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New NBN Pay-TV Fizzer Looms As Next Big Headache

Seems like deja-vu all over again? Sure does, quite a few observers of National Broadband Network are saying, after NBN Co CEO Bill Morrow this week tacitly admitted that the networking company’s plan to pump fast Internet connections to up to three million households via their Telstra pay-TV cables has so far been a fizzer – like the Optus pay-TV fiasco before it.

In the case of the Optus HFC network, after outlaying an estimated $800 million for the privilege of using Optus’ wires and connections, NBN Co found the ageing system simply unusable and too costly to fix. In September 2016 it announced it was dumping it, leaving Optus customers temporarily in the lurch and itself $800m out of pocket.

In the current case, Morrow has revealed that evening dropouts on the Telstra system have been widespread, and will take months to fix. Only 370,000 of the 3.2 million Telstra HFC customers have so far been connected and the rest will now see delays of up to nine months, perhaps more.

However it could be Telstra, not NBN Co, paying any repair bill. Under a $1.6 billion contract awarded in 2016, Telstra was to be responsible for design and upgrade of its HTC network. If the network isn’t working, it presumably has to fix it – or give back at least some of the money.

According to Communications Day proprietor Grahame Lynch, amplifiers and so-called F-connectors used in the Telstra HFC system are simply not up to the task of supporting wider use of the frequency band for the NBN.

His solution: “Replace all the F-connectors (which literally cost just a few bucks each), identify locations which need an amplifier upgrade (they sell for a few hundred bucks each) and build lead-ins to un-connected premises at the initial deployment stage (this will be slightly more expensive, maybe a thousand or two a time)”.

Hmm. A “thousand or two” for each of the 2.7 million unconnected homes adds up to quite a pile. Would Telstra ante up, or would NBN Co have to foot the bill?

There has been speculation in parts of the press and the telecoms community that a repeat performance of the Optus HFC situation could now be in the offing.

NBN Co might choose to cut its losses and shift at least some portions of the HFC rollout – and perhaps all – to a different access technology, such as fibre-to-the-curb (FttC), fibre-to-the-node (FttN), or fibre to the distribution point.

The current decision for a nine-month delay is a blow to Telstra, which will see lengthy delays in the payment NBN Co is due to provide to the big telco in return for access to its pay-TV customers. Reflecting that, Telstra shares slid a further six cents to $3.40 on the ASX yesterday, after losing two cents on Monday. – DF

And a final note from independent commentator Paul Budde, e-mailed from Hong Kong late last night as he flew back from Europe:  “This is again an example of what you can expect when you retrofit old infrastructure.  Problem after problem – and this will certainly not be the last in what has become a very expensive project, only based on political upstaging.

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