Fibre to the node may be a thing of the past for NBN

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Australian Broadcasting Corporation

Broadcast: 15/03/2016

Reporter: David Lipson

On a day of chaos and noise in the Senate, there are claims the Government's fibre to the node option of delivering faster broadband on the National Broadband Network could be over.


EMMA ALBERICI, PRESENTER: As expected, it's been a day of chaos and noise in the Senate as the Government sought debate on major changes to the voting system and the crossbench went all-out to avoid it.

Nothing's been resolved as yet, but the old threat of forcing the Senate to sit through the weekend has reared its head again.

Amid all the fury, the Treasurer appeared to quietly shelve a key goal of the Coalition Government: income tax cuts in the upcoming budget.

Joining me now to discuss all of that: political correspondent David Lipson.

David, why has the Treasurer seemingly thrown such an important matter overboard?

DAVID LIPSON, REPORTER: Good evening, Emma.

In a nutshell: it's because the economic and budgetary conditions for income tax cuts don't appear to be right.

It seems to be yet another consequence of the Government dumping plans to increase the GST. And the Government, of course, had been building the case for that for some months but decided, after having economic modelling done on such a "tax mix switch," as it described it, not to proceed with increasing the GST.

It's easy in many ways to throw the GST increase overboard, despite having actually built the case for it for several months, because many people would be happy to not see that tax increase. But the problem for the Government when it comes to tax cuts is: it's also been building expectations in that space. And it seems from the Treasurer's rather subtle comments today that they have fallen by the wayside in this upcoming budget, at least, as well. Have a look:

SCOTT MORRISON, TREASURER: It has to be something that can make a difference. The best way to drive income tax cuts ultimately is off growth. So our focus is very much on: let's drive the growth.

EMMA ALBERICI: And David, another important issue that seems to have been lost a little in today's melee is the National Broadband Network. And there are claims we could soon see the end of the Government's much-lauded fibre-to-the-node plans. What's happening there?

DAVID LIPSON: Yeah, it's a very interesting one. We saw the head of the NBN, Bill Morrow, today admit, indeed, that the company had been conducting secret trials of a new type of fibre optic technology at two sites in Victoria. And the results: very promising indeed, that they could be delivered significantly cheaper and much sooner as well.

But as you mentioned, the Government for now is sticking to its preferred option of fibre-to-the-node, despite many experts claiming that this will deliver a second-rate National Broadband Network.

(Footage of NBN official launch, 12 August 2010)

JONATHAN BIGGINS, MASTER OF CEREMONIES (12 Aug. 2010): One, two, three, push.

JULIA GILLARD, PRIME MINISTER 2010-2013 (12 Aug. 2010): There we are.

DAVID LIPSON: The National Broadband Network was at the centre of Julia Gillard's 2010 election pitch.

JULIA GILLARD (12 Aug. 2010): Lovely to meet you.

The future is here and the future is this national broadband investment.

(Footage ends)

TONY ABBOTT, PRIME MINISTER 2013-2015 (archive): Malcolm!

MALCOLM TURNBULL, COMMUNICATIONS MINISTER 2013-2015 (archive): How are you, mate?

TONY ABBOTT (archive): Terrific to see you, mate.

DAVID LIPSON: And after initially vowing to destroy the case for the NBN, the Coalition in 2013 pledged not only to save it - but to do it better.

(Footage of Tony Abbott watching NBN demonstration)

TONY ABBOTT (9 Apr. 2013): Wow. Isn't that extraordinary.

MALCOLM TURNBULL (9 Apr. 2013): What we are going to do is get this job done. And we will bring very fast broadband to all Australians sooner, cheaper and more affordably.


DAVID LIPSON: Just as the rhetoric has moved forward, so has the technology.

(Footage of Senate committee hearing)

SU-VUN CHUNG: So that's why people use the term "skinny fibre". It's a cute way of describing it.

DAVID LIPSON: Dr Su-Vun Chung from Corning Optical Communications is helping provide cutting-edge technology to the NBN. In a Senate committee today he showed off what's colloquially known as "skinny fibre".

(Su-Vun Chung joins fibre cables together)

SU-VUN CHUNG: You align the arrows. You can see the arrows. I can see them but you can't. And that's what you do.

STEPHEN CONROY, LABOR SENATOR: That seems to be a lot simpler than splicing fibre?

SU-VUN CHUNG: Oh, it's a lot simpler. That's the reason why NBN likes this.

(Footage ends)

PAUL BROOKS, DR., VICE CHAIR, INTERNET AUSTRALIA: Essentially the cables are thinner. It's the same type of glass in the strands of fibre that are in the cables. But the cables have fewer strands of fibre in there and that makes them thinner and makes them easier to pull through the ducts and the conduits and the pipes that are around the cities and underneath the footpaths.

That means that hopefully there'll be less digging, less remediation, less fixing of the conduits required. And it also means that those jointing enclosures - the places where you join one cable to another - can be much smaller than what they were using in the first few iterations, the first few designs.

ANNOUNCER (NBN advertisement): The more we use the internet, the more our current copper network is struggling to keep up.

DAVID LIPSON: NBN has been conducting secret trials of the technology in Ballarat and Karingal, Victoria. The 4,500 homes connected so far went live a few weeks ago.

ANNOUNCER (NBN advertisement): The National Broadband Network: connecting us to a better future.

(Footage of Senate committee hearing)

BILL MORROW, CEO, NBN: The findings are encouraging. Relative to cost, we were able to reduce the cost per premises by roughly $450 per premise. And while this is early, it's still significant. And relative to time, we also believe that we could shave four weeks off the time of the build.

(Footage ends)

MALCOLM TURNBULL (archive): You will get double the speed of what you would get.

DAVID LIPSON: For a project that's been plagued by reports of delays and cost blowouts, this is welcome news. And tech experts say it's proof the days are numbered for the Government's preferred option of building fibre optic cable to the node - or a cabinet at the end of the street - and then using the existing copper network to the home.

MARK GREGORY, DR., RMIT: The comments today by NBN CEO Bill Morrow are the final nail in the coffin for the Government's desire to roll out the cheapest possible technologies for this nation's broadband future.

DAVID LIPSON: In the midst of it all: another leak. This document obtained by Lateline and marked "for official use only" highlights the cost effectiveness of rolling out skinny fibre all the way to the front gate. It's a technology that also lasts much longer than copper and delivers vastly better internet speeds.

PAUL BROOKS: Because the copper length is much shorter, it can be run at much higher speeds. So we should expect to see speeds somewhere in the order of 600, maybe 800, maybe approaching 1,000 megabits per second.

DAVID LIPSON: Taking into account other associated costs, the price of skinny fibre to the front gate is around $2,000 per premises, still much cheaper than fibre all the way to the home at $3,700, but just $400 more than the Government's fibre-to-the-node technology.

JASON CLARE, OPPOSITION COMMUNICATIONS SPOKESMAN: The only reason I can think that they're not switching from the copper NBN to this new technology is because it would be humiliating for Malcolm Turnbull to admit that he was wrong and to switch from what they're doing now to this new technology.

DAVID LIPSON: NBN chief Bill Morrow says that difference in cost does add up.

BILL MORROW: So even with the $400 or $500 difference, you have to multiply that times millions. And worse yet is: it's going to take us a lot longer.

(Footage of Malcolm Turnbull shaking Bill Morrow's hand)

MALCOLM TURNBULL, PRIME MINISTER: Bill, how are you? Good to see you, mate.

DAVID LIPSON: According to Bill Morrow, the new technology still doesn't reach the Government's benchmark of delivering fast broadband cheaper and sooner. He raised the new technology with the NBN board a year ago, but it's still not being rolled out.

BILL MORROW: As it relates to our remit that comes from the Government: it is to do it in the fastest way possible at the least possible cost. And with that as our overarching direction, our recommendation is to do fibre-to-the-node.

(Footage of Malcolm Turnbull with NBN installation workers)

MALCOLM TURNBULL: Have they got to the end?

DAVID LIPSON (to Bill Morrow): That remit, though, is a political remit. Is that getting in the way of the best business model for the NBN?

BILL MORROW: Well, that's a question you really have to ask the politicians.

EMMA ALBERICI: And the Minister for Communications, Mitch Fifield, responded tonight, saying the Government had given NBN a clear mandate to find the fastest and most cost-effective way to complete the network.

He said NBN is continuing to innovate and look for ways to lower costs, but there is no better approach available right now.

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