Exchange upgrades may cost NBN: Telstra

Summary:A concentration of National Broadband Network points of interconnect (POI) at existing exchange locations and a focus in metropolitan areas rather than regional areas risks making the network inefficient and increasing the costs for NBN Co and access seekers, according to Telstra.

A concentration of National Broadband Network points of interconnect (POI) at existing exchange locations and a focus in metropolitan areas rather than regional areas risks making the network inefficient and increasing the costs for NBN Co and access seekers, according to Telstra.

(Credit: NBN Co)

A POI is where two networks meet and exchange information. For the NBN, this is where NBN Co passes on data carried over the national network to the internet service providers' networks. Where the points of interconnect are located determines how much backhaul a provider would have to supply in order to connect customers to the NBN. How much backhaul the supplier has to provide has a significant impact on the price of the service it can offer consumers.

Late last year, the NBN Co proposed 14 POI in each capital city in Australia, with an option for an additional 195 as required around the country. After feedback from industry, the Australian Competition and Consumer Commission (ACCC) ruled that the NBN Co would be exercising "mission creep" because it would encroach on competitive backhaul territory in only providing 14 POI, so the number was extended to 120.

After further consultation with industry on the locations of the POI, the NBN Co has now proposed to relocate five of the POI, add two POI and consolidate one POI bringing the total to 121.

In a submission made in January and published on the ACCC website yesterday (PDF), Telstra said that the proposed POI locations were based on where Telstra's exchanges are located for its 100-year-old copper. Because the reach of fibre was a much greater area than copper, it would lead to duplication in some areas, and risked making the network inefficient, according to the telco.

"Telstra believes that some of the locations identified for POIs could result in an inefficient network architecture that raises the costs of the network deployment for NBN Co and access seekers, and could lead to a less than optimal network performance for end users," Telstra's executive director of regulatory affairs Jane Van Beelen said in the company's submission.

Telstra also argued that NBN Co would have to invest significant cash to upgrade the existing exchanges to fibre or find alternative locations due to space concerns.

"Of the 120 POIs, Telstra believes that over half would require a considerable level of additional investment and an extensive period of time for either the ready works to be performed on the Telstra exchange, or for NBN Co to establish alternative accommodation," Van Beelen said.

Telstra used the example of the proposed Cranebrook POI, located in Sydney's western suburbs. Telstra said that the Cranebrook location had insufficient space to house NBN Co's infrastructure. Telstra proposed that Penrith, just a few kilometres away, would be a better location with more space. This proposal was backed up by fellow telco AAPT in its submission.

Van Beelen also pointed out that of the 120 POI, only approximately 35 are located in regional areas, and this could impact on users in regional areas where transmission links will have to cover greater distances.

"Telstra believes given Australia's geography, there should be a greater number of regional POIs which would provide a more efficient network, account for larger regional population centres and potential future growth in these areas, and be in the long-term interest of end users," she said.

Telstra proposed adding additional POI in regional locations along Australia's eastern seaboard.

Both Optus and Primus raised issues in their submissions with the ACCC's definition of competition on backhaul routes. The ACCC had proposed that it would remove some regulation on backhaul routes deemed to be "competitive" because there was Telstra plus one competitor. Both companies suggested that two competitors on one backhaul route didn't necessarily mean it would be competitive.

AAPT in its submission questioned whether access seekers would be given access to Telstra's ducts as part of the Federal Government's $11 billion deal with the incumbent telco so they could use them to build out to the NBN's POI.

Topics: Telcos, AAPT, Broadband, Government, Government : AU, NBN, Optus, Telstra

About

Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

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