Thursday, February 4, 2016

FTTN vs FTTP (6): the graphical version

After attending a Data Visualisation workshop at University of Melbourne this week (Resbaz 2016; D3 Visualisation workshop, workshop; Thanks Isabel and Errol), I have tried to plot graphically the FTTN vs FTTP perspectives. See my outputs here from this week's workshops.

Through playing with the model (available on figshare (v5)), the most important variables seemed to be:

- impact on GDP per household after 20 years
- discounted by an interest rate (0,3,5,10%)
- impacted by a delay in FTTP rollout (0,2,4,6,8 years)
- impacted by Household GDP growth (0,1,2%) externality

as discussed in earlier posts. FTTN (blue) vs FTTP (orange). Some assumptions support FTTN (blue). Other assumptions support FTTP (orange).

Datapoints: GDP per household at Yr 20, discounted to current $$; difference FTTN -  FTTP
eg 1. At Year 20, FTTP Delay = 8 yrs, 0% discount rate, FTTP and FTTN GDP impact is $20k per household. Difference is close to $0. A datapoint of $0 is plotted;a brown dot. Where FTTN GDP > FTTP GDP then plot is blue (positive nos). When FTTN GDP < FTTP GDP impact, then plot is orange (negative nos).
eg 2. At year 20, Delay = 6 years, interest rate 5%, household GDP impact 1% pa; FTTP GDP impact is: $13k; FTTN GDP impact is $20k. So the difference ie $7k is plotted; a light blue dot.

The dots are smoothed into colour sections. Blue sections where the assumptions favour FTTN (preferred by the Liberals Party, in conjunction with HFC, some FTTP and other wireless tech for Regions and Remote) and orange sections where the assumptions favour FTTP (preferred by Labor Party). Live version of image, with mouseover datapoints at: Figshare (v5) to download, and Github to view.

Click pic to enlarge

Figure 1,2,3: Stronger colours indicate more value. FTTN vs FTTP GDP per household impact at Year 20, discounted by interest rate; Y axis shows interest rate (discount rate). X axis shows years delay until FTTP installed. Orange zones indicate FTTP preferred. Blue zones indicate FTTN preferred, per model (linked above). Heatmap coded added to Figshare model (v5). Html version shows GDP values at each point. Blogger unfortunately doesn't run javascript. See live heatmap version here.

var data = [{
  z: [[-12, -9,-6,-3,0],
       [-9,-6, -3,0, 2],
       [-7,-3.5,-1,1.5,3]]; // GDP diff FTTN - FTTP $k per HH, 0% HH GDP imapct

  x: [0,2,4,6,8], // Delay years
  y: [0,3,5,10]}; // Discount rate
z: [[-12, -6.5,2,5,11],
       [-9,-3, 2,7, 11],
       [-7,-1,4,7.5,11]], // GDP diff FTTN - FTTP $k per HH, 1% HH GDP impact
z: [[-12,-4, 5,14,22.5],
       [-9, 0,7,14, 20.5],
       [-7,1,8,14,18]], // GDP diff FTTN - FTTP $k per HH, 2% HH GDP impact
Source: Figshare model (manually entered from model into heatmap html);
view source on Github page.
What the above figure shows is:
  • at 2% impact on household (HH) GDP ($70k household) then FTTN is highly favourable, even if only short two year delay. The HH GDP annual impact $1,400pa is much larger than around $2,000 difference between FTTN and FTTP capex and dwarfs OPEX and revenue differences.
  • at 1% impact on HH GDP, a four year delay in FTTP installation is sufficient to favour FTTN over FTTP.
  • at 0% impact on HH GDP, then FTTP is favourable even with long delays to FTTP. At higher interest rates, then a shorter delay for FTTP is equivalent to FTTN.
In previous cost benefit analyses of NBN, a 0.5 - 1.0% impact on GDP was sufficient to make the NBN NPV positive - ie benefits exceed costs, accounting for time impact of cashflows. At these lower household impacts, FTTP is preferred, but where there are immediate significant household GDP impacts ( ie more than 1%) then FTTN is preferred. Long delays in FTTP encourage more use of FTTN, as do higher interest rates.

NB: outstanding and unaccounted for issues were described in the last post, eg cost of replacing FTTN at the end of its perhaps 10 year life; the excess benefit of FTTP over FTTN, and so on.

FTTN and FTTP are only as good as the assumptions that assert their case.  There are many cases, listed above where FTTN is better than FTTP for GDP over 20 years. Where the NBN impact on household GDP is significant, this prompts an earlier install of FTTN.

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