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Australia - The National Broadband Network

  • September 2014
  • -
  • Paul Budde Communication Pty Ltd
  • -
  • 195 pages

It is now a year after the original plans for the NBN were abandoned and a new version was launched. So it is interesting to check how things balance out after that first year of NBN 2.0
While very little progress has been made on the new plans the good news is that the original planned rollout of the FttH has been gathering steam and is well and truly underway. Some fine-tuning has taken place and in general terms the rollout process is in better shape than before. With more and more countries rolling out FttH networks the knowledge base of the technology has increased, while at the same time the cost of deployment has decreased. Around the world FttH has become the norm in greenfield deployments. This has also led to a review of the possibility of including more FttH in NBN 2.0. These developments are extensively covered in the report.
The major difference between the original plans and NBN 2.0 is that at this stage the FttH plans have largely been abandoned; this technology will not cover much more than 20%-25% of all broadband connections in the country – the so-called lucky people. The remainder will be linked via a mixture of multi-technologies (MtM) of HFC and DSL-based networks. These are the existing coax and copper cables, mainly from Telstra.

The delays in rolling out NBN 2.0 clearly shows that to embark on MtM is easier said than done as it significantly increases the complexity of the technology. At the same time changing plans also means making sure that the regulatory environment will be altered to ensure that MtM can be made available on an open, wholesale-only basis.
The reality is that MtM largely depends on Telstra's network and Telstra's expertise, and the government totally depends on Telstra's cooperation to deliver the plan. The problem that many in the market now see is that Telstra's dominance is only increasing because of its important position in government policies. Even if it does lose some of its retail privileges the money it receives from the government makes it possible for the incumbent to basically do what it wants. Telstra's prime position is covered in a separate chapter of this report.

In 2013 the government promised a quick delivery of its policies, but this is dragging on well into 2015. In the meantime Australia is falling further and further behind on the international ladder of providing citizens with good quality broadband. It is at the bottom of the OECD list and even on a larger international overview it sits somewhere around the 50th position. It also severely hampers growth in the market as, apart from Telstra all other players are now staring to experience a period of stagnation. The health of the market depends on a rapid deployment of the NBN.

There is still hope that NBN Co will be able to find better and cheaper ways to deploy FttH than MtM, but the reality is that with the financial squeeze being experienced by NBN Co there is little chance that they will be able to upgrade the MtM to proper FttH any time soon. This will leave many Australians stuck on a potholed broadband network while the rest of the world (and other parts of Australia) have access to superhighways.
Data in this report is the latest available at the time of preparation and may not be for the current year

Table Of Contents

Australia - The National Broadband Network
1. NBN Co 2.0
1.1 The new plan of the new government
1.2 Backgrounder NBN Co - 2009 - 2013
1.3 NBN Co's full year 2014 financial results
1.3.1 Introduction
1.3.2 Financial Results
1.3.3 Rollout statistics
1.4 Analysis of NBN 2.0
1.4.1 Two competing NBN offerings
1.4.2 The multi-technology NBN
1.4.3 Design and rollout problems
1.4.4 Contracts, negotiations and regulations
1.4.5 The execution
1.4.6 Current FttH plan requires simplification
1.4.7 So on to the next review in 2016?
1.4.8 Still missing a national vision
2. Developments and Analyses 2014
2.1 Latest NBN Developments- September 2014
2.1.1 FttP Rest of the world is wrong but Australia is right?
2.1.2 If people don't need NBN speeds, what about their computers?
2.1.3 Let's get on with the NBN
2.2 NBN-related jobs increase by 248% since review
2.3 Competition in the telecoms industry is dwindling
2.4 Market-led demand for FttH is picking up
2.5 TPG highlights the fragile NBN environment
2.5.1 Market-led vs. Government intervention
2.5.2 You cannot unravel the NBN
2.5.3 The fragility of the wholesale-only model
2.5.4 NBN is a finely balanced exercise
2.5.5 TPG exposes weaknesses in NBN retail models
2.6 NBN assessment April 2014
2.6.1 Introduction
2.6.2 Reviewing the last few weeks
2.6.3 From reviews to leadership
2.6.4 Tension with the review commissions
2.6.5 The end goal will remain FttH
2.6.6 The NBN future looks bright
2.7 Is the government opening a NBN Pandora's box?
2.7.1 Pandora's Box
2.8 Aligning broadband and healthcare
2.9 Government reneges on election promises
2.10 Where is the economic plan for the post-manufacturing era?
2.11 NBN debate continues in a policy vacuum
2.12 Regional councils concerns over the NBN changes
2.13 Privatisation of NBN is not popular
2.14 The NBN will always remain in Beta.
2.15 Telstra's cashflow may suffer from NBN rollout delays
2.16 What PRISM, credit card hacking and Chromecast have to do with FttH
2.17 The pros and cons of vectoring
2.18 Will LTE steal the broadband revolution?
2.19 Multi Dwelling Unit broadband
2.20 Is the NBN Co business model flawed?
2.21 NBN leadership or NBN procrastination
2.22 The Dutch Disease, broadband and the mining boom
2.23 NBN could slash telecoms maintenance costs
2.24 Broadband demand-side management
2.25 The NBN and the opportunity for virtual' players
2.26 Will infrastructure constrain the digital entertainment market?
2.27 Will the half-built HFC disaster be repeated?
2.28 Digital infrastructure essential to manage the transition to the e-world
3. The FttH Rollout
3.1 Rollout update mid 2014
3.2 Roll out updates of revised NBN
3.2.1 19,000 premises cut over to FttH
3.2.2 Roll out changes under the new Government
3.2.3 Multi technology mix
3.2.4 NBN fibre basements rollout starts later in 2014
3.2.5 Review of the regional roll out 2014
3.2.6 Fixed roll out update March 2014
3.2.7 Roll out update early 2014
3.2.8 Gosford Council - NBN fibre via Ausgrid
3.2.9 Multi dwelling units
3.2.10 More details on the HFC plans
3.3 Original roll out program 2010-2013
3.3.1 The initial announcement
3.3.2 Roll out progress report late 2012
3.3.3 Roll out update mid 2013
3.3.4 Take-up rates late 2013
3.3.5 NBN Co breaks out state-based rollout data
3.4 Tasmania
3.4.1 NBN aerial deployment
3.4.2 Aurora's NBN report tabled in the Senate - 2014
3.4.3 NBN pilot roll out
3.4.4 Other NBN related projects
3.5 The first mainland release sites
3.5.1 Introduction
3.5.2 Armidale
3.5.3 Kiama
3.5.4 Willunga
3.6 Second-release sites
3.6.1 Nineteen new sites
3.6.2 Second construction phase
3.7 Detailed overview of the roll out program
3.7.1 National overview
3.7.2 Dapto first on the list for 2012
3.7.3 Eight more cities announced February 2012
3.7.4 Roll outs northern Queensland
3.7.5 Brunswick
3.7.6 98K more premises across the country
3.7.7 Newcastle
3.7.8 Western Sydney
3.7.9 Perth
3.7.10 Geraldton
3.7.11 ACT
3.7.12 Darwin
3.8 Multi-dwelling units
3.9 First fixed wireless roll outs
3.10 Roll out issues - analysis
3.10.1 Community engagement
3.10.2 Inhouse networking
3.10.3 Existing FttH users?
3.10.4 Municipality Broadband
3.10.5 Real estate investment
3.10.6 Brownfield restrictions
3.11 Regional Backbone Blackspots Program (RBBP) - Historic
3.11.1 Background information
3.11.2 Adelaide blackspots receiving high-speed broadband
4. Fixed Wireless and Satellite Networks
4.1 Introduction
4.2 NBN Co's Fixed Wireless Network
4.2.1 Services based on 2.3GHz spectrum
4.2.2 Construction plan
4.2.3 Visionstream to construct the network
4.2.4 NBN facilitates wireless competition - Analysis
4.2.5 Fixed wireless rollouts
4.2.6 Other developments
4.3 The NBN Satellite Network
4.3.1 Introduction
4.3.2 Ka-band satelittes
4.3.3 Satellite speeds
4.3.4 Interim satellite services (ISS)
4.3.5 Running out of capacity
4.3.6 Boost to capacity
4.3.7 NBN Co Satellite Support Scheme (NSS)
4.3.8 Added capacity for 9000 more satellite users
4.3.9 Satellite launch likely delayed until 2016
4.3.10 10,000 VSAT terminal milestone for NBN
4.3.11 Via Sat to supply satellite ground equipment
4.3.12 Ground station gateways
4.3.13 Satellite launch contracts
4.3.14 Analysis - Satellite and wireless uptake greater than expected
4.4 Why wireless broadband is no alternative to FttH - Analysis
4.4.1 Problems in metro fringe areas
5. Infrastructure Plans and Contracts
5.1 The network plan
5.1.1 Overall design and architecture
5.1.2 User access to the network
5.1.3 The backhaul network
5.1.4 ACCC location of 121 POIs
5.1.5 Points-of-interconnect (POI) architecture
5.1.6 Paid for Network Extension
5.2 NBN spurs record telecom capital spend
5.3 External analysis of the Australian Fibre-to-the-Home (FttH) architecture
5.4 NBN Co buys TransACT
5.5 NBN Co contracts
5.5.1 Satellite operation outsourced to Ericsson
5.5.2 Introduction
5.5.3 Universal Communications Group Multi Dwelling Units contract
5.5.4 Daly International deploys MDU broadband
5.5.5 Skybridge
5.5.6 Defect-management solution from Geomatic Technologies
5.5.7 Transit Network
5.5.8 End-user equipment
5.5.9 Network facilities Centres
5.5.10 Via Sat to supply satellite ground equipment
5.5.11 Contracts with Transfield and Service Stream
5.5.12 Geraldton new fibre rollout contract with WBHO
5.5.13 Construction agreements for SA and NT
5.5.14 Constructions agreements for NSW and Victoria
5.5.15 Melbourne, Brisbane and regional NSW constructions
5.5.16 Second contract for South Australia
5.5.17 Fibre-optic contracts
5.5.18 Ericsson to build fixed wireless network
5.5.19 Network Operations Centre for NBN
5.5.20 Contractors for first-build sites
5.5.21 Nokia Siemens Networks selected for DWDM
5.5.22 Data Centres
5.5.23 IBM selected as systems integrator
5.5.24 Site Management
5.5.25 Internal IT systems
5.5.26 Network maintenance, installation and activation contract
5.5.27 NBN satellite ground station contracts
5.6 Mobile backhaul
5.7 HFC equipment
5.8 Telstra upgrades pit and pipe infrastructure
5.9 Infrastructure Sharing and Coordination
5.9.1 NBN Infrastructure Co-Development Program
5.9.2 Smart grids and the NBN
5.9.3 Is it smart to over build the NBN?
6. Telstra
6.1 Telstra and the NBN plans of the new government
6.1.1 Assessment based on the new plans
6.1.2 Moving towards a deal on the copper
6.1.3 Telstra will also need to remain strategic about the infrastructure
6.2 Telstra and government agree on NBN future
6.2.1 Two years of negotiations
6.2.2 More than two years delay
6.2.3 Analysis of the agreement
6.2.4 Definitive Agreement signed and sealed
6.3 Telstra Structural Separation Undertaking
6.3.1 Telstra's initial undertaking
6.3.2 Telstra's final undertakings analysis
6.4 Telstra's e-health initiatives
6.4.1 Introduction
6.4.2 Royal Australian College of General Practitioners
6.4.3 High Definition rural e-health services
6.4.4 Cloud computing initiative
7. Policies and Regulations
7.1 NBN Under the Coalition Government
7.1.1 NBN Statement Minister Turnbull
7.1.2 NBN Co given the opportunity to save the current NBN (Analysis)
7.1.3 NBN reviews
7.2 Labor seeks a restoration of FttP
7.3 Regulatory Framework
7.3.1 Introduction
7.3.2 Bills passed House of Reps
7.3.3 Key elements of the Companies Bill
7.3.4 Key elements of the Access Bill
7.3.5 The key points of the NBN amendments
7.4 Special Access Undertakings
7.4.1 The NBN Co Review
7.4.2 Analyses - telecoms or digital infrastructure a SAU question
7.5 Connectivity Virtual Circuit (CVC)
7.6 Joint Committee on the National Broadband Network
7.7 Regional Telecommunications Policies
7.8 Regulatory reforms for the transition period
7.8.1 Introduction of regulatory instruments
7.8.2 Regulatory instruments - analysis
7.8.3 Final Access Determinations for fixed line telecommunications
7.8.4 Layer 2 bitstream on non-NBN Co networks
7.8.5 Telstra needs to tighten up its migration plan
7.9 Government to fund NBN voice migration
7.10 Budget funding for the National Broadband Network
7.10.1 Administrative and regulatory support
7.10.2 Funding planned until 2016
7.10.3 Funding for The Department of Broadband, Communications and the Digital Economy (DBCDE)
7.10.4 Funding for the ACCC and ACMA
7.11 Telstra Structural Separation Undertaking
7.11.1 Telstra's initial undertaking
7.11.2 Migration Plan
7.11.3 The Australian Competition and Consumer Commission (ACCC) involvement in the NBN
7.11.4 Telstra's Structural Separation Undertaking
7.11.5 Breaches of structural separation undertakings
7.12 Universal Service Obligations
7.13 Sale of NBN Co
7.14 Special access for smart utility services
8. Wholesale and Competition
8.1 NBN retail competition at lower margins
8.2 Wholesale Product Overview
8.2.1 NBN for business
8.2.2 1Gbps wholesale service
8.2.3 The FttN service
8.3 The NBN wholesale and PoI debate
8.3.1 Wholesale dominance
8.3.2 Backhaul competition
8.3.3 The business opportunities of the POIs
8.3.4 CVC issue resolved sort of
8.3.5 Access seekers gateways
8.4 NBN Co's multicast service
8.4.1 Overview of the service
8.4.2 Wholesale Pricing
8.4.3 iiNet
8.4.4 4K TV
8.5 Pricing Strategies
8.5.1 Wholesale Broadband Agreement
8.5.2 NBN Co special access undertaking (SAU)
8.5.3 Wholesale prices
8.6 NBN Utility Management service The Retail Clause
8.7 Do we need infrastructure-based competition?
9. Surveys, Statistics and Forecasts
9.1 Introduction
9.2 Market Surveys
9.2.1 Deloitte's Media Consumer Survey - 2014
9.2.2 Privatisation of NBN is not popular
9.2.3 FTTN modelling results
9.2.4 NBN speeds over 25Mbps
9.2.5 Broadband benefits for households
9.2.6 Poll prefers FttP plan above FttN plan
9.2.7 Support for fast broadband via an NBN
9.2.8 Customers prepared to pay for higher speeds
9.2.9 NBN Business Readiness Survey - 2013
9.2.10 Research into the NBN first release sites
9.2.11 Stats and demographics for the 2012-2015 NBN footprint
9.3 Industry transformation
9.3.1 Introduction
9.3.2 Fixed infrastructure market
9.3.3 Wholesale market
9.3.4 The retail market
9.4 Penetration Updates and forecasts
9.4.1 Early uptake indications
9.4.2 Broadband access penetration forecasts
9.5 The mobile market
9.6 The digital economy - trans-sector market
9.6.1 Forecasts 2015; 2020
9.6.2 The digital media market
9.7 Business market survey
9.7.1 NBN impact on industry output by 2020
9.7.2 Summary of survey findings
9.8 Business models and mergers and acquisitions (MandA)
9.8.1 Fixed market scenarios
9.8.2 Mobile market scenarios
9.9 Forecasting notes
10. Background Information
10.1 General overview of the plan
10.2 How Australia got its NBN
10.3 National interest utility
10.4 NBN national infrastructure, not just telecomms
10.5 Economic reforms
10.5.1 Fundamental change to the economy
10.5.2 Business modelling - the key to success of the NBN
10.5.3 NBN Co 2.0
10.5.4 The multi-technology NBN
10.6 Why wireless broadband is no alternative to FttP
11. Cost Benefit Issues
11.1 Vertigan Report on cost benefit analysis
11.1.1 Vertigan Panel
11.1.2 The findings of the Cost Benefit report
11.1.3 Analyses and comments on the report
11.2 Bill Scales Report on cost benefits (analysis August 2014)
11.2.1 Cost benefit analyses need to look at digital productivity gains
11.2.2 Can bureaucrats be turned into policy visionaries?
11.3 Measuring the social benefits of the NBN
11.4 NBN leadership or NBN procrastination
11.5 The key issues
11.5.1 Does the NBN have the right legislative foundations?
11.5.2 The Productivity Commission has a point
11.6 Measuring Social and Economic benefits
11.6.1 Deployment requires intelligent approach towards measurement
11.6.2 Massive increase in efficiency, productivity and customer satisfaction
11.6.3 Privacy is paramount
Table 1 Capital Expenditure 2012 - 2014
Table 2 NBN Co Revenue 2012 - 2014
Table 3 NBN ARPU 2013 - 2014
Table 4 NBN Co' key operational data 2012 - 2014
Table 5 NBN Premises Activated 2011 - 2014
Table 6 Communities in NSW where build preparation is underway mid 2014
Table 7 - Communities in Victoria where build preparation is underway - mid 2014
Table 8 - Communities in Queensland where build preparation is underway - mid 2014
Table 9 - Communities in WA where build preparation is underway - mid 2014
Table 10 - Communities in Tasmania where build preparation in underway - mid 2014
Table 11 - Communities in South Australia where build preparation is underway - mid 2014
Table 12 NBN Co' key operational data 2012 - 2013
Table 13 - Key NBN metrics for 30 June 2013
Table 14 - Deployment schedule for 2011-15 corporate plan
Table 15 - Deployment schedule for 2016-21 corporate plan
Table 16 Numbers of premises passed first release sites (incl. Tasmania)
Table 17 NBN pre-sales take up rates first release sites
Table 18 - NBN Co 2012 roll out schedule
Table 19 - List of points of interconnection to the National Broadband Network - November 2012
Table 20 Total payments to be made to Telstra 2012 - 2020
Table 21 NBN deal valuation cash flows
Table 22 NBN budgeted and actual expenditure 2008 - 2015
Table 23 NBN pricing schedule for access virtual circuits
Table 24 NBN pricing schedule for PoI connections
Table 25 Benefits of broadband for households a national framework
Table 26 Scenarios summary of benefits in 2020
Table 27 NBN take up rates first release sites (pre-sales indications)
Table 28 Broadband uptake* scenario forecasts 2015; 2020 (household penetration)
Table 29 Impacts of the NBN on industry output at 2020 (% change)
Chart 1 Market share size of NBN trans-sector market 2020
Chart 2 NBN services revenue share estimates by market share 2015
Chart 3 NBN services revenue share estimates by market share 2020
Exhibit 1 - FttN trial areas
Exhibit 2 The Regional Backbone Blackspots Program
Exhibit 3 - IP Channel Bonding
Exhibit 4 - IT Platform and capabilities
Exhibit 5 - Demo centre and demo truck
Exhibit 6 NBN review panel
Exhibit 7 - Key elements of Telstras SSU
Exhibit 8 - Privatisation of NBN is not popular
Exhibit 9 - Ultra-HDTV 4K standard' for satellite TV
Exhibit 10 Summary of scenarios considered in this report
Exhibit 1- Trans-sector vs. Cross-sector
Exhibit 11 Economic benefits of broadband overview of surveys

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