NBN two years on: On a precipice

“Today we are here to make an historic announcement about broadband, jobs and the future of the Australian economy,” booms the ever-serious and authoritative voice of (then) Prime Minister Kevin Rudd.

“Just as railway tracks laid out the future of the 19th century, and electricity grids the future of the 20th century, so broadband represents the core infrastructure of the 21st century.”

The Rudd Government's newly-announced initiative would involve spending $43 billion to build a nationwide fibre-to-the-home network over eight years covering 90 per cent of Australian premises, with ambitious fixed wireless and satellite-based technology covering the remainder of the population.

The infrastructure-based dichotomy established by the Labor Government on 7 April, 2009 would haunt the National Broadband Network (NBN) over the next two years, as critics and fans alike argued over what exactly the national network announced that day constituted: A profitable government investment, a re-entrenchment of telecommunications or a vital piece of infrastructure, whatever the cost?

Nor was the project free of the spectre of previous failed government broadband initiatives. According to Labor, the previous Coalition Government was responsible for some 18 failed attempts to revitalise broadband in Australia, including the famously scrapped OPEL project.

But the press conference also signalled the official scrapping of the Rudd Government’s own initiative: An extensive private sector tender process carried out the year before, in which many tried but failed to convince the government of what was needed to push Australian broadband into the 21st century. As a result, the budget increased tenfold and the stakes became much higher.

It would be fair to say the announcement of the NBN caught many - including those in the industry - by surprise. But, two years on, there’s still little doubt the announcement and subsequent efforts to set up a wholesale-only, open-access government enterprise in NBN Co had one specific purpose: Deconstructing Telstra.

“There was no interest from Telstra to cooperate with the government,” says telecommunications analyst, Paul Budde. “In that sort of situation, it was a unified sigh of relief that the government did stick to its guns - that we have to have a structural separation, a national infrastructure, and NBN Mark II in place.”

Those guns were aimed squarely at the incumbent monopoly telco, according to Telsyte analyst Chris Coughlan. The timing of the NBN announcement - Telstra head honcho, Sol Trujillo, had only announced his departure from the company a month earlier - was fortuitous: It provided the government with the ammunition it needed to restructure Australian telecommunications.

The $11 billion financial heads of agreement signed last year by Telstra, NBN Co and the Federal Government solidified that goal. Rather than the government having to enact legislation that forced a Telstra separation, the previously reticent company was now willing to play ball.

“In my discussions with David Thodey, it became clear to me that he definitely was a person of the new age rather than the old age,” Budde says, attributing the decision - yet to be finalised - to the customer-focused CEO who replaced Trujillo. “But there was always that doubt: Can one person, like David Thodey, pull it through?”

The on-flows of the initial announcement have rarely been predictable, and, with the dust settled, there has been no shortage of those eager to share their thoughts on the issue. From constant demands of a cost-benefit analysis for such a massive project to the microscopic surgery conducted on every single decision made by those surrounding the project, it is little surprise when those suffering from a lack of proper broadband access call for the government to simply get the job done.

Coughlan and Budde agree that the NBN has been sidetracked to a degree by debate surrounding the project. “Having to front up to Senate committees, and answer the perennial question ‘Why don’t you do this with wireless?’ — any technologist will tell you that’s a silly question,” Coughlan says.

But with the network now set in stone - a fact even the opposition has reluctantly begun to admit - the conversation has slowly turned from whether or not the project should go ahead, to how the project should be rolled out and what an NBN world actually looks like.

For Telsyte’s Coughlan, the major issues going forward revolve around how a future telecommunications sector will work. It’s a murky issue, made more complex given recent arguments from Internode’s Simon Hackett that NBN Co’s pricing structure squeezes small ISPs out of the equation. Should they want to participate, they’ll likely be pushed onto a wholesale aggregation service operated by either Telstra or Optus - an eerily familiar story.

“I think there’ll be consolidation, but I don’t think it will actually improve unless new entrants come into the market,” Coughlan says. The pricing structure itself is likely to push bundling, he says, “to maximise the revenues they make from the service”.

While Budde acknowledges this is an issue, those internal industry concerns fade in comparison to the prospect of involvement from industries other than the traditional telecommunications players.

“At the moment I think the whole situation is still very much telco-centric - it’s all about Telstra, all about Optus, AAPT and god knows whoever,” he says. “The real issue is what is this going to do for our economy, for our society? We will see that increasingly these other sectors are going to be demanding, that they want to be looked after the same way Telstra and Optus are looked after.”

Budde’s prediction may be justified, based on recent rumours the NBN could become a project governed by multiple departments within the Federal Government. It’s hard to believe, given the project has become Conroy’s pet in many ways.

But with much of the legislation now in place and the NBN's rollout likely to be in full swing by the end of the year, it has grown from the squalling baby opening its eyes in the bright world of politics, to a toddler taking its first steps and gaining a voice amid the confusion.

Where the NBN heads next is anyone’s guess. It’s clear there are major steps that need to be taken: That many of the same debates continue to circulate among the wider Australian populace signifies a need for education, while recent tender issues indicate that it is not free from the risk of becoming another government-funded financial wreck.

What is clear is that the network has become much more than a niche, geeky issue - the outcome of last year’s federal election exemplified the need to embrace all Australians in the major decisions yet to be made, rather than a select few.

But the current ambivalent attitude from many toward the project - “it’s good, but it could be better” - may not yield the high short-term take-up NBN Co hopes will justify the $43 billion spend.

Follow James Hutchinson on Twitter: @j_hutch

Follow Computerworld Australia on Twitter: @ComputerworldAU

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