nbn says it must be "cheapest" method. Fifield instead says "cost effective."

nbn CEO Bill Morrow on LateLine

On ABC’s LateLine last night, nbn CEO Bill Morrow was asked why the new “skinny fibre” (a new form of fibre-based broadband technology) wasn’t being used instead of Fibre-to-the-Node (copper based broadband) despite only being slightly-more expensive.



According to the new nbn company, the cost of Fibre-to-the-Node is $1,600 per premises while a Skinny Fibre connection is $2,000. Full Fibre-to-the-Premises was calculated as $2,600 per premises in the NBN Co 2013 Corporate Plan though that figure was expected to drop over time. However, the Coalition Government’s highly-contentious Ergas-analysis ballooned this figure up to $3,700.

When ABC reporter, David Lipson asked Morrow about the seemingly-small difference in price between Fibre-to-the-Node and Skinny Fibre, Morrow said, “So even with a four or five hundred dollar difference, you have to multiply that figure by millions and, worse yet, it’s going to take us a lot longer.”

Morrow didn’t explain how it would take a lot longer but his claim flies in the face of recent internal document leaks which describe how NBN is significantly behind schedule in its FTTN rollout largely due to the long-known bureaucratic and practical issues surrounding electricity companies (who have to connect the power to the nodes).

Most interesting, however, is that Morrow says he told the board about the Skinny Fibre benefits a year ago but that it was still not being rolled out. He explained, “It relates to our remit that comes from the government that is to do it in the fastest way possible at the least possible cost. With that as our overarching direction, our recommendation is to do Fibre-to-the-Node.”

This remit seems to fly in the face of common sense especially as Turnbull has acknowledged many times that fibre is the endgame but that it’s more cost effective to upgrade to it in two stages – the base justification for his Fibre-to-the-Node policy. (Performing a second, nationwide, upgrade rollout would cost dramatically more that $400 per premises.)

The ABC pushed along these lines with Lipson asking, “That remit though is a political remit. Is that getting in the way of the best business model for the NBN.”

Morrow replied, “Well that’s a question you really have to ask the politicians”

That’s just what the ABC’s Emma Alberici followed up with, quoting Communications Minister, Mitch Fifield as saying, “The government had given nbn a clear mandate to find the fastest and most cost-effective way to complete the network.”

This statement doesn’t impose the limits on the nbn company remit that Morrow says exist.

With the dramatic improvements in business, services and revenues that fibre-based broadband affords is it really not more cost effective to switch to skinny fibre instead of following a remit of “least possible cost” (which doesn’t apparently exist) to the letter?