Australia: What to expect from changes to the NBN
How the change in government could affect you

The road so far

One of the major policy differences between the Coalition and Labor during the recent Federal Election was the approach to building the National Broadband Network (NBN), which is being rolled out by the Government-owned NBN Co.

The former Labor Government's approach to building the NBN involved a fibre-to-the-premises (FTTP) solution that would initially be capable of speeds of up to 100 Mbps (upgradeable to 1 Gbps). This FTTP network was intended to cover up to 93% of Australian homes and businesses, with the remaining 7% of premises being connected by wireless or satellite infrastructure. However, Labor's FTTP model involved a very substantial cost, most recently estimated at A$44.1 billion. As the FTTP model requires new fibre-based connections to be installed into all houses, apartment complexes and office buildings, Labor's NBN was not expected to be completed until at least 2021. The roll-out to date has been problematic at times, with difficulties encountered in the tender processes with suppliers and asbestos found in a number of old telecommunications installations, resulting in substantial delays. Consequently, NBN Co has at times missed its own estimates and deadlines for the number of premises connected to the NBN.

In contrast, the Coalition's model for the NBN is a fibre-to-the-node (FTTN) network that involves the deployment of optical fibre-based connections to thousands of 'nodes', which would be placed on street corners and in the basements of apartment buildings and office towers. The Coalition's FTTN version of the NBN would build on the existing deployment already undertaken on the NBN, with 22% of premises connected directly to the fibre network and 71% connected using the Coalition's preferred FTTN technology. The remaining premises would be connected by fixed wireless and by satellite.

The Coalition's FTTN model would retain the so-called 'last mile' of the existing copper-based telecommunications network to connect individual houses, apartments and businesses to each node. Under the Coalition's plan, the cost of an FTTN-based NBN is A$29.5 billion. The deployment will be undertaken in stages, with an interim milestone deployment (with a minimum speed of 25 Mbps for all connections) to be achieved by 2016 and full build-out estimated to be completed by 2019, with speeds of 50 Mbps to 100 Mbps to be made available to 90% of the population.

What's next?

Now that the Coalition has been voted into office, we expect that the new Government will begin implementing a number of its policy initiatives, including revising the NBN. Initially, the Coalition will have a great deal of work to do to unwind the current arrangements for the NBN, as contracts have been entered into between NBN Co and a range of third parties, including Telstra, Optus and other contractors involved in the construction and deployment of the NBN. Many of these contracts are likely to need to be substantially re-negotiated. Given the scope of the contracts entered into and the amounts of money involved, this negotiation process is likely to be protracted. Regulators such as the Australian Competition and Consumer Commission (ACCC) and the Australian Communications and Media Authority (ACMA) are likely to be consulted as well.

Shortly before the Election, the Coalition indicated that it did not expect to encounter substantial additional costs in re-negotiating arrangements with Telstra to continue to use the 'last mile' of the Telstra-owned copper infrastructure. However, given the substantial complexity of the existing contractual arrangements, any re-negotiations may well preoccupy the new Coalition Government for some time.

What does this mean for you?

Initially, a period of review and consultation is likely to be undertaken and may involve a number of Government agencies and departments that have an interest in the communications field, including regulators such as the ACCC and ACMA. Such a process is necessitated by the shift to the Coalition's plan for an FTTN model for the NBN and may involve regulatory changes as well as the re-negotiation of a large number of existing contracts.

For State and Federal agencies not directly involved in communication policy areas, the impact of the change in the NBN from an FTTP to an FTTN model is harder to assess in light of the relatively long deployment period for the NBN. In the short term, it is possible that internal agency projects relating to telecommunications or online delivery may be put on hold. Until there is greater certainty around the re-structuring of the NBN from an FTTP to an FTTN model, such an unsettled state of affairs is likely to be a relatively poor environment for longer-term strategic decision-making in respect of investment in telecommunications sector infrastructure or services that can be delivered over the NBN.

In the medium term, the change to an FTTN model is likely to require wider co-operation with state and local government agencies at the design and construction stage. For example, the deployment of FTTN 'nodes' on street corners may require coordination between NBN Co, local councils and state road authorities.

Ultimately, the faster roll-out of an FTTN version of the NBN under a Coalition Government has the potential to drive faster take-up of high-speed internet by Australian businesses and members of the public, resulting in a critical mass of high-speed internet connectivity being achieved that could in turn drive increased e-government initiatives and innovative online solutions such as telehealth initiatives.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.