Comment by Rhonda Griffin, Blogger

Formula for disaster
by Rhonda Griffin, Friday, 15 June 2007


Telstra has felt compelled to take out advertisements to bring the G9's
nasty little secret to the attention of the Australian public: that G9 gives
itself freedom to dramatically increase prices for broadband and telephony
should its scheme go ahead.

The formula by which G9 would price its fibre-to-the-node service is a fog
of mathematic symbols to cleverly obscure the fact that all the risk of the
project is pushed onto consumers.

Isn't it ironic! The ACCC is meant to act in the "long term interests of end
users" but it is actively promoting G9 and a dodgy deal that, if it ever got
up, would push any increased costs onto the public.

It's like one of those tricky toll road schemes that allow the toll charges
to rise if there isn't as much traffic through as the developers projected.

In the same way, if the G9 network didn't attract enough customers, or their
costs were higher than they thought, they could pass on the increase after
three years i.e. by the time the thing is built. In respect to the
"guess-timate" of the amount G9 would have to pay Telstra for confiscation
of its network, they don't even have to wait that long to pass on any higher
actual cost.

And the chances of the pricing being wrong are pretty high, given that
prices need to be based on cost, and the G9 has no real-world way of
estimating its costs. This is something that G9 hasn't even tried to hide.

In the first Access Period the forecasts of sales of BAS (broadband access
services) are inherently less reliable and, consequently, FANOC (fibre
access network operating company) is not required to absorb risk associated
with sales from forecast and risk associated with the actual cost of
constructing the HFTP network.

With the disclaimer duly delivered, they have then produced the most
rose-coloured budgetary forecasts imaginable - low ongoing operating
expenses, 100 per cent market share, high broadband penetration, apparently
no need for ongoing capital expenditure and a payment to Telstra for access
to its network which is around half the current wholesale line rental price.

On top of this, they have made no provision for a contribution to the rural
cross subsidy, and don't seem to take any responsibility for the regulatory
obligations that should rightly transfer to the network operator. These
include the Universal Service Obligation (which is not just a rural
obligation), customer service guarantees, priority assistance etc.

But what next? The process of ACCC review gets underway with its six-month
timeframe, plus "stop-the-clock" provisions, and the Government announces
its expert panel to decide how an FTTN should be provided and before you
know it, we are the other side of an election. Problem solved.

---

› See More: Comment by Rhonda Griffin, Blogger

On 2007-06-16, James Bell <[email protected]> wrote:
> Formula for disaster
> by Rhonda Griffin, Friday, 15 June 2007

http://www.tellthetruthtelstra.com.au/

--
Russell Wood <http://www.dynode.net/~rjw/>

Sad, Bellboy, even by your usually low standards.


James Bell wrote:
> Formula for disaster
> by Rhonda Griffin, Friday, 15 June 2007
>
>
> Telstra has felt compelled to take out advertisements to bring the G9's
> nasty little secret to the attention of the Australian public: that G9 gives
> itself freedom to dramatically increase prices for broadband and telephony
> should its scheme go ahead.
>
> The formula by which G9 would price its fibre-to-the-node service is a fog
> of mathematic symbols to cleverly obscure the fact that all the risk of the
> project is pushed onto consumers.
>
> Isn't it ironic! The ACCC is meant to act in the "long term interests of end
> users" but it is actively promoting G9 and a dodgy deal that, if it ever got
> up, would push any increased costs onto the public.
>
> It's like one of those tricky toll road schemes that allow the toll charges
> to rise if there isn't as much traffic through as the developers projected.
>
> In the same way, if the G9 network didn't attract enough customers, or their
> costs were higher than they thought, they could pass on the increase after
> three years i.e. by the time the thing is built. In respect to the
> "guess-timate" of the amount G9 would have to pay Telstra for confiscation
> of its network, they don't even have to wait that long to pass on any higher
> actual cost.
>
> And the chances of the pricing being wrong are pretty high, given that
> prices need to be based on cost, and the G9 has no real-world way of
> estimating its costs. This is something that G9 hasn't even tried to hide.
>
> In the first Access Period the forecasts of sales of BAS (broadband access
> services) are inherently less reliable and, consequently, FANOC (fibre
> access network operating company) is not required to absorb risk associated
> with sales from forecast and risk associated with the actual cost of
> constructing the HFTP network.
>
> With the disclaimer duly delivered, they have then produced the most
> rose-coloured budgetary forecasts imaginable - low ongoing operating
> expenses, 100 per cent market share, high broadband penetration, apparently
> no need for ongoing capital expenditure and a payment to Telstra for access
> to its network which is around half the current wholesale line rental price.
>
> On top of this, they have made no provision for a contribution to the rural
> cross subsidy, and don't seem to take any responsibility for the regulatory
> obligations that should rightly transfer to the network operator. These
> include the Universal Service Obligation (which is not just a rural
> obligation), customer service guarantees, priority assistance etc.
>
> But what next? The process of ACCC review gets underway with its six-month
> timeframe, plus "stop-the-clock" provisions, and the Government announces
> its expert panel to decide how an FTTN should be provided and before you
> know it, we are the other side of an election. Problem solved.
>
>

nough said! now piss off!