Reproducing the voice services of the existing Telstra phone network under the Coalition's fibre-to-the-node (FttN) alternative national broadband network (NBN) model “may not be a sensible use of Government funding,” NBN Co has warned in a confidential assessment of the options for delivering voice services over the network.
Warning that the delivery of voice services is “a critical issue” and a “fundamental decision” in the construct of the NBN and should be given “priority” in architectural planning, the NBN Co report – prepared during the caretaker period for the incoming government brief ('blue book') delivered to now communications minister Malcolm Turnbull – warned that "whether NBN Co is mandated to provide voice services comparable to currently available services will influence cost outcomes.”
“The delivery of voice services impacts NBN Co's ability to generate the required returns in implementing the Coalition's Plan,” it explained, “as it impacts premises connections.”
While it outlines the three options for delivering analogue-equivalent voice services, NBN Co's report also questions the value of doing so, noting that any viable case would require it to develop a business case including projected revenues from the voice service.
Telstra's 8.1 million fixed-line services handled 3 billion local calls and 4.7 billion national long distance minutes in 2011/12, but the company's 2012/13 results noted a 9.5 percent ($459m) year-on-year drop in fixed-voice revenues, the loss of 346,000 fixed customers, and a 6.1 percent drop in fixed-services EBITDA.
Given this ongoing and significant decline in fixed voice services revenue, the NBN report warns that the business case for implementing new systems to support analogue voice, rather than simply migrating customers onto entirely VoIP-based NBN services carried as data, was not clear.
“Demand for PSTN voice products is declining globally, including in Australia,” the report warns. “Investing in a state-of-the-art PSTN network may not be a sensible use of Government funding.”
NBN Co's preferred option for analogue voice
Voice services can be delivered to customers using voice over IP (VoIP) technology in either the current FttP or the Coalition's proposed FttN model, NBN Co notes, “so long as the VDSL2 line rate exceeds the rate of the configured TC-1 and Customer Premise Equipment (CPE) properly manages quality of service.”
However, if the government mandated that an analogue-equivalent service were provided – necessary to let customers continue using their existing handsets, faxes and other devices without any change – the architecture would need to be much different.
“Demand for PSTN voice products is declining globally, including in Australia. Investing in a state-of-the-art PSTN network may not be a sensible use of Government funding.”
“The provision of analogue (or equivalent) services over an FTTN architecture is more complex,” NBN Co warned.
The report outlined explored three possible scenarios for delivering voice services in an FttN context, with its preferred option involving the delivery of wholesale voice services to customers through the installation of voice line cards – currently installed at Telstra exchanges – within the estimated 60,000 'nodes' that would be installed around the country under the Coalition's alternative NBN plan.
This approach would allow NBN Co to deliver fixed-line services to customers with minimal interruption, reselling those services to third-party telecommunications providers as currently happens now. Noting that a fully NBN Co-managed solution would leverage voice over IP (VoIP) technology, the company warned that extending this technology to end-user customers could require “development of a new feature set and interface for access seekers to provision voice services.”
This would include the development of a session initiation protocol (SIP) proxy – a fundamental part of a VoIP architecture – that could manage calls between the line cards and the analogue end-user equipment. SIP proxy features are already hard-coded into the network termination device (NTD) being used in the current FttP architecture.
This approach would also pose problems because positioning NBN Co as a wholesale provider of voice services would require the company to operate at OSI Layer 3 – the network layer, where IP protocol traffic is managed. This would violate NBN Co's long-running design requirement to only operate at OSI Layer 2 – the data link layer upon which the wholesale model dictates that retail service providers, and not NBN Co, provide their own services.
An alternative approach, and the one preferred by NBN Co, is that the line cards be integrated directly with Telstra – which would free NBN Co from dealing in Layer 3 services and would see Telstra providing wholesale voice services to customers through competitive carriers.
However, integrating line cards into FttN nodes would introduce new problems – including the need to make FttN nodes larger and increase their power draw to accommodate the additional equipment.
Moving line cards from the Telstra exchange to the FttN nodes “would be enabled by a copper cutover at the node and would involve installing line cards at every node”, which would mean that the cabinets “need to house line card equipment in addition to DSLAMs, any FTTP equipment, patch panels and power supplies including battery backup,” the analysis advised.
Issues with the amenity of streetside cabinets were identified in the analysis as one of twelve significant issues requiring resolution for the Coalition to meet its accelerated FttN rollout schedule.
Integrating line cards into FttN nodes would introduce new problems – including the need to make FttN nodes larger and increase their power draw to accommodate the additional equipment.
The second option for voice services considered by NBN Co involves the provision of a modem-based wholesale solution, which would move the SIP functionality to the customer premises and enable existing analogue voice equipment to be plugged into the NTD. This would mirror the functionality current FttP rollout, which provides two UNI-V ports into which existing analogue equipment can be plugged.
This approach would, however, involve significantly increased costs because a separate visit by NBN Co staff would be required for every installation – significantly increasing the overall cost of the FttN rollout. NBN Co has separately advised the government to reduce the number of visits required to every premise by rolling out the network in one go.
It would also require the development of a suitable modem for installation in every premises, which NBN Co warned “would impact the start time of the FttN rollout” and increase capital expenditure costs for the project. Furthermore, the approach would risk stranding customers that didn't receive their equipment before their migration date.
Responsibility for the modem installation could be offloaded to RSPs, the report notes, but this “could lead to issues with standards and add to RSP costs (which may ultimately be passed on to the end user)”.
The final option – and the least preferable, in NBN Co's assessment – is for Telstra to continue providing a wholesale voice solution from existing exchanges, effectively perpetuating the existing copper network. However, the report notes, this approach “is inconsistent with Telstra's current structural separation obligation” and would “impact” the value and renegotiation of the government's $11b Telstra Definitive Agreements.
The first option is preferred “because installing line cards at the node is anticipated to be significantly faster, less expensive and carry less delivery risk than installing CPE, the report notes. “However, the ability of NBN Co to deliver a voice solution will depend on how the company accesses Telstra's copper network. Proper consideration needs to be given to the cutover and migration scenario.”
Turnbull has previously dismissed the report as "totally political" and out of date — despite subsequent evidence to the contrary — and has promised that details of his network's cost and technological models will be revealed soon.
Turnbull recently received the findings of the strategic review, but has delayed its release and defied calls by the Senate to make the document public. The report is now expected to be released later today.
NBN Co has not responded to requests for comment on the confidential report.