Aus broadband decision a 'watershed'

Rose Major

Australia’s communications minister, Senator Stephen Conroy, yesterday told an international conference that the decision to join with the private sector for an investment of up to A$43 billion in a national broadband network “was not taken lightly”.

“It was taken following a lengthy Request for Proposals that demonstrated that the private sector was unable to achieve a national broadband solution – particularly in the current economic environment,” said Sen Conroy. “Our decision is a watershed moment for the telecommunications sector in this country.”

A tender process for backbone rollouts for the network will begin soon with construction for these links expected to start in September.

Speaking at the FTTH Council Asia-Pacific conference in Melbourne, Sen. Conroy added that the project would resolve the conflict inherent with existing legacy networks where the owner, incumbent telco Telstra, also competes at the downstream layer with its customers, other telcos to whom it wholesales capacity.

“The platform we build for the future of our economy is too important to be mired in endless legal disputes and confrontation. Despite worthy goals, the current regime has failed to deliver and Australia has some of the most expensive and slowest broadband in the developed world,” Sen. Conroy said.

Australia lags behind much of the world in broadband provision, particulaly in Asia. Fibre-to-the-premises (FTTP) is becoming the standard for broadband in the Asia-Pacific region. According to FTTH Council statistics released at the conference, FTTP now represents 63% of the overall regional broadband market. Take-up is accelerating with subscriptions surging 12% in 2008.

Australia’s proposed network is a FTTP solution that will reach 90% of homes and businesses. It will start at 100 Mpbs. Future hardware upgrades will boost speeds to beyond 1Gbps.

The minister cited two reports that such a network would be beneficial for the country at large. Access Economics predicts that a national high-speed broadband network would drive economy-wide productivity growth 1.1% higher after ten years compared to going without. It views this as a conservative estimate.

Another report by the Centre for International Economics said broadband could lift national economic output by 1.4% after five to six years. This is equivalent to $15 billion in terms of GDP in 2007/2008.

The speech came just a day after Telstra’s new CEO, David Thodey, took the helm from outgoing CEO Sol Trujillo. An internal appointment, Thodey is expected to be more conciliatory towards the government, especially over Telstra becoming involved in the new network build rather than merely concentrating on developing its own high-speed network. The company has been pushing up speeds on its hybrid fibre-cable network and also focusing on its wireless network. The government hopes that wireless will be used to connect the 10% of homes and businesses not on the fibre network.