NBN: The Opt-In/Opt-Out Debate

There has been a lot of discussion in recent weeks in regards to the opt-in or opt-out question for individual premises during the rollout of the National Broadband Network (NBN). In Tasmania, where the initial rollout of the network is underway, the government has chosen to adopt an “opt-out” model, while New South Wales and Victoria appear to be heading down the path of an “opt-in” model.

There are certainly advantages to each approach, but the confusion and lack of consistency is another worrying sign as to the way the network is understood in the wider community. The biggest failing of the Labor government in regards to the NBN at this stage has been its inability to sell it to the people.

So, what are the two options?

  • OPT-OUT – in this situation, as the fibre network is rolled out down your street, a fibre connection will also be run from the cabling in the street, to a termination point on your premises – unless you specifically request that this does not happen. The cost to run that connection from the street to your premise will be relatively cheap – workers will already be in the street, will already have all the gear and cabling to achieve the task, and will be able to do everything at once. Simple, quick, and effective, and every premise will have the cabling ready to go, should they choose to make use of the NBN.
  • OPT-IN – in this situation, as the fibre network is rolled out down your street, a fibre connection will also be run from the cabling in the street, to a termination point on your premises – but only if you specifically request for this to happen. The per-premise cost to provide that connection from the street to the premise will be somewhat higher, because workers will need to return at a later date to run that cable, and connect it to your premise. This also adds uncertainty to rollout schedules, and therefore service availability – an area may be officially “NBN-ready”, but it may take weeks to organise a connection because someone has to be scheduled to come and run the street-to-premise connection, before a service can be activated.

On the surface, the opt-in model absolutely appears cheaper, as only premises who specifically request for the cable to be connected will have this work done, and even if 70% of premises are connected initially while the street cabling is done, this is undoubtedly cheaper and faster than doing 100% of premises.

Opponents of the opt-out model jump up and down and complain that forcing the street-to-premise connection onto people is forcing them to connect to the NBN, but this is somewhat inaccurate. Having the cable run from the street to your premise does not force you to pay for services to be provisioned OVER that cable – there is no obligation there whatsoever.

As part of the Universal Service Obligation (USO), every premise in Australia has at least a single copper line – (or equivalent service) – assigned to it under this condition. It is clearly stated under the current form of the legislation that “Telstra has the obligation to provide an STS to all people in Australia”, where STS means “Standard Telephone Service”.

Given that the copper network is planned to be decommissioned in fibre-enabled areas, every individual phone service in those areas will be required to move onto the NBN to maintain the USO – that’s the law. There simply won’t be an operational copper network, so those services have to go somewhere.

Also, since the NBN will be taking over USO obligations, quite clearly the state of play will become “NBN Co has the obligation to provide an STS to all people in Australia”.

But if not every premise is connected to the NBN because people opted out – (whether that was the default choice, or they actively chose it) – an interesting situation arises when the copper network is turned off area-by-area. Suddenly, if you don’t have an NBN fibre attached to your premise, the USO fails.

People need to understand that the advent of the NBN will effectively remove the copper Customer Access Network (CAN) built in the 1950’s, so if they opt-out, there is no phone line, and the required connection for every premise under the USO is gone. Exactly what this means for the USO is somewhat open to interpretation.

Does it mean that it will disappear? Does it mean people will legally be able to opt-out of the USO?

From what I can see, the answer is no – it will not disappear, and it will not be able to be opted-out of. This is important, particularly when you look at the stated goal of the USO:

“The universal service obligation (USO) is the obligation placed on universal service providers to ensure that standard telephone services, payphones and prescribed carriage services are reasonably accessible to all people in Australia on an equitable basis, wherever they reside or carry on business. No carriage services have been prescribed to date.”

The important point is “no carriage services have been prescribed to date”. The USO does not imply that you have to pay a phone company to have an active telephone service running over your connection, but the USO does define that the physical cable must be in place. When the requirements of the USO move from Telstra to the NBN, this does not change.

So one way or another, unless the USO is to be removed, every premise in a fibre-enabled area will be required at some point to have an NBN-fibre connection run from the street to the premise. Through pure economies of scale, it must be cheaper overall to do this in the first instance, rather than allow people to opt-out initially and require someone to come back at a later date to do the drop cable from the street to the premise.

The deal between Telstra and NBN which paves the way for the decommissioning of the copper network explicitly addresses the question of the USO, so it seems quite clear that the USO is not going anywhere anytime soon. Opting-out initially may seem cheaper, but in the end it will cost more – and that cost will be passed on to you, the end user.