NBN not worried about 5G competition, completes own 5G tests

NBN has reported revenue up 50 percent to AU$620 million for the first quarter of FY19, alongside a 65 percent improvement in earnings.
Written by Corinne Reichert, Contributor

The new CEO of Australia's National Broadband Network (NBN) has said he is not overly concerned about losing market share once 5G arrives, while the company has revealed completing its own 5G testing.

This is because NBN already competes with 4G offerings, Stephen Rue explained to media during the company's FY19 Q1 results call on Monday morning.

"One of the hot topics in our industry is how 5G will impact NBN. We are, as you would expect, well aware of the potential of 5G, and keep a close eye on developments, and the impact of wireless competition is built into our Corporate Plan forecast," Rue said.

"The first reality is that we will have a network fully rolled out to all by 2020; we are therefore in a very good place to compete for market share. And the second reality is that we are already facing competition from high-speed 4G mobile broadband, even with nationwide 4G in place ... we are still seeing our expected take-up of NBN services right across the country."

According to Rue, NBN believes that fixed-line networks will continue carrying "the vast majority" of traffic in Australia, citing Australian Bureau of Statistics (ABS) stats that mobile networks carried just 3 percent of traffic in 2017.

"It remains our belief that 5G and fixed-line over the long term will be complementary to each other," he added.

Rue's comments follow Australian Competition and Consumer Commission (ACCC) Chair Rod Sims last month saying NBN should not be protected from 5G competition.

"What we must never do ... is seek to restrain others in order to protect the NBN business model. This would be a disaster for consumers," Sims said.

"For those RSPs with an alternative mobile or wireless network, it may be more cost effective to offload some fixed NBN data traffic onto their own network where consumers have a hybrid modem or seek to supply some services entirely over their own mobile network, completely bypassing the NBN."

NBN has also completed its 5G tests with Ericsson, the company told ZDNet, with the details on what took place as well as the results to made public in the next few weeks.

"Our CTO team continue to look at 5G technology, and that could involve some [more] trials over time. At this stage, we continue to review what we will do in that space," Rue told ZDNet.

For the first quarter of the 2019 financial year, NBN reported earnings before interest, tax, depreciation, and amortisation (EBITDA) of negative AU$270 million, a 65 percent improvement from the negative AU$778 million reported a year ago, on revenue of AU$620 million, up 53 percent from AU$405 million.

NBN made AU$191 million in revenue from its fibre-to-the-node (FttN) network; AU$197 million from connectivity virtual circuit/network-network interface (CVC/NNI); AU$119 million from fibre to the premises (FttP); AU$36 million from hybrid fibre-coaxial (HFC); AU$21 million from fixed-wireless; AU$10 million from satellite; and AU$2 million from the new fibre-to-the-curb (FttC) network.

As of September 30, there were almost 4.4 million premises activated on the NBN: 2.3 million on FttN; 1.2 million on FttP; 438,334 on HFC; 254,400 on fixed-wireless; and 92,595 on satellite.

Premises ready to connect has grown to just over 7.3 million -- 3.8 million on FttN; 1.7 million on FttP; 621,268 on HFC; 618,253 on fixed-wireless; and 433,917 on satellite.

FttC had 148,822 premises ready to connect and 39,146 premises activated as of the end of the quarter.

During the quarter to September 30, NBN spent AU$1.4 billion on capex, with HFC receiving the most, at AU$360 million. It was followed by FttC, at AU$304 million; FttN, at AU$277 million; common capex, at AU$168 million; fixed-wireless, at AU$95 million; transit, at AU$90 million; FttP, at AU$76 million; and satellite, at AU$24 million.

Cost per premises (CPP) of connecting each type of networking technology is sitting at AU$4,403 for FttP brownfields; AU$3,784 for fixed-wireless; AU$2,433 for HFC; AU$2,246 for FttN; and AU$2,228 for FttP greenfields, with FttC CPP still not broken out.

NBN still not convinced on G.fast use cases

Rue also gave ZDNet an update on the G.fast deployment on its FttC network, saying it would begin being deployed but would not be activated until there is more demand for higher-speed services.

"We have G.fast DPUs or boxes that we put in the pit for FttC that we've acquired from several vendors, but it does it in dual mode, it does it in G.fast, it also does it in VDSL," Rue explained.

"At this stage, we intend to deploy them as VDSL until there is a demand from the community for higher speeds ... we will have more to say about that by the end of the year."

After NBN chief engineering officer Peter Ryan told ZDNet earlier this year that G.fast will be launching in late 2018, but that it won't be available at all premises in the footprint, previous CEO Bill Morrow in August revealed that NBN was close to adding G.fast to the FttC network.

"I'm delighted to say that we are close to ending the testing phase, and will shortly install our first G.fast-enabled DPU on this FttC network," Morrow said during NBN's full-year results for FY18.

"We will be one of the first operators in the world to take this step on FttC. What we are doing here is preloading the NBN network to be able to meet the bandwidth demands of the future with G.fast technology. It will enable gigabit-per-second speeds over copper lines, with the vast majority of the one and a half million premises on the FttC network to be G.fast-enabled by the year 2020.

"However, as with DOCSIS 3.1, we will not be offering those ultra-fast speeds on the FttC network just yet. As I said, the consumer demand just simply is not there at this point in time. But on HFC and FttC, we will have the ability to make those speeds available in the future when the demand does come."

NBN reported full-year revenue up 98 percent to AU$1.978 billion on EBITDA of negative AU$2 billion.

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