NBN nearly finished network rollout, but new technologies threaten to make it obsolete within years

With less than six months until the rollout is finished, the NBN’s future is facing new competitors that could leave its technology behind.

The company in charge of building the national broadband network has 150 days to get a million more premises ready to connect before the rollout of the network officially ends at the end of June.

But NBN CEO Stephen Rue is keen to remind everyone the end of the rollout is not really the end.

“Our job does not end there,” he said on the government-owned company’s half yearly earnings call on Tuesday.

“The task of extending and maintaining this vast information highway continues for NBN. Our job to continually improve this great asset does not end.”

The improvement of that asset hopefully means better internet for more customers in the future.

A lot has changed since the NBN first began rolling out the network, and new technological advancements, particularly in wireless internet have created new competition.

While the NBN could add those technologies in the future, for now it is focusing on making better speeds available on the equipment that’s currently in place.

In May, telcos will begin selling a higher speed 250/40 NBN bundle.

This would allow for download speeds of 250Mbps and uploads of 40Mbps.

There are more, faster bundles in the pipeline for later in the year.

Stephen Rue became CEO of NBN in 2018, replacing Bill Morrow. Picture: Aaron Francis/The Australian

But the rollout completion also means the NBN can focus on another task: paying us back.

Tens of billions of dollars of taxpayer money have been poured into the network over more than a decade.

The economic benefits of the NBN make a powerful argument that it’s all worth it, and Mr Rue said the improvements outside of metropolitan areas in particular have been massive.

“Compared to what they had ten years ago, there’s vast improvement across the whole nation in rural and regional areas,” he told news.com.au following the earnings call.

“We need to continue ensuring a focus on customer experience and how NBN engages communities, including regional and rural Australia, to assist them from a digital point of view.”

Good internet in regional areas can have massive implications for the facilities available in those areas, not just for businesses and residents, but for the applications it facilitates in education and healthcare in places that are less well resourced, such as allowing remote classrooms and consultations with doctors.

Prior to the NBN, internet access was significantly better in the cities because the higher populations (and therefore larger customer base) made it more worthwhile for companies to deploy better technologies.

The NBN was designed to address this issue, but has been mired by the politics surrounding it.

NBN contractors laying cables at one of the 11.5 million premises that will be ready to connect or already connected by the end of June.

While the company’s job is far from over, the actual rollout of the network almost is.

10.5 million premises are now ready to connect, but only 6.4 million actually have.

Mr Rue said the discrepancy was due to a number of factors, including vacant properties around the country, households that choose not to connect to the network, and areas that have just been made ready to connect recently where consumers don’t know the NBN is available.

NBN aims to have 11.5 million premises ready to connect by the time the rollout finishes.

Mr Rue said the company is on track to hit that easily, and has met all of its monthly connection targets for the past two years.

New homes and developments will still need to be connected in the future, and there are also existing premises including heritage-listed or culturally significant premises that require a more specialised approach to connect, as well as Australia’s outlying island territories.

There’s also a need to rebuild infrastructure destroyed in disaster events, such as the recent bushfires.

Mr Rue began Tuesday’s half yearly earnings call talking about the bushfire crisis, saying it demonstrated how important communications are.

He said NBN staff played a “small but important role” in restoring sites as well as establishing connections in 33 evacuation centres in NSW and Victoria using the SkyMuster satellite.

“It’s been humbling to see the efforts of many NBN employees who gave up their holidays and time with their families and helped reconnect communities affected by these fires,” Mr Rue said.

He added the crisis showed how the country and the NBN needs to prepare for future disasters, and said the NBN was “actively looking” at options for satellite broadband.

One of those options could be similar to Elon Musk’s plan to create a constellation of low orbit satellites around the Earth capable of delivering high speed internet access pretty much anywhere in the world.

RELATED: Elon Musk’s plan to fix our rubbish internet with Starlink plan

A Falcon 9 SpaceX rocket with a payload of approximately 60 satellites for SpaceX's Starlink broadband network launched last month. Picture: AP Photo/John Raoux

The SpaceX Starlink plan recently took one step closer to reality with approval from the Australian Communications and Media Authority.

Mr Rue said the NBN welcomes the competition but he doesn’t expect it to replace the fixed line networks.

“When you go to our purpose: to lift the digital capability of Australia … from where we sit we continue to see a large amount of data consumed over fixed line networks.”

Mr Rue added that data consumption is projected to double every four years.

“We have no doubt that NBN will provide the heavy lifting for the data consumption of the nation.”

The NBN didn’t make a submission to ACMA’s consultation on Starlink, but Mr Rue said the authority is aware of the company’s concerns.

“Our discussion with ACMA has been around making sure the spectrum for satellite and fixed wireless is in no way interfered with, so ACMA are aware of those needs of ours, it’s something ACMA will work through.”

There are also new wireless networks coming online around the country.

The 5G mobile network is another potential point of competition for the NBN.

Optus is using its 5G network to deliver a home broadband offering, promising faster speeds than those currently available to consumers on the NBN, for roughly the same price as its most popular speed tier.

The NBN is aware of the new technologies and may look at implementing them in the future, but doesn’t appear to be in any rush.

“From my point of view we’re focused on the existing technologies we have,” Mr Rue said.

Those existing technologies are a mix that has left many worse off.

The NBN was switched to a mix of different technologies after it had already started rolling out.

While early connections benefited from fibre to the premises (FTTP), areas where the network was rolled out later were forced to make do with fibre to the node (FTTN) or kerb (FTTC), with the existing copper wiring taking data the rest of the way.

Only 1.9 million have access to FTTP, with the majority on FTTN (4.45 million) or hybrid fibre coaxial connections (2.3 million).

Just under one million, mainly rural and regional customers, use satellite or fixed wireless connections.

With the rollout nearing completion, Mr Rue is aware of the annoyances many connecting customers have dealt with.

“There has been disruptions to people’s lives as they move on to NBN network, we’ve had the privilege of being in their home, the experience has been less than they’ve wanted.”

He said the completion of the rollout will make it easier for telcos and the NBN to better support customers.

“At that point NBN and retailers can increasingly focus on the use experience of consumers and that the experience on their network continues to be improved.”

Some of those improvements will include higher speeds being made available.

“We already provide 1000/40 on the FTTP network, we will continue with our retail partners on introducing higher speed tiers for example on the HFC network.”

Mr Rue said not many consumers opted for that 1Gbps speed tier and not many retailers even offered it.

This could be due to only 1.9 million premises being able to connect to FTTP infrastructure, which was originally intended to carry the whole network until the government changed in 2013 and the network was altered to one that used a mix of different technologies.

It could also be because 1Gbps speeds don’t have many applications for the average household to justify the extra cost.

Two sisters walk their dog among burning NBN cable rolls in Mallacoota last month. Picture: David Caird

“The actual usage of those speeds today in a consumer environment is not high,” Mr Rue said.

“Obviously over time the application will become developed with the growth of data consumption. I’m sure there will be more consumers looking for higher speed tiers.”

They may be in luck if the NBN becomes cashflow positive and can continue upgrading the network for higher speeds.

Mr Rue expected that to happen in the coming years, as costs begin to significantly drop when the rollout finishes.

Over the next few years, he predicted three things would happen.

Firstly, the NBN’s revenue would grow as more people connect to the network. The company’s costs will also come down because it won’t be building as much new infrastructure (it currently has operating costs over one billion dollars a year). Finally, the payments it has to make to Telstra and Optus for parts of the NBN that use their infrastructure will end in 2023, 18 months after the rollout is completed (at which point the old networks are switched off).

The first of those things is already happening.

The average revenue per user on the NBN rose two dollars in 2019, from an average of $43 to $45 per customer.

Mr Rue attributed this rise to more people opting for higher speed tiers.

56 per cent of customers were on 50Mbps plans at the end of 2018, but that grew to a full two-thirds by the end of last year.

“Our job has been to build a network that provides 25Mbps across the nation, and for 90 per cent of the fixed line network to be able to get 50Mbps and above. There are many who get well in excess of that,” Mr Rue said.

There are also many who pay for that speed but don’t receive it.

The Australian Competition and Consumer Commission reported last year that one out of eight NBN services rarely come close to meeting their advertised speeds.

There’s a chance they will in the future if the company can begin making money which can then be used to upgrade connections.

“Our job is to get our business to the point where we are in a cashflow positive position so that we can continue to invest in the network.

“NBN’s job is to get to cashflow break even, I think that will absolutely happen,” Mr Rue said.

Has the NBN been made obsolete before it’s even finished rolling out or is the new technology still too far off? Let us know what you think in the comments below.