COMMENT: The real costs of FTTdp

Chastened by recognition that there is near zero political support for pervasive fibre to the home anymore, recent “fibre fanatic” campaigning has gone into promoting Fibre-To-The-Distribution Point or Fibre-to-the-Curb. Commentators such as Internet Australia and academic Mark Gregory say that FTTdp should replace planned FTTN installations at once on the grounds that it can support 100Mbps+ speeds, can be upgraded easily and that it only costs a little more than the FTTN it would replace.

But if something seems too good to be true then it probably is. Yesterday in the Australian, Gregory stated definitively that FTTdp would cost only $200 per home more than FTTN and that FTTdp could be upgraded to FTTH for less than $1,000 extra. Replacing all of the FTTN with FTTdp would only add $1.2-$1.5 billion to the cost of the NBN he opined, while further upgrades to FTTH could be absorbed within a further two to three years.

Sounds great. What a no-brainer! Except it is wrong. The definitive numbers, checked yesterday with NBN, are as follows: FTTH costs $4,400 based on real world numbers across a million lines, blended FTTN/B costs $2,200 based on the same scale sample. No one knows exactly what FTTdp will cost yet as it has yet to even complete a full-scale trial but best estimates at this stage suggest $2,800 per premises.

These are averages, distorted by the slightly inflated costs of FTTN in regional areas where there aren’t enough customers within sufficient radius to fill the 384 line capacity of nodes. In higher density cities, the cost of FTTN falls to $1,800. FTTdp, which pushes out fibre to within 30 to 200m of customers lacks similar scale advantages.

NOT TESTED: FTTdp hasn’t even been fully trialled yet. The experience with all other NBN technologies has been that the “on paper” costs swell in the field. It was the case for all five major technologies employed by the NBN to date and no doubt would be the same for a sixth one yet to be modelled outside of a spreadsheet.

But even in comparing a “modelled cost” with real observed costs, replacing FTTN would FTTdp across 6 million lines would more likely cost $3.6 billion in capital expenditure increases alone.

That’s not the sum of it. As the NBN cost benefit study of August 2014 clearly identified, much of the benefit from the multi-technology mix of the NBN comes from its speed to market. A benefit in the hand now is worth more than one in ten years time for a dollar spent now—a point which gets lost on NBN critics who seemingly care more about broadband in the year 2032 than the year 2017.

It takes NBN—or indeed any large broadband provider—about 12 to 18 months to complete the design, integration, IT, product and engineering requirements of a new network. The bulk of that work has already been completed for FTTN and that why that network is now being deployed at ever increasing scale. To bin all that and start again with an FTTdp topology which is only currently in trial status, would set back the NBN deployment by two years. So to replace FTTN with FTTdp across six million homes? Your real cost would not be $1.2 billion-$1.5 billion, but more likely $3.6 billion in additional capital cost and—assuming $42 monthly ARPU—about $1,000 of forgone revenue for every customer subject to a two year delay for connections. Six million customers delayed by two years means $6 billion of foregone revenue.

That is a $9.6 billion impact on the NBN business case. Hardly inconsiderable.

NBN is concentrating its planned 700K FTTdp line deployment in two specific segments: areas too sparse to be served by FTTN (because the economics of that technology depend on density and specifically whether there are 384 premises or less within a km of the node) and the Optus HFC network (where existing customers are used to 100Mbps headline plan claims and need to be upgraded to something superior for the NBN deployment to mean anything). The Optus HFC network requires considerably more node installation than the Telstra HFC network to reach NBN standards and its topology is ill-suited to an NBN network based on Telstra exchanges. FTTdp makes sense for these sporadic deployments.

MTM MORE FUTURE PROOF: The 2014 cost-benefit analysis of the NBN captured the overall issue quite well when it said “The MTM scenario leaves open more options for the future because it avoids high up‐front costs while still allowing the capture of benefits if, and when, they emerge. It is, in that sense, far more ‘future proof’ in economic terms: should future demand grow more slowly than expected, it avoids the high sunk costs of having deployed FTTP.”

“On the other hand, should future demand grow more rapidly than expected, the rapid deployment of the MTM scenario allows more of that growth to be secured early on, with the scope to then upgrade to ensure the network can support very high speeds once demand reaches those levels.”

While there is considerable noise advocating pervasive FTTdp, the arguments of these NBN antagonists fall apart under examination.

One argument is that FTTN cannot be upgraded. But copper lengths can be reduced and line speeds enhanced through use of 48 line micronodes, while the deployment of VPlus can increase normal FTTN speeds way beyond 100Mbps to 200Mbps or more. The technological path for VDSL is not dead.

Another argument is that in ten to fifteen years, all the investment in FTTN will have to be wasted. But FTTN will truly be a sunk cost by then and will be spinning off cash, benefiting from historical cost and speed to market advantages over the costlier, sluggish-to-build FTTH alternative. And, of course, the fibre to the node part of FTTN can be reused!

Then there is Gregory’s argument that you can just abolish the Connectivity Virtual Circuit and open the gates to maximum speeds. In fact, the whole idea of the CVC is to keep access fees for low end users cheaper: NBN uses it to offset about a third of access charging. Abolishing it would see a need to increase access charges by at least 50% to make up lost revenue. The best way to reduce the CVC is to suppress costs.

QUOTAS UNUSED: Gregory also argues that most NBN users are opting for small data quotas. Notwithstanding the fact that monthly usage is a different beast to speed (it reflects time online as much as the speed you have), average NBN households use 150Gb per month of data: most plans offer 500Gb or more. Typical users are not quota constrained. They simply have other things to do in their lives.

Then there is the argument that NBN needs to be “gigabit-ready” because you can buy gigabit plans in Singapore and Hong Kong. Again, complete rot. Gigabit plans in those cities are marketing gimmicks where, by very definition of what a broadband line can be used for, you will rarely exceed 5% use of your capacity and with compression advances unlikely to ever even half use in your lifetime. Not while TCP/IP remains a thing! Home gigabit is the broadband equivalent of a flashy sports car that cannot be driven legally at its top speed or George Michael or Andrew Ridgeley sticking shuttlecocks down their pants on stage. Nice to envy but not a genuine human right.

For an NBN that has to span millions of square kilometres of terrain, meet the market for legacy broadband services priced on a Telstra CAN valued at less than half the NBN cost and attempt to reduce risk to the taxpayer as much as possible, it shouldn’t even be thinking about gigabit. The object is to get the poor buggers numbering several millions off sub-10Mbps DSL tech that haven’t seen an upgrade in a decade.

The biggest lie of all is that we are all starved of speed, that proper broadband is some way off and we are all being denied our future because of Bill Morrow and Mitch Fifield. It’s what I, as an editor, identify as the “future tense” trick to deny the present reality. Between the Telstra and Optus HFC networks now and the existing live NBN FTTH/N network with over 2 million customers, there are several million people now able to access 50-100Mbps services. Nearly all medium to large businesses have access to fibre or wireless equivalents commercially (it is not in the NBN’s remit to service such customers). Have you noticed that sound of normality? The distinct lack of revolution? The sense that life continues on unchanged?

Indeed. Their lives have not been transformed by their new found superpowers. They are not clamouring for even more at state expense. Getting them to a gigabit is not and should not be a matter of policy focus.

Let’s worry about getting everyone else to 25-50 megabits at a price they can afford—both directly as customers and indirectly as taxpayers—for the genuinely deprived in what remains of this decade before we worry about 1000 megabits in decades hence.

That is simply good public policy. And that’s the mission of the NBN.

Grahame Lynch is the founder of CommsDay and a former global editorial director for America’s Network, Telecom Asia and Telecom China. He has reported and commentated in technology for 23 years


Finalists for the Edison Awards

Over 40 finalists have been announced for the Edison Awards, CommsDay’s new telecom industry award program, to be held on Thursday March 16 in Sydney.

The most heavily contested category is the Best Internet of Things/Machine 2 Machine company category where six firms are lining up for recognition: Challenge Networks, Cisco, NNNCo, Huawei, Telstra and Vodafone.

Another keenly contested category is Best Virtual Network Operator—a technology agnostic category covering virtual operators of both mobile and fixed networks—where five have made the shortlist: Amaysim, Foxtel, NextDC, Southern Phone and Symbio.

The fixed wireless category is another one with strong competition, with BigAir, NBN, Optus and Vertel all in contention, as with the law firm category where Bird & Bird, Clayton Utz, King & Wood Mallesons and Maddocks are all listed.


Finalists for thirteen categories are being announced today with three to be announced on the night of the awards. Nominations from additional organisations are still being considered and may be added to the list over the next few days.

CommsDay founder Grahame Lynch said that the quality of nominations was high and reflected the high standards and competitiveness of Australia’s telecommunications industry. “We have assembled a 12 judge panel who will look at the nominations over coming days and score them. Based on our initial look, it is going to be a very difficult decision with some extremely strong nominations across all the categories,” Lynch said.

The judges are: ACCAN CEO Teresa Corbin, ASTRA CEO Andrew Maiden,, CommsDay group editorial director Petroc Wilton, CommsDay senior editor Geoff Long, Coutts Communications principal Professor Reg Coutts, Decisive Publishing director and CommsDay founder Grahame Lynch, Eintellego Networks founder Skeeve Stevens, HKBN CTO and former NBN Co CTO Gary McLaren, International Institute of Communications president and former ACMA chair Chris Chapman, Market Clarity principal Shara Evans, New Street Research senior telecommunications analyst Ian Martin and Telsyte managing director Foad Fadaghi.

The Edisons will be held on March 16 at the Westin in Sydney. The event’s guest of honour is Communications Minister Mitch Fifield. Shadow regional communications minister Stephen Jones will also be in attendance.

The initial instalment of the Edisons is sponsored by Optus, Axicom, Juniper Networks and Cisco Systems. CommsDay readers are invited to book tables or individual tickets at the following link: https://edisons2017.eventbrite.com

The Edison awards finalists
* Best telecom marketing initiative: Cisco, Huawei, Telstra
* Best telecom law firm: Bird & Bird, Clayton Utz, King & Wood Mallesons, Maddocks
* Best mobile device: To be announced on the night
* Best cloud provider: BigAir, Cisco, Telstra
* Best telecom core network vendor: Ericsson, Juniper, Nokia
* Best telecom software or support system vendor: Cisco, EEConnect
* Best data centre operator: Equinix, Metronode, NextDC
* Best voice and hosted PBX provider: Aussie Broadband, MNF, Symbio
* Best fixed wireless operator: BigAir, NBN, Optus, Vertel
* Best virtual network operator: Amaysim, Foxtel, NextDC, Southern Phone, Symbio
* Best streaming video on demand provider: Foxtel, Optus
* Best IoT/M2M company: Challenge Networks, Cisco, NNNCo, Huawei, Telstra, Vodafone
* Best satellite company: To be announced on the night
* Best broadband provider/ISP: Aussie Broadband, Foxtel, Optus, Telstra
* Best mobile operator: Optus, Telstra, Vodafone
* CommsDay Hall of Fame: To be announced on the night
Note: Additional nominees are currently being considered and may be added to shortlist


Nominations open for Edison Awards

NOMINATION FORM

Communications Day has been providing Australia’s telecommunications industry with daily news and analysis since 1994. We’ve been organising and hosting what have become Australia’s leading telecommunications industry conferences since 2001, and since then, in conjunction with the Service Providers’ Action Network and Communications Alliance, we have helped organise and host Australia’s leading telecom industry awards.

We are now excited to announce that in 2017, we launch a new telecom industry award series for a new telecom industry; the Edison Awards (“the Eddys”). Named after Thomas Edison, the prolific American inventor who made our industry’s networks and applications possible, the Edison Awards have one simple goal:

To identify the best-of-breed businesses, organisations and individuals in each recognized industry vertical market and honour them publicly. No distractions. No noise. Just recognition.

The Edison Awards are judged by an eminent panel of Australian and global telecommunications experts.

This is the nomination form for the 2017 Edison Awards. Nominations for the Edisons are free. To nominate, you must:

* complete full contact details for your nomination
* nominate the category for your submission
* attach a nomination pitch of up to 1000 words
* Attach up to three links or supporting documents such as testimonials, websites or articles supporting your nomination.

Send your nomination pitch in a readable format and your links/supporting document in one email to: Grahamelynch@commsdaymail.com
Any questions MUST be made by email so that answers can be made definitively.

Just one nomination per application/email. If you wish to make multiple nominations, please send each of them in a separate email.
NOMINATION DEADLINE IS FEBRUARY 13 2017 COB.

Your nomination must include your contact name, email, phone no, the nominee company/product/individual and the category in which you wish to nominate

CATEGORIES

* Best telecom law firm
This category is open to legal companies and organisations which provide services to the telecommunications sector. Please explain in up to 1000 words what your organisation achieved in calendar year 2016 which marks you as the best of your peers. Attach up to three links or supporting documents such as testimonials, websites or articles supporting your nomination.

* Best telecom industry analyst/advocate (individual)
This category is open to individuals who act as industry analysts or advocates. The category is open to but not limited to such nominees as equity analysts, lobbyists, technology futurists, researchers and academics. Please explain in up to 1000 words what you achieved in calendar year 2016 which marks you as the best of your peers. Attach up to three links or supporting documents such as testimonials, websites or articles supporting your nomination.

* Best telecom capital raising (joint award)
This joint category must name both a financial and industry nominee for best capital raising in calendar year 2016. The category is open to but not limited to initial public offerings, debt issues, mergers, acquisitions, reverse listings and venture capital deals. Please explain in up to 1000 words what your organisation achieved in calendar year 2016 which marks you as the best of your peers. Attach up to three links or supporting documents such as testimonials, websites or articles supporting your nomination.

* Best mobile device
This category is open to nominated devices which were brought to market in the calendar year of 2016. The category is open to but not limited to mobile handsets, specialist mobile communications devices such as those for emergency services, dongles and IoT devices. Please explain in up to 1000 words what defined your device as the best in class. Attach up to three links or supporting documents such as testimonials, websites or articles supporting your nomination.

* Best cloud provider
This category is open to service providers who provide Infrastructure as a Service (IaaS), Software as a Service (SaaS) or Platform as a Service (PaaS) or a service related in concept. Please explain in up to 1000 words what your organisation achieved in calendar year 2016 which marks you as the best of your peers. Attach up to three links or supporting documents such as testimonials, websites or articles supporting your nomination.

* Best telecom network vendor
This category is open to network manufacturers who supplied core or access network technology to an Australian telecom operator in 2016. Please explain in up to 1000 words what your organisation achieved in calendar year 2016 which marks you as the best of your peers. Attach up to three links or supporting documents such as testimonials, websites or articles supporting your nomination.

* Best data centre operator
This category is open to data centre operators with Australian premises. Please explain in up to 1000 words what your organisation achieved in calendar year 2016 which marks you as the best of your peers. Attach up to three links or supporting documents such as testimonials, websites or articles supporting your nomination.

* Best voice and hosted PBX provider
This category is open to service providers of PSTN, VOIP or hosted PBX services. Please explain in up to 1000 words what your organisation achieved in calendar year 2016 which marks you as the best of your peers. Attach up to three links or supporting documents such as testimonials, websites or articles supporting your nomination.

* Best fixed wireless operator
This category is open to network operators providing fixed wireless solutions in rural, regional and urban markets but does not include mobile services. Please explain in up to 1000 words what your organisation achieved in calendar year 2016 which marks you as the best of your peers. Attach up to three links or supporting documents such as testimonials, websites or articles supporting your nomination.

* Best virtual network operator
This category is open to resellers or VNOs of both mobile and fixed telecommunications services who do not use their own networks. Please explain in up to 1000 words what your organisation achieved in calendar year 2016 which marks you as the best of your peers. Attach up to three links or supporting documents such as testimonials, websites or articles supporting your nomination.

* Best SVOD provider
This category is open to firms who provide streaming video services both free and subscription based, including both OTT providers and operators. Please explain in up to 1000 words what your organisation achieved in calendar year 2016 which marks you as the best of your peers. Attach up to three links or supporting documents such as testimonials, websites or articles supporting your nomination.

* Best IoT/M2M company
This category is open to service providers in the Internet of Things and Machine To Machine markets. Please explain in up to 1000 words what your organisation achieved in calendar year 2016 which marks you as the best of your peers. Attach up to three links or supporting documents such as testimonials, websites or articles supporting your nomination.

* Best satellite company
This category is open to any company which provides services in the Australian satellite market, including international and domestic operators, resellers, ground infrastructure providers and others. Please explain in up to 1000 words what your organisation achieved in calendar year 2016 which marks you as the best of your peers. Attach up to three links or supporting documents such as testimonials, websites or articles supporting your nomination.

* Best ISP
This category is open to service providers of broadband Internet services. Please explain in up to 1000 words what your organisation achieved in calendar year 2016 which marks you as the best of your peers. We have a particular interest in network upgrades, service and price differentiation, plus branding and marketing initiatives. Attach up to three links or supporting documents such as testimonials, websites or articles supporting your nomination.

* Best long haul network operator
This category is open to operators of long haul networks such as submarine cables, terrestrial trunk fibre or backhaul. Those networks must have an Australian footprint or landing point. Please explain in up to 1000 words what your organisation achieved in calendar year 2016 which marks you as the best of your peers. Attach up to three links or supporting documents such as testimonials, websites or articles supporting your nomination.

* Best mobile operator
This category is open to mobile network operators. Please explain in up to 1000 words what your organisation achieved in calendar year 2016 which marks you as the best of your peers. We have a particular interest in network upgrades, service and price differentiation, plus branding and marketing initiatives. Attach up to three links or supporting documents such as testimonials, websites or articles supporting your nomination.

* Hall of fame
This category is open to individuals with a life time of achievement in the telecom sector in Australia and should be nominated by those other than the nominee. Please explain in up to 1000 words what this individual achieved in their career which justifies their inclusion in a hall of fame. A short list will then be put to a reader vote.

WHAT HAPPENS NEXT
After you have emailed your nomination it will be considered by a panel made of up of some of the following judges:
* ACCAN CEO Teresa Corbin
* ASTRA CEO Andrew Maiden
* CommsDay group editorial director Petroc Wilton
* CommsDay senior editor Geoff Long
* Coutts Communications principal Professor Reg Coutts
* Decisive Publishing director and CommsDay founder Grahame Lynch
* Eintellego Networks founder Skeeve Stevens
* HKBN CTO and former NBN Co CTO Gary McLaren
* International Institute of Communications president and former ACMA chair Chris Chapman
* Market Clarity principal Shara Evans
* New Street Research senior telecommunications analyst Ian Martin
* Telsyte managing director Foad Fadaghi

The judges will consider your nomination throughout February 2017 and as soon as they reach their decision, winners will be informed so they can prepare for attendance at and/or acceptance speeches for the March 9 ceremony. We expect to do this before February 21. Winners will be entitled to one free pass for the event for the accepting executive. They will also be offered winners packages which license them the ability to use the official award logo and recognition in their own marketing for the ensuing year.
Please send your nomination with supporting documents in one email to Grahamelynch@commsdaymail.com by February 13 2017.
Sponsorship opportunities are also available from Veronica Kennedy-Good at veronica@mindsharevents.com.au


CommsDay announces a new awards series

Communications Day will next year launch a new awards series for the Australian telecom industry. The Edisons will take place at Sydney’s Westin Hotel on Thursday 16 March 2017.

The Edisons have one simple goal: To identify the best-of-breed businesses, organisations and individuals in each recognised industry vertical market and honour them publicly. No distractions. No noise. No roasts. Just recognition.

The Edisons will be judged by an eminent panel of Australian and global telecommunications experts. Among their number is CommsDay founder Grahame Lynch and group editorial director Petroc Wilton.

CommsDay has been organising and hosting what have become Australia’s leading telecommunications industry conferences since 2001, and since then, in conjunction with the Service Providers’ Action Network and Communications Alliance, we have helped organise and host Australia’s leading telecom industry awards. With the ACOMMS developing primarily into a proud celebration of Communications Alliance’s achievements and membership successes, CommsDay has decided to go it alone with the Edisons.

CommsDay’s relationship with Comms Alliance remains strong and the two will work together on new events in 2017.

There are 16 categories including Australia’s first ever Telecom Industry Hall of Fame. Winners of Segments 2 and 3 will be able to give 90 second acceptance speeches.

There will also be “highly commended” awards for close runners-ups. The awards will be MC’d by a major celebrity. Attendance at the awards will be comprised of a mix of invited VIPs, sponsor guests and ticketed delegates.

Nominations will open for the Edison Awards with a downloadable nomination inputable PDF form from next month. Nominees will be invited to include 1000 words or less in support of their nomination plus any linked digital brochures, documents, URLs for videos or other material.

A judging panel of over12 judges will then examine the nominations and award each one a mark out of 20 adding to a final aggregate. Where judges have conflicts of interest they will not judge relevant categories. Judges will also be asked to present individual award categories.

edisonsCommunications Day is the industry bible of Australian telecommunications read by everybody who is a somebody in the sector. 22 years old this year, it also runs the successful CommsDay Summit and Melbourne Congress. It also has hosted successful awards series with SPAN and Comms Alliance for over a decade.

COMMUNICATIONS DAY is offering attractive sponsorship packages to organisations who wish to be associated with excellence. Contact Veronica Kennedy-Good at veronica@mindsharecomms.com.au for more details.

THE AWARD CATEGORIES

SEGMENT 1
Best telecom marketing initiative
Best telecom law firm
Best mobile device
Best voice or hosted PBX provider
Best telecom core network vendor
Best data centre operator

SEGMENT 2

Best cloud provider
Best fixed wireless operator
Best virtual network operator
Best SVOD provider
Best IoT/M2M company
Best satellite company
Best broadband provider
Best mobile operator

SEGMENT 3
CommsDay Hall Of Fame inductees
(by popular vote of CommsDay readers)


Labor to take FTTH to 39% of NBN

shorten
The Australian Labor Party has revealed its hotly-awaited NBN election policy: a re-worked multi-technology mix with up to two million more households connected via FTTP than in the Coalition’s model, retaining the use of the Optus and Telstra HFC networks. The ALP has pledged to spend an extra A$3.4 billion in capex for the extra FTTP, following through on its earlier promises to roll out more fibre if elected, with a completion date of 30 June 2022. Government equity contributions would not be increased, meaning that the incremental funding would be drawn from additional debt; the entire total funding cost would also be hard-capped at A$57 billion, taking priority over the two million premise FTTP target if necessary.

Labor has also said that the model will save A$1.2 billion in opex out to build completion, and push the base internal rate of return to 2040 up to 3.9% from 2.7%. That last point will likely draw even more attention to NBN’s capacity-based pricing and underlying business model, which have become an increasingly public area of concern for key telco industry stakeholders. However, at least from opposition, the ALP has stopped short of diving into that vexed issue; its NBN election policy is focused almost solely on the access technology debate, with the party promising only that wholesale pricing will be “the same or lower” if it takes government and that it will monitor connectivity virtual circuit charges.

The current Coalition NBN policy would see about 20% of Australian homes and businesses connected with FTTP, with the rest using either FTTN, HFC, satellite or fixed wireless, and a total funding range of A$46-56 billion. The ALP policy – checked and tested by the Parliamentary Budget Office, and by an unnamed independent accounting firm – aims for around 39% FTTP coverage with a higher total price range of A$49-57 billion (with the high-end figure being a strict cap). The cost differential for the extra two million premises ties back to the difference in cost per premise for FTTP and FTTN in NBN’s most recent corporate plan, just over A$2,000, with the ALP also expecting FTTP costs to come down over time.

“One of the big mistakes Malcolm Turnbull made on this was he underestimated the cost of FTTN. In his strategic review, he thought that FTTN would be A$600 per house; the truth is it’s [almost] triple that, it’s gone up to A$1,600. The cost of the copper version of the NBN’s gone up, while we’re now seeing the cost of the fibre version of the NBN going down,” shadow communications minister Jason Clare told CommsDay in Western Sydney near Penrith, where he launched the policy alongside federal opposition leader Bill Shorten. “We’ve modelled this very conservatively at A$3,700. As you know, from the trials that were done in Ballarat last year – and NBN admitted this in evidence to an NBN committee only a couple of months ago – they’ve now got that down to around A$3,200-A$3,250. In the model that’s part of these documents, we’re assuming a 19% improvement on that price over time; very conservative, again, because look at what Chorus has done in New Zealand, something like 29% over twelve months.”

“The other point just to make on costs, [to be] very, very clear: to do what we are doing, the capex cost is high, about A$3.4 billion. But the opex cost, the cost of running this system, is less, about A$1.2 billion. Why is that? Because you don’t have the cost of fixing the old copper, and you also don’t have the electricity costs that come with running 30,000 nodes. Those 30,000 nodes that Malcolm Turnbull wants to build all around the country will cost, when they’re all set up, A$60 million a year to run. So you save on the operational costs.”

Labor also plans to phase out FTTN construction as the current pipeline of construction work is completed, making way for its additional FTTP; it has pledged to honour existing contracts and supply agreements, renegotiating or repurposing them as necessary and possible for the access technology change. “I don’t want people to think that if we win the election, we just click our fingers and all the nodes disappear. Malcolm Turnbull’s invested A$15 billion of taxpayers’ money in this second-rate version of the NBN over the last two and a half to three years, including rolling out FTTN; there are about 1.3 million homes at the moment where construction is underway on FTTN. So where we can, we stop FTTN and we roll out FTTP,” said Clare. In addition, Labor has said that the a government under Shorten would commission Infrastructure Australia “to manage the development of a plan that outlines how and when the parts of Australia left with Mr Turnbull’s second-rate NBN should be transitioned to FTTP.”

Clare added that many of the premises that would be connected with FTTP rather than FTTN under the ALP policy would be in “outer suburban parts of Australia, but also in regional Australia as well,” partly because Labor would stick to the current plan of using HFC with next-generation DOCSIS technology in major metro areas.

“One of the decisions we’ve made in putting this policy together is to keep the using the HFC network, the Foxtel network for want of a better description, that runs the street of about 3-4 million homes around Sydney, Brisbane and Melbourne as well as a few other parts of Australia,” he said.

“We’ve made the decision to keep that and upgrade it, as the government’s proposing to do, because when you weigh up that vs the copper version of the NBN, it is better than the copper version. Also, because Malcolm Turnbull has signed Telstra about the upgrade of that, they’ve invested millions of dollars into it. None of it’s been switched on yet; they promised 2.61 million homes would be connected to this HFC network by the end of the year, and none have been switched on yet, but the first one gets switched on soon… it’s one of the reasons we believe that the government’s slower, second-rate version of the NBN is not going to meet its deadline of December 2020; it’s going to blow out to Jun 2022.”

Labor has also committed to further exploring the potential of fibre to the distribution point, although the technology – still at a relatively early stage of maturity – does not form a definite part of its election policy.

STAYS AWAY FROM CVC: Clare said that the higher quality of service from greater proportion of FTTP under the new Labor model would increase revenues. “And the internal rate of return, the money back to taxpayers, goes up under this model from a minimum of 2.7 to 3.9%, because people are getting a better service,” he added.

That may, however, not wholly reassure senior telco industry stakeholders – such as MyNetFone CEO Rene Sugo, serial entrepreneur Bevan Slattery and most recently Optus corporate and regulatory affairs VP David Epstein – who have voiced concerns about NBN’s underlying business model and the way it extracts revenues from its RSP customers. Epstein, for instance, has suggested that even under the averaging model recently proposed for the capacity-based CVC charging structure, RSPs could pay a margin penalty for offering better tiers of NBN services than rivals at common price points – and that the relatively high CVC pricing could make it difficult to meet customers’ expectations of high speed services.

“Wholesale prices on the NBN will be the same or lower under a Shorten Labor Government as under the Liberals,” Clare’s office told CommsDay. “NBN Co’s wholesale prices are regulated by the Australian Competition and Consumer Commission under NBN Co’s Special Access Undertaking, approved in November 2013. Labor’s plan assumes that NBN Co’s wholesale prices will decrease in real terms, per the SAU.”

“Labor will monitor CVC charges in government to ensure the correct balance is struck between encouraging internet use and achieving the long term rate of return on taxpayer equity invested in this critical infrastructure project.”

COALITION RIDICULES LABOR: Communications minister Mitch Fifield attacked the new policy yesterday, describing the cost projections as a fantasy. “The last time the NBN looked at how much it would cost to do Labor’s FTTP rollout, NBN found it would cost around $30 billion more and would take six to eight years longer,” Fifield said. “Now Labor are out today saying that there will be little additional cost and that Labor’s roll out will be finished at roughly the same time – it’s a magic pudding! “Shortennomics” strikes again.”

“Consumers aren’t willing to pay for Labor’s high-price NBN. Four out of five users are purchasing NBN plans with speeds of 25Mbps or less. Labor’s FTTP network costs $4,400 per premise to connect to the NBN. In contrast, the Coalition’s FTTN network costs $2,300 per premise, and Hybrid-Fibre-Coax technology costs $1,800 per premise.”

Petroc Wilton


GRAHAME LYNCH ANALYSIS: Smoke and mirrors as ALP goes MTM

Labor has pulled off a spectacular double political coup with its NBN election policy announced in Penrith yesterday morning. For eight years its commitment to a 93% FTTH policy has been used by fibre zealots to smack away any sensible discussion of broadband technologies. To their credit, Bill Shorten and Jason Clare have combined to finally jettison Stephen Conroy’s 2009 fibre dream, having effectively adopted the Multi Technology Mix ethos which underlies the Coalition policy.

Fibre to the node? Tick. Existing connections to about 20 percent of the footprint will all be retained with their “upgrade path” to be pushed off to an Infrastructure Australia review. HFC? Tick. That stays. Fibre to the “premises” will be expanded to those premises currently slated for FTTN but not yet designed or under constructed, up to 2 million premises or another 20% or so. Essentially as much as you can buy for another $3.4 billion.

No definition was proffered as to what constitutes FTTP and I suspect it will likely involve a degree of FTTdp, the platform that takes fibre kerbside and then uses a copper lead-in. After all, this was already viewed as a solution for the 20% of premises still slated for FTTP connections which apparently have blocked ducts and cannot be fed with fibre easily. The skinny fibre solution which excited ALP senators earlier this year can be deployed across all platforms to feed nodes and, as a result, doesn’t preference any specific access medium.

In other words, Labor will build a network that won’t look radically different to the one the Coalition will build.

However, perception is everything. TV media emphasised a grab last night from Jason Clare saying “Malcolm Turnbull’s fraudband is over. We are replacing the copper with fibre.” Of course, FTTN also replaces most of the existing copper with fibre, especially the problematic bundles which feed exchanges and cause much of its exaggerated maintenance issues. But that doesn’t matter. Optics are everything if you pardon the pun. Clare had the best lines even if the details weren’t so convincing.

Clare spoke yesterday of the $60 million required to power an expected 30,000 nodes per year and how this cost would be saved under FTTH, referencing a citation which fed into his theme that overall opex savings offset about one third of the new capex funding requirement. I hope he can find a better source of savings than power. For a start, the ALP plan implies that 15,000 nodes or so will be retained so that claimed saving will only be $30 million a year.

But $60 million spread across 4m lines isn’t really a significant avoided cost anyway if you are adding over $3 billion of additional capex. This works out to $15 power cost per line a year. With an extra $2,000 capex required for FTTH, it would be 133 years before that extra cost is offset by the saved power requirement.

And besides, building a gold plated telecom network to avoid the costs imposed by over-priced gold plated power networks doesn’t necessarily have an overall economic benefit!

But the ALP has got away with it. The fibre zealots who dominate Whirlpool and Delimiter seem happy with a network that is resolutely 60% not FTTP.

Long time fibre advocate Mark Gregory who, bizarrely, is now the lead telecom commentator at Rupert Murdoch’s usually conservative flagship The Australian approves, as does Rod Tucker, an original NBN Expert Panellist.

The reality is that this policy is only a couple of faint shades of gray different to the Coalition’s. And with the way NBN was developing its skinny fibre and FTTdp platforms up until now, it is more than likely that the network will end up in a similar place should Malcolm Turnbull retain office anyway.

Of course, the whole access medium debate is misguided.

It’s easy to throw another few billion into the capex mix but that just incentivises the NBN to maintain its CVC congestion tax. This currently serves to restrict the actual amount of bandwidth requisitioned for all those lovely new FTTx connections to a fraction over one megabit per home. The whole 50Mbps vs 100Mbps debate is an enormous fraud perpetrated on the public in that regard.

A universal FTTN/HFC network with the requisite savings of several billion dollars could reduce contention—and congestion– to more overall economic benefit than that enjoyed by the 10% of people or less who want a largely illusory 100Mbps access plan.

For reasons such as this neither Labor or the Coalition want to talk too much about the NBN in this campaign. The contradictions of the NBN just pile up on themselves. Labor will be happy if its “replacing copper with fibre” meme takes hold, something made more likely by releasing the less-than-affirming fine print on a public holiday where everybody was thinking about Islamic terrorism and gun control.

One thing is for sure. This is likely to be the last election where a politician takes ownership of NBN futures. By the next election, there will be 20 billion reasons why commercial lenders to the NBN will be the ones determining what technology is used where and at what price.


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