FTTH Council Asia–Pacific Conference
Sofitel Hotel, Melbourne
Tuesday, 19 May 2009
It is a pleasure to be here for the 4th annual conference of the FTTH Council Asia–Pacific.
I would like to extend a particular welcome to those that have travelled to Melbourne from overseas to be here.
These are very exciting times for the communications sector in Australia, and indeed, for anyone with expertise, insight and interest in the deployment of fibre-based access networks globally.
By now most of you would be aware that last month the Australian Government made one of the most significant infrastructure decisions in this country’s history.
The Government is moving boldly to ensure that this country has the infrastructure it needs to grow and prosper into the 21st century.
This includes investing with the private sector to build a high-speed FTTP broadband network connecting 90 per cent of homes and businesses - and deploying next-generation wireless and satellite to service the remaining 10 per cent.
The National Broadband Network will be the single largest nation-building infrastructure project in Australian history.
It will be Australia’s first truly national wholesale-only communications network.
It will drive employment and business activity in the short-term, helping stimulate the economy for our recovery from the global economic recession.
It will also form the platform for our future economy, ensuring we are best placed to capitalise in the years ahead.
I know that all of you here this evening are keenly interested in the future of communications and specifically in our decision to drive investment in fibre-based broadband.
You may be aware that we are conducting a number of consultations to attract industry input.
We are also moving towards implementation planning, which will include detailed consideration of vital issues I know are of particular interest to those in the room this evening.
The telecommunications sector is rich with experience and expertise and the Government wants to ensure Australia has the best opportunity to benefit from that resource.
All of you understand the capacity for these investments to revolutionise the communications landscape and provide opportunities across the economy.
You understand the importance of not falling behind other countries forging ahead in the digital economy.
Our decision to join with the private sector for an investment of up to $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.
Our decision is a watershed moment for the telecommunications sector in this country.
As I have said, this will be the country’s first truly national wholesale-only communications network.
It resolves once and for all the conflict inherent with existing legacy networks where the owner also competes at the downstream layer with its customers.
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.
The current regime also fails to allow Australia to plan for its future as a digital economy leader.
As we invest in the new platform, we are consulting on reforms to the existing regulatory regime.
It is timely to consider these reforms today to improve competition and consumer safeguards during the time that it takes to rollout the National Broadband Network.
Equally, it is timely that we invest now in the future of our nation.
Clearly, businesses and Governments today are negotiating a starkly different operating environment than even a year ago.
Significantly though, there is a growing view that technology will play a substantial part in the world’s recovery from economic recession.
As Intel CEO Craig Barrett has said, you don’t save your way out of a recession, you invest and innovate your way out.
Investing in the National Broadband Network will create 25,000 jobs in Australia for each year of the eight year build – peaking at 37,000.
This is important economic stimulus and will help cushion Australia from the effects of the global economic recession.
Additionally, the availability of affordable, high-speed broadband will provide the basis for Australia to maximise its potential in the post-recovery environment.
The National Broadband Network will form the basis for a generation of innovators and for businesses to drive efficiency and productivity growth.
Access Economics predicts that a national high-speed broadband network would drive economy-wide productivity growth 1.1 per cent 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 per cent after five to six years.
This is equivalent to $15 billion in terms of GDP in 2007/2008.
I know that members of the FTTH Council understand the potential of high-speed broadband to stimulate economic activity.
You are well aware of the way countries across the world, and particularly across the Asia–Pacific are working to stimulate fibre broadband rollouts.
In fact, FTTP is becoming the standard for broadband in the Asia–Pacific and according to the FTTH Council stats released today, now represents 63% of the overall regional market for broadband.
Take-up is accelerating at extraordinary rates and subscriptions surged 12% across the Asia–Pacific over the year to December 2008.
Australia must keep pace with the global community and particularly our Asia–Pacific neighbours who are rapidly adopting fibre broadband.
This includes global FTTP leaders such as South Korea, Hong Kong, Japan, Taiwan and fast-growing China.
Our plan with the National Broadband Network will help us achieve this goal.
I note comments from Larry Smarr, the physicist and internet architect, in the media just today:
"Everywhere I go, people are now saying Australia is number one, they are the leader now."
In Australia, advice received by the Government highlighted the importance of a FTTP as a long-term national broadband solution.
The Panel of Experts that evaluated the proposals put forward encouraged the Government to invest in a FTTP network.
The Government also called on the ACCC to provide a report to the Panel on those proposals.
It is important to note that the Panel did not consider costing for FTTP.
This was done by central agencies based on advice from their technical advisors.
In addition, the Government has received advice on the technical suitability of FTTP from a range of high-level sources.
The overwhelmingly strong view of this advice was that FTTP is the technically superior broadband solution.
Advice from CSIRO stated:
"Of all the technologies available, FTTP delivers the highest dedicated speed to the end user."
The Defence Science and Technology Organisation has stated:
"This technology is the most future proof... It is the only technology expected to meet the user demands of 2020 and beyond in urban and suburban environments."
NICTA advised:
"FTTP is the most future-proof technology."
Based on that advice, and that of our Panel of Experts, we are now progressing with a FTTP solution to 90 per cent of homes and businesses.
We have listened to the experts and will deliver a National Broadband Network that exceeds our election commitment and establishes Australia’s broadband sector for the future.
I know that all of you here this evening recognise that fibre is the end-game when it comes to broadband deployment.
It is for this reason that we have taken the bold step to invest in such an ambitious rollout.
Our network will start at 100 Megabits per second, but once fibre is distributed, future hardware upgrades can boost speeds even further to 1 Gigabit per second and beyond.
This is not about short-term gains.
This is about national infrastructure that supports our national interests for the decades to come.
High-speed broadband can support smart grids, improving energy efficiency and reduced carbon emissions.
In health and aged care, broadband will support in-home care, reducing the need for hospitalisation and providing a better quality of life for patients.
In education, broadband offers the chance to break down geographic barriers and ensure resources for students regardless of where they live.
Broadband can secure our long-term investments with smart infrastructure that helps owners to manage and maintain their assets.
Broadband also presents the opportunity for new trade and partnership opportunities, opening new markets for regional businesses and Australian innovators.
It may come as a surprise to our international visitors that there is still mixed understanding among Australian politicians about the truly far-reaching benefits and implications of a National Broadband Network.
Some still question the need for speeds of 100Mbps or more when they say currently available speeds are adequate for the tasks they conduct today.
They claim the only benefit of a national high-speed broadband network will be faster movie downloads.
They suggest that wireless has a capacity to meet our entire national broadband needs and that there is no evidence of FTTP being delivered as a commercial proposition.
This would be considered ignorance of the highest order if it were not simply political opportunism in the extreme.
Indeed, our Opposition has repeatedly called for investment in productive economic infrastructure to help Australia out of the global economic recession.
This blatantly ignores the fact that high-speed broadband is THE productive economic infrastructure of the 21st century.
These opportunistic attacks completely miss the point that the Government is establishing a future competitive environment to deliver the best-possible broadband for Australia.
There is no disputing that wireless will always have an important role to play in Australia.
Indeed, next-generation wireless and satellite will connect 10% of homes and businesses to the National Broadband Network.
Wireless and mobile will also continue to be important complements to fixed broadband in urban environments and for people who value mobility.
However, to support future services such as those I have described, fibre optic broadband will be required.
In the words of Ziggy Switkowski, the former Telstra CEO:
"The plan supports a standardised fibre-optic platform with predictable scaling and functionality upgrades that will coexist with complementary wireless environments.
This is the global communications mix of the future. It is not a risky exercise in picking winners."
Current Telstra CTO Hugh Bradlow has described FTTP as the end-game when it comes to broadband.
As I mentioned, this is supported by advice from our Panel of Experts and from a range of technical advisors.
I’m sure it is supported by those in the room this evening.
In fact, it is also supported by the mobile industry.
As Chris Althaus, CEO of the Australian Mobile Telecommunications Association said last month:
"The NBN feeds the appetite for mobile broadband, mobile broadband feeds the appetite for the NBN... there are a lot of synergies there."
At the same time as critisising Government for its fibre ambitions, our opponents also question why we are not deploying fibre to 100% of homes and businesses.
In fact, evidence suggests that 100% coverage of the population with FTTP is the exception rather than the rule.
South Korea is one of the very few countries planning to get that far.
Recognising the underlying economic realities, other countries such as Japan and Finland are planning fibre coverage of around 90% of population.
In Australia, our low density of population and large physical distances would result in extremely high deployment costs for FTTP beyond 90% of homes and businesses.
Our opponents remain in a position of denial as the world passes them by.
As the statistics the FTTH Council presented today demonstrate, the world is moving further towards fibre platforms and Australia should not be left behind.
Progress
Since our announcement in early April, we have been making strong progress towards the National Broadband Network rollout.
Negotiations are progressing with the Tasmanian Government to commence an early rollout of a FTTP network and next generation wireless in Tasmania by July.
We have also commenced consultation on our $250 million priority broadband backbone investment for regional areas.
We will soon begin a competitive tender process for the backbone rollouts and construction for these links is expected to begin as soon as September.
Additionally, I as mentioned earlier, consultation has started on legislative reforms to make the existing regulatory framework work more effectively.
Submissions are due in early June, with legislation to be introduced before the end of the year.
Tapping the vast expertise contained within the telecommunications sector is a vital part of our plan to deliver the National Broadband Network.
We have begun this process with consultations on regulation and backhaul.
Also, on a daily basis we are meeting with players from across the sector to canvas different views and input to the challenges we face.
Very shortly we will begin the next consultation for the development of the National Broadband Network.
This will focus on greenfield property developments and their employment of FTTP.
It is the Government’s intention that all greenfield property developments deploy FTTP technology from mid-2010 and our consultation will focus on the precise arrangements necessary to achieve this goal.
Already, many property developers are forging a new path by deploying fibre networks at the same time as they lay the roads and connect other essential services to new buildings.
This alleviates the need to retro-fit fibre to these developments in the years to come while there is evidence to suggest FTTP contributes positively to property values.
We will be very interested to hear from the industry and those in the room about this issue when we issue our discussion paper.
We value and we want your input.
Implementation Study
Of course, there is far more to consider than the issues canvassed in the three consultations I have outlined today.
We are aware that a lot of people in the sector, and no doubt many in this room, have a myriad of questions about the rollout and for the FTTP network element in particular.
For example, I know many people want to understand in detail issues that go to the heart of the National Broadband Network rollout and operation.
Issues like the precise configuration of the network, the prices that will be offered and the assumptions that underpin the Government’s $43 billion cost estimate.
Industry is rightly intrigued and is offering its view on major considerations such as:
- future take-up rates,
- exactly how many homes and businesses will be passed or connected,
- the mix of aerial v underground rollouts,
- the location, indoors or outdoors, of customer equipment,
- the quality of existing assets, such as the ability of deployed optical fibre to support backhaul speeds of 10 Gigabits per second, or even 40 Gigabits per second, and
- the design and specification of access services on the FTTP network.
For example, should the network use point-to-point architecture, or passive optical networks (PON)?
If we adopt a passive optical network design what flavor of PON should we deploy?
I understand and welcome the level of interest and debate that the National Broadband Network is attracting.
I also recognise that consideration of these complex issues, and more, will be fundamental to the success of the network.
That is why we are undertaking detailed implementation planning to establish the solutions and parameters for the project.
Expressions of Interest to take the role of Lead Advisor for the implementation study closed today.
I’m pleased to say that we received a strong response and I look forward to work beginning mid-year.
The National Broadband Network implementation study will be multi disciplinary, including involvement from commercial, technical and legal advisers.
It will examine detailed engineering, commercial and structural issues for the project.
The study will determine the operating arrangements, detailed network design, and ways to attract private sector investment.
It will also look at ways to provide procurement opportunities for local businesses.
It will provide further opportunities for industry experts to share their views and expertise.
These views and the advice we receive will contribute to an integrated report on the implementation study for completion in early 2010.
I note that our opponents have been pre-occupied in recent days by our estimated cost of $43 billion for the National Broadband Network.
It is important to note, and we have always been clear, that advice to Government identified a cost range of $38 billion to $43 billion for the project.
As I said earlier, these figures were provided by technical advisors to central agencies within the Government.
While people have expressed a range of views on our enhanced National Broadband Network vision no-one has seriously suggested that these figures are an underestimate.
Indeed, we expect that the actual cost to be significantly lower than $43 billion for a number of reasons, including the substantial contingency intentionally built into the estimate.
In addition, we expect that there will be substantial private sector interest in this network.
This includes the possibility that companies will want to vend-in existing assets that can support the National Broadband Network for equity or some other financial arrangements.
This will avoid the need for the duplication of some assets and subsequently also bring down the total cost figure even more.
Already there have been strong statements from players within the telecommunications sector about the attractive nature of the opportunity and the potential to become involved.
I’m looking forward to constructive conversations with players across the industry, including Telstra, about the National Broadband Network opportunity.
In light of criticism about the cost and risk of embarking on this nation-building project, it is worth reflecting on another great Labor infrastructure venture that helped shape Australia – Ben Chifley’s Snowy Mountains Hydro Scheme.
It is worth noting the comments of Robert Menzies, who as Liberal Opposition Leader in 1949, reflected on the need for an element of risk when it comes to national interest.
He said:
"When we begin some great national work of this kind, that is by common consent vital to the real industrial development of this country, we must accept some risks."
He went on to say:
"We cannot be expected to work out in advance the rate at which we shall some day provide hydro-electricity… We should not start off with rosy ideas about cost factors, we must say to ourselves this is a great national undertaking."
This is the kind of vision that the Rudd Government is applying to broadband.
It should be noted that we have already completed substantial work and are well advanced with project planning.
We are now moving to the next stage and these matters, along with other issues around the detailed design of the network will be considered in the implementation study.
As I have said, this process will include more ways for industry to get involved in how we deliver the National Broadband Network.
We highly value the expertise of the telecommunications sector, including the experts assembled in the room this evening.
We welcome the debate, scrutiny and discussion that our announcement has spurred and should continue as we move towards rollout.
The National Broadband Network is a bold nation-building project and is of vital importance for our long-term economic prosperity.
It is therefore in all of our interests to ensure that it is achieved with the highest level of care, consideration and enthusiasm.
Thank you.
