Optus weighs in with plan for broadband
by: Mitchell Bingemann
From: The Australian
September 12, 2013 12:00AM
OPTUS is considering plans to front the construction costs of laying fibre across the last mile of the Coalition's fibre-to-the-node plan, allowing consumers to get it direct to their homes on multi-year broadband contracts.
The plans, which have been under consideration for months, would allow Optus to amortise the costs of laying fibre to homes over multi-year contracts, similar to how mobile phone contracts are set for two years.
The theory is that by subsidising the cost of laying fibre to homes — which the former Labor government said could cost as much as $5000 per connection — Optus will be able to offer plans that lock in customers on long-term contracts.
Informa analyst Tony Brown described the play as a "ground-breaking idea", but warned that it would depend on a number of factors falling into place.
"First, Optus will actually need the Coalition to turn the NBN around and to start installing and activating nodes — that's probably about 18 months away at least," he said.
"Second, this sort of idea really works best if done on a neighbourhood basis; the economics just don't work if only the IT geek at No 37 orders it because he is going to be paying a fortune for the connection."
Steve Dalby, the chief regulatory officer of the nation's No 3 broadband provider iiNet, said the telco had not considered funding fibre connections for consumers, but he would not rule it out.
"Without more detail from the Coalition it's hard to determine if this would be viable. Maybe we will look at the option, but we haven't done so yet," he said.
Mr Dalby warned that there would be some hurdles in locking in consumers long enough to recoup the expensive cost of laying fibre along the last mile.
"People change residence regularly in Australia so that could be a big problem. If you move house, it could incur large break fees. It would probably make more sense for businesses to do this, though," he said.
Optus has been toying with the idea since the Coalition announced its NBN policy earlier this year.
Under Labor's NBN plan, a fibre network was being rolled out to 93 per cent of the nation's homes and businesses.
The Coalition, however, plans on scaling back the NBN fibre deployment to cabinets on street corners and retain copper connections to homes.
While cheaper and quicker to roll out than Labor's plan, the Coalition policy will deliver slower download speeds.
The Coalition says that by 2019 it wants at least 90 per cent of consumers in the fixed-line footprint on 50Mbps.
For businesses and consumers dissatisfied with lower speeds under the Coalition plan, it has promised a "fibre-on-demand" option where users pay for fibre from the node to the premises, which would usually be less than 800m.
Incoming communications minister Malcolm Turnbull has said that in Britain, a product offered by BT Openreach, known as "fibre on demand", costs a customer living 500m from a node pound stg. 1500 ($950).