NBN Co out to tame troublesome copper

NBN Co CEO Bill Morrow has said that as the company shifts to the "multi-technology mix" model, it will be crucial to ensure that issues over the quality of the legacy copper network are kept to a minimum.

In announcing the company's half-year results on Thursday, Morrow said that the second half of 2015 will be when the fibre-to-the-node (FttN) rollout kicks into gear, now that NBN Co can begin accessing the legacy copper from Telstra.

But NBN Co does not yet know the state of the Telstra copper network. Morrow confirmed on Thursday that during renegotiations, NBN Co did not seek, and was not provided with, a history of Telstra's maintenance costs associated with the copper network.

According to information provided by the company to a Senate committee, NBN Co conducted "desktop-based due diligence" on the copper network that included information about the state of the network.

Speaking to ZDNet on Thursday, Morrow said that while he believes most Australians would stop considering what technology is being used to deliver their broadband speeds, he recognises that FttN would have challenges.

"I believe that copper in an FttN naturally is more susceptible to exterior conditions -- the rain, the sun -- and those sorts of things. So that will naturally have a higher trouble rate associated with it than virtually every other technology we are going to deploy," he said.

"So there may be some discussions around 'mine goes out more often than my relatives who have a different technology have'.

"But hopefully, we're going to keep that to a minimum, and to an acceptable level. When it comes to the actual speed experiences, I just don't feel there's going to be a material issue."

He said that for customers who live over 1.5km away from a node, and would get much lower speeds than those next to the node, NBN Co is currently thinking through its options.

"We're thinking through how to address that. Do we bundle two pairs together? Do we bond them together to give them that higher speed through?

"We're currently thinking through that now. We'll sort that as we go."

This week saw NBN Co sign an AU$400 million deal with Arris to provide network equipment for the hybrid fibre-coaxial (HFC) networks that the company will take over from Telstra and Optus. NBN Co will still need to sign contracts to fill in the missing pieces, such as houses without lead-ins, installing new end-user equipment, and extending the network to streets in HFC areas missed by the network, but Morrow said HFC would still be the cheapest for NBN Co to roll out across all five technologies.

The commercial launch is still being timed for HFC users to come online in early 2016, after an end-user trial towards the end of 2015.

"The likelihood is that we're going to see chunks of the HFC network come on in different times, but there will be a lot more larger chunks being made available than what we're seeing currently in FttP [fibre-to-the-premises] or wireless technologies. While FttN will give us a bump there, HFC will do it even more so," Morrow said.

NBN Co isn't extending the network, but would roll out cable in streets of the HFC footprints that were skipped when Telstra and Optus initially rolled out the networks.

"It's more of an infill. So if you ringfence around where HFC is today, it doesn't make sense to try and go in and find a pocket to put in some other technology. It makes more sense to build out the coaxial cables in those places," he said.

But there would be some exemptions for apartment blocks, where installing cable might be problematic and expensive.

"If you have a large [multi-dwelling unit] building, if it is in a HFC footprint, then we're likely going to pull in fibre there and do an FttB [fibre-to-the-basement] application there," he said.

"It won't be as pure as 'that area's only HFC, or that area is only FttB'."

TPG brought its NBN-competitor, fibre-to-the-basement product back on the market earlier this month. The product threatens to undercut NBN Co's revenues in high-density, high-value locations in Sydney, Brisbane, and Melbourne. Morrow said NBN Co's commercial response would be in place soon.

"It's well under way, and tracking very well. We've got quite an aggressive program to ensure we're protecting the taxpayer dollars. We haven't revealed it yet, but we will in due course, and it is pretty exciting," he said.

"It's a win-win in multiple areas. By focusing on where our competitors would, we're focused on the high-value, high-margin areas. That wasn't necessarily the way in which the company was thinking about it before. This is good, this is what we should be doing anyway."

NBN Co has seen a shift away from users taking up the 100Mbps service, with the vast majority of customers taking up services of 25Mbps or less, with 23 percent of users on 50Mbps or higher.

Morrow said that this indicates most users are satisfied with the lower speeds.

"I think for most applications out there, unless you have a lot of users over the same [connection], 25Mbps is sufficient," he said.

But Morrow said that the AU$3 rise in average revenue per user for the half, to AU$39, indicated that people would want to move to the higher tiers over time.

"As we see data increase ... eventually, that starts to become a contention issue against the speed. Maybe then they'll want to upgrade from the 12 or the 25 to the 50 at that point in time," he said.

"I'd suspect that's a natural evolution. I do get excited to see that the ARPU lift because of the consumption factor, that does project a little bit of an increase, in terms of moving up speed in the future."

Morrow said the focus for NBN Co is now on getting on with the job.

"We have to be agile enough to know we'll overcome anything that gets put in our way. Right now, let's just get the momentum going."