OpenNet wins Singapore broadband bid

update The Infocomm Development Authority of Singapore (IDA) has appointed the OpenNet consortium as the network company (NetCo) for the country's planned next-generation National Broadband Network (NBN).

The IT regulatory body announced Friday the Axia NetMedia-led consortium would be responsible for building the fiber infrastructure of the NBN.

OpenNet, which comprises Canada-based Axia and three local companies, SingTel, Singapore Press Holdings and SP Telecommunications, was in competition for the government contract with Infinity consortium. The latter was initially formed between Singapore telcos MobileOne (M1) and StarHub and Hong Kong's City Telecom (CTI), but CTI dropped out last month and was replaced by Qatar Investment Authority (QIA).

Minister for Information, Communication and the Arts, Dr. Lee Boon Yang, declined to comment on whether Infinity's restructuring negatively impacted its bid. Speaking during a press conference, he said it is "not appropriate to consider this factor", but that the IDA's decision was made based on the merits of each consortium's request-for-proposal (RFP) outline.

Khoong Hock Yun, IDA's assistant chief executive, infrastructure development group, said one of the highlights of OpenNet's proposal was its ability to reuse existing underlying passive infrastructure, such as ducts, manholes and exchanges. This lowers the cost of the roll out, as well as minimizing disruptive building activity and inconvenience to the public, he said.

The consortium will use member, SingTel's existing passive infrastructure assets to deploy the network, said Dr. Lee. SingTel owns a substantial portion of the country's existing duct network, which SingTel CEO Singapore, Allen Lew, has said is more extensive than competitor, StarHub's network.

However, part of the proposal states SingTel will transfer these assets to a neutral party within 24 months of the NetCo's contractual close. This party, known as the Asset Company (AssetCo), will be independent and separately-managed.

SingTel will reduce its stake in the AssetCo within five years of the contractual and financial close. Future maintenance of the fiber assets will be entrusted to the AssetCo.

Dr. Lee said OpenNet has proposed an accelerated roll out of the NBN two years ahead of the IDA's initial schedule. Sixty percent of households and buildings will get wired up by 2010, with 95 percent coverage expected by 2012. "From 2013, OpenNet will meet all subsequent requests to install fiber access points in homes, offices and buildings throughout Singapore," said Dr. Lee.

OpenNet has proposed wholesale prices of S$15 (US$10) per month per residential fiber connection and S$50 (US$35) per month per non-residential connection. These prices will be extended to the next layer of operating companies (OpCos) which will repackage services atop this layer and retail packages to consumers at a higher price.

The government will provide OpenNet with a grant of up to S$750 million (US$525 million) to support its effort, said Dr. Lee.

StarHub CEO Terry Clontz said in a statement e-mailed to the press: "We are disappointed that the Infinity Consortium was not selected for the NetCo project.

"The Infinity Consortium proposed what we believe is a very good solution for Singapore’s long term success with the Next-Gen NBN. Also, our proposal would have substantially diversified, for the first time, fixed infrastructure ownership."

Analyst firm, Ovum, said it remains to be seen how the structural separation of the AssetCo will play out. "This implementation will be closely watched in countries where duct access is recognized as a competition issue, particularly in Europe.

"Is this a model for other countries? It is too early to say because the business model for a separated NGN network will only become clear once the prices of wholesale services offered by active switching operators are known," said Ovum in a statement.

Singapore's size should also be taken into account, it noted. Its dense structure "more closely resembles a metropolitan environment than a truly national one--which normally includes a mix of metropolitan and urban environments," the research firm said.

This means the country's example is more applicable at a city level rather than national for other larger countries, Ovum added.