NBN Co fibre rollout may surpass DSL by 2015: Telsyte

Fibre optic internet access is set to bypass digital subscriber line (DSL) in 2015 if the NBN Co continues its fibre to the home (FTTH) rollout across Australia but this is dependent on the Labor government staying in power, according to analyst firm Telsyte.

The study — Fixed Broadband and Voice Report — found that NBN Co fibre is set to be used by 4.2 million homes in 2017. If the opposition is elected, fibre may only be used by 700,000 customers at that time.

Malcolm Turnbull, the opposition's communications and broadband spokesperson, recently promised not to remove the NBN cables already in the ground if the coalition wins office.

“By the end of 2015, NBN Co fibre will match the penetration of DSL with about three million active connections to homes and businesses if the rollout is uninterrupted,” reads Telsyte's report.

Telsyte director of research consulting, Chris Coughlan, said in a statement that the firm considered the current political environment and the Coalition’s opposition to NBN Co when compiling the report.

“If the NBN Co is allowed to continue by the federal government, optical fibre connections will connect some 4.2 million premises by the end of 2017,” he said.

“However, if the Coalition wins power in 2013, we expect the new government will stall the National Broadband Network [NBN] while it goes through the Productivity Commission and policy reviews for the initial term of government.”

Coughlan added that if this happened, the market would swing back to DSL and optical fibre would only be connected to approximately 700,000 premises by the end of 2017.

“The fixed broadband market growth has slowed to 3.8 per cent, from over 20 per cent in 2007, resulting in increased industry rivalry as participants move to capture subscribers from each other,” he said.

“This trend is further exacerbated by the rollout of the NBN, as there will be an advantage to incumbency when it comes time for customers to move to the new network.”

According to the report, in the last 12 months the dominant market participant, Telstra, has shown renewed aggression in the market, with increased download limits, lower prices and bundles that the market is finding attractive, resulting in a market turnaround; the 1 per cent decline in customers has improved to 7 per cent growth in the last year.

According to the report, this increased market competitiveness has also impacted the lower end of the market.

“The other standouts were iiNet and TPG; both are impacting the market,” he said.

“Telsyte view them as strong participants focusing on bundles and utilising unconditional local loop service [ULLS] and their own infrastructure to enhance the profitability of their businesses."

Coughlan added that it was becoming increasingly difficult for wholesale-based DSL providers to compete against Telstra retail and the larger unconditional local loop service providers such as iiNet and TPG.

“We believe subscriber numbers in this segment of the market has contracted by 8.2 per cent in the last year,” he said.

“There will be consolidation and possibly failure as time progresses with smaller operators.”

Follow Hamish Barwick on Twitter: @HamishBarwick

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