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National Broadband Network Corporation Limited
Company typeGovernment-owned corporation
IndustryTelecommunications
Founded2009
FounderAustralian Government
HeadquartersMelbourne Central, The Tower 360 Elizabeth Street Melbourne 3001,
,
Australia
Area served
Australia
Key people
Mike Quigley (CEO)
Websitenbnco.com.au

The National Broadband Network, is a Fibre to the Home (FTTH) network set to be built in Australia. The Australian Government has established a Government business enterprise, NBN Co Limited[1], to design, build and operate an Open Access Network providing download speeds of 100 Megabits per second to 90% of Australian homes and businesses, for which it is offering to contribute an initial cash injection of up to A$43 billion. The remaining homes and businesses will be supplied using wireless and satellite technologies. The network will be built as a public private partnership.[2] It will be the largest single infrastructure investment in Australia's history.[3] Work on the rollout in Tasmania began in July 2009 and the first services are expected to be available by July 2010.[4] On 20 June 2010, Telstra signed a non-binding agreement to participate in the National Broadband Network rollout. [5]

Projected characteristics

The National Broadband Network will be built with the following characteristics:

  • Download speeds of 100 Megabits per second for 90% of Australia homes and businesses
  • The remainder of Australian homes and businesses will be serviced by a combination of next generation wireless and satellite technologies with a minimum speed of 12 Megabits per second
  • Network to be operational progressively over 8 years as a public-private partnership
  • Be able to provide high quality voice, data and video services including symmetric services such as high definition video-conferencing
  • The Network is expected to cost up to A$43 billion with the government issuing infrastructure bonds to allow private investment in the network, this will be capped at 49%
  • Network to be an Open Access Network
  • Have a uniform pricing structure, regardless of customer location
  • The Australian Government will hold a 51% share and will operate the network for ten years once completed before selling down their stake.
  • It will require the creation of 47,000 new jobs over the next eight years and will support 25,000 jobs every year until completed[1]

Bidders

The following organisations placed bids before the deadline on 26 November 2008:

Bidder
 Coverage Details
Acacia National Proposed 100% population coverage.[6]
Axia NetMedia National[7] Proposed use of FTTP in metro areas and FTTN in regional areas.[8][9]
Telstra National[10][11] Submitted a 12-page bid[12] but withheld a fully detailed bid and proposed 90% population coverage.[10][13][14]
Terria/Optus National[15] Optus Networks Investments submitted a 1000-page bid[12] on behalf of Terria,[16] proposing use of FTTN.[9]
Tasmanian Government Tasmania[17] Proposed FTTH and wireless services to remote areas not covered by FTTH
TransACT ACT[18]

On 15 December 2008, the Australian Government excluded the Telstra bid from the process as it did not comply with the RFP (Request for Proposals).[19][20]

On 7 April 2009, the Australian Government announced that the RFP had been terminated and that the Australian Government would instead construct a A$43 billion FTTH network to supply 90% of the population with speeds of 100 Megabits per second the remainder being served by next generation wireless and satellite technologies with speeds of 12 Megabits per second. The decision was based on a report stating that the remaining bids did not present value for money.[21] The Tasmanian Government was selected for fast-tracked negotiations to build on its proposal and work within the federal government's revised plan, with a view to starting construction in July 2009.[2][21] Because the RFP was terminated, companies such as Telstra can still purchase infrastructure bonds in the new company.

History

The NBN was proposed during 2007 as an election promise by then opposition leader Kevin Rudd.[22] The proposal both competed with and was to run alongside the then government's 'Broadband Connect' project, which was awarded to OPEL Networks in the lead up to the election, but was cancelled in April 2008 once Kevin Rudd's Labour Government came into power.

Following Kevin Rudd and the Australian Labor Party winning the 2007 Australian Federal Election, a Request for Proposals (RFP) was issued, with proposals submitted by Telstra, Terria, Canadian based Axia NetMedia, Acacia,[23] as well as an individual state bid by the Tasmanian Government and a Canberra based bid lodged by TransACT.[24]

Following the release of network information by incumbent carriers, a closing date of 26 November 2008 was set for the RFP.[25]

The incumbent carrier, Telstra, was removed from the process on 15 December 2008. According to a spokesman for the Communications Minister Stephen Conroy "The expert panel has determined that Telstra’s submission to the national broadband network is not compliant. They are out of the process for the moment."[26]

On 7 April 2009, Prime Minister Kevin Rudd and the Minister for Broadband, Communications and the Digital Economy announced that the NBN would be built by the Australian Government as none of the private proposals have been "value for money."[21] Although the RFP was terminated, the Tasmanian Government was chosen for fast-tracked negotiations to begin construction of the NBN in Tasmania.[27]

Tasmania - Stage Two

On 21 October 2009, The Federal Government and Tasmanian state government announced stage two of the National Broadband Network roll-out in Tasmania[28]. Stage two will include the areas of Sorell, Deloraine, George Town, St Helens, Triabunna, Kingston Beach and South Hobart[29].

Industry Reactions

Initially, key communication industry players kept a fairly neutral and diplomatic opinion of the FTTP NBN plan. However, after AAPT labelled the NBN plan as "absolute rubbish" on 19 Nov 2009[30], others quickly took their sides. Telstra softly opposed the plan, "You use the right technology where it is cost-justified", indicating support of the idea of the NBN[31] - they also called for "debate on the need for a national broadband network". TPG are growing wary of the plan, calling for proper Cost-Benefit analysis[32] - a common request to the Government. Optus appears to currently support the plan, after initially opposing it.

Most industry players also have short-term plans for network upgrades, reaching speeds of 100Mbps yet only covering smaller areas of population. Optus announced trials of LTE hardware[33]. Telstra announced an upgrade to their HFC network in Melbourne[34], closely followed by Optus but in 3 cities[35].

TransACT has already built up the country's first dedicated FTTH gateway in the new suburb of Forde in the ACT region. It's offering triple-play services( voice, video, broadband )via FTTH links at up to 100Mpbs download speed to 4 new greenfield suburbs namely Forde , Fraklin stage 2/3 , Crace and Casey 2 as off 2009 .

Such build-up can be perceived in a mixture of ways, opportunistic - with the Government stoking the growing hunger for bandwidth, pessimistic - the industry have high doubts that the NBN will be completed, competitive - getting ahead of the NBN, even providing an environment which makes the NBN unfeasible, and Government Sale - building with a desire to sell to the Government for a share in NBNCo.

Criticism

The main criticism is the cost. $43 billion divided by 8 million Australian households[36] is $5,000 per household. Though this criticism is somewhat valid it does not take into account other uses of the network such as cellular network back-haul (which is negligible as many carriers have already invested in their own), pay television, on-demand services and business-to-business use of the infrastructure. No cost benefit analysis has been performed.[37]

The Government has indicated a wholesale price of between $40–$70 compared, to $16–$30 for an ULL [38]. If the upper limit of $70 is added to a typical retail margin of $50, it would cost $120 just for broadband alone. Monthly fees of over $200 have been suggested, while current fees are typically about $50 per month.[39] Of course bundling extra services would be more valuable as the wholesale connection is already paid for, but with service delivery such as telephony and video content moving toward internet based delivery, the ability to bundle extra services may be a pointless feature.

Compounding the issue of cost is competition. In order to pay off the capital of building the NBN, a high proportion of subscribers are needed before the revenue is greater than expenditure (which includes interest payments). The figure is likely between 60%[40] and 80%[41]. The forces against the NBN include current communication infrastructure, pre-existing fibre backhaul, Microwave and Dark fibre already used by big corporations, POTS copper network, HFC, green-field FTTP, 3G wireless networks and WiMax networks, as well us planned infrastructure, LTE[42] and HFC [43]. All of these networks will act in the marketplace as competition for the NBN, and the wireless alternatives are also quite interesting, given that they enable mobile freedom - which is becoming very popular[44]. If the required market penetration is not reached the NBN company will be running at a loss, requiring higher subscription fees, cost cutting, further investment or Federal Tax bail-out.

The key benefit of the NBN fibre is higher bandwidth. However, Existing ADSL Bit rate lines provide well over 1.5 mbits which is sufficient for DVD quality video with modern CODECs as demonstrated by the ABC's IView system. It is difficult to determine how many people will pay a substantially higher cost if the only new application they receive is very high definition video.

A further criticism is that key documents have not been released which makes it difficult for people outside the government to assess the proposal.[45]

A related criticism of the government and the ACCC is that in making competition an end in itself, rather than a means to an end they are being ideological.

In November 2008, potential tenderers iiNet and Telstra criticised the government for a lack of certainty over the regulation of the new network.[46] Corporate competition issues threatened the tender process, with Telstra insisting on assurances that the government will not force Telstra to separate the NBN from its retail operations in the future.[47] Following the failure of the RFP in 2009, both companies showed support for the Government's plan to build the network itself, with iiNet managing director Michael Malone stating that this was "like Christmas for Australian broadband consumers!"[48][49]

A subsequent announcement on September 14, 2009 that the Australian Government will force Telstra to separate its wholesale and retail operations, if successful, will enable Telstra's wholesale arm to play a bigger role in the NBN's rollout and mitigate the risks that Telstra would compete against the Government-owned corporation.[50]

Continued speculation has dogged the National Broadband Network tender process, despite this the Minister for Broadband, Communications and the Digital Economy has stood firmly behind the 2007 election commitment.[51]

The then opposition leader Malcolm Turnbull claimed: "This makes the Whitlam era look modest and unassuming".[52] Turnbull has compared the project to the failed Sydney cross-city tunnel and said that this time Australian taxpayers are taking the risk and wearing the loss.[53]

A web campaign has been set up against the plan, NoNBN.org. They claim the "high" monthly costs of the NBN will be out of reach for over 3.5 million Australians. They also question the "productivity" gains spruiked by the Federal Government, as only HD video streams need more bandwidth, but cannot be considered more productive.[54]

The topic is also hotly debated in the Whirlpool Forums.

Alternative use of $43 billion

There is constant argument in the Australian media to spend the $43 billion on critical infrastructure instead, such as healthcare, transport, education.[55]

References

  1. ^ a b "New National Broadband Network" (Press release). Joint Press Release: Prime Minister, Treasurer, Minister for Finance, Minister for Broadband. 2009-04-07. Retrieved 2009-04-07.
  2. ^ a b Rob (2009-04-07). "Australia to build broadband network". Reuters. Retrieved 2009-04-07.
  3. ^ Egan, Michael (2008-09-05). "A separate company for a broadband network". The Age. Retrieved 2008-09-07. {{cite news}}: Unknown parameter |coauthors= ignored (|author= suggested) (help)
  4. ^ "Tasmania NBN Co Limited established".
  5. ^ "Telstra signs National Broadband Network agreement". Australia Times. 2010-06-20. Retrieved 2010-06-20.
  6. ^ Foo, Fran (2008-11-26). "Acacia confirms national NBN bid". The Australian. Retrieved 2008-11-26.
  7. ^ "Axia Submits Australian NBN bid" (PDF) (Press release). Axia NetMedia. 2008-11-25. Retrieved 2008-11-26.
  8. ^ "Canadian plan for national broadband network is 'faster, cheaper'". The Australian. 2008-12-11. Retrieved 2008-12-10.
  9. ^ a b "Axia shows its NBN hand". Australian IT. 2008-12-11. Retrieved 2008-12-11.
  10. ^ a b "Telstra submits NBN proposal" (Press release). Telstra. 2008-11-26. Retrieved 2008-11-26.
  11. ^ McGauchie, Donald (2008-11-26). "National Broadband Network - Telstra Proposal" (PDF). Telstra. Retrieved 2008-11-26.
  12. ^ a b [1]
  13. ^ "Telstra broadband bid is valid:Conroy". ABC News. 2008-11-26. Retrieved 2008-11-26.
  14. ^ Bingemann, Mitchell (2008-11-26). "Telstra 'bid' a joke: Optus". The Australian. Retrieved 2008-11-26.
  15. ^ "Optus launches NBN bid backed by TERRiA" (Press release). Optus. 2008-11-26. Retrieved 2008-11-26.
  16. ^ "Terria NBN bid morphs into Optus bid". iTWire. 2008-11-26. Retrieved 2008-11-26.
  17. ^ "Tasmania's National Broadband Network bid lodged" (Press release). David Bartlett, Premier of Tasmania. 2008-11-26. Retrieved 2008-11-26.
  18. ^ "TransACT's National Broadband Network proposal to deliver a world-class solution for the ACT" (Press release). TransACT. 2008-11-26. Retrieved 2008-11-26.
  19. ^ "Telstra proposal excluded from further consideration under Government's NBN process" (Press release). Minister for Broadband, Communications and the Digital Economy. 15 December 2008. Retrieved 2 September 2009.
  20. ^ "Commonwealth excludes Telstra from National Broadband Network RFP process" (Press release). Telstra. 15 December 2008. Retrieved 2 September 2009.
  21. ^ a b c "National Broadband Network: 21st century broadband". Department of Broadband, Communications and the Digital Economy. 14 August 2009. Retrieved 2 September 2009.
  22. ^ "Building Australia's Prosperity - Federal Labor's New National Broadband Network" (Press release). Australian Labor Party. 2007-03-21. Retrieved 2008-09-05.
  23. ^ Tindal, Suzanne (2008-10-01). "Acacia up for national NBN bid". ZDNet Australia. Retrieved 2008-10-02.
  24. ^ O'Sullivan, Matt (2008-08-08). "National $10b-plus network a step closer". The Sydney Morning Herald. Retrieved 2008-09-05.
  25. ^ "Date set for National Broadband Network proposals" (Press release). Minister for Broadband, Communications and the Digital Economy. 2008-09-03. Retrieved 2008-09-05.
  26. ^ "Telstra's NBN bid rejected". www.news.com.au. 2008-12-15. Retrieved 2008-12-15.
  27. ^ "Tasmania first to receive superfast broadband" (Press release). Minister for Broadband, Communications and the Digital Economy. 2009-04-08. Retrieved 2009-04-08.
  28. ^ http://www.arnnet.com.au/article/323043/stage_2_tasmanian_nbn_announced NBN Stage Two
  29. ^ http://whirlpool.net.au/news/?id=1850 Tasmania Stage Two
  30. ^ "NBN a plot to break up Telstra: AAPT". November 19, 2009.
  31. ^ "NBN a plot to break up Telstra: AAPT". November 19, 2009.
  32. ^ "TPG's David Teoh urges caution on NBN plans". November 23, 2009.
  33. ^ "Optus first off the blocks with LTE trial". November 18, 2009.
  34. ^ "Telstra takes Melbourne cable network to 100 Mbps". November 19, 2009.
  35. ^ "Optus leaps over Telstra with 3-city DOCSIS 3 upgrade". November 19, 2009.
  36. ^ "Family Facts & Figures".
  37. ^ "OECD calls for broadband cost-benefit analysis". 12 May 2009.
  38. ^ "Conroy endorses $40-70 estimates for NBN wholesale prices". CommsDay. 2009-10-23. Retrieved 2009-11-19.
  39. ^ "$43 billion national broadband network price tag 'a bluff'". September 17, 2009.
  40. ^ "Total NBN costs 'no more than $27B' – Axia chief". iTWire. 2009-07-05. Retrieved 2009-11-19.
  41. ^ "Details of new broadband network and Telstra's future soon to be revealed". The Sydney Morning Herald. 2009-08-14. Retrieved 2009-11-19.
  42. ^ "Optus to launch LTE wireless trials". iTWire. 2009-11-18. Retrieved 2009-11-19.
  43. ^ "Telstra accelerates HFC as NBN playing field tilts". CommsDay. 2009-07-05. Retrieved 2009-03-10.
  44. ^ "Mobile broadband booming - but subscriber loyalty low, claim study". Fierce Wireless. 2009-03-18. Retrieved 2009-11-19.
  45. ^ "Minchin is gaining on Conroy".
  46. ^ Tindal, Suzanne (2008-11-07). "NBN doomed to failure: iiNet". ZDNet Australia. Retrieved 2008-11-18.
  47. ^ Hewett, Jennifer (2008-11-08). "Tough Sol Trujillo has few regrets on Telstra". The Australian. Retrieved 2008-11-18.
  48. ^ Warne, Dan (2009-04-07). "Internode "gobsmacked", iiNet welcomes FTTH network". APC. Retrieved 2009-04-07.
  49. ^ "Telstra welcomes opportunity to engage Govt on broadband". Now We Are Talking. 2009-04-07. Retrieved 2009-04-07.
  50. ^ "Historic reforms to telecommunications regulation". Department of Broadband, Communications and the Digital Economy. 2009-09-15. Retrieved 2009-04-15.
  51. ^ Salna, Karlis (2009-03-31). "Govt will deliver broadband plan: Conroy". The Age. Retrieved 2009-03-31.
  52. ^ "Do not swallow broadband line - Turnbull warns". Sydney Morning Herald. 2009-04-09. Retrieved 2009-04-09.
  53. ^ Coalition slams broadband plan
  54. ^ http://www.nonbn.org/default.php
  55. ^ [2]
Scope of proposed NBN regulation, business structure and possible telecommunications legislation reform.
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