The Real Story Behind NBN's HFC Delay

NBN Co's announcement last week that it would cease selling services on its hybrid fibre-coaxial (HFC) network has revealed one of the biggest errors in judgment the company has made under a Turnbull-Abbott led government.

The government-owned NBN Co blamed "interference" — which was leading to dropouts and unacceptable broadband service on a minority of users' services — for the decision, which will result in an average delay of between six to nine months for millions of households looking to sign up.

But NBN Co first discovered that interference might become a problem down the track in mid-2016, Fairfax Media has learned, when the first HFC asset transfers occurred between Telstra and NBN Co.

At the time, NBN management made the risky judgment call that it would not be a huge an issue. While it suspected that interference would cause some headaches in the rollout, NBN management didn't fully realise the extent to which Telstra's HFC network was in need of repair, or in the words of NBN Co engineers and management, "optimisation".

Regardless, NBN ploughed through activating premises and dealing with issues later, until they became too large to ignore. NBN had originally envisioned doing network repairs once the network was in full operation and had been released for sale to service providers. To this point, the optimisation work had been part of its post-activation servicing rather than part of the construction schedule.

Of course this isn't what ended up happening, and now optimisation work — or repair — is having to be conducted in many areas before HFC services are released for sale.

While NBN data showed that only 1 per cent of end users were reporting faults via their service provider, alarm bells began to ring after an internal NBN Co commissioned consumer satisfaction survey found up to 15 per cent of users were scoring their HFC service close to 0 out of 10, meaning that they were having the absolute worst time on HFC but that their provider wasn't necessarily reporting it as a fault to NBN Co.

Furthermore, some affected users were high-profile, inner city journalists who began making their voice heard on social media. Given this and the reputational damage it was starting to have on the NBN, and with the HFC fault rate increasing by the day as more users were activated, NBN Co decided late last month to finally act. It advised the Communications Minister the week prior to its announcement that it would imminently announce the delay.

A letter was sent to the minister on Wednesday November 22, one day before a senate estimates hearing where Labor was set to quiz management on the NBN and the issues it had faced to date. The matter didn't come up during the hearing. NBN then announced the delay the following Monday.

What is causing the so-called 'interference'

The interference on the network is caused by three separate issues. The first is that the spectrum NBN acquired from Telstra (15-40MHz spectrum) is not, according to critics, designed to be used for super-fast broadband. This leads to the second issue, which is that the spectrum is far more prone to interference. While some Telstra HFC customers were having a great broadband experience prior to being switched over to NBN HFC, this became worse after the changeover, because of the new NBN spectrum they were placed on.

This interference occurs in the joints — or the "taps" as they are called by engineers — between the HFC cable in the street pit and the cable that goes to your house. Because of their age, some of these are deteriorating, causing so-called "leaks". And because HFC networks are a shared service, these leaks then spill over into your neighbours' connections as well, causing their internet to potentially drop out and speeds to deteriorate as well.

The third interference issue is the wall-plate in peoples' homes being damaged. The most common way this can occur is by household objects, most often vacuum cleaners, running into them and damaging them. This then causes the same issue as the first, leading to dropouts and slow speeds, sometimes for your entire neighbourhood given there are normally 400-550 people connected to a HFC node (they can handle up to 650).

Although the same HFC spectrum is used by other global operators, including cable TV players, they are able to use the spectrum successfully because they keep their networks tight and therefore keep interference to a minimum, the plan NBN is now moving to.

The main issue, it seems, was that NBN was activating HFC users faster than it could deliver the required network repairs to combat interference.

NBN Co recently examined an area with 100 users and found that in two thirds of cases, it could reduce the noise to a satisfactory level by just fixing the taps. For the other one third, or 30 cases, it is likely that it may need to enter the homes to fix wall-plates or replace the HFC cable between the street pit and house. Alternatively, it may choose to "isolate" users' connections by splitting them off a cable run to reduce noise on their neighbours' connections.

According to the financial modelling used by one of NBN's corporate plans, the impact such a delay would have on NBN peak funding is between $423 million to $790 million.

Meanwhile, Telstra cut its expected earnings for fiscal 2018 by $600 million as a direct result of the announcement. Despite this, Telstra chief executive officer Andrew Penn "applauded" the NBN's decision to delay, claiming that, while it affected Telstra financially, the implications would not be "long-term" and were in the interests of providing a better service for customers.

A critic would argue, however, that NBN Co is potentially now spending a lot of money repairing a network that wasn't fit for purpose in the first place.

Remember how NBN Co dumped the $800 million Optus HFC network due to it not being "fit for purpose"? While the reasons were different (it was becoming increasingly expensive to connect the network to the NBN points of interconnect, often in Telstra exchanges, while also being "oversubscribed" by Optus, meaning it would lead to congestion issues), the delay to HFC and inevitable cost blowout gives Labor further firepower to question whether re-using an ageing network in the first place was such a smart idea.

As independent telecommunications analyst Paul Budde said earlier last week in an email entitled The next NBN debacle, "the problem with the NBN multi technology mix (MtM) policy is that they are using old technologies. And if you are going to upgrade this you will come across lots of nasty surprises, as already has become clear in relation to the FTTN part of the project".

Budde continued: "Some parts of the cable infrastructure is even more than 50 years old. In relation to the HFC network, this dates back to the 1990s, so also old infrastructure."


This article originally appeared in Digital Life, The Sydney Morning Herald's home for everything technology. Follow Digital Life on Facebook and Twitter.

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Comments

    Coaxial connections will also oxidise over time and need replacement. I've had HFC in the past and experienced this. The tech advised this was their main reason for call outs. Just 1 of many..many issues with a copper network.

      Properly installed coaxial connections don't. Few people take the time to properly seal the connections. It depends if you build a network for 5 years or 20 years.

    You know, being sneaky about all this, really isn't going to help their brand, it's already pretty tarnished.

    So the real story behind the delay is pretty much what everyone thought it was when MTM was announced.

      Now only if we had done a postal survey would they of listened to us! Cause doing the obvious thing requires conviction of saying "We suck at our jobs, let the people decide"

        If they could make a secure voting portal (base it off my.gov.au ) they could survey a large percentage of people quickly for next to nothing.

    "The first is that the spectrum NBN acquired from Telstra (15-40MHz spectrum) is not, according to critics, designed to be used for super-fast broadband. " It's not according to "critics". Critic is a really poor choice of word, implying it's an opinion when it's really an indisputable fact based on physics. The low frequencies propagate really well down cables which is about the only benefit. It looks like a reasonably broad range if you don't really know what you are looking at, but it's still only 25MHz of bandwidth which is equivalent to half the 2.4GHz wifi band (not quite 2 wifi channels) so they have to use really complicated modulation to jam lots of data down, the more complex the modulation the less noise tolerant it is. That band is also littered with garage door openers, cheap remote control cars, cordless phones, AM CB radio, the top end of the HF radio spectrum (which has really beefy transmitters), it's a real lemon. They should have used the 700MHz band which is rather quiet, a huge range and actually used to be TV channels so the coaxial network is ideally suited to carrying it but the carriers want that for LTE. Bear in mind this is a multidrop network, so you're sharing the equivalent of ancient wifi with how many other customers on the same branch? It's never going to work well.

    Some areas earmarked for HFC roll-out and status "Service available" has now been rolled back to "Planned availability: Upgrading the network*".
    Whilst this new 6-9 month delay is affecting these houses earmarked for HFC connections, this to my knowledge and research does not apply to MDU's. I have not come across any MDU as yet getting connected to HFC. So I fired of an email to NBN Co and specifically asked about this.
    Needless to say they probably just triggered the 'default' reply which meant they haven't even read my question in this regard. This NBN circus is really starting to %^& me off.

      I live in a MDU in Surfers Paradise. Its 14 floors and aprox 135 units. We never sadly had Telstra HFC to units and couldn't get Foxtel or even Austar. As our area was a NBN HFC area, the NBN decided to backbone our entire building and run coax cables to every unit. It took nearly a month. NBN paid for all of it, the Body Corp were not charged a cent. The area was due to be active in January 2018, but now has the delayed 6-9 month message instead. The good news is that earlier this year we got TPG FTTB installed. The work took about 3 days in total and its fast, reliable, cheap, unlimited and never slows in the evening. I just can't understand why NBN would think its best to cable highrise buildings from top to bottom with old technology cable. Its such a waste of money. TPG are far better at this.

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