Vertical Hold Episode 297 Podcast Transcript

September 30th, 2020 - Get new posts sent straight to your inbox, click here. Nicole

NBN backflip embraces Fibre to the Home: Vertical Hold ep 297

Co- Hosts:

Alex Kidman @alexkidman: Freelance Tech Journalist, Co-host @VerticalHoldAU, Former editor at CNET, Gizmodo, PC Mag, Finder and many more.

Adam Turner @adam_turner: Award-winning Australian freelance technology journalist with @theage @smh, corporate writer and co-host @VerticalHoldAU tech news podcast

Guests:

Phil Britt, managing director, Aussie Broadband

Supratim Adhikari, deputy business editor, Sydney Morning Herald @SupratimA

Chris Duckett, editor, ZDNet Australia @Dobes

Subscribe:

Apple Podcasts https://apple.co/38pw09u

PocketCasts https://bit.ly/2ZFpcRr

Spotify https://spoti.fi/2VFeTeT

Google Podcasts https://bit.ly/31FTZ37

Amazon: https://amzn.to/3ksJWV7

RSS https://bit.ly/3iu2ggv

Audio: https://verticalhold.com.au/2020/09/25/nbn-backflip-embraces-fibre-to-the-home-vertical-hold-ep-297/

TEASERS

Adam Turner: After leaving millions of Aussies languishing on fibre to the node, why has the NBN suddenly developed an appetite for fibre?

Alex Kidman: What does it mean for Aussie broadband users, rival networks and the future of 5G?

INTRO MUSIC

AT: Vertical hold is proudly brought to you by Aussie Broadband. Changing the game with their award winning network an Australian based support

INTRO

Adam Turner

Hi there, welcome to Vertical Hold: Behind the Tech News, the weekly podcast where we sneak across the state borders to catch up with Australia’s leading technology journalist and get the stories behind the big tech news of the week. I’m Adam Turner. And I’m joined as always by Alex Kidman, a man who because it’s such a slow news week is about to listen to me spend the next half hour talking about Footscray making the AFL finals and Richie Port on the podium at Paris. Alex, who are your picks for the grand final and the Giro d’italia?

Alex Kidman

Look, all I know is the lads are going to get out there. They’re going to give it 110% It’s a game of two haves. And I think I can keep the sports cliches flowing. As long as, and I stress, there’s no huge breaking news like a sudden massive change in direction for the NBN or something but how likely is that?

AT

All right, so sportsball it is. And we’re joined this week in the virtual vertical home studio by Chris Duckett editor of ZD Net Australia. Chris, what’s your sports ball tips?

Chris Duckett

Oh look, it’s just it’s just nice to be on the back of the peloton after hanging out in the autobus for you know, 200 kilometers. So it’s it’s good to be back boys.

AT

And because we had a hunch that there might be some NBN news on the cards. It’s a huge show this week. We’re also joined by Supratim Adhikari the deputy business editor at the Sydney Morning Herald. Supratim. How goes it? What’s your sporting tip?

Supratim Adhikari

Well, that I’m a cricket tragic. So you know, for me, I’ve just started watching the IPL a little bit. And I can say as long as we get a boxing day test happening this year, I will be very happy.

AT

Oh, yeah. Can’t argue with that. Can’t argue for that. And that’s the show for the week. Oh, hang on, there’ some late  breaking news. Of course, our soup de jour has become the main course this week with the huge news that NBN has decided to let Australians upgrade from fibre to the node for free if they’re prepared to pay for faster speeds. Now, Alex, what exactly have they announced?

AK

Well, NBN Co was announced this week, $3.5 billion investment to get around 75% of the fixed NBN footprint able to get gigabit speeds eventually. But there’s a lot of detail to this, they’re going to do local loops of fibre not quite to the premises. Because if you want it to the premises, as you just said, you’re actually going to have to upgrade to a faster plan. There’s also some smaller concessions for people on HFC, or fibre to the curb, and even smaller concessions for the smaller percentage of people on fixed wireless or satellite.

AT

Alright, so we’ll dive into the details of that in a minute. But first, we’re going to catch up with our podcast sponsor, Aussie Broadband, and chat to managing director Phil Britt about exactly what this means for broadband in Australia.

FIRST SEGMENT:

Phil Britt, managing director, Aussie Broadband

AT

Hi, Phil, welcome back to the show.

Phil Britt

Yeah, thank you.

AT

It’s been a huge week in NBN announcements. So what are your thoughts?

PB

Look, it’s it certainly has been a big week. Look, I think for the most part, it’s, there’s been some good stuff in it.

AT

Why now? Is this the thing that we should have done in the first place? Was fibre to the node always the weak link in the NBN?

PB

Look, I think fibre to the node has always been the weak link. But the way I sort of look at it is it has allowed us to get I guess  everyone on onboard sooner. And and I think this was always the intent was to move to more fibre deeper into the networking in stages. But I think this has been a relatively good compromise with getting people on quick. And now moving to the next phase of upgrading people as demand exists.

AT

And what kind of take up do you expect to see?

PB

Oh, God,

PB

We’re seeing around about 6% of our new customers taking the 250 and the gigabit speed plans. And so we think that will grow over time. And the concept with this roll out fibre. So if you’re on a poor fibre to the node service, you can only get so 60 meg or something like that you want to buy 100 Well, then I’ll move on to fibre. But if you’re able to get 100 and fibre to the node, we’ll deliver it for you, then you’ll you’ll stay there unless you want to go into the highest speed tiers. So I can see people moving up tiers purely to get that fibre install.

AT

And we haven’t actually got a definitive line on what speed tier you need to order before they’ll do this. Have we?

PB

Look, I don’t think it’s hard and fast. But some of the conversations we’ve had is it’s more a case of if the service won’t deliver the speed that you want to go to, then that’s the trigger for the upgrade. So I think in that scenario, I just just played out there where you want 100 but you can only get 60, that would trigger the upgrade.

AT

And do you have any insight from what you’re seeing from your customers on what percentage of people are out there who aren’t happy with the speeds they can get from their connection? And would perhaps want to take advantage of this?

PB

Look, this, we see a lot of people that are on the hundred tier that that and it’s probably in the realms of around about 20 to 30% of our fttn base that are in the 100MB tier actually want 100MB be getting sub 100 MB. So rather than drop down, like they still pay for the hundred MB even though they might only be getting 60 or 70.

AT

And what about people stuck, like have you got many people stuck on a sub 50 or even a sub 25? Because I know there are some connections, they’re still trying to sort out and improve?

PB

Yeah, look, they’re definitely sort of in the minority, now. It’s, there’s been a lot of work done by RSPs and NBN, to sort out those sort of sub 50 kind of realm. There’s, there’s still definitely some out there, but they’re very much in the minority now.

AT

And what kind of impact you think this is going to have on the NBN. And overall performance as more people take up faster connections?

PB

I think COVID has actually been a really good test of that, because it’s showing that the NBN can handle higher speeds more traffic per user and do it with relatively ease. So I think the issue around can the NBN handle it is “yes it can”, in my view, it’s really coming down to the pricing construct and then can provide providers afford to provide those higher speed tiers. And that’s really the CVC argument.

AT

I was gonna say that brings us back to CVC. Because they they gave us a 40% boost for COVID. It’s been extended twice now. I think now it’s supposed to run out in November. Do you think that that will be extended beyond that? And do you think that they might come to the point where they go, right, let’s just make it permanent?

PB

Yeah, look, I don’t think they’re going to go, No, we’re removing CVC in November? Well, we’re hoping that they’ll do. And this is purely hope, there’s no signs coming out of NBN, it’s going to happen is that I might increase the inclusions as a stepping stone measure. But whether that actually plays out or not. Hopefully we’ll find out sometime between now and the end of November.

AT

So there was obviously a spike during COVID. As you know, more people staying at home watching Netflix working from home. Are you seeing that subside at all? Or are we still in the middle of that?

PB

Look, it’s it’s subsided a little bit, but certainly nowhere near the levels would expect. And what’s really interesting is we’re looking at it on a state by state basis and stats like WA and Queensland which are relatively free from restrictions and things like that still have much higher traffic profiles, and they did pre-COVID. And so I think it’s been a good trigger for people who have you, instead of having one  Netflix device, now they might have two or three or the kids might be smashing YouTube more it it traffic, I don’t think is going to return to the pattern we used to see.

AT

Yeah, so it sort of changed people’s behavior and they’ll stick with that afterwards.

PB

That’s what I believe here.

AT

So part of the talk is that perhaps the move now to offer more people access to faster speeds is a response to the potential threat from 5G to take away NBN customers as fixed wireless customers. Do you think that that’s partly a factor there?

PB

Look, I think it is partly a factor. I think there’s you’ve got that at play. You’ve got wanting to increase the the ARPU or the average revenue per user. There’s a number of factors that are that are at play here.

AT

I know that it’s still five early days for 5G, but it’s starting to look like that. Well, obviously, you can’t have 5G replace the NBN. We know that you can’t have like a city wide wireless network do the same job as fibre. But in terms of, you know, cherry picking people who who are in areas where they can’t get good fixed line connections. Do you think that 5G has the potential to cut into the NBN?

PB

I think it will. And I think we’re it’s going to probably hit is more at the lower end of the spectrum. So lower data data usage customers. I think the the concept of an unlimited plan on 5G is probably a long way off if it happens at all. And so I think if you’re in a sort of a sub hundred gig kind of realm, then 5G would be quite a viable alternative for you. If you’re greater than that, then it’s probably still going to be fixed-line NBN.

AT

So for NBN obviously it helps their bottom line to be to selling high speed plans and helps the NBN look more attractive if you’re trying to sell it off if they put more fibre in the ground, but from an RSP’s point of view, is it more difficult to sell these higher plans? Are you still making as much money of them or like how does it stack up for you as a business model?

PB

Look, it’s, it’s an interesting one, we’ve recently increased the price of our hundred Meg offering back to sort of the for the 100/20 back to the $99 price point, we were running it at the $89 price point. And that and that is based around customer usage on those plans is higher. And so therefore, we have to provision more. So we say, I think it’s, it doesn’t actually really matter what the access speed is, it really comes down to what’s the average usage, because someone on a 12/1 connection can do just as much CVC damage, just someone on 100/20 plan. Yeah, and so it really does come down to the inclusions and how that plays out.

AT

And so looking forward, what do you think we’re gonna see, because obviously, this is like, some people want to spin it as, okay, they’ve completely thrown away the multi technology mix. And that’s “fibre for you, and fibre for you and fibre for you”. But that’s clearly not what we’re talking about here. It’s only some sections of fibre to the node will be changed, not everybody will have access to it. In a year or two, how much of a difference do you think this will actually have made?

PB

Look, I think, I mean,  million premises is what they’re saying it’ll roll past. They’re expecting only about 400,000 premises to have taken up, I guess, a plan speed upgrade to trigger that. So I still look at it and go, well, that’s 400,000 people that could get fibre that otherwise couldn’t. So that’s that’s a win. But I mean, I also look at it from the perspective of, if you’ve just got someone sitting at home, they’re not using the speeds, then why pay the money to put fibre into them sort of thing. If someone needs it, then let the NBN pay the money and put it in. It seems like a more logical solution to me.

AT

Fair enough. Great. All right. Well, thanks for making the time to talk to us.

PB

No worries. Thank you.

SECOND SEGMENT:

Supratim Adhikari, deputy business editor, Sydney Morning Herald

Chris Duckett, editor, ZDNet Australia

AK

So Chris, with the changes to the NBN, it’s not quite that original plan of fibre for I think was like 98% of the population is it, it’s a little bit more constrained than that.

CD

Yeah, there’s still quite a thread running through the whole thing of trying to save as much money as possible. So all these new connections are going to be on demand for the residential customers. So that means that you know, if you sign up to a plan, and we don’t know exactly what plan that is, but I assume it’s probably going to be over 100 megabits, then NBN will come out and roll out a line into your place for free. But it’s only doing that on request, this is the important bit because that’s how you can somehow get $4.5 billion, hook up a whole bunch of businesses, and only hook up 400,000 premises by 2024. So it’s not quite fully Back to the Future. But I mean, in theory, in essence, the framework, it’s almost exactly yeah. It’s, it smells a lot like what Labor proposed way back, and what they tore down.

AT

Call me crazy. Isn’t this the expensive way to do it? One of the times people asked for, wouldn’t it make more sense, perhaps to just go down street by street and hook everybody out?

CD

Look, I I wouldn’t actually I think there’s room for argument here that. And I’m talking way back like in 2010, that you could actually have made an argument. To do this, as it has been planned. In the sense of, we’re going to get everybody to a base level. It’s going to pay for itself, which is set to do in the next couple of years. And then you return and you can then over build stuff. And that’s fine, because you’ve got the cash flows behind you. But no one ever said that right? It was all running around and saying fibre is expensive, it can’t be done. Nobody wants it. All this sort of just just a whole decade’s worth of crap that we’ve all had to swim through to basically end up in the same spot. So yes, it does cost more. But you can make an economic argument that you you’ve got a baseline out to people quicker and what you’ve rolled out pay for itself so therefore you’re free to invest future cash flows into it, which is kind of what NBN sort of said but like the ministers are basically you know, they’re trapped by their own stupidity and their own stupid words from elections past.

AK

Supratim I know you when you look at the the business side of this, how is it not going to be more expensive for them because presumably, they’re running this stuff as local loop. So the idea is they they run it down your street, if you’re in a fibre to the node area, as we said, you have to ask to be connected. Doesn’t that mean they’ve got to keep and maintain the fibre to the node stuff for the people who don’t want faster or won’t pay for faster and fibre connections at the same time. Aren’t they actually talking about now running an extra network?

SA

Well, it’s clearly you know, what has been announced this week. I mean, there’s two elements to it. The first one, obviously, the one around, you know, the business park issue, the issue of the getting into the business market. Again, that’s a very different sort of element to what NBN Co is going to do. But the issue that was released yesterday around the fibre upgrade part, this has very little to do with exactly how it, you know, the efficiencies of the NBN. I think it was very much more of a political play by the Morison government. It’s used, you know, this is all going to come into the budget, that’s going to land on October the sixth, where the government is going to say it’s spending money on infrastructure building, there’s going to be 25,000 jobs created, it’s going to really provide a bigger return. So I think a lot of the commentary around this being a backflip or, you know, going back to the Labour’s model, I don’t think it’s got anything to do with that. This is not about force feeding fibre into into 92% of premises across Australia. This is a very selective targeted upgrade pathway, that’s going to take an enormous amount of time to get started. And it’s really more of a defensive play against trying to at least create an environment of competitive tension in the market, especially in metro areas, where there might be some contention where 5G fixed wireless services may be able to steal customers away from NBN. So I don’t really see this as a huge I mean, of course, economically doesn’t make sense

AK

I’m glad you said that

SA

that you know, this besides selectively rollout that you’re going to selectively roll out fibre to for me, we don’t know any details about this, we don’t know which premises will be selected, which won’t, although I suspect there will be a very high overlap between areas that get these upgrades and areas where NBN Co feels they will lose out to a competitively priced fixed wireless option. Right? I think this is going to, there’s a few elements here, but none of them really are about, you know, delivering an upgraded full fibre pathway to to help homes because it’s just so selective. It’s only it’s the only very few people are going to be able to afford it at this rate, the way it’s being priced. And it completely bypasses the core issue here, which is that RSPs, NBN resellers do not want to sell high speed broadband to Australians. Because they have to package it at an enormous sum of money for a retailer at a retail cost to make their margins worthwhile. And B they actually want to bypass the NBN altogether. And C we have a patchwork MTM network which doesn’t allow the provisioning or delivery of high speed broadband to a larger substantial chunk of the country.

AK

But doesn’t this fix that though, your point that we’ve got this, you know, hodgepodge MTM doesn’t this – and the stuff to do with HFC and to a lesser extent FttC – fix that problem?

SA

It seems like such a small segment of the overall population, that I just can’t see how much value it will deliver, you know. I mean, they’re clearly going to look to get a premium pricing model getting in here, you know, so they’re obviously going to target areas where they feel people can actually afford to pay 150, 160, $180 Plus, you know, so I think that’s, that’s, you know, too, I don’t know how it actually delivers the upgrade benefit to the vast proportion of end users. You know, it’s just so targeted. And I mean, let’s not forget also the civil engineering elements here, you know, I mean, we know that the construction and rollout has been a huge problem, whether under Labor or under, you know, the Coalition government’s methodology. I just can really see, I don’t really understand we know that the sort of the inherent inefficiencies here, where you’re going to go into a neighborhood and say, oh, maybe you know, we’re going to give only 50% of homes here want $180 fibre upgrade, you know, and others don’t. So how does that actually work? But I suspect none of that matters, because that’s not what these announcements were about. These announcements are much more short term in view. And I think much closer linked to the budget announcements that we’re going to get in a week or so than any real significant shift in how NBN Co wants to work.

AT

So you think they’re gonna spin it really is a COVID stimulus?

CD

They already have.

SA

I suspect it really is more about that spin and the optics around that than any real. And you know, what happens here, if you see Scott Morrison and Paul Fletcher don’t wear any of this risk, right? They’re going to come out looking, they will spin it hard. It’s going to make them look really good, but who’s gonna wear the damage? It’s going to be Stephen Rue, and it’s going to be the NBN board that wears all of the risks here, right? If this doesn’t work, they’re the ones who are going to get it, but not not so much the Morison government or whichever government is there at the time, right? If this is within the next two years, if this whole thing turns out to be, you know, the whole strategy goes pear shaped? Well, there’s little accountability, you know, attached to the government, We did what we did it’s NBN fault, it’s the board’s fault if they can’t execute properly.

AT

So we you really think that because I just made the assumption that maybe they meant 50 megabits per second, because that’s what they’ve talked about for a while they’re trying to get people up to that level of asking for 50 megabits per second, and some people are running around like this is a complete backflip, you know, we’re getting rid of the the MTM, it’s fibre for everybody. It’s clearly not fibre for everybody. Because as you said, they’re not getting rid of cable, they’re not getting rid fibre to the curb.

AK

Adam, we’re already we’re actually already there. I mean, I looked at there and I looked at NBN Co’s own numbers on this yesterday. And I reckon something like 69% of homes and businesses are on 50 meg plus, yeah.

CD

It’s been a 50 meg network now for better part of the year.

AT

So if you declare it that 50, you’re basically going to get everybody on board. So they’ve set the bar higher.

CD

Well the bar’s still low, at 50. It’s just that they’ve got the potential to get to a gig. So the people that have running around saying, Oh, this is going to fix the digital divide, it’s actually going to make worse than ever, because you’re going to have potentially 70% of the network, theoretically able to get a gig on demand somehow, because they’re not including fibre to the basement in this. And you’re still going to have fixed wireless. And the satellite stuck around somewhere between 25 and 50, depending on which way the wind blows. And unfortunately, those people in those last two footprints, they’re the ones that need the telehealth and all the benefits that NBN is said to provide. And so they’re and there’s no upgrade path for them. Like to upgrade the satellite either need to launch a new one, or buy some bandwidth when Elon covers the entire sky in satellites.

AK

So Chris, can you just clarify, because I may have got this wrong earlier in the week when I was reading their pieces. It looked from what they were saying. And let’s face it, a lot of this detail is vague. But it looks as though they were they were not saying we are replacing the entire fibre to the node network. Am I wrong in that? Are they actually getting rid of all that copper? Is there a certain percantage of fibre to the node that doesn’t get this upgrade at all?

CD

Yeah, yes.

AK

That’s what I that’s what I thought was the case.

CD

Yeah, what they announced, yeah, exactly, there’s on this announcement was only for 2 million fibre to the node premises. And it’s only theoretical, and they only expect 400,000 to take it up. But in the stuff that Stephen Rue was saying it sounds like in subsequent corporate plans, they might take that 2 million, you know, maybe they’ll have the whole footprint covered by 2026, or 2028, or something.

SA

I think by 2026 28, NBN, co will no longer be, will potentially not be a government backed entity at all, enterprise at all. It’ll be a, it’ll be a privatized entity by then. And I think that’s the whole issue here, they are going to start this upgrade pathway, as they always said they will. But they will do it in a very, very piecemeal manner. Because I mean, the one thing that you do get out of this is that you make NBN Co dress it up as a much more viable entity, to for buyers, right for potential buyers, for people who are willing to invest in long term digital infrastructure assets that are going to deliver a return over the long term. So I think this idea of  NBN Co using taxpayer money to underwrite the debt, they will raise from private markets to upgrade the entire fibre to the node, HFC or fibre to the curb footprint. I don’t think that’s going to realistically happen, I feel. But you know, what it does is I think the clear thing, it shows that if there is an incredible level of contention now, in a number of high value, metro, outer metro areas where as you said, you know, as Chris said, the you know, the network is, is relatively optimised for 50 Mbps, there’s a high uptake of 50 Mbps plans in the market. But how do you cope? Or how does that add up or stack up when you have within the next say year and a half or within the next two years, you’re going to have telcos who don’t want to pay high wholesale prices coming to homes and saying we can give you hundred megabits for $65 or $70 because we’re going to use a optimised fixed wireless option for you, you know. So there’s this contestability now that’s entering the market within the next year and a half. And I think when NBN goes out there and says, you know, we have the option to give fibre to the premises if you want it at a certain price point, it is it is trying to address that contestability, it’s trying to give the end user in selected areas an option, an alternative to saying ‘do you sign up to a fixed wireless service? Or do you say, none, I’ll stick with NBN  and if I need more speed, Well, look, you know what, I’m happy to pay for it’. But let’s not forget that this whole service has to be priced and delivered by the very RSPs and telcos that, that do not want to pay CVC, they don’t want to pay CVC, they don’t want to pay this combined CVC AVC price of 80 to 85 bucks, because they just don’t make any money out of it.

CD

Yeah. And, and these upgrades also, they increase NBN’s internal rate of return. So the telcos are definitely going to run around and say, well, you’re making more money now. You’ve got less of an excuse to keep the prices where they are.

SA

That’s right. That’s right. And I think we can get ready to hear some serious chatter on that CVC from everybody, you know, that that, that that problem is not going away. And and I mean, it’s weird, like Australia is just one of these weird situate geographies now, where we’re actually even having a conversation of having a fixed wireless alternative to a fixed line product. It just doesn’t exist in many other geographies, you know, because just because no one else has such a hodgepodge fixed line network that delivers so that that is so unreliable or delivers such a wide range of performance metrics, you know,

CD

Yeah, or an off-budget, government-owned wholesaler which has to make a commercial return.

SA

Exactly. I mean, if we had a fixed line network that was reliable and was delivering, and I guess that’s what the dream always was from Labor, right? That if we could do that, then we create an environment of you know, where there’s a reliable fix line connection, and then people can, you know, use other options depending on their needs. But we’ve got such a patchy fixed line network now that the fact that we can think about millimeter wave powering fixed wireless services, I mean, it’s an amazing indictment on how the whole process has played out.

AK

But Supratim, how quickly are we realistically going to see that wide scale, 5G fixed wireless anyway, I mean, so far Optus is the only real player in consumer land doing it. Telstra is yet to kind of tip its hand. If they’re all waiting on millimeter wave that doesn’t even get auctioned until I think it’s early next year. So that actually start the build out. Isn’t that a couple of years away as well.

SA

I think it’s going to run  parallel, I think with this process. And I think I believe NBN Co said yesterday that they’re not even get the forward planning, the planning stages of this fibre upgrade ready until late next year. You know, and I think we all have an understanding of how this works, right, given the track record of NBN Co of how long this actually goes from, I guess from a blueprint right now to to actually achieve, you know, in practice. One of the things with 5G is that deployment can be done at a quicker pace. And I don’t think any of the RSPs are really going to use leverage millimeter wave fixed wireless to create a mass market alternative to you know, to to to the NBN. What they’re going to do though, however, is they’re going to pick the pockets of dissatisfaction. And while NBN Co is looking to create a premium product right now with this fibre upgrade, what I feel the likes of Telstra and Optus and TPG. And I think it’s well could be Optus and TPG really driving this within the market and Telstra coming in a bit later. But it really will be they’re going to go to areas where they can deliver a comparable service or maybe even a better service to the NBN in fttn areas where people are not willing to pay hundred and 50 bucks to get fibre to the premises and their signals having line dropouts on their, you know, dropouts on their HFC or their fttn substandard fttn connections. You know, I think that’s where the opportunity will be. So I don’t think there’s ever going to be a sort of a mass market, you know, wholesale competition against the NBN. But at the end of the day, even on selling a $75 hundred megabits plan for Optus in select suburbs means it still gets to keep more money than having to resell NBN fttn 50 megabits product where they’re still wearing a bit you know, they’re they’re making very little money out of that. So it’s all going to come down to that I think. One. How many? How many sort of 5G fixed wireless services does a telco need to sell to be able to make some margin out of it?

AT

So Chris, how dirty would you be if you’re one of those poor bastards who spent thousands of dollars on the technology Choice Program to get a bit of fibre run to your house?

CD

Especially given that NBN has announced that they’re going to do instant quotes on the site with no fee. And those poor buggers not only having to pay 10s of thousands for a line had to pay like $800, just to get a quote from somebody who did a desktop analysis, which means they just pull up the map and go, Oh, yeah, yeah. Probably about that much. I would be looking to get a refund or something out of them. Because you unless you would like one guy who ran fttp in a fixed wireless area. I’m sorry, that one’s on you. But otherwise, yeah, you’d be pretty, pretty dirty.

AT

And there’d be a lot of people as well, when they changed the footprint. Originally as fibre to, as it became harder to run out fibre to the node and fibre to the premises, they started to take more and more people and just shunt them across the fixed wireless and satellite because it was easier than fixing the problem in that area. So there would be people who were stuck on those now who originally would have been in a fixed line area. Yes?

CD

Yeah. Yeah. I mean, look, NBN does a lot of shifting of stuff. Because as I like, you know, you plan stuff on a map, and then you get out there and you work out the ground is full of basalt and stuff. And you know, you just, you just can’t do it. So, you know, I’ve done I’ve done yarns on people in South Australia getting shunted on the fixed wireless, but then by the same token, a community got shunted onto satellite because they didn’t want fixed wireless towers. So you know, you can complain, it’s awful. But you’re, you know, they couldn’t find a single farmer to put a tower up. And at the same time,

AK

Here is your foot, you have shot yourself in it.

CD

Yeah, yeah. And don’t try and deploy 5g in that area is probably the next piece of advice. But But yeah, they’re playing with this stuff all the time. I think the interesting thing is when they do these regional fibre runs, because NBN’s always said that when a fibre runs past, you know, a suburb or something that they can cheaply connect people up there with better service. And if they’re running fibre into some of the regional towns that were previously put on fibre to the node, I would love to know if they’re actually going to run proper spurs off them or not/

AK

Explain the difference for the for those of us keeping up at home.

CD

Well, yeah. So what it would mean is maybe somebody up in, you know, up in northern New South Wales might suddenly find that the house is capable of getting a full fibre connection, instead of being stuck on fixed wireless or fibre to the node like they were under the old plan. And that’s just because there’s a fibre line going into the main street of town.

AK

Gotcha, gotcha. Gotcha, actually. So here’s my other question with this whole rollout, Chris.

CD

Oh, this one’s actually close to your heart, Alex. Yeah. Um, on the list of towns that were now fibre business zones. One of the ones they announced was Armadale, Armadale was the first to get fibre because of Tony Windsor.

AK

Isn’t that just hurrah, job done day one, because they were literally it was Armadale and I think Kiama were the first mainland, non Tasmania bits of the NBN. So that that feels like they’re just filling out lines there. But I was gonna say, Chris, because I know you were in on NBN’s media calls and stuff, and so on, what strikes me with this whole request loop thing versus technology choice is, I can’t see what stopping someone – given so many of the NBN plans a month to month now – saying, well, they said technology choice will cost me you know, x thousand dollars or whatever, or even x hundred dollars if you’re very lucky. Or they’re going to run it pass my place. But I’ve got to sign up for a faster plan. So a plus hundred Meg plan, basically, I think, is the assumption. We’re working on. What’s to stop me saying, right? I’ll have that for one month, so that I can get the fibre leading for the better  reliability you get out of fibre. After the month I just go to the ISP, right, I’d like for 50 back please.

CD

Probably the asterisk in the contract. Yeah, I would imagine that they’re gonna say we do this you have to stay on 100 megabit plan, wherever you are, for like, one or two, three years. It’s just that those are the same causes, by the way, they’re putting in on the business side of the equation as well. So those that they announced on Monday or Tuesday whenever they did it that, if a business gets a fibre lead in NBN won’t charge them. But if they stay less than 12 months, NBN will then charge the retailer.

SA

I mean, this is the interesting, you know sort of space we find ourselves in right we have a fixed wholesale network, which relies on RSPs, selling high speeds, but it provides them almost no incentive to sell high speeds to people. You know, there’s absolutely no intention also, I don’t think I mean, if you do get if someone does put their hand up to get this fibre upgrade, they’re going to have to cop that price for a substantial period of time because there’s just no way RSPs are gonna let them escape you know.

CD

Yeah, I think that’s how you suppress the number down to 400,000, over two years, because there is only a certain segment of the market that’s going to cop that.

CD

It’s incredibly expensive broadband, you know, it’s an incredible price point to ask a household to pay that much for a fixed line, irrespective of how much they want to use and what their user metrics might be and what their data demands might be. It is there’s just no other way around it. It’s very, very expensive home broadband, and I think highlights another couple of issues with the NBN. I know, we’ve always focused a lot on access technology, and you know, whether it should be fibre or a mix of technology. But there’s a bigger sort of inherent issue, structural issues here that are being there are coming to he fore. Now. You know, I mean, this idea that NBN Co spends money to go into urban area to do to deliver fibre on demand. I mean, it’s ludicrous, right? Compare that to would it be better if we had private companies who would roll this out inside, you know, your digitec or something like that? I mean, that’s how the market should work in the metro.

CD

Yeah, we did wait for 30 years….

AK

There was a bit of evidence that they weren’t keen to do that, except where they could cherry pick

SA

But I think the reason why it doesn’t happen. And I mean, NBN Co was meant to fix that, right? But it didn’t, what it did instead was create another monopoly, which is now aided and abetted by including the competition regulator, where if you are a private investor, who wants to say, Hey, you know, what, don’t pay hundred and 50, don’t sign up the $150. plan from from an RSP. Because it’s all about NBN’s economics. What if a small company could roll it out to you? The point is, you don’t want to do that. Because the minute you hit scale, you’re gonna get smashed by the ACCC. So I mean, we’ve created an investment environment as well, where there’s just absolutely, no, there’s nothing in it for a private investor to come in and try to fix the issue, right? Because, you know, Chris, the, the the fixed wireless and the satellite consumers that you mentioned, there is zero hope for them, of ever getting any kind of upgrade, right?

CD

Yeah.

AK

Because it already costs the NBN $4 billion to service, those  loss making areas but you know, I would much rather see NBN Co raise money from the private capital markets, that’s, you know, debt underwritten by taxpayers, for them to go into these areas and give them the best possible service. You know, instead of saying, we’ll selectively choose areas in and around the metro areas where we think it works best for us and get people to sign up to expensive broadband.

CD

Yeah, I do think that NBN’s timing has been accidentally impeccable. In the sense of these these upgrades, were going to start in about three years time, and probably not to the quantum that we’ve seen announced this week. At the same time, there’s obviously been an uplift in data because of the pandemic. And at the same time, the capital markets, you can borrow money so cheap, it’s unbelievable. Like, if you’ve got if you’ve got the means go out there and borrow all the money you can because it is so cheap. And for all those reasons combined it’s like, oh, my goodness, there is no better time to do this. And, you know, Stephen Rue ever can sit there looking at his balance sheet going, ‘aha, I’m very smart’. But you cannot convince me that he meant any of that.

SA

Yeah, there’s definitely a confluence of events here that does make it good, easier to go into the markets now. But it is debt that will have to be paid back. You know, that’s the thing.

CD

Yeah, but thank  but I mean, what I could get from the capital market is probably cheaper than the dividend they’re meant to pay to the government in like five years.

SA

Yeah, that’s right.

AK

So what does this mean though, because the NBN was completed, with an asterisk, mid-year, but you had those hundred thousand odd places that were stuck in the too hard basket. What does it mean for those folks?

CD

80% of them are done by the year, end of the year supposedly, so that’ll probably leave about 20,000 really difficult ones. And they basically will get what they given.

AK

And they’ll like it.

AT

Yeah, don’t expect miracles.

CD

No, I know there’s gonna be enough people to appear on a current affairs show at seven o’clock near you. For yep, a sufficient period of time

SA

yet. Yeah. Well, until it gets privatised pretty much you can fill a slot every day of someone who is dissatisfied with their service or has been, you know, not received what they paid for or didn’t get what they expected. You know, I think that’s that’s definitely true.

AT

Well let’s just spitballing here, let’s say it was privatised next year. Now that’s obviously not going to happen it’s further away than that. But once it’s privatised, all of this can go out the window can’t it? So there’s nothing obligating them once becomes a private company to actually stick with this promise of we will hook you up with fibre if you pay for a better plan.

SA

Well, the privatisation would firstly depend, you know, hiving off the loss making parts of NBN Co, right.

AT

So big chunks of it.

SA

Yeah, a big chunk of that will have to be hived out or have to be sold separately or rolled into some other sort of an instrument. Right, that will go out to the market. Ah, then the core is the core attractive business will do the wholesale monopoly that that is NBN Co in the metro areas. I mean, the assumption is that, you know, whoever ends up buying it will, it’s in their best interest to keep on upgrading the network, right, and fixing up the FttN and the FttC to, and also the HFC I guess, to a full fibre environment as quickly as they can. I mean, that would be the ideal goal here, right? That, but it there’s going to be that very distinct divide between what stays as the NBN that services the metro areas of Australia and, and fixed wireless and satellite. You’re gonna have to dress them up and make them attractive in a way where you can fit in with there’s some value there or that may, you know, I mean, I don’t know how you can service those areas, without some sort of government money flowing in there, you know, some sort of funding or something like that.

CD

Well what they are as RBS is meant to pay for the rural broadband, charge, whatever it is.

SA

is, yeah, that charge again, you’re going to wonder I mean, that charge, how much money does that actually raise, and is that sufficient money to service the needs of regional area? Or is it again, another disincentive to telecoms companies to not compete against the NBN? You know, I mean, NBN Co, has been given a lot of protections as an entity, you know, which I think sometimes are, in some ways have become counterproductive.

CD

It has but back to Adam’s question, I was sort of thinking to myself, I wouldn’t want to be holding my breath waiting for a free lead in from Bain Capital Broadband Network.

SA

Yeah. I mean, we don’t know who it will be. You know, that’s the thing.

AK

*cough* Telstra *cough*.

AT

We could get Sol back!

Chris Duckett

You want to rake over those coals again?

AT

What’s Sol doing these days?

CD

That’s a good question. Actually. What is he doing?

AT

Counting his money.

CD

Yeah, I was about to say he’s probably well retired on a private island or something.

SA

He’s probably a tech bro somewhere, you know, investing money in all kinds of blockchain maybe? Or crypto.

CD

He’s probably running a blog; Let’s Talk Blockchain.

SA

But yeah, look, the privatisation thing is gonna play out, but it’s still, I reckon it’s gonna be a while before that becomes a reality. You know, for the moment, it’s all about NBN. Co and I think the most pressing issue is really, that the pricing issue.  It’s really making such a disincentive for the RSP is that NBN really relies on them right to sell those prices. So I don’t know like, what point do we get, you know, some sort of an understanding from NBN Co to look at or revisit that wholesale pricing, the telcos are always going to keep agitating for it. But again, it’s one of those issues, which is at the heart of, I guess, some of the end user problems that we end up seeing as well from time to time as well, you know.

WRAP

AK

Well, that just about wraps up a bumper episode of Vertical Hold. Thanks to both Chris and Supratim, for joining us for this week’s show.

CD

Pleasure as always.

SA

Thanks, guys. Great to be here.

AK

So Chris, if people want to find yourself on social media and online where did I do that?

CD

Ah, come and see the writing ZDnet.com. And do not track me down on social it is a den of just awful memes.

AK

You’re probably not wrong there. Supratim, same kind of question Where do people find your work online and you on social media?

SA

We’d love for for the audience to obviously read the SMH and The Age online, but also obviously when you can pick up the paper as well. And as for social Look, my social media is really more consigned to my cooking escapades in the kitchen more than anything else

AT

He is the Iso cooking king. He really is.

AK

And of course, you can catch up with us on Twitter at @VerticalHoldAU. Online at verticalhold.com.au or via the Vertical Hold Facebook page.

AT

Once again thanks for joining us for a huge weekend NBN news. Don’t forget to tell your friends, leave us a review on your podcasting platform of choice to spread the good word and carn the Bulldogs!

OUTRO MUSIC

AT: Vertical Hold is proudly brought to you by Aussie Broadband. Changing the game with their award winning network an Australian based support.

Outtake

AT

That’s gonna end up on the cutting room floor. I can assure you.

CD

Aw, include it you cowards.

— ends —