NBN Co rides into the unknown

Communications Minister Malcolm Turnbull and Finance Minister Matthias Cormann have directed NBN Co to proceed with the Coalition’s multi-technology mix (MTM) approach for the National Broadband Network (NBN).

Turnbull has come under considerable pressure from the telecommunications industry to provide the industry with clear guidance on where the NBN is heading.

So it comes as no shock that Turnbull took the opportunity at the CommsDay conference in Sydney this week to water down expectations on the reach of the fixed wireless and satellite rollouts and to quietly slip a new statement of expectations to NBN Co.

Yesterday ZDNet reported Turnbull’s comments at CommsDay that "the company [NBN Co] has got to get on. It doesn't mean there won't be a change to it. There have been a number of statements of expectations already. The key point is you have the freedom to use the mix of technologies that suits the particular locations.”

But Minister Turnbull, is the use of a “mix of technologies” supported by a cost-benefit analysis?

The abrasive approach taken by the minister has been roundly criticised, but has Turnbull put the final nail in his coffin? Does he have any credibility left after the pre-election “lemon” of an NBN plan -- the MyBroadband debacle and figures hidden in the strategic review showing the similarity in costs for Labor’s NBN and the Coalition's NBN 2.0 by 2025?

It’s possible that Turnbull has taken a personally difficult decision to put the NBN related politics on the back seat and to act in the best interests of the telecommunications industry. Over coming days or weeks we should expect to hear a lot more from the minister on a number of NBN related matters, and one of those will be TPG’s proposed FTTB network.

Switkowski speaks out

The one person we probably won’t hear a lot from going forward is Ziggy Switkowski.

On the ABC’s The Business on April 7, the NBN Co chairman provided clear guidance on the company’s preferred outcome of the negotiations underway with Telstra about its legacy networks, including copper and HFC.

Was Switkowski’s appearance his public swan song and therefore his last opportunity to indicate how he would like to see NBN Co move forward?

Now that the new CEO Bill Morrow has come on board and immediately put to the sword the remaining key management figures left over from Labor’s time in Canberra, we should expect Morrow to become the public face of NBN Co.

Switkowski told the ABC: "I think the outcome of these negotiations should lead to a situation where the copper network, the ownership, is transferred into the NBN, the ownership of the HFC network is transferred into NBN Co. And then we get to invest in it, provide in-fill where needed, upgrade progressively over time so that consumer needs for ever-higher bandwidth -- which we know are going to grow spectacularly -- can be met by our use of those networks."

And this would include NBN Co being responsible for the maintenance as well which, according to a leaked analysis of the Coalition’s pre-election NBN plan by NBN Co carried out at the behest of the former government, would be up to six times greater than the maintenance cost for the FTTP NBN.

"At the end of it all Telstra shouldn't be out of pocket relative to what they had agreed to before, and the taxpayer shouldn't be exposed to higher costs, unless they're getting more services," Switkowski said.

Switkowski’s statements to the ABC are in concert with previous statements by Turnbull, especially that the negotiations should not result in an outcome that will add cost to taxpayers.

However, here we have the chairman of NBN Co clearly stating the purpose and preferred outcomes of negotiations with Telstra, the largest of the telecommunications companies. Does Switkowski really believe that Telstra will roll over and give the government a no additional cost outcome?

Since taking on the NBN Co chairman and chief executive roles Switkowski has at times been vague and on several occasions has stated the impossibility of predicting what our broadband requirements will be in 10 years. Just so that he is in no doubt of what Australians expect from a next generation NBN, let me provide an example:

A group of people (say, 10 holding a family meeting) carrying out a video teleconference call utilising their high definition televisions at home where everyone is transmitting a high definition (12-16 Mbps) video stream to the other participants. This would provide each participant with the opportunity to either look at all the participants at the same time or to be able to look at each participant one at a time in high definition.

The total download bandwidth required for this is about 150 Mbps. And for the video teleconference call to be successful there is also a need for traffic class management and low contention.

FTTN design?

One of the key features of an all-fibre NBN is that the public switched telephone network (PSTN) becomes obsolete -- and this includes the Telstra exchange infrastructure such as the Ericsson digital telephone exchanges.

Unless NBN Co implements a more expensive fibre-to-the-node NBN that includes Voice over Internet Protocol (VoIP) to Plain Old Telephone System (POTS) equipment at every node there will be a need to utilise the Telstra PSTN, including existing Telstra exchange infrastructure.

The other alternative is for every customer to be provided with a Network Termination Device (NTD) that includes a PSTN to VoIP converter (this capability is available in some of the newer VDSL2 capable firewall/modems). But the question is who is going to pay for this device?

The cost of retaining the PSTN and failing to move to an all-IP telephone system that is not reliant on Telstra in some way will add tens of millions, if not more, to the cost of any renegotiated agreement with Telstra.

Does Switkowski mean that his preferred option is for NBN Co to take possession of the Telstra exchanges and the entire PSTN infrastructure? Of course not -- what Switkowski is talking about is the 800 or so metres of copper from the FTTN street cabinets to customer premises.

The real cost of any renegotiated agreement with Telstra will come in concessions and additional payments demanded by Telstra related to the use of Telstra’s remaining infrastructure and this may include favourable outcomes for other Telstra networks such as mobile cellular, backhaul, etc. And what will the rest of the industry say about Telstra achieving a better deal than what had already been agreed?

Morrow joins the fray?

Now that Morrow has joined NBN Co one of his first positive steps should be to publish an FTTN network design for the FTTN trials at Woy Woy in New South Wales and Epping in Victoria, and to have a detailed costing done on the time taken for each of the trial customer premises installations and the cost of material including the cost of the NTD if one is to be deployed into customer premises.

NBN Co now has guidance on what to do; Morrow needs to fill the void and provide guidance on what NBN Co’s intentions are. Now that the merry-go-round of reviews and audits has drawn to a premature end the public deserves to know when they will get a network that is more reliable with lower contention.