Stuart Kennedy
December 11, 2017

NBN’s financial hit on HFC fix

Broadband

NBN’s financial hit on HFC fix

Michelle Rowland: The cost of the HFC problems is 'yet another bitter pill for taxpayers'

The NBN remains a favorite whipping boy for the opposition, but as the Coalition version of the Labor inspired network builds out, questions mount as to what an incoming Labor government would do with the NBN.

Last Friday communications shadow minister Michelle Rowland scored a little NBN sugar in a month when the opposition’s mostly year-long high political fortunes have waned with Senator Sam Dastyari’s China influence troubles and Labor’s own problems with the dual citizenship saga.

A standing committee hearing had NBN Co chief financial officer Stephen Rue last week admitting that a delay in HFC connections to the NBN could mean a revenue hit to the company of about $50 million, and possibly a $500 million delay in the NBN’s revenue take if the delay hit all the remaining 1.9 million customers in the HFC footprint.

This follows NBN Co announcing in November that it would halt HFC connections while it sorted the tech out.

“This outcome would require a further $500 million to be drawn down from a $1.7 billion taxpayer-funded contingency pool, which is repeatedly being used to patch-up Turnbull’s multi-technology mess,” said Ms Rowland in a presser.

“This is yet another bitter pill for taxpayers and consumers who are being punished with a second-rate network that costs more and does less,” she added.

Ms Rowland piled in further in an email reply to questions from InnovationAus.com this week.

"It was somewhat disingenuous for NBN to hold up one hand and claim the HFC halt was done in the name of the consumer, while the other hand is hurling hundreds of millions down the drain because of ongoing technical and implementation failures," Ms Rowland wrote.

"This is real money that would otherwise not need to be borrowed, or could have been spent on delivering a better technology-mix with more fibre."

"Instead, we are approaching 2018, and taxpayer funds are being used to patch up a network which still doesn't work properly."

Prime Minister Malcolm Turnbull’s multi-technology-mix (MTM) rejig of the NBN to replace the previous Labor government’s mostly fibre-to-the-premises model has become a sumptuous political gift to Labor as the network rollout passes the halfway mark riddled with cost blowouts, delays and pissed off punters unhappy with everything from network speed to connection delays and network reliability.

The HFC side of the MTM sought to use the cable TV networks rolled out in the mid-nineties by both Telstra and Optus in Melbourne, Sydney and Brisbane as part of the NBN network.

The strategy backfired spectacularly when it was discovered that the Optus side of the network was so badly maintained as to be unusable and that areas where there was only Optus HFC would get nice, fresh fibre to the curb (FTTC).

Where better maintained Telstra HFC was present, the cable TV technology would remain.

Scoring FTTC is second prize in the fixed-line side of the NBN lottery, with fibre to the premise first prize, upgraded HFC third prize and last prize going to punters scoring copper laden fibre to the node.

While the NBN might be racking up the political points for Labor at the moment, the party’s own NBN policy going in to the next election cycle remains foggy.

Officially it still rests mainly where it was at the July 2016 double dissolution election where then comms shadow Jason Clare promised two million more homes would get the coveted FTTP treatment lifting the FTTP side of the NBN from 20 per cent of customers under the Coalition to about 39 per cent under Labor.

The HFC side of the NBN would remain in place under the 2016 policy.

Mr Clare also promised to commission Infrastructure Australia to develop a plan to upgrade the 2.5 million premises on FTTN to FTTP.

It is difficult to see those old promises being met as the Coalition NBN locks in and Labor is looking to freshen its NBN policy around the middle of 2018.

By then the MTM NBN rollout will be within spitting distance of its promised 2020 conclusion.

Labor already looks to be working plenty of wriggle room into its strident anti-MTM stance.

"With every passing month this multi-technology mess becomes more complex and costly to unscramble," said Ms Rowland in an email reply to questions from InnovationAus.com on Labor’s policy around HFC.

"The HFC option should have been given the sword very early on when the engineers made clear that upgrading the legacy network was a bad and expensive idea.

“Once you move beyond that point a sizable segment of costs become sunk and there are contractual constraints on the ground – there is no looking past that," Ms Rowland wrote.

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