Following the failure of the coalition broadband policy at the 2010 Federal Election, opposition spokesperson Malcolm Turnbull has begun strongly advocating a Fibre To The Node (FTTN) / Fibre To The Cabinet (FTTC) / Fibre To The Basement (FTTB) alternative, which he claims would be cheaper than the Fibre To The Premises (FTTP) NBN, but just as good. So, why not?

The Concise explanation

• FTTN is a short-term “stop gap” using old technology

• Most countries that have installed FTTN are now replacing it with FTTP (ie: To the same system as our NBN plan)

• The investment in FTTN would be largely wasted when the inevitable upgrade to FTTP is required

• FTTN would be almost as expensive to implement in Australia as FTTP

• FTTN’s Speed-to-Price ratio is poor

• FTTN delivers vastly different performance levels depending on location

• FTTN delivers very low upload speeds

The Detailed explanation

FTTN is a short-term, “stop gap”, using old technology

FTTN is not a new technology, having been rolled out in many areas of the World for over 5 years. Indeed, Telstra proposed this technology for Australia way back in 2005, but their pricing and competition model was rejected by the ACCC, and they decided not to proceed. If they had decided to proceed, there’s no doubt that the urgent need for the NBN would be greatly reduced. FTTN was certainly excellent technology for 2005.

But we are now in 2011. The short effective life of FTTN is becoming apparent, and countries which previously installed FTTN systems (like Germany, New Zealand and the UK) are now gradually replacing their networks with Fibre to the Premises (FTTP).

So Malcolm Turnbull is effectively suggesting that we roll out a cheaper, short-term network instead of leap-frogging it for the NBN. He’s suggesting we roll out a network that other countries have already decided is inadequate, and are replacing. And that is the first crux of the FTTN debate: It is unarguably a stop-gap solution. Even manufacturers of FTTN equipment say this, admitting they expect FTTP to be the standard within 10-15 years.

Given that it will take 10 years to roll out FTTP in Australia, to step backwards to FTTN at this stage would be an incredible waste of time and money.

In New Zealand, their relatively new FTTN network only delivers an average peak speed of 13Mbps for its users. This is only 40% higher than the current average speed available in Australia, and a fraction of the initial speeds available over a full FTTP network.

Any investment in FTTN would be largely wasted when the inevitable upgrade to FTTP is required

FTTN isn’t really a pathway to later upgrades to FTTP. Most of the systems deployed for FTTN will not be reused, and so would be wasted. FTTP uses about 1/3 the number of street cabinets as FTTN, and those cabinets are about 1/4 the size of FTTN cabinets (Think esky versus refrigerator). FTTP nodes also don’t require electrical power, unlike FTTN cabinets. All of the DSL systems that go along with FTTN are also wasted.

All of the considerable labour costs of rolling out FTTN, such as fibre installation, cabinet installation, electrical labour, fibre splicing, copper upgrades etc are all wasted when moving to FTTP. Worse, it will cost more money to remove the redundant FTTN architecture and electrical systems when FTTP is rolled out.

The only portion of an FTTN network that could potentially be reused would be sections of the fibre run to the nodes. But even this would have to be cut, added to, re-spliced and extensively modified to upgrade to an FTTP system.

In other words, FTTN will cost money to roll out, have a short useful life, and cost more money to remove and replace. Of the estimated network cost of FTTN of about $15 billion, almost none adds any value or reduces the expense of a future “upgrade” to an FTTP system, so it’s money down the drain.

To quote Mark Newton from Internode:

“FTTN doesn’t bring FTTP any closer, but it does push it several billion dollars further away….there’s no upgrade path from one to the other. This notion that FTTN is a “stepping stone” to something else is pure fantasy. If an FTTN network is built you’d better like it, because it’ll be around for a long, long time to come.”

In practise, FTTN would be almost as expensive to implement as FTTP

While in theory FTTN is a cheaper option, that only applies if it’s done by the incumbent telecommunications provider. In other words, Telstra. Without Telstra’s co-operation, an FTTN network would likely cost almost as much as the NBN.

According to The Australian Government, assorted communications consultants, and former Telstra executives interviewed for a 4 Corners programme on the NBN, the total cost of an FTTN network covering ~95% of Australia would have been $30-35 Billion dollars. This comprised $15 billion for the network construction, plus a further $15-20 billion for compensation to Telstra for taking their copper network.

Considering the total NBN cost is $36 billion (including several billion for rural wireless and satellite services), spending $30-35bn on a vastly inferior FTTN system is hugely inefficient, without even considering the fact that additional funding would be required for wireless and/or satellite services for the final ~5%.

FTTN’s Speed-to-Price ratio is poor

To support his argument, Malcolm Turnbull cites a 2007 Alcatel Lucent paper entitled “Deploying Fiber-to-the-Most-Economic Point”.

Even leaving aside the cost of procuring Telstra’s copper network (discussed above), the paper reveals that to deliver a 25Mbps FTTN network would cost 50% of delivering a 72Mbps FTTP network. In other words FTTN is far more expensive than FTTP on a cost-per-megabit scale, costing 50% less money but delivering only 35% of the performance.

The paper also reveals that deploying FTTP in greenfield estates (ie: new housing developments) costs the same as FTTN. In fact, it specifically says “The lowest cost solution with the highest bandwidth in a greenfield, single dwelling unit application is PON (FTTP)…. Due to its bandwidth superiority, PON should be deployed in greenfield, single dwelling unit situations with rare exception.”

For Brownfield overbuild situations (ie: existing premises), it’s support of FTTN is based on three major assumptions:

1. It assumes that there is no cost to access the existing copper network; and

2. That it is only suitable for “modest bandwidth needs, [of] less than 40 to 50 Mb/s”; and

3. That it’s suitability is “predicated on the maximum anticipated distance between the subscriber termination and FTTN system…[being] kept within the acceptable limits of rate versus reach”.

In other words, Malcolm’s plan doesn’t make any economic sense whatsoever. Any Government plan requires payment to Telstra to access the existing network, adding costs. There is no chance that a network providing “less than 40Mbps” will meet requirements in 10 years time, and in our sprawling suburbs, the chance of keeping nodes within the “acceptable limits of reach and rate” are very slim, and add additional costs.

FTTN delivers vastly different performance levels depending on location

While FTTP is essentially unaffected by distance, the same cannot be said for FTTN. For that system, the achievable speed is all about distance. Take a look at this graphic, showing the speed dropoff of various DSL technologies over distance:

The above speeds for VDSL2 assume 2 pairs of copper wire (known as bonding), which most homes in Australia don’t have and VDSL1 speeds are over coaxial cable. They should be (approximately) halved for a single copper pair. Therefore:

• At 100m, FTTN could deliver about 100Mbps

• At 500m, that drops to about 50Mbps

• At 1km, it drops to about 25Mbps

Remembering that the distance is the actual copper length (not as the crow flies), a typical FTTN system would deliver maximum speeds of less than 25Mbps, which is in line with the NZ experience of 13Mbps average.

FTTN delivers very low upload speeds

One of the major drawbacks of FTTN is upload speeds. In the case of ADSL2+ FTTN deployments, these are a maximum of about 3Mbps. In the case of VDSL2 FTTN systems, they are typically about 8Mbps. Again these speeds are dependent on distance, so the further you are from the nose, the lower the speeds become.

The NBN will offer upload speeds of up to 400Mbps.

The importance of upload speeds is often overlooked, but it is a vital component of any interactive broadband connection. Whether it be two-way, high quality video communication (such as for conferencing, eHealth or remote learning), for cloud computing services/remote backups, or for telecommuting.

FTTN does not provide sufficient upload speed for any of these services to be delivered effectively, especially as file sizes and bandwidth requirements grow into the future.

The Bottom line

FTTN would have been a great idea 5 years ago. But now, it’s out of date. Countries around the World are already beginning to replace their FTTN networks with FTTP. The NBN is our opportunity to leapfrog these countries, and save the billions of dollars associated with the double-upgrade. Economists have been suggesting we do this since 2007!

FTTN, while an incremental improvement on what we have now, is a short-sighted waste of time and money that will still leave Australia lagging behind the rest of the developed World, squandering billions of dollars on obsolete technology in the process.