The Queensland government is setting up a state-owned entity called FibreCo Qld that will open up 6000km of existing fibre optic backhaul cabling to carry residential internet traffic.
The announcement was made Sunday by the state’s Labor government and came a year after the state’s ambitions were first revealed.
However, what was once billed as a broadband network to rival the NBN is now being touted as something that could reduce costs and raise competition in the NBN market.
“FibreCo Qld will work with internet service providers to connect parts of the state-owned optical fibre network to the NBN in key regional areas,” the state government said.
“This will then enable existing and new NBN retail service providers to acquire much better backhaul capacity at very competitive pricing.”
The state government said that FibreCo Qld would particularly target the entrenched position of Telstra (and to a lesser extent Optus) in providing backhaul services into regional parts of the state.
Limited commercial backhaul options into regional NBN points of interconnect mean the price to service residents in those areas can be high.
FibreCo Qld could result in some direct competition for NBN Co as well, however it would be up to network operators, such as wireless internet service providers or WISPs, to build the ‘last mile’ connections to serve residents or businesses.
State government backhaul could make that proposition more affordable than it currently is, meaning an expansion of such providers offering better speeds than the NBN in certain areas.
The government said that FibreCo Qld would focus on serving areas including Toowoomba, Bundaberg, Rockhampton, Mackay, Townsville and Cairns.
Iseek CEO and founder Jason Gomersall welcomed the state-backed incursion into backhaul.
“Prices for backhaul north of Brisbane is many factors higher [than in Brisbane itself],” he said.
“This initiative should see that pricing dynamic change for the benefit of regional Queensland.”
The Courier Mail reported that FibreCo Qld would be in market from about mid-2019.
The company’s business model will be centred on “cheap fast backhaul”.
The government expects to be able to support internet speeds up to ten times faster than is available on the NBN at a cheaper cost.
About 600,000 homes in regional Queensland could benefit from the new backhaul entrant, the newspaper reported.
Queensland is only the latest state to fund an internet network that could cannibalise parts of the market for NBN.
NSW has a scheme called the NSW regional digital connectivity program which, like Queensland, is funding the rise of small, niche telcos with NBN-comparable services.
The SA Labor government also this year opened its own existing fibre backhaul network and expanded its reach in a bid to encourage players other than NBN Co to build fast last-mile networks.
It’s unclear what the effect of all these programs will be, however NBN Co’s economics require a national take-up rate between 73-75 percent.