Thursday, April 18, 2013

NBN: The experience curve and our cash position will make us look like dills

OK, I want fast and reliable Internet connection into my house. And I hate the way that something as technically arguable as this has been reduced to a personality game.

In 2003 I bought a USB drive, and I was the coolest kid on the block. It was amazing - it had a flashing LED and I could take everything I need home in my pocket.

USB drive: 256MB - $500. Today's price $2.

In 2005 I bought an MP3 player. How cool! I could listen to music and even my favourite radio programs. That means I could be working in Hong Kong and listen to all of Phillip Adams' late night live from the last week.

MP3 player: 128MB - $390. Today's price $20.

There is a thing called the experience curve. The more stuff you do, the cheaper it gets to do it. We are seeing it with solar panels now, and it happened as far back as with the Model T Ford.

Right at the moment, fibre modems (the boxes in the house) are relatively new technology. The fibre (node to premises) is probably due for some cost reduction too. But most importantly:

The country doesn't have lots and lots of money.
Whatever the reason, we don't have much money. I'm seeing big arguments over numbers the size of $2bn (ie University cuts).

Personally, last year I entertained ideas of buying a new car. Exactly the same arguments as the FTTP idea - upgrade from old, dodgy stuff, set up for the future, perhaps even lower maintenance costs. But for me this year is a little financially uncertain. I needed to reassess my spending.

Surely, surely, a turnaround from a projected (small) surplus to what looks like an $18bn deficit can call for a tightening of the belt. As I have said before the "Fibre to the node" plan is not the palace in the clouds, but it's also not abandoning the idea of telecoms infrastructure. And the experience curve will make the leg from the node to the premises way cheaper (in today's dollar terms) when we do it - even seven years from now.

"Dad, why don't you buy a new Holden Cruze?"
I'd love to, kids, but I'm not sure what the next few years has in store for me, financially. I could make a new car appear in my driveway, but that would involve me taking a loan I might not be able to pay back, or defaulting on a tax debt that I'm accumulating. Either way buying a new car, right now, is dumb. We'll have to go with the Barina for a few more years.

This is not political, unless you choose to see it that way
I have desperately tried to avoid a political argument. I'm avoiding political comment as much as possible for six months. This is purely technical, and financial. In another five years, when we have our "band aid broadband" we will see it as an improvement, but we'll be complaining because the technologies we haven't even dreamt of will have us wanting more. But today, where even two billion dollars is a scary number, the option to save twenty or more seems very sensible.

My bet is that some clever company will devise a workable high speed "Node to Premises" wireless service. No copper, no fibre. We'll see. I am constantly pleasantly surprised by what our super geeks come up with.

- Posted using BlogPress from my iPad

1 comment:

  1. Comment from Geoff Atkinson on FB. I know how I feel about his points but wish to avoid a SIWOTI time spiral. Geoff's points are worth making, though:

    Geoff Atkinson I see your very valid argument, but what do you say to the fact our technology also requires a lot more data to be transferred year after year? Say you were expecting two more kids in the coming year, could you really stay with the Barina? Or are you actually needing to reassess the use of your car to a larger model. Does it make sense to buy an older larger car that will need replacing after a few years, or to get a new car that will still have a good resale value once the first batch leave the nest?

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