NBN Co warns of copper network's mounting costs

NBN Co has made its strongest criticism of copper-based broadband yet, arguing it faces mounting operational and maintenance costs for premises it can’t switch over to fibre.

The network operator finally filed a revised 400-page special access undertaking (SAU) on Wednesday afternoon, but the real interest will be in its explanatory notes. [pdf]

These include, among other things, an entire chapter devoted to “the rationale for investing in fibre”, which paints an unflattering image of the enormous costs of operating copper-based services compared to fibre-to-the-premises (FTTP).

The company revealed that fibre-to-the-node (FTTN) fault volumes averaged “approximately 27,000 in FY22, which is nearly four times higher than the average FTTP fault volumes at approximately 7200”.

“This also led to higher truck rolls for FTTN (1.2 truck rolls for FTTN versus 0.47 truck rolls for FTTP per 100 premises),” it said.

On a whole-of-footprint basis, the picture is worse: “Truck roll rates on the FTTN network were between 1.33 and 1.75 times higher per month than on the FTTP network over the same period.”

NBN Co said extra truck rolls were required because “it is more difficult to find a fault location on the FTTN network, and typically requires significantly more civil works and labour to rectify, driving up the average unit rate.”

In a period dominated by natural disasters, FTTN repairs have been especially costly; NBN Co said the “relative cost impact of weather events” in 2021 for FTTN came in a whopping 22 times more expensive than FTTP.

It’s worth noting some of that is likely to be a result of the size of the active footprints. The fibre footprint had 1.625 million active premises in May this year, compared to over 3 million active premises for FTTN.

However, NBN Co said it faced increased operational and maintenance costs for its copper-based network into the future, highlighting the need to upgrade as many of these premises as possible to fibre to avoid future costs.

“Copper-based networks are more susceptible to external factors than fibre-based networks,” NBN Co said.

“Each copper circuit has its own transmission characteristics that change over time due to many factors (e.g., moisture and corrosion, speed variability at distance from node, susceptibility to nearby electromagnetic interference, etc.), creating a complex, unpredictable and challenging operating environment (particularly where the copper is aged). 

“The differences between NBN Co’s fibre-based and copper-based access networks are likely to worsen over time due to copper degradation. 

“This will ultimately have implications for the costs that NBN Co will need to recover from its regulated prices, as well as the service standards that NBN Co is able to offer its customers.”

The company added that “a fibre-based network is therefore less complex as well as less costly to operate and maintain.”

It appeared to make a subtle push for either more funding - or, in this case, favourable regulatory conditions that would enable it to earn sufficient revenue to make more copper-to-fibre upgrade investments itself.

As to what it will cost to upgrade FTTN connections to fibre, NBN Co put a range of $2000 to $3000 per premises, with costs “split 50/50 between street fibre and premises lead-in”. 

It said this cost compared well to the previous user-pays upgrades, where upgrade costs could easily run into the tens of thousands of dollars.

The company also defended deploying copper instead of fibre in the first place, arguing in the chapter, as well as in fine print, that it made financial sense in the short-to-mid term, and also connected customers to the network sooner.