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News, Telecommunications - Written by Renai LeMay on Monday, June 18, 2012 11:08 - 204 Comments
NBN: Turnbull strengthens FTTN focus
news Shadow Communications Minister Malcolm Turnbull has intensified the Coalition’s focus on fibre to the node as an alternative to the fibre to the home-style rollout used by the NBN, using similar FTTN rollouts by AT&T in the US, BT in the UK and Deutsche Telekom in Germany as examples for how the broadband rollout style could be carried out in Australia.
The Gillard Government’s current NBN policy being implemented by NBN Co focuses on using a fibre to the home rollout in which cables are deployed from centralised points (usually telephone exchanges) all the way to home or business premises around Australia. The previous NBN policy focused on rolling fibre out to neighbourhood cabinets known as ‘nodes’, using Telstra’s existing copper cable for the last hop to home and business premises. However, it was ditched in April 2009, after an independent panel of experts warned the Federal Government that the policy was not feasible due to the requirement for industry involvement — and no satisfactory industry proposals.
The Coalition has never explicitly detailed how it would evolve the current Labor Government’s FTTH NBN policy to a FTTN if it took power, but since October 2011, Turnbull’s public discussion of the NBN under a Coalition Government has increasingly focused on using FTTN. Last week on Twitter, Turnbull added to that focus. Turnbull pointed out that in a number of “comparable” telecommunications markets to Australia, the “common sense” FTTN approach was being used, such as by giant telco AT&T in the US, and incumbent telco players BT in the UK and Deutsche Telekom in Germany.
In the US, AT&T’s so-called “U-verse” fibre to the node build was scheduled to hit some 30 million homes by the end of 2012 (consisting of some 55 to 60 percent of the company’s addressable footprint). The platform provides speeds up to 24Mbps, although such speeds are generally much more guaranteed at various tiers, compared to the so-called “up to 24Mbps” speeds which Australia’s current ADSL2+ footprint offers. In the UK, BT is rolling out fibre to the node in a number of areas and plans to achieve 80Mbps download speeds and 20Mbps upload speeds this year, while in Germany, Deutsche Telekom is also rolling out fibre to the node to millions of homes.
Turnbull said the only question regarding telecommunications infrastructure is “whether the fibre needs to go all the way into every premise”. “If we are a few years behind US why has Verizon stopped its FTTP rollout and AT&T is continuing with its FTTN?” he asked the ABC’s Technology and Games channel on Twitter, responding to an extensive article posted by the media outlet last week analysing the potential of the Coalition’s rival NBN policy.
The Shadow Communications Minister also addressed the issue of the potential return on investment which NBN Co could achieve from a FTTN-style rollout, as opposed to the current FTTH structure.
The NBN is not expected to cost the Federal Government money; it is currently expected (based on financial projections) to make a return on its investment in the long term of between 5.3 percent and 8.8 percent on that investment — from $1.93 billion in the worst case to $3.92 billion in the best case.
In contrast, the Coalition has not yet detailed the costs involved in its own policy, which in general features a scaled down approach to the NBN, focusing on the likely separation of Telstra, upgrading current HFC cable infrastructure and targeted fibre to the node rollouts, as well as, potentially, satellite and wireless use in rural areas. A recent analysis by Citigroup found that the Coalition’s policy would cost $16.7 billion. The Citigroup report didn’t mention what financial return, if any, the Coalition’s proposal was slated to bring in on its own investment.
However, Turnbull said on Twitter last week that AT&T’s FTTN rollout cost a third or less of Verizon’s rival FTTH deployment, but had very similar average revenue per user; so he expected the return on investment from FTTN to be “much better” than FTTH.
The Liberal MP didn’t give detailed answers to all of his questioners on NBN-related issues, however. Asked by the New Zealand Government had switched to a FTTH-style deployment, abandoning its initial FTTN plans in its own high-speed national broadband project, Turnbull said: “Politics”.
I know that this isn’t what many Australians want to hear, given the strong popular support for Labor’s current FTTH-based NBN policy, but Turnbull is beginning to make a strong case with respect to the rollout of fibre to the node infrastructure in the mid-term in Australia.
If it is true that a much better ROI could be achieved from replacing much of the current FTTH rollout structure with FTTN, and if speeds of up to somewhere like 80Mbps could be achieved in Australia as they are with BT’s similar rollout in the UK, and if the planned industry re-structure could still be achieved, with Telstra ceding control of its copper network somehow and its attached vertically-integrated monopoly, then the Coalition’s NBN policy starts to look very appealing.
Of course, these are a lot of ifs. The task of modifying Telstra’s extensive agreement with NBN Co to focus on a FTTN-style rollout instead of FTTH is a gargantuan one alone, and I anticipate it would take at least 18 months or so of negotiations (similar to when this agreement was first negotiated) to get that out of the way. Then there is the fact that NBN Co itself does not believe that Australia’s copper network is capable of the same FTTN speeds as seen elsewhere, and Turnbull hasn’t yet provided hard data as evidence for why his FTTN approach would provide a better ROI than the FTTH-style NBN rollout.
In addition, overweighing all of this is the fact that Australia will in the long-term very likely shift to FTTH anyway, even if FTTN is used as an interim solution. In the 20-30 year time frame, such a deployment will likely be necessary and affordable, given the ongoing commoditisation of technology and growing bandwidth requirements. In this context, a focus on FTTN in the short-term looks short-sighted.
But at the end of the day, the Australian consumer would still end up with a good outcome from a FTTN-style deployment by an organisation like NBN Co (if it is indeed NBN Co that Turnbull wants to deploy such infrastructure; he has also discussed the potential for industry to do so). Up to 80Mbps broadband to a large swathe of Australia would help provide for our needs in the medium-term, and I personally would love to be able to get such speeds to my residence; as would most Australians. I would most assuredly make good use of them.
As I have previously mentioned, although it doesn’t match up to Labor’s more strategic vision, there is still a lot to like about the Coalition’s current NBN policy as a whole. It just needs to provide a lot more detail about how it would be implemented.
Image credit: Office of Malcolm Turnbull
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