The Federal Coalition has proposed a new National Broadband Network policy which would see Australia provided with broadband through a combination of developed HFC cable in urban areas, splitting up Telstra into wholesale and retail arms to serve suburban and regional areas, and wireless and satellite solutions to serve the rest of Australia in remote regions.
In a speech given to the National Press Club in Canberra today (the full text of which is available online), Shadow Communications Minister Malcolm Turnbull broadly divided Australia into a number of different zones when it came to addressing future telecommunications policy.
Urban areas in major capital cities, the Liberal MP stated, were covered to a great extent by the existing HFC cable networks operated by Telstra and Optus. Under Labor’s existing NBN policy, Telstra’s HFC network will stop providing broadband services as customers are migrated to the NBN, while Optus will decommission its own network as part of the same process.
However, Turnbull questioned “why on earth” Labor and NBN Co wanted to overbuild and decommission the HFC networks, which he said passed 28 percent of Australian premises.
“The network has plenty of potential for future upgrades,” he said. “As NBN Co’s corporate plan acknowledges, HFC node splitting ‘could be implemented as early as 2013 and would result in an increase in typical download speeds to 240Mbps and upstream speeds to 12Mbps’. In the US, UK, Canada, South Korea, Japan and many other countries HFC is a fiercely viable competitor to copper – indeed it is usually the only threat that prompts incumbent telecoms to upgrade to FTTx.”
In suburb and regional Australia — those areas not served by the HFC networks yet not so remote that they required cost-effective wireless and satellite technologies to service their broadband needs — Turnbull proposed that a Coalition Government would invite private sector companies to deliver wholesale broadband services within the designated areas, subject to set of ‘common carrier principles’ guaranteeing wholesale access and ‘reasonable’ access prices to third parties.
“Some of these areas will be commercially viable and the timing and nature of upgrades will depend on the terms and regulatory certainty provided to investors,” he said. “Others will not be economic in purely market terms and in addition to regulatory certainty will require different levels of Government support, which could be in the form of co-investment, capital subsidy or in a few cases both capital and recurrent subsidies.”
Turnbull noted that Telstra would be “in a prime position to tender for much or all of this role”, given its existing copper network.
However, for Telstra to win the work would require it to separate that network off into a separate company, which Turnbull dubbed ‘Network Co’.
“Assuming Telstra did form a new Network Co of its own, which could be one of several wholesalers in different parts of the country, it would be a regulated common carrier, would not offer retail services and would not discriminate between access seekers,” said Turnbull. “Its assets at the outset will consist of the Telstra exchanges, the copper customer access network and the HFC cable.”
Truly remote areas would be served, under the Coalition plan, through wireless and satellite services similar to the existing NBN policy, and the previous Howard Government’s OPEL strategy.
Lessons from New Zealand
Much of Turnbull’s thinking appears to have been influenced by New Zealand’s own NBN policy, which he mentioned frequently in his speech today.
“While we may hope to thrash the All Blacks in the World Cup, we have been completely and utterly outdone by our Kiwi cousins on broadband,” said Turnbull. New Zealand’s Ultra-Fast Broadband policy has similarly seen its monopolist telecommunications provider, Telecom New Zealand, separate its operations into a number of separate companies and a number of wholesale providers (principally electricity networks) set up fibre to the node networks in a number of areas.
“At the end the New Zealand Government will have ensured nationwide access to fast (or ‘ultra-fast’ in most cases) broadband with public investment of $500 per FTTH household and $800 for households covered by the Rural Broadband Initiative. Overall net cost to taxpayers will be about $650 million, or $400 per household,” said Turnbull today. “All that without a great big new Government monopoly. Or artificial restraints on facilities-based competition.”
“The Kiwis look across the Tasman at the NBN with astonishment. Its extravagance is almost beyond conception. .The most common reaction was “Well, you’ve got all those minerals so I suppose you can afford it. We have to watch our pennies here.”
The last time the Coalition unveiled a major telecommunications policy — during the 2010 Federal Election — much of the telecommunications sector and wider business community pilloried the initiative as not having gone far enough, compared with Labor’s NBN policy, which was budgeted at an amount in the multiple tens of billions.
The policy announced today appears to have gone further than that existing policy, which did not feature the restructure of Telstra or incentives for wholesale providers to build competitive broadband access infrastructure in suburban areas. However, it remains unclear what extent of funding Turnbull’s policy announced today would require.
The Coalition’s new NBN policy in brief:
- Optus and Telstra HFC networks to be upgraded
- Wholesale providers to be invited to supply services in other areas
- The likely separation of Telstra into retail and wholesale arms, with the integration of NBN Co infrastructure
- Satellite and wireless to supply remote areas
- Focus on driving competition in the retail market, with Government subsidies where appropriate
- Using New Zealand’s Ultra-Fast Broadband policy as a model
Image credit: Office of Malcolm Turnbull