised"
"He said satellites could be used to boost communications in rural areas rather than paying a large sum of money to deliver "fibre to the farm", while many people now preferred wireless internet, which allowed them to work where they pleased."
Secondly the potential of the existing system is set to be demonstrated in dec http://www.itnews.com.au/News/160879,telstra-takes-melbourne-cable-network-to-200mbps.aspx
At a cost of the less than projected 300 million, Telstra has just given 1 million melbourne homes 200 mbs over their existing HFC network.
My bet is that Telstra will use this trial to demonstrate that the % of people taking up this 200 mbs service is small and that will be "evidence" that the 100 mbs of the NBN will not be embraced. It will also demonstrate the economics of utilizing the existing network. My guess is that say 10 million australian homes could be reached by the HFC network for an upgrade cost of around 3 billion. This figure is a "guestimate" but based on the real world example of the "less than 300 million" in melbourne to reach 1 million homes. An expanded upgrade programme would benefit from the economies of scale. Even if my figures are not correct one thing you can be sure about, is that they will be much closer than any figure that the NBN is based on. So if my figure blows out to 5 billion, an extra 2 billion, you can be sure that the NBN would blow out by that figure and so much more.
Using 3 billion for half the population, focuses the economics back onto the servicing of the other half or the population for lets say another 40 billion. Now as an adult who was once a country lad, I can appreciate that this would be a great service for the country areas- no doubt. But how many of these country residents are prepared to pay the NBN entry fee? Remember the average incomes in rural australia are far below the city levels, and even at city income levels the take up of adsl 2+ (20 mbs) is less than 5 %. Demonstrating quite clearly that demand for fast broadband is VERY elastic. I would suggest that at NBN prices that the 5% figure would be an optimistic target in the city let alone in the country with lower income levels. So the NBNco will be trying to justify spending 40 billion on 10 million people who at current takeup would not be interested except for 5 % ie 500,000 people. For the uptake to be significantly higher , I would suggest that the tax payer would have to subsidize heavily the "marginal users" who have a very high elasticity of demand. I would suggest that the NBN entry price ( my guess around $100 pm) would have to be reduced to around $50 pm. And that is just to get a significant number interested say 30% . Some may say that it is the job of government to ensure that essential services are provided that private industry wont provide due to being financialy unviable . Fair enough. But is the NBN essential? We already have an alternative that can be upgraded for 10 % of the amount.
Even in a truly socialist country such as France ,where tax rates are much higher and the population is triple australia's, and the density of population in rural areas is probably 20 times that of australias rural population, the french government have only got fast ( adsl 2+) broadband to around 10% of their population. This in a country where there is a huge sense of entitlement (and rightly so given their huge tax rates) Total broadband penetration in france is currently 27.7% The highest in europe is 37.1 % in Denmark and the netherlands. http://www.websiteoptimization.com/bw/0910/indextest.html
What about other essential services that are being ignored?
Water security energy security Health
If we spend all our bullets on the NBN we will have nothing left to address our more pressing needs. Something that our country can ill afford to ignore.
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