NBN Co willing to move on points of interconnect

The "inventor" of NBN Co’s controversial point of interconnect plan said the architect of Australia’s next-generation fibre-to-the-home network may change its tune on where and how many access points it offeredfollowing consultation with industry.

Speaking to the IQPC Smart Grid Forum in Sydney today, NBN Co general manager of design and planning Peter Ferris, pictured, said networking operators grousing about the unfairness of the 14 points of interconnect (or PoIs in industry parlance) were doing so because they have "made an awful lot of money over a long period of time" and didn't want to shake up the status quo.

The PoI plan was met favourably at the Australian network operators' conference in September but has since been the subject of criticism from the Opposition and mainstream media. 

But Ferris said the new regime would make it easier and more profitable for ISPs to enter the market to provide innovative services.

A PoI is the point at which wholesale service providers and retail service providers or ISPs connect to the NBN and exchange traffic. They were intended to be built in five capital cities and could be expanded as needed. They serve a similar role albeit on a grander scale to a Telstra telephone exchange on the copper access network. NBN Co would use the PoIs to charge the same rate for all traffic no matter where it originated or wound up.

Ferris said he took as a “compliment” the faint praise the PoI proposal received from some quarters.

“Some feedback we got says the solution proposed was an elegant engineering solution, I take that as a compliment because I invented it,” Ferris told energy industry heavyweights gathered to hear how the fibre-network operator could ease their load in rolling out new energy infrastructure that some predict will hit a bill of $130 billion over the next decade. 

“But the framework put out there was put out for consultation to look at what the industry feedback was - to get that balanced view."

But that view was being dominated by backhaul operators to the exclusion of ISPs, he said, who were getting in the way of NBN Co's mission of  "fundamentally restructuring the industry".

"Telstra, Optus, Nextgen, the guys with transmission networks in capital areas, they have all said they don’t like it because for them it changes their business model and takes away the opportunity for them to make more money," he said.

"Unfortunately, we haven’t had the 600 [ISPs] all speak up and say - this gives us the ability to deliver ubiquitous services across the country. They haven’t stepped up.

"So in terms of the feedback that’s come through the ACCC and registered on the website, there has only been three of the small ISPs [including] iiNet and Primus, who have actually put in a comment."

Ferris said that if the backhaul networks were working as well as NBN Co critics claimed, "you wouldn’t have an issue where the Government would have to invest in a regional blackspot network and pay Nextgen to put in capability".

"They’d put it in to make money, they’d put it in."

But they won't "because you can't make money" on such infrastructure unless the taxpayer is willing to stump up the bill, he said.

"Australia’s a huge country, to join [it] together with fibre infrastructure is a very expensive business."

Ferris said that NBN Co would "execute" Government directives but "did not make policy", which meant it would "absolutely" change its interconnect proposal if the tide of submissions and public opinion was against its technical solution and it received that direction from the Government.

What NBN Co builds depends "on what policy is set by DBCDE [department of broadband] and our shareholders.

"NBN Co does not make policy, we execute policy," he said. "From an NBN Co perspective, we welcome the industry consultation. We will put a joint paper up to the ACCC, to the Minister to get policy. When we have that policy, we’ll execute that policy."

But telecoms analyst Paul Budde has defended the backhaul operators who he said have a right to be fearful that their infrastructure investment will be "stranded".

"It doesn’t make strategic sense to now force that issue with a plan that most players don’t agree with," Budde wrote today in the online journal Business Spectator.

Budde, who was also a keen proponent of smart grids, was "disappointed" that industry forums weren't used to further the conversation but believed the interconnect issue would be resolved to enable the NBN to proceed.

And NBN Co was looking for 30-year leases on "dark-fibre" [excess optical lines in the ground] especially in capital cities, Ferris said, and anyone who "wants to make a little bit of money" should come to talk to the network architect. 

These "indefeasible rights of use" were the only way a wholesale provider such as NBN Co could economically shore up coverage in central business districts; it was not interested in paying for data, he said.

He said "no one has the volume of fibre" NBN Co needs, "not even in the CBD".

"They still don't feed every unit, location or apartment in the CBD."

But he said NBN Co was "very, very willing" to "rent anybody’s network that has fibre in the right place".

Flick the page to find out how the power companies and NBN Co are teaming up to upgrade your premises.

Using the NBN for smart grids

The energy industry, faced with rising capital spending costs that may dwarf the NBN, was looking to offset costs especially around providing command-and-control infrastructure to every household and business.

Industry voices at the conference told iTnews that it made sense to partner with NBN Co, which was passing every house as it rolled out over the next eight years. In that way, energy providers - generators, distributors and retailers - may defray or reduce spending.

But while Ferris was pitching to the power industry, he said that NBN Co's prime responsibility was to the broadband network and that it wouldn't compromise or increase its costs if the utilities couldn't get their act together.

For instance, NSW power provider Energy Australia was building a WiMax wireless network to control its smart grid deployment and connect 1.6 million households - a network that was of little use to NBN Co, Ferris said. Energy Australia general manager of engineering Geoff Lilliss later said that "interoperability with the NBN has quite strategic possibilities for the [power] industry" because it made sense to install customer-premises equipment for both projects at the same time.

Energy Australia general manager of engineering Geoff Lilliss

"There are many, many different networks that exist in the country today," Ferris said. "We smile and nod and say thank you very much but we’re building a delivery network that transports data to 100 percent of the premises.

"How does it (Energy Australia's WiMax network) fit? It doesn’t." 

"An ambitious project" delayed by the elements

Ferris admitted that rains and physical obstacles had slowed the building of the network - it was running about two months behind schedule owing to unforeseen issues.

"We need to ramp up to 1.5 million homes passed a year," Ferris said.

"That's roughly 6000 a day.

"If it rains, we gotta catch up. If we miss something, we gotta catch up. It's what they call an ambitious project."

He said that when NBN Co hits its stride, 20,000 to 24,000 people will be involved in construction.

"Funnily enough, when you're digging out there with all this gear down each street and it starts to rain you've got to stop work so we're a little bit behind where we'd like to be and would have liked to have the passive [optical transmission gear] finished by now; it's not.

"It won't be finished until the end of January [due to] delays with, funnily enough, rock.

"We encountered a little bit more of that in [early-release site] Minnamurra than in other places."  

iTnews is a media partner of the IQPC Smart Grids forum.

More connection points means more business for backhaul operators while less points means ISPs will be the prime beneficiaries of the NBN. Who should get the easier run - wholesalers or retailers? Which plan delivers the best returns for Australia? Tell us how many PoIs there should be and where they should be located in the comments below.