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User-pays NBN a 'cop out', analyst says

Letting customers pay for full fibre services shifts the cost of the network from the government to the user, according to Paul Budde

Telco analyst Paul Budde has called a user pays system for the National Broadband Network (NBN) a "cop out”.

On Tuesday, shadow communications minister, Malcolm Turnbull, told the Kickstart event that part of the Coalition’s plan for the NBN would involve a user-pays system where customers could pay for fibre extensions from nodes on the street to their premises, according to AAP.

Communications Minister, Stephen Conroy, said this type of fibre extension could cost up to $3000.

"This user-pays fee for high-speed broadband is on top of the $15 plus billion cost to the Australian taxpayer of the Coalition's copper-to-the-home broadband plan,” Conroy said in a statement.

Budde estimates costs could range from $1500 to $5000.

Fibre-to-the-node (FTTN) rolls out fibre to nodes in the street and uses copper for the remaining connection from the nodes to customer premises.

It is the Coalition’s preferred method for rolling out the NBN, compared to Labor's plan to roll out fibre right up to the doorstep of premises for 93 per cent of Australia, called fibre-to-the-premise (FTTP) or fibre-to-the-home (FTTH).

“If you’ve got a customer that wants fibre for whatever reason then there’s no reason technically why you shouldn’t make it available,” Turnbull said on Tuesday.

However, Budde said letting consumers pay for full fibre services is a “cop out” and is simply shifting the cost of the network from the government to the consumer.

“Just to leave this to the happy few who can afford their own construction work is a bit rich. The same applies to access to tele-health and tele-education services,” he said.

Consumers can already pay for fibre extensions to their premises under Labor’s $37.4 billion NBN if they fall outside the fibre footprint.

In NBN Co’s network extension fact sheet, the company states there are several factors involved which determine the cost of a fibre extension.

This includes where the premise is located, the distance from the fibre footprint, the time and cost involved with civil works for the extension, the cost of using third-party infrastructure and any environmental and planning approvals involved.

NBN Co states fibre extensions can take from a few months to 12 months or more to build, but it does not include any cost estimates in its fact sheet.

In Armidale, private businesses which are located in an estate on the southern outskirts of town have reportedly been told it would cost them $225,000 to join the fibre network.

“So there’s no standard price. It could range from hundreds to thousands of dollars,” David Kennedy, analyst at Ovum, told Computerworld Australia. The cost of doing this on an individual basis could also be cost prohibitive, Budde said. “The costs would be significant higher if these connections will have to be done one by one on a case-by-case situation. Each connection would than require a very expensive separate roll out,” he said.

“I would be more sympathetic to this plan if, for example, you would say those who want a FTTH sooner than what is available in the roll out plan can do so by paying for it, but that over time everybody will be connected to this network.”

However, Kennedy said it is technically feasible for vendors to provide fibre extensions and the option should be considered.

“In my opinion, any modern FTTN installation ought to include this capability because it helps to provide for diverse demand and it can meet the requirements of that market segment who see significant value in the high-speed services that fibre can support,” he said.

Follow Stephanie McDonald on Twitter: @stephmcdonald0

Follow Computerworld Australia on Twitter: @ComputerworldAU

Tags Stephen ConroyFibre-to-the-Premise (FTTP)Malcolm TurnbullNational Broadband Network (NBN)fibre-to-the-node (FTTN)

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