If you've wondered why we can't get fibre to places that got copper almost a century ago, the answer is $16 billion dollars. Is it still worth it though? Credit: Carl Curtain (ABC Rural)

The unpalatable truth of the NBN is that everybody who wants it wants to be on the fibre (including your humble author), but there was never any prospect of fibre reaching 100 per cent of the country.

Australia is big and our most distant communities are very remote. Fibre-to-the-Home is unlikely to ever reach outstations of a few dozen people, who are situated more than 100 kilometers from their nearest telephone exchange. The same political and economic considerations that leave such locations off the electricity grid will, at least for the foreseeable future, deny them Fibre-to-the-Home as well.

However, one of the burning questions for the NBN is "why do 'I' have to put up with fixed wireless?" It's both salient and difficult: near any boundary between fibre and wireless services, it will be straddled by people who are moderately near neighbours.

The angst over fibre-versus-wireless has fed into anti-wireless lobbying, with both individuals and councils arguing either that their community is large enough to sustain a fibre connection, or demanding that fibre be deployed to their community to save them from allegedly-dangerous wireless signals.

Because it sets down the economic considerations that informed the government's planning - and NBN Co's early planning - I'd like to start by returning to the 2010 NBN implementation study. Deep into the study, there are tables and graphs modelling how the per-premises cost of the fibre rollout escalates with increasing coverage.

NBN Implementation Study, page 207



This alone should explain why a line had to be drawn: if the plan had left out the wireless option (fibre to 97 percent of the population, satellite for the rest), the incremental per-premises price would have passed $27,000.

"But there are so few premises: couldn't the cost be spread across the rest of the country?"

Yes, but if the implementation study models were correct, the cross-subsidy to communities now slated for wireless would be enormous. The table below, from the implementation study, lays out the per-premises escalation, but doesn't calculate totals.

NBN Implementation study, page 208



What does this mean in total capex terms? I've constructed a table (below) to calculate it. The assumptions are that each percentile represents 140,000 premises (since by the end of the project, the NBN will reach 14 million premises), and an estimate from the Implementation Study graphs of $12,500 per premises at the 94th percentile.

Escalating capex (original: R.Chirgwin)



There's your answer: $16.3 billion dollars.

The line had to be drawn, because an extra 5% of premises would have represented nearly 50% extra cost to roll out the network.

The image below helps illustrate why: it shows modified outlines (so as not to infringe on Telstra's copyright) of two NSW exchanges, Balmain (upper right) and Windellama (lower). Windellama isn't even particularly remote: its exchange is about 40 kilometers from Goulburn - it's a far more typical example of the line between wireless and fibre than the Kunawarritji outstation in Western Australia (which Google Maps, for example, can't correctly locate).

Map: Windellama and Glebe



The Glebe exchange area packs around 14,000 households into 28 square kilometres; while Windellama's 166 households occupy more than 520 square kilometres.

Unlike nearby Goulburn, there's very little clustering of households within the Windellama exchange - which means the average distance between premises is in the order of 1 KM. The average distance between Glebe's 14,000 households? Just 14 meters - about fourteen hundredths of the spread of households in Windellama.

For most of the country (with the exception of the most remote communities, which are anyway in the two percent destined to receive satellite services), density rather than remoteness is what draws the line between fibre and wireless. Somewhere between Glebe and Windellama is the place where the cost escalated too far.

And - frustratingly for communities - it's often a nearly-instant transition between dense and sparse. Goulburn's roughly 8000 households are vastly more sparse than Glebe's, but are sufficiently concentrated to mean the fibre will arrive one day. The transition to "too sparse" only needs the five kilometres south to the airstrip.

[Editor's Note: the cost of servicing rural communities is also extraordinarily high. It may yet be that the cost can be covered with a Cost Benefit Analysis that factors in the cost of providing healthcare and such like. This would, if not cover the cost of deployment, subsidise it to some degree. We will be covering this over coming months.]

Richard Chirgwin is a Sydney-based telecommunications analyst and freelance journalist, and is Australian correspondent to The Register.