Australia - The National Broadband Network - Moving into 2016

Australia - The National Broadband Network - Moving into 2016

Code: BC2015-11 | Published: Sep-2015 | Pages: 170 | Budde Communication Pty Ltd
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The NBN moving towards 2016 - an update on where we areBetween 2009 and 2012, the NBN company designed the architecture for a national FttH network. Legislation and contracts were completed in 2012 and shortly afterwards the rollout started, based on a rolling three year plan. The election of the Coalition government in 2013 resulted in a political review. As a result the FttH plan was abandoned and instead a so-called multi-mix technology (MTM) solution was introduced. This will see the continuing use of both the copper and the HFC networks.

However the government had to honour existing contracts that had been signed under the previous government, including the initial three years of the FttH rollout. It is this rollout that is saving the NBN at the moment as it is the only part of the project that is in full swing.
Under the new scheme, FttH will connect 26percent of premises by 2020, while a further 44percent will be served by FttN and the remaining 30percent of it will receive services via existing HFC networks. Using this approach, the government anticipated that 91percent of premises connected to fixed-line infrastructure would receive 50Mb/s by 2020.

This means a lot of hard work for the NBN company (their official name changed to NBN in 2015 but for practical reasons we will refer to them as NBN Co) as the rest of the project has hardly started. As we predicted when the government changed the plans for the NBN, this would take, not the six months indicated by the minister, but at least 2-3 years. So in all we have lost at least another two years. During that time the OPEX costs of the company continued, as well as significant extra costs in political reviews, consultancy reports, new designs, pilots and so on - all of these costs eating into a limited budget that, in the case of government funds, will start to run out in 18 months time.

On top of that NBN Co also faces a skill shortage, so it has plenty of headaches ahead.

In April 2014 the government formally opted for the NBN to provide a multi-technology mix rather than be predominantly FttH. Under the new scheme, FttH will connect 26percent of premises by 2020, while a further 44percent will be served by FttN - using the VDSL technology - and the remaining 30percent of will receive services via existing HFC networks. Using this approach, the government anticipated that 91percent of premises connected to fixed-line infrastructure would receive 50Mb/s by 2020. The capital cost was put at $29.5 billion (US$27.4 billion).
NBN Co was also instructed to focus on serviceable premises as a performance metric, as opposed to the number of premises passed, according to which a large number of premises had been passed by fibre but could not in practice receive services. NBN Co was serving 6,000 brownfield premises per week by mid-2014.

In December 2014 Telstra and Optus signed agreements with NBC Co setting out the terms under which their copper networks will be incorporated within the NBN. When regions are declared ready for service Telstra is obliged to cease advertising new retail and wholesale services, and will have an 18-month period in which its customers will be migrated to the NBN. For Optus, its HFC infrastructure will be retained in areas where it provides the best means to secure broadband for premises in the region.

The number of premises with an active NBN service across all access technologies has increased from 70,100 in June 2013, to 130,700 at the end of 2013; 156,000 in June 2014; and 870,000 by April 2015. NBN Co planned to connect over 3.1 million premises by September 2016.

The third element of the NBN is the HFC network. A bit of background here ..
The main cable network operators Telstra and Optus have upgraded their cable networks with DOCSIS 3.0 technology in recent years, and so provide data at up to 100Mb/s across much of their networks. This investment has helped to enable them to meet consumer demand for faster broadband services. However these upgrades are interim measures: in Europe, HFC networks commonly deliver data at 200MB/s or higher, and there is considerable scope for Australian players to make additional upgrades. The rollout of the NBN under the December 2013 strategic review has placed a greater emphasis on existing hybrid fibre coax plant being part of the national broadband plan. In December 2014 the revised NBN agreement saw Telstras HFC network and elements of Optuss HFC infrastructure deployed as part of the NBN, thus reducing the overall cost of the NBN rollout, which aims to reach some 3.6 million premises by June 2016. In April 2015 NBN Co revealed plans to trial new HFC technologies in several suburbs of northern NSW and southern Queensland by mid-year, with a potential to incorporate DOCSIS 3.1 technology within the NBNs multi-technology mix from 2017.

The other main cable player is TransACT, operating a hybrid fibre coax network in Ballarat, Geelong and Mildura. Since the acquisition of TransACT by iiNet in late 2011, these networks have been integrated in the latter companys overall infrastructure plans.

At the beginning of 2015 there are 966,000 cable broadband subscribers, accounting for less than 8percent of the total broadband market in Australia. However, most of these subscribers are high-end users providing relatively high ARPU for the cablecos.

When Australia began the discussion on its broadband future back in 2005 a key reason to warrant national attention and national investment was that Australia had dropped to around the 25th position on the international level that measured national broadband services. In particular suburban, regional and rural broadband was very poor. Telstra had a stranglehold on the market and there was little indication that this situation would change any time soon without government intervention.

When the NBN was launched in 2009 one of the goals was to get the country into the top ten of the international ladder. Now, in 2015, we have dropped to the 42nd position. This drop is mainly due to the ongoing delays in the rollout of the project, because of the partisan political situation in the country. With the rest of the world now moving clearly towards FttH Australia is set to linger on at the bottom of the international ladder for many years to come. Yes, the situation will most certainly improve, but there is no chance of the country ending up in the top ten in the near future.

Does this matter? We would say yes, as internationally high-speed broadband is seen as an important economic development. It is essential in order to increase productivity, to become more competitive and to develop new high-value jobs. Given the digital disruption that is taking place because of technological changes, we need to make sure that the Australian society and economy is ready and able to transform into one that facilitates the new sharing and networking economy models.

After the mining boom it is clear that Australia needs to diversify and that our very poor level of productivity needs to be improved, and the digital economy is key in that. If we want to be competitive in our Asian and globalised markets we need to lift our digital profile among our trading partners, and the NBN is key in that. We shouldnt stop at the already out-of-date multi-mix technologies - these should be extended as soon as possible to a fully-blown FttH network, in line with what other developed nations are building.

Table of Contents

1. Key developments and analyses
1.1 Political Developments
1.1.1 Australias first Hi-Tech Prime Minister
1.1.2 NBN - a win for grassroots democracy
1.1.3 NBN - this is as good as it gets
1.1.4 Labors NBN 3.0 back to FttH
1.1.5 After the storm - do we need a national inquiry in the reliability of our telecoms networks?
1.1.6 Should taxpayers pay for a NBN based on MTM?
1.1.7 The Minister for Lost Opportunities
1.1.8 Staying focused on the NBN outcomes and bypassing political roadblocks
1.1.9 Biggest threat to NBN is political panic
1.1.10 The unravelling of the NBN
1.1.11 Politics is setting Australia back years over the digital economy
1.1.12 Can the NBN deliver the goods in the networked economy?
1.2 The NBN company
1.2.1 How independent is NBN Co?
1.2.2 NBN Co threat to proper broadband competition
1.3 Technology Issues
1.3.1 The difference between FttH and FttP
1.3.2 Why Australia needs a Fibre-to-the-Premises policy
1.3.3 Market-led demand for FttH is picking up
1.3.4 Appealing to the professional code of our NBN engineers
1.4 Competition Issues
1.4.1 Open up the metropolitan NBN market to competition
1.4.2 Competition in the telecoms industry is dwindling
1.4.3 TPG highlights the fragile NBN environment
1.5 Other Issues
1.5.1 Broadband services in rural Australia worse than was thought
1.5.2 Australia vs America - what leaders say about broadband speeds
1.5.3 Content - the next regulatory war zone
1.5.4 NBN-related jobs increase by 248percent since review
2. Statistical overview, surveys and forecasts
2.1 Market Surveys
2.1.1 NBN key to the creation of 3 million jobs by 2030
2.1.2 Economic Benefit of the National Broadband Network
2.1.3 NBN support still strong
2.1.4 Towards a Connected Australia - NBN Co Report 2015
2.1.5 Deloittes Media Consumer Survey - 2014
2.1.6 Privatisation of NBN is not popular
2.1.7 FTTN modelling results
2.1.8 NBN speeds over 25Mbps
2.1.9 Broadband benefits for households
2.1.10 Support for fast broadband via an NBN
2.1.11 Customers prepared to pay for higher speeds
2.2 The Digital Economy - Trans-Sector Market
2.2.1 Forecasts - 2015; 2020
2.3 Business Market Survey
2.3.1 NBN Business Readiness Survey
2.3.2 NBN impact on industry output by 2020
2.3.3 Summary of survey findings
2.4 Business Models and Mergers and Acquisitions (M&A)
2.4.1 Fixed market scenarios
2.4.2 Mobile market scenarios
3. Policies and regulations
3.1 Telstra - NBN Co deal 2.0
3.1.1 NBN - this is as good as it gets (Analysis)
3.2 NBN regulatory reform - late 2014
3.2.1 Repositioning of the NBN and NBN Co
3.2.2 Changes to be implemented before the end of 2016
3.2.3 Changes beyond 2016
3.2.4 Carrier Licence Conditions (Networks supplying Superfast Carriage Services to Residential Customers) Declaration 2014
3.2.5 NBN levy to support remote telecoms
3.2.6 New NBN migration procedure
3.3 Original Regulatory Framework
3.3.1 Introduction
3.3.2 Bills passed House of Reps
3.3.3 Key elements of the Companies Bill
3.3.4 Key elements of the Access Bill
3.3.5 The key points of the NBN amendments
3.4 Special Access Undertakings
3.4.1 The NBN Co Review
3.4.2 Analyses - telecoms or digital infrastructure - a SAU question
3.5 Connectivity Virtual Circuit (CVC)
3.6 Regulatory reforms for the transition period
3.6.1 Introduction of regulatory instruments
3.6.2 Regulatory instruments - analysis
3.6.3 Final Access Determinations for fixed line telecommunications
3.6.4 Layer 2 bitstream on non-NBN Co networks
3.6.5 Telstra needs to tighten up its migration plan
3.7 Government to fund NBN voice migration
3.8 Budget funding for the National Broadband Network
3.8.1 Administrative and regulatory support
3.8.2 Funding planned until 2016
3.8.3 Funding for The Department of Broadband, Communications and the Digital Economy (DBCDE)
3.8.4 Funding for the ACCC and ACMA
3.9 Telstra Structural Separation Undertaking
3.9.1 Telstras initial undertaking
3.9.2 Migration Plan
3.9.3 The Australian Competition and Consumer Commission (ACCC) involvement in the NBN
3.9.4 Telstras Structural Separation Undertaking
3.9.5 Breaches of structural separation undertakings
3.10 Universal Service Obligations
3.10.1 Universal service reform legislation for the NBN
3.11 Sale of NBN Co
3.12 Special access for smart utility services
4. The NBN company
4.1 NBN Corporate Plan for the period 2014 - 2018
4.2 Results 2015
4.2.1 NBN Results first quarter 2015
4.2.2 NBN Co results - December 2014
4.2.3 Progress towards the Multi-Technology Mix
4.3 The network plan
4.3.1 Overall design and architecture
4.3.2 User access to the network
4.3.3 The backhaul network
4.3.4 ACCC location of 121 POIs
4.3.5 Points-of-interconnect (POI) architecture
4.3.6 Paid for Network Extension
4.3.7 IPv6 transition
5. Infrastructure plans and contracts
5.1 Developments in 2015
5.1.1 NBN Co should open up its networks to others
5.1.2 NBN bid to double installer numbers
5.1.3 NBN issues MTM FttN contracts
5.1.4 NBN national construction plan - Update March 2015
5.1.5 NBN Co reviewed contracts
5.2 NBN Major Contracts from 2014 onwards
5.2.1 Introduction
5.2.2 Telstra receives planning and design contract
5.2.3 Tata and Kordia win subsequent NBN design deals
5.2.4 Coriant - Optical transport network
5.3 NBN Co contracts 2009-2013 period
5.3.1 Introduction
5.3.2 Satellite operation outsourced to Ericsson
5.3.3 Universal Communications Group Multi Dwelling Units contract
5.3.4 Daly International deploys MDU broadband
5.3.5 Skybridge
5.3.6 Defect-management solution from Geomatic Technologies
5.3.7 Transit Network
5.3.8 End-user equipment
5.3.9 Network facilities Centres
5.3.10 Via Sat to supply satellite ground equipment
5.3.11 Contracts with Transfield and Service Stream
5.3.12 Geraldton new fibre rollout contract with WBHO
5.3.13 Construction agreements for SA and NT
5.3.14 Constructions agreements for NSW and Victoria
5.3.15 Melbourne, Brisbane and regional NSW constructions
5.3.16 UCG moving into single dwelling units
5.3.17 Second contract for South Australia
5.3.18 Fibre-optic contracts
5.3.19 Ericsson to build fixed wireless network
5.3.20 Network Operations Centre for NBN
5.3.21 Contractors for first-build sites
5.3.22 Nokia Siemens Networks selected for DWDM
5.3.23 Data Centres
5.3.24 IBM selected as systems integrator
5.3.25 Site Management
5.3.26 Internal IT systems
5.3.27 Network maintenance, installation and activation contract
5.3.28 NBN satellite ground station contracts
5.4 NBN telecom capital spend - 2013
6. FttH, FttB rollouts and early developments
6.1 Introduction
6.2 Overall Roll out Updates
6.2.1 FttH statistical overview 2015
6.2.2 One million target met
6.2.3 NBN national construction plan - Update March 2015
6.2.4 Review of the regional roll out - 2014
6.2.5 Fixed roll out update March 2014
6.3 Fibre-to-the-Premises (FttP) rollout
6.3.1 19,000 premises cut over to FttH
6.3.2 Roll out scaled down -late 2014
6.3.3 Rollout update mid 2014
6.3.4 Roll out - end 2013
6.4 Fibre-to-the-Basement (FttB)
6.4.1 Multi dwelling units
6.4.2 NBN fibre basements rollout started in late 2014
6.4.3 TPG
6.4.4 Telstra tests FTTB product
6.5 Other developments
6.5.1 NBN Co outlines policies for fibre-on-demand
6.5.2 Cost of a NBN brownfields FTTP connection.
6.6 The difference between FttH and FttP
6.7 Tasmania
6.7.1 NBN aerial deployment
6.7.2 Auroras NBN report tabled in the Senate - 2014
6.7.3 NBN pilot roll out
6.7.4 Other NBN related projects
6.8 The first mainland release sites
6.8.1 Introduction
6.8.2 Armidale
6.8.3 Kiama
6.8.4 Willunga
6.9 Second-release sites
6.9.1 Nineteen new sites
6.9.2 Second construction phase
6.10 Detailed overview of the initial roll out program
6.10.1 National overview
6.10.2 Dapto first on the list for 2012
6.10.3 Eight more cities announced - February 2012
6.10.4 Roll outs northern Queensland
6.10.5 Brunswick
6.10.6 98K more premises across the country
6.10.7 Newcastle
6.10.8 Western Sydney
6.10.9 Perth
6.10.10 Geraldton
6.10.11 ACT
6.10.12 Darwin
6.11 Multi-dwelling units
6.12 First fixed wireless roll outs
7. FttN and VDSL plans
7.1 Statistical overview FttN - 2015
7.2 From FttH to FttN
7.2.1 FttN trial programmes
7.2.2 NBN Co expands FTTN pilot
7.2.3 Second technical trial
7.2.4 NBN Co names first 140 FTTN sites
7.2.5 More details released in mid 2015
7.2.6 G.Fast
7.3 The VDSL Market
7.3.1 VDSL developments
7.3.2 VDSL vectoring
7.4 VDSL infrastructure analysis
7.4.1 Communications Alliance: Changes needed to Vectored VDSL2
7.4.2 VDSL consideration for FttN roll outs
7.4.3 VDSL an interim solution
7.4.4 FTTN modelling results
7.4.5 The aesthetics of the cabinets
7.4.6 Reliability and performance of the cabinets
7.4.7 Issues in relation to savings coming from sharing infrastructure
7.4.8 The risk of short-circuiting
7.5 Fibre-to-the-Distribution-Point (FTTdp)
7.6 Strategic Analysis
7.6.1 Video explosion pushing fixed broadband
7.6.2 After the storm - do we need a national inquiry in the reliability of our telecoms networks?
7.6.3 Computer transactions, not people, are driving the need for all-fibre networks
7.6.4 NBN - telecoms or digital infrastructure - a SAU question
7.7 Australias high international broadband costs
8. THe HFC network
8.1 Technology
8.1.1 Hybrid Fibre Coax (HFC)
8.1.2 The DOCSIS standard
8.1.3 The next development for DOCSIS
8.1.4 Can Cable Networks Deliver a Gigabit?
8.1.5 HFC DOCSIS vs. fibre
8.2 NBN - HFC Program
8.2.1 Statistical overview 2015
8.2.2 Overall plan
8.2.3 Arris appointed supplier of the network
8.2.4 Roll out plan
8.3 Market statistics and estimates
8.4 Telstra
8.4.1 Background information
8.4.2 Network upgrades
8.5 Optus
8.5.1 Overview
8.5.2 Network upgrades
8.6 IiNet/TransACT
8.6.1 Overview
8.7 BES/e-wire
8.8 Austar United Communications (AUSTAR)
8.9 Industry analysis
8.9.1 DOCSIS 3.0 -v- DOCSIS 3.1 (Analysis)
8.9.2 Do we need infrastructure-based competition?
8.9.3 Moving on from the HFC of the past
8.9.4 No long-term future in HFC cable broadband
8.9.5 HFC incorporated in multi-technology NBN
8.9.6 From HFC to Fibre-to-the-Premises (FttP)
8.9.7 Open access policy
9. Fixed wireless and satellite networks
9.1 Introduction
9.2 Wireless statistics - 2015
9.3 Fixed Wireless Rollouts Accelerating
9.4 NBN Cos Fixed Wireless Network
9.4.1 Services based on 2.3GHz spectrum
9.4.2 Construction plan
9.4.3 Visionstream to construct the network
9.4.4 Hills to do the home installations
9.4.5 Colocation and tower sharing
9.4.6 NBN facilitates wireless competition - Analysis
9.4.7 Fixed wireless rollouts
9.4.8 Other developments
9.5 The NBN Satellite Network
9.5.1 NBN considering higher speeds for satellite service
9.5.2 The name of the service: Sky Muster
9.5.3 Education and community applications
9.5.4 Broadband services in rural Australia worse than we thought
9.5.5 Launch delays
9.5.6 Introduction
9.5.7 Ka-band satellites
9.5.8 Satellite speeds
9.5.9 Interim satellite services (ISS)
9.5.10 Running out of capacity
9.5.11 Boost to capacity
9.5.12 NBN Co Satellite Support Scheme (NSS)
9.5.13 Added capacity for 9000 more satellite users
9.5.14 Satellite launch likely delayed until 2016
9.5.15 10,000 VSAT terminal milestone for NBN
9.5.16 Via Sat to supply satellite ground equipment
9.5.17 Ground station gateways
9.5.18 Satellite launch contracts
9.5.19 Analysis - Satellite and wireless uptake greater than expected
9.6 Why Wireless Broadband is no alternative to FttP - Analysis
9.6.1 Problems in metro fringe areas
9.7 NBN Fixed Wireless Broadband: A Global Comparison
Table 1 - Homes connected to fibre - 2005 - 2010
Table 2 - Support for NBN
Table 3 - Benefits of broadband for individual households - a national framework
Table 4 - Scenarios - summary of benefits in 2020
Table 5 - Impacts of the NBN on industry output at 2020 (percent change)
Table 6 - NBN budgeted and actual expenditure - 2008 - 2015
Table 7 - Premises Ready for Service 2014-2018
Table 8 - Premises Activated 2014 - 2018
Table 9 - Technology mix 2012
Table 10 - Weighted average cost per premise by technology
Table 11 - Key financial statistics NBN company
Table 12 - FttH Premises Ready for Service 2014-2018
Table 13 - FttH Premises Activated 2014 - 2018
Table 14 - FttH Weighted average cost per premise by technology (rounded to the nearest 100)
Table 15 - Communities in NSW where build preparation is underway - mid 2014
Table 16 - Communities in Victoria where build preparation is underway - mid 2014
Table 17 - Communities in Queensland where build preparation is underway - mid 2014
Table 18 - Communities in WA where build preparation is underway - mid 2014
Table 19 - Communities in Tasmania where build preparation in underway - mid 2014
Table 20 - Communities in South Australia where build preparation is underway - mid 2014
Table 21 - NBN Co key operational data 2012 - 2013
Table 22 - Brownfields cost per premises
Table 23 - Numbers of premises passed - first release sites (incl. Tasmania)
Table 24 - NBN pre-sales take up rates first release sites
Table 25 - NBN Co 2012 roll-out schedule
Table 26 - FttN Roll Out 2014-2018 (cumulative (‘000)
Table 27 - FttN - Weighted average cost per premise by technology (rounded nearest $100)
Table 28 - Capex and Opex savings for different network sharing deployment models
Table 29 - HFC Roll out 2014-2018 cumulative (‘000)
Table 30 - Weighted average cost per HFC premise (rounded nearest $100)
Table 31 - Cable broadband subscribers by major operator and annual change - 2002 - 2014
Table 32 - Cable subscribers versus other broadband technologies - 2009 - 2014
Table 33 - Optus financial data - 2011 - 2015
Table 34 - Optus financial data - 2011 - 2015
Table 35 - Optus financial data by sector - 2009 - 2015
Table 36 - Optus on-net broadband subscribers - 2009 - 2014
Table 37 - Premises Ready for Wireless Services 2014-2018
Table 38 - Wireless Premises Activated 2014 - 2018 (cumulative (‘000)
Table 39 - Weighted average cost per premise
Table 40 - Comparison download times - NBN vs dial-up internet
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
Chart 4 - Overview of cable broadband subscribers by operator and annual change - 2002 - 2014
Chart 5 - Overview of cable subscribers versus other broadband technologies - 2009 - 2014
Exhibit 1 - Can grid power keep the internet alive?
Exhibit 2 - Summary of scenarios considered in this report
Exhibit 3 - Updated financial arrangements
Exhibit 4 - Key elements of Telstras SSU
Exhibit 5 - Privatisation of NBN is not popular
Exhibit 6 - IT Platform and capabilities
Exhibit 7 - Demo centre and demo truck
Exhibit 8 - FttN trial areas
Exhibit 9 - Very-high-bit-rate digital subscriber line (VDSL)
Exhibit 10 - Can grid power keep the internet alive?

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