Australia - The National Broadband Network

Paul Budde Communication Pty Ltd, February 2013, Pages: 225

This report provides the very latest update on all the developments surrounding the NBN. As BuddeComm has been involved in the NBN from its inception we are in a unique position to provide you with the insights of this large scale project, the largest of its kind in the world.

It provides a range of analyses on all the aspects of the project. It also 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 overviews. Comprehensive information is provided on the roll-out and on the exciting digital economy developments taking place at a regional level.

Subjects covered include:

- The NBN as its stands in early 2013
- The latest data on the FttH roll-out and the plans going forward
- Government and opposition policies and regulations
- Wholesale, competition, pricing and products
- NBN Co, infrastructure plans and updates on the latest contracts
- The developments surrounding the fixed wireless and satellite roll outs
- Industry in transition – both from the perspective of Telstra and the rest of the industry
- The opportunities for councils and communities to capitalise on the social and economic benefits
- Market forecasts 2015, 2020
- The all important digital economy that will be built on top of the NBN.

1. The NBN Moving into 2013
1.1 The Coalition’s NBN plan is starting to look interesting
1.2 With high-level bipartisan support for the NBN – what is its future?
1.3 Who is the cheapest plumber in town?
1.4 Is the NBN Co business model flawed?
1.5 Surge in high speed broadband demand
1.6 NBN leadership or NBN procrastination
1.7 The Dutch Disease, broadband and the mining boom
1.8 Comparisons with broadband plans from AT&T and BT
1.9 NBN could slash telecoms maintenance costs
1.10 Broadband demand-side management
1.11 The NBN and the opportunity for ‘virtual’ players
1.12 Will infrastructure constrain the digital entertainment market?
1.13 Will the half-built HFC disaster be repeated?
1.14 Four million households within reach of the NBN by 2015
1.15 Digital infrastructure essential to manage the transition to the e-world
1.16 Increased support for the NBN

2. Introduction and Overview
2.1 General overview of the plan
2.2 How Australia got its NBN
2.3 National interest utility
2.4 NBN national infrastructure, not just telecomms
2.5 Economic reforms
2.5.1 Fundamental change to the economy
2.5.2 People issues
2.5.3 Business modelling - The key to success of the NBN
2.5.4 Recommendations of the 2009 Implementation Study
2.6 Where is the user in all of this?
2.7 Why wireless broadband is no alternative to FttH

3. NBN Co
3.1 National Broadband Network Corporation (NBN Co)
3.1.1 An infrastructure company
3.1.2 The role of NBN Co
3.1.3 Governance and management of NBN Co
3.2 NBN Co Corporate Plan 2012-15
3.2.1 Long-term financial data on the investment
3.2.2 Operating costs
3.2.3 Effects on revenue
3.2.4 Analysis
3.3 NBN Co Corporate plan - 2010
3.3.1 Key highlights
3.3.2 Pricing and market assumptions
3.3.3 Product offerings
3.4 Analysis
3.4.1 NBN Co – a company under stress
3.4.2 Can NBN Co do the job?
3.4.3 NBN Co’s position needs to be clarified
3.4.4 NBN Co’s trans-sector role questioned

4. Infrastructure Developments
4.1 Infrastructure Plans and Contracts
4.1.1 The network plan
4.1.2 NBN spurs record telecom capital spend
4.1.3 External analysis of the Australian Fibre-to-the-Home (FttH) architecture
4.1.4 NBN Co contracts
4.1.5 Telstra upgrades pit and pipe infrastructure
4.1.6 Infrastructure Sharing and Coordination
4.1.7 Other Technology Issues
4.2 The FttH Rollout
4.2.1 Introduction
4.2.2 National Roll Out
4.2.3 Tasmania
4.2.4 Constructuion Roll Out
4.2.5 The first release sites
4.2.6 Second-release sites
4.2.7 Full roll out program
4.2.8 First fixed wireless roll outs
4.2.9 Roll out issues - Analysis
4.2.10 Regional Backbone Blackspots Program (RBBP)
4.2.11 Fibre-to-the-apartment
4.3 Fixed Wireless and Satellite Networks
4.3.1 Introduction
4.3.2 NBN Co’s Fixed Wireless Network
4.3.3 The NBN Satellite Network
4.3.4 Why wireless broadband is no alternative to FttH - Analysis
4.4 FttH Greenfield Market
4.4.1 Fibre Deployment Bill 2011
4.4.2 Analyses
4.4.3 Rollout developments NBN Co
4.4.4 Fibre wholesale from Telstra
4.4.5 Productivity Commission rules on complaints
4.4.6 Major Players
4.4.7 Retailers

5. Legislative and Regulatory Environment
5.1 Policies and Regulations
5.1.1 Regulatory Framework
5.1.2 Joint Committee on the National Broadband Network
5.1.3 Regional Telecommunications Policies
5.1.4 Regulatory reforms for the transition period
5.1.5 Government to fund NBN voice migration
5.1.6 Budget funding for the National Broadband Network
5.1.7 Telstra Structural Separation Undertaking
5.1.8 Sale of NBN Co
5.1.9 Special access for smart utility services
5.2 Analysis of the Opposition’s position
5.2.1 The Coalition’s NBN plan is starting to look interesting
5.2.2 The need for vision and policy
5.2.3 NBN Co’s delays so far
5.2.4 Global Slowing investments in fibre
5.2.5 Killer applications
5.2.6 The costs of the NBN
5.2.7 FttH and HFC solutions
5.2.8 In-house connections
5.2.9 Ongoing finetuning
5.2.10 Greenfield telcos
5.2.11 A different NBN?
5.2.12 Questions and assumptions
5.2.13 Conclusion

6. Industry Developments
6.1 Wholesale and Competition
6.1.1 More of the same competition in 2013
6.1.2 Wholesale Product Overview
6.1.3 The NBN wholesale and PoI debate
6.1.4 NBN Co’s multicast service
6.1.5 Pricing Strategies
6.1.6 NBN Utility Management service – The Retail Clause
6.1.7 Do we need infrastructure-based competition?
6.2 RSPs Pricing and Products
6.2.1 Retail trends and developments
6.2.2 NBN Penetration Forecasts
6.2.3 RSP Products and Prices
6.2.4 Other developments
6.2.5 Telstra to trial copper-fibre transfer
6.3 Industry in transition
6.3.1 Tough year for 2nd tier telecoms companies
6.3.2 Industry Transformation
6.3.3 Telstra made the first move
6.3.4 Market analysis
6.4 Telstra
6.4.1 Telstra and government agree on NBN future
6.4.2 Telstra Structural Separation Undertaking
6.4.3 Analysis

7. Municipal and Community Networks
7.1 Local councils need to be more active in NBN development - analysis
7.2 Case studies
7.2.1 The NBN for central Victoria
7.2.2 Wagga Wagga
7.2.3 Port Macquarie
7.2.4 Fibre revives Woodstock in central New South Wales
7.3 Trans-sector thinking and municipal broadband
7.3.1 Local government
7.3.2 What is trans-sector thinking?
7.4 The role of local councils
7.4.1 Infrastructure comes natural to local councils
7.4.2 Why should local government be involved?
7.5 Cities are taking charge
7.5.1 Introduction
7.6 How to get started
7.6.1 A city broadband agenda
7.6.2 The local community model
7.6.3 Framework for local government policies
7.6.4 Steering committees
7.6.5 Broadband education
7.7 Broadband development phases
7.7.1 Quality and affordability
7.7.2 The development of quality broadband demand
7.7.3 Industry is ready to deliver applications
7.8 City marketing
7.8.1 The concept of telematica
7.8.2 Three strategic elements of telematica
7.9 Examples of tele-cities
7.10 Communities left behind because of NBN party politics (analysis)
7.11 Broadband speeding up local governments
7.12 Smart cities, buildings and communities

8. Industry and Market Forecasts 2015, 2020
8.1 Industry transformation
8.2 Fixed infrastructure market
8.3 Wholesale market
8.4 The retail market
8.5 Penetration forecasts
8.5.1 Roll out penetration
8.5.2 Broadband access penetration
8.5.3 Stats and demographics for the 2012-2015 NBN footprint
8.6 The mobile market
8.7 The digital economy - trans-sector market
8.7.1 Forecasts – 2015; 2020
8.7.2 The digital media market
8.8 Business market survey
8.8.1 NBN impact on industry output by 2020
8.8.2 Summary of survey findings
8.9 Business models and mergers and acquisitions (M&A)
8.9.1 Fixed market scenarios
8.9.2 Mobile market scenarios

9. Digital Economy
9.1 Strategic Analysis
9.1.1 Australia’s digital transformation is underway
9.1.2 The issue is the digital economy, not broadband - analysis
9.1.3 The impact on the economy
9.1.4 The thousands of unreported benefits of high-speed infrastructure
9.2 National Digital Economy Strategy
9.2.1 Introduction
9.2.2 Other specific initiatives
9.2.3 The Digital Hubs and Digital Enterprise programs
9.2.4 Local e-government initiative
9.2.5 The NBN-enabled education and skills services program
9.2.6 Tuition for new migrants using the NBN
9.2.7 E- health services
9.2.8 Smart home in Armidale
9.2.9 Energy efficiency and sustainability
9.2.10 Teleworking
9.2.11 NBN Regional Legal Assistance Program
9.2.12 High-definition videoconferencing pilot program
9.3 NBN Art grants
9.4 Business participation on the NBN
9.4.1 Broadband – a key digital driver
9.4.2 Broadband boost
9.4.3 Network driver
9.4.4 Utility features
9.5 Sense-T
9.6 Traffic lights and alarm system go M2M over the NBN
9.7 More education required to sell the NBN to business users
9.8 Digital Inclusion

10. Glossary of Abbreviations

Table 1 - List of points of interconnection to the National Broadband Network - November 2012
Table 2 - Deployment schedule for 2012-15 corporate plan
Table 3 – Numbers of premises passed – first release sites
Table 4 – NBN pre-sales take up rates first release sites
Table 5 - NBN Co 2012 roll-out schedule
Table 6 – NBN budgeted and actual expenditure – 2008 - 2015
Table 7 – NBN pricing schedule for access virtual circuits
Table 8 – NBN pricing schedule for PoI connections
Table 9 – Scenario forecasts of household penetration from NBN uptake– 2015; 2020
Table 10 – Overview of NBN fibre plans by selected provider – 2013
Table 11 – Overview of Commander (M2) NBN business fibre plans
Table 12 – Total payments to be made to Telstra – 2012 - 2020
Table 13 – NBN deal valuation cash flows
Table 14 – NBN take up rates first release sites (pre-sales indications)
Table 15 – Broadband uptake* scenario forecasts – 2015; 2020 (household penetration)
Table 16 – Impacts of the NBN on industry output at 2020 (% change)
Table 17 – What does a better broadband service look like?
Table 18 – Will better broadband increase your digital economy participation?
Table 19 – What do you value in a broadband service?
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 - Trans-sector approach to broadband
Exhibit 2 – Economic benefits of broadband – overview of surveys
Exhibit 3 - IT Platform and capabilities
Exhibit 4 - Demo centre and demo truck
Exhibit 5 – The Regional Backbone Blackspots Program
Exhibit 6 - Key elements of Telstras SSU
Exhibit 7 - International NBN service
Exhibit 8 – Trans-sector benefits
Exhibit 9 – The social and economic benefits of broadband – case study
Exhibit 10 – Key broadbanding steps
Exhibit 11 – Some application bit rates
Exhibit 12 – Key applications of a digital economy
Exhibit 13 – Round 1 funding recipients Digital Hubs and Digital Enterprise
Exhibit 14 – Eligible round 2 communities Digital Hubs and Digital Enterprise
Exhibit 4 – Eligible round 3 communities Digital Hubs and Digital Enterprise
Exhibit 5 – Digital local government program projects – round 1
Exhibit 6 - Local councils added to the project in May 2012

The NBN in 2013At the start of 2013 NBN Co indicated that the rollout plan was now slightly above target. This bodes well for a rapid rollout of the network, to reach close to four million connections by 2015. With all the major foundations now in place it should be reasonably plain sailing from here.
The ACCC has laid down its wholesale conditions for the transitional period and it is in this area that further tension will develop, especially at the point when the copper services are actually being cut off and all the customers are being transferred to the FttH network.

Also, more detailed information is becoming available from the Opposition and, while there remain strong areas of disagreement, 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, which we share with them. There is still a misalignment between the social and economic benefits of the NBN and NBN Co's business plan. The Opposition also wants to prioritise the underserved areas and is looking at other technologies to create some earlier wins. The question, however, is how much can be changed at this late stage – and also if this really will 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 FttH around the globe. The key reason for the government's involvement in the NBN is to increase the country's competitiveness and productivity.

The first retail prices are very promising. Entry level charges are most competitive and will assist in a reasonably easy transition from the old networks to the NBN.

Focus Shifting To The Digital Economy

With the roll out of the NBN now well and truly underway people are starting to look at what this new infrastructure means for them. This is helped by the experiences organisations have already had regarding the impact of the internet, plus the fact that the current financial and economic climate is forcing cost-cutting and improved productivity.

The debate has shifted to what is needed to transform society and the economy in order to obtain the benefits of digital productivity. The NBN is no longer the story. Instead it has created other, new stories in the many different components of our society and our economy.

With slow-growing and stagnating developed economies and increased competition from the highly productive developing economies there is no other way for the developed economies to maintain their current economic and social lifestyle but to become more productive; and there is no better way to do this than by utilising smart digital technologies.

Within that context perhaps the single most important element will be the smart use of big data. As discussed in the report, this is also why we need the NBN – not to get faster access to the internet, but to build the right digital infrastructure – infrastructure that has the capacity, reliability, security, etc to allow the country to increase the amount of data needed to create digital productivity, to create a smart country – not just more data but also the capability to connect that data to achieve smart outcomes. The growth in M2M will be phenomenal.

Organisations are starting to understand this, and this is certainly stimulating the shift in the debate. It reflects the increased understanding of people in general regarding the benefits of the digital economy.

One example from the report alone should make everybody sit up and listen. Currently 20% of the national budget (all levels of government combined) is spent on healthcare, and this is set to double over the next 40 years. This, of course, will not happen, as it is totally unsustainable – it would, for example, mean that the total State budgets would have to be spent on healthcare alone.

While it will not happen the alternative, in a linear scenario, will have to be a very dramatic decrease in the level of services and the affordability of medical services. For many years BuddeComm has earmarked healthcare as the key sector that will profit from the gains we can make in digital productivity. The financial gains in healthcare alone could, over a period of 10 years, pay for the total cost of the NBN.

The report provides an up-to-date and detailed overview of the rollout of the network, the players involved, their product offerings and their plans and prices. It covers the FttH, fixed wireless, satellite and greenfield markets. The transitional period and Telstra's role in this are dealt with in separate chapters.

It also provides insights into NBN Co and overviews of the contracts and the companies involved in building the network, as well as analyses of the infrastructure.

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