The rollout of the NBN has begun in WA, but how it ends up will be determined by politics.
The rollout of the NBN has begun in WA, but how it ends up will be determined by politics.
ABOUT 34,000 homes and businesses in Western Australia will be connected to the National Broadband Network within the next year and plans are in place to begin connecting more than five times that number by the end of 2013.
But with a federal election on the horizon, and the opposition calling for a less ambitious version of the network, it’s feared much of the state could miss out on the super-fast broadband as is currently promised.
Within weeks, network builder Syntheo is expected to begin digging trenches and laying fibre in Victoria Park and Applecross in Perth, and in central Geraldton and Mandurah.
The joint venture between telco network contractor Service Stream and land and building contractor Lend Lease began designing the network for these suburbs in late 2012 after NBN Co awarded it the $174 million construction contract – which could increase to $484 million if extended beyond the initial two years.
The imminent construction phase is expected to take less than seven months; meaning the 33,600 premises in these areas could be switching on their NBN connections before year’s end.
Alongside initial progress, however, arguments persist over the timeframes set out in NBN Co’s rollout plan, and whether the government’s proposal is the most appropriate.
Land developers are also concerned about the lack of infrastructure and information regarding the rollout (see Developers urge more guidance, support).
The company’s rollout schedule, announced in March, has expanded on the initial areas in central Perth, Geraldton and Mandurah where design work is already under way.
It will move into areas surrounding Victoria Park and Applecross, then spread south to Bibra Lake and Canning Vale and east to fill the Como void between Victoria Park and Applecross, with final stages of work here expected to commence before the end of 2013.
Syntheo will also begin designing the network for the outer suburbs of Mandurah by the end of next year, as well as Northampton (near Geraldton) and Wundowie north-east of Perth. But it will be another year before customers in those areas can purchase NBN plans from an internet service provider, given the 12-month design-to-completion timeframe.
Beyond fibre
These are just the plans for providing fibre to the premises (FTTP), which the government ultimately plans to implement in 93 per cent of Australian locations. In addition is the fixed wireless and satellite piece of the NBN puzzle, which will service the remaining 7 per cent of the country, and is progressing much faster than the fibre rollout.
Across Australia up to 48,000 people are already using the interim satellite service, which Optus is being paid $200 million to manage for NBN Co until its own satellites are launched in 2015. The contract allows NBN Co access to Optus’ existing satellites and enables internet service providers to sell the service. iiNet has about 200 customers nationwide already connected to the NBN via the satellite service.
Meanwhile, the rollout of infrastructure to provide fixed wireless to areas on the outer suburbs of Geraldton, the first location in WA, is also well under way.
Fixed wireless is being rolled out to areas where it’s not considered economical to build fibre networks, typically those with fewer than 1,000 premises.
NBN Co expects the entire fixed wireless network to be completed by 2015-16, meaning customers in less-populated communities will have internet access with peak speeds of 12 megabits per second before attention even turns to designing the fibre layout in other areas.
In Perth, for example, planning work for suburbs north of the river is not scheduled to begin until after June 2015 and it could be 2016 before customers here can switch on.
Also under way is the provision of fibre infrastructure to new developments around Perth, Broome, Newman and Kununurra. NBN Co has prioritised putting fibre into new developments to make them NBN ready and future-proofed, which, while beneficial to developers, is presenting some issues (see Developers urge more guidance, support).
In his address to a parliamentary committee earlier this year, NBN Co chief executive Mike Quigley conceded that the rollout in these new developments was putting pressure on deploying the NBN in established suburbs.
The increasing number of new developments in remote areas due to WA’s mining boom and the state’s labour shortages is squeezing resources. And while it may also seem a prudent move to equip these new developments with the latest technology, it means many will be ready and waiting for the NBN well ahead of when the rollout even reaches that area – if it’s not stopped by a change in government first.
FTTP v FTTN
The opposition’s communications and broadband spokesman, Malcolm Turnbull, has long argued that the government’s NBN plan to roll fibre to the door of 93 per cent of premises is unnecessary.
Instead, Mr Turnbull believes it would be more cost-effective and practical to stop the fibre rollout at the ‘node’ (termed fibre to the node – FTTN) and utilise a mix of existing infrastructure to cover the ‘last mile’ into people’s homes.
The ‘existing infrastructure’ is the copper and HFC cables, which could provide peak speeds of between 50-60 Mbps – as opposed to the fibre optic delivery that promises initial speeds of 100 Mbps and the potential to increase to 1 Gbps (1,024 Mbps) in the future.
Mr Turnbull’s argument is that most customers won’t need the 1 Gbps speed and the dedication to providing it has pushed the NBN budget up to an unnecessary $35.9 billion.
The Coalition’s plan to reduce the scope of the rollout and stop at the node would save $19.2 billion of capital expenditure, according to an analysis of the policy by financial services company Citi.
Others say it’s nonsensical to rely on the ageing copper infrastructure and have rejected arguments that it’s unnecessary to provide the majority with 1 Gbps potential.
Nextgen Networks managing director Phil Sykes said providing fibre services to a wide range of premises would open the floodgates for competitive service providers to offer new innovative services to businesses and consumers.
“If you look back at the major investments in telecommunications over the past 100 years they have produced profound value for the country; PSTN digitisation, mobiles, broadband internet,” he said.
“Every time the industry has put more capability and capacity into the market, services providers and end users have found ways to use it that we would never have imagined and new businesses to start that we couldn’t have conceived before.
“The key challenge for the industry has and will continue to be, to time the investments to match the uptake of new services. I am confident that Australia’s competitive services providers will further step up their innovative offerings to customers over the new NBN fibre, wireless and satellite access networks.
“There’s a reasonable lesson from history that significantly improved communications services enable businesses to innovate to improve business efficiency and national competitiveness.”
Internet service provider iiNet is set to benefit from the increased access to wholesale fibre access afforded by the NBN, as opposed to the hold Telstra has previously had on the market given its position as both wholesaler and retail provider.
The ISP’s NBN product manager Rachel McIntyre said the higher capability provided by the NBN would vastly increase the range of products internet service providers could offer.
“It will completely open up the entertainment and technology experience in the home without anyone being constrained,” Ms McIntyre told WA Business News.
“In 10 years when NBN Co’s rolled out the fibre network, 100 Mbps will be the standard, so if we don’t grow in advance of where we are now there will be significant constraints.
“Technology is moving so significantly, who knows what the next leap will be?”
At the other end of the spectrum are arguments that the fibre optic technology will not keep up with demands over the coming decades and investment should be reduced to enable upgrades in the future – arguments NBN Co’s external relations manager Trent Williams disregards.
“We haven’t figured out how to move things faster than the speed of light (which optic fibre uses) so what else are we going to use?” he said.
Mr Williams said any upgrades required to increase capacity would be needed in the connections between the fibre, which were much easier and cheaper to replace.
It remains unclear how the Coalition will deal with the current rollout of the NBN if it wins the federal election, but its policy commits to undertaking a complete cost-benefit analysis of super-fast broadband options, and Mr Turnbull has consistently called for the Productivity Commission to oversee such an investigation.
It seems unlikely that it would continue with the rollout of fibre to 93 per cent of the country, instead opting for the fibre-to-the-node option. That means some premises would be equipped with the highest technology and initial 100 Mbps speeds (with the potential to increase to 1 Gbps speeds in the future) while the remainder languish on slower speeds and copper infrastructure up to 50 years old.
Whatever the Coalition opts to do if Labor is ousted, it’s not likely to happen quickly; the Citi report said that it would take at least five years to renegotiate the $11 billion Telstra agreements that have given NBN Co access to the telco’s existing fibre networks.
Competition
Before the launch of the NBN project, Nextgen was contracted to build a backhaul fibre link from Perth to Geraldton – known as the regional blackspots broadband network.
The construction of the link enabled internet service providers to utilise fibre other than Telstra’s network – increasing competition in the market and improving regional access to broadband.
NBN Co’s activity comes one step down from that link at the transit network – where other wholesaler’s exist, albeit it mainly Telstra.
This is the fibre that the $11 billion contract with Telstra gives NBN Co access to, but NBN Co has also committed to negotiating with other wholesalers to utilise existing networks and avoid having to double-build fibre.
However the company concedes there’s no requirement for wholesalers to agree to working with NBN Co, and subsequently there may be instances where it has to build over the top of existing fibre.
The construction of the NBN is likely to provide more opportunities for some of those wholesale network operators, however, Amcom for example.
It has been building its network, largely around metropolitan Perth, for the past 12 years and has about 18,000 kilometres of fibre.
Its key clients are corporate businesses it provides with broadband speeds of up to 1,000 Mbps – 10 times the peak speed that the NBN will initially offer customers.
Amcom chief executive Clive Stein said the difference was that the NBN focused on providing services to small businesses and households, which would be well serviced by the initial 100 Mbps speeds, but larger clients were unlikely to opt-in to the NBN given their need for higher capacity.
He said the NBN would give Amcom the opportunity to enter regional markets where it was currently unfeasible for it to build a network; it will utilise the NBN transit network and enter regional markets as an internet service provider.
“It’s going to be quite competitive, but our differentiation will be based on the fact that we’ll be offering additional services to existing customers that are on our Perth fibre network,” Mr Stein said.
“Our service will originate from our Perth fibre network, to say the head office, and it will be seamless and transparent to the customer connecting to their regional office in say Geraldton.”
Following the full rollout of the project, NBN Co will become a key provider of wholesale broadband and it has committed to setting prices similar to what they are today. (Hence there’s unlikely to be a reduction in price for broadband services.)
But iiNet’s Rachel McIntyre said the NBN would create a level playing field for internet service providers, which will require them to provide better services as a differentiator to competitors.
“Everyone will have equal access to NBN Co as a wholesaler; it’s what ISPs can then bring to the party in addition to that network that will help their customers make a decision,” she said.