Project: Fibre to the premises, wireless, and satellite
Population: 22.6 million
Premises to be passed: 12.2 million premises on fibre by 2021, 1 million covered by fixed wireless and satellite services
Percentage: 100 percent: 93 percent by fibre, 4 percent by fixed wireless, 3 percent by satellite
Cost: AU$37.4 billion in capital expenditure to be paid off by 2040
Government/private/mix: Government bonds with a minority of funding to come from private investment
The Labor party went to the 2007 federal election with an AU$4.7 billion policy for a fibre-to-the-node broadband network for 98 percent of Australia. However, when it came to government, it took over a year of discussion about proposals with the industry before ultimately rejecting all proposals in favour of the NBN policy announced on April 7, 2009. This policy was for an AU$42 billion wholesale, fibre-to-the-premises network that would reach 90 percent of the population.
The policy came in the depths of the global financial crisis, and a period of peak antipathy between Telstra and the government. Telstra, which was originally owned by the Australian government, retained the copper access network when it was privatised in the 1990s. Telstra was not only in the best position to get its network upgraded, but also to help the government achieve its policy goals. The company had previously attempted to get the Howard government to invest in an FttN upgrade in 2006, but in 2008, when the Rudd government sought proposals for a broadband plan, Telstra, under CEO Sol Trujillo, did not meet the government's requirement for the proposal, and the government ultimately decided to move ahead with the full fibre-to-the-premises NBN.
Since the 2009 announcement, the policy has changed to become an AU$37.4 billion network with 93 percent of the population covered by fibre, 4 percent by fixed-wireless long-term evolution (LTE) networks, and 3 percent covered by satellite services.
NBN Co was set up by the government to construct, establish, and run the network as a wholesale operator, with an eye to make a 7 percent rate of return on the network to ultimately pay off the government's investment. Along with the government, NBN Co negotiated with Telstra under the more government-friendly leadership of CEO David Thodey to structurally separate its retail and wholesale arms, lease ducts and pipes to NBN Co for its network, and transfer customers from the copper network onto the NBN for a total value of AU$11 billion.
Under the deal, Telstra will also cease using its hybrid fibre-coaxial (HFC) network to deliver broadband in Sydney and Melbourne. Optus is also set to receive AU$800 million to decommission its own HFC network.
To ensure the viability of the national network, in conjunction with buying out Telstra and Optus customers, the government enacted new legislation to ensure new networks that would offer comparable broadband services to the NBN could not be rolled out unless they offered similar wholesale access to their networks. It means that companies cannot target profitable areas, like the inner city of Sydney or Melbourne, and roll out a new network that could undercut the NBN on price.
The NBN offers a range of speed tiers on the fibre network: 12Mbps down and 1Mbps up; 25Mbps down and 10Mbps up; 50Mbps down and 20Mbps up; and 100Mbps down and 40Mbps up.
As of the end of December 2012, the network had passed 339,700 premises, with a total of 34,500 active services. The vast majority of premises are so far covered by the satellite service, with 250,000 covered and 23,100 using satellite. There are 17,300 premises that can access fixed-wireless services, with 1,000 active services, and 72,400 premises able to get fibre services, with 10,400 active services.
There are around 40 retail service providers (RSPs) able to offer connections to the NBN, and plans start from AU$29.95 and go up to AU$164.95.
The construction of the network has been slow, and most recently the company revealed it was three months behind schedule due to issues with construction companies not employing the numbers of workers required as fast as was needed. NBN Co has said it would make up the time by maintaining its peak run rate of over 6,000 premises passed per day for longer than originally planned. The network is scheduled to be completed in mid-2021 if it runs to completion.
The federal opposition is against the scale of the project, stating that an FttN network would be more cost effective and completed faster than Labor's NBN. If the Liberal-National coalition wins the federal election on September 14, it is unlikely that the NBN project will remain in its current state.
Shadow Communications Minister Malcolm Turnbull has not yet released his policy in full, but he has said it would be similar to the fibre-to-the-cabinet roll-out currently underway in the United Kingdom.