Observing fibre builds

At least three National Broadband Networks of any note, are happening in the region – Australia’s National Broadband Network,  Singapore’s Next-Gen NBN and Malaysia’s High Speed Broadband (HSBB).  Respected telecom commentator, Grahame Lynch, shares his observations.

Australia’s open access NBN was announced four years ago and currently is only about 2% complete despite having spent close to 10% of its overall completion budget. Quite a lot of delay has come from the fact that it is a new company and used up time negotiating a deal with the actual incumbent to access infrastructure such as ducts and exchanges. Right now only about 15,000 people are actually connected to an NBN built network.

There was never an official cost benefit analysis into the NBN so one cannot say what the estimated benefits are as there has been no attempt to quantify them. NBN advocates say that the NBN will allow great breakthroughs in telehealth, e-learning, telecommuting and so on but often are guilty of conflating benefits achievable with existing or cheaper forms of broadband upgrades with those possible on the NBN.

Actually it began in 2010 with various trials in Tasmania. The key negotiation was with incumbent Telstra which owned much infrastructure which NBN Co could save time by accessing. The eventual deal took a year or so to negotiate and is worth over AU$20 billion in ongoing payments to Telstra. A smaller AU$1 billion deal with Optus sees it retire its cable TV network in favour of using the NBN as it is built. But the NBN is built mostly around a legislated monopoly so it doesn’t have to negotiate so much but simply decree.

Top issues with Australia’s NBN implementation
Australia’s NBN been seriously underway for well over a year. The top issue is the unforeseen logistical issues with getting contractors to actually build it. This is partly because there is a mining boom in Australia and contractors cannot afford the high rates needed to attract labour to build the NBN.

The second issue is the political uncertainty over the project as it is an expensive, controversial policy pushed by an unpopular government who is likely to lose office this year. Many people are adopting a wait and see approach which doesn’t help its momentum.

Observations about Singapore’s NBN
Singapore’s NBN has had similar issues to Australia in that it has taken a little longer than they would have liked. Rather than creating a new NBN management company from scratch they did an internationally unparalleled “separation” of the passive and active network owners which just happen to be internally driven respectively by the two largest retailers of that network, SingTel and StarHub, respectively.

This has led to an unfortunate blame game scenario. It’s early days but it’s hard to describe Singapore as having been an outstanding success at the moment.

Do they get a better end product than before? Sure. But the jury will be out for a long time as to whether it was all worth it.

Takeaways for Malaysia’s HSBB
Having an incumbent (Telekom Malaysia) do it means it gets built faster but it also means that other retailers may feel disadvantaged. My gut feeling tells me that the hassles of starting a new network operation separated from the former incumbents created a whole lot of cost and delay hassles which just may well wipe out any of the supposed competition gains you get from the policies of Australia, New Zealand and Singapore.

But it is early days and the ultimate success of the Malaysia approach really depends on the strength of the wholesale arrangements. There are lots of successful models from countries such as the UK and NZ as to how to do operational and functional separation of networks owned by incumbents and Malaysia could do well to take a closer look at them.

There is no reason why TM automatically wins from the current scenario if there are strong access obligations placed on it.