Too little, too late, for the local loop?

Too little, too late, for the local loop?

Summary: The news this week that Canberra-based TransACT was going to start rolling out fibre-to-the-home (FTTH) services it announced in May, was at first intriguing.


The news this week that Canberra-based TransACT was going to start rolling out fibre-to-the-home (FTTH) services it announced in May, was at first intriguing.

Hearing that TransACT will go live with the service by the end of the month, I believed for a split-second that this was the flood to break Australia's fast-broadband deadlock.

Like the proverbial Ferrari, I imagined rivals following suit by pouring funding into their own FTTH rollouts. After all, if Canberra can do it, surely other areas around the country can manage it as well?

Then I read about the scope of TransACT's little project. Although it's offering cutting-edge technology, the company only expects to offer that technology to 1500 homes in the new suburb of Forde by 2013.

That's 214 homes, or fewer than 500 people, connected to these services on average per year. That kind of rollout isn't going to break any kind of drought at all -- especially if download speeds over the network are limited to 10Mbps, as TransACT describes.

I've had a 10Mbps cable connection for many years now, so I have to ask: Why is the undeniable promise of a proper FTTH rollout being compromised by such lackadaisical specifications?

To be fair, TransACT is also talking about a 30Mbps service, but this and faster speeds, as I pointed out recently, are already attainable over less expensive cable networks, which combine fibre and cable-based last-mile connections to carry data at up to 100Mbps.

Assuming that fibre is more expensive than cable and copper on a per-kilometre basis, where's the business case for an FTTH rollout that doesn't deliver anything other technologies already can?

Even Telstra this week showed that fibre isn't the only way to get higher bandwidth, after confirming it would upgrade 1.7 million cable services to support 30Mbps connections by year's end.

Of course, this does little for anyone who doesn't already have Telstra cable, since the company isn't expanding its cable network's reach so much as upgrading infrastructure to provide more speed to people that are already online.

Not that there's anything wrong with that -- but building layer upon layer of similarly specced data services doesn't really seem like the way to service new markets.

TransACT's fibre-based approach could potentially offer lightning-speed connections, but that carrier's extremely modest ambitions will relegate that project to irrelevance for anybody outside of a few square kilometres of the Canberra suburb.

The worst part about all of this is that technology-driven announcements like these mask the real problem: carriers simply aren't spending on wired networks, still a mandatory service for billions of people, like they used to.

Telstra has made no secret of its desire to tie further network investment to its ability to get the regulatory environment it wants, and its latest full-year results confirm it's not just a bluff. Overall capital expenditure increased from AU$4.303 billion in fiscal 2006 to AU$5.982 billion in fiscal 2007, the increase was explained by AU$1.015 billion spent on the new Next G and Next IP networks, and AU$449 million on "intangibles mainly due to development and acquisition of IT software assets".

In other words, Telstra is spending basically nothing on its existing networks, shifting capital to newer, closed services. What we haven't heard, until recently, is that Telstra's position may be less unusual than we think: an Ovum report out this week found that North American telcos are also slashing their wired network spending. My unsettling conclusion: the landline is well and truly on the way out.

That's a harsh future for a technology that has served the world for a hundred years, but it reflects the shifting market realities that carriers face.

Sure, xDSL technologies will continue to run over the local loop for some time, but that local loop will continue as a patchwork assemblage of old services rather than a completely new local loop. If you can't already get xDSL, it appears, the odds are that you never will.

It won't happen overnight, but with this kind of treatment the copper loop will simply fade away into obscurity, with customers forced onto better-funded mobile networks for broadband and phone services -- not because they're better, but simply because they work.

Here we are, then, between a rock and a hard place: FTTH works great but it's too expensive for a general rollout. Mobile networks have their appeal, but they honestly were not designed as a full-term replacement for the local loop. What, then, is the best way forward? Or, more worrying, is there even one?

Topics: Telcos, Broadband, Telstra


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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  • FTTH will struggle to get up for a long time yet

    Where is the business case for FTTH? Answer - when the telcos can profit from large bandwidth services. But with the rise of YouTube etc that is becoming less of a possibility. The content providers are bypassing Telcos, with the likes of Joost and iTunes.

    Unless you start billing people for video and other services (and the revenue is substantial), there is no incentive to spend what is required for the FTTH infrastructure.

    This is more or less the same as the argument put forward by Telstra about FTTN: Why bother when your unlikely to get a "commercial" return.

    FTTH is more scalable, so the minimum speeds would likely start at 30 Mbps (like in the US with Verizon, AT&T) but they could rise quickly from there. However, I believe the bandwidth on Passive Optical Networks is shared in the last mile, so 2.5 Gbps at a typical ratio of 1:32 is only 78 Mbps. VDSL2 can do 100 Mbps today, but this relies on loop length, copper quality, crosstalk, etc.

    I guess our only hope is that greenfields (and selective brownfields) deployments start popping up, but this would require partnerships between builders/stratas and companies like iiNet and Internode who won't charge $5k per customer (like Telstra's current FTTH offering).
  • Not one way forward, but many

    The attachment people have to wired networks is sentimental. We are so used to a wire coming into the house that we begin to think it is the only way*, yet we don't even think twice about using mobile phones and watching TV delivered over the airwaves.

    Sure, wireless wasn't designed to replace the fixed local loop, and fibre is more expensive than copper. So what? There is a way forward, but it will require a willingness to invest in a range of networks for a range of situations. Fibre is clearly worthwhile in TransACT's case. Wireless, cable and even copper may continue to be suitable elsewhere.

    * Clearly not all of us though, since Telstra's fixed-line revenues have been in decline for some time.
  • The existing speed was a joke, too

    Look at the speed TransACT is offering with its fibre network: 1-2 Mbps.
  • Better than being capped

    Better than being capped at 64kbps on some (no names mentioned) ISPs
  • copper pairs

    I've yet to see a replacement for lifline services when the power goes down? This is critical for many people and a basic service ignored by technologists.
    I also appreciate the quality of pstn calls as opposed to any replacement technology that I've sampled to date.