NBN Co takes a stand for common sense

Despite the absurdities surrounding NBN policymaking, NBN Co has formulated a clear and rational plan for delivering the Coalition's NBN in a timely and cost-effective fashion.

NBN Co’s statement of the principles that will underlie its multi-technology rollout are statements of common sense in an area of policy blighted by absurdities.

There is nothing radical or surprising within the principles, given that they are directed by Turnbull’s desire (and that of NBN Co’s relatively new board and management) to deliver the NBN as quickly as practicable at the lowest cost to taxpayers.

They do, however, provide clarity as to what broadband technology consumers might expect to be connected to.

There are three key differences between the national fibre-to-the-premises network originally announced by Labor’s Stephen Conroy and Kevin Rudd.

Turnbull’s NBN includes providing broadband access via Telstra and Optus’ HFC networks and fibre-to-the-node as well as the FTTP, satellite and fixed wireless technologies the Labor plan was based on.

Where Labor’s NBN was all-FTTP, Turnbull’s will connect around 45 to 50 per cent of the premises via FTTN, with FTTP serving up to 25 per cent of the premises, the HFC networks about 30 per cent of them and satellite and fixed wireless the rest.

Apart from the addition of the HFC networks and FTTN to the technology mix, there is also the material matter of cost.

By utilising the existing HFC networks (built at a cost of several billion dollars) and deploying FTTN, NBN Co can reduce the overall funding requirement for the network from about $73 billion (in net present value terms) to about $41bn.

Conroy, of course, had committed to paying Telstra and Optus billions of dollars not to use their HFC networks and NBN Co to spending billions to connect premises that are today either connected to or passed by those Telstra and Optus cables, which are capable of delivering download speeds of up to 100 Mbps even without the technology upgrades NBN Co plans. That was a rather extravagant and planned waste of taxpayer funds.

NBN Co’s principles underpinning its multi-technology rollout are that where areas are already served by the HFC networks, the upgraded cables will be used to deliver broadband; where FTTP has already been deployed or in an ‘’advanced stage’’ of being rolled out, it will be retained; in areas already earmarked for satellite or fixed broadband, those will be deployed. And, for everyone else, it will be either FTTN or, for multi-dwelling units, fibre-to-the-basement.

In other words, the roll-out of FTTP is drawing to a close. NBN Co is close to starting to execute the Turnbull plan.

NBN Co is also looking at a 'fibre-on-demand' product for those who really want FTTP in areas where it won’t generally be available. It says it will also work with small communities that choose to co-fund FTTP in areas where it plans to deploy the other technologies.

The cost of that product has yet to be determined but it would be reasonable to assume that it won’t be cheap.

Given that there is only a relatively small proportion of Australian households or businesses that would be likely to need more than the 50 Mbps-plus speeds that NBN Co’s strategic review said could be delivered to 90 per cent of households by 2019, a user-pays model for those who want FTTP in areas where it hasn’t been rolled out would appear more rational than rolling out FTTP to virtually the entire nation. It is also conceivable that broadband retailers might devise packages where the cost of dedicated fibre is amortised over the life of a broadband plan.

In any event, the multi-technology plan will give more premises access to high-enough speed broadband years earlier than they would have gained access under a full FTTP roll-out.

A pre-requisite for the use of FTTN and the HFC cables in the NBN roll-out is, of course, the finalisation of revised deals with Telstra and Optus, which are taking more time to finalise than anticipated. NBN Co’s Bill Morrow, however, appears to be hopeful the negotiations will be concluded by the end of the year -- and there’s no doubt that Telstra and Optus are keen to co-operate.