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Are National Broadband Networks Doomed?

Over the years, I’ve worked with national broadband projects in Australia, New Zealand, Qatar and Singapore. More recently in Australia, the National Broadband Network (NBN) has been in the news for all the wrong reasons. Their Retail Service Providers (RSPs) – who sell the NBN services to end customers, have been up in arms about NBN approaching large enterprise customers directly. Today, they announced that they would no longer do that – and that has the RSPs like Vocus, Mactel and Telstra very happy. Arguably, the decicion for NBN to sell direct was in breach of the founding principles that the Australian government put in place when it created NBNCo.

Such controversy is not why I think the NBN and the equivalents in other countries are doomed, although it’s not helping their case in the eyes of the public and end customers.

No, I think the proliferation of 5G networks and more recently global players like SpaceX’s Starlink constellation could be the harbinger of death for NBN.

Slow Rollouts

NBN has been copping a lot of flack lately in the media for taking too long to roll out. I get it, Australia is a HUGE country – even with most Australians living within an hour of the coast, it’s still a lot of physical ground that needs to be covered by the fibre and HFC networks that cover the bulk of the NBN end users. This has lead to a level of dissatisfaction with NBN as a whole.

Slow Network

Those end customers that do have a NBN connection are often complaining to the telecommunications ombudsman about the service they get – and while some of those faults are laid at the doorstep of the RSPs, some of it is due to physical breakages of modems and network termination devices and some are the fault of NBN – in all cases, because in Australia, we include NBN in the product offerings of the RSPs (ie – its customer facing), NBN cops the blame for ALL of the issues. As an example, my RSP (Optus) sold me a 100/40 HFC based NBN connection – which is usually fine. I often get 90-95 Mbps downstream and 30-37 Mbps upstream. However, so many HFC customers were seeing much slower than advertised speeds that Optus removed that speed combination from the market – the fastest they sell now is 50/20. (50 Mbps down, 20 Mbps up).

5G Networks

The 5G rollout in Australia is still pretty limited, but the 4G (LTE) rollout is pretty comprehensive and on 4G, I often see speeds approaching my home NBN based connection. Assuming 5G will bring a significant boost in speed (along with many other advantages including much great density of connections per cell) – which means that a 5G connections promises to deliver faster connections than NBN and without the need to tie the end customer down to their home boundaries.

If you add unlimited plans (in terms of Gb to be transferred up or down) to such as 5G (or even a 4G service) then you have a strong competitor to the NBN.

Some local mobile network providers and even MVNOs are already talking about selling fixed mobile services instead of selling a NBN based home (or office) connection.

Starlink

This morning, SpaceX launched another 60 satellites into orbit, bringing the total to 240 – that’s 120 new satellites within a month – well on the way to 12,000 satellites.

As I’ve mentioned in my previous blog post (see https://telcotalk.online/index.php/2020/01/09/starlink-a-global-csp-disruptor/), SpaceX’s Starlink constellation of communications satellites promise to deliver broadband (up to 10 Gbps) AND low latency (good for gaming) to 100% of Australia (other than the Australian Antarctic Territory). If SpaceX can deliver reasonable plans (in terms of speed, capacity and price) then SpaceX will be a strong competitor for NBN. If the plans are right, it could kill NBN.

Two NBN alternatives – either could kill NBN

Sure, NBN in Australia is facing some significant challenges, but these are exactly the same challenges that all national broadband networks/project face… Customers have zero allegance to NBN – and if 5G or Starlink will provide faster speeds at a competitive price, NBN is doomed.

If you disagree, let me know what you think…

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New Zealand’s National Broadband Project – progressing

Originally posted on 5Jul10 to IBM Developerworks (10,547 Views)

Since I last posted about New Zealand’s National Broadband project which seemed to me to be much more focused on the subscribers and the products they would have available to them (and the retailers that sold them) than the high speed backbone network.  My impressions may have been tainted by the work I was doing with the Telecom New Zealand Undertaking In Progress (UIP) project that I was involved with – the rather public forced split of Telecom New Zealand’s Retail, Wholesale and Network departments to ensure equivalency of input for all retail and wholesale partners for (only) broadband services.

My understanding of the situation has developed somewhat since then and we can see that the situation in New Zealand Government also involves a similar structure to what is happening in Australia with the Communications Alliance and the NBN Company.  In New Zealand, the companies are a little different.  Certainly, we have the NZ Government Ministry of Economic Development (MED) as one participant, then we have Crown Fibre Holdings (not much of a web site there!) -set up by the Government to manage the process of selecting the companies to build the National Broadband Network and manage the government’s investment in the NBN.  Together with the companies that are bidding for the deal Crown Fibre holdings will form Local Fibre Companies (LFC) which (combined) will match the government’s contribution to the NBN.  That will mean the total project will cost NZ$3 Billion** with the LFCs kicking in NZ$1.5B and the NZ government contributing NZ$1.5B.  I dont have the full schedule, but from a couple of sources, I have compiled an overview of the progress to date:

  • 21 October 2009 – Communications and Information Technology Minister Steven Joyce announced the government’s process for selecting private sector co-investment partners.
  • 13 November 2009 – Intention to respond due. 
  • 9 December 2009 – The Ministry and Crown Fibre Holdings release a clarifications and amendments
  • 14 January 2009 – The Ministry and Crown Fibre Holdings released additional clarification and amendments with respect to the Invitation to Participate.
  • 29 January 2010 – Proposals must be lodged
  • 4 February 2010 –  Crown Fibre Holdings notify respondents of handover of responsibility for the partner selection process
  • August 2010 – Refined Proposals to be re-submitted to the government (See http://www.totaltele.com/view.aspx?C=0&ID=456818 )
  • October 2010 – Successful respondents announced/notified.

What I find a bit interesting is that the government are only looking to cover 75% of the population by 2019.  For a small country (compared to Australia at least), that seems to me to be a very low target to aim for.  If we compare that with Australia’s NBN project, their target is 90% coverage at greater than 100Mbps and 10% greater than 12Mbps (that’s 100% coverage!) by 2017.  Admittedly, the Australian project has about a year’s head start, but it’s also a MUCH bigger country with a population nearly five times larger.  Lets have a quick look at the comparisons:


 AustraliaNew Zealand Ratio
(AU to NZ)
Population22.4M4.3M5.2
Area7,617,930 km2268,021 km228.4
Population Density2.833/km216.1/km20.17
Planned NBN Completion year20182019–
NBN Coverage22.4M (100%*)3M (70%)7.5
NBN Cost**AU$40B = US$33BNZ$3B = US$216.5
NBN Cost per person (US$/person)US$1473US$6662.2
NBN Cost per area (US$/km2)US$4331US$74620.6

* 100% coverage is split between greater than 100Mbps (90%) and greater than 12Mbps (10%)
** One Billion is using the short scale definition = 109 = 1,000,000,000

What do I take from this quick comparison?  Lets take a quick look at the numbers.  Obviously, Australia is a much bigger country (28.4 times larger) and has a much larger population (5.2 time larger), so it is reasonable (in my opinion) that the cost per potential NBN customer should be higher for Australia (and it is at 2.2 times higher) but the thing that makes me ponder is the cost per square kilometre:  New Zealand is nearly twice that of Australia.  When the New Zealand target is only 70% of the population and thus enables them to avoid areas that are physically difficult to provide coverage to (I’m no NZ geologist, but I would imagine lots of the South Island’s most mountainous areas would pose significant problems for cablers) I find myself wondering why the NZ network is going to be so expensive.  I guess it could be a matter of scale – but I thought the biggest cost was actually laying the cables rather than the back end systems which every broadband network will need (routers, switches, administration and management systems).  Maybe I am missing something – does anyone have any ideas?

edit:  I’ve just found this quote in Wikipedia which (I think) is truly revealing when you consider New Zealand’s 70% coverage target:

“New Zealand is a predominantly urban country, with 72% of the population living in 16 main urban areas and 53% living in the four largest cities of Auckland, Christchurch, Wellington, and Hamilton“

source: wikipedia.com

By only extending the NBN to those 16 main urban areas and nowhere else – they’ve achieved their target!  You wouldn’t want to live in country New Zealand and be dependent on a fast network!

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A tale of three National Broadband Networks

Originally posted on 21Feb10 to IBM Developerworks where it got  12,303 Views

Providing a National Broadband Network within a country is seen by many governments as a way to help their population and country compete with other countries.  I have been involved in three NBN projects; Australia, Singapore and New Zealand.  I don’t claim to be an expert in all three projects (which are ongoing) but I though I would share some observations and comparisons between the three projects.

Where Australia and Singapore have both opted to build a new network with (potentially) new companies running it, New Zealand has taken a different path.  The Kiwis have decided to split the incumbent (and formerly monopoly) Telecom New Zealand into three semi-separated ‘companies’ Retail, Wholesale and Chorus (the network), but only for the ‘regulated products’ which for the New Zealand government is ‘broadband’.  They all still report to a single TNZ CEO.  I have not seen any direction in terms of Fibre to the Home or Fibre to the Node, just defined the product as ‘broadband’.  The really strange thing with this split is that the three business units will continue to operate as they did in the past for other non-regulated products such as voice. 
 
As an aside, the Kiwi government not regulating voice seems an odd decision to me – especially when you compare it to countries like Australia and the USA where the government has mandated that the Telcos provide equivalent voice services to the entire population. Sure, New Zealand is a much smaller country, but it is not without it’s own geographic challenges in providing services to all kiwis, yet

Telecom NZ is now Spark

A key part of the separation is that these three business units are obliged to provide the same level of service to external companies as they provide to Telecom and it’s other business units.  For example if Vodafone wants to sell a Telecom Wholesale product, then Telecom Wholesale MUST treat Vodafone identically to the way they treat Telecom Retail.  Likewise Chorus must do the same for it’s customers which would include ISPs as well as potentially other local Telcos (Vodafone, Telstra Clear and 2Degrees).  This equivalency of input seems to me to be an attempt to get to a similar place to Singapore (more on that later).  Telecom NZ have already spent tens of million of NZ$ to this point and they don’t have a lot to show for it yet.  It seems to me like the Government is trying to get to a NBN state of play by using Telecom’s current network and perhaps adding to that as needed.  For the kiwi population, that’s not anything flash like fibre to the home, but more like Fibre to the node and then have a DSL last mile connection.  That will obviously limit the sorts of services that could be delivered over that network.  When other countries are talking about speeds in excess of 100Mbps to the home, New Zealand will be limited to DSL speeds until the network is extended to a full FTTH deployment (not planned at the moment as far as I am aware) 

Singapore, rather than split up an existing telco (like Singtel or Starhub) have gone to tender for the three layers – Network, Wholesale and Retail.  The government (Singapore Ltd)  has decided that should only be one network and run by one company (Nucleus Connect – providing Fibre to the Home), that there would be a maximum of three wholesale companies and as many retail companies as the market will support.  A big difference to New Zealand is that the Singapore government wants the wholesalers to offer a range of value added services – that they refer to as ‘sit forward’ services to engage the population rather than ‘sit back’ services that do not engage the population base.  Retail companies would be free to pick and choose wholesale products for different wholesalers to provide differentiation of services.

Singapore, New Zealand and Australia are vastly different countries – Singapore is only 700km2 in size, Australia is a continent in it’s own right and new Zealand is at the smaller end of in between.  This is naturally going to have a dramatic effect on each Government’s approach to a NBN.  Singapore’s highly structured approach is typical of the way Singapore does things.  Australia’s approach is less controlled – due to the nature of the political environment in Australia rather than it’s size and New Zealand’s approach seems somewhat half-hearted by comparison.  I am not sure why the NZ government has not elected to build a new network independent of Telecom NZ’s current network. 

In Australia on the other hand, the government have set up the Communications Alliance to manage the NBN and subcontract to the likes of Telstra, Optus and others.  The interesting thing with that approach (other than the false start that has already cost the Australian Taxpayers AU$30 million) and the thing that sets it apart from Singapore is that the approach doesn’t seem to have any focus on the value added services (unlike Singapore’s approach) – it’s all about the network, even the wholesaler plan for Australia is talking about layer 2 protocols (See The Communications Alliance Wiki.  All of the documents I have seen from Communications Alliance are all about the network – all very low level stuff. 

Of course, these three countries are not the only countries that are going through a NBN project.  For example the Philippines had a shot at one a few years ago – the bid was won by ZTE, but then a huge scandal caused the project to be abandoned.  It came back a while later as the Government Broadband Network (GBN) but that doesn’t really help the average Filipino.  It’s interesting to see how these projects develop around the world…