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Australia - National Broadband Network

Attention: There is an updated edition available for this report.

This annual report offers a wealth of information on the trends and developments taking place in the e-government, e-health and e-education sectors. The report analyses the issues surrounding the growth of such services and includes global and regional information. Comprehensive information on the exciting developments taking place on a regional level is also provided. Subjects covered include:

  • NBN Co and infrastructure;
  • Trans-sector thinking, approach and projects;
  • Deployment strategies;
  • Competition and regulations;
  • E-government market overview, analysis and statistics;
  • E-health market overview, analysis and statistics;
  • E-education market overview, analysis and statistics.Researcher:- Paul BuddeCurrent publication date:- November 2010 (2nd Edition)Next publication date:- November 2011

NBN - Opening up large new investment opportunitiesThe Australian government’s decision to launch a $43 billion national fibre-to-the-home broadband network is an unmistakable indication that broadband has been acknowledged as essential infrastructure. It fulfils a national purpose as its trans-sector multiplier effect delivers massive social and economic benefits in healthcare, education, energy and the environment.

A digital economy requires an open broadband infrastructure, and for that infrastructure to work it is essential that it be built by a national utility (in Australia, NBN Co). There are certainly questions concerning the business model and the investment plan; however widespread support exists for the visionary plan.

The most important ingredient in the success of the Australian National Broadband Network (NBN) will be the infrastructure company running the network, NBN Co. It has to make the critical architecture and design decisions that will form the basis of the new infrastructure for at least the next 25 years. It will be essential for the network to facilitate the vision laid down by the government, which includes multiple use of the network by other sectors such as healthcare, education, energy, etc.

At the same time the company will need to ensure that it remains an infrastructure company and does not become another telco.

This report also discusses issues around technologies such as network operation centres (NOC), the optical network terminal (ONT) and IPTV versus RF video. From vision to implementationAfter the vision comes the actual design and rollout of the network.

Australia was the first country to get the national purpose vision right. The USA soon followed and is now showing real leadership as well. The Netherlands and New Zealand are also on the right track. The European Union, OECD and United Nations have all given their support to this new concept. Economic and trans-sector innovations are now key items on the political agenda of many countries.

However, when it comes to deployment there is no silver bullet and each individual situation generates its own set of unique implementation models. The report discusses a new approach, which applies across infrastructure projects and looks at the potential synergies between the building of roads, sewerage systems and water and gas pipe networks, as well as telecoms and electricity networks.

New social and economic policies and strategies need to be taken into account in the design and architecture of the infrastructure. Pragmatic solutions must be developed to maximise the use of existing infrastructure and other resources. Under-served areas need to receive priority and local communities and local government can play a key role in this. Wireless broadband will play a major role as well.

These early projects could also be an ideal testing ground for trans-sector applications, and this report explores these at a high strategic level. Transition period and regulatory reformsThe NBN will certainly change the game. While there will be a transition period where some of the old activities will persist there will be an increasing move towards the new environment. The players will begin to realign themselves and, in preparation for the new world, many will start changing their business plans well before that time.

Nevertheless, while accepting the inevitability of a transitional stage, the government has produced a far-reaching regulatory regime change publication that leaves no doubt that the old days (when the incumbent was able to game-play the regime, creating endless delays and stifling competition) have gone forever. In the end the outcome of the new framework will be aligned with the goals of the NBN, and negotiations and discussions aimed at shaping this new environment are already taking place.

Australia will be the first country in the world in which the entire industry will adopt a new plan for the future. In the past strategies were based on ad hoc decisions and there was little room for long-term planning. The market survived on the crumbs that fell from the Telstra table, and on regulatory relief, which often took many years to eventuate and was often too late to help a starving competitive environment.

Industry transformation for Telstra and the other playersIn the past uncertainty has been a major obstacle. All decisions depended on Telstra’s response.Those who developed their own independent plans quickly discovered that Telstra’s reach was long and deep. Examples of this are TransACT in Canberra and the Unwired service. Even larger companies like Optus and AAPT (Telecom New Zealand) struggled to set their own course.

The single most important element of the NBN is that it will provide certainty for the industry about future directions. There will be problems, and the outcome will not be perfect, but for the first time individual companies will be far more in charge of their own destiny.

Soon after the NBN was announced in April 2009 Telstra realised that change was inevitable. It reacted swiftly. A new management team was appointed, led by the new CEO, David Thodey. Telstra immediately declared its support for the NBN and its willingness to work with the government. The company also put its weight behind the trans-sector concept, which will be the conduit to new revenue. Negotiations have been tough but a Heads of Agreement was signed in June 2010 and support for the government’s regulatory reforms followed in October that year.

New revenue streams from new sectorsInitiatives are already being undertaken in the areas of smart grids, education and healthcare. Further action is expected to ensure that the business that will be generated from these sectors can be taken into account within the NBN business plan. This report provides an overview of the key sectors, plus a summary of the first trans-sector projects initiated by the government.

For more than a decade the traditional media has been on notice in respect of the changes they will be facing with developments in the digital media market. So far they have failed to take decisive action - partly due to their fear of cannibalisation, and partly because their business models do not cater for swift business action. This has brought about a decline in their revenues, but, far more importantly, they have failed to seize a share of the new market, which is now dominated by newcomers such as Google, YouTube and Facebook.

The NBN is the next stage. Here again the media have largely been absent from this debate, but the NBN will create changes, with new revenue options. The traditional media players can take a leadership role, looking at the trans-sector opportunities the NBN has on offer - or they can simply copy their outdated models onto the NBN, perhaps by using the wholesale services of a telco. However, for the next decade, their attention will mainly be on Digital TV rather than on the NBN.

E-health may become an area in which key killer applications emerge - applications that utilise truly high-speed broadband networks. By 2020 this may perhaps account for as much as 25% of the NBN’s income. All of this will assist the industry to double its size to around $80 billion by 2020.

New applicationsThe Australian government is leading the way in strategic trans-sector thinking, linking e-health developments to the NBN. Early diagnosis and after-treatment patient monitoring are two areas where significant synergies may be found, using applications provided to users at home.

As the financing of the Australian public health systems becomes increasingly costly an opportunity exists to lower these costs through more effective use of web services for healthcare consumers. With widely available and cost-effective high-speed broadband infrastructure e-health will be in a position to enable all customers to benefit from advances in medical technology and medical services. Over the next five years the use of IT and telecommunications technology within educational environments will also increase dramatically, as high-speed fibre-based broadband becomes widely available in Australia. Simultaneously, the capability of Internet services in relation to e-education is set to increase enormously over the next decade as well. To a large extend this trend will be driven by schools, universities and their educational staff.

With its large landmass and relatively small population Australia is an ideal market for remote education services. As such Australia is home to many successful e-education service providers, as well as being a relatively important market for e-education services.

The Australian government already offers its citizens relatively sophisticated e-government services and, as with education, the establishment of a fibre-based broadband network may see the government improve and broaden the range of web services for which it is responsible.

Australia, therefore, is a fascinating and relatively advanced market for both e-education and e-government services. This report discusses related telecommunications infrastructure developments as well as trends and innovation related to the e-education and e-government services. Many exciting developments will take place in 2011 in the area of smart grids. These developments will stimulate others to move on from demonstration projects and to progress from smart meter rollouts to smart grids.

Global involvementEvents that started in Australia in 2005 have grown into an international groundswell, with BuddeComm involved as a leading consultant with the governments in USA, UK, Netherlands, Australia and New Zealand, as well as with the United Nations (ITU/UNESCO).

The key to the concept is to release untapped social and economic benefits by using broadband as an affordable utility infrastructure to deliver a range of trans-sector services (healthcare, education, smart grids, etc). The industry has been working on the applications for over a decade but only with strong government leadership can these benefits be realised.

Broadband services uptake scenario forecasts of household penetration - 2015 - 2020

Broadband service charge p/m | Uptake 2015 | Uptake 2020 |
$25 | 70% | Approximately 100% |
$50 | 50% | 80% |
$100 | 10% | 30% |

(Source: BuddeComm estimates)
Note: This is different from the rollout uptake as the government is committed to 100% penetration

Data in this report is the latest available at the time of preparation and may not include the current year.

1. NBN Moving into 2011
1.1 NBN Co is building the business model
1.1.1 An outsider’s view of the National Broadband Network (NBN)
1.1.2 Financial picture will be a pleasant surprise
1.1.3 Praise for NBN architecture and design
1.1.4 Be prepared - and expect the unexpected
1.2 NBN rollouts need to include trans-sector projects
1.2.1 The race to the next election
1.2.2 Rollouts will need to be complemented by trans-sector projects
1.2.3 Upscalable pilots will drive new business investment
1.2.4 Regional projects can be the first cabs off the rank
1.3 NBN spotlight now moving towards Telstra
1.3.1 Clearing the way forward
1.3.2 Telstra needs to show industry leadership
1.3.3 Telstra fully supports trans-sector concept
1.4 More NBN infrastructure deals
1.5 Will Australia cash in on international interest?
1.5.1 Global broadband focus is on Australia
1.5.2 Overseas companies are already moving in
1.5.3 Australian businesses should ready themselves for export
1.5.4 Australia’s diplomatic service and Austrade need to lift their game
2. Overview and Analysis of the NBN
2.1 Overview of the National Broadband Network (NBN) plan
2.2 Implementation issues
2.2.1 Fundamental change to the economy
2.2.2 People issues
2.2.3 Business modelling - the key to success of the NBN
2.2.4 Recommendations of NBN Implementation Study
2.3 Socio-economic benefits
2.4 Regional broadband
2.4.1 New elections
2.4.2 Regional politicians lacking action?
2.5 Where is the user in all of this?
2.6 Analysis of developments during 2009 and 2010
2.6.1 Why shouldn’t we build the NBN? (late 2010)
2.6.2 Trans-sector commitment to NBN is one step closer (mid-2010)
2.6.3 Coordination of the various NBN segments (mid-2010)
2.6.4 Research and development (R&D) missing out on NBN benefits (early 2010)
2.6.5 NBN passed through Parliament (late 2009)
2.6.6 Business becoming in charge of the NBN (mid-2009)
2.6.7 NBN is moving in the right direction (mid-2009)
2.7 Opposition broadband policies
2.7.1 NBN turnaround - analysis late 2010
2.7.2 First glimpse of policies
2.7.3 Analysis of the Australian Opposition’s broadband policies
3. Market Forecasts - 2015; 2020
3.1 Overview
3.2 Total overhaul of the industry
3.3 Fixed infrastructure market
3.4 Wholesale market
3.5 The retail market
3.6 Penetration forecasts
3.6.1 Rollout penetration
3.6.2 Broadband access penetration
3.7 The mobile market
3.8 The trans-sector market
3.8.1 Forecasts - 2015; 2020
3.9 The digital media market
3.10 Business models and mergers and acquisitions (M&A)
3.10.1 Fixed market scenarios
3.10.2 Mobile market scenarios
4. NBN Co and Infrastructure
4.1 National Broadband Network Corporation (NBN Co)
4.1.1 An infrastructure company
4.1.2 The role of NBN Co
4.1.3 Service Oriented Architecture
4.1.4 Governance and management of the NBN Co
4.1.5 Testing network design in first release sites
4.1.6 Network Operations Centre for NBN
4.1.7 NBN Co announce contractors for first build sites
4.2 Open network = innovation and affordability
4.3 Infrastructure considerations
4.3.1 Collaborative services network concept
4.3.2 Smart Grids and the NBN
4.4 The network plan
4.4.1 Overall design and architecture
4.4.2 The backhaul network
4.4.3 Points of Interconnect architecture
4.5 External analysis of the Australian FttH architecture
4.6 Fibre Deployment Bill
4.7 The infrastructure
4.7.1 Basic infrastructure
4.7.2 The copper network
4.7.3 FttH infrastructure
4.7.4 Wireless infrastructure
4.8 Technology issues
4.8.1 The Optical Network Terminal (ONT)
4.8.2 IPTV versus IPTV+RF
5. Deployment Strategies
5.1 Introduction
5.2 Wholesale
5.2.1 Robust regime based on previous experiences
5.2.2 What about existing FttH users?
5.2.3 NBN pricing infrastructure not telco-based
5.2.4 NBN penetration forecasts
5.3 Rolling out the NBN
5.4 Telstra to trial copper-fibre transfer
5.5 Regionalised rollouts
5.6 Wireless broadband for rapid deployment
5.7 Other quick-win areas
5.8 Deployment requires an intelligent approach towards measurement
5.9 Massive increase in efficiency, productivity and customer satisfaction
5.10 Privacy is paramount
6. Competition and Regulations
6.1 Structural separation - commonsense has prevailed
6.2 OECD gives Australia’s telecoms policy the thumbs up
6.3 Regulatory issues
6.3.1 Background
6.3.2 ACCC’s involvement in the NBN
6.4 Administrative and regulatory support
6.5 Regulations - critical considerations
6.5.1 Learning from other models
6.5.2 Reform delusions
6.5.3 USO Co
6.6 Regulatory telco reforms
6.6.1 Integration
6.6.2 Competition models and opportunities
6.6.3 Retail telcos modelled on media marketing
6.6.4 Niche markets
6.6.5 The mobile industry
7. Industry at Crossroads
7.1 NBN Analysis
7.1.1 Full steam ahead after the 2010 elections
7.1.2 More NBN infrastructure deals
7.2 NBN opportunities for the main players
7.2.1 Telstra
7.2.2 Optus
7.2.3 AAPT/Telecom New Zealand
7.2.4 Macquarie Telecom
7.2.5 Primus Telecom
7.2.6 Internode
7.2.7 iiNet
7.2.8 Amcom
7.2.9 TransACT
7.2.10 TPG
7.2.11 M2
7.2.12 Austar
7.2.13 Crown Castle
7.3 The submarine cable conundrum
8. Telstra
8.1 Telstra and the NBN after the election
8.1.1 Clearing the way forward
8.1.2 Telstra needs to show industry leadership
8.1.3 The company fully supports the trans-sector concept
8.2 Telstra and government agree on NBN future
8.2.1 Heads of Agreement (HoA)
8.2.2 Analysis of the HoA
8.2.3 History of the deal
8.3 The new Telstra?
8.3.1 Transforming the company
8.3.2 BuddeComm and Telstra
9. Early Projects
9.1 Co-development of fibre and the digital economy
9.2 Examples of FttH applications
9.2.1 E-Health
9.2.2 E-Education
9.2.3 Metering and remote sensing
9.2.4 Remote diagnostics
9.3 The early NBN projects - rollouts
9.3.1 Introduction
9.3.2 Tasmania starts first phase of NBN rollout
9.3.3 Backbone rollouts in regional Australia
9.3.4 First release NBN mainland rollout sites
9.3.5 Second release rollout sites
9.4 Brisbane to build its own NBN
9.5 The early NBN projects - trans-sector services
9.5.1 Project for social services
9.5.2 Adelaide blackspots receiving high-speed broadband
9.6 Business applications
10. Municipal Networks
10.1 Trans-sector thinking and municipal broadband
10.1.1 What is trans-sector thinking?
10.2 Local government
10.3 Municipal broadband
10.3.1 Social and economic benefits
10.3.2 Why should local government be involved
10.3.3 High-speed communities
10.4 Cities are taking charge
10.4.1 Introduction
10.4.2 Global lessons
10.5 How to get started
10.5.1 The local council model
10.5.2 Framework for local government policies
10.5.3 Steering committees
10.5.4 Proactive local governments are essential
10.5.5 Broadband rollouts
10.6 How to move forward
10.6.1 Quality and affordability
10.6.2 Australian market has been on hold for five years
10.6.3 Industry is ready to deliver applications
10.6.4 Case studies from Wagga Wagga and Port Macquarie
10.7 A city broadband agenda
10.8 Broadband education
10.9 City marketing
10.9.1 The concept of Telematica
10.9.2 Three strategic elements of Telematica
10.10 Examples of tele-cities
11. Trans-sector Model
11.1 Trans-sector awareness update 2010
11.1.1 2010 election put focus on trans-sector
11.1.2 Sectors are starting to understand the benefits
11.1.3 Commitment from Prime Ministers
11.1.4 The NBN can pay for itself
11.2 E-Services in the context of national broadband
11.3 Introduction to trans-sector thinking
11.3.1 Fragmented society requires cohesive leadership
11.3.2 Problems in most silos
11.3.3 National welfare depends on new ways of thinking
11.4 A matter of leadership
11.4.1 Obama’s leadership - a catalyst for change
11.4.2 Digital Economy Industry Work Group (DEIWG)
11.4.3 Work in progress: political leadership
11.4.4 Trans-sector thinking at highest levels in Australia
11.4.5 Towards trans-sector government
11.5 Barriers to broadband adoption
11.6 We lack the structures to implement trans-sector visions
11.7 Multiplier effect for the NBN
11.8 Trans-sector regulation
11.8.1 Regulations need to be rewritten
11.8.2 FttH will change telecom models
11.8.3 Utilities-based regulation
11.8.4 Taking away blockages
12. Trans-sector Projects
12.1 The key sectors
12.1.1 Background information
12.1.2 Telecommunications
12.1.3 Media
12.1.4 Government communication and information
12.1.5 Healthcare
12.1.6 E-education and E-science
12.1.7 Smart grids
12.1.8 Business
12.2 Major trans-sector NBN projects
12.2.1 E-education - Australia’s first trans-sector initiative
12.2.2 Trans-sector project: smart grid/smart city
12.2.3 Trans-sector project for social services
12.2.4 Intelligent infrastructure
12.2.5 Trans-sector project E-health
12.2.6 Broadband trial of trans-sector applications
12.2.7 Tasmania’s innovation strategy for NBN
12.3 Smart communities and smart buildings
12.3.1 Connected communities
12.3.2 Smart communities - where to start?
12.4 Cloud computing
12.4.1 Introduction to cloud computing
12.4.2 Cloud computing generates huge interest
12.4.3 Cloud computing requires business strategies
12.4.4 Cloud computing in the trans-sector context
12.4.5 Optus launches cloud computing for businesses
12.4.6 Telstra alliance on cloud computing services
12.4.7 Clouds not yet on business agendas
13. Changing the Media Model
13.1 Open wholesale network key to change
13.2 Industry wants wrong piece of the NBN action
13.3 Industry needs to start changing
13.4 New business models
13.5 Breaking out of the silo
13.6 Trans-sector thinking
13.7 Media companies well-positioned to operate trans-sectorally
13.8 Risk will be unavoidable - not taking it will be deadly
14. E-Health
14.1 E-health in the context of BuddeComm research
14.2 Introduction to e-health
14.2.1 Definitions, overview, challenges
14.2.2 Healthcare challenges
14.2.3 E-health: start with the professionals
14.3 E-health and the NBN
14.3.1 The NBN and healthcare - depending on each other
14.3.2 Broadband supported ICT key to e-health
14.3.3 Strategic trans-sector thinking
14.3.4 Broadband-based healthcare solutions
14.3.5 Large financial benefits
14.3.6 The economic multiplier effect of infrastructure
14.3.7 Market led by an enabling government
14.3.8 From pilots and projects to national implementation
14.3.9 Digital economy benefits
14.4 The national health reform
14.4.1 Introduction
14.4.2 E-health high on the agenda
14.4.3 E-health identifiers
14.5 Optimising e-health
14.5.1 Critical e-health assessment from Booz & Company
14.5.2 Key conclusions
14.6 E-health - key to the success of NBN - analysis
14.6.1 Support collaborative services concept
14.6.2 Patients will have a central role
14.6.3 Intelligent personalised e-health
14.6.4 Accountability and transparency
14.6.5 NBN key to national e-health
14.7 Public healthcare projects and pilots
14.7.1 Government’s e-health - NBN policies
14.7.2 Aged Care offers e-health solution
14.7.3 E-health Neuroscience projects
14.7.4 Broadband enabling better chronic disease management
14.7.5 HealthInsite
14.7.6 Australian Health Information Council
14.7.7 Clever Networks programs
14.7.8 Digital Regions Initiative
14.7.9 Other public initiatives
14.8 R&D projects and initiatives
14.8.1 Melbourne University
14.8.2 NICTA
14.9 Private initiatives
14.9.1 E-Health in the private hospital sector
14.9.2 iSOFT
14.9.3 E-Prescriptions - ArgusConnect, PSLnet and Medseed
14.9.4 Aged care and comprehensive medical assessments - HealthCube
14.9.5 E-Health trial in Queensland - Data#3
14.9.6 Fibre for greenfield projects - Access Health
14.9.7 South Australian Internet health record system - emerging systems
14.9.8 Remote diagnosis - Kestrel Computing
14.9.9 Video consults - Cisco
14.9.10 Home care monitoring
14.9.11 Patient e-health monitoring service
14.9.12 Electronic health records - Smart Health Solutions
14.9.13 Telstra’s e-health initiatives
14.9.14 Mobile e-health for aged carers
15. E-Education and E-Government
15.1 Education and the need for NBN
15.2 New vision for e-education
15.2.1 Australia’s first trans-sector initiative
15.2.2 A standardised e-education system
15.2.3 Risk of failure - people, not technology
15.2.4 Interactive and personalised education system
15.2.5 Expanding the teaching profession
15.2.6 From medieval schools to a digital society
15.2.7 It is all about economic benefits
15.3 Funding for e-learning - 2011
15.4 NSW schools get fast broadband
15.5 Remote laptops from OLPC
15.6 E-education infrastructure initiatives
15.6.1 National government policy - FttH to the schools
15.6.2 A national broadband network for Catholic schools
15.7 E-education content in Australia
15.7.1 Australia’s largest online library
15.7.2 E-learning from ACS
15.7.3 Media literacy
15.8 E-government
15.8.1 Outline
15.8.2 Survey on e-government services usage
15.8.3 Conclusions
15.8.4 Government deploys national TelePresence system
16. Smart Grid
16.1 Value of Australian smart grid market
16.2 Key trends moving into 2011
16.2.1 Price of electricity to double
16.2.2 Smart grid: $5 billion in annual benefits
16.2.3 Smart grids and CO2 emission savings
16.3 New Government initiatives
16.3.1 Prime Minister’s Task Group on Energy Efficiency
16.3.2 Smart grid to deliver renewable energy
16.3.3 The Prime Minister on smart grids
16.4 Policy Analysis
16.4.1 Can we develop a holistic policy?
16.4.2 Smart grid concept gathering momentum
16.4.3 Smart grids require policy changes
16.5 Regulatory framework
16.5.1 Confusion regarding regulations
16.5.2 Action needed
16.5.3 Facilitating smart grids
16.5.4 International benchmarks
16.5.5 New spectrum proposal boost for smart grids
16.6 Industry still searching for direction
16.6.1 Meters in Victoria not so smart
16.6.2 Electricity industry still not sure about smart grid
16.7 Industry Transformation
16.7.1 Utilities need to be modernised
16.7.2 Technology solutions need to be followed through
16.7.3 The need for a trans-sector approach
16.7.4 Energy saving not in the interest of the owners of the retailers
16.8 ICT solutions for global warming and energy saving
17. Glossary of Abbreviations
Table 1 - Initial take up rate NBN - late 2010
Table 2 - Household penetration broadband uptake scenario forecasts - 2015 - 2020
Table 3 - NBN uptake scenario forecasts 2015 - 2020 (household penetration)
Chart 1 - Market share of NBN trans-sector market - 2020
Chart 2 - NBN services revenue estimates by market share - 2015
Chart 3 - NBN services revenue estimates by market share - 2020
Exhibit 1 - Economic benefits of broadband - overview of surveys
Exhibit 2 - Key applications of a digital economy
Exhibit 3 - Trans-sector benefits
Exhibit 4 - Case study - The social and economic benefits of broadband
Exhibit 5 - Key broadbanding steps
Exhibit 6 - Some application bit rates
Exhibit 7 - Economic effects of trans-sector broadband
Exhibit 8 - Smart Homes
Exhibit 9 - Definition: cloud computing
Exhibit 10 - Amazon Web Services
Exhibit 11 - Costs of e-health plan
Exhibit 12 - Funding for e-records

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