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Regional Connectivity: how new
technologies on the near horizon are set to completely
re-shape how we approach the digital divide
CommsDay Summit
2020
Michael
Ackland's presentation 27 October 2020
Today I'd like to speak on regional
connectivity, and how new technologies on the near
horizon are set to completely re-shape how we approach
the digital divide.
I'll address
this topic from three key points.
First, over the past decade
regional Australia has become more connected than ever
before — but the digital divide continues to deepen as
metropolitan connectivity improves even more.
Second, I'll discuss how the
Australian approach has created technology winners and
losers — and a tangle of telecoms policies in regional
Australia.
And finally, I want to talk about
how new technologies are set to solve this regional
telecoms tangle — and how fibre connectivity is
fundamental to their success.
So I'll start off by reflecting on
how far we've come in past decade when it comes to
regional connectivity, and how far we still have to go.
The last time I had
the pleasure of presenting to a CommsDay audience was 10
years ago. Since then I have been a part of programs
rolling out over 20,000km of long-distance optic fibre
cable, on land and under the sea. We at Vocus have an
intimate understanding of the challenges, risks,
business and most importantly customer needs in regional
and remote locations.
Looking back on all this technology
deployment, it's hard to imagine that it was less than
ten years ago that the Government of the day signed a
fresh contract with Telstra to continue to deliver the
Universal Service Obligation, as part of its Definitive
Agreements with NBN C0 12
The USO arrangements
would ultimately be worth around $2 billion 3
, and ensure that all Australians would "have reasonable
access to a standard telephone service" — meaning voice
telephony — which would almost always be delivered over
a Telstra copper line.
The contract contained no
obligation to provide broadband services — these would
be delivered by NBN as part of its fixed wireless and
satellite network as part of the national rollout.
And I say that it's
hard to imagine because here we are, less than ten years
later, and regional telecommunications has progressed
considerably in that time — even if the USO contract
hasn't. Today, close to 620,000 premises are able to
order a service on NBN's Fixed Wireless network, and
more than 330,000 premises have connected.
Over 430,000 premises can connect
to NBN's Sky Muster Satellites, and more than 100,000
premises have an active connection.
In that same period, five funding
rounds of the Mobile Black Spot Program have funded more
than 1,200 new mobile base stations — with more than 800
of them now constructed and delivering mobile voice and
data services in regional areas today.
[1]
So with these all
advances in regional connectivity, there's a certain
irony that the 'digital divide' between cities and the
country is getting deeper. While people living in
regional Australia undoubtedly have better connectivity
today than they did a decade ago, people living in
cities have seen far greater advances in the broadband
speeds available to them, as well as a strong
competitive environment which provides more options than
ever before.
NBN's recently
announced fibre to the premise upgrade plan is a boon
for 2 million homes in metropolitan areas and suburbs.
Combined with upgrades to the HFC network and NBN's
existing FTTP and fibre to the kerb footprints,
three-quarters of the fixed-line footprint will have
access to gigabit speeds by 2023
[2].
It's something that regional users
on fixed wireless and satellite can only dream of.
And this is an important point
given the ongoing impact of COVID on the economy.
COVID has made Australians more
reliant on broadband connectivity than ever before, and
NBN should be commended for working constructively with
industry to ensure there was sufficient capacity to keep
Australia connected throughout the pandemic.
Connectivity has proven to be a
critical service during COVID as Australians have
shifted to working from home, schooling from home, and
accessing streaming entertainment from home. But people
in regional areas remain at a disadvantage to their
metro counterparts, despite the fact that their
connectivity today is better than ever before.
And this brings me to my second
point — Australia's approach has created technology
winners and losers — and resulted in a tangle of telco
policies in regional Australia.
With the recent announcement of
NBN's fibre to the premise upgrade program, we can once
again debate the merits of a Government-subsidised
national network operator "picking winners" when it
comes to technology choices.
The announcement of the FTTP
upgrade to an additional 2 million premises came within
a week of Telstra announcing its 2,000 th 5G
site, with its network said to reach more than 40% of
the Australian population
[3] .
Days later Optus announced that its
own 5G network covered some 650,000 premises, providing
average download speeds above 200Mbps.
[4]
Analyst firm Venture
Insights has predicted that Australian mobile operators
could attract as many as 1.2 million 5G fixed wireless
subscribers by the end of FY 24, expecting them to focus
on customers in areas where NBN Co has deployed FTTN —
but who are lighter data users.[5]
As a fixed-line operator of course
NBN would ultimately seek to deploy a FTTP network as
its 'technology winner'. But when the
Government-subsidised national network owner picks a
winner, that inevitably results in losers.
What does it mean for these
multi-billion-dollar 5G upgrades when NBN is also
rolling out its own multi-billion-dollar FTTP upgrade,
and these rollouts will largely cover the same
geographic areas?
The business cases for these 5G
investments were signed-off long before NBN's upgrade
plan was announced. Billions of dollars were invested in
spectrum, contracts were signed with equipment vendors,
rollout plans put in place.
As a result, over the
next three years we're likely to see the majority of
metro and suburban areas have access to gigabit NBN
speeds as well as two or even three competitive 5G
networks offering speeds in the hundreds of megabits per
second.
So while there's
technology winners and losers, there are also geographic
winners and losers. People living in regional Australia
will continue to have access to NBN fixed wireless and
satellite, as they do today. If they're lucky, they
might also have access to 4G mobile broadband, and in
some fortunate cases they may even have access to 5G if
the rollouts have progressed beyond lucrative metro
markets.
But the digital divide will be
wider than ever.
And unless there's a
change in direction, regional areas will continue to be
served by a piecemeal approach which has created a
tangle of telecoms policies - all broadly trying to
solve the same problem.
We'll continue to have the USO,
which sees Telstra paid around $250 million a year to
maintain the
Standard Telephone Service in
regional Australia. This is partially a direct
Government payment of $100 million a year, and partially
via the Telecoms Industry Levy or 'TIL' which collects
around $250 million a year for a range of public
interest telecoms services including the USO.
Telstra pays the lion's share of
the TIL — more than $150 million — effectivity paying
itself to deliver the USO. But NBN contributed more than
$11 million to the TIL last year — and as NBN's revenues
continue to grow in coming years, so will its share of
the T IL.
This means NBN will be paying
Telstra tens of millions of dollars a year to keep its
copper network alive in the same places NBN operates its
own Fixed Wireless and Satellite networks.
At the same time, NBN's Fixed
Wireless and Satellite networks will be subsidised by
commercial operators via the Regional Broadband Scheme,
or RBS. The RBS is expected to raise over $741 million
in its first year of operation, to offset losses of a
staggering $12.9b for the period between 2009 to 2040,
with the majority of the RBS paid by NBN to itself, and
industry picking up the tab for around 5% of the total
annual cost.
As a result, Telstra pays most of
the TIL to itself and NBN will pay most of the RBS to
itself — and Telstra and NBN are also increasingly
paying each other to operate duplicative networks.
Combined, the USO and the RBS will
raise around $1 billion annually to subsidise networks
serving the same users in the same areas of regional
Australia.
On top of this, we've
got the Mobile Black Spot Program which subsidises
mobile network coverage in many of the same areas that
are already subsidised by the USO and RBS, and we've got
the Regional Connectivity Program which will subsidise
new local telecoms infrastructure in areas which already
have NBN Fixed Wireless or Satellite.
Additionally, we have various
State-Government programs like NSW Gig State, Victoria's
own mobile coverage program, and the WA grain belt fixed
wireless program.
To be clear, I'm not saying this as
a criticism — these programs have delivered tangible
benefits to many regional communities, and the Regional
Connectivity Program will do the same. People living and
working in regional Australia deserve all this and more.
What I am saying is that these
various subsidy programs have created a telecoms tangle
in regional areas, and in many cases, they overlap and
overbuild one another.
So we have situation
where metropolitan residents already have access to
superior broadband technologies enjoying
multi-billion-dollar upgrades, versus regional residents
who have access to fixed wireless, satellite and mobile
networks which will forever be dependent on Government
subsidy programs.
Unless, of course, a
technological breakthrough came along which completely
changed the game. And this brings me to my third point:
new technologies on the near horizon can untie this
telecoms tangle — and all of them will be dependent on
more fibre in regional Australia.
There's a famous quote by science
fiction writer and futurist Arthur C Clarke that says:
"Every revolutionary idea seems to evoke three stages of
reaction... (1) It's completely impossible. (2) It's
possible, but it's not worth doing. (3) I said it was a
good idea all along."
This quote came to my mind as I was
considering the new generation of telecommunications
technology is being rolled out 'literally' around the
world — Low Earth Orbit Satellites.
This technology has
moved from the "It's completely impossible" stage
(thanks to OneWeb), to the "It's possible, but it's not
worth doing" stage thanks to the work of SpaceX. Falcon
9 rockets are bringing the cost of launching a rocket
down from US$600 million to, reportedly, US$35 million
 along
with the capability of launching 60 satellites at a time
instead of just one.
By this time next year, we'll be at
Stage 3 — there will be a lot of people claiming that
this was a good idea all along.
This technology has the potential
to solve the regional telecoms tangle. Not only could it
make all of the funding programs I mentioned earlier
redundant, it may even make the technologies being
deployed redundant.
A number of global technology
giants are racing to deploy global LEO satellite
networks which are expected to revolutionise
connectivity in both regional and even metro areas.
Google, Amazon, SpaceX and at least
half a dozen other companies have announced programs to
deploy LEO satellite constellations. Telesat LEO, with
300 satellites, is developed by the Canadian
telecommunications company Telesat. Project Kuiper is
the brainchild of Amazon CEO Jeff Bezos with 3,236
satellites
[6].
Finally, there is Starlink from Elon Musk's space
company SpaceX which has long-term plans to launch as
many as 42,000 satellites.
Mark Zuckerberg's Facebook has
confirmed it is working on its own LEO sat project,
Athena, with an unknown number of satellites. Google
does not want to be left out, and has announced plans
for a Satellite Constellation with "only" a thousand
satellites.
And it's not only
western technology companies. China does not want to be
left behind. Some of their projects include Hongyun
(rainbow cloud) with 864 satellites and Hongyan (wild
goose) with 320 satellites. The Russian state-owned
company for space operations, Roscosmos, is also joining
the race. Through the company Gonets (Russian for
"messenger"), services are offered for commercial and
military purposes. The satellite network now has 18
satellites in two orbits, the total plan is for 36
satellites in six orbits.
On February 24, 2020 a company
called Lynk successfully connected a standard,
unmodified mobile phone to one of its four 'cell towers
in the sky' satellites". Lynk are launching one
satellite every six months.
Bloomberg has even
reported that Apple has a secret team working on
satellite technology that the iPhone maker could use to
beam internet services directly to devices, bypassing
wireless networks.
The technology is so vastly
superior to existing satellites that their performance
is more comparable to terrestrial networks. Traditional
satellites have always been hampered by the laws of
physics which mean round-trip latency of 600ms is
unavoidable. In contrast, Real-world tests using
low-orbit satellites have demonstrated round-trip
latency between 40 to 50ms — comparable to terrestrial
networks.
Traditional high-orbit satellites
can sit as high as 36,000 kilometres from Earth's
surface. LEO Sats sit closer to 550 kilometres above the
earth, hence the low latencies. Download speeds above
100Mbps have already been demonstrated on early LEO Sat
deployments — comparable to speeds available on
residential fibre and 5G networks.
Gartner analysts have
said LEO Sats have the "potential for a dramatic social
and commercial impact", not only by providing high-speed
connectivity to areas currently unserved by fixed or
mobile infrastructure, but also for providing a real
alternative to 5G.
The applications offered by LEO
Sats are likely to be replicate the offerings of LTE and
5G in a number of areas — and likely at much lower cost.
Today, railway operators are installing private LTE
networks for signalling — LEO satellites could provide
this without requiring a single new base station to be
built. It's a similar story for data on the trains
themselves.
In fact, many of the
IOT applications being touted as dependent on 5G may
well be more economically served by LEO Sats, such as
transport and logistics, autonomous vehicles, and other
in-vehicle data applications. Why would Mercedes, when
seeking coverage for autonomous cars, sign up 172
agreements with local mobile operators around the world,
for patchy, incomplete coverage when they could have one
contract with a worldwide provider?
By now you're probably wondering
why a speaker from a company that specialises in
high-capacity fibre networks is speaking about LEO Sats?
Quite simply, the success of these
LEO Sats is as dependent on their ground infrastructure
as their space infrastructure. That's where Vocus steps
in.
Vocus has no 5G network, and we
have no revenues to protect in the 5G market. With our
extensive fibre network, particularly in regional areas,
we are able to facilitate the entry of this technology
into Australia, and we intend to sell it.
With LEO Sats dramatically
decreasing round-trip time from earth to space compared
to traditional satellites, the speed of the network will
be largely dependent on ground-station connectivity.
Il
https://lynk.world
We can expect to see a
proliferation of new ground stations in regional areas
to support these new LEO Sat fleets — meaning access to
high-capacity, low-latency fibre in very remote areas
will be critical to their success.
Vocus is ideally placed to play in
this space with our expansive region fibre network and
proven reputation as the 'carriers' carrier'.
If LEO Sats deliver on
their promise, this could solve the regional telecoms
tangle in the next few years. The USO, RBS, MBSP and
various state-based funding programs are likely to
become redundant.
So, what policy approach should we
take to regional telecoms if LEO Sats deliver a better
service than the USO or NBN?
The single common element — whether
you are talking 5G, LEO Sats, Fixed Wireless, or even
Edge Data Centres — is that they will all be dependent
on having competitive backhaul in regional areas.
Competitive access is different to regulated access.
Backhaul networks require cooperative augmentation to
connect sites that only competition by willing providers
will allow for.
So many of these areas
are still stuck with a monopoly provider, and regulated
rates which rarely, if ever, reflect real-world
commercial prices. But we have a real-world example of
how to unlock competition for the benefit of regional
users: the Regional Backbone Blackspot Program or RBBP,
which Vocus has operated on behalf of the Commonwealth
since 2011.
The RBBP was ahead of
its time in getting the policy settings right to improve
competition in monopoly areas: Open-access wholesale
backhaul with equivalence obligations. This means that
Vocus as the operator of the network has no commercial
advantage over any other wholesale customer — the same
price is offered to all customers, and when the price
goes down for one customer the price goes down for all
customers.
The RBBP introduced competition on
monopoly routes, brought down prices and increased the
available bandwidth.
A good example of the
outcomes this open-access structure provides can be seen
when it comes time to upgrade the technology. Under the
'Terabit Territory' contract announced with the NT
Government, Vocus' $20 million upgrade to this network
will implement 200G per wavelength between Adelaide,
Darwin and Brisbane. This is a massive upgrade at no
cost to the Commonwealth.
Will this be the case when it comes
time to upgrade mobile blackspots towers from 4G to 5G
in regional areas?
This same principle of open access
wholesale with equivalence provisions can be key to
future Government programs in regional areas.
Next-generation satellite will be dependent on fibre to
connect ground stations, just as 5G will be dependent on
fibre to base stations.
Future rounds of programs like the
Mobile Black Spot Program and Regional Connectivity
Program should mandate that any proposals with a
backhaul element must have open-access wholesale with
equivalence obligations to ensure public funds work for
the benefit of all users — not just the successful
proponent.
So I'll conclude by saying that the
future is very bright for regional telecommunications.
Over the past decade regional
Australia has become more connected than ever before —
but currently, the digital divide continues to deepen as
metropolitan connectivity improves even more.
Throughout this period, the
Australian approach has created technology winners and
losers — and a tangle of telecoms policies in regional
Australia.
But new technologies, in particular
LEO Sats, are set to solve this regional telecoms tangle
— and fibre connectivity will ultimately fundamental to
their success.
Thank you.
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