NBN Co Abandons Plans to Procure Dark Fibre

NBN Co once planned to procure dark fibre from private operators rather than overbuilding them. However, the company abandoned this plan recently.

The procurement plan happened after the company was offered fibre that has been priced multiple times higher compared to its own build costs in early 2020. This was the company’s response to the widespread RSP outrage over what was deemed as unfair tactics of the company in the enterprise market. These tactics included direct selling to corporate customers and overbuild existing broadband links. The RSPs were already considering pursuing legal options against NBN Co until the latter proposed a range of mitigation measures. One of these measures was the procurement of dark fibre.

NBN Co claims that it has already conducted a proof of concept trial when it comes to the procurement of dark fibre. However, the quotes coming from private operators proved to be too significant. Based on the company’s extensive analysis, the prices quoted for metro fibre were 492% higher than NBN Co’s own five-year build and operational costs. On the other hand, in regional Australia, the costs rose to a whopping 1792%. In this case, even the cheapest option was still 226% higher.

“It is clear that the indicative prices received as part of the PoC were not commercially viable options for NBN. A key reason for this is that the cost to procure a dark fibre connection from a third-party provider involves a mix of upfront and ongoing recurring charges where NBN’s build cost only involves a one-off upfront cost,” NBN Co said.

“Based on the results of the PoC as well as discussions with participants, there is no evidence to suggest that an industry-wide procurement model for third party dark fibre connections to deliver wholesale enterprise services would be commercial or operationally feasible based on current NBN build costs, available third-party footprint, operational timelines and SLAs. Therefore, NBN will be concluding the consultation at this time.”

Nevertheless, the company said that it may revisit dark fibre procurement in the future: “The consultation has highlighted the number and variety of fibre assets and services that exist in Australia, which could be leveraged by NBN should there be a commercial need to do so in future. Since the beginning of the consultation, a number of infrastructure providers have developed and launched commercial dark fibre products or indicated a willingness to explore additional dark fibre capabilities and offerings. NBN remains interested in procuring dark fibre or similar products from suppliers where it makes commercial and operational sense to do so and in circumstances where the issues noted in this paper can be appropriately resolved.”