Australia starts debate on future of wholesale-only NBN

Australia starts debate on future of wholesale-only NBN

04 January 2021 | Alan Burkitt-Gray

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Australians have started the year debating the future of its national broadband project after a government minister declared it “built and fully operational”.

Options, from 2022 onwards, include acquisition by a large telco, such as Telstra, or by pension funds or private equity investors.

Communications minister Paul Fletcher set off the debate hours before the Christmas holiday when he accepted a report that the wholesale-only National Broadband Network (NBN) was able to connect over 11.8 million premises. Only 35,000 premises across the country remained to be served by New Year’s Eve.

“In my view the evidence before me shows it is appropriate to make the declaration that the NBN should be treated as built and fully operational,” said Fletcher.

“Of course the government recognises that there are some premises which have not yet been made ready to connect — and I expect NBN Co to work as speedily as possible to make the network available to those premises.”

The role of the NBN Company is to build the last-mile networks connecting premises across Australia, by fibre, copper and other means. Connectivity is then sold to retail companies, including Telstra, Optus and the recently merged Vodafone/TPG group.

As part of the deal to set up NBN, the government-owned company bought Telstra’s local copper infrastructure.

In a report in mid-2020 consultant Paul Budde — who helped to inform the previous Labor administration’s early NBN plans more than a decade ago — wrote that it was “the failure” of Telstra at the time “to start building an affordable high-speed network that forced the government to intervene”. He added: “There was broad bipartisan support for action aimed to reign in the monopolistic behaviour of Telstra.”

But Fletcher’s statement has already started a debate across the country over the future of NBN Co and whether it is likely to be privatised.

Under the 2011 law that set up the NBN the federal government can now look at future ownership models. The government said it won’t do that during the current parliamentary term, but Australia holds elections every three years, and the last was in May 2019, so the next is only 16 months away — putting the future of the company in the agenda for the 2022 election.

After initial harmony, the scope of the NBN was reduced when the right-wing Liberal government won the 2013 election and ended the previous Labor administration’s ambitious plan to create a nationwide fibre-to-the-home (FTTH) project.

The Liberals decided on a mixture of FTTH and older, slower but cheaper technologies, such as fibre-to-the-cabinet (FTTC) and cable-TV-based hybrid fibre coax (HFC), with target speeds reduced from up to 1Gbps on fibre all the way to 25Mbps downstream and 5Mbps up.

The NBN report that led Fletcher to make his declaration states that 4.1 million premises are available for connection via fibre-to-the-node (FTTN), and 1.4 million via FTTC. Only 2 million have fibre-to-the-premises (FTTP), plus 620,000 fibre-to-the-building (FTTB).

There are 2.5 million available via HFC and 620,000 on fixed wireless services, with another 430,000 on satellite only.

Fletcher said: “As with all large telecommunications networks, NBN Co will need to keep investing in additional network capacity, extend its network to connect new developments and remediate technical issues as they arise.”