NBN's FttC network reaches 18K premises

NBN has reported Q3 EBITDA of negative AU$389 million on revenue of AU$521 million, with 3.7 million end users.
Written by Corinne Reichert, Contributor

Australia's National Broadband Network (NBN) company has announced that its new fibre-to-the-curb (FttC) network has 18,500 premises ready for service (RFS), although just 1,047 of these premises are ready to connect.

"FttC is forecast to be the network access technology for nearly one and a half million homes," NBN CEO Bill Morrow said during the company's Q3 results call.

"We are one of the first network operators in the world deploying FttC at this level of scale. And therefore we're being especially prudent in our delivery of the new technology, and will ramp up the pace of this rollout as our processes and systems mature."

The FttC network was launched in parts of Sydney and Melbourne last month, with NBN adding another 440,000 fibre-to-the-node and hybrid fibre coaxial (FttN and HFC) premises to the FttC footprint.

By the end of the quarter, NBN had 3.7 million total end users: 1.8 million on FttN, 1.2 million on fibre to the premises (FttP), 413,703 on HFC, 226,901 on fixed-wireless, and 87,478 on satellite.

NBN on Thursday also revealed that 40 percent of all fixed-line end users are now on speeds of 50Mbps and above after its wholesale pricing changes began providing discounts for retailers offering services on its 100Mbps and 50Mbps speed tiers.

After saying it expects to have 1.2 million people on 50Mbps speeds by June thanks to the new connectivity virtual circuit (CVC) pricing, NBN on Thursday said 28 percent of fixed-line users are on the 50/20Mbps speed tier; 12 percent on 100/40Mbps; 30 percent on 25/5Mbps; 29 percent on 12/1Mbps; and 1 percent on 25/10Mbps.

Across its fixed-wireless network, 75 percent were on speeds of 25/5Mbps as of March 31, with 17 percent on 12/1Mbps and 8 percent on 50/20Mbps. Satellite speeds were split between 67 percent on 25/5Mbps and 33 percent on 12/1Mbps.

The Australian Competition and Consumer Commission (ACCC) lauded the announcement, pointing out that the 50/20Mbps speed tier has grown from making up 4.6 percent of all NBN plans in December to 26 percent in March.

According to the ACCC, 989,360 50Mbps services were acquired in the quarter.

"Nearly 1 million customers are now using a plan with 50Mbps speeds. This is a remarkable shift in just three months," ACCC Chair Rod Sims said.

As of March 31, premises ready for service numbered 3.5 million on the FttN network, 1.6 million on FttP, 1.4 million on HFC, 586,978 on fixed-wireless, and 427,871 on satellite. Premises ready to connect reached 3.4 million on FttN, 1.6 million on FttP, 586,978 on fixed-wireless, 443,681 on HFC, and 427,871 on satellite.

Cost per premises (CPP) was AU$4,396 for FttP brownfields, AU$3,698 for fixed-wireless, AU$2,404 for HFC, AU$2,263 for FttP greenfields, and AU$2,225 for FttN, with NBN not yet reporting its CPP for FttC.

Total revenue for the quarter was AU$521 million, up 99 percent year on year. For the nine months to March 31, revenue was AU$1.4 billion, up 112 percent. During those nine months, satellite brought in AU$21 million in revenue, fixed-wireless AU$51 million, HFC AU$85 million, FttN AU$368 million, CVC/network-network interface (NNI) AU$441 million, and FttP AU$329 million in revenue.

NBN reported earnings before interest, tax, depreciation, and amortisation (EBITDA) of negative AU$389 million, a 41 percent improvement from the negative AU$664 million reported for the same period last year. However, EBITDA for the nine-month period was negative AU$1.766 billion, compared to the negative AU$1.668 billion reported this time last year.

Average revenue per user (ARPU) remained steady quarter on quarter, at AU$44 per month.

In the last nine months, NBN has spent AU$1.3 billion on FttN capex; AU$520 million on common capex; AU$313 million on its transit network, which CFO Stephen Rue said was to support the growing network; AU$274 million on FttP; AU$243 million on fixed-wireless, which Rue said was due to acquiring 157 wireless sites and integrating 190 base stations; AU$54 million on satellite; and AU$1 billion on HFC thanks to "design, optimisation, construction activity".

"In relation to HFC ... despite the pause in activations, we have continued to build out this access network in addition to the remediation work being performed," Rue added, after NBN relaunched its HFC network last month.

Rue said NBN has so far drawn down AU$3.7 billion under the AU$19.5 billion loan agreement with the Australian government.

Morrow called the quarter's results "solid", and said NBN is progressing well on its three main goals of completing the build by 2020, improving customer service, and delivering "modest returns" on taxpayer investment.

The outgoing CEO also reiterated his support for the multi-technology mix (MTM), following reports last month that he had blamed the use of legacy copper for slow speeds on the NBN.

"The quickest and most financially prudent way to help drive these economic and social benefits is to leverage existing infrastructure, and this is achieved through our multi-technology mix," Morrow said.

"Today, more than 60 percent of the country is able to be connected. By the end of this calendar year, it will be close to the three-quarter complete milestone. On top of this, together with RSPs we've activated more than 3 million homes in the last three years alone.

"To be clear, we would not have been able to make the progress we've made in my time as CEO every quarter if we hadn't adopted this MTM approach."

The advantage of using the MTM approach is that NBN can also deploy "new technologies such as G.fast, DOCSIS enhancements, or even 5G", the chief executive said.

Morrow additionally said that NBN's research and development (R&D) partnerships with UTS and Melbourne University -- which cover Internet of Things (IoT), robotics, artificial intelligence (AI), smart cities, programmable networks, data analytics and visualisation, wireless technologies, and "technology for social good" -- are important.

"When you look at academia and private industry, and even government, when they come together to say, 'let's really make the most of all of the expertise that we have by people in these different industries', that's when we actually make the most advancements of taking technology that helps people's lives, whether it is an economical benefit, or like we often talk about with the applications," Morrow told ZDNet on Thursday.

"I'm not so sure we have done enough of that; Telstra has a good history out there working with the universities, now that NBN is of the size and has the experience that it has, we actually want to step up and work with universities to see if we can't again advance technology in a way that helps Australia, helps the citizens of Australia, and of course helps productivity for business."

According to the ACCC, five retail service providers are now connected to all 121 points of interconnect (POIs), with six connected to 120 POIs and seven to 95 POIs.

"This is a sign competition is continuing to increase, and consumers at ever more locations have a greater choice of providers who directly connect with the NBN," Sims said.

For the first half of FY18, NBN had reported revenue of AU$891 million, up 121 percent, and EBITDA of negative AU$1.377 billion -- 37 percent higher than the previous year's negative AU$1 billion.

For FY17, NBN reported full-year revenue of AU$1.001 billion, up 138 percent from AU$421 million for the previous financial year, with EBITDA of negative AU$2.4 billion -- 53 percent higher than the previous year's negative AU$1.57 billion.

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