There’s good news and bad news for Australians waiting for the National Broadband Network in yesterday’s announcement about the project’s satellite services. For those on the outskirts of major cities the good news is more areas will get faster fibre and wireless connections while many rural users are going to find their satellite connections further limited. Rolling fibre out to the entire nation under the NBN was never going to be feasible and the broadband solution for most of the country’s land mass – although only 3% of the population – was going to be satellite internet. Overloading the satellites Unfortunately for the NBN, the wireless and satellite services proved to be way more popular than expected with projections of 600,000 regional homes, businesses and farms wanting a connection compared to the original estimates of 230,000. For the government the choice was to send up another satellite to cater for these needs or to extend the planned fibre and wireless networks. The latter option was chosen which means around 300,000 premises than originally planned will get wireless, rather than satellite connections and an additional 25,000 will get fibre access. Bad news for the regions For those in outer suburban areas an improved service is great news but for people in more remote areas NBN Co intends to manage demand by putting download caps on the satellite service. A stingy 20Gb per month will stunt the growth of startups and other businesses outside the wireless and fibre footprints. In its 2013 survey of the nation’s digital economy, the Australian Communications Media Authority found that fixed line internet users are downloading over 30Gb each month and that number grew 57% over the previous year. Clearly businesses in the satellite footprints are going to be disadvantaged compared to their city cousins and overseas competitors. For agricultural startups the limited speeds and data caps of satellite services is going to make it harder for these ventures to grow while based in rural locations. A magic pudding The cost of extending the fibre and wireless footprint to regional areas is estimated to be $1.5 billion. NBN Co’s management claim this is “within the envelope” of the $41 billion budget of the project. A magic pudding mentality was one of the hallmarks of NBN Co’s earlier management where Mike Quigley and his team always maintained that everything was under control as things were allowed for in the company’s Corporate Plan. The assurance that an additional $1.5 billion cost is allowed for in the current numbers is not encouraging; whether the current leadership is better at controlling costs, reducing delays and meeting expectations remains to be seen. The challenge facing the CEO Bill Morrow’s team in meeting existing timeframes shouldn’t be underestimated with the project stalled in many parts of the country, contractors at war with their subcontractors and customers complaining about problems in being connected in the areas where NBN Co has completed work. An uncertain future Adding to Morrow’s task is the uncertainty of the coalition’s multi-technology-model (MTM) where no one is quite sure exactly how many premises will be connected to fibre, copper or the Pay-TV cables. Until the scope of the project is defined, it’s going to be difficult to figure out what the ultimate costs and timings will be. That the take up rate of satellite was far greater than expected shows just how important broadband is to regional businesses, for Australia’s startup sector getting the NBN right is essential to being able to compete in the digital economy.
Social networking giant Twitter has filed papers with the US Securities and Exchanges Commission ahead of an IPO in which it seeks to raise $US1 billion. The company revealed that it had 218 million users as of June 30, compared to around 1.2 billion for Facebook and 240 million for LinkedIn. Twitter also revealed it lost $US69.3 million during the first half of 2013, compared to a $US49.1 million loss for the same time last year, but revenues grew to $US254 million from $US122 million. Turnbull names Switkowski as new NBN chairman Communications Minister Malcolm Turnbull has named former Telstra and Optus chief executive Ziggy Switkowski as the chairman of NBN Co. The German-born nuclear physicist replaces current NBN chairwoman Siobhan McKenna, while also temporarily replacing Mike Quigley as chief executive until a full-time replacement is appointed. “In appointing Dr Switkowski to the board as chairman, we're appointing one of the most experienced telecom executives in Australia ... someone who's been the CEO of not just Telstra but Optus as well, a very distinguished company director and chairman," Turnbull says. Retailers renew calls for GST threshold cut as online shopping figures are released The Australian Bureau of Statistics has released figures showing consumers spent more than $7.6 billion on online retailers on purchases below the $1000 GST threshold, prompting calls to remove the low-value threshold. Australian Retailers Association executive director Russell Zimmerman says the higher than expected sales point to an uneven playing field in the sector between local retailers and overseas-based online retailers. “The concern isn't that people are spending money online – either locally or overseas. The concern is that it's not a level-playing field,” Zimmerman says. “We believe that the firm of online [shopping] generally will grow, and as that figure grows, there will be a bigger loss of income to the states and territories if they don't do something about the low-value threshold.” Overnight The Dow Jones Industrial Average is down .9% to 14996.48. The Aussie dollar is at US93.96 cents.
The National Broadband Network has finally confirmed what everybody already knew – the infrastructure project is three months behind schedule. The confirmation of a delay comes after weeks of reports construction partners were falling behind, with industry pundits accusing NBN Co executives of tinkering with figures to make it seem the project was still on schedule. NBN Co also announced the appointment of a new chair yesterday, exacerbating a perception of mismanagement. Chris Coughlan, an independent telecommunications analyst, told SmartCompany this morning the delay is “probably a glitch” in the long-term planning process of the giant infrastructure project, but said “it’s come at a bad time”. “In essence the bad PR has been orchestrated by the way the government has set themselves up,” he said. In a statement, NBN Co chief executive Mike Quigley said the delay was due to construction partners not hiring “boots on the ground” fast enough. “We work closely with our suppliers across all parts of our network to build and monitor their progress to ensure each individual element is ready within the required timeframe,” said Quigley. “In the case of the volume fibre rollout, NBN Co’s public projections have been underpinned by commitments from our four construction contractors that they would meet the June 30 target.” The June 2013 Corporate Plan target of passing 341,000 premises is now expected to be achieved after a further three months. The network will only pass between 190,000 and 22,000 premises overall. Quigley also said the NBN Co will attempt to get the schedule back on track over time through some adjustments to current construction options. Shadow communications minister Malcolm Turnbull has said the delay is an attempt to avoid scrutiny, with the NBN Co announcing the problems during the Labor leadership spill. NBN has denied this is the case. Coughlan says the delay isn’t necessarily a deal-breaker for the project, but does say it comes at a bad time. “The project is gearing up now and you can expect these types of blips. With an election coming, it’s really bad timing for this sort of publicity.” The NBN Co announced the replacement of its current chair Harrison Young with former McKinsey partner and Ten director Siobhan McKenna. McKenna is the managing partner of Lachlan Murdoch’s investment group, Illyria. The group owns a stake in Ten Network and DMG Radio Australia. She has sat on the NBN Co board for four years. This story first appeared on SmartCompany.
The Federal Government's control over the National Broadband Network has been questioned after it released an update for its corporate report yesterday, confirming the project will be delayed by six months and cost an extra $1.4 billion.