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nbn™ adds premises to FTTC, HFC, slims down FTTN build

Build will end in 2020, stay in the financial envelope.
We promise, really, truly

There's nothing wrong with fibre-to-the-node (FTTN), nothing at all – but nbn™, the company building Australia's National Broadband Network (NBN), has decided to move more than a million premises onto other technologies.

News of the change came in a new corporate plan released yesterday, which detailed how lucky householders who don't get stuck with FTTN will instead get hybrid fibre-coax (HFC) or fibre-to-the-curb (FTTC). When the network is completed in 2020, nbn™ says, just under 40 per cent of premises will be offered FTTN connections. FTTC (more than a million premises, around 8.6 per cent of the total) and HFC (an expected 3.1 million, 26.7 per cent) will carry more of the load.

Since the start of this year, FTTN has increasingly taken the role of the millstone around nbn™'s corporate neck, with a combination of troubled activation processes and poor performance.

Within the industry, it's become a festival of finger-pointing, and consumers are so unhappy that the Australian Competition and Consumer Commission has sunk the slipper into the collective behinds of the whole industry.

Adjusting the rollout to give more users higher-speed tails makes sense from that point of view, if the retailers can be relied on to put more into backhaul, but nbn™ said yesterday this is happening. Its adjustments to Connectivity Virtual Circuit (CVC) pricing means retailers are provisioning more capacity for their users.

Pushing FTTC further out into the network makes it more expensive, but fortunately, by a relatively trivial amount: a predicted per-premises outlay of AU$2,900 instead of the $2,800 in last year's corporate plan.

The FTTN cost-pre-premises remains the same as last year at $2,300; given that the rollout is already at considerable scale, there doesn't seem much chance that will fall. Likewise, HFC is still pegged at $2,300 per household, and fibre-to-the-premises (FTTP) is $4,400 per connection.

It's difficult to present an apples-for-apples comparison of the rollout compared to older corporate plans, for two reasons: this year is the first time the company's broken out FTTC premises in their own right; and second, because it says better geo-analysis has shown it has fewer premises it needs to connect.

The change is a total of 200,000 premises (with the network now pegged to serve 11.6 million when all's done and dusted) – 300,000 duplicates have been culled from the geographic database, but 100,000 new homes are expected to be built between now and the end of the build.

The corporate plan promises that the build will be completed within the AU$49 billion funding envelope the government has imposed.

Taking on Telstra

Absent from the corporate plan was any discussion about Telstra's hopes to renegotiate its financial arrangement with nbn™.

Announcing the carrier's financials mid-August, Telstra's CEO Andy Penn said he wanted to get nbn™ to let it securitise upwards of $5 billion worth of forward payments for customer migrations.

nbn™ said “no dice” on Wednesday, but Vulture South can't imagine Telstra will let that be the end of the matter. The incumbent is a formidable and persistent negotiator – it's worth remembering that it delayed the previous government's NBN plan with lawyerly negotiations so effectively that by the time the 2013 election rolled around, an all-FTTP rollout could be presented as a shambles.

Money was at stake then, and money is at stake now: as the NBN changes Telstra's fixed broadband to a retail play, the carrier's financials will suffer.

It's at least reasonable to expect Telstra to continue writing to communications minister Mitch Fifield and nbn™ putting its case – and it's almost certain the carrier is mobilising its considerable legal resources on the matter. ®

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