Stilgherrian is perhaps one of Australia’s best tech writers, and I enjoy his Crikey columns, but we’ll disagree on a quote today:
Yes, $43 billion is expensive. As Duncan Riley calculated, that?¢‚Ç¨‚Ñ¢s around $5000 per household. But we?¢‚Ç¨‚Ñ¢re creating brand new infrastructure to completely replace a copper network that was built across more than half a century. This is an investment on similar time scale.
The problem with that statement is two fold. One, we’re not replacing the copper network. Telstra owns the copper network, and I haven’t heard that they’re about to rip it out. It still does a fine job at delivering my ADSL 2+
Second, we’re not creating brand new infrastructure: in large parts of capital cities, we’re duplicating it, because Telstra and to a lesser extent Optus (and a couple of bit players around the place) already have fibre in the ground. The point may be one of semantics: the NBN cables will be “new,” but the context is one that suggests its new because it doesn’t currently exist.
The last point to me is a key one. Instead of forcing Telstra’s hand, or using legal means to use the infrastructure currently in place, the Government is spending $43 billion on a network that will duplicate some of what’s already there.
Lets presume you put Telstra’s network into the mix, but the Government still wants everyone else to get fibre. I can’t find a definite figure on Telstra’s current network, but the figure in Melbourne alone was “1 million customers.” One figure I saw suggested Telstra was aiming for 6m customers, but I don’t believe that figure. Lets say it’s 3 million Australia wide.
There are 8.296m households. Each one costs $5,063 to service. 3m = $15.2 billion in NBN costs.
Telstra has a market cap of $41.6b. How much would it cost to buy Telstra’s cable network, presuming you didn’t want to force Telstra’s hand by other measures? Even if it cost $10b to acquire, you get a network in the ground now that needs maybe $1 billion in upgrades (the Melb upgrade is priced at $300m) and you save $4.2billion. But here’s where it’s even better: because you’d also cut the rollout time from 8 years to maybe 5 by not having to roll out fibre to those places that already have it.
See what I mean now about duplication and waste?