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Tag: nbn

  • Where’s the NBN Debt Provision in the Budget?

    As I noted last night, besides some small related investments, there was no additional funding allocated to the NBN in the 09/10 budget, leaving a $38.3b short fall.

    The Government has previously said that the NBN would raise money via infrastructure bonds, but wouldn’t these bonds count as debt?

    The on the books catch is that they may not need to appear in the budget, because the bonds will be raised by the NBN corporation; not dissimilar to Telstra debt when it was still majority Government owned (NBN will be min 51% Government owned.)

    But here’s the part that’s got me stumped: the form of the bonds.

    From a previous Government statement:
    ?¢‚Ǩ?ìThe network will be funded from Aussie Infrastructure Bonds while private sector investment in the new company will be capped at 49%”

    The implication here is that those bonds are Government backed. If they are issued by the company, with the Australian Government backing them, the Government in effect acts as a guarantor for the bonds. The last time I looked a guarantee of debt is counted as a liability until such time the debt is cleared.

    If they’re not guaranteed by the Government, the use of the Aussie Infrastructure Bonds name is erroneous, but more importantly the cost of raising the money will increase relative to the security offered being less, which will further drive up the cost of the NBN.

  • Blue Moon: NBN waited for you….

    Oz: Telstra open to break-up

    TELSTRA will consider a voluntary separation of its wholesale and retail arms as well as the sale of some assets to the federal Government’s proposed $43 billion broadband network in a spectacular about-face that effectively dumps the aggressive four-year strategy championed by chairman Donald McGauchie and chief executive Sol Trujillo.

    The radically different and more conciliatory approach is part of an attempt to ward off the threat of much greater government intervention in Telstra’s business. The company’s board has set up a special committee of directors and executives to come up with a new approach and to negotiate with the Government.

    Even if the economics still don’t add up for the NBN, breaking Telstra up would be a massive win for the Government, and an even bigger win for consumers.

    Now if only we could do something about censorship 🙂

  • NBN as a TV killer? Unlikely

    Mark Day in the OZ (via Mumbrella)

    IF we look through the increasingly clouded questions surrounding the Rudd Government?¢‚Ǩ‚Ñ¢s plans for a fibre-to-the-home high-speed broadband network, how it will be designed, who will build it, who will own it and what it will cost end users, one thing is crystal clear: this is a game-changer for media.

    The $43 billion plan is a television killer. When it is built it will consign the Packer era of TV to the dustbin of history. Our future TV menu depends on new technologies and new paradigms.

    It’s a nice theory. Will the internet kill TV? Yes, I believe it will, as I’ve argued time and time again. But will the NBN kill television?

    No.

    The problem isn’t one of lack of demand. You only have to look at the exceptionally high level of BitTorrent usage in Australia to know that Australians love their internet TV.

    The problem is one of legal rights, and access to that content on a television set.

    There’s no Hulu in Australia, and even Hulu in the US is trying its best to stay off of television sets. We have a mix of content now online from FTA providers, but it’s hit and miss, and not anywhere near consistent.

    Lets say we’re 5 years behind the US (that we are behind is a given, but we can argue on the time frame): does Day really believe that the NBN is going to overcome issues not yet overcome in the United States?

    The real problem comes down to rights distribution models. TV stations here pay a lot of money for rights to US content. The only way a NBC or CBS is going to offer their content directly online to Australians over the NBN to a large screen TV is when doing so delivers a higher return then selling the rights to a local TV stations.

    As much as I wish to believe this will happen soon (and it will happen eventually), that’s not a short term proposition in Australia. NBN doesn’t change that at all.

    Also consider that Australian uptake of pay-tv (cable) is far lower than most comparable markets. Australian’s aren’t all that keen in paying big dollars for content. That complicates the consideration more.

    I mentioned in an earlier post that bundling may be the saving grace for the NBN: in that context, it’s not Day’s suggestion of internet TV (although it may be delivered via Internet protocols) but Cable over the NBN. That could work, well…depending on the cost.

  • Holy Smokes Batman: Telstra might be broken up!

    Age:?Ǭ†Telstra set to abandon major cable upgrade

    In the aftermath of the Government’s decision last week, Telstra’s immediate task will be to rethink its investment in cable after it emerged that regulatory changes could include forcing the telco to divest the network which passes 2.5 million homes and businesses.

    Wow. Just wow.

    Should the Government decide to force Telstra to divest the cable network, Merrill Lynch said it could be folded into the proposed national broadband network, which would mean that fibre-optic cables would not have to be rolled out to many homes and businesses in the cities.

    The broker said the new company proposed by the Government to run the national network was the “only logical buyer” of Telstra’s city cable network.

    More wow.

  • Whoops, NBN might not be feasible. The devil is in the detail

    Steve Murphy in the Business Spectator:

    The 21st Century infrastructure equivalent of the Snowy Hydro is what K-Rudd says of his new Broadband plan, but will we end up flushing as much money down the fibre optic drain as we do water down the Hydro.

    The problem is we don?¢‚Ǩ‚Ñ¢t know and the Government can?¢‚Ǩ‚Ñ¢t tell us with any degree of precision because it is yet to conduct a feasibility study. That?¢‚Ǩ‚Ñ¢s right, K-Rudd and the team don?¢‚Ǩ‚Ñ¢t know if what they?¢‚Ǩ‚Ñ¢ve announced is feasible.

    I did some digging, the Government doesn’t use the words feasibility study…but it’s an accurate description. Point one of the NBN rollout (source)

    Commence an implementation study to determine the operating arrangements, detailed network design, ways to attract private sector investment

    but wait, there’s more:

    The preliminary estimate is that the enhanced NBN network will cost up to $43 billion…

    The Government’s objective is to achieve 90 per cent coverage of the FTTP network, and remaining coverage to be delivered through wireless and satellite technologies, within this funding envelope. Initial advice to the Government is that this objective is achievable, but this estimate will be subject to an implementation study.

  • NBN Questions: debt + international connections

    Two questions

    1. Does the $43billion include the cost of repayment of debt, or is it simply the cost of the actual rollout?

    Whether the Government directly borrows, or offers infrastructure bonds, both come with interest that needs to be repaid. The official release says “will invest” which could suggest that the $43 billion figure is to be spent on the rollout, not the repayments. If this is the case, the $43 billion could actually be something like $45 billion.

    2: Why doesn’t the NBN include planning for increased international access?

    The NBN includes

    implement measures to address backhaul ‘black spots’ through the timely rollout of fibre optic transmission links connecting cities, major regional centres and rural towns – delivering improvements to telecommunication services in the short term

    But no mention of international pipes. We already have the problem where say a 20mbps ADSL connection here is the equivalent of maybe a 2mbps connection in San Francisco because of the distance and congestion in the connections that pull the data across the Pacific.

    100mbps internal connections mean little if there isn’t increased capacity on the international backbones. Yes, you’ll be able to access sites hosted in Australia quickly, but sites outside Australia are another matter.