NBN is about ubiquity, not just uptake and speeds

Abandoned FTTN tender expert panel member says a key element of the NBN is being missed

The National Broadband Network (NBN) is not just about consumer take up of faster Internet speeds. It’s about ubiquity, according to one of the expert panel members that evaluated the now abandoned fibre-to-the-node (FTTN) tender for the network.

In the wake of the release of the NBN Implementation Study there has been a raft of analyst and media commentary focussed on the question of uptake and the attraction of 100Mbps speeds on the NBN.

But much of it misses a key element of the network’s goals, University of Adelaide Professor Emeritus of Communications, Reg Coutts, told Computerworld Australia.

“The point is the NBN is not just about higher speeds, it is about ubiquity. Many of the problems with the current broadband rollout is it is patchwork quilt,” Coutts said. “Then you have to remember Australia is the fast technology follower market. We are still seeing the early days of the sorts of applications that require higher bandwidth.”

The fact the NBN will be a fibre-to-the-premise (FTTP) network that is rolled out to up to 90-93 per cent of the population while also addressing backhaul issues, is more salient than the question of the attraction of speeds for Coutts.

With Telstra’s copper network approaching the end of its life and few, if any telcos willing to fill in the blackspot patches in the country’s network quilt, Coutts maintained it is up to the Government to forge ahead with the plan as “the train has left the station”.

“Many countries are looking at Australia and are saying ‘Gee, I wish we could do that’,” he said. “Nobody can be definitive about when you hit the wall, but the wall is approaching and you can see it. Every developed country is going through this and because of the commercial context, the incumbent telco, with probably the exception of Verizon in the US, hasn’t got a business case for rolling out broadly fibre to the premise other than in restricted coverage to particular market segments in particular cities.”

“We are not building this so everyone can have an iPad,” he added “We are doing this so that we can restructure the deliver of health services, education, and science.”

(See Computerworld Australia’s comprehensive coverage of the NBN Implementation Study.)

In early 2009, a seven member panel of experts - including Coutts - knocked back all bids in a tender process for the original NBN plan of fibre-to-the-node because none were viable. The NBN Implementation study goes some way to validating this decision, Coutts said.

“Essentially to go down the FTTN road would mean something in the order of, greater than 50 per cent of the capital being put into digital cabinets in the suburbs," he said. "They then become an obstacle to the final solution… fibre-to-the-premise. Fibre-to-the-node was not a stepping stone to fibre-to-the-premise. In fact, if anything it would put it backwards. The second reason, of course, is in no other market have people proceeded with fibre-to-the-node other than an incumbent. It is a solution that is the right solution for an incumbent that has a copper infrastructure.”

Coutts continued that the NBN is not just about NBN Co and whether it can make a commercial return, but is also about restructuring the industry.

“This is a key issue. What we have seen over the years is a change in the industry’s structure from a telecoms as a public service to an attractive commercial sector with commercial returns,” Coutts said. “So that from Telstra’s point of view they have to seek commercial returns compared to other options they may have. Once you change the paradigm to it being a utility, funding roads and so forth, you are into a different rate of return. This is a message the Federal Government, I guess, has found challenging to communicate. The problem here is the telco sector is very capital impatient compared to what it might have been 40 years ago.”

Communications minister, Senator Stephen Conroy, was trying to push this message on the weekend, telling the ABC’s Inside Business program the NBN Co shouldn't be held to higher commercial return standards than those imposed on telcos like Telstra (ASX:TLS).

“Telstra have made the point themselves; they cannot build a business case to reach 100 per cent of Australians [with a fibre-to-the-home network]," Conroy said. “The best they have said they will be able to do is to reach 60 per cent of Australians. That is five capital cities and a little bit up and down, north and south of Sydney.

“So we have never taken the approach that we need to make the rate of return that the telco sector is used to. This is a project which returns all of the government’s money and interest costs, and makes a modest return of six to seven per cent."

(NBN Implementation Study: The graphs and charts)

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