Sunday, 31 March 2013

NBN: Cost per premise of FTTN

Sol Truijillo suggested in 2008 that full (98%) FTTN coverage (to an assumed 8.6M service addresses) would cost over $15 billion: $1,750/premise to the incumbent
vs $1,340 for NBN Co's current FTTP.

Presumably this was for 6-12Mbps: 1500m ADSL2 or VDSL2 quoted in 2005/6, 160 lines/node.
[Telstra swaps between 6Mbps and 12Mbps in their briefings, with multiple projects outlined.]
12-25Mbps, 800m VDSL2 as deployed in the UK would be much more as many more smaller nodes (40 lines/node).

Telstra have been coy about their FTTN design and costs, but in 2007, in a response to the G9/Terria proposal, claimed they could achieve 25Mbps with VDSL2 ISAM's from Alactel over 1500m. They also claimed a 40% reduction on nodes by re-architecting the copper network versus the G9/Terria "leave the copper as it was for phones" approach of G9/Terria.

Whilst Telstra did include VoIP cutover [tls385 doc], nothing in their briefing papers suggests they costed more than passing premises, as opposed to connecting and activating premises.

Telstra is charging NBN Co around $845/line disconnected, plus considerable rental charges for facilities access and pits-pipes-conduits (a 25% higher post-tax NPV ($5B vs $4B) over 30 years, vs 10 years, both with a 10% discount/interest rate).

Telstra never exactly describes the Customer Premises Equipment (CPE). The closest is "home gateway" mentioned by Jamie Chard on pg 16 of the TLS-389 briefing transcript. Mr Chard explicitly mentions "remote management" and "plug and play", in the context of customers purchasing "units" and self-installing.

From this absence of detail, I can only conclude that the Telstra FTTN, unlike NBN Co's FTTP, pushed the cost of the CPE/NTU (Network Termination Unit) onto the customer. This is a $150-$350 additional cost, further tipping the balance away from FTTN.

We know from the TransACT experiment in 2002, that the cheapest deployment of an FTTN will be $800/premise (55,000 premises, $40M): aerial with fibre transit and new copper cables, with overlaid PSTN and VDSL networks. VDSL nodes did not provide any telephony (VoIP) services.

Presumably, this was only for passing, not connecting premises. Also, in private correspondence, I've been told the nodes were not "fully populated". Although nodes could serve 32 connections, only a few VDSL line cards were initially installed, reducing deployment costs.

The TransACT PSTN network was separate with "super-nodes" of around 500 connections.
The Motorola VDSL premises devices were expensive and later replaced with low-power, smaller units. From (a single) personal experience, connection was a half-day by a team of three.

Looking at the Telstra & Terria/G9 docs, I can't find definitions of what they're counting in the install.

  • is it 'services passed' (and cutover to PSTN-via-the-Node)?
  • or 'services connected'?
My guess, it'd cost $250-$500 to install a Network Termination Unit in a premises. $150-$200 for the boxes and $100+ for the install.
It's easy to fudge FTTN costs by shifting the NTU cost to the subscriber, whereas NBN Co supplies the external fibre connection point and the NTU boxes, but does charge a separate fee for them.

There are 3 things that have been bothering me about the FTTN that on the public record but not mentioned by anyone:
  •  The cost of electronics was estimated at over 50% of the node costs in 2009 [Reg Coutts of the Expert Committee Report]. The 2005 TLS technology briefing docs cite a 20-year life. These are not just 'sunk' costs, but upgrades cost either for new line-cards, or removal of the Nodes and running GPON anyway.
  • Mr Quigley on Inside Business described FTTN as like Mobile Telephony, needs lots of electronics. it's more akin to a kind of a mobile network in terms of the amount of processing that you have to do to get the highest speeds.
  • Sol Truijillo was reported in 2008 that a full (98%) FTTN-NBN would cost $15+Billion.

Per-premises Fibre costs:

Telstra 2005/6 FTTN Links:

TLS385 Technology Briefing: Jim Moore, p8
All PSTN services in the footprint area will be migrated to a Multi-Service Access Network with an IP core.

Prof Reg Coutts, NBN Expert Review Committee:
“Essentially to go down the FTTN road would mean something in the order of, greater than 50 per cent of the capital being put into digital cabinets in the suburbs," he said. "They then become an obstacle to the final solution… fibre-to-the-premise. Fibre-to-the-node was not a stepping stone to fibre-to-the-premise. In fact, if anything it would put it backwards. The second reason, of course, is in no other market have people proceeded with fibre-to-the-node other than an incumbent. It is a solution that is the right solution for an incumbent that has a copper infrastructure.”
“Telstra have made the point themselves; they cannot build a business case to reach 100 per cent of Australians [with a fibre-to-the-home network]," Conroy said. “The best they have said they will be able to do is to reach 60 per cent of Australians. That is five capital cities and a little bit up and down, north and south of Sydney.”

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