Mining for OPELs, coming up with ... ?

Mining for OPELs, coming up with ... ?

Summary: Hopefully, you've been spending your end-of-year break better than the executives at Optus, who seem to have taken advantage of the annual industry-wide lull to get onetime WiMax aspirant Austar United Telecommunications to the negotiating table.

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Hopefully, you've been spending your end-of-year break better than the executives at Optus, who seem to have taken advantage of the annual industry-wide lull to get onetime WiMax aspirant Austar United Telecommunications to the negotiating table.

And, after who knows how many months of negotiating, Optus is finally ready to start making good on its pre-election promises. Well, we hope so, at least. Having spent AU$65 million for the radiofrequency spectrum it needs to begin rolling out its WiMax services, the Optus-Elders OPEL partnership would seem to be finally getting some momentum to deliver on its promises.

That's a good thing, because with 2008 already here and the election behind us, many will begin pressuring the companies to show something for all the money the government has thrown at them.

No matter what they do, delays will be perceived as a sign that things aren't going as smoothly as they had hoped, so the companies would be well advised to put some runs on the board in order to silence their critics.

One can be certain that the venture's new government overseer, Stephen Conroy, will be watching the effort for any opportunity to throw a spanner in the works. Of course, he has his own promises to deliver upon, with many voters likely to also begin asking where their oft-promised FTTN connections have gone.

Just what OPEL and Conroy are and aren't doing will likely be the subject of quite a few ruminations this year, so I won't bore you with it all just yet. What I will say, however, is that this purchase is a significant shift in Australia's telecommunications landscape -- for all the wrong reasons.

Consider Austar, which believed enough in WiMax eight years ago that it shelled out AU$180 million for the spectrum that would allow it to roll out the services around the country. In subsequent years, however, the prospects for that service have grown increasingly dim as Austar realised the hype of the dot-com era, and its attendant spectrum auctions, was going to be difficult to translate into real, commercial services.

I spoke with John Porter, CEO of Austar, in the middle of last year and he hinted at the kinds of problems the company was having turning its vision into reality. Porter was dirty on the government's "cognitive dissonance" stemming from its need to both nurture Telstra and encourage the company's competitors -- which had, he felt, resulted in a duopoly-based telecoms market that simply made investment by other companies untenable.

"There aren't a lot of public policy visionaries in government, and they're very short-sighted in terms of the implications [of their policies]," he said. "There was a view that a strong Telstra, and a strong duopoly with Optus, is the best way forward for telecoms in this country. But when you have the emergence of new technologies, which you had with [Hybrid Fibre Coax] 10 years ago and which you will shortly have with wireless technologies such as WiMax, [the duopoly approach] doesn't create a particularly level playing field -- one where people are willing to put capital at risk."

Would one say that Optus is now willing to put capital at risk? Well, yes, since it has matched Elders by shelling out AU$32.75 million for its rights to the spectrum it needs to build out Australia's next major wireless network.

Yet while the sale of spectrum to OPEL may reflect a starting point for WiMax, it also reinforces a sad point: rolling out broad swatches of coverage in rural areas simply isn't going to happen without the direct involvement of a major carrier -- and Australia only has two of those willing to take a punt on large portions of the bush.

That means Australians still face limited choices, and uncertain outcomes for their votes and taxpayer dollars. Austar couldn't make the most of its asset, so it has sold the spectrum at a loss and focused on a core business that it reportedly does pretty well. OPEL have a plan and now have the spectrum to make it happen -- so hopefully, they can succeed where others have not.

Of course, this success will face other problems: the licence Optus has purchased expires in six years; while one would hope Conroy would be above pettiness, one wonders what kind of cost or conditions might be attached to a renewal of the WiMax spectrum licence should Labor be re-elected three years from now.

That's all speculation, of course. For now, and because it's a new year and we should all be positive for the new year, let's simply send condolences to Austar -- and hope that OPEL will move quickly to deliver on their promises.

Austar is counting on OPEL to be able to provide WiMax services for it to wholesale to its customers by the end of the year -- so here's hoping this deal will finally make 2008 the year of WiMax.

Topics: Broadband, Government, Government AU, Networking, Telcos, NBN, Wi-Fi

About

Australia’s first-world economy relies on first-rate IT and telecommunications innovation. David Braue, an award-winning IT journalist and former Macworld editor, covers its challenges, successes and lessons learned as it uses ICT to assert its leadership in the developing Asia-Pacific region – and strengthen its reputation on the world stage.

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9 comments
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  • OPEL

    What the author fails to mention is that OPEL are not going to retail there WIMAX / ULL network, they are going to wholesale it. This will foster the growth of small players (like Austar) without them having to risk large amounts of capital on networks.

    This is also the aim of the G9 FTTN bid. An open access network where all players pay the same access costs and create value and differentiation through their product offerings.
    anonymous
  • Caution urged by the Minister.

    Opel would be wise to seriously consider the suggestion and advice given them by Senator Conroy.

    The Senator advised Opel to be cognisant of the fact that his Government proposes to become involved in a business that would be in opposition to Opel.

    Also, one would imagine that Senator Conroy, being a economic conservative, would not have looked kindly upon the one thousand million dollar free gift to Opel by Mr Howard and Senator Coonan.

    Opel should be appreciative of the Senators timely warning and understand that should they proceed they can expect no more handouts from his Government.
    anonymous
  • It is at least three way competition

    It is going to be at least a three way competition in the market with Vodafone rolling out a HSDPA high speed wireless network to a very large part of Australia (92%+). This network, along with Optus's own HSDPA network will offer a fast network with speeds of up to 14.4Mbps and an upgrade path to much faster speeds.

    Also I didn't think the Opel deal was a done deal yet. I believe the Department of Communications still has to sign off on some key documents. The sale of the WiMax spectrum is subject to this condition.
    anonymous
  • Minister needs to back Opel

    The current communications minister would be mad not to help Opel out even if it is done on the quiet. They now have access to 200Mhz of spectrum. This pales in comparison to anything the mobile phone network owners own (I think Telstra own only something between 10 and 20Mhz for the NextG network).

    Opel is for underserved homes. That is homes that cannot receive a metro equivalent broadband service. Labor's FTTN is something that will never make it to these homes as it will never be cost effective to do so.

    In any case the current FTTN policy is a pipe dream for the Labor government no matter who gets the go ahead it will immediately be tied up for years in the courts as compensation payments are argued over to the parties who will lose access to customers or infrastructure.

    Two years of court proceedings and then another 2 years to build in metropolitan areas is a long time in broadband technology. Then another 2 years after that for FTTN to be built in the major regionals. All the while with any luck people like myself who cannot receive metro equivalent broadband will be able to surf at faster that the current 28k dial up speeds as Opel roll out WiMAX 802.16e technology.

    If Senator Conroy knew his portfolio he would be trying to help Opel as much as possible and try to convince everyone it was the current Labor government that made it all possible.
    anonymous
  • Can't agree more

    Telstra's reponse to the WiMAX proposal was ridiculous and arrogant, attempting to bully an entire government around. I can't wait for the day I unplug my phone from the wall for good. Bye bye Telstra.
    anonymous
  • Re: Can't agree more

    Telstra's initial response to OPEL's Wi-MAX was ridiculous and arrogant? FYI: according to previous reports, many 'experts', not just Telstra (WiMAX Day, George Fong etc) criticized OPELs "original plan as unworkable" - shadow minister/now minister Conroy even called it a "dog of a plan"! Since winning the tender many months back, Elders - the EL in OPEL, have had a number of execs resign (in disgust???). OPEL didnt and maybe still dont, have a CEO or CFO. Even Optus - the OP in OPEL, own GM of Technology Peter Ferris, admitted OPEL "doesn't exist and apparently referred to it as a hypothetical company/trademark only". Obviously, OPEL and this politically motivated funding agreement, have more holes than Swiss cheese! Regardless, hopefully now with this new spectrum, they will finally comply (apparently they still hadnt/havent actually received the money because of non-compliance in certain network areas) and for all our sakes, the $1b will not be wasted! Meanwhile, apparently some can't wait to unplug from Telstra. Well, thats exactly what I did a few years back, until I actually sampled the incompetence of 5 of Telstras competitors. Since then I have returned to Telstra, much wiser. So if you dislike Telstra so much, why not back your convictions and faith in 'hypothetical' OPEL, "say bye bye to Telstra now" and simply wait for the wonder that is OPEL? After all, gauging the fantastic progress and professionalism they have shown over the first 6 months, you won't be waiting long! LOL.
    anonymous
  • Held to ransom by the bush

    It is quite unbelievable to see how much power the bush vote yields over political decisions. I can't quite fathom why a decision to live in a remote community, taken for all sorts of positive reasons, should entitle those making the decision to expect the same level of amenity and service as those that bunch up in metropolitan areas, for all sorts of pragmatic reasons. So the discussion about duopolies and the need to put money at risk to achieve a level of service in remote areas misses the point that the premise that there should be services comparable to metropolitan areas is wrong. On the subject of mobile networks, even most bush-folk would agree that the beloved analog network of days gone by was perfectly adequate. A motivation for the telcos to replace older networks is the lower maintenance cost of more recent technology combined with lots of taxpayers money. The same money that is not spent on bringing the telco infrastructure of 90 % of the Australian population into the 21st century, through roll-out of FTTH, which would also put paid to the Telstra copper monopoly.
    anonymous
  • Held to Ransom by "Pitt Street Farmers"

    Its called trying to run a business. The majority of the people who live in the country just want reliable telecommunications that work, are affordable and allow us to operate efficiently. In the last 12 months I have had my 2-way SAT internet connection and my copper phone line go down at least 8 times, with all of the problems being the result of inadequate installation, Telstra's refusal to preform proper maintenance or equipment that Telstra has installed that doesn't suit my location. As for FTTN and FTTH, I have what was supposed to be Telstra's main Fibre-optic backbone between Sydney and Brisbane via Tamworth and Toowoomba running through my property. After spending countless millions placing a cable in the ground that would have made it cheaper for everyone in Australia to use the Internet, Telstra shelved the plan when there was only 100km of cable left to put in, all because Sol Trujilo didn't agree with the setup. I'd have very reliable internet at a very cheap price if Telstra had of held up their end of the bargain and delivered on the connection to that line that they promised when the Reps came around to ask us for permission for the cable to come through our place. Also if you check your facts buddy, you will see that if it wasn't for us "up in the sticks" that you guys wouldn't have your network backbones and infrastructure because the said infrastructure runs through quite a lot of our places. You city guys should be overjoyed for us country people getting such services because it improves the network backbones for you guys too.
    anonymous
  • OPEL responsibilities come with profits

    So if OPEL creates a superior service in the bush to Telstra (and all the other so called national carriers) - would it not then make sense for them to bear the burden of the universal service obligation - particularly in relation to 000 calls. After all - its all about the best and most reliable service isn't it?? If they build a better service , I would want my 000 calls to be carried over that service - wouldn't you???
    anonymous