Conroy’s folly is not considering FTTN for NBN, Vocus says

The NBN should comprise a mix of technologies, including fibre-to-the-node, according to the CEO of ASX-listed company Vocus Communications.

James Spenceley, CEO at ASX-listed company Vocus Communications, says that fibre-to-the-node (FTTN) technology should make up part of the National Broadband Network (NBN).

Senator Stephen Conroy, Minister for Broadband, Communications and the Digital Environment, has dictated what customers need for the NBN, Spenceley says, instead of assessing whether different consumers around Australia need different things.

“That’s my biggest criticism of NBN – it’s never approached this to say, ‘What does the customer require?’ The customer in the bush requires something very different to someone in a mid-sized town to someone in a CBD,” he says.

“They also have varying amounts as to how much they’re willing to pay. I think that’s the biggest folly … of Senator Conroy’s is not looking at technology for the right application.”

Spenceley says the correct technology for an NBN is dependent on location. For example, he says fibre-to-the-home (FTTH) is suitable in densely populated areas, whereas FTTN would work better in other locations.

“It really comes down to the technology that’s right for the area and the requirements,” he says.

Malcolm Turnbull, shadow minister for communications and broadband, has consistently stated FTTN would be cheaper and faster to roll out, and is a viewpoint which Spenceley agrees with.

“It just means that people get it earlier and you save a hell of a lot of money in what are probably semi-challenging economic conditions globally,” he says.

While much of the debate on the NBN has centred on FTTH versus FTTN, Spenceley believes people in regional areas of Australia don’t have a preference for how the NBN is delivered or what speed they receive. Instead, he says they want to any technology which is better than dial-up or satellite broadband.

“I think if you said to some people in the bush, ‘Do you want wireless-style access today at 5Mbps or 100Mbps NBN but in five years' time and the price is double – which would you prefer?’ I’m going to guess it’s not quite as clear cut as probably the NBN assumes,” he says.

Using FTTN would also allow Australia to prioritise the rollout to regional and remote areas of Australia, Spenceley says, which is in line with New Zealand’s approach to roll out high-speed broadband to regional areas first.

“My concern as an industry participant is still about getting broadband to people who don’t have it, necessarily, rather than rolling out fibre to every single house,” he says.

“[That] has always been my greatest criticism of the NBN – it’s fibre-to-the-home because that’s what [communications minister Senator] Stephen Conroy said.”

Spenceley has been an outspoken opponent of the NBN, telling the Australian Financial Review in February this year uncertainty over the network was stifling investment in it.

Seven months on and Spenceley says investment is now starting to filter through.

“I’m also starting to see, anecdotally, people rolling out more DLSAMs in areas. For such a long time it stifled investment – I think a lot of it is just creeping through now, but it’s not a landslide of investment that’s coming through by any means,” he says.

However, the current rollout of the NBN, and the $37.4 billion price tag of the network, is something which Spenceley says reminds him of the dot com boom days of the Internet.

“We’re kind of doing that dot com boom-day situation where you throw all the money in, you invest it, [say], ‘We’re going to build this fantastic website that’s going to sell pet food online’ and you list on the Nasdaq and you go up and suddenly the demand isn't there, the revenue doesn't turn up and it doesn't make sense.

“That kind of [sounds] like what we’re going through. It’s that ‘build it and they will come’ [attitude]. I think you’re far better off in today’s economic environments to be a little bit more careful about the way we invest money.”

The future for Vocus Communications and the NBN

A change of government would provide an opportunity for Vocus Communications to be more strongly involved with the network, according to Spenceley, making it more likely to invest in the network with other RSPs.

“If the Liberals get in and there’s a rethink [of the NBN], we’d like to have a lot of involvement, certainly on ideas and policy and different ways to think about rolling out broadband,” Spenceley says.

“I suspect Malcolm Turnbull has a different view and Malcolm Turnbull comes from the industry, so he has a much sounder understanding of the industry, dynamics and consumer demand so I think there might be some more interest in hearing our opinion.”

However, Vocus Communications is investing some money in the network. Last year it invested $8 million in developing its own fibre services around Australia, with the company spending $7 million this year.

The company’s fibre and Ethernet division also recently recorded the company’s strongest growth, with revenue increasing 201 per cent to $5.4 million and Vocus Communications expanding its fibre network by 298 per cent.

Spenceley says the company will continue to be involved in the NBN.

“I think we’ve been through a number of the processes to starting to add services and I think we’ll progress that once we get customer demand,” he says.

Follow Stephanie McDonald on Twitter: @stephmcdonald0

Follow Computerworld Australia on Twitter: @ComputerworldAU

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