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Australia - National Broadband Network - Developments and Analyses 2016

  • August 2016
  • 21 pages
  • Paul Budde Communication Pty Ltd
Report ID: 2026571

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By late 2016 over two million premises were able to connect to the NBN so far most of them have access to the original NBN, three-quarters have access to FttH, the remainder to wireless and satellite networks. The revised rollout of the so-called multi-mix technology (DSL and HFC) started in earnest in 2016.
After the Coalition Government won the 2016 federal elections, any it is becoming too late for any debate about changes to the underlying infrastructure as the roll out of the multi-mix-technology (MTM). However, the NBN company has indicated that it does have a road map towards providing fibre deeper into the residential network.

Apart from another two-year delay due to the political changes to the NBN - and more than doubling of the costs, there still is also significant uncertainties about the MTM rollout. There are lots of unknowns in this process and overseas FttN experience shows that it is not all plain sailing and in many cases large-scale replacement of old infrastructure will be required. At the same time rolling out fibre has become significantly cheaper, especially when done by new companies, as is the case in the USA, France, the Netherlands and a number of other players in Northern and Eastern Europe. Most countries skip an MTM rollout and go straight into FttH.

As there are several telcos willing to skip the MTM and go straight into fibre networks competition is arriving in some of the multi-dwelling units (MDUs) in metropolitan areas of the large cities. Competition is heavily restricted through regulation and the complex and expensive NBN wholesale offerings for smaller players. Companies are therefore eager to look at how to bypass the NBN and as such compete with the national broadband network company. Advances in wireless technology especially in comparison to what a second rate NBN can deliver will also see more people opting for wireless access.

While the government in mid-2015 revived some of the digital economy strategies that were put in place between 2009-2013 there is still no holistic approach to services such as e-health and e-education. Interestingly we do see cities developing their own strategies around the concept of smart cities. When the government announced its innovation policy it did not mention the important role the NBN can play here.

By late 2016 seven years after the launch of the NBN over two million premises were able to connect to the NBN. So far three-quarters have access to FttH (fibre to the home), the remainder to wireless and satellite networks. The revised rollout of the so-called MTM (multi-technology mix) based on FttN and HFC) only began in earnest in 2016. The NBN company has now fine-tuned its rollout strategy and is set to extend the network by 40,000 premises a week; but from here on FttH will play only a minor role, mainly in greenfield installations.

After the Coalition government won the 2016 federal election any debate about changes to the underlying infrastructure faded away, as the rollout of the MTM is now too far advanced. However the NBN company has indicated that it does have a roadmap towards providing fibre deeper into the residential network. Fttdp (fibre to the distribution point) is one of the key technologies they are investigating.

Around the same time the industry started to seriously question the regulatory environment around the NBN. The smaller players are in danger of being squeezed out of the market through complex and expensive NBN wholesale offerings. These same arrangements also mean that the end-users are not receiving the benefits of high-speed broadband in an affordable form. The ACCC reacted to this by launching a fresh competition study, the results of which will become available in 2017.

As a result of unattractive wholesale arrangements and a second-rate NBN, several telcos are eager to skip the MTM-based infrastructure and deploy their own fibre networks. In this way competition is arriving in multi-dwelling units (MDUs) in various cities, this despite the fact that competition is heavily restricted through government regulations. Advances in wireless technology especially in comparison with what a second-rate NBN can deliver has seen an explosion in new players entering this market. Furthermore future developments in mobile technologies (LTE and 5G) will lead to more competition with the NBN, as more and more users will opt for better and more affordable high-speed broadband services through these alternative services.

All of these developments are putting a cloud over the financial future of the NBN company. Government funding runs out in 2017, and with another $20 billion likely to be needed to finish the job it is questionable whether private investors will be interested in funding this shortfall.

Companies covered in this report include:

NBN Co, Telstra, Optus, Vodafone, TPG; My Republic, OPENetworks, LBNCO, NHK, PWC.

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