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Industries in Australia - Post NBN


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Industries in Australia - Post NBN

  1. 1. National Broadband Network Update - Dec, 2010 Analysing NBN’s Impact Across Industries Presenter: Vishal
  2. 2. AgendaWhy NBNNBN - Moving from One Monopoly to AnotherGovernment and Telstra Agreement - Meaning & HurdlesPolitics Behind NBN - Government and Opposition at LoggerheadsNBN Business PlanImpact of NBN on Telstra, Telco & Media in AustraliaPost NBN - Australian Stock Exchange, Australia Post, David JonesImpact of NBN on Australian Industries - Retail, Health, Education, Utilities, SoftwarePost NBN - Fifth Domain Warfare 2
  3. 3. Circular Quay 19001809 - 1st Australia PostProsperous Place in Beginning of 20th CenturyIndustrialisation – Steam Engine(shipping) and Telegraph 3
  4. 4. Circular Quay 1920Few Cars compared to TramsNo one knew how this is going to change the societyApplying the methods of steam driven economy to car economy has failed Source: NBN - Freeways of The Future 4
  5. 5. Harbor Bridge - Over Build6 Traffic Lanes, where people didn’t own the car30 yrs later, removed tram lanes40 yrs later, plans of duplicating itToday, most Australian connection come intoNorthern Sydney, Growth is Exponential Source: NBN - Freeways of The Future
  6. 6. Harbor Bridge - Over Build ??8 Traffic Lanes
  7. 7. Application Evolution 7 Source: NBN Co
  8. 8. Bandwidth Demand Source: NBN Co 8
  9. 9. MonopolyOnly PSTN wholesaler in countryOne Seller many Buyer, including retail arm as a BuyerNo competitor for seller, hence value is created for seller onlyCustomers are forced to pay beyond their WTP (premium price)Law of one price is missing What I can Pay Telstra Optus iiNet iPrimus Retail Agree on this Price Telstra Wholesale (Copper) What I can Sell for 9
  10. 10. Monopoly - NBN Retail Service Retail Service Retail Service Retail Service Retail Provider Provider Provider Provider Layer 2 Tunnel Layer 2 Layer 3 IP Protocol Wholesaler Backhaul Wholesaler (Includes Backhaul) Wholesaler Wholesale Layer 2 Ethernet Access Network -WholesalerUntil 2020 -2030, it will be a Monopoly, after that it will be sold to pay off debt 10 Source: NBN Co
  11. 11. Telstra & Government Agreement Non - Binding Telstra and NBN Decommission InfrastructureCopper HFC• Progressive • Progressive de-activation except decommission Foxtel• Traffic migrated to • Traffic migrated to NBN NBN • NBN Co. pays Telstra per• NBN Co. pays Telstra disconnection Ducts & Pits Lead In conduits Backhaul Exchanges NBN Co. uses fit-for-use NBN Co. uses fit-for-use NBN Co. uses dark NBN Co. uses rack infrastructure within NBN conduits which are fiber and managed space in Telstra network design connected into ducts solutions exchanges NBN Co. uses 11 Source: ZdNet & NBN Co.
  12. 12. Telstra & Government AgreementTelstraSigned a non-binding agreement with GovernmentIn principle assumes structural separation of (Ret. & Wholesale) without enabling legislation being passedLeases it ducts, pits and exchanges, 20 to 30 yearsMigration of its 9 million copper (PSTN) and HFC customers on NBN Co FiberReduced CAPEX requirements and relief from funding major parts of its USO. Contract for 10 years - 2022Multiple Revenue StreamsWritten commitment for not to be barred from LTE (4G) SpectrumRelief from the regulatory burden of local access disputes (local loop), lawyers are out, and marketers are inGovernmentPractical agreement for structural separation of Telstra (without legislation being passed)Regulatory reforms long demanded by the Australian Competition and Consumer Commission (ACCC)A wholesale open-access network available nationally to RCSPs on equitable access conditions Source: Gartner, 10B Telstra Agreement,2010 12
  13. 13. Telstra & Government AgreementNBN CoAccess to Telstras backhaul network infrastructure for a more rapid FTTP roll-out, revenue starts earlyA wholesale open-access network available nationally to RCSPs on equitable access conditionsTelstra as its largest retail customerHurdlesTelstra shareholders to approve the agreement by 2011 (1st Quarter)ACCC to approve it, consultations with NBN Co to finish by Nov, 2010 Telstra Separation with NBN Co Legislation Passed by Senate and Lower House 13 Source: Gartner, 10B Telstra Agreement,2010
  14. 14. Telstra & Government Agreement - Pre Business Plan43 Billion Capex 40% 60% NBN Co. 100% Raised by = Govt. Funded Bonds 43 Billion = (not on Govt Bal. Sheet) (no trail for this no’s since 26 Billion = inception) 17 Billion 11B to 9 Billion 2 Billion 26 = Telstra = Billion Leases USO Telstra Ducts, (Telstra - Pits & 2022) Exchange 14
  15. 15. Telstra & Government Agreement - Post Business Plan 35.7 Billion Capex 24% 76% NBN Co. 100% Govt. Funded Raised by = = Bonds 35.7 Billion 27.1 Billion = 8.6 Billion 13.8B 11.3 Billion 2.5 Billion 27.1 to = = Billion 49.6 Billion Telstra Leases Telstra Ducts, USO (Telstra - Pits & 8.6 2022) Exchange Billion 13.8 Billion by 2020 To TelstraSource: NBN CO Business Plan Summary 15
  16. 16. Telstra & Government Agreement7 Year Stock TrendP/E ratio below 15 (Avg on ASX) – not a growth stock, only dividend stockIf 28c fully franked dividend cant be maintained stock price will plummet as stock is hold bySuperannuation firms and baby boomers (low risk appetite). NBN payments will help in maintaining div. 16 Source: Yahoo 7
  17. 17. Post Business Plan - No Agreement37.4 Billion Capex 28% 72% NBN Co. 100% Govt. Funded Raised by = = Bonds 37.4 Billion 27.1 Billion = 10.3 Billion 17 Source: NBN CO Business Plan Summary
  18. 18. Politics on NBNOppositionLost crucial support of two Independents, Tony Windsor and Rob OakeshottWants productivity commission to study the cost benefit analysis, as it suggests to deliver a commercialrate of return, not the low 6-7%, lost the motion in parliament by 73-72Wants Infrastructure Australia to do the analysisWants Business Case to be publishedGovernmentConceded to Greens to let parliament decide privatisation of NBN after it’s completion. Source: Gartner, 10B Telstra Agreement,2010, The Australian 18
  19. 19. Politics on NBNBudget & DebtVital for Labor Govt. to be in surplus (for historical reasons) to drive Economic Credentials. Liberals are usingthis as a scare campaign. In comparison to other OECD we are doing quite well 19 Source: Comm Sec, 2010
  20. 20. Impact of NBN on Industries Telecom, Media & Manufact. Entert. & Utilities Logistics Financial Healthcare Services & NBN Biomedical Retail Tourism Education Govt. & Learning 20
  21. 21. Impact of NBN on TelstraStructural SeparationFunctional SeparationPartial Structural Separation 21
  22. 22. Partial Structural Separation - Likely ApproachAdjusted Structural Separation (Least Initial Cost)The wholesale and retail (including TE&G and TB) continue tofunction as separate units with minor modifications such thatwholesale has NBN as one of the primary customer. Retail WholesalePart of the access (copper and HFC) is decommissioned andcustomers are migrated to NBN. NBN uses Telstra ducts/pipes Impactand backhaul (spare bandwidth) for a service charge.The current arrangement could be used as an initial phasetowards a complete structural separation in future BSS ImpactROI dependent on providing access to duct/pipes, use of OSSbackhaul and migration of customers ITS Access Core & Impact N/W Edge N/W Network Services 22
  23. 23. Impact on IT Fulfillment Cutomers Assurance Inventory Strategy, Infrastructure & Product Operations Operations Fulfillment Assurance Billing Strategy & Infrastructure Product Support & Commit Lifecycle Lifecycle Readiness Management Management Impact Impact Impact Inventory Enterprise Management Shareholders Employees Other StakeholdersNote: No impact on Billing is perceived 23
  24. 24. Post NBN Information AsymmetryAustralian Stock Exchange 1.37 (Adverse Trillion Selection)2,260 Listed Companies1.37 Trillion Market Cap.Impact - 25% of Listed Companies 24 Source: The Age, The Australian
  25. 25. Post NBN – Retail, David Jones Functional Innovative Virtual Showroom (pre view shopping) Products Products Co - Creation Supply Chain Sales Staff and Teller will use smart device like iPad Efficient Consultations on Skype/Google Voice Match Mismatch Entire World as Display Supply Chain Responsive Mismatch Match 25Source: HBR - What is the Right Supply Chain For Your Product, PSFK , Future of Retail
  26. 26. Post NBN1st Australia Post in 1809 at Circular QuayToday, 4,000 postal outlets, including 2,500 in rural. Maintain 10,000street posting boxes.Declines in letter offset by the growth in parcels, retail and business-to-business express delivery “When email was invented, Telstra gained and Australia Post lost. Anything that acts to shift economic activity from the physical to the digital would automatically benefit communications providers “– Lindsay TannerEmbraces Digital World, e-Services new biz. unit, focusing onopportunities such as secure, identity-verified, digitalcommunications, e-commerceParcel Delivery for Online Stores (DJ, Myers, Zara)Superannuation Centres 26 Source: The Age, The Australian, Auspost
  27. 27. Post NBN - Seminar or Lecture Melbourne, AUS California, USASource: The Future Apps of NBN, 2009 27
  28. 28. Post NBN - SoftwareTurning Products into Open PlatformsMoving from licensing model to Utility and Brokerage (using API’s)Commodity Software or Business Process will be enabled via Cloud 28 Source: Source: APIs and Open Platform –Federico Cargnelutti
  29. 29. E-Health - Building a Wired Health Care SystemToday Tomorrow Allied Health NGO Allied Health and NGO Private Sector and Diagnostic Diagnostic Sector Providers GP’s Professionals Professionals Personal Jurisdictions Health Profile Pharmacists Jurisdictions Online Informati Pharmacists Consumer on and GPs Customer Communi ties Clinicians Family and and Communities Family and Private Nurses Clinicians Communities and Nurses Providers Consumer Customer Clinician Customer Policy Maker CustomerObjective is to provide the right information to the right person at the right place and time to optimise healthcare outcomes 29 Source: Deloitte, National Health Strategy, The Way Forward, 2010
  30. 30. E-Health is InevitablePublic hospital doctors in Victoria to get iPads in 2011, Victorian Govt. 30 Source: Deloitte, National Health Strategy, The Way Forward, 2010, The Australian
  31. 31. E-HealthMulti Scale Bio Medical ImagingMedial Research CollaborationEducation 31 Source: The Future Apps of NBN, 2009
  32. 32. Utilities - Smart Grid From Supply Driven to Demand Driven: Market forces & convergence of more active customers has created the need to evolve the traditional energy value chain Towards an industry with multidirectional flows of information 32Source: IBM Smart Grid Framework, How Stuff Works , Smart Grid Blog
  33. 33. Post NBN - Fifth Domain WarfareAt speed of light, Global in nature, Preparation is less visibleStuxnet is a Windows -specific worm discovered in June 2010Function is to take control of industrial facilities. Searches forvery high speed electrical motors, controlled via SCADAsystems. These are used to spin gas centrifuges, which is oneway uranium can be enriched into fissionable material. 33 Source: Wikipedia, Symantec, The Economist
  34. 34. SummaryThe 21st century infrastructure project needed for a service economy like usMonopoly of Telstra in PSTN space is removed by Monopoly in Wholesale space (Fiber only)NBN has become a political battleTelstra & NBN – both need each other for their survivalLot of industries will be impacted and new services and business model will emerge 34
  35. 35. Thank youEnd of DocumentFor further information, please contact: Name: Vishal Title: Client Services Manager Address: Infosys Technologies Australia Pty Ltd Level 5, 818 Bourke St Melbourne VIC 3000 Australia LAN: (03) 9860 - 2429 Mobile: 0438 580 349 Email: 35