Last updated: 20 Jun 2012 Update History
Report Status: Archived
Report Pages: 176
Analyst: Paul Budde
This annual report provides the very latest update on all the developments surrounding the NBN.
It offers a wealth of information on infrastructure rollouts; contracts; wholesale and retail arrangements; legislative and regulatory issues; an overview of key players and stakeholders; the e-government, e-health and e-education sectors.
The report analyses the issues surrounding the growth of such services and includes global and regional information. Comprehensive information is provided on the exciting developments taking place at a regional level.
Subjects covered include:
Researcher:- Paul Budde
Current publication date:- June 2012 (5th Edition)
Several things became clear during the privatisation process of Telstra in the 00s. Broadband quality was below the international benchmark; end-user and wholesale prices were above that mark; and there was no economically viable business case for high-speed broadband infrastructure for regional and rural Australia.
At that time both sides of government were in favour of government intervention to rectify this situation. Telstra, however, was determined to maintain its monopoly and in the end the government had to step in. At the same time, because of the GFC, the government decided to change its broadband infrastructure plan from a regional to a national one. They also linked that to the development of the digital economy and launched supporting policies in e-commerce, e-health, e-education and smart grid, all aimed at utilising the NBN for those purposes.
The $36 billion plan includes a government investment of $27 billion and needs to be seen in the context of the $60 billion raised by the privatisation of Telstra.
The start of 2012 saw the conclusion of the structural separation and other regulatory issues associated with the rollout of the NBN. The ACCC also issued its wholesale conditions for the transitional period. Two months later NBN Co launched its rollout plan for the next three years, which showed that by the end of that period the NBN will be within the reach of close to four million households and businesses across the country.
This report provides financial and operational information regarding NBN Co's corporate plan, including forecasts covering the three years up to 30 June 2013. The plan outlines competitive pricing for wholesale broadband, including a basic service offering with a uniform national wholesale access price.
There is now also more detailed information becoming available from the Opposition and, while strong areas of disagreement remain, the reality is that, despite the possibility of a change of government in late 2013, the NBN is here to stay.
The Opposition certainly has some valid points of criticism. There is still a misalignment between the social and economic benefits of the NBN and NBN Co’s business plan. However the Opposition has not so far revealed its own NBN policy. Does it see this as essential infrastructure for the emerging digital economy, e-health, tele-education, internet of things, etc? Only when a vision has been arrived at can a strategic plan be generated. Without such a vision it is difficult to discuss technologies such as FttH, FttN, HFC, wireless, etc. You first need to know what you want to do with it.
Australia is extremely reliant on its income from natural resources and, like other resource-rich countries, it needs to diversify its economy. Interestingly, it is these resource-rich countries that are leading the rollout of FttH around the globe.
Affordable price is the key to a successful uptake of NBN services. Early indications are that a 12Mb/s entry level service will be priced at around $39 per month, and a telephone service will be added for an extra $10. IPTV add-ons are also priced at $10. Voice-only services are around $25 per month. Compared with similar services available over the current telecoms networks these offerings are most competitive, and this should easily lead to a 70%+ commercial uptake over the longer term.
The report includes overviews of the latest activities of the RSPs.
The actual rollouts of both the FttH and the fixed wireless networks are now well and truly underway and an interim satellite operation is operating. Tasmania will be the first state that will see the completion of the rollout and Armidale will be the first city to have full coverage. In all, rollouts are now underway in over 40 areas. Overviews of these rollouts are provided in the report.
With the national broadband network becoming a reality cities, regions and communities are starting to become involved in developing strategies that will see them taking advantage of the social and economic benefits that it can bring. A proactive local government is a vital element in the deployment of broadband to the point where it can begin to deliver community benefits in education, healthcare, community services, job creation and export.
The Regional Backbone Blackspots Program has also been completed, which saw the construction of 6,000 kilometres of high-speed infrastructure covering just under 400,000 people in regional Australia.
Australia is the first country in the world where the whole industry will adopt a new plan for the future. The process that led to the NBN started around 2005 and became a key government policy in 2007. Its visionary character attracted the attention of many governments around the world, including the Obama Administration and the European Union; and it became a catalyst for the UN Commission for Broadband.
Of course these changes will not happen overnight, and there will be a transitional period during which Telstra and its competitors will have to cooperate, and this will require give and take. However the NBN will change the industry forever. Companies will have to reinvent themselves and totally revise the business models in order to benefit from these game-changing developments.
A key element of the success of the NBN has been the cooperation of Telstra. The company accepted that changes were inevitable, and once it had accepted this it reacted swiftly. In 2012 Telstra finalised an $11 billion contract with the government, which saw the company making infrastructure assets available to NBN Co and agreeing to switch off its copper network after the NBN becomes available.
These massive changes propelled the company into a process of transformation which saw it competing aggressively with its rivals, particularly in the mobile market. It has ramped up its customer service and introduced innovative new services. So far so good, as the company has become one of the most financially successful telcos in the developed economies.
Of course, the market will change dramatically for the whole Australian telecommunications industry over the next ten years. A complete overhaul of the industry will take place, and developments such as cloud computing and the internet of things (IoT) will be accelerated.
The NBN will become the predominant infrastructure and, as a utilities-based network, it will also provide its services to other sectors, such as healthcare, education and business. With these sectors involved we will see the industry developing specific new business models around infrastructure, ICT and retail. IPTV and other media and entertainment applications will start to play a more important role as well.
For this purpose the government also developed its national digital economy strategy. Based on the trans-sector model the NBN will become the shared infrastructure for a range of these sectors. The first release sites are playing a key role in testing this concept. Overviews of the initiatives within these projects are provided in the report.
This approach will most likely result in economic and social benefits worth many billions of dollars and, as we are already seeing, it will create significant new business opportunities for Australian companies. In healthcare alone there is talk of savings worth more than $10 billion; and $2 billion in smart grid.
Telcos will have to decide where they want to play. Infrastructure will largely move to NBN Co, its contractors (eg, Telstra) and a few backhaul providers. Companies also have the opportunity to become the ICT providers to those other sectors. The larger sectors in particular will create a sizeable demand for value-added infrastructure services. The first of such contracts signed in the healthcare industry offers glimpses of such a future.
All of this will help the industry to double its size to around $80 billion by 2020.
Paul, May I congratulate you on a very successful and enjoyable afternoon with the Minister. In providing the roundtable discussions between government and industry, it highlighted the strong interest by stakeholders in Broadband and its implementation but it also presented us with other issues and opportunities that we need to address.
Dominic Schipano, CITT
BuddeComm's strategic business reports contain a combination of both primary and secondary research statistics, analyses written by our senior analysts supported by a network of experts, industry contacts and researchers from around the world as well as our own scenario forecasts.
For more details, please see:
Have the latest telecommunications industry news delivered to your inbox by subscribing to Paul's FREE weekly News & Views.