Infrastructure Australia calls for full benefits of NBN but skirts technology choices

In its over 200-page report, Infrastructure Australia lauded the benefits of broadband, but failed to state the obvious fact that the days of fibre to the node are already limited.
Written by Chris Duckett, Contributor

Of all the topics covered by Infrastructure Australia's more than 75 recommendations made in its over 200-page Australian Infrastructure Plan, the word "transformational" appears twice, and both times it relates to the National Broadband Network (NBN).

"The delivery of the NBN is a transformational opportunity to enable all Australians to benefit from an increasingly digitised world," the report states.

But before grabbing a drink and settling into a dissertation of how the NBN endgame will be something other than fibre to the node -- whether it be the old Labor dream of full fibre to the premises (FttP), or a mixture of multi-gigabit HFC, G.Fast-powered fibre to the distribution point, and however much FttP is deployed in the upcoming years -- one should know that the word "fibre" appears three times. All in one dot point that deals with NBN's inevitable privatisation.

"NBN Co could be split along technology lines: One company selling services over the hybrid fibre-coaxial cable networks (technology developed by the cable television industry), one over fibre-to-the-premises or fibre-to-the-node networks, and others through the satellite and wireless networks," the report puts forward.

An interesting idea to attempt to boost competition, but does the country really want to see an HFC-based company looking to overbuild FttP areas in the future? This is exactly the sort of silliness that the creation of NBN Co was made to avoid in the first place.

The report calls for the establishment of separate internal business units within NBN, and a scoping study to be conducted to determine how best to sell the NBN off. However, that sale would be better once the network is complete, the report said, in order to avoid risk to potential investors.

These ideas mirror the thoughts that Australian Competition and Consumer Commission (ACCC) chairman Rod Sims voiced in 2014, as well as recommendations made by the Vertigan panel in the same year.

"Disaggregation would improve the prospects for infrastructure competition now and in the future, encourage private investment, and bring specialist skills to bear in managing each of these networks. Rather than duplicate fixed costs, the approach the panel recommends would secure the maximum leverage from existing assets whose costs are sunk, using those assets as the basis for actual and potential competition," the panel said.

However, Malcolm Turnbull kiboshed the thought as soon as it appeared.

"While disaggregation of NBN Co's business units (as the panel recommends) after the network is complete cannot be ruled out, now is not the time," the now-prime minister said in a statement made alongside the Vertigan report. "Breaking up NBN Co would distract its management, and delay the provision of high-speed broadband to all Australians."

In the scenario of NBN being split along technological lines, it would be intriguing to see who would be interested in purchasing the HFC company. Leaked documents that made their way into the public gaze in November showed that not only is the Optus HFC network not fit for purpose, but it also costs more to keep an HFC network running than any other technology in NBN's arsenal.

Should any investor think it is a good idea to buy a company based on a superseded technology with higher running costs, and in full knowledge that a competitor is waiting with full fibre technology literally around the corner in some places, then I have a great number of Sydney bridges that are also looking to be purchased at a good rate.

"Across the nation, we must encourage strategic and integrated planning," Infrastructure Australia chairman Mark Birrell said in his opening. "We can show that we have learned the lessons of the past, pursuing best-practice procurement and delivery that sees new infrastructure constructed for the right reasons at the right price."

To that end, the report recommends that the Universal Service Obligation (USO) -- which currently sees Telstra as the fixed-line phone service provider of last resort -- should be redirected to mobile services instead.

"Diverting funding to provide better mobile coverage in the regions will support greater use of new technologies that rely on smartphones. This could involve introducing a technology-neutral USO to support mobile services, in conjunction with existing programs," the report says.

"A major barrier to increased coverage in regional areas is the cost of fixed-line transmission -- otherwise known as backhaul."

The federal government should work with NBN and the business community to develop a framework for low-cost backhaul, the report says, but importantly, NBN should not become a retail service provider.

"Wherever possible, NBN towers should also be made available to mobile network providers. This would build on the current situation, whereby tower locations are published, and mobile network providers are able to request co-location.

"Sharing of towers can avoid duplication of infrastructure, minimise the visual disruption associated with towers, and support increased coverage and choice in regional areas."

Not surprisingly, Vodafone welcomed the proposed changes to the USO.

"Vodafone has long advocated changes to the USO, which currently gives AU$253 million to one player each year to maintain an outdated copper network in regional areas which will be connected to the NBN, entrenching its market dominance in those areas," Vodafone chief strategy officer Dan Lloyd said in a statement.

"We agree strongly with its findings that USO funding would be better spent on modern telecommunications technology, such as mobile, and that increased telecommunications competition is needed in regional and rural areas. There are now two major government reports supporting USO reform, and we urge the federal government to implement a full review of the USO when it responds to the Regional Telecommunications Review report shortly."

Whereas Telstra saw it differently.

"We're proud of our history of investing in and servicing these communities. It is vital that government policy does not undermine the strong investment incentives delivered by the highly competitive mobile and backhaul markets," Telstra said.

"Telstra is currently responsible for delivering the USO, making sure every Australian who wants access to a standard phone service is able to get one. We are open to working with the government and industry on changes to the USO while honouring the commercial agreement between Telstra and the government."

It is strange that Infrastructure Australia would choose to pick winners when it comes to the USO, but not wade into the choices behind the largest infrastructure project under way in the nation, especially when the report calls for government, the community, and business to come together and gather around the campfire to embrace the NBN.

"This will boost productivity and increase the efficiency of services and infrastructure. Government should lead the way by increasing the delivery of government services and information online," the report says.

"Advances in technology, facilitated by access to high-speed broadband, have the potential to profoundly change how we live, work, and connect to each other, and the rest of the world.

"We should ensure we realise the full suite of benefits for cities and regions made possible by the delivery of the NBN.

"The ongoing rollout of the hard infrastructure is only half of the story. The entry of the NBN into communities should be met by initiatives that ensure businesses and individuals take advantage of this transformational investment."

A chance has been missed to test the how set in stone the orders of the government are to NBN in relation to the mixture of technologies used. NBN CEO Bill Morrow has previously said that it is flexible, and Turnbull claimed in opposition that he was open to increasing the percentage of FttP used in the rollout.

"Governments should ensure that the full benefits of high-speed broadband are realised, and that it provides long-term connectivity dividends," the report states. "High-speed broadband offers opportunities that benefit all sectors of the economy."

It seems that the nation will have to wait for physics and time to verify a technical argument that was sorted long ago. In the long term, FttP, or a form of FttDP at the very least, is where our fixed-line broadband infrastructure needs to be -- not 500 metres up the road, attached to a pillar in a vain attempt to squeeze every last drop of value out of copper assets.

It is a shame that Infrastructure Australia chose to be timid on the NBN, whereas it offered ideas elsewhere in the report that went against the current political narrative, such as wanting the government to borrow more money, especially given the weight assigned to broadband access by it.

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