NBN delays work in our favour: iiNet

NBN delays work in our favour: iiNet

Summary: iiNet CEO Michael Malone has said that, while annoying, delays in rolling out the National Broadband Network benefit a company like iiNet.

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TOPICS: Telcos, NBN, Australia
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While iiNet is keen to get more customers on the National Broadband Network (NBN) as quickly as possible, CEO Michael Malone has admitted that delays in rolling out the network does help iiNet get returns on its DSLAM investment.

According to iiNet's results, released on Thursday, iiNet has 545,000 on-net customers in areas around Australia where it has deployed DSLAM infrastructure into exchanges. It is cheaper for the company to offer services through its DSLAMs rather than wholesaling every part of the internet service from Telstra, but DSLAM infrastructure takes around five years to pay itself off at each location.

The news last week, that NBN construction by external contractor Syntheo has been delayed in South Australia, Western Australian, and the Northern Territory due to a range of issues, was not of great concern to Malone. He told journalists on Thursday that it would lengthen the life of the company's DSLAM investments.

"We're now at the point where delays are to our benefit, 'cause our DSLAM network is now at an average age of over four years, depreciated over five years. We can sweat it indefinitely until something better comes along for the customers," he said.

However, Malone added that the company would like to see the NBN rolled out as quickly as possible, because the company is looking to increase its market share on the NBN beyond its current standing of one third of all connections.

Malone said that the NBN, in conjunction with a looming regulatory decision on the price that Telstra can charge for wholesale DSL services, means it is unlikely that the company will invest in any new DSLAMs.

"In terms of investment decisions, I don't think NBN is impacting that terribly either way," he said. "We didn't light up any new DSLAMs in the last six months, and I don't foresee us doing any in the foreseeable future.

"Really, our focus is just increasing the ports in the exchanges we're in already."

On the upcoming election in September, and the potential for the NBN rollout to change under a different government, Malone said that this wouldn't impact the investments that iiNet is making in the NBN today.

"Our expectation would be the NBN IT systems and wholesale structure would stay in place; rather than building fibre out, they would then start bringing in these other things, and making them wholesale as well," he said.

He also said he believes that he would not get the government to consider utilising iiNet's hybrid fibre-coaxial (HFC) or fibre networks before the election.

"I don't see any action on those this side of the election," he said, adding that the networks could be part of a potential coalition policy.

"They may well have significance post the election if the Coalition wins."

Topics: Telcos, NBN, Australia

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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  • Really? 5 year DSLAM payback?

    That conflicts with an interview of Simon Hackett by Business Spectator (http://www.businessspectator.com.au/bs.nsf/Article/NBNinternodeSimon-Hackettbroadband-Telstra-ADSL2-pd20110518-GXVWQ?opendocument), in which he stated " The debt’s been taken on to build ADSL 2+ DSLAMs and they turn out to have, in the places we've built them along with obviously other people in the industry, a break-even period of between about one and a half and four years, depending on where the things are".

    That would indicate DSLAMS are a substantially better cash-cow than Michael Malone would care to admit...
    DaveBPitt