NBN rejects analysis: FTTP rollout to take “significantly longer”

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news The NBN company has called into question the validity of a detailed value analysis by a Monash University researcher, stating that a full Fibre to the Premises rollout would take significantly longer to achieve in Australia than its current Multi-Technology Mix model.

Yesterday Delimiter highlighted research published by Monash University researcher Richard Ferrers in December, which appears to show that the original FTTP option for the National Broadband Network would actually deliver better value than the technically inferior Fibre to the Node model which the Coalition has instituted in the NBN network.

Ferrers is a research data analyst at Monash, with a PhD in Technology Innovation Management. He is a part of the Australian National Data Service, which focuses on making Australia’s research data assets more valuable for researchers, research institutions and the country at large.

On his personal blog (we recommend you click here for the full post), Ferrers noted that the release of internal NBN documents late last year had, for the first time, provided the opportunity to compare the costs of the NBN company’s various technologies, using the company’s own financial figures.

Ferrers’ analysis suggests, he wrote, that FTTP ended up being better financial value than FTTN when the NBN company’s operational expenditure and projected revenue figures were examined six and a half years after each technology was deployed.

In response, the NBN company today questioned Ferrers’ work. The company told Gizmodo: “The figures used as the basis for his analysis are from draft documents from early 2015 — not endorsed by our executive.”

In a statement issued to Delimiter, the company repeated what has become its standard line that its priority is to provide access to the NBN network to “all Australians as soon as possible in the most cost-effective way with an upgrade path to meet future demand”.
 
“A full Fibre-to-the-Premises rollout will take significantly longer to complete than the Multi-Technology approach,” the company said. “This means delayed revenue opportunity and an inability to take advantage of a ubiquitous network in the next four years.”
 
In addition, the NBN company added: “A faster rollout of the network leads to earlier activations and revenue opportunity.”

The NBN company’s statement that it would take less time to deploy its Multi-Technology Mix appears to be accurate. Its most recent corporate plan targets completion of its MTM-based NBN by the end of 2020, while the company estimates it could take up to eight years longer to deploy a full FTTP network around Australia.

However, the cost of the various options has been heavily contested by the NBN company and other parties. The company currently estimates it could cost up to $30 billion more to deploy a FTTP option, while other parties such as the NBN company’s original chief executive Mike Quigley have held to original estimates showing the company would eventually make a return on its investment no matter which technology model it used.

Quigley also last year published analysis which appeared to show that recent cost blow-outs at the NBN were due to the company having underestimated the cost of switching to its MTM model.

opinion/analysis
Standard response from the NBN company here, but seasoned readers will note that the company is now including the following phrasing in its statements: ” with an upgrade path to meet future demand”.

Fibre to the Distribution Point (FTTdp)/G.Fast is indeed coming, people. Watch for a formal announcement over the next six months from our Prime Minister as to how the odious FTTN millstone around his neck will be neutered as an election issue.

55 COMMENTS

  1. “Watch for a formal announcement over the next six months”

    Surely if they want to announce it before the snap early election it will be need to be a lot sooner than six months. There is only so long the new shiny toy (Turnbull) can distract people from the fact that him being PM changes very little about this bunch of clowns.

    • Go copper in the clever country that built the Asian century: let us all heil intergenerational loans for the kiddies and the great grandfathers and uncles who died for the privilege of paper profits and mcmansions.

      I mean, GO AUSTRALIA!! China is building FTTP,…. thanks mum and dad: ………………………………………..NOTTTTTTTTTT!

  2. I’m not sure the electorate will be particularly pleased to hear Malcolm admit that:
    1. he really doesn’t know what he’s doing because the MTM is changing again; and
    2. you will get fibre to your curb but not to your house. Sounds incredibly half-arsed to me.

    • 1. I’d beg to differ. He’s just (well, a few months) replaced a sitting PM with some instability in the ranks, if he made big changes such as bringing back the carbon tax/price on carbon (which he supported) or going full FTTP, he might find himself under threat of a shorter PM’ship than Abbot. Turnbull might be the tool you guys like to make him out to be, but you don’t get to where he is by being a moron.

      2. And yet it is one step closer to FTTP, which you all seem to want… The MTM was Abbott’s plot to undermine the ALP’s technically superior solution by delivering it faster. Whether that was even vaguely possible (much like ALP’s plan to replace it’s own FTTN, slated to finish in 2012, with FTTP slated to finish in 2017, and we saw how well that turned out…) is neither here nor there, reality really has no place in politics… =)

      And as for the electorate, as long as Malcolm is “not Shorten/Abbott”, I don’t think they’ll care much… People just want something, if he gives them a stable 25 Mbps, most punters who have half a clue will be over the moon. It will only be the technocrati who kick up a fuss, and in the grand scheme of things that’s a non issue for our pollies.

  3. “The figures used as the basis for his analysis are from draft documents from early 2015 — not endorsed by our executive.”

    So there are actually documents endorsed by your executive why hasn’t the new more transparent NBN released them. Based on a lack of actual released documents we are going to base analysis on what is leaked and until actual released documents say otherwise we will assume the leaked ones are true.

  4. Oh yay another network architecture that needs to be supported and maintained making those awesome B2B systems that aren’t already complicated enough just that little bit more!

    Is there any form of network/internet tech MTM isn’t adopting aside from FttP??.

    • I’m guessing that MTM wont be adopting the Internet delivery technologies described in RFCs 1149, 2549, and 4824. I don’t think giant African snails ever became an RFC, MTM probably will only implement that if they can find a plentiful supply of giant Australian snails.

      • Only because he’s smart enough to realise the one thing you don’t do as an Aussie PM is take on Customs when it comes to plants and animals importation ;)

        He doesn’t want to be the PM that imported the next version of the cane toad etc (otherwise I bet MTM would be adopting those or at least running ‘trials’ in lab).

  5. “The figures used as the basis for his analysis are from draft documents from early 2015 — not endorsed by our executive.”

    And this is the key point. No one trusts the numbers that are endorsed by the executive! They are convoluted, inconsistent and offer context that is beyond the pale.

    • Bruce, this statement is also a spin merchants way of not saying straight out the analysis is wrong, merely that it’s “not endorsed”.

      Gives them a legal dodge when they get hauled before a royal commission on the destruction off the nbn.

  6. The game’s up NBN Co, to borrow a Wild West saying. You have obfuscated. You have double talked to the Sheriff. You have stacked the saloon with your hired partisan lackeys. But it’s the end. It’s over. Come out right now with your hands up and no more sweet talk. All the moral fibre that you had is gone. The naked truth of your lies and tall tales is like a letter written across the sky.

    It’s high noon. Either you come out of your saloon hiding place by choice. Or we, the people and our sheriff, Renai Le May, march in and throw you out to face justice!

    Which one do you choose? We are starting an hourglass of sand for 1 minute…

    • This applies even more to the organ grinder the renewal of whose contract is in the hands of the electorate. Deportation along with the other unwelcome folk would be a fitting outcome.

  7. Well it only took 2.5 years to connect 1,000 node users so that’s frightening fast!
    (I joke)

  8. There is a great course on Pluralsight called “The Dark side of Technology Careers”. In it bad technology companies are discussed. NBN Co are like something out of that course. Rampant mismanagement. A one track schedule to ignore customer needs. Behind schedule. Wrong technology choices. That course author would happily use NBN Co as an example of how technology companies can go bad.

  9. Ugh, FTTdp, what about my area which is due to be ready for FTTN service in the next 6 months. Imagine the mess of managing all these different connections when it could have all been the same fibre with 4 possible services per premises. Breaks my heart…

  10. “Significantly longer” is both unqualified and lacking in evidence to back up whatever the claimed significant difference would be. That’s an area that NBN Co *should* have some relatively concrete numbers on with evidence behind it in order to justify the lack of its use in a mixed technology model looking for long term value and return on investment.

    The lack of evidence in their response provides either one of two things: mismanagement in meeting the requirements of the project; or negligence in delivery through selection of inappropriate technology based on political requirements rather than best return for the nation.

    Either way we lose.

  11. What documents are endorsed by the executives? They each their hands of them all.
    Faster rollout to achieve faster revenue, that didn’t happen did it?

  12. Ah yes and NBN (as opposed to the real NBNCo) have been soooo right so far…

    So I’m convinced :/

  13. I’m getting tired of NBN asserting something and not provided a shred of evidence to support it. Then when (or even if) they finally do provide ‘evidence’ its clear its heavily biased and flawed reasoning. They will ignore all criticism or assert its false and provide no evidence – and the cycle continues. We are just going around in circles – an NBN merry-go-round, oh what fun!

    • Its standard right wing practice, lie lie lie, even when you know full well you are flat out wrong.

      A good example is Michaela Cash on tv the other day claiming the libs are paying down the national debt when the reality is they’ve more than doubled it from 180 Billion to over 500 Billion dollars in 2 years with nothing to show for it.

      Part of the problem is the Murdock dominated media who actively help peddle these lies and therefore they go uncontested. Imagine if this was labor, the media would be screaming from the roof tops about poor financial management, in fact they did this even when the alp was buffering the country from the worst effects off the GFC.

  14. Oh dear, GimpCo has their first hissy fit for 2016 :(

    However the “upgrade path to meet future demand” line effective admission it was a mistake to move backwards to FttN and the rest of the mess associated with it.

  15. I’m in full consensus with the view that we need a royal commission into the handling of the NBN.

    However, before it begins, I would like to see some sort of evidence that there would be real, serious repercussions for politicians who were found to make decisions wilfully against the interest of Australia.

    The facts around the mishandling of the NBN are pretty clear. Only diehard partisans can ignore them. Having a royal commission restate these facts won’t achieve anything. Unless there is some authority to also punish those who have lead us into this mess for personal or political gain, then I can’t see a point.

    • It’s blatant corruption which imo all leads back to Turnbull, after all it’s his cronies that are responsible for the fraudulent reports that enabled this whole mess in the first place.

      Then just look at all the ex ozemail and Telstra execs he parachuted in and then allowed to keep their Telstra shares and negotiate a new Telstra agreement which has boosted their stock values as a result of Telstra getting a sweet deal.

      I could go on but that’s a good start.

      • He’s not a fool so there’d not be much leading back to him if anything. MT is a savvy operator after all and a seasoned politician.

        • He is solely responsible for all the interviews and pressers he has given. It’s all on the digital record.

  16. If you went out to all Australians in simple language with the figures – FTTP will cost this much and be completed by xx or MTM will cost this much and be completed by a couple of years sooner than xx (and include the subsequent upgrade costs to FTTP) there would be an overwhelming response for the former. Even non-tech people are able to see the massive cost benefits of taking longer initially and doing it right first time rather than building a noodles network that has to be upgraded as soon as it is completed.

  17. In response, the NBN company today questioned Ferrers’ work. The company told Gizmodo: “The figures used as the basis for his analysis are from draft documents from early 2015 — not endorsed by our executive.”

    Interesting, so the figures could now be worse?

  18. ” In a statement issued to Delimiter, the company repeated what has become its standard line that its priority is to provide access to the NBN network to “all Australians as soon as possible in the most cost-effective way with an upgrade path to meet future demand”.

    “A full Fibre-to-the-Premises rollout will take significantly longer to complete than the Multi-Technology approach,” the company said. “This means delayed revenue opportunity and an inability to take advantage of a ubiquitous network in the next four years.”

    In addition, the NBN company added: “A faster rollout of the network leads to earlier activations and revenue opportunity.”

    Have a read of this follow up article by Richard Ferrers if you have haven’t already seen it:
    http://valman.blogspot.com.au/2015/12/fttn-vs-fttp-2-fast-cheaper-sooner-vs.html

    This was linked to the comments in the Detailed analysis of NBN Co’s finances shows FTTP better value than FTTN article here:
    https://delimiter.com.au/2016/01/04/detailed-analysis-of-nbn-cos-finances-shows-fttp-better-value-than-fttn/

    Analysis:
    What these figures show, is that:
    – FTTP is much more profitable for NBN Co. than FTTN, even when running eight years later. Profit in this case is Revenue less OPEX less Depreciation, where FTTN is depreciated over ten years, and FTTP is depreciated over 25 years. FTTN never makes a profit, nor generates positive cashflow even after 20 years. There is a cash benefit relative to FTTP though. Roughly $2100 is saved in the case where FTTP starts eight years later than FTTN. But by Yr 20, FTTP has generated $1500 more cash, for the Yr 8 scenario.
    – FTTP generates as much GDP as FTTN, so long as FTTP is no more than four years later
    – the PM is correct. when FTTP is six or eight years later than FTTN, greater customers sales and GDP is generated by FTTN. But a four year delay, makes the outcome by Yr 10 and thereafter almost identical.
    – FTTP is generally superior to FTTN whenever the gap between availability is less than four years.
    – none of the FTTN scenarios is profitable for NBN Co.

    The Yr 10 – 20 figures must be more suspect for FTTN revenue, since the likelihood of revenue stability after the ten year useful life of the FTTN network (especially relative to the FTTP network) must be suspect. The FTTP is upgradeable for the foreseeable future, and likely to Yr 20.

    Next
    The next step is to compare the $30B statement. Can the PM’s statement that $30B is saved by using his MTM (ie FTTN, HFC) rather than FTTP really amount to a $30B saving? That will have to be addressed in the next post.

  19. I think the new NBN will be somewhere between FTTN and FTTP… being FTTO.

    O for Oscar winning backflip from the Libtards.

  20. Realistically, the Coalition isn’t going to roll-back to ubiquitous FTTP. So how about nbn(tm) installing FTTdp instead of FTTN, and “allowing” individuals to choose to upgrade the last leg to fibre themselves. To my mind that would be the best-case scenario for both consumers and the Government.

    FTTdp should be good enough for the next few years, and the consumer can always upgrade as and when they feel the need.

    Has anyone compared purchase and installation costs for a single FTTN node servicing @350 premises against n x FTTdp’s servicing @4 premises?

    I read this today, but it’s from 2014. Perhaps costs have changed since.
    http://telsoc.org/ajtde/2014-03-v2-n1/a26

    • So how about nbn(tm) installing FTTdp instead of FTTN, and “allowing” individuals to choose to upgrade the last leg to fibre themselves. To my mind that would be the best-case scenario for both consumers and the Government.

      Logically that would be making the best of a really bad situation. Of course wasting time doing that and even debating this wouldn’t be an issue had the FttP roll out continued as planned. I don’t think anyone expects the coalition clowns to do the sensible thing and start up FttP again. That would be too logical and go against their religious copper zealotry.

      FTTdp should be good enough for the next few years, and the consumer can always upgrade as and when they feel the need

      Funny. I remember a time when people were saying pretty much the exact same thing about FttN.

      • if FTTN had never been planned or begun being rolled out then it would seem silly (to do it in preference to FTTP) but with a current either/or situation for urban areas FTTdp seems fantastic, would give consumers currently pegged for FTTN speeds that will suit them for many years to come in most cases, the cases where an entrepreneurial type eventually expands home based business to need FTTP would be fine, they’d be able to afford the last leg of fibre if there are no hiccups with provision for those speeds beyond what the curb copper can provide

    • With greater defection to fibre, the per-user cost of copper rises. The question then becomes, who wears the cost? Should the regulator allow for increasing fixed costs for copper users (thereby becoming a natural driver for further defection)?

      Serious question about designing the regulatory framework and dealing with unintended consequences.

  21. I would be interested to see an analysis of how this change will actually affect costs. Is this another blowout?

        • Oh, I just thought of a question. Does this reverse-powering mean that you can still use your connection in a black-out, provided you have a UPS or solar or some other way of powering the modem?

          • Correct, if you have all your comms gear on UPS, then as long as the POI remains powered and your UPS stays up, you will stay online.

          • Assuming the is fed from the FAN with backup power via GPON then sure.

            If fed from Fibre LT card from the node then as long as that battery lasts.

            Thus is why talk of FTTdp without knowing the architecture is not very useful by NBN Co.

      • Remember the lower OPEX is from cost shifting (nbn to customer), not cost reduction.

        And sadly still not to be concidered a reliable connection.(per nbn)

  22. The end game really should be for FTTP for all. BUT, after all their posturing that FTTP is too expensive, I just don’t believe that the Coalition will perform a political U-turn this huge, this late in the game. Not happening.

    A change of tack could be in order, and it would probably be in everyones best interests if concerted pressure were brought to bear for a change from FTTN to FTTdp, instead of constantly banging on about FTTP.

    At least with a change to FTTdp, the Coalition save a bit of face and are more likely to acquiesce. They get to deliver FTTdp with a half-decent service for less than the cost of FTTP – and the consumers get a half-decent service with a relatively cheap upgrade path to FTTP.

    Win win.

    • But those who think along the lines which got us to this position in the first place would still have their hands on the state’s tiller.

      I reflect on the fact Churchill lost the first election after WWII despite the expectation the nation would have been grateful for its deliverance. Can history repeat itself?

  23. Evidence from overseas from telco’s that have years of experience rolling out both FTTN and FTTP like BT in the UK always state that FTTN is faster and cheaper to deploy than FTTP.

    Apparently Australia is unique in the world where the opposite is true, FTTP is faster and cheaper to deploy, not only that our payback on FTTP is also shorter than anywhere else, this is despite evidence that the majority of existing NBN FTTP customers elect to purchase the lower speed plans.

    Australia is also unique in the world in that our copper is a special sort of copper that is totally unsuitable for FTTN.

    • … but the chuckle turned into absolute confusion when for the first time ever, R appeared to post the most logical, straight forward and accurate comment in the history of his time on Delimiter.

      I’d applaud, but I have a feeling you’ll come back and make yourself look like a dick again soon enough.

      • There needs to be a term for those occasions when someone (who is divorced from reality) attempts sarcasm and ends up saying something sensible by mistake.

  24. Life would be a whole lot simpler if the NBN execs had the spine to just use the Nuremberg defence rather than trying the convince the public of the superiority of the latest technical solution floated by the most recently installed minister.

    Like speed limit signs on the side of the road, we all just need to follow along with the latest policy decision regardless of the merits.

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