national broadband network

NBN
1 National Broadband Network
The National Broadband Network (NBN) is a nationalwholesale-only, open-accessdata
network under development in Australia. Up to one gigabit per second connections are sold to
retail service providers (RSP), who then sell Internet access and other services to consumers. The
NBN has been subject to political and industry debate for a number of years, before construction
actually commenced.

The network is estimated to cost a$35.9 billion to construct over a 10-year period, including an
Australian Government investment of a$27.5 billion. The build cost has been a key point of
debate. NBN Co, a government-owned corporation, was established to design, build and operate
the NBN, and construction began with a trial rollout in Tasmania in July 2010. The mainland
rollout began with five first-release sites with the first services connected in April 2011.

The fibre to the premises (FTTP) rollout is planned to reach approximately 93 percent of the
population by June 2021. Construction of the fixed wireless network is planned to begin in 2011,
delivering its first services in 2012 and to be completed by 2015. Two satellites will be launched
by 2015. The network will gradually replace the copper network, owned by Telstra and currently
used for most telephony and data services. As part of an agreement with NBN Co, Telstra will
move its customers to the NBN, and lease access to its exchange space and extensive network
ducting to assist in the rollout.

2 Contents
1 Policy development
o 1.1 Previous attempts at national broadband networks
 1.1.1 Broadband Advisory Group 2003
 1.1.2 Telstra Copper Upgrade Plans 2005
 1.1.3 Broadband Connect Policy & OPEL Networks 2006/07
 1.1.4 G9 Consortium 2007
o 1.2 Current policy
 1.2.1 Initial failed federal government RFP 2007/09
 1.2.2 Current policy announcement April 2009
 1.2.3 Creation of NBN Co April 2009
 1.2.4 'National Broadband Network Companies Act 2011'
 1.2.5 Agreement with Telstra and Optus 2011
o 1.3 Responses by stakeholders
2 Network design
o 2.1 Fibre to the premises
o 2.2 Fixed wireless and satellite
o 2.3 Equipment and connectivity

3 Expected cost and return
4 Implementation
o 4.1 Trial rollout in Tasmania
o 4.2 First release sites
o 4.3 Second release sites
o 4.4 National rollout
 4.4.1 Fibre to the premises
 4.4.2 Fixed wireless
 4.4.3 Satellite services
5 Retail offers
6 See also
7 References
8 External links

3 Policy development
See also: Telecommunications in Australia

4 Previous attempts at national broadband networks
5 Broadband Advisory Group 2003

In a report released on 22 January 2003 the Howard government’s Broadband Advisory Group
(BAG) recommended the Federal Government work with other governments and industry
stakeholders to form a "national broadband network". A subsequent Senate committee
recommend the Federal Government replace the "increasingly obsolete" copper network with a
new network based on fibre to the node (FTTN) or alternative technologies.

6 Telstra Copper Upgrade Plans 2005

On 15 November 2005 Telstra, the owner of the national copper network, announced a plan to
upgrade its ageing networks, including a rollout of a fibre to the node (FTTN) network. At the
time, the Federal Government was the majority shareholder of Telstra, but the plan did not
involve any additional government investment. The rollout was later put on hold after the
Howard Government refused to exempt the new network from laws requiring third party access,
instead saying Telstra could achieve the exemption by applying to the competition regulator, the
Australian Competition and Consumer Commission (ACCC). Telstra dropped plans for the new
network on 7 August 2006, after reaching an impasse in negotiations with the ACCC. Former
ACCC chairman, Graeme Samuel later said the proposal was "an illusion on cost and on the
capacity to truly deliver high-speed broadband to end users".

7 Broadband Connect Policy & OPEL Networks 2006/07

In June 2006 the Broadband Connect policy was announced by the Howard Government with an
aim of providing greater access to broadband services in rural and regional areas.

OPEL Networks—a 50–50 joint venture between Optus and Elders—was announced on 18 June
2007 as the sole successful bidder in tender However, on 2 April 2008 Communications
Minister Stephen Conroy terminated the agreement because OPEL had "failed to meet the terms
of [the] contract".

8 G9 Consortium 2007

Nine telecommunications companies—AAPT, Internode, iiNet, Macquarie Telecom, Optus,
PowerTel, Primus, Soul and TransACT, formerly known as G9—proposed its own FTTN
network on 20 April 2007, however, it was rejected by the ACCC on 17 December 2007 because
of future unknown conditions for access.

9 Current policy
10 Initial failed federal government RFP 2007/09

In the run-up to the 2007 federal election, opposition Labor party leaders announced a Labor
Government would build a "super-fast" national broadband network, if elected.

The network was estimated to cost a$15 billion including a government contribution of a$4.7
billion which would be raised in part by selling the Federal Government's remaining shares in
Telstra. After the election, the new Labor Rudd Government issued a request for proposals (RFP)
to build the NBN, and six proposals were submitted by Acacia, Axia NetMedia, Optus on behalf
of Terria, TransACT and the Tasmanian Government (covering their respective states only), as
well as Telstra. Telstra’s submission was later excluded leading to warnings that if the project
were to go ahead, Telstra would be entitled to compensation estimated at A$15–20 billion With
the other bidders neither able to meet the government's requirements nor able to raise the
necessary capital during the global financial crisis, the RFP was terminated on 7 April
2009Current policy announcement April 2009

After terminating its initial RFP, the Rudd Government announced it would bypass the existing
copper network by constructing a new national network combining fibre to the premises (FTTP),
fixed wireless and satellite technologies.

Tasmania was selected for a trial deployment based on the Tasmanian Government's submission
to the RFP.

11 Creation of NBN Co April 2009

NBN Co was established on 9 April 2009 and Mike Quigley was appointed chief executive
officer on 25 July 2009, an implementation study was commissioned in April 2009 and released
on 6 May 2010 by the Rudd Government. McKinsey & Company and KPMG concluded the
NBN can be implemented and made 84 recommendations in the study, including expanding the
fibre footprint to 93 per cent from the original 90 per cent. NBN Co released its business plan on
20 December 2010, including forecasts and network design. A number of changes were made as
part of NBN Co’s business plan, including an increase in the peak speed to one gigabit per
second, in response to Google Fibre and giving "priority" to regional and rural areas during the

rollout following the events after the 2010 election.'National Broadband Network Companies
Act 2011'

The Parliament passed the National Broadband Network Companies Act 2011 and a related bill
on 28 March 2011with amendments by the Greens and independent senators adopted on 26
March 2011. The amendments centred on transparency, freedom of information and competition
concerns, including the adoption of uniform national wholesale prices for NBN connections. The
Government has required support from the Greens to pass NBN legislation through the
Parliament. The Greens have voted in favour of NBN legislation, but have also won support for
amendments that make NBN Co subject to freedom of information laws, and that make any
proposal to privatise the NBN subject to review by the Parliament and by the Productivity
Commission. The Government has also required the support of other independent and minor
party members and senators for NBN legislation. Independent senator Nick Xenophon also
supported NBN legislation in the upper house, but only after the government agreed to release a
summary of NBN Co.’s business case.

Agreement with Telstra and Optus 2011

A Cable Pit for access to Telstra's ducts; this infrastructure is used by NBN Co.

Following threats by the federal government to force a structural separation of Telstra, NBN Co
signed a definitive agreement with Telstra on 23 June 2011 estimated to be worth a$9 billion
post-tax net present value, Building upon the signing of a financial heads of agreement a year
beforehand. Instead of separating, Telstra agreed to "disconnect" its Internet customers from the
copper and hybrid fibre-coaxial networks in areas where FTTP has been installed, and agreed to
lease dark fibre, exchange space and ducts to NBN Co. Apart of the agreement, Telstra would
not be able to market their mobile network as an alternative to the NBN for a number of years.
This clause is similar to the one in the agreement with Optus over its hybrid fibre-coaxial
network estimated to be worth an$800 million post-tax net present value. The ACCC—whose
approval is required before both agreements take effect—raised concerns about the clauses being
anti-competitive. Both Telstra and Optus would remain the owner of their respective networks.
On 18 October 2011, Telstra shareholders overwhelmingly approved the deal.

Network design

12 Fibre to the premises

The FTTP network.

Premises within the FTTP footprint are connected using Ethernet over a gigabit passive optical
network (GPON) giving a peak speed of one gigabit per second. A fibre-optic cable, known as
the "drop fibre", goes from the premise to the street ending at the top of a power pole or in an
underground pit. The "drop fibre" cable joins a "local network" which links a number of
premises to a splitter in the fibre distribution hub. A "distribution fibre" cable connects the
splitter in the distribution hub to a fibre access node, which is linked up to a Poi. Mike Quigley
said one of the advantages of a GPON network is the distribution hub requires no electronics. He
used an example in the United States where a hub was "under water and full of mud" and it
continued to function while the fire department used a high pressure hose to clean it without
electronics, the distribution hub does not require a power supply, nor a battery for power outages.
In a GPON network only the local exchanges housing the fibre access nodes and the equipment
on premises require a power supply

The FTTP network architecture chosen by NBN Co comprises a number of replicating modules
which is combined to make up the FTTP network. A fibre distribution area includes up to 200
premises linked up to a fibre distribution hub. A fibre serving area module comprises 16 fibre
distribution areas, which services up to 3,200 premises. A fibre serving area comprises 12 fibre
serving area module connected to a fibre access node, which services up to 38,400 premises.
During the 10-year construction, NBN Co plans to build or lease approximately 980 fibre serving
areas, servicing up to 37,632,000 premises. Mike Quigley said the modular design will decrease
the construction risk of the NBN and allow continuous improvements in the construction,
network design and supply chains.

13 Fixed wireless and satellite

NBN Co wireless outdoor antenna

Approximately 93 per cent of the population is planned to be serviced with fibre to the premises
(FTTP), with the remainder serviced by either fixed wireless or satellite technologies. The FTTP
build costs for each premise increases with each percentile in the last 7 per cent, because of a low
population density. The current funding could only achieve approximately 93 per cent FTTP
footprint, however, the FTTP footprint will be expanded where users or communities are willing
to pay the incremental costs of installing FTTP.NBN Co will deploy a 4GLong Term Evolution
fixed wireless network covering approximately 4 per cent of the population outside the fibre
footprint. The premises in the fixed wireless footprint will be hooked up to an antenna allowing a
connection to a wireless base station; the base station links to a Poi via a backhaul. The 2.3 GHz
and 3.4 GHz spectrums will be used to deliver these fixed wireless services. Unlike the mobile
networks, only premises can connect to the NBN's fixed wireless network. The number of
premises assigned to each base station will also be limited. Mike Quigley said the limits will
ensure users received a "good service" because of the "high[er] throughput". Users at the edge of
the coverage for each base station will receive a peak speed of 12 megabits per second, the speed
increases "considerably" moving closer to the base station.

NBN Co is planning to launch two Ka band satellites by 2015, each offering 80 gigabits per
second of bandwidth, compared to four to six gigabits per second capacity available from current
satellites servicing Australia. In the interim, NBN Co will use existing satellite to provide six
megabit per second to a limited number of premises which currently do not have access to
broadband speeds. The satellites will be used to bounce signals from a satellite dish on the
premises to an earth station, known as a "gateway"; the gateway is then connected to a PoI via a
fibre backhaul. Mike Quigley said the satellite design was "not easy", because the required
coverage is about "five per cent of the world's land mass" containing "at least 200,000 premises"
spread across "over 7,000 kilometres" of area between Cocos Islands and Norfolk Island.[83]

14 Equipment and connectivity

How RSPs and wholesalers connect to the NBN.

Internet access and other services using the NBN are sold to consumers from a retail service
provider (RSP), who connects their network to the NBN at a Point of Interconnect (PoI). Mike
Quigley has said the "ubiquity and standardisation" is important in the NBN, he continued RSPs
will be able to connect to PoIs "using the same BSS processes and interfaces, at the same prices
and with the same product constructs as far as is possible across all three technology products".
Layer 2 network access is sold to RSPs, with uniform pricing within each of the three
technologies regardless of where the service is delivered and across the technologies for the basic
package. To provide this uniform pricing, regional and rural areas will be cross-subsidised with
the lower cost metropolitan areas. To prevent other potential providers from undercutting NBN
Co in metropolitan areas, new fibre networks are required to be open access and charge similar
prices; these rules are known as the "anti-cherry picking" provisions, which were passed into law
with other NBN legislation.

When completed the NBN will have 121 PoIs available to RSPs. Originally, NBN Co planned
for a more centralised model with only 14 PoIs, however, was overruled by the Federal
Government on the advice from the Australian Competition and Consumer Commission
(ACCC). The ACCC considered the plan to be "mission creep" and would have given NBN Co a
monopoly over backhaul, however, NBN Co said centralised model would have allowed smaller
RSPs to connect without going through a wholesale aggregator. ACCC recommended 121 Pols
after public consultation. Internode criticised the "insane" number of PoIs and after its pricing
announcement warned it might have to charge more in regional areas because of the increase
costs. In response, Shadow Minister for Communications, Malcolm Turnbull said the
"government can't deliver on a crucial promise" of "national uniform pricing", however, Minister

for Communications, Stephen Conroy said we "guaranteed uniform wholesale pricing" not retail
pricing.

The NBN will use one of the three technologies to connect the RSP and its network to the
network termination device (NTD) on premises. The NTD will allow devices to connect the
NBN using the Ethernet or telephone ports. An external source is required to power the NTD,
while a battery will supply power for a limited time during power outages. NBN Co will supply a
battery during the rollout, however, the end users or their RSP will be responsible for
maintenance and replacement of the battery. Mike Quigley said the batteries are the biggest
source of complaints from trial users with some users doubting they will ever use the battery.
The Federal Government and NBN Co are in talks over the issue. Chinese Telecom manufacturer
Huawei were prohibited from bidding by the Australian government

Expected cost and return
The Rudd Government estimated to the total cost of the project initially to be a$43 billion. NBN
Co later revised down the cost in its business plan to a$35.9 billion. The project is to be financed
by a combination of a Federal Government investment of a$27.5 billion and private investment
for the remainder. The size of the government investment in the NBN has been a key point of
both criticism and praise. The Coalition called for a cost-benefit analysis, describing the NBN as
"a white elephant on a massive scale". The Economist Intelligence Unit (EIU) criticised the NBN
as a "huge cost to the public sector", however, Minister for Communications, Stephen Conroy
said the EIU were a "right-wing dogma" and would criticise any government investment in
infrastructure. Vint Cerf, co-creator of TCP/IP, said the NBN is "a stunning investment"and
asked for a "full and frank breakdown of the costs" at the conclusion of the project, to "aid and
inform attempts by other countries to build a national network". NBN Co intends to begin paying
dividends back to the Federal Government in 2020, and to have fully repaid the Government's
contribution by 2034. NBN Co's business plan forecasts a return on investment of 7 per cent,
expecting to turn over revenue of a$5.8 billion by 2021. Prime Minister Julia Gillard says
"taxpayers will be repaid their investment in the NBN with interest", however, Shadow Minister
for Communications, Malcolm Turnbull said "expectations of strong early revenues [for NBN
Co] are looking overly optimistic".

Of the first 4000 residences in Hobart, only 10.9% have actually taken up a service. However,
part of the agreement with Telstra was to decommission the existing copper network where the
NBN was available, and further to restrict wireless services so that they do not compete with the
NBN. Thus it is expected that the NBN will have a high take up rate as it will be the only option
for fixed telephones and broadband internet access.

Implementation
15 Trial rollout in Tasmania

The trial rollout in Tasmania, including stage one (in red), two (in yellow), three (in green) and
fibre "backbones" (in grey).

Tasmania was selected as the first state to begin the rollout of the NBN, based on the Tasmanian
Government's "shovel ready" submission to the RFP for the original NBN.[25] A new company,
NBN Tasmania (previously Tasmania NBN Co), was formed on 8 April 2009 to build the NBN
in Tasmania. The Company was planned to be a joint-venture between NBN Co, Aurora Energy
and the Tasmanian Government. The Tasmanian Government also floated an idea to invest
a$12.7 million in Aurora Energy to get access to its fibre network, however, the joint-venture
and deal were both cancelled on 9 November 2010 when the negotiations reached an impasse.
Although the joint-venture was cancelled, Aurora Energy still plays a role in the construction of
the NBN in Tasmania.

The trial rollout in Tasmania comprises three stages. Stage one was announced on July 2009 with
the first customers being connected a year later. Stage one included connections to premises in
Smithton, Scottsdale and Midway Point and construction of fibre "backbones" from Port Latta to
Smithton, Cambridge to Midway Point, Midway Point to Triabunna, George Town to Scottsdale
and Scottsdale to St Helens. On completion of stage one, 4,000 premises were offered fibre
installation; 51 agreed to be "NBN Ready" (at no cost), but only 10.9% actually took up the
service as of 6 May 2011, 712 premises have an active service and 11 premises are awaiting
service activation by a retail service provider (RSP).

The Tasmanian Parliament passed opt-out legislation on 18 November 2010, to allow NBN Co
to install fibre connections to premises unless the property owners explicitly decline the
installation. The fibre connection is free, however, if the installation is declined and a connection
is ordered at a later date, NBN Co may charge a connection fee. The bill passed the Tasmanian
lower house with the support of all members. During his second reading speech, then-Premier of
TasmaniaDavid Bartlett said the take-up rates were "a good early result", however, he said it was
"important to increase the participation rate". In his closing remarks, Bartlett said "[the] NBN in
Tasmania is a once-in-a-generation opportunity to create jobs and contribute to a new economic
direction". In her second reading speech on behalf of the Tasmanian Opposition, Elise Archer

said "the NBN is an important infrastructure", but that "the State Liberals have some concern that
the NBN business model seems to rely more and more on eliminating competition and other
technologies".

Stages two and three were announced on 21 October 2009 and 1 March 2010, respectively.
Approximately 11,150 premises in Sorell, Deloraine, George Town, St Helens, Triabunna,
Kingston Beach and South Hobart were included in stage two. Stage three includes
approximately 90,000 premises in Hobart, Launceston, Devonport and Burnie. Stage two will
include a trial of expanding the FTTP footprint to areas not included in the initial rollout. The
trial will allow individuals and councils to pay the incremental cost of a fibre connection over
fixed wireless in order to receive a fibre connection from NBN Co. The costs will include
provisioning further space in exchanges and rolling out additional fibre optic cables.

At the time of launch, the access prices for RSPs were temporarily set at a flat rate of a$300 per
premises with no ongoing monthly charges. Mike Quigley said one of the reasons for the flat rate
is the OSS and BSS systems was not built to make the process automatic. He continued if NBN
Co charged a monthly charge without the systems, it would have been a "very manually
intensive process" and not a "sensible proposition". However, RSPs did charge a monthly fee to
customers, to cover the cost of the trial.

First release sites

The first (in red) and second (in green) release sites of the NBN rollout.

Five areas comprising around 14,000 premises were chosen as the "first mainland sites", each
representing rollout challenges the NBN was expecting to face during an Australia-wide rollout,
with the first services going live on 19 April 2011. Commenced on 17 August 2010, Armidale
was the first site to officially launch on 18 May 2011 with 2,900 premises included of which
90% did not opt out for connection. Kiama Downs and Minnamurra was the second site to
officially launch, following Armidale on 29 July 2011. Approximately 2,350 premises were
passed, of which 80 per cent did not opt out for installation. Brunswick had the lowest
installation rate at the time of its official 4 August 2011 launch: of the approximately 2,689
premises passed, only 50 per cent opted for installation. Aitkenvale and Mundingburra followed
Brunswick on 1 September 2011 with approximately 3,100 premises passed and 63 per cent did

not opt out for installation. Willunga was the fifth and final "first release site" to officially launch
on 16 September 2011 with approximately 940 premises passed and 91 per cent did not opt out
for installation.

These figures are for passive installation of a dark fibre to the premises. To activate it residence
need to purchase a service from an RSP. Furthermore, following the low take up rates in
Tasmania, the government has adopted an opt-out model in which users are assumed to want the
service unless they explicitly opt-out. Thus passive installation figures may be quite different
from the proportion of residences that actually use the NBN service.

16 Second release sites

Fourteen second release sites comprising 54,000 premises in all states and territories were
announced on 8 July 2010 with construction commencing in August 2011. The sites comprise
premises in Aspley, Bacchus Marsh, Casuarina, Coffs Harbour, Geraldton, Gungahlin,
Mandurah, Modbury, Prospect, Riverstone, South Morang, Springfield Lakes, Toowoomba and
Victoria Park.[151] [152] Telstra had agreed to allow NBN Co to use its exchanges and ducts in the
second release sites before the agreement was finalised.

17 National rollout

Construction of the NBN began with a trial rollout in Tasmania with the first customers
connected in July 2010 NBN Co plans to complete the FTTP rollout by June 2021, along with
the completion of the fixed wireless and satellite rollout by 2015.

Fibre to the premises

In April 2010, NBN Co began a tender for the major FTTP rollout. 14 vendors submitted a
proposal, however, NBN Co suspended the process on 1 April 2011, as the prices were
"unacceptably high". After the suspension, NBN Co entered into an agreement worth up to
A$380 million with Silcar on 1 June 2011. The agreement covers the construction of the NBN in
Queensland, New South Wales and the ACT by Silcar, a company joint-owned by Siemens and
Thiess. The agreement also includes the option of a two-year extension with an additional value
of a$740 million.

Fixed wireless

The 2.3 GHz and 3.4 GHz radio spectrums will be used to provide Long Term Evolutionfixed
wireless covering approximately 4 per cent of the population outside the fibre footprint. NBN Co
bought spectrum from Austar for A$120 million in February 2011, with the remanding spectrum
covering areas in Western Australia, the Northern Territory, South Australia, outback
Queensland and New South Wales were bought on 13 July 2011 for A$1.3 million in an auction
by the Australian Communications and Media Authority. NBN Co said the spectrum bought
from Austar and in the auction covers "all the geographic coverage it needed" to build its fixed
wireless network.

NBN Co-signed an initial 12-month contract on 1 June 2011 with Ericsson to design, build and
operate the network with options to extend the contract for up to 10 years at a total cost of a$1.1
billion. Construction will commence in 2011, with the first five locations announced as the
regional and rural communities surrounding Geraldton, Toowoomba, Tamworth, Ballarat and
Darwin. The first services are scheduled to begin in 2012 and completion in 2015.

Satellite services

While the planning continues on the two satellites due to launch by 2015, NBN Co has launched
interim satellite services on 1 July 2011, providing up to six megabits per second. Due to the
limited satellite capacity, these services were given to customers who did not have access to
alternative "metro comparable" services, similar to the Federal Government's Australian
Broadband Guarantee (ABG) program which ended on 30 June 2011.

The criteria for alternative "metro comparable" services were minimum data speeds of at least
512 kilobits per second, a 3GB per month data allowance and a total price to the end customer of
no more than a$2,500 over three years. To provide these services NBN Co bought managed
satellite services and satellite capacity from Optus for $200 million and additional satellite
capacity from IPstar for A$100 million.

NBN Co has contracted Space Systems/Loral to build and launch two Ka band satellites in 2015
at a total cost of a$2 billion, each offering eighty gigabits per second of bandwidth.

18 Retail offers
As of September 2012, there were a large number of Retail Service Providers for NBN based
services.

Pricing for fixed broadband varied across retail providers, for example Telstra charges $90/
month for 200GB, Optus charges $69.99 for 150Gb (split on/ off-peak) and iinet charges $59.99
for 200GB (split on/ off-peak).

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