FTTH emerges as preferred NGN access in Asia , but questions remain

David Kennedy/Ovum
09 Apr 2009

In the last few days, Singapore , New Zealand and Australia have all taken decisive steps towards national fibre to the home (FTTH) networks, albeit from very different starting positions.

Singapore and New Zealand press ahead
On 31 March 2009, the New Zealand government called for submissions on a proposal to build an FTTH network in New Zealand reaching 75% of the population (the top 25 cities) and taking at least six years to roll out.

The New Zealand government will invest up to NZ$1.5 billion in the network, and seek additional private sector investment to create a national market in dark fibre and wholesale broadband access. The funding will be invested in a government-owned enterprise, which will jointly invest with the private sector in local fibre companies (LFCs) in the 25 cities.

Last Friday Singapore announced a StarHub-led consortium as the winner of its OpCo tender for the national FTTH switching infrastructure. This was the culmination of a tender process launched by the Singapore government back in 2006. The passive fibre infrastructure will be built by a SingTel-led consortium. Completion is expected by 2013.

Australia changes direction
Instead of announcing a winner of its FTTN tender today, the Australian government instead announced a significant policy change. It rejected all of the bids, and announced that it would instead pursue a wholesale-only FTTH network over a significantly longer 7-8 year timeframe. The government will commit its promised $4.7 billion investment, and will seek additional private investment directly and through the issue of infrastructure bonds.

In our view, abandoning the FTTN proposal is realistic. First, the global financial crisis made the original 4-5 year timeframe problematic. Second, it had become clear that achieving sub-loop access to Telstra\'s copper network would be a legal quagmire.

The new 7-8-year timeframe will give the project more financial and commercial flexibility to manage risk. In addition, the choice of FTTH technology will bypass the copper network.

The government also announced a comprehensive review of telecommunications regulation. Of course, access to copper remains important, but access to ducts will be even more important as FTTH rolls out. The review therefore canvasses further functional separation of Telstra, which could include its passive infrastructure. The industry has generally welcomed the open regulatory reform process that the government is now launching.

The review will also address the outstanding regulatory issues around the FTTH network. Crucial issue will be the access price for the fibre network. A low price will discourage private investors, but a high price will discourage consumer uptake and service innovation. Finding the right balance will be a major challenge.

An emerging model
Out of these three countries, a basic policy model seems to be emerging:

The preference for FTTH technology has become clear in all three countries, with a recognition that this will be focused on urban populations.

All three countries want a "

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