MARK GREGORY
April 3, 2017

Surge in NBN bypass numbers

TelcoLand

Surge in NBN bypass numbers

Service fault: The number of homes being bypassed by the NBN as too hard is climbing sharply

In a stunning admission by NBN Co CEO Bill Morrow, the number of premises deemed too hard to connect to the National Broadband Network (NBN) has continued to rise sharply. He said some of the bypassed premises may not get connected until 2020.

On the 25 November 2016, Mr Morrow told the Senate Estimates committee that the number of premises in the too hard basket (Service Class 0) was around 10,000, while the most recent NBN Co weekly report puts the number at 108,606. The number of premises not being connected during the initial NBN rollout is climbing.

After an initial inspection, an increasing number of premises that require additional work, including copper replacement or remediation, are being bypassed and consumers are being left in limbo, not knowing what the problem is and when their home will be connected to the NBN.

Speaking at a Senate Estimates hearing, held on 24 March 2017, Mr Morrow stated “we have been given direction that the underserved areas are our priority and then again the volume. So if we can go through and do 100 homes within a day in an area versus that same amount of resource doing three or four, we are going to wait on the three or four, get the hundred in and eventually come back after we have these big swaps of homes that are connected.”

The rapid rise in the number of premises being declared Service Class 0 – that is, put in the too hard basket – is about five to six per cent according to Mr Morrow.

In September 2016, the number of Service Class 0 premises was about 2.5 per cent and the more than doubling of Service Class 0 premises in the past six months highlights the ongoing problems at NBN Co.

“We made the commitment that it will be done by 2020. It could very well be that we have to come back to address that home next year or even, potentially, the year after,” he said.

“It is our objective and our desire to have everybody connected as soon as possible. We know how frustrating it can be for an end user if they know that their next-door neighbor suddenly can get fast broadband service and they cannot, and they are being told that they have to wait until 2019.”

When asked if the expected number of Service Class 0 premises would escalate as the rollout ramps up, Mr Morrow replied “of course” and that premises previously put in the too hard basket will be addressed “no later than 2020.”

Mr Morrow’s evidence highlights a couple of key outcomes and primarily that NBN Co is struggling to meet the 2019 deadline that it committed to.

How the Turnbull Government intends to spin the slippage prior to the next election is unclear but we should expect a greater barrage of fairy tales from the Prime Minister than he delivered prior to the 2013 election, when his mantra as the opposition communications spokesman was that he would deliver a minimum of 25 Mbps to all Australians by the end of 2016.

Part way through 2017, only about half of the nation has been declared ready for service for a National Broadband Network (NBN) connection and NBN Co continues to struggle to make up the time lost due to the change to the multi-technology mix model, the Telstra agreement renegotiation 18-month delay, and the harsh realities of dealing with the degraded copper network.

In the 24 September 2013 Statement of Expectations, the Government stated that NBN Co was to “publish weekly information on your website indicating the numbers of premises passed, those premises that are passed but cannot receive a service (e.g. service class 0) and those premises with an active service for each element of the network.

It was only a couple of months earlier, in July 2013, that Mr Turnbull lashed the Government for bypassing Service Class 0 premises.

“This is inconsistent with the definition of a premise ‘passed’ in the NBN Corporate Plan (p.36): ‘Premises are passed / covered when the shared network and service elements are installed, accepted, commissioned and ready for service which then enables an End-User to order and purchase a broadband service from their choice of retail service provider.'

The government now appears to have no qualms with NBN Co adopting a similar practice to what was instituted before the September 2013 election. With the full support of the Turnbull Government, there appears to be an acceptance by NBN Co management that the number of Service Class 0 premises will grow significantly over coming years and most will not be connected to the NBN until 2020, but the reality is that many will not be connected for some time, possibly years, after 2020.

Mr Turnbull has argued at length that the FTTN technology was a sensible approach, there would be no problems with the copper network and, as Government policy, the NBN will be completed by 2019. The government has failed to achieve many of the commitments he made regarding the NBN over the past four years, and has failed to address the mounting evidence presented at the Senate Estimates hearings from NBN Co executives that the 2019 deadline will not be met, and the rollout will extend into 2020 and possibly beyond.

Currently the NBN related legislation contains a requirement that the ADSL copper network be turned off 18 months after an area is listed as ready for service by NBN Co. Repeated attempts by the government to have this requirement removed have failed.

NBN Co appears to be acting in contravention to the legislation by not disconnecting the ADSL network 18 months after FTTN areas have been declared ready for service, as Mr Morrow’s evidence to the Senate Estimates committee appear to indicate that Service Class 0 premises are being pushed back to 2020, well beyond the time when the ADSL should have been disconnected in FTTN areas completed in 2016-2018.

The Australian Competition and Consumer Commission (ACCC) should have taken note of Mr Morrow’s statements to the Estimates committee and take immediate action to ensure that NBN Co complies with the legislated requirements regarding the rollout and the disconnection of the existing copper network 18 after months after an area is declared to be ready for service.

The ACCC Chairman Mr Sims should ask NBN Co to identify the locations of Service Class 0 premises and match this information with regions declared ready for service.

It is vital that Australian’s know what is happening with the NBN rollout now that the NBN Co management team is struggling to meet its legislated commitments.

If the ACCC fails to act, then consumers will be left without any protection. The result will be catastrophic for Australians seeking to benefit from the NBN and for business as it works to become part of the global digital economy.

If NBN Co continues down the current path there could be up to 10 per cent of premises with consumers waiting well beyond 2020 for a connection to the NBN.

Patience is a virtue but for many Australians not only will the wait be long and painful, but at the end of the wait, they will be provided with an obsolete FTTN connection to the second rate NBN.

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