Transcript - Launch of OPENetworks - 3 September 2013

September 3, 2013
Communications & Broadband
Transcripts

Tuesday 27 August 2013

TRANSCRIPT OF THE HON. MALCOLM TURNBULL MP
LAUNCHES THE SYDNEY PARK VILLAGE SUPERFAST BROADBAND NETWORK WITH MICHAEL SPARKSMAN AND SEAN O'CONNOR

Subjects: National Broadband Network
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MALCOLM TURNBULL:

Let me just start off by saying I’m delighted to be here with Michael Sparksman the Chief Executive of Open Networks and also with my friend and colleague Sean O’Connor, the Liberal Candidate for Sydney, we’re within the Sydney electorate here just outside the electorate of Wentworth. But I want to congratulate Michael for installing here a Fibre to the Node system a VDSL system where he has taken a connection from the fibre running outside the street used the latest technology to hook it in to the copper network that was put into the building when, this development when it was built in the 90’s and is offering a 100 megabit per second service down 40 megabit per second up and we’ve just been in Paul Shepard’s apartment and as you’ve seen there, he had some speed tests there, he didn’t quite get to 100 on the download, no doubt due to the contention in the RSP’s network that he’s bought the service from so that’s outside of Michael’s balliwick, but you can see a very significant improvement in download speeds, and very high upload speeds.
One of the criticisms the Labor Party make is that Fibre to the Node is not able to deliver high uploads, well you had nearly 40 megs upload there on that product. It’s made a very big difference to Paul’s business – working from home – but above all, as Michael Sparksman going to explain in a moment, what he’s been able to do here is deliver very, very fast broadband, quickly and cheaply in terms of the cost of construction, therefore affordably for customers and at a huge cost differential to running fibre into all of these premises. SO I might invite Michael to say a little bit about the project and the relative cost between the service he has provided here and what he would have involved if he was going to take fibre into every apartment which is what the NBN Co’s current plan of course requires. So Michael, over to you.

MICHAEL SPARKSMAN:

Yes, thank you very much Malcolm. I would like to open by thanking Malcolm Turnbull for opening and launching our product in Sydney Park Village, it’s a great honour to have you here –

MALCOLM TURNBULL:

Oh, you’re very kind.

MICHAEL SPARKSMAN:

And particularly to explain to everyone in Australia the sort of services you can expect from VDSL, this is a basic product, VDSL2, if we wanted to step it up to VDSL Vectored or Bonded product we could have provided a much faster service but the demand in this residential complex of over 850 units is primarily for 100 meg services. So what we’ve provided here is a service which actually meets the market. The costs associated with providing this product is $200 being labour and materials, about 50/50, if we were providing a vectored or bonded service that cost would have risen to approximately $400-$500 per service. If we were going to fibre to the node –

MALCOLM TURNBULL:

Fibre to the premises.

MICHAEL SPARKSMAN:

Sorry! Fibre to the premises Malcolm! And we did some costings associated with this project, the cost per unit would have gone in excess of $5,000 per unit. So to meet the market of providing a service quickly and efficiently, VDSL2 is the obvious way to go with Fibre to the Node, the Node is just over here under this building, we’ve put another extension under that building to ensure that all buildings and apartments here have 100 meg service. The VDSL networks that we’re rolling out to about 60 premises around Sydney in our initial rollout will be very similar to this. The timeframe for delivery of these services is very quick because we don’t disturb any of the existing infrastructure we use all of the copper, there is no change at all other than we put a new plate inside the premises to indicate the Ethernet port and apart from that there is no observable change to the apartment or the structure which meant that the managers and owners of this complex have not had to put up with any delay or construction turmoil which we would have had to do at great expense and over a long period of time if we were going to do fibre to the apartment.
So this sis the significant difference between the sort of plan the Member for Wentworth has announced and we have followed as opposed to NBN Co which intends to fibre all apartments right around Australia, which is over 4.5 million apartments. So you can imagine the time and the costs associated with doing that.

MALCOLM TURNBULL:

So Michael, you costed this – this is such a big difference – you’ve costed this and you know it costs $200 per apartment to provision this service if you had gone to Vectored VDSL, which is the model we proposed in our policy, it would have been more like $400 to $500. But to take fibre would have been $5,000 and you costed that.

MICHAEL SPARKSMAN:

Yes we did.

MALCOLM TURNBULL:

And you build networks for a living so when you cost something you know what you’re talking about.

MICHAEL SPARKSMAN:

We’ve been building them for many years, well before the NBN, Malcolm.

MALCOLM TURNBULL:

Right, I know that. Well, that’s very interesting. So, Sean, this is in your electorate, what is your impression of this development here?

SEAN O’CONNOR:

I just think it’s a great example of business investing in the policies and the technology we’ve been talking about for so long and as a result of that we have 800 residences here in the Electorate of Sydney that now have access to very, very fast broadband, much cheaper and more faster than if we would have been waiting if we were following Labor’s NBN process. Apartments like Paul’s here could have been waiting for who knows how long if he was to wait for NBN Co it could be up to five years it could be 10 years, who knows? But instead he’s got access to it today, which allows him to compete internationally with other colleagues around the world with a much, much cheaper product.

MALCOLM TURNBULL:

This is really the issue, that you’ve got what is a 25 times difference between the cost of what you’ve done and what fibre to the apartment would have cost so --

MICHAEL SPARKSMAN:

And the time…

MALCOLM TURNBULL:

And a huge amount of time. So if you believe that broadband is important and we do, and if you believe that very fast broadband is important to take advantage of all the opportunities of the digital economy as Paul’s described in his business, you’ve got to get people’s services upgraded quickly. And it’s got to be done at a price they can afford to pay. And this is a good practical example of that in action. So congratulations to OPENetworks and perhaps do we have any questions?

JOURNALIST:

Malcolm this complex is about 15 years old so the copper is quite modern, Paul is quite close to the node. How representative is this going to be for the public?

MALCOLM TURNBULL:

Well let’s just – Paul do we know how far the copper run from the node to Paul’s apartment is?

MICHAEL SPARKSMAN:

Yes in fact he’s over 500m away from the initial node so to give you an idea he’s a long way from the node. But importantly also –

JOURNALIST:

The initial node?

MICHAEL SPARKSMAN:

The initial node. And we put in a further node down here under one of the other buildings so he would be maybe 100m away from that.

JOURNALIST:

100 metres?

MICHAEL SPARKSMAN:

But importantly the other thing to bear in mind is this entire project was done in under 3 weeks including all the works in the street and in the apartments. So the installation, all the works done and dusted in three weeks so now it’s simply a matter of connection on demand.

JOURNALIST:

How representative is [INAUDIBLE]

MALCOLM TURNBULL:

Well it’s interesting. More recently constructed apartment buildings would be likely to have better copper in them than this. They would have category 5 or category 6 for their telecoms, this is category 3 as I understand. But you’re right the copper varies from place to place but this is similar copper to what you would find in a suburban layout.

JOURNALIST:

One of the protections that Labor built in to the NBN was preventing certain organisations such as OPENetworks from building networks to compete with NBN Vo to undermine its business. Would you let companies like OPENetwork to continue to do this work?

MALCOLM TURNBULL:

Yes. We think the object of policy is to ensure that everybody gets very fast broadband as soon as possible and our approach is we’re not going to prevent competition with the NBN, we think that is something that certainly shouldn’t be obstructed as long as the competitors are common carriers and are providing a wholesale service, that is important. As far as greenfield developments which is where companies like Michael’s have been historically most active, our approach is that there should be no obstacle to them installing a wholesale service there, that should be their perfect right to do so and we’ll also have as you’ve seen in our policy an arrangement where if the developer pays Michael’s company or one of his competitors to put in a network there, a broadband network, as long as it complies with the NBN specifications then the NBN Co would acquire it, there would be a tariff in effect and what that really means is that a developer then knows that he or she can get the fibre deployment company they know and trust and work with to get the work done so that it can either be operated as a network run by the developer or by a company like OPENetworks or it could just be sold over to the NBN Co.

JOURNALIST:

If the Coalition does win government in Townsville the rollout’s begun, is it correct that the Coalition will only offer fibre to the home contracts where they’ve been signed and in other areas they’ll get the Coalition’s plan. So for instance towns like Ballart’s in suburbs to the west and the south will have the Coalition NBN whereas the central and north areas of Ballarat will have Labor’s program?

MALCOLM TURNBULL:

Well what we’ve said is we’ll honour all contracts so if there hasn’t been any agreement or any signature then there isn’t a contract so we’ll honour existing contracts. The critical thing is to get the NBN built. Get it built sooner and of course at less cost but at the way it’s going at the moment it will take decades to complete. So to cut to the chase will it be a hybrid network? Yes. The NBN as envisaged by Labor is a hybrid network. Under their vision you’ll have most people with fibre to the premises and then others with wireless and satellite. All we are proposing is that you add an additional technology, that is to say vectored VDSL, fibre to the node, along the lines of what we have here and so there will be some cases of where we have fibre connected to the premise, some with fibre to the node but the point is that everyone will be able to get a service that is of more than sufficient speed to enable them to use all of the applications and services they value. And that’s the critical point.

JOURNALIST:

So you would reject claims from Labor then that we’re going to end up with a hybrid system that’s problematic and could ultimately affect property prices?

MALCOLM TURNBULL:

Well we have a hybrid system now, that’s why it’s called the Internet, it’s a network of networks. So nothing’s going to change there. As far as property values are concerned, look. There are huge differences between broadband speeds availability at the moment in Australia. There’s 2 million premises that don’t have any broadband at all. Under our policy by 2016 everybody will have access to very fast broadband and nobody will have access to less than 25mbps. Now most people in the fixed line footprint will have much higher speeds of course. So in fact the disparity between broadband speeds availability will be much less under our approach than it is at present and there’s no sign at present that broadband availability is made any discernible impact on property prices. So look I think Anthony Albanese is just getting a bit desperate, he’s trying to run a property price scare on Tuesday, I would say by Friday you can mark your cards for this he’ll be saying that the Coalition’s NBN if implemented will make your teeth fall out and your hair turn white and other dreadful physical manifestations to appear.

JOURNALIST:

So just to be clear then you reject the idea that we could end up with towns like Shepparton and Ballarat that are in a sense digitally divided?

MALCOLM TURNBULL:

You could very easily, you will end up with some areas which have different forms of technology delivering them their technology as they do today. And even under Labor’s scheme you will have, if you are within the fixed line footprint you will have fibre to the premises if you are not you will have fixed wireless – very different technologies. But the critical thing, really the only thing that is important is – can I get the applications and the services I value? Do I have a technology that is reliable and delivers me that at an affordable price?  And can I get it soon? You see if you buy the proposition and I do passionately, that there are universal benefits in having access to having very fast broadband then the sooner we have it the better. As I’ve always said and I’m sure Michael would agree. If time was irrelevant and money was irrelevant so you didn’t care if something cost you $200 a premises or $5000 then you would put fibre everywhere. But in the real world time and money are vitally critical. And that’s the advantage of our approach. What OPENetworks have done here is provide proof. With three weeks work, everybody in this development has got access to up to a 100 megs service. And as Michael says with some additional work, some additional investment , not a huge amount of additional investment that could be two, three, hundred megabits per second. But as he’s technically skilled and he’s also numerate and he knows no one will pay him for that so he’s not proposing to pay money he can’t get a return on.

JOURNALIST:

You said before Malcolm, well you reported anyway that it would take about 12 months to turn around fibre to the node to fibre to the premises. Is that still your timetable? And there’s been people asking us, given the different priorities in the way it will be rolled out is there going to be any kind of timetable that you’d publish give the public an idea of when they will get the rollout?

MALCOLM TURNBULL:

Yes well we certainly will do that. We can’t do that from opposition. But we are going to operate the NBN Co in a totally transparent way. There will be an end to all this spin and end to all the bodgey statistics. We’ll have a very thorough review of the business so we’ll all know within 60 day, is our goal, what the currently specified project will cost in dollars and years to complete and what savings in time and dollars we can achieve by making changes along the lines of the ones we’ve canvassed and others. So we’ll be – transparency will be the new watchword of the NBN Co. As you know at the moment it’s go a public information policy that would put the Kremlin to shame.

JOURNALIST:

Would it be less than a year do you think?

MALCOLM TURNBULL:

We’re hoping to get some demonstrations of this type underway much sooner that that but we have been very careful in our policy and we haven’t proposed anything that we not very confident in delivering.

JOURNALIST:

In terms of, what if a resident wanted to upgrade to fibre to the premises? How much would that cost? And also ISPs are you opening up the network to and how does you wholesale price compare to NBN Co’s current wholesale price?

MICHAEL SPARKSMAN:

OK, just in reverse order. Our NBN price that NBN Co are currently offering are currently replicated by our ISPs. Our wholesale price is actually under the NBN Co wholesale price – so the ISPs can either pass that saving on or they can alternatively keep it and make a profit. But our wholesale prices are across the board slightly cheaper than NBN Co’s wholesale price. In terms of the costs of connections to the upgrade – as I said early the price to upgrade a VDSL standard product which is currently delivering 100 by 40 at $200 a connection to VDSL2 vectored service might be in the order of $500 per connection. So it’s a cost that needs to meet a market. If there was a demand in here we’d swap out the DSLAN that is currently available for that particular building and install the better performing DSLAN that provides VDSL on a vectored or bonded basis. To go to a fibre to the home solution in this complex we costed as just over $5000 – we stopped counting – per apartment. So if we were to provide as Labor have promised to provide a fibre to the home solution a buyer could order it, we could upgrade it, but it would cost a significant amount of money to do so. We’d have to put a VDSL OLT in the basement to replace the DSLAN an ONU on the wall and we’d fibreing though the carpark, up the rises, down the corridors you’d be doing repairs and maintenance obviously to all of the wall surfaces and ceiling it’s quite a costly basis to retrofit fibre into old buildings. So if you’re looking at $5000 and someone wants to pay for that in an apartment building – yes we’d be able to do it. But at this point in time there is no demand for that service in these residential complexes.

JOURNALIST:

Which ISPs are you open to?

MICHAEL SPARKSMAN:

At the moment we’re open to all ISPs we’re a fully open access provider. We’ve got twelve ISPs that have currently signed standard form access agreements with us. We will bring on more. We are currently in negotiations with Optus wholesaler. They have 32 aggregated ISPs. We are a fully open access wholesale only provide. We provide no retail services of our own, so we don’t compete with ISPs and we provide it on an open access in compliance with the legislation.

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