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Ahead of meetings with the Commerce Commission, Treasury and Ministry of Economic Development officials, a trio from Swedish telco infrastructure player Ericsson took time out for a Keallhauled lunch.
25 hobby networks
“The 25 LFCs seem to float in space,” says Ericsson’s Sydney-based strategic marketing manager Colin Goodwin, who was joined by Singapore-based fibre-to-the-home sales director Jan Tezcanli, and Stockholm-based business development director Roger Bjork.
While fully behind the government’s move to drive $3 billion+ on fibre-to-the home via public-private partnership, the trio warn that creating up to 25 local fibre companies (LFCs) could be a recipe if not for disaster, at least for disappointment.
“There’s a risk of creating 25 hobby networks,” says Mr Goodwin, who would prefer more focus on a single national network, driven by a single public-private partnership, as is the case with the Australian government’s proposed $A43 billion National Broadband Corporation.
Assuming the LFC structure stays in place, Mr Goodwin would like to see more emphasis – in fact, any emphasis – on backhaul between the 25 population centres, each covered by their own company and network (it’s also possible that a bidder could control more than one of the 25 areas the government has listed).
While Australia seems to be heading towards what Mr Goodwin calls a “nationally coherent network”, New Zealand could devolve into 25 fibre islands, connections between which could be slow and strangled.
Mr Goodwin was also critical of the MED Broadband Investment Initiative Draft Proposal, put forward by Communications & IT minister Steven Joyce, in that it’s not TV-friendly enough.
“The New Zealand document almost apologises for the fibre network being good for television,” says Mr Goodwin.
I explained that digital TV was something of a political minefield, with the new government naturally inclined to support Sky TV, but with an analogue switch-off looming – and $60 million in public funding already tied up in Freeview (now mutating into a Freeview-TiVo hybrid) – also obliged to build up the public alternative. (On its own initiative Sky TV has experimented with IPTV delivery over fibre in new subdivisions, in partnership with WorldXChange and Telecom, while Freeview has told NBR its board has discussed fibre as an alternative to Kordia’s terrestrial and satellite service).
Instead, Mr Joyce should embrace the possibilities of IPTV, says Mr Goodwin. (Who also discloses that in 2007 Ericsson bought Tandberg Television, one of the world’s largest makers of IPTV hardware).
Mr Bjork notes that both in countries where private fibre has been laid, like the US, and in the case of public or public-private networks in Holland, France, Germany and Sweden, bundled TV services have helped pay for fibre to the home. Why be sheepish about it?
I don’t know. Aside from the Sky TV vs Freeview element, possibly TV is seen as too frivolous a use of taxpayer money. Still, if it helps pay the cost of a fibre network necessary for business in the broader sense, what’s the problem?
The Swedes also take issue with Mr Joyce’s decision to aim for a 100Mbit/s fibre network.
He points to something called Nielsen’s Law of broadband, an internet rejoiner to Moore’s Law in personal computing, which has maintained – correctly, over time – that the top internet services consume 50% more bandwidth every year.
In ten years time, when New Zealand’s crown fibre network is due to be completed, 100Mbit/s will look like nothing.
The government should aim for 10 times the speed or 1Gbit/s from the get-go, then move on from there.
“Carpe diem. Get the target right,” says Mr Goodwin.
Coverage too narrow
While he’s still dubious about the astronomical amount of state funding involved, and whether it can work on a financial and structural level – “it’s unique in the world, the government creating a telco from scratch” – Mr Goodwin does like the way the Australian government has raised its target coverage to fibre-to-the-home for 90% of the population (compared to New Zealand’s 75% for fibre; the government has pledged $48 million for backhaul in other areas, but not detailed plans).
More coverage is better from a macro-economic standpoint, says Mr Tezcanli.
It also helps to create a mass market demand for broadband services, says Mr Goodwin. And without such demand, fibre could financially fail from the start.
As an example of high-demand, Mr Tenzcali points to his current base of Singapore, where the average 8 to 24-year-old (yes, 8, not 18) spends nine hours a day online.
In his home country, the state-funded fibre-to-the-home build was partly justified by moving almost all public-facing government services online. Everybody has their own home page, therough which they can access or engage most government departments (and pay taxes and levies).