The NBN Fibre Cost Shock

NBN Co's FTTN/ Fibre on Demand has been released and the cost will shock most people. This week in Business Spectator the details of NBN Co's FTTN/FOD are discussed and what this means for customers that want to upgrade to FTTP is described and the outcome is not pleasant.

Read the full article below

Communications Minister Malcolm Turnbull has achieved a major milestone with the launch last week of NBN Co’s Fibre-on-Demand (FOD) offering. Turnbull’s pre-election commitment to provide a pathway from copper to fibre has been achieved but the cost of paying to have the fibre rolled to the premises has blown out to a fearsome extent.

The prospect of which will no doubt dampen the fervour of the average Australian stuck with Fibre-to-the-Node (FTTN) hoping to make the switch.

In the lead-up to the last election Turnbull promised Australians that there would be the option for FOD to be provided to people in the areas where Fibre-to-the-Node (FTTN) had been rolled out, following the approach used by British Telecom (BT) in the UK.

It wasn’t that long ago that the Communications Minister was throwing his support behind FTTN/FOD. In February 2013, he made the comment reported by ZDNet "Absolutely. I don't see why you wouldn't do that. If you can offer fibre on demand, and the reason you've got that is you've got in these modern [full service access networks], you've got ports that are capable of supporting GPON and VDSL."

"And so if you've got a customer that wants fibre, for whatever reason, then there's no reason, technically, why you shouldn't make it available."

In his policy FAQ Turnbull states “there is the technical possibility to run fibre to one or more customers in an area served by a node. In the UK this product, known as ‘fibre on demand’ is made available for a fee. For a customer living 500 metres from a node, for example, the charge is GBP1500 or about $2,250.”

What Turnbull fails to mention on his FAQ is that the cost for FOD in the UK was increased in January 2014 by BT to about GBP300 ($600) for premises less than 200 meters from a node through to GBP6,125 ($12,000) for premises close to 2km from the node.

ISP Review reported that BT estimated that the average cost per premises for FOD would be between GBP1,100 ($2,250) and GBP2,500 ($4,500).

Australians will be charged $300 when they apply for FOD and $300 for a design and quotation. The application fee for a FOD design and quote for an entire area, such as a regional town, is $1000 with the design and quote fee to be provided “upon application.”

The cost shock is likely to not stop there because the cost per metre for fibre has not been published by NBN Co as it has by BT. What this means is that the cost for FOD could vary widely around Australia but NBN Co’s lack of transparency will make it difficult for customers to know what anyone else is paying.

And if you live some distance from a node where it is more likely that you will experience poor FTTN connection speeds driving up the need for FOD then you will get to pay more than someone close to a node who is less likely to want FOD because their FTTN connection speed is much higher.

According to NBN Co “The cost to change technology infrastructure for Area Switch could range from tens of thousands of dollars to few millions of dollars and for Individual Premises Switch from few thousand dollars to tens of thousands of dollars.”

If you pay for FOD then you’re effectively paying for the installation of a connection twice. Initially you will have FTTN and you pay for the FTTN installation as part of your monthly plan. Now if you opt to get FOD you will pay upfront for the FOD installation but your monthly plan fee won’t be reduced to take into account the fact that you’ve paid for the FOD installation and no longer use FTTN.

It would seem that the FOD option presented is nothing more than a political stunt, with the application, design and quote fees little more than a thinly disguised price signal, a device that the Coalition government is currently very fond of. It means that the average Australian is not likely to know the true cost of FOD because most will be put off by the high cost of finding out.

This no doubt suits NBN Co because it is unlikely that the FTTN nodes being rolled out will have more than a couple of GPON ports available if any at all.

What happens if you are renting?

If you’re one of the approximately 31 per cent of Australians that rent then FOD is unlikely to be high on your list of priorities and if you’re in regional or remote areas where NBN Co is rolling out fixed wireless and satellite then FOD is not an option, unless you’re prepared to pay significantly more for the infrastructure needed to support FOD or FTTP.

For a small business person seeking a sea or tree change you can forget about having anything other than “bare-minimum broadband”.

Don’t forget that with FOD fibre is run from a node all the way to premises and this could be up to 800 metres or more and you will pay per metre. What happens if your neighbour asks for fibre at the same time you do? Or when your neighbour asks for fibre at a later time? Do you think that NBN Co will put a multi-port in the pit outside your home so that you can share the fibre from the pit to the node or do you think that NBN Co will charge for a second fibre all the way back to the node?

Self-install to the rescue?

If you want to reduce the cost of FOD you might decide to investigate purchasing a fibre self-install kit from Huber and Suhner that includes the fibre and components needed to connect from the outside of premises to an inside point where NBN Co’s equipment would be connected.  You might even go so far as to self-install fibre from the outside of the building to the telecommunications pit on the street adjacent to the property.

A spokesperson for NBN Co told Business Spectator that NBN Co is not opposed in principle to the idea of individuals or communities doing fibre self-installation but there is a need for this to be investigated further before the go ahead is given and what Telstra’s position will be on access to the infrastructure between premises and nodes is unknown at this time. Presumably, it’s unlikely to be positive if people try to self-install fibre down streets from the pit to the node.

While NBN Co is paying Telstra nearly $100 billion over the next thirty years for the copper in the street, maintenance of the copper and “help” to do the FTTN rollout, Telstra will retain ownership of the pits, ducts, traps and other key infrastructure.

It would be very tempting for Telstra to charge yet again for FOD installations and Telstra will tell you that the potential for damage to FTTN or other FOD connections is too high for individuals or communities to self-install fibre down streets.

Is there an opportunity for communities to find suitably trained volunteers to help out and what would Telstra and NBN Co say to this?

Will NBN Co wholesale FOD so that RSPs can do the installation as part of a product bundle? Could competition reduce the cost of the FOD install especially if a customer was to sign up for a two or three year contract?

And when will NBN Co release the long awaited update to the network design rules with the missing technical details on how FTTN/FTTB/ FOD are to be provided?

Following BT down the rabbit hole

What we are doing is following the BT model to the hilt but bear in mind that the broadband journey hasn't been a pleasant one for the British telco giant.

BT commenced rolling out FTTN about ten years ago and in January 2015 TechCrunch reported that BT would rollout “ultrafast broadband” using a combination of FTTP and FTTdp/G.Fast to offer “initial speeds of a few hundred megabits per second to millions of homes and businesses by 2020″ and increasing thereafter to “up to 500Mbps” for “a majority” of the UK population “within a decade”.

So by sometime after 2025, twenty years or more after BT commenced an upgrade from ADSL2+ to VDSL, the “majority” of premises in the UK would still not have the gigabit speeds already available today over NBN Co’s FTTP footprint, that should cover about 20 per cent of Australian premises under the Coalition’s NBN plan.

Having made the decision to use the copper based VDSL technology ten years ago BT is now struggling with how to meet customer expectations for the gigabit broadband that can best be provided by FTTP. BT’s “ultrafast broadband vision” includes the option for a FTTP solution if FTTdp/G.Fast does not measure up.

TechCrunch reported that “[BT] is also planning to develop a premium fibre broadband service for those residential and business customers who want even faster broadband, of up to 1Gbps.”

“We’re exploring options for a premium 1 Gbps service,” the BT spokesman added. “There are various things we can look at. We’re looking at deploying fibre all the way to the customer’s premises, as we currently do with fibre on demand, but we’re also quite keen to see what speeds can deliver as it evolves. So we’re keeping our options open there.”

In Australia’s case if NBN Co were to complete the FTTN rollout before looking at a technology upgrade to FTTdp/G.Fast we would be struggling to complete the FTTdp/G.Fast upgrade before 2030 based on BT’s projections.

By this time Australia could well and truly be in the broadband wilderness. 

Yet another broken promise?

The final word on FOD goes to the Shadow Minister for Communications Jason Clare when he stated recently in a media release “only the rich can afford super-fast fibre broadband, whilst the poor will be stuck with the old copper network to their home.”

“Before the election, Labor warned that under Malcolm Turnbull’s second-rate broadband plan households and small business in fibre-to-the-node areas would be forced to pay up to $5,000 for a fibre connection.”

“At the time, Turnbull referred to ‘Fibre on Demand’ charges costing ‘about $2,250.’ Now it looks as if these charges could be up to ‘tens of thousands of dollars.’”

“This is another broken promise and shows once again that you can’t trust anything this Government says.”

Mark Gregory is a Senior Lecturer in the School of Electrical and Computer Engineering at RMIT University.