I spent Christmas and New Year visiting friends in Australia and I took the opportunity to catch up on what was happening with their National Broadband Network (NBN) Co.
In April 2009 I was representing Ofcom at the Commsday Conference in Sydney speaking on standardised Wholesale Ethernet Access when the Labor Government announced that, rather than continue increasingly frustrating negotiations with an aggressively incumbent Telstra, they were going to build the fibre network they believed Australia needed, themselves.
There was near universal agreement that this was a bold and visionary stroke, but there were also concerns over the price tag of around $AU 40 Billion, and the technology choices made – Fibre-to-the-Home (FTTH) plus fixed wireless and satellite. And both the principle and the practise – should the state be building a network and even if it should, could it do so in time and to budget?
And would anyone use it if they did?
Over Christmas and New Year I met with Stephen Conroy, Minister for Communications, Malcolm Turnbull, Shadow Minister for Communications, as well as the CEO and CCO of NBN Co and other stakeholders to see where they were in providing answers to these questions.
Well, they have just completed their target of having construction commenced or completed in areas covering 758,000 premises before the end of 2012. They are on track to achieve their end of June 2013 target of 286,000 premises passed. After a ramp up over the next eighteen months they expect to level out at approximately 6000 premises passed per day until 2021.
The network is Gigabit Passive Optical Network (GPON) FTTH to 90% of the country with the rest guaranteed 12 Mbits through fixed wireless (not mobile) and satellite. Controversially NBN Co is also paying Telstra and Optus to decommission their hybrid fibre-coaxial (HFC) networks and migrate those customers to the NBN. These HFC networks cover about 20% of the population – the richest, densest, easiest to get to 20%. NBN Co argue they need those customers to make the overall economics of what is a natural monopoly work.
NBN Co will be a purely wholesale play, no retail, and only offering a ‘simple’ layer 2 ethernet service which, not by coincidence, looks something like the standard wholesale access that I was promoting when I worked for Ofcom. This Active Line Access has been formally standardised by NICC - although BT still do not support it.
Australia has a unique network topology, 85% living within 50km of the coast and density is good for networks costs. However, 76% of Australian homes are detached houses as opposed to only 22.5% in England, making for lots of long local loops.
Each home will have a box like today’s Virgin Media or Sky boxes, to enable the delivery of a wide range of Ethernet based services from home movies to telemedicine. Importantly though, each of these set-top boxes will have four Ethernet ports, so the customer doesn’t have to be ‘captured’ by one provider for all services.
At $Au40 Billion it is costing about £2000 per home. In the UK, by contrast, we are spending approximately £2 Billion of public money to deliver FTTC to the ‘final third’ that is around eight million homes. So that’s £250 per home, one eighth what the Australians are spending.
But it is not a fair comparison – firstly there is just the sheer size of Australia – roughly 32 times the landmass of that of the UK. This size has a direct impact on the costs of rolling out Broadband infrastructure in Australia, with the costs to deliver the last 30% far greater to that of the first 70%.
Also Australia is getting fibre to the home, which currently means about 100 megabits but in practise is almost infinite as technology advances mean we can encode more and more data into the simple turning on and off of light down a fibre. In contrast, fibre to the cabinet is already getting towards the physical limit of the copper infrastructure rolled out in the twenties and thirties and any further advances require short line lengths and hugely complicated – and energy hungry – signal processing.
But Australia is also getting an asset – NBN Co will own the network and anticipates a return of 7% to the Government. The subsidies we are paying out are ending up in BT’s coffers and BT owns the resulting network.
Clearly the UK is not in a position to make the kind of investment NBN Co represents. Autralia’s banks did not require a massive bailout and their economy has not suffered a double dip recession.
But what the UK should be able to deliver is a vision of our communications future. Australia knows where it is going and why. In the UK the Department for Communications chaos could not even put together a green paper, and in response to my recent parliamentary question, said it had no plans for BDUK post 2015:
Chi Onwurah: To ask the Secretary of State for Culture, Media and Sport what plans she has for Broadband Delivery UK after 2015. 
Mr Vaizey: There are currently no plans for Broadband Delivery UK beyond the current spending review commitment.
UK businesses and consumers need to know what kind of broadband future they can expect. It’s increasingly clear this Government isn’t going to provide that.
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