The 12 labours of Turnbull: NBN hurdles Coalition must cross in 18 months to meet 2019 deadline

An internal review of Australia's national broadband network (NBN) has identified 12 major issues that must be resolved within the next 18 months or so if there is any chance of the Australian government meeting its promised 2019 date for completing the massive project.
Written by David Braue, Contributor

The emergence of a confidential NBN Co report – prepared during the caretaker period at the request of the former Department of Broadband, Communications and the Digital Economy (DBCDE) for incoming communications minister Malcolm Turnbull – confirmed long-held concerns that the new government would struggle to keep its NBN election promises.

NBN Co identified twelve significant tasks facing the new government if it is to have any hope of making its 2019 FttN rollout deadline.

Delivering 25Mbps to all Australian premises by 2016, as promised in the party's broadband election policy, was "unlikely", according to the report, which was recently obtained by Fairfax Media and ZDNet Australia.

The NBN Co assessment said the government's secondary deadline – the upgrading of 90 percent of premises to 50Mbps speeds by 2019 – "could be achievable"  but would slip if the government failed to move quickly to resolve a number of significant issues.

The report, which also said the new government was taking the wrong approach by rolling out its NBN in two stages, suggested a period of "for example 18 months" would be an indicative timeframe for all of the issues to be resolved.

Like the twelve labours of Hercules from Greek mythology, the issues identified in the report are many and complex. Here they are:

  • The delivery of a new Statement of Expectations (SoE). The SoE outlines the new government’s overall strategy and an updated SoE was delivered by Malcolm Turnbull to NBN Co in late September (click here to read it).

  • The development of NBN Co's FTTN architecture and FTTN product suite. The NBN will offer a range of wholesale broadband services to retail service providers (RSPs), but these are limited by technical considerations and are likely to be different than those under the current FTTP rollout. NBN Co advised that these limits will restrict the range of products and services that can be offered over the network, which will in turn affect an FttN's revenue potential and future product strategy.

  • The renegotiation, shareholder approval and ACCC approval of the $11 billion Telstra Definitive Agreement. The current $11b agreement, negotiated over two years between the Labor government and Telstra, only allows NBN Co to run its own fibre through Telstra’s underground network ducts; it does not provide access to the network itself.
    Turnbull’s FttN plan relies on this access, and he has previously indicated he expects Telstra will give the government access to the network for free. However, Telstra has recently been talking up the value of the copper network and is unlikely to hand it over for free. While CEO David Thodey has called for a quick renegotiation with the government, the real length of time it will take is still anybody's guess – particularly since the deal is already the subject of legal action by Telstra.

  • Gaining exemptions from regulatory requirements that could prevent a rollout by NBN Co using Telstra's copper sub-loop. Effecting any substantive legislative change in this area is likely to be difficult for the new government until the new Parliament sits in mid 2014.

  • Gaining access to the copper network, with time factored into the build for the "significant amount of network remediation that is expected to be required" as the network is rolled out. Telstra CEO David Thodey has argued that the company's network will last another 100 years, but outside observers have said parts are "dilapidated". The leaked NBN Co report makes it clear that the full extent of remediation is still unknown. 

  • Successful deployment of a VDSL2 trial, which will be "important" to finalise the wholesale product to be offered to retail service providers; clarifying the responsibilities for in-house wiring and CPE installations; finalising any requirements for the VDSL2 node equipment to be rolled out by NBN Co; and developing migration procedures. NBN Co CTO Gary McLaren recently said early trials of the technology had been a success, while Turnbull has feted the trial as an example of things to come.

  • Powering the FttN nodes, including negotiations with power companies to provide power to node sites. Such works are typically unremarkable everyday undertakings when related to the deployment of new street lights and intersection lights, but present a different challenge altogether at the scale of the Coalition's NBN policy.

  • The need for Council planning and approval requirements. Switkowski admitted on Friday that the full requirement for council approval for the installation of FttN nodes across Australia's streets is still unknown. The patchwork of approval processes could be a nightmare for NBN Co to navigate: even though it has a high success rate in getting approvals for wireless towers in rural areas, council approvals for work in high-density areas are notoriously unpredictable and there are likely to be protests from citizens. 

  • Completion of procurement processes for any new suppliers, and renegotiation of existing supplier arrangements. Turnbull has previously said the former government's tender process had resulted in prices so low that it was sending contractors broke, and the high-profile pullout of NBN contractor Syntheo is likely to cause jitters amongst potential FttN bidders.

  • "Significant work involved" in the redevelopment of IT capabilities to support delivery of services over the copper network. NBN Co warned the government that the need to redevelop IT systems to support FttN's new product suite posed a "high risk" to the rollout. The current OSS/BSS tender was awarded to IBM in early 2011 at a cost of $200 million over a term of three years.

  • Time required to re-skill the existing workforce and source new employees necessary to deploy VDSL2 architectures "at volume". This includes redirection of existing FTTP contracts and retraining of existing employees. Availability of skilled employees – and getting enough of them into the field at adequate rates – has been a significant issue for the rollout and will continue to temper any rollout plan by the new government.

  • Reconsideration of the Special Access Undertaking (SAU) and Wholesale Broadband Agreement (WBA). The process of approving the SAU – the document that outlines NBN Co's pricing strategy through 2040 – has dragged on for years, with the ACCC most recently issuing instructions to NBN Co of additional changes it needs to make to approach regulatory approval.
    An FTTN rollout would involve a complete overhaul of the network's product and pricing strategy, which would inevitably set the SAU effort back significantly. The same goes for the WBA, which manages arrangements between NBN Co and access-seeking service providers. The leaked NBN Co report noted that the WBA would need to be rewritten, given "the relative age of copper compared to a newly-installed fibre access network". 

"The issues outlined above are likely to impact on NBN Co's ability to achieve volume rollout," the NBN Co report warned. "Subject to the conditions outlined...being completed in a relatively short time frame (for example 18 months), NBN Co considers that a 2019 completion date could be achievable given that time could be saved rolling out an FTTN network compared to an FTTP network."

"However, any significant delays in the preparatory and transition work could delay a 2019 completion."

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