Report Highlights Risks of NBN Co’s All Fibre Strategy

Respected telecommunications analysts Analysys Mason have recently produced a detailed report which has some alarming findings for the Rudd Gillard Government’s NBN.

The reports looks at the roll out of fibre networks around the world.  It concludes that there are significant dangers for those countries which are adopting a pure Fibre to the Home (FTTH) approach;  that such rollouts are susceptible to the faster roll out of upgraded wireless and DSL networks; and that countries where there is a focus on Fibre to the Node (FTTN) and VDSL will have a much higher take up of fast broadband in the next five years.

The report notes that a FTTH approach will entrench the “digital divide”.   The author of the report, and a lead analyst for Analysys Mason, Rupert Wood, states:

“Given the as yet untapped potential of copper over short distances, we wonder whether it is really sensible at this stage to take fibre to people’s homes.  Sticking rigidly to FTTH runs the risk of delivering next-generation access to largely urban or well-to-do-elite, while delaying delivery to other users and potentially losing customers.  This may come to look both commercially and politically unacceptable”.

Of course, “sticking rigidly to FTTH” is a very good description of what NBN Co is doing.  This follows the decision taken by Stephen Conroy and Kevin Rudd in early 2009 to use FTTH (dumping the previous policy of FTTN) for purely political reasons.

It seems much more likely that careful operational and financial analysis would recommend extensive use of FTTN, at least in brownfields locations (that is, existing built up areas.)  This is not a decision which should be made by politicians without detailed analysis.  That is why Coalition Communications Shadow Minister Malcolm Turnbull has committed to an inquiry by the Productivity Commission to check the most cost effective way to proceed.

Mounting evidence – including the Analysys Mason Report – suggests that using FTTN would lead to a faster and cheaper rollout, and would in turn be likely to mean lower prices to end users and faster take up of broadband – thus narrowing, rather than widening, the digital divide.

FTTN would use the existing copper wires for the last few hundred metres, and could readily deliver speeds to end users of up to 30-40 Mbps.  Such speeds will create a fast and rich internet experience, with speeds more than adequate to deliver both current applications as well as those that are envisaged.

In a remarkable display of incompetence, the Rudd Gillard Government failed to lock in a pathway to move smoothly to FTTN should this become the preferred option.

Extraordinarily, under its deal with Telstra, the Rudd Gillard Government agreed to pay Telstra $11 billion – but failed to reserve to NBN Co or the government any right to use the copper network in the future.  It is very hard to understand why the Rudd Gillard Government did not follow the basic principle of negotiation – always leave yourself with as many options as possible.

None of this makes it impossible to move to FTTN in the future.  But it is yet another example of the way the Rudd Gillard Government has repeatedly made the wrong call when it comes to NBN.