NBN BUZZ: Activations and false comparisons

The NBN uptake issue hit the headlines this week with news that take-up in the first release sites is currently hovering around the 25 per cent mark. However, the activation story quickly slipped out of the picture only to be replaced by a risible comparison of China's NBN ambitions with Labor's fibre endeavour.

We have The Australian to thank for both the news points and let's start with the one that actually merits some scrutiny.

According to the paper, just one in four homes in areas where the NBN has been active for more than 12 months has signed up for the service.

Now the numbers may seemingly cut a poor figure when compared to the time and money invested by the government to spread the NBN but the reality is that they mean very little in the overall scheme of things.

NBN Co spent $11.2 million in the 2011-12 financial year on spruiking NBN services and Stephen Conroy's office has been equally active, spending $20 million on ads this fiscal year. For the time being, NBN Co shouldn't lose any sleep over whether it's getting bang for its buck.

According to NBN Co, the take-up rate in some sites is well ahead of expectations, with Kiama at around 45 per cent and Wilunga not that far behind. Importantly, these uptake numbers are present even before the copper has even been put out of commission.

This is an important consideration because once the copper is taken out of the equation people will start moving over to the fibre. The current figures do indicate that perhaps the level of demand for the higher speed NBN services, over and above what's available through DSL, is not large. But then again there would be a large section of consumers hamstrung by their existing contacts or simply with no other option than wait for Telstra's NBN services.

With a nationwide uptake rate of 15 per cent, what's noteworthy is the variance in the activation numbers and this could be a reflection of our telecoms landscape. It shouldn't be surprising to see that consumers in areas poorly served in the past would be inclined to pick up NBN services as they are made available. In comparison, consumers in areas with relatively adequate services will naturally exhibit a lower willingness to sign up to the fibre just yet.

According to Ovum's David Kennedy, the variations could potentially be used to argue strongly for an ‘outside in' approach to the build.

“If the variations can be definitively attributed to the fact that outlying areas are under served at the moment, if that is true, then that would suggest that that's where the NBN is going to get the most success with uptake,” Kennedy says.

The end game, of course, is that when the copper is taken out of action most consumers will have to move to the fibre. Kennedy adds that with ISPs still gearing up to market their NBN services we are yet so see a concerted retailer-led campaign to encourage uptake.  

So the shrill alarm calls about the poor NBN uptake are not as pertinent as the Coalition would have us believe. And debating the merits of what a 25 per cent or 15 per cent activation rate bodes for the NBN on the whole is a fool's errand.

Rollout blue murder

The activation story was also accompanied by a warning that NBN Co could potentially miss its target of 341,000 premises by June 2013.

A senior executive from a firm working on the rollout has told The Australian that NBN Co would fall short of that target by 20,000 to 30,000 premises.

"The NBN Co is absolutely obsessed with hitting this June 2013 target of passing homes with fibre," the executive told The Australian.

"But the program is just too tight. Everything has to go right for NBN Co to achieve it, and that could happen, but normally it doesn't. A lot of NBN Co's credibility is riding on hitting those targets and they are threatening blue murder if it doesn't happen."

The fact that NBN Co is ‘threatening blue murder' is most reassuring. With the rollout on track a certain degree of obsession on the part of NBN Co will come in handy to ensure that there are no slip ups.

Quite simply, NBN Co can ill-afford any missed targets, irrespective of the metrics it chooses to follow. NBN Co‘s ambitious targets, and there's nothing wrong with ambition, include having a national construction footprint of 758,000 premises by the end of December 2012 (that is, premises where construction has commenced or is complete). 286,000 premises passed in brownfields by the end of June 2013 and 44,000 brownfields fibre end-users over the same period.

The current timetable is achievable but will require a steely resolve from NBN Co, there's already been one major slippage in the timetable and it's impossible to rule out another. To dispel the doubts NBN Co needs to demonstrate prompt delivery and evidently that will require leaning a bit harder on the construction firms.

The China syndrome

Finally, to China and the billion Chinese who are going to get fibre for a third of the cost of our NBN.These sort of odious comparisons do nothing to encourage a meaningful debate on the NBN .

There are so many factors (population density, wages, not to mention the system of government) at play here that making a meaningful comparison is useless. Perhaps the one key takeout from the whole story, for the pro-Labor NBN lobby, is that Beijing is pursuing a Fibre-to-the-Premises (FttP) approach and not the Coalition's Fibre-to-the-Node (FttN).

But the opprobrium generated by the story has, for the lack of a better option, focused on the manner of reporting the news than on the news itself. The Australian may have an axe to grind with the current NBN and the Labor government but spewing spurious tangents is a patently counterproductive measure.