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finally, decent broadband « Previous | |Next »
April 8, 2009

Surprise surprise. The Rudd Government has decided to scrap its previous plans for a high-speed national broadband fibre-to-the-node network funded by the private sector with the government tipping in $4.6billion and gone for a fibre-to-the-home network costing $43billion.The Government will set up a company in which it will hold a 51 per cent stake and will invite the private sector to invest in the remainder. It's a nation building project

NicholsonBroadband.jpg

Since the proposed new network will be a wholesale product open to all telecommunications carriers and so provides a solution to the problem created by the Keating and Howard governments when Telstra was privatised a decade ago when it was still holding a monopoly on network infrastructure and dominating the retail market.That was the big mistake.

The solution means that there is no need to compensate Telstra since the new cable will be laid alongside the old copper phone lines. The ISPs will be able to lease capacity from the government-owned NBNCo without having to deal with Telstra. That is good news because Australian business and consumers have been under-served by broadband speeds and overcharged as they have helped to prop up Telstra's near-monopoly profits.

It is about time as the copper wire telephone network is old technology that made Australia an also ran in the international broadband world. Now there is the opportunity to build a new network based on the realisation that wireless broadband is not a replacement for fixed-line digital mega-highways, but rather a supplement. Though fibre to the home would boost upload and download speeds, and decreases the time taken to transmit the data through a network, it will not address the lack of bandwidth on the fibre links between Australia and the rest of the world.

Another other issue is funding. Can the Federal Government fund the $43 billion cost of the National Broadband Network? Will there be private sector investment? If so, will it be the $21 billion envisioned?

In a discussion paper released on the same day as the NBN announcement, countenanced regulatory measures that the Government could introduce as the NBN was being built. These included beefing up the Australian Competition and Consumer Commission's power to regulate other companies' access to Telstra's existing network, some form of separation of Telstra's retail and wholesale arms and forcing Telstra to sell its HFC high-speed cable network and its stake in Foxtel. So are the consequences of the Trujillo/McGauchie strategy.

To enjoy speeds of up to 100Mbps, internet service provider Internode says users would be charged a monthly cost of $99.95. I pay around $80 per month for ADSL 2+. Internode should know, as they already offers the same internet access technology -- fibre to the home -- as the Government's yet-to-be-built broadband network.

| Posted by Gary Sauer-Thompson at 11:02 AM | | Comments (21)
Comments

Comments

Seems to me that this new plan comes straight from the "Department of Grand Announcements" and wont actually come to fruition.
But it is nice to know that all Australians will get the broadband they deserve. Well 90% is the new 100% don't you know.

Nice one "Credit Card Kev"

Les,
It is a massive government intervention in telecommunication infrastructure. The rhetoric is that the Government is only helping out because the private sector is temporarily unable to do the job.The private sector is saying that the rate of return on its investment would be too low.

I tend to share Les's scepticism that this will ever happen. If it does, it will only be if the government works through private contractors, because nobody in the public service has the necessary skills and resources after decades of relentless downsizing and privatisation.

The Leighton group of companies will be salivating at the prospect of winning such huge contracts on a virtual cost plus basis. Estimated final cost if it actually happens? $100 billion would be my ball park guess.

I'm still trying to figure it out. As I understand it the proposed NBN will be a wholesale network--- the NBN COMPANY will only provide the working fibre network in the ground, selling that service in bulk to ISPs with a single monthly or annual payment. ISPs then decide how to structure the plans, acquiring customers (i.e. marketing and sales), technical support and billing. So you get what you pay for--just like now.

It seems as if it is a faster version of the existing product/service that we have now.

Even faster spam. Hooray.

I haven't decided yet whether to be optimistic or pessimistic about it.

Nation building - tick.
Thinking of the future - tick.
Flipping the bird at Telstra - tick.
FTTH - tick.
Government debt when the economy stalls - apparently good.
Cost - dunno. How much fibre optic is already around? Can some of that be utilised?
PPP - there's a lot of pessimism around today, but yesterday the other telcos were all wanting to invest.
More expensive for consumers - the Opposition seems to think so, but they think a lot of odd things.
Senate - another field day for Fielding?

Lyn,
it is being sold by Rudd as the equivalent of the building of the railways in the 19th century---as a public good. It will be fully financed by the Government, if required, and then sold back to the private sector after it is completed in eight years. There is lots of cable around apparently--maybe that will be folded into the new network.

Nan,
It is true that the overwhelming majority of households don't want 100 megabits of speed now. Twelve megabits is ample because it doesn't matter whether they can download video in three seconds or 30, but it does matter whether they are paying $50 or $150 a week for the service.

However, one hundred megabits is useful for governments, research institutes, universities, utilities and hospitals now and will be vital for their work in a few years.

Gary,
From a psychological point of view I think the timing for a big nation building idea is good. And communications infrastructure is a public good.

Tasmania is a good place to start - small, and I understand there's already a lot of cable there so if it can be used, that state could be done fairly quickly so there'd be something to show for it. And a couple of seats at the next election won't hurt.

I wouldn't trust Conroy to build a sandcastle, let alone NBN. And I certainly wouldn't leave him to explain it to people.

Barnaby is being a National on this, so the senate won't be a problem. But I think they'll have to get the filtering/censoring thing out of the way sooner rather than later.

Yes and running the cable along the Murray will save lots of digging.

Peter,
It will increase the range of possibilities beyond the internet. Phone, TV, movies, video conferencing (health delivery, distance education, all the things we currently don't use video conference for because of poor quality).

The WWW will be only one among many things carried along these cables.

Lyn,
it's a long way to go re the Senate and many things could happen. But you are right about the Nationals in the Senate. Telecommunications is their core business. They are not going to say no to a national broadband network just to keep onside with the Liberals. Not when it means better education and medical services in regional Australia.

Lyn,
okay. I see your point---build it and they will come. So who came with the idea of fibre to the home/business and a new regulatory regime that is aimed at Telstra's dominance? It is a bombshell. It certainly wasn't Conroy or his department. Both are policy lightweights.

It is a big change in media policy--- goodbye to the old style free-to-air media networks and Foxstyle subscription packages.

Peter,
No it wasn't Conroy. He has little command of policy detail and so it is difficult for industry representatives to have a conversation with him about capital, networks, core technology issues, content or the delivery of public services. That is the view of industry insiders.

The big idea probably came from Tanner and the expert panel.

Surely Conroy cannot keep communications for much longer?

Every time I see or hear Conroy I'm more convinced he thought he would be dealing with talkback radio caller types. He doesn't seem to know what to do with the levels of intelligence he's dealing with.

Optus has offered to swap its cable for a stake in the new company, upon which their customer base would start contributing income. Poor Malcolm. There goes his business model idea.

Helen Coonan did her best on Q and A last night, but it's clearly too late.

Peter, it will be goodbye to so much we're currently accustomed to it's hard to think about. No more broadcasting monopolies of any kind. If women want women's soccer televised all they'll have to do is film games. Live will come to mean something else altogether.

Content licensing will have to be rethought. What will this mean for public broadcasting? Or tertiary education? Or the advertising industry?

What will happen to the concept of the masses if there's no longer any such thing as a mass audience?

Conroy's ministerial career will depend on the delivery of the new broadband network. Conroy is best described as a factional dalek and so generates a high degree of loathing and fear.

Lyn,
I missed Q+A. But I will try and catch over the weekend.

I concur that the emergence of user-friendly internet tools has allowed people to take video, web creation and interaction into their own hands. That changes the drum beats of free-to-air TV and pay TV even though they are still the dominant political mediums in Australia. More slow tv will happen

We now make little distinction where and how we get our information---the internet, newspapers, radio or television---when there is a vast expansion of bottom-up voices. This will undercut the importance of the old media---such as free-to-air television --will diminish whilst the role of of new media will increase. However, the old media will not easily give up its power and influence at the centre of political discourse.

Lyn
I watched Q+A re the broadband thingy---not much was said. Coonan's six lane highway metaphor to a regional town struck me as odd after coming back from several days in the West Coast of New Zealand. They have switched from mining and forestry and tourism with government help over the last 20 years, but they need that six lane highway to run their tourism businesses. If they can do that then they can stay in the region and not have to go to Auckland to get a job or make money.

The Liberals in Tasmania know it. Tasmanian tourism depends on high speed broadband.

Gary,
I found Coonan's 6 lane highway argument quite strange coming from someone who's supposedly part of the coalition. Boiled down, it means rural and some regional areas aren't worth the bother.

Mark Day makes some interesting comments in his blog in the Australian.He argues that it is a game-changer for media.

The true significance of the Government’s decision is that it will turbocharge and bring forward the transition to a more web-based society....Existing separate platforms for free-to-air television, cable or satellite systems and telephony - fixed or mobile - will merge in devices using internet protocol. Most television sets sold by 2015 will have inbuilt internet connection capacity, which, when connected to large pipes, will become an alternative method of distribution....Further developments in technology will encourage time-shifting or catch-up viewing, with both trends built on the emergence of the next version of the internet, already identified as Web 3.0, or the “semantic” web.

I am pleased to see the end of the old mass audience television.

Lyn,
re Coonan's remarks---they are a bit like saying that those in regigonal Austrlaia should be okay with 1 megapixel digital cameras and 1 giabyte computer hard drives.

I guess it was an attempt to support the natyional broadband proposal as a good thing but to do so critically.

It is suggested that video will become the predominant form of data sent online---the prediction is that video will account for more than 95 per cent of all data transmitted online in coming years.

Postal DVD movie retailer Quickflix eventually hopes to be able to distribute movies online .They say that the creation of the network would offer broader choice for content beyond TV and DVD rental stores.