NBN’s decision last year to cut 500 staff is coming back to bite the company, which critics say is suffering a “customer crisis” as it struggles to keep up with demand for fibre to the premises (FTTP) upgrades even as it rebalances its satellite and fixed wireless customer base.

Just over 2 million premises had been declared ready for customers to order FTTP services by the end of December, the company reported – meaning that they have been connected to the company’s expanding fibre backbone and can order the faster services if they want them.

Yet the number of customers actually connected to fibre remains low, with NBN Co now delivering FTTP services to just 139,000 premises that were previously using fibre to the node (FTTN) services, and 57,000 customers who were previously using fibre to the curb (FTTC) services.

That’s around 10 per cent of the 2 million premises now fibre capable – and while CEO Stephen Rue said the company is “on track” to boost that number to 10 million by the end of 2025, it will need to boost rollout speeds dramatically to get there.

Just 960,000 premises were connected to the growing fibre backbone over the six-month period, with 726,000 of those in multi-dwelling unit premises where NBN Co has fought competitive threats from the likes of TPG.

If it can maintain that rollout speed, it will take five years until the other 8 million premises can access FTTP services; meeting the 2025 deadline would require NBN Co to speed up its current rollout by a factor of ten virtually overnight, to the point where it could connect an average of 77,000 premises per week.

This won’t be easy for a company that lost many skilled rollout staff after it last year cut around 10 per cent of its workforce, putatively to streamline as it fights rival fibre backbone projects backed by cities and competitors.

The company has borrowed an additional $3.4 billion from private markets during the half-year to ramp up its urban and regional FTTP migration programs – yet actually switching on the fibre services will be yet another challenge: Rue said NBN Co actually completed just 108,000 full fibre upgrades during the half year – an average of just 4,153 completed upgrades per week.

With around 7,000 customers now ordering fibre services per week, that means the company is currently building up a backlog of FTTP orders that will, at current rates, see around 216,000 more customers on FTTP by year’s end – and another 150,000 customers waiting for their fibre to be connected.

Availability of full FTTP services “has been made possible by our network investment strategy,” CEO Stephen Rue said while admitting that NBN Co’s 15 years of network building to date “was a sprint to get to the start of a marathon… We are building it – and they are coming.”

Rebalancing customers – or losing them?

The rampup of NBN Co’s fibre upgrade program was just one of the challenges outlined during the results, which see the company pivoting to fight off competition from Elon Musk backed Starlink, which has built a strong local customer base at NBN Co’s expense.

NBN Co had 12,861 fewer active satellite customers at the end of 2023 than it did a year earlier – and lost 2,079 more during January alone.

The result led Liberal MP David Coleman to declare the latest company results “an absolutely shocking result” compounded by figures showing NBN Co is also shedding brownfields customers.

Brownfields premises are existing properties that generally already have internet and phone cables running into them, such as Telstra copper phone lines, so the NBN install is a migration from the old network and can be complicated through having to dig and drill around existing infrastructure.

Greenfields premises are new developments where they raze an area and lay out utilities. Since NBN fibre is now standard, these areas generally get fibre to every home and it is much easier for NBN Co since they can freely dig trenches during the construction phase.

The company had 7.158 million active brownfields premises as of 30 December, compared with 7.192 million a year earlier – and while the number of NBN connections in new greenfields developments continues to rise, Coleman said accelerating customer losses showed NBN Co price rises had left the company “smashed in the market as customers looked elsewhere”.

NBN Co has been actively moving satellite customers onto its fixed wireless network, with 120,000 previously satellite-only premises expected to be migrated to free up space on the satellites – although many seem to have been lost to rivals because fixed wireless subscriber numbers remained flatlined despite the changes.

With average data consumption increasing from 400GB per month to 433GB per month during the half year period, the changes are necessary to help the company keep up – although Australian figures paled by comparison to US figures citing average US usage of 641GB, which is expected to pass 1TB per month within five years.

Meeting this demand will require a continued and accelerating rollout for NBN Co, which – despite spending $1.87 billion of its $2.75 billion half-yearly revenues on network building – has so far failed to move the needle on the key average revenue per user (ARPU) metric, which has remained steady at $47 per user per month but could see a nudge from new pricing arrangements that will boost the cost of the most popular plans.