Optus' HFC problems were never a secret, so why did nbn™ need the network?

Someone check in on former senator Stephen Conroy, would they, and make sure he hasn't laughed himself to death?

One of the reasons nbn^TM set the Australian Federal Police (AFP) onto the pugilistic parliamentarian was that documents leaked to him suggested Optus' hybrid fibre-coax (HFC) network wasn't fit for purpose.

That led AFP Commissioner Colvin's Keystone Kops to stage a raid during an election campaign, to obtain documents it can't even look at until the Senate Privileges Committee decides their future.

Yesterday's announcement that the Optus HFC will be ditched (we note that the current US copper scrap price is 75 cents per pound right now) vindicates Conroy's leaker entirely.

It's a good thing, then, that nbn^TM got the network for nothing.

“What's that?” you ask. “Didn't nbn^TM agree to pay AU$800 million for the network?”

No, it turns out. However the agreement was understood – or misunderstood – by the public and the media, the payment was to compensate Optus for having its customers switched to the National Broadband Network wholesale network (as explained to us in here).

While that gives nbn^TM a face-saving hill to die on, Vulture South can't help but wonder why the company spent so much time and effort defending the Optus HFC, and – right up until the cracks first started emerging – including it in the "we can get HFC to gigabit speeds" hype used to justify the decision to drop an all-fibre build.

It took until the November 2015 leaks before the world at large started to hear about the network being in poor condition, but other issues with the network were documented in public.

In March 2008, Optus told the Australian Competition and Consumer Commission (page 10 of the PDF) that of the “2.2 million homes passed” by the network, 800,000 could not be serviced (500,000 of those in blocks of flats).

Some of the “homes passed” were passed by a cable that had never been activated, in some places because Telstra's parallel rollout spoiled the economics, and in other places because the hasty network construction left it with stranded cable runs. Here's a telling excerpt:

“[T]he network was rolled out rapidly without due consideration to its connectivity to the main network in some areas. As a result, the network in some areas was never commercially viable.”

In the same document, Optus said the nodes on its HFC were much larger than Telstra's – in other words, network contention was much higher. Optus doesn't say precisely how many customers were connected to each node, but said the network was unsuitable for VoIP because that required a “maximum number of cable modems of only several hundred per node”.

In other words, Optus ran more than “several hundred” customers per node: to use that network in the NBN demanded substantial re-engineering, and nbn^TM has decided overbuilding the network will be cheaper.

Why did nbn^TM bother?

Prior to Malcolm Turnbull's Multi-Technology Model (MTM) mandate, nbn^TM already had a customer transfer agreement in place with Optus, and in 2014, Optus noted that there was no business need to renegotiate it.

nbn^TM could have ignored the HFC network completely, and connected customers using fibre to the node (FTTN) - if Telstra copper was available – the Optus submission to the ACCC includes a discussion of the overlap) or heaven forfend, fibre to the premises (FTTP) if there was no other choice.

Instead, driven by the MTM mandate, nbn^TM renegotiated the agreement to include the network, only to tell the Senate in March that 500,000 of the homes passed would never get HFC NBN services.

The network could have been ignored: the re-negotiation – which delayed the NBN rollout and added to its cost – was a political, not a business or engineering necessity.

A last laugh for Conroy, even though he wasn't the communications shadow at the last election, can be found in the NBN policy Labor took to the last election.

With no way to reverse Turnbull's MTM and return to a full fibre rollout, Jason Claire instead set down a target to take fibre to 39 per cent of the NBN.

If we accept that fibre to the distribution point is going to get darned close to fibre performance, then it seems reality is converging with the ALP's policy.

Not the government's. It seems that politics is a very poor substitute for an engineer. ®

Bootnote: It would make sense for nbn^TM to withdraw its police complaint about the leaks, but we don't expect that to happen. ®