Quigley: Why an all-wireless NBN is pointless

Commercial return a hot topic.

An all-wireless NBN would require five times the total number of mobile cell sites in Australia today to achieve a committed information rate of 5 Mbps, according to "saturday afternoon" calculations by NBN Co.

NBN Co chief Mike Quigley used his brief appearance at the CommsDay summit in Sydney today to attempt to dispel some of the myths and misquotes on the feasibility of different options for the network rollout.

After spending the past few months dispelling suggestions of a move into layer three, today Quigley dismissed the prospect that the NBN could be built using wireless for last-mile access.

Quigley presented a scenario ("we did some sums for fun on a saturday afternoon") in which a wireless NBN would operate on a contention ratio of 5:1 - business grade - and where NBN Co would have access to the entire spectrum allocation to be vacated in the analogue-to-digital TV switchover - known as 'the digital dividend'.

"To get a committed rate of 5 Mbps, you would need 80,000 cell sites," Quigley said.

"We have 16,000 today so we'd need to multiply today's wireless networks by five to get a committed information rate of 5 Mbps to 60 percent of premises.

"And of course if you have 80,000 cell sites around the country, what do you connect them up with? Fibre. So you still need ubiquitous fibre."

In contrast, NBN Co would deliver speeds of 100 Mbps to 90 percent of homes via fibre.

"It's no accident that fibre-to-the-premises is happening on a worldwide basis," Quigley said.

No returns

Quigley also addressed reports on the back of his appearance in front of the NBN Senate Select Committee last week that suggested the NBN would achieve no commercial return for up to 30 years.

"The suggestion that we won't generate a return for 30 years is wrong," Quigley said.

"We will generate a positive return on our costs - that is, be EBITDA positive - before the end of the construction period. We'll recover yearly costs including capital expenditure - become net income positive - a few years after that.

"We'll also be building the project so we repay the Government's equity contribution within the normal life of a telecommunications project - that is, a 20 to 30 year period I think."

That suggestion was later disputed by Pipe Networks chief Bevan Slattery who believed a commercial return was out of the question if the network ended up costing in the region of $43 billion.

"In Australia you can't get a commercial return on building out a $43 billion network. You can't do it," Slattery said.

"Don't play cute, generate spin or bulls--t. Trying to draw out a 30-year payback period, whatever, that's not a commercial return."

Slattery believed such a realisation could force the Government to back away from its commitments for the network, including that it would reach 90 percent of homes with fibre, and also over proposed ownership regimes.

"If [the Government] proceeds with NBN regardless, I don't know if we'll get to the 90 percent. When this thing is not paying out I think that will be a problem," Slattery said.

"The Government ownership of NBN Co could also be 100 percent - prepare yourself for that. I also don't think they will sell out their stake in NBN Co because [the buyer] could not get a commercial return."

The summit continues today.