NBN may miss financial targets due to HFC pause, Switkowski says

Company still committed to HFC rollout

NBN’s chairperson, Dr Ziggy Switkowski, says the company remains committed to the use of hybrid fibre-coaxial for the National Broadband Network although he has acknowledged the decision to pause the rollout of HFC could see the company miss its financial targets next year.

NBN last month put the activation of new HFC services on hold, citing performance problems encountered by end users.

The company had planned to connect 3.1 million households using HFC, though Switkowski last night told a Senate Estimates hearing that “whether we have the same numerical target will be determined in the months ahead”.

“Whether the HFC end point numbers get varied in the light of our pause in the rollout and remediation of the network are decisions that are still ahead of us,” he said.

Any revised figures will be “finalised and revealed” in the operating plan published in the early months of the 18/19 fiscal year, he said, but the company at this stage does not expect to stop rolling out HFC.

“On the other hand, the decision to pause in the rollout reveals kind of a serious concern about the need to go back over the network and identify those areas that need remediation and attend to it,” Switkowski.

Announcing the rollout pause, NBN CEO Bill Morrow said that company expected a hiatus of six to nine months.

Morrow announced the pause on 27 November, with NBN’s board signing off on the move at a 21 November meeting.

The problems with HFC and the decision to halt activation of new services were described by Switkowski as part of an “escalating process”.

“Around about the middle of this calendar year — so as we were finalising numbers for the 17-18 plan — we were getting reports back as to the performance of the network and the level of customer concerns and complaints and the volume of tickets of work that were required in order to address issues,” the NBN chairperson said.

Every time NBN launches a new technology for its network it goes through a period of “learning how to do it well” and eliminating problems, Switkowski said.

“But the volume or the sheer number of households that the HFC network build was including in the footprint was so great and the volume of defects was not coming down as a proportion of the footprint, that as we went through July, August and September concerns were growing.”

In October NBN realised it was not improving the rate of complaints as a proportion of the build, he said.

The financial impact is “still to be settled,” Switkowski said. NBN has previously indicated it is still analysing the cost of the hiatus.

“We haven’t made public what the figures are likely to be,” Switkowski said. “The figures actually look as if they won’t be material in terms of a dollar consequence… we’re still working against a $49 billion project spend but we don’t have the figures and we don’t expect to have them until we have some weeks if not months of experience in reviewing the network.”

In the “the year ahead” NBN may miss its financial targets for the first time since Morrow was appointed CEO, he added.

A six-month pause means that NBN will forgo revenue from around 300,000 customers, he said.

The board has not been presented with a proposal to ditch HFC in favour of FTTC, Switkowski said, although NBN expects to “escalate” the roll out of FTTC.

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Tags broadbandNetworkingnbn conational broadband networkNational Broadband Network (NBN)Hybrid Fibre Coaxial (HFC)

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