Analysis of the National Broadband Network Announcement Australia
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 entertainment 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
April 7th, 2009 at 12:51 pm
Great analysis Paul. I found it surprising, but refreshing news that this whole broadband infrastructure saga looks to be finally heading in a positive direction.
April 7th, 2009 at 1:30 pm
It’s good news. At last we’re seeing some serious action on infrastructure that is not bogged down by ideological or legal games. Not before time.
As for Telstra, I’m not sure I understand why this announcement has been good for its share price. As you say, this project this will result in de-facto structural separation. Fiber to the home means Telstra’s monopoly on copper will be worthless. Any explanation Paul?
April 7th, 2009 at 1:41 pm
Paul,
I’d suggest that this outcome, which is certainly beyond my expectation, has been considerably been brought about by your contribution, and persistence, in influencing the Government, stakeholders, and beneficial users.
We all owe you a great deal of gratitude.
Well done!!!
April 7th, 2009 at 1:51 pm
Nice analysis Paul.. the ‘Killer Apps’ as envisaged by those wise old men in the Broadband Services Expert Group many years ago may now finally have a delivery vehicle & one independant of T!
April 7th, 2009 at 1:52 pm
Paul, I don’t see how this will happen. Hasn’t the government already comitted the taxpayer to worrisome levels of government debt over the next few years without this additional expense?
After the demise of Broadband Connect, the NBN, Project Vista (Qld Govt) and the WA’s state wide broadband, I feel very uncomfortable with goverment involvement in these schemes.
Government’s methods of selecting winners via overly restrictive (anal?) tendering processes with suffocating levels of probity inhibits intelligent choices.
We may criticise Telstra for all sorts of things but their feat with NextG could never have been achieved by a Canberra bureauacracy.
April 7th, 2009 at 1:53 pm
Great depth so quickly. Let us hope the correct physical wiring is used, the eventual privatisation is not another quick rich grab as those in charge now may well be well away from the scene. Having now said a few negatives it has been a long time coming, virtualisation with regionalisation will now arrive. It will be fantastic for private companies, healthcare, education and virtually everything else as expertise can be tapped like water. You will be able to live anywhere as even the most stubborn companies will be swept aside unless they join. Mind you, I wouldn’t want to be a share holder in an airline but maybe I’m wrong.
April 7th, 2009 at 1:55 pm
“As for Telstra, I’m not sure I understand why this announcement has been good for its share price.”
I suppose they thought Telstra would be blocked out so anything is better than nothing. And anything could be plenty, if they can change.
April 7th, 2009 at 2:07 pm
One way to get around the copper cable issue would be to change the Telecommunications Act to alllow individual households to actually own their home to street connection. Using an approved supplier, households could have their own fibre cable installed. That’s proper privatisation.
April 7th, 2009 at 2:15 pm
This is certainly interesting news and a good analysis Paul. Australia has been well behind with the rest of the countries in terms of such network availability.
Steve’s comment has merit though. Whilst it is good the Rudd Government has taken this by the horns and put in a significant investment in this regards, I am unsure if a Government controlled company will assist in innovation and be responsive to change as quickly as we like. Perhaps this is not an issue but history speaks for itself. Lets hope they are more responsive to change and opportunities for the benefit of all.
My only hope is that the new provider of NBN will ensure that disability access issues are at the forefront of their planning process as Australia will continue to experience a significant increase in the disability sector (including the ageing population). Unfortunately Australia is one of the worse countries in this regards so hopefully we can change all that.
April 7th, 2009 at 2:17 pm
First reaction is “ripper Rita”, we can get beyond the bit of bits of wire debate and look forward to reinventing Australia as a leader of digital services to a global market place.
Next stage is digital skills development for every small business in the country (60% don’t have a website).
Looking forward to “delivery”.
April 7th, 2009 at 2:24 pm
Thanks to all for their comments so far.
In addition to many media interviews in relation to today’s announcement, Paul is also involved in the SmartGridAustralia Conference and AGM today (www.smartgridaustralia.com.au).
Currently he is unlikely to be available to provide feedback on the blog until after 5pm, possibly 6pm today.
Please continue to post your thoughts and comments and I am sure Paul will read them with interest this evening and respond asap.
Thanks,
Alan
April 7th, 2009 at 2:31 pm
The more I look at this the more I like it. Congratulations, Paul, on being so instrumental in bringing about this outcome.
Funding it shouldn’t be a problem. I was at a conference a couple of years ago, and sat next to someone who represented European superannuation funds looking for government infrastructure projects in which to invest. They wanted low risk and understood this meant low returns. He only had about 150Bn Euro’s to invest…
April 7th, 2009 at 2:31 pm
Paul, thank you for your attitude and oppinion on the NBN. I am wondering how this service can possibily be supplied for a price below current service cost considering the 43 billion dollar investment.
April 7th, 2009 at 3:00 pm
“But the big work will require replacing the copper cables that are going into people’s homes by fibre”
Does this mean Telstra cables will be replaced with fibre. Then after the 5 year rollout the goverment will had it over to Telstra. So the Gov will update the old copper cable to fibre and hand it over to Telstra to run. Is that why Telstra pulled out in the first place? Why spend the money upgrading the network when the Gov will do it for you and then give it to you to run. Maybe we are not giving Telstra enough credit. sounds like a great business case.
April 7th, 2009 at 3:13 pm
Hi Paul
Heard you on radio and at least I understand whats happened without the usual over the top tech head language. My question is whos going to do the installation work? The government will need to employ thousands of newly qualified installers…technicians? How will exisiting homes need to change to accept the fibre cable? More work for the technicians . Seems like a great opportunity for kids and training providers as well as cable suppliers.
April 7th, 2009 at 3:15 pm
Like many, I think this is the best of decisions. The Aussie Bonds idea is a master-stroke, and otherwise the structure closely resembles the “Alberta supernet” model (or, the WA government Big Pipes version of it).
I’m now listening to Senator Nick Minchin (on ABC radio) display his complete lack of understanding of the technology and the processes.
No wonder we’re so far behind where we COULD have been, due to the ignorance and ideological dinosaurism shown by the last 3+ coalition Ministers that had responsibility for telecommunications!
(Alston, Minchin, Coonan?)
The current conservative WA State government acted hastily last Friday (3 April 2009) to ditch the Big Pipes broadband infrastructure proposal that its ALP predecessor could not get around to implementing from 2006 onwards. I wonder if that was in anticipation of the new NBN – in order to complement and augment the Federal NBN rollout – or just another act of petulance and isolationism by Buswell and Barnett? I suspect it was the latter.
Also, I was amazed by the lack of knowledge shown by consultant Paul Fletcher (on ABC Radio National’s Breakfast interview). I wonder how that bloke makes a crust? The interview was simply a promo for his new book. He’s deluding himself if he thinks someone will waste their dollars to read the naive viewpoints he expressed this morning.
Similarly, the Leader of the Federal Opposition (Malcolm Turnbull) has – by his petulant comments on the infrastructure funding – shown his inability to see beyond his failed strategy of confrontation and disagreement with anything the Rudd government implements.
The conservative side of Australian politics has a sorry record in respect of education, technology and innovation, during the last 10+ years. I predict they will be increasingly isolated if their leaders and spokespersons continue with spoiler tactics rather than contributing positively with the ideas and discussions that we need in this century.
April 7th, 2009 at 3:49 pm
Covering how to get a good ROI you can go on for hours but to position ourselves on the valid points made by Sydney L and MeyerM all you need to do is divide 43 billion by 22 million, add 15% Annual Maintenance and over 5 years that is $733 per year so $62,7 per month per person. And, keep it in mind that a lot of people also pay for phone, pay TV, printers and other items.
As the current BigPond network spends a lot of time huffing and puffing around Australia I would say you can get the NBN Maintenance price much lower over 10 years. Combine that with advertising, the huge cost reductions from all those state health departments, VIC police overruns, odd bod multiple Defence systems, crummy responses to catastrophes, the annual support costs per Microsoft XP and Vista, etc., it is a pretty good, low risk investment for both private and state investors.
All you will need is a large screen (if you wear glasses) and you can do all your processing online in a virtual manner from a dumb terminal and as far as security is concerned it must be safer. The PC world reached its plateau in 2005 so it is really time to move on and rid yourself of all the problems and simply download your spreadsheets, presentations, etc. to your own super USB or some other peripheral device as some people do today with pictures, videos, etc.
How many of you would say Yes to a dumb terminal with zero support?
April 7th, 2009 at 5:08 pm
Appreciate your quick coverage of this Paul, especially the impact on health and education … and not to mention small business. This is definitely a big and innovative challenge issued by the Government for itself, the Opposition, service providers and users. In the first instance it’s taken on that complex question of whether or not its better to have a government owner/controller or private owner when a natural monopoly exists. There is no black and white answer to this, but the Government have made a defining move. I would like to think that Telstra was smart enough to induce the Government to take on the upgrading project, but on past performance I find that impossible to believe.
One of the biggest challenges here will be implementation of the Public Private Partnership agreement and making that model work in a competitive way. PPPs dont have a great record of successes in this country. And any sign of implementation problems then wireless will take over and the costs/user will escalate… beyond that (Peter above) $62.70/month … perhaps by a large multiple.
But overall the concept may bring a new level of competition between all service providers and that’s going to be good for everyone… for a while at least.
April 7th, 2009 at 6:33 pm
OK – great FttH – at last and leading the world BUT what about the other end(s)? FttH is useless if it is not connected to a global switching network and for us on RIM/Mux boxes and pair gain this means the following needs to be explained carefully by the Minister.
1. Fibre will bypass the many, many Telstra RIM/Mux units deployed to users who are distant from an exchange or where Telstra wanted more line connections at low price. Right? or Wrong?
2. If right, just what does the home fibre connect to?
a. A fibre terminator at a Telstra exchange? Who owns this terminator?
b. A replacement for the whole Telstra exchange based on a digital TCP/IP infrastructure?
3. If wrong, given that the RIMs/MUX units may already be fibre connected
to an exchange, will the new corporation take over these units and refurbish them with fibre to each connected home/businesses? If this is the choice, then what are the legal implications since Telstra owns these mux units and the associated exchanges.
4. What are the implications for the base exchange units to which the FttH scheme will be connected or is the plan for a totally new telecommunications infrastructure for Australia – exchanges and all?
5. Timing – for those operating at 35Kbits/sec on pair gain do we really have to wait 8 years? Even the satellite system currently offered, at exorbitant prices, even with the DBCDE guarantee, and at ridiculously low speed and download “allowance” is totally unrealistic. The pressure must be placed on the new corporation, as tentatively indicated by Minister Conroy, to get rid of the Telstra “black spots” in regional, and even city, locations FIRST – but that means solving the connectivity equation.
Paul, what is your reading?
Bill Caelli
April 7th, 2009 at 6:44 pm
Congratulations Paul to you and your team for staying the course.
April 7th, 2009 at 7:39 pm
Paul, my congratulations (and deep respect) for you and your team! Here in the Netherlands things are going fast, but now we have to admit: “Australia docet”!
April 7th, 2009 at 8:35 pm
The anouncement of Prime Minister Rudd’s High Speed Broadband, Fibre to the Home Network, is something that most Australians will support. Once the new network is completed it will have an enourmous impact on Australia in terms of its economy as well as positive impacts socially, environmentally, educationally, as well as health infrastructure. It will also have a considerable effect on the future development of a cashless society in Australia, as the potential growth for ecommerce in the light of the new network will be enormous.
April 7th, 2009 at 8:40 pm
This is exactly what was needed – govt leading the delivery of an infrastructure for the “wholesale” information / telecommunications pipes.
Road, rail, electricty, gas, water … there is a mixture of public and private all through – telco for so long has been integrated and precluded investment at the “utility” end of town.
This model is not new – consortiums were formed to do exactly what is proposed now – the blockers were the liberal govt (national party were very supportive, ney!!! ready to fully support – just read about project homestead) and advisers who ended up in Telstra. The models proposed back in 2004 were for investment around $9-10B for non capital cities, and $15B for metro areas. So the $43B in todays $$ is hitting the mark.
My concerns, business risks are:
??? This is based on utility model that begs, no, demands seperation of retail from wholesale – electricity / utlity have operated with their LTIE for “infrastructure deployment” very well.
??? Following – will be the imperative from government to rework the regulatory environment for this “seperation” – in little bits (Uecomm, Pipe Networks and so on) have shown that a wholesale network operation can exist and be commercially viable), but we are now talking national / whole of industry outcomes
??> Would this mean that maybe Deanna Schiff would be best placed to take over Telstra – business acumen and led a very strong wholesale operation – food for thought
?? How much $$ would be needed if Telstra played ball as a industry player for LTIE – they have a lot of fibre out there – they just argue they find it hard to “seperate” their spaghetti. All those who did not feel that Telstra should be out of govt ownership will now be looking for answers, we know the questions
??? Systems and technology to manage seamless the interconnectios nd so will be worked up – but the proposed sale would requie planning aon this front from Day 1
??> This high capacity rollout (OK it is using FttX and wireless technologies – but that is irrelevant to end user BW demands) will be quickly used by social service needs – health, smart homes (electricity etc), education, video links etc. Childeren sitting at home accessing systems/applications/file storage at school through Citrix is tedious at times – these are government obligations – so no wonder a government would want to see a fibre based network in existence.
I know this is no small undertaking and is the big picture soolution wer have looking for – now we are looking for the blueprint from K Rudd and Team for Australians High Capacity Network – addressing technicalities around funding, technology, regulatory – game on.
Again thanks Paul – Australia may actually now lead the world and it will be great to see the people gear up and act on the dream.
April 7th, 2009 at 9:16 pm
Paul, a good analysis of a good initiative.
April 7th, 2009 at 9:49 pm
I don’t know about Saint Kevin, but I vote we start the cause for Paul Budde’s canonisation. Well done, Paul, for your coordination and guidance, and thank you Senator Conroy for listening to the real experts.
April 7th, 2009 at 11:02 pm
Paul,
Many thanks for your quick response and analysis. As the situation unfolds, there will be a lot of questions regarding the National Broadband Corporation’s set-up, its composition, its authority to oversight and supervision of implementation within the 49%-51% Private – Public make up.
How will the government raise the money (Infrastructure Bonds!)? and what mechanism will be put in place to attract over AUD20 billion from the private industry.
April 7th, 2009 at 11:44 pm
Great analysis Paul.
Only a few weeks ago we were in despair with little confidence that the Government would stand up to Telstra and set up a fibre network to connect us all.
From today’s announcement Telstra will have to face the consequences of their contempt for the tender process. It now appears likely that operational separation will also be imposed. The big question remaining is how long Telstra can hold up the Government’s project in the courts. Certainly the fact that the initial work will be carried out by a Government entity with its own enabling Act will make it more difficult for Telstra to mount a successful challenge.
Three cheers for the Government. (I never thought I would say that).
Well done
John
April 7th, 2009 at 11:49 pm
I dont agree with this. $47 Billion seems an incredible amount of money to spend on upgrading cable to fibre. With 1/47th of that – the government could engage private enterprise – or the CSIRO – to develop suitable technologies which could traverse existing infrastructure at speeds much greater than those promised by fibre.
Take a look at what south korea are doing or the swedes – 100mbps ? please save the time and money. by 2018 – the world has moved on to 1gps plus – and we are lagging behind in the 100mpbs.
http://www.engadget.com/2008/03/31/swede-used-40gbps-internet-connection-to-dry-laundry/
http://www.engadget.com/2009/02/02/south-koreans-could-see-1gbps-web-connections-by-2012/
April 8th, 2009 at 9:16 am
Praise. Total masterstroke. Rudd does irritate me sometimes, but at least he’s getting on with Broadband and the job of it’s construction. The potential for business is simply stunning.
April 8th, 2009 at 12:02 pm
Thanks for your great comments and contributions
Finally some time to breathe
I have been involved in some 35 interviews over the last 30 hours (it started at 6am yesterday). I am still enthusiastic and based on some of your comments even more. I also didn’t realise how much of the new plans can be found back in the FttH report we wrote for the Minister. He has certainly taken our advice into account – and he also publically has stated that to me. So we can make a difference!
When I spoke to the Minister yesterday morning I still had some hesitations, and I think Steve, Dean and Bill also pointed them out. My main concerns are the structure of the NBC, the implementation of the plan and the technology choice (we should follow the Amsterdam/Singapore models).
However, I don’t think you would have expected anything else from me than to say: Yes We Can!’ and ‘Let’s do this together”. I have already mentioned this to the Minister. We have a Roundtable and a dinner with him on May 7th and we are going use this to event to discuss with him how we can assist him in realising this fantastic opportunity. I am sure you will be in this too.
http://www.budde.com.au/Conferences/Roundtables_with_Paul_Budde/FttH_and_Digital_Economy_Roundtable__Dinner_with_Senator_Conroy_-_Thursday_7_May_2009.aspx
I also received envious but very supportive comments from the Obama Team, they are very interested and several of the experts are eager to participate in our work group to contribute and to learn.
Now the work starts and it is not the government who will decide in isolation what is going to happen but we all will have a say in this so let’s continue with the work that we have done so far and discuss our ideas and suggestions with him on the 7th.
Paul
PS Thanks to the fantastic BuddeComm Team at the office who managed my day yestarday a job extremely well done. Thanks also to the Smart Grid Australia conference delegates for their understanding of the difficulties I faced chairing the conference and managing the interviews.
April 8th, 2009 at 2:53 pm
Paul,
While your commentary on the NBN proposal has highlighted certain great possibilities it is exceptionally one sided. You assume much faster broadband A. a good thing for everyone, and B. wouldn’t have been provided by the industry anyway.
Many users will never require very fast broadband and competitiveness in the industry has improved enormously driving down prices while improving coverage. While improvements can of course be made the current proposal may jeopardise these gains.
You also fail to comment properly on the lack of clarity regarding the cost of these new services. It is expected, given the enormous sums involved to build the new network, that either broadband users will have to pay much more than they do today or the general tax payer will have to provide a significant subsidy.
Your hope, or rather expectation, that the health and education sectors will suddenly embrace IT&T is unrealistic based on a reading of recent history. These industries can be considered the worst users of IT&T and to expect a sudden transformation simply because faster broadband is available is bordering on naive.
Lastly you make no mention of the high handed treatment of the NBN bidders who were asked to submit proposals for one thing (Fibre to the Node) – while the Government secretly intended doing something significantly different from both a technological and financial viewpoint (Fibre to the Home). The socialisation of a significant portion of the telecommunications industry was not a clear component of the Labour party’s pre-election manifesto. Misleading the industry and the electorate in this manner weakens our system of Government. It is simply improper for a Government to take advantage of a broader economic crises to take action in support of a narrow ideology. An ideology which, once the implications are properly understood, is a view that is not widely held by the majority of Australians. This risks a significant backlash should the execution of the plan turn out to be underwhelming which may reverse hard won gains earned by left of centre political establishments.
What is required is a frank assessment of both the positives and negatives of the Government’s proposal. There is enough cheer-leading going on as it is and the public is reliant on sites like this providing critical and well considered comment. Overly optimistic and factually ungrounded sound bites should be left to politicians.
April 8th, 2009 at 3:47 pm
I applaud this announcement and believe this is perhaps the best infrastructure investment Australia has ever announced but I am worried about the fact that it is sorely lacking an implementation plan.
Once the dust settles and the media move onto shark attacks and bikie gangs again will this actually happen? The announcement has been made but a roundtable will be held in a month to discuss how to do it… Cart before the horse…
The scale of this type of implementation is ground breaking and to make such an announcement would require some solid planning beforehand surely?
Do the government really know what they are talking about?
Having been involved in building backbone networks in Germany and Switzerland I am in awe of considering fibre to the home in a country the size of Australia. Do we really believe a government led company has the efficiency to deliver such a project? Has the PPP model not failed and are we not in a credit crisis where bank borrowing has disappeared?
This is a great announcement but can we please move this blog on from back slapping to discussing how this will happen. I feel we have not seen enough of the latter.
April 8th, 2009 at 3:56 pm
The proposed NBN is the only practical option left after successive Governments’ total failure to separate the ‘natural monopoly’ component of the network from the outset. Telstra developed normal monopoly behaviour milking their cash cow and protecting their monopoly at all costs. Meanwhile customer service suffered and the monopoly culture spread through Telstra led by the Board and Executives.
The proposed NBN is a very bold scheme that should facilitate all Australian infrastructure and most businesses to develop efficient and cost-effective delivery for the future. For instance, ’smart’ electricity networks.
The proposed public-private partnerships could work well – or could be a disaster. The secret will be in the hands of the NBN Board. If ‘best practice’ partner selection, governance and contract management is applied, Australia will be the envy of the world. If not, expect derision, massive cost and time overruns and taxpayer revolts.
April 8th, 2009 at 4:39 pm
Paul, that was the result I was hoping for.
Sandra (above) is right when she mentions that the comments here are all leaning towards the positive side and hardly highlight the negative.
What I don’t agree with her, is her assumption (?) that health ‘can be considered the worst users of IT&T’.
Having worked closely with a large European medical systems developer, I can say that there is an enormous need for decent broadband. I would even go as far as claiming that the medical / health industry will be one of the major users of the network.
What I read in many negative comments is that ‘nobody needs these high download speeds’, which misses the point completely. These high speeds will create possibilities for TV, radio, phone, internet, B2B, B2C, remote health care, security, education all over the one fibre. I can name hundreds of services (and therefore jobs) that can be created or improved using this new technology.
But as always, people won’t use what’s not available. To draw the conclusion that therefore there’s no demand is why we haven’t got a decent broadband network today.
April 8th, 2009 at 6:13 pm
Sandra’s comments of course are beckoning for a reply. Thanks for sending us your critical note, much appreciated and yes we do need to look at it from all sides.
Of course I am also a bit apprehensive about the plans and I mentioned that to the Minister when he called me yesterday morning to discuss the new plans.
I went through a dozen or so previous plans over the last decade so a bit of healthy scepticism is not misplaced. Nevertheless this is visionary and big. As I mentioned in my comment above, as was the case in previous situations we (as the Aus FttH/Digital Economy industry work group) will again be supportive and work with the government to will do our best to get it right this time. We all have a role to play not just the government/minister.
Now to some of your more in depth comments.
Yes it will be good for everybody and everybody will be connected and you don’t have to pay for that. This will for example make it possible to deliver certain services (healthcare, education, energy management) free of charge. Because this will save costs elsewhere. I think Peter addressed the healthcare issue well. Other services will also be free to users (sponsored by advertising) and other services will have to be paid for.
What is one of the key roles of government in our society? In my opinion that is infrastructure – schools, hospitals, roads, energy, water, gas, you name it. The reason is that in general private enterprise doesn’t take on such massive projects. Especially in these economic times; which private company will invest in something that has a ROI of 5 or 10 years? The government’s participation makes it easier to secure the capital needed.
True the details of the plan are not there, but this is something I indicated above we do need to do together.
You complain on behalf of the bidders, however, most have welcomed the outcome and most can participate in the new set up. I am a bit disappointed that TransAct was not included together with Tasmania, but I think there is room for discussion.
But to come back to your criticism yes this can be derailed, no we don’t have a good political track record here, but should be a good enough reason to give up? You know my answer
Paul
April 8th, 2009 at 6:47 pm
could’nt we get a head start – using telstra’s and optus’ cable -this could be their equity in the project -there could be an early revenue flow – avoiding triplicate stringing of cable in some parts of the cities.
April 8th, 2009 at 7:06 pm
I know the benefits to egovernment will be tremendous and I don’t think that is a moot point. Other exisiting and new industries will also flourish if we can really build this network.
Back to the implementation issue. This is a ground breaking project that requires some serious expertise in planning, delivery, technology and management. Can you give some more information about the roundtable other than the costs?
Due to the poor telecom infrastructure that we have in Australia there has been a huge brain drain here for decades and I believe we will need more than a few local specialists (and egos) to decide how best deliver this project. The idea of an open forum to discuss this is theoretically a great idea but the fact you have to pay a high price to attend means that it will become a sales pitch for telco vendors.
Can you give us any information on a steering committee, agenda, purpose?
April 8th, 2009 at 7:07 pm
INFRASTRUCTURE LAYER: I would say that the issues at hand on good or bad need to be sorted into some layers as being left or right wing in ideology doesn’t help me much and as I pay US taxes for sales in the USA and I don’t like bailing out these bank losers or paying Australian bank fees. So, I will add some comments on building the infrastructure and must add I have worked and lived as a resident in a communist country and know how daft they were.
To make a direct profit is not in this dice or the current deck of cards. I don’t think for a moment that the Rudd government had such a plan up their sleeve when they came into government and the circumstances in 2009 have changed all the pack. I make this comment as a small business where no one has ever contacted me directly from any government, outside of tax that is. Any talk that our health, education and other areas won’t improve fails to recognize that most of their leaders are lost which is certainly not the case for the children and many retired folk. I meet these guys all the time on the upper APPLICATION LAYER and boy many of these clean skins are a real worry and their advisors are just about becoming twitterers.
The NBN is simply the next big step as was motorways, telephones, airlines, electricity, railways, dams, viaducts, certain ancient (and communist) Walls and so forth. The position of Private equity is normally downstream and government is upstream and that is the case of every government in this country including the last federal one (railway N/S). So, we must take care that the downstream rewards are given as first priority to the upstream suppliers which is of course includes the tax payer (tons of super recently wasted by copy cats) and those that dare to win, we won’t forget.
One last point is that the state governments and councils are in the middle of the Internet sandwich so watch out for those political infrastructures. My guess is that within 20 years the public will vote to dissemble the state and councils and replace them with something greater, and that doesn’t mean physical size as it will be based on logical matters and those include global warming issues; natural dykes instead of cement and much more, we really need NBN.
April 8th, 2009 at 8:02 pm
Good article,
However I disagree with a few points. This will not be cheaper than current broadband, all companies will be receiving it for the same rate wholesale, and they will all own the cable company. So you effectively need that company to be viable they will be charging a heap for the service.
Also Fibre the t House option is a large waste of money and infrastructure, currently there are fibres going up and down the east coast that are nowhere near capacity, and there are multiple companies running them. I like the Telstra model of FttN as much more cost efficient and would easily produce the 100Mbit with a fraction of the cost. They were saying the could do the country with $8billion weren’t they… The government could build this which would be over adequate for 90% of the coverage area and where necessary they could put fibres into particular buildings where it is user pays.
It is to expensive for what it is………..
Nice article!
April 10th, 2009 at 12:27 am
One of the great benefits of the NBN to my mind is that it will really encourage the establishment of virtual offices and take “working from home” to the next level. Rather than commuting up to 90 minutes each way to sit at a cubicle for 8 hours, this should allow for the cheap and effective virtualisation of the office (encrypted VPN, webCam, VOIP Phone, Departmental video conferencing software etc..) This will keep 100,000s of cars off the road, save money on roads budgets, company fixed office space not to mention really having an impact on the county’s carbon footprint. probably not that great for Toll road operators, petrol company’s …
April 10th, 2009 at 7:14 am
If the Rudd Government wishes to provide Australia with a new NBN system that is well and good but when they start to talk about banning opposition or confiscation of competitors plant and equipment I think they, and Australia, are on shaky ground.
April 10th, 2009 at 10:02 am
And as the phoenix-like Keynesian economics rises from the ashes…
How simply fascinating is this chess game going on here. Both sides seem to have done their scenario analyses and know the range of outcomes possible. However, the government has the trump card – legislation. 2 years ago it was un-thinkable, so maybe the T side has under-weighted the possibility, but right now it seems a single nationalised infrastructure is looming large. The losers? The mums & dads T share-holders. The winners? Everyone else.
Second most likely outcome is T with an upgraded last mile network.
The winners? T share-holders. The losers? Everyone else, since we will have paid for the upgrade but not share in its capital return.
April 11th, 2009 at 1:36 pm
Bruce M, you would know that every Australian, man woman and child, has a vital interest in the well being of Telstra.
This interest in Telstra, as I said, encompasses all Australians and is made up in four parts.
1. 1,400,000 Australian shareholder owners of Telstra.
2. 35,000 Australian Telstra employees.
3. Australians who have superannuation investments in Telstra.
4. Every Australian man, woman and child via the billions of shares held on their behalf in the Future Fund.
Mr Rudd should tread with care if he intends to destroy Telstra to advantage his creation the NBN. Whatever happened to his call for free and open competition?
April 11th, 2009 at 5:22 pm
[...] Analysis of the National Broadband Network announcement [BuddeBlog] [...]
April 11th, 2009 at 8:46 pm
Hello Paul,
In referring to wireless, you say at the end of your blog entry:
“in less densely populated areas it will be able to deliver a service equal to FttH”
I don’t know about what’s over the horizon in wireless tech, but are you saying that there will be 100Mbs wireless as reliable as FttH and with as low a latency in the near future?
As I understand it, once the fibre is in place speeds could go well into the Gbps in the decades to come. Will wireless keep up and be cost comparable? Will people in the bush really get the same level of service at a comparable price? If so, why doesn’t the government commit to 100Mbps everywhere?
I’m keen to get to the bottom of this because I live and work amongst the 10% that won’t be getting FttH. I’m sure FttH will be great for the nation as a whole, but I’m concerned people like me will be left behind.
April 11th, 2009 at 10:38 pm
The biggest barrier right now to many organisations wanting to embrace video communications using their IP networks is the tragic bandwidth available to them. This holds back potential improvements in productivity and communications and forces a reliance on traveling to meetings (at great cost to businesses and to the environment). Improvements to Australia’s network… better late than never… The roll on benefits to businesses and to our economy will be harnessed with these improvements. Bring it on boys!
April 12th, 2009 at 4:52 pm
As much as I would like to see broadband across Australia I have to say that the current NBN proposal by the government is the wrong approach. I note many comments above are perhaps from people who may have never experienced true broadband so let me just tell you that the difference between a 20 Mbps connection (available now in Australia) and 100 Mbps (the “future”) from a typical users point of view is not significant unless we start talking about VOD etc. People think they need a “faster” connection when in fact what they really need is a cheaper connection. (and with no download limits)
The fact is that if there was a significant demand for high speed broadband it would have already been deployed, and arguments that a high speed internet backbone will drive up productivity are misleading.
The best thing to for governments to do is to get the heck out of the way of technology and let demand take the driving seat. After all we seem to have been able to deploy 3G mobile networks in Australia without creating a government enterprise, so why do we need one this time?
Finally don’t you think it is funny that none of the responses to the government broadband tender were accepted? Could this be because what the government asked for was simply not viable?
April 12th, 2009 at 9:55 pm
Paul, thanks again for such a brilliant post and analysis of the National Broadband network announcement. Cheers!
April 13th, 2009 at 10:29 am
Digital Economy Industry Work Group
In preparation for the meeting with the Minister on May 7th I have prepared the first draft for the discussion report for the DEIWG, the aim is to present the Minister with our suggestions on how to go from here. If you are not on the DEIWG mail list and you would like to be involved that please let us know.
Paul Budde (pbc@budde.com.au)
April 13th, 2009 at 11:48 am
I share the concerns on the structure of the NBC as many others. My concern stems from the use of “Wholesale” rather than “Utility” and the expressed limit/target of 100Mbps – which to me translates into PON, which for an infrastructure that is meant to keep us competitive for decades to come strikes me as a limiting. I’ve been about too long and involved in too many initiatives to not be worried by these issues. I sincerely hope the trans-sectorial approach
Below is a quote of a post of mine from a discussion of the Linkedin “Telecom Australia” group about how I envisioned the network being structured…
——
I sincerely hope they structure it in a manner that is similar to the approach outlined in http://googlepublicpolicy.blogspot.com/2008/11/homes-with-tails.html .
In my opinion the government should concentrate their effort on fibre lead-ins, pit-and-pipe, to all premises back to aggregation exchanges/co-lo where different access technology providers are free to utilise those fibres for provision of connectivity to service providers. The access technology providers would be free to utilise whatever technology they wanted to (PON, Gigabit ethernet, DWDM, etc) over the fibre – note the customer’s freedom to choose the provider independent of their neighbour. Technologies such as http://www.glimmerglass.com/ would even allow for the customer to switch providers rapidly – so long as the network termination equipment was compatible.
That structure allows innovation at all layers with a fibre foundation and brings the customers to a market place where they can choose the best access, service provider and ASP mix they want. Smart access providers would leverage the ability to have more than one wavelength to allow for IP and non-IP solutions, or even concurrent delivery of different service providers to the one premise.
The real beauty is that the government doesn’t have to lock the country into a technology choice – it currently looks like they might be hitching them selves to the PON bandwagon.
April 15th, 2009 at 6:34 pm
[...] the national internet infrastructure to a decent standard. For a thorough analysis on this see BuddeComms analysis of the [...]
April 16th, 2009 at 9:00 am
Thankyou for your assessment, and influence. I see the current direction as a very good thing, and have been disappointed so many have viewed the NBN as “just like what we have now, but faster, if you ignore international capacity constraints”. What we have ahead is potentially so many more different things to just faster web browsing.
I’m already a telecommuter, and manage my employer’s Wide Area Network linking over a dozen sites, most of which are outside the reach of ADSL today.
One thing I believe has been overlooked by all is the feasibility of fibre in rural areas. We’re familiar with ADSL’s limitations on distance over copper. Voice is similar, with 30km making for a very noisey phone line. Prior to NextG’s rollout, Telstra had started replacing troublesome long runs of copper with fibre, using a system called “ScaDS”. At various points along a run (usually at the driveway to a farm, silo, factory, research station or other collection of settlements) would be a small box, usually solar powered, providing voice, ISDN, and sometimes Frame Relay data, though with a total uplink of 2Mbps per box.
If that was feasible only a few years ago, why not now, and with faster uplink onto the NBN? Fibre is better for long runs than copper. Fibre has a long useful life. Fibre has a lot more scope for upgrade than wireless. I see no reason why the NBN should stop at 90% – deployment might then slow down but the network should keep expanding.
Given the wholesale nature of NBN, and potential for different services to be provided in parallel over the same infrastructure, it should be easy for a telco to deploy (or make available) microcells and picocells – what a great opportunity to fill in mobile and wireless coverage!
April 16th, 2009 at 9:46 am
Thx Greg,
I am in full agreement and I hope we will look at this opportunity here in Australia as well.
You might want to have a look at rural fibre in Vermont: http://www.fiberevolution.com/2009/04/interview-tim-nulty.html
I have also covered at regular intervals the Fibre to the Farm project in the Netherlands.
Paul
April 21st, 2009 at 5:13 pm
Thx Paul
I believe that a small but key announcement is the mandating of FTTP in greenfield estates. This very quickly provides a new approach of FTTP provision that establishes a new marketplace model unhindered by previous fixed line telecommunications arrangements. It was important to establish a preferred approach for the future and not a homogenous approach compomised by needing to solve the more complex brownfield issues.
April 21st, 2009 at 7:59 pm
In principle I am totally supportive of the Federal Government’s NBN MkII decision, however there will be a substantial number of very difficult issues to be dealt with as the policy is further developed and implemented.
One that needs to be carefully considered by Minister Conroy and those that would advise him is the practical role that could potentially be played by the Local Government sector. In this context I believe that the indication that fibre links to premises will in some cases be via aerial cable installation is both short-sighted and can only represent an unnecessary “red herring” debate. It will be opposed by many communities and Local Councils and will distract the discussion away from the many other essential matters that will need careful consideration. Minister Conroy appeared to think that this probable opposition to aerial deployment of cable could be overcome simply by “consultation”.
I would propose an alternative approach in which the Federal Government establishes a historic direct and equal partnership with Local Government. This is a real opportunity for these two tiers of government to join together to achieve the most effective realisation of the FTTP policy.
The Federal Communications Department has already developed close and co-operative links with a number of Local Councils via previous infrastructure development projects under programs such as Clever Networks. These should be built on and extended.
Canberra needs to appreciate that it is Local Government that is “on the ground” and that a significant number of Councils are already working on how to get FTTP into greenfields estates and have been for some years. This experience and commitment should be recognized and taken advantage of within the overall NBN MKII blueprint.
Other Councils will struggle with the concept of mandated FTTP in greenfield property developments, especially if there is any insistence on aerial installation of cable. This should also be recognized and dealt with co-operatively and sensitively.
Another short point – Minister Conroy and his colleagues should reduce the emphasis on the “monument building” aspects of the NBN and instead spend more time promoting the social, economic and community benefits that will be the real raison d’etre of the initiative. The NBN is not an end in itself but will only be justified and justifiable for what it can do for the country and the community.
April 24th, 2009 at 1:18 pm
Thx Brad I know that you in the meantime also have send some comments for the discussion with the Minister on the Greenfield issue. So we will most certainly address those issues.
Dick I can’t agree more with you. Between 2001 and 2005 I spoke to 50 councils talking about the broadbanding of their local communities. Unfortunately sofar very little has happened here, partly because historically councils have never been involved in telecoms and this makes it very difficult from them to move into that area. I believe they can play a key role in this both on a infrastructure level (something councils are involved in) and community and business development. I also know that the Minister is keen in getting the councils involved but so far I have not seen a good plan of action on how these rather positive developments forwards, hopefully we do find a good formula for that.
I also red your letter in the AFR. The digital economy benefits that you state are exactly the sort of issues we need to raise. The naysayers only see the FttH as fast Internet and scaremonger that this will cost us $200 pm. So even what I would assume are well informed people apparently ‘don’t get it yet’. This means that we do need to continue to emphasise that the FttH as critical infrastructure for the digital economy. I am also using my electricity vs. gaslight example to illustrate that see: http://www.budde.com.au/News_and_Views/2009/April/Malcolm_Turnbull_and_the_gas_light.aspx
April 27th, 2009 at 10:37 am
[...] We have heard positive public comments from potentially important participants in the NBN such as Telstra, Optus, Internode, Primus, Unwired, Austar and Aarnet. If you read the contributions to our blog on this issue you will see there are many more people supporting the government’s plan than opposing it. See Analysis of the National Broadband Network Announcement Australia. [...]
April 28th, 2009 at 4:34 pm
Sorry to rain on your parade but no one on here has given a thought to
whether the finance will be available to construct this “Business as Usual”
project. Peak Oil occurred in the middle of 2008 and the current financial
global crash agrevated the sub-prime loans affair to such an extent that
when some recovery does occur the financial system will run up against
energy depletion.
It is most unlikely that the energy will be available to finish the NBN.
The economy will slow in lock step with energy powerdown and money will
be very tight and probably not available for the NBN.
The politicians do not acknowledge the problem but never the less it is
upon them already.
April 29th, 2009 at 1:02 pm
Sorry to rain on Barry White’s parade, but Peak Oil is a furphy. Well-meaning but ultimately dishonest advocates of a move away from fossil fuels use it as a scary “stick” to bring about change, but the “carrot” of cheap and clean alternatives is the best way to change behaviour toward renewable sources. The oil price is half what is was last year, which would simply not be the case if low-cost oil reserves were running out, moving drill rigs onto the medium-cost ones.
Back on the topic of paying for FttH, it is inevitable that it will be built, so it is good to get underway sooner rather than later. In my view, a combination of paid entertainment delivery and remote-sensing and control of electricity supply at premises will be major contributors to the revenue stream and cost offsets respectively. If the recession eases next year as predicted, it will have very little impact on funding sources for this ten-year project, which Barry agrees is Business-As-Usual infrastructure.
Forgetting about the Peak Oil claims, it is fantastic to see a leap in R&D into better solar cells (e.g. the low-cost polymeric materials whose sub-molecular structures are being fine-tuned using visual analysis by Melbourne University’s new sub-angstrom-resolution electron microscope), as this is where a lot of Australia’s future energy will come from. All our energy has the sun as its ultimate source (apart from the moon’s gravitational contribution to both ocean waves and ground stress that builds geothermal energy). The sun enables all life, which decomposes producing oil and gas, for instance. Although we are now in our third year of global cooling after the thirty-year warm cycle of the mid-1970s to mid-2000s, according to NASA’s latest observational data, our huge available sunlight will eventually be converted much better than current expensive cells can manage and will make local power generation ubiquitous and even portable. Parabolic mirrors for direct solar heating of water at coal power stations are already starting to reduce the amount of coal needed to drive their base-load steam turbines. I can’t wait to see what happens next in this exciting technology field, and frankly get very tired of hearing pseudo-science horror scenarios.
May 8th, 2009 at 6:01 pm
Irrespective of what any of us say or think there are problems that Conroy’s $43Billion scheme will not and cannot address, and unless they are resolved it could make the whole notion of FTTG irrelevant. This is because the trunks may be clogged as suggested in this article.
FTTG – Fibre To The Gate – sounds so much better than FTT Premises – except that it wont apply to the farm gate
May 19th, 2009 at 12:08 am
I am also looking forward Telstra building its FTTH in the Metropolitans to compete with the NBN. It is certainly good news for our consumers.
June 12th, 2009 at 10:54 pm
[...] a clear realignment of the Australian Government NGA priorities. You can read Paul Budde’s excellent analysis on the matter, and the Government’s announcement for more [...]
August 14th, 2009 at 11:05 pm
Telsta’s destruction is LONG OVERDUE I’m sure most Aussies would agree it’s time for the monopoly to end whatever the cost
September 30th, 2009 at 7:54 pm
hi, This is a healthy activity of Australian Government.It is a good new for whole Australia.