Direct fibre could make NBN cheaper: Hackett

NBN Co could reduce the cost of rolling out the National Broadband Network (NBN) in Australia by doing away with the six-port NBN connection boxes and leaving it to the retail service providers, according to Internode founder Simon Hackett.

Inside each premises that opts to connect to the fibre network, NBN Co will install a six-port unit that was previously known as a network termination device or unit (NTU) but NBN Co now calls a NBN Connection Box, that retail service providers then plug in their own equipment into one of the six ports to provide their own services over the NBN.

Speaking at the Communications Day Wholesale and Datacentre conference in Sydney today (slides and audio here), Hackett said that although he doesn't have access to NBN Co's accounting books, he believes the network construction could happen quicker and cheaper if NBN Co did away with the connection boxes, and just provided the fibre connection into the house.

He said much of connection box, and the associated battery backup unit, is there to continue to provide voice services for a what will be an increasingly smaller group of people in the community who have fixed line voice services provided that way, with many either switching to mobile or Voice over IP.

He said that of the six ports on the box, the vast majority of customers will likely only ever use one.

"The rest of it is a waste. It's a waste in a couple of ways," he said. "The NTUs that Alcatel-Lucent have delivered have got enormous amounts of custom software engineering built into them at NBN Co's expense in order to make that box look like six separate boxes.

"That virtualisation, running six virtual networks inside the box, is actually pushing what the Alcatel-Lucent box is capable of and it has caused large delays in getting feature sets out."

He said that the result was that the NBN software model would look different to GPON networks in the rest of the world and had the potential to lock in NBN Co to the one vendor, Alcatel-Lucent, which has picked up some of the biggest vendor contracts on the NBN. He said it would be significantly cheaper for NBN Co to just provide the single fibre port and let the retail service provider (RSP) handle the rest.

"Most RSPs deliver a box to their customer to deliver the value-added services that they want to deliver," he said.

"You can buy those routers today with the GPON port straight out of the box. So you can take the fibre out of the wall from NBN Co. Now you've not only taken the entire cost of those boxes away from NBN Co, you've recreated a genuinely competitive market of what the RSP does right at the edge of the network."

In addition to cutting costs on each connection box, Hackett said this would speed up the build times for subcontractors rolling out the NBN into each premises because it would remove the need to sort out electricity for the unit in addition to pulling the fibre through into the premises.

"I put it to you that a lot of the reason why this stress is happening in the deployment of the network, why subcontractors are starting to get upset about the process getting more and more squeezed is they are deploying a design which in itself needs to be reviewed," he said.

The construction of the network has been under pressure in Ballarat and Hobart this week as subcontractors ceased working on the construction of parts the network in those locations over pay disputes with Transfield and VisionStream.

The other benefit that removing the connection boxes could have, Hackett said was that with a standard GPON arrangement it could reintroduce competition for the network supplier for technology in the core of the NBN.

"You could have competitive tension alongside Alcatel-Lucent and Ericsson. Dare I say it some suppliers from countries the current government doesn't like very much. They could charge a hugely lower amount of money to deploy the inner works just as well," he said.

"Some of those suppliers would fall over themselves to charge Malcolm Turnbull's price for Stephen Conroy's network today."

He said he would also like to see the 121 point of interconnect model mandated by the Australian Competition and Consumer Commission (ACCC) scaled back to 14 points of interconnect as the government had originally wanted, and he again reiterated his desire for NBN Co to remove the contentious connectivity virtual circuit charge on bandwidth. 

NBN Co is already looking at ways to utilise the six-port connection box, iTNews today reported that the organisation is looking to reserve one port on each box in every Australian premises in the fibre footprint exclusively for the delivery of government services.