NBN: Won’t be finished on time. Simple as that!

By LAURIE PATTON | 24 October 2018

Oh dear! New NBN Co boss Steven Rue has told Senate Estimates they are still projecting that FTTN (the trouble-plagued technology using Telstra’s ageing copper wires) will be used until 2040.

Experts, including Internet Australia chair Dr Paul Brooks, say FTTN will have to be replaced within 5-10 years of completion, preferably before then.

It’s not Mr Rue’s fault of course. He has been left ‘holding the baby’ – stuck with the flawed multi-technology mix (MTM) strategy introduced by his predecessor.

Surveys regularly show that people increasingly regard access to broadband as an ‘essential service’. Which is why it is essential that we fix the mess that NBN Co has managed to get itself into.

In my opinion, the National Broadband Network will not be completed until everyone has access to fast, reliable and affordable broadband. On that basis the rollout will take us well beyond the current official deadline of 2020. It looks like a lot of NBN Co customers are in for a long hard ride unless Mr Rue and his team can convince the Government to allow them to abandon FTTN sooner rather than later.

Adopting the MTM model will end up having cost us far more than the original NBN and more than then communications minister Malcolm Turnbull was told to expect when he was ordered by then prime minister Tony Abbott to “destroy” the NBN.

The people who advised the Government back in 2013 are the ones most to blame, along with the current NBN Co board members who refuse to concede that what they are now building is a dud. An Australian Financial Review article from 2013 revealed that former ABC chair and current NBN Co board member Justin Milne was one of the leaders of the pro-FTTN cheer squad – arguing it would be “orders of magnitude” faster and cheaper to deploy. Wrong!

Recommending FTTN was a big mistake – but perhaps even worse, they also failed to consider the run-down state of the Telstra and Optus HFC (Pay TV) networks. Optus HFC has been totally abandoned and Telstra HFC is in need of much repair. Both the FTTN and HFC decisions are at the heart of NBN Co’s current dilemma.

Appearing at Estimates, the Department of Communications and the Arts revealed that unbudgeted costs associated with remediation of the Telstra HFC network mean NBN Co will not be able to repay the $19 billion it is borrowing from the Government by the due date. Indeed, it will now need to borrow more money to complete the project.

NBN Co is also facing a revenue shortfall due to its inability to sign up enough customers. On the one hand, many people are apparently sticking with their legacy services for as long as possible (and are reportedly not being encouraged to switch by at least some NBN re-sellers). There are too many news reports of people moving to the NBN only to see their Internet speeds fall, not to mention the drop-outs that plague much of the FTTN service. On the other hand, NBN Co is falling behind in the physical ability to connect premises as the rollout stalls due to technical problems.

The broadband world has moved on since 2013. When I joined Internet Australia in 2014 the IA board favoured returning to a full-fibre (FTTP) NBN. So, too, did the majority of Internet experts in the country – and full-fibre or cable rollouts are what’s occurring in nearly 80 percent of broadband projects globally.

IA later resolved to call for a new technology known as fibre-to-the-driveway, or as NBN Co prefers to call it, fibre-to-the-curb (FTTC). Numerous experts maintain this is a suitable interim option because it can be upgraded later as needed.

FTTC only uses a short hop of copper wire from the footpath into the premises. Over that distance reasonable speeds are currently possible, with new equipment coming onto the market that will deliver very fast broadband. In time, depending on demand for greater speeds, the line running into premises can be retrofitted with fibre at reasonable cost.

While NBN Co is starting to deploy some FTTC it is still rolling out more FTTN. The obstinate refusal of the NBN Co board to abandon its flawed technology choices has left the Government with an impending crisis. One that will arguably keep escalating as we approach the next elections.

In September 2017 the Parliamentary Joint Standing Committee on the NBN published its first report – following an extensive on-the-ground review of the NBN rollout. The committee effectively called on the Government to direct NBN Co to abandon FTTN. While its Liberal Party members understandably dissented, significantly, the sole National Party member voted with the majority. If people in the capital cities are unhappy with their NBN, that’s nothing compared to the absolute derision it receives in the bush.

In New Zealand, they’ve progressively reduced their ‘per premises’ cost for fibre by about 50 percent. If we’d done the same we could have built the NBN for much less than it will have cost once you add in the expense of eventually having to replace about 40 percent of the fixed line network that’s using FTTN.

The way we’re heading now, whoever is in office in 2020 will have to deal with our biggest ever national infrastructure debacle. NBN Co will owe the government around $19 billion or more, and will have to fund the inevitable replacement of FTTN. Nobody knows how much it will cost to rip out the copper network and replace it – or even with what it will be replaced (although it is a fair bet it will be FTTC). Until that happens, the NBN will remain a work-in-progress.

Former NBN Co boss Bill Morrow saw the writing on the wall and left the organisation last month. Before departing Morrow admitted he took a proposal to the board to fully embrace FTTC. Apparently the directors rebuffed him, thereby placing concerns over marginal short term cost increases ahead of what would have been far greater long term savings. Not to mention providing a far better service to about four million customers. They did the Government no favour. Not to mention the rest of us!

On Internet Australia’s behalf I regularly called for a bipartisan rethink and an agreed plan to solve the problems plaguing NBN Co. We warned both sides of politics that business-as-usual was not a viable option. I even spoke personally to Mr Turnbull (when he was prime minister) and subsequently briefed his then chief-of-staff. Of course, that very person, Drew Clarke, headed up the communications department when the fateful decision was made to junk the original NBN model. He now sits on the NBN Co board!

With Morrow gone, and Turnbull no longer prime minister, communications minister, Senator Mitch Fifield is perhaps the last-man-standing to defend the MTM. Like Steven Rue, it’s not his fault that we are no longer being delivered a 21st Century NBN. However, it will arguably be he who ultimately takes the blame if nothing is done pretty soon.

POSTSCRIPT: Telstra, which had the first option to build the NBN but declined, is now positioning itself as a potential future purchaser. As Alan Kohler says: “Why would the long-suffering taxpayers and internet users of this country go through years of mind-numbing chaos and cost for the purpose of splitting up Telstra’s network monopoly, and then write off goodness knows how many billions of dollars, before giving a brand-new monopoly network back to Telstra for a bargain?”

(Laurie Patton was CEO / Executive Director of Internet Australia, the NFP peak body representing the interests of Internet users, from 2014-2017. He is a former journalist and media executive, now working primarily in the NFP sector.)