How fibre optics and super-fast broadband can stimulate the whole of Australia? E&T looks at Australian government's network initiative.
In a move that will transform Australia's telecommunications, in April this year the Australian government unveiled an ambitious US$34bn (£20bn) project to extend super-fast fibre-optic broadband across the country.
Announcing the plan for a state-controlled company to build the National Broadband Network (NBN) from scratch, Prime Minister Kevin Rudd described it as the biggest infrastructure project in Australia since the building of Sydney Harbour Bridge.
The comparison is not just a flippant sound bite. The Sydney Harbour Bridge was completed in 1932 during the depths of the great depression and was nicknamed the Iron Lung for its life-preserving effect on the Australian economy. The investment in broadband infrastructure is similarly seen as an inflationary deep-breath.
The new network will see FTTH (optical fibre to the home) for 90 per cent of Australians, while covering the remaining 10 per cent with high-bandwidth ADSL and/or wireless. Plans are at an early stage, but the National Broadband Corporation (NBC) has been formed and Tasmania will host the pilot phase of the project, beginning immediately.
If the roll-out goes according to plan, consumers hope for 100Mbps, unlimited downloads - and all for around US$25 a month - in line with other broadband-advanced countries.
Critics argue that the project is but an expensive toy for music downloaders and game-players, believing that costs will never be recovered unless consumers are forced to pay exorbitant prices for connection.
Opposition leader, Malcolm Turnbull, asked if the plan was commercially viable at all. "If, as the industry analysts say, this would require households who are currently paying between US$30 and $40 a month for broadband, to pay $120, where is the evidence they will do that?"
But the project is not just about consumer broadband, points out Paul Budde, a telecoms analyst and strategic advisor on NBN to the Australian government. It's an infrastructure project, he explains. "If you build this network, then you are not just doing it for high-speed Internet. You have to start looking at e-health, education and environmental services and all sorts of other things.
"The healthcare service in Australia, for example, has indicated that by investing in e-health, it could save $23bn over a 10-year period and save 1,300 lives every year because of an intelligent system of patient records," says Budde.
Access Economics with IBM have also weighed into the debate with an analysis of 'smart' systems, potentially enabled by the NBN. "The amount of data collected in all areas of human activity is vast and is expanding rapidly. Smart systems will allow us to use this data far more effectively, providing the potential to radically alter our economy and society for the better."
The report 'conservatively' predicts that adopting smart technologies in electricity, irrigation, health, transport and broadband communications will:
- quickly lift GDP by 1.5 per cent (within a few years);
- increase the net present value (NPV) of GDP by US$25-65bn over the first ten years;
- create more than 70,000 jobs by 2014.
Overall, Budde estimates that 25 per cent of the FTTH roll-out cost will be covered by healthcare services, between 10 and 15 per cent by smart goods, and another 10 per cent by education. "Once you add it up, it becomes commercially viable, and only a quarter to a third of the cost needs to be covered by Internet access," he says.
You can begin to understand why the Australian government has decided to invest its $43bn in the NBN.
Certainly, the Tasmanian Prime Minister, David Bartlett, is very happy that the NBN roll-out will begin in his state. His background in ICT - he once worked for a major telecoms company, Telstra - has given him deep knowledge of the project and its potential to rocket Tasmania into the first division of digital regions; it is a personal passion.
"People see this as some sort of overnight sensation, but we have been working on it for some 10 years in Tasmania, and I've been on the pathway in a whole range of roles," he says.
He was part of the strategic decision to lay fibre optics to the mainland back in 1999. "We've spent over US$80m in 10 years bringing together our own fibre optic assets and building them into a backbone. Essentially that gets us to the NBN starter gun," he explains.
He believes the NBN will bring as many benefits as hydro-industrialisation - a 50-year period that transformed Tasmania's economy, delivering new industries, new jobs and thousands of migrants to an invigorated island.
"NBN will be an economic opportunity right from the beginning as a stimulus in trench digging and cable splicing and hanging, and project management. But then, of course, you get into higher-end network management," says Bartlett.
He sees investment cascading into Tasmania as its digital facilities outstrip other Australian states and, ultimately, the rest of the world. "Tasmania is a great place for the establishment and investment of server farms and data centres and we already have a lot of people knocking on the door. We see great opportunity all the way up to content development platforms, entertainment and recreation, interactive TV and the convergence of TV and computer screens," he concludes.
Of course, the NBN is not just about Tasmania. Over the next few years, it will roll-out across the country and the Australian Computer Society (ACS) is equally enthused about its prospects, even at the initial stages.
ACS chairman, Kumar Parakala says the incomes of ICT professionals employed in the private sector are increasing more slowly than those of other professionals employed in the industry, due to the impact of the global financial crisis, but "a number of infrastructure programmes that have been put in place and investment in R&D that has been allocated will have a positive impact on ICT employment and salaries. The investment of US$2.5bn in public and private sector research and development over the next four years will accelerate the growth of high-tech jobs and the initial investment of $3.7bn in our NBN will require specific skills sets and will create over 55, 000 jobs".
And yet, none of these benefits are automatic. "They depend on the Australian government being released from the silos of departmental thought," says Paul Budde and explains: "Trans-sector thinking is needed to break through this barrier. You are creating infrastructure for smart buildings, smart cities, smart homes and that's what the end goal should be, not just high-speed Internet access. You have to establish a trans-sector approach between the various government departments."
He admits this is like "trying to herd cats, and it's a very difficult sort of proposition", but he is confident Australian officials are capable of the holistic, systems-level thinking required.
"They are the first government in the world to be taking this broader approach," he says, and points to the naming of the minister in charge of the NBN as an illustration. "Our minister is called the minister for broadband communication and the digital economy. That clearly shows the government knows what it's talking about."
Even so, barriers to success are numerous and formidable.
Australia has vast regions of extremely sparse population. Townships might comprise just a few houses at their centre but have many properties far from the hub.
Rural trials in Tasmania have allowed for the signals to be sent up to 12km from a node. "Therefore we're hopeful that fibre will get out that far from townships," explains Andrew Connor from the community action group, Digital Tasmania.
"That being said, there will still be homes far off the beaten track that can't be reached by fibre in an economical way, or by high-bandwidth wireless broadband. We have called on the State and Senate to use existing radio towers, dotted around the State, to get a wireless NBN as far into rural communities as possible. The State owns about 65 police radio communications towers, and through another government business, Hydro Tasmania, it could have access to 50 more."
Connor's example nicely illustrates how NBN requires joined-up thinking if it is to succeed. Even where they exist, many public and private networks, their fibre and equipment, cannot simply be co-opted into the NBN. A vast programme of negotiation, legislation, perhaps even nationalisation, will be needed to ensure disparate organisations cooperate for the greater good.
A win-win situation
"The government will try to get NBN going as quickly as possible; it's a key project for the Rudd administration," says Nick Abrahams, partner at law firm Deacons and leader of Deacons' Technology, Media & Telecommunications Group in Sydney. But there are many regulatory issues to consider. "It's a major change to the way telecommunications services are delivered. There will be a review of the regulation around access to infrastructure. It may get its own statute and they might even review the whole competition framework at federal state and local level."
"It's a very complex project. There's the engineering complexity; there's the technological elements; then there's the legal element. You need to dig up the street or drape the cable from power poles, so there will need to be a review of access entitlement to ensure an efficient roll-out," he adds.
Yet it remains to be seen how successful the project will ultimately become.
"It's so big and so easy to run off the rails that if you don't have good governance then it will run out of budget and waste money. It's the governance issue that's critical," says Budde.
"If we believe this is a government job, it will fail. If government believes industry should look after itself, it will fail. It is one of those situations where if only we all work together, it's a win-win."