This is designed to be a basic history of the lead up to the current NBN. It is not a complete history, but covers the most relevant and pertinent points that drove the current NBN to be implemented.
Broadband in Australia
ULL and Competition
DSLAM's and Competitive ADSL
FTTN and Telstra
Telstra enters into discussions with the ACCC in March of 2006. But an alliance between, primarily, Optus, iinet, Internode, TPG and several smaller ISP's emerges that wages war against what iinet CEO Michael Malone, at the time described as "a ridiculously transparent attempt to return to a monopoly position". This FTTN network would see Telstra control, once again, the entire line to the customer, with no way for the competitors to access unless they paid a "fee" which was undisclosed at the time. It would essentially remove the work the ULL had done at de-monopolising the Telecommunications sector.
So, Telstra is losing money from its' wholesale business every year, steadily, because of the encroach of competition in fixed-line. There was alot of hostility between the CEO, Sol, of Telstra and the Howard Government back then because of regulatory pressures. Telstra offers up the proposal of the FTTN network to "upgrade the ailing infrastructure" in March 2006. It entered into discussion with the ACCC.....and got precisely nowhere by August 2006, thanks largely to the unofficial alliance formed by the other ISP's. The ACCC discussions amounted to Telstra saying "We'll build it, but we want primary access to it, with other competitors a secondary concern"....to which the ACCC promptly replied "Mmmmm......NO" in essence. It would've seen a return to pre-ULL days, which the ACCC had just worked through. It was for exactly this reason many believed Sol offered this "solution"- to reclaim the lost revenue from ULL wholesaling regulation.
The 2007 Election
An FTTN "NBN"
Next went the discussion on FTTN. An expert panel is formed to discuss the options in early 2008....and by the end of 2008 (November) the tender process is finished....to have Telstra excluded a few weeks later for refusing to produce a complying bid. This extract from the Evaluation Report, from January 2009, into the FTTN tenders by the 6 consortiums (including Telstra) shows an interesting point- The excuse given by the committee to exclude Telstra is that "Telstra had failed to submit a Small and Medium Enterprise (SME) Plan as required under the RFP." This is a fairly small and technical point to throw an entire tender out by the largest Telco and therefore most likely contender to build the FTTN in Australia. But, then, Telstra had provided only 13 pages for their bid, compared to the Terria consortium's 1000. Why? Perhaps Sol knew the Labor government wasn't seriously considering Telstra- after all, this government was even MORE hostile towards Telstra. The extract notes:
"The Proposals have also demonstrated that rolling out a single fibre-to-the-node- likely to require exclusive or near-exclusive access to Telstra’s existing copper sub-loop customer access network (CAN), the so called ‘last mile’, thereby confirming that strong equivalence of access arrangements would be essential. As well, providing such access to a party other than Telstra runs a risk of liability to pay compensation to Telstra. The Proposals have this risk remaining with the Commonwealth but they have not addressed the potential cost to the Commonwealth of any such compensation. In any event, the Panel considers that no Proponent could accept the cost risk and continue to have a viable business case."
This was the true harbinger of the death of the FTTN NBN, because, sources inside Telstra (including Phil Burgess, Sol Trujillo's manager of Public Policy and Communications) tell us now, as seen in this ABC report (and 4 Corners) that while the network may very well have cost the Labor government $4.7 Billion to build, the Telstra CAN would have to be bought, because the nature of the FTTN architecture meant the CAN had to be cut at crucial locations to splice in the nodes. This cost? $20 BILLION. And Telstra would then use that money to build past the FTTN network it just built for the government with an FTTP network in many areas, cherry-picking all the customers off with better services for less money.....
Needless to say, there were many rumours surrounding what Kevin Rudd did and said when he was advised of this.....perhaps that was where his penchant for bad language came from?
So, the board is empty. Next comes the bit of folklore, which says that Rudd, quite miffed with Sol and Telstra about the whole thing, says to Conroy and his advisors "Why don't we just screw Telstra completely and build our own?" Supposedly, this discussion was had on his jet when travelling from/to Canberra and "written on the back of a napkin." And the idea? A FTTH network, which completely bypasses Telstra's CAN (hence saving the money being paid to them to buy it and stopping them overbuilding the new network) to 90% of the country, with the final 10% being serviced by wireless, satellite and existing ADSL. Total cost? $43 Billion.
Welcome, to the National Broadband Network.
NBN Mk2 Costings
The KPMG/McKinsey report is released to the government in early 2010 and then to the public in May 2010. It says the NBN is achievable, that it will be cheaper than believed originally (around $38 Billion total, but only $27 Billion to government- perhaps less including Telstra deals), should be able to reach to 93% with fibre, not 90% and confirms that an FTTH (fibre) NBN is the way of the future, for future upgradability and maintenance. It also recommends the final 7% be served by fixed wireless (4%- via LTE) and satellite (3%).
NBN Trials- Fibre, Satellite and Wireless
The first FTTH trials started to rollout in Tasmania, where a State NBN had already been planned and given to Aurora Energy, as a direct result of the FTTN bid in 2008 and the government had tied up a deal to incorporate that into the NBN at large. That saw the first FTTH trials rolled out in 2010 by Aurora and after legislation was passed in early 2010, saw that come under NBNCo. jurisdiction. The trials were completed and the first services tested in mid-2011, modest as they were (several thousand premises were connected, a few hundred used the service). Several thousand are now connected since commercial services have been turned on, with tens of thousands now passed.
The next fibre trials, on mainland Australia were in Armidale, Kiama, Townsville, Wilunga and Brunswick. These covered varying geographies and societal differences. They were announced in April 2011 and conducted until September 2011, when commercial services were launched in the trial sites. Again, initial takeups of the service were small, but have now risen to many tens of % in several of the sites after commercial service was turned on, including to nearly 35% in Kiama. While this seems small in the overall scheme of things, as a comparison, takeups of 15% overseas in similar rollouts at this stage in the rollout are considered normal.
In the meantime, satellite deals for NBNCo's "Interim Satellite Services", which see 6/1 services supplied over existing commercial satellites, were signed in May 2011 with Optus and IPStar and offered from July 1 2011. These services have much cheaper prices than normal commercial services (see SkyMesh and compare NBN Satellite with IPStar satellite plans) and much higher speeds, with much higher downloads. And the contention is managed on these satellite slots, meaning these NBN customers continue to receive higher speeds when in peak times, on the same satellites. Once NBNCo. launch their own satellites, by 2015, there will be 90Gbps shared between 200 000 people. This seems low; after all, if everyone were to download at full speed the entire time, it would result in 450Kbps maximum speed. However, the satellite area is so vast, the likelihood of even half these services downloading at full speed (12/1) at the same time is negligible.
The second mainland fibre trial sites partially skipped "trial" phase and instead switched on commercial services as soon as connected. These were done at 15 other locations and expanded 4 of the original locations in the trials, resulting in some 65 000 connections by April of 2012. However, reported takeup was only some 3700 actual services by then, on fibre.
Wireless trials were conducted from April this year, with a few hundred premises outside the fibre footprint of the trials in Armidale, being connected via NBNCo's fixed wireless LTE solution, for current speeds of 12/1. This was expanded to Toowoomba and Tamworth in June. There are a little over one thousand people on the NBNCo. wireless plans.
All these trials have been planeed, executed and spaced out according to the best ways to tackle the various geographies of Australia. The trials are now totally completed. Full commercial rollout of the NBN services, announced as part of the 3 Year Rollout plan in very late March this year (just after the Telstra agreement signed in December took effect in March), were to begin this month. Some 750 000 connections will be started or completed by the end of this year and 3.5 Million will be started or completed by 2015.