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Apr 10, 2014

Turnbull pulls the plug on FTTP, so 'we're back to the drawing board'

More than 3.4 million Australian homes are stuck with bog-standard broadband, thanks to the Coalition's latest NBN misstep. Our own correspondent feels dudded.

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That’s it. For me, anyway, and residents of some 3.4 million Australian homes — ironically perhaps the most willing and able to pay for fast broadband. We’re set to miss out on fibre to the premise, because we sit within the footprint of the existing hybrid-fibre or coaxial cable network that delivers pay TV.

Communications Minister Malcolm Turnbull decided our fate yesterday when he instructed NBN Co., chaired by former Telstra boss Ziggy Switkowski, to work towards a multi-technology mix for the National Broadband Network. Retaining the HFC network is a fundamental plank of the MTM strategy.

This is not news to anyone following the NBN closely, it’s just that now it’s official. We already knew the Coalition intention — when in opposition, Malcolm Turnbull decried the inherent waste of money, with the government paying hundreds of millions of dollars to shut down the perfectly serviceable HFC networks.

The NBN Co. strategic review released in December included MTM as the preferred option and envisaged that about 30% of homes would get the NBN through a substantially like upgraded HFC network that will deliver FTTP-like broadband.

The release of the strategic review sparked a fierce debate among the technology specialists about whether the HFC network was up to it. Among the concerns was serviceability of an overhead cable network that, although much younger than copper, had been exposed to the weather for 20 years. Crikey put this to Telstra chief David Thodey at the half-year results — he flatly rejected it, given Telstra had just spent $300 million upgrading the HFC network in Melbourne.

Journalist Adam Turner wrote two strong pieces arguing it wasn’t. After copping flak from Turnbull’s office, Turner ultimately conceded the quality of broadband delivered via HFC depended on how much was invested in the the upgrade, and he feared the government’s attitude — reasonably, given Prime Minister Tony Abbott’s view that FTTP is “wacko” and Treasurer Joe Hockey’s confected budget crisis — would be that “near enough was good enough”.

Guru (and NBN Co. director, admittedly) Simon Hackett wrote an excellent analysis which argued the gaps in the HFC network will be filled in, and there will be more nodes meaning less competition among local households for bandwidth (which slows down present HFC internet at the moment to 100/2Mbps (download/upload speed). Certainly, it seems, the broadband delivered over the HFC network now is no guide to the broadband that will be delivered via HFC by NBN Co. in the future.

What is also certain, however, is that it won’t be as good as FTTP. It will be delivered sooner, at lower cost to the NBN and therefore the country. It will give FTTP-like performance perhaps — and hopefully, where it falls short, it will be priced more cheaply.

Like everything to do with the NBN, it is hard to be definitive about any of this because it is still up in the air and depends crucially on the deals negotiated with Telstra and Optus. Under its $9 billion deal with Telstra (the government was going to kick in an extra $2 billion to fund the universal service obligation), NBN was to buy the HFC network and shut down voice and data so only Foxtel could come down the line. The price was never split out. NBN was also going to pay about $800 million for Optus’ HFC network. We also don’t know yet how much of NBN’s budget will be set aside to upgrade the HFC network.

Last week, Business Spectator‘s Alan Kohler wrote a heartfelt memo to Turnbull — “don’t stuff up the NBN” — which rang true: he’d spoken to people in inner Melbourne’s Brunswick, which already has FTTP, to find out what they thought of the NBN and what they were doing with it. Striking was one NBN customer Melissa who just loved the internet speeds: “It’s increased the value of our house, no doubt about it. We’ll never again live where they haven’t got the NBN.”

Critics accuse Kohler of talking his own book — Business Spectator is an online business, the argument goes — but for mine it rang true. Arguments about the impact of broadband on property prices are terribly subjective. But I’d hazard a guess that frustration with slow internet is the norm by now and with the NBN it’s almost the opposite of the usual NIMBY syndrome (perhaps we need a new acronym: BRIMBY — bring it to my back yard).

BBY telecommunications analyst Mark McDonnell says there is a definite industry consensus that using the HFC network is an incredibly efficient way to deliver fast broadband, albeit not as fast as FTTP. Still he wonders where the government is going with the NBN and the mix of technologies: “It’s in no man’s land. Literally, we’re back to the drawing board.”

Paddy Manning —

Paddy Manning

Crikey business editor

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35 thoughts on “Turnbull pulls the plug on FTTP, so ‘we’re back to the drawing board’

  1. TJDW

    I’ve said it in many other places and I’ll say it here too. This is the official death of the NBN. There will no longer be a singular, ubiquitous network that benefits all Australians equally. There will not be any technological innovation in this country. There will not be foreign investment thanks to our broadband speeds. We will not be able to compete with New Zealand and our other Asian neighbours. FTTN and HFC will not, I repeat NOT deliver the kind of broadband service we will need in 10 years’ time. In most cases it’s barely able to deliver the speeds we need now. This is purely and simply an ideological move by the Coalition. They refuse to admit that Labor got it right the first time. They’re not interested in what’s best for the country. If they were, they’d be trying to find a way to make a FTTP rollout faster and affordable, not replace it with inferior technology that is already obsolete right now. We’re about to spend $41 billion on a network that will not be able to cope with demand when we could spend just a fraction more ($56 billion vs $41 billion – admittedly a lot of money but then this IS an infrastructure project – ie. it will make that money back and then some) to get the NBN completed properly with FTTP. Telstra, Foxtel and Optus will be laughing all the way to the bank, having offloaded the maintenance and operating costs of networks that they no longer want at tax payers’ expense.

    Further, anyone who is living in a home with FTTP right now is in a very fortunate position. In a few years’ time when the MTM network officially falls apart either by economic problems or by the simple fact that it is not up to the task of handling our digital future, their houses will increase in value exponentially.

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