& cplSiteName &

NBN Digs a Hole for Itself

Robert Clark
News Analysis
Robert Clark
3/26/2014
100%
0%

Not many holes are being dug right now for Australia's NBN (national broadband network), but the project is certainly creating fresh ones for the country's new government.

The latest is that a small telco, TPG Internet Pty, is planning to connect fiber to 500,000 apartments in major cities such as Adelaide, Brisbane, Melbourne, Perth, and Sydney.

That should be a positive for a country that ranks 52nd in global broadband speeds, but it's not part of the script. The centerpiece of the NBN plan, launched five years ago by the previous government, is to put a FTTH monopoly in the hands of the state-funded NBN Co Ltd. (See Australia Unveils $31B FTTP Plan.)

But TPG is exploiting a loophole that allows telcos to extend their networks to buildings within 1km of their rollout at the time the law was introduced in 2011. And if TPG is allowed to continue, then Telstra Corp. Ltd. (ASX: TLS; NZK: TLS), the dominant service provider, is likely to do the same thing.

These are just further complications for the conservative government elected six months ago on a platform of both speeding up and cutting the cost of the project. (See Australia's NBN: Will Fiber Get Voted Out?)

Since coming into power, the government has ousted the old NBN management and installed ex-Telstra boss Ziggy Switkowski as chair and former Vodafone Japan chief Bill Morrow as CEO. The government has also capped its contribution to the NBN at A$29.5 billion (US$27.2 billion) -- well short of the latest official total cost estimate of A$41 billion ($38.8 billion).

Mixed media
To reduce costs, it has killed not only the previous government's plan of running fiber to 93% of households, but also its own proposal, which relied solely on copper to take up the slack. (See Australia's NBN Looks Copper-Colored.)

Now the Communications Minister, Malcolm Turnbull, is keen to bring the Telstra and SingTel Optus Pty. Ltd. HFC-based cable TV networks into the equation. Under this plan, 24% of households will connect with fiber, 41% with FTTN/C, 28% with HFC, and the remainder with wireless and satellite.

But this creates another problem. Under NBN version 1.0, the HFC network was supposed to be progressively shut down as the NSN rolled out, and Telstra was to be compensated for that shutdown. The NBN has reached fewer than 2% of all households, so the incumbent's HFC network is still in place: Turnbull will have to strike a fresh deal with Telstra.

Tony Brown, senior analyst at Informa Telecoms & Media, says that unlike copper, which has an existing unbundling regime, the HFC networks are not opened up for sharing by multiple service providers. Turnbull will have to find a way of opening up them up without either giving Telstra too much power or unduly favoring the NBN Co.

Brown also points to the difficulty of selling broadband service across multiple technologies, requiring operators to create several service packages. And while FTTN copper can deliver 30-50 Mbit/s, "you can't guarantee those speeds. You will have to market it on service rather than on headline speeds, which is what the current practice is."

Rush job
Brown attributes the problems to the previous government's attempt to "rush into" the NBN without the support of Telstra or other political parties. "You are going to need bipartisan support for a 20-year project like this."

Even the scaled-back FTTH project is still a huge task, covering 2.8 million homes. Brown says the UK's Openreach , the operationally-independent access network division of incumbent telco BT Group plc (NYSE: BT; London: BTA), initially planned FTTH trials, but quickly scaled those back because of the difficulties, while Australians were promised FTTH before anyone had even tested or trialled the feasibility of such a plan.

Such plans often fall foul of unforeseen physical impediments. For its FTTH connections, the NBN will be trying to blow fiber through old conduits across people's yards, "which may have collapsed, or a tree root has grown through it or someone may have built a fish pond," notes Brown.

Because of these unknowns, the cost of the project is still not clear.

To cut the bill, incoming NBN boss Morrow is keen on doing joint rollouts with Telstra and reducing the NBN workforce, but that raises questions over the role of Telstra, which currently dominates the broadband market as gatekeeper.

"The big problem is we just don't know the cost, and there's a A$29 billion cap," notes Brown. "So what if it ends up costing more than that? What if we use all of that cash and end up with only half the country connected?"

— Robert Clark, contributing editor, special to Light Reading

(9)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
sortius
50%
50%
sortius,
User Rank: Light Beer
3/26/2014 | 10:44:19 PM
Re: Over-integrated
For sure, when I worked for Telstra the techies, support staff, and designers were all baffled as to why Telstra wasn't split into a wholesale and retail company. It's too late now and any attempt is being met with resistance from Telstra.

I fear the intention of the NBN is being lost in the political battle that has ensued, for now I don't have much hope of a positive outcome.
R Clark
50%
50%
R Clark,
User Rank: Blogger
3/26/2014 | 10:28:57 PM
Re: Over-integrated
Looking back, the past 20 years have been a textbook 'how not to deregulate' - create a duopoloy, let the dominant player roll out HFC and then privatise it, so inevitably all those services would be cut.

Agree, the best idea about the NBN was to try to make it a wholesale non-Telstra network, but really Telstra should been separated from its networks a long time ago. But it wasn't possible to build it without Telstra's help as the previous govt tried to do.

 

 
sortius
50%
50%
sortius,
User Rank: Light Beer
3/26/2014 | 9:07:15 PM
Re: Over-integrated
Yep, it was a terrible time under Ziggy's rule (I was working in Telstra Plant Assign/Activations at the time), Customer Network Improvement pretty much died, and they reaped the rewards of underservicing the bush.

The point of the NBN was to stop this convergance/vertical integration of Telstra, however the Liberal party seem to be happy with it.

It doesn't bode well when the Comms Minister owns a boat with an ex-Telstra director does it?
R Clark
50%
50%
R Clark,
User Rank: Blogger
3/26/2014 | 8:49:24 PM
Over-integrated
Blame has to go to those who allowed Telstra to become the developed world's most vertically integrated telco, owning the biggest HFC network and 50% of the major pay TV provider as well as all the other kit, right across the country.


This will take a long time to sort out. Google's balloons might be faster.

 

 
sortius
50%
50%
sortius,
User Rank: Light Beer
3/26/2014 | 5:42:33 PM
re:
There's a few glaring errors with this story.

Firstly, the HFC rollout will be closer to 35% of the total build, yes, 35%.

Optus was to shut their network down, Telstra wasn't. Both HFC networks have not been extended in a decade, and while basic upgrades have happen, the speeds are still lacklusture. There's a 600 premises to 440Mbps ratio for Telstra, Optus is far higher premises:speed, although they are cagey about this. Most of Optus' network maxes out at 30Mbps.

Also the line "while Australians were promised FTTH before anyone had even tested or trialled the feasibility of such a plan" is patently false. The senate had a lengthy inquiry into the technology to use for the NBN, if you aren't aware the original technology was FTTN, which was rapidly canned due to the lack of future-proofing, the poor quality of Australia's copper (acidic & saline soils coupled with a lack of investment from Telstra have done this), and the inability to deliver ubiquitous service.

The key is, the lack of bipartisan support comes from our current Prime Minister, Tony Abbott's, intentions back when he assumed leadership of the opposition. He taksed Malcolm Turnbull, who he rolled as leader, with destroying the NBN.

Whether there was bipartisan agreement or not is moot, as Tony Abbott would have done the same thing as he did with the Emissions Trading Scheme: remove support when he became leader.

Not only this, the original "option" from the opposition was to "let the free market build it", something that has failed Australia for over a decade now. Telstra was privatised by the Liberal government and has since refused to ugprade without heafty funds from the government.

In fact, since 2001 there were no less than three attempts by Telstra to get the then Howard government to fund an upgrade to FTTN (there was one for FTTH too). All requests were knocked back.

The objection to the NBN is an ideological one, not a technological one. The last thing the Liberal party wants is people with high speed internet, maybe ask them why they don't want to. I have my own theories.

 
Mitch Wagner
50%
50%
Mitch Wagner,
User Rank: Lightning
3/26/2014 | 3:59:52 PM
Ziggy
I love the name Ziggy Switkowski. It's up there with Juan Pedro Fernandez-Palacios Gimenez.
nasimson
50%
50%
nasimson,
User Rank: Light Sabre
3/26/2014 | 12:29:49 PM
Re: what's the point
What a mess! As the world marches forward, Australians would be underconnected. There are countless examples where Govt went beyond the regulatory role and got its citizens into long term trouble.
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
3/26/2014 | 10:16:01 AM
what's the point
It sounds like NBN has become a schizophrenic mess. We want to build a national fiber network but we won't allow the private sector to be directly involved. And we aren't going to fully fund the project. But we'll change some rules on the fly if it suits a purpose. Uzbekistan may get a national fiber network sooner.
komatineni
50%
50%
komatineni,
User Rank: Lightning
3/26/2014 | 7:51:38 AM
re:
Always surprised to see statements like nobody ever done. When countries like Singapore, HK or Korea S can do, why can't Australia do it in atleast cities?

Singapore did it in two-three years time frame and probably at a fraction of cost due to geography, cheap labour, and most importantly the will. But Australia can still do it in a city or two in five years.
From The Founder
Kicking off BCE 2017, Light Reading founder Steve Saunders lays blame for NFV's slow ramp-up and urges telecom to return to old-fashioned standards building and interoperability.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Interviews
Masergy: It's Time for SD-WAN Options

6|28|17   |   03:09   |   (0) comments


Paul Ruelas, director of network products for Masergy, explains how adding SD-WAN has changed the service mix for his company's customers. In some cases, the change is incremental, enabling more granular customer control. Masergy's newest version, SD-WAN Go, gives up some of those controls for a streamlined version targeting mid-sized customers with the most ...
Women in Comms Introduction Videos
Intel Ushers in the Revolutionary 5G Era

6|28|17   |   5:00   |   (1) comment


5G will bring job opportunities for women in telco and IT, as well as a whole new era of communications for consumers and industries of all kinds, says Caroline Chan, vice president and general manager of the 5G Infrastructure Division at Intel.
LRTV Custom TV
VeEX at ANGA COM

6|27|17   |     |   (0) comments


At ANGA COM 2017, Cyrille Morelle, president and CEO of VeEX, updates Alan Breznick with VeEX's new products and technology. This includes VeSion cloud-based platform for network monitoring, AT2500-3G advanced spectrum analyzer and MTTplus-900 WiFi Air Expert module. He also comments on DOCSIS 3.1 deployment and Remote PHY technology.
LRTV Custom TV
The Overall Objective Is to Win the Game

6|26|17   |     |   (0) comments


SCTE•ISBE's Chris Bastian discusses Energy 2020's success to date and the importance of a flexible approach that allows for changes in specific strategies in order to reach significant milestones.
LRTV Interviews
CenturyLink: Let's Get Past SD-WAN Hype

6|23|17   |   04:02   |   (0) comments


Technology becomes a "shiny object" unless it's properly focused on solving business needs for enterprise customers, says Bill Grubbs, network solutions architect for CenturyLink. He explains to Light Reading why SD-WAN deployments have to be tailored to specific needs – and more.
Women in Comms Introduction Videos
Infinera's Sales Director Paints Tech's Big Picture

6|21|17   |   4:14   |   (1) comment


Shannon Williams, Infinera's director of sales, shares how she achieves work's many balancing acts -- between her role and the broader company, today and tomorrow's tech and more.
LRTV Custom TV
SD-WAN Innovation & Trends

6|20|17   |     |   (0) comments


Versa CEO Kelly Ahuja discusses with Carol Wilson the current status and trends in the SD-WAN market, Versa's innovation around building a software platform with broad contextualization, and the advantages that startups can bring to the SD-WAN market.
LRTV Interviews
Ovum's Dario Talmesio on 5G in Europe

6|20|17   |   02:16   |   (0) comments


At 5G World 2017, Dario Talmesio, principal analyst and practice leader on Ovum's fixed and mobile telecoms European team, explains the emerging trends amongst European operators as they prepare for 5G.
LRTV Custom TV
Putting Power on a Pedestal

6|19|17   |     |   (0) comments


ARRIS's John Ulm says a major accomplishment of SCTE•ISBE's Energy 2020 program is increased focus on power cost and consumption, including inclusion of energy requirements in operators' RFPs and RFIs.
LRTV Custom TV
Gigabit Access: The Last-Mile Pipe for All Future Services

6|19|17   |     |   (0) comments


A Gigabit access platform being deployed today must be able to deliver all types of services to an increasing number of devices. A non-blocking architecture is necessary to support the ever-increasing growth in bandwidth demand. The Huawei Gigabit access solution is based on a distributed design that is fully scalable to deliver a unprecedented performance.
LRTV Custom TV
Key Factors to Successfully Deploy an SD-WAN Service

6|19|17   |     |   (0) comments


As service providers transition their SD-WAN solution from trials and limited deployments into production at large scale, there are important considerations to successfully operationalize these solutions and realize their full potential, without adding complexity, introducing uncertainty or disrupting current business operations. Sunil Khandekar, CEO and Founder ...
LRTV Custom TV
IoT Solutions: Rational Exuberance

6|19|17   |     |   (0) comments


IoT solutions are morphing from hype into viable business opportunities. Huawei has the platform and ecosystem support to help carriers successfully address new business opportunities in the IoT space.
Upcoming Live Events
October 18, 2017, Colorado Convention Center - Denver, CO
November 1, 2017, The Montcalm Marble Arch
November 1, 2017, The Montcalm Marble Arch
November 2, 2017, 8 Northumberland Avenue, London, UK
November 30, 2017, The Westin Times Square
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
No Imagination: UK Chip Biz Goes Up for Sale
Iain Morris, News Editor, 6/22/2017
Does AT&T Deserve Time Warner?
Mari Silbey, Senior Editor, Cable/Video, 6/23/2017
Hulu Is Greatest Threat to Pay-TV Providers – Study
Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation, 6/27/2017
Calix: Russo's Not-So-Overnight Success?
Carol Wilson, Editor-at-large, 6/28/2017
Verizon Takes 'One Fiber' to More Cities
Mari Silbey, Senior Editor, Cable/Video, 6/22/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Following a recent board meeting, the New IP Agency (NIA) has a new strategy to help accelerate the adoption of NFV capabilities, explains the Agency's Founder and Secretary, Steve Saunders.
One of the nice bits of my job (other than the teeny tiny salary, obviously) is that I get to pick and choose who I interview for this slot on the Light Reading home ...
Animals with Phones
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.