{"id":3817,"date":"2011-09-21T17:29:41","date_gmt":"2011-09-21T07:29:41","guid":{"rendered":"http:\/\/michaelwyres.com\/?p=3817"},"modified":"2011-09-21T17:29:41","modified_gmt":"2011-09-21T07:29:41","slug":"a-simple-nbn-maths-lesson","status":"publish","type":"post","link":"https:\/\/michaelwyres.com.au\/mwdc\/2011\/09\/a-simple-nbn-maths-lesson\/","title":{"rendered":"A Simple NBN Maths Lesson"},"content":{"rendered":"

Amid all the bickering, postering, bleating and prognosticating over Australia’s National Broadband Network<\/a> (NBN), there has been one thing missing from a lot of the arguing.<\/p>\n

A simple and clearly defined explanation of where it will make its money back.<\/p>\n

Many claim it could never justify its cost, including the federal opposition who said the government should just take the money and build some freeways<\/a>.<\/p>\n

The problem with freeways, is they cost billions of dollars, and the money spent never comes back – (unless it’s a toll road) – though of course their mere existence provides economic benefit, presuming they were needed and done the right way.<\/p>\n

The NBN too, is a freeway – (or that terribly clich\u00e9d “information superhighway<\/a>”) – the mere existence of which will also provide economic benefit to Australia. The main difference is that the NBN will make money, because it will be a “toll road”.<\/p>\n

People will pay money to use it – so therefore all of the money will eventually be recouped. The question will be how long will that take?<\/p>\n

Difficult to answer, and the jury is still out.<\/p>\n

For basic internet services, NBN Co will be charging ISPs for two components – the “AVC” and the “CVC”. CVC pricing is contentious, and difficult to model since different ISPs will invest in this part of the service in different proportions to others.<\/p>\n

But the basic AVC wholesale price is $24.00 per month for a 12Mbps\/1Mbps service. We know this, and this is the exact per user price as it stands right now.<\/p>\n

The NBN will eventually cover approximately 12,000,000 premises, so lets do some really simple maths – and presume that only 50% of all premises take up a service, and they all take up only the basic service:<\/p>\n

<\/p>\n

To explain the graphic above:<\/p>\n