Group buying could extend NBN fibre footprint

Group buying could extend NBN fibre footprint

Summary: The AU$150,000 quotation from NBN Co to run fibre to an SA man's home may seem extravagant, but it's a great benchmark for satellite and wireless-targeted communities that could use group-buying strategies to broker an acceptable price.

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To the anguished gentleman who informed Whirlpool that NBN Co quoted him AU$150,000 to extend its National Broadband Network (NBN) fibre footprint down the 1.3km of road to his house: give me a pickaxe and about two weeks, and I'll do it for AU$75,000.

But I jest: I have neither the tools nor the skills to do the fibre joining, so I'll have to outsource that part. Which might cost a bit more.

What's that, you say? Oh, yes, of course we'll look after you if you're paying cash.

My obvious first reaction to this piece of news (first spotted by iTnews) was to assume that this AU$150,000 figure will become yet another deceptive throwaway line in the Coalition's anti-NBN arsenal; stay tuned to see whether that prediction comes true.

Could the community-driven Google Fiber effort be replicated in Australia to extend the NBN fibre footprint?
(Downtown from Top of Liberty2 image by Hngrange, CC BY-SA 3.0)

However, if you think past the number itself, it's actually a useful piece of information — and an important call to action that could affect the way that the NBN is rolled out in the future.

Firstly, it's a good benchmark by which to judge the previously hidden costs of rolling out extra fibre. This figure has been far from obvious in the past, and will be of great interest to those councils that are interested in joining the NBN fibre roll-out, even though they have been earmarked for satellite services.

Second, it shows exactly why private-sector operators simply aren't interested in rolling out competitive infrastructure, especially in sparsely populated areas: it's just too expensive to be worthwhile. Telstra's USO obligations have forced it to roll out copper where no other company could justify it, but there is no such impetus for private-sector fibre; as we've seen in South Brisbane, Telstra's enduring monopoly position in last-mile access has given it the unrivalled ability to pick and choose where it decides to put fibre.

Thirdly, and perhaps most interestingly, is that AU$150,000, while high, could be effectively met through concerted community action. Although it is obviously ridiculous for a single homeowner, would it be so ridiculous if a community of 150 homes all signed on to split the cost of the roll-out?

The total cost would presumably be higher if multiple houses were connected, but GPON is designed to cater for many houses on a street, so the incremental cost of each house would be far lower than the first. I suspect that homeowners could, with the right negotiating tactics and a measure of NBN Co goodwill, end up getting fibre internet installed for AU$1000 to AU$2000.

Throw in a two-year contract with an ISP, and that cost could be amortised on a monthly basis; extend it to three or four years, and payments would be lower with the added benefit of encouraging a service discount from the ISP.

It's not as though this is a revolutionary scheme; Google is using community registrations to target its Google Fiber roll-out in Kansas City, in the US. The company has broken down the city — which straddles the states of Kansas and Missouri — into "fiberhoods", and is collecting deposits of US$10 per household for people who are interested in getting the fibre.

The green-light point is, by reports, 40 to 80 homes in a fiberhood, which seems to be an entirely reasonable number.

Whether such a scheme could be replicated in Australia, of course, is another matter entirely. Such a project would require extensive organisation and a willingness by NBN Co to be somewhat more flexible on its price. This might be less of an issue, of course, than sheer scope: with the NBN effort battling to meet its revised roll-out targets, the last thing the company needs is to add even more things to its to-do list.

I suspect homeowners could, with the right negotiating tactics and a measure of NBN Co goodwill, end up getting fibre Internet installed for AU$1000 to AU$2000.

But you never know; it could happen as the roll-out progresses and, presumably, picks up the momentum that it will need to realistically meet its targets. Organisations like StreetSmart Energy are working to use market weight to chisel lower prices out of energy providers, while group-buying sites continue to offer nice discounts on everyday services.

Whether this would translate into the NBN is not entirely clear yet; such an effort would have to be executed without the support of a giant like Google, which has already indicated that it won't be replicating Google Fiber in Australia (ironically because we're getting the NBN).

ISPs, perhaps, could become the instigators of such an effort, motivated by the promise of a big whack of locked-in NBN subscribers who might be willing to sign long contracts to get fibre. Local councils might chip in, since higher NBN penetration would support their desire to paint themselves as "smart" cities.

Who knows: maybe Telstra, reduced to little more than one of many retail service providers (RSPs), will see group buying as a way of tapping into its own fibre-laying prowess, and chip in to the overall cost on the promise of 100 long-term NBN customers.

This whole idea heaps one bit of speculation onto another — but if someone can think of a way to consolidate demand and present a financially viable model for extending the NBN footprint, I imagine that there would be a number of interested audiences for it. The question is: who will be the first to build out a creative, workable way of solving the NBN's last-mile problem?

What do you think? Would you pay AU$1000 to get an NBN fibre connection? And would your neighbours?

Topics: NBN, Broadband, Google, Australia

About

Australia’s first-world economy relies on first-rate IT and telecommunications innovation. David Braue, an award-winning IT journalist and former Macworld editor, covers its challenges, successes and lessons learned as it uses ICT to assert its leadership in the developing Asia-Pacific region – and strengthen its reputation on the world stage.

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Talkback

13 comments
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  • Possibilities

    David
    I have been a proponent for the community effort as being done overseas. Depending on locale and density nodes will be required and customer drops, with provision for future growth and increased density. So the cost could be well above the quote.

    However, power is run as is the copper, so possibly the power company could become involved, we have the Greenfield companies and companies such as the Transact installers. Whether it could be treated as a "Greenfields Private or Community" "Estate" that can be integrated into the NBN to manage it with contributions from many areas .

    Consider the cost to have the copper phone connected to premises even when an existing service, get VDSL connected for an 8/8 Mb is over $1,000 install and approx $400/Month.
    This would be a one off connect cost for infrastructure to last for decades, and any future change of customer would be cheap, unlike getting the phone connected.

    In the UK, with the co-operation of Councils and residents/farmers. Locals dug the trenches and piping/duct to specs on private property avoiding red tape or councils and State Govt could facilitate, contractors could roll out and install and NBN could provide the nodes and Customer equipt. then manage and maintain.

    Plenty of quotes, however where there is a will there is a way.
    Libs and NP love subsidies, pity they couldn't make it all a common effort and have a positive constructive effort for the betterment of us all, instead of destructive ideologically driven B.S
    Abel Adamski
  • Musing

    We do live in the COMMONWEALTH of Australia don't we , so why shouldn't we build a National High capacity integrated ubiquitous business capable communications infrastructure for a long term foundation element of our economy and society
    Abel Adamski
  • Initial Design not Extension Cost is the underlying issue

    Hi David,

    I'm the "gentleman" [you are too kind with that description! :)] that is facing the prospect of a $150K bill to receive fibre in the NBN rollout.

    I'm afraid I'll have to knock back your offer of $75k, for a couple of grand I could go buy a trenching attachment for my Dingo, a few hundred more for fuel and I could have the job done in a week. :)

    Anyway, enough of the funnies...

    It is important (finding out the cost of an extension and making it publicly available), but that was not my aim. It was/is to highlight what appears to be some serious flaws in NBNCo's planning/design phase in my area.

    As equally important as finding out the cost of an extension and making it publicly available, there are a number of questions regarding the design/planning of the Fibre rollout (in my area , but could concern any area) that still remain unanswered by NBNCo.

    Housing Density has been used to justify which areas receive fibre. The area this particular
    fibre rollout is occuring is a network of dead end roads. Fibre is being rolled out to the end of every one, except the last 1.4km (approx) of Charlick Rd. This road is of similar length to Wyly Ln. a side lane off Charlick Rd. Wyly Ln is receiving fibre (with approx 6 properties over a 1.2km length), the last 1.4km of Charlick Rd has about 15 properties).

    If housing density is a factor in planning/design of the NBN fibre, it appears not to have been adhered to in this case. The major factor (in not rolling out the fibre) appears to be the council boundary, as that is where it is stopping. This is despite receiving all infrastructure/services from the other council end (because it's a dead end road).

    Time will tell if NBNCo review this issue (I sincerely hope they do, for my wallet's sake), but it does demonstrate their planning/design is (on this occasion anyway), not following the "rules" they should be abiding by, or even common sense. Where it is meritorious to do so these things need to be questioned. The problem I've had since Feb 2012 is trying to get my concerns looked at by NBNCo. I saw all this coming, after my first glance at the proposed rollout map back then.

    Whether this does become a throwaway line for the pollies, who know? I email both sides (in the same email), asking both of them to look at my particular circumstances and see if there is anything that could be done. (TBH, I dont expect a reply, other than a generic response, but we'll see).

    In the meantime, if NBNCo don't review the decision to not rollout fibre all the way to the end of my road, those 15 properties will have to find an estimated $10k each to connect to fibre. If not, it's Wireless or Sat for us. (At least we would get to keep the fixed line phone. I'm sure Telstra will be ecstatic to learn that that will have to maintain their USO to a max of 15 residences [min of 1] in an area that will surrounded by fibre.)

    cheers
    Matt
    _MW_
    • Digging

      I guarantee you, NBN don't care about council boundaries.

      Telstra ESA boundaries for sure, but not council boundaries.

      Oh, they'd also care about ducts. Ducts make life easy. No duct = lots of digging and/or rental for poles. Most likely, due to the bushfires in the region with the 150k quote, they don't want to use poles.
      That means digging. 3km down a dead end road to serve a couple of houses?

      Usual cost for digging is around $100/m, though it does depend on the area. Looking in google maps, frankly it looks like a pain in the butt to dig, but we'll go with $50/m.

      3000m x $50 = $150k.

      Throw in a couple of k for the actual fibre and we're done. Network extended!
      myne-819b4
  • Interesting

    Thanks Matt for clarifying and providing some perspective
    From what you have indicated, I wonder if the NBN's Planning may be done by teams working within Council boundaries, or groups of councils.
    In that case it makes sense, your fibre is sourced outside of of the Council area you are in, as such that team looking after your area has no fibre to provide in the planning from within their area.
    Just a thought, if so a definite flaw in the planning process, but processes can be improved.
    The problem is the toxic environment politically and the media, a bipartisan approach facing the practical reality that the NBN as planned is by far the best option for Australia's future, less haste and rush, possibly better end result.
    Lets not have distorted ideology handicap us
    Abel Adamski
    • Is it the best?

      "the practical reality that the NBN as planned is by far the best option for Australia's future,"

      Unless you currently have ADSL, like to online game/VoIP and the government/NBN co seem to think you live in the middle of no where (when you don't) and want to give you satellite internet with it's rain fade, 500+ms latency and drop outs, inherent in a technology stuck 36 000km out in space.
      Frank111-a1c82
    • Not councils

      I repeat, it has nothing to do with council boundaries.

      Take a look. This boundary is the Exchange Serving Area as defined by Telstra.
      The road in question is cut out.

      http://www.adsl2exchanges.com.au/viewexchange.php?Exchange=STIC
      myne-819b4
  • It's certainly an interesting situation

    Matt, your situation as you've discussed over on WP is very intriguing and I think needs close attention paid to it. There seems to be no question that this is a planning oversight, although whether it's to do with density or council boundaries (as seems likely) is yet to be seen.

    My concern with this is that it will generate another throw away FUD line for the Coalition to whack the NBN with. We all know that $150k is ridiculous for any single (or even several) premises to get fibre from a fibre network. However, it would be ALOT more if you asked Telstra to do it. I guess what I'm saying is, to both yourself and David, is that while this situation definitely needs publicising and investigating, we want to be careful NOT to give ammunition for the war of attrition that is going on against the NBN. NBNCo. may have planning issues they need to work out (after all, to be fair, they've only been on volume rollout for 2 months). But we also need to be aware fibre connections are expensive because of labour, ease of laying and network overall design (directly proportional to labour). NOT because of lengths of fibre.

    We're all interested in hearing how you go. Keep us updated and hopefully this can work out well for you (and your neighbours- they should give you a medal if you manage to get them free fibre!) AND we can learn a bit more about NBNCo's planning and hopefully DISPROVE any FUD that might be generated by poor planning originally on NBNCo's behalf.

    Cheers

    seven_tech

    aka James
    seven_tech
    • Re: It's certainly an interesting situation

      Wholeheartedly agree James,

      I am being somewhat "selfish" in trying to get this rectified (I think anyone in my shoes would be too), but the last thing I want is for it to derail rollout (or even become a political football).

      I see it a as minor hiccup right at the start of NBNCo ramping the rollout up. I would've much preferred it didn't get to this stage, I've been trying for 6months to get this sorted behind the scenes.
      (I'm not one to seek the spotlight, I've lost my anonymity on WP as collateral damage, but if it gets a good result for me and my neighbors, that is a small price to pay.)

      Hopefully it will also result in NBNCo paying a bit closer attention to the planning/design for the fibre rollout, especially at the boundaries where it will be stopping.

      To me, (and to everyone that has looked at my specific circumstances), it appears to be a planning/design mistake, one that NBNCo is expecting me to potentially fork out $150,000 to fix.
      (Note: I have no experience in network design, and there may indeed be a valid reason for the rollout stopping where it is planned to, we've all yet to hear back from NBNCo as to their reasoning though.)
      _MW_
      • Possible outcomes

        I dont know if this will apply to your situation Matt, but I know that along the South Coast of NSW they are rolling the NBN out to sub-1000 premise communities just because its easier to do it now than later.

        In a similar situation, there are a bunch of small communities several hundred meters off the main road, which in the normal course of events would miss out. But the decision was made to include them, which I see as a step forwards for many smaller communities.

        It may be that your location being so relatively close to a junction will be enough to secure yourself and your neighbours a connection. My worry would be the FUD generated by the Liberals about it 'costing $150,000 for one premise' - thats a line I can easily see LNP throwing about.

        I cant find any links, but it was LNP MP Joanna Gash's electorate - Princes Hwy 150kms or so south of Sydbey.

        Alternatively, like the story says, I can see ISP's supplying the connection for you on a fixed plan. When you're talking about the big 4 ISP's, $1m wont be a huge outlay to secure the area, and will be one of the few areas they will be able to compete in fixed line connections.

        Wont take much for some sort of deal to be worked out with NBN Co either - NBN Co agrees to buy it back once they have made a return on the investment, or something like that for example.
        Gav70
  • Council boundaries

    My elderly parents' farm is on one side of a street split down the middle by a council boundary.

    Every other street in town has been sealed for decades, but this one is simply too hard, because it requires coordination of road crews or split funding between two councils.

    Over the past five years, they have sealed a couple of 100m sections of the 2km road by jointly funding a road crew, while residents have funded another section. Perhaps what is needed, if it does not already exist, is a pro-active regional council committee to ensure works on two councils' boundaries are not neglected. NBNCo could then liaise with that committee when doing detailed planning work.

    NBNCo has shown great flexibility in solving such issues in the past, and I have no doubt it will do so here if the problem is as described. It is worth noting in NBNCo's network extension guidance material that extensions will not result in queue-jumping, but will ensure that approved, pre-paid extensions will be incorporated into the local rollout when it happens.

    Best of luck, Matt, and thank you for contributing your comments.
    umbria
  • Caqble Laying Costs

    I well believe the NBN could come up with those costs to link to their NBN network.

    I am a in a rural area and also a land owner where infrastructure including copper telecommunications, electricity, water is present and gas is coming.

    The unpaid time I spend because of the infrastructure authorities, ignorance, lack of commercial nous and just plain stuffups would justify most of these costs.

    I have seen a 500 m copper replacement take over 3 years to effect with management of just this job changed between telstra and private contractors 3 times.

    The final cable job occurred when it was too wet to lay cable but at the insistence of telstra where the onsite component would have cost 5 times what the cost could have been if done during most of the previous 3 years.

    This is not unique to communications but has been repeated in just the last few years for electricity, water and gas.

    I believe the the head office overhead, and the redesign of the back haul to allow for the additional load would be substantial component of these costs as a fibre connection would see substantial addition usage compared to radio options offered to us. This is the rule in telecommunications from my experience. Our exchange is on a major optic fibre link and in the past I have been inadvertently sent details of the interstate commitment of that link which precluded exchange upgrades despite the full commitment of the exchange. There were a range of excuses given to us but never the truth.
    Wayne McKay
  • Of Technology and things

    In 1985 I sold my first technical solution, a primitive by todays standards commodore CPM PC. As I recall it had 8bytes of RAM and cassette player with the software as the floppy drive was not yet available. It attached remotely to a computer called Medusa via an acoustic couple device that allowed the user to perform credit checks for on the spot finance deals to be done.

    Each system cost $6500 at the time when 2 bedroom apartment in Neutral Bay was 60k, a new commodore (car) cost around $9,500.

    Couldn't get enough of them, some locations would buy 10 on the spot, no networks, no shared anything. This stuff was leading edge. Within two years every single system was landfill.

    Then it was desktop laser printers, 10k a pop. 8 ppm black and white, no graphics. ratio of printers to terminals was 1-4 because that was the biggest print share switch available at the time. Put two into every commonwealth bank branch in the country. 2 years later they were all landfill.

    The point?

    All of the gee whizz things you keep banging on about will be a distant memory in the near future, the only thing that will will remain will be the business value of what was solved.

    Motor dealers will still buy F&I solutions so they can approve finance on the spot, banks will still buy printers. Its not the what its the why.

    Connroy, Labor, NBNco and Turnbull have not articulated the 'why' yet.

    If they ever do then opposition will melt away and bipartisan support will be there, like building a kids shelter - who would say no?
    Sultanabran