There is currently a national roll out of an optic fibre based National Broadband Network throughout Australia that is being promoted by the Labour Federal government. Predictably the Liberal Opposition wants a cheaper option – wireless. Here is the latest on this controversy from The Australian.
It is interesting to note that while Telstra prepares to unveil a massive upgrade to its mobile network, it is also a partner with the Australian Centre for Radiofrequency Bioeffects Research (ACRBR). I would call that somewhat of a conflict of interest to say the least!
Wireless threat to National Broadband Network plan
By Annabel Hepworth and Mitchell Bingemann
February 15, 2011 12:00AM
THE growing popularity of wireless internet could have a “significant” impact on the economics of the National Broadband Network, according to Labor’s own corporate advisers. And they have warned the government that the risks associated with the taxpayer-funded NBN rollout warrant extra layers of scrutiny over the $35.9 billion project.
As Telstra prepares to unveil a massive upgrade to its mobile network to increase capacity and provide download speeds comparable with the NBN, a government-commissioned review has found competition from alternative technologies is a key risk to the NBN Co’s ambitions to rapidly sign up homes.
Telstra will today announce plans to usher in the nation’s first commercial release of super-fast 4G mobile technology, which will be deployed in capital-city CBDs by the end of the year. The telco giant will roll out the so-called LTE, or Long-Term Evolution standard, which is capable of peak download speeds as high as 150 megabits a second, although speeds fall rapidly as more people use the network.
The NBN promises a network capable of delivering 100mbps to most Australians, with the potential to hit 1000mbps.
Next-generation wireless is at the heart of President Barack Obama’s plan to make wireless available to 98 per cent of US homes.
The move by Telstra comes as a review of the NBN Co’s business case by corporate advisory group Greenhill Caliburn identifies the preference of some consumers for mobile services as a risk.
Labor’s policy is for the NBN Co to roll out fibre to 93 per cent of Australian premises, with the rest to be served by a mix of fixed wireless and satellite.
“Trends towards ‘mobile-centric’ broadband networks could have significant long-term implications for NBN Co’s fibre offerings, to the extent that some consumers may be willing to sacrifice higher speed transmissions for the convenience of mobile platforms,” the Greenhill Caliburn report warns.
The opposition seized on the report to accuse the government of “absurd wastefulness” for over-building the fibre network. Opposition communications spokesman Malcolm Turnbull said the document “fails to address the single most important issue: what is the most cost-effective way to ensure all Australians have access to high-speed and affordable broadband? It beggars belief any responsible government would embark on such massive expenditure without answering that question,” he said.
The government said the report showed the NBN Co’s business plan was on a par with what a blue-chip company would deliver.
The document – of which only a seven-page executive summary was released – concludes that the NBN Co’s corporate plan to develop the NBN is reasonable. It says the plan is produced to high standards and enables the government to make commercial decisions about the NBN Co. And the NBN Co should be able to successfully tap the financial markets for debt, given the implied government support in the project.
The NBN Co is pinning its hopes on forecasts that 56 per cent of homes it passes will take up subscriptions by 2015 and 63.4 per cent will do so by the end of 2020, when the rollout is close to completion.
These uptake rates are crucial to the NBN Co’s ability to generate revenues to start repaying the government’s equity contribution of $27.5bn after the project is built.
As well as the potential impact of competition from alternative technologies, the report identifies other risks to NBN Co’s revenues. These include the potential for NBN Co to have to lower its prices to overcome an initially low uptake.
While releasing the executive summary of the report, Communications Minister Stephen Conroy said the government would work closely with the NBN Co to scrutinise the project.
“As with any infrastructure project, there are always risks, contingencies and external factors, and the government will work closely with NBN Co to put in place agreed performance indicators to track its performance and adjust strategies or operations as needed,” Senator Conroy said.
But the Greenhill Caliburn report urged the government to bolster oversight of the NBN, particularly in its early stage.
Specifically, it said the government should establish arrangements with NBN Co to “manage its ongoing risks as an investor in NBN Co”.
The report urged the government to nominate an “investment committee” – modelled on those used by many professional investors – to oversee the project.
It proposes that the NBN Co be required to make detailed, regular disclosures to the government every three months on uptake rates, usage levels, the costs to connect premises to the project and trends in competing technologies.
The reporting would be to Senator Conroy and Finance Minister Penny Wong, to minimise “the ongoing risk of reputational issues for the commonwealth from underperformance relating to the NBN”.
Despite the report being finalised only this month, Senator Conroy’s office said the government had already put in place mechanisms for overseeing the rollout of the NBN as recommended by the advisers.
These included monitoring by Senator Conroy and Senator Wong, “supported by appropriately skilled shareholder teams within their departments”.
While not commenting on whether an “investment committee” would be set up, Senator Conroy’s spokeswoman said the “the government is already working with NBN Co to develop a more extensive performance monitoring regime”.
Debate about the potential for better internet technologies to be thwarted by the NBN erupted last year after the Organisation for Economic Co-operation and Development warned that the government had adopted a “picking-the-winner strategy” that could stymie “unknown, superior technological alternatives”.
NBN Co spokeswoman Rhonda Griffin said the government-owned company was “conscious of the competition provided by wireless technologies and has therefore taken independent advice on potential market scenarios”.
The corporate plan assumes that while 13 per cent of residential premises are wireless-only today, that will increase to 16.3 per cent by 2025 and 16.4 per cent by 2040. Ms Griffin said the company had made provisions for a 13 per cent “leakage” from wireless-only users.
Additional reporting: Lauren WilsonLeave a reply →