A CIO's Guide to the NBN

Australia's $43 billion National Broadband Network will usher in a new era of connectivity and business innovation. Here’s what CIOs need to know. . .

Forests have been felled and new server rooms built to carry the torrent of words written about broadband Internet access in Australia. Some of the country’s most brilliant technical, business and social minds have joined what has become at times little more than a cacophony of claims, counter-claims and lies.

And what do we have to show for it? Something close to the slowest, most expensive and most inequitable Internet access on the planet -- the worst of all worlds. Even our own prime minister calls us a “broadband backwater”.

Not for long.

The NBN is about how a CIO can change a business model to either be more disruptive, to find a lower cost method, or to tap into new talent pools

John Simon, managing director of Optus Enterprise and Business Group

If you hadn’t heard, the Federal Government has established the National Broadband Network Company (NBNCo) and will spend $43 billion -- the GDP of Luxembourg -- building a new fibre optic national broadband network. It is the largest infrastructure project in Australia’s history, the single largest investment by any Australian government and it will transform how we live, work and play. That’s the theory.

CIO canvassed a wide range of opinions from within and outside the telecommunications industry -- CEOs, CTOs, CIOs, boosters, soothsayers and naysayers -- to build a no-nonsense perspective on just what the NBN means.

How the NBN will transform telco carriers and the services they offer

You can almost hear Ravi Bhatia, the CEO of Primus Telecom; David Yuile, the COO and CIO of AAPT; and John Simon, managing director of Optus Enterprise and Business Group, rubbing their hands with glee as they wax lyrical about the NBN.

For them, and the businesses they lead, a wholesale-only, open access network with equal prices and terms for all comers is the Nirvana they have longed for.

For their customers? Well, what’s not possible with an Internet connection of 100 megabits per second direct to every home, school and workplace in the country? “Where you deploy competitive infrastructure it challenges the incumbent and you can deliver new services that appeal to the market,” says Simon from Optus. “That has been proved in our mobile market share in metro Australia and with our IP-VPN product for corporates.

“Where everyone struggles is when you’re trying to meet corporate needs that span Australia. In wholesale, an STM1 link from Sydney to Melbourne will cost a certain amount. The same capacity from Melbourne to Mildura, for example -- less than half the distance -- will cost 10 times as much. The end user has to cover that cost and that’s why you don’t get competition, you don’t get take-up in those areas and you end up with a monopoly-type environment. The NBN will change all that.” Primus Telecom’s Bhatia says telcos will also have to change the way they sell their wares.

“A lot of what we do now is already a commodity,” he says. “And a lot of what we custom build for businesses today will become a commodity. It will be sold on the Net. So we have to create foolproof processes to sell it on the Net, make it simple and provision it quickly because that’s what our customers will demand, especially the low-end mid-corporate and high-end SME sectors.”

AAPT’s Yuile says that historically, telecommunications have been seen only as voice, Internet and data. This too will change. “With the NBN and changes in technology in general, things will move from being at the customer premises, or in the home, to being in the cloud,” he says. “Your VCR will disappear and your desktop at home will disappear because that computing power will exist in the cloud. Your home and office will un-clutter because the speed of your connection will allow you to operate everything via the cloud.”

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Damien Tampling, the national leader of the Technology, Media and Telecommunications Industry Group at Deloitte, says bandwidth of 100 megabits per second will encourage telcos to become not just retailers of the network, but also developers, managers and marketers of applications on that network. They’ll still make money as network retailers, but their focus will switch.

British Telecom realised that if it couldn’t continue to own the network, then it had to own one or two of the major applications that would drive traffic on the network

Damien Tampling, the national leader of the Technology, Media and Telecommunications Industry Group at Deloitte

“Look at Telstra Media,” he says. “For years it has owned a swag of content rights in Australia for sports. We also know Telstra Business Group has just launched T-suite, its software as a service portal. And Telstra is working on another kind of phone in the home that can act as a centralised device for many applications. This is what will happen. The NBN will drive telcos to think more intensely about the applications they want to own.

“We saw this in the UK with British Telecom. BT realised that if it couldn’t continue to own the network, then it had to own one or two of the major applications that would drive traffic on the network, which is quite intelligent.”

Management and technology consultants BearingPoint Australia say that business needs telcos to offer new services at internationally competitive prices. BearingPoint Australia managing director Matt Goodlet says business wants a viable, innovative telco industry vying for its customers.

“Business should be able to select iPhones from Optus, a VPN from Telstra, Internet from AAPT, VoIP from TransACT, 3G from VHA and video content from iiNet -- or some other combination -- and have them all work seamlessly together,” Goodlet says.

The takeout: telecommunications companies will become media communications companies. Technology will be cloud-centric rather than location centric.

How the NBN will affect the day-to-day operations and career prospects of Australian CIOs

It’s a brave new world -- starting yesterday.

Bhatia says the role of CIO will change from maintainer of services and computer rooms, to being a strategic partner of management in the use of IT.

“[CIOs] will become essential to senior management because they will refresh the business,” he says. “The whole IT pie will grow dramatically and CIOs will become catalysts of change within the company. There will be wonderful opportunities for them to shine but there will be winners and losers. Those who don’t adapt will be eaten by the guys who do -- the ones who are nimble. And adaptation starts now, not in six months.”

Because the NBN has so many technical features, understanding how a business might benefit or be threatened is as much a question of strategy as it is of technology, according to Tampling from Deloitte. So business heads will turn to their CIOs to interpret what the NBN means.

“For the CIO, it’s important they consider the NBN alongside their business strategy and development people; understand what has happened overseas in their industry in places where networks of this nature have been built; make sure they start thinking early; and collaborate with contemporaries.

“For the good CIO who thinks ahead there will be some wonderful opportunities to become the go-to person for boards and CEOs to better explore how they can leverage the NBN. CIOs who don’t think about it early will be on the back foot.” Deloitte conducts an annual board effectiveness study where it interviews board members of top ASX companies. Tampling says this year’s results threw up a curious finding: almost unanimously, boards felt anxious about their companies’ digital strategy -- unsure if it was covered by their strategy person, their marketing person or their CIO.

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Says Tampling: “For CIOs who see the NBN as something that fits within their role they should grab the territory and get the organisation thinking about it now.” Yuile says there will be a big separation between platform investment and applications. Just like buying apps for an iPhone, CIOs will buy apps to use for six months and then discard them for something new.

“We will see more adoption of a broader range of software services and applications, and CIOs who don’t adapt to this model will flounder,” Yuile says.

“Traditionally, CIOs have spent their time pushing applications at people who didn’t want them. Now, they’re trying to stop people. CIOs will have to think very differently. They won’t be able to tell colleagues it will take two years of software development before they can have that new application. They’ll have to say ‘that app you found yesterday, we can adapt it and plug it into our platform within six weeks’.

“The NBN will allow CIOs to achieve great things. However, if they take the stance that the technology is their patch and they want to control every aspect of it then they will struggle. There will always be things a CIO has to control but they will have to be more trusting and more willing to take a few chances with new technology. They will also need to be more responsive to internal and external customers. That will be critical for their success.”

While Simon is loath to lecture CIOs, he says he knows what their businesses will be seeking to achieve.

“The NBN is about how a CIO can change a business model to either be more disruptive, to find a lower cost method, or to tap into new talent pools,” he says. “That’s where organisations struggle -- they don’t have access to enough people with the right skills, or those people are too expensive. The NBN can open new doors in this area.

“The only advice I would give: CIOs should investigate how they can use new technologies to help their business lower costs. That’s one of the priorities of all organisations, especially in this business environment. The NBN will provide opportunities to do a lot more with a lot less.

“The other message is that whatever contracts you are about to sign be sure to leave yourself enough flexibility. Getting locked in now for a five-year deal is an idea you might want to revisit given the amount of change that will take place over the next two years.”

Bhatia says it’s also time for CIOs to be more gung-ho.

“CIOs shouldn’t wait for their Boards or CEOs to come to them,” he says. “They should tell their CEO: ‘there is a massive opportunity heading our way. Free up 20 per cent of my time so I can ensure it benefits our company.’ It may sound a big ask but the clever CEOs will do it. They hate missing opportunities.”

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Tampling’s big tip for Australian CIOs is to study closely what happened in the UK when the British Government split the wholesale and retail divisions of BT and created Openreach, a new independent, wholesale company. Tampling says it is a fine case study of what happens when a new network is created under a new regulatory regime. “You might also want to Google ‘Project Canvas’,” Tampling adds, referring to the BBC project to create an on-demand service for television sets via Internet-connected set-top boxes.

How the NBN will inspire new IT transformation projects

Bhatia, Simon and Yuile all agree the NBN will inspire a cornucopia of new business applications, services and models, some of which are still to be imagined.

A list of their most likely would include virtual, multi-media contact centres; telepresence -- state-of-the-art video-conferencing that produces full-size, life-like picture quality; e-health that will connect doctors and patients thousands of kilometres apart; smart metering of homes by water, gas and electricity utilities; movies and television programs via IP (Internet Protocol) TV; video-phones to become commonplace; and Internet-based learning that is more widespread in schools, universities and the workplace.

As Finland becomes the first country in the world to make broadband Internet access a legal right -- rushing through legislation that will force telcos to offer speeds of at least 1 megabit per second to 5.3 million people -- workmen are digging trenches in Tasmania to lay the first fibre optic cable for Australia’s NBN. By next June, three pilot towns -- Scottsdale (pop 1904), Smithton (pop 3361) and Midway Point (pop 2589) -- should be enjoying connections speeds of 100 megabits per second.

Telecommunications could be the most boring business in the world if it didn’t affect everyone and wasn’t vital to the future of national economies everywhere. This instead makes it one of the most dynamic.

But as any telecommunications engineer will tell you, fibre optic technology is to networks what asphalt is to roads -- even at German autobahn speeds. The magic of fibre optics at 100 Mbps comes in what we do with it.

SIDEBAR: NBN: the facts

  1. The NBN will connect 90 per cent of all Australian homes, schools and workplaces to broadband services with speeds up to 100 megabits per second.

  2. It will connect all other premises in Australia with next generation wireless and satellite technologies with speeds of 12 megabits per second.

  3. The new superfast network will comprise optical fibre to the premises (FTTP), extending to towns with a population of about 1000 or more.

  4. It will be Australia’s first national wholesale-only, open access broadband network.

  5. It will be built and operated on a commercial basis by a company established at arm’s length from the Federal Government.

  6. It will be rolled-out, simultaneously, in metropolitan, regional and rural areas -- and completed in 2017.