Thursday, February 29, 2024

Research Data vs VRIO; valueable, rare, imperfectly imitable and non-substitutable

... in progress....

What is VRIO?

Source: Jay Barney 1999? 

Haven't heard of VRIO, but sounds derivative of Michael Porter's work on Strategy. And especially Resource Based Theory. And especially whether resources are: (in order to Achiev[e] a sustainable competitive advantage)

  • Valuable - they enable a firm to implement strategies that improve its efficiency and effectiveness.
  • Rare - not available to other competitors.
  • Imperfectly imitable - not easily implemented by others.
  • Non-substitutable - not able to be replaced by some other non-rare resource (which looks like or very close to VRIO) There's a very big rabbit hole to go down here....

    Is Research Data intended to give SCA(sustainable competitive advantage)?

  • - the business of research
  • - the research of business

    How does competition relate to research?

  • - competing for grants
  • - competing for promotion
  • - competing for having answers generally accepted
  • - competing for policy influence
  • Friday, March 10, 2023

    China's broadband approach; FTTP makes a difference

    China over the last ten years has rolled out a superfast fibre-based broadband network, while Australia, who aspired to something similar, took a commercially conservative approach - abbreviated by the Coalition Government to "better, faster, sooner". At the time the Coalition won the 2013 election, China decided a FTTP network was the right approach. This approach is now showing up (ten years later) in the Global Rankings, Speedtest Global

    China is now in the Top 5 of countries (median speed: over 200Mbps) and has two of the Top 5 cities; Beijing and Shanghai; averaging close to 250Mbps). The median speed means 50% of users get faster than 200Mbps. Australia after some 15 years of NBN rollout, still sits (as a country) at around 80 in the world, with a median speed around 50Mbps. Our fastest city, Sydney, scrapes into the Top 100 cities in the world - slightly behind Kathmandu, Nepal (#92), Dehli, India (#87), Kharkiv, Ukraine (#85) and Moscow, Russia (#58).

    See  my dataset where I track Speedtest performance since 2017, for Australia's Top Ten trading partners. Partners include: US, China, NZ, UK, Germany, Thailand, Japan, South Korea, India and Singapore.

     

    Figure 1- 2017 to 2022 Speedtest Global (China, US, Australia) - Accelerating China fibre use

    China's Fibre Timeline

    YearResult
    2012 20M Fibre Users[1]
    2013 Broadband Strategy [1a]; 2015 Aim 20Mbps speed; 50% of Urban use. By 2020, Aim 50Mbps plus 50% at 100Mbps plus some gigabit.
    2014 34% on FTTH; 68M users [1]
    2015 57% on FTTH; 120M users [1]
    2017 84% on Fibre; 289M users; 39% at 100Mbps or faster [1]
    2019 91% on Fibre; 396M users; 77% at 100Mbps or faster [2]
    2020 93% on Fibre; 417M users; 85% at 100Mbps or faster [2][3]
    2021 93% on Fibre; 489M users; 93% at 100Mbps or faster; 34M gigabit [4]
    2022 93% on Fibre; 554M users; 94% at 100Mbps or faster; 92M on gigabit (16% of total) [4]
    June 2023 641M users; 94% at 100Mbps or faster; 128M on gigabit (21% of total) [5]
    Reality 1: Source: "Applications for it are pretty minimal ... It’s like putting a supercharged V8 on an ebike and driving it around Shanghai during rush hour. Like, yeah, in theory you could go super fast but the reality is less exciting."
    Reality 2: Source: "I usually don't bother with super highspeed internet in China since the bottle neck is your VPN (50Mbps)."
    SOURCE:
  • [1] CNNIC; 2017
  • [1a] China Broadband Strategy
  • [2] CNNIC 2019
  • [3] Tweets: Graph 2017 Graph 2019
  • [4] Tweets: Report Mar 2023
  • [5] Tweets: Report Aug 2023

  • Wednesday, May 4, 2022

    Value in elections; Australia's 2022 Electoral Advertising

    Gathering the data before the Aust 2022 election on May 21.

    Data:

    Friday, December 17, 2021

    Apple, AR, Cars and Value

    This post analyses why Apple may be interested in AR and developing a car. It structures my thoughts about both these potential technologies and why they might be attractive to Apple to create a product. Apple has been working on both technologies for a number of years, and invested thousands of hours and people's time into efforts to bring these technologies to the Apple community. 

    What does Apple say it will do? See case on Apple and Value in my book The Value of Value.

    Apple says it:

    - will "continue to make the best products in the world that delight our customers and make our employees incredibly proud of what they do" (Tim Cook 2011) 

    - is "unwilling to cut [corners] in delivering the best customer experience to the world. [It's] this relentless commitment to innovation and excellence [that] is the reason that our customer[s] choose our products and this will always be the driving force behind Apple... we remain very confident in our strategy and will use our world-class skill and hardware, software and services to delight our customer[s]" (Tim Cook 2012 Q4 Earnings Call)

    - "priced [iPad Mini] aggressively... delivering incredible value to our customers" (CFO Oppenheimer 2012 Q4 Earnings Call)

    - "will not make a product that somebody may feed good about it for the moment that they're paying for and then when they get it, they really ever use, that's not what we're about" (Tim Cook 2012 Q4 Earnings Call)

    - wants to build great products (Cook 2012), not the most products

    - wants to show "just how much we care" (Jony Ive in Macbook Pro unibody video and Grobart 2013)

    - "we will only do a few things... where we can make a significant contribution... to society at large... [with a] maniacal focus on making the best products... enriching people's lives" Cook in Tyrangiel 2012.

    - "very very simple focus on trying to make something beautiful and great." (Jony Ive on  Steve Jobs in Bergen (2015)

    - "instead of encouraging ..  or permitting a thousand ideas to bloom, Jobs insisted that Apple focus on just two or three priorities at a time - Ch. 35 Steve Jobs (Isaacson 2011), or "there are a thousand no's for every yes" (Jony Ive, AZQuotes)

    Other things that Apple do, but not say are;

    - create new user interfaces for mass markets eg mouse and WYSIWYG for Macintosh, touchscreen in ios/iPhone, digital crown in Apple Watch.

    AR 

    AR is glasses (or other projections) where digital objects are represented within our field of vision. That is traffic directions may appear as floating arrows directing us which way we need to go. Or our phone or computer screens are represented as floating in space rather than attached to physical output devices. Currently Apple provides AR on an iPhone as digital objects the phone can represent as the phone is directed around the user, using the sensors to tell in which direction and which angle a phone is pointed. Apple makes 3D AR versions of products, such as Macbooks, or logos of Apple Events. Thus in Pokemon Go, a pokemon may appear in front of us on the phone screen, in a certain direction and of a certain size.

    What problem does AR solve? AR can provide contextual information in the context of place, direction and angle. AR can also provide a larger if not endless screen for users. Rather than a 27" monitor, or a 50" or 65" 4k television (as monitor), AR can provide a 360* immersive screen, up to the sky and down to the floor. This can enable more content, and some users have large content use cases, such as brokers who have multiple screens or control rooms which have many gauges and dials to read. Similarly on our phones we have multiple messages, emails, posts to read. Each one could be represented as hanging in space rather than in a list, where we only see the title. Extra screen size of AR could enable a home for each message, each communication we receive.

    Does AR have application for a large number of users?

    iPhone is used by a billion customers, whereas Mac perhaps has only a hundred million users. How many customers might use AR? Does Apple care if only a proportion of iPhones users use AR? Will you need an iPhone to power AR - initially? eventually? 

    If all our messages were shown separately, then this view could be useful for anyone who has large amounts of messages, emails, tweets or texts. This could potentially benefit large numbers of users

    Can Apple make a significant contribution?

    AR may provide new use cases, not just of output but of input. AR could record our surroundings instead of displaying over our surroundings. For instance, AR could record our activity, including identifying objects we see, and classifying their location. So when/if we lose our keys, we can go back to the last time we saw our keys. Where did I put X? But this is a very niche action, that may perhaps only be used once a month.

    Another function of AR glasses would be as corrective lenses. If AR could correct what we see, so that we would never need to buy another pair of glasses, that is perhaps hundreds of dollars value. That could also potentially enable a new user interface to sharpen our vision to bring the world into focus. A potentially high impact contribution for users.

    What user interface could Apple use for AR? 

    If AR works through glasses, and has an unlimited screen space, then how does a user control that space? We could wait and see, but it is interesting and fun to speculate how to control such space. Could your hands control the space, like Tom Cruise in the movie, Minority Report (youtube link)? Could our fingers type on a floating keyboard?  Would voice make sense, dictating our commands, and text? Could our eyes and blinking control actions, looking and blinking to select and choose? Could a finger control a trackball on a ring? Or a finger touching a fingertip? 

    Update: Apple launched its AR Product - Vision Pro - on 2 Feb, 2024 for $3500 USD. About 200,000 units were sold in the first weekend.

    Cars

    Why would Apple make a car?

    Some underlying technologies of an electric car are like Apple technology - lithium batteries, cameras, screens, control software, power management, hardware design, user testing, meeting consumer needs. But why does this need to be a car? Could it be an electric scooter? An electric trike? As John Gruber suggested an electric autonomous robot, for inside the house? Electric skateboard? Electric roller skates?

    What problem does an Apple Car solve?

    Does an Apple Car have application for a large number of users?

    Can Apple make a significant contribution? See my recent thoughts. Maybe this market isn't a big enough opportunity for Apple to make a difference.

    What interface could Apple use for their car?

    Update: 28 Feb 2024 - Apple announced its car project, Project Titan, would be closed and many staff transferred to its AI, generative AI initiative.

    More to follow....

    What is the value of a dog?

    In Melbourne this year, we have had a lot of lockdowns, so one highlight this year, was the addition to the family, of a dog called "Banjo". His mother was a Kelpie, and his father was a Blue Merle Border Collie (see pic below). We say he is Border Collie at the front end (black and white and merle underneath), and Kelpie at the back end (black). He arrived in late June, a sprightly, fluffy 6kg, and now at year end, he was recently weighed at 16 kg. The lockdown has meant he has been mostly at home with us, while I work from home (like today), but he cries when he is left at home, and it breaks my heart. He is so joyous when we come home; wagging and dancing and rolling on the floor, getting much love and pats.

    Banjo (8mths) is loved.

    What value does a puppy bring?

    Love at first sight (8 wks)

    Of course, love - he is a new child in the family (to extend our only child little world), but one that grows faster than a human. By the time he is one year old, new research suggests a puppy is equivalent to a human at 40; past childhood, teenage and early adulthood.

    He is a new chore, to be fed, walked, played with, his waste managed.

    Banjo is a new threat, stealing clothes especially undies and dirty socks (the smellier the better), chewing Christmas presents under the tree, destroying a shoe, pulling clean clothes off the inside drying clothes rack.

    He is still a delight, sitting under my feet as I type, chewing a toy. He will sit on the bed, leaning on me as I read. He now sleeps in a bed in our bedroom, now accidents are less likely during the night. I did not expect that a working dog would be so relaxed. He will happily lie at our feet as we watch tv at night, sometimes cuddling up to us as we sit on the couch; where he also often curls up, for family time.

    Banjo's Parents

    Banjo is an exercise regime, making me walk, throwing his favourite ball.

    The Litter
    The Litter

    After ten throws, (chasing and some retrieving of the ball) at the park a few minutes away, he can pant for 30 minutes recovering from summer heat.

    Banjo is a learning exercise, as we all struggle  to communicate with him, train him to sit, bring the ball back, and when we leave home, the recent challenge is not to bark and disturb the neighbours.

    Banjo is also a tool; he experiences the world quite differently to me - acute hearing, a nose when he walks that chases many scents, which evade my senses, and when there is a ball or a stick involved - he becomes a laser focussed, one trick pony who has only eyes for one thing. Chasing a ball his feet thunder past, like a racehorse.

    Banjo is a financial cost; he was $500, plus shipping ($200) and came on a plane from Queensland, a two hour flight away, but was born, some 20 minutes drive from where my mother was born and now rests. Coincidentally, we were visiting my Mother's gravesite, on the day Banjo was born, not 30 minutes away, but did not meet him in person until ten weeks later. It cost another few hundred dollars to outfit our house for Banjo - a crate to sleep in, food, toys, leads, vaccinations and monthly worm, fleas and tick treatment ($20 per month).

    So Banjo is cost, love, duty, family, fun, time, novelty, and a power tool. So Banjo has many types of value, and overall the love suggests a strong positive emotion. Yet he also causes problems, yet these are overwhelmed by the positive feelings he generates.

     


    Friday, April 9, 2021

    Where are we at with the NBN?

     It has been nine months, since we passed the target build completion date for the NBN. In the half-yearly report, NBN generated a $0.4B positive EBITDA (effectively cashflow from operations), largely due to declining Subscriber Costs (down $0.6B), and increasing revenue (up $0.4B), while CAPEX is also close to half the previous year, declining from $2.5B to $1.4B for the half-year.

    NBN also commenced a post-build investment of $4.5B, announced in the Sept Corporate Plan, with headlines of enabling 75% of the fixed line network to reach gigabit speeds (the highest offered). This will enable all the FTTP, HFC and FTTC (and maybe FTTB) to reach the fastest speeds, and a proportion of the FTTN to be upgraded to enable an FTTP overbuild. There is $700M for regional business fibre hubs, and $300M for co-investment with rural and regional communities.

    On the demand side in 2020/21, there has been a significant slowdown of brownfield's new signups (See Figure 1; 2021 Avg 206k/Qtr, 2020 Avg 393k/Qtr, 2019 336k/Qtr, 2018 355k/Qtr):

    • Q1 20 - 325,000 additions
    • Q2 20 - 250,000 additions
    • Q3 20 - 130,000 additions
    • Q4 20 (budget) - 120,000 additions. Around 1% of 10M ready to connect premises.


    Figure 1 - NBN Consumer adoption (2016 - 21); Source NBN Weekly Summary. Data: Google Sheet.


     

    Figure 1a. - NBN Brownfield Additions 2021 - significantly slowing. Source/Data: per Figure 1.

    NBN retailers (RSPs) are being consulted about NBN's proposed pricing, looking forward for two years, and continue to complain about CVC variable costs, which put pressure on RSP margins, if consumers are not increasing their plan speeds and prices. Both Senate and large RSPs are keenly interested in the potential for NBN to reduce reliance and exposure to rising CVC costs due to increased consumer data demand.

    NBN revenue is nearing a $5B annual rate, with more boost from business usage (inc new fibre zones), and demand for consumer speed increases. NBN #FocusOnFast is the 2021 plan to lift subscribers from 50Mbps to 100Mbps and above, through a six month discount of $20-30 on the most expensive plans; reducing gigabit retail prices from $149 to $119, and 250Mbps from $129 to $99, and 100Mbps from $99 to $89 per month. These plans are mostly for unlimited data, so can incur greater CVC costs, though NBN bundles more CVC with the fastest plans to encourage higher plan usage.

    Current NBN penetration, given slowing additions, are at the following rates (see Figure 2):

    • Brownfields - 71% and slowly rising (2020 - 64%)
    • Greenfields - 66% and steady (2020 - 64%)
    • Wireless - 57%, jumped from 2019, but now slowly rising (2020 - 53%, 2019 - 43%)
    • Satellite - 26%, very slowly rising (2020 - 23%, 2019 - 21%)

     


    Figure 2 - NBN adoption by Technology (2016 - 21); Data NBN Weekly Summary: Google Sheet

    So NBN is reaching a revenue headwind period, where revenue growth will become more challenging, (and expensive) and come from:

    - new additions; new homes in Greenfield sites, or 1% organic growth in Brownfield sites, plus some potential for growth in Satellite and Wireless usage

    - lifting consumers to higher speed plans (increasing ARPU); with discounts to entice usage of faster speeds (#FocusOnFast); which will also be impacted by levels of NBN satisfaction

    - engaging more businesses on to the NBN (increasing overall ARPU); but which will require investment in a Business Sales force.

    A lesser opportunity for growth is through CVC, where rising consumer data usage incurs increasing CVC, which can either squeeze RSP margins, if prices are inflexible, or create price inflation, which could reduce demand and/or decrease satisfaction.


     Figure 3 - Sales and NBN Users - Corporate Plans (2016 - 24). Data: Observable

    Other issues:

    - NBN is refinancing its $20B debt with the Commonwealth, with private debt by mid-2024, and has also raised $10B private debt at low rates, enabling the post-build investment, and retiring of some Commonwealth debt.

    - NBN faces increasing competition from both 5G in slower FTTN suburbs, and more rural wireless sites, and LEOs in the Satellite footprint, but the $140 per month LEO pricing will be more attractive to higher end consumers or businesses. 

    - ABAC: The Minister, Paul Fletcher has appointed an Advisory Council to provide guidance around broadband generally and ABAC released its first report, Riding the Digital Wave. The Council will focus on specific industries eg Agriculture and Health, plus Digital Inclusion, Digital skills and small/medium businesses. (p.3)

    - In global competitiveness, Australia still compares poorly  (Data: Figshare) against our top ten trading partners in average national speeds (per Speedtest Global), though Feb 2021 saw a 20% increase in Australian national average download speed (from 59Mbps to 71Mbps; which looks like a year's growth in two months), perhaps from more gigabit services coming online. The speed jump would equate to about 1% takeup of gigabit plus 1% superfast (250Mbps) services; significantly higher (8X) than the 25,000 over 100Mbps services the ACCC reported at Dec 2020. ACCC's March report (expected late May) will provide takeup information for over 100Mbps services.

    Comparing Broadband Speed with Trading Partners

    Speedtest has made its data available globally (in anonymised 600m^2 blocks), so it is possible to see distributions of speed across the country. This enables our cities to compare with our Top Ten Trading Partners eg Shanghai, Bangkok and Los Angeles. Melbourne, for instance, has far slower distribution of broadband services compared to these overseas cities.


    Figure 3. Comparing Speedtest results of Australian and Top Ten Partner cities, Q3 2020 (Data; Figshare | Pic: Twitter thread).

    Further work - Broadband performance data (Speedtest) vs NBN Technology

    An activity to compare NBN technology maps (see https://www.data.gov.au/dataset/national-broadband-network-connections-by-technology-type) (showing regions of FTTP, HFC, FTTC, FTTB, FTTN etc) and average Speedtest results is underway. This will produce maps of Australia cities, showing distribution of speeds, and eventually average speed by NBN technology. There is also a plan to compare broadband speeds with SEIFA index, the socio-economic index of areas, to see if broadband speeds vary by wealth of neighbourhoods.


    Figure 4. Speedtest results across Melbourne Q2 2020; colour coded by speed (Data Figshare; Source: Twitter).

    The results show speeds vary across the city, with patches of faster broadband, north of Geelong, and in outer west, and in wealthy inner-east suburbs and slower on the fringes of the city, but across the suburbs, your mileage will vary. See Twitter thread for more images and analysis. This data is also loaded to the AURIN geospatial workbench, where Australian researchers can access the data online (Figure 5).


    Figure 5: Speedtest data available at AURIN geospatial workbench (Data/Image: Figshare).


    Figure 6: Speedtest data Q3 2020 - AURIN - three colour (less than 20Mbps; grey; over 90Mbps; blue; Rest = red) (Data/Image: Figshare).

    Friday, November 6, 2020

    Has FTTN paid for itself?

    I will analyse Communication Minister Fletcher's recent claim that NBN's FTTN has paid for itself. FTTN is the poor cousin to FTTP, the gold standard of broadband. Where FTTP is capable of terabits per second (10 ^ 12 bps), but twice as expensive as FTTN to install ($4000 vs $2000),  in contrast, FTTN suffers from degradation over distance from the fibre at the node, so 1/3 get very fast (<500m; up to 100Mbps and a bit more), 1/3 fast (500-750m; up to 50Mbps) and 1/3 slow (>750m; less than 50Mbps). NBN's plans in 2020 include enhancing half of NBN's FTTN footprint with fibre on demand, and upgrading FTTC and HFC to gigabit speeds, giving 75% of NBN's fixed line customers access to gigabit speeds.
     

    Background

    FTTN is one of the fixed line technologies, NBN (the National Broadband Network) uses to deliver broadband to Australian homes. It is part of Australia's MTM (multi-technology mix) approach that aims to deliver broadband to Australians at lowest cost to the Government and as early as possible, ensuring that nearly all Australians were ready to connect with broadband when the COVID-19 pandemic arrived in 2020. In contrast, Australia's prior government envisioned an NBN with largely FTTP broadband delivery, which is more expensive to install, but capable of very high speeds over potentially future decades. 

    FTTN uses copper phone lines to deliver the last stretch of broadband, while FTTP takes fibre right into the house. The longer the copper, the more the interference through the medium and the slower the broadband speeds to the user. NBN Co reported in its Corporate Report 2021 that FTTN users fell into one of three categories; 1. 1.2M who could get 100Mbps; 2. 1.9M who could get 50Mbps, and 3. 1.0M who could only get the baseline 25Mbps. FTTP in contrast currently enables 1000Mbps, with some countries now activating 10,000Mbps access speeds over fibre. 

    Australia's current government argues that most households are satisfied with their current access speeds, but are providing a way forward, as households demand higher speeds. NBN for instance launched cheaper 250Mbps and 1000Mbps services in May 2020, which attracted a few thousand new subscribers to these high speeds, and may have caused a 25% uptick in Australia's average broadband download speed.

    Upgrades Corp Plan 2021-24

    Following NBN Co's completion of the volume rollout in 2020 (99% complete, with 100,000 more difficult premises to finish), its Sept 2020 three year Corporate Plan announced investment to lift Australian broadband performance. To that point, NBN's goal in its Statement of Expectations was to provide all premises with at least 25Mbps by 2020, and 90% of fixed line premises with 50Mbps (as soon as possible). The Corporate Plan announced several investment strands, including:

    - business zones where businesses could get fibre services connected for $nil upfront on committing to a service

    - upgrade to HFC and FTTC technologies to gigabit service levels

    - upgrade of 50% of FTTN footprint to enable fibre on demand, when customer demands a fast service, which its FTTN can not provide, for $0 install cost to customer.

    Minster Fletcher

    In announcing the NBN Co Corporate Plan and committed investment, Minster Fletcher stated:

    "By 2023, the FTTN network will have generated $9 billion in revenues, cost $7.3 billion to build and $1 billion to operate. FTTN will have effectively paid for itself - and will continue to provide a very good service to millions of premises for many years, generating cashflows well into the future". CommsDay Speech, 27.10.2020. 

    Let's look at the "paid for itself" claim. 

    Assessing the claim

    The claim consists of three parts;

    - FTTN has generated $9 billion in revenue - I agree

    - FTTN has cost $7.3 billion to build - my estimate $11 billion

    - FTTN has cost $1 billion to operate - my estimate $2 billion, but full costs add another $20 billion.

    Revenue

    The NBN has generated $10 billion in revenue in the last five years (2016 - 2020); NBN Co Annual Report 2020, p.56. Over the next three years, NBN is budgetted to generate another $15.6 billion (Corporate Plan 2021, p.54). NBN revenue can be prorated by the types of technologies to apportion their revenue by technology type. At 2020, FTTN/B has 3.1 million activated premises from a total of 7.3M active connections - 42% of connections. By 2023, FTTN drops to 36% of connections as another 1.5M premises are activated but very few are FTTN (less than 10%). A first cut estimate of FTTN revenue is 43% of pre 2020 revenue, and 36% of post 2020 revenue; equating to about $9.6 billion. So close to Fletcher's claim.

    Build Cost

    NBN reports cost per premise (CPP) by technology. Per NBN Corporate Report 2020, NBN had 4.7M homes serviced by FTTN/B as CPP of $2340 (NBN Corporate Plan 2020, p.52). This gives total Build Cost for FTTN of about $11 billion. Added to this should be a proportional share of common CAPEX. The 2020 Annual Result presentation shows Commons CAPEX at only around 10% of total CAPEX, so would only make a minor difference. The NBN Annual Report does not break down Network assets by network technology type, nor identify levels of common capex. But NBN shows on their books a network worth $42.5 billion less $9 billion depreciation, for 11.7M premises ready to connect - an overall average of around $3600 per premise. So, overall the Minister's claim of FTTN costing $7B to build seems low compared to my $11B estimate.

    Cost to Operate

    In 2020, NBN reported Direct Network Costs of $641M, about 30% of total Operating Costs ($2.0B) NBN Operating Result Presentation 2020, p.11. From 2016 - 2020, NBN reports Operating expenses totalling $9.4B (NBN Annual Report 2020, p.56). Using the 42% share of revenue as above, the FTTN share of Operating Expenses would be around $4B, and likely direct network costs at 30% of $1.2B. For 2021 - 2023, Operating Expense can be calculated as Revenue - Subscriber Payments - EBITDA or ($15.6B - $1.4B - $8.6B = ) $5.6B. The FTTN share at 36% would be close to $2.0B, with Direct Network Costs (30%) around $0.6B. So my estimate of total Direct FTTN Network costs of ($1.2B + $0.6B) around $1.8B, close to double Minister's Fletcher's estimate.

    However,  how much of non-direct Operating Expenses should be attributed to FTTN. Should it include employee costs (around 30% of operating expenses), subscriber acquisitions costs (close to $10B). Addition of these costs would increase FTTN related expenses to $2B (employee costs) and roughly $4B for related subscriber costs). There is also depreciation and interest cost incurred by NBN, which in 2016 - 20 are in the order of $15 billion. A share of FTTN would add another $6B to FTTN's bill. Thus total expenses related to FTTN would be closer to $14B (2016 - 20) while the direct costs to operate, I estimate are around $2B (2016 - 23). To add the 2021 - 23 portion of FTTN costs, would add another $2B of employee expenses and 3/5 of depreciation/interest, so close to $3.5B. Grand Total Expenses: $21.5B  Thus the $1B FTTN Cost to Operate is extremely light on in excluding employee costs, subscriber acquisition costs, depreciation and interest, understating total costs by close to $20 billion over 2016 - 23.

    Conclusion

    Thus I would argue that FTTN has not paid for itself. Even with a narrow view of network operation costs, margin earned by FTTN services has contributed around $7 billion to NBN operating funds, while I estimate build costs at $11 billion. A fully expensed costs of FTTN is closer to $20 billion for 2016 - 23, including employee costs, depreciation and share of subscriber costs.