New NBN proposal promises faster Internet for homes and businesses

Federal Government to form public-private partnership and implement FTTH connections.

The Federal Government this morning unveiled its plans for the National Broadband Network (NBN). Spanning eight years and projected to cost $43 billion with split ownership between the Australian government and private telcos, the network will provide 100 megabits per second (Mbps) Internet connections to 90 per cent of Australian homes.

The announcement placed particular emphasis on the NBN's effect on homes, businesses, the national economy and employment. Prime Minister Kevin Rudd said the NBN project will support an average 25,000 jobs every year during its implementation, with a potential 37,000 jobs supported during its peak. The NBN will add $37 billion to Australia's GDP, according to the government.

The PM said that Australian consumers and businesses suffered from low speeds and high costs when compared to other OECD countries. Since none of the original NBN tenders met the government's requirements, Rudd said, the government would form a wholesale-only public-private partnership with telcos in order to provide better value for households and businesses.

Speed was also addressed in this morning's announcement, with Rudd and Communications Minister Stephen Conroy announcing the use of a FTTH (fibre to the home) or FTTP (fibre to the premises) connection. The original NBN proposal would have involved a FTTN (fibre to the node) connection, which would provide a fibre optic connection to individual telephone cabinets.

The new proposal will instead provide a fibre optic connection directly to buildings, eradicating the need for a copper-based "last mile" connection and increasing the potential speed of the network. Rudd this morning claimed that under the new proposal, homes and businesses could expect an Internet connection with a potential throughput of 100Mbps, up from an initial prospect of 12MBps, which has previously been criticised as too slow.

The FTTP connection will reach 90 per cent of Australian homes over the next eight years, with construction in Tasmania to begin as early as July. A statement issued by Conroy this morning after the announcement claims that FTTP connections will be used in greenfields developments from 1 July, 2010.

Telecommunications analyst Paul Budde told PC World Australia that the new proposal is a "total shift in telecommunications" that is essential for Australia's communications infrastructure. Due to the changed proposal, Budde said that the NBN had become an open platform on which traditional broadband subscription models could work in tandem with new models paid for by advertising and other methods.

Maha Krishnapillai, Optus' government and corporate affairs spokesman, echoed Budde's sentiments in an interview with PC World Australia. Krishnapillai said that the new NBN proposal was "absolutely welcome" and remedied the problems in the initial proposal, including the use of an FTTN connection rather than FTTH. He also noted that the regulatory reform that the Australian government introduced today — alongside the new proposal — would create a level playing field for ISPs, media outlets and other potential innovators. For the average home user, Krishnapillai believed that the increased speeds would allow broadband providers to offer a "plethora of new services and new features that people will value and are willing to pay for".

Separate press releases issued by iiNet and Telstra this morning both congratulated the government on the announcement. Telstra's statement suggested that the telco was open to negotiations with the government in relation to the implementation of the NBN strategy and potential partnership in the corporation. Paul Budde said that the proposal is the "worst case scenario for the old Telstra" and that the telecommunications giant would have to rethink its model to compete under the NBN.

iiNet's managing director, Michael Malone, told PC World Australia that while the ISP does not have access to the capital required to become a major partner in the NBN public-private partnership, it intends to contribute as an "access seeker," whether through its existing partnership with the Terria consortium or as an individual ISP. Malone commended the government's proposal, saying that it would allow for an "open, transparent fair access network" that would provide the requisite infrastructure to serve the majority of Australian homes for more than 20 years. Malone said the proposal was a "game changer" that would provide the competition required to ensure fair pricing for households and businesses.

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