They say a week is a long time in politics; and so too in the Australian telecommunications industry.

On Monday, Don McGauchie confirmed he has formally begun the process of finding a replacement for Sol Trujilo. With the departure last year of Phil Burgers, then recently his right hand man in Greg Wynn, the time has come for the last of the three Amgios to also call it a day. Perhaps with his departure some compromise can be achieved with a new direction for Australia's incumbent telco.

The one thing that will be Trujillo's legacy at Telstra was his almost relentless attack on the Government and ACCC over regulation of the telecommunications industry and the company he lead in particular.

Tuesday saw Optus mention it would consider an alliance with the two other national biggers to build the federal government's national broadband network. However the group may have to wait for some time because of the constraints under the RFP guidelines. A joint venture between the three parties would deliver the best outcome for Australia. Axia could build their proposed backhaul network, Optus offer the access network (which they already have a good coverage with the ULL, HFC, Mobile and Satellite and Acacia the network operator delivering truely Open Access to the market.

Wednesday saw our Communications Minister reiterate that is was the Government's "ambition" to sign a contract by the end of March, after a prolonged attack be Senator Minchin in which he repeatedly questioned Minister Conroy when the Federal Government would be ready to sign a contract with a successful tenderer.

It has previously been reported in many circles - including on this blog - that Optus, Axia and Acacia may seek regulatory guarantees before signing a contract with the Government. Considering the upper house is still controlled by the opposition parties who so far have been vehemently opposed to the National Broadband Network, I don't think anyone will be signing a $10b contract based on promises which the Government cannot guarantee will be passed.

On Thursday, Senator Nick Minchin - Shadow communications minister - introduced a motion which would require the government to immediately furnish the Expert Group's report to the Senate. After a compromise was reached with Family First Senator Stephen Fielding, the motion was passed requiring the report to instead be published the day after the NBN tender is awarded.

Minchin said Conroy had failed to deliver on claims that the NBN process would be open and transparent. In a statement Minchin said, “While I maintain this advice should be publicly released before a successful tenderer is chosen, the Senate has agreed that at the very least they should be tabled immediately after a winning bid is announced”, further adding “Public scrutiny of this crucial advice to the government will enable a proper assessment of whether Labor is acting truly in the national interest and not purely in its short-term political interest.”

Back in November, Art Price - CEO of Axia NetMedia - made a presentation to the Senate Select Committee investingating the National Broadband Network and the tender surrounding it.

http://axia.com/Video/Nov2408_Senate/player.html

I find the most interesting part about competiting with your customer does not work. Historically speaking, it is only the incumbent telecommunications industry which advocates that competing with one’s customer can work. However, we have seen plenty of evidence in Australia where such competition has constrained the business growth of access seeking retailers because of the uneven playing field. In no other industry is there a high performing enterprise where a provider of a service sells it into a value chain and then turns around and competes with the buyers of that service.

Canadian telecommunications company Axia NetMedia has spoken publicly on the Rudd Government's National Broadband Network, saying that unless it is built using fibre all the way to homes and businesses in metropolitan areas, then it shouldn't be built at all.

While the Government has called for the broadband network to be rolled out to 98 per cent of households, most bidders have proposed using fibre to the node (FTTN) technology rather then the better and faster Fibre to the Premises technology, which has been dismissed by some local telcos as too expensive to consider.

Axia is touting a broadband wholesale access charge of only A$15 a month, compared with the $85 a month being talked about by Telstra earlier this year. This access would also be at least five times faster at 100Mbps, but providing a very simple upgrade path to 1Gbps to each home.

The group's cost modelling is based on what it expects to offer in Singapore, where Axia is in a consortium with Optus's parent, Singapore Telecommunications, to build a $2 billion national fibre network on the island.

Having made several posts now on TERRiA and Acacia about their NBN bids, its time I look at Axia NetMedia the forth national bidder.

According to their web site "Axia takes care of planning, designing and operating open access broadband networks." It's small company when compared to the likes of Optus, Telstra or even Acacia, but it has some reasonable growth, positive earnings, no long-term debt and a pile of cash.

They are the leading member of the OpenNet consortium (with SingTel and a number of other firms) that won the NetCo business (passive fiber network) for the Singapore FTTH network. They also built the Albert SuperNet in Canada, a substainial fibre optic network covering the majority of the state.

They are true advocates of the "Open Access Philosophy", and unlike Telstra or Optus they dont have a retail arm competiting against other providers on their network. Contary to what Telstra has been promoting as Open Access, it is regarded around the world that Open Access precludes the network operator also retailing services in competition to others using the network.

Recently they released their Q3 results. Some interesting points from the release:

Axia is also qualified to respond to the second Singapore RFP, to build the active layer (OpCo). The network is supposed to be full open access and vertically/structurally separated.

Axia has 4 proposals oustanding in France. Decisions are expected by the end of this year.

I am sure many of you have already seen the news that the NBN bids are all in.

As I predicted in my last post there were four national bidders in Telstra, Optus Axia, and Acacia. On top of this there is also the state bids from the Aurora Energy/Tasmanian Government (TAS) and TransACT (ACT). The only bit I got wrong was TERRiA did not bid - perhaps not a surprise considering the loss of support from AAPT, Soul/TPG, TransACT and Powertel.

Two weeks ago I posted an article were I said my money was on Acacia to win the NBN. Someone posted a comment that I was likely to lose my money (or my job) over this, but I think given the situation many factors have changed.

Firstly Telstra have failed to submit a conforming bid and despite Senator Conroy's protests, tender guidelines require conforming bids are assessed first and if one bid meets the requirements, that must be taken over any non conforming bid. Telstra's bid may very well never be considering unless the government wants to break its own rules - and potentially end up in court.

TERRiA failed to submit a bid instead, falling in being Optus Network Infrastructure (a Singtel/Optus company formed just for the NBN) and supporting their proposal and business model. Terria revealed details of its proposal last week. It costed the network at about $15 billion and said this would buy 75,224 nodes, two satellites, 1360 new wireless base stations and 100,000km of fibre.

Acacia however has finally shown its hand and has bid a truely open access network with a mix of technology including FTTH, FTTN and Wireless - exactly the approach I have been espousing for the past 8 months. They have a clear separation between the operator of the infrastructure and the many retailers of services that run over that infrastructure - the key to open access which Telstra is refusing to consider with their objection to structural seperation. They have also pledged a fair return for owners of existing assets for use of their facilities, so they are happy to co-exist with existing networks.

So we now sit tight over Christmas for the "expert panel" to evaluate the bids within 6 weeks, which makes it the 7th of January for a decision date. Looks like the expert panel and their team of technical, commerical and legal advisors are not having Christmas this year.

Having avoided publishing too much on the NBN in recent months - because most of the reporting is purely speculation as the bidders are all under gag orders - it is time to summarise the recent events that have taken place.

Perhaps the biggest news is the former G9 now called TERRiA has started to crumble as one by one the original group of nine Australian Telcos has dropped to only five. AAPT merged with Powertel last year, reducing the group to eight, and they were the first of the telcos to drop out last month. Soul was taken over by TPG who decided it was all too hard to manage their own backyard let alone be part of a team. TransACT was the fine partner to withdraw, but they were already submitting a separate bid for Canberra only. So that leaves Optus, Internode, iiNet, Primus, and Macquarie telecom to hold up the team.

Paul Broad, the CEO of AAPT, wrote an article recently for The Australian where he claimed "We're weeks away from the government commencing its selection process to award Terria or Telstra". A little bit presumptuous there Paul, considering there are at least another four bidders that I am aware of also in this; one of which I think will put forward a more compelling solution than either TERRiA or Telstra.

Shadow Communications Minister, Senator Minchin has been on the front foot over the past weeks attacking the Government over its handling of the NBN and the value it will bring to Australia. In response to Telstra's submission to a Senate hearing into the project that operationally it simply could not build or maintain a world-class NBN with further separation, the Senator said "Telstra's evidence was a damning indictment of Labor's fatally-flawed NBN tender process and highlighted just how unrealistic many of its key objectives are".

Speaking at the Broadband World conference in Sydney last week, Centre for International Economics (CIE) director, Kerry Barwise, said a key dynamic for ensuring competition is the rate of return sought by the National Broadband Network (NBN) builder. His analysis into the NBN showed a market and regulatory structure that permitted the exercise of market power through vertical integration and if permitted would allow the operator to obtain a relatively high rate of return on equity which in turn would lead to a loss of GDP of around 0.35 per cent per annum. In other words if Telstra wins the NBN, we are going to be heading backwards - no news there. “So with 0.35% what happens is, every five years the community will pay again for this asset," he said. "The community would pay the first time and then every five years they would have pay again through high prices.”

Finially my own views on the NBN. As it stands today, I would be placing my money on Acacia as the most likely winner. They are a dark horse and have not said much about what they are doing - perhaps because they are just getting on with the job. Just look at the team:

* Two ex-Telstra senior executives - gives them the telco experience required to make a competitive bid
* A director of a major international bank - a source of debit funding
* One of Australia's richest men - a source of equity funding
* Connections to Israel and the Jewish community - another source of equity funding
* A director from Leighton Holdings - a construction team to build the network, but also owns Australia's second largest fibre network providing a existing operating vehicle and much needed backhaul capability
* A director from Macquarie Infrastructure Group - another source of debit/equity funding significantly involved in big infrastructure projects and as the government has said this is the largest in recent history.
* Directors or former directors from various big companies such as SEEK, Berri, and Uncle Tobys

With this amount of business smarts I am sure they are not in this to come anywhere but first.

Addressing the CommsDay Melbourne Congress earlier this week, CEO of Axia NetMedia - Art Price - said "FTTN is an unnecessary compromise that safeguards incumbents’ revenues from copper infrastructure", further adding that it "is not future-proof" and "risks delaying the eventual move to FTTP".

According to the report by CommsDay journalist Petroc Wilton, Price argued that "FTTN is a compromise that is simply not necessary...It does not create competitive alternatives to the incumbent because the underlying economics of electronics at the node, for the size of the market at the node, are simply not viable... nobody is competing at the node anywhere in the world with the incumbent.”

The statements by Price echo the the points I have made many times since my first presentation and white paper on this subject in 2006. The NBN should be a complete overbuild using FTTP technology (to 85% of the homes and business in Australia) as this would provide the best outcome for Australia and the public.

Price went on to say “The copper just doesn’t cut it...It lacks performance, and it’s not future-proofed... you have to look awful hard at steps that are leading to FTTP, and not waste your money on an in-between step that delays FTTP for ten years.”

Friday was D-Day for the lodgement of the bank guarantees for the government's $5m bond for securing the right to bid on the National Broadband Network.

Speculation is rife as to who has submitted the bond. We know for sure that TERRiA and Telstra have entered the race as they have publicly announced their intentions. But there are a few interesting developments.

TransACT have lodged their own bond while being part of the TERRiA consortium. Chief executive Ivan Slavich said the TERRiA bid was the first priority, but a bond had been lodged to maintain flexibility. "We're part of the TERRiA consortium, but we're keeping our options open," Mr Slavich said. "We're very much committed to the consortium but a lot of other things need to happen between now and when the bid needs to be lodged". Some speculate that TransACT may be bidding directly just for a state based bid, however TransACT, who recently took control of Neighbourhood Cable, also has network in Geelong and Ballarat and Bendigo. Optus, another of the TERRiA consortium members also lodged their own bond backed by Singtel.

Sources close to Macquarie Bank confirmed that it had lodged a bond, taking the approach of a utility access model which would be separated from the retail providers. If this is true, their bid is most likely to be supported by industry and the state governments who have been demanding operational separation of the network from the retail providers.

It is also believed that the Canadian-based Axia NetMedia and the Tasmanian Government may have lodged bonds, however neither party have publicly commented if this is true - adhering to the rules of the tender.

EDIT: According to MIS Australia, the Tasmanian goverment has confirmed its lodgement of the $5m bond and will be making a State based bid to specifically address the state's broadband disadvantage relative to the rest of the nation.

So in all, there seems to be 6 bidders in the game.

According to a Dow Jones Newswires, a company spokeswoman from Axia NetMedia (a Canadian telecommunications carrier based in Alberta) is considering a role in Australia's multi billion dollar National Broadband Network.

Axia has been hovering around both state and federal governments for several years, making presentations on the success of their broadband network in Alberta. One such presentation was to the Western Australian government which later spawned the "State Broadband Network" EOI. This seems to have gone the same way as the Queensland government's AU$550 million Brisbane FTTH network - NOWHERE!

Axia is best known as the company who built the Albert Supernet, a high-speed network that connected 429 communities across the Canadian state. The Government contributed to the building of the state-of-the-art IP network on the proviso it connected 4,200 government locations that included health, education, and municipal facilities.

Most interesting is the Alberta SuperNet uses an open access model which means any service provider in the province can use the SuperNet to deliver ultra-high speed services, including Internet access, to retail and business customers.

Axia is also the leading player in a consortium named OpenNet, which recently announced that it was bidding on the Singapore government's NBN project.

OpenNet proposed a comprehensive plan for a truly open access Fibre to the Home Network to cover the entire Singapore population. It intends to accomplish its "pristine open access" through:

• No individual parties having control over OpenNet;


• Three of the four OpenNet owners are not integrated telecommunications players hence there are no conflicting interests;


• Network is specifically designed to enable choice by OpenNet customers, large and small;


• Interests are aligned as OpenNet’s commercial success depends on its customers’ success.

In the proposal, OpenNet (which is made up of Axia NetMedia 30%, Singapore Telecommunications Limited 30%, Singapore Press Holdings Limited 25% and SP Telecommunications Pte Ltd 15%) will leverage SingTel’s existing extensive high-quality ducting network and turn it into an ultra-fast broadband network. Reliability is also guaranteed as the subterranean ducting system is least vulnerable to damage. OpenNet can deliver a resilient tamper-proof fibre-to-the-home network by 2010, at least two and a half years ahead of schedule.

With SingTel expressing some interest in bidding for Australia's NBN outside of the Optus lead TERRiA (formally G9) consortium, perhaps they are going to hitch up with their stable mate from OpenNet.

Senator Conroy should have taken a long hard look at the Singapore approach before running head long into our own NBN. In Singapore, they have created a three level operating model: NetCo - the network owner, OpCo - the network operator, and the retail providers who purchase wholesale services on the network. This ensures complete structural separation and ensures everyone is playing on a level field.