The big work will require replacing the copper cables that are going into people’s homes by fibre. Examples from around the world have indicated that it is very difficult to build a business plan around this but the government is taking the sting out of this by basically guaranteeing the investment money for the project and also indicating the use of the infrastructure for other sectors (healthcare, etc).
On the weblog of Australia based global telecom consultant Paul Budde:
The Government’s plan sees us skipping the halfway house of so called ‘fibre to the node’ which would have seen street cabinets being installed around the country. The government will now bring the fibre network straight to people’s homes. This is the most ambitious infrastructure ever undertaken in Australia and will be the most ambitious FttH network anywhere undertaken in the world.
The Australian Government is one of the few governments who, in a holistic way, understand the importance of broadband across the various sectors. This network is not just for high-speed Internet and entertainment but, more importantly, for healthcare, education, smart grids, etc.
The $43 billion also clearly indicates that the investment will go well beyond Internet and broadband and that it understands the need to use it for the digital economy. This will set Australia up as potentially one of the international leaders here. This Government understands the trans-sector approach that is needed to stimulate the digital economy. The nature of the investment further highlights this it is an open network and the infrastructure will be made available on a wholesale level. This makes it possible to deliver that infrastructure on a utilities’ basis which, of course, is going to make access to the network very affordable to the end users.
While the concepts are right – high quality broadband and an open access infrastructure – at the same time, such a massive project requires planning and design that is going to take time. The Government had foreshadowed two quick wins:
- the first project will start in Tasmania perhaps as early as within the next few weeks.
- The government has indicated it will also immediately start work on the backbone network. This has been discussed for many years and indeed work can start on this rather quickly.
But the big work will require replacing the copper cables that are going into people’s homes by fibre. Examples from around the world have indicated that it is very difficult to build a business plan around this, just based on Internet access – you simply will not be able to generate enough revenue from such services that warrant such an investment.
The government is taking the sting out of this by basically guaranteeing the investment money for the project and also indicating the use of the infrastructure for other sectors (healthcare, etc). What this means is that, for example, healthcare can independently
provide e-health services to all Australians over the network, without these people needing to have a paid subscription. Media companies could do the same if for example they want to finance their applications through advertising. So what is happening is that there won’t be a gatekeeper involved who clips the ticket of everything what is happening over the network.Telstra
The accompanying regulatory documentation doesn’t give Telstra (the national leading telecom provider) any room to manoeuvre. The company can of course participate but based on the rules of the government and not based on the monopolistic structure of its current vertical integrated service offerings. Most current players in the industry have already indicated that they have no problems with this concept, so there is a good chance that some, if not all of the players, involved in the tender become partners in the National Broadband Corporation.
Open network = innovation and affordability
The open network approach makes it possible to offer the basic infrastructure on a utility basis to content and service providers, and this paves the way for the development of the digital economy. In this way the FttH investment will deliver an economic multiplier effect that will benefit the healthcare, education, energy and environment sectors as well as the digital media and Internet providers.
These content and service organisations can now independently develop their own products and services without being controlled by a gateway-keeping and ticket-clipping, vertically-integrated telco.
The structurally separated model of the FttH plan also allows the National Broadband Corporation to work very efficiently. Using infrastructure construction companies in the most effective way of building a network. This allows Telstra, Optus and the other telcos to
concentrate on developing the intelligent structure on top of that, and this will deliver innovative new applications and services in the most cost-effective way, securing an affordable service for everyone.As we see with the Tasmanian State Government the project allows regional organisations to add their own local and regional touch to it and it supports local competition and local development, while at the same time fitting into the overall national picture.
What’s next for Telstra?
Telstra now has another choice to make. It can continue its obstructive behaviour and launch new court cases or (let us hope!) it can look at the business opportunities that are now available to it. It can work with the new Corporation and establish working relationships, based on the new rules set by the government.
What the new plans are doing is providing a bigger cake – not just another telephone or Internet network, but an infrastructure that will attract a large number of new services.
BuddeComm estimates that once the network is deployed healthcare alone could account for 25% of its capacity. Equally, given the right business circumstances, services related to education and energy/environment could take up another 25%. Over time the traditional telecoms and Internet services will only account for perhaps 25% of the NBN.
Not that these latter services have shrunk in volume or revenue – this simply demonstrates the volume of additional growth that will be unleashed on this open network infrastructure.
While Telstra’s NEXT G network is certainly impressive and its cable network upgrade will also help it to move forward, it will be no match for this new state-of-the-art FttH.
FttH and wireless
There may be many steps along the way but the FttH is the final destination. Once fully deployed the FttH infrastructure will deliver 100Mb/s and who knows what else? We can only guess what might be possible in five or ten years’ time.
And wireless broadband will be weaved into all of this, partly to make sure that people don’t have to wait five or ten years before a fully-deployed FttH network is available to them, and partly because this technology is also evolving rapidly and in less densely populated areas it will be able to deliver a service equal to FttH.
Future Vision by Erwin Van Lun on this article
This will really boost the economy of Australia. It’ll transform an economy that is now largely driven by natural resources to an economy that sells and delivers virtual experiences to the whole world. Australian entrepreneurs will soon sell immersive interactive experiences via all kind of interactive screens and projections (of which we now see predecessors such as games, interactive movies or virtual learning environments). These kind of experiences have we never seen before.
Australia has some other strong points that empowers this country to be extremely successful in the years after the introduction of the FttH network:
- The English language. This might seem a little bit obvious but this holds for example Korea or the Netherlands, both equipped with strong broadband networks, to offer their services worldwide.
- Strong ties between individual people all across the world on a personal and professional level. 25% of the residents in Australia are not even born here! These strong ties will lead to business partnerships, trade and very fast word-of-mouth marketing.
- The movie industry. Although small, Australia has a movie industry. The impact in the world of new media is immediately visible: professional video is much more integrated in the lives of media professionals than in, for example, the Netherlands. When traditional distribution of movies and games will disappear and content will be tapped (and paid) per minute, Australia can distribute video content to individuals all across the world.
- The long distances: The long distances within the country will allow Australia to develop technologies, and business models and test them on the internal market. For example: webbinars (speaking to an online audiences) are much more accepted and popular than in a dense populated country like the Netherlands. When you have successfully developed a long-distance model within a country, the rest of the world is just the next step.
- The presence of all nationalities in the world who truely work together. Here in Sydney, I’ve personally noticed that all cultures work together on a shared future. People came to Australia from all over the world to build a better life and a better future. This diversity will allow Australia to customise content for the whole world
What a present for me during my last week in Sydney, preparing my migration to Australia!
Erwin van Lun