NBN Infrastructure Development: Confusion or Politicisation?

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shutterstock_88451932The Australian Minister for Communications issued a statement to NBN Co on 9 April, 2014 confirming that the company should continue its rollout of infrastructure using a multi-technology model (MTM) previously proposed in a strategic review.

Inherent in NBN’s mission statement is that future technologies which form part of the MTM model should be incorporated into the NBN framework.

The strategic review, which the Minister confirmed on 9 April, included the following MTM technologies as components of NBN’s framework:

  • Fibre to the node/basement/distribution point (FTTN/FTTB/FTTdp)
  • Fibre to the Premises (FTTP)
  • Hybrid fibre coaxial (HFC)
  • Fixed wireless and satellite.

The statement went on to confirm the Government’s policy of providing download rates of at least 25 Mbps for all premises, and 50 Mbps to 90% of fixed line premises as soon as possible.

Confusion or politicisation?

Regrettably, political events sometimes compromise good intent and issues which date back to 2009 still haunt the future development of Australia’s telecom infrastructure.

There are four critical factors which interact to create a state of confusion, if not conflict. These are the government, NBN, MTM and Telstra. For completeness, we should add a fifth factor inherent in government and business affairs – money.

Concerns raised by Paul Budde, an independent telecom researcher and consultant, in an article published in late October questions whether the current model promoted by the government is going to work.

MTM is a critical issue. There seems to be some confusion as to the perceived end solution of infrastructure development. Experts, including NBN, agree that Fibre-to-Premises (FTTP) is the ultimate end solution.

NBN as well as Telstra favours a development that aims straight to FTTP. However, because of some unfortunate political decision made years ago, the government does not want to aim straight for FTTP as the end solution.

Why then did the Minister confirm the NBN strategic review proposals?

To actualise its current policy, the government needs the cooperation of Telstra who have their own views about infrastructure development and costly investments. Telstra is the only Australian organisation with adequate resources to implement the MTM framework, but they need considerable concessions from the government to embark on such a vast project.

It would seem that Telstra and its strategic preferences may be in conflict with components of MTM that the government has locked itself into while in opposition. The concessions which Telstra need for a massive infrastructure development may also cause intervention from the Australian Competition and Consumer Commission (ACCC).

These are the relevant issues:

  • Telstra would not want to accept the financial risks linked to the MTM model. They would need substantial financial guarantees and concessions.
  • The government, on the other hand, would want something in return in the form of regulatory concessions.
  • Telstra would want a clear path towards FTTP incorporated in the MTM plan.
  • Telstra may want to force bipartisan support for a definite MTM roadmap.
  •  The government needs to produce new legislation and regulations that provide a competitive telecom environment in Australia and ensure this does not produce conflict in terms of concessions offered to Telstra – ACCC may get involved again.

Watch this space for updates on these dilemmas.

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