A new report from a leading analyst suggests NBN is losing ground to fibre-to-the-node (FTTN) technology.
Analysts at IHS predict NBN will continue to struggle against the incumbents in the next few years and that fibre to premise (FTTP) will be more competitive in the long run.
“The NBN will have to be in place for the NBN to compete with other high speed services,” analyst Michael Hickey said.
However, he warned that the rollout of FTTP would be “very expensive”.
“For a company with a limited amount of capital and capital costs, the NBN is going to be expensive,” he said.
“It’s going to have to compete to attract investors and that’s going in the wrong direction.
I think this is a company that’s in the early stages of trying to attract investment.
If the company can’t attract that, then it’s not going to succeed.”
IHS expects NBN to lose 50 per cent of its business to fibre in the five years to 2026.
That means the network will be about a third smaller than it was in 2018, when NBN launched fibre to premises.
While NBN’s rollout has been slow, Hickey predicted it will make a big difference in the future.
The company has committed to building 10,000 homes by 2026, but is already facing pressure to keep up with demand from the rollout’s “crowd” of customers, he said, and it could face a shortage of staff.
Hickey said that the company needed to build “a few hundred thousand” homes by 2025.
A lack of capital would likely result in NBN’s “worst-case scenario” of needing to spend $100 million on the network, he added.
NBN’s current cash balance is $18 billion, compared to a projected $52 billion for 2020.
Its debt is estimated at $4.6 billion, with the company’s balance sheet of $25 billion.
It is due to be replaced by fibre-coaxial (FCoax) technology by 2020, but the Coalition is refusing to give NBN a deadline on its plans to install the new technology.
“It is a matter of urgency to get FCoax on the ground as quickly as possible, as we are facing a shortage,” NBN chief executive Steve Costello said.
“We will do everything possible to provide the infrastructure to deliver this infrastructure as soon as possible.”
Costello said NBN would spend “considerable” money on FCoAX by 2027.
But Hickey warned that NBN could face problems in the rollout if it was unable to meet demand for its network.
He said NBN could also face problems as the technology improves and as the network was installed.
Network failures are not the only problems for NBN.
Some of the biggest bottlenecks are its rollout of fibre to mobile, which is now being completed at the “slowest pace in decades”, according to a report by the Federal Government.
At the same time, NBN is facing criticism over its handling of the rollout and the cost of its fibre to homes.
Last month, NBN released its annual report which detailed its financial position.
In its latest financial report, NBN reported that its network had been upgraded from the “very rough” NBN rollout it had seen in 2016, to “a very stable, solid network”.
But it also said its rollout had been “complex and challenging”.
Norman Dickson, the chair of the Productivity Commission, said the company should take a “hard look at the current status of its network” and consider a “multi-pronged approach” to the rollout.
Meanwhile, NBN has been criticised by a number of stakeholders for its rollout.
The Federal Government has pledged to invest $11.4 billion in the NBN, but NBN is currently facing questions over whether it has enough money to fund its network and for how long.
On Monday, NBN’s board released a report into the rollout, but only a portion of the recommendations were included in it.
Several recommendations were made about how the company could increase the speed of its networks, and some of them were also rejected.
One of the most contentious recommendations was that NBN should “work out a deal with the Government on the cost” of the network.