Good riddance to bad broadband memories

One of the great strengths of covering an issue for a long time – like Alan Kohler and a few others have done with the NBN and broadband – is that you have a very long institutional memory.

The downside is that you run the risk of relying too heavily on old data points and getting stuck in old arguments.

John Maynard Keynes famously remarked that when the facts change, he changed his mind – yet sadly this has not always applied to the broadband argument in Australia.

To get an idea of how persistent supporters of Labor’s NBN can be with old arguments is their insistence on posting photographs on Twitter of ‘nodes’ that Telstra was thinking of deploying in 2007 that are the size of a small outhouse.

The nodes being deployed commercially around the world now are much smaller – typically about a metre tall, and not that much larger than the 60,000-odd fibre distribution hubs being used by the NBN in its rollout.

A notable exception to this has been former ACCC head Graeme Samuel who acknowledged that much has changed since the ACCC last looked at the fibre to the node issue in 2009.

Since then the nodes have become smaller, the VDSL technology developments have surprised nearly everyone and the nodes themselves have developed so that they can offer both GPON (full fibre) services alongside VDSL. 

Samuel said the advice he provided the government back in 2009 on the inability to upgrade FTTN is no longer applicable: “What it means is that if you want, at your option, to convert the copper running from the node to the premises into fibre to get super high fast speed broadband then you can do it.”

This has a huge impact on the economics of FTTN and what that means for delivering upgrades sooner and more affordably – particularly in light of a failing FTTP rollout.

The other key advance that has changed the attitudes of telcos everywhere in the world has been the huge advances in VDSL technologies.

Vectoring has been a key technology which has extended the life of copper everywhere from China to Germany.

Just yesterday, the German regulator approved a €6 billion ($7.5 billion) investment by Deutsche Telekom to deploy vectoring, which deliver speeds of up to 100mbps to 65 per cent of its footprint by 2016.

And China’s biggest telco, China Telecom, on Tuesday announced the successful trial of vectoring in Guangdong province, offering speeds of up to 100mbps.

At the recent Broadband World Conference, Alcatel recently announced that it has already shipped 471,000 vectored lines, so the market interest in the technology is substantial.

To my knowledge, very few of these advances have been acknowledged by any vocal supporters of the NBN. 

Professor Rod Tucker, for instance, published an article in the Telecommunications Journal of Australia in the lead up to the last election which claimed: “DSL technologies are now mature and are close to achieving their maximum possible performance” and that 100mbps was only capable over FTTN if there was a node outside every second house.

At this year’s European FTTH Council conference in February, Simon Johnson, the head of telco analyst house Point Topic, hit the nail on the head when he spoke of the growing disconnect between political and commercial realities.

“Despite its success in winning hearts and minds among the media and politicians, the FTTH Council is not getting results in terms of faster growth of fibre-to-the-home networks which it seeks,” he said.

The dilemma is that telcos are finding that ambitious FTTH rollouts are proving much harder than expected – sound familiar? – and that the performance of rival technologies, especially VDSL, continue to defy expectations.

“VDSL [that is, fibre to the node] and Docsis 3 [HFC networks] have gained much wider coverage because, as things are today, they are much cheaper in most circumstances.  End-users still get the speeds they want, but many more get access to superfast than we could afford if we were insisting on FTTH for everyone,” Johnson said.

I note that Alan Kohler yesterday wrote that “the FTTP network would end up being be a great investment, in my view, because of the rapid increase in broadband traffic as the internet carries more and more video … Is carrying video into lounge rooms a worthwhile social purpose? No, but it’s going to be a good business” (Turnbull has saved the NBN, April 11).

But this continues to ignore the central issue facing telcos.  If you can get the same performance for a third or a quarter of the cost, isn’t that a much more compelling business case?

And the dilemma for governments should be: If we can unlock all the social benefits of broadband but save taxpayers from borrowing and spending $64 billion  – there are a few other important priorities around, such as an NDIS – and avoid prices rises of 122 per cent to 2021, isn’t that the socially responsible thing to do?