Monday, 4 June 2012

A Coalition Broadband plan...maybe and FTTN vs FTTH....FIGHT!

So, we've covered some fairly broad information about the alternatives to the current FTTH NBN. But in this post, I want to discuss a little more in-depth, the differences of the major section of the network that may or may not get built, depending on currently, how the elections turn out in 2013. While wireless is likely to play an increasingly important role in our everyday lives, it will not do the heavy lifting required of businesses, Video-On-Demand (VOD) and Cloud storage. For these applications, we need fixed-line systems, such as we currently have with Telstra's CAN (predominantly copper), HFC networks (Optus and Telstra) and backhaul network (predominantly Telstra fibre).

The argument is, with a fixed-line network made up of FTTN, HFC and copper, as in the Coalition's current plan, we will have enough bandwidth to serve the majority of Australians for several years to come at a cheaper price. Whereas the FTTH network of NBNCo. and Labor will give us a network that is more expensive, but provide us with bandwidth to spare and to grow into. Note here I'm saying Coalition and Labor; unfortunately, this is where politics and the NBN clash directly. When I refer to "The Coalition" or "Labor" in this post, it is not an attempt to belittle or persuade, politically. It is simply a matter of fact that, as it stands right now, we have 2 competing ideas for a network, that span the 2 political ideals of our country. The NBN SHOULD be politically agnostic....but it isn't.

So, let's have a look a little more closely at FTTN.

FTTN and VDSL- Partners in crime

FTTN is a network architecture choice that many countries around the world have made- There are several in the US, including the big one AT&T's U-Verse (although we have to be careful, because some of it IS FTTH, but the majority is FTTN). Germany's Deutsche Telecom, under the subsidiary of T-Home (also offered in different countries). Bell Telecom Canada also, which offers its' services under the Fibe moniker and several others around the world. Finally, New Zealand, which has recently stalled its' FTTN rollout by TelecomNZ, the NZ incumbent. There is good reason they've stalled, and in fact decided to go with FTTH to 75% of premises, which will become clear. You'll note I've linked to Wikipedia's sites for these companies; it is significantly difficult to get information directly related to the FTTN architecture of a company, if you're not directly in the industry. It is usually sold under a moniker, such as in Australia, where HFC is sold under Telstra as Bigpond "Elite" Cable or BigPond "Ultimate" Cable, depending on your preference for speeds/price. For this reason I've linked to Wikipedia to give an overview, not a detailed analysis via this source.

These networks, depending on country, usually offer services on a "triple-play" basis; Voice, Internet, IPTV, all over one cable. The TV options vary (PayTV or VOD) as do Voice ("Analog" normal phone services or VOIP), but the Internet speeds can range from as low as 13 Mbps to as high as 200 Mbps. Now that is quite a range and, you might ask, why on earth is it such a big range? Is this speed tiered information? No, this is real-world data that has been received, such as this letter from the CEO of TelecomNZ, regardless of tier break down. So why then, if people are asking for 100Mbps, are they getting 13 in some cases? Such is the physics behind VDSL, the technology used to bring FTTN to the majority of premises.

VDSL (or Very-high-bit-rate Digital Subscriber Line) is a technology behind FTTN architecture. It is, essentially, running on a mix of copper to the premises, running back to a cabinet, where the signal is converted to fibre and sent on to the backhaul of the network. VDSL is HIGHLY dependent on premises' geography for its' speed:

This graphic, from Boundless, a "Rural Broadband company" in Britain, gives a good idea of the unfortunate reality of VDSL. If you live within, say, 300m of your fibre cabinet VDSL2 (the newest iteration) will give you better speeds than ADSL2+. Within 1km, VDSL1 will STILL give you better speeds than ADSL2+, but after that, you're better off sticking with good old copper all the way to your exchange (Note: other graphs go higher to 300Mbps for VDSL2; this is not possible for most Australians, as I will explain). Now, in a country like the US or UK, where there are small, densely populated areas and even the "rural" areas are only a couple of tens of km's away, VDSL can make a difference. But, as I've shown before, 60% of Australians are more than 2km from their exchange. Alcatel-Lucent are boosting that, to enable people within 2km to received higher than 24Mbps, but it drops below that after 2km....again, no good for the majority of Australians. Let's face it, we're a spread out country, even in the suburbs. Boundless themselves actually have a novel idea of "Wireless Fibre" or "Fi-Wi" (WARNING Copyright infringement likely over the "Wi-Fi" brand....) where the cabinets have high power, fixed wireless that enable MUCH faster connections to those beyond 2km, up to 100Mbps. But this is not currently what we're discussing, as I'll talk about below.

One of the problems when talking about FTTN arguments in this country is we don't actually have fine detail about the Coalition's plan for FTTN. For example, will FTTN cover...40%, 50%, 60%, higher? Lower? We don't know. We were only told "97 percent of premises are able to be served by high speed networks capable of delivering from 100 Mbps down to a minimum of 12 Mbps peak speed" and this comes from the Coalition policy on Broadband from 2010- it is NOT the idea of SPECIFICALLY FTTN that Turnbull has launched since mid last year and which Tony Abbott FINALLY mentioned in his Reply to the Budget speech a few weeks ago. It is in fact the original broadband policy that contributed to them losing the 2010 election, which was a mix of subsidies to increase HFC rollout by Optus and Telstra, wireless in the rural and regional areas and other "undisclosed" subsidies for improving FTTH rollout in Greenfields. I have explained this policy and its' disadvantages in my "What about the Alternatives" post. The Coalition seems to have realised this isn't a decent policy now and have gone to FTTN; but we still have no information about it.

So, in actual fact, we have NO details about FTTN in terms of how much of the Australian populace it would cover. There is good reason for that, as I will demonstrate. Note: I know I'm wading into politics here, but unfortunately, the Coalition are basing much of their policy around politics, not good ideas. Such is life, we now have to wade through the muck to get to the gold about the realities of the FTTN in Australia.

The Telstra Dog and Pony Show

Telstra offered up its' 2 cents several years ago in 2006 about FTTN to 60% of the population, although it was shown later that, in fact, it would be to 40% of Australians, in the most profitable areas....and it wouldn't really be available to competitors thanks to the non-ability of the cabinets required in FTTN to allow competitors DSLAMs (the hardware that connects a competitors fibre backhaul with the customer line) to fit in and use ULL's (Unbundled Local Loops), essentially re-establishing a full Telstra monopoly to these areas. Needless to say, the ACCC threw this one out.

Next was Labor's original NBN, or NBN-1.0 as some people like to call it, that would provide "broadband speeds of up to 12Mbps to 98% of the population".  Seeing as almost 50% of Australians can (with some reliability) already access these speeds, it was considered by many a waste of time and money, as it wouldn't actually substantially increase the speeds the majority of Australians could receive. And for those it wouldn't be by much (another 20% can get speeds up to 10Mbps). But this was not the worst of this plan; oh not by a long shot.

See, this "12Mbps to 98%" could only be achieved using FTTN. This, of course, meant rolling fibre to, presumably, 98% of exchanges, whereby cabinets would be installed to "splice" the last mile copper into the fibre network. These cabinets would be large, powered and managed by Telstra. The copper, was to remain an integral part and therefore, Telstra must be compensated for it, as it was essentially actually selling the copper, as it would now be in the FTTN system. Well, that's not something Telstra, particularly then with Sol Triullo at the head at the time, would've parted with lightly. This was THEIR infrastructure, bought by shareholders, they would want fair recompense. The government was told, confidentially, according to experts at the time, Telstra would accept nothing less than $15-20 BILLION dollars for the copper CAN. That would put the total spend, at the time believed to be around $5 Billion, to around $20 Billion MINIMUM, for essentially the same service the majority of Australians had already. Oh, and it got even worse- Telstra, who would be out for competition of this new network, would simply build over it with FTTH in profitable areas and wipe its' usefulness out entirely if their were no laws to prevent it (as there are in the NBN). Telstra's own advisor to Sol at the time admitted as much.

So, Labor came up with the new plan of FTTH to 93%- NBN-2.0. And then we have this unknown % rollout of FTTN by the Coalition. But WHY is it unknown? Is it because the Coalition have simply not fleshed out the policy being this far from the Election? Quite possibly. There is no reason to believe otherwise....but there is a reason to suspect why they MIGHT want to hold back on fleshing it out at all.

The FTTN Australian Dillema

Assuming the Coalition are serious about FTTN, and assuming they will stay with their mantra of fixed wireless/satellite to a large portion of remote, rural and remote regional areas, then it would follow then that approx. 40% of premises would be passed by this FTTN network (seeing as 35% are classed semi-urban (unprofitable for new networks) or regional/rural, ~25% are serviced by current HFC and rounded out 5% remote). So at 40% of premises passed (my assumption isn't bad, considering that's what Quigley has assumed too, once you take into account HFC networks), what would this cost? The Coalition are saying $7.6 Billion. We'll work on $8 Billion. So, $8 Billion to provide 40% of premises with....what? Again, we don't know. 12Mbps? 50Mbps? 100Mbps? More? Again, we're going to assume around 50Mbps. The explanation for this is that, because FTTN speed, using VDSL, is HIGHLY dependent on proximity of its' cabinets to a premises (ie. length of the copper between the premises and fibre splicing point) there has to be a point of economic efficiency. Let's face it, if you roll the fibre to within 100m of each premises to give maximum speeds to all, you're getting AWFULLY close to a FTTH network and most of the cost OF the FTTH network is fibre laying. So, shortening the fibre run by increasing the distance from premises to cabinet is cheaper, at the cost of speed. Hence, the middle ground of 50Mbps.

So, that's $8 Billion to provide 40% of Australians with average 50Mbps. Wait a minute "average"? Yes, that's right, average. Depending on copper line quality, whether you have a physical pair gain system (shared copper line between 2 houses, which to be fair, would probably be upgraded) AND, most importantly, if you have 2 copper lines run to your house, of which the majority of people, don't. Telstra's CAN, in many places, has a single bonded pair of copper running to homes, with no spares available. But for VDSL2 to work, requires 2 bonded that won't work unless you lay more copper....and that's getting a bit silly. Already that FTTN is on shaky ground for the majority then. Also, as I've pointed out before, the majority (60%) of Australians live more than 2km from their exchange, which means, seeing as only 40% of Australians are classed as semi-urban or regional/rural, there must be some portion of this 40% getting FTTN that will require cabinets considerably closer than their exchange.

This, then, means several hundred, if not a thousand or more cabinets will have to be installed for these 40% to get ANY benefit whatsoever above the 24 Mbps available via ADSL2+ to most premises. Also, to make it a reasonable investment, even those inside the 2km limit, will likely need that cut in half to achieve 50Mbps, partly, because without adding a bonded copper pair, VDSL2 speeds aren't available, so VDSL1 is all we have. Hence, likely, several thousand cabinets. All these will, possibly, be administered and installed by NBNCo., as the Coaliton have recently stated they will keep working with NBNCo. if elected and not scrap the company. (this seems logical, now they've realised, because it cost nearly $300 Million just to set everything up (see the Corporate Plan)).

So, the FTTN has become a FTTC (Fibre-to-the-Curb) network, running to approx. 40% of premises, mainly in city suburbs and large regional hubs. We've fleshed this out ourselves, because, as I've said, we have no details of the Coalition's actual policy, but this is in agreeance with most experts and it seems,  at least some of the Coalition now.(read the comments section). There will be ~25% of Australians covered by HFC networks (subsidised to increase competition). And that leaves 40% covered by the copper CAN, or, wireless. The Coalition have not yet said what % of this 40% will get wireless. Obviously, if wireless can only provide 12Mbps (as under the NBN) and some of that 40% can already get 8-10Mbps on copper, they're unlikely to get wireless. Let's say 10% of the last 40% would get wireless, at up to 12Mbps.

A Coalition Broadband Policy, finally....maybe....

So, here we are then, the Coalition's Broadband Policy, as produced (in copyright protection, of course) by me (backed up with help by Citigroup's analysis, if I need to be honest):

- FTTN upgrade to ~40% of premises in Urban, semi-Urban and high density Regional areas
- HFC to ~25% of premises in existence already, subsidies to make competition better and drive prices down
- Copper CAN continuation to ~25% of premises, able to receive speeds of up to 24Mbps (many less)
- Wireless to 10% of premises currently unable to get much over speed over the CAN, if at all

So, this then, is the Coalition's "mixed technologies" plan, or "alternative path of upgrade" as Turnbull calls it in his speech to the Broadband conference in Malaysia recently.

What speeds do we get from this? Now? (or when it is done rather) 25% of premises up to 100Mbps (HFC), 40% average 50Mbps (FTTN), 25% up to 24Mbps (CAN) and 10% up to 12 Mbps (Wireless). So, if you want fast broadband, under the Coalition, looks like you'll have to choose carefully where you move for work or play. Ultimately, this plays against the Coalition, because this fragments the market, making it difficult for consumers who move around (and there are alot of us, look at the rental market). And, as Citigroup notes, it will actually promote, even more than now, the geographic nature of wholesale, and subsequent retail prices of broadband, meaning the digital divide we already experience gets significantly worse as private companies refuse to invest in non-profitable areas.

Upgrading...or not

However, of course, even this last paragraph is assumption. Because of course, we haven't dealt with the "white Elephant in the room" yet; the NBN. If the Coalition do indeed win the 2013 election and opt to stop the NBN where it sits, that will still leave somewhere between 10-20% of people on the NBN ALL over Australia. (perhaps THIS is why NBNCo.'s rollout seems haphazard, makes it more difficult to stop...?)

So we need to modify our numbers again. Some people in Armidale will have access to 100Mbps on the NBN, while some people in Blacktown, Sydney, won't get above 24Mbps and that's if they're lucky enough to get that at all. This seems like a fairly farcical situation and indeed it would be. How would the Coalition deal with this? Part of the reason the NBN is going in is to "close the digital divide" of regional and urban Australians (or even semi-urban and urban Australians...). I don't have an answer for this. All I can assume is that they would choose to increase the amount of FTTN rolled out to deal with these areas that some have NBN and some don't. Otherwise, you'd be left with the East half of a town with 100Mbps and the West half with possibly little access to broadband at all!

So our policy price goes up. To what? This is pure conjecture here, but while it's clear from Citigroup's analysis it would indeed be more than the $8 Billion we've been working with, (they suggest $16.7 including all legislation) Citigroup work on the assumption of no NBN whatsoever, so we can't use those numbers. I would hesitate to put down a figure, but my guess would be.....$23-25 Billion, including all legislation and CBA, seeing as FTTN gets more and more expensive the further apart premises get. And much of the NBN would have stopped in regional areas, where FTTN may not have been slated under a "pure status quo" situation. Now, of course, we're in a situation where the % on copper has decreased, the % on wireless MAY have decreased and the % on FTTN increases, significantly. Possibly to as high as 55%, although likely hovering around 50%.

And there's the next question too, of where do we go from there? Paul Fletcher believes there is much technologically we can do yet with HFC, copper AND FTTN. Technologies like phantoming and DMM in FTTN can provide current bandwidth up to 300Mbps along last-mile copper, very true....but what he doesn't point out is that phantoming and DMM are VDSL2 technologies and, as I've said, many Australians don't have 2 bonded pairs going to their houses. Also, 300Mbps is PEAK speed at no more than 300m from the exchange. It drops rapidly after that.

Here's also an interesting tidbit from ospmag:

Due to the amount of calculations involved, vectoring will provide the best results in nodes with a limited number of lines (FTTN or FTTB deployments, for instance). The only requirement is that all lines are under full control of a single operator, meaning that there can be no sub-local loop unbundling. Indeed, if the lines belong to multiple operators and are terminated on different nodes, then there's no way to collect all the signal and crosstalk data.

Emphasis added; the vectoring here is talking about VDSL2 technology paths. Hmmm, single operator?....sounds awfully familiar...I seem to remember a certain incumbent telco back in 2006 presenting something like this....Of course, if NBNCo. was enabled to deal with the FTTN section, this would possibly be viable. But we, as yet, have no confirmation on any of this. Worrying nonetheless that FTTN higher bandwidth technologies simply do not ALLOW competitors to use the line if it was to be built by Telstra....

HFC? We could node split, much like FTTN where we put cabinets closer to the premises. But apart from many large and unsightly cabinets, the investment would be substantial. How much? Unknown, until it becomes clear what sort of bandwidth is being demanded.

Copper? VDSL2 straight from the exchange is all we have at the moment. But being useless beyond 2km, that makes it useless for 60% of Australians, probably many of whom are the ones with the WORST current broadband. And of course it depends on copper quality too, which, depending on which side of the NBN argument you're on, appears to be "really bloody awful in general" or "quite adequate for the most part" half full/empty anyone? comment....

Wireless? Well, there's no question LTE is greatly boosting bandwidth for both fixed wireless AND mobile solutions. I've already talked about wireless as a "competitor" to the NBN in my "What about the Alternatives?" post, so leaving that aside, what other wireless options are available? There's the "Fi-Wi" I mentioned earlier, where FTTN is run and instead of using the copper in the ground already, we could put high power LTE transceivers and hardware on nodes to provide coverage at anywhere from 3-20km depending on the frequency. The speeds would be in excess of 40Mbps (real-world) currently, and more in the future to many in the wireless serving areas, much higher than many have now. Obviously, this would be a secondary "internet only"connection as, to have reliable phone, copper connection would still be required. (VOIP would still be possible however)

There are problems surrounding this- contention, as has been explained before (think Sunday night, everyone's home, schoolwork, work work, watching youTube/iView...) and it applies here, as more people access it, the spectrum is shared, so it reduces throughput. Weather, although this is a minor factor unless high wind or lighting knock-out transceivers. Transmission power; this is because there would have to be several of these "Wireless nodes" to cover a decent number of premises and allow sufficient bandwidth for those premises, due to contention. The power would have to be enough to overcome interference from surrounding LTE transceivers AND domestic wireless devices. I won't go into this debate, but we're ALREADY seeing much argument surrounding actual affects of EM radiation with just mobile wireless towers. I for one, DON'T believe it has everlasting harm, but that's me....

The bottom line

So what IS the bottom line here? The bottom line is....there isn't one, at least for the Coalition plan currently. We don't have enough information. But I believe my analysis (with help) has shown that even with some of the best circumstances, the Coalition's plan would deliver little benefit for the similar cost of the NBN. There is several quotes that come to mind, one being the famous "Do it Once. Do it Right. Do it with Fibre" mantra that was thrown around years ago on the topic of FDDI networks in large corporations. Of course, then Gigabit copper came along and removed its' much less cost too, as a slap in the face. However, I believe this applies for FTTH, unlike for LAN FDDI, which is short range only (less than 1km, usually less than 500m), mainly because of this statement from ospmag's "Turning Copper into Gold" article by Stefaan Vanhastel and Wim Van Daele:

FTTH, with fiber running all the way from the central office to each home and every apartment, is the clear endgame. FTTH architectures are future-safe, enabling operators to deliver (more or less) unlimited bandwidth: 100 Mbps per household today, with technology evolutions set to increase this in the future. Their main drawback, however, is that (nationwide) FTTH deployments require a lot of time and money.

And also:

FTTH is the clear end-game, supporting the delivery of 100 Mbps per household today and technology evolutions set to further increase this in the future.

So, we KNOW the NBN is going to cost between $27 Billion and, somewhere around $30 Billion (to the Government, total cost likely to blowout to maybe $45 Billion) once inevitable blowouts and inefficiencies are taken into account. (such as NBNCo.'s recent revelation that 1/3 of their address data (NOT their own) is wrong and Telstra's delay of 8 months in signing the Telstra Financial Heads of Agreement on NBN). This is high, but I've shown it is not a taxpayer burden and our government debt levels are some of the best in the Western world, therefore the risk is minimised.

Seeing as it appears ALL telco's are moving towards the ultimate goal of FTTH, as it gives the most bandwidth capability and the only reason they don't ALL jump straight to it is cost and investment risk, and the government is backing FTTH investment mitigating the risk, why NOT "Do it Once. Do it Right. Do it with Fibre" all the way? It would be a world first. A massive boon to our digital and real economy. Social benefits also innumerable in a country as vast as ours would prevail.

Why NOT be the envy of the world? We do it so well elsewhere....

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