NBN gearing up for the era of artificial intelligence as losses widen

The government-run telco is betting big on the need for fibre and higher-speed internet as AI computing moves to centre stage.

NBN is gearing up for its AI era.

NBN Co is gearing up for the AI era, banking on the fact that the relatively new technology will significantly increase demand for its fibre network.

Interim chief executive Philip Knox hopes the shift will help the government-run telco turn its losses around, and that the NBN will reach more Australian households and businesses with the introduction of higher-speed internet tiers.

The telco’s revenue jumped 4 per cent to $5.5bn in the past financial year, which NBN puts down to increased demand from business customers.

Over the 12 months to June 30, the telco reported underlying earnings of $3.93bn, up 9 per cent from the previous year.

Its capital expenditure grew to $3.76bn, up from $3bn the previous year. NBN said that included investment after a $771m cash injection from the federal government to improve its fibre upgrades, part of a total $2.4bn funding campaign.

Despite the revenue bump, the company still reported a loss of $1.176bn, which was worse that the $1.119bn the previous financial year.

NBN interim chief executive Philip Knox.

Chief commercial officer Anna Perrin said part of the driving force behind data demand was video, which now accounted for 50 per cent of traffic across the entire network. Streaming services also played a significant role.

“That’s why our fibre rollout is so important, because we know that fibre has the capability to meet the demand that we can see that is still growing,” she said.

“We’re expecting that will continue to grow with AI but of course it’s not just AI – virtual reality and augmented reality are expected to grow by 15 per cent year on year as well.”

The telco said its fibre projects were beginning to pay off, and it was seeing more connections to both residences and businesses. Average revenue per user is now $47.

Mr Knox said NBN would compete for new estates and developments that would be connected by fibre and help grow its network and customer base.

It was also seeking to expand its transit network, which accounts for 76,000km of fibre across the country and carries 83 per cent of the nation’s data.

On the residential front, NBN had a crucial role to play in the future of smart devices, Mr Knox said. More appliances, consumer and health devices would require internet connectivity.

“It is predicted that nearly three quarters of households will be using some form of smart home connected device, such as household appliances, security cameras and lighting systems,” he said. “These emerging technologies rely heavily on high-speed, low-latency broadband connections; so for us at NBN we (need to) continue to invest in network upgrades so that the right technology is ready for the industry and for our nation when it is needed.”

The telco said the average household now consumed 452GB of data a month across 22 devices. A decade ago it was 30GB across five devices.

NBN is investing in its network on the basis that the average household will have at least 40 connected devices by the end of the decade.

“Looking ahead, our proposed acceleration of NBN speed tiers and the nation’s multi-gigabit future is aimed at ensuring Australia is equipped with the critical infrastructure it will need to support the explosion of data that’s coming in the years ahead,” Mr Knox said.

NBN reaffirmed that it was on target to meet a goal of having over 10 million premises ready to connect to its Home Ultrafast tiers by the end of 2025. Near 78 per cent of NBN’s fixed line network now has access to the Home Ultrafast tier.

The telco said it had laid more than 70,000km of new fibre, allowing full fibre access to about 3.5 million premises.

The telco is still confident that new “hyper-fast” speed tiers, which it put out for consultation earlier this year, will be popular among customers.

Some telcos share a similar view. Aussie Broadband last month announced its own “challenger” brand Buddy Telco, which will offer lower speeds at a discount, while higher tiers will be reserved for its higher paying ABB customers.

NBN Co has upgraded 375,000 premises from “fibre to the curb” or “fibre to the node” to “fibre to the premises” (FTTP).

These upgrades mean those customers can access higher speed tiers for services.

The telco finished the financial year with 8.6 million homes and businesses connected.

The total number of homes and businesses ready to connect is 12.4 million.