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.
>
>