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NBN Co

For many people, hearing the words “NBN” is enough to elicit a sigh, or at least a look of resignation. Why all the fuss? Well, because NBN has become shorthand for two major issues that are dominating Australia’s telecommunications industry: Labor’s ill-fated National Broadband Network (and the failed satellite component), and reports that the network is struggling along in trials with – wait for it – slow speeds.

NBN A good idea poorly executed

The broadband you can smell – that’s been the tagline for the company called Nextgen Networks. It seemed to be a perfect pitch: broadband delivered by people who understand local telecom services and products, not faceless technicians sent out from a big city office somewhere, trying to figure out our crappy internet speeds on their inaugural visit. The problem was that every time I tried their service – via satellite, of course – it stank. And then they went bust and folded last year. But at least I found out what NBN actually stands for after all that!

The National Broadband Network is, yes, a network. Well, several networks actually. Its original vision was outlined in April 2009 by then-opposition communications spokesman and former minister for broadband Senator Stephen Conroy (who you can read more about later). The key to the whole NBN plan was speedy connectivity – much faster speeds than what most Australians were experiencing on their internet connections back then. Labor also saw fibre optic cable as the technology of choice rather than existing copper wire technologies.

What is FTTH?

NBN basically uses optical fibre cables to connect homes and businesses directly to broadband services offered over those cables. It’s a revolutionary idea compared with current ADSL2+ landline connections that rely on old twisted-pair wire technology – think of them like leaky pipes that only allow a certain amount of water through at any time. With ADSL2+, the more people connect to a local exchange, the slower things get for everyone – and that’s on top of the regular speed limit imposed by your telephone company (Telstra in most cases).

By contrast, optical fibre cables are brand new ‘pipes’ made from special glass with a diameter thinner than a human hair. They can transport many times more bandwidth per second than twisted-pair copper lines and last longer too. In fact, it takes around 50 years for landlines to degrade to the level where they need replacing, but optical fibre cable lasts decades longer.

The original NBN plan involved rolling out this all-fibre style of broadband to 93% of the population. To do that, it called for new infrastructure: new exchanges dubbed ‘data centres’ (or nodes) each taking on a share of the workload and linked via fibre optic cable back to Telstra’s Trans-Australian network (TAN). That way, the NBN could be built without being directly connected to existing legacy copper phone networks used by Telstra and rivals such as Optus. Once finished, anyone with access to an NBN data centre would have more speed and reliability than most Australians get right now.

If things had gone according to plan – especially with respect to timing – we’d all be enjoying this super-fast broadband service today. But we’re not because things didn’t go according to plan. That’s because the rollout is very expensive – more than twice what it was originally expected to cost, with a final price tag of at least $54 billion.

In addition, there were problems with the existing infrastructure that needed upgrading and other issues with Telstra such as an unwillingness to hand over some of their copper networks for immediate use and others including maintenance and repair responsibilities along with access to shared ducts on power poles. We’ll look at those points in more detail later but suffice it to say they had a major impact on completion dates (some parts of Australia are still waiting) while pushing up costs even further.

The first NBN plan also called for digital television service providers Foxtel and Austar as well as satellite TV provider Optus to move their existing cable networks onto the NBN instead of using a separate infrastructure of their own. This transition happened in early 2013 and it was expected to cost about $500 million, but a Senate hearing in March 2016 revealed that number had by then blown out to more than $1 billion.

This original plan was thrown into chaos when the Coalition won the Federal Election in September 2013 and promptly dumped Labor’s NBN model for its own scaled-down idea which relied on using Telstra’s existing fibre infrastructure along with other technologies such as copper wire and wireless. It also pushed back rollout completion dates yet again.

To cut a long story short, here’s what we’re doing right now: building an initial version called ‘the multi-technology mix’ which uses three different kinds of technology to get broadband into our homes, not just fibre. This mix combines the most popular options for high-speed internet services around the world right now – optic fibre cabling, existing copper wire and so-called ‘fixed wireless’ radio transmission. All up, there are five different flavours of a network employing these technologies: fibre to the node (FTTN); fibre to the building (FTTB), aerial fibre to a neighbourhood box then down old phone lines or coaxial cable from that box; satellite delivery via NBN’s new satellites; and fixed wireless where reception towers link with smaller antennas installed on houses (or sometimes businesses). The fifth flavour is called HFC because it relies on Telstra’s hybrid fibre-coaxial networks which are a combination of fibre and copper for high-speed broadband.

Last year, NBN announced that it would upgrade or ‘rewire’ 200,000 premises in Willunga, South Australia, to FTTN after realising its original model was too expensive. This is part of the $AU10 billion spent on capital expenditure (or capex) costs as well as spending on labour ($9.5 billion), building and leasing new offices ($1.8 billion) and buying equipment ($3.6 billion). In total then, the company has government funding of about $29 billion with nearly half of this going into rolling out fixed wireless towers connecting regional towns which can’t get access to other forms of broadband because they’re too far away from NBN’s fibre nodes and other equipment. The rest of this money was spent on rolling out fixed-line infrastructure – either FTTN or FTTP – to homes and businesses across the country as well as connecting them up to the network.

A total of 1.3 million households could get access to superfast broadband under the first plan, but only about two thirds (900,000) will be able to get that speed by 2020 before construction costs start rising again and more delays are likely because some parts of Australia may just not be ready for high-speed internet no matter how much money NBN spends trying to connect people in these areas. That said, given 700,000 premises already have access via fixed wireless services while another 400,000 have access via satellite, it’s obvious the NBN is reaching a lot of people despite the many problems.

Of course, that first plan was also supposed to cost $30 billion in capital expenditure on top of operational spending so for this second version…it’s going to be much more. The Coalition initially estimated its MTM model would cost about $29 billion in total but costs are rising again, NBN boss Stephen Rue revealed his company expects capex alone will reach between $46 billion and $56 billion by 2020 which means we’re probably looking at another multi-billion dollar bill down the track for maintenance or upgrades. That said, Morrow believes customers will save money in ‘total customer service spend’ because they’ll no longer need a phone line or pay for data allowances.

So will Labor’s original fibre-to-the-premises model have been worth the money? It certainly would have connected a lot more people to faster broadband than the MTM version. But given what we are building now won’t reach everyone and some homes may never get superfast access, it’s hard to tell if Australia will be better off in 10 years’ time when considering how much we’re spending on this program. More than that, even though not all households were supposed to get FTTN under the first plan, most of them would’ve got fixed wireless telephony via towers connecting to smaller antennas on each house – an upgrade from their old copper lines which also looked likely then. The NBN’s internet protocol television (IPTV) also looked possible under the first plan as well.

If we’re only getting 25Mbps via satellite and fixed wireless, will people be happy with that? After all, there is talk Britain could abandon its own fibre-to-the-premises rollout for something more affordable because it’s so expensive – but the UK also said it would bring a ‘ top end’ of 1Gbps speeds to everyone. Australia’s existing copper network isn’t capable of supporting gigabit speeds either which partly explains why NBN needs to replace this infrastructure – although many Australians can currently get 100Mbps thanks to technology such as vectoring or aggregation while Telstra recently launched 10Gbps plans in some cities. Broadly speaking, the whole reason for replacing copper is so that we can have faster internet but how will people feel about slower broadband than what they already get?

It’s hard to tell at this stage, especially given Australians could still end up with a mixed model – no matter how much it costs. The NBN Undertaking did set targets for connection speeds and many of these were changed last year from 100Mbps to 25-100Mbps during peak periods with more delays possible (up to 2021) if construction problems are encountered in some areas. So maybe Australians won’t care so much after all because those speeds are still good enough for most households and businesses although it’s worth remembering that NBN also promised uniform pricing across Australia which isn’t happening yet while there are also questions about customer service standards.

That said, the NBN Undertaking was only a guide and we’ve already seen some of its targets changed as well as the mix of technologies used for the network – not to mention delays in some areas which are primarily caused by problems acquiring Telstra’s copper lines and HFC cable networks. Speaking of Telstra, it also has an interest in this debate because while many people believed it would be able to make money from any government-owned broadband use of its existing infrastructure, that’s no longer true because NBN owns those assets now. Instead, Telstra is working with NBN on upgrade plans in order to provide faster speeds and perhaps VoIP services over its old copper network but there are still doubts it will achieve this without charging more for those services.

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