news One of Australia’s most respected telecommunications analysts this week called for the nation’s politicians to show “leadership” when it comes to national telecommunications infrastructure, arguing out that further cost/benefit analysis conducted on the sector would constitute further ‘procrastination’, after dozens of such studies have already been conducted.
The concept of Australia building a ‘national broadband network’ of some kind was first raised back in late 2005, when then-Telstra chief executive Sol Trujillo proposed to the Federal Government that it help the telco to fund a national upgrade of its copper telephony network to support so-called fibre to the node infrastructure. Since that time, the two major sides of Australian politics have been locked in a bitter struggle over what the future of national telecommunications infrastructure should look like locally.
Currently, the Labor Federal Government is pursuing a fibre to the home strategy, where Telstra’s copper network will gradually be replaced with fibre, and several competing hybrid-fibre coaxial cable networks will be shut down. Rural areas will be served with a combination of satellite and wireless infrastructure. In contract, the current Coalition Opposition is proposing that it would place the current Labor NBN rollout on ice if it took Government at the next Federal Election, while it commissioned the Productivity Commission to conduct a cost/benefit analysis into the best way to provide fast broadband to Australia. The Coalition broadly favours a fibre to the node-style rollout of the type first proposed by Trujillo seven years ago.
However, in a lengthy blog post published yesterday, local telecommunications analyst Paul Budde argued that further study in this area would only serve to delay necessary infrastructure. “What is needed from politicians and other decision-makers is leadership. We elect or appoint these people to come up with innovative solutions that enable us to advance as a society,” he wrote.
“During the previous government (1996-2007) 25 Inquiries were undertaken in telecoms, without any progress being made on their structural recommendations. This is a typical example of procrastination. And in that process Telstra became so dominant that the ACCC indicated it had become increasingly difficult to regulate. Subsequent decisions made by the new government in relation to the policies surrounding the NBN need to be judged against that background and that reality.”
“Leadership also means daring to take decisions and sticking to them. If needed, the NBN policy provides NBN Co and the parliament with means to make changes where and when it makes sense and some of these changes have already been made. There is no shame attached to recognising the need to make adjustments. Supported by a solid vision and strategy NBN policies should not be dogmatic; the market is far too dynamic for that. However, changing the original vision and strategy based on politics or the interests of vested interests is not good leadership.”
Budde write that he was not saying that cost/benefit analyses were useless or that they should not be undertaken – but he was arguing for a balanced approach between vision and leadership on the one hand, and conservative management of the issues on the other.
“One can argue endlessly about what technologies should be applied and at what cost, but I believe that – once sound policies decision have been made, clearly articulating for what purposes the NBN will be built – it is best to leave the technical decisions to the experts. International telecoms experts unanimously agree that an FttH network is the best future-proof solution. One can debate about whether it is needed in 5,10,15 or 20 years – and again that depends on some of the differences between countries as mentioned above – but in the end FttH is the best final solution for all urban and many regional premises.”
“Nobody has a crystal ball capable of making a truly reliable CBA for the next decade. If we have to depend on that, along with the endless arguments about the hundreds of possible scenarios that might ensue, we will continue to procrastinate.”
opinion/analysis
Right now, you’re probably thinking something like: “These comments by Paul Budde are all very well and good, Renai, but what the hell is that godawful-looking image at the top of the article, which appears to have been dragged from the history records?” And it’d be a valid question.
That image is taken from a Telstra presentation given by its management under then-chief executive office Sol Trujillo to the media and analysts in November 2005, as Trujillo and his team (which included current Telstra chief executive David Thodey) outlined their plans to reform Telstra from top to bottom – from network infrastructure to IT systems, from its marketing strategy to its product set.
It details Telstra’s plan at the time – famously subject to regulatory approval by the Federal Government – to massively upgrade its existing copper network to use fibre to the node technology, rolling out 20,000 ‘nodes’ around Australia and deliver a guaranteed 12Mbps broadband speed to some four million Australian premises. The rollout was slated to begin in November 2005 and would have been finished threeish years later – in 2009.
Now, its important to realise that nearly every other aspect of Trujillo’s visionary plan for Telstra went ahead. The company did massively overhaul its IT systems. It did build an entire new 3G mobile broadband network – the same one which millions of Australians rely on today. It did overhaul its marketing and product strategies. In fact, almost every aspect of Telstra was rejuvenated under Trujillo’s leadership.
Except one. And I’m betting you can guess which one.
Yeap. If Trujillo’s plan in 2005 – seven years ago – had gone ahead, then millions of Australians would likely be already receiving the sorts of FTTN speeds which Shadow Communications Malcolm Turnbull likes to talk about when it comes to broadband – speeds of at least 12Mbps but more likely closer to 60Mbps or even 80Mbps, as the FTTN nodes were upgraded to support such speeds.
However, the then-Howard Coalition Government, with Liberal Senator Helen Coonan leading the communications portfolio as Minister of the day, knocked back the plan, leading to an incessant back and forth debate about the future of Australian fixed-line telecommunications infrastructure which would plague Australia literally for the next seven years. For most of the past decade, Australian politicians have been arguing about this issue – and there’s no clear resolution in sight, given the stark disagreements which politicians such as Communications Minister Stephen Conroy, and his shadow, Turnbull, have about this issue.
I post the image above not to demonstrate that I agree that Trujillo’s FTTN plan was the best one available – it wasn’t. It was an inherently selfish and opportunistic land grab that would have allowed Telstra to entrench its position as a vertically integrated fixed-line telecommunications player. And it would have laid waste to the investments which rivals such as iiNet, Optus and TPG had made in competitive ADSL infrastructure.
However, at least Trujillo was willing to lay down some cash and do something about the issue – to actually focus on providing better broadband services to Australians. Under Trujillo’s plan, Australia would have had a national FTTN network in 2009. 2009! That’s three years ago! Three years in which Australia’s two major sides of politics have suffered a crisis in their ability to agree about almost anything when it comes to the future of fixed-line telecommunications in Australia. That’s the cost Australia is paying constantly for their ongoing differences of opinion.
Paul Budde is 100 percent correct. Australia’s political class desperately needs to show leadership when it comes to the National Broadband Network. Well, to be correct, Labor is showing a great deal of leadership at the moment in this portfolio, even if it has been a bit brash about it at times. The Coalition needs to pull its socks up and work with Labor on a solution for Australia’s future. These kind of infrastructure projects require a decade or more to complete. And fundamental infrastructure is not an issue which should be tugged back and forth between governments every three years. This is one issue which needs to transcend Australia’s electoral cycle and all the petty bickering it engenders.
Image credit: Telstra
It’s actually a very interesting diagram.
If Telstra – (the Coalition appointed champion of all things telco) – thought it would take seven years to do 20,000 nodes, how long would it take to do 80,000 to 85,000 nodes under the current coalition FTTN plan?
Add to that the time to renegotiate the Telstra deal, the ACCC SAU, redesign the network and all the other issues that would have to be dealt with the stop the FTTP build and go with FTTN, and how long will the FTTN plan take?
Longer than it would take to keep going.
Ahem.
No — Telstra thought it would take three years to do 20,000 nodes.
Is there any information on how many premises these 20,000 nodes were to service?
never mind just noticed the 4 million in the pic
I think 3 years is a reasonable schedule for 20,000 Nodes. Doubling that number of Nodes probably adds a year or more to that schedule.
Problem is, that’s only possible if you’re Telstra. And in Telstra’s plan was the assumption that the government could set up the necessary regulations in a matter of months.
Bottom line is, if we just tossed in the towel and gave Telstra everything it wanted, right now, we could have a fully functional FTTN network in about 5 years – that’s 2017.
Of course we’re all entitled to dream. The reality is that if you take Turnbull on his word (yes, I am laughing right now) then he’s committed to using a GBE. That means a) redesign work b) even lengthier negotiations. And even ignoring the Senate for a moment, this takes the finished date back to 2019.
So much for “faster” in the sense of completed sooner.
But, it gets worse. In the real world you can only piggyback on existing legislation so far. A renegotiated deal with Telstra is unlikely to go without scrutiny from the ACCC. Likewise there will be intense scrutiny from other industry stakeholders – and Optus may even take the whole thing to the Courts.
Probability that the Liberals can pull it off without the Senate: vanishingly small.
(But heck, Renai, there’s another article for you – tell us how the Liberals can actually pull it off without any changes to regulation/legislation)
So what happens? Probably some form of FTTN “demonstration”. And what’s that get the Liberals? A chance to show the world how utterly broken their promises are with the bulk of customers getting 20-30Mbps speeds and a small percentage getting anywhere beyond 50Mbps. Meanwhile somewhere between one and three million households will have a live fibre connection (depending on your assumption about whether or not the Liberals would be dumb enough to put the fibre build on hold). Net result a public relations disaster as those getting FTTN scream blue murder.
And .. if the Liberals wanted to go for the gold medal of stupidity.. they could take it all to the 2016 election. Vote for us. Give us control in the Senate. And we’ll ensure we can pass the legislation needed to complete the project. Mind you even if they did win control of the Senate then, the new Senate doesn’t kick in till mid 2017.
Bottom line: FTTN won’t be finished until 2021.
Oh, and btw Renai, you neglected to mention the terms and conditions that Sol imposed on his deal and the prices they were demanding (I think he was asking for $83 average return per user, and that was wholesale!).. Not to mention that the whole project was “cherry picking” even then. No wonder the whole thing was described as blackmail. No wonder even the Liberals said NO.
At the end of the day Renai, what Telstra want is not FTTN but FTTH and they want a renewed monopoly. The Liberals are their best chance.
You’re right…I misread the timeline. But still, three years to do four million premises, or eight years to do twelve million.
Better run rate for NBN Co.
+1
Malcolm Turnbull’s FTTN: Quicker. Cheaper. Faster. Choose none.
Interesting, so we extrapolate that in a linear fashion then going on Telstra initial estimates we are looking at 12 years to roll out the the 80,000 – 85,000 nodes estimated to be required for the coalitions FTTN plan.
Now even if that time frame is out by as much as 50% and it only takes 8 years to do such a rollout, then assuming that the liberal government go in at the next election, the current Labour FTTN plan would be finished before it would be possible to complete this second rate solution.
*EDIT*
the current Labour *FTTP* plan would be finished before it would be possible to complete the Coalitions second rate solution.
Oh come on, let’s put the revisionism away and pull out some reality.
Opel would have serviced people and been completed by now, but it was shelved by Labor in favour of FTTN, which was shelved in favour of FTTH and 12 Mbit wireless. Meanwhile, the underserved (ie. those who need gov. subsidy more than inner city locations where multiple ADSL2+ providers have plenty of presence) are still waiting for a product.
Labor’s FTTN plan relied on Telstra (literally no other option including Axia which I was broadly in favour of could work without access to the CAN last mile) and when they didn’t put in a compliant bid, it ended the process. Plenty of time wasted there, and lo and behold, Telstra has a huge compensation package coming so the gov can use their infrastructure for FTTH.
Original completion of Labor’s FTTN network was slated for 5 years (so it would be winding down around now), instead we got promised 8 years in 2009 (so 2017) and now we’re out to 2021. Quality of the final product not withstanding, it would have been a substantial update for a big portion of the country and laid the groundwork for future upgrade to FTTH.
Any assumption based on Telstra’s rollout schedule should also apply to Labor’s FTTN, which leads to the question “Were they ever capable of delivery or did they just piss a year and a half away for the hell of it?”
Irt Budde’s comments, the time for a CBA has been and gone. Yes it should have been done when they could have done it, but they’ve pushed past the point now. Of course, Labor’s ‘leadership’ in this matter may well fall down because of their other policies and the point may be moot. I wonder if the people waving off a CBA now (and in the past) will be as generous with a coalition government if they decide to not do a CBA on whatever form of network they decide to push. My bet is that the same people working hard to protect labor will be the ones screaming the loudest for a CBA from the libs.
“Opel would have serviced people and been completed by now, but it was shelved by Labor in favour of FTTN”
Opel was shelved because more than a year after the contract was let, not a single clod of earth had been turned, not a single site had even been acquired.
Compare that to NBNco’s effort which already has customers connected to it’s wireless network.
OPEL was in reality just another mechanism the Howard government used, like those 26 communications enquiry’s, to be SEEN to be doing something without actually delivering anything.
@Asmodai
I wonder if the people waving off a CBA now (and in the past) will be as generous with a coalition government if they decide to not do a CBA on whatever form of network they decide to push. My bet is that the same people working hard to protect labor will be the ones screaming the loudest for a CBA from the libs.
See, here’s the problem Asmodai- you assume, automatically, everyone who supports the NBN wholeheartedly supports Labor. That’s simply untrue- otherwise, some 40-50% of the country would be voting Labor, as a minimum, which, we aren’t. I support protecting the NBN- it doesn’t require a CBA, as you say. If it did, its’ time has passed and it is now not relevant, especially after all the reports coming out about economic factors from broadband and the implementation study itself.
I WOULD be pushing for a Coaltion CBA because the BENEFIT of FTTN OVER FTTH has not been quantified. Ever. And the Coalition themselves have been harping on about doing a CBA. So yes, I would insist they do a CBA, because there is not evidence that there is BENEFIT over FTTH ESPECIALLY when FTTH has already been started and because they themselves have promised one. So I would expect one.
“My bet is that the same people working hard to protect labor will be the ones screaming the loudest for a CBA from the libs”
I’d settle for a costing of the network over the next 30 years. I want to see how they can make it cheaper to roll out FTTN in the short term then have to replace with FTTH in 5-10 years. I think the benefits of a state of the art communications infrastructure that keeps up with that of the rest of the world is obvious. The question is who can really do it cheaper? Yes, FTTN is cheaper now, but is it in the long term?
I wont enter the debate except to comment on the costing timeframe.
30 years is 2-3 economic cycles and while one can estimate numbers out that far what do they actually mean? To put it into context, the federal treasury predicted at the start of the financial year that the deficit would be ~22bn and now it is 43.7bn. That is an example of an increase of 100% over 1 year, or just how unpredictable the current economic climate is.
I would enjoy seeing an error analysis on figures that far out or some variance (std. dev.) included to put them in context.
Well then, do it for 10 years. On current data FTTN will be obsolete by 5 so FTTH better be rolling out by 10.
The point being is that FTTN will need upgrading. Costing the thing as JUST FTTN and ignoring the future upgrade to FTTH is just delaying a spend that has to happen and as far as I can see will make getting to FTTH more expensive in the long term.
It’s quite simple really:
$FTTH < ($FTTN + $FTTH).
Quod erat demonstrandum.
“Original completion of Labor’s FTTN network was slated for 5 years (so it would be winding down around now), instead we got promised 8 years in 2009 (so 2017) and now we’re out to 2021.”
What’s the rush? According to some faster speeds are not needed and ADSL2+ is enough for anyone… Serious question though it sounds like you are quite eager to get faster speeds as soon as possible so you recognise the need to upgrade communications infrastructure, so do you also recognise that even faster speeds will be needed after a “5 year” FttN build? What is your long term solution after these hypothetical events take place?
“My bet is that the same people working hard to protect labor will be the ones screaming the loudest for a CBA from the libs.”
For the record I don’t vote labour but the NBN is one policies of theirs I am in favor of. This has nothing to do with “protecting” labor at all however I will be making a lot of noise if the “libs” fail to do CBA should they win the next election for the simple reason they are the ones that have been “screaming the loudest” for a CBA now. I dont intend to let anyone forget that sort of blatant hypocrisy should a CBA fail to materialise from them. That’s treating voters with very little respect and considering them fools. It’s insulting. You should be angry too… unless you are “working hard to protect” “the libs”.
NBN’s higher speeds up and down should result in more offices moving away from expensive CBD real estate to transport hubs closer to where employees live. This would reduce commuting times and commuter infrastructure needs and take pressure off the pressure for a second harbour crossing — a multi-billion dollar project. Much of our transport infrastructure is needed for the twice a day commuting panic.
How much of savings like this should be included in the “B” part of CBA?
“My bet is that the same people working hard to protect labor will be the ones screaming the loudest for a CBA from the libs.”
The Libs call for a CBA had one and only purpose, the same purpose of every one of the other couple of dozen inquiries had, to delay the beginning of the network build past the election date so they could then quietly cancel it.
And in case you’re finding it hard to count Danny, total time to completion for Labor’s plan is 14 years from the original election promise through to estimated (and still possibly not final) date of completion in 2021. Versus the original 5…
“total time to completion for Labor’s plan is 14 years”
As against the infinite time it would have taken a coalition government that funded literally dozens of enquiries without ever actually achieving anything what-so-ever.
Abbott’s alternate so called NBN is designed to produce the same result, starting as it will with their 27th enquiry.
Wow, that’s pretty good progress. Much faster than the Libs did their improvements. Oh wait, they have never done any. Hmmm, and I believe Abbott has recently said we don’t need any. MT seems to be the only one planning to do anything. I hope his master allows him to do something.
http://delimiter.com.au/2012/10/03/more-nbn-costbenefit-analysis-pointless-budde/#comment-500682
3/10/12 – Paul Budde… “During the previous government (1996-2007) 25 Inquiries were undertaken in telecoms, without any progress being made on their structural recommendations. This is a typical example of procrastination. And in that process Telstra became so dominant that the ACCC indicated it had become increasingly difficult to regulate. Subsequent decisions made by the new government in relation to the policies surrounding the NBN need to be judged against that background and that reality.”
Says it all really and right on cue.
Woops scroll up to article :)
The real question here is, how long does it take to build a FTTN network, have to pay for it, then build a FTTH network?
It all depends on how high much you can get away with charging the users doesn’t it..
If a FTTN costs half as much but you have to pay for it in half the time (10 years) then there’s no real saving to end users.
So lets take that figure. Liberals build a FTTN network. That takes us to 2019. By 2029 it gets paid for. And..
By 2039 we have a FTTH network.. Only 32 years after the Liberals last had an opportunity to build a future proof network.
Not only build but plan and source equipment.
You need to go back further before Trujillo to Ziggy at Telstra.
“Before Trujillo arrived, Telstra, under Ziggy Switkowski and his right-hand man Bill Scales, had been engaged in a project to gain regulatory concessions from the Government in preparation for building a fibre to the home network, not the cheaper and slower fibre to the node network the company now spruiks.”
http://www.theaustralian.com.au/news/tower-of-babble-topples-on-telstra/story-e6frgb26-1111113796019
Trujillo’s FTTN was a BACKWARDS step compared to Ziggy’s FTTH.
Which makes my point:
Telstra does not want FTTN, it wants FTTH and it wants a renewed monopoly.
And the Liberals are their best chance of getting there.
If Telstra went ahead with that plan, we would still be paying $100+ for 80Gb plans, with both uploads and downloads counted, and 13c a Mb if you go over your limit. Telstra have only ever offered reasonable prices when competition has forced them to.
And that’s most likely why the then Coalition government canned it – Telstra’s investment was conditional on crippling communications competition in Australia.
As much as the Coalition like to do things that are beneficial for private shareholders rather than the public, competition is also one of their key planks, so wiping it out wouldn’t have gone down well with the party room.
I know I’ve said it a number of times already, but to my mind the real problem the Coalition has with the NBN isn’t that it’s a Labor project, it isn’t that it’s expensive – it’s that it’s publicly-owned, and the profits will be returned to the public (in terms of network expansions & upgrades, lower prices, etc). They seem rather fixated on private profits over public benefit.
I’ve got a lot of time for Paul Budde. He’s seen a lot of telecommunications in his career, not here AND overseas.
But I don’t expect any politician in the Coalition to listen to that. After all, Mike Quigley is completely inexperienced and wrong for is job…..so says the investment banker Turnbull….
While it is all well and good to ruminate about missed opportunities by Telstra not building that proposed FTTN network, I think we dodged a bullet. 20,000 nodes to guarantee 12mbps service? Sounds like wishful thinking to me (either that, or a *lot* of people would just miss out altogether, creating a digital divide). And then there’s the issue of wholesale access to this proposed network. Correct me if I’m wrong, but I seem to faintly recall Telstra stating they’d deploy this FTTN network on the condition that competitors would not be allowed wholesale access for a period of time (5 years? Or did I just conjure this out of thin air?). If so, we might have ended up with a Telstra monopoly FTTN network being operated at a commercial ROI of at least 25% (possibly in the region 40-50%). I’m aware that this is wild speculation based on potentially erroneous information, but it is a sobering thought.
Just like many others, I have been immensely frustrated at the painfully slow rate of progress at the political level when it comes to telecommunications policy. However, the end result of these delays has been a brilliant piece of policy in the form of the NBN. We may have taken far too long to arrive at an answer to the question of our telecommunications future, but at least we arrived at a bloody good one. All we have to do now is ensure that the NBN is allowed to achieve fruition.
There is one important thing to remember here: Telstra already had most of those 20,000 nodes deployed, except they were called RIMs. All of them already had fibre connectivity back to an exchange, so the only requirement was to upgrade the equipment in them to support ADSL2.
Oh, wait, isn’t that still happening? The ‘Top Hat” project is doing exactly that, isn’t it?
Telstra could have gone ahead and started doing this type of upgrade years ago, but there was no money to be made from it. And we all know that making money is the only reason to do anything.
I agree with Paul Budde. Make a decision and stick with it. FTTH, FTTN, tin can with string. Just decide and get on with it.
We have all waited too long.
@ToeKnee93
Mmm, no, not quite. To guarantee a minimum of 12Mbps, they would’ve had to have put nodes in the cities. There are very few RIM’s in cities. And they wouldn’t have been using ADSL. They would’ve used VDSL, a short range, wider frequency system with higher throughput.
RIM’s and ADSL are different.
“more likely closer to 60Mbps or even 80Mbps, as the FTTN nodes were upgraded to support such speeds.”
Is it a question of upgrading the nodes or upgrading the copper which rather defeats the purpose of saving money under FTTN?
Just vote Labour in at the next election and let them finish the NBN, and all of this back and forth bull-shit will go away. Forget the opposition, they have nothing to contribute, your future proof comms system is currently being built…… HALLELUJAH
You bring up a good point really.
Apart from “soil magic”, “stop the boats”, “kill the great big tax” and “faster, better, cheaper” (all of them fairly dubious in my view) the Liberals have zero policies beyond “No”.
They may screw up sometimes, but at least Labor is getting on with actually doing stuff…
In the beginning God created the heavens and the earth. Now the earth was formless and empty, darkness was over the surface of the deep, and the Spirit of God was hovering over the waters.
And God said, “Let there be NBN Co,” and there was light. God saw that the NBN was GOOD.
As I recall from my Sunday school lessons there was little use for the NBN until such time as Adam and Eve received a tweet about something called the tree of knowledge – at which point the limitations of fibre to the home became all too obvious. After many begats, floods and GPS failures their descendents came to realise the wisdom of a wireless data service. God looked upon this and after warning his children not to confuse practicality with bandwidth let them go on their way with nar’y a smote. The children gave thanks and set out to invent new ways of manipulating large data sets without needing to bring them to their terminal devices. In honour of all that had gone before, the repositories of these data sets were referred to as clouds. The rest is history.
Epic post is Epic :D
On average, 200 premises per node… Roughly what maximum distance from the node, then?
That’s a good point. Assuming an average street frontage of 25m, that makes:
<1km, 40 premesis in either direction (total 80/200)
2km, and therefore down to ADSL speeds… the remaining 40 premesis.
@Dan
Mmmm, the average property frontage in the city is 9m….in the regional centres I believe it’s about 15m.
That’s a good point. Assuming an average street frontage of 25m, that makes:
under 1km, 40 premesis in either direction (total 80/200)
under 2km, 40 premesis in either direction (total 160/200)
over 2km, and therefore down to ADSL speeds… the remaining 40 premesis.
(angle brackets killed the post)
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