Activating our first trial premises with a live FTTC connection is another proud moment for nbn. Not only are we leading the world in this technology, but we are innovating to make sure we complete the rollout of the nbn™ broadband access network by 2020.
With FTTC we can deliver an identical end-user experience to Fibre-to-the-Premises (FTTP) – with the exact same 100/40Mbps top-speeds – but we can do it more cost-effectively – around $1,500 cheaper – and we can do it with far less inconvenience to residents, as we no longer need to dig up people’s driveways like we did on FTTP.
It’s a good example of what we have been able to do under the mixed technology model and the turnaround that has occurred since the new leadership team was established in 2014. Back then, our people were told to design and build the fixed-broadband network no matter the time or cost.
By bringing Fibre-to-the-Building (FTTB), Fibre-to-the-Node (FTTN), Hybrid Fibre-Coaxial (HFC) – and soon FTTC – into the network we have been able to address this problem.
Before I became a CEO, I was an engineer in the telecoms industry, so I can absolutely understand the huge attraction of an all-FTTP network.
From an engineering point of view it would be incredible – the problem is that it is just not feasible to do it in a country like Australia.
In fact, no country in the world has rolled out an all-FTTP network (with the exception of the city-state of Singapore).
One of the keys to turning the project around these last couple of years has been the flexibility that we now have in our Multi-Technology Mix (MTM) approach.
We are now able to deploy the most appropriate technology in each area of the build and this makes our deployment much faster and cost-effective.
Of course, I understand why some people come out with glib catchphrases like, “Do it once, do it right, do it with fibre”. If only it were as simple as that in the real world.
Here are the plain facts.
This network is not being delivered as a free gift – the Government wants taxpayers to get their $49 billion back and expect a small return as well.
That means that the people who will ultimately pay for the nbn™ access network are the Australians who buy services delivered over the network.
So, to be quite blunt about it, the more money that nbn spends on building the network then the more expensive the services will be for Australians – it really is that simple.
If we decided tomorrow to upgrade the entire FTTN footprint to FTTP – upgrading nearly 5 million premises at a cost of $2,000 each – then that’s another $10 billion we would have to recoup for taxpayers.
To put that number into perspective – BT in the UK have spent less than $6 billion on upgrading nearly the whole of the UK – with a population three times that of Australia’s – to FTTN.
When this project started there were a whole bunch of predictions about how much end users would be willing to pay for services on the nbn™ access network, but those forecasts proved to be way off base.
We don’t need to make predictions any longer because we have six years of operational experience and three million premises buying services on the nbn™ access network – so we know very well how much end users are willing to pay.
Even on our Gigabit-capable FTTP network, only around 14% of end users are buying 100/40Mbps plans – so knowing what the financial returns would be, we could not rightfully sanction piling billions of extra dollars of debt onto nbn – and ultimately the Australian people.
Working with our retailers to make sure services on the nbn™ access network are affordable for end users – and improving their nbn experience when they are online – are absolute top priorities for us.
That’s why we have reduced the cost of bandwidth for our retailers from $20/1Mbps to now as low as $8/1Mbps, provided they buy enough bandwidth – but we have only been able to do that by substantially bringing down the cost of the build via the MTM model.
Again the plain reality is that we can’t reduce the cost of our wholesale services – as retailers want us to – and at the same time spend billions of additional dollars on the network as some so-called industry experts are demanding – because it’s ordinary Australians that will end up paying the price for that.