CommsDay magazine October 2011 by Graham Lynch

October 2011 • Published by Decisive • A CommsDay publication

Where no cable has gone before How plug’n’play VoIP will finally kill incumbent PSTN Fibre gets built, the quality standards follow NTT’s global acquisition strategy - let it be The dirtiest word in today’s telecom policy: redundancy

Why LTE Advanced is damn good broadband

Fender didn’t anticipate Hendrix Great inventions never get old. They constantly evolve to spawn new great inventions. Just like Fender’s electric amplification of guitars eventually paved the way for rock & roll, a genre that remains the engine of global youth culture today. We believed from the start that Mobile Broadband was such an invention. That it would come to revolutionize how the world communicates. Today, 20 years after coining the term and filing the first patents, we think we’re finally there. Mobile Broadband has become a whole new way of doing business, and it’s time to explore its full potential.

UNPLUG! Let´s Unplug Mobile Broadband - visit http://www.ericsson.com/unplug

An expansion for CommsDay Magazine

ne of the original motivators for launching an e-magazine of this type was the ever-growing trend for less outlets for long-form telecommunications industry journalism. The bulk of reporting endeavour in this sector is now based around real-time web site publishing: get the story, turn it around, optimise it for search engines and get the traffic. Perspective, explanation and exposition tend not to do too well under this scenario. As most of CommsDay’s journalists file daily we are all too aware of the limitations of writing the “first draft” of history. Hence the original idea for a long-form magazine such as this, married with the idea of a format suitable for reading when the aircraft doors are shut and the iPad or laptop is whipped out for an hour or two of immersive reading. Out first couple of issues of CommsDay magazine were well received, hence the decision I have made to upgrade its frequency to a near-monthly (we reserve the right not to publish around Christmas time!). Our Hong Kong-based editor-at-large Tony Chan takes over as the magazine’s editor from next issue with Sydney-based Petroc Wilton to serve as group editor.

Tony is probably the besr English-language telecommunications journalist in Asia. He has worked since the late 1990s on titles such as Wireless Asia, Telecom Asia and the Hong Kong Standard and, critically, he has actual experience in the sector having worked with submarine cable and capacity player Pacnet for many years. Under Tony and Petroc we hope that this magazine will prosper and fill a major gap in the market for long-form sectoral journalism and analysis that has emerged with the decline of print media and the rise of web media.

nother major string to the CommsDay bow is our ever popular events, another opportunity for industry luminaries to get beyond the day’s headlines and spend up to 30 minutes each providing their perspectives on the industry. Our next CommsDay event takes place in Melbourne on October 11 and 12 and features some interesting highlights. Firstly we will be hearing from two CEOs not widely heard in the Australian industry: the new CEO of Primus Australia Tom Mazerksi and the CEO of Dodo Internet Larry Kestleman. Both firms are

critical players in competitive telecommunications in Australia and it is time their views were heard by an influential audience. Secondly, we are also pleased to be presenting a representative of arguably Australia’s most prestigious research house Roy Morgan. Howard Seccombe will give us a first look at a survey of Australian businesses that canvasses their views on the planned National Broadband Network. His presentation will also canvass the impact of high speed broadband in regional Australia as well as on entertainment and lifestyle consumption. Finally we will also be featuring the high profile shadow telecommunications minister Malcolm Turnbull, who is opposed to the NBN and proposes a cheaper alternative. We feature an extended treatise of his views in this edition of CommsDay magazine. Although we know his views won’t be universally popular among CommsDay magazine readers we believe it is important to understand the views of those who have not been captured by industry and who resist some of its claims. Grahame Lynch, CommsDay founder

ABOUT COMMSDAY MAGAZINE Mail: PO Box A191 Sydney South NSW 1235 AUSTRALIA. Fax: +612 9261 5434 Internet: www.commsday.com COMPLIMENTARY FOR ALL COMMSDAY READERS AND CUSTOMERS. For special subscription arrangements, contact Sally Lloyd at sally@commsdaymail.com. Published up to 10 times annually. Editorial inquiries email Petroc Wilton at petroc@commsdaymail.com CONTRIBUTIONS ARE WELCOME WRITERS: Petroc Wilton, Tony Chan, Bill Bennett, Miro Sandev, William van Hefner, Grahame Lynch, Dave Burstein, Richard Chirgwin, Bob Fonow ADVERTISING INQUIRIES: Sally Lloyd at sally@commsdaymail.com EVENT SPONSORSHIP: Veronica Kennedy-Good at veronica@mindsharecomms.com.au ALL CONTENTS OF THIS PUBLICATION ARE COPYRIGHT. ALL RIGHTS RESERVED CommsDay is published by Decisive Publishing, 4/276 Pitt St, Sydney, Australia 2000 ACN 13 065 084 960

INSIDE THIS ISSUE

COVER STORY 07 Why LTE Advanced is damn good broadband By Dave Burstein 09 Putting LTE to the test By Tony Chan FEATURE ARTICLES 11 Where no cables have gone before By Tony Chan 15 The death of the PSTN By Petroc Wilton 17 NTT’s leave-it-alone expansion strategy By Petroc Wilton 25 The role for QOS in a fibre world By Geoff Long OPINION COLUMNS 03 An expansion for CommsDay magazine By Grahame Lynch 20 Why expensive FTTH and visionary politicians don’t mix By Malcolm Turnbull 27 When did redundancy become a dirty word? By William van Hefner

Cover by Peter Darby

JUST TWO WEEKS TO GO: 11-12 October 2011: Langham Hotel

COMMSDAY MELBOURNE CONGRESS • • • • • •

Updates from key decision makers at NBN Co, ACMA and industry The Opposition’s alternative plan for the NBN if it wins gov’t Carrier views including Primus, Dodo, Internode CEOs The legal implications for carriers from the cloud revolution Latest global developments in wireless & M2M Exclusive new research from Roy Morgan on rural, vertical market and business trends in broadband adoption

SPEAKERS INCLUDE

PLATINUM SPONSOR

GOLD SPONSORS

Shadow communications minister Malcolm Turnbull

NBN Co chief executive Mike Quigley

Institute for a Broadband Enabled Society exec director Dr Kate Cornick

Comms Alliance CEO John Stanton

Ericsson Aust/NZ MD Sam Saba

Primus Australia CEO Tom Mazerski

Optus Networks MD Günter Ottendorfer

Internode founder & MD Simon Hackett

SILVER SPONSORS

OTHER TOP SPEAKERS INCLUDE • • • • • • • • • • • • • • • •

ACMA deputy chair Richard Bean PIPE NETWORKS chief executive officer Jason Sinclair DODO AUSTRALIA CEO Larry Kestelman QUALCOMM South East Asia & Pacific president John Stefanac ROY MORGAN RESEARCH dir, client services Howard Seccombe ACCAN CEO Teresa Corbin AMTA CEO Chris Althaus CIENA global chief technology officer Steve Alexander TATA CONSULTANCY SERVICES chief scientist Dr Anand Sivasubramaniam ALCATEL LUCENT ANZ CTO Martin Sharrock C-COR senior solutions architect Michael Risos POTTINGER joint CEO Nigel Lake ALLENS ARTHUR ROBINSON partner Michael Pattison MALLESONS STEPHEN JACQUES partner Neil Carabine OVERTURE NETWORKS Asia Pac MD Graeme Bellis BROADCAST AUSTRALIA corp development director Brett Savill

BOOK ONLINE AT http://bit.ly/o4kR11 COMMUNICATIONS DAY 26 August 2011 Page 8

REFRESHMENT SPONSOR

SATCHEL SPONSOR

SUPPORTING SPONSORS

CommsDay Melbourne Congress 2011 TUESDAY OCTOBER 11 9am Shadow Communications Minister Malcolm Turnbull 9.30am Optus Networks MD Gunter Ottendorfer 9.55am Ericsson ANZ MD Sam Saba 10.20am ACMA deputy chairman Richard Bean 10.45am Break sponsored by Overture Networks 11.00am NBN Co CEO Mike Quigley 11.25am Juniper Networks director, systems engineering ANZ Allan Young 11.50am Internode founder & MD Simon Hackett 12.15 NSN ANZ MD Kalevi Kostiainen 12.40pm Qualcomm SE Asia & South Pacific director John Stefanac 1.05pm LUNCH sponsored by Qualcomm 2.05pm Confirmed speaker TBA 2.30pm Pipe Networks CEO Jason Sinclair 2.55pm C-COR senior solutions architect Michael Risos 3.20pm Overture Networks Asia Pac MD Graeme Bellis 3.45pm Break sponsored by Overture Networks 4.00pm Mallesons Stephen Jacques partner Neil Carabine 4.20pm Allens Arthur Robinson partner Michael Pattison 4.40pm Pottinger joint CEO Nigel Lake 5.00pm DRINKS

WEDNESDAY OCTOBER 12 9am Roy Morgan Research head of client services Howard Seccombe 9.30am Institute for a Broadband Enabled Society executive director Dr Kate Cornick 9.55am Comms Alliance CEO John Stanton 10.20am Primus Australia CEO Tom Mazerksi 10.45am Break sponsored by Overture Networks 11.00am Dodo Australia CEO Larry Kestelman 11.25am Tata Consultancy Services chief scientist Dr Anand Sivasubramaniam 11.50am AMTA CEO Chris Althaus 12.15pm ACCAN CEO Teresa Corbin 12.40pm Ciena global chief technology officer Steve Alexander 1.05pm LUNCH sponsored by Ciena 2.00pm Alcatel Lucent ANZ CTO Martin Sharrock 2.20pm Norton Rose partner Nick Abrahams 2.40pm Broadcast Australia corporate development director Brett Savill 3.00 Cisco ANZ data centre lead Dylan Morison 3.20pm PANEL SESSION: THE ROAD AHEAD with CommsDay founder Grahame Lynch, consultant Kevin Morgan, BBY analyst Mark McDonnell 3.45PM CLOSE & REFRESHMENTS

Yes, I would like to attend the CommsDay Melbourne Congress, October 11 & 12 LOCATION: Langham Hotel, Southbank, Melbourne [ ] One registration at $997 (Australian residents add GST) [ ] Three for the price of two at no extra charge $A1994

Name ____________________________________ Company __________________________________ Phone No ________________________ Email _______________________________________________ Address _______________________________________________________________________________’ ______________________________________________________________ Postcode _______________ Names of other delegates _________________________________________________________________ I want to pay by: [ ] Mastercard [ ] Visa [ ] Amex [ ] Diners [ ] Invoice me Name on card ______________________________________________________ Card Number ______________________________________________________ Expiration Date _______________________ Signature _____________________

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Fax this form to +612 9261 5434 Phone Sally Lloyd at +61 2 9261 5435 Mail to PO Box A191 Sydney South NSW 1235 Register online at http://bit.ly/o4kR11

Why LTE broadband could be damn good broadband Early versions of LTE are spectrum constrained but that won’t be such a problem as the platform evolves to later iterations, reports Dave Burstein in New York City

ith theoretical peak rates of more than one gigabit and practical rates to 50 megabits or more for each user, LTE Advanced can offer real competition to DSL and cable in many areas. It will be particularly interesting in rural zones, such as the seven percent of Australia not being reached by the fibre of the national broadband network or the 12% of Verizon lines they intend to serve only with wireless broadband. Today’s LTE offerings sound good until you realise their capacity and caps are too low. The kicker: Wireless is shared and there simply isn't enough capacity using the 20 megahertz of spectrum in early versions of LTE. LTE Advanced can use 60 MHz and even 100 MHz where spectrum is available. Advanced is designed for a shared gigabit; earlier LTE aimed for only a tenth that capacity. Verizon & AT&T's 2-3 gigabyte/month caps blow out in less than an hour at LTE speeds. Verizon’s 10 gigabyte/month might last two hours but costs $80. Deutsche Telecom offers 50 gigabytes but charges $125. In comparison, $30-50 DSL and cable offerings typically have caps over 100 gigabytes. Verizon, Cablevision, France Telecom and many others have no cap at all. Today, Deutsche Telecom offers "up to 50 megabit LTE," faster than many DSL and cable offerings. Verizon is consistently delivering 5-12 megabits down. Speed-

tests at Telia in Sweden often are over 20 megabits. There’s no longer any doubt LTE has the speed for decent broadband. Most DSL is under 5 megabits today, most cable only 10 megabits. Very few customers are willing to pay more for speeds over 10 megabits.' Verizon intends to begin deploying in 2013, so this isn’t science fiction. AT&T, on the other hand, expects a key feature - aggregating bandwidth from different frequency bands - to be delayed until “at least late 2014.” Advanced will require more sophisticated radios and antenna but uses the same poles, fast backhaul, and packet core as LTE. The additional cost per cell site might be 25%, perhaps $US25,000 over five years compared to $100K or more for adding another tower. Since Moore’s Law continues to bring equipment costs down, a cell

site with Advanced in 2015 should cost less than a simpler LTE cell costs in 2011 but offer easily five times the performance. Greater capacity at similar cost translates into much better offerings in strongly competitive markets. Around 2015, 25-75 gigabytes/month could go for $US30/ month. 50-150 gigabytes/month could be $US50-60. In more typical markets, with two or three dominant players evolving cartel like prices, only a strong regulator can bring down the prices. There are almost always hundreds of megahertz of spectrum unused in low density areas that could be available if the regulations are rationalised. Some of the larger carriers already have plenty of spectrum for LTE. Deutsche Telekom has 95 megahertz from the digital dividend. Vodafone just acquired an additional 60 mega-

hertz in the Spanish auction, where Telefonica bought 50 megahertz. Sprint Clearwire has 50-80 megahertz coming free in most of the U.S. There’s actually plenty of wasted capacity in urban areas, but in many places it would require a major reworking by government. Any regulator serious about making more wireless broadband available will move to some form of “use it or lose it” regulation, but incumbents will fight viciously.

dvanced is fully described in the 154 page Release 10 of the 3GPP standards. Key features include the aggregation of spectrum. Current LTE is designed to use no more than 20 megahertz. Advanced will use 60 and even 100 megahertz, aggregating multiple “carriers” of up to 20 megahertz each. The total capacity goes up proportionately, while the increase in capacity for each user goes up even more. Queuing theory predicts more efficient sharing with higher capacity. Each user can have a higher limit because the ratio of the peak to the average is reduced. Ideally, all frequencies comprising the 100 megahertz are contiguous, as in the illustration from Ericsson. That will rarely be possible, so that Advanced also allows the aggregation of non-contiguous blocks of spectrum. Vodafone in Spain, for example, bought 20 MHz of 800 MHz spectrum and 40 MHz of 2600 MHz but initially will only be able to deploy a single 20 MHz carrier. Ericsson warns “aggregation of non-contiguous spectrum is challenging from an implementation perspective. The actual implementation will be strongly constrained, including specification of only a limited number of aggregation scenarios. Aggregation over dispersed spectrum only will be being supported by the most advanced terminals.” This corresponds to AT&T’s expectation that early

deployments of Advanced will not aggregate spectrum from different bands. Some of the potential of Advanced should be realised in 2014; other features might be delayed until 2015-2017. Whenever it comes, the benefits will be powerful. Any smart network designer is already designing for the upgrade. Another key feature is enhanced multi-antenna support 100% improvement. LTE fixed works as well as it does because a decent antenna outside roughly doubles performance of a wireless link. From the beginning, LTE was designed for MIMO multiple antennae, two and possibly four at each end. Advanced goes up to 8x8 MIMO, which Ericsson uses in their 960 megabit car demo video at http:// bcove.me/tgwyj82t . In theory, 2x2 MIMO can double speeds and 8x8 MIMO can multiply speeds eight times. In practice, the separation of the signals is less than perfect and speeds are less than theory. There are very few unclassified systems using more than four antennae today. 3x3 and 4x4 are in numerous trials but few large scale deployments. There are major improvements here but be skeptical of all claims. For perhaps a tenth the price of another basestation, relays can extend and deepen coverage on an LTE network. They receive a signal from the cellsite, decode it, then re-encode it and send it out with more power. This is a natural way to reach areas uneconomical to reach with additional basestations. In many geographies it can massively improve the local capacity as well. Receivers far from the cellsite require far more power than those closer. A cluster can be served by relay, reducing the drain on the power of the cellsite dramatically compared with connecting to each. Yijie Wang and Gang Feng in an IEEE paper calculate that

Source: Ericsson adding 4 to 11 relays will improve the performance/cost of a typical cell.

emtos, Small Cells & Heterogeneous Networks will be huge. AT&T is the thought leader here, saying “the quicker you can get the byte of information onto a hard facility (copper, fiber) the cheaper it is to operate the network.” AT&T planned a cloud of five to ten million femtocells across the U.S., telling Wall Street it would save them billions of dollars in spectrum. As they deployed, they discovered interference problems because of inadequate “layer management between the Femto and the Macro network.” Despite that problem, AT&T has distributed hundreds of thousands of femtos and gives them free to selected customers. Sprint in the U.S. and especially Softbank on Japan are also distributing free femtos. Over two million have been deployed worldwide. But with WiFi standard in the majority of phones selling in most countries, it provides an attractive alternative. Again, AT&T is leading. They’ve set up thousands of hot spots, including Times Square in New York. The world’s largest carrier, China Mobile, is well along in its deployment of a million WiFi hotspots. Cisco estimates that 22% of “mobile” traffic in the U.S. will be offloaded via femto or WiFi. With a determined effort, that percentage could be much higher.

Advanced (GPP Release 10) contains numerous features for more efficiently using these diverse base stations, also known as heterogeneous networks. Ericsson has made “Het Nets” central to their plans. Especially exciting is the concept of “self organising networks.” The location of bandwidth demand is constantly changing. Some of the change is predictable, like people going to offices in the morning. Other changes are far tougher to predict and impractical for an engineer to manage. Many engineers believe the network can be much more efficient if constantly adjusted to the actual demand. LTE Advanced is just a step in the evolution of wireless networks co-coordinated by 3GPP, the Third Generation Partnership Program. They are already working furiously on the next releases, 11 and 12. Further out is the hope of virtually unlimited capacity with different system design. MIT’s David Reed believes "Interference is a metaphor that paints an old limitation of technology as a fact of nature. There's no scarcity of spectrum any more than there's a scarcity of the color green. We could instantly hook up to the Internet everyone who can pick up a radio signal, and they could pump through as many bits as they could ever want. We'd go from an economy of digital scarcity to an economy of digital abundance." Spread spectrum, cognitive radios, and intelligent mesh networks are among the tools that will get us there. Better receivers are a far more potent tool than additional spectrum. Can we keep up with everincreasing bandwidth demand? Ericsson CEO Hans Vestberg answers, “Human ingenuity will keep us ahead, I’m pretty sure.”

Putting LTE to the test

ith Telstra launching LTE, Australia’s LTE market is rapidly gearing up with all the operators committed to deploying the next generation mobile technology. Being based in Hong Kong, where Telstra’s CSL became the first operator in Asia to launch a commercial LTE offering, I was fortunate enough to get my hands on a 4G LTE USB dongle – courtesy of the operator. My experience so far has been pretty good, despite some software issues, such as the dongle timing out on me after being idle for a stretch so that I have to reconnect. But despite those minor issues, there is nothing wrong with the performance of the network when it is working. As CSL’s CTO Christian Daigneault put it to me, LTE is no longer about speed – because there’s plenty of it. According to Daigneault, CSL’s network is giving its users well over 30Mbps at times – partly due to the fact that there’re not that many subscribers on the network at the moment. However, the goal of the operator is to maintain between 6Mbps to 10Mbps of consistent performance on the network. Such speeds, Daigneault says, will give a consistently good user experience, even full screen high definition video on your PC. In tests, I recorded between 16Mbps and 32Mbps down and a consistent 16Mbps up. So what can you do with such a LTE network? For Vodafone Germany, the answer is television. At this year’s IFA show in Berlin, Vodafone Germany is showcasing a trial of

IPTV over LTE, as well as other enhanced media services like video-on-demand and interactive television. What’s more surprising perhaps is that Vodafone Germany is not looking at IPTV over LTE as a new service, because it already offers IPTV in the market, but instead a replacement for all the fixed lines it rents from Deutsche Telekom for the service. By migrating its IPTV customers onto its LTE network, it will no longer have to rent fixed lines from the incumbent to deliver the service. There are obvious challenges for mobile operators to get into the television business. For starters, they will have to build relationships with the broadcasting community and get their hands on enough content. They will also have to be mindful of the amount of spectrum they have, since more users on the network will directly impact network throughput, unless they have enough spectrum for more capacity. Then again, Vodafone’s ambition shows that the technology is ready to do much more than just allow users to download their next YouTube video faster onto their mobile phone. LTE will probably never take over from fibre, but it certainly gives technologies like DSL a run for its money. For operators in markets with a lot of DSL broadband users, an early move into LTE would not only give them a platform to compete against fixed broadband but allow them to roll out a range of new services. Opportunities abound for the mobile industry with LTE. The question is: are mobile operators ready to capitalise on them? Tony Chan

High Density Colocation High Availability

Highly Redundant Architecture

Highly Connected Multiple Diverse Fibre Paths

Highly Accessible

DCs in Sydney, Melbourne & Perth

Brave new connections There are a raft of new undersea cables going where no cable has gone before. Tony Chan in Hong Kong introduces us to them

hifts in the global economic growth, climate change and the search for more direct and diverse network paths have spurred a spate of investment and interest in new cable systems outside traditional trans-Oceanic pathways. Over the past year, start-ups such as eFive Telecoms out of Africa, Global Nexus in the Caribbean, and Arctic Cable Company, have proposed radically different routes aimed at addressing new markets and network utilisation models. On top of that, regional projects are in the works that will bring new diversity to existing routes, as well as to offer subregional connectivity to the Pacific Islands, Middle East, Africa, and South East Asia. At the same time, several new and somewhat radical proposals are on the table for systems that will run overland between Asia and Europe, and to link Europe to North America across the Arctic. Together these systems will bring not only new capacity to the market but offer an abundance of network paths for globally traffic. Many of these systems are still in the preliminary stages. It is probable that not all of these projects will be built due to funding, logistic and regulatory issues, but the ideas are well formulated. eFive Telecom’s South Atlantic Express Perhaps the most advanced of these new systems is eFive Telecom’s South Atlantic Express (SAex) cable linking Angola and South Africa with Brazil.

The rationale behind Saex is to link up the fast growing economies south of the equator, namely, Brazil and South America with Africa, extending to Asia, including China and India. At the time of the unveiling, the backers of the South Atlantic system noted the shift in economic power to these countries, hence anticipating a growing need for direct connectivity between these markets, instead of relying of current paths that need to go via Europe and the US. Earlier this year, eFive Telecoms engaged UK consultancy Datawave to draft the business case, and Alcatel-Lucent to eventually construct the project. According to online reports, the project, estimated to cost around US$400 million, has already received financial commitments from the Bank of China and South Africa’s Industrial Development Corp. The main segment across the Atlantic on Saex will be configured with 4 fibre pairs running 40Gbps technology and launched with a design capacity of 12.8Tbps. The system will also be extended from Angola to South Africa with a 2-fibre pair branch with a design capacity of 6.4Tbps. In addition to the new links, eFive Telecoms has reportedly entered into interconnection agreements with MainOne and SEACOM to provide onward connectivity. MainOne would extend Saex to Europe along the west coast of Africa, while SEACOM will link it to India and onward to Asia. eFive has also engaged FibreCo, Cell C, Internet Solutions

and Convergence Partners – the firms behind the Dark Fibre Africa consortium for backhaul in South Africa. On the other side of the Atlantic, Saex will be interconnected to GlobeNet for connectivity to the Caribbean and the US. While the project has been quiet for several months, eFive Telecom is reportedly aiming to launch Saex as early as 2013. GlobalNexus’s Bahamas-Canada cable Another system looking to address the growing traffic demands of Latin America is the Global Nexus Cable System, which aims to provide a direct link between the Bahamas and Canada, intentionally bypassing the US. The idea behind the Global Nexus Cable System is to create a new hub in the Caribbean for traffic going between Latin American to the US and onward to Europe, as well as provide an alternative path for traffic along the east coast of the US. First unveiled at ITW this year, the Global Nexus system will initially consist of a 12 unrepeated fibre link between the Bahamas and Grand Bahama Island, and a 4 fibre-pair link from there to Halifax, Canada. There are a number of key advantages to the new system, Steve Wells, CEO at Global Nexus Telecommunications told CommsDay. For starters, it leverages the growth potential of Latin America and creates a path for traffic from Latin America to Europe that bypasses the US, thus avoiding the

complexity of having to engage multiple terrestrial fibre providers to traverse the North America continent. According to Wells, Global Nexus is already working on partnerships with GlobalNet, the subsea operator in Central and South America and Hibernia across the North Atlantic. At the same time, the new system will also serve as an entry point to the US for future cable systems, allowing them to bypass increasingly strenuous regulatory requirements to land in the US. “The arduous regulatory process of getting approval to land in Florida is not going to get any easier as time goes by. What we intend to do is to use the Bahamas as a nexus, meaning any cable being built in the medium and long term, can land in Grand Bahama Island. We are working on a possible arrangement with a dark fibre provider to take them into the US,” he said. “They can build into Grand Bahamas and take a dark fibre to Miami, so they can bypass that arduous process, they just need to apply to the FCC to carry their traffic into the US.”

Global Nexus has selected TE SubCom, formerly Tyco, as its vendor, who is expected to deliver the system under a ‘nineteenmonth program.’ The system will initially use 40G and is ready for 100G, SubCom said. Arctic Cable Company’s ArcticLink Melting Arctic sea ice due to global climate change has prompted Arctic Cable Company to propose an ambitious project to build a system that would link Tokyo to London via the Arctic Ocean north of Canada. The path of the ArctiLink system will feature a link from Japan to Alaska via the Bering Strait, then across the Arctic Ocean on what is commonly referred to as the Northwest Passage, then across the Atlantic just south of Greenland to the UK. The project is backed by Kodiak Kenai Cable Company – set up by two native Canadian Indian tribal corporations, and is currently seeking regulatory approval from various governments to go ahead. The project clearly has a long way to go in terms of financing,

and getting the appropriate agency approvals – especially given the sensitive environmental regulation surrounding the Arctic region. More importantly, its feasibility is wholly dependent on the state of change in the Arctic ice cap. In order for ArcticLink to be built, the Northwest Passage will have to stay open long enough on an annual basis for the cable building ships to lay the system in an efficient and costly manner. On other hand, the proposed project has gained the attention of industry leaders, including John Hibbard, the chairman of the Pacific Telecommunications Council, who says that such as cable will likely be technically possible in the next two years. LIRNEasia’s LION The last major trans-continental cable being tabled in recent months comes from LIRNEasia, a Sri Lankan-founded non-profit think tank on international telecoms and IT policy, proposing a terrestrial open access network along the major roadways between Asia and Europe. The proposal, dubbed LION

(Longest International OpenAccess Network), hopes to leverage the right of way enjoyed by the UN Economic and Social Commission for Asia and the Pacific’s Asian Highway project, to build a meshed terrestrial telecoms network spanning from Japan and Korea to the east, Thailand and Indonesia in the south, Russia to the north, to reach Western Europe. The proposed project, unveiled by Abu Saeed Khan, senior policy fellow at LIRNEasia, will put fibre alongside the 141,000km of roads built by the Asia Highway project, which already connects some 32 Asian countries. The proposed model solves one of the key issues with building terrestrial cables – rights of way, but it has a long way to go in terms of financing and even regulatory approval since it is asking regulators to allow road companies to operate telecoms infrastructure. In some cases, governments may have to restructure their telecoms market just to support the entry of a new telecoms player, or at the very least redefine their service requirements and regulation for what constitutes a telecoms operator. At the same time, road companies will have to be convinced to enter a new business that they likely know nothing about. Khan’s proposal do make provisions for both issues, calling for ownership – hence potential profits – for road companies, and recommendations for regulatory models for governments that minimise any impact, as well as an open access for operators. The challenge will be convincing international organisations, both private and public, to invest in the project. If the project finds backers, the economic implications are significant, resulting in a network that will pass economies with a combined worth of more than US$16 trillion and a population consisting of some 60% of

the world. Regional and sub-regional systems In addition the proposed transcontinental systems, a number of regional and sub-regional systems are also in the works that will vastly improve capacity for markets such as Australia, South East Asia, and the Middle East. After several aborted attempts, which left Australia connecting to its South East Asian neighbours on the legacy SEA-ME-WE3 system, Australa’s Leighton Contractors Telecommunications and its subsidiary, Australia-Singapore Cable (International) Ltd., will undertake a project to put up to 16Tbps of capacity between Perth and Singapore. According to Leighton, ASC will initially be built with two fibre pairs supporting 80 wavelengths operating at 40Gbps for an initial design capacity of 6.4Tbps. With a 100Gbps upgrade option, the system will eventually be able to support more than 16Tbps, the company said. The route taps into onward connectivity from intra-Asia systems such as the Google-backed Singapore Japan Cable, as well as the Asia Submarine-cable Express, being jointly built by a NTT Communications-led consortium as well as Telekom Malaysia. It also positions the new cable in close proximity to new India to Europe systems such as EIG and IMEWE. Within South East Asia itself, members of the Brunei Darussalam-Indonesia-Malaysia-the Philippines East ASEAN Growth Area (BIMP-EAGA) are now looking to build a US$150 million sub-region cable system to connect together their respective markets. The new BIMP-EAGA Rink system will feature a principal subsea link between Borneo Island, Indonesia, and Mindanao, in Southern Philippines – where it will connect to international cables landing there. From Borneo Island, the system will connect to

Kalimantan and Tarakan in Indonesia, then over terrestrial links to Sandakan and Tawau in Sabah, Malaysia, and then presumably into Brunei. In addition to offering connectivity within the sub-region, the new system will bring these locations onto the global network infrastructure. The most direct way to achieve this is via AAG, which links both Malaysia and Brunei to the US. At the same time, traffic from the sub-region can now be routed to the Philippines, where they can connect to key international hubs like Hong Kong and Singapore, as well as onward transPacific capacity in North Asia. Over in the Middle East, cable investments have increased significantly over the last five years with new systems being put in place by Gulf Bridge International and Tata Communications, as well as consortium-backed Asia to Europe systems like EIG and IMEWE. But these systems are either focused squared in providing regional capacity within the Persian Gulf, or are choked up off the coast of Egypt, making it vulnerable to multi-system outages. One solution, being proposed by a consortium made up of Cable&Wireless, Rostelecom, Telecommunications Infrastructure Company of Iran, and Omantel, is to connect the Middle East to Europe via land. The project, called the Europe Persia Express Gateway, will link Oman and Frankfurt, Germany, transiting through Iran and Russia in the process. The cable construction boom doesn’t stop there. New fibre projects are underway to bulk up connectivity in the Mediterranean, among the Pacific Islands, within Indonesia, inside the Mekong Delta, and connect together landlocked African countries. All these projects will be bringing unprecedented connectivity to new locations and expand the existing Internet universe.

2 Cables from NZ to the US – Full diversity – Low latency – Automated security with protected products

Capacity Supply Commitment for NZ – – – –

Capacity potential currently 6Tb using 40G transmission 100G transmission proven in May 2011 On-going transmission advances will keep expanding our capacity potential Next capacity upgrade in 2012

Competitive Price Commitment for NZ – – – –

NZ-US prices will never be higher than competition based AU-US prices NZ-AU prices the same as competitive Hawaii – US prices Southern Cross prices fall in anticipation of capacity expansions Southern Cross price declines averaged 23% pa since 2000

Service Commitment until 2025 – Indications are we will be in service for longer (at least 2030) – Optical Switching installation underway

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How to kill the PSTN Scott Bartlett from NZ ISP Orcon reckons plug-and-play VoIP can finally see off the PSTN, writes Petroc Wilton

cott Bartlett – CEO of New Zealand ISP Orcon – recently got up on stage at a CommsDay event to talk about the death of the PSTN. But it was by no means a lament. Rather, Bartlett was examining how previous efforts to end the stranglehold of the old network had failed – and how Orcon’s latest hardware collaboration, packaging tried and tested VoIP technology into a customer-friendly box, might finally slay the beast. “The public switched telephone network, the good old copper analogue network… really hasn’t changed as a technology platform or a product for decades. It’s allpervasive, every home in the country has a phone line going into it. And sure, with mobile phones we’ve started to use it less and less, but fundamentally it’s still the anchor points for revenues… the PSTN was the basis on which the entire industry was formed,” said Bartlett. “And extending the PSTN, and the copper which underscores and underwrites it and services like DSL, has been our story so far as an industry.” Bartlett was referring specifically

to the PSTN owned by the country’s incumbent telco, Telecom New Zealand – a network that has already survived attempts to end its dominance. “Unbundling was meant to be the start of the death of the PSTN… but it hasn’t really worked out that way. I’m a very strong supporter of unbundling, always have been and always will be, but it hasn’t truly actually delivered on the promise that it made to us all,” said Bartlett.

“

Prices were going to go down every year… competition was going to benefit, investment would go up, and broadband

speeds would improve. And that’s happened to an extent – but not the extent that we thought. There’s been some things that have been unique to the New Zealand market to [make] our story different to that in the UK, Germany and Australia.” “We’ve seen substantial investments in this thing called cabinetisation, or sub-loop – which is where Telecom build the cabinets close to the home… to try to improve the speeds of broadband. [But] that created competition issues whereby unbundlers such as ourselves have 50% of the available market in those exchanges

that have been unbundled disappear due to the cabinetisation program. That had quite a substantially detrimental effect on the business case for unbundling in the extent to which unbundling was going to deliver a step-change in the pricing.” “And so then the industry sort of wrapped its head around this, because we kind of didn’t know how big cabinetisation was going to be and it turned out to be bigger than we all thought, and faster than we all thought – but okay, the country needed it. So then we came up with this wonderful thing called SLES, sub-loop extension service... which basically means that we take a resold broadband service from Telecom in that cabinet, but we can still provide the voice from our equipment. So we can at least use it for something for that 50% of the market that can’t be touched by this infrastructure any more due to the cabinets. [But] that was never made available to us.” “The other side of that was ‘well, why don’t you just unbundle the whole cabinet for yourself?’. Unfortunately, unless you’ve got about 60-70% market share… you can’t economically unbundle those cabinets either. So the entire landscape, the entire ladder of investment in this country were fundamentally altered. What did that do for the PSTN? Preserved its life, preserved its market, preserved its ability to charge a premium for the service, because there was no competition available in those locations.” But Bartlett believes that the death of the PSTN is now finally at hand via ATA voice gateways, a technology used to convert a VoIP service to work with a normal phone. The only problem, he added, was that early ATA devices were clunky and inaccessible. “ We’ve talked about consumer VoIP as being one day the bastion of hope that will remove the

clutches of the PSTN from us… but this was what you had to deal with. Not just a small box with cables running into it, but you had to have a computer science degree to understand how to get the bloody thing to work!” he said. “Generally, it was very clunky, didn’t look very nice, and was basically a pretty poor customer experience. This technology has been available for years… and yet we still haven’t seen it make any impact in terms of the market and in particular on the PSTN – primarily, the point is, because it’s simply not user-friendly.”

rcon’s solution is the Genius. Adapted by agreement from hardware built by Australian ISP iiNet, the Genius is intended to link traditional handsets with VoIP services in a manner that’s actually accessible to the consumer. “It’s just a very sexy-looking ATA, with DECT technology tacked onto the side of it… but trying to get these technologies to work in a way that is truly plug-and-play has actually been extraordinarily difficult,” said Bartlett. “What does it do? It’s a modem and it’s a phone, it delivers your voice over the internet. And owing to… naked DSL, we don’t need to purchase a PSTN line and resell it in order to deliver this service. And it’s available to 85% of New Zealand homes – it’s available to markets that have never seen any competition in

retail price inputs.” While the Genius boasts an array of other features including 3G backup and multiple handset support, Bartlett believes that the plug-and-play accessibility is the most important. “You do not need to do anything with the device. I think that this is the sort of thing that Kiwis want; this is the sort of thing that the Kiwi consumer expects from the technology industry. It should be easy, it should be simple.” And Bartlett sees the design philosophy embodied in the Genius as even more key as New Zealand, and other countries in the region, move towards governmentfunded fibre networks; of course, that’s another trend that will sound the death knell for the PSTN. “Besides the fact that this device is ready for the [fibre] future, there will be no PSTN in a fibre world. Everything is going to go VoIP,” he said. “We’ve really, as an industry, got no choice – the PSTN has to be thrown out, and this is going to happen progressively over the next 5-10 years as the copper investment starts to wind back, fibre winds up, and customers are migrated over to FTTH.” “There will be no PSTN, and I firmly believe as an industry that we take the customer approach, make it simple, make it easy. Otherwise, I can’t fathom why a customer would bother going to fibre!”

Leave them alone: NTT’s plan for global expansion Senior NTT executive Sadao Maki tells Petroc Wilton that his firm is focused on acquisition without integration

ippon Telegraph and Telephone Corporation may enjoy a dominant position in the Japanese telecoms market, but subsidiary NTT Communications Group faces a very different set of challenges as it seeks to become a global leader in ICT services delivery – challenges that have driven the company’s string of recent high-profile acquisitions around the world. However, as senior executive vice president Sadao Maki explains, a key plank of the firm’s strategy is to carefully preserve the identity and business philosophy of each acquired company, rather than to integrate them all into a single monolithic corporate culture. Under his direction, NTT Com will face its future not as a homogenous juggernaut but with a phalanx of specialised companies under its wing – each continuing to strengthen the brand with its own expertise and specialised technologies, critical to prospering in a climate of rapidly shifting technological change. Reporting to president and CEO Akira Arima, Maki has worked for NTT since 1977, in senior roles including GM for overseas business development of the entire organisation and VP for global strategy for NTT communications; he has served on the

boards of Verio, Philippines Long Distance Telecom Company, NTT Worldwide Telecommunications Corporation and Starhub as well as NTT America, Europe and China. He holds a Master’s degree in business administration from the University of Chicago and a Bachelor’s from the University of Tokyo. Now, Sadao Maki is a key driving force for NTT Com’s strategy to carve out a major slice of the global market. “In Japan, NTT has been in a ‘leader’ position while internationally, NTT is a challenger. In addition, while in the domestic market we are supporting both residential users and corporate users and are obliged to provide comprehensive services nationwide as a universal service… in overseas markets, we are targeting mainly multi-national enterprises within all verticals,” Maki told CommsDay. “In order to… [increase] market share and become a significant global player, the strategy we will take outside of Japan is to become a global ICT partner. NTT has evolved from a traditional network operator to a global organisation which not only offers network products and services, but now the complete stack of ICT Services including data centre operations, IT outsourcing and infrastructure services and application management services.” To supply that capability, NTT has been on the acquisition trail around the world. NTT Communications snapped up German IT security provider Integralis in 2009 after an offer of around €75 million; NTT Group bought Dimension Data in July 2010 for £2.1 billion, giving it access to the South African firm’s IT systems expertise and substantial customer base. Most recently, NTT Com announced a purchase of 70% of Frontline Systems Australia, a deal set to give NTT Australia the resource to start a push on that country’s managed services market.

But even while Maki is carefully building NTT’s purchases into what he hopes will be a strong combined offering, he is adamant that each of the acquired organizations must retain their own corporate identities and cultures. “The combination of all our group company’s capabilities and resources creates a powerful story for the ANZ market and the rest of the world as we now have the capability to deliver products and services which encompass a seamless ICT offering,” he said. “[But] I believe consolidating, integrating and restructuring the acquired companies with the existing NTT Com companies is taking a big risk of losing a good part of the acquired company and its momentum and this would be an approach unlikely for NTT Com to take.” “Instead, as a challenger in the global market, by preserving and respecting the culture and the way of business the acquired companies have developed, we would like them to stay confident and collectively provide a one-stop solution fully leveraging their respective best of breed offerings in the market. With all NTT group companies, we will proudly provide multi-national companies with the competitive one-stop solutions to meet a variety of different requirements that will change from time to time in this dog year.” The strategy that Maki describes is an intrinsic part of ‘Vision 2015’, the growth strategy announced by NTT Communications in May this year. “NTT Com aims to become a true global leader in the delivery of seamless ICT services, helping companies to expand operations quickly in the emerging markets of Asia and beyond,” explained Maki. “[However], our geographical emphasis will continue to be on Asia, the fastest growing market and where non-Asia customers tend to outsource IT operations. We would like to further enhance Asia capabilities with the bundled

model of Network+ Data Centre + Managed IT services and become the best partner for customers expanding to Asia.”

key element of NTT’s proposition is to keep adding more innovative services to its ICT repertoire, especially in the cloud computing field. “By anticipating both market trends and customer needs, we will develop highly original products that offer true value,” continued the executive VP. “As a reliable global ICT partner, we will provide high-quality services that earn the customer's trust. Reliability will be emphasized in everything we offer, including applications, maintenance and operation services, all supported by our robust global infrastructure of networks, data centres and more.” So in an increasingly complex environment, what challenges does Maki see ahead for the telecommunications market more generally? “The speed of changes in technology and the development of new business model around telecoms markets are much faster than anyone had thought,” he said. “Mobility, cloud and security will be key in the next few years. How fast enterprises will apply mobile devices such as tablets and smartphones to their corporate use as well as how much they apply cloud into their IT platform will significantly impact on the outlook of telecoms market in the future.” “[And] while the technology is evolving very rapidly, the importance of security continues to be one of the critical factors when customers choose vendors. I believe eventually an enterprise would choose only trusted partners who can sort out those challenges, especially around security. Although it’s not an easy path to take, we would like to be a trusted partner to meet our customer requirements.”

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Why expensive FTTH & visionary politicians shouldn’t mix Australian shadow broadband minister Malcolm Turnbull presents his argument against a $50 billion NBN covering all Australians

dvocates of super fast FTTH broadband often justify themselves by saying you cannot suspend the laws of physics citing the superior capacity of fibre. Well, in a world of scarce resources and almost endless claims on governments' budgets you cannot suspend the laws of economics either. Australia’s National Broadband Network is unique in the world. The NBN is intended to connect 93% of Australian households and business by fibre to the home with the balance being connected by fixed wireless (4%) or, in more remote areas, by satellite. Whereas other countries are encouraging private sector construction of broadband infrastructure, in Australia the NBN is being built entirely by the Federal government. The level of government contribution to broadband projects differs from country to country, but Australia’s dwarfs all of them. The peak cash requirement of the build according to the company’s own corporate plan will be about $50 billion and the total capex is expected to be $37 billion. By comparison, other govern-

ments have invested money much more prudently with private sector involvement. For example the New Zealand government’s subsidies have a net cost to government of NZ$600 million (US$493 million) to deliver FTTH to 75% of the population (1.2 million households) and an additional NZ$300 million subsidise a Rural Broad-

band Initiative for the remaining 25 per cent, which will be serviced by FTTN, wireless and satellite. Whereas other countries are seeking to encourage greater competition in telecommunications, including at the facilities level, in Australia the NBN will not only be government owned but will be a fixed line monopoly.

Telstra’s existing, ubiquitous, copper access network will be overbuilt and decommissioned. Further, the two HFC cable networks owned by Telstra and Singtel Optus that pass 30% of Australian homes will in return for a substantial cash payment from the government - no longer be permitted to offer broadband and voice services. This is an extraordinary measure, so far as I am aware without any precedent. HFC as you know is in many markets the leading channel for provision of broadband connectivity. DOCSIS3.0 upgrades readily provide 100 mbps speeds, node splitting will enable 240 Mbps and there are many examples of trials of much higher speeds over HFC including Virgin’s trial in East London at 1.5 Gbps. And if anyone were minded to build new fixed line broadband infrastructure they will be obliged, by law, to wholesale access on the same terms as the NBN. Telstra as part of its $11 billion deal with the NBN Co has agreed not to promote wireless broadband as an alternative to the NBN. This mandated monopoly for NBN is one reason why a number of other telcos, who initially welcomed the NBN since it would clip Telstra’s wings, are becoming much less enthusiastic.. The justification given by the government for the establishment of this monopoly is to support the economics of the NBN – a throwback several generations when Australian State governments imposed onerous regulations on the trucking industry in order to prevent it competing with the government owned railways. If one needed more evidence of how unorthodox is the Australian government’s approach consider the recommendations of the OECD Council on Broadband Development from 2004. Given their emphasis on competition

and the role of the private sector, the NBN is inconsistent with 7 of the ten recommendations. Not a good score. How did Australia, a vibrant and successful free market society, come to have its own government building the most expensive, most anti-competitive broadband network in the world? The history would take too long to relate, but in a nutshell both the previous Liberal government and the Labor government which took office in 2007 were unable to reach a satisfactory arrangement with Telstra, the former PTT, to upgrade its access network so as to deliver universal fast broadband. The NBN FTTH plan was born, therefore, out of frustration and it has been alleged and not denied that it was conceived by the former Labor Prime Minister Mr Rudd and the Communications Minister Senator Conroy, on the back of a napkin mid-air between Sydney and Brisbane.

hat remains most mysterious about the project is this: Every politician can understand the appeal of promising that all citizens will have access to very fast broadband. But citizens expect politicians who make such a promise to do their homework and ensure that they deliver their promise in the most cost-effective manner. The Labor government had come into office in 2007 with a pledge that no major infrastructure project would be financed by the Federal government without a rigorous cost-benefit analysis to support it. And yet this project, the largest in our history, has never been the subject of any cost benefit analysis. The opposition have sought to persuade the government and the Parliament to do so, so have leading business groups and economists. But the government has not budged from its resolve and so

there has never been any analysis, for example, of whether a fibre to the node deployment would be more cost-effective in brownfield areas, or of whether it would make more sense to continue the upgrade of the HFC networks rather than decommission them. Regardless of one’s views of the merits of FTTH vs other broadband topologies, the failure to conduct the cost-benefit analysis lies at the very core of the political controversy about the NBN in Australia. A proper cost-benefit analysis would at least have ensured all views were considered. If conducted, as it should have been, by a respected independent, expert agency its conclusions would have gathered considerable political, community and institutional support. This lack of due process therefore has created considerable unease about the NBN which has been exacerbated as Australians learn more about what is being done in other countries. Are we so confident in our own innate genius to believe that our approach – a massive, new government owned fixed line broadband monopoly – is correct and, as a consequence, every other country is wrong. It is very uncomfortable, as an Australian, to sit with telecoms executives and officials in China and be told that the NBN approach would not find favour in their country because “in China we are seeking to promote competition in telecommunications infrastructure.” In the Asian region the experience of Korea, Hong Kong, Malaysia and Japan all point to the benefits of vigorous facilities based competition between HFC, VDSL and fibre driving usage and affordability. Right now the Australian government lacks a majority in the Parliament in its own right and is hanging onto power thanks to the

support of several independent members. It is way behind in the opinion polls and objectively its prospects of being re-elected are very poor. So naturally there has been considerable interest in the Opposition’s critique of the NBN project and, in particular, what we are likely to do with the project if we return to government. The first thing I should observe here is that a lot will depend on when that change of government occurs, if indeed it does occur at all. . The latest date is about this time in 2013, but with a hung parliament one defection, death or retirement could trigger an early poll. However whenever a change occurs, if it does, I can assure you that the new Communications Minister will repeat the old joke about the traveller who calls into an Irish pub and asks for directions to Dublin and is told by the barman “Well, if I were you, I wouldn’t be starting from here.” In terms of the construction probably the most contentious issue is the decision to build a FTTH network in the brownfield areas. Nobody argues in Australia against installing FTTH in Greenfield developments. A key issue for a new government would be to consider whether to take fibre to the node, rather than to the home. Of course all fibre networks are “to the node” in the sense that the node is the point where the glass hands off to the copper. This may be on the wall of your house or in a basement of an apartment building or in a street corner cabinet or, indeed, in an exchange. So when I refer to FTTN I am referring to a design which brings the fibre far enough into the field to enable the copper loop connected to the premises to be short enough to enable VDSL and speeds of 25 mbps and, indeed, much more.

Proposed extent of the Australian NBN The best estimates in Australia have been that FTTH will cost, in brownfield areas, between three and four times as much as a FTTN deployment. I note that is consistent with a recent paper by Analysys Mason which estimated that FTTH costs 3.4 times more to pass and connect than VDSL. The justification for FTTH (to homes) and the 100 mbps plus speeds it enables is often couched more as an affirmation of faith than business logic.

enator Scott Ludlam is the communications spokesperson for the Australian Greens which support both the current Labor government and the NBN project. He recently announced that video would not be the ‘killer app’ of superfast internet. Instead, he declared: “It is something that will be new— Google-augmented reality, cyberspace bleeding across into the real world, a merging of worlds.” Others, more prosaically have talked about it “future proofing” telecommunications, and when presented with the fact that consumers around the world appear

most reluctant to pay any meaningful premium for very high speeds assert that its time will come as it will enable us, in twenty years, to use the applications which today we are still incapable of imagining. Informa’s Tony Brown recently traversed the broadband scene in the AsiaPacific and concluded that unless 100 mbps or faster speeds were offered as or at the same price as entry level products they were not being taken up. “What we do know from the markets in which operators are still offering traditional tiered service offerings with their fastest services at the top-end of the pricing spectrum is that the vast majority of subscribers are sticking with cheaper packages with lower download speeds with the take-up of the highest speed services typically ranging in the 15-20% range.” He quotes a KT executive as saying the reason only around 15% of their customers took the 100 Mbps product (costing about $5 more per month than the entry level 50 Mbps product) was because “subscribers tell us that

there is nothing that they can do with the 100 Mbps service they can’t do with 50 Mbps.” See also my own analysis of the South Korean broadband market here. While consumers are declining to pay up for very high speed products, politicians in Australia and elsewhere routinely point to the many benefits from better broadband services and in the same breath assert that these undoubted wonders can only be delivered by FTTH. Many people would be excused for thinking the only alternative to FTTH is dial-up if not carrier pigeons. In markets where the critical investment decisions are being taken by private sector players, FTTH is being reconsidered in favour of improved technologies, such as vectoring and bonding, that can deliver higher and higher speeds over copper as Informa’s Rob Gallagher has reminded us. Government subsidies can support FTTH roll outs, although again when one compares the government investments in, say, Singapore and New Zealand, to achieve very wide FTTH roll outs it only confirms the extravagance of what we are doing in Australia. Beyond the object of ensuring people in rural and remote areas have access to telecommunications services, what are the other appropriate objects for subsidy? In my country, and I imagine in most others, the biggest barrier to accessing the Internet is not technology or geography, but rather lack of income. In Australia 94 per cent of the highest income households have the internet at home compared to 43 per cent of low income households. And this is why, of course, a competitive market for broadband services is so important. Since 2005 retail prices for ADSL have fallen by 69 per cent in Australia during that time And no surprise that as a consequence of the 1.2 million households who account for new Inter-

net connections since 2005, 66 per cent were in the income brackets of below $80,000. So an important object for any government’s broadband policy should be to ensure that so far as possible all citizens not only have access to broadband but at a price they can afford. I regret to say that Australia’s NBN offers no prospect of cheaper access to broadband. As a heavily capitalised, government owned monopoly the NBN has both the incentive and the means to charge high prices. The extent to which the NBN will use its monopoly powers is yet to be seen. However, in a recent proposal submitted to the competition regulator, the NBN Co proposes to fix the wholesale price of its basic wholesale offer at $24 per month for the next five years. However, it seeks to reserve the right to be able to raise the price on any higher speed products by up to five per cent above inflation in any of the next 30 years. It would be more than absurd if the consequence of such a massive government investment in broadband was that access prices, which had been coming down for the last decade, now started to go up again or at best remained flat. The NBN business plan shows that the average wholesale revenue per user will be $33-$34 a month by Financial Year 2013, which is 33 per cent more than average access charges today on the copper network. Leading industry analyst Ian Martin notes that on the revenue and connection projections in the NBN Co corporate plan, the ARPU is indicated at around $65 per line per month by 2025. He concludes that: “This is a 5.7% annual increase sustained for a further 12 years, about twice the rate of inflation, and at odds with access price trends over the past half decade or more.” What a bitter irony! Tens of

billions invested and a bad deal for both taxpayers and consumers. So what is to be done? Our goal in government will be to ensure that all Australians have access to fast broadband at an affordable price. We cannot undo the investments made by the NBN Co and will seek to realise value for them. We will seek to achieve an outcome where facilities based competition is restored and enabled, not prohibited and where the provision of network services is undertaken by the private sector, not the government. Our approach will be technology agnostic. Subsidies would be provided in circumstances where, for example because of geography, it is not economic for a commercial operator to provide fast broadband services. The NBN proposes to subsidise rural and remote areas by prohibiting competition in the cities so that higher prices can be charged there with a view to cross subsidising the bush. In our view competition should be encouraged everywhere. This will deliver lower prices in the cities no doubt and subsidies to ensure equitable and affordable access in the bush should be transparent and paid for out of the budget. What can the rest of the world learn from the Australian experience? Clearly starry-eyed politicians and staggeringly expensive technology are a dangerous mix. The current Australian government’s approach to NBN shows that a blind pursuit of superfast broadband at any cost can lead you to some very anomalous policy outcomes. The Australian case is particularly acute. But surely we (either as policy makers or business people) could all benefit from being very clear about what we are trying to achieve with fibre to the home and whether, and if so, why it is essential to achieving those goals.

No future for QoS? Questions about quality in the fibre world reflect the divisions between Internet and PSTN values reports Geoff Long

he great migration from copper to fibre is well underway in many parts of the world, with the likes of Australia, New Zealand, Singapore and more recently Qatar all now seeing significant progress in making generational infrastructure changes. These changes are not just technological – as the industry is starting to learn, some of the biggest changes that need to be made are in the policy arena, most notably setting standards to ensure the same performance and quality of service can be met in the fibre world as consumers have been used to on copper infrastructure. But what happens when the rollout of next-generation networks occurs at a faster pace than the standards are set? In some respects, that is what network builders are now facing. In the copper world, regulators and service providers looked to the International Telecommunication Union to set global standards that would then be followed regionally and nationally. While the ITU is still a major influence internationally, when it comes to nextgeneration networks many of the needed standards are still being drafted. In the meantime, there are a whole host of organisations that

have formulated technical standards that are becoming more relevant, particularly in a world dominated by Internet Protocol. And today, it would seem that the ITU is less relevant in the IP world than it was when copper and circuit-switch technology ruled the industry. A recent issue of the Telecommunication Journal of Australia kicked off an interesting debate on the so-called “policy gaps” in regulating next-generation infrastructure. A number of authors pointed out that regulations and available standards might not ensure end-toend service delivery on fibre, while also claiming that voice services might also be negatively impacted on broadband infrastructure. A follow-up series of forums also heard similar arguments, with many presenters questioning whether the general public was in for a shock when it came to the overall quality of their services on these next-generation infrastructures.

ne of the chief criticisms was that the ITU as a standards body was not keeping pace with change. For example, Mike Rocke and Kit Wignall from telecommunication consultancy Gibson Quai – AAS argued that end-to-end service

could be compromised on Australia's national broadband network as a result. “In the move of existing telecommunications services (such as telephony) to an Australian NGN (of which NBN Co's network will be a fundamental part) there is a risk that the current consistency of high-quality end-to-end service quality of (fixed) telephony services may be unacceptably reduced. As a consequence there is significant potential for the quality of telephone calls to vary significantly and to fall outside the current high standard enjoyed by customers,” they wrote in the Journal. The ITU-T's Series Y recommendations (Y.1541 and Y.1542) are intended to deal with end-toend QoS on next-generation networks involving multiple providers. But as the Gibson Quai authors note, there is no final standard, with a review of the works set down for 2012 and no timeframe for finalisation. Similarly, they suggested that in the local context standards body the Communications Alliance, which closely follows the relevant ITU-T recommendations, has not released a timeframe for updated standards dealing with end-to-end QoS on next-generation networks (G632 and G634). “In an environment where the

NBN Co will shortly commence a commercial rollout a stable, agreed process for allocation of end-toend QoS performance standards across multiple networks (including international networks) is rapidly becoming critical,” they argue, stating that there is a lack of any framework both within Australia and internationally. The authors go on to propose that the industry should perhaps forge ahead with its own standards in anticipation of the work from the ITU-T. But given the rollouts that are occurring of nextgeneration networks around the world, is it really the case that fundamental services such as voice could be at risk? According to some of those building the networks, probably not.

ary McLaren, chief technology officer of NBN Co – the governmentowned company building Australia's national broadband network – agrees that the ITU could be falling behind in its standards setting role – but he doesn't believe that the industry is lacking in standards for end-to-end quality of service as a result. On the contrary, he suggests that service providers have been negotiating how QoS can be standardised across multiple network environments since telecommunications markets embalked on deregulation more than a decade ago, and says they now have in place workable frameworks to ensure performance. Similarly, he dismisses concerns that voice quality could be compromised as a result of IP services on next-generation networks, arguing that while standards bodies have splintered, the technology itself is proven. “The internet is the way now and the whole standards world has changed. We're seeing a blend of standards bodies and it is a challenge sometimes keeping up, but it's nothing new,” he said, noting

that the move to next-generation networks was more evolutionary than revolutionary. McLaren said that the ITU's influence was waning and suggested that it was struggling to catch up.“The ITU won't disappear but the question is can it keep pace with innovation?” In addition to international Internet standards bodies such as the IETF playing a major role in the new environment, McLaren said that the Communications Alliance had also played its part in smoothing the transition. “They were very much on the front foot on the issue of end-to-end QoS even before the NBN came up,” he said. The NBN Co CTO also pointed out that, in the case of Australia, potential service providers on the NBN had to demonstrate their interoperability and QoS performance by going through a network onboarding process. “Before we allow service providers to connect they have to go through our interoperability lab. So we have a quality process check that we take them through and they go through that thorough testing regime,” he said. John Stanton, CEO of the Communications Alliance, said the local industry continued to base its documentation on international standards but also rejected criticisms that it had not been proactive enough when it comes to nextgeneration networks. “Multiple network providers using a number of different network platforms interconnecting already exist today,” Stanton pointed out. “In delivering end to end voice performance there are current arrangements in place and based on agreed industry standards and bilateral arrangements. The CA guidelines supplement the current arrangements and provide for a good start until international standards evolve.”

nother who thinks that QoS, particularly for voice traffic, is a non-issue is Simon Hackett, MD of broadband provider Internode. He explained that on the NBN voice traffic was designed to be carried at the highest traffic class and as a result it will operate with “bulletproof carriage” of the data at the highest priority/lowest latency. “It should basically never drop a frame ever, despite any and all other traffic on the path between a customer voice port and their RSP's voice switching equipment,” he said. That said, Hackett raises another issue in relation to the transition to next-generation networks that could come into play – peering, particularly peering between the newer fibre networks and legacy operators. In the Australian context, that legacy network is Telstra's copper network but Hackett suggests that the issue will be relevant to all VoIP providers as the world moves to nextgeneration networks. The problem arises when new providers want to enable local number porting and voice peering to the circuit-switched legacy voice world. In the Australian scenario, he says VoIP providers will be forced to pay enormous amounts of money to interconnect with Telstra using the now legacy SS7 call signalling and carriage protocols instead of VoIP. Hackett said that while Internode had made investments in SS7 interconnect, others will be disadvantaged. “Pity any smaller RSP who has only just started to realise that this matters, who won't be able to afford to do it, and who will take more than two years to figure out how to – even if they can afford the millions of dollars needed to do it nationally in the old school way. QoS is a furphy argument here in comparison,” he commented.

WILLIAM VAN HEFNER

Why redundancy has become a dirty word .

ince I first began following Australia's NBN, I have continued to be amazed by the striking omission of a single word in discussions concerning this massive project. Redundancy. It is not a word that you will find on the tip of the tongue of most politicians, nor will you find much mention of it in technical documents prepared by NBN Co. The issue of redundancy doesn't seem to gather much traction in the popular press and it almost never comes under consideration by the average broadband consumer. In fact, the word seems almost entirely absent from mention in the nation's media, aside from occasional discussions about network outages. The reason behind such a glaring omission is, unfortunately, much easier to understand when you realize that redundancy is not a quality that the NBN can truly afford to provide under its current budget. Network redundancy and reliability are key design components for any company the provides telecommunications services to the public. The driving force behind this need is simple. No person, or company, wants to buy services from a provider that has a history of network outages. The most frequent cause of outages is the inability to reroute traffic when a “weak link” in the chain of a network is broken. The easiest way to avoid this problem is to construct networks with a degree of redundancy that allows them to cope in such situations. The proposed NBN network map does not seem to reveal a great amount of network diversity or redundancy. Sometimes, you actually can judge a book by its cover though. The NBN would be

better classified as a loose conglomerate of point-to-point connections than it would a “web” of interleaving networks. It only takes one or two points of failure to disrupt connectivity to an area larger than most countries occupy. Although this may be due in part to the country's geography, it is also undoubtedly due to political considerations as well. Redundancy comes at a price. In this case politics, not the free market, largely dictates that price. Broadband services in Australia are currently nowhere near as universally available as the NBN Co proposes and mass outages have been a rarity up to this point. Australians that do have access to broadband service have come to expect reliability from their providers without giving much thought to the long-term investment and inherent financial risk involved in network construction. In reality, achieving the degree of reliability that most consumers have come to expect as a basic right is a far more complex and costly task than most would imagine though. Unlike private broadband providers that are being driven by long-term profits, the NBN Co's philosophy of network design is driven largely by short-term political will. Politicians will support the NBN only as long as the public is convinced that it will be both reliable and cost effective. Unfortunately, these two qualities are often in direct opposition to one another, which is a fact that few politicians seem to acknowledge. The current political wind is blowing in favor of the NBN's construction, largely because the public has been assured of two things. First, that everyone will have access to outrageously fast

internet connections. Second, the assurance that almost wherever they live, broadband will be universally available to them eventually. The public has largely just assumed that network redundancy and reliability are inherent in the NBN's design, since most private networks have proven to be fairly reliable up until now. Network providers who have not performed up to the public's expectations have suffered financially, as would be expected. Unfortunately, few voters (or politicians) seem to ask about the ability to deliver fault tolerant connectivity under the NBN Co's current budget, which has resulted in redundancy becoming a rather low priority in the network's design. While the current budget for deploying a nationwide fiber optic network may seem enormous, it most certainly would be much, much more if it were designed to continue providing service in the face of natural or man-made disasters. If the public knew how much it would cost to provide true redundancy across the network, the political fallout may have very well doomed the project before it even began. Since most decisions concerning network deployment of the NBN have thus far been politically motivated, it remains to be seen just how robust the network will prove to be under actual use. In the end, Australians will undoubtedly get the network they paid for, whether it meets their expectations or not. The real question is, how much more are Australians willing to pay in order to achieve true network redundancy and high reliability in an age where 99% uptime is considered inadequate?