The Insider has been intrigued of late by the arguments and counter-arguments being bandied about regarding the virtues of fiber broadband network rollouts, especially the national variety. It appears that fiber is still the only commercially viable medium that has the ability to deliver the ever-increasing data requirements of internet and cloud usage in the foreseeable future.
The European Union’s Digital Agenda commissioner, Neelie Kroes, believes so, and is doing all she can to ‘encourage’ incumbent operators to invest in new fiber-based broadband networks. It seems that those incumbents prefer to sweat out their copper assets rather than make major investment in next-generation fiber rollouts, and who can blame them?
For those present at the recent Broadband World Forum held in a rather warm converted car-park under La Defense in Paris, there were plenty of contradictory presentations that generated some heated debate – for and against national broadband network (NBN) fiber rollouts. Almost as if to purposely aggravate the true believers, the organizers unleashed Australia’s Shadow Minister for Communications, one Andrew Turnbull, who unceremoniously ‘bagged’ the Australian government’s NBN initiative, viewed by many others as ground-breaking.
Why a member of an opposition party and avowed anti-NBN activist be given a chance to address a broadband industry forum defies logic. Statements like “starry-eyed politicians and staggeringly – expensive technology are a dangerous mix” and “it has been alleged – and not denied – that NBN was conceived by former Prime Minister Rudd and communications minister Conroy on the back of a napkin, mid-air somewhere between Sydney and Brisbane,” must have had Aussies in the crowd squirming with embarrassment. Maybe Turnbull is not aware that the late Steve Jobs and Steve Wozniak designed the first Apple computer on the back of a table napkin in a Sizzler restaurant. It seemed to work for them.
However, getting back to the point, Neelie Kroes is looking at forcing a cut in access prices to copper networks in the hope that networks will see the benefit in investing in fiber where they could earn higher revenues. Interesting logic, but not one that will be readily supported by the networks. They will need to see a lot more support from governments and regulators before they ‘bet the business’ on any type of national fiber network rollout. The other issue that this raises is that all the operators would then need to do their own thing causing unnecessary and expensive replication of network, not to mention the disruption to roads and homes as multiple players start digging.
So, according to Turnbull, a government funded NBN that is open to everyone with regulated wholesale pricing is simply uncompetitive and a burden on taxpayers. The Neelie Kroes concept of network operators building their own competitive networks will unlikely be met with acceptance by private enterprise having to fund it and smaller players who will, most certainly, be left out in the cold.
That leaves the Singapore model where two ‘private’ companies are granted the right to operate the passive and active elements of the NBN, both substantially funded by government. The main differentiator being that the opening duopoly wholesale positions will be relaxed later allowing open competition.
If we look at what is now happening in the wireless market where multiple players, rolling out multiple networks under heavy regulation and with constant technology upgrades, we might get a feel for what fiber network operators may be in for. It’s not only a very expensive way to do business, it is also questionable how sustainable multiple NBNs could be. Even the mobile operators are starting to look at ways of sharing their assets to reduce costs and, in some markets, mergers are becoming the order of the day simply to survive.
Maybe, just maybe, those European incumbents extracting all they can from their copper assets are being very prudent after all. With no clear path to follow in the early evolution of national fiber rollouts, holding out may actually be the best option.
Posted
10-05-2011 8:13 PM
by
The Insider