nbn, the company responsible for the rollout of the National Broadband Network (NBN), has just released its financial results for the last financial year. After heavy scrutiny and relentless criticism over the past year, nbn was determined to show the public that the NBN deployment is well on-track, that the company was financially viable and that FTTN is the right technology for the network. Here's what you need to know about nbn's financial results.
nbn really needs some good publicity. The company couldn't catch a break as it forged forward with the use of mixed technology (MTM) with fibre-to-the-node (FTTN) as the star of the show. Technology-savvy NBN critics have vociferously voiced their opposition to FTTN as it still relies on outdated copper technology. The better option, albeit a more expensive one, is a full fibre broadband network.
Former nbn chief Mike Quigley, said it's not too late to revert back to the original fibre-to-the-premises (FTTP) NBN plan, but as the company showed in its financial year 2016 presentation, it will not be budging on FTTN.
nbn has announced that in the last financial year, it has exceeded all expectations, both in revenue and in rollout progress. According to its presentation, nbn has doubled the number of premises that are ready for service to 2.9 million. It has more than doubled the number of activated end users (1.1 million) and, more importantly, doubled its revenue to $421 million.
nbn chief financial officer Stephen Rue attributed the revenue growth mainly to increased uptake of NBN services and the jump in average revenue per user (ARPU) from $40 to $43 in the last financial year.
While FTTP services is still the breadwinner of the MTM family, since parts of it was already rolled-out before new management arrived, nbn has lauded FTTN (and to some extent, copper) as the technology driving the company's success.
"FTTN is delivering exactly what we needed and we are able to scale up deployment from 25 million to 100 million," Rue said in the presentation. "Copper only required modest remediation, which is in line with our expectations."
He then proceeded to show that, since it was first launched in September last year, FTTN already has 119,694 active users. FTTP active users sit at 822,652. Fixed wireless was at 117,514 while satellite users came in at 38,764.
FTTN was also praised as the cost-effective technology to use for the NBN. The company pointed out that FTTP deployment cost per premise for brownfield and greenfield areas was $4411 and $2608, respectively. Meanwhile, FTTN only costs $2257 per premise, way below the expected cost of $3200 per premise.
"FTTP is significantly more expensive; FTTN is 49 per cent cheaper [than FTTN brownfield deployments]," Rush said and pointed to the quicker rollout time of FTTN as well.
nbn also tried to dispel concerns over FTTN's inferior performance compared to FTTP by showing a breakdown of user uptake based on download and upload speeds:
|Fixed Line speed tier mix (upload/download by Mbps)||As at 30 June 2015||As at 30 June 2016|
As you can see, uptake for NBN packages at the slower end of town remained popular while higher speed plans stagnated. nbn does recognise that data consumption of users have jumped in the last financial year but said there was still little demand for higher speed NBN plans.
"The thing I want to point out is that we did some research of companies overseas — Google, Comcast, AT&T and so on — to ask about their Gigabit per second services and asked whether there was a lot of uptake. The answer was no, but they offer them as a market competitive element," nbn chief Bill Morrow said. He noted that while demand for such high speed services may increase with the advent of virtual reality and higher resolution media content, it's anybody's guess when this will actually happen. But nbn said its prepared to meet the demands in the future.
Morrow also addressed ongoing commentary about how the NBN should be deployed and criticism about FTTN:
"We know we are doing something important and vital for Australia. WE know there are many opinions on how this should be done but we have been given a remit to deliver the network as fast as possible and at the lowest possible cost. "… People talk about Australia falling behind in [internet speed rankings]. That is not a reflection of the NBN and the technology behind it. It's a reflect of the ADSL circuits that are around and how we did nothing with those circuits while other countries [upgraded their infrastructure]. We are confident we will be competitive with those countries [through the current NBN rollout]."
You can find nbn's full financial results for financial year 2016 here.