NBN a metaphor for Federal Government's budget challenge: Ziggy Switkowski

NBN Co chairman Ziggy Switkowski has described the NBN as a metaphor for what the Government confronts in Tuesday’s Federal Budget in a wide-ranging speech to business leaders.

The speech, delivered at an Australian Industry Group event, addressed the “overwhelming” challenge of connecting 100,000 premises every month for the next eight years to meet a “2020-ish” deadline.

This challenge is made greater by the fact that 70 per cent of the 12 million premises will need to be connected on networks the NBN does not yet own, such as Telstra’s copper network and Optus’ HFC pay-tv cables.

NBN Co last year conducted a strategic review which recommended a move away from a mainly fibre-to-the-premise (FTTP) rollout to a multi-technology mix that would include fibre-to-the-node and fibre-to-the-basement or distribution point (FTTB/DP).

Switkowski said the reason he used the NBN as a metaphor for the government in the current environment, was because of what he found when he arrived shortly after the incoming government’s clear out of NBN Co.

“NBN Co had got themselves into a situation where the forecasts were wrong, the targets were implausible, the policy settings were ideological and the business plan begun with a thought bubble,” he said.

“Now they are harsh comments and are not intended to be political, but that is the way you have to describe NBN as we found it.

“NBN Co has a similar set of challenges and there had to be a number of changes to get us aligned with a more realistic set of expectations."

Switkowski reaffirmed his support for the use of Telstra’s copper network and described TPG’s bid to offer Fibre-to-the-Basement in competition with the NBN as “unwise”.

“Those of you who think that copper is old fashioned and that there’s no future (in copper), should know that the ability to deliver high-speed connectivity well in excess of 100 Mbps is considered to be likely beginning from next year onwards,” he said.

“What we are trying to do now - a multi-technology mix, instead of 100 per cent Fibre-to-the-Premise - would have been right way forward."

Switkowski said the new multi-technology configuration would be built as 43 per cent copper, 23 per cent HFC cable, 22 per cent fibre and another million premises served by fixed wireless and two satellites.

“In the future we expect to have about 70 per cent of our premises connected by networks we currently don’t own,” he said.

“It’s never uncomplicated. TPG have a right with existing infrastructure to offer an alternative service to NBN and TPG have flagged that they are going to do that, and have started marketing that service.

“We have indicated we think that’s unhelpful, and that over time it’s unwise, but we will let that play out.”

A total of 3,643 lots were passed by the network this week, according to NBN Co. 2,331 were in Brownfield and 471 were in Greenfield areas.

Fixed wireless coverage increased by 841 premises during the week, to an additional 3,308 premises. It also had services activated on the network, including 3,050 on fixed line services and 258 using satellite and fixed wireless technologies.

Switkowski said Australia’s average internet speed had gone from 256 kilobits per second in 2004 to an average 6 to 8 Mbps in 2014.

“By 2020 we are expecting most premises will be able to get 100 Mpbs if they want to, and we think that progression will stay just ahead of actual demand,” he said.

“What we are doing at NBN is planning for a range of platforms that we are confident are upgradable at a rate that will meet the needs of almost all Australians over the period of our stewardship.”

Swikowski said NBN Co had worked hard to rebuild trust with retail service providers.

“They had become mad at us for completely understandable reasons,” he said.

“We had a fragmented build with many areas of sub-critical coverage, so we would go to an RSP and say 'we have done this street' and they would say 'come back when you have finished the suburb.'

“They just got unhappy with us and also there were missed forecasts. We have had to repair all that and I think we have done a reasonable job and now we are consulting we RSPs almost on a daily basis."

He said it was still a formative period for the venture, and NBN Co was not in a position to cope with the accelerating demand.

“At the required run rate to get this job done by 2020-ish we have to bring on about 100,000 premises a month for 90 months.. so eight years,” he said.

“At the moment we are passing 6,000 a week, so 24,000 a month. We need to increase that by a factor of four.

"It’s more complicated than that but there will be big steps taken forward once we complete the negotiations with Telstra and we can open up the HFC network.

“But at this stage we can only cope with a certain amount of demand and even that is exposed to some brittleness."

He said he wanted NBN to be indispensable but conspicuous.

"And together, with wireless broadband, it will be the low bearing girder of a productive society and a successful economy.”