Fibre to the home: and government to do it

From the Department of Communications website:

The Government has announced it will establish a new company that will invest up to $43 billion over eight years to build and operate a National Broadband Network delivering superfast broadband to Australian homes and workplaces.

To turn its vision into action the Government will immediately:

• establish a company to build and operate the network and make an initial investment of $4.7 billion in the network
• commence an implementation study to determine the company’s operating arrangements, detailed network design and ways to attract private sector investment
• fast-track negotiations with the Tasmanian Government, as suggested by the Panel of Experts, to build upon its National Broadband Network proposal to begin the rollout a FTTP network and next generation wireless services in Tasmania as early as July
• implement measures to address backhaul ‘black spots’ through the timely rollout of fibre optic transmission links connecting cities, major regional centres and rural towns – delivering improvements to telecommunication services in the short term
• progress legislative changes that will govern the national broadband network company and facilitate the rollout of FTTP networks, including requiring use of fibre optic technology in future greenfield developments, and
• commence a consultative process on necessary changes to the existing telecommunications regulatory regime.

The Government terminated the Request for Proposals (RFP) process on 7 April 2009, on the basis of advice from the independent Panel of Experts that none of the national proposals offered value for money. The Panel noted the rapid deterioration of the global economy had a significant impact on the process. Refer to the extract from the evaluation report for more information.

And this from Communications Day:

Government abandons RFP, to build own $43b FTTP network

The Federal Government will build a $43b fibre network extending fibre to 90% of Australian premises after deciding to abandon the NBN RFP.

PM Kevin Rudd said none of the bids remaining in the process were acceptable and as a result the government had decided to “bite the bullet” and start its own company to build the network. It will support speeds of up to 100Mbps. The remaining 10% of the country will be serviced by 12Mbps wireless and satellite services.

The project will be run by a government-controlled company with private sector involvement of up to 49%. But the government intends to sell down its holdings after 5 years.

All companies will be invited to join the process, including, potentially, Telstra. The network will be funded from Aussie Infrastructure Bonds after the government concluded the market could not finance a venture of this scale, but the final extent of government involvement has yet to be “scoped out”.

Rudd said the network would be wholesale-only and open access. It will be accompanied by a full review of the regulatory system.

There will be an implementation study conducted over the next eight to nine months. Rudd said the network would support 25,000 jobs annually during the life of the project, expected to take seven to eight years. Curiously, despite the $43b cost, Rudd estimated it would add $37b to the economy.

Interestingly, it appears that the government has decided to accept the Tasmania Government bid for that state and will proceed with negotiations to begin a separate rollout there. A build in Tasmania will commence mid-year.

Rudd defended the government’s involvement saying “we’re not Robinson Crusoe”, alluding to similar public-private FTTH builds elsewhere.

He said “it should give a return over time to the Australian people.”

More details in a special edition of CommsDay later today.