The path to NGN

10 Jun 2008

This is the story of two broadband networks. Neither yet exists, but the success or otherwise of their rollout could set the pace for next-generation network construction worldwide.

NGN network tenders are now underway in the diverse markets of Singapore and Australia.

They're not the first in the region: Japan and Korea have already built out extensive fiber networks (see story NGN Definition page 20). But they're the first into which governments have put so much effort - and tax dollars.

If successful, they could represent a marked departure from the past 20 years of deregulation.

The joint private-public investment approach holds appeal especially to smaller and emerging telecom markets.

Large markets such as the US and Japan have the financial clout to carry through next-gen deployments on their own, but that's not the case in capital-scarce small and medium-sized economies.

As IDC New Zealand said in a recent research note, "If we rely on commercial and competitive incentives to drive fiber deployment we won't get the economic outcomes we require. The government has a critical role to play."

The winner of the Singapore and Australian tenders will be given exclusive rights to build a nationwide NGN and a large bucket of cash. It's "a natural monopoly," said Leong Keng Thai, deputy CEO of Singapore's IDA.

But the radically different nature of next-gen technologies also calls for the active involvement of telecom regulators.

It's very difficult to unbundle a fiber or VDSL network in the same way a copper DSL loop is resold today. Instead of selling access to a wire, network owners will most likely be selling bitstreams, says Amrish Kacker, head of Analysys Mason Singapore.

The most elegant solution, theoretically, is to separate out the network ownership and investment and sell services at arms-length. This has the added attraction to regulators of making the market vastly more competitive; if the last 20 years of deregulation have shown anything, it is that there is nothing harder than bringing competition into the local loop.

In the UK, BT imposed separation on itself in setting up a firm, OpenReach, that owns and operates the access network, but that's not a pill other incumbents would willingly swallow.
More likely is the Swedish approach, where the regulator had mandated a structurally separate carrier to build out dark fiber and on-sell it to carriers on an open access basis.

That's the model adopted by the Singapore government in its NGN tender. The network must be initially capable of 100 Mbps downstream and 50 Mbps upstream and up to 1 Gbps per household. Over time it is will become fully symmetrical. "Asymmetry is not going to serve in the future," said Leong.

It's not the first broadband network the Singapore government has commissioned. The first-gen broadband network SingaporeONE was built by SingTel and the then cable TV company SCV (now a part of StarHub) under a government-driven plan in the late 1990s.

The NGN is part of Singapore's digital "masterplan" over the decade to 2015, by which time it is intended to be available to all premises across the island.

Right now 81.1% of Singapore households subscribe to broadband, two-thirds of which have access to download speeds of between 2 and 10 Mbps, says Leong.

The project began with an announcement in the PM's budget speech two years ago and still has nearly a year to run.

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