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@sortius on how and why the Coalition’s NBN policy is designed to fail

In Kieran Cummings, NBN, Telecommunications on April 12, 2013 at 4:19 PM
Created by BushfireBill @BushfireBill

Created by BushfireBill @BushfireBill

By Kieran Cummings (@sortius)

April 12, 2013

Since the release of the Coalition’s broadband policy on Tuesday it has become clear that the policy is designed to fail. Even if taken at face value it is clear that the plan will not be able to meet its targets. So why devise a policy destined to fail?

One simple answer is to keep the ‘free market’ free – free from regulation, free from anti-monopoly legislation and free from responsibility.

The policy itself is made redundant by the three separate reviews the Coalition is planning for the NBN – a strategic review, an ‘independent’ audit and a cost/benefit analysis. Having these codified into the policy ensures that no matter the promises made, the Coalition can build a case to limit or even cancel the rollout, or cancel it in line with its 2010 election policy, using its long-running austerity narrative.

Who will do the reviews?  I’d guess Peter Costello. After his Queensland Commission of Audit, we can assume that the Coalition intends to use the same tactics to remove any case for change to Australia’s telecommunication network.

This will set Australia back decades under the guise of ‘economic management’. With broadband speeds barely reaching 13Mbps on average in Australia, & Akamai’s data transfer caps reaching a measly 4Mbps, the Coalition cancelling the NBN would have dire consequences for Australia’s digital economy.

Who will benefit from a negative outcome? The people who benefit from slower broadband speeds are legacy content providers like Foxtel. With over 70% of the population covered (but only 30% subscribed) to Foxtel’s pay TV service, the NBN is a direct threat to their business model.

Recent developments in the IPTV (Internet Protocol Television)/OTT (Over The Top) market in the US and Europe mean Foxtel can see that its days are numbered as a virtual monopoly. The only way to prevent ‘cord-cutting’, a term used to describe disconnecting pay TV services, is to stymie broadband development.

The NBN’s plan to decommission Telstra’s HFC network that Foxtel runs on ensures that competition is fostered amongst smaller players in the content delivery market. Murdoch’s press has been very vocal against the ‘wasteful’ NBN since 2010, leading me to believe there’s more to the Coalition’s plan to deliver substandard services to Australian consumers than meets the eye.

The main take-away from Murdoch’s speech at the IPA last week was less regulation, less fostering of development and more ‘freedom’ for corporations. The idea that developing national infrastructure is ‘placating a nation’ is laughable, as there has been little to no development of broadband markets by private organisations over the past decade (transcript of Murdoch’s speech below).

It’s clear that News Ltd’s market reach would be drastically reduced if smaller content providers were able to gain a foothold in this lucrative market. Users would no longer be subject to the whims of a monopoly and Foxtel’s ability to use lock-in contracts would be diminished. Read the rest of this entry »

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Coalition’s NBN plan to stop consumers taking control of media

In Kieran Cummings, NBN, Telecommunications on April 9, 2013 at 3:40 PM

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By Kieran Cummings (@sortius)

April 9th, 2013

The Coalition held its broadband policy launch at, wait for it, Murdoch’s Fox Sports, And the press secretary handed out copies of Murdoch’s Daily Telegraph instead of policy documents. Guess what the final outcome of Malcolm Turnbull’s broadband plan will be. The policy debate will heat up over the coming months because there are massive amounts of detail missing from the policy.

Turnbull was combative, if not outright belligerent. From the outset he was unable to give details on even the basics of his policy in answer to questions such as ‘How long will the copper last?’.

I had thought that finally Turnbull would release a policy filled with cogent arguments and factual information, but this was not to be so. Instead the press conference was laced with misinformation, leaving me feeling underwhelmed and annoyed. Details are even more scant in the press release offered up by www.liberal.org.au. Most of the document is merely an attack on the current NBN and vague figures like ‘estimated $90b’ & ‘up to 100Mbps’. There’s no real meat in this policy, and the oft quoted ‘background documents’ are non-existent.

So because I can’t do deep policy analysis I have to go with this policy being a Claytons policy – lots of words, but nothing to say. The best any journalist can do is look at the assumptions and see how out of kilter with reality they are.

There are no details on the future plans of the Coalition or on what will happen to NBN Co once the build is completed. Unfortunately for Turnbull, Tony Abbott played his hand early, stating unequivocally that an LNP government would sell off the NBN. No details as to whether they would uphold the legislation that ensures NBN Co remain a wholesale-only company and be required to foster innovation and competition.

If anything, the build and sale planned, to deploy VDSL via FTTN, would stifle innovation and quash competition within the network. With Vectored VDSL, as Turnbull keeps stating will be deployed (but not mentioned once in the policy document), competition is incompatible. You cannot run multiple ISP’s vectored services via the same cable.

The next thing to look at is the LNP’s build estimates. Unfortunately there is no data to support the costs given, however there seems to be a large amount of information missing on ongoing maintenance costs, power consumption costs for running the cabinets and the cost of acquiring Telstra’s copper network. All of these together would seem to wipe out any reduction in the $40b-odd an FTTP deployment is estimated to cost.

There is no way the Coalition are anywhere near the mark with their $90b estimate to build FTTP, especially since even they have even said it would cost ‘several thousand dollars’ per user to run FTTP from a node. If we look at the BT example of FTTP upgrades and extrapolate an average user being charged ad-hoc rates close to $7000 per premises, it will cost users approximately $65b to upgrade all services. Seeing NBN Co is not charged ad-hoc rates, this cost would be far lower (closer to $30b for an end-to-end fibre service). So the savings from the Coalition are merely offloading costs from off-budget financing to end-user financing.

The main question is who benefits from the savings? It’s certainly not end-users. It’s certainly not businesses. It’s most certainly not retail service providers. The people who benefit will be the people who buy the network.

So who could possibly buy the network? Optus, iiNet, or even Vodafone? The three might be able to handle such a big fixed line network; however they do not have the technicians to maintain the copper. The only player capable of handling such a network is Telstra as they already have technicians and contracts with third parties to maintain the network.

So the end result would be Telstra selling their copper to NBN Co for an inflated price then buying it all back at a discount price, as no other company would want to take on such a liability as $1b per year in maintenance costs to run the copper network.

The fact that Murdoch’s subsidiaries have been so involved in this policy release betrays who is calling the shots. It’s not Turnbull (or as Abbott named him, Mr Broadband), nor is it Abbott. It’s clear that Murdoch’s media empire does not want FTTP – just read any of their papers on any given day to see the utter contempt for NBN Co in any article on the NBN.

The bottom line is that this is all about control. With FTTP the control is in the hands of consumers, giving them an opportunity to utilise Over-The-Top (OTT) services and remove the need for Foxtel if they wish to watch pay TV services.

With FTTN the need for satellite dishes and coaxial cable connections is vital to maintain internet speed while watching pay TV. Turnbull’s claim that VDSL is capable of carrying HD streams is myopic at best, as he ignores the technological advancements in broadcast systems such as the soon-to-be-released 4K broadcast standard.

@jtwyman John Twyman Speed difference between the #NBN & the Opposition's #fraudband proposal

@jtwyman John Twyman Speed difference between the #NBN & the Opposition’s #fraudband proposal

Even the most compressed 4K video requires at least 20Mbps of bandwidth, so the Coalition’s plans for a minimum of 25Mbps is severely lacking after network overheads are taken into account. The only way users on FTTN will receive 4K video is to utilise a dedicated connection to pay TV providers, meaning OTT providers are left out in the cold.

Essentially this policy ignores future needs of Australian consumers and business in favour of end-of-life technologies. Utilising such technologies ensures the control of media in Australia is maintained by the likes of Murdoch and his ilk.

If voters can take anything away from today’s policy announcement it’s this: the Coalition do not want to see Australia’s telecommunication network progress, but merely want to waste $30b delivering what’s there now to sell it off to the people who screwed up the network in the first place.

Read More:

Why Murdoch’s media is gunning for your NBN

Jack McCaw’s NBN story

Why Jake’s impatient for the NBN

Why Murdoch’s media is gunning for your NBN

In Kieran Cummings, NBN, News Limited, Telecommunications on February 27, 2013 at 1:09 PM
Kim Williams, ex Foxtel and now CEO News Limited.

Kim Williams, ex Foxtel and now CEO at News Limited.

By Kieran Cummings (@sortius)
February 27th, 2013

It seems a day doesn’t go by where articles are being posted to News Limited (Murdoch) websites with nothing but negative spin for the NBN. Most, if not all, are founded on poorly constructed arguments that ignore technology & the reality. They all seem to point to one solution: anything the Coalition are saying they’ll deploy.

While this does reek of patent bias amongst Murdoch’s Australian arm, I feel this goes a little deeper than just wanting a Coalition government, but a fear of becoming obsolete in the age of IPTV (Internet Protocol Television).

While FTTN (Fibre to the Node) can offer basic IPTV, it cannot offer multi-set full HD broadcasting as FTTH/P (Fibre to the Home/Premises) can. With this in mind, it doesn’t take long before it’s apparent the likes of Comcast & Time-Warner in the US, are bleeding subscribers or seeing a slowdown in subscriber uptake due to internet streaming services such as Netflix or Amazon’s Prime service.

While we haven’t seen a drop in subscribers here in Australia, there has been a slowdown in subscriber uptake that is sending a message direct to News Limited/Fox: kill off any advancements in broadband speeds before it kills off your business model.

WHAT MAKES FTTN BETTER FOR PAY TV PROVIDERS

One thing to remember is that the main differences between FTTN & FTTH are, speed, service area, & reliability, with FTTN failing on all three. These differences can mean someone can happily use an IPTV service, or you are relegated to stuttering pixelated video. The one (& only so far) pure IPTV example I can give in Australia is FetchTV, with others like Quickflix not quite making their mark due to limited outdated content.

FTTN, which a large portion of Australia already relies upon, can be of many flavours, but the generally accepted limit is VDSL2+ up to 1km, VDSL2 up to 2km, & ADSL2(+)/ADSL1 after that. Looking at these numbers, even if VDSL2+ is used, a large portion of Australia will not be able to stream more than one channel to one TV comfortably in HD. Some will not be able to receive HD video at all, having to opt for 1.5Mbps “lite” services offered by IPTV providers.

sdtv-vs-hdtv-vs-4k-uhdtv-graph2-706px-a (1)

With this in mind, we can see that opting for slower, less reliable, with a smaller service area for higher speeds, broadband benefits satellite & cable TV (pay TV) providers by limiting customers’ ability to utilise lower cost IPTV services. Don’t get me wrong, Foxtel are dabbling with IPTV with massively crippled plans that are far more expensive in dollars-per-channel than their set-top-box contract locked services.

Essentially FTTN offers a moderate speed boost to allow for slightly faster speeds, but not so fast as to make pay TV obsolete. This benefits pay TV providers, but not customers or content producers, leaving a monopoly in place to reap the rewards of archaic infrastructure that’s way past its used by date. Read the rest of this entry »