FttN, HFC are dead-end NBN alternatives: Samuel

FttN, HFC are dead-end NBN alternatives: Samuel

Summary: Former ACCC head Graeme Samuel has said that the FttP wholesale pricing is actually cheaper than the original FttN estimates.


Australians have a "fundamental" Howard government mistake to thank for the structural separation of Telstra, retirement of "congested" cable-broadband networks, and construction of a fibre National Broadband Network (NBN) that's cheaper than earlier alternatives, former ACCC head Graeme Samuel has argued.


Graeme Samuel (Credit: David Braue/ZDNet)

Samuel ran the competition regulator for eight years, and repeatedly faced off against combative Telstra CEO Sol Trujillo. He now heads the Melbourne office of corporate advisory firm Greenhill Caliburn, and he told the Australian 2012 IPv6 Summit today that Trujillo's relationship with the regulator dramatically changed the course of the telecommunications industry.

"Looking at the new Telstra that we have under the leadership of Catherine Livingston as chair and David Thodey as CEO," he said, "let me say that had they been in place in 2005, we might have a whole new telecoms paradigm in this country from what we got as a consequence of the engagement of Trujillo and [regulatory head Phil] Burgess."

Yet, that engagement provided impetus for the rejection of a prior fibre-to-the-node (FttN) NBN: "We ought to be grateful for that fundamental error having been made," Samuel said. "It ultimately said to the government that if you want to sort this out, you have to go through the major process of structural separation that we now have in place."

Recounting the process by which Telstra's non-compliant FttN proposal was rejected in December 2008, Samuel said that careful consideration of the three compliant bids had confirmed that FttN — when paired with the estimated AU$20 billion cost of accessing copper from an unseparated Telstra — simply wasn't economically viable.

Mooted wholesale pricing for the FttN network was far higher than that currently being proposed by NBN Co over its fibre-to-the-premises (FttP) network.

"I'm not at liberty to reveal the wholesale costs that would have been charged on the [FttN] network, but suffice it to say that they do not compare favourably with some of the costs now being talked about for [Labor's] FttH [fibre-to-the-home] network."

Even with Telstra structurally separated, Samuel said that it would be wrong to revert to an FttN NBN infrastructure, as has been repeatedly mooted by opposition communications spokesperson Malcolm Turnbull.

"Back in January 2009, the fundamental message we could give the expert panel regarding FttN was that it would not cost AU$4.7 billion, but would ultimately end up costing many times that," Samuel said.

"Should we return to FttN? In my view, no — for the same reason we didn't go to FttN in the first place."

Turnbull has repeatedly argued that the Coalition's yet-to-be-detailed NBN alternative plan would deliver broadband faster and cheaper than Labor's current program. Samuel did allow that the complexity of running fibre into multiple dwelling units (MDUs) might require the use of local fixed-wireless services as an alternative to fibre in some cases: "many older MDUs don't have service cores that make it easy to run fibre optics to individual premises," he said. "There might be an argument to substitute some sort of fixed wireless to make that easier."

However, he is sceptical of claims that FttN is an intermediate step to FttP, noting that an expected investment of more than AU$10 billion in "thousands" of street-corner FttN nodes would need to be recovered before the country could even begin considering a later move to FttP.

Samuel is equally sceptical about the long-term relevance of Telstra and Optus' hybrid fibre-coaxial (HFC) networks, upon which Turnbull's policy will depend.

"I think it is highly unlikely to be a longer-term competitive infrastructure to the NBN," he explained. "What has happened with HFC is that more and more data is being pushed down, and at this point in time, it's suffering contention issues."

HFC networks have gotten so bad that Samuel joked that he advises neighbours at the street Christmas party not to subscribe to Telstra's "hopeless" HFC — just so "at least I can continue to get reasonable speeds at 8 p.m."

"Fortunately, most people listen to me as the local expert on the subject, and don't go onto Telstra's cable for their broadband," he laughed. "It's a great relief in my street."

Topics: Telcos, Government AU, Telstra, NBN


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  • Mr Samuel is totally right. I’ve been saying the exact same thing ever since the great NBN debate started. It's even more pertinent now. Expect Turnbull to have a hissy fit over this latest endorsement of FttH. The usual foaming will appear on his website in the next few days I’m sure...
    Hubert Cumberdale
  • Misleading and deceptive

    Telstra is a company that adds huge margins. Look at its prices for every product. NBNCo is going for the smallest margin that returns barely enough for Labor to claim the taxpayers money being spent is an investment not an expenditure. Samuels' comparison of Telstra's planned FTTN prices to NBCo's planned FTTP prices, and saying that the fact that the former were more than the latter proves the technology the former was going to use is fundamentally cheaper than the technology the latter is going ahead with, is at best meaningless, and at worst an attempt to mislead and deceive.
    Gordon D
    • Plenty more

      Samuel's position on HFC deficiencies is valid given the current investment in the network, investment frozen when the Rudd govt proposed it's $4.7b NBN as has all competitive technologies.

      HFC delivers high speed broadband in a number of markets today, its technology is well understood, solutions for contention reqdily available.

      Trujillo years, as were Ziggy, were unnecessarily combative in my opinion and thankfully over. However the point is these are private companies, the appointment of senior management the responsibility of the Board responsible to shareholders.

      The cost of acquiring the copper network is now known, it is already agreed. It isnt the figure quoted.

      Samuel agrees FTTN is cheaper than FTTP (obvious) however warns that this is more expensive than straight to FTTP assuming transition to the laer is immediate. This ignores several scenarios including current cost of rollout, demand for FTTP and the cost of money.

      Competiton is the best guarantor of value for money in this market as the ACCC would know. The exemptions of ACCC oversight and already agreed to exemptions from competition policy a real concern.
      Richard Flude
      • Blah

        Blah, blah...
      • So what is the cost?

        "The cost of acquiring the copper network is now known, it is already agreed. It isnt the figure quoted."

        What agreement? Telstra has agreed to lease pit & pipe to NBN Co but Telstra will retain full ownership of the copper network. Can you provide an authoritative reference to this alleged agreed cost of acquiring the copper network? If the figure quoted is incorrect, what is the correct figure?
        • Value of copper network

          If the copper network is to be turned off, wouldn't that make its value equal to the NPV of the net revenue it will generate in the meantime, and reduce over time to nothing?
      • Mr Samuel factually incorrect.

        Mr Samuel's position on HFC is factually incorrect and based on his NON TECHNICAL personal experience of what was offered by one service provider on a network they have no desire to upgrade because of the current market situation.

        The fact is and has been proven in Australia and around the world HFC can and does offer speeds of 100Mbps and more (in the USA you can get 300Mbps services on an HFC network) and this can be offered on an open access basis.

        What annoys me is these people of responsibility who have no technology experience or knowledge make these statements which are then believed as being factually correct by the populus.

        Sorry Mr Samuel you are VERY VERY VERY WRONG in your misguided assumptions on HFC. Just because your personal experience on ONE HFC network does not mean HFC cannot deliver what is expected.
    • err

      Yes, subtitles for your jibberish please...!
  • Ignored at their peril

    So, not only do we get the undeniable truth from someone who was at the coalface when the NBN was first mooted, but it might actually be widely and truthfully reported as there seems to be a great deal of respect for Graeme Samuel. As Hubert Cumberdale says, wait for the dummy spit from Turnbull. No doubt Mr Samuel will be pilloried as just another zealot!

    Except of course, he's decidedly not. Rational; sensible and very informed. To ignore sage advice such as this is political folly at its best. But then that's what Turnbull does........
  • Re: Plenty More

    I agree that there are other hidden costs that aren't be added into FTTP, particularly as the costs caused by this artificial demand for FTTP are causing supply constraints in specialised labour, council processes and other constructions costs.

    Additionally, in built-up areas, if the FTTN nodes can be used for FTTP by replacing the cards, then the investment wouldn't be entirely lost. However the argument that follows is that in lower density areas this is not good GPON design - it would be preferable to have the Nodes sit further into the network, within exchanges, in high density equipment.

    However, we should also consider that this current rush for FTTP, and the constraints imposed, may cause an increase in costs, poor design, and even more errors, particularly in the last mile.

    Importantly, it may also cause an artificial post-NBN slump in the Telecommunications sector, which is also a hidden cost. This is an issue that has not nearly been discussed enough.

    But I agree, the biggest argument for FTTN is the cost of money and the reduction in construction risks.
    beau parisi
    • All valid points

      I'd like to add the speed of network delivery, retaining infrastructure competition, and more transparent costs. Important when taxpayers money is on the line.
      Richard Flude
      • Transparent costs?

        When "private enterprise" is involved?

        I think you'll find you are totally wrong on that point Richard.
      • Competition

        Why is infrastructure competition a good thing? Retail competition, definitely, but infrastructure, not necessarily.

        Our telecommunications have gotten significantly worse since Telecom became Telstra and was privatised, and thats as a result of being profit focussed rather than service focussed. Simplest example is the much vaunted HFC rollout. Apart from chasing each other down the same streets, they got their magic 30% then... stopped. No rollout since, no investment whatsoever.

        Cant blame them, there wasnt any money in it.

        Want a more recent example, just look at 4G right now. Wheres the competition? Telstra has their near monopoly right now, Optus is lagging behind. Then there's Vodaphone...

        Again, where has infrastructure competition worked? What it does, and has been doing since Howard failed to separate Telstra, is to create monopoly situations. Private profit-based monopolies at that.

        I get what you say about monopolies, dont get me wrong. But monopolies have only been an issue when they have been retail focussed, and thats not the case here.
  • Construction risks?

    And the Telstra owning the fundamental copper risk?

    Not factored... sigh!
  • FTTH Cost?

    It's about time the media really got stuck into Turnbull , it only requires one question.
    Will fibre to the node only be cheaper than fibre to the home if fibre to the home is never installed?
    Kevin Cobley
    • Futility of asking Turnbull

      Leigh Sales on ABC 7.30 Report asks Turnbull these sorts of questions. He just refuses to answer them.
  • Visit Delimiter Kevin (if you haven't already)

    Renai LeMay former ZD boy, now with his own site, says it as it is... and both Turnbull (with his ludicrous NBN attacks) and Conroy (with his filter fixation) don't like it.
  • Addendum

    As does David Braue (of course) and Nick Ross over at ABC.
  • FTTN will make FTTH cheaper.

    A FTTH solution drawn now which may be ready in over a decades time, is dead money.

    As in a decades time the equipment installed and used in construction would already be obsolete, and better, cheaper ways will be available.

    FTTN maybe a reasonable solution whilst we wait for technology to get better and cheaper.
    beau parisi