Virus impact over each market - telecom operators, government agencies and regulators' responses - revised forecasts for the next 5 years.
Last updated: 12 Feb 2014 Update History
Report Status: Archived
Report Pages: 110
Analyst: Paul Budde
After the September 2013 election in Australia, and with a new government in charge, a number of reviews were announced that will shape the future direction of the NBN.
This Interim report on the NBN addresses and analyses some of the recent developments including:-
BuddeComm’s other report on the NBN the Australia - The National Broadband Network comprehensively covers all aspects of the NBN and a new edition will be available mid 2014.
Researcher:- Paul Budde
Current publication date:- February 2014 (1st Edition)
Australia - National Broadband Network - Developments and Analyses
After the September 2013 election in Australia, and with a new government in charge, a number of reviews were announced that will shape the future direction of the NBN. For a start, the Minister asked NBN Co to first carry out its own review, based on the original specifications of the NBN – it being a majority FttP rollout.
The outcome was that at a strategic level the NBN will most likely continue fairly smoothly. There will most certainly be changes made to the rollout but these could quite possibly be implemented by NBN Co itself, now that it has largely been relieved of the political pressure under which it had to operate during the onslaught of attacks by the then Opposition, which started off with a policy to ‘kill the NBN’. At this stage at least the NBN now has bipartisan support.
The recent announcement regarding the protection of the NBN against cherry-picking was another good step forward.
Also, because of the likely continuation of the NBN many of the issues that existed under the previous government remain unchanged and therefore will require the attention of the present government, and/or will need to be taken into account in future policy developments. BuddeComm has already indicated support for certain changes to the NBN in relation to greenfield developments and multi-dwelling units (MDUs) and these issues will now receive significantly more attention than they were given in the past. Again, earlier comments and analyses made on these issues remain relevant under the new government.
The rollout has seen delays, but at this stage there are no indications that this will affect the longer-term outlook for completion of the project. The review will obviously shed more light on this, but so far the issues seem to be more one-off and/or resolvable – for instance, by being more flexible in the use of technology, for example, in MDUs.
A serious omission remains – that there is no policy or information that takes into account the importance of the NBN for the digital economy, the opportunity to use it to increase digital productivity, and where this infrastructure fits in relation to e-business, e-health and e-education.
This is an untenable situation as important decisions regarding a project that will run over a 20-30 year period are being made in a policy vacuum. Costs and technologies have been discussed ad nauseam, but so far nobody has addressed the enormous economic and social benefits, essential in running a modern society. We put the question forward – can we afford not to have an FttP-based NBN?
There is still a misalignment between the social and economic benefits of the NBN and NBN Co’s business plan. The new government wants to prioritise the underserved areas and is looking at other technologies to create some early wins. The question, however, is how much can be changed at this late stage – and also whether it will really lower costs and speed up the rollout.
Australia is highly 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 FttP around the world. The main reason for those governments becoming involved in digital infrastructure is to increase their country’s competitiveness and productivity in areas other than resources.
All these issues are addressed and analysed in this report
The FttP Rollout
Unfortunately, during the period 2009-2013 the NBN rollout became a political football, resulting in an environment where NBN Co experienced many constraints and constant diversions of management time and energy into unproductive activity. Under enormous political pressure NBN Co had to balance its plan between what is technically required to deliver a first-class infrastructure, on the one hand, and delivering as much as possible before the September 2013 election on the other.
After the election the new government had to further revise the rollout projections downward.
As promised, it will honour existing contracts that have been signed under the previous government; and it instructed NBN Co to come up with a plan that will see as much as possible salvaged from the original NBN plan, based on a more agnostic deployment of technologies.
There are many ‘unusual’ reasons why the rollout has seen so many delays – the negotiations with Telstra and Telstra’s asbestos scare are among the most notable ones. The question is whether these were simply one-offs and NBN Co should therefore be able to catch up. The foreshadowed reviews will reveal if that is possible or if the problem is more structural. In the meantime, after the asbestos scare the rollout has resumed and has been ramped back up to its original plan.
The next step after that is for RSPs to sign up customers for their broadband service. Uptake among some the first sites is already climbing to 50%-60% but with all the uncertainty surrounding the future of the NBN many customers are understandably confused and this is affecting the cutover rates.
Many local councils have also expressed concern regarding the future of economic developments in their regions if the NBN is downgraded.
Fixed Wireless and Satellite Networks
The NBN will connect approximately 7% of all premises in the country to wireless networks. They consist of an LTE-based component that will cover 5%, with a satellite-based network dealing with the remaining 2%. In all, just under one million premises. In 2013 NBN Co announced an upgrade of the infrastructure with new speeds of 25 Mb/s download and 5 Mb/s upload.
The two ka-band satellites that are currently being built at the cost of $2 billion will be managed by Optus.
In late 2013 the interim satellite reached full capacity and plans are underway at present to boost capacity to service as many customers as possible.
The first fixed-wireless release sites are under construction and this network should be finalised by 2015. As the wireless rollout had bipartisan support, it will more or less continue as planned under the new government.
Surveys, Statistics and Forecasts
The Australian telecommunications market will change dramatically over the next ten years, accelerated by an urgent need to increase digital productivity across businesses and government sectors. Major economic transformations are underway to face the many economic, social and environmental problems, and high-speed broadband, M2M, cloud computing and real-time data analytics will play a key role in this process.
Over-the-top (OTT) applications are being developed and provided by many industry and government sectors and as a result these are becoming increasingly prominent in the development of the future of the telecoms industry. This will start to blur some of the borders between these sectors, as well as blurring borders between infrastructure, IT and applications.
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 also begin to play a more important role.
The question remains – how successful will the telcos be in retail space?
They 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 these moves are already underway, with a focus on cloud computing, M2M and data analytic services. Contracts have been signed in the healthcare and energy sectors and various government services. These new developments offer a glimpse of the direction the industry will take in the future.
All of this will help the industry to broaden itself and double its size to around $80 billion by 2020.
Data in this report is the latest available at the time of preparation and may not be for the current year
I have both worked with Paul and valued his opinion on many occasions. Following, his many comments on the telecommunications industry has been rewarding and insightful. His reports have always been of value and help guide us through the maze of jargon, politics and defined the real road map of this complex industry.
David Hayes, Country Manager - Australia at Bulletin Wireless
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