Australia places the bets on fiberCostas Troulos, Senior Analystcostas@diffractionanalysis.com

• Consultant with Diffraction Analysis

• Over 15 years of experience in designing and operating  telecommunications networks

• Blogging about anythingbroadband: www.broadbandprime.com

\% who –q 

A quick look at the Australian NBN

•Replace the copper with fiber in the access network

•Enable new services creation

•Public investment will reach $26 bnin CAPEX. Annual OPEX: at $2 bn ‐IRR: 7%

•Revenues: $20 bn

•Network footprint is made of 93% fiber, 4% wireless and 3% satellite

•A total of 181k Km deployment with130k Km  of road distances and 57k Km of transit backhaul

•Wholesale only, capacity (Layer 2) – bitstream equivalent ‐ services

•Common pricing list for allservices across

Long‐term Goal

Costs & RevenuesCoverage

Services

Construction Costs & Service Revenues

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upper bound lower bound

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NBN Co's fiber access ARPU

The cost per home passed stabilizes after  the 4th year of construction

The ARPU is expected to grow by 52% by the end of the construction period

Customer Base

•Maintain oradvance theirpositions in thebroadband market

•Move more aggressively into delivering advancedcontent services

•Meet growing end‐user demand for bandwidth

•Become independent fromaverage quality DSL for base stationinterconnections

•Meet growing demand forbackhaulbandwidth

•Advance offeringsto fixed‐linemarkets (picocells)

• Leverage fiberaccessinfrastructure for streaming contentdirectly to end‐users

• Leverage nationalor global brand for customer acquisition

•Public utilities andbroadbandresellers

• Improve operations(e.g. smartmetering)

•Use establishedbranding to expandservice porrtfolio

• Save money on telecoms and IT expenditures

Retail Service Providers Mobile Operators Content Providers Non‐telcos

Modular design and long‐term partnerships

Network Access Point

Fiber Access Node

Clusters of Fiber Distribution Areas

Connectivity Serving Areas 

Point of Interconnection

Owners and real‐estate developers  will build internal cabling

Use lead‐in conduits from Telstra and ownthem afterwards (100%)

Leverage on ducts and manholes of Telstra’s access network (75%)

Leverage on poles and ducts of public utilities and other distribution networks (25%)

Use 60% of the collocation and interconnection facilities of Telstra 

Lease dark fiber from Telstra when needed

Products & Services

• AVC: price tag starts at $20 for 12/1 speeds. Prices escalatemoderately to encourage user to purchase higher speed services

• CVC: price tag at $20 per Mbps, purchased on increments of 50 or100Mbps.

Access Network Backhaul Network

Network Architectue

Service Overlay

Point ofInterconnection

Fiber Access Node

UserPremises

UserNetworkInterface

NetworkNetworkInterface

Access Virtual Circuit(AVC)

Connectivity Virtual Circuit(CVC)

Creating economic space for more businesses

$5,42  $8,00  $9,40 $5,44 

$13,00 $5,88 

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BaseScenario

Local non‐telco

Nationalnon‐telco

A regionalutility

Regionalniche

provider

Regionalnew

entrant

CVC Cost

AVC Cost

The margin of cost per connection between an efficient large‐scale providerand a small niche provider creates opportunities for wholesale resalebusiness models

Go‐to‐market strategy

• Ink deals with the big boys– Telstra: Definitive agreement ensures copper disconnections 

and migration of HFC customers (estimated cost: $9 bn after tax)

– Optus: Agreement for migrating HFC customers (estimated cost: $800 mn)

• Connect end‐users without extra cost during the initialstage of deployment

• Run workshops with Retail Service Providers• Showcase advanced applications (Healthcare)• CVC rebates: rebate the charges of the first 150Mbps if

the service area has fewer than 30.000 homes passed

Positive reactions from the consumersand the industry

Homes Passed14.000

Homes connecting50‐80%

Homes activated800

2.200 greenfield areas applied: A sum of 176.000 premises

New applications: 50 per week

19 RSPs have signed up for connecting to NBN

10 RSPs are already certified to connect to the infrastructure

Current achievements & future issues

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Market is effectively separated: Telstra submitted a Structural SeparationUndertaking and a draft migration plan for approval by ACCC.

Uniform wholesale pricing: A major development for the Australian market. Itimplies subsidization between urban and rural users. 

4

Passing capital investments to operating costs may push back the investmentreturns and does not advance the business case of the network. 

The market is completely restructured making hard to comprehend how the newwhoesale monopoly will influence business strategies and market development.

Lessons learned for fiber access providers

• Reach out to the consumers; they are eventually your end‐customers

• Synchronize your strategy to the needs of the market; Create a level playing field; Involve all stakeholders in your plans; match your business with your buyers’ business

• Expand your customer base; Extend offerings to non‐telco customers because disruptive technologies needgreater audience to enhance penetration

• Keep a low commercial profile: refrain from offering retail products and befriend to your buyers

“Something has to happen, before something is going to happen”

Johan Cruyff

Thank You !

Costas Troulos (@ktroulos)costas@diffractionanalysis.com