Telstra CEO Andy Penn has said the hybrid fibre-coaxial (HFC) network it provided to Australia's National Broadband Network (NBN) company is working well for existing Telstra and Foxtel services.
Speaking at an American Chamber of Commerce (AmCham) lunch in Sydney on Tuesday, Penn said the issues causing NBN's HFC rollout pause announced on Monday cropped up during NBN's works.
"What's critical is that NBN are putting the customer experience ahead of the rollout schedule, and that's fundamentally the most important thing because I think there has been some pain with the HFC technology," Penn began.
"Can I say, to be clear, that is the same cable that currently provides internet services to Telstra's customers and also for Foxtel pay TV services, and for those services, it is absolutely fine, it's been a great experience.
"It's in the process of NBN taking it and making whatever technology changes they are making to it where they've had some issues."
Penn did not refer to the AU$1.6 billion contract Telstra picked up in April 2016 to provide design and management services for NBN's HFC network, however.
"All design, program management, construction management, and scheduling activities will be undertaken by Telstra," Telstra said last year.
"Field construction activities will largely be performed by NBN's MIMA [Multi-technology Integrated Master Agreement] partners, while in-exchange construction activities and limited upstream in-field activities will be undertaken by Telstra."
NBN's HFC MIMA partners are Lend Lease, Broadspectrum, Fulton Hogan, Downer, ISGM, and BSA.
NBN had two years ago said it would have been too difficult to coordinate with Telstra on each building out the HFC network, with services possibly disrupted due to the necessary node splits, and that it would therefore take a step back and hand over management work to Telstra.
Telstra signed a AU$11 billion definitive agreement in December 2014 that saw NBN take ownership of Telstra's legacy copper and HFC networks.
Earlier on Tuesday, Communications Minister Mitch Fifield described the HFC repairs as involving the taps connecting the cable in the street with the cable inside the home and an issue involving spectrum frequency causing network dropouts for some customers.
While Telstra had announced to the Australian Securities Exchange (ASX) on Monday that the HFC rollout halt would affect its FY18 projections, Penn would not confirm rumours that it would cost the company up to AU$300 million.
"Financially, there's no net long-term change," he explained.
"There is quite a lot of complexity in the relationship between NBN and Telstra financially. There's a whole range of disconnection payments, then there's connection costs, and then there's also -- NBN interestingly still acts with a very significant amount of Telstra's infrastructure. We have something like half a million dollars in ducts, 7 million pits across the country, 5,000 exchange buildings, 200,000 kilometres of dark fibre, so they pay us annually for those as well.
"We're working through the timing and the impacts on the numbers at the moment, and we'll make a stock exchange update in relation to our guidance in the coming days."
In the wake of Telstra also having to refund 42,000 NBN customers last month due to not providing them with the speeds they were paying for, Penn described the process of signing up NBN customers going forward -- given it cannot tell what speeds a particular premises will see until it is connected.
"We will provide a customer with a plan of say 25 megabits per second download. If they're on fibre, we'll offer them a speed boost because there's a fair chance that they can get that sort of speed. If they're not, if they're on copper, we will not offer them the speed boost," Penn explained.
"Where a customer does buy a speed boost, what we then do is we actually check once it is connected that the customer can receive effectively what we promised, and if they can't for whatever reason -- and that would be a technology issue, maybe there's a long piece of copper or maybe there's an issue with the copper or something along those lines -- we'll offer to give the customer the opportunity to effectively choose not to have that speed boost."
Penn noted that the only way RSPs can really influence the speeds an end user sees on the NBN is by purchasing enough connectivity virtual circuit (CVC) capacity, which he said Telstra is using robotic testers to calculate to ensure it exceeds the Australian Competition and Consumer Commission (ACCC) guidelines.
"The ACCC has recently issued guidelines to RSPs to ensure customers can expect that at least 60 percent of the maximum speed in their plan is available during the peak hours 7 and 11pm. At Telstra, our position is to provide the best network experience on the NBN. This is why we continually monitor traffic and adjust our CVCs to meet demand," he said.
"We have robotic testers in our network to measure customer speeds to ensure we are buying enough CVCs. Our plans are to deliver significantly ahead of the ACCC guidelines and deliver 80 percent of the maximum speed during peak times."
Penn also disputed claims that the incoming 5G network will supersede the NBN, saying it would require a "very, very significant investment" for a single mobile network to handle the amount of capacity that will be used across both fixed and mobile by 2020.
"Today, the average amount of data downloaded over a mobile device in Australia is approximately 3 gigabytes per month, while over fixed, it is 150 gigabytes -- 50 times the volume -- and this is what the NBN is aimed at," he explained.
"It is true to say 5G will be very fast, but to achieve the same level of capacity on mobile as fixed will be very expensive because of the number of cells that would be required.
"5G will definitely enable many customers to switch to mobile in preference to a fixed broadband service at home. But no, 5G will not completely replace the NBN. So the NBN is important to all of us and we need the rollout to be a success."
While 5G won't completely eliminate the need for the NBN, he said its business will be impacted by the many customers who are predicted to dump fixed-line connections.
Penn also used his AmCham keynote to discuss automation, robotics, connected healthcare, machine learning, the Internet of Things (IoT), and cybersecurity, saying the fourth industrial revolution will all rely on the connectivity Telstra can provide.
"There is no tech innovation today that is not intended to be connected, from drones to driverless cars, cloud computing to online banking, ecommerce to the Internet of Things," he said.
"All these applications and services have one thing in common: They rely on a high-quality, fast, reliable, and secure telecommunications network. Telstra is an organisation with deep skills in network and electrical engineering, a world leader, and we have the best networks.
"However, we also need to build new skills in new areas, in software engineering, in data science, in artificial intelligence, and ultimately in quantum computing."
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