Sunday, 28 July 2013

NBN: Is the Turnbull Node Plan "Telstra RIMs+HFC in Metro Areas" leaving NBN Co the scraps?

This chance comment caused me to revisit a burning question: Just how will Turnbull make good on his Node Plan? It's a Financial Disaster of the highest order as written.

This massive digital divide is going to be perpetuated if Telstra’s eight-year-old 2005 FTTN plan gets government funding, as rejected by John Howard then and proposed by Malcolm Turnbull in April.

It dovetails well with an analysis by Malcolm Moore, a Telecomms Engineer who "intricately involved with Backhaul Network and Customer Access Network design, construction and performance standards" in Telstra for quite some time, creating an innovative design and first-cut estimates for a Metro Broadband Network using Telstra HFC Cable Network and extending RIMs:
"Inexpensive Metropolitan Broadband Infrastructure" - about 6,000,000 premises would be inexpensively connected with Fast Broadband Internet and could  have Download speeds well exceeding 16 Mb/s.  

Mr Moore explains the 6M premises could be covered by HFC Cable and suggests that Metro areas account for roughly 80% of Australian premises, a good match to the 71% Coalition figure.

Telstra already has 8,500 RIM/CMUX's deployed, making it the largest & most-experienced "Node" operator in the country. It is also perfectly placed to redesign its Copper Customer Access Network to satisfy the Turnbull Node Plan and VDSL2 coverage. It already has its "Top Hat" project with DSLAM upgrades to RIM/CMUX's.

This explains many issues:

  • Why Turnbull refuses to go further than "They Will" when asked why Telstra would co-operate.
  • Why the Node Plan never addresses the complex issues surrounding renting or buying the Telstra Copper CAN.
  • Why reversing legislation and contracts on Cherry-Picking, over-building the HFC network, changing the ACCC wholesale price to a "maximum" and maximising reuse of existing infrastructure is at the fore of the Coalition statements.
  • Why the aggressive timetable for rollout.
  • Why the very strange and peculiarly specific number of FTTN premises covered: 8,968,000.
I suspect that the amount of enabling legislation & regulation changes would be small. Mainly removing the requirement for new services to only use Fibre and unwinding the Telstra HFC agreement. As proven by the failure of the Australian Cable TV market, there is only room for a single HFC Network in any one region. Either Optus will co-operate or continue with its HFC retirement contract.

From my first reading of the NBN legislation, I understood that any operator that was prepared to offer their wholesale services at NBN PoI's and conforming to the Layer 2 Data interface was allowed to operate - but would only be paid the ACCC wholesale rate. Relaxing that rule means Telstra can charge what it likes in any local area and isn't obliged to offer a service it feels is "not commercially viable".

The ACCC would also need to be directed on allowing undercutting of NBN Co AVC charges and that any operator, including Telstra, could Cherry-pick services in any region and not have to offer a uniform pricing scheme or national coverage.

Where does this leave the Telstra Structural Separation Agreement? Probably untouched.
Will it need another Shareholder Meeting and Vote? No, the existing Agreement will be in force and may even be taken up in 10-15 years time. A double win for Telstra.

Is it a good idea for the Nation and the Telecommunications industry reinstating a Telstra near-monopoly? A lot of people may not think so.

Two important questions remain:
  • Will Turnbull be forced to sweeten the deal with Telstra and pay them to roll-out al of part of their new 2005 NBN?
  • Will NBN Co be able to survive commercially having to service all "non-viable" premises? The inherent cross-subsidies was a major part of the business case.
If this is indeed the Coalition Plan, or close to it, when will they admit it and how long after an electoral victory would they sign the necessary agreements and legal changes?

1 comment:

  1. This is still predecated on the cost/benefit analysis that Malcolm says will need to be done. It is quite likely that he already knows the answers to your questions, but will allow the "independant" report to announce those answers. In the end, if it does (and will) return a negative assesement, then Malcolm can just claim fiscal responsibility and say they will suspend all project upgrades until it is more economically rational to do so. At that point everything reverts to the staus-quo.


Note: only a member of this blog may post a comment.