NBN Goes Multi-Platform: Fiber to Where It Can Make Money

The Australian National Broadband Network, building a wholesale-only high speed access network across Australia, believes a new “all of the above” or multi-platform approach will accelerate the construction timetable by four years.

That is a practical investment approach some service providers have for years dubbed "fiber to where you can make money." In other words, the amount of investment is directly related to expected return on investment.

NBN also revised its deal with Telstra, the former incumbent operator, has NBN Co. progressively taking ownership of elements of Telstra’s copper and hybrid fiber coax  (HFC) networks in those parts of the country where it represents the fastest and most cost effective way to deliver fast broadband to families and businesses.

The original agreements between NBN and Telstra in June 2011 gave NBN Co access to Telstra assets such as ducts, pits and exchanges to use in the rollout the NBN, but not access to Telstra’s copper or HFC assets.

The latest deal is part of a lengthy and contentious struggle between Telstra and the government about the NBN. Telstra was no more anxious than most tier one fixed network owners to sell its fixed network assets, and become a non-facilities-based service provider.

On the other hand, Telstra eventually agreed to sell its fixed assets, in exchange for greater freedom in mobile services, and a great deal of cash. Precisely how much Telstra will be paid for decommissioning its access network and becoming a wholesale customer of the NBN is not known. But there is speculation the amount could be as much as AU$100 billion over a period of 55 years.   

NBN’s business plan is highly dependent on revenue assumptions. Among the key elements is a doubling of average revenue per user over a decade and limited competition from mobile or untethered alternatives.

NBN is betting that wireless-only households not buying a fixed line service will not exceed 13.5 percent of total high speed connections to 2041. Doubters likely will focus more on the latter assumption as problematic. Overly-optimistic revenue assumptions have been a problem for the NBN in the past.

And competition could well emerge as a key problem.

But demand assumptions also might be an issue. Single-person households likely will not be an issue. But multi-person households could be another issue. On average, Australian Internet users average about 2.1 people per household.

But as with all statistics related to the Internet, “average” might not be so useful, representing a mix of single-person households and families or multi-person sites.  

Construction of the NBN is set to have commenced or be complete for around 3.3 million Australian homes and businesses by June 2016. More than 309,000 premises across Australia are connected to the NBN in 2014.

It is NBN Co’s goal to make all homes and businesses serviceable by 2020 with access to download data rates of at least 25 megabits per second. The majority of premises in the fixed line footprint will have access to download data rates of at least 50 megabits per second.

Where there are households and businesses already served by the Optus or Telstra HFC cable networks will receive fast broadband over an upgraded HFC network, they will continue to be connected using the HFC network.

Where the NBN fiber-to-the-premises (FTTP) network has been deployed or is in advanced stages of being built, that will be the connection approach.

Where the NBN fixed wireless or satellite networks are earmarked for deployment, that will continue to be the case.

In other cases, communities are likely to receive service using a fiber-to-the-node (FTTN) network, while  multi-dwelling units such as apartment blocks will get fiber-to-the-premises.

In other words, NBN will be using a “fiber to where we can recover our investment” approach.
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