In my opinion, the NBN will not be a completed project until everyone has access to fast, reliable broadband. On that basis, the rollout will take us well beyond the currently projected deadline of 2020. What’s worse, it will end up having cost more than the original 2009 version and far more than then communications minister, Malcolm Turnbull, was told to expect when he adopted his so-called multi-technology mix model.
The people who advised the Government back in 2013 are the ones to blame. They recommended using Telstra’s ageing copper (FTTN) network – but even worse, they failed to consider the run-down state of the Telstra and Optus HFC (Pay TV) networks. Optus HFC has been totally abandoned and Telstra HFC is in need of much repair. Both the FTTN and HFC decisions are at the heart of NBN Co’s current dilemma.
Last week Telstra announced a major restructure, conceding it will fail to reach revenue targets based on receipts from the handover of its copper network to NBN, and also resulting from delays to the re-purposing of its HFC network.
NBN Co, too, is facing a revenue shortfall due to its inability to sign up enough customers. On the one hand, people generally are sticking with their legacy services for as long as possible (and are reportedly not being encouraged to switch by the NBN re-sellers). There are too many news reports of people moving to the NBN only to see their Internet speeds fall, not to mention the drop-outs that plague much of the FTTN service. On the other hand, NBN Co is falling behind in the physical ability to connect premises as the rollout stalls due to technical problems.
The broadband world has moved on since 2013. When I joined Internet Australia in 2014 the IA board favoured returning to a full-fibre NBN. So, too, did the majority of Internet experts in the country – and full-fibre is still what’s occurring in 80 percent of new broadband rollouts globally.
IA later resolved to call for a new technology known as fibre-to-the-driveway, or as NBN Co prefers to call it, fibre-to-the-curb (FTTC). Numerous experts maintain this is a suitable interim option because it can be upgraded later as needed. FTTC only uses a short hop of copper wire from the footpath into the premises. Over that distance, reasonable speeds are currently possible, with new equipment coming onto the market that will deliver very fast broadband. In time, depending on demand for greater speeds, the copper running into premises can subsequently be replaced with fibre at a reasonable cost.
While NBN Co is starting to deploy some FTTC it is still rolling out more FTTN. The obstinate refusal of the NBN Co board to re-visit its flawed technology choices has left the Government with an impending crisis. One that will arguably keep escalating as we approach the next elections.
On IA’s behalf, I regularly called for a bipartisan rethink and an agreed plan to solve the problems plaguing NBN Co. We warned both sides of politics that business-as-usual was not a viable option. I even spoke personally to Mr Turnbull and subsequently briefed his then chief-of-staff. Of course, that very person, Drew Clark, headed up the Communications department when the fateful decision was made to junk the original NBN model. He now sits on the NBN Co board!
In September 2017 the Parliamentary Joint Standing Committee on the NBN published its first report – following an extensive on-the-ground review of the NBN rollout. The committee effectively called on the Government to direct NBN Co to abandon FTTN. While its Liberal Party members understandably dissented, significantly, the sole National Party member voted with the majority. If people in the capital cities are unhappy with their NBN, that’s nothing compared to absolute derision it receives in the bush.
Despite all the strife it is in NBN Co is apparently sticking to the argument that the current strategy has allowed a cheaper rollout. The evidence is firmly to the contrary. In New Zealand, where they’ve stuck with fibre they’ve progressively reduced their ‘per premises’ cost by about 50 percent. If we’d done the same we could have built the NBN for much less than it will have cost once you add in the expense of eventually having to replace about 40 percent of the fixed-line network that’s using FTTN.
The way we’re heading now, whoever is in office in 2020 will have to deal with our biggest ever national infrastructure debacle. NBN Co will owe the government about $19 billion, which it is having to borrow to complete the rollout, and will have to fund the replacement of FTTN. Nobody knows how much it will cost to rip out the copper network and replace it, or even with what it will be replaced (although it is a fair bet it will be FTTC). Until that happens, the NBN will remain a work-in-progress.
The boss of NBN Co, Bill Morrow, has admitted he took a proposal to the NBN Co board to fully embrace FTTC. Apparently, the board rebuffed him, placing concerns over marginal short-term cost increases ahead of what would have been long-term savings of a far greater magnitude. Not to mention providing a far better service to about four million customers.
Morrow is leaving at the end of the year. Even an ever-ebullient chino wearing American can presumably foresee there’s a car crash waiting to happen up the road. A search is on for a replacement CEO. Hopefully, the lucky recipient will bring their own flak jacket and tin hat.
Laurie Patton was CEO / Executive Director of Internet Australia from 2014-2017. This article first appeared on his The Lucky General site.