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

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12 Comments

industry observer

1

and what bpart of this comment is not driven by his commercial interests ?

gnome

2

Spenceley grandly and without the slightest foundation decrees that different areas have different needs for service (they don't), while conveniently allocating his own area to the top level. It's hard to take such nonsense seriously.

Perhaps he is seeking Liberal preselection for one of his personally favoured suburban areas?

Phil Collins

3

This article is absolute tosh and should be binned by the editor.
1. What was the 2008 RFP if not a consideration of FTTN? 2. An FTTN NBN Mark 2 would have required cash payment for TLS copper. Imagine that "negotiation."
3. The NBN does prioritise regional areas.
4. The NBN does employ a mix of technologies.
5. The NBN is a competition reform.

Steven Hambleton

4

This is surely an advertorial? Sorry but it should be marked clearly as such. This line says it all - "it (Vocus Communications) invested $8 million in developing its own fibre services around Australia".

Vested interest in not having a ubiquitous national fibre network? Surely not...

Mark Hill

5

"people in regional areas of Australia ... want any technology which is better than dial-up or satellite broadband."

Wow. Talk about insult half the country in one fell swoop. Is he implying that us regional types only need to check our sheep-prices once a week whereas those sophisticated city folk need high speed connectivity for that new fangled IPTV thingamajig? What a stunningly antiquated view of regional Australia.

If anything, regional folk are far more dependent on good quality connectivity as that is the only way they can access many services that city folk can take for granted.

Mr Spenceley sure proves he has no clue outside his own little world and relegating regional Australia to second-rate connectivity is a complete misunderstand of the goals of the NBN.

Zok

6

Individuals and businesses have different needs, irrespective of the area they live in. The only way to fairly provide those needs is with a ubiquitous network infrastructure that allows users to purchase service levels according to their need, instead of having the "solution" imposed by random luck of geographical location, distance from the exchange/node and variable quality of copper in the ground...

Francis Young

7

James Spencely has been around long enough to know better than to make such a silly assertion.

We costed FTTN (NBN Mark I) and found it wanting in 2009, due principally to Telstra's ownership of the copper.

From a purely technical perspective, FTTN suffers speed fade with distance due to high frequency loss in copper. Consequently, if it was "suitable" to less dense urban areas, it would be even more "suitable" in densely populated cities, where the copper run is shorter.

As a datacentre owner and fibre backhaul provider, Vocus naturally wants to quickly ramp up the number of end users with fast bandwidth, but FTTN will not achieve this. Even if a coalition government were to stop all uncontracted FTTP work and begin asking councils to approve tens of thousands of large, fan-cooled cabinets with a five-year useful life to be erected all along the nation's residential footpaths, most customers would still not get their faster broadband any sooner than 2018, and would be capped at copper speeds, especially for uploads, on which datacentre revenues depend. The biggest new revenue stream will be from hitherto constrained regional Australia, and Vocus should know this.

Altogether, this is an inexplicably pointless contribution from Vocus.

Abel Adamski

8

I suspect one of Malcolms "experts" and friends has outed himself
"A change of government would provide an opportunity for Vocus Communications to be more strongly involved with the network, according to Spenceley"
“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.”

Thank God he has no input on the Nations future, he may well destroy it if the Libs get in however.
1) He has decided what people need at this time, no regard for their future needs, or the needs of future occupants. Shades of Stalinist arrogance
2) Rural areas tend to have larger properties, so more cabinets with less customers, much of the rural copper is poor quality. and backhaul is still needed which can be the major rural cost

“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.

Demonstrating a business point of view , minimum cost, no provision for the future just current perceived needs, maximum profit. Useless as National infrastructure for many decades
The NBN is actually essential National Infrastructure designed to be business capable from 93% of premises, itbis not about current needs from those premises and addresses, but future needs as well considering occupant will change and even their needs will change.

I wonder if the products his Companies offer are as shonky as the NBN he proposes.?

ozimarco

9

How does James Spenceley know what people in rural areas want? How presumptuous of him to declare that, as long as it's better than dial-up or satellite, they'll be happy. Goodness! I have news for you, James, we want a superfast fibre connection and nothing less. You can stick your FTTN and all the rest of it.
I think James is just pissed that he is not getting more work out of the NBN. His opinion is cleared coloured by his business interests.

Karl

10

People who say FttN should be deployed in regional areas are either complete idiots, or lying out of their asses. You don't even need to understand the technicals to get it, watch:
- The idea of FttN is to take the fibre close to houses, and run the rest of the connection over the existing copper.
- Therefore the nodes are put on street corners to serve the nearby residents.
- When you are out in rural areas, there are less people close together, meaning there are less people per node.
- extreme example: in the more spread out areas, you'd probably have nodes with only 1 person connected to them. How does it make sense to lay fibre most of the way to a house, put a huge, power guzzling box in front of their house, and then pay Telstra to use 300m* of copper to finish the connection?

*300m is the distance that gets us Turnbull's promised 80mb/s** - a number that'll be inadequate by the end of the decade anyway***

**assuming the copper cable is in perfect condition, which it will never be

***but hey, I'm not trying to point out why FttN is a shit idea, that's already been well documented****, I'm just pointing out why it's an even more shit idea in less populated areas than it is in cities.

****as long as you don't read anything published by News Ltd to try and find the truth.

William Tell

11

So Spenceley assumes that regional Australians have lesser needs than those in the golden triangle - just better than dial up or satellite broadband? Just what does he base that on? "I think" won't cut it. It sounds like: "that'll do for you". He clearly didn't hear the angry response from regional Australia to the shambolic piece-meal approach of the Howard Government under Networking the Nation which offered just such a second class option - the last time the Liberals had a shot at national telecommunications policy. Any uncertainty over the NBN is the achievement of Abbott's dalek-like "exterminate" call, and Turnbull's equivocal efforts to inject some kind of sanity into the Liberal's mindless destructiveness.

And as for the metaphorical association of the NBN with a speculative dot com web site - surely the comparison is with the existing copper network? Current copper network services are constrained, and still it makes money for itself and countless client businesses hand over fist. Can it be imagined how a new network with exponentially improvable performance capability might build on the services and resulting revenues? "They" have already come, and are already demanding higher performance and wider reach. There is no market mechanism to "prove". Build it right, build it once. Even with Spenceley 's limited vision, Vocus should still be able to make money.

Abel Adamski

12

There has certainly been a folly, but not Conroys, rather this self serving vacuous rant

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