Clutching at straws

Interesting tweet from Malcolm Turnbull, shadow spokesperson for destroying the NBN. It reads;

very thoughtful article rob gallagher of informaTM about costs and questionable benefits of FTTH http://t.co/xMFF9yH #NBN

The article is indeed thoughtful, even though it tries to deal with Fibre to the Node as if it is the Lord Voldemort of technology - that which cannot be named.

Gallagher tries to make two points. The first is that there is more speed (bandwidth) to be rung out of copper yet, the second is that average user requirements don't rise as fast as peak user requirements. The conclusion he reaches is that an operator is unlikely to have a business case for an Fibre to the Home deployment.

The bad news for MT is that Senator Conroy, Mike Quigley and everyone who supports the NBN would agree with the last part of the proposition. But that is different to the proposition that in the long run progressing straight to FttH is a better investment.

Let's go through the issues.

Firstly the sorts of things Gallagher sees as being able to breath more life into DSL have limited practical application. Line bonding is a part of the ADSL 2+ standard and does allow for the ability to get double the 24 Mbps theoretical maximum - but at the price of using two copper pairs. There is nowhere in Telstra's network where spare pairs are the main feature - in fact urban consolidation has been making the issue worse not better.

The concept of vectoring is about doing more to co-ordinate the encoding across multiple paths to reduce crosstalk. The requirement is that all pairs in the bundle are served by the one DSLAM. So it certainly isn't a strategy that works for the current environment, and certainly wouldn't be embraced without structural separation.

Meanwhile he tells us that Omega DSL from Alcatel-Lucent promises DSL speeds of up to 1 Gbps by 2020. The proviso is that the distance is limited to 200 metres.

What is forgotten in these discussions of FTTN is that such a network is an active network, every one of those nodes needs to be powered leading to dual vulnerability, and excessive cost. the shorter the bit of copper being used the more nodes to be powered. It works fine to reticulate through a building if the DSLAM is in the basement, but you'd be far better off putting fibre through the building anyway.

The real question comes down to the demand for more bandwidth and the price people will pay for it. The first thing to note is the scale economies of both supply and demand in a telecommunications network. That means a big bang investment approach will get you lower average prices over time than an incremental one.

The second is the value of ubiquity - not often enough mentioned but should be. Applications become practical to invest in as a developer if I know everyone can access them - subject to them being willing to pay the price.

So to counter the comment,

But such an analysis ignores some fundamental principles that Nielsen built into his law. First of all, the law applies to connection speeds only for high-end users, not all users. And as Nielsen notes, average connection speeds will diverge ever further from high-end one as the mass-market of customers get online, as they are more likely to be low-end users.

I simply note that you can't tell a priori which user wants the peak and which one doesn't, but that also the NBN business plan assumes a distribution of speed demands consistent with the observation.

Gallagher's point is that fttH isn't a good strategy for an operator. He is right. but it is a good strategy for a nation - which is why the Government has chosen to build it as a piece of national infrastructure - just like roads.

Yes Malcolm, a very thoughtful piece that explains why the right decision on improved broadband won't come from the market.


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