Tassie telco warns of emerging “two-tier” NBN

The NBN's Multi Technology Mix rollout is seeing some RSPs, like TasmaNet, forced to adopt a "two-tier" approach to market

The National Broadband Network’s (NBN) Multi Technology Mix (MTM) rollout is giving way to a “two-tiered” network, according to Joel Harris, managing director of Tasmanian telco and NBN reseller, TasmaNet.

“With the onslaught and the onboarding of new technologies such as fibre-to-the-node (FttN) and fibre-to-basement (FttB), there are significant differences between the fibre component of the network, fibre-to-the-premises (FttP) and fibre-to-the-node components,” Harris told the Parliamentary committee reviewing the network’s rollout, in a public hearing on 24 July.

While the potential disparities between the various technologies used in the government’s preferred MTM rollout for the national network is nothing new to consumers and network retail service providers (RSPs) alike, Harris outlined how the imbalances emerging as a result of the current technology mix are affecting resellers.

“One of the other things that frustrates us as a small company – and I believe this also frustrates larger companies – is that the NBN network is becoming a two-tiered network,” he said. “It is also not a ubiquitous network.

“We can no longer have a single termination device for all our customers. We now need to stock two, because it's almost impossible to source a device that can terminate fibre to the node and fibre to the premises.

“Also, fibre-to-the-node requires normally two visits, mainly because there're generally problems with the connectivity – either incorrect pairs being terminated, being unable to find the pairs within a building and things like that, or the quality of the pairs just isn't up to scratch."

The MTM approach to the NBN rollout came about thanks to an election promise by the Coalition government to roll out the network faster, and at a lower cost, than the previous administration’s fibre-heavy model would allow for.

However, the difficulties presented by the existing technology choices – or lack thereof, depending on the individual premises being connected – necessitates a two-tiered go-to market approach for players like TasmaNet.

“We've actually had to change our marketing and our go-to market and separate out the marketing strategy around fibre-to-the-node from fibre-to-the-premises, all because the expectations are different,” Harris said.

Discussing the different options open to NBN resellers such as TasmaNet under the current technology mix, Harris said that the widely used fibre-to-the-node technology will inevitably have to be replaced at some point, largely due to the reliance on existing copper cabling over varying distances to premises – a factor that has drawn almost continuous criticism from some industry quarters.

This last point was also flagged by the CEO of Launceston RSP, Launtel, and fellow Tasmanian, Damian Ivereigh, who warned the Parliamentary Committee reviewing the NBN rollout that Australia can expect to further issues to arise result of the MTM rollout.

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“The issue that we are going to have with the multi-technology mix is going to be in several years’ time,” Ivereigh told the Committee during a public hearing on 25 July.

“Once we've got these issues sorted out with the bandwidth from the retail service providers, such as the issue of economics, then we will start hitting this barrier. People's requirements will go up.”

Moreover, Ivereigh suggested that one of the biggest issues with the MTM approach for RSPs like Launtel, which has a big focus on the business end of the market, is that it makes no distinction between a business area and a residential one.

“I think there is a lot of argument to say that residential premises do not need the high speeds, but there is no question that businesses do,” Ivereigh said.

“You can't have a one-size-fits-all and expect that the people who really need that bandwidth are going to be able to get it. If I were to do it differently I would have made consideration for business districts and industrial areas and rethink the technology we use,” he said.

The timing of the issues raised by Harris and Ivereigh are particularly poignant given recent comments by RMIT University’s School of Engineering associate professor, Mark Gregory.

In an op-ed for InnovationAus, Gregory suggested that the decision transition Australians from ADSL internet to an MTM rollout is likely to cost between $30-$50 billion more than what was needed to transition from ADSL directly to a FttP network.

Further, if Australia does eventually decide to move to a full-fibre network, it won’t happen now until 2030 at the earliest, thanks to the MTM decision. Former Prime Minister Kevin Rudd’s initial NBN plan envisioned a predominantly FttP rollout to reach completion by 2020.

While Ivereigh conceded that the feasibility of “turning the ship into a different direction” at this late stage would be questionable, pointing out that it took several years to switch to the MTM approach in the first place, Harris placed some credence in the idea of delaying the Government’s requirement for a return on investment from the NBN in order to get the best rollout for all Australians.

“On the investment by government there is still this thought that, as a shareholder, we've got to get our money back,” Harris told the Committee. “That, therefore, forces the management team or CEO to make decisions that are very commercially minded.

“Whereas, if we were to remove that, even if only for five or six years, I think the management decisions would change dramatically if they had a mandate to, say, build the best platform for the nation—something like that,” he said.