NBN: The commercial innovation of NTD multiple porting

Originally published on http://stevej-on-nbn-er.blogspot.com/2013/07/nbn-business-myths-or-nbn-co-pricing.html

The NBN isn't just about the high speed fibre cabling. With Labor's FTTH/P solution there is also the device which brings the signal from the main line to use in your house. This is called an NTD (Network Termination Device). The current NTD being offered has what's called a 4 + 2 port set-up. This entails 4 data ports and 2 dedicated voice ports as standard when your FTTH NBN is connected. Note these do NOT come with the Coalition's 'copper last mile' policy, as this is basically delivery of ADSL as you likely have now, just slightly faster, but still as unreliable. You may need to purchase an expensive VDSL router with that, but it will still be permanently limited in its port number.

The innovation of Multiport NTD's is that you the customer can simply and cheaply connect to multiple RSP's (Retail Service Providers - formerly known as ISP's). The beauty of this is you can have a port dedicated to connecting to work (allowing telecommuting), to the institution you study or research with and for telehealth assisting the aged, disabled and those in chronic pain. This can also be a great way for children to connect directly with their school in a very secure manner, it allows them to access their school on an isolated network. The arrangement of the 4 data ports will be up to the user, there are so many options and all very viable allowing the consumer choice and security. As stated before, simple and cheap connection.

Simon Hackett is one of the best known and most respected Comms commentators in Australia, he's an informed and important voice in the ICT industry. Simon gained this respect through starting his own very successful Telco/ISP and running it for more than 15 years. Simon spoke this week at a CommsDay event, "Wholesale and Data Centre Summit". [slides]

Simon called for real debate over the implementation of the NBN: How to build a Fibre NBN on a Copper Budget. Mike Quigley, CEO of NBN Co, also called for an "all options" debate earlier this year, but the Coalition attacked, mocked and pilloried him for suggesting this. I hope Simon's call will start real debate now.

Simon made three points in support of his assertion, "there's a financial time-bomb in the plan" and again called for a small number of replicated MegaPOPs, not the 121 PoI's, to lower burdens on ISPs':

• Drop the tiered AVC (Access Virtual Circuit) Charges should be dropped and, like current ADSL/ULLS, adopt a single charge.
• Plus, remove or radically reduce the CVC (Connection Virtual Circuit) or Volume charges.

• Drop QoS (Quality of Service) altogether, just like current ADSL/ULLS. Four 'traffic classes', TC1-TC4, are defined to allow customer traffic to be prioritised.

• Drop the customer 4+2-port NTD (Network Termination Device) and separate power supply, with optional battery-backup (UPS).
• Allow RSP's to provide their own integrated GPON-Routers, just like current ADSL services.
• Or supply a simple single-port GPON to Ethernet device.

It seems to me that Simon has misunderstood why these three innovations are actually very good for both the Customer and NBN's Retailers.

However, I do strongly agree with him that installing the high-end NTD without charge and by default is an unnecessary financial drag, one that could be converted to revenue. And I agree that the NBN free install should end with the internal FWO (Fibre Wall Outlet) and a tested/certified optical connection, not the full service and CPE (Customer Premises Equipment).

Firstly, Simon seems to have misread the NBN Co Corporate Plan. Yes, the ARPU (Average Revenue Per User [per month]) does increase from around $30 to $110. This is a good thing - it means business has increased! This is exactly like complaining "I'll pay more tax". Yes, A Good Thing! You're earning more and getting more in your pocket.

Secondly, NBN Co provided a comparison of their wholesale volume charges versus Telstra ADSL. Retailers also need to pickup backhaul from the 121 PoI's (Points of Interconnect) versus Telstra's interconnects in 7 State Capitals. In NBN Co's view, and the independent umpire (ACCC), the volume charges are fair.

Simon could've reused the NBN Co chart, avoiding calculating and charting the data, Exhibit 8-11 2012 NBN Co Corporate Plan.

4-port NTD

While I agree that both giving away this piece of high-end 'kit' and its installation, for free, seems poor business  practice, I don't agree that the NTD is a bad idea. The lack of connection options and 'no charge' are commercially unsound: providing a cheap, 1-port GPON/ethernet device or allowing RSP's to provide integrated GPON Routers will provide customer choice and better match needs. Selling 4-port NTD's as an upgrade seems better commercially to me.

I agree with Simon that including 2-voice ports for the GPON NTD isn't necessary. The Fixed Wireless NTD only includes 4 data ports, no voice.

The basic "layer-2" architecture of the NBN is very different to current ADSL networks in three important ways:

• Customers access IP directly, not over tunnelled connections (PPPoE).

• VLAN's (Virtual LANs) allow separation of traffic throughout the network.
• This network isolation provides both security and simple administration for RSP's.
• It allows customers access to multiple RSP's on the single connection.

• Multicast, versus normal TCP/IP unicast, allows the NBN Co network to 'amplify' packets and cheaply provide broadcast traffic, like scheduled TV, saving Customers and RSP's substantial costs. This cannot be done with ADSL's PPPoE.

The commercial innovation of direct-IP & VLAN's and the multi-port NTD is that customers can simply and cheaply connect to multiple RSP's say ISP, TV and Work. It's the modern equivalent of tuneable Radio and TV. [Radios were once sold pre-tuned to a single station.]

Professor Rod Tucker, director of the Institute for the Broadband-Enabled Society states:
"If access to customers, patients is not ubiquitous because the services cannot be provided over some ISP's networks, or if a particular customer's data limit for the month has been exceeded, then the benefits of such a universal service become limited."

A dedicated NTD port on FTTH/P guarantees  reliability of service. With a health or education agency becoming an NBN services provider there would be no danger of the service being slowed or ceased if the user's monthly data quota is reached. Also this would allow tele-health monitoring services to be billed as part of the community care package.

The NBN is not all about the raw numbers, it is also about societal care and service. Multiple port NTD's provide varied and easy as well as cheap access for those who truly need it. The technologies are in place and will continue to make use of these, as Moore's law will attest.