NBN Co. just dumped its $800 million Optus cable plan

Photo: Getty / File.

The National Broadband Network has just done a $800 million backflip.

After insisting that Optus’s old hybrid fibre-coax infrastructure could be used for the NBN, the government-owned company announced yesterday that the network would be dumped from its plans.

In 2011 NBN Co. cut an $800 million with Optus to de-commission its HFC (Hybrid Fibre Co-Axial) – the original pay TV network rolled out in the 1990s – which covers around 2 million premises and transition them to the NBN. Three years later, NBN Co. revised the deal to include the option of using parts of the Optus HFC network in the broadband network.

The NBN had flagged HFC as playing “a critical role” in its network for around four million premises, mostly in our capital cities, using the old Optus and Telstra HFC networks.

Now, the company cites cost and efficiency of bringing the Optus HFC up to NBN standard as the reason for the change in strategy, impacting on 700,000 premises.

The change of heart is even more embarrassing for the NBN because last November the company dismissed concerns about the state of the Optus infrastructure after a leak exposed its dire condition.

That leak led to the politically-charged AFP raids on retiring Labor senator Stephen Conroy, the former minister in charge of the NBN, and his office, in May as the federal election got underway.

Labor hit back today, with communications spokesperson Michelle Rowland saying “this confirms what everyone already knew – that the HFC network was a lemon and could not deliver the broadband speeds and quality Australians expect and deserve”.

She added “every assumption made by Malcolm Turnbull in formulating his second-rate NBN has been proven wrong. NBN Co has now conceded that upgrading the Optus HFC network would have been too expensive and taken too long.”

The $800 million rethink in the NBN Co.’s $50 billion-plus rollout comes as the last tranche of $8.8 billion in $29.5 billion in public funding set to be delivered by the end of the 2016/17 financial year.

The $29.5 billion figure was the Coalition’s initial cost estimate in the lead-up to the 2013 election under then communications spokesman Malcolm Turnbull. Since then, cost estimates for the project have jumped twice – first to $41 billion after a strategic review in 2013, and more recently to between $46 billion to $54 billion under the 2016 corporate plan.

The company now needs to raise between $16.5 billion and $26.5 billion to complete the rollout.

After ditching the Optus network, fibre-to-the-distribution-point (FTTdp) will be rolled out in its place. This solution, which brings fibre to the “kerb” with the last connection into the home on the existing copper phone line, is somewhere in between Labor’s original all-fibre proposal and the Coalition’s preferred fibre-to-the-node system.

“When we consider the advancements we’ve made in FTTdp, combined with the up-to-date learnings we have on the Optus HFC network, nbn has confirmed it will deploy FTTdp in those areas where the use of the Optus HFC network was planned, with the exception of the already launched network in Redcliffe, Queensland,” said NBN chief network engineering officer Peter Ryan.

While the former Labor government had originally planned for Optus HFC customers to be migrated to the NBN, the agreement with Optus was revised to actually use the HFC infrastructure as part of the NBN network under the Coalition.

The leaked document last year showed the Optus HFC was not “fit for purpose” and that considerable investment was needed to replace ageing equipment. The report also showed the NBN was considering spending another $375 million to replace the HFC.

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