Telstra faces payment delays as NBN presses pause on HFC connections

NBN Co has called a halt to HFC connections amid concerns about service quality, a move that will delay payments to Telstra.

NBN installers in Cheltenham, Victoria, Australia

NBN Co has called an immediate stop on connecting households to the hybrid fibre-coaxial (HFC) portion of the National Broadband Network, with NBN Co boss Bill Morrow saying that the suspension is necessary to deliver a reliable and quality service on the pay TV cable.

NBN Co is aiming to have 3 million homes on the HFC footprint by the end of the rollout and the latest concession will now see significant delays in getting millions of homes connected to the NBN. It will also delay the payments Telstra is set to receive from NBN Co to compensate for its loss of its wholesale monopoly.

“The delay in the NBN rollout will delay a proportion of the payments to Telstra from NBN into future periods,” the telco (TLS) said following the announcement from NBN Co.

The move comes in response to the growing discontent from NBN customers who have been put on the HFC footprint, with many receiving lower than promised speeds and service dropouts. Mr Morrow acknowledged on Monday that the HFC network was struggling to cope with the number of customers being brought on to the NBN.

“Effective immediately we will delay new activations over the HFC network and delay the rollout until we can adjust a number of issues on the network,” Mr Morrow said

“There are a lot of people out there who are not getting the best experience they can with their broadband service and we want to change that, while we see improvements happening they are not happening fast enough, in particular with our HFC.”

“This will result in a 6 to 9 months average delay for those people yet to connect to the NBN over HFC and we are going to work through a number of issues focused primarily on those customer who already have the service today, once that is complete we will advance these improvements to future areas,” Mr Morrow said.

The homes that will have to wait until NBN Co irons out the kinks in the HFC technology will have to rely on the existing Telstra services on the network and standard ADSL services.

Pressing pause on the HFC rollout is a significant embarrassment for NBN Co and the Coalition’s mandated multi-technology mix rollout, however, Mr Morrow said that it doesn’t jeopardise the overall completion date of the rollout.

“We do not believe this will in any way jeopardise the rollout being complete by 2020 and having 8 million active users on the NBN,” he said.

Telstra’s shares slide after NBN Co’s announcement and were down two cents, or 0.57 per cent, to $3.46 at 3.53pm (AEDT).