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12 January 2014

Threat to NBN as Optus plans fibre to the basement rollout

Optus has joined TPG Telecom in exploring a private rollout of fibre optic cabling to apartment buildings, potentially threatening the economic stability of the national broadband network

SingTel-Optus is exploring a private rollout of fibre optic cabling to apartment buildings, in similar fashion to plans from TPG Telecom, potentially threatening the economic stability of the national broadband network.

The move would see Optus' existing fibre network, which primarily serves large inner-city businesses, extended to reach the basements of apartment buildings and shopping complexes. The existing copper wiring within the buildings would then be used to deliver faster, NBN-like broadband speeds.

It comes as TPG has progressed with its own, separate plans to connect 500,000 apartments across five cities with the technology. This month it acquired Telecom New Zealand subsidiary AAPT for $450 million, which owns a significant fibre network, further boosting the plan's prospects.

It's a bit of a headline grab but we're looking at whether we should be doing that or not, Optus' managing director of networks Vic McClelland said. We're still looking at whether it's viable to do that.

An Optus spokeswoman said there were no definite plans for the rollout.

As a one of Australia's leading telecommunication providers, we routinely look at many different business and technology scenarios to inform our network design, she said.

If Optus progresses with the network build-out, it could put further pressure on NBN Co's ability to raise funds and pay back the estimated $41 billion capital cost of its network.

Its revenues rely heavily on high-density, heavy broadband users in inner-city areas, where Optus and TPG's planned networks would both be concentrated.

NBN Co has begun its own trials of the technology in Melbourne, reaching initial speeds that are significantly faster than those available over the traditional copper network.

But analysts have warned of the technical difficulties in having multiple telcos offering fibre-to-the-building technology in the same apartment block.

Mr McClelland acknowledged that a situation in which TPG, Optus and NBN Co were all offering the same service could make for a worse experience for consumers.

You've really got to consider the mix of technologies in that building and, if you roll out a new technology, are you causing interference for everybody else and causing them a crap experience, he said. I think those factors weigh into whether we should do it or not.

We're a little bit more cautious but we're looking at it.

The company has previously raised the prospect of rolling out fibre-on-demand to homes and businesses that are in the planned fibre-to-the-node footprint.

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