NBN 2.0: What future for Australia's National Broadband Network?

The future of the NBN hinges on the outcome of NBN Co's strategic review of its operations and the rollout of the network

The Liberal-National Coalition may have won the federal election, but whether it ever won the argument over the National Broadband Network is open to debate.

The Coalition took a broadband policy to the election that promised to complete the NBN – albeit, a very different-looking NBN – quicker and cheaper than Labor could.

Under a Coalition government, the NBN will be rolled out "using a mix of technologies that will provide high speeds at a reasonable cost". The policy put in place by the Labor government relied primarily on fibre-to-the-premises for the rollout, except for remote and regional areas, where satellite or fixed wireless would be used instead.

Communications minister Malcolm Turnbull has already introduced sweeping changes to NBN Co leadership, tapping ex Telstra CEO Ziggy Switkowski for executive chairman and installing a new board for the organisation.

A review of NBN Co's operations and the NBN rollout will be led by former Telstra exec JB Rousselot. Precisely what technology mix will be used for the NBN is likely to be made clear after the completion of the review.

NBN Co should stop behaving like Telstra or the Tax Office and start behaving like a customer-focussed, action-oriented service company.

Steve Dalby, iiNet

In the lead-up to the completion of the review, Computerworld Australia spoke to Steve Dalby, chief regulatory officer at Internet service provider iiNet; analyst Paul Budde of BuddeComm and independent telco analyst Chris Coughlan to gauge their views on the NBN Co strategic review and the future of the NBN.

Turnbull's made it pretty clear that there's going to be some changes to the technology mix for the rollout. Do you have any thoughts on that?

Steve Dalby, iiNet: The original NBN concept was a mixture of delivery modes, being fibre, fixed wireless and satellite. The post-review NBN is likely to deliver a national infrastructure with very different proportions and introduce additional modes, such as FTTN [fibre-to-the-node], HFC [hybrid fibre-coaxial] and possibly a number of FTTH [fibre-to-the-home] companies.

Both approaches have the goal of providing Australians with access to high-speed Internet access, but the lack of standardisation may create barriers for new economy companies looking to broadly deploy online applications and services. With a variety of technologies delivering patchy performance, online companies will struggle to accurately define an addressable market.

The pressing change required of a rebooted NBN is an economic model that encourages consumers and businesses to take advantage of the high-speed Internet access delivered by the new network. This is required on both the supply-side to permit the development of new online applications and services; and also on the demand-side, as customers take up those services.

iiNet has ongoing concerns over the economics of NBN Co's current CVC [Connectivity Virtual Circuit] charges. At the moment, the NBN's fee structure treats the abundant capacity on the NBN as if a scarcity existed. When access to abundance is irrationally constrained by NBN Co, bogus scarcity is created – like an artificially enforced famine.

NBN pricing in terms of access may be manageable if the CVC charge is brought into the world of the rational. iiNet continues to be very concerned about input costs from NBN Co which are disconnected from real-world costs.

Depoliticise the NBN; make it a business project rather than a political one

Paul Budde

Paul Budde, BuddeCom analyst: The overall longer term goal should remain to maximise FTTP. However, there should be more flexibility with the use of interim technologies to build that road to FTTH. Wherever it make sense to make changes such as the use of VDSL in MDUs [multi-dwelling units] and the use of other providers in, for example, greenfield markets that should be pursued as well.

Chris Coughlan, independent telco analyst: The Coalition government policy is to use the most economical technology to provide high-speed broadband to Australian households and businesses. The current strategic review and other work will determine what the mix of technologies will be used to meet this objective.

If we examine how the original NBN Co technology mix was determined, it was predicated on Telstra’s non-compliant response to the government’s original FTTN tender. We now have a Telstra leadership that isn’t particularly protective of their fixed access network, having already agreed to disconnect customers from the copper network as NBN fibre is deployed.

Recent interviews with David Thodey show that Telstra is willing to renegotiate the NBN Co agreements and have a larger role within the deployment.

How about changes in terms of how NBN Co is managing the rollout process? For example, could there be changes in terms of rollout priorities or construction partners or changes in terms of rollout priorities?

Budde: There are only so many construction companies in Australia, so I don’t think making major changes here is a real option. You can question if NBN Co or a telco (Telstra) should be given the management of such construction. However, if Telstra is considered that will create anxiety among the industry which could lead to regulatory issues and if regulations are going to be unravelled than there will be significant delays. So an overall NBN Co strategy looks to me the most feasible option. Rollout priorities could be good however, the question will be – if you are going to change what I understand is the most cost-effective rollout that has been developed so far, [for] a prioritised one will, that increase the overall costs – and will that be acceptable to the government?

I would not be surprised to see a deal that is not necessarily expected by the industry, based on Telstra taking a larger role with the NBN going forward.

Chris Coughlan

Coughlan: The original rollout priorities were influenced by the last government’s need to placate the independent MPs holding the balance of power, and as such probably were as efficient as could be reasonably be expected. Any new rollout schedule should be done with efficiency as a primary objective.

A change in access technology will require a number of things such as: Process to select a vendor for the FTTN equipment; new designs for the rollout of the technology; work instructions need to be written for the contractors.

The contractors currently deploying the FTTP should be capable of deploying FTTN given the appropriate training. NBN Co and their shareholder may choose to renegotiate contracts with the prime contractors to better promote and incentivise the rollout.

What about on the regulatory side of things? Part of the Coalition's NBN policy states it "will remove or waive impediments to infrastructure competition introduced to provide a monopoly to Labor’s NBN". TPG recently announced that it intends to offer FTTB plans, which has generated some discussion on the possible repeal of 'anti-cherry-picking' regulations, for example.

Dalby: The regulatory environment needs to stimulate the exploitation of telecommunications for the benefit of all Australians. Telecommunications has always been a mission-critical enabler for both commercial and community outcomes. In the past, this was more noticeable for business and government, but the price/performance ratio has changed massively in the past 10 years, such that individuals can now easily afford better communications services than were available to the largest corporations only a short time ago.

"So what?" you ask. So the world has changed, that's what.

Yet, the regulatory environment is still stuck in the circuit-switched telephony world of 1990. It needs an overhaul.

On the FTTB 'plans' of our competitor, it’s notable that while TPG has issued its press release suggesting the possibility, iiNet has been installing such services for some time. We have more than 60 MDUs using such an approach.

Budde: If cherry picking will be allowed, the bill for the government will simply become much higher and that would totally undermine the principle of a utilities based return on investment for the government. I can’t imagine that this government will want to run that financial risk.

Coughlan: The Coalition government’s policy was to re-introduce competition in the access network, so I expect they will look to modify this legislation and other legislation. Currently the minister has the power to allow applicants dispensation. However, should the legislation be reversed the implications are that it will add risk to the NBN Co business case, in particular its ability to cross-subsidise regional and rural Australian higher costs with higher margin metro services.

Malcolm Turnbull has promised a "total change of management culture" at NBN Co – what do you think needs to change within the organisation?

Dalby: They need to get rid of 90 per cent of their lawyers and focus on enabling their customers (like iiNet) to be successful in rolling out services. Stop behaving like Telstra or the Tax Office and start behaving like a customer-focussed, action-oriented service company.

Budde: It was heavily politicised because of the Coalition's initial threat to kill the NBN at all costs and the political importance of the NBN to the previous govt. If the politics are taken away, I believe the NBN Co culture is a good one and if they are given the time to adjust to the new government then NBN Co will be fine and no major changes to their culture will be needed.

Coughlan: There is a systemic danger with start-ups of this kind with a seemingly bottomless budget that they create inefficient organisations especially when they are allowed to grow quickly. A review of structures and functions is probably needed to ensure that the organisation is delivering to the core objectives and not focused overly on non-core functions.

Any other thoughts on possible changes either on the government side in terms of legislation or by NBN Co?

Budde: Depoliticise the NBN; make it a business project rather than a political one. Let engineers and business people make the decisions within an overall broad policy concept vision/setup by the government.

Coughlan: It's very early days in this process. My expectation is that any renegotiation with Telstra will be long in the end – to resolve the previous agreements the last government had to step-in and resolve the difference in expectations. I would not be surprised to see a deal that is not necessarily expected by the industry, based on Telstra taking a larger role with the NBN going forward.

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8 Comments

equality

1

My predictions are, expensive Telstra controlled networks, fibre to the home options at very high prices, now not a cheap service available to one and all, new government and corporate mates want higher outrageous profits and big restrictions to apply for the lesser fortunates in society.

The original concept now being altered to satisfy corporate greed and Turn Bull slitherings.

John Young Edgar

3

Profit means power .Power means to charge what ever the market can pay . the consumer market is just a cash cow that keeps bleating but will continue to pay. Telstra know that ,the banks know that and the liberals know that, and soon the consumer will know that

Goresh

4

What future for Australia's National Broadband Network?

Dead, Buried and Cremated I would say.

The simple facts are, as highlighted in this article, the coalition has made mutually exclusive promises with regard to the NBN roll-out.

It cannot provide an affordable service in the country without a metro cross subsidy, but has promised open slather on infrastructure cherry picking.

Thodey may be more willing to negotiate, but he has also made it abundantly clear that he will NOT be giving away the copper for the $0 that the coalition FTTN model is predicated on.

Certainly to date the coalition has shown itself for more inept than the previous governemnt in dealing with contractors. Roll-out has fallen by 90% since the election.

Goresh

5

What does it say about the computer knowledge/skills of a publication calling itself Computerworld whaen it is the only site I visit incapable of accepting comments from the second most popular computer web browser?

Rohan

Staff

6

@Goresh What browser? I can see two comments from you (and I'm posting this from FF, which is the world's second most popular browser, at least according to some stats.)

Davy Adams

7

Just tested on FF, IE and Chrome... couldn't see a problem. Goresh can you still replicate the issue? What browser was it?

Max

8

I do not believe that it is viable for Australia to provide equal infrastructure to every corner of the country. Do we believe that every country town should have its own underground railway system? There's pros and cons living in the city or country - density of population increases viability of service delivery. Call it cherry picking or whatever, the fact remains this is a big country with very few people.

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