Government « Broadband Prime

NBN facing the rocks of Symplegad

On April 7, 2011 / Access, Government / Leave a comment

Almost a year ago (29th of March 2010) NBN issued a Request for Capability Statement for the construction of its network. In June the 23rd after assessing the applications filled 21 companies were invited to bid for the tender. Nevertheless, a few days ago, NBN Co announced that it withdraws the tender, the head of construction resigned and the construction industry was left in the cold.

NBN Co considered the bids submitted overpriced on the double digits, which would increase significantly the construction costs and consequently the average cost per home passed. It seems that the risks relating to the construction of the network are read differently by NBN and its industry partners. NBN has announced three major provisions to keep costs as low as possible:

Aerial deployment: 25% of the total access network will be deployed aerially and not over trenches.

Rights-of-way: The Government has express its intention to embark state government and local authorities to the project to facilitate the relinquishment of rights-of-way for the NBN constructor(s).

Telstra Agreement: The agreement with Telstra includes the re-use part of its infrastructure by the NBN Co for laying access and backhaul fiber.

Since neither of those assumptions has yet substantiated (recall also that the bids were submitted months ago) the risk asked from a constructor to assume is significant. If these issues were resolved it is likely that the offers would be closer to what NBN expected. Besides, NBN Co business plan states specifically that costs and time frame are based on these (among others) assumptions.

Addressing these issues as quickly as possibly could make things turn differently. Alternatively or complementarily, the time frame of the construction may well be extended. Decreasing the fiber reach to meet the budget constraints could be a third point of action, albeit it would become a serious political liability for the Government since it could translate in to accepting a major flaw in its own assumptions, before even the start of the project. Finally, there is the option of private negotiation with selected partners. Could that solve the problem without mounting rumors and disbelief about NBN Co’s legitimate intentions?

Things are getting tougher for the NBN since the industry seems relucant to take the assumptions for granted. However, the Australian Government has shown so far a remarkable ability to finding an alternative plan. Only this time the Government is bouncing between its political capital jeopardized by the recent developments and the (un)willingness of the market to swallow the risks. The Argonauts sent a pigeon to sail through the Symplegads; what will it take for the Australians to find their way through this one?

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NBN’s Pater Noster

On March 13, 2011 / Access, Government / Leave a comment

Have you ever noticed how NBN sounds like Amen? Here’s a noble prayer to Mike Quigley, CEO of NBN Co. Some people have humor:

“Our Chief Quigley,
respected be thy name,
Your fibre kingdom come,
may your plans become reality,
on Aussie soil as it is in Korea,
Give us this day our daily bandwidth,
and forgive us our symmetric dreams,
as we forgive those who have throttled us,
and lead us not into wireless deprivation,
but deliver us from ignorance & the Liberals,
For thine is the way of ubiquitous coverage,
upgradeable now and forever,
NBN”

Found at Delimiter.

FCC and EC on Network Neutrality

On November 15, 2010 / Government, The Blog / 3 Comments

Network Neutrality has emerged as a key influential factor of telecommunications regulation in recent years, due to primarily the equivocal practices applied by major telecoms operators to transit and terminating network data streams. The observation I wish to bring to the fore with this post is simple and straight forward and relates to the difference in approaching the matter between the European Commission and the FCC.

FCC seems to acknowledge the necessity to have a 2-speed Internet for the standard services and for those services that will be characterized as “specialized”. [See this and that]. On the other hand the European Commission intermediate report on this summer’s public consultation on the matter highlights [See this] the fact that current situation is broadly acceptable among industry and other stakeholders, however future provisions should consider possibly differentiated measures according to developing conditions.

In my view, the difference in perspective between the EC and the FCC is the result, to a large extent, of the level of competition in respective markets. In effect, US is governed by a duopoly, while Europe faces a much more competitive landscape in the access market. FCC focused on regulating the long-haul, thus encouraging competition in the interstate circuits markets, while EC focused on access which fostered the emergence of numerous alternative broadband operators (exploiting the LLU regulatory regime).

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NBN decides Australian Government

On September 8, 2010 / Access, Government, The Blog / 4 Comments

Broadband has been increasingly influential to political life and political decision-making across the globe. This is no secret. A number of municipalities and city councils in USA campaigned, some of them far from conservatively, to attract Google’s attention for an FTTH pilot. City officials in Europe and US include broadband related issues in their political campaigns and operational programs, the Swiss are asked to vote for or against the roll-out of NGA networks before the city councils commit to the projects, etc.

However, recent Australian elections with the consecutive 17 days of limbo-swinging for power, seems to have outweighed all past cases. Labor Government remains in power and preserves a fragile (76-74) minority government with national broadband plan appear as the deciding factors. Tony Windsor, one of the independent MPs backing up of Labor confirmed that “The issues that [...] were critical to this [backing up the labor Government], and possibly the most critical, was broadband“.

That’s not all. According to The Sydney Morning Herald, Greens are most likely going to remove ISP network filtering from the original Labor’s national broadband plan.

Don’t think that you are living the dream, because you are. Australians are about to get their fiber with no packet filtering whatsoever.

I really look forward to see what comes next!

[Update] Read also this: NBN a key factor in decision: independents

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National Broadband Networks: Break off on L1 or L2?

On August 25, 2010 / Access, Government, The Blog / 3 Comments

The purpose of this post is to put a few observations regarding the services options available to public planners of NGA infrastructures; for future reference. This is only a draft on benefits and risks for public offerings on Layer 1 and Layer 2 services.

National broadband plans (i.e. nationwide NGA infrastructures) concentrate primarily in building an access infrastructure and serving the wholesale markets. This is a business option widely adopted to allow private innovation and competition in the services layer (which carries the greatest value for broadband). Responsibilities, services and prices are regulated and usually contractually agreed.

The fundamental drawback of similar national plans is that the success of the wholesaler (the operator who runs the network for the Government) depends on the success of the retailers market, and provided the current development level of high-speed broadband market, interest by access operators in the infrastructure is not guaranteed. This is a major risk.

State interventions aim usually at Layer 1 products (i.e. dark fiber & unbundled fiber) for access providers as a base model. Luckily, L1 services offer the widest possibilities for telecoms operators for business flexibility and innovation potential.

However, L1 offerings are not immediately connected with retail, thus ISPs have to invest in Layer 2, something that may delay access sales and penetration rates. This is a crucial point for business sustainability. The infrastructure operator needs buyers for his products and the buyers are mainly interested in Layer 3. So there is a gap in L2 that needs closing. There are two options for that:

Contract a Communications operator: Communications Operators offer L2 products (capacity / connection services) across the infrastructure. The prices of L2 offerings are also regulated. Communications operators are provided with the option to offer L3 services (retail) as well, however with a form of functional separation between layers 2 and 3.
Integrate to L2: The infrastructure operator sells L2 products along with its L1 offerings. The infrastructure operator is structurally separated between L2 and L3 and functionally separated between L1 and L2. L2 is more attractive profit-wise for the infrastructure operator and a price relation between L1 unbundling and L2 wholesaling has to be put in place.

Simultaneously, passive infrastructure can be made available to other businesses (not only telecoms operators), e.g. large organizations, public services, education and health institutions, mobile carriers. Dark fiber is offered to this type of customers as a point-to-point connection between two premises (looped at the CO), and generally require sufficient IT staff for using the dark fiber connection. This however, is not well received by incumbents since it directly competes with their wholesale products.

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Thailand considers the FTTH Open Access model

On August 2, 2010 / Access, Government, The Blog / 9 Comments

Thailand swings with the idea of investing in FTTH infrastructure on Open Access principles. Alcatel-Lucent presented to Thailand’s Minister of ICT the case of a passive (unbundler/wholesaler) operator on the footmarks of Singapore and the plans of Australia.

Thailand has 63.52million population and 19 million households. Despite the ICT intensity of the national economy there are only 3.03million Internet users. And, only 2.29million are using high-speed Internet services.

In the current economic context with the financial crisis not yet clearly behind us, Government assistance to construct open infrastructures gains traction among nations.

If you want to read the whole story, visit ‘One Fiber – One Family’: FTTx Network Model for Thailand.

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A business model for municipal FTTH/B networks: the case of rural Greece

On July 7, 2010 / Access, Government, Greece, The Blog / 5 Comments

A few weeks ago, Info, the journal of policy, regulation and strategy for telecommunications, information and media of Emerald Press published my article “A business model for municipal FTTH/B networks: the case of rural Greece” co-authored with colleague Vasilis Merekoulias and prof. Vasilis Maglaris.

The article proposes a business model for municipalities for the establishment and management of regional FTTH/B networks in rural areas where competition is unlikely to take any initiative soon. Here’s a short abstract:

Purpose – In recent years, many municipalities have made investments in fiber to the home/building (FTTH/B) infrastructures to enhance the digital future of their local communities. This paper aims to propose a business model for managing these municipal FTTH/B networks. The paper also seeks to form a part of the discussion on the business, social and policy implications of municipal involvement in physical broadband infrastructures.

Design/methodology/approach – The paper reviews the international experience in municipal FTTH projects and identifies the best practices. Greece is then used as a case study due to the country’s strategic plans to create efficient broadband infrastructures in the periphery of the country. Finally, the municipal business model is examined on three premises: the extent of horizontal integration; the degree of vertical integration; and the appropriate form of ownership.

Findings – The passive infrastructure model applied within the model presented has strong potentials to ensure fair and open competition. The proposed business model exhibits substantial benefits for the telecommunications industry, the local communities and the managing company. It could become an effective policy tool for future regulation, broadband universal service framework, socially optimal investments and social inclusion.

Originality/value – The paper contributes to the international debates regarding the adoption of the “highway” model (“open access”) versus “vertical integration” and the suitability of public-private partnership (PPP) as a method for developing and operating FTTH/B networks. It also contributes to the discussion about the implications of the public sector’s involvement in broadband infrastructure development.

You can access the article here.

The journal of policy, regulation and strategy for telecommunications, information and media

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The Public MANs and the Dream for FTTH for all

On June 6, 2010 / Access, Government, The Blog / 2 Comments

More than a month ago the public consultation on managing the public MANs (built in 68 cities in the country) concluded with intelligent remarks coming from the private actors, public authorities and even a good amount of informed citizens.

I think the major issue here is that there is a confusion about the Government plans regarding the development of a country-wide broadband infrastructure. Some market players see the MANs in isolation with the national broadband strategy and effectively considering them as a separated infrastructure serving the broadband needs of the public sector alone, while others expect that MANs will/have to integrate with the FTTH plans.

In either case, the Government must eventually communicate effectively how it plans to deal with this metro infrastructure within the context of the national broadband plans. Provided the given situation of the public finances, using MANs as a seeding point to carefully expanding into an FTTH buildup and leveraging on the public sector as an anchor tenant of the broadband infrastructure is in fact a very attractive option.

The second big issue for the responders was the role of municipalities (public authorities) in these plans. The depth of city involvement is heavily debated (e.g. whether public authorities will participate in some form to the administration of MANs and the resulting network – if expanded – or whether public authorities will only be involved at the policy level – i.e. facilitating constructions, administering the rights-of-way). The value of municipal committment is overall accepted, nonetheless, there is scepticism regarding the efficiency in which the municipalities can/will contribute to the broadband development of the country.

The fact of the matter remains that we do have a long way ahead of us.

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On The Cost of Defering the National Broadband Plan in Cebit & WCIT

On May 26, 2010 / Access, Government, The Blog / 2 Comments

In an interesting discussion about the cost of the NBN (National Broadband Network) during the Cebit Australia 2010 some part of the focus kept on the opportunity cost of not building the network, especially in terms of competitive disadvantage that Australia would suffer in comparison to other national economies.

In a similar and more provocative tone (and righteously so), on the other side of the planet, Neelie Kroes at her address at the ‘World Congress on Information Technology‘ in Amsterdam said, in a more intergrated context, pretty much the same thing. Here’s a quote from her speech:

“Some people compare the roll-out of the internet to the way railway and electricity networks have transformed our lives over the last 150 years. They don’t mention that we need to achieve in 10 years with the internet what we have spent 150 years achieving with the other networks. Many European countries still lack High Speed Trains: we are promising high-speed internet by 2020 at the latest. Most people still use incandescent light-bulbs: the equivalent of dial-up internet.

This is one hell of a task. But it is not unrealistic because we each have so much at stake if we get it wrong. Your jobs, your health, your standards of living and your ability to leave the world a better place than when you arrived – this all pivots around maximising the potential of ICT.”

In other words, when someone considers the implementation costs of a National Broadband Plan as a unique weakness then he should also assess whether the threat/cost of being left behind other nations simply outweights these investment costs.

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Public Consultation on Managing the Greek City MANs

On April 1, 2010 / Access, Government, Greece / 1 Comment

The Special Secretariat for Digital Planning announced today the public consultation for the terms and conditions based on which an administrator for the city metropolitan fiber networks will be selected.

Currently the MANs cover primarily the center of each city and selected areas of interest in the urban periphery and hubs all public buildings and municipal services to a central location. It also expands to a large number of OTE’s outside cabinets (facilitating a potential sub-loop unbundling regulation).

According to the announcement the Secretariat’s goal is to have selected and approved a MAN administrator by the 1st of January 2011. The MAN Administrator will be responsible for wholesale services (unbundling and capacity offerings) over the infrastructure for a period of 25 years.

The consultation asks questions about the criteria of grouping distributed MANs in greater operating entities, the tender specifications, the terms, conditions and financing of the network expansion etc. It is critical in the sense that these networks hold the potential to speed up broadband development in the country if they are properly integrated in the national broadband strategy.

If you want to have a look, the consultation is available in Greek and English here. The deadline for contributions is the 19th of April 2010.

For background on the story read the following posts on Broadband Prime:

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