Interestingly, we are now beginning to see the opposite of what many incumbents have been scaremongering about for several years. Incumbents all over the world are starting to heavily invest in FttH.

As a matter of fact, a global FttH boom is underway. In some counties incumbents are still quibbling about capex and talking about halfway systems (FttN) once a proper regulatory regime is in place, while their competitors are happily investing in FttH – this, in turn, is forcing the incumbents to follow suit. Our senior analyst Europe, Henry Lancaster, recently reviewed these developments.

The FttH trend started five years ago, in SE Asia (Japan and Korea) and has expanded to neighbouring countries like Hong Kong, Malaysia and Singapore. The US is also making good progress and Europe is well and truly on its way. Britain is now seeing multiple investments in FttH, following the example of the French, where FT and its competitors began to fibre Paris and other cities in full competition with each other.

At the same time, the Netherlands and Sweden are still way ahead in Europe. KPN indicated that in order to make its FttH business case stick it needed to open up its infrastructure to attract maximum traffic over its network. According to that company, open access based on end-to-end unconditional wholesale was the way forward.

And once the decision was made in New Zealand to separate its incumbent, FttH is all that is being talked about.

Three to six months ago, according to many of these incumbents, no business case existed; today, investments funds worth tens of billions of dollars are flowing into the marketing all aimed to get FttH underway. And, as we have said before, each country has found its unique solution – not one is the same. But with investments flowing and the regulatory environment now well-defined, with the exception of the USA, all these new networks are built on the principle of open networks and equivalence of services. (Interestingly, as was pointed out in last week’s blog by our senior analyst North America, Lawrence Baker, discussion about open networks has now also begun in the USA – this eventuality was predicted by BuddeComm back in 2005.)

But in Australia once again, ‘l’histoire se répète’.

The absence of decision-making and the ongoing delays in the broadband market here are slowly but surely impeding the government from fulfilling its all-important election promise to get started with a 12MB/s broadband network before the end of the year. So again we are fast falling behind the rest of the world, as happened in the early days of broadband, then with Local Loop Unbundling and ADSL2+. This time we are making the exercise so complex that it could easily take a year to unravel that complexity; again we are the only country in the world making it so difficult for ourselves.

In none of the other countries that are steaming ahead of Australia was it necessary to prepare extensive infrastructure maps for discussion – the incumbent was either directly or indirectly ‘forced’ to open up its infrastructure and get on with the job. In Australia it is mistakenly believed that success can be achieved without Telstra, and, so as to appear to be doing something, a great deal of effort is being put into a RFP process that is not going to work.

Nobody will be able to build an alternative network without the full cooperation of Telstra, and nothing will be achieved until the government acknowledges this and makes a policy decision to force Telstra to cooperate. Without that we will continue to be trapped in the morass of delays, submissions, investigations, court cases, etc.

This is what happened with the previous government, and it appears that under the new government we are once again digging the same holes for ourselves.

How many more delays will the government accept, as it is most unlikely that the information will assist the others to properly design and cost a network – apart from the complexity of the information that is required; it is for a network that’s not going to be built anyway, since it makes no economic sense at all.

The longer the government waits before making the decision for separation the more ammunition it will give to the Opposition to undermine it, a process which is already underway and achieving some political success. The Opposition is more than happy to exploit this opportunity that has been handed to them. They already noticed that while Kevin Rudd used broadband in every other speech before the election, the PM has since gone rather quite on the issue, indicating that also he sees this as a looming hornets nest.

While I am agnostic about separation, it doesn’t look as though Telstra is going to come up with a more palatable solution. There is not much the government can do, other than compel Telstra to come to the party, by giving the ACCC the power to enforce structural separation, which hopefully will be enough to get Telstra to the negotiating table.

I have commented previously on the fact that Australia has had three times more government Inquiries than the USA, and most of the remaining countries involved have had one, maybe two. At the latest count we have had over ten, and we still can’t make a decision.

And there are yet more Inquiries underway. The latest one, forced upon the government by the Senate, would not have been necessary if it had been more decisive when it came to power. The longer the government delays its decision the more legs this Inquiry will get. The government may be fuming but this latest Inquiry is one of its own making.

As we have argued in several submissions to the many Inquiries, very few of the countries rolling out fibre are doing so with government subsidies. We maintain that once the right policies are in place investment will follow, and developments elsewhere in the world have proved this to be correct.

The sad fact is that the current policies now being discussed in Australia are already outdated. Few of the countries that are presently rolling out the next generation of broadband infrastructure are talking about FttN anymore. They are all talking about FttH, starting with the delivery of minimum broadband speeds of 20Mb/s-50Mb/s for the period 2010-2015.

We are still talking about 12Mb/s over that same period.

What looked like a good idea a few years ago now appears to be out of date. And, we haven’t even got started.

Article reprint with permission from Paul Budde Communications. Buddecom prepares various reports on this subject matter which you can purchase from:


Post a Comment