news NBN Co’s Strategic Review has found that it will not be possible to deliver the Coalition’s stated policy goal of delivering broadband speeds of 25Mbps to all Australians by the end of 2016 or at the projected cost, and has recommended that up to a third of Australian premises theoretically already covered by HFC cable networks effectively receive no upgrade at all under a drastically revised deployment scheme.
When the Coalition released its rival NBN policy in April, it based the policy on the core pledge that the party would deliver download speeds of between 25Mbps and 100Mbps by the end of 2016 — effectively the end of its first term in power — and 50Mbps to 100Mbps by the end of 2019, effectively the end of its second term. According to the Coalition’s statement, the 25Mbps to 100Mbps pledge applied to “all premises”, while the higher pledge by 2019 applies to “90 percent of fixed line users”.
The detailed policy document disclosed that these speeds would predominantly be delivered over the long-term with fibre to the node technology through upgrading Telstra’s existing copper network, focusing on areas where “the poorest broadband” services are currently suffered by residents and businesses. By the end of 2019, some 71 percent of premises were slated to be covered with fibre to the node infrastructure.
In some other areas — such as greenfields housing estates, and “wherever copper has to be replaced” — such as areas where Telstra’s copper has degraded — fibre to the premise technology, as under Labor’s current NBN plan, would be deployed. The Coalition estimated that some 22 percent of premises would be covered by FTTP under its plan. The remainder of premises, as under Labor’s NBN plan, would be covered by satellite and fixed wireless technologies.
However, in its landmark Strategic Review document published today, and available online in PDF format, NBN Co instead recommended a drastically reduced rollout schema, which it dubbed an “Optimised Multi-Technology Mix”).
In this mix, FTTP-style broadband would be deployed to some 24 percent of Australian premises located in metropolitan areas by the end of 2020, with another 32 percent to receive FTTN infrastructure, 12 percent to receive Fibre to the Basement or similar and a large 30 percent to receive effectively no upgrade, considering that percentage is already covered by the HFC cable networks operated by Telstra and Optus. This rollout in total would cover 93 percent of the population.
In remote areas (the remaining seven percent of Australia), 10 percent of those areas would be covered by FTTN, 53 percent by fixed wireless, and 37 percent by satellite.
In a statement, NBN Co claimed this this “new look NBN” would “resemble the architecture of similar broadband rollouts in other advanced economies, embracing a range of technologies including Fibre to the Node and HFC alongside Fibre to the Premises, fixed wireless, satellite as well as future advances in telecommunications technology.”
The company said this approach should be able to deliver access to wholesale speeds of up to 50 Mbps to 90 percent of Australia’s fixed-line footprint and wholesale speeds of up to 100 Mbps to 65 percent to 75 percent by 2019. The company also claimed it would reduce costs and bring forward revenues for the company, reducing peak funding from what NBN Co has newly estimated at $73 billion under Labor’s NBN plan to $41 billion under its revised outlook. This figure is $11.5 billion more than the Coalition promised in April.
“… the accumulated delays and state of NBN Co mean the Government’s aim of ensuring nationwide access to fast broadband by 2016 cannot be achieved,” said Communications Minister Malcolm Turnbull in a statement this morning. “The Government will work with NBN to search for ways to accelerate the rollout in its early years.”
NBN Co’s new executive chairman Ziggy Switkowski claimed in a statement that the approach that NBN Co had recommended to the Government would delivery “very fast broadband to homes more quickly and at less cost”.
“We will do this by investing taxpayers’ money appropriately on the right technologies at the right time, by translating a long term milestone into a rolling series of realistic and actionable near term plans, and by being alert to upgrades in technology and shifts in consumer needs,” wrote Switkowski.
“By 2019 more people will be able to access higher speed broadband than would have been the case had the previous plan continued on its current trajectory. What’s more, viable economically attractive upgrade paths currently being trialled internationally are capable of providing speeds well beyond 100 Mbps and can be deployed as consumer demand increases over time.”
However, it does not appear as though NBN Co’s new ‘Optimised MTM mix’ is currently possible to deliver, based on the company’s current commercial relationships and the state of Australia’s technology sector.
A large number of premises currently covered by the HFC cable footprint, which NBN Co is planning to use to provide broadband to some 30 percent of metropolitan Australian premises, cannot connect to the HFC cable networks, as they live in so-called multi-dwelling units such as apartment blocks, or work in office environments where multiple offices are in the same facility.
Neither Telstra nor Optus are currently willing to connect such facilities to HFC cable unless the whole building is connected; something most landlords are currently unwilling to pay for. This will mean residents and business users in those areas will likely remain using ADSL2+ technology, which typically only delivers speeds of up to 16Mbps. Theoretically it can go a little higher — up to 25Mbps, but few Australian users see such speeds in practice, even if they are close to their local telephone exchange. The overwhelming of Australians in the HFC cable footprint are not using the technology, due to its inflexibility and cost, and the inability of many to get it connected.
Secondly, the HFC cable networks operated by Telstra and Optus are not open to wholesale access and are not regulated for price. NBN Co cannot currently provide Internet services over such networks unless the ACCC or the Parliament forces Telstra and Optus to open their HFC networks, or to sell that infrastructure to NBN Co. Neither Communications Minister Malcolm Turnbull nor Switkowski were able to answer questions this morning on how NBN Co would gain and control access to such networks, or how it would force Telstra and Optus to offer certain prices on the networks.
The NBN Strategic Review also found significant problems with Labor’s existing NBN policy. It estimated that Labor’s all-fibre NBN will cost $73 billion and take until 2024 to complete, and increase average broadband bills by up to 80 per cent to meet the rate of return targeted by the former Government. NBN Co’s persistent inability to meet its targets reflected “a lack of deep internal experience in complex infrastructure, construction projects and project management”,” the report found.
Key decisions were taken “without appropriate commercial rigour and oversight”, it added, and NBN Co’s previous leadership clung to unachievable Corporate Plan forecasts “notwithstanding clear factual evidence to the contrary”.
However, compared with NBN Co’s new ‘Optimised MTM’-style rollout, it appears clear that Australians, and the telecommunications industry as well, would still be significantly better off under Labor’s original NBN policy, even if it was delivered four years late and at a cost around $30 billion more than originally planned.
This is because the construction of the NBN would result in all Australians achieving significantly upgraded broadband services, with 93 percent of the population having access to gigabit speeds under the planned FTTP rollout. Under NBN Co’s new plan, a significant percentage of the population would receive little to no upgrade compared to their current access. In addition, unlike FTTP and FTTN, HFC cable infrastructure is a shared medium at the local network level, meaning it will likely suffer from congestion issues as additional users are added to the network.
The extra $30 billion NBN Co now estimates Labor’s original NBN policy will cost, and the extra four years it estimates it will take to complete the project, are not viewed as statistically significant factors by most technical commentators, due to the long-term nature of the NBN project, in that it will deliver infrastructure that will provide services over the next 50-100 years.
NBN Co’s new model would likely see demand for upgrades starting from when it was slated to be completed in 2020, whereas Labor’s original NBN model would not need to see its fibre upgraded in the foreseeable future.
NBN Co’s new rollout plan is not the first time that allegations have arisen that the Coalition is planning to ignore Australia’s areas ‘covered’ by existing HFC cable areas. In February 2013, then-Communications Minister Stephen Conroy challenged then-Shadow Minister Malcolm Turnbull to confirm his rival broadband policy would not see fibre to the node technology immediately deployed to areas already covered by the HFC cable networks operated by Telstra and Optus, despite the fact that few used the ageing HFC networks.
Subsequently, Turnbull confirmed that metropolitan areas of Australia in the HFC cable footprint of Telstra and Optus would not immediately receive the Coalition’s planned fibre to the node upgrade if the Coalition won Government and did not commit to deploying FTTN infrastructure in those areas in the long-term.
Image credit: Office of Malcolm Turnbull