Optus-NBN deal would make 'total sense', says Budde

By Ry Crozier on Oct 6, 2010 2:15 PM
Filed under Telco/ISP

NBN Co thirsts for customers and engineering skills.

Optus labelled reports that it was in "advanced talks" to transfer its cable customers to the National Broadband Network as "speculative" but at least one prominent analyst believed a deal made "total sense".

The Australian Financial Review reported today that Optus' 425,000 hybrid-fibre coaxial (HFC) customers could be moved to the next-generation fibre network, although it did not cite a source or support its claim.

Rival Telstra will transfer its cable broadband customers to NBN Co in an $11 billion draft deal announced in June.

Optus did not deny that it was holding discussions with NBN Co but disputed the extent of the discussions.

"The article in today's AFR is speculative," an Optus spokesman said.

"Like all retail service providers, Optus is engaged in ongoing discussions with NBN Co, DBCDE [Department of Broadband, Communications and the Digital Economy] and the industry more broadly around next steps for the NBN."

Telecommunications analyst Paul Budde thought it likely that NBN Co would be interested in Optus' customers given the Government company's deal with Telstra.

"The Government has to do similar deals with other providers," Budde said.

"They can't just favour Telstra."

Budde speculated that NBN Co could also be interested in securing the services of Optus' engineers.

"They're likely to be interested in [Optus'] customers and what infrastructure skills and services Optus has that NBN Co can use," Budde said.

"If that's the case, there could be an outsourcing or leasing contract... where Optus is providing infrastructure services along those lines."

Budde did not think that NBN Co would also be interested in recycling Optus' cable.

He said that about 80 percent of the such networks in Australia were duplicated (known as "overbuild" in industry parlance), a result of Telstra and Optus following each other down the same streets in the '90s before the wasteful practice was halted.

"There would be a lot of duplication [with Telstra's cable network]," he said.

Even if NBN Co was to sort out which HFC cable assets were most useful, it wouldn't be as easy as ripping and replacing the coaxial cable with fibre to ready its network for the NBN, he said.

The ageing fibre sections in HFC networks could also need replacing.

"They [NBN Co] have to be very specific about what fibre is in the ground before they can start making sensible positions on what they can and can't use," Budde said.

Optus-NBN deal would make 'total sense', says Budde

8 comments in this discussion

"Ezy2Confuze Re: "1.) I thought the $11 billion was to allow access to Telstra's Exchanges, pits etc to allow easier laying down of cabling?" The deal was always much more holistic than that. ..."

By Mike_Sadler

Tags

optus, nbnco, nbn, broadband, advanced, talks, afr, hfc, cable, customer, transfer, budde

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Comments: 8

epimetheus Oct 6, 2010 5:03 PM	"NBN Co thirsts for customers and engineering skills" In my view they are not only thirsty but starving also. Starving for someone with intelligence, that is, to rescue them from the deep mire of stupidity into which they are leading more and more of the population. By this I mean trying to convince everyone involved that the lead blocks they are trying to sell to us are actually life-preservers which will keep us afloat in the stormiest waters! Personally I wouldn't give them a job as janitors in the worst toilets of the country!
Ezy2Confuze Oct 6, 2010 5:03 PM	A few points that maybe more well versed people can answer: 1.) Rival Telstra will transfer its cable broadband customers to NBN Co in an $11 billion draft deal announced in June. I thought the $11 billion was to allow access to Telstra's Exchanges, pits etc to allow easier laying down of cabling? So if this includes rolling over their customers, whats the breakdown of costings just for the access to Telstra infrastructure, as this will provide a true showing of the value for money we taxpayers are receiving in the deal. 2.) The ageing fibre sections in HFC networks could also need replacing. I've seen more arguments on this very site as to the longevity of fibre cabling, so my question here is what is the age of these "ageing fibre sections" because if they are less than the 15 years stated previously from NBN Co and the Government, a few people have some explaining to do, considering the timeline for the NBN to be implemented is over a decade. If the cabling can't even last that long, what's the use in spending the money?
Francis Oct 6, 2010 6:16 PM	@ Ezy2confuze Point 1. I don't know the answer to this as it has not been widely explained to the public at large so blame Con-Boy and Telstra for not making it Public. 2. Forget the total HFC package as it was yesterdays Technology before it was even installed here. Also the NBN may require different routes for its fibre and will not need the exchanges, so Telstra will get a lot of Money for it's Real Estate 3. Forget the figures being bandied about as to the longevity of Cable as most of the figures relate to the write down time for the investment rather than the actual life of the cable. You need to look at the NBN from a clean sheet of Paper Point Of View.
Francis Oct 6, 2010 6:16 PM	Good one Paul I Totally agree
addinall Oct 9, 2010 11:20 AM	"Budde speculated that NBN Co could also be interested in securing the services of Optus' engineers." BWAHAHAHAHAHAHAAAAAA! Conroy and Squigly running it, budde as a 'consultant' and OPTUS engineers at the face! Can anyone say Titanic! Geez, this gets more bizarre daily.
Rossyduck Oct 11, 2010 12:06 PM	Does get more and more bizare. In reality we have an almost exclusive a transfer of telstra engineers as en-block to Melbourne, bringing with them the crappy Telstra culture and reportedly unable to work with the largely Sydney based ex-optus engineers. Throw in more Optus network, demoralised Optus techs who have risen through the ranks to repalce the engineers Optus don't want to pay - stir it all up .... and half bake it .....
Francis Oct 11, 2010 2:12 PM	@addinall & @Rossyduck. You guys are overlooking a couple of vital ingredients. 1. These guys are probably going to be out of work anyway are you suggesting they go on the dole because there would be few other companies in this country who could use their skills. 2. The company sets the culture not the employees. If they do not shape up they ship out. That should also apply to ConBoy and Squigly. 3. The NBN is going to Need engineers and other staff, where do you suggest they get this staff from? Seems logical they get staff who already have the skills and they will mainly be found within the Industry. 4. Paul Budde is an internationally renowned Telecoms Analyist and he is just stating the facts. on the other hand I don't see your name up there in lights so until you have the requisite skills, respect and experience that Budde has I suggest that you pipe down.
Mike_Sadler Oct 11, 2010 4:57 PM	Ezy2Confuze Re: "1.) I thought the $11 billion was to allow access to Telstra's Exchanges, pits etc to allow easier laying down of cabling?" The deal was always much more holistic than that. Not withstanding the parties would need to be seen to canvas all the variations, its a 'replace the copper CAN with the FTTP CAN wherever possible' play, the only one that makes sense IMHO. Just as Telstra is 'giving up' a bunch of network, facilities, access, etc, they are bringing forward a FTTP migration for Telstra, who get paid for it, maintain access to a lot of capital they would otherwise have needed to do FTTP themselves (and to maintain the copper CAN in the interim and fight for non-declared access to 'their fibre' through the media/courts too). So... basically, not only wouldn't you seperate the bits of the deal 'on paper', you couldn't; there'd be so many dependentcies and very strict criteria around performance of certain things, with both parties basically required to ensure they don't impede the other in the migration process. Telstra has agreed to give up a big slice of their business, but they will obviously ensure they still have a lot of/better security around access to network resources than now. Optus will be similar. Ditto, Soul/TPG/Pipe, NextGen, iiNet, Internode, et al. One of the points of this exercise is to create a monopoly at L1/2... migration of all customers to NBNCo's network resources is an essential part of that. Its the reason the end-user pricing can be on par with ADSL/HFC... there isn't the scandalous duplication of effort and resources evidenced with HFC, ADSL, Wireless, etc. The players 'giving up' (lured by money) network WANT a public monopoly; there's no way they want any of their competitors controlling these cost inputs. They'll just move their competition further up the value chain, which will be fantastic for innovation both here and for export. As Francis has noted @addinall & @Rossyduck, there is a bigger picture here. These folks (NBNCo) DO know what they're doing. As part of the original decision to go down the NBNCo monopoly path, one of the factors would have been HR. With a monopoly, mostly ubiquitous system, you simply aggregate all L1/2 'hands' in the nation back into one (or several large) structures from where they're deployed very efficiently (not 7 techs in Sydney CBD installing 7 diferent DSLAMS to 7 different GigE fibre links, none in Sutherland) to build a single homogonous platform. Reality is, techs working for Visionstream, Alliance SI, Talon, et al and currently sub-contracting to Telstra, Optus or both (especially the 'good' ones) would be given some sense of security that things would be pretty much 'normal' and 'better' when they eventually contract to NBNCo via the same intermediaries. These machinations aren't an afterthought, rather some of the many facets that had been thought through right from scratch. @epimetheus; you can rest assured I'd gladly give you a job as a janitor in the worst toilets of the country! Yet again, your backward looking comments don't appear to have anyything to do with the topic of this article, nor do they add any value; at least YOU might do SOME good in a dunny somewhere ghastly. Absence would make the heart grow fonder, for me at least.