Thursday, May 21, 2009

Migration to FttH

One of the big conundrums for the Fibre to the Home deployment in Australia will be how to maximise take-up early. Other big services projects haven't faced this challenge. When areas get connected to sewerage and water for the first time householders are required to pay the conection fee and disconnect sceptic tanks and water tanks.

With the FttH the expectation is that it might be a little more like the PayTV model where connection is voluntary. But that doesn't really work if we want a port on the fibre available for smart metering.

The idea that the citizenary can be forced to pay to continue to enjoy a service is already getting a work-out with conversion to digital TV, so we shouldn't say that's not possible.

Anyhow here's three ways it could be done;
1. Have a two price offer for connection - the price for connection at the time of deployment is X while the price at a later date is X+Y. Also advertise that the existing network will be cut off in Z years - make Y sufficient incenive to spend X now.
2. Create a giant credit scheme. The value of connection is X. If the customer elects not to pay it it is treated as a secondary (or new kind of) mortgage on the property and needs to be discharged before the property can be sold - interest can accrue at whatever rate is neceessary to fund it plus a cost of scheme administration. This could be paired with the scheme above.
3. Create 9 million shares (or whatever the number of houses is) and give each householder a share in the NBNCo when they pay for their connction.

Interestingly model 2 is a way that householders could be required to pay the entire cost of the network not just their connection charge. That would create equity with the Greenfields scenario. The share concept could be added to it.

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