FTTN system for NBN may prove impossible to operate

Just over four years ago, in the midst of a worldwide recession, Australia made a forward-looking decision to use fibre-to-the-home (FTTH) as the key technology for its national broadband network (NBN).

Under the Labor government, the NBN had been expected to reach 90% of all premises (later increased to 93%) with fibre-optic cable - enough to enable a digital transformation of work, play, education, health care, energy management and government for the entire country. Broadband Communities, an international publication based in the United States, applauded the decision at the time and has watched the progress of the NBN with interest since then.

This strategic decision was sound then and remains sound today. Australia’s people and Australia’s economy will benefit far more from a fibre-to-the-home system than from any alternatives. Here are some of the reasons:

• Copper cannot come close to matching fibre’s upload speeds. Yet many emerging network uses involve uploads, whether you are placing family videos on YouTube, consulting your doctor or running a business that depends on remote computing services - services in  the ‘cloud’.
• To carry high speeds on a copper-based fibre-to-the-node (FTTN) network, old copper must be refurbished, or ‘conditioned’. Phone companies usually underestimate the amount of conditioning needed. Conditioning takes time and must be paid for. This extra investment is much like the investment in keeping an old car running. Sometimes it pays off, but at a certain point, the repair won’t buy enough additional time to justify the expense. At that point, a wholesale upgrade makes good sense.
• Even though the latest copper-based technologies can - at least in theory - provide high download speeds, those speeds will be woefully obsolete in five years. New network uses are emerging quickly. Just one example: Ultra high-definition (4K) televisions are already on the market. They display four times the number of pixels as the highest-resolution sets now in common use, and their prices are fast falling to mass-market levels. 4K video is currently being broadcast in Europe at 40 Mbps; better compression may reduce this, but 4K, especially if there are multiple TV sets per home, will still challenge copper-based networks.
• The social and economic benefits of a copper-based network are limited. That’s bad enough for a network builder, and it’s an extremely poor choice for a national economy. New industries don’t get started. Citizens’ income doesn’t rise as fast. Entrepreneurs looking to offer new online services and content will have to look elsewhere. Of the large private carriers expanding FTTN - notably BT in the UK, Deutsche Telekom in Germany, BSNL in India and AT&T in the United States - only BT is committed to bringing significant services from entrepreneurial outside developers to customers. None are willing or able to open their networks to all comers, as is planned for the NBN. No large FTTN network has ever allowed open access, and none is capable of being used that way.

A view from afar

All these issues, we (Broadband Communities) thought, were settled long ago in Australia. As Australia’s choices have international implications and as the political debaters often cite international examples to justify their policies, we take the liberty of offering a view from afar.

Worldwide, capital-starved private network operators often opt for FTTN networks as an interim step towards all fibre-optic networks. This allows them to make use of their existing copper lines, which may not even be fully paid for. In general, operators have been disappointed by FTTN’s lower-than-expected performance, higher operating costs and lost revenue opportunities. The most successful large-scale FTTN deployment has been in Germany, where the existing copper was in fairly good condition.

But private carriers should not and do not factor national wellbeing into their overall strategies. That’s not their job. It is the government’s job, enforced through regulation or through direct or indirect investment.

All that said, government, like any investor, should strive for efficiency. Money is not to be wasted.

Costs and timetables

The Coalition’s latest plan for a mainly FTTN network calls for an investment of close to $30 billion, high in comparison to other FTTN buildouts. However, because of the need to condition the old copper, we (Broadband Communities) think it unlikely that FTTN can be built for significantly less than the cost of FTTH.

Labor’s NBN capital plan called for the mainly FTTH network to cost about $41 billion, or about $5000 for each household passed. (By contrast, the Verizon FiOS buildout, which is even larger than Australia’s planned NBN, would cost about $1200 per household passed if it were getting the same 70% uptake rate the NBN is getting.)

There are reasons for the differences between Australian and world costs - Australia’s geography and network construction skills among them. There’s also the fact that the FTTH plan was designed for a 50-year lifetime. So if there was a need to lower the cost of the buildout, there may be some trade-offs that can be made in the design. For example, in some apartment buildings it might make more sense to bring fibre to the basement rather than to each unit.

FTTN’s apparent advantage in deployment time is also unlikely to prove out in practice. True, Labor’s FTTH network was slow to ramp up. However, fibre deployers all over the world have started out slowly and picked up speed once they overcame the initial learning curve. And the FTTN timetable is likely to be an underestimate because of the time needed for redesign and for conditioning copper cable.

This article was originally published in Broadband Communities magazine.

www.bbpmag.com