National Broadband Network

National Broadband Network

The National Broadband Network (NBN) is a national wholesale-only, open-access data network under development in Australia. Up to one gigabit per second connections are sold to retail service providers (RSP), who then sell Internet access and other services to consumers. The NBN has been subject to political and industry debate for a number of years, before construction actually commenced.

The network is estimated to cost A$35.9 billion to construct over a 10-year period, including an Australian Government investment of A$27.5 billion. The build cost has been a key point of debate, especially the additional cost to serve some country and rural areas. NBN Co, a government-owned corporation, was established to design, build and operate the NBN, and construction began with a trial rollout in Tasmania in July 2010. The mainland rollout began with five first-release sites with the first services connected in April 2011.

The FTTP rollout is planned to reach approximately 93 per cent of the population by June 2021. Construction of the fixed wireless network is planned to begin in 2011, delivering its first services in 2012 and to be completed by 2015. Two satellites will be launched by 2015. The network will gradually replace the copper network, owned by Telstra and currently used for most telephony and data services. As part of an agreement with NBN Co, Telstra will move its customers to the NBN, and lease access to its exchange space and extensive network ducting to assist in the rollout.

Contents

Broadband policy

See also: Telecommunications in Australia

Previous attempts at national broadband networks

Broadband Advisory Group 2003

In a report released on 22 January 2003 the Howard government’s Broadband Advisory Group (BAG) recommended the Federal Government work with other governments and industry stakeholders to form a "national broadband network". [1] A subsequent Senate committee recommend the Federal Government replace the "increasingly obsolete" copper network with a new network based on fibre to the node (FTTN) or alternative technologies.[2]

Telstra Copper Upgrade Plans 2005

On 15 November 2005 Telstra, the owner of the national copper network, announced a plan to upgrade its ageing networks, including a rollout of a fibre to the node (FTTN) network. At the time, the Federal Government was the majority shareholder of Telstra, but the plan did not involve any additional government investment.[3][4] The rollout was later put on hold after the Howard Government refused to exempt the new network from laws requiring third party access, instead saying Telstra could achieve the exemption by applying to the competition regulator, the Australian Competition and Consumer Commission (ACCC).[5][6] Telstra dropped plans for the new network on 7 August 2006, after reaching an impasse in negotiations with the ACCC.[7] Former ACCC chairman, Graeme Samuel later said the proposal was "an illusion on cost and on the capacity to truly deliver high-speed broadband to end users".[8]

Broadband Connect Policy & OPEL Networks 2006/07

In June 2006 the Broadband Connect policy was announced by the Howard Government with an aim of providing greater access to broadband services in rural and regional areas.[9]

OPEL Networks—a 50–50 joint venture between Optus and Elders—was announced on 18 June 2007 as the sole successful bidder in tender [10] However, on 2 April 2008 Communications Minister Stephen Conroy terminated the agreement because OPEL had "failed to meet the terms of [the] contract".[11]

G9 Consortium 2007

Nine telecommunications companies—AAPT, Internode, iiNet, Macquarie Telecom, Optus, PowerTel, Primus, Soul and TransACT, formerly known as G9—proposed its own FTTN network on 20 April 2007,[12] however, it was rejected by the ACCC on 17 December 2007 because of future unknown conditions for access.[13]

Current policy

Initial failed federal government RFP 2007/09

In the run-up to the 2007 federal election, opposition Labour party leaders announced a Labour Government would build a "super-fast" national broadband network, if elected. [14][15]

The network was estimated to cost A$15 billion including a government contribution of A$4.7 billion which would be raised in part by selling the Federal Government's remaining shares in Telstra. [16] After the election, the new Labour Rudd Government issued a request for proposals (RFP) to build the NBN, and six proposals were submitted by Acacia, Axia NetMedia, Optus on behalf of Terria, TransACT and the Tasmanian Government (covering their respective states only), as well as Telstra. [17][18][19][19] [20][21] Telstra’s submission was later excluded [22] leading to warnings that if the project were to go ahead, Telstra would be entitled to compensation estimated at {{nowrap|A$15–20 billion [23][24] With the other bidders neither able to meet the government's requirements nor able to raise the necessary capital during the global financial crisis, the RFP was terminated on 7 April 2009. [25]

Current policy announcement April 2009

After terminating its initial RFP, the Rudd Government announced it would bypass the existing copper network by constructing a new national network combining fibre to the premises (FTTP), fixed wireless and satellite technologies. [26]

Tasmania was selected for a trial deployment based on the Tasmanian Government's submission to the RFP. [25]

Creation of NBN Co April 2009

NBN Co was established on 9 April 2009 [27][28] and Mike Quigley was appointed chief executive officer on 25 July 2009,[29] An implementation study was commissioned in April 2009 and released on 6 May 2010 by the Rudd Government.[30] McKinsey & Company and KPMG concluded the NBN can be implemented and made 84 recommendations in the study, including expanding the fibre footprint to 93 per cent from the original 90 per cent.[31] NBN Co released its business plan on 20 December 2010, including forecasts and network design.[32] A number of changes were made as part of NBN Co’s business plan, including an increase in the peak speed to one gigabit per second,[33] in response to Google Fiber[34] and giving "priority" to regional and rural areas during the rollout following the events after the 2010 election.[35][36]

'National Broadband Network Companies Act 2011'

The Parliament passed the National Broadband Network Companies Act 2011 and a related bill on 28 March 2011[37] with amendments by the Greens and independent senators adopted on 26 March 2011.[38] The amendments centred around transparency, freedom of information and competition concerns, including the adoption of uniform national wholesale prices for NBN connections.[39][40] The Government has required support from the Greens to pass NBN legislation through the Parliament. The Greens have voted in favour of NBN legislation, but have also won support for amendments that make NBN Co subject to freedom of information laws,[41] and that make any proposal to privatise the NBN subject to review by the Parliament and by the Productivity Commission.[42] The Government has also required the support of other independent and minor party members and senators for NBN legislation. Independent senator Nick Xenophon also supported NBN legislation in the upper house, but only after the government agreed to release a summary of NBN Co's business case.[43]

Agreement with Telstra and Optus 2011

A manhole for access to Telstra's ducts; this infrastructure is used by NBN Co.

Following threats by the federal government to force a structural separation of Telstra,[44][45] NBN Co signed a definitive agreement with Telstra on 23 June 2011 estimated to be worth A$9 billion post-tax net present value,[46] Building upon the signing of a financial heads of agreement a year beforehand.[47] Instead of separating, Telstra agreed to "disconnect"[48] its Internet customers from the copper and hybrid fibre-coaxial networks in areas where FTTP has been installed, and agreed to leased dark fibre, exchange space and ducts to NBN Co. Apart of the agreement, Telstra would not be able to market their mobile network as an alternative to the NBN for a number of years.[46] This clause is similar to the one in the agreement with Optus over its hybrid fibre-coaxial network estimated to be worth A$800 million post-tax net present value.[49] The ACCC—whose approval is required before both agreements take effect—raised concerns about the clauses being anti-competitive.[50] Both Telstra and Optus would remain the owner of their respective networks. [51] On 18 October 2011, Telstra shareholders overwhelmingly approved the deal. [52]

Responses by stakeholders

Since the announcement, the NBN has received both criticism and praise, from politicians, telecommunication companies, businesses and the public. The Coalition has described the NBN as a "dangerous delusion"[53] and "a white elephant on a massive scale";[54] instead advocate a policy on filling "gaps"[55] in the current copper networks where "commercial solutions were not always viable".[56] Nationals senator Barnaby Joyce said the NBN mirrors a proposal released by their think tank, saying it "delivers a strategic infrastructure outcome" and it is "vitally important that the [NBN] gets to the corners of our country where the market has failed".[57] The Greens said the NBN "is a key piece of 21st century infrastructure".[58] Independent MPs Rob Oakeshott,[59] Tony Windsor,[60] Bob Katter[61] and Andrew Wilkie[62] have expressed support for the NBN. Bob Katter said the NBN is "a great thing for this country".[61] Tony Windsor said the NBN is "too good an opportunity to miss".[60] Family First Party leader Steve Fielding said the NBN will "bring [Australia] up to speed".[63]

Telecommunication companies Optus,[64][65] iiNet,[64][65] Internode,[64] and Vodafone-Hutchison,[65] have expressed support for the project, along with the Australian Internet Industry Association, which said optical fibre solutions are "a critical part in the evolution of the internet".[66] Internode managing director Simon Hackett said he was "glad [the NBN is] going to go ahead".[64] Vodafone-Hutchison CEO Nigel Dews said the NBN will “transform the competitive landscape”.[65] However, other telecommunications companies including AAPT,[67] PIPE Networks[68] and Exetel[69] have expressed opposition to the NBN. AAPT chief executive Paul A. Broad said the NBN will "stifle competition".[67] PIPE Networks founder Bevan Slattery said the NBN is "economically irresponsible".[68] Exetel chief executive John Linton described the NBN as a "political stunt".[69]

Microsoft, Google and Intel have expressed their support for the NBN.[65][64] Google's head of engineering, Alan Noble, said the NBN will "be the greatest enabler of innovation". Intel managing director Philip Cronin said "the NBN has the potential to deliver significant long term benefits".[64] The Swinburne University of Technology conducted a survey of Australian Internet usage for the World Internet Project between September 2009 and October 2009. The survey of 1,000 people asked about Internet usage and how it influences daily life.[70] A question was included asking if the NBN was a "good idea"; 74.5 per cent agreed.[71] In the survey, the NBN had stronger support among younger people and Internet users.[72]

Network design

Fibre to the premises

The FTTP network.

Premises within the FTTP footprint are connected using Ethernet over a gigabit passive optical network (GPON) giving a peak speed of one gigabit per second.[73][74] A fibre-optic cable, known as the "drop fibre", goes from the premise to the street ending at the top of a power pole or in an underground pit. The "drop fibre" cable joins a "local network" which links a number of premises to a splitter in the fibre distribution hub.[75] A "distribution fibre"[76] cable connects the splitter in the distribution hub to a fibre access node, which is linked up to a PoI.[75] Mike Quigley said one of the advantages of a GPON network is the distribution hub requires no electronics. He used an example in the United States where a hub was "under water and full of mud" and it continued to function while the fire department used a high pressure hose to clean it.[77] Without electronics, the distribution hub does not require a power supply, nor a battery for power outages. In a GPON network only the local exchanges housing the fibre access nodes and the equipment on premises requires a power supply.[77][78]

The FTTP network architecture chosen by NBN Co comprises a number of replicating modules which is combined to make up the FTTP network.[79] A fibre distribution area includes up to 200 premises linked up to a fibre distribution hub. A fibre serving area module comprises 16 fibre distribution areas, which services up to 3,200 premises.[79] A fibre serving area comprises 12 fibre serving area module connected to a fibre access node, which services up to 38,400 premises. During the 10-year construction, NBN Co plans to build or lease approximately 980 fibre serving areas, servicing up to 37,632,000 premises.[79] Mike Quigley said the modular design will decreases the construction risk of the NBN and allow continuous improvements in the construction, network design and supply chains.[80]

Fixed wireless and satellite

Approximately 93 per cent of the population is planned to be serviced with FTTP,[81] with the remainder serviced by either fixed wireless or satellite technologies.[82] The FTTP build costs for each premise increases with each percentile in the last 7 per cent, because of a low population density.[81] The current funding could only achieve approximately 93 per cent FTTP footprint,[83] however, the FTTP footprint will be expanded where users or communities are willing to pay the incremental costs of installing FTTP.[84]

NBN Co will deploy a 4G Long Term Evolution fixed wireless network covering approximately 4 per cent of the population outside the fibre footprint.[85] The premises in the fixed wireless footprint will be hooked up to an antenna allowing a connection to a wireless base station; the base station links to a PoI via a backhaul.[86][87] The 2.3 GHz and 3.4 GHz spectrums[88] will be used to delivery these fixed wireless services. Unlike the mobile networks, only premises can connect to the NBN's fixed wireless network.[89] The number of premises assigned to each base station will also be limited.[83] Mike Quigley said the limits will ensure users received a "good service" because of the "high[er] throughput".[83] Users at the edge of the coverage for each base station will receive a peak speed of 12 megabits per second, the speed increases "considerably" moving closer to the base station.[90]

NBN Co is planning to launch two Ka band satellites by 2015, each offering 80 gigabits per second of bandwidth of which is a jump from the four to six gigabits per second capacity available from current satellites above Australia.[83][91][92] In the interim, NBN Co will use existing satellite to provide six megabit per second to a limited number of premises who currently do not have access to broadband speeds.[83][93] The satellites will be used to bounce signals from a satellite dish on the premises to an earth station, known as a "gateway"; the gateway is then connected to a PoI via a fibre backhaul.[87][94] Mike Quigley said the satellite design was "not easy", because the required coverage is about "five per cent of the world's land mass" containing "at least 200,000 premises" spread across "over 7,000 kilometres" of area between Cocos Islands and Norfolk Island.[83]

Equipment and connectivity

How RSPs and wholesalers connect to the NBN.

Internet access and other services using the NBN are sold to consumers from a retail service provider (RSP),[95] who connects their network to the NBN at a Point of Interconnect (PoI).[96] Mike Quigley has said the "ubiquity and standardisation" is important in the NBN, he continued RSPs will be able to connect to PoIs "using the same BSS processes and interfaces, at the same prices and with the same product constructs as far as is possible across all three technology products".[97] Layer 2 network access is sold to RSPs,[95] with uniform pricing within each of the three technologies regardless of where the service is delivered and across the technologies for the basic package.[98] To provide this uniform pricing, regional and rural areas will be cross-subsidised with the lower cost metropolitan areas. To prevent other potential providers from undercutting NBN Co in metropolitan areas, new fibre networks are required to be open access and charge similar prices; these rules are known as the "anti-cherry picking" provisions, which were passed into law with other NBN legislation.[99]

When completed the NBN will have 121 PoIs available to RSPs.[100] Originally, NBN Co planned for a more centralised model with only 14 PoIs, however, was overruled by the Federal Government on the advice from the Australian Competition and Consumer Commission (ACCC). The ACCC considered the plan to be "mission creep" and would have given NBN Co a monopoly over backhaul, however, NBN Co said centralised model would have allowed smaller RSPs to connect without going through a wholesale aggregator.[101] ACCC recommended 121 Pols after public consultation.[100] Internode criticised the "insane"[102] number of PoIs and after its pricing announcement warned it might have to charge more in regional areas because of the increase costs.[103] In response, Shadow Minister for Communications, Malcolm Turnbull said the "government can't deliver on a crucial promise" of "national uniform pricing", however, Minister for Communications, Stephen Conroy said we "guaranteed uniform wholesale pricing" not retail pricing.[104]

The NBN will use one of the three technologies to connect the RSP and its network to the network termination device (NTD) on premises. The NTD will allow devices to connect the NBN using the Ethernet or telephone ports.[105] An external source is required to power the NTD, while a battery will supply power for a limited time during power outages. NBN Co will supply a battery during the rollout, however, the end users or their RSP will be responsible for maintenance and replacement of the battery.[106] Mike Quigley said the batteries are the biggest source of complaints from trial users with some users doubting they will ever use the battery. The Federal Government and NBN Co are in talks over the issue.[107]

Expected cost and return

The Rudd Government estimated to the total cost of the project initially to be A$43 billion. NBN Co later revised down the cost in its business plan to A$35.9 billion.[108] The project is to be financed by a combination of a Federal Government investment of A$27.5 billion and private investment for the remainder.[108] The size of the government investment in the NBN has been a key point of both criticism and praise. The Coalition called for a cost-benefit analysis, describing the NBN as "a white elephant on a massive scale".[54] The Economist Intelligence Unit (EIU) criticised the NBN as a "huge cost to the public sector",[109] however, Minister for Communications, Stephen Conroy said the EIU were a "right-wing dogma" and would criticise any government investment in infrastructure.[110] Vint Cerf, co-creator of TCP/IP, said the NBN is "a stunning investment"[111] and asked for a "full and frank breakdown of the costs" at the conclusion of the project, to "aid and inform attempts by other countries to build a national network".[112] NBN Co intends to begin paying dividends back to the Federal Government in 2020, and to have fully repaid the Government's contribution by 2034.[113] NBN Co's business plan forecasts a return on investment of 7 per cent, expecting to turn over revenue of A$5.8 billion by 2021.[114] Prime Minister Julia Gillard says "taxpayers will be repaid their investment in the NBN with interest",[114] however, Shadow Minister for Communications, Malcolm Turnbull said "expectations of strong early revenues [for NBN Co] are looking overly optimistic".[115]

Implementation

Trial rollout in Tasmania

The trial rollout in Tasmania, including stage one (in red), two (in yellow), three (in green) and fibre "backbones" (in grey).

Tasmania was selected as the first state[116] to begin the rollout of the NBN, based on the Tasmanian Government's "shovel ready"[117] submission to the RFP for the original NBN.[25] A new company, NBN Tasmania (previously Tasmania NBN Co),[118] was formed on 8 April 2009 to build the NBN in Tasmania.[119] The company was planned to be a joint-venture between NBN Co, Aurora Energy and the Tasmanian Government.[117] The Tasmanian Government also floated an idea to invest A$12.7 million in Aurora Energy to get access to its fibre network, however, the joint-venture and deal were both cancelled on 9 November 2010 when the negotiations reached a impasse.[117][120] Although the joint-venture was cancelled, Aurora Energy still plays a role in the construction of the NBN in Tasmania.[121]

The trial rollout in Tasmania comprises three stages. Stage one was announced on July 2009 with the first customers being connected a year later.[122][123] Stage one included connections to premises in Smithton, Scottsdale and Midway Point[121] and construction of fibre "backbones" from Port Latta to Smithton, Cambridge to Midway Point, Midway Point to Triabunna, George Town to Scottsdale and Scottsdale to St Helens.[124] On completion of stage one, 4,000 premises were offered fibre installation; 51 per cent took up the offer.[125] As of 6 May 2011, 712 premises have an active service and 11 premises are awaiting service activation by a retail service provider (RSP).[121]

The Tasmanian Parliament passed opt-out legislation on 18 November 2010,[126] to allow NBN Co to install fibre connections to premises unless the property owners explicitly decline the installation.[127] The fibre connection is free, however, if the installation is declined and a connection is ordered at a later date, NBN Co may charge a connection fee.[128] The bill passed the Tasmanian lower house with the support of all members.[126] During his second reading speech, then-Premier of Tasmania David Bartlett said the take-up rates were "a good early result", however, he said it was "important to increase the participation rate".[128] In his closing remarks, Bartlett said "[the] NBN in Tasmania is a once-in-a-generation opportunity to create jobs and contribute to a new economic direction".[129] In her second reading speech on behalf of the Tasmanian Opposition, Elise Archer said "the NBN is an important infrastructure", but that "the State Liberals have some concern that the NBN business model seems to rely more and more on eliminating competition and other technologies".[130]

Stages two and three were announced on 21 October 2009 and 1 March 2010, respectively. Approximately 11,150 premises in Sorell, Deloraine, George Town, St Helens, Triabunna, Kingston Beach and South Hobart were included in stage two.[131][132] Stage three includes approximately 90,000 premises in Hobart, Launceston, Devonport and Burnie.[133] Stage two will include a trial of expanding the FTTP footprint to areas not included in the initial rollout. The trial will allow individuals and councils to pay the incremental cost of a fibre connection over fixed wireless in order to receive a fibre connection from NBN Co. The costs will include provisioning further space in exchanges and rolling out additional fibre optic cables.[134]

At the time of launch, the access prices for RSPs were temporarily set at a flat rate of A$300 per premises with no ongoing monthly charges.[135] Mike Quigley said one of the reasons for the flat rate is the OSS and BSS systems was not built to make the process automatic. He continued if NBN Co charged a monthly charge without the systems, it would have been a "very manually intensive process" and not a "sensible proposition".[136] However, RSPs did charge a monthly fee to customers, to cover the cost of the trial.[136]

First release sites

The first (in red) and second (in green) release sites of the NBN rollout.

Five areas comprising around 14,000 premises were chosen as the "first mainland sites", each representing rollout challenges the NBN was expecting to face during an Australia-wide rollout, with the first services going live on 19 April 2011.[137][138][139] commenced on 17 August 2010,[140][141] Armidale was the first site to officially launch on 18 May 2011 with 2,900 premises included of which 90% opted for connection.[142][143] Kiama Downs and Minnamurra was the second site to officially launch, following Armidale on 29 July 2011. Approximately 2,350 premises were passed, of which 80 per cent opted in for installation.[144] Brunswick had the lowest installation rate at the time of its official 4 August 2011 launch: of the approximately 2,689 premises passed, only 50 per cent opted for installation.[145] Aitkenvale and Mundingburra followed Brunswick on 1 September 2011 with approximately 3,100 premises passed and 63 per cent opted for installation.[146] Willunga was the fifth and final "first release site" to officially launch on 16 September 2011 with approximately 940 premises passed and 91 per cent opted for installation.[147]

Second release sites

Fourteen second release sites comprising 54,000 premises in all states and territories were announced on 8 July 2010 with construction commencing in August 2011.[148] The sites comprise premises in Aspley, Bacchus Marsh, Casuarina, Coffs Harbour, Geraldton, Gungahlin, Mandurah, Modbury, Prospect, Riverstone, South Morang, Springfield Lakes, Toowoomba and Victoria Park.[149][150] Telstra had agreed to allow NBN Co to use its exchanges and ducts in the second release sites before the agreement was finalised.

National rollout

Construction of the NBN began with a trial rollout in Tasmania,[116] with the first customers connected in July 2010.[122][123] NBN Co plans to complete the FTTP rollout by June 2021,[151] along with the completion of the fixed wireless[85] and satellite rollout by 2015.[91][92]

Fibre to the premises

In April 2010, NBN Co began a tender for the major FTTP rollout. 14 vendors submitted a proposal, however, NBN Co suspended the process on 1 April 2011, as the prices were "unacceptably high".[152] After the suspension, NBN Co entered into an agreement worth up to A$380 million with Silcar on 1 June 2011. The agreement covers the construction of the NBN in Queensland, New South Wales and the ACT by Silcar, a company joint-owned by Siemens and Thiess.[153] The agreement also includes the option of a two-year extension with an additional value of A$740 million.[154]

Fixed wireless

The 2.3 GHz and 3.4 GHz radio spectrums will be used to provide Long Term Evolution fixed wireless covering approximately 4 per cent of the population outside the fibre footprint.[85] NBN Co bought spectrum from Austar for A$120 million in February 2011,[155] with the remanding spectrum covering areas in Western Australia, the Northern Territory, South Australia, outback Queensland and New South Wales were bought on 13 July 2011 for A$1.3 million in an auction by the Australian Communications and Media Authority. NBN Co said the spectrum bought from Austar and in the auction covers "all the geographic coverage it needed" to build its fixed wireless network.[156]

NBN Co signed an initial 12-month contract on 1 June 2011 with Ericsson to design, build and operate the network with options to extend the contract for up to 10 years at a total cost of A$1.1 billion. Construction will commence in 2011, with the first five locations announced as the regional and rural communities surrounding Geraldton, Toowoomba, Tamworth, Ballarat and Darwin.[157] The first services are scheduled to begin in 2012 and completion in 2015.[85]

Satellite services

While the planning continues on the two satellites due to launch by 2015, NBN Co has launch interim satellite services on 1 July 2011, providing up to six megabits per second.[158] Due to the limited satellite capacity, these services were given to customers who did not have access to alternative "metro comparable" services, similar to the Federal Government's Australian Broadband Guarantee (ABG) program which ended on 30 June 2011.[158] The criteria for alternative "metro comparable" services were minimum data speeds of at least 512 kilobits per second, a 3GB per month data allowance and a total price to the end customer of no more than A$2,500 over three years.[93] To provide these services NBN Co brought managed satellite services and satellite capacity from Optus for $200 million and additional satellite capacity from IPstar for A$100 million.[159]

NBN Co is planning to launch two Ka band satellites by 2015 at a total cost of A$1 billion, each offering eighty gigabytes per second of bandwidth.[91][92]

Operation

Greenfields and Brownfields

See also: Greenfield land and Brownfield land

On 20 June 2011, the Productivity Commission said they have began an investigation spanning across approximately three months to look into allegations of anti-competitive behaviour by NBN Co in new housing estates. Three separate complaints were received from private greenfields fibre builders, led by Greenfield Fibre Operators Australia chairman and OPENetworks' Michael Sparksman. The operators were concerned that NBN Co was misleading housing estate developers by promoting its role as "provider of first choice", rather than its commitment as the "provider of last resort".[160]

See also

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References

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