The Federal Government’s new $43 billion National Broadband Network promises to deliver Australians far more than fast movie downloads, writes telecommunications analyst Paul Budde.

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 Fibre to the Home (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 the government 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 that this 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 even 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 to 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 there won’t be a gatekeeper involved who clips the ticket of everything that 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 is the most effective way to build 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.

Once the network is deployed, healthcare alone could account for 25 percent of its capacity. Equally, given the right business circumstances, services related to education and energy/environment could take up another 25 percent. Over time the traditional telecoms and internet services will only account for perhaps 25 percent 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 is managing director of Paul Budde Communication ^[1] (trading as BuddeComm), a global independent telecommunications research and consultancy company, which includes 45 national and international researchers in 15 countries. Budde.com.au has 2,000 research reports covering 170 countries, 400 companies and 200 technologies and applications. The company operates what is believed to be the largest telecommunications research service on the Internet and has over 3,000 customers in 80 different countries.