A SMALL wholesale broadband start-up taking on the might of the NBN has completed its showcase deployment in Melbourne — and says it’s doing it much cheaper than the government-backed project.

The company’s initial network has been a proof of concept which involved a fibre-to-the-premises (FTTP) rollout in parts of inner-city suburbs Elwood and St Kilda using patented European technology.

DGTek — which is one of many small companies trying to provide a wholesale network alternative to the NBN — uses 1Gbps GPON cable (Gigabit Passive Optical Networks) and runs it directly into customers’ homes with the intention of capitalising on the dense population of inner Melbourne.

In partnership with cable manufacturer Prysmian, the rollout began in mid-January and finished earlier this month.

Despite initially wanting to use overhead wiring, “entirely new pit and pipe underground infrastructure had to been installed including a new pit outside each building,” DGTek’s chief operating officer Eli Bekker told news.com.au.

Although small in scale and exclusively servicing a densely populated area with high-rise living, apartment blocks and freestanding homes, the total cost of labour, materials, contractors and equipment has come to less than a $1 million to connect its nearly 2000 customers.

That works out to be approximately $450 per customer, Mr Bekker said.

As the company points out, it’s a number roughly 10 times cheaper than the average FTTP connection rolled out by the NBN.

While that might be true, it’s hardly apples to apples. While NBN Co is guarded over figures, it was revealed last year that it costs the company about $4400 per customer, per FTTP connection. But that number is skewed by the company’s mandate to connect otherwise economically unviable properties.

For example, in a bid to head off criticism last year NBN Co took the unusual step to release a list of the most expensive FTTP connections including one home which cost a whopping $91,196 to connect.

However its costs are certainly higher. In some metropolitan areas, NBN relies on old pay TV cables known as HFC (hybrid fibre coaxial) but NBN’s half-yearly results revealed the cost of HFC connections have increased from $2258 to $2403 per premise. Meanwhile its average cost of a fibre-to-the-curb connection (which could be seen as FTTP’s little brother) is $2900 per premises, according to the NBN’s recent corporate plan.

READ MORE: NBN expands use of fibre-to-the-curb by 440,000 properties

As DGTek looks to expand, if it can gain approval to use overhead wiring instead of digging channels in the ground, Mr Bekker expects connection costs per customer to reduce going forward.

The company has primarily worked with smaller retail internet providers such as Pineapple Net to deliver services to end-users.

In addition to a connection fee between $275 and $500, DGTek provides service with no lock-in contracts that begin at $80 a month for 250GB of data at download and upload speeds of 100 Mbps. DGtek’s top offering comes in at $150 a month with unlimited data and 1000 Mbps speeds.

Mr Bekker said most of the customers had opted for 300 Mbps upload and 300 Mbps download for $129 per month.

DGTek is also able to easily upgrade to achieve huge 10 Gbps speeds when needed.

The company has said it will offer free internet service to any government organisations in their footprint such as public schools and public hospitals as well as non-profit organisations. Mr Bekker said the Melbourne Latvian Society on Dickens St, Elwood has taken advantage of the offer.

“That’s obviously a big cost reduction for them,” he said.

Back in August 2016, DGTek told news.com.au that it had plans to expand throughout Melbourne and further into areas such as Geelong, rural Victoria as well as one day launching in Sydney.

Mr Bekker said such plans continue to be the goal, however the company requires significant investment to expand rapidly and has been selling bits of equity in the company to raise funds to expand.