‘Severe impact’: Rival FTTB plans worry NBN Co



blog The debate about whether major telcos such as TPG, Telstra and Optus should be allowed to deploy their own Fibre to the Basement infrastructure to compete with NBN Co’s own planned network has raged on constantly over the past several weeks. Some commentators, such as Business Spectator’s Alan Kohler, believe the telcos must be restrained, to protect the profitability of NBN Co. Others, such as myself, believe that the rollouts would provide immediate benefits to consumers, and thus should be allowed to go ahead. So what does NBN Co itself believe? Well, according to ZDNet (we recommend you click here for the full article), NBN Co executive chairman Ziggy Switkowski told a hearing of the Senate Select Committee into the NBN this morning that the planned rollouts would be a major issue:

“We haven’t done the full economic analysis but the impact could be quite severe,” he said. TPG would likely target “high value” customers that could hit NBN Co’s revenues by up to 10 percent, he said.

As I wrote on this issue last week, this situation places Communications Minister Malcolm Turnbull in quite the tricky situation. On the one hand, the Earl of Wentworth is an avowed fan of infrastructure-based competition, and it is true that having multiple FTTB rollouts to apartment buildings around Australia would immediately bolster competition to consumers and deliver better broadband more quickly to those areas. On the other hand, one has to wonder whether the Minister should allow portions of NBN Co’s network to be overbuilt.

If the Coalition had stuck with Labor’s largely Fibre to the Premises NBN policy, of course, all this wouldn’t be an issue. Talk about unintended consequences. Setting regulatory frameworks can often be like this; you need to think through several steps ahead, especially when it comes to a long-term project such as building a national broadband network. Switkowski’s comments merely dial up the pressure on the Minister to make a decision on this issue, one way or the other.

Image credit: Parliamentary Broadcasting


  1. Earl of Went South.

    NBN…going nowhere soon. I’d say give the telcos 12 months to connect as many people as they like and then stifle them again. I’m sure they’d get the cities done.

    The CBN is supposed to be about open competition and empowering the private sector. It’s more about politics than giving the public faster internet.

    It’d be nice to see the NBN say “we’re losing 20% of our revenues because we’re not deploying FTTP”.

  2. As Switkowski says, they can’t allow competition for the CBN business model to be viable, which really means it comes down to whether or not they want the CBN ‘on budget’.

    That aside, allowing infrastructure competition seriously undermines the raison d’être of the NBN, which was twofold: 1) eliminate the vertically-integrated Telstra monopoly that was holding Australian telecommunications back, and 2) use a cross-subsidy model that provides for substantially improved communications for non-metropolitan areas, using the same technology (FTTH) where reasonable, and otherwise fixed wireless or satellite that significantly boosts connectivity in remote & rural areas.

    Allowing private telcos to cherry pick the profitable urban areas will just mean the CBN will run out of money, the rollout will be stopped, the carcass will be sold to the highest bidder (most likely Telstra) and most of the country will be up the creek. Especially as Telstra will use their clout & size to rollout FTTB as fast as possible to as many buildings as possible to lock out their competitors.

    Is there any expectation of price controls on those private Telco rollouts? Any open access requirements? If not, then you’re staring down the barrel of repeating the worst mistakes the US market has made. Competition? Sure, they have 3 or 4 major telcos providing services, so it *must* be a competitive market, right? The fact that if you live in any given town you can only get services from *one* of those companies doesn’t exactly help to drive prices down.

    • This is pretty much what everything is riding on now; whether or not the CBN is kept “off budget” (by showing it as an investment) or it all – including everything already spent by Labor – falls back “on budget”.

      The LNP and Mal’s mates running NBNCo (now) are doing everything they can to spend just enough to call it an investment while not actually advancing our telecomms infrastructure, and crying foul now that the ‘competition’ they so dearly love is moving to assault their highest ROI customers.

      Next time I hear someone tell me (to my face) that “we had an election and people voted the LNP in” I’m going to explode in a cacophony of facts about the population being duped, and that at least 100 of the things people thought they were voting for have been abandoned, delayed, called in to question, or turned out to be outright lies.

  3. How droll. Refuse to deliver what the people want and then complain that private enterprise will fill the gap that you insist people didn’t want (after all, Australia voted against the Labor NBN, right?).

  4. The great rollout race!

    It’s on you mark get set off goes the gun Optus Telstra, TPG, NBN Co all rolling out optical cable in a re run of the Telstra Optus debacle 15 years ago, it will be the same result. A whole bunch of apartments in the inner city will get much better broadband.
    The companies will all blow their capital on a fruitless rollout race, run out of money and agree not to continue the rollout.
    Those that are left without improved broadband will get nothing as the cash will be gone.
    We will all be losers, the sheer incompetence of Mr Fraudband expecting another failed rerun of a policy that didn’t work last time to work now is by definition insanity.

  5. [opinion]

    On the one hand, the Earl of Wentworth is an avowed fan of [Telstra]

    I think you’d find that if Telstra were the first to announce their plans for FTTB, old Malcolm would have given it the green light as well as his personal seal of approval.

  6. “Switkowski’s comments merely dial up the pressure on the Minister to make a decision on this issue, one way or the other”

    Waiting waiting waiting on instructions from Rupert who hasn’t made up his mind yet as his media has been anti, now the consequences could blow up in their face. Fine balancing act, decisions decisions, who will be sacrificed

    • Who will be sacrificed? Currently, it looks like TPG. They are the ones currently paying the expenses of planning and pre-development, and if they time it right to throttle them, the main player that will have incured the most expense.

      I’m sure Aunty Telstra wouldnt be disappointed in that…

  7. Got to love Ziggy other comment

    ” It really doesn’t matter what technology is used to provide fast broadband to your home – any more than it matters what frequency your television programs are broadcast on or where your electricity was generated”

    So with that comment everyone should just get adsl2+ and be happy with what ever speed they can get

    • ADSL2? I was happy with dialup, why did I need to change?

      It constantly amazes me that they are CHOOSING to limit the technology. They arent being forced to base their plan on FttN, but are choosing to, seemingly for political gain.

      That alone should be the one key thing that everyone needs to remember in the decades to come – the LBP is CHOOSING to limit our capabilities.

      Lets build a dam. But lets limit its size so it only deals with the expected growth of the next 10 years… Oh, and it’ll take 9 of those years to build… Wouldnt make sense, would it?

      Morris Iemma was lambasted back in the day for putting a desalination plant in Sydney, yet time has shown that if he hadnt, the water supplies would have dried up a number of times. But people dont realise that because its not reported anywhere. Its not news, because its doing its job.

      And thats whats not being done here – no planning for the future, only a choice to be political rather than serving the long term needs of the country.

      And Ziggy’s just facilitating that choice by being a yes-man..

      • Yeah I know, Turnbull has no vision.

        But I can also see a cost blow out as will MR Fraudband promise that any copper lines to bad to repair would be replace with fibre and I can see that they will just lay more copper just to try to prove that FTTN will work on our dieing CAN

        • Copper lines will be replaced with fibre WHERE ITS APPROPRIATE. People always forget the addendum to the statement.

          What does this mean?

          Without going into any detail, I could be stuck with 6 MBps for a very long time, while 100m up the road they’re enjoying 1 Gbps connections.

          Going into detail, its a combination of Turnbull basically stopping FttH rollout, the MyBroadband site showing my wedge having access to 18.69 Mbps (or higher in a post-FttN network), and my phone line going the long way around to the local exchange.

          Every time people have made assumptions with what will happen, Turnbull has proven them wrong. He’ll honor contracts. Great, except people assumed he meant where the 13 month process had started, and he meant the final build contract.

          Note that since they “updated” the rollout maps, nothing new has been added. Why arent new areas getting the final contracts as old ones are finished, if they are continuing the FttH rollout up to the point their FttN plan starts?

          Or that Tasmania will get full FttH. Enough’s been written on that lately to show how different reality ended up. And in both situations, Turnbull and Abbott did nothing to correct the misperceptions at the time, but allowing them to happen as it put them in a better light.

          Dont trust them, and dont make assumptions. Which means you’re right – the upkeep of the copper lines will be a cost blowout. Not necessarily to prove FttN can work, as it obviously can, but because their decisions are made on incorrect assumptions.

  8. Ziggy is simply echoing the statements from the report Turnbull commissioned.

    That he places no value in communications and or high-speed Internet is well documented throughout his career. I (Ziggy) can’t think of a reason, ergo your considerable number of factual professional and consumer use-case examples are invalid.

    There are numerous risks documented in the NBNco report. Competitive loss of market share is the worst case scenario for profitability.

    Even assuming that all competition is legislatively required to wholesale, and that was aggressively policed by the ACCC, the outcome is that the market is fractured into a number of commercial interests; in many cases it would be safe to presume a singular supplier per-building.

    That isn’t infrastructure competition. It’s cherry picking.

  9. Sigh. but i thought competition was the best thing for consumers! infrastructure competition is the best way to lower prices!

    Oh you mean it makes building a national network too expensive?

    That is what we have been saying for the last 4 years every time Turnbull, Hockey and Abbott brought the fucking thing up..

    Christ. You’d think we were shouting at the fucking clouds with the amount of brainpower these politicians are showing.

  10. The cross-subsidy model is doomed to fail under the CBN.
    Here’s why:
    under Labor’s NBN, 93% of people would have had FTTP. The remaining 7% would have been more expensive to deliver fiber to, and therefore competition from other ISPs would have been a non-issue.

    Under the Coalition’s CBN, 22% get FTTP, 33% get HFC, and the rest get … something else. HFC can match FTTP’s 100 Mb downstream rate in theory (if we neglect congestion), but its upstream rate isn’t anywhere near that. That means you have a whopping 40% of the population who are no longer getting FTTP, a significant number of whom would be very happy to buy it from their ISP.

    This means that there are two options:
    -outlaw competition, and leave the demand unmet. Given that this negatively affects nearly half the population, it will most likely end badly.
    -allow competition, and see the cross-subsidy model collapse on itself.

    There is also a third option, which is to allow competition, and fund rural internet connections via some other means (such as a tax). Frankly, this is the option the Coalition should be pushing for if they want a free market approach. Of course, that means they no longer get to take credit for giving people fibre, but then since when was politics about actually serving the people as opposed to yourself?

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