Exchange upgrades may cost NBN: Telstra

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, Broadband, Government, Government AU, AAPT, Optus, Telstra, NBN


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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  • I have to agree on the Cranebrook Vs Penrith argument. Penrith exchange is a 100x100 metre, 2 story building in the CBD. Cranebrook exchange is an insulated portable building about the size of a 20' shipping container, located in a paddock!
  • It is quite extraordinary that a national network should be designed on political and economic criteria, with no reference to engineering, reliability or performance measures. The NBN is supposed to be an ACCESS network, not a long-haul network. If ACCC had not intervened the "access" network would have extended for thousands of kilometres with little resilience, no opportunity for route optimization and no competition on those routes. Telstra is right to point out that the longer reach of fibre technology (compared with copper) permits a reduction in the number of POIs required in each large metropolis. One would expect more POIs in regional areas.
  • This drop in the bucket exposes the things to come. Telstra, with its expertise, should be deploying the NBN. Reinventing the wheel in the midst of the enormous complexities is... hatari sana. (swahili)
    Vasso Massonic
    • TLS has no expertise, they uses contractors just like the NBN Co. It's not reinventing the wheel, it's about giving everyone a levelled playing field. Talk about blinded by TLS shares...GREED and more GREED from the V****
      Salami Chujillo
      • And so the long time silent, Salami Chujillo posts a typical anti-Telstra point of view, and is instantly commented on by you know who !.........................Hmmmm!!!
        • Mike (Wallingford) seriously, grow up then come back and try to mix it with the adults...

          Thank you!
          • Hahaha.....couldn't help yourself could you RS! You certainly recognise the term "you know who"whenever the trem is used on this site. But seriously, don't you think it's about time you dropped the "Greedy Telstra Shareholders" line, now that you also admit (though hard to prove) the bit about you buying and selling Telstra shares yourself, whenever their prices drops to an opportune amount. Fair dinkum RS, you are a joke, because if that is not rank hypocrisy, then what is !!! Get a life, mate !!!
    • Indeed Salami...

      BTW - Telstra had their chance to build the NBN TWICE...

      Once which would have insured re-monopolisation (there's a good word...LOL) in urban areas with FTTN, but Telstra withdrew from negotiations with the ACCC, when they were all but done... such was the egotism and stupidity of the previous (MIS) management.

      And then again with the RFP to build an NBN, BUT... they submitted a non-complaint bid... and "were the only ones to do so" (enter stupid pedantics now usual suspect...LOL).

      Not one monumental blunder, but two...!

      Instead of re-monopolisation as a vertically integrated, unstoppable 800lb gorilla, they will soon be just another "leech" [sic] (as the Telstra greed mob used to refer to others who HIRED Telstra's equipment) sans monopoly and separated...LOL!

      So on second thoughts... thanks Sol, without you and your wisdom [sic] to withdraw from FTTN and that brilliant [sic] non-compliant bid, decimating the gorilla", we wouldn't soon be receiving the previously, unheard of - no more than a dream... level playing field....!

      Three cheers for Sol, a true blue Aussie, who brought down the gorilla (without even realising it...LOL!!!!).
    • Image what Telstra would be saying if the Government weren't paying them off to the tune of $8 billion.
      • Umm, I’d suggest (like any owner of any asset/commodity anywhere) if the user isn’t willing to pay the price or come to a negotiated compromise… Telstra’s answer to the government would “obviously” be along the lines of one of the three following options.

        No thanks
        **** off

        It isn’t rocket science – FFS!
  • Can some one please tell me how back haul works in terms of the transport layer?

    Is it all modualted data at 6dB, or is it a digital link running at a certian speed and protocall? (Such as DOCSIS 3)
    • The access network (aka "last mile") is the cable between the customer and the local exchange. Backhaul is cable between exchanges.

      None of this is really related to the transport layer (which has entities such as UDP and TCP)

      Typical backhaul technologies are SDH or Gigabit Ethernet, carried over DWDM where traffic volumes warrant it.

      NBNCo should provide backhaul. If you ignore vested interests and their cable investments, a backhaul-inclusive NBN is a no-brainer from both a CAPEX and OPEX point of view.
      • Note that I am not saying the NBNCo should overbuild all existing backhaul fibre - in general they should lease existing capacity. Should a sensible commercial price not be available, then overbuilding may be a sensible course of action.
  • Telstra track record : 1830 to 2011

    NBN track record: none
    Vasso Massonic
  • A URL to Telstra...?

    Telling us how great Telstra is what next a copy/paste from 2005 NWAT or the UNAustralian again...?
  • They dont need extra POIs in regional oz, as most of the LAND MASS,(see coverage and footprint of fibre cable, maps @ NBN Co website) ,will be 12Mbps on satelite or wireless ONLY.Regional australians are as usual being treated as 2nd class citezens getting a 2nd rate communications network,those who are in the satelite coverage only areas, still wont be able to use a mobile phone,unless there is already a service provider with a tower in the area, while city dwelllers are getting 100mbps cable,There's a list of towns getting fibre and or wireless.If your town IS NOT on the list you get satelite only.Look at the list and think about how many towns AREN'T on it,they get sat. only connection,Oh, and if DON'T opt in you can NO PHONE SERVICE because we, (the Gov't), are going to shut down the copper network.100% FTTH.TREAT ALL AUSTRALIANS EQUALLY.
    • It's funny you should say that, considering regional Australians almost always support conservatives and have been one of the most easily fooled group of Liberal mouth-breathers ever since Labor proposed the NBN.
      • Hang on, I thought the purpose of the NBN was to provide glorious 100mbps to everyone in the country, so that we could all be equal and everyone could move to the bush and enjoy cheap housing and mangoes and telecommute and they'd be no congestion on the road and carbon emissions would drop and everyone would be equal.... but now you're saying people in the country aren't equal, they are mouth breathers and they dont' deserve fibre anyway....
        • NBNCo absolutely wants to put fibre everywhere if possible.

          It has ranked all clusters of premises in Australia by the cost of building the fibre to them. After the 93rd percentile of premises as ranked on fibre cost, it becomes cheaper to build wireless to deliver 12 Mbps reliably to all of them.

          BUT, if you are outside the 93% for whom fibre was cheaper to build, NBNCo will liaise locally to find a way to fund the difference and avoid wireless-only.

          The mechanism is likely to be that it will cover the 93rd-percentile cost (i.e. the most costly-to-fibre premises in the original footprint) if the local community covers the balance. Several hamlets and farms strung out along a country road might find that for an extra $1000 per premises they can get permanent fibre, too. Something like the HiBIS subsidies might even be available to cover this.

          There will be situations where fibre is too costly, but don't give up solely on the basis of the partial list of towns of May 2010. And even 12 Mbps fixed wireless (which may even be faster in five years when later deployments are being rolled out) is still far better value than dialup and today's satellite, and six times faster than the median ADSL speed of Australians now (cf. ABS, 20 September 2010).
        • Once again coolguy4 you demonstrate your lack of understanding re: the NBN.

          From day 1 of the announcement that the government were to build the NBN (April 2009)… the plan was 90% fibre (up to 100Mbps) and the rest wireless/satellite (12Mbps).

          Since then that figure has increased to 93% fibre, to do exactly as you mock, give even more Aussies the opportunity to experience fibre/100Mbps.

          Almost 2 years on you still didn't know even this, yet you come here to tell us all...?