NBN: Question marks over copper costs persist

NBN lodges revised SAU with ACCC

It’s still too early to determine how much effort will be required to whip into shape the elements of Telstra’s copper network that will be used for the National Broadband Network rollout, according to an analysis prepared on behalf of NBN.

The analysis was prepared by Analysys Mason, which was engaged by Webb Henderson on NBN’s behalf.

“[T]here is currently insufficient data available on the condition of the [copper access network] CAN to be able to evaluate how much remedial and augmentation work will be required,” the document states.

“Depending on the local condition of the CAN, if the extent of remedial and augmentation work is significantly different from what has been allowed for, then this may potentially raise cost issues from both a capex and opex perspective.”

The analysis was commissioned in support of NBN’s revised Special Access Undertaking (SAU) — the agreement lodged with the Australian Competition and Consumer Commission (ACCC) that governs NBN’s operations as a wholesaler provider of network access.

The SAU is being revised to take into account NBN’s shift away from solely rolling out fibre to the premises (FTTP) within the network’s fixed line footprint.

Instead, the ‘multi-technology mix’ (MTM) model will involve fibre to the node (FTTN), fibre to the building (FTTB) and hybrid fibre coaxial (HFC) as well as FTTP. (Fibre to the distribution point — FTTdp — will also potentially be used, NBN has said.)

However, the Analysys Mason document adds that “as the network roll-out proceeds, further real data regarding the condition of the CAN will become available which may enable nbn to change its strategy to reduce its costs.”

NBN has previously acknowledged uncertainties around the remediation work necessary for the FTTN rollout. A leaked document (which led to dramatic Australian Federal Police raids) showed that the cost of remediation was significantly higher than an estimate contained in the 2013 strategic review commissioned by the government and used to justify the switch to an MTM rollout.

However, NBN said at the time that its updated corporate plan took into account the potential costs associated with the use of the copper network.

The focus of the work by Analysys Mason was NBN’s methodology for determining which type of network technology it will roll out in different areas and the initial design work for the FTTN, FTTB and HFC networks.

“Analysys Mason believes that the methodology and processes used by nbn for determining which type of MTM network it will deploy in a particular geographical area is prudent and efficient,” the document states.

The analysis also says that the copper network should, based on data provided by Telstra and NBN modelling, be capable of meeting the government’s download speed targets (25 megabits per second to 100 per cent of premises, and, further down the track, 50Mbps to 90 per cent of premises).

When preparing the analysis, the terms of reference given to Analysys Mason meant that it didn’t assess whether the switch from an FTTP-only model to the MTM model was a wise decision.

Revised SAU

The ACCC today published the revised SAU. The competition watchdog is accepting submissions on the draft revised agreement until 26 August.

“The SAU provides an overarching framework for the regulation of access to the NBN,” ACCC commissioner Cristina Cifuentes said in a statement.

“The SAU currently does not capture the additional network technologies that NBN Co has introduced since the SAU was accepted. NBN Co is now seeking to address this through the SAU variation.”

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