I was invited to attend the AFR Broadband Conference in Sydney last Tuesday on behalf of IBM Australia. The event attracted a variety of interesting speakers.
In short, the situation in Australia:
- Broadband speeds are currently slow in comparison to the US, Europe, Japan, Korea etc. (Average download speed in Australia is 710.6 Kbps, based on 12469 tests from download-speed.org)
- Broadband coverage is patchy. The cities have
reasonable coverage, but there are holes (e.g. Balmain in Sydney).
Most of the country (geographically speaking) cannot access ADSL2+ broadband. See the map.
- Telstra owns the existing copper wire network. In
the cities, there is competition, with companies like iiNet having set up their
own. Unsurprisingly, where Telstra is the only provider, prices are
much higher (Telstra was privatised and therefore acts in the best interests of
its shareholders - not the public, or the country).
The Australian Federal Government recognises that digital information and communication is becoming increasingly important to businesses / the Australian economy, culture and society and that Australia will be significantly disadvantaged if the lack of broadband speed and coverage is not addressed.
The Australian Federal Government has committed to create a National Broadband Network (NBN), which will be the single largest infrastructure project in Australian history. The details are still being ironed out. This is what we know so far:
The NBN will be a wholesale only fibre network (i.e. not allowing for retail conflict as with Telstra in the past)
The NBN will deliver 100-1,000MB connection speeds via direct fibre.
The NBN will connect at least 90% of homes/premises in Australia (actually, the Hon Senator Stephen Conroy indicated during his speech that he was not interested in leaving out any % of the population).
Wireless networks will be supplementary to the direct fibre NBN.
The NBN is estimated to take approx 8-10 years to roll out (2017-2019 completion).
The NBN is expected to have a 50+ year life.
The NBN will be future proofed. (Professor Douglas Van Houweling said he expects packet info transfers will always be used via Internet Protocol but that the way those connections occur will evolve.)
The NBN is expected to cost 43 billion AUD (mostly labour cost) and create 25,000 jobs.
The main discussion points at the conference:
1. Is structural reform a necessary precursor to the NBN?
The consensus was ‘yes’, a regulatory reform package is required to get the structure of the sector right.
Professor Allan Fels suggested rules governing broadcasting should be reviewed by the Productivity Commission (they performed the 2000 review).
An agreement must be reached to separate Telstra’s existing assets (their copper wire network will become obsolete with the rollout of NBN). Government may need to compensate Telstra?
The NBN must be a wholesale network, separate from retail. (This means the retail ISP’s would not be able to differentiate on product. Some are already starting to focus on customer service!)
Since the NBN project is actually a 40-50yr investment (taking adoption into account) – in order to see the project through to completion, the Labour Government would need to be re-elected three times! Because of this, it would make sense to have laws put in place to protect the build of and investments in the NBN.
2. Where will the 43 billion come from?
Firstly, the estimate of 43 billion is now considered to be on the high side. Phil Campbell from Citi Investment Research estimated, during the panel discussion that it would cost 30 billion.
The Federal Government recently committed 5 billion (the Hon Senator Stephen Conroy confirmed during his speech that they would foot the whole bill if necessary, though they don't expect to have to do that). Suggestions were: 10 billion vended assets, 20 billion via infrastructure bonds (tax free investment opportunity).
3. What will the NBN mean for the broadband industry in Australia?
In the next 8-10 years (the gap prior to NBN), steps must be taken to ensure existing broadband services continue to expand and competition continues in order to keep prices down.
Once NBN is in place, the ISP’s will need to differentiate based on service (as the product will be ubiquitous). This is the situation in Korea, where the broadband network is a wholesale monopoly with the retailers playing on top of it.
4. How will the NBN change things for business, society and the country?
Rohan Lund from Yahoo!7 spoke about the media revolution we’re already seeing as audiences use the internet to communicate, discover and be entertained. He outlined how Australians have adapted their internet behaviour to the speed currently available:
Yahoo!7 (which aims to be a guide to content on the internet) holds proportionately less market share to Google in Australia than in other countries. Google’s cleaner, faster search experience has been embraced by 90% of the Australian market.
Video is consumed, but in low quality, bite sized chunks.
The lighter social networking sites are most popular.
Clearly the NBN would be a good thing for Rohan and Yahoo!7 !
Abigail Thomas from the ABC talked about some of the innovative projects she’s undertaking. ABC iView (internet television) is, I gather, currently only feasible due to agreements with several ISP’s whereby the content download charges are not ‘metered’ for their customers.
Projects being undertaken overseas, such as digital health record
systems (England, Denmark, Chicago), or traffic management systems
(Stockholm, London), are reliant upon the creation of the NBN. See
my earlier post ‘"Towards a smarter economy" with a National Broadband Network’.
Professor
Douglas Van Houweling (in the US) joked via phone hook-up (after his
video speech had been played) that it was a shame he couldn’t yet see
us – his audience – via real-time video hook-up. Real-time video upload
will be possible with the NBN.
Related points:
- Professor Douglas Van Houweling said the rest of world will be watching as Australia rolls out the NBN and becomes a leader in this area. He suggested the US needs to think about ensuring 100MB connectivity within 3 years, with at least 10MB upload speeds. (It’s important to remember users will contribute, not just consume. Example is medical centres uploading x-rays.) This point re. upload capacity will hopefully be considered for the Australian NBN.
- NBN will ‘float the boats’ in that many internet based applications that will be created by the business community and government will be reliant / sit upon it.
- Korea currently has the fastest broadband speeds in the world and is investing 24 billion to increase to 1GIG connectivity by 2012!
Videos of some speeches from the conference:
For more info, check out 'The Scoop' by Mark Jones.
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