Tuesday, February 15, 2011

More on Greenhill Calliburn

Yesterday I noted that Greenhill Calliburn had backed up my comments about the robustness of the NBN Co business plan.

Last week I responded to an op-ed in the AFR which is behind a paywall. The original letter as submitted reads (the letters editor unpacked the acronyms):

There are many bases on which to criticise the NBN and the Government’s approach to it. These mostly relate to its governance structures and accountability. They do not, however, extend to questions of its logic in pursuing a single, national, structurally-separated and Government funded fibre access network.

An enduring legacy of the Trujillo era at Telstra is the commentators who were fired up by Phil Burgess to push a US-style libertarian line. Michael Porter is one of those and has shown with his rambling and incoherent comments that he simply doesn’t understand the market and the technology (“Time to ditch broadband clunker” AFR 9 Feb).

The line Porter pursues is that we could have the wonders of 100 Mbps now through HFC and wireless without government intervention and with competition. The problem is we tried that and it wasn’t what we got.

The expensively duplicated HFC networks don’t provide the possibility for everyone connected to simultaneously get that speed, even with DOCSIS 3.0. That speed is achievable with wireless if you and your dog are the only users of the base station and the metaphorical equivalent of “the wind is in the right direction” – that is under the best possible environmental characteristics.

On some specifics, no part of Telstra’s agreement decommissions modems from Optus’ HFC cable. The HFC cable owned by Telstra is exclusively used by Foxtel, not Austar (which is satellite only except in Darwin where they own the HFC).

The Government is keen to get Telstra’s participation to deliver structural reform to the industry. It also recognises that which we forgot in the eighties and nineties, that wired communications infrastructure to the home is just as much a natural monopoly as gas and electricity distribution.

I now note that Greenhill Calliburn also share my concerns about governance, writing;

To the extent that the requirements generally imposed on government business enterprises
fail to do so, Greenhill Caliburn recommends that the Commonwealth agree with NBN Co that
it will make a number of detailed, periodic disclosures to the Shareholder Ministers to allow
them to assess the implications of any variations on a more timely basis and evaluate and
introduce mitigants as required.

Novae Meridianae Demetae Dexter delenda est

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