The news today that NBN Co has been given new instructions by the Communications Minister Malcolm Turnbull came only hours after I wrote in Technology Spectator about the Game of Reviews and Audits coming to a rapid end. Is it surprising that Turnbull has acted before the business case has been completed? No. After all the purpose of the endless reviews and audits has been to provide economic rationalist justification for the NBN to be turned on its head.
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The past week has been a rollercoaster for NBN Co and with homes and businesses in 15 towns across Australia set to say goodbye to the copper lines in 45 days, NBN Co chairman Ziggy Switkowski is understandably concerned about what happens next.
Switkowski’s comments at the CommsDay conference in Sydney highlight how the Coalition’s preferred multi-technology model brings with it some serious teething issues. NBN Co’s failure to provide a one-year and three-year construction plan by March 31 as required by the special access undertaking approved by the Australian Consumer & Competition Commission (ACCC) last year provides the clearest guidance yet that the change in direction has thrown NBN Co into a period of internal chaos.
NBN Co's head of regulatory affairs, Caroline Lovell, wrote to the ACCC on April 2, 2014 and stated the failure to lodge the rollout plans was partially due to the "major change in direction to the multi-technology mix (MTM) architecture”.
Lovell wrote that NBN Co had been putting resources to addressing "planning and construction issues that led to delays and frustration in the past".
And the Coalition’s planned reduction of staff numbers at NBN Co will help matters how?
Timing is everything
Meanwhile, the news this week continues to be bad for the thousands waiting for their switch-over to the NBN as construction delays continue to cause havoc.
In a speech at the CommsDay conference yesterday, Telstra’s head of regulatory affairs, Tony Warren, said it was time the telecommunications industry developed a unified solution to the customer migration problem that is only going to grow as more people gain access to fibre-to-the-premises (FTTP).
Warren said “The end user frequently experiences delays and disruptions when they try to switch to the fibre network,” and he went on to say, “Problems include too many premises not being ready, construction delays and an incomplete product set".
Warren did not blame NBN Co for the problem but indicated that the absence of a single industry-wide framework was an issue and went on to suggest that the Communications Alliance (CA) should oversee the customer migration process.
The timing of Warren’s speech could be either a coincidence or part of an orchestrated plan to support the CA submission to the NBN Cost-Benefit Analysis and Review of Regulation chaired by Dr Michael Vertigan.
For the last four years the telecommunications industry has been told that there were problems with NBN Co’s construction approach and the huge gulf that existed between key players in the NBN pantomime.
Warren made the point of highlighting the failure of the telecommunications industry when he said that “everybody needs to step up, it’s been a failure across the board, and it’s really harmed the brand of the whole rollout, and the industry brand”.
Suddenly, we have CA stating in a submission to one of Malcolm Turnbull’s endless reviews and audits that it should take more responsibility for the NBN and reduce NBN Co’s management role -- and lo and behold Telstra’s Warren, who was an outspoken critic of the NBN, argues that it is time for CA to develop and manage an industry-wide customer migration framework.
Is Warren really advocating for a much greater role for CA as the MTM NBN 2.0 begins in earnest?
Under the NBN 2.0 model CA would by necessity have a greater role because there would be a need to provide standards, plans and frameworks for the operation, coordination, customer migration and management of the MTM networks leased to NBN Co, including the Telstra FTTN, the Telstra and Optus HFC networks and the soon to be Telstra, TPG, Optus, etc. fibre-to-the-basement (FTTB) networks.
It’s all in the numbers
The NBN will connect to an estimated 10 million or more premises. The rollout plan estimated there would be about 700,000 premises that would fall into the fixed wireless (4 per cent) and satellite (3 per cent) footprints.
Exactly how many of the 700,000 premises would connect to the NBN fixed wireless and satellite services has not been widely discussed but in another amazing co-incidence, areport by The Sydney Morning Herald highlighted Communications Minister Malcolm Turnbull’s imputation that unforeseen growth in customer numbers in regional and remote areas will cause “a deterioration of operating cash flows of its [NBN Co] satellite and fixed wireless networks of up to $1.2 billion by 2021".
The problem, according to Turnbull, is that NBN Co’s latest modelling shows demand in fixed wireless and satellite areas, originally modelled to be about 7 per cent of Australian premises, would grow to about 620,000 customers (about 6.2 per cent) rather than the anticipated 230,000 (about 2.3 per cent).
What this means is that the new modelling shows that of the 7 per cent of Australian premises falling in the fixed wireless and satellite areas there would be about 80 per cent connecting to the NBN rather than the 30 per cent that Turnbull will claim was originally projected.
Quite remarkable really -- provide people with better internet connections and who would have thought they might actually sign up? And what of the people waiting to sign up for FTTP?
Here's what the minister has to say: "Put together, these problems mean that without policy changes, the project as planned would not be able to service an estimated 200,000 to 300,000 premises outside of the fixed line footprint."
Turnbull explains that the problem is exacerbated by NBN Co’s failure to secure spectrum needed for the fixed wireless network on the outskirts of major urban areas such as Melbourne and Sydney.
The Australian Communications and Media Authority (ACMA) is still sitting on unsold digital dividend spectrum that could be used by NBN Co. The 30MHz in the 700 MHz band remains unsold and it would be reasonable for Turnbull to allocate this spectrum to NBN Co for the fixed wireless network.
But the purpose of Turnbull’s speech is not about what could be done, but what is going to happen and to justify what has already been decided was necessary to “find” that demand will be higher than originally thought and then to “forget” that the government owns spectrum that could be used to solve the problem.
The regions that were going to receive fixed wireless or satellite with the “explosive” demand will now be put on hold and provided with FTTN at some point many years from now.
Publish the modelling
Turnbull claims to be in possession of new modelling that covers fixed wireless and satellite customer connections and undoubtedly the modelling will also include fixed telecommunications customer connections.
Under Turnbull’s “transparent and open” approach to information about his portfolio he should have NBN Co publish the data used for the modelling and the results found.
It is likely the data will show that FTTP will be more popular as retail service provider competition kicks in -- TPG’s low-cost entry plans are a guide to future competition and how consumers will benefit.
Die-hards still optimistic
The die-hards over at Whirlpool have resurrected a thread on FTTdp (fibre-to-the-drop point) as a possible option that would utilise fibre carrying GPON past premises that are connected using existing copper and GPON to xDSL converters.
For many on Whirlpool the thought of utilising fibre-to-the-node (FTTN) technologies in the NBN 2.0 could only be made worse by being forced to sit in the front row at the Communications Minister Malcolm Turnbull’s press conference to be held in June 2014 when he finally brings to an end the Game of Reviews and Audits and makes the announcement that Australia will spend $43bn and strive for 10 years to have the worst “next generation” broadband network in the developed world.
My proposal to use FTTdp as a cost effective alternative to FTTN that provides flexibility and an upgrade path to FTTP has been ignored by the government and unfortunately for the Whirlpool die-hards the Telstra FTTN pilot and NBN Co FTTN trials at Woy Woy in New South Wales and Epping in Victoria signal the futility of hoping for sensible alternatives to be utilised.
The “greatest con in Australia’s history” is reaching a critical juncture. Over the next month expect Turnbull to ramp up criticism of Labor’s NBN by throwing around “facts and figures” that support the Coalition’s MTM NBN 2.0.
The Game of Reviews and Audits reaches the final episode in June 2014. Are you prepared for the inevitable?
