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Caelum

NBN - Is it too expensive?

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Ugh. So just found out i need to get my house restumped as well as the roof fixed. The restump is going to cost $15k, and i need a roof or i am pretty much fucked. Yeah, i know i will save money in the long run if i get the whole roof done now but i really cant afford it, so a roof patch will have to do while i ensure my house is liveable for me and my family.

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Just playing devil's advocate from both sides:

 

If you have to borrow the 10 grand, then the longer you defer the 20 grand subsequent cost, the better it looks from a financials perspective.

 

However, if you are going to "save" a lot on that 10 grand, then odds are you are doing it by deferring it a lot longer than you are publicly acknowledging. As in, it's not going to be 5 years till you fix the rest of the roof, you might be limping along for another 10+...

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Having a fast, reliable and scalable Internet connection has another major benefit. You can replace TV stations with an on-demand streaming equivalent and reclaim the frequencies for other uses such as mobile broadband.

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Just playing devil's advocate from both sides:

 

If you have to borrow the 10 grand, then the longer you defer the 20 grand subsequent cost, the better it looks from a financials perspective.

 

However, if you are going to "save" a lot on that 10 grand, then odds are you are doing it by deferring it a lot longer than you are publicly acknowledging. As in, it's not going to be 5 years till you fix the rest of the roof, you might be limping along for another 10+...

Well, don't forget that the cost of borrowing does vary, and is dirt cheap right now. Assume that you can borrow the $10k now at 2% /year (non-compounded for ease of maths) for 5 years, but if you wait 5 years the interest rate will be 5%. (in reality the difference in likely borrowing costs is actually larger than this.) So you're looking at $11k now or $24K later.

 

Deferring the cost also saves more if the inflation rate is high. As it stands, it looks likely that it will remain low for quite some time.

 

As Keynes said, the boom, not the bust, is the time for austerity. Right now we have a weak(ish) economy (that could use the stimulus), very low borrowing costs, and low expected inflation. These are ideal conditions for a major infrastructure project. That may not be the case in 15 years when they get around to completing the transition.

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Now THAT, is an interesting and totally valid economic argument, I would also note that the NBN in its current form is already generating defraying revenue - I know, my office, well, I quit last week, is paying for superb service :)

 

Cheers

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Guest xyzzy frobozz

I'll say this - we are connected to fibre here in our part of Western Australia, and I no longer think about the internet, I just do it. Whatever I want, whenever I want. Even with a good ADSL2+ connection, where we lived literally next door to the exchange, I couldn't say that. I'd have to plan certain activities at certain times depending on bandwidth and network congestion.

 

Now I just fire up the computer and off I go.

 

Posted Image

Edited by xyzzy frobozz

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Not NBN... But NBN speeds... and i tell you, it does make a massive difference to the 'usability' of the 'net, as frobozz mentions above...

 

Posted Image

[Limited to 100mbit throughput as it is daisychained through a voip phone]

 

At home i get maybe 4mbit on a great day... typically 2mbit, and frequently 2mbit with lots of dropouts. I live in the inner suburbs of perth...

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Just playing devil's advocate from both sides:

 

If you have to borrow the 10 grand, then the longer you defer the 20 grand subsequent cost, the better it looks from a financials perspective.

 

However, if you are going to "save" a lot on that 10 grand, then odds are you are doing it by deferring it a lot longer than you are publicly acknowledging. As in, it's not going to be 5 years till you fix the rest of the roof, you might be limping along for another 10+...

but if you only have to borrow 2/3rd the amount because the roof, for people like myself, is not going to be any better, why replace it all straight away?

 

Do you always replace all four tyres on your car at the same time? Of course you don't because why would you replace something that works? Sure, if you do replace all four tyres rather than just the ones that need it you could probably notice the difference in grip - you cant beat the feeling of all new tyres. And, it may be cheaper per tyre because you may get a bigger discount than on just buying one or two. But most people aren't going to replace all four because of the opportunity cost.

 

 

Enough with the analogies :)

 

Replace what doesn't work or doesn't exist, maintain what makes sense to maintain.

 

My only beef with the NBN has always been that the existing cable network may be serviceable for quite a number of years to come. People who have access to that should be at the bottom of any new technology rollout, where it makes design sense.

 

Do we need a national broadband network? YES! Do we need it all to be new? Was there any analysis done of the existing capability?

(The answer to the second question is obviously no, otherwise some of the issues that have come up in the past 6 months would have already been raised)

 

I don't even know why we are discussing it, no matter who gets in after September the NBN will continue...

Edited by Mac Dude

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but if you only have to borrow 2/3rd the amount because the roof, for people like myself, is not going to be any better, why replace it all straight away?

 

Do you always replace all four tyres on your car at the same time? Of course you don't because why would you replace something that works? Sure, if you do replace all four tyres rather than just the ones that need it you could probably notice the difference in grip - you cant beat the feeling of all new tyres. And, it may be cheaper per tyre because you may get a bigger discount than on just buying one or two. But most people aren't going to replace all four because of the opportunity cost.

The problem with that analogy is that it implies that it costs the same to replace one tire now and the others later as it does to replace all four now. Suppose instead that each tire costs $100, but the mechanic charges a fee of $250 to even look at your car (and the tires can only be changed by this mechanic) regardless of how many tires he changes. Suppose also that your front tires need replacing now, while the back ones are pretty worn down but could make it for another year. Do you replace all four now ($650) or the front ones now and the back ones later ($450 now, $450 in a year, for a total of $900)?

 

To take that one step further, suppose that the interest rate is low now, but is likely to be much higher in a year. Do you lock all of the expense in at the low rate, or do you wait a year and pay the higher rate on the back tires?

Edited by DaCraw

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Do you always replace all four tyres on your car at the same time?

using that analogy Mac the copper network is bald on all four corners with only the spare having some tread and that's a pretty perished 80Km/h limited temporary use spare tyre.

:P

 

As far as HFC goes it is close to the same boat as the PSTN network. Both HFC owners have spent minimal dollars on maintenance, and from all reports the Optus HFC in particular is nasty being way over subscribed.

 

As far as

People who have access to that should be at the bottom of any new technology rollout, where it makes design sense.

Well a lot of MDUs in particular can't get HFC despite being in HFC areas so most if not all HFC areas need some FTTH run, so rather than doing a building here and there and then going back to expand the FTTH coverage it makes sense to do the whole area in one hit.

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but if you only have to borrow 2/3rd the amount because the roof, for people like myself, is not going to be any better, why replace it all straight away?

Upload speed. Choice of ISP and hence quota size.

 

That second one is a huge benefit over HFC.

 

I don't even know why we are discussing it, no matter who gets in after September the NBN will continue...

Not in its present form, a lot of people in brownfields will be lumped with what I regard as ADSL3, may as well not bother.

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Mac Dude - I think nearly everyone in Australia will have an opinion on what the NBN could have done differently. I'm not advocating the argument that the NBN is/was rolled out in the best possible way, with the least inefficiency.

I'm talking in general terms on deferring the cost. I don't think Turnbull is being disingenuous when he predicts we might save 12 Bn by deferring some of the rollout, but I don't think he's deferring it by only a few years either :)

 

I'm pretty sure the cost to roll the NBN out is extremely variable, and the pay-back time likewise variable. I'm sure there is either a really good business ( & political?) reason why you are getting it, and under-serviced areas in Melbourne's East aren't even on the 3 year roadmap. Most likely it's to do with the projected ROI, and the amount of money required to put functioning NBN hardware in.

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but if you only have to borrow 2/3rd the amount because the roof, for people like myself, is not going to be any better, why replace it all straight away?

 

Do you always replace all four tyres on your car at the same time? Of course you don't because why would you replace something that works? Sure, if you do replace all four tyres rather than just the ones that need it you could probably notice the difference in grip - you cant beat the feeling of all new tyres. And, it may be cheaper per tyre because you may get a bigger discount than on just buying one or two. But most people aren't going to replace all four because of the opportunity cost.

The problem with that analogy is that it implies that it costs the same to replace one tire now and the others later as it does to replace all four now. Suppose instead that each tire costs $100, but the mechanic charges a fee of $250 to even look at your car (and the tires can only be changed by this mechanic) regardless of how many tires he changes. Suppose also that your front tires need replacing now, while the back ones are pretty worn down but could make it for another year. Do you replace all four now ($650) or the front ones now and the back ones later ($450 now, $450 in a year, for a total of $900)?

 

To take that one step further, suppose that the interest rate is low now, but is likely to be much higher in a year. Do you lock all of the expense in at the low rate, or do you wait a year and pay the higher rate on the back tires?

 

That's the problem with analogies - I made assumptions and now your adding assumptions such as the $250 fee just to look at the car - something that I think is unreasonable and not based in reality as it isn't difficult to tell if a tyre is bald, and if you do have trouble there are plenty of places that will tell you for free.. I'll stick with the generalisation however, that most people don't replace all 4 tyres at the same time every time.

 

 

Do you always replace all four tyres on your car at the same time?

using that analogy Mac the copper network is bald on all four corners with only the spare having some tread and that's a pretty perished 80Km/h limited temporary use spare tyre.

:P

 

 

Bingo! That's the problem I have. People make a lot of assumptions on the state of the cable network based on a few pits they see on 60 Minutes or A Current Affair. Where is the report on the state of the network that shows such a massive investment is being rolled out correctly? Where is the analysis saying that the cable network is indeed in a '4 bald tyres state'?

As far as HFC goes it is close to the same boat as the PSTN network. Both HFC owners have spent minimal dollars on maintenance, and from all reports the Optus HFC in particular is nasty being way over subscribed.

 

As far as

People who have access to that should be at the bottom of any new technology rollout, where it makes design sense.

Well a lot of MDUs in particular can't get HFC despite being in HFC areas so most if not all HFC areas need some FTTH run, so rather than doing a building here and there and then going back to expand the FTTH coverage it makes sense to do the whole area in one hit.

 

Which is why I highlighted where it makes design sense - no point in rolling fibre to every second household.

 

I guess I'm just amazed that people are happy to throw away the whole existing cable network without even looking at the state it's in, for no real reason than 'fibre is fast'.

 

Mac Dude - I think nearly everyone in Australia will have an opinion on what the NBN could have done differently.

Agreed, it's the NBN at any cost attitude that has me scratching my head.

 

I've spent a lot of time doing market analysis in Asia Pacific to get a good understanding of the 'Total Addressable Market' for specific products, understanding the current climate, globalization/localization costs, routes to market, support implications, end user eco-system requirements, etc. There is a LOT that should be done before introducing a technology to a market otherwise you're just pissing money away.

 

Of course, there is a possibility that the NBN fans are correct and that the entire cable network is on the verge of collapse, so the best solution is a blanket NBN rollout.

 

I just don't think Conroy put in the hard yards to find out.

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I guess I'm just amazed that people are happy to throw away the whole existing cable network without even looking at the state it's in, for no real reason than 'fibre is fast'.

I'm under the impression that when the question of open access was asked, the response from the HFC network owners (Telstra and Optus) was essentially "no chance".

 

So while HFC could have been part of the NBN (following the open access rules), the incumbents are preventing it.

 

Where do you go from there? Single-retailer networks have no place on the NBN.

Edited by SquallStrife

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I guess I'm just amazed that people are happy to throw away the whole existing cable network without even looking at the state it's in, for no real reason than 'fibre is fast'.

I don't believe people are backing it JUST because 'fibre is fast'.

 

It's a major infrastructure project. Do it right the first time seems to be the general consensus in the arguments. Speed is important for broadband so it's no wonder people want to back the fastest solution but it's more than that. No one wants a "Western Ring Road" for internet in this country. The plan by the libs echoes scarily like the mentality that appears to go into road planning. Build it as cheaply as possible and let the next lot bear the cost of building it the way it should have been built at the start.

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I'm sure there is either a really good business ( & political?) reason why you are getting it, and under-serviced areas in Melbourne's East aren't even on the 3 year roadmap. Most likely it's to do with the projected ROI, and the amount of money required to put functioning NBN hardware in.

No actually the rollout of the fibre is first and foremost decided on network engineering principals, then other factors are added in to modify the rollout schedule. Actually you can blame the ACCC for some of the issues with the rolout as for some weird reason they insisted on 121 POIs around Aus where as the original plan was for 14 POIs. This meant some redesign of the network and rollout schedule.

 

Where is the report on the state of the network that shows such a massive investment is being rolled out correctly? Where is the analysis saying that the cable network is indeed in a '4 bald tyres state'?

Difficult things to find as the networks are private so they can keep those sorts of things under their hats.

As far as the actual state of the network all we can really go on is the number of complaints about issues, comments from the people who work on the actual network and the sheer amount of money spent maintaining the networks. In the case of Telstra it is around 1 billion per annum on the copper for just straight out repairs.

 

Agreed, it's the NBN at any cost attitude that has me scratching my head.

That's what the Conservatives are claiming but it is not at an "any cost". The ALP NBN has a budget and cost for installation and while it "may" run over that cost only the Coalition is claiming it will be 60, 70, 80 or 94 billion or whatever they are claiming today.

 

Using their same criteria their FTTN would be up around those prices too. Unless of course you somehow believe that the Coalition are somehow magically able to eliminate all cost blowout risks.

 

Given the poor state of the copper network as outlined in http://www.abc.net.au/technology/articles/.../23/3639761.htm and

http://www.abc.net.au/technology/articles/.../27/3642266.htm

what's the alternative? Spend an ever increasing amount just trying to maintain the status quo? Or patchwork replacement in dribs and drabs as the network fails leaving people isolated till that section is replaced?

Sometimes you just have to call the wreckers to take away that old rust bucket and buy a shiny new vehicle.

 

 

I'm under the impression that when the question of open access was asked, the response from the HFC network owners (Telstra and Optus) was essentially "no chance".

 

So while HFC could have been part of the NBN (following the open access rules), the incumbents are preventing it.

 

Where do you go from there? Single-retailer networks have no place on the NBN.

Ye from what I can find out Optus and Telstra weren't interested at all. It also (again only from what I have read here and there) it would actually be technically very very difficult (read expensive) to make these networks open access, and the other major ISPs where not really interested in spending the money to try and work with the HFC systems.

You also have to look at it that there is no real room for customer number expansion on the HFC without running in to massive congestion issues (remember it is a shared medium) so making it open access means the owners losing retail customers to the new ISPs that have access to the HFC.

Edited by aliali

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Mac, the trouble with the copper network is it would be ridiculously expensive to even begin to assess just how good/bad it is.

 

Telstra and their predecessors were not particularly good at documenting the cabling at all and maintenance fell through the floor after privatisation.

 

I'm dealing with a case of that right now, moving house so I ask for the number of the new place to prep for net. The new house is in Heathridge, a suburb I have lived in before that was a net black hole until iinet put some DSLAMS in, before that we had wireless and not very good wireless.

 

The new place I could throw a stone and hit the old one, but, the number at the new house, according to Telstra, does not map to the address it maps to one several suburbs over, which makes no sense, there are several exchanges in between. Talking to people in the area they were not surprised. So even the numbering system, let alone the network mapping is scrambled.

 

In the end I don't think it matters if some of that copper is good, it probably is, finding out is going to cost more time and money than it is worth. That's a situation many LAN owners faced as the technologies changed so quickly in the eighties, it's cheaper to ditch it.

 

Cheers

Edited by chrisg

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The argument is entirely based on what should be done with no consideration for how people behave, and how well we respond to perceived savings.

I predict it'll go like this; if the 'other party' wins, maybe skip the first step.

 

1. NBN rolled out properly, Fiber to each home, everyone happy.

2. Costs end up being even MORE than predicted.

3. NBN has its pin pulled, but the people demand it gets finished.

4. Finish the deployment using Fiber to the Node to 'save costs'

5. Users demand speed, and fibre to the home is finished anyway, at a much higher cost.

 

On paper it looks cheaper for the 'now'. They'll be hoping Australia's economy gets even stronger before the time to continue with FTTH so it has less of an impact.

 

As for the above copper argument, I dont think its the state of the entire network thats the issue, I think its the inconsistency.

For example, I have a fairly short run to my exchange. yet my sync speed is below 3mbps. it SHOULD be more like 20; but its not, and the line into the house is brand new. So its a street thing. While they're uprooting my road to lay new copper, why not make it fiber while you're there?

 

The solution is probably a mix though, isnt it?

new\CBD housing will have good quality lines, and likely sync at 15+mbps. They usually have some form of fiber already available, even if its just telstra or Optus owned, so these networks can stay in place and save money.

 

However the 'burbs with phone lines that fail when it rains (like mine) should be replaced with fiber as a priority.

Honestly, while its laughable to the rest of the world, FTTN isnt that objectionable to me. Gets everyone closer to that 20mbps range, and although its not cheaper, it appears that way to a lot of people, and will likely get the job done quicker.

 

tldr? Dont care, spend a lot, or spend a little. As long as you can get Aus connected at 20mbps+ each, you're good in my books.

 

Mac, the trouble with the copper network is it would be ridiculously expensive to even begin to assess just how good/bad it is.

Exactly!

Though there is a simple way to tell. the big ISP's just need to share SNR\attenuation readings for each street from everyone with ADSL.

However we as a country aren't good in having companies work together like that.

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Mac, the trouble with the copper network is it would be ridiculously expensive to even begin to assess just how good/bad it is.

 

Telstra and their predecessors were not particularly good at documenting the cabling at all and maintenance fell through the floor after privatisation.

 

I'm dealing with a case of that right now, moving house so I ask for the number of the new place to prep for net. The new house is in Heathridge, a suburb I have lived in before that was a net black hole until iinet put some DSLAMS in, before that we had wireless and not very good wireless.

 

The new place I could throw a stone and hit the old one, but, the number at the new house, according to Telstra, does not map to the address it maps to one several suburbs over, which makes no sense, there are several exchanges in between. Talking to people in the area they were not surprised. So even the numbering system, let alone the network mapping is scrambled.

 

In the end I don't think it matters if some of that copper is good, it probably is, finding out is going to cost more time and money than it is worth. That's a situation many LAN owners faced as the technologies changed so quickly in the eighties, it's cheaper to ditch it.

 

Cheers

copper is not cable, though the cable is copper :) The story of your move is just as relevant as me posting my speed - it isn't because it's too small a sample.

 

People are making a lot of assumptions about the state of the cable network and I honestly don't believe anyone here, or in government/opposition actually knows.

 

As for a review of the network being 'ridiculously expensive', spending 40 billion or whatever it is without an understanding of the existing infrastructure would be even more ridiculous IMO.

 

All the analogies and anecdotes in the world aren't a replacement for a proper analysis when you're spending tens of billions of dollars.

 

EDIT : I'll stop being pedantic as this horse has not only left the stable, it's well and truly dead :)

Edited by Mac Dude

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:)

 

Anecdotes are indeed just that, but I have to tell you in over twenty years of net connecting premises anywhere outside a CBD it has been FAR more common for me to have trouble with the external copper, including just finding out where the hell it terminates.

 

There is another way to put it into perspective, compare the total cost of an all fibre NBN, which will go over budget, to just one defense project, try Collins submarines or the current JSF debacle.Both are relatively short-lived, we are already working on next gen submarines. What real value do those hugely expensive projects add to the country compared to a network that will last and last and meanwhile be paying for itself?

 

Cheers

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As for a review of the network being 'ridiculously expensive', spending 40 billion or whatever it is without an understanding of the existing infrastructure would be even more ridiculous IMO.

Well see that is the thing with a new FTTH network. Except where the ducts and buildings are being reused a review of the existing network is totally pointless. With a whole new network you have the chance to design it to suit current and projected demand, population centres and population distribution. The existing network is largely irrelevant to it.

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ali, I totally agree, as you well know.

 

I just hope this time some idiot has the plan properly in place to track the new network.

 

My first experience with the NBN was not particularly encouraging from that point of view, the records were already out of date which delayed the connection by weeks.

 

Cheers

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No actually the rollout of the fibre is first and foremost decided on network engineering principals, then other factors are added in to modify the rollout schedule. Actually you can blame the ACCC for some of the issues with the rolout as for some weird reason they insisted on 121 POIs around Aus where as the original plan was for 14 POIs. This meant some redesign of the network and rollout schedule.

Which may be exactly one of the problems Mac Dude was alluding to.

Are area's with pre-existing network infrastructure to support a wide range of options the best places to roll out the NBN?

To go back to using the dodgey analogies, isn't that just patching part of the roof with the smallest holes, because it's easier to cover them quickly and cheaply?

 

The entire point of the NBN, in terms of delivering effect for price, is the delta. The change between current tech, and NBN tech. If you install the NBN in places with loads of high speed options, then it might be initially cheaper, but it's also providing a pretty marginal advantage.

I can understand rolling it out in new areas, but I think they should have skipped wiring up apartments until later, and given them FTTN in their basements.

 

I also think there are a lot of areas (on the Victorian map at least) where they are rolling out in areas with loads and LOADs of pre-existing competing technologies.

 

I understand nobody here probably has the background/inside knowledge to understand exactly why some areas are chosen over others, but it's incredibly frustrating to see areas with heaps of cable/ADSL/ethernet over copper/ethernet over wireless options getting the NBN, over areas of Melbourne that lack those options.

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Strange Tinny, I asked precisely that question at an NBN briefing session last year.

 

The roll-out order is predicated upon some pretty complex parameters, some to do with the exchange locations, some to do with fibre they have been able to take over and some to do with efficient use of work teams.

 

What that can sometimes mean is that an area that already has decent other technologies may still be part of a parcel for the rollout because of what is in the area.

 

It was one aspect of the briefing that they actually did rather impressively in terms of demonstrating that it is not a helter-skelter approach.

 

It's not always going to be fair but it does seem reasonably organised.

 

Cheers

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No actually the rollout of the fibre is first and foremost decided on network engineering principals, then other factors are added in to modify the rollout schedule. Actually you can blame the ACCC for some of the issues with the rolout as for some weird reason they insisted on 121 POIs around Aus where as the original plan was for 14 POIs. This meant some redesign of the network and rollout schedule.

Which may be exactly one of the problems Mac Dude was alluding to.

Are area's with pre-existing network infrastructure to support a wide range of options the best places to roll out the NBN?

To go back to using the dodgey analogies, isn't that just patching part of the roof with the smallest holes, because it's easier to cover them quickly and cheaply?

 

The entire point of the NBN, in terms of delivering effect for price, is the delta. The change between current tech, and NBN tech. If you install the NBN in places with loads of high speed options, then it might be initially cheaper, but it's also providing a pretty marginal advantage.

I can understand rolling it out in new areas, but I think they should have skipped wiring up apartments until later, and given them FTTN in their basements.

 

I also think there are a lot of areas (on the Victorian map at least) where they are rolling out in areas with loads and LOADs of pre-existing competing technologies.

 

I understand nobody here probably has the background/inside knowledge to understand exactly why some areas are chosen over others, but it's incredibly frustrating to see areas with heaps of cable/ADSL/ethernet over copper/ethernet over wireless options getting the NBN, over areas of Melbourne that lack those options.

 

I'll add an anecdote to your analogy - 2 years ago fibre was rolled out right past our street, yet our street won't have the NBN for 3+ years. As the street already has access to cable this is ok by me. Sure it would be nice to have the option to pay more for the same speed from a different ISP, but it's more important to connect those folks further up the hill who don't have cable access. So by accident, the way the NBN is being rolled out near me appears to be correct :)

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