The NBN must face wireless

Last week’s annual LTE World Summit in Amsterdam reinforced just how fast wireless technologies are developing. And if they continue to evolve as fast as they have in the last year alone, the assumptions for wireless-only broadband penetration in the NBN’s business plan look set to fall apart. And so does the claim that the project is a commercial investment that should remain off budget. But this political outcome should not be driving the project.

For the government to do the sensible thing and re-think their now two-year-old strategy, better accounting for the future impact of wireless technologies in light of industry developments, it would probably mean political suicide. It would also be ideal to include national wireless goals in the plan alongside fixed goals, as is the case with many other national broadband plans around the world.

And given the opposition are calling for a more technology-neutral approach it would seem natural for them to allow the government to do this if they really care about getting the best long-term outcome for our national communications infrastructure. But they won’t. As a result, the NBN looks set for a bumpy ride whose future will be driven by desired political – not technical – outcomes.

I do not intend to create further discussion about the merits of fibre’s speed and capacity over the mobility and convenience of wireless or vice versa. No doubt, Telstra’s announcement this week that it had switched on its first 4G base stations (well, it’s really 3.9G, but I’ll get to that later) in Sydney, Melbourne, Perth and Brisbane will add to this. But Stephen Conroy is absolutely right that wireless and fibre need to be complementary technologies – we will need them both in the future. It is not about one or the other. But let’s move on from that discussion.

The real problem is that the NBN business plan’s success relies on a specific assumption of exactly how complementary the technologies need to be over the next 30 years: specifically, no more than around 16 per cent of households can choose to take non-NBN wireless-only broadband connections in favour of NBN connections by 2040, compared to a penetration that is already between 11 per cent and 13 per cent today.

(Let’s be clear that wireless-only does not include all those WiFi connections in homes and cafes that many smartphones and tablets default to in those environments: they are powered by a fixed connection.)

Quite simply, if the business plan assumptions are wrong then the commercial case for the network falls apart, as does the claim that the project should remain off budget. But in the last six months alone, developments in the wireless industry do not bode well for those assumptions.

Notably, with much of the focus recently on the troubled past of Alcatel-Lucent, many have missed something Mike Quigley’s old company announced earlier this year that could have a very big impact in the future: Light Radio.

Light Radio is a new product that Alcatel-Lucent claim will fundamentally shift how mobile networks operate, delivering increased network capacity through Rubik’s cube-sized modules that combine 2G, 3G and 4G wireless capability into a single module. As they put it, the product heralds “the death of the basestation” – a claim to take seriously from a group whose track record includes inventing the transistor and the laser, along with building the first communications satellite and commercial cellular network.

According to the company, the new modules will shift the way mobile networks are developed, effectively removing the requirement for large cell towers. Initial figures are that a single cube will deliver double the capacity of current infrastructure for about half the cost, providing a coverage radius of about two city blocks in dense urban areas. They can also be stacked together like Lego blocks to provide increased capacity in high density and high traffic areas, along with being ideal for blanket coverage in lower-density fringe areas. Additionally, it’s also claimed that the energy consumption is around half of that of using existing radio access infrastructure.

Any location that can receive power – including via wind or solar – will become a potential site to expand wireless networks, including lamp posts, the sides of buildings and bus shelters. Alcatel-Lucent expect commercial availability next year, and have already lined up the world’s largest mobile operator, China Mobile, for trials later this year. Sprint Nextel in the US and Orange in Europe also plan to trial the new technology this year. It would not be surprising if Telstra put their hand up when their NBN Co deal is out of the way.

If the product delivers as promised it’s easy to see how microsites like these could extend the reach and capacity of future mobile networks much deeper than is currently possible. Indeed, it would hardly look like the “ugly tower on every street corner” future that would be delivered using today’s infrastructure. Nokia Siemens Networks and Ericsson have also announced competitive offerings, and Chinese manufacturers like Huawei and ZTE probably won’t be too far behind.

Of course, these products will rely on a fibre backbone – but not fibre all the way to virtually every household in the country. Again, it’s about being able to get the right mix of technologies – not one over the other (as tends to drive the NBN debate).

Beyond infrastructure developments, there have also been some key LTE developments since February’s wireless versus fibre debate regarding the NBN. But it’s not the basic LTE technology which formed the basis of that discussion (which is also the so-called 3.9G technology that Telstra has started to deploy). It’s the next step beyond that, called LTE-Advanced, which is a true 4G technology.

Just last month, SK Telecom in Korea announced that it plans to upgrade its network to LTE-Advanced during 2013, whose planned specification is to deliver peak wireless speeds of 1Gbps download and 500Mbps upload. Of course, the real speeds will be lower in practice, but even a fraction of these speeds look impressive – particularly compared to the 12Mbps download / 1 Mbps upload NBN fibre service that almost half of all households will still be using by 2020 according to the NBN’s current business plan. Of course, it remains to be seen how pricing will stack up, along with how the spectrum situation will play out.

Trials of the technology were conducted earlier this year by – you guessed it – the South Korean government’s Electronics and Telecommunications Research Institute (ETRI), where they achieved 600Mbps download speeds to mobile devices while driving around in a van. NTT DoCoMo in Japan started trials in two cities a few months ago as well, and Chinese trials have reportedly delivered 1.2Gbps download speeds in a fixed environment.

Indeed, if wireless developments continue in this manner for the next few years it’s hard to imagine how the government’s long-term assumptions – that wireless-only penetration will remain relatively low and effectively flat at around 16 per cent of households between 2015 and 2040 – will become a reality.

But if these future wireless developments need to be fought in Australia – not embraced – to protect the NBN’s business case and keep it off budget then it hardly seems like the best outcome for the nation. If both sides of politics want to deliver the best outcome for the project it’s time for a re-assessment of the current plan. But the current state of politics seems to indicate that both sides will choose politics over good policy.

In any case, with rumours that a deal with NBN Co is close, Telstra will certainly be very focused on making sure Kevin Rudd’s written guarantee of last year – that it is eligible to bid for 4G wireless spectrum if it reaches a deal with NBN Co – gets a new signature on it this time. Using Rubik’s cubes to deliver superfast wireless broadband certainly sounds like a good new way to pick a few extra cherries (complemented, of course, by your own fibre backbone network).

Even if the government continues to discount such a possibility in Australia’s NBN future, external investors certainly won’t be blinded by politics and ignore a world of growing wireless evidence. They’ll know we need both fibre and wireless, but they’ll probably assume a different mix if their money is at stake. And they won’t care if the project is on or off budget.

Andrew Harris is an independent telecommunications consultant who has advised on fibre, wireless and satellite business planning, financing, M&A and bankruptcies for operators, banks and governments worldwide since the late 1990s.