Should the govt extend the NBN overseas?

Should the govt extend the NBN overseas?

Summary: The death of the Pacific Fibre undersea cable reflects continuing risk aversion in the telecoms private sector. Given the NBN's looming bandwidth hunger, should the government step in and extend the network overseas?

TOPICS: Telcos, Broadband

Ever-present demand for additional fibre-optic backhaul has been an ongoing issue in discussions about the NBN's future.

Yet, even as the network taps into the massive additional terrestrial capacity, provided by the Regional Backbone Blackspots Program (RBBP), the death of the privately-funded Pacific Fibre effort last week reinforces concerns that the private sector no longer has the investment appetite to serve our ever-expanding appetite for bandwidth.

That's something of a concern — particularly in New Zealand, which faces major changes in fixed-line infrastructure, as it pursues its own NBN-like UFB project, and recently saw TelstraClear's network brought to a standstill when it was flooded during an all-you-can-eat promotional deal.

While Australia has more route redundancy, total capacity is still facing pressure as traffic volumes increase, and cloud-computing adoption puts additional pressure on limited overseas links.

Maintaining this growth is, of course, a priority for the telecoms sector — but the failure of Pacific Fibre to raise NZ$400 million from the private sector suggests that carrying data to and from Australia is simply not a profitable enough venture to justify interest from overseas.

Apart from the hit to Australia's future bandwidth pipe, the failure of Pacific Fibre says some very important things about the current state of the private sector, to which Labor eventually wants to sell the NBN — and on which the Coalition will rely heavily to build its own, watered-down version of the NBN.

In a market that is as risk-averse as telecoms, it's not necessarily surprising that private capital holders are a bit skittish about putting too much in the kitty. Yet, without increased overseas links, the NBN will serve, not as a way of improving Australia's connectivity to the world, but instead as a way of creating an Australian online community that is, at once, more provincial and more isolated than we are already.

Some will laud this isolation, arguing that it presents significant opportunities to bring new content services onshore, so that they can be delivered via the NBN from low-latency, well-connected servers around the country. Certainly — as Akamai CEO Tom Leighton predictably argued — the NBN era will involve a role for content distribution networks (CDNs) that do just that.

Such CDNs are already in place to some extent, and their extension to homes via the NBN will obviously create new opportunities for getting content here. One could reasonably argue that, since media giants will benefit the most from CDNs, they should be the ones investing in the infrastructure to enable them.

However, as the FCC recently learned, private-sector reliance is a many-headed beast. If the private sector doesn't want to build new infrastructure onshore, and it doesn't want to build new connections linking Australia to the rest of the world — it seems we are simply going to be left further and further behind.

New undersea capacity will be crucial if the NBN is going to succeed in truly opening our lounge rooms to the world — and if the private sector isn't going to build it, perhaps the government should help.

Why not? A cable like Pacific Fibre could be built for a fraction of the dosh being thrown at NBN Co's satellite solution, and would offer a step upgrade in terms of global capacity, available to the more than 20 million eventual users of the NBN.

Many would argue that the government should stay out of the undersea cable market because it is already well-serviced by the private sector, and there is some truth to this: improvements in DWDM technology means that existing undersea cable still has more to give, as evidenced by iiNet's recent deal to boost its Southern Cross capacity from 20Gbps to 200Gbps.

If the government were to build an undersea cable through a public-private partnership, could it offer value to a market where, as Pacific Fibre shows, there is a will, if not a way? One could argue that building massive trunk connections between Australia and Singapore or Hong Kong — both significant transit points in the global internet — would be a worthwhile national investment, on par with building a smoother and faster freeway between Sydney and Brisbane.

The price tag isn't even that bad: NZ$400 million for a significant information-transit enabler, compared with the AU$250 million that Ted Baillieu strangely promised, to build a rail link to the tiny Avalon Airport.

Supplementary overseas bandwidth would serve the same purpose as local road upgrades that are constructed to facilitate ingress to and egress from a major new toll highway. Heck, if it followed the route of Pacific Fibre to New Zealand, we could even get that country's government to chip in — reducing the cost of the project to Australia, and opening up new opportunities for trans-Tasman online collaboration.

It may seem like a frivolous investment to some, or yet another unnecessary government incursion into a privatised market to others — but just as the AU$250 million RBBP program has improved backhaul capacity around the country, a bigger link to the rest of the world would seem to be a natural extension for the NBN, and a way for the government to complete the upgrade of our ageing, piecemeal telecommunications infrastructure.

Of course, there's unlikely to be short-term political will for such an investment, given the existing sensitivities around telecommunications infrastructure and the likelihood that, barring a spectacular Labor upset, Turnbull's razor gang will go to work on the NBN before the ink is dry on the next election results.

But in an ideal world, a project like the NBN would be accompanied by supplementary overseas bandwidth, which would complete its vision of ubiquitous broadband connectivity. It might be something to consider.

What do you think? Should the government step in and extend the NBN to link up with transit points in Singapore, Hong Kong or the US? Or do we need to let the private sector figure this one out?

Topics: Telcos, Broadband


Australia’s first-world economy relies on first-rate IT and telecommunications innovation. David Braue, an award-winning IT journalist and former Macworld editor, covers its challenges, successes and lessons learned as it uses ICT to assert its leadership in the developing Asia-Pacific region – and strengthen its reputation on the world stage.

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  • Practical Realities versus ideological Dogma

    David, I could not agree more.
    In the context of current and future needs, not to mention redundancy capacity.
    If the Mountain won't come to Mohammed, Mohammed must go to the mountain.

    It would be an excellent investment for the NBN to come in as major investors in Pacific Fibre, Possibly NZ could have contributed, however with the toxic Australian environment just a pipe dream

    Alternate routes such as via Singapore etc. would also be prudent possibly as co ventures providing Geographical redundancy

    Think Smart and Lateral, one cut and one size does not fit all scenarios regardless of the mindset of some
    Abel Adamski
  • I you thought it was a good idea to build the NBN why not

    It's as simple as this if you thought building the NBN because someone might use it in the future I guess building a government funded fibre to the rest of the world would also be good. According to Gillard the Gold standard NBN is more important than a gold plated electrical grid (given it's actually in a worse state then the telephone network because of all the green power crap) I just wish the governor general could step in and kick this moronic government out. We need a change and we need it NOW.
  • I dont think so.

    I dont agree with this. The point of a government backed NBN is to intervene in the market failure that is the last mile communication networks. It is not feasible to have infrastructure competition (ie duplication) in a natural monopoly situation.

    Australia's international communication links is not a natural monopoly, and it is not a market failure. Sure, it requires substantial investment to get off the ground, but I suspect that Pacific Fibre's failure to obtain funding is less an issue of market failure or risk-averse companies, but more to do with the lack of a credible current business plan. Australia has a huge oversupply of overseas data capacity, only a fraction of it is lit, most of it is unused. The barriers to entry in the market will not decrease until that oversupply is used.

    Governmental intervention into markets should be discouraged. There are no reason to do it in this application, and every reason to avoid government induced distortions. Leave the free market to work in areas where it can, and all evidence points to it working fine here.