Tuesday, April 07, 2009

My intitial broadband thoughts

It was to be $4.7 billion of government money, now it's at least half of $43 billion.


And 90 per cent of it will be fibre-to-house, not the merely-incremental fibre-to-node it was to be.

Best of all, it bypasses Telstra's existing copper wire network, removing all sorts of problems.

And because it will totally wholesale, it it'll also bypass Telstra's attempts to stop other companies using the public backbone. There will be a new public backbone, and everyone will be abvle to get access qucikly and on good terms.

Of course, the whole idea is still silly, but it you are doing to do it, it is an effective, gutsy, game-changing and incredibly-expensive way to do it.

UPDATE: Joshua Gans: "Wow!"

UPDATE: Paul Budde writes: Australia starts leading the world...

"The Government’s plan sees us skipping the halfway house of so called ‘fibre to the node’ which would have seen street cabinets being installed around the country. The government will now bring the fibre network straight to people’s homes.

This is the most ambitious infrastructure ever undertaken in Australia and will be the most ambitious FttH network anywhere undertaken in the world.

The Australian Government is one of the few governments who, in a holistic way, understand the importance of broadband across the various sectors. This network is not just for high-speed Internet and enterainment but, more importantly, for healthcare, education, smart grids, etc.

The $43 billion also clearly indicates that the investment will go well beyond Internet and broadband and that it understands the need to use it for the digital economy. This will set Australia up as potentially one of the international leaders here. This Government understands the trans-sector approach that is needed to stimulate the digital economy. The nature of the investment further highlights this it is an open network and the infrastructure will be made available on a wholesale level. This makes it possible to deliver that infrastructure on a utilities’ basis which, of course, is going to make access to the network very affordable to the end users.

While the concepts are right – high quality broadband and an open access infrastructure – at the same time, such a massive project requires planning and design that is going to take time. The Government had foreshadowed two quick wins:

. The first project will start in Tasmania perhaps as early as within the next few weeks.

. The government has indicated it will also immediately start work on the backbone network. This has been discussed for many years and indeed work can start on this rather quickly.

But the big work will require replacing the copper cables that are going into people’s homes by fibre. Examples from around the world have indicated that it is very difficult to build a business plan around this, just based on Internet access – you simply will not be able to generate enough revenue from such services that warrant such an investment.

The government is taking the sting out of this by basically guaranteeing the investment money for the project and also indicating the use of the infrastructure for other sectors (healthcare, etc). What this means is that, for example, healthcare can independently provide e-health services to all Australians over the network, without these people needing to have a paid subscription. Media companies could do the same if for example they want to finance their applications through advertising. So what is happening is that there won’t be a gatekeeper involved who clips the ticket of everything what is happening over the network.

The accompanying regulatory documentation doesn’t give Telstra any room to manoeuvre. The company can of course participate but based on the rules of the government and not based on the monopolistic structure of its current vertical integrated service offerings. Most current players in the industry have already indicated that they have no problems with this concept, so there is a good chance that some, if not all of the players, involved in the tender become partners in the National Broadband Corporation.

Open network = innovation and affordability

The open network approach makes it possible to offer the basic infrastructure on a utility basis to content and service providers, and this paves the way for the development of the digital economy. In this way the FttH investment will deliver an economic multiplier effect that will benefit the healthcare, education, energy and environment sectors as well as the digital media and Internet providers.

These content and service organisations can now independently develop their own products and services without being controlled by a gateway-keeping and ticket-clipping, vertically-integrated telco.

The structurally separated model of the FttH plan also allows the National Broadband Corporation to work very efficiently. Using infrastructure construction companies in the most effective way of building a network. This allows Telstra, Optus and the other telcos to concentrate on developing the intelligent structure on top of that, and this will deliver innovative new applications and services in the most cost-effective way, securing an affordable service for everyone.

As we see with the Tasmanian State Government the project allows regional organisations to add their own local and regional touch to it and it supports local competition and local development, while at the same time fitting into the overall national picture.

What’s next for Telstra?

Telstra now has another choice to make. It can continue its obstructive behaviour and launch new court cases or (let us hope!) it can look at the business opportunities that are now available to it. It can work with the new Corporation and establish working relationships, based on the new rules set by the government.

What the new plans are doing is providing a bigger cake – not just another telephone or Internet network, but an infrastructure that will attract a large number of new services.

BuddeComm estimates that once the network is deployed healthcare alone could account for 25% of its capacity. Equally, given the right business circumstances, services related to education and energy/environment could take up another 25%. Over time the traditional telecoms and Internet services will only account for perhaps 25% of the NBN.

Not that these latter services have shrunk in volume or revenue – this simply demonstrates the volume of additional growth that will be unleashed on this open network infrastructure.

While Telstra’s NEXT G network is certainly impressive and its cable network upgrade will also help it to move forward, it will be no match for this new state-of-the-art FttH.

FttH and wireless

There may be many steps along the way but the FttH is the final destination. Once fully deployed the FttH infrastructure will deliver 100Mb/s and who knows what else? We can only guess what might be possible in five or ten years’ time.

And wireless broadband will be weaved into all of this, partly to make sure that people don’t have to wait five or ten years before a fully-deployed FttH network is available to them, and partly because this technology is also evolving rapidly and in less densely populated areas it will be able to deliver a service equal to FttH.

Paul Budde"

Joint media release


New National Broadband Network

The Rudd Government today announced the establishment of a new company to build and operate a new super fast National Broadband Network.

This new super fast National Broadband Network, built in partnership with private sector, will be the single largest nation building infrastructure project in Australian history.

This new National Broadband Network will:

Connect 90 percent of all Australian homes, schools and workplaces with broadband services with speeds up to 100 megabits per second100 times faster than those currently used by many households and businesses

Connect all other premises in Australia with next generation wireless and satellite technologies that will deliver broadband speeds of 12 megabits per second

Directly support up to 25,000 local jobs every year, on average, over the 8 year life of the project.

Under the Rudd Government's new national broadband network every house, school and business in Australia will get access to affordable fast broadband.


The Rudd Government's National Broadband Network will be built and operated by a new company specifically established by the Australian Government to carry out this project.

The Government will be the majority shareholder of this company, but significant private sector investment in the company is anticipated.

The Government will make an initial investment in this company but intends to sell down its interest in the company within 5 years after the network is built and fully operational, consistent with market conditions, and national and identity security considerations.

This company jointly owned by the Government and the private sector will invest up to $43 billion over 8 years to build the national broadband network.

The Government's investment in the company will be funded through the Building Australia Fund and the issuance of Aussie Infrastructure Bonds (AIBs), which will provide an opportunity for households and institutions to invest in the national broadband network.

The new investment is also the biggest reform in telecommunications in two decades because it delivers separation between the infrastructure provider and retail service providers. This means better and fairer infrastructure access for service providers, greater retail competition, and better services for families and businesses.

This announcement follows the Government's decision to terminate the NBN Request for Proposals (RFP) process on the basis of advice from the independent Panel of Experts that none of the national proposals offered value for money. The Panel noted the rapid deterioration of the global economy had a significant impact on the process.

This historic nation-building investment will help transform the Australian economy and create the jobs and businesses of the 21st century.


The new superfast network will:

. connect homes, schools and workplaces with optical fibre (fibre to the premises or 'FTTP'), providing broadband services to Australians in urban and regional towns with speeds of 100 megabits per second - 100 times faster than those currently used by most peopleextending to towns with a population of around 1,000 or more people

. use next generation wireless and satellite technologies that will be able to deliver 12 megabits per second or more to people living in more remote parts of rural Australia

. provide fibre optic transmission links connecting cities, major regional centres and rural towns

. be Australia's first national wholesale-only, open access broadband network

. be built and operated on a commercial basis by a company established at arm's length from Government and involve private sector investment

. be expected to be rolled-out, simultaneously, in metropolitan, regional, and rural areas.

Every person and business in Australia, no-matter where they are located, will have access to affordable, fast broadband at their fingertips.

High speed broadband is increasingly essential to the way Australians communicate, and do business. It will help drive Australia's productivity, improve education and health service delivery and connect our big cities and regional centres.

The Government will invest in this major nation-building infrastructure to stimulate jobs in the short-term and pay a dividend to the Australian people through enhanced productivity and innovation in the long-term.

This is a major nation-building project that will support 25,000 jobs every year, on average, over the life of the project. At its peak, it will support 37,000 jobs. Given the productivity gains associated with this investment, the full benefits will continue to flow for decades beyond the completion of the project.

The Government's announcement today has been informed by expert advice. The Panel of Experts has encouraged the Government to invest in optical fibre technology, supplemented by next-generation wireless and satellite technologies. The Australian Competition and Consumer Commission has also endorsed the use of FTTP as a superior technology to Fibre to the Node.

The preliminary estimate is that the enhanced NBN network will cost up to $43 billion, which has been developed taking into account advice from specialist technical advisers.

The Government's objective is to achieve 90 per cent coverage of the FTTP network, and remaining coverage to be delivered through wireless and satellite technologies, within this funding envelope. Initial advice to the Government is that this objective is achievable, but this estimate will be subject to an implementation study.

The Government will seek private investment in the company to draw on private sector capacity and expertise. However, ownership restrictions will be established to protect the Government's objective of a wholesale open-access network.


To turn its vision into action the Government will immediately:

Commence an implementation study to determine the operating arrangements, detailed network design, ways to attract private sector investmentfor roll-out early 2010, and ways to provide procurement opportunities for local businesses

Fast-track negotiations with the Tasmanian Government, as recommended by the Panel of Experts, to build upon its NBN proposal to begin the rollout of a FTTP network and next generation wireless services in Tasmania as early as Julyan immediate start on a nation-wide investment.
Implement measures to address 'black spots' through the timely rollout of fibre optic transmission links connecting cities, major regional centres and rural towns - delivering improvements to telecommunication services in the short term.

Progress legislative changes that will govern the national broadband network company and facilitate the rollout of fibre networks, including requiring greenfields developments to use FTTP technology from 1 July 2010.

Make an initial investment in the network of $4.7 billion.
Commence a consultative process on necessary changes to the existing telecommunications regulatory regime.

The initiative announced today is a historic nation-building investment focused on Australia's long-term national interest. It will fundamentally transform the competitive dynamics of the telecommunications sector, underpin future productivity growth and our international competitiveness.

7 APRIL 2009
PRESS OFFICE (02) 6277 7744