Hard News: Locking in the Future
117 Responses
First ←Older Page 1 2 3 4 5 Newer→ Last
-
Telstra Clear is now publicly fretting about being sidelined by an unbeatable infrastructure competitor
Oh boo hoo. As someone who's subject to Telstra's predatory pricing* I hope they go on fretting and, frankly, that they get done like a dog's dinner. As for the NBN, don't be fooled... as the ABC's Alan Kohler said just a few days ago:
...the leak and press release were just clumsy attempts at spin. The purpose of that can only be imagined - so I'll imagine something.
The thing that's becoming clear about the NBN is that it's effectively a joint venture with Telstra.
A large part of both the construction and operations budgets will be paid to Telstra for the use of its ducts and for the decommissioning of its copper wires.
After it's built, Telstra will be the NBN's biggest customer, and the largest supplier of backhaul. In fact the ACCC has enshrined Telstra's position as the key wholesaler in the future of Australian telecommunications.
Not quite the rosy open market Juha seems to feel it is (though huge kudos to him for breaking the story).
* Telstra's ownership of the infrastructure (which could have been broken when it was wholly government owned) means every retailer is beholden to it. And when the ACCC tries to regulate, Telstra finds a way to gouge. For instance when you move house, you should be able to give your ISP the former phone number and get reconnected for ~$50.
But Telstra always finds an excuse to have to send a technician out and charge you $300. So far I've been told "it's because it's an old property", "because it's a new property", "because it's an old block of flats" and "because it's a new block of flats". The tech spends 30 seconds with a multimeter and a phone and leaves looking apologetic.
So excuse the schadenfreude if they're the ones suffering at the hands of a monopoly. Which doesn't make it any better for the customer, I know.
-
I got this from a reader who works for a large telco and is familiar with the work of the industry working parties relating to ultra-fast broadband, but would rather not be named:
You ask why Mr Joyce believes a holiday to be necessary. I believe this to be simple really – it’s all about uptake. Crown Fibre Holdings are terrified about uptake – or lack thereof – for two reasons.
1. Reduced uptake lengthens the “earn out” provision in the PPP deal and increases the CFH risk and exposure.
2. An absence of willing partners. As others in the thread have pointed out, the investment looks dicey without a guaranteed market. Market share is hard to guarantee. So is margin – if the Comcom is allowed to intervene. The Comcom is easier to control than the market is.
2.1. If Telecom were to win, an incentive needs to be provided to force a migration from copper to fibre. What better incentive than to remove oversight?
2.1.1. If Telecom doesn’t win, the UFB will compete with cheaper copper. Which might harm uptake. Some of your posters have assumed that they will have the choice of remaining on cheaper copper – I’m not so sure. Also, the bill would relax UCLL and Wholesale regulation.
It has taken the media quite a while to realise there is something afoot here. The issues with the UFB and CFH are more than skin deep, and the problems are not restricted to regulation – ever asked yourself why a local fibre might prefer a technology such as passive optical network to an active fibre architecture? From day 0 they are being allowed to climb the “value chain”. It’s not the “Telcos” (well in the traditional sense anyhow) that you should be worrying about. Everyone thinks they will be getting fibre, when the truth is something quite different…
I follow this apart from the PON part – I can understand why a local fibre company would prefer a passive network – way cheaper to build, just much harder to scale – but not how that lets the LFC “climb the value chain”.
-
Sacha, in reply to
The regulatory holiday highway
applause
-
So basically, what we are looking at is that the price of ADSL2 (and basic telephony) service from Telecom and its resellers will increase in order to make the expensive fibre more attractive. It's pretty much taxing those who don't want fibre in order to subsidize it into the home.
-
Andrew E, in reply to
It's pretty much taxing those who don't want fibre in order to subsidize it into the home
I think you need to substitute another word for 'taxing' in that sentence.
How about 'rorting', or 'ripping off', or 'funding the bonuses of senior managers and dividends to shareholders through excess profits from' ?
-
SarahPutt, in reply to
At the very beginning (first draft proposal in 2009) it was specified P2P, but then about Sept 2009 they allowed PON. This enables Chorus to participate in the UFB using it's cabinetisation or Fibre to the Node roll out.
-
I really need to have more of a think about what I want to say about all this so this may turn into an amorphous brain-dump. Despite working in the industry, my own opinions on what should happen from here on out are conflicted. I don't think the "regulatory holiday" issue is as simple as Telecom wanting to protect its own potential investment via a new monopoly at the expense of the New Zealand consumer.
You have to look at the culture of the industry, which has always been inherently conservative-big projects are routinely cancelled early on if there's some suggestion that they might be affected by government regulation or changing market conditions. In an ideal, rational world we'd have started building a publically-owned national fibre network a couple of years ago, and we'd already be putting plans in place for the next network (whatever that might be.) Instead, we're still scambling around for a solution to the end of life of the copper network.
If Joyce and co really want to provide financial certainty for whichever companies are engaged to make the UFB happen, then that's what he should say: and he should work out a deal that actually provides financial certainty directly, whether through monetary guarantees, or the possibility of interest-free loans at a later date or whatever. I'm perfectly aware that this would be politically awkward, especially right now, but effectively it'd be no worse than setting up a new network monopoly, and probably a good deal better in the long-run.
-
A separate question, and one which Mr Edgeler might be able to help with:
I had understood that an established constitutional principle was that governments/parliament could not legislate in a manner which binds future governments. If this is the case, how is a proposed 10 year regulatory 'holiday' consistent with that principle?
Also, if an opposition party disagrees with the current government's proposed approach on regulating UFB, presumably if it expresses that disagreement now, no company could have any claim for damages against a future government led by the party currently in opposition, should that government change the regulatory rules/shift the goal posts etc?
-
Sacha, in reply to
how is a proposed 10 year regulatory 'holiday' consistent with that principle?
It's no more inconsistent than some of Rodney Hide's changes to local government legislation to allow 35 year private water contract terms, and no doubt some of the outcomes from the corporate farming water-grab in Canterbury after ECan was replaced.
-
Ana Simkiss, in reply to
Good question, and you are right. Nothing that this Parliament could do could prevent the repeal of the legislation or regulation that creates the regulatory "holiday". The businesses and interests concerned would just have to make it as painful as possible (politically) to repeal it.
<sigh> Another reason why bipartisan agreement on some issues is a good idea. As noted by someone above - the threat of government and regulatory change is a major risk for these projects.
And now I am wondering why this is so different from any significant infrastructure investment that is necessary and that needs to be as futureproof as possible (see: roads). is it simply the (necessary?) involvement of the private telecoms (etc) companies that makes this different - i.e. the need for profitablility in the medium term?
-
Sacha, in reply to
In an ideal, rational world we'd have started building a publically-owned national fibre network a couple of years ago
You'll recall generally right-wing thinker Rod Drury proposing some years ago a government-owned, fair access, cost-plus, wholesale network because it just made more sense.
If we insist on private monopolies then they need regulators with balls, not locked in their kennel for ten years so some ideological free market fantasy can appear to work out. This nation should have had fibre more than a decade ago if we hadn't had feeble neolib wastes of space like Maurice Williamson acting as the public's custodians and letting Telecom under-invest for the previous decade while merrily exporting profits in the form of 85% dividends.
Cunliffe finally seemed to have sorted out a functioning market and now wonderboy Joyce has spent two and a half years re-fucking it. What a genius.
-
I don't imagine even teh nats WANT it to be like this. It's probably a case of:
Joyce: We promised the natives fibre, but dammit, noone wants to pay for it.
Key: Well, the natives can pay for it, they wanted it.
English: Don't look at me. No money. Nada. Broke. Taxation is theft.
Key: Hmm. So how we structure this to make the natives pay for their damned fibre, but hide it from them they are paying?
Joyce: Leave it to me. Just a little snake-oil and- what size gag and cuffs do we need for the commerce commission?
English: I think we have some left over from ECan, Auckland City Councils, School Boards of Trustees... -
Juha Saarinen, in reply to
Not quite the rosy open market Juha seems to feel it is (though huge kudos to him for breaking the story).
Thanks Rex and no, I don't think the NBN's a rosy open market. Kind of hoped that NZ, starting later, would do better. That's all.
-
Juha Saarinen, in reply to
PON is harder to unbundle than active fibre-optics.
-
Russell Brown, in reply to
PON is harder to unbundle than active fibre-optics.
So I am (now) told.
Because individual fibre does not go back the the exchange,
there is no way for anyone else to physically access it, only at the Ethernet layer. So no wholesale competition no wholesale price competition, no technological competition. Just retailing.And you know that gigabit fibre Maurice Williamson was telling us about before the election? Yeah, nah. We're not building that kind of network now.
-
Rich of Observationz, in reply to
[Apart from entrenched basic law, which is a tricky issue], no parliament can bind a successor. If a regulatory holiday is entrenched in statute, it could be repealed. There would be no compensation, just as you can't sue the government for making you pay more GST.
-
I probably haven’t put this very well but speculating as a would be telco monopoly…
When would this regulatory holiday start if proposed completion is in 2014 ?
With the threat of repeal coming after a change in government, what length of regulatory holiday would I realistically be betting on ?
Spelling corrected.
-
Sacha, in reply to
There would be no compensation
Unless "free" trade agreements like TPPA allow foreign-owned corporates to sue our government. Not local companies, just overseas ones, mind.
-
And just as you can't sue the government for demolishing your quake-affected building using civil defence powers.
In other news, while the UFB bill is still at select committee, two parties are calling for amendments to reach bi-partisan support.
Labour's Clare Curran last Thursday:
Phil Goff has written to the Prime Minister today requesting his engagement to achieve a consensus on the Bill and work through the amendments needed to ensure bi-partisan support.
Greens' Gareth Hughes this afternoon:
I’d like to propose a UFB truce – opposition parties won’t attack the Government for not rushing to deliver on their broadband plan if the Government takes a pause and works constructively with other parties to develop durable and broadly-supported legislation.
-
Also, I get the impression that if PON is deployed, it can only be upgraded on a district at once basis - all the splitters, exchange and premise equipment would have to be changed (or an entire duplicate set of gear cut over to).
Is that right?
-
Juha Saarinen, in reply to
Because individual fibre does not go back the the exchange,
there is no way for anyone else to physically access it, only at the Ethernet layer.Well, in theory there is. Each fibre strand is split into 24 connections (residential) or 12 or 6 (business). Unbundling takes place after the splitter and then of course there's the issue of the return link to consider. Complicated but doable if you really have to.
One thing I'd like to have explained is how say house 12 out of 24 can pick ISP A, whereas let's say house 5 can pick ISB B for retail service, instead of all 24 being with a single provider.
So no wholesale competition no wholesale price competition, no technological competition. Just retailing.
Basically... yes.
And you know that gigabit fibre Maurice Williamson was telling us about before the election? Yeah, nah. We’re not building that kind of network now.
Ah no, you can get gigabit connections too, even dark fibre. Doubt you'll be able to afford it though.
Cool feature, auto-quoting if I select the text!
-
And of course, by "fibre strand" I meant the laser light signal. :)
-
This whole mess can't be good for our Transparency Intl rankings.
-
Sacha, in reply to
can't be good for our Transparency Intl rankings
For that we have Joyce's dodgy dealings over Mediaworks - and Idiot/Savant is delving into OIA responses that among other things show that it was not Key who over-rode official advice against lending out dosh at favourable rates. And that the company would have survived anyway, just not so profitably.
-
Russell Brown, in reply to
TBH, I was prepared to accept a case that the risk of Mediaworks' failure was such as to justify financing. I'd set the bar pretty low on that, not being a fan of disaster capitalism.
But the things that Idiot/Savant has found are shaping up as a significant story.
Post your response…
This topic is closed.