When reading Big Mal’s “Strategic Review”, one cannot help but be struck by two things:
One, the amount of redaction of figures to do with HFC, as I covered yesterday, and two, the amount of information that doesn’t match up with NBN Co’s 2013-2016 Corporate Plan.
The latter is concerning, as the review’s supporting “Independent Assessment” found:
Simple, to fudge the numbers.
If we look at the 2012-2015 premises passed prediction for FY2013, it’s over 200 000 premises more than that of the 2013-2016 Corporate Plan (CP). We understand there were delays, this is a given, but to make up figures like this is crazy. The 2013-16 CP was only missed by 22%, NOT the 55% that the Strategic Review states.
Not only this, the review rewrites history by stating that only 66 000 and 82 000 total premises had been passed by June 30 2011 & 2012, even though BOTH NBN Co Corporate Plans (2012-15 and 2013-16) show that in 2011 183 000 premises had been passed in total. The 2013-16 Corporate Plan shows that 213 000 premises had been passed as of June 30 2012.
This is where much of the assumptions of a 2024 finish for an FTTP NBN come from. The worst part is that they don’t even try to hide the fact they are removing premises already passed from the figures, to the tune of 120 000 and 130 000 respectively.
It’s easy to make a nice convincing graph if you are fudging numbers.
The next thing fudged is the take-up rates. This would drastically affect any predictions on revenue, and we can clearly see that Turnbull’s flying monkeys have done him proud here.
Not only did they fudge the total take up rates, but also the speed tiers. Claiming that 19% of people in an area serviced by FTTP were taking up the service (overall, this is closer to 37%, and over 60% in some areas), and revising down figures for the higher plans.
With figures like this, we can see that both the ARPU will be lower (less people on faster plans) and the total revenue predictions will be lower. This only covers some of the dodgy accounting that’s been done to show costs will be far above what it will really cost.
The explanations are as weak as Turnbull’s original plan; with the review claiming the cost per premises (CPP) of the Local Neighbourhood Distribution Network (LNDN) will increase 78% to $1997 AND a 50% increase in CPP for connections to $2100. These two alone are farcical, with nothing at all to back up these claims. Just some nice numbers that Rousselot has directed his minions to stick in there.
If we look at the table used to support the per premises increases we can see that the supporting evidence… doesn’t exist:
FTTP Access Network cost per premises passed has decreased from an average of $5,000 for the Tasmanian Pre-Release sites to an Estimate at Completion (EAC) average cost of between $1,100 and $1,400 per premises passed for FSAMs currently under construction for which DDDs are available.
- NBN Co Corporate Plan 2013-2016
Without any justification this review doubles all costs associated with the rollout. Essentially there’s $13.7b in totally unjustified & unreasoned costs. That only got them half way to the $28.5b lie. The rest is made up by halving revenues, revising interest repayments up while revising interest on funds up. Yes, that ludicrous!
Essentially this review is an exercise in fraud. Yes, I’m not going to tone down this claim, because that’s what it is. If you attempted to pass this document off in the business world you would be fired at the very least. With knowledge that most of the executive team are ex-Telstra, that Turnbull has strong personal connections with many of these people (he co-owns a boat with Rousselot, as a tweeter said “partners in brine”), and there is a serious amount of money for Telstra to make from this deal. We’re talking in the 10′s of billions of dollars. This is verging on the level of insider trading and securities fraud, yet somehow we are supposed to believe this.
It’s like asking a murderer or rapist to sentence themselves.
This is all moot anyway, with Henry Ergas being appointed to head up the Cost/Benefit Analysis. Why? This is the same Henry Ergas who claimed we’d all have to pay $215 a month to get returns that NBN Co predicted and that any costs over $17b was unacceptable for the NBN.
Essentially this review was the precursor to the shut down of the NBN completely. In some ways that would be the best thing to do at this stage, as spending $41b to take us back a decade is far from acceptable.