It seems almost certain that in about 15 days we will have a new coalition government. Broadly speaking their NBN policy is a switch from FTTH to FTTN. Much has been written about why FTTN is inferior to FTTH and why, given the state of the copper and the likely lifetime of an FTTN solution, any savings are probably illusory so I won’t repeat it all again.
What I do want to do with this post is try and predict what the LNP will actually do with the NBN. I am not brave enough to make a single prediction, so I will give some options and my opinion on how likely they are.
Option 1 – They conduct a review of the NBN and decide that FTTH is the right way to go after all – 5%
Option 2 – They spend 6-8 months negotiating with Telstra for access to the copper at a reasonable price before giving up and deciding to stick with the current FTTH plans – 10%
Option 3 – They spend 6-8 months negotiating with Telstra for access to the copper at a reasonable price before giving up and selling NBNCo to Telstra in exchange for some agreement on ‘structural separation’ between wholesale and retail – 50%
Option 4 – They spend 6-8 months negotiating with Telstra for access to the copper at a reasonable price before giving up and giving NBNCo to Telstra and paying them $20B in subsidies to complete the rollout in exchange for some agreement on ‘structural separation’ between wholesale and retail – 20%
Option 5 – They spend 6-8 months negotiating with Telstra for access to the copper, end up paying them $10B and rollout an FTTN network that is obsolete before it is completed, takes longer to deploy than the original FTTN NBN and costs more – 30%
Although options 1 & 2 involve a complete about-face on their FTTN policy, it is conceivable as they will very likely be in a strong position, electorally, and able to blame it on Labor (“they committed us to FTTN and it is unfair to have some people with lower speed access”) or Telstra.
Under options 3 and 4 (especially 4) I think there is a reasonable chance that Telstra will continue to roll out FTTH – they have already done this in new estates and in South Brisbane, and it gives them a chance to be rid of the majority of their copper network. This will reduce the cost of maintenance and give them an excuse to retrench a lot of maintenance employees & replace them with subcontractors (those that haven’t already been replaced with subcontractors that is). A homogeneous FTTH network would also be cheaper to manage than a mixture of FTTH, FTTN and HFC.
It will be interesting to come back in August 2014 and see how my predictions have panned out.
*Update* – Scott’s comment reminded me that I meant to point out that under both the Labor and Lib’s plan rural areas get fixed-wireless or satellite. This means that there may not be much horse-trading required with the Nationals. It also means that I guess the one issue that I might care about in this election doesn’t affect me either. hmm…
2 Replies to “My NBN Predictions”
I’m sure Telstra would be more than happy to roll out FTTH if they are being paid $20bn to do so. Any “separation” real or imaginary that is concocted will almost definately be written in such a way as Telstra are not disadvantaged at all.
There will also be the change in focus for where it is deployed. Telstra and the Libs will be most interested in seeing a rapid number of connection and rapid ramp in revenue to combat the “slow” deployment NBNCo has been accused of. That means the denser population cities will be the first target so rural and country will be screwed big time. Just look to the HFC for the most obvious example. It will drag on, and Telstra will hit the Government up for more money when they get around to the country areas.
How the existing HFC will fit into the picture is tricky as it has been pretty well agreed that opening it up for access by other providers is near impossible.
All up, you’ve got a nice summary of options. Personally I think Option 3 is the most likely, with the government also throwing some money in with an assurance Telstra will work to “improve the bush” or some such to keep the Nationals quite. OPELv2 anyone?