News, Telecommunications - Written by Renai LeMay on Tuesday, June 4, 2013 12:35 - 70 Comments
Optus mulls user pays FTTH NBN plans
news The nation’s number two telco Optus has revealed that it is considering launching plans which would allow Australians to individually pay to have the Coalition’s fibre to the node NBN infrastructure extended all the way to the premises, in a move which will echo similar plans launched in the UK by British telco BT.
The Coalition’s NBN policy unveiled in mid-April this year would see fibre to the node deployed to 71 percent of Australian premises, with a further 22 percent to be served by fibre all the way to the premises, and the rest of Australia served by satellite and wireless options. It differs in this choice of technologies from Labor’s policy, which would see fibre to the premises used for almost all premises, and a small percentage of premises served by satellite and wireless.
However, Shadow Communications Minister Malcolm Turnbull has also left open the possibility that individual users could pay a fee to have fibre extended all the way to their premises. In June 2012, British telco BT, which is also deploying a FTTN network, revealed plans to modify its 80Mbps national fibre to the node rollout so that customers will be able to choose to have fibre fully extended to their premises, delivering a large speed upgrade to 330Mbps in the process.
Under the FTTP extension trial announced last year, British retail ISPs will be able to order the extension process where there is interest and then assist network infrastructure owner Openreach with the cost of deployment. “It will then be up to the [ISP] to decide whether to absorb that likely one-off charge, recover it through higher monthly prices or pass it on in full to their customer,” BT wrote in its media release at the time. “The pilots will enable Openreach to gain an in-depth understanding of the costs of deploying FTTP on Demand. Any installation fee is highly likely to be distance dependent given the nature of the necessary work.”
Since that time, Openreach has revealed the cost of its fibre extension. An article on its site published in March this year states: “When ordering FTTP on Demand, a distance-based construction charge applies, in addition to the fixed installation fee of £500.00. The distance-based construction charge is determined by the distance of the customer’s home or business from the local fibre network.”
“Openreach estimates more than half of premises (55 per cent) will incur a distance based charge of between £200 and £1000. Virtually all other premises will face a charge of between £1,400 and £3,500. It will be up to communications providers to decide whether to pass on those charges to businesses and consumers. A small percentage of orders will also incur an [Excess Construction Charge] in addition to the other charges.”
“There will be longer lead times for FTTP on Demand than for a standard connection due to the amount of planning and construction work that is required to extend fibre to a customer’s premises. The current estimate is typically 60 working days for the service to be installed.”
In a FAQ article published on his site in late April, Turnbull wrote: “While we anticipate that for the vast majority of consumers in the areas serviced by FTTN the speeds offered will be more than adequate, there is the technical possibility to run fibre to one or more customers in an area served by a node … Fibre on demand is the most practical way of ensuring that a network like the NBN is rolled out as quickly as possible to all users, without imposing unnecessary costs on everyone using that network.”
Up until this point, Australian ISPs have displayed little interest in the still-nebulous possibility of deploying user pays FTTP under the Coalition’s FTTN model. However, in a new interview over the weekend with the ABC’s Inside Business program, Optus Australia chief Kevin Russell revealed that Optus was actively considering the possibility.
“… are you thinking about paying for it yourself and putting it on a plan like a mobile phone, so if somebody signs up a contract for two years or whatever, that you’ll pay for the fibre-to-the-home?” asked host Alan Kohler. “… there’s details we’re looking at, ideas we’re bouncing around. Nothing I can talk about,” responded Russell. When pressed on the issue and whether it was an option, Russell acknowledged “That’s one of them. But there are multiple options.”
The news comes as users continue to demonstrate a strong appetite for higher-level NBN speeds, rather than the entry to medium-level speeds possible under the Coalition’s rival NBN policy. For example, in October last year, NBN Co revealed that 44 percent of NBN customers signed up to the network so far had opted for the company’s fasted 100Mbps speed tier, as evidence continues to accumulate that Australians will overwhelmingly pay for the fastest broadband speeds available if given the chance.
I want to do a more detailed article on this subject at some near point in the future, but let me say two things here. Firstly, I don’t take Russell’s comments that seriously. He was speaking off the cuff, and given the fact that there is very little FTTN infrastructure yet in Australia at all, and none with respect to the NBN, I suspect that any user pays FTTP model under the Coalition is at least 2-3 years away. Turnbull has only acknowledged it as a technical possibility at this point — and that’s very far away from confirmation that this will be a definite, affordable option.
The second thing I want to note, however, is that this should indeed be an affordable option for telcos like Optus, Telstra, iiNet, TPG and so on to offer to customers. Consider the fact that many mobile phone monthly plans range up above $1,000 and even to $2,000 and higher now. Even if user pays FTTP costs up to $5,000 per customer, it’s still feasible that that cost could be delivered on monthly plans over three to four years quite affordably. It would especially be attractive to those who work from their own home that they own and also own their own businesses, which could absorb the costs as a tax write-off.
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