NBN reality check: Construction remedies and Telstra's copper

Don't be fooled by Malcolm Turnbull's bluster at Question Time the next 18 months are going to be bruising for the Communications Minister and NBN Co.

NBN Co executive chairman Ziggy Switkowski shouldn't be too discomfited by the invectives launched in his direction. He is on the same page as Communications Minister Malcolm Turnbull, which is perfectly understandable. And when it comes to the future of the NBN, they both know that delivering the NBN is going to be a tough slog.

While Turnbull pleads the telco industry for patience, Switkowski faces a very real threat of overseeing a process that could end up missing its first deadline. The pragmatism on display is perhaps wise. Despite Turnbull’s bluster on Question Time, and his hectoring of the media, the next 18 months are going to be bruising for the minister and NBN Co.

Switkowski confirmed this week that the “transition” to the Fibre to the Node (FTTN) NBN “will take most of next calendar year to execute.” As Technology Spectator reported last week, the FTTN cabinets are unlikely to make an appearance in a hurry (Coalition's FttN network unlikely to start rolling out before 2015) and until then, as Switkowski points out, fibre will keep rolling into premises.

The strategic review is now at the halfway point, and Malcolm Turnbull maintains that the final outcome isn’t predetermined. Just what that outcome will be, depends on the questions being asked behind closed doors.

And it all revolves around these two basic themes: Do we want a network that provides the most future proof option for Australia? Or do we want a network that significantly improves broadband speed and can be delivered on time relatively cheaply.

Turnbull has so far managed to maintain some flexibility with regards to making that sooner, cheaper message stick. But neither he nor Switkowski are under any illusions about the magnitude of the challenge they face. The strategic review is only the beginning but the situation is still salvageable provided the NBN Co gets the FTTN deployment architecture right before the next election.

While the cabinets won’t be hitting the streets anytime soon, there’s still plenty of work that will take place behind the scenes.

Rolling the fibre out further into the field, the design of the nodes, their distance from premises are critical parts of the networks, which won’t garner a lot of public attention but if done well can see the nodes lit up just as the 2016 election rolls around.

This is of course an incredibly optimistic scenario and Turnbull will need everything to go right for that to happen.

Construction remedies and Telstra's copper

NBN Co's biggest fear lies on the construction side of things. It effectively scuttled Labor's plan and while it has given minister Turnbull ample ammunition to rub Labor's nose in it, the boot could potentially end up on the other foot.

Building a NBN, especially in Australia, is no laughing matter. In the UK, British Telecom had a team of 6000 engineers working with the contractors working to make sure things ran on time. NBN Co is a substantially large organisation but it never had the engineering expertise and the boots on the grounds to get the FTTP up and running in the scale that was needed. The reliance on contractors has so far proved to be ineffective and Switkowski and his team are going to have to come up with a remedy. In that regard, the return of former head of construction Patrick Flannigan to the NBN Co board is a positive.

Another sign of progress is NBN Co's Fibre to the Basement (FTTB) trial which is almost certainly going to end up as the preferred method of connecting multi dwelling units (MDUs). There's already belated recognition within NBN Co that the idea of running fibre to every single apartment was never going to work. Malcolm Turnbull may insist that all options are still on the table but when it comes to MDUs, insiders have told Technology Spectator that the FTTB trials are a precursor to eventual deployment.

Moving to Telstra's copper, and this is where Switkowski's response to the Senate Estimates almost bordered on comedy, the actual state of the network is a mystery that perhaps even Telstra doesn't have the answer to. It may not be as dilapidated as Turnbull's critics have warned but it's certainly not in a shape that makes vectoring and g,fast deployment a slam dunk for NBN Co.

As Informa analyst Tony Brown points out, getting the nodes as close as possible to the premise will help with the speeds but the real issues are with the last mile.

"What we know from trials that vectoring over copper works well most of the times but it's like a racehorse - it can work brilliantly as long as everything on the network is just right," Brown says.

Any problems on the network and it all comes to naught.

"If you don't fix the network beforehand you are not going to get a speed boost. If you are running a massive copper bundle, say a thousand pairs in the bundle, and you try to run vectoring it's not going to work, there's just too much interference."

Another curious factor is the insulation where a paper versus plastic equation comes into play. According to Brown, in some cases paper insulation does not respond well to vectoring, it just doesn't protect the copper well enough compared to the plastic insulation.

Much of the internal testing at NBN Co is currently focused on diagnosing the true health of Telstra's copper. It's a work in progress and could well be the final arbiter of how the Coalition's NBN is deployed and how much it costs. In areas where the copper is damaged the emphasis will be to get the fibre as close to the premise as possible and run vectoring over the shortest possible length. 

Running fibre straight to the premise is going to be the last option for NBN Co and Brown says that vectoring could be deployed in areas of very high demand

"If they see an area of very high demand where vectoring might be a stop gap measure at best they will then run the fibre to the home on a demand-based model," Brown says.

A CEO with a BT connection?

A lot of this is from British Telecom's Openreach playbook and it does raise the tantalising prospect of NBN Co eventually ending up with a CEO with a BT connection.

That candidate is senior BT executive Mike Galvin, the man heading the £2.5 billion Openreach fibre rollout, who recently spent a couple of weeks at NBN Co. By all accounts Galvin made quite an impression during his two week secondment, which was a rather curious move by a senior exec while the Openreach rollout is still underway, to advise NBN Co.

It is understood that Galvin was quite candid with NBN Co staff and let's keep in mind that by early next year the Openreach network will be up and running. By April next year, the 19 million or so homes and businesses will be connected and that could well be the window that allows Galvin to come on board the NBN Co on a more permanent basis.

Galvin brings with him a formidable reputation and the level of expertise that would fit very nicely with Turnbull's aspirations. Whether or not he gets the gig is still uncertain but Galvin is a blue chip candidate.

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