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<h2 class="title">Uh-oh, telcos: 93% of Australia getting gov't-run fiber</h2>
<div class="byline"><span class="author">By <a href="http://arstechnica.com/author/nate-anderson/">Nate Anderson</a>
</span> | <span class="posted">Last updated <abbr class="timeago datetime" title="May 7, 2010 8:11 AM">about 4 hours ago</abbr></span></div><div class="byline"><span class="posted"><abbr class="timeago datetime" title="May 7, 2010 8:11 AM"> </abbr></span></div><div class="byline"><a href="http://arstechnica.com/tech-policy/news/2010/05/uh-oh-telcos-93-of-australia-getting-govt-run-fiber.ars">http://arstechnica.com/tech-policy/news/2010/05/uh-oh-telcos-93-of-australia-getting-govt-run-fiber.ars</a> </div><div class="byline"><br></div>
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<!--body--><p>
When the FCC issued its <a href="http://arstechnica.com/tech-policy/news/2010/03/national-broadband-plan-arrives-quoting-shakespeare.ars">National Broadband Plan</a>
earlier this year, it set some modest goals for the nation: 100Mbps to
100 million homes by 2020, universal service of 4Mbps everywhere.
</p><p>
Australia plans to do things... a bit differently. Within the next eight years, the Australian government will <a href="http://arstechnica.com/tech-policy/news/2009/04/shocker-aussies-to-build-own-open-access-fiber-backbone.ars">spend AUS$43 billion (US$38 billion) to build its own "world-class broadband infrastructure"</a>
that will deploy fiber to 93 percent of all Australian homes and bring
12Mbps broadband to everyone else. The network will be wholesale only
and will be open access, enabling every ISP to use the fiber to offer
services. </p>
<!--page 1--><p>
What about the presence of a "highly profitable vertically-integrated
and horizontally-integrated incumbent with a monopoly position in most
fixed-line access in many backhaul routes"? (This is a reference to
Telstra, which controls most of the copper telephone line in the
country.) Well, Telstra can partner with the government and make a bit
of money off the rollout, or it can choose not to cooperate and the
government will do what it wants anyway.
</p><p>The message is clear: Australia refuses to be held back by the
business decisions of a single company. As a new report on the
Australian plan makes clear, there's not much attempt to make this
easier on Telstra. </p><p>
"Existing participants will need to adapt to succeed," says the government report.
</p>
<h3>
Aim high
</h3><p>The <a href="http://www.minister.dbcde.gov.au/media/media_releases/2010/040">new report</a>
(PDF), out today from consultants at McKinsey and KPMG, is an
"implementation study" to make sure the government's plan is
feasible—and the report is remarkably positive.
</p><p> The government initially planned to spend AUS$43 billion
(about US$38.9 billion) and build a fiber network that would reach 90
percent of Australian homes. The rest would get wireless broadband,
while the truly rural would have access to a new class of satellite
service that can deliver a least 12Mbps to the entire country.
</p><p>Too modest! says the report. Instead, Australia should bump its
fiber build up to 93 percent, provide fixed wireless service for four
percent, and Ka-band satellite service for the remaining three
percent—and it can all be done in eight years and on budget. (Australia
will apparently launch two of its own Ka-band satellites to provide a
redundant national connection serving up to 350,000 homes.)
</p>
<div class="news-item-figure CenteredImage" style="width: 640px;">
<div class="news-item-figure-image">
<img src="http://static.arstechnica.com/2010/05/06/NBN-cost-estimate.png">
</div>
<div class="news-item-figure-caption">
<div class="news-item-figure-caption-text">Cost breakdown (source: implementation report)</div>
</div>
</div><p>"The new fiber infrastructure covering 90+ percent of premises will
be long-lived and will redefine the current industry structure,
superseding the copper network that has been in place for over 50 years
in many places," says the report "the fiber laid over the next decade
will be in place for possibly as long again."
</p><p>As for Telstra, there's not much consolation here. The new
fiber buildout will produce a "fundamentally different industry
structure... This change will accelerate the evolution of the industry.
At times this may be smooth; at other times it will be uneven. New
business models and companies will emerge."
</p><p> The incumbent can make money by doing a comprehensive deal
with the government to "share infrastructure such as ducts, pits,
exchanges, and unused backhaul fibers." Telstra has over 100,000km of
conduit in the ground already, and it's estimated that 50-80 percent of
these ducts still have unused space to run fiber. This could save the
government significant money in trenching costs if Telstra will sell
access. Likewise, the incumbent has plenty of dark fiber installed
around the country to serve as backhaul links between exchanges; the
government could also save the expense of laying its own fiber over
these routes if it partners with Telstra.
</p><p> But it's clear that the new network won't be held hostage to
Telstra's demands. The consultants conclude that, in the absence of an
agreement, [the fiber network] should proceed to build both its access
network and its backhaul unilaterally."
</p>
<h3>"Fiber": Australian for "broadband"
</h3><p> Because of its harsh interior geography, nearly all Australians
live on the perimeter of the country. The report notes that only 9
percent of the country's land mass is inhabited, and 90 percent of the
people live in just 0.2 percent of the space. It's relatively easy and
inexpensive to run fiber to these locations, but it's still a big job
that will take years to complete. </p><p>
Just think about what's involved: fiber will run alongside almost every
road in the country. The report notes that 250,000km of fiber optic
cabling will be needed and that the new network will have to make
"5,000 customer visits per workday" for eight years to hook everyone
up.
</p><p> The obvious downside of this approach is that no other
wireline competitors will likely emerge to challenge the
government-controlled fiber network. On the other hand, there's not
that much competition right now; only 20 percent of Australian homes
can get cable service, and most others are left with lines from Telstra
(which does resell to numerous ISPs, but it retains control of the
access network).
</p><p>To encourage competition, the government will not enter the ISP
business itself. Instead, the plan is to wholesale fiber connections
out to ISPs, and the network will be open to every ISP that wishes to
participate. This is similar to what <a href="http://arstechnica.com/tech-policy/news/2010/02/your-new-isp-google-launches-1gbps-fiber-to-the-home-trial.ars">Google plans to do with its 1Gbps testbed fiber network</a> somewhere in the US—but over an entire country.
</p><p>
The report expects that wholesale prices should start at AUS$30-35 (US$27-32) per month for 20Mbps broadband with voice service.
</p><p>
Australia's plan may never have worked for the US: we have much
stronger duopoly competition than Australia, and a company like Verizon
has already invested $18 billion-20 billion in fiber. Also, population
density is different between the US and Australia. Still, it's an
exciting project to watch, and it certainly makes us wonder what the US
would look like with fiber to 90+ percent of homes and a healthy ISP
competition over that fiber. (Google's project seems designed to make
US residents think about the possibility.)
</p><p>But for now, we watch. We wait. And we hope our own rural
residents are happy enough with their 2Mbps connections—when they can
get broadband at all. </p>
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