NBN Co's rural rollout tightrope

It's not all doom and gloom for those outside the fibre footprint, as long as all of NBN Co's ducks line up in a row.

The 7 per cent or so of Australian households outside the immediate fibre footprint of the National Broadband Network can justifiably feel a little discomfited about their prospect of getting better broadband. But it’s not all doom and gloom -- as long as all NBN Co's ducks line up in a row.

NBN Co may have promised to invest up to an extra $1.5 billion and revised the scope of the technology to deliver the services but it’s still running a very tight race.

While one can appreciate the detail provided by the landmark strategic review on the fixed-wireless and satellite component of the NBN released this week, the revised roadmap is bit of a mixed blessing.

Satellite management

More areas are now in line to get a fixed-wireless service, courtesy of the 1300 or so new mobile towers that will be built, and a portion of households will also be brought into the fibre-to-the-node footprint. However, those left reliant on the satellite service run the risk of receiving somewhat limited services, because two satellites is about as good as they're going to get from NBN Co.

The prospect of a third satellite was always bleak and with NBN Co deciding to shift more users to fixed-wireless and FTTN, the satellite service will now become a carefully managed resource.

NBN Co is maintaining its target wholesale speed of 25 Mbps per satellite service but there will be stringent fair-use strings attached. The fair-use policy hashed out between NBN Co and the retail service providers will have to be iron-clad and there will be limited speeds. Data caps will also come into play as the RSPs start spruiking services.

The $5.2bn needed to deliver the services by 2021 shouldn’t be cause for alarm. As far as NBN Co is concerned the money equation is all “within the envelope” of the $41bn budget of the project.

Fair enough, but as NBN Co chief executive Bill Morrow and the rest of his crew were at pains to point out yesterday, unless the cross-subsidy inherent in the NBN model stays in place all bets are off -- and that includes the fixed-wireless and satellite component of the network.

Just how the Coalition government decides to deal with TPG Telecom cherry-picking the high-value areas remains critical.

More towers to the rescue                     

Meanwhile, rolling out 1300 new towers is certainly achievable but the procurement and approval processes involved will need to be carefully managed.

Ericsson Australia, which is helping NBN Co roll out its 4G LTE fixed-wireless network, is pretty confident that it can be done.

Company chief execitve Hakan Erikssson says that while the sheer scale of the project -- especially the number of new build sites involved -- has proved challenging, things are in much better shape now.

The report recommends that NBN Co explore closer cooperation with mobile operators to maximise the opportunity to share towers. So it’s safe to assume that there will be an element of horse-trading with the telcos.

Independent telco analyst Chris Coughlan warns that the one sticking point could be the fact that NBN Co and the carriers have opposing technical site requirements.

“In regional and low mobile broadband/voice demand areas the mobile carriers want sites that provide coverage," Coughlan says.

"For NBN Co they will want smaller coverage with near line of sight and the highest possible throughput (modulation scheme) for each premise, to ensure higher aggregate throughput and efficiency. So NBN Co will want a much higher cell density than the mobile carriers.”

Where's the extra spectrum coming from?

With regards to securing the additional radio spectrum -- which NBN Co says it will need to ensure 80,000 premises in the urban fringes of cities are connected to the fixed-wireless network -- it’s going to be an interesting game. Moving some households to the FTTN network relieves some of the immediate pressure but NBN Co will need to get its hands on some extra spectrum.

While the spectrum NBN Co purchased from Austar is fit for the purpose for now, Eriksson says that no stone should be left unturned when it comes to getting that extra spectrum. NBN Co is currently using the 2.3GHz licences in regional areas and there is talk that it had been pursuing spectrum from Unwired before Optus snapped up the Unwired/Vividwireless business.

Coughlan says NBN Co would be wise to pursue all available options, with Optus’ 3.4GHz licences a viable option. Given that Optus’ HFC network is back in the picture the renegotiations around that infrastructure may see the issue of spectrum put on the table as well.

“While not as attractive as the 2.3GHz these may well suffice, though I expect that NBN Co would need to pay a multiple over the renewal price of 3 cents per MHz Pop,” Coughlan says.

Then there’s the spectrum that the Coalition government has at its disposal. While NBN Co had little need to pursue the subject with the former government, things could be a bit different this time around.

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles