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Vertigan’s cost benefit analysis

Volume II of the Vertigan reports the cost benefit analysis (CBA) of the NBN. The focus was on the difference between the multi-technology mix approach now used and fibre to the premise. It is no surprise that the former is better in terms of cost and time to deliver.

The surprise was that a key study underpinning the CBA finds that only 5% of households will need 43Mbps by 2023. This has significant implications for the role of mobile broadband, discussed in this opinion piece.

This opinion piece also explores the idea that while there is no current killer application for high speed broadband, the impact of bestowing full speed broadband on traffic and innovation needs to be considered.

In Australia, there is no premium for speed on mobile networks. If the same applied to fixed networks, Australia would lead the world.

The 4 page opinion piece can be read by clicking Economuse 2014-09-15

Hobson’s choice with NBN Co. pricing

NBN Co.’s July consultation paper on pricing and billing has wilfully ignored the only serious option that has been put up against its own product and pricing construct. Unless it is changed, the NBN will not be affordable and will not increase broadband utilisation.

This paper calibrates the options against the 2012-2015 NBN Corporate Plan and other analysis.

It includes the “traffic model” as Option 6 and concludes that this will make the NBN more affordable and give the industry the certainty is seeks in future reductions in unit traffic charges.

The paper can found by clicking here: Economuse 2014-08-14

Option 6: Assessing the revenue impact of the “Traffic Model”

This paper complements others written about the Traffic Model. It is described as Option 6 because it was wilfully neglected in the Options considered by NBN Co. in its July 2014 consultation paper.
The wholesale tariffs in this paper were calibrated from retail broadband prices at September 2013 and the revenues are compared with those in NBN Co.’s 2012-2015 Corporate Plan (the only publicly available plan currently).
It is interesting to note that despite a very low entry level (Starter) tariff of $10pm compared with NBN Co.’s $24 pm (includes CVC component); the Traffic Model is viable.
The Traffic Model is a better match with real consumer expectations and policy goals than NBN Co.’s current revenue model.

The 4 page paper can be accessed by clicking Option 6

How long will MTAS be necessary?

The ACCC regulates the price of terminating calls on mobile networks. The bottom-up cost model it has been using was built around technology that is old. It is rightly concerned that any new bottom-up cost model based base on 3G could soon become redundant when operators start to carry voice over 4G – which they will within the term of the pricing determination.
With 4G (where voice will be IP based) and the NBN, there is no need to distinguish between voice and data as all traffic is bytes. The tried and tested way of exchanging bytes is peering and transit – which are unregulated. There are no termination fees for voice and SMS now – if they are carried as bytes over apps like Skype and Whatsapp. In this emerging context, there is no need to model costs or to regulate termination.
In the short term, the ACCC is considering using “actual costs” to model costs from the top-down – which is the same as the Building Block Method (BBM) the ACCC is now using in the fixed network. That seems the best approach for now. But, when voice becomes data (4G), the ACCC can step aside and leave it to the market.

To read the opinion piece, click here: Economuse 2014-08-08

Can we go faster and cheaper, please?

How compelling is the NBN value proposition? From May 2014, the early NBN release sites are being disconnected from the copper and HFC networks.

The column looks at the implications of take-up and speed choices for NBN’s viability and the national interest.

It also shows how the alternative traffic pricing model (that I have advocated for a number of years now) would make the NBN more affordable for voice-only users and also make the NBN more competitive against mobile services.

To read the column, click here: Economuse 2014-07-21