Tuesday, April 3, 2018

Is there a business case for the National Broadband Network?

I made a model to calculate the value of NBN for the Business Case Inquiry, using an online calculator(JavaScript) called an Observable Notebook.
See introduction to Observable Notebooks at: https://beta.observablehq.com/@mbostock/five-minute-introduction

I had a class in Feb at Melb Uni which showed these HTML sliders controlling the colour of a box; https://beta.observablehq.com/@maegul/basic-html-and-viewof-play and I thought it would be cool if you could make a model of NBN's finances and use a bunch of sliders to check out various scenarios eg

  • people leave NBN for mobile
  • people leave/stay with FTTN because too slow/good enough
  • when to replace FTTN with FTTC/FTTP (I ended up using two sliders. One to put $$$ aside to replace FTTN, as % of cash profit. The other is what to replace FTTN with, FTTC or FTTP or mix.)
So I wondered with a bunch of sliders, say six, could you model 100M possible scenarios.

As I say in my submission:
This submission introduces an online model which describes financial scenarios of NBN’s business over the next 20 years; including replacing FTTN with FTTC/FTTP, repaying debt, upgrading to gigabit services and the potential fallout of not replacing FTTN, to calculate NBN’s financial value under these different possible futures.

Figure 1. NBN Cashflow graph and four sliders.

Here the Observable model is - NBN Financials from 2021 on. The model rates a Base Case value of NBN at $31B. https://beta.observablehq.com/@areff2000/nbn-financials-from-2021-on-v5a-verbose-off

I was so rushed getting it finished, and 5pp summary(see figshare link) for NBN inquiry, didn’t think to share here, at Whirlpool, for comment. I should have.

Here is the link to the version with explanations; https://beta.observablehq.com/@areff2000/nbn-financials-from-2021-v5-on

Key findings of the model

  • NBN cash profit(EBITDA) after 2021 $2.44B per year
  • can afford to replace FTTN In 6-8 yrs depending on FTTC/FTTP, if not repaying debt
  • each loss 1% of customers worth $1B in NBN value
  • gigabit services can add $20B to NBN value
  • FTTN replacement pays for itself if 30% of FTTN users upgrade to gigabit
  • customer satisfaction has big impact on NBN value
  • where gigabit costs 2* avg ARPU...but higher margin...
  • Model suggests NBN will have enough $$$ to replace FTTN, if don’t have to repay debt urgently. Otherwise run into FTTN end of life and possible loss of customers...
Disclaimer; model had no tax, interest, inflation, price rises, but was built in four weeks, so there you go. The next thing I would add would be interest on debt, and a slider for the rate, to add a time dimension/penalty to the replacement of FTTN.

Any comments, as usual, appreciated.
rf


Links:
Twitter mention: https://twitter.com/valuemgmt/status/979110826643660800?s=21

Thursday, February 8, 2018

Why walk on the footpath when you can walk on the grass? ...a value choice...

Walking to the train this morning, I noticed the long grass verge next to the footpath, as if for the first time. They are upgrading the train near my house, so for the last three months I have had to walk for ten minutes to the 2nd closest train station. It is summer here, and so I had my slip on shoes on to keep cool.

On a whim, I took my shoes off, and walked on the grass instead of the footpath. My 900m walking commute suddenly became a walk in the park. #shoesOff The footpath in bare feet seemed alien and unfriendly. The grass, while uneven and coarse, I realised was gently massaging my feet.

I realised how dull my feet felt in shoes on pavement. While barefoot on grass, I felt more alive, more in touch with nature, more normal.

Then a young woman, headphones on, frightened me as she scooted past on the footpath, walking briskly. Left Right Left Right, she was soon gone up the road, as I ambled along enjoying the tickle of the grass on my soles.

Aha. I was having a value moment. In that choice between grass and concrete, between fast and slow, between smooth and bumpy, we were each finding our value. Hers was quick and smooth and efficient, while mine was bumpy, slow and (like an Aussie wit) laconical. Her value was functional while mine was pleasureable. Hers was a means to an end, while mine was an end in itself.

Monday, I will probably be scooting down the footpath, on a cooler day, socks and shoes on.

Value is thus an individual choice, in a perceived context, between value dimensions eg function vs pleasure, each according to their current momentary needs. That choice for me happened in an instant today, but not occurred to me over the previous three months.

Thursday, February 16, 2017

What do consumers value in smartphones?

As part of the Little Book of Value (#LBOV), I am writing a number of case studies, including:

- Value of smartphones - see draft case here
- Value of NBN; national infrastructure
- Value of new products (denting the universe); Apple and iPhone

The #LBOV is a collaborative writing project at Github, but the pics need to be on a URL, so I will post the pics here for linking from Github. Please add you Value stories as a link to this post, or other #LBOV posts on this blog.

Here are the images of what consumers valued in their smartphones. All images CC-BY.
Please also refer to my Phd at Ferrers (2013), full reference at: http://dx.doi.org/10.6084/m9.figshare.680002.



Fig 1. What do consumers value in smartphones? A small sample.


Fig 2. Count of value elements by consumer - the PhD sample.


Fig 3. Comparing value dimensions across consumers - the PhD sample


Fig 4. Theoretical saturation - Value Concepts - the PhD sample


Wednesday, February 1, 2017

NBN coming to Vic 3166 - I made a map. Here's how.

See the map (v.1) I made (with 40 datapoints) at:
https://twitter.com/ValueMgmt/status/827009730870521856 
I made a (v.2) map (with 60 datapoints) at:
https://t.co/zd8F86Z9am

Method

If you want to repeat this for your area, here's how I did it.

Getting Started

  • Lat/Long: I use a Mac, and its Map program provides an easy way to turn an address into a Lat Long. You can also use maps.google.com.
  • Spreadsheet. I used a Google Sheet. You can also load data into excel (csv) and drop into Google Maps.
  • Google Maps. You need a Google login for this.

Making the Map

  1. Create Google Sheet (or spreadsheet) with four columns
  2. A. Address B.Lat C.Long D. NBN Status – in rollout (yes/no)
  3. Get the Lat Long. In Apple Maps, pick an address, Drop a pin = Right Click. Click (i). Copy address into Column A. Copy Lat/ Long in Col B,C. Alternatively, in Google Maps, right click What's here to get the Lat/Long of any point. You can also find a Lat/Long with Google Maps API; by inserting and address into: http://maps.googleapis.com/maps/api/geocode/json?address=ADDR where ADDR = 12carlislecrescent,hughesdale,vic eg Link

  4. Paste address into NBN map checker:
  5. http://www.nbnco.com.au/connect-home-or-business/check-your-address.html
    This gives rollout status. In Hughesdale it was either (1) (Available: Apr – Jun) = yes or (2) (Still finalising) = no.

  6. Paste Address status (yes/no) into Col. D.
  7. Gather a list of addresses you want to map... I did about 25 before I made a map. Then the map helped pick where to check next.
  8. Go to Google Maps: https://www.google.com.au/maps/
  9. -> Menu -> Your places -> Maps -> Create Map -> Add Layer -> select Google Sheet -> indicate Lat/Long fields -> indicate NBN Status: Yes/No field
    This places all your address points on a map.
    Add a title and description to explain what area you are mapping.

  10. Colour code the points into different colours for NBN Status: Yes/No.
  11. Select Layer -> Uniform Style -> Uniform Style -> Style by Data Column -> Col D. (NBN Status).

  12. When you add new data to your spreadsheet, you need to (but maybe there is an easier way) readd the layer: Add layer -> select Google Sheet i.e. repeat Step 6,7. Delete the old layer: Choose layer -> layer options (three vertical dots) -> delete this layer.
  13. Add polygon to show the boundary of rollout for the region.
  14. Post to Whirlpool / Twitter for comments: Maps -> Share -> Change: anyone with the link can View – copy/paste URL

  15. Enjoy!

Friday, January 27, 2017

The Little Book of Value

I am writing a 75 page book on Value to publish by the end of this year (2017).


  • Will be $10 for the plain black and white text copy (eBook at Amazon).
  • Will be $20 for the colourful eBook, with videos, photos, exercises and more.
  • Will be free for the Community Version, where you earn a copy by contributing your value stories.


If you want to be part of the writing process, either:

- comment below with your email, and tell me "what do you value?", or
- make a three minute video and post the link below to the question "what does value mean to you"
- the writing process will be a public community exercise at Github.

By posting, you agree your content can be included (royalty free) in the above books. All included entries will earn the author, 10 copies of the book, so be sure to leave your email.

Add your comments to the wiki or fork the repository. Add your questions about value either in comments below or at Github.

You can see the outline at Github.

Happy New Rooster Year!!

Thursday, January 19, 2017

A new beginning: creating and destroying value

On the eve of the 45th Presidency, it seems appropriate to reflect on the potential for innovation to create and/or destroy value. [1]

I have long argued here that innovation is doing new things that create value. But many new things destroy value. For instance, a tweet saying a President-Elect will cancel a $5B contract sends a company share price down as investors price that information into a stock.

It is harder to create value with new things. At ANDS, we work with Universities to promote the new idea of #openscience and data sharing as a value creator. The idea takes time, effort and investment to implement, which are costs. These costs have uncertain returns, so may create or destroy value. As Gilder suggests, the entrepreneur takes a leap into the future ("Faith of the Futurist", Wall Street Journal, 1999), reaching out to grab some uncertain future potential value.

Of course, Schumpeter talks of "creative destruction" (1942, Capitalism, Socialism and Democracy). So a new industry or product negatively affects what came before. Cars puts horses out of work, as did farm machinery. Agricultural labour fell from 70% of the population to low single digits (say 4-5%) as machinery and mechanisation raised the amount of work a farmer can do. The losses of jobs are destruction of value. The raised productivity of the remaining agricultural workers add value. Similarly, Rogers in Diffusion of Innovation (1962, 2004), quotes Machiavelli, saying (I paraphrase), a new idea has the lukewarm interest of those who may benefit and the criticism (resistance) of those who benefit under the old regime. Thus new things benefit and harm people. New things, new ideas, new products both create and destroy value. The value of those benefiting under the old regime is destroyed (transferred) to those benefitting under the new regime.

The trick for innovation is when there is more than a zero-sum game. When the benefits outweight the costs. Generally we can see this through GDP as those benefits and costs are turned into dollar equivalents. However, value is not measurable in dollars alone. Social, emotional and other types of value exist alongside economic value (see Value Dimensions). So people are concerned, worried, anxious about the new Presidency and his potential actions. Such emotions are temporary negative value, that may be converted into economic value, with consumer outlook an intermediate measure.

What comes to pass, we will have to wait and see. For me, I have set my expectations so low, that I may be pleasantly surprised when a new President does something half sensible. New perspectives bring opportunity for new ideas, new interpretations, new approaches. It remains to be seen whether these will create or destroy value. There is always another election in four years (let us hope).

There is always risk and uncertainty in new things. So let us not judge a person by their words, (which fade away like flowers, the wind, or a wave lapping on the beach). Let us judge a person by their deeds, that will last. Let us let our emotions assess ones words, and tell us whether to like, trust or resist their actions. I have noticed that new leaders arrive full of new ideas, but a real test is what can be put into action, as those ideas have to pass through the value filters of those affected both positively (the promoters) and negatively (the resistors) to those ideas.  This is the social process of creating and diffusing an innovation. A process whereby the value in the idea is assessed by all those affected by it.

[1] I believe we have no word for something new, destroying value (maybe 'denovation', Valman 2009).






Monday, August 8, 2016

Where is the economy growing / shrinking? #AU

The Australian Tax Office (ATO) has recently provided me with a dataset to examine innovation in Australia. I am interested in economic activity over time and by location. Previously the ATO has provided corporate data, but companies are seen only as Australian, and not having a point or multi-point location. Employees however have an address which provides a point location.

Thus the ATO has kindly provided all the salaries and wages data (for 12 years), and sole trader data, by fine detailed industry and location. Sole Trader's have 500 industries and employees have 1500 occupations. Australian locations, while requested at postcode level, were provided at a statistical area level (SA4) which splits Australia into 100 regions of similar population. Cities have many zones, while the country has large zones.

See my request for the data here.

The resulting dataset has two tables:
  • Sole Traders (100,000 rows) 2014 $96B, 2002 $61B.
  • Salary and Wages (200,000 rows) 2014 $584B, 2002 $285B.
The raw data is available here at data.gov.  I have loaded the data into an online database at Nectar, which provides free cloud services for Australian Researchers. Preliminary analysis is taking place at a website set up for that purpose here. For SELECT access to the database please contact me.

Data Visualisation of the Industries of Sole Traders.


See details including rollover to get names of each bubble here.

A Data Visualisation of growth by SA4 region

Figure 1: Growth by SA4 region (2006, 2010, 2014). Data
Data Citation: Ferrers, R., Australian Tax Office; AURIN (2016): Where are Australian jobs growing or shrinking (2002 - 2014; over 100 regions; SA4)?. figshare. Online at: https://dx.doi.org/10.6084/m9.figshare.4056282.v3 Retrieved: 06 05, Oct 27, 2016 (GMT)

Top ten occupations (2010-2014) - growing / shrinking

Top Ten Growing Occupations**20102014Diff
Sales Assistant (General) 235,449 273,104 37,655
Corporate General Manager 162,899 198,595 35,696
Office Manager 145,522 172,883 27,361
Primary School Teacher 121,599 147,589 25,990
Child Care Worker 73,496 92,813 19,317
Aged or Disabled Carer 103,196 121,359 18,163
Labourers nec 72,007 89,238 17,231
Program or Project Administrator 81,640 94,905 13,265
Registered Nurse (Aged Care) 29,605 42,581 12,976
Machine Operators nec 18,764 31,263 12,499


Top Ten Shrinking Occupations**20102014Diff
Practice Managers nec 131,480 73,434 68,722
General Clerk 361,094 326,118 34,976
Earthmoving Labourer 33,313 13,585 19,728
Sales Representatives nec 90,840 74,679 16,161
Nurse Practitioner 35,031 21,767 13,264
Secretary (General) 46,570 33,800 12,770
Farm 33,781 21,038 12,743
Hospitality Workers nec 40,256 28,725 11,531
Clerical and Administrative Workers nec 44,280 32,874 11,406
Checkout Operator 65,242 54,294 10,948
NB**: excludes unnamed occupations. Full List. Data (1162 lines, csv).

Other sample reports

Several sample reports are now available, including;
  • List of Occupations from largest to smallest
  • List of Occupations from highest average wage to smallest
  • List of Sole Trader industries from highest sales to smallest
  • Change in one Industry over time - Hairdressing.
For more information: contact richard.ferrers@monash.edu.