Introduction
No technology has quite changed the way we interact with each other like the internet has. From email to Facebook, from Twitter to Quickflix, people are spending more and more of their time online.
Not only are we spending more of our time online, but we’re downloading more and more stuff every day. More than four billion hours of video are watched each month on YouTube, while there are over a billion monthly active Facebook users.
But it’s not just social. Businesses are moving to the web en masse, creating an industry worth billions. The convenience of shopping from home, or accessing your favourite media instantly via the web has seen more and more startups and services launch businesses specifically for the web.
All this demand for content has put a strain on the infrastructure that connects homes all over Australia to the internet. For the most part, that infrastructure consists of ageing copper wires, owned by Telstra and in need of upgrading.
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ADSL technology, which delivers broadband to the vast majority of Australian homes, has reached its peak as well, with ADSL2+ unable to offer more than a theoretical maximum download speed of 24Mbps. That number is always much less, as the quality of the signal over copper degrades with distance.
Fibre Optic cable, on the other hand, offers an easy 100Mbps connection, that is largely unaffected by distance.
What’s more, it can be scaled upwards, with 1Gbps speeds already available on some networks around the world, and research showing 40Gbps speeds can be attainable and affordable within a few years.
For the speeds to get faster, the cable in the ground remains the same, it’s the connections at the ends of the cable that need to be updated.
It was with this idea in mind that the Labor government went to the polls in 2007 with a policy for a national broadband network.
Initially, the government was hoping to have private companies build and rollout the network, but it quickly became apparent that the job would be too big, too expensive and too risky for the private sector to pursue.
So in 2009, The Labor Government announced its plans for the National Broadband Network. A nationwide, fibre to the premises network that serviced 93 per cent of Australian homes, with wireless being used to reach the remaining seven per cent.
Run by a government funded company – NBNCo – the NBN would offer wholesale fibre services to ISPs to sell on to the end user.
A massive undertaking, both in scope and in price, the NBN quickly became a political football, kicked between the government and the opposition to score cheap political points.
But while it continues to be a controversial expense for the government, the rollout has continued, with NBN services being switched on all over the country.
As we head for a federal election later this year, the network has currently passed over 1 million premises across the country and has over 50,000 active subscribers to the network.
History
Following its victory in the 2007 elections, the Rudd Labor government called for private companies to offer proposals to build a nationwide super-fast broadband network.
There were six submissions in total, including one from Telstra that was excluded for not complying with the application requirements.
The Telstra application was in fact a half-submission, doing its best to dance around the potential issue of structural separation, where the government would force Telstra to split its wholesale and retail arms into two businesses.
In the end though, none of the applications met the government’s requirements. More of an issue was the timing – in the middle of 2009, the world had just hit the Global Financial Crisis, and none of the companies that had submitted a proposal could raise the necessary capital to fund the project.
What’s more, the government discovered that should it go ahead and build a Fibre-to-the-Node (FTTN) network – as was being pitched at the time as a more affordable approach to the NBN – it would end up having to pay Telstra between $ 15-20 billion in compensation to access the copper wires connecting the node to each home.
This fact more than anything else spurred the government to create its own solution to the issue of nationwide broadband, in the form of the NBN.
The launch of the NBN
In April 2009, the Government formally announced its plans to bypass Telstra’s copper network entirely by building a Fibre-to-the-Premises (FTTP) network, and supplementing it with additional fixed wireless and satellite services for remote customers.
To build the network, the government established NBNCo, and announced a trial deployment of the network in Tasmania. Before the dust had even settled from announcement, NBNCo had kicked off the hard part of building the Tasmanian network, starting work on July 1 2009.
In March 2010, NBN Co announced the first five mainland sites to have the NBN built. Armidale, Kiama Downs and Minnamurra, Brunswick, Aitkenvale and Mundingburra and Willunga – five sites totalling approximately 14,000 homes – had the NBN rollout commence in 2010.
In July 2010, the second stage of the NBN rollout was announced, adding 14 towns across the country to the national network. Work commenced in this second stage rollout the following month, in August 2010.
The first mainland NBN service was officially switched on in Armidale on May 18, 2011. Since then, services have gone live all around the country, with 32,295 premises passed by fibre as of September 2012.
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Continuing the rollout
In March 2012, NBN Co announced its three year rollout plan for its FTTP network. The plan outlined the plans to construct the fibre network in over 1500 communities and past 3.5 million homes between now and June 2015.
To coincide with the announcement, NBNCo released an interactive map detailing what areas will be getting what level of NBN within that initial three year rollout period.
NBNCo has stated that it plans to complete the construction of its fixed wireless and satellite services by 2015, while the fibre component will continue to be built until 2021.
Problems with the contractors signed up to build the network has seen some significant delays in the networks construction, although the rollout is still continuing.
In May 2013, just four months out from a federal election, NBNCo expanded its three year rollout plan, adding an additional 1.3 million premises to its construction plans.
Should the Labor government retain power after the election, more than 4.85 premises will have been passed by the NBN by the middle of 2016, provided construction remains on schedule.
Telstra, Optus and the ACCC
The NBN was initially conceived as a way to work around Telstra’s monopoly of copper telecommunications infrastructure.
Yet as part of the NBN construction process, NBNCo and Telstra formed an agreement that involved the leasing of Telstra exchanges, ducts and pipes and currently unused fibre infrastructure to the NBN.
This arrangement, worth more than $ 9 billion to Telstra’s bottom line, ensured that NBNCo would be the only wholesaler of fibre broadband in Australia, while getting Telstra to migrate its customers away from its copper network and onto the fibre one.
Similarly, an agreement with Optus worth about $ 800 million will see the telco switch off its HFC network and move to the NBN.
After some initial caution about potential anti-competitive behaviours, the ACCC approved both the Telstra and Optus deals, allowing NBNCo to speed up its planned rollout by using Telstra’s infrastructure.
The technology
The NBN will use three different technologies to bring high speed broadband to Australians across the country.
93 per cent of the population will eventually have access to a fibre to the premises broadband connection, with the remaining seven per cent being connected to a fixed wireless or satellite service.
The reason for the different technologies comes purely down to cost. While the bulk of Australia’s population lives in cities, the cost of running fibre to remote parts of the country is far from cost effective.
By using fixed wireless and satellite services, NBNCo is able to manage the expense of building the network, while providing rural Australians with an internet connection speed that is actually usable.
Fibre to the premises
Fibre to the Premises, or FTTP, is exactly what it sounds like. Optical fibre runs from the local exchange to the house directly, allowing for super-fast broadband speeds.
By contrast, Fibre to the node (FTTN) only delivers the optical fibre to the local node, relying on a pre-installed copper connection to connect each house to the network.
While there are definite speed improvements for FTTN over a complete copper connection, it still suffers from many of the problems faced by current copper infrastructure.
At present, NBNCo is making its FTTP network available with download speeds up to 100Mbps and upload speeds of 40Mbps. But the company has already announced its intention of upgrading that to 1Gbps download speeds before the network is completed.
Fixed wireless
Roughly four per cent of the population living outside the fibre footprint will get access to broadband using a fixed wireless service. But what does that even mean?
For the NBN, fixed wireless will use a version of the LTE 4G technology, running on the 2.3GHz and 3.4GHz spectrums.
Unlike the 4G services from Telstra and Optus, the NBN fixed wireless technology will deliver a set amount of bandwidth to a set amount of people.
Where mobile networks can have lots of different people accessing the network at the same time, slowing the network down, NBNCo can effectively guarantee enough bandwidth for each user by having a pre-determined amount of people on its fixed wireless network.
It also won’t be affected by changing distances away from the mobile towers like your 4G smartphone.
Initially, NBNCo’s fixed wireless service will be limited to theoretical maximum speeds of 12Mbps. It has stated that it will improve those speeds in the future, although no timeframe has been given for the upgrade.
NBN Co purchased a chunk of spectrum from Austar in early 2011, plus an extra bit of spectrum from the ACMA in July that year to help deliver its fixed wireless network.
Satellite
About three per cent of Australia’s population lives in areas so remote that the only realistic way to offer a broadband connection is via satellite.
Satellite technology is hardly an ideal solution for broadband delivery. The interim offering currently available from NBN Co can only deliver up to 6 Mbps download speeds.
The current solution involves using bandwidth bought from Optus and IPstar satellites, but NBNCo has also made plans to build and deploy its own satellites.
Due to launch in 2015 by Space Systems/Loral, the two Ka band satellites will deliver 80 Gbps worth of bandwidth each, and will deliver peak speeds of 12Mbps to the 400,000 premises outside both the fibre and fixed wireless areas of the NBN.
The connection
During the rollout, NBNCo will be installing an NBN connection to every home in Australia, unless that home "opts out" of the service. Given the NBN will see the current copper network decommissioned, opting out probably isn’t the smartest move.
The installation process involves NBNCo workers running fibre optic cable either underground or overhead on powerlines, depending on the current infrastructure. It will be free for all households during the initial rollout, but if you decide to opt out and then change your mind later, you’ll be forced to pay for it.
When the NBN installer connects your home to the network, there will be a box installed on the outside of your house called a Premises Connection Device, which is where the fibre optic cable will connect to your home.
Inside your home, another box called a Network Termination Device (NTD) will be installed. This is like the box that will allow you to plug devices in to the NBN, from your television to your wireless router and your telephone.
There are four data ports on the NTD and two telephone ports for multiple phone UNI-V phone lines. The data connection ports on the NTD can be used to deliver IPTV as well.
The NTD requires a dedicated power source, which is also installed inside, and plugs into a standard 240V power point. It also includes batteries as a back up for the telephone in case of a blackout.
The power source cannot be connected to a powerboard, extension cable or double adaptor, so it’s worth considering where the internal connection offerings will go in your home and having an extra power point installed if need be.
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Phoning it in
The NTD features two dedicated ports for phone connections. It’s important to note that they aren’t just for two phones, but for two connections – you will be able to have multiple phone lines from different providers delivered in your home with the NBN.
Because phone calls will be made over optical fibre, which cannot carry power, the connected power supply unit will include batteries for making phone calls during blackouts.
The batteries provide between two to three hours of continuous power to the phone line to make calls.
It’s important to note that data connections are automatically switched off when mains power is lost in order to extend the battery life for the phone connection. Also, when battery power reaches 50 per cent, it automatically switches off, requiring a manual switch on should you need to make a phone call.
The system will work with any regular home phone, although cordless handsets won’t work during a blackout as the base station requires its own power connection.
Getting online
Once everything has been installed and the service has been activated in your local area, your direct dealings with NBNCo are finished. To get online, you’ll need to sign up to a plan with an ISP.
It’s important to note that there is no need to pay for line rental like there is with ADSL plans. That said, companies like Telstra are charging more for data and offering discounts when you bundle your internet access with a phone plan.
There is no obligation to have a phone plan though, so those who are content with mobile phone coverage and broadband don’t need to pay for something they won’t use.
The cost
The biggest argument against the NBN from the federal opposition revolves around the network’s cost to build.
However, in almost every case, the information delivered by the liberal party is either being misrepresented or misconstrued. Whether that’s done intentionally for political gain or mistakenly through a fundamental lack of understanding about the economics of the network is irrelevant.
The biggest source of confusion seems to be the idea that the network is being funded by taxpayers dollars, and is therefore costing the general public a lot of money. It’s not.
To fund NBNCo, the federal government borrows money and gives that money to NBNCo to construct the network. The idea is that once the network starts operating and selling its wholesale network, it can begin to pay back the government with money from its customers.
In other words, it works almost exactly like a regular business loan from a bank, except with much bigger numbers.
The opposition spent a lot of time arguing against the fact that the NBN isn’t classified as an expense as part of the federal budget. But the government’s accounting decision was justified by a research note from the Parliamentary Library of Australia, which explained that "Australia has adopted internationally accepted accounting standards, and these are applied in the budget treatment of the NBN."
Build cost
The other myth that continually flies around arguments about the NBN is the cost of building the network. While the Liberal party is more than happy to throw around the number $ 50 billion, the truth is that the cost of the network has never come close to that figure.
The capital cost of building the NBN is $ 36 billion. Of that amount, the government really only needs to raise around $ 26 billion, as once the network reaches critical mass, the network will start making enough money to cover the cost of completing the rollout itself.
The other factor to consider is that the network is going to cost $ 36 billion to construct over the course of at least 10 years. It is not an up front expense that needs to be paid for in full.
The future
From the outset, the NBN has been a political football, bruised and battered as politicians from both sides of parliament do their best to kick it in their favour.
The Labor government and its supporters claim it is the best way to deliver super fast broadband to all Australians, while the opposition claim it is too expensive, and similar results could be attained with a FTTN network for a much lower cost.
This bickering has led to some question marks about the future of the network, should there be a change in government in the 2013 federal election.
The Liberal party has had a slightly shifting position on exactly what it will do with the NBN should it come into power. Initially, they planned to scrap the network completely.
But in early 2013, the Coalition finally announced its plans for a Fibre-to-the-Node NBN costing $ 29 billion.
While cheaper than Labor’s NBN, the Coalition network will rely on current copper wiring to connect homes to nodes placed on street corners.
Opposition leader Tony Abbott has claimed his party’s NBN will deliver speeds of 25Mbps by 2016, with the network to be fully constructed by 2019. So far, neither Abbott or shadow communications minister Malcolm Turnbull has mentioned the network’s upload speeds.
Turnbull has, however, come out and compared the Coalition’s NBN policy to BT’s network operating in the UK. While the Coalition hasn’t set a rate to then run fibre from the node to a residence if a person requests it, Turnbull’s example indicates that it could cost around $ 3000 for this service.
Adding to this, Telstra CEO David Thodey in June 2013 said that the copper network was in fine working order, though there has been concerns over the years about its condition. The Coalition’s policy could in turn receive a boost after Thodey said that the century old copper network could last for another 100 year.
Whatever happens, it will most likely be messy. Over the past four years, NBNCo has signed a lot of contracts. Some of them have large compensation figures written into them should it be decided that the network won’t go ahead.
NBNCo’s is also on the search for a new CEO after Mike Quigley resigned. Though he said that it won’t affect the rollout, it has caused some to question the stability of the company.
The biggest question mark about the oppositions NBN revolves around the agreement with Telstra. While Turnbull seems confident an arrangement to use Telstra’s copper network for the last mile will be easily attained, history shows that government negotiations with the telco have been tense, complicated discussions.
To further complicate matters, during the rollout process of the NBN during May and June 2013, there were reported incidents involving asbestos in Telstra’s cabling ducts and pits. With ramifications ranging from the halting of the rollout to possibly an extra $ 50 million clean-up bill for Telstra, any new negotiations with the telco may hit a few extra snags.
Faster speeds
One of the best things about the NBN’s fibre build is that it will be upgradable over time. Initially delivering a theoretical maximum download speed of 100Mbps, NBNCo has already announced plans to upgrade the network to 1Gbps.
Recently, British researchers have developed a way to realistically deliver 20Gbps speeds over fibre, potentially upgradeable to 40Gbps.
In other words, the infrastructure put in place by the NBN’s fibre build is future-proof, scalable to adapt to growing data consumption on the network in future decades.
On the other side of the policy divide, FttN will eventually need to be upgraded to Fibre to the Premises anyway.
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