Leaked NBN plan for Optus HFC mere wargaming and fool's gold: Fifield

Australian Communications Minister Mitch Fifield has labelled as 'fool's gold' the document leaked out of NBN yesterday that said the Optus HFC network is not fit for purpose.
Written by Chris Duckett, Contributor

The Australian government and the company responsible for rolling out the National Broadband Network (NBN) across the nation have big plans for hybrid fibre-coaxial (HFC), according to Communications Minister Mitch Fifield.

Speaking in Question Time in the Senate today, Fifield said a document leaked out of NBN yesterday that labelled the Optus HFC network as "not fully fit for purpose" was merely fool's gold.

"The document which became available yesterday was representing the sort of planning that commercial organisations do, the sort of wargaming that they do, the sort of scenario guessing that they do -- which is entirely appropriate for an organisation that they do this to look at worst case scenarios, best case scenarios, and those in between. That's what that document represented," Fifield said.

The minister berated Labor for allowing NBN Co to enter an arrangement with Optus that would see the telco shut down its HFC network. That deal was revised in December last year, allowing NBN to take ownership of the Optus HFC network.

"I think only those opposite could come up with the sort of genius and brilliance that would see millions of dollars spent to shut down a network, only to then have to spend billions more overbuilding it," Fifield said.

"What we thought was entirely reasonable was, for no extra money, to make sure we had these networks available to us."

Fifield said Optus is continuing to invest in its HFC network, which was written down by AU$1.4 billion in 2002, prior to its handover to NBN.

"HFC is very capable high-speed broadband technology ... NBN will invest further in HFC with new technologies like DOCSIS 3.1, which will allow for gigabit speeds, and, unlike fibre to the premises, it already passes 4 million homes around Australia," he said.

"The cost and the time to upgrade it are much smaller than Labor's rip-up-and-replace plan."

According to the document leaked yesterday, the cost to replace 350,000 premises on the Optus network with fibre to the premises (FttP) would cost NBN AU$500 million in capital expenditure. However, FttP would have much lower running costs.

For its part, Optus agreed yesterday that its HFC network needs to be updated.

"Optus and NBN Co have always acknowledged that parts of the HFC network would need an upgrade to support the NBN's product set," an Optus spokeswoman said. "In advance of handover, there has been and continues to be major investment into the HFC network to manage subscriber growth and capacity demand."

NBN attempted to hose down any concerns that it would be subject to cost blow-outs.

"Our corporate plan has accounted for the ebbs and flows expected in a project of this scale," the company said.

"Scenario planning is part of good governance, and has been accounted for in the corporate plan released in August."

NBN said it is currently conducting a 4,500-premises HFC trial in Redcliffe, Queensland, and has not found any "unexpected" technical issues with the Optus network.

In the Senate yesterday, former Communications Minister Stephen Conroy defended the decision of NBN to decommission the HFC networks run by Telstra and Optus.

"There is a reason we were going to close it down -- that is, because it was not fit for use," he said.

"We knew it, Optus knew it, and the whole country knew it, but not Prime Minister Turnbull. He decided he knew better than all of the engineers and all of the experts in the country, and Optus today are laughing all the way to the bank."

The amount of money Optus gained under both deals with NBN Co was an identical AU$800 million.

In 2012, then-Shadow Communications Minister Malcolm Turnbull said Optus had hit the jackpot with its original deal with NBN Co.

"HFC is an extremely viable competitor with the NBN Co, and because its original capital cost was written off long ago, Optus could upgrade it for a modest cost which would enable it to undercut the NBN on price and provide equivalent services for most customers," Turnbull said at the time.

"Recognising this, the government and the NBN Co decided to use our taxes to buy out this competition just as they have done with Telstra's HFC.

"A black day indeed for the ACCC and competition in Australia."

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