Telstra challenged by Australian NBN study

www.WirelessFederation.com/news: An implementation study has been released by the Australian government for its proposed National Broadband Network (NBN) recommending aggressive wholesale pricing to drive rapid fiber uptake. Demonstration of the feasibility of a national fiber rollout in competition with the incumbent, Telstra, has been reflected in the study even though the government has not responded formally.

National Broadband Network Company (NBN Co) was established by the Australian government in 2009 to build a wholesale-only FTTH network to cover 90% of the market. McKinsey was appointed by the government to prepare an implementation study for the project, which was released on May 6.

There are certain recommendations made in the study which includes extension of FTTP to 93% of premises and that the NBN Co launches two Ka-band satellites to deliver 12Mbps services to 3% of the remaining market. 12Mbps wireless technology will serve the intermediate 4% of the market with the operator to be selected by tender.

Only Layer 2 will offer the access services but Layer-3 services might also be considered to support services such as IPTV. Designing of the network will be done in a way to support future Layer-1 unbundling, but this is not recommended during the eight-year rollout.

A$42.8 billion ($38.3 billion) has been set as the cost of the entire network, of which A$26 billion is for fiber, a realistic figure in our opinion. Low double-play wholesale price point of $30 has also been recommended to compete with current wholesale DSL pricing. High take-up rates within the fiber footprint of 612% per annum are the real intentions behind the pricing.

A high take-up rate means that NBN Co is winning wholesale customers off the Telstra network. It has been implied that with the implementation of the study, the low wholesale price point will cause traffic to migrate off Telstra’s copper network, ultimately forcing Telstra to migrate also.