NBN: "Trouble at Mill" for subs transitioning to Coalition's FTTN

What's a transition to an FTTN going to looklike? This could be the achilles heel of the Coalition plan.
Is this why Telstra declared it was "spectacularly agnostic" about the two NBN proposals?

Previously I've written about the inevitable, but orderly, voice-to-NBN transition: Telstra will be keen to hasten it along to reduce maintenance costs (and crystallise payments), whilst many voice-only customers will want to "drag the chain", to not do anything for as long as they can. Telstra could even transparently deploy compact small-scale VoIP (voice over IP) equipment in exchanges for the last 5-10% of local users to enable them to literally clear the floors and migrate early to a single network: full IP voice services.

There's a few points that seem problematic with an FTTN-NBN:

• Who owns and maintains the remaining 800m of Copper: Telstra or NBN Co?
• What triggers the Coalition's "when economic" upgrade of a copper service to fibre?
• Will there be any fibre at the beginning or only after some years?
• How do you cut consumer lines and install a node without affecting existing voice services?
• Will customers still be forced to transition to the NBN for voice-only services?
• Will Telstra agree to that, forcing it to leave all copper in place and maintained?
• What happens if the old copper can't support VDSL2 @ 25Mbps?
• Is new "cat 5" copper going to be run like the Transact rollout in Canberra?
• Will fixed wireless be the only option available to subscribers?
• Or will fibre be run in the first-deploy but only "when economic"?

The key difference to the Fibre-NBN and Coalition FTTN plan is this: the two can run in parallel and there is no equipment in common outside the subscriber premises.

These clear-cut boundaries are good technically and contractually. Everyone, engineers, accountants and subscribers, can tell where the work is up to, can easily name and identify what equipment is installed and in use and not be confused as to what services are in use.

Telstra's SSU is very clear about when payments are made (the service is transferred to the NBN) and what obligations Telstra has (migrate all voice and special services starting 18 months after an area is declaring "available for service").

The NBN agreements presume two separate infrastructures with a clear-cut, orderly migration between them: copper to fibre. The Telstra payment, and the end of their maintenance obligations, triggers when a subscriber is disconnected and transferred to the fibre-NBN. The Coalition must now negotiate with Telstra for an additional fee: ownership of the final 800m of copper and NBN Co, because of the new, higher, maintenance costs, will need to create and have approved by the regulator, the ACCC, new wholesale pricing. Telstra are renowned for being tough negotiators and the ACCC for their close scrutiny: both will cause significant delays in the project and increase deployment costs.

The reality for fibre-NBN probably will be, because Number Portability is supported, a subscriber will for a short time have both an NBN-fibre phone service and a POTS copper service. When the new voice service is working, tested and accepted by the subscriber as "OK", their existing number will be ported to the fibre-NBN automatically triggering disconnection of the POTS copper service. With the best planning, skill and will in the world, all 12 Million services to be migrated will not go flawlessly. Subscribers will have available at all times a working voice service, and hopefully a digital service as well.

I expect the same style of transition will be supported for same-ISP ADSL-to-NBN transitions. Two notionally working services at one time, with a cut-over and test period. Config changes for subscriber equipment will be simpler for ADSL customers because they will not be able to use their current firewall/routers: NBN-ONT's (Optical Network Terminations) provide the subscriber a direct Ethernet input, not ADSL. The ISP can disconnect the ADSL service once the subscriber accepts the NBN service as "OK". ISP's will need to co-ordinate with Telstra to ensure the copper circuit is not prematurely cut: I'd expect many people will first migrate voice then ADSL.

Subscribers that choose to change ISP's when migrating from ADSL/HFC to NBN will, as now, have to manage the transition themselves to ensure gap-free Internet connectivity.

For an FTTN-NBN, there are two important differences in the subscriber transition:

• subscribers cannot have two working services at once, voice or Internet, it's either/or, plus both services must transition together.
• ADSL services will fail immediately the node connected. There is no grace period.
• there is no safe, trivial fall-back available when the inevitable problems arise.
• There's an essential design and contractual difference: because copper is still in place, subscribers could still have a POTS voice service wired back to an exchange. Telstra won't want this and the Coalition will need to sell this to the 10-15% of the public who resist a forced change.

I'll assume that since large-scale FTTN rollouts, like BT's "Infinity" in the UK, good processes exist for inserting nodes into the subscriber wiring loop without interrupting service. From personal experience, both professionally within a Telco and as a subscriber, I know that large-scale cut/re-join activities are highly prone to human error. With 12M services to migrate, there are going to be 500,000 or more of these problems. Usually with mass-jointing solutions, multiple errors are introduced with off-by-one errors, meaning the whole joint has to be redone, with the possibility of creating further errors/problems.

A Coalition FTTN will cause NBN Co grief: significant cost and effort in defining new processes, selecting and training staff and in equipment specification, tendering and selection: as an independent for-profit company, the Coalition cannot direct their choice of vendor, nor will the choice for another country, e.g. the UK, be appropriate for the wide range of extreme conditions in Australia.

Telstra is going to cause the Coalition grief if an FTTN-NBN is pursued: there need to be contracts agreed to transfer ownership and responsibility for the last 800m of subscriber copper - Telstra shareholders will not let their managers give it away for free (~10,000,000 km of copper, ~70,000 tonnes @ $5,000+/tonne is $350MM in scrap, less cost of retrieval). Telstra also wants the $1B/year copper network maintenance off its books as soon as possible.

The Coalition will need to deal with significant pushback, delays and additional costs from all players: subscribers, ACCC, Telstra and NBN Co.

Dealing with the remaining headline items:

• Who owns and maintains the remaining 800m of Copper: Telstra or NBN Co?
• What triggers the Coalition's "when economic" upgrade of a copper service to fibre?
• Will there be any fibre at the beginning or only after some years?

As the Coalition's tagline is "Better Broadband, cheaper, sooner and more affordably", price minimisation, hence lowest possible costs, will be the new directives issued to NBN Co.

The inevitable response by the Coalition to an NBN Co "FTTN will be more expensive" judgement, already foreshadowed by Mr Abbot, will be to "pause" the rollout. This is political-speak for "we'll scrap the plan". Again, Telstra, the ACCC, and subscribers (voters) will be very unhappy with that. Telstra may be able to sue for breach of contract and its forced continued maintenance costs, above the $209MM cancellation fee.

Mr Turnbull's "when economic" line is a nonsense. In the last 25 years no fully commercial Telco has ever judged it "economic" to install fibre instead of copper for simple residential services: it's a matter of ARPU and ROI. (Average Revenue Per User and Return on Investment). Telco's want an ROI far greater than NBN Co's ~7%/year and that new investment has to beat a copper network that is fully depreciated and now only consumes operating expenses.

This is the real breakthrough thinking of the fibre-NBN: it allows Telstra and Optus to move to a fibre subscriber loop without needing to meet shareholder ROI/ROCE (Return on Capital Employed) demands, or using any of their own capital.

I'm not sure if NBN Co would find situations where initial FTTN copper-loop replacement would be "economic", when the whole point of the exercise is to beat a GPON price (Gigabit Passive Optical Network).

• How do you cut consumer lines and install a node without affecting existing voice services?
• Will customers still be forced to transition to the NBN for voice-only services?
• Will Telstra agree to that, forcing it to leave all copper in place and maintained?

Mr Turnbull has yet to make clear if the Coalition policy is to follow the current model and force everyone onto fully digital telephony, or require Telstra to maintain the existing analogue POTS over copper. Telstra will argue that'd prevent it removing copper cables and exchange equipment, as well as old and creaking I.T. systems, plus the exponentially increasing copper maintenance costs spread over a very few users: they'll argue for quite punitive payments to continue the POTS telephone network for 30 years or more.

• What happens if the old copper can't support VDSL2 @ 25Mbps?
• Is new "cat 5" copper going to be run like the Transact rollout in Canberra?
• Will fixed wireless be the only option available to subscribers?
• Or will fibre be run in the first-deploy but only "when economic"?

Because the Coalition promise is all about price, their only options are:

• aerial "cat 5" in short-distance, high-density areas with low payments to Power Distribution companies that own the Poles.
• Fixed wireless (4G).

In Summary: A copper-to-copper network transition is going to be messy and expensive. It's a poor substitute for the clean copper-to-fibre transition.