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Next-generation network is set to transform Australia

27 апреля 2009

Plans drawn up by the Australian government this month for a nationwide next-generation network look set to propel the country up the global 'league table' for broadband access.

Australian Prime Minister Kevin Rudd revealed on 7 April that the government is to create a public-private company to invest up to AUD43 billion (EUR23.6 billion) in a next-generation fixed network that connects 90% of Australia’s population. The announcement also included plans for wireless and satellite access for the remaining 10% of citizens. The government will make an initial investment of AUD4.7 billion (EUR2.58 billion), which it hopes to supplement with private finance.

The plans mark a major step forward in broadband connectivity for the country. The next-generation network, which is due to be completed in 2017, will include new core infrastructure to connect towns that previously lacked high-speed connectivity. At the access level, it will provide fibre connectivity for every home passed, giving citizens up to 100Mbit/s access to the Internet.

Taking into account the size of Australia’s population, the planned investment is massive in comparison to other countries’ next-generation network investments. Australia’s population is one of the sparsest in the world, and the estimated costs reflect this, at EUR1146 per capita. By contrast, Analysys Mason has estimated that it would cost EUR446 per capita to provide fibre to every home in the UK (based on GPON topology).

The costs also reflect the relatively limited broadband infrastructure in Australia. The country’s broadband service take-up rate is reasonable in comparison with those of other developed countries, but its broadband infrastructure is relatively poor: it typically offers headline downstream speeds of just 1.5–2Mbit/s. For that, subscribers can expect to pay a comparatively expensive fee: AUD69.95 (EUR38.34) per month for services from incumbent Telstra. Incumbent operators in other developed markets are able to offer much more attractive propositions, such as GBP24.46 (EUR27.21) for 8Mbit/s (BT in the UK), USD30 (EUR22.68) for 3Mbit/s (AT&T in the USA) and SEK309 (EUR28.42) for 8Mbit/s (Telia in Sweden) – and resellers and altnets offer many less-expensive deals. Furthermore, some of these operators have already rolled out fibre-based services.

The Australian government’s decision to form a public company to oversee the roll-out of the network has come as a surprise to consumers, operators and investors. The network has been the subject of much debate for the past two years, and it had been thought that a private consortium would lead the project, though a less expensive fibre-to-the-node network had been envisaged. Five private sector organisations had pre-qualified in a government RFP process that was launched in April 2008. However, the government has stated that none of the proposals offer value for money, citing the negative effects of the economic slowdown as the reason, although the downturn has arguably affected Australia much less than Europe and the USA.

This will not be the end of private-sector investment in Australian broadband, but the government can expect to provide much of the capital required while markets remain weak and operators continue to assess the level of demand and ARPU that next-generation access will provide.

The government’s termination of the RFP process enables Telstra to once again become involved in the network, after it was excluded for failing to meet the guidelines on the provision of services to SMEs. The incumbent has expressed its keenness to re-enter the process and has formed a committee of some of its leading executives to negotiate with the government.

The advancements Telstra has made with its cellular network will help its case. Although towns with a population of about 1000 people or more are likely to receive FTTH, smaller settlements – particularly those that are remote from the conurbations on the west and east coasts – will probably receive wireless coverage. Telstra is rapidly expanding its cellular network capacity by rolling out HSPA+ upgrades, and is working on techniques to expand its cell sizes. Harnessing the cost efficiencies of mobile coverage will be critical to the operator that assumes the responsibility for providing rural access. The most-remote citizens are likely to only receive satellite coverage, which will offer less bandwidth and higher latency.

Australia has taken a bold and expensive move, but there remain many uncertainties. One of these is exactly how much the network will cost taxpayers. However, the government’s haste could yield a nationwide network that is a radical improvement on the country’s current infrastructure, and that can provide a broad range of long-term economic benefits.

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