One of the signatories to a national broadband proposal unveiled at the eleventh hour to rival Labor’s own long-running NBN project has accused vendors and telcos of stirring up hype for a fibre-optic cable future in line with a view to serving their own interests in generating massive contracts and gaining operating certainty.

There appeared to have been a growing public consensus in Australia’s telecommunications industry over the past 18 months since Labor unveiled its NBN policy that fibre to the home was necessary to take the country forward, especially when it came to growing a strong technology sector.

However, the issue has increasingly been questioned over the election period, with the Coalition unveiling a much more minimalist policy, and a group of telcos this week breaking with the industry to push their own “NBN 3.0″ policy which shares many similarities with the Coalition’s wireless- and backhaul-based plan.

Vendors like Ericsson and Alcatel-Lucent have discussed the issue in the public over the past several years, including the benefits that high-speed broadband can bring. And so have top-tier telco executives such as Internode’s Simon Hackett.

“I don’t want to offend anyone, but I would suggest there is probably some vested interests at play in the NBN,” said BigAir chief executive Jason Ashton this week, when asked why the industry consensus has lasted so long.

Ashton, along with counterparts from telcos like AAPT, Pipe Networks and others, is part of the NBN 3.0 group, which has dubbed itself the Alliance for Affordable Broadband.

Ashton said it wasn’t surprising that vendors would be pro-NBN, given the potential for NBN Co to dole out “incredible contracts, the likes of which this country has never seen in terms of a technology contract”. “You’ll get a lot of people supporting the project, simply because the scale and the numbers are so unbelievable in that sense,” he said.

French giant Alcatel-Lucent has already become a beneficiary of the NBN project, inking a deal in June to supply NBN Co with up to $1.5 billion worth of optical and ethernet aggregation equipment.

But according to Ashton, the claimed self-interest also extended to some of BigAir’s fellow telcos. “Perhaps one of the reasons for ISPs supporting NBN Co is that it’s de-risking their business,” he said.

Normally, according to Ashton, it was telcos themselves who would take on market risk by investing in infrastructure and certain technologies. However, in the NBN paradigm, that onus would shift to the government.

“NBN Co’s saying: ‘Don’t worry, we’ll do it for you’,” he said. “Effectively you’re doing all the heavy lifting for a lot of these telcos … In a way, they’re kind of benefiting from the government’s largesse.”

Infrastructure-based competition
The Coalition’s own policy — which features a focus on market competition to provide better services — has been attacked by various sections of the telco and IT industry, as well as executives from other sectors such as retail and banking.

But Ashton said from his point of view, it was infrastructure-based competition rather than service-based competition that drove better outcomes in the market.

“I think the current paradigm where you have competing fixed networks actually delivers the best long-term competition outcomes. And I guess that’s one of the tenets of our philosophy here in that you need competing infrastructure, not just retail providers, to deliver long-term competition benefits.”

“If NBN Co rolls out its 100Mb or gigabit, what’s going to drive them to go beyond that? I’ll tell you what’s going to drive them — it’s going to be other infrastructure providers.”

The comments echo the Australian Competition and Consumer Commission’s mantra during the previous Howard Government that infrastructure-based competition would drive outcomes in the telecommunciations market — a mantra that the regulator has since said would not be easy to push with the next generation of services.

Ashton described the ACCC’s modified stance as being “incredibly hypocritical”. But he said the regulator might have had another motivation for welcoming Labor’s NBN.

“The ACCC is probably sick to death of beating up Telstra,” he said.

Blowback
The NBN 3.0 group has already, however, been accused of suffering from the exact same self-interest that Ashton has accused other sections of the industry of.

“I respect them. I think they’re good businessmen,” IDC telecommunications analyst David Cannon told ZDNet.com.au this week, “but I do not believe that they’re doing it in the interests of the nation.” Several of the rebel alliance are wireless or backhaul players. Cannon argued they would not stand to benefit from the NBN — as players like iiNet or Internode would.

And an executive at another wireless player — vividwireless’ David Havyatt — also criticised the proposal on his personal blog this week in a post entitled “we believe in fairies at the bottom of the garden”.

“Their beliefs include that infrastructure-based competition has worked — despite the fact that the bulk of broadband competition takes place over Telstra’s copper network asset. ADSL is not, and has never been, infrastructure based competition,” he said.

“Where there has been infrastructure based competition has been in HFC — a failed model as both builds stopped after 3 million households were passed by two networks and the rest were passed by none.”

Image credit: Mateusz Stachowski, royalty free

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1. OzAz
   Posted 02/09/2010 at 2:24 pm | Permalink | Reply

   All players have their own self-serving interests at heart. Wireless predominant players don’t want FTTP as they will (most likely) lose business.

   Bottom line is, which is best for the consumer, ignoring government expenditure (whether that’s $6B or $47B)? Personally I can’t see how a predominately FTTP NBN can be beaten.

   • Marty
     Posted 02/09/2010 at 2:32 pm | Permalink | Reply

     ‘ignoring government expenditure ‘

     For me that’s the issue. Obviously FTTP is the best thing to do technology wise. Wireless will never be as good as fibre. The question is should tax payers be paying for nearly every home in Australia to be connected?

     • Animal
       Posted 02/09/2010 at 3:04 pm | Permalink | Reply

       Yes the government (ie. the public) should subsidise for all Australian premises to be connected to a fibre network (just as this was done with copper telephony).

       Business will not provide equitable access, as is abundantly clear to anyone who has tried to get decent Internet connectivity in the bush.

       Remember that these fibre connections will replace copper based telephony, which means all Australia’s emergency communications.

       The weakness of wireless would cost peoples lives in future medical and natural disaster emergencies.

       The current NBN debate exhibited fails to comprehend the actual situation outside of the big cities. The notion that free market forces would provide suitable infrastructure for rural and remote Australia speaks volumes about the city-centric miopia of both the media and the ICT industry on this.

       • Chris Schneider
         Posted 02/09/2010 at 4:17 pm | Permalink | Reply

         interesting you say “The weakness of wireless would cost peoples lives in future medical and natural disaster emergencies.” in disaster WIRELESS is almost always the quickest form to get back up and running telegraph poles are ripped down (including the ones running fibre remember they want to run fibre in the air) and if there is a fire it could be even worse! but wireless is normally in a safe area and even if it is not a new tower can be set up for an emergence in hours!!! Trying running new fibres over pole… Quite a silly statement only during a storm would Fibre be better. Any other time the reliability is HIGHER for wireless. Most people point to drop out on wireless but you can’t take you fixed line down the road so why take a drop out outside of your area as being an issue in this debate!

         In the ACT TransACT ARE providing this service in brown feild area as are Telstra. There are also MANY Greenfield developments which are doing the same… because YOU don’t have it doesn’t mean it’s NOT happening. I sure with out the NBN it would be happening more often as companies feel profits can be made.

         • Animal
           Posted 02/09/2010 at 4:47 pm | Permalink | Reply

           You haven’t tried to use the actual wireless infrastructure in the Australian bush I take it.

           Cause from actual experience i can only assume that you are ignorant of the real situation or are taking the piss.

           Even using the only half decent network (Telstra) the black spots are more like massive smears than spots.

           Some fibre is going in the air much is already being buried (it should all be buried).

2. Renai LeMay
   Posted 02/09/2010 at 2:54 pm | Permalink | Reply

   I am kinda torn at the moment. I like the technical details of Labor’s plan (fibre yay!), but I don’t like the economics or industry structure. On the other hand, the Coalition’s minimalist vision doesn’t go far enough — not even restructuring Telstra.

   Can’t we have something in the middle?

   • Animal
     Posted 02/09/2010 at 3:16 pm | Permalink | Reply

     IMHO the only problem with the economic structure is the wrong-headed plan to privatise the network.

     Compared to roads, bridges, dams, power-stations etc. it isn’t inordinately expensive.

     FTTP is clearly and obviously superior and has the potential to be upgraded extensively.

     NBN is infrastructure for the Australian people not for business (although business will reap great benefits too).

     So why is business making these impotent counter-claims (and why are they garnering media attention)?

     It stinks of folk sore at failing to win tenders, they should suck-it-up and STFU.

     • Chris Schneider
       Posted 02/09/2010 at 4:21 pm | Permalink | Reply

       Really?

       Business is where the benefit will come from in the next ten years. Residences DON’T need fibre… I have been talking to my local member about solution that could fix a lot of ADSL issue we currently have with out the expense of fibre.. you MUST think of the cost it’s the MOST important thing! think about how many hospitals could be built for $43billion! the NBN WILL be a chain around our neck for many years. If that wasn’t the case why isn’t there a cost benefit analysis? It’s simple because the figures DON’T add up

       • Animal
         Posted 02/09/2010 at 5:03 pm | Permalink | Reply

         Chris, when the copper twisted pairs began being laid would you have expected to that an accurate cost-benefit analysis reflecting anything like the value we have derived from that infrastructure?
         Before the invention of packet switching when actual people called operators physically patched connections—could you have expected valid analysis including the burgeoning of technologies across that same copper ISDN, STD, PPP, DSL…

         The nature of a physical fibre network is that it can provide what at present we see as massively excess capacity. It has massive capacity for growth.

         What households need/require now is a business concern, the infrastructure concern is what can accommodate the as yet unknown needs and requirements of the future.
         The next ten years is a small fraction of the effective lifespan of a physical fibre network. As a frame of reference it is very short sighted.

         Right now outside of the cities the provision of copper has been retarded massively since the privatisation of Telstra. From experience; to trust communications for the bush to business is to screw the bush.

3. Clytie Siddall
   Posted 02/09/2010 at 3:39 pm | Permalink | Reply

   It’s pretty worrying right now, watching pollies prodding our future technological capacity back and forth over our heads like a piñata, and wondering who will damage it the most.

   Is “the least damage” the best we can hope for?

   We have some long-standing issues at stake here, especially the Telstra monopoly and the lack of service provided by the old copper infrastructure. Both these issues have ham-strung our technological development.

   We need better. We need people committed to providing viable connectivity for this country.

4. Verity Pravda
   Posted 02/09/2010 at 4:05 pm | Permalink | Reply

   David Havyatt steered clear of making any comment about the proposal. He actually wrote;

   “My comments here are not designed to advocate for or against any of the existing broadband policies doing the rounds. They are however observations on the claims of this group, just as I’m prepared to make observations about other claims.”

5. Davo
   Posted 02/09/2010 at 4:44 pm | Permalink | Reply

   “Normally, according to Ashton, it was telcos themselves who would take on market risk by investing in infrastructure and certain technologies. However, in the NBN paradigm, that onus would shift to the government.”

   This is exactly why the government needs to build the NBN, just as they did the copper network, the Snow River project, roads etc. If the private sector fails or is not interested in building what is in the nations best interest, why on earth should the government not step in and take the load on to do this. I vote because I want governments to make tough decisions that will have a positive impact on the life of Australians, both now and into the future. The NBN must be built and we can’t wait for the private sector to do this.

   BigAir has a vested interest in the NBN not being built. Firstly it removes competition for them, and they are also in line for Liberal Party funding for building a 4G network, and a 5G network when that comes around. Take Big Air’s statements with a rather large pinch of salt…please.

6. Richard Ure
   Posted 02/09/2010 at 5:50 pm | Permalink | Reply

   National Broadband is like the ABC. Everyone can use it (including telephony) and each additional user adds nothing to the cost of providing the service. Being free to users (RSPs) maximises the public good by maximising services rather than duplicating infrastructure and means it should stay in public ownership.

   The nation can often benefit more than the person who actually uses it directly, by for example, reducing the need for transport infrastructure. So instead of banging on about the number of hospitals which could be built with the money, think about the resources which may not be needed with ubiquitous high quality communications.

   If we were thinking of starting the ABC today would we ever get past the debates we are thrashing about with now?

   The copper network has been written down to nothing. Enterprises usually replace written down equipment, with the current model. When the horse dies, you replace him with a B double.

7. Daniel
   Posted 02/09/2010 at 7:20 pm | Permalink | Reply

   1. The two alternative plans provided both accused Labor of reckless but yet both of these alternatives do not go into great detail themselves.

   2. To get any benefit from this new backhaul, we must sign upto a new provider that is wireless, gee I wonder how my parents will feel about this!

   3. This deal, as well as the Coalitions Wireless plan, leaves the new network and existing networks regulations and legislations untouched. This means that people on existing 3G networks will continue to complain, even though this group shows very little trust in regard how it regulations and legislation.

   This is nothing but Fraud.

   Why should we tax payers, who will own 50% of the network from this group of contenders and can only get access to this backhaul via 4G network ? What about Pricing? ACCC Arrangements? Plans? SAU ?

8. Jerry
   Posted 04/09/2010 at 12:29 pm | Permalink | Reply

   The future of internet services will be based on the concept of cloud……………do any of you ignorant non tech heads understand the implications of that?

9. Me
   Posted 06/09/2010 at 3:57 pm | Permalink | Reply

   People seem to be focussing on the couple of wireless guys in the group who formulated this proposal and yelling “It’s all self interest!!”.
   How about JRS (Vocus)? They sell international bandwidth fir crying out loud! It would be 100% in his self interest to promote the NBN, but he has gone the other way. Same for many of the other guys.