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Thread: Format Wars, Standards & Competition

When you have eliminated the impossible, whatever remains, however improbable, must be the truth.

The Boy Stood On The Burning Deck ...

Chronogical Blog Entries:

Date: Tue, 30 Nov 2010 21:49:54 +1100

At long last the government's bill to split Telstra has been passed. Over the past few weeks there has been considerable activity behind the scenes as the government negotiated with the various independents and minor parties that now hold the balance of power, in order to ensure passage of the bill through the entire legislative process.

In keeping with their job description, Her Majesty's opposition have maintained their opposition ... To everything in general and the NBN project in particular. But when the final vote was called the opposition went out with a whimper instead of bang. According to news reports the final bill was passed on voices alone.

This may mark a turning point in opposition leader, Tony Abbott's political career. Since the last election, which he came so very close to winning, it seems that most analysts have come to agree that the close result was mostly due to a lack of discernible difference between the electoral campaigns run by our two major parties. There may be actual differences between the two parties, because of their different history and culture. But it didn't show in the carefully scripted, tightly managed and controlled campaigns that had been put together by marketing experts on both sides, mainly, it seems, to offend the least number of swinging voters.

However, the one obvious policy difference, The National Broadband Network (NBN) is probably what tipped the scales in favour of the Labor Party. Nevertheless Tony Abbott has continued to fight the good fight ... To stick to his guns ... And go down with his ship, his chin set firmly in defiance. Either he is a man of principles who has a deep and abiding conviction about the essential evil of of any large scale public enterprise or he knows something that we don't.

The opposition has striven to remind us that the Labor party gave us the "School Halls Debacle" and the "Home Insulation Scandal" ... This is, they say another such scheme. But they're wrong of course. The NBN is bigger than a hundred "School halls projects" and a thousand "Home Insulation schemes". It is many orders of magnitude greater than any recent government project ... The only projects in our history that come close to it (in relative terms) would be The Snowy Mountain Scheme or the Sydney Harbour Bridge.

The structural separation of Telstra is something the Liberal party had the opportunity to do when they were in power. But instead they gave us T2 and T3, which minimised the amount of effort on behalf of the government, maximised the short term gain on the sale price, and left us with an 800 pound gorilla that dominated our communications landscape and blocked other carriers access to consumers. The structural separation of Telstra had to go ahead because of T2 and T3. It is in effect T4 ... And of course it is expensive.

But it is probably the only way to get some genuine competition in the broadband sector. The NBN will break Telstra's vice-like grip on the market.

And it seems that Tony Abbott, who boasts that he is "no tech-head", still does not get it. He still doesn't understand that the NBN is big ... Bigger than King Kong ... Bigger than Godzilla! For better or worse it will re-shape the Australian communications landscape. And yes, it will cost a giant bucket-load of cash. But now that it is about to start rolling, it threatens to become a juggernaut. One that, when combined with new technology, will change the way we live, work and play.

Tony Abbott can continue his opposition to it and against all the odds, with great courage and tenacity still de-rail that monster before it gathers momentum ... And save us all! (and a small rousing cheer will go up from the ranks of the anti-global resistance movements).

Or he might not ... In which case his opposition will be as significant as single grasshopper's resistance is to the windscreen of a laden, moving road train. And it would be a supreme irony if the NBN should rumble right over Tony Abbott and extinguish his political career at that very point in the Australian political Zeitgeist when voters seem set to turf state Labor governments out of office.

No doubt the federal Liberal party could appoint a new leader ... And at this point, your humble blogger must confess that he realises that the Liberal party probably don't even read his humble blog ... And if they did, they wouldn't heed his advice ... And at the risk of too much irony, your blogger might humbly opine that Malcolm Turnbull is a talented and articulate politician who might make a good leader of Her Majesty's opposition ...

But he does need to bone up on those email headers!

And speaking of email headers, in mid October, your blogger was alerted to a chain letter doing the rounds in Australia. Here is a copy:

The finer detail ...that the politicians are not telling everyone about !

I am a network architect for one of Australia's largest Telco's - so I speak with some authority on this issue.

Here are some of the technical reasons NBN will fail:

  • Fibre optic cable has a maximum theoretical lifespan of 25 years when installed in conduit. Over time, the glass actually degrades (long story), and eventually it can't do it's bouncing of light thing any more. But when you install fibre outside on overhead wiring (as will be done for much of Australia's houses, except newer suburbs with underground wiring), then the fibre degrades much quicker due to wind, temperature variation and solar/cosmic radiation. The glass in this case will last no more than 15 years. So after 15 years, you will have to replace it. Whereas the copper network will last for many decades to come. Fibre is not the best technology for the last mile.

  • You cannot give every house 100Mbps. If you give several million households 100Mbps bandwidth, then you have exceeded the entire bandwidth of the whole internet. In reality, there is a thing called contention. Today, every ADSL service with 20Mbps has a contention ratio of around 20:1 (or more for some carriers). That means, you share that 20Mbps with 20 other people. It's a long story why, but there will NEVER be the case of people getting 100Mbps of actual bandwidth. Not for several decades at current carrier equipment rates of evolution. The "Core" can not and will not be able to handle that sort of bandwidth. The 100Mbps or 1Gbps is only the speed from your house to the exchange. From there to the Internet, you will get the same speeds you get now. The "Core" of Australia's network is already fibre (many times over). And even so, we still have high contention ratios. Providing fibre to the home just means those contention ratios go up. You will not get better download speeds.

    Similarly for those very remote places where a "guaranteed" 12Mbps satellite services would be available, this is still a contended service. If the Government is guaranteeing 12Mbps as a service per user, costs for each would be astronomical. For example Oil & Gas platforms operating off the Australian coastline with a "guaranteed" 10Mbps service are currently paying in the region of US$2M-US$3M per annum from satellite operators!

  • New DSL technologies will emerge. 15 years ago we had 56k dial-up. Then 12 years ago we got 256k ADSL, then 8 years ago 1.5Mbps ADSL2, then 5 years ago 20Mbps ADSL2+. There are already new DSL technologies being experimented on that will deliver over 50Mbps on the same copper we have now. $zero cost to the tax payer.

  • 4G wireless is being standardised now. The current 3G wireless was developed for voice and not for data, and even so it can deliver up to 21Mbps in Australia . There are problems with it, but remember that it was developed for voice. The 4G standard is specifically being developed for data, and will deliver 100Mbps bandwidth with much higher reliability (yes, the same contention issues apply mentioned earlier), but at $zero cost to the tax payer.

  • The "NBN" will be one of the largest single networks ever built on earth. There are only a few companies who could do it - Japan's Nippon NTT, BT, AT&T, Deutsche Telekom etc. Even Telstra would struggle to build something on this scale. Yet we are led to believe that the same people who can't build school halls or install insulation without being ripped off are going to do it? Because when it all comes crumbling down after they have spent $40+billion of Australian taxpayer's money and the network is no more than complete, it could be up to Telstra to pick up the pieces!

The above email was suspicious for a number of reasons. It had been carefully crafted with many "half-truths" as well as an appeal to the author's own authority ... And yet the author chooses to remain anonymous. Most suspicious of all was the reference to "school halls" and "insulation", which closely resembles the arguments advanced by the coalition in parliament against the NBN.

At the time, (mid-October), the chain letter had been posted in many online discussion groups.

For several days your blogger tried in vain to find an "original". However nothing came to light. By now the above message has been widely recognised as a chain letter "fake". And there is ample analysis of the email and the many things wrong with it, elsewhere online.

However, it does raise the question of whether or not it has been constructed by someone inside the Liberal party or Telstra.

Because it is not only the Liberal party that may have to re-adjust their view of reality because of the passage of this bill. It may also become a watershed for Telstra, the organisation that in its different forms has so convincingly dominated our Telecommunications for decades. In the early parts of the previous century, as Telecom, because they had a government guaranteed monopoly and in the twenty-first century because of the strangle-hold they had on the national network. Now however, Telstra may have to learn to compete.

Since T2, Telstra has promoted the cause of "value for shareholders" whilst conveniently over-looking any potential "value for consumers". Lately however Telstra's customers, who according to many surveys are among the most extravagantly billed and poorly served Telco customers in the world, are voting with their feet. Add to this the fact that new content providers such as Apple, Amazon, new technologies such as VOIP and streaming video, and search giants like Google threaten to erode their traditional revenue model ... And Telstra may find it difficult to offer their shareholders "value".

The NBN will accelerate all these trends towards new technology and content, posing serious threats for telcos and media conglomerates. Cutting costs may only accelerate their decline into irrelevance.

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