What does a new government mean to ISPs?
John Lindsay, CTO, iiNet Ltd
• A little iiNet background
• What we know about the Coalition plans
• Why iiNet are NBN fans
• What happens if nothing happens?
• What don’t we know?
• Rocket Science
• Abundance and scarcity
Why the NBN is so attractive to iiNet
Access cost per user ($/mth) for like-for-like 12Mbs broadband and phone bundle - excludes backhaul & transmission and customer usage drivers
A similar access cost equation for on-net (metro) An improving access cost equation for off-net (regional)
Our NBN approach and results
• Over 20,000 customers
• >60% of customer sign ups are new to iiNet
• >50% customer bundle voice and data
• Blended ARPU is ~$70
• 60% fibre, 35% satellite and 5% wireless
• 50% of customers buying higher speeds than 12
mbps entry level product
• Very low fault rate
Positive performance to dateMarketing approach
• Geographically targeted approach to NBN
marketing based on roll out – more cost effective
• Customer communications up to 12 months
from network readiness – “NBN education”
• Active customer management through decision
and migration cycle
Potential stranded investment and ongoing costs
Operating costs include :
• Marketing and brand awareness – national brand presence
• Ordering and provisioning – systems and process
• Customer service and support costs – operating a scale call
• Billing systems processing and management
• Employee support costs across shared services functions
• Product support costs for complex bundles
Establishment costs include :
• Presence and transmission from 121 POI’s
• Points of presence in 7 capital cities
• Establishment of long term inter-city and international
• Customer authentication and management systems
• Developing billing and NBN B2B system interfaces
Operating costs to manage a small national
customer base (say 200k) are $30-40m per annum
Establishment of a national network - $30-$35m
costs to enable a national
NBN network presence
Significant operating costs to
support and service 200k
Analysis excludes direct customer related cost of sales (e.g access fees etc) and operating cost is based on 20-25% of revenue assumption
What we don’t know about the Coalition NBN plans
• Anti cherry-picking – will it be repealed?
• Will we be allowed to extend our fibre networks?
• VDSL2 and vectoring – in 2007 CommsAlliance stopped the standards process after
members couldn’t agree on VDSL2 deployment rules.
• Who is responsible for greenfield connections?
• Will NBNCo be required to meet Customer Service Guarantee for 100% of connections?
• Will FTTN look like wholesale “bitstream” ADSL with obligatory PSTN or like NBN UNI-D
+ UNI-V? Or something else altogether?
• Will FTTN use the same POIs, or more, or less?
• Will NBNCo revise its FTTP product set and pricing?
• NBNCo are building 10 Satellite ground
• Each linked to all the POIs servicing users
• Assume 2% of premise get
satellite, that’s 180,000 households
across 121 POIs so 1,500 total users per
• In theory this avoids “disadvantaging”
business near the POIs running web sites
• In practise the large service providers
only swap IP traffic in capital cities
• Will load unnecessary costs on RSPs
Image credit: William Murphy – Flickr. Creative Commons License.
• When you build something
with abundant capacity and
then limit access to it you
create artificial scarcity, a
• Like the Potato Famine, the
causes are multiple, but we’re
ignoring people who have
been waiting since 2006
(OPEL) for useable, affordable,
• Why have access speed tiers?
• Why have bandwidth based CVC
• We’re paying for it so why can’t
we use it?
• We have a cornucopia of
capacity in new networks but
$20 per megabit CVC charges
will choke the future growth of
broadband services in Australia
Image credit: Sally Oh – Flickr. Creative Commons License.
A new alternative: stripped down FTTH
One Ethernet port (not 4 x Ethernet + 2 x PSTN + Battery)
• Delivers government outcomes – major cost saving and installation time saving...
• Other benefits:
– Removes need for 6 virtual networks inside each NTU (cost saving)
– Avoids permanent single vendor lock-in (competition)
– Allows multi-vendor network hardware deployment (competition)
or NBN could also offer just the fibre port
• RSP can supply router direct to end user
• Again, this reduces cost and timeframe.
• Retail service providers have made significant investment to use the NBN
• iiNet likes the economics, performance and reliability of the current NBN
• The economics of POIs, CVC charges and technology changes are threats
• Satellite economics are going to bite as soon as the POIs shift to regional areas
• Abundance beats scarcity unless you’re a vendor who can control supply
• It’s not too late to change direction on FTTP, reintroduce competition and radically