NBN Co confirms Telstra copper trial

NBN Co has confirmed it is in discussions with Telstra to lease access to the telco’s copper network to trial fibre-to-the-node technology in several areas of NSW and Victoria.

The contract would fall outside the existing $11 billion definitive agreements between the two organisations, and would allow NBN Co to pilot a FTTN build in Umina on the NSW Central Coast and Epping in North Melbourne.

NBN Co is expected to rent, rather than purchase the copper - the government-owned wholesaler said today it did not expect there to be a "value transfer" involved at the end of the Telstra negotiations.

Communications Minister Malcolm Turnbull has previously said he expected Telstra to hand over access or ownership of its last-mile copper for FTTN for no additional cost.

NBN Co plans to build two small scale copper serving area modules, “erecting kerbside node cabinets which will connect [NBN fibre] to spare copper pairs in the Telstra pillar”. Neither sites were to receive FTTP in the next year under the previous plan, according to an NBN Co spokesman.

NBN RSPs will be invited to participate in the trial and help test whether Telstra’s copper network - which has faced criticism over quality and maintenance concerns - can be used to provide high-speed broadband. The trial will cover up to 200 locations across both regions.

NBN Co is also independently currently trialling fibre-to-the-basement throughout several suburbs in Melbourne, rolling fibre to nodes in communications rooms of apartment and office blocks in Carlton, Brunswick and Parkville. The trial has produced download speeds of 108Mbps and upload speeds of 48Mbps.

Under Communications Minister Malcolm Turnbull’s new multi-technology mix model for the NBN, customers will be connected by the most "economically efficient technology" for each location.

NBN Co said today it expects to begin transitioning to the new model from next year.

“The company is determined to stabilise and improve the efficiency of the rollout, and to help provide ongoing certainty for the Australian construction industry. As a consequence, the existing fibre to the premises (FTTP) rollout in the fixed-line footprint will continue throughout calendar 2014,” it said today.

“Accordingly construction orders continue to be issued and FTTP deployment continues to areas in line with the company’s current guidance for FY14, on top of the 351,046 premises already passed by fibre as at 31 December 2013.”

NBN Co will provide more details on the transition in its corporate plan, due later this year.

It also confirmed today it is currently renegotiating existing contracts with contractor partners. It said the discussions were "business as usual" to issue new work packages and would not involve entirely new contracts.

In its first half-yearly results presentation today, NBN Co revealed a 50 percent increase in capital expenditure to $1.2 billion for the six months to December 31 2013 - a result of “continued expansion of the network” compared to the six months to December 2012.

Operating expenses grew 50 percent to $500 million, and revenue came in 63 percent higher to $48 million for the half.

Revenue was boosted by a fourfold increase in telecommunications earnings, which grew to $21.8 million.

NBN Co posted an operating loss of $715 million, compared to the $430 million loss it posted at the end of 2012. NBN Co does not expect to post profit for the next few years during its construction phase.

Assets (including pits, ducts and pipes) grew 118 percent to $7.7 million, and the total number of users on the NBN grew to 131,000 from 34,500 in the last half of 2013. Around 80,000 of those are fibre users.

NBN Co's total average revenue per user rose to $36.50.

Employee expenses grew 23 percent to $189 million, a result of a 32 percent boost in headcount to 2949. The company had around 3450 workers working on the build of the NBN at the end of 2013.