While NBN Co may have declared “Mission Accomplished” on the rollout of the NBN, where does that leave up to 250,000 premises who cannot receive the minimum download speed of 25 Mbps. 1
NBN Co’s riding instructions from government, the so-called Statement of Expectations, makes it very clear that all Australian premises must have a broadband service capable of downloading at a minimum of 25 Mbps.
In a paper promoted by Huawei and TelSoc, and written by the consultancy firm Omidia, the number of premises not meeting the minimum requirement is estimated at 200,000 to 250,000 households. These are customers on the Fibre to the Node (FTTN ) technology that are located too far (typically more than 1000m) from the node equipment for the copper network to be able to sustain download speeds of 25Mbps. 2
As outlined in the Omidia paper this poses a significant dilemma for NBN Co. Upgrades for these customers will be very expensive as these customers are located ‘on many thousands of different cabinets [or nodes]’. These nodes are in outer urban and semi-rural areas with low population densities making the cost per premise of the upgrades (by installing more optical fibre) significantly higher than the average cost published by NBN Co for the initial rollout.
At a conservative estimate of the cost at $5,000 per premise and assuming 250,000 premises the total extra cost for NBN Co would be approximately $1.25 billion. The revenue from these services, assuming a wholesale fee of $45 per month, would be $135 million per year – making any payback take at least 9 years. This is before any changes in wholesale pricing that may result from NBN Co’s pricing review that has been going on for over 12 months.
Rather than building out the FTTN network, what other options are available to NBN Co? Of course some customers could be migrated to NBN Co’s fixed wireless and satellite networks – however there are likely to be congestion and coverage issues with both of these options – hence the reason why NBN Co has put these premises on FTTN.
Another alternative for NBN Co would be to enlist the help of Australia’s mobile network operators. Telstra, Optus and Vodafone have either announced or are investigating plans to provide Fixed Wireless services as an alternative to NBN using 4G and 5G networks. Where these mobile operators have coverage and spare capacity they could offer services that could meet the 25Mbps download requirement. The outer suburban and semi-rural areas are likely to be ‘sweet spot’ for both of these criteria.
So rather than spending an extra $1.25 billion on building out the FTTN solution a more pragmatic and cost-effective way for NBN Co to meet its obligations could be to co-ordinate with mobile operators to enable them to service these households who have missed out on the minimum declared benefit from the NBN rollout.
Will we see this type of pragmatic approach from NBN Co? Or will NBN Co worry about the loss of customer revenue that would come from ‘losing’ these customers to the mobile networks? Will this also lead to more households moving to mobile network operators in other parts of the FTTN network that meet the 25 Mbps threshold but can get higher speeds on mobile networks?
NBN Co has not met its Statement of Expectations until all households can get a minimum of 25 Mbps. Rather than spending a lot more precious capital trying to finish off the job, NBN Co should think of more efficient ways of getting this remaining part of the job done.
Notes:
- 25 Mbps is a speed measured at the Layer 2 Ethernet level – lower speeds (by approx. 10%) will be available to the Layer 3 TCP/UDP Internet Protocol level and measured by most speed test sites. ↩
- Another reason for slower speeds is interference with older ADSL services. Some premises may get higher speeds when the ADSL network is turned off but this is unlikely for the premises at distances of 1000m or more because the new vectoring VDSL technology does not help at these longer distances. ↩
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