“There is simply no getting away from the fact that delivering universal FttP in Australia is always going to be more expensive than almost anywhere else in the world. Conditions here do not lend themselves to a cheap and fast FttP deployment to every single premises and that is not going to change,” says Peter Ryan, NBN Co’s chief network engineering officer in his latest blog.
According to Ryan, the higher costs of deploying FttP in Australia are explained by the geographic nature of Australia and its cities and the big difference in the type of dwellings getting the service compared to cities like Hong Kong, Tokyo, Singapore and Seoul.
“If you had to pick a country in the world where it would be most expensive to deploy a FttP network, Australia is always going to be very close to the top of that list.
“Indeed, if you look at the world’s leading FttP market of Hong Kong, you will find that operators such as Hong Kong Broadband Network have deployed FttP on a cost per premises of below US$150 – hence 90% of people in Hong Kong have access to FttP.
“By contrast, Australia’s cities are vast, sprawling outwards for many kilometres and, apart from in our relatively small CBD areas, the majority of Aussies live in standalone dwellings with decent-sized front gardens that set the house a fair distance back from the road – these are key in driving up our costs”.
Ryan concedes that while costs might come down with new deployment processes and delivery methods, the costs of deploying alternate technologies will also improve, and says “it's highly unlikely that fibre to the premises will ever be cheaper than the other technologies NBN is deploying, nor anywhere near as quick to deploy”.
“There are thousands of areas on our suburban fringes where a kilometre of new fibre deployment might only actually connect a couple dozen premises – and these are areas that are less than an hour from a major capital city. This inevitably drives up per premises costs.
“Furthermore, you then have to look at the type of premises that we have to connect, remembering that we have to make access to the NBN network available to all. We cannot pick and choose who we connect based on how much it will cost to connect them.”
Ryan claims: “This means that, while some private operators such as Verizon in the US are able to reject an application for an FttP connection because of the high cost involved — thereby helping to keep their overall FttP connection cost per premises down — we do not have this ability."
According to him, Verizon has been able to keep its overall cost per premises for FttP down by focusing on deploying its network to “high-margin, low-cost metropolitan areas and ignoring more outer suburban and rural areas where its cost to connect would be much higher”.
But, he says NBN Co cannot adopt this model.
“As a result, over the last few years NBN Co has had connection costs for individual premises that have run to tens of thousands of dollars — and these are not isolated cases by any means — inevitably driving higher costs for our overall FttP deployment.
“Remember, we cannot simply shove these premises onto our Sky Muster satellite service. Capacity on Sky Muster must be preserved for our rural and remote Australians – and we can’t just shove a problem premises onto fixed wireless either, as there is unlikely to be coverage available.”