Telco alliance acting on self-interest: IDC

Telco alliance acting on self-interest: IDC

Summary: The members of the Alliance for Affordable Broadband, which last night released a manifesto with an alternative plan for a national broadband network, are looking out for their own interests and not those of the nation, according to IDC telecommunications analyst David Cannon.

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The members of the Alliance for Affordable Broadband, which last night released a manifesto with an alternative plan for a national broadband network, are looking out for their own interests and not those of the nation, according to IDC telecommunications analyst David Cannon.

"I respect them. I think they're good businessmen," Cannon told ZDNet Australia, "but I do not believe that they're doing it in the interests of the nation."

Telecommunications chief executives including AAPT's Paul Broad, Pipe Networks founder Bevan Slattery, Vocus Communications' James Spenceley, and others including BigAir's Jason Ashton, Allegro Networks' David Waldie, EFTel's John Lane and Polyfone's Paul Wallace are all part of the Alliance for Affordable Broadband.

The alliance's idea is that there is a need for a fibre-based network, closer to the Coalition's $6 billion proposal than Labor's $43 billion plan, but that it should only be rolled out where it is supported by a cost-benefit analysis or need.

The alliance's option, which it believes would cost $3 billion, involves a number of facets:

  • 4G national wholesale network coverage, to 98 per cent of Australians, at up to 100Mbps;
  • Fibre or equivalent high-speed broadband for backhaul, school, hospitals and most businesses, at speeds up to 1Gbps;
  • A fibre-based solution (whether that be fibre to the premise or FTTN or a combination of both) for areas of demonstrated need via commercial return, or where there is a demonstrated and justifiable improvement in productivity and/or social equality to justify taxpayer contribution;
  • Satellite for remote areas, at speeds up to 12Mbps.

However, Cannon doesn't think that the alliance's motivations are pure.

"The reality is ... they've never had a better time than right now in the market," he said, explaining that telcos now have regulated access pricing from the Australian Competition and Consumer Commission, which presented them a great business case for providing DSLAM-based broadband.

No new competitors were appearing as no-one else was getting into exchanges now, he said. Access was a key differentiator and the smaller players were taking market share away from Telstra.

These players didn't want that to change, Cannon believed. He also believed that the requirement in the plan that 4G wireless spectrum come with conditions attached was a sign of those players feeling they'd missed out on the wireless pie, which carriers such as Telstra and Optus currently enjoy.

Cannon didn't agree with the alliance's proposal of a national wireless network, saying that he was yet to see a wireless service that didn't fluctuate based on user load and line of sight. He also bagged the proposal that fibre should be rolled out where it was commercially viable or where there was a sufficient case. He said that everyone understood that this network wasn't about getting a commercial return; the return on investment is over 10 years, he said.

"It's not about today. It's a generational shift."

However, analysts such as independent telecommunications consultant Kevin Morgan, have said that the NBN is a Rolls Royce approach to broadband based on "over-hyped technology" and that wireless will be perfectly sufficient.

Ovum analyst David Kennedy said the alliance's ideas were sound.

"Just looking at the principles — none of these seem to be out of court," he said. "It makes perfect sense."

Kennedy said that it looks like the National Broadband Network will really have an uphill battle from here.

With hindsight, he said, the decision to rush through and implement a broadband network with no research and analysis was not a good one.

The alliance's proposal for a national broadband showed that the industry had as yet reached no consensus on what investment strategy was needed to support future needs, according to Kennedy.

"We haven't done the work to figure out where our broadband needs are going in the future," he said.

The Labor Government has rammed the National Broadband Network policy down everyone's throats, Kennedy said, which had meant it seemed inevitable so people sat back and waited.

Now, however, the balance of power has changed earlier than everyone thought.

"There is space for alternative debate that hasn't previously existed," Kennedy said.

He believed that the alliance was trying to influence the course of negotiations between the parties and independents, and said that was a good strategy.

"If you wanted to have your voice heard, now is the time to do it."

IBRS analyst Guy Cranswick agreed with Cannon that the proposal was self-serving, but also said that the idea had merit and raised questions about costing and feasibility.

Cranswick said it took aim at the failure of a business case, and provided a solution that had an implied business case by allowing the market to determine price and service.

The manifesto didn't, however, solve the problem of Telstra's control of the last mile, he said.

(Front page image credit: Rock series image by Stefano Tambolo, CC2.0)

Topics: Broadband, CXO, IT Priorities, Telcos, Telstra, NBN

Suzanne Tindal

About Suzanne Tindal

Suzanne Tindal cut her teeth at ZDNet.com.au as the site's telecommunications reporter, a role that saw her break some of the biggest stories associated with the National Broadband Network process. She then turned her attention to all matters in government and corporate ICT circles. Now she's taking on the whole gamut as news editor for the site.

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37 comments
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  • As one of the authors of the NBN3.0 AAB document I can assure I have no self interest, my business Vocus (ASX:VOC) provides international capacity, I don't get any benefit from NBN vs. NBN3.0

    Bevan (PIPE founder) sold his business 6 months ago, again no self Interest, except maybe as a tax payer.

    I've seen no self interest from the group and certainly not from me

    We've come together because we care about the Industry and believe there needs to be some serious debate and the current NBN is expensive and has not been costed properly.

    .

    Cheers,

    James Spenceley
    jrs2-335db
  • Soryy James, but according to your linked in page, "Vocus provides International and Domestic Internet to a large portion of Australia's Independent ISPs and Content Hosting companies. In addition to Data services, Vocus has a large interconnected Voice network and provides Call Termination and Phone numbers across Australia.

    If the independant ISP's go to the NBN and the voice and data switches to companies that can compete via the NBN, wouldn't that directly effect VOCUS?

    It's not about the commercial return, it's about giving all Australia a fair chance to compete in a world market. Apart from the horrible latency, let's not forget the spectrum for all of this is reliant on the shut down of the analog tv signal wich won't be finalised for at least FOUR years! So what do they propose we do?? Would they prefer if we sat back and waited FOUR years because their option although it will be less reliable, prone to overloading of cells and slower speeds (I use 3G on the road and the speeds advertised are NOT what you get by a long shot!)?
    Why Knot
  • Great. This is exactly what we need as if the coalition hadn't muddied the waters already with their half-assed broadband plan now we have a third group of twits trying to put their interests ahead of the nations (not surprising really) and quite frankly I'm sick of all this wireless talk too, it's a dead end we all know it. We should do this NBN right the first time. Lay fibre ask questions later.
    Hubert Cumberdale
  • @gregsmith

    "If the independant ISP's go to the NBN and the voice and data switches to companies that can compete via the NBN, wouldn't that directly effect VOCUS?"

    Actually that is good for us, they will buy their first/last mile from NBN but that is only the link to the house, they'll still need International/Domestic Internet and Voice termination for the VOIP service.

    If you want to look at affordability check out the plans for Singapore's new FTTH network.

    http://info.singtel.com/personal/fibrebroadband

    EVEN those services magic 200mbps services have the International limited to 15-25Mbps and the cheapest plan is $85 !

    Can you imagine how much cheaper it is to do FTTH in a country with the population density of singapore.

    If anything that prooces the current NBN is just plain broken and we need to look at a new model that includes a number of options (FTTH,N,HFC and wireless) if we don't want unaffordable broadband.

    James
    jrs2-335db
  • All Australia a fair chance? Are saying is there is a groundswell of rural businesses out there that are moribund because they can't get 1000M Internet access or 1000M WAN links? The greater majority of the business that would require anything like these speeds already have them available and they are in the capital cities that are already fibered. (They don't normally use anywhere near that much BW, btw). Unfortunately "build and they will come" or "you don't know what you don't know, so let's build for the future" isn't fair to the country.... I am sure we could use the $35B to $90B on a range of projects to fix other things wrong with Australia (health, water supply, rail transport, law & order?).

    Many seem to see this as a once in a lifetime, mutually exclusive, event. It isn't. Any fibre backbone developed by the Coalition NBN or this NBNv3.0 to hit the rural/regional 'blackspots' would obviously form the basis of any FTTH network if this was proven to be necessary in the future. To date this is not proven.... Australian fixed line use is dropping and people are moving to wireless. Many people now don't have a fixed line service in their home.

    Telstra and Optus are well advanced with their tests of LTE, those that decry wireless shouldn't base it on existing 3G/3G+ services. LTE and the inevitable LTE Advanced will be much superior.

    As regards spectrum, it's true that normal frequencies used for LTE are current used for some analog TV channels.... but not all channels are used in every area (particularly in rural areas) and it possible to either move stations to another channel or bring forward the migration to Digital in some areas, or use an entirely different band for LTE in Australia.... the Federal Government manages frequency allocation so they have the power to do this.

    It is easy and all too obvious to blame self interest for this alternative plan, but just maybe these guys have the real-world experience to advise on a network that develops Australia, provides value for money services, and isn't an ongoing drain on taxpayers.
    FiberLover
  • $35b -90b ... $90b, that's a newie, nice figures Phil, why not just round it up to a nice neat $100b, since we're (well you) are claiming complete BS?

    As said before, we spend $80b per year on governance alone, yet you cry the Liberal FUD that $4.3b p.a. max. is too much to spend on a nation wide FTTP network, that will benefit more than a few greedy pollies?

    Again, trim the $80b by a meagre 5% per year and in ten years when completed, the savings from parliamentary extravagancies, will have paid for a NBN for all!
    RS-ef540
  • James... there's a gentleman here named Syd.

    Syd is a Telstra shareholder, an active Telstra supporter, attends every Telstra AGM, has been interviewed on NWAT and used to comment at multiple blogs daily, "perpetually, in defence of, or on behalf of, Telstra".

    Now of course Syd "actually believed" that he was commenting logically and impartially. But, he would say things like, God Bless Telstra and refer to them as Saint Telstra (seriously). So whild Syd may have wrongly assumed his impartiality, in essence, he was as biased as one could possibly ever be and simply speaking on behalf of his own financial agenda/those beaten and bruised TLS shares.

    James (along with your own like-minded, band of amigo's) you remind me of a lot, of Syd...!
    RS-ef540
  • Nice one PhilIT

    Its nice to see someone thinking logically, I get very scared when the only reason I hear to do something is "we can't be left behind".
    jrs2-335db
  • Google "Rolls-Royce NBN" for another view on your beloved.

    Unfortunately networks need managing, and equipment needs replacing probably every 5-10 years.
    FiberLover
  • Perhaps what's even scarier, is when those like you finally realise that it's too late, we have actually been left behind, then what...?
    RS-ef540
  • Now Google ostrich and go to images Phil.

    Is that one in the middle there with his head in the sand you or James, bit hard to tell?
    RS-ef540
  • there it is ...
    "hurry or it'll be too late"
    "we'll be left behind"
    It will never be "too late" we can always build network as demand is there
    No-one will be left behind, it's not like suddenly the world will look at us and say, hey Australia only has 100mbps Internet and not Gbps, don't visit them, trade with them or have anything to do with them.

    Guys there is no "left behind" most countries are rolling out FTTH to about 15-30% of their country, that is what is economically viable, go do the research and verify that. Does that mean ~70% of most european and Asia countries are also being left behind ?
    jrs2-335db
  • That's very metro focused of you Phil. I know bucket loads of businesses who are constrained by ADSL2 today. Wireless is too unpredictable for full time office use without hurting productivity (great for mobility though).

    What about workforce flexibility? I know a successful Marketing business who's owner is based in a town of 6500. They have rural and metro clients. They have a dispersed workforce of 8 people in small or home offices in metro and rural. They collaborate on large documents and media files...... & they scream at me when they're being hammered by a deadline and it takes forever to move data around.

    The best available solution to them is ADSL2+ on a Telstra port. Are you suggesting that 1mbps is plenty for business? I work in an office of 20 people in said town of 6500 & I can tell you that 1mbps isn't exactly awesome.

    So the AAB is saying fibre to most businesses. My office of 20 employs health promotion staff and health professionals to deliver services and education in a rural area. Are they saying that we should relocate to the Sydney CBD?

    I agree, this alliance is about self interest, not national interest. I think much less of those involved because of it.
    neil_mc
  • hahahah.....i missed uncle Syd, was going to coment while on the way to work but my half arse wireless is to slow for me to do anything so i have to wait till i get to the office. Some day, the wireless stays connected well throughout the trip, other days, it's so f&*ked up. That's wireless for you.
    Salami Chujillo
  • Spot on Phill, when it comes to the NBN rollout many put on the rose coloured glasses and only see what they want to see.
    advocate-d95d7
  • "I agree, this alliance is about self interest, not national interest. I think much less of those involved because of it."

    So getting the taxpayer at massive cost to bankroll FTTH to the door of your business is what exactly if not also 'self-interest'?
    advocate-d95d7
  • "So getting the taxpayer at massive cost to bankroll FTTH to the door of your business is what exactly if not also 'self-interest'?"

    I can see what you're getting at. State and national road projects have a budget of about $100 billion over the next 10 years. Having a sealed road to your business is also pretty selfish. When it falls apart (like copper) we should just patch it up with a sort of works solution ;)

    "Massive cost" gets thrown around a lot, but if you think of it in a national long term infrastructure perspective, what exactly is massive about it?
    neil_mc
  • Anyone who says "wireless is sufficient" obviously hasn't tried to use it in earnest, or has a vested interest. Also the idea that people are "moving" to wireless is b.s. based on uptake figures of wireless, but ignoring that there is no correlating drop in ADSL connections. Wireless is a complimentary technology at best. As someone who travels weekly, I use both ADSL and wireless a lot and like the poster above me am often swearing at the dodgy wireless connection even in the middle of the CBD but as for ADSL, its just always on and I barely even think about it.
    xBeanie
  • Why now after all these years? Where have you been slackers? Yup, Defiantly Self-INTEREST.

    It wouldn't surprise me that they want the government to build the most difficult part, the backhaul.
    Nitrofiet
  • And who is going to provide compensation to Telstra for loosing enough customers on the copper network to keep it sustainable?
    Nitrofiet