Telstra and NBN Co come to an agreement
While it is possible for a National Broadband Network (NBN) in Australia to proceed without contribution from Telstra, this does not appear to be a sensible proposal. It does not make sense for the NBN to be built without Telstra’s assistance, and this forms the basis of the recent agreement between the Australian Government and Telstra. Putting egos and grandstanding aside, it is logical that the NBN should use as much of the existing network available in Australia as possible. It is always cheaper to use what is available than to build it again from scratch.
Telstra has an international reputation for being a first-class telecoms engineering company. The fibre network it has built is invaluable to NBN Co and can be extended from where it is now to reach even further into Australian homes and businesses.
Cooperation from all parties means that the network can be rolled out cheaper and faster, and without ongoing regulatory challenges. It is in the best interests of everyone involved to now move forward as a team, because for the first time industry incentives will be more aligned. Of course challenges will be encountered because this is a highly complex and competitive industry, but the current environment in Australia is providing a platform from which to move forward.
It is therefore not surprising to see that the Australian example is being closely monitored by other governments worldwide, particularly in the US and Europe, and it is also interesting to see that many countries are already adopting some of the ideas which were initially presented in the Australian NBN model. Australia also features very significantly in the commission that has been set up by the ITU/UNESCO, where broadband is seen as a catalyst for digital developments.
The recent agreement between Telstra and the Australian Government shows that Australia has a great team of leaders which has been able to overcome extremely difficult circumstances and deep-running conflicts to achieve a vision and a viable strategy that serves the national interest, and also makes commercial sense. So BuddeComm congratulates Senator Stephen Conroy, Minister for Broadband, Communications and the Digital Economy, and Telstra’s Chief Executive Officer David Thodey, as well as the teams which they have been managing.
A critical factor in Telstra’s decision is that the new structure which the NBN represents – a utilities-based basic infrastructure network that will be made available on a wholesale basis in a transparent and equivalent way – makes also economic sense to them.
The fact that Telstra has made this major step forward is vindication that this industry structure is not only advantageous to the social and economic benefits of our country, but that it also represents sound economics.
Declining telecoms revenues worldwide are an indication that we are reaching the end of the telecoms model which we have used for around the last 50 years. So with or without the NBN, the traditional telecoms companies will have to come up with new revenue streams anyway.
The internet has opened the way to a digital economy from which business opportunities are more likely to arise than from the old telecoms business models. The structure of the new NBN model offers a way to develop new trans-sector services that can run on top of the infrastructure, so the commercial benefits are moving away from the basic infrastructure towards what can actually be achieved with that infrastructure. This will result in what BuddeComm sees as the development of mini telcos, which will need to be created to look after the very specific needs of healthcare, education, smart grid and other services.
The commercial focus will shift to the value-added IT infrastructure which will facilitate all of these new services, and this is where companies such as Telstra will benefit. Obviously Telstra will face competition from others who we all be using the same transparent wholesale network providing equivalent access to all, and it will no longer have the advantages of its previous monopolistic position, but under its current leadership Telstra feels confident with its present circumstances and therefore should be able to maintain a strong position in this emerging structural separated environment.
At the same time the new structure will increase the total telecoms pie. BuddeComm predicts that this will add roughly a 30% increase to the present size of the telecoms market, as more funds from budgets from other sectors will be directed to digital investments. Because this is completely open to competition, there are good opportunities for all players in the market.
Paul Budde
- Australia – National Broadband Network – Changing the media model
- Australia – National Broadband Network – Competition and Regulations
- Australia – National Broadband Network – Critical Considerations
- Australia – National Broadband Network – Deployment Strategies
- Australia – National Broadband Network – Early Projects
- Australia – National Broadband Network – Government’s Trans-Sector Conference
- Australia – National Broadband Network – Industry at crossroads
- Australia – National Broadband Network – NBN Co and Infrastructure
- Australia – National Broadband Network – Overview & Analysis
- Australia – National Broadband Network – Telstra
- Australia – National Broadband Network based on Trans-sector model
- Australia – National Broadband Network Trans-sector projects
Tagged in: Australia, Broadband, National Broadband Network, NBN, NBN Co, Telstra
