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Telecommunications Gang of Nine releases alternative FTTN plans
Telecommunications Gang of Nine releases alternative FTTN plans | Gang of Nine releases alternative FTTN plans |
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| by Stuart Corner | |
| Monday, 10 July 2006 | |
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The group released two weeks ago an interim report detailing the policy issues around FTTN. The key to the proposal, set out in a report prepared by the Allen Consulting Group and dandolopartners, is a company dubbed SpeedReach to which the owner of the network (dubbed Fanoc) would cede control over most matters concerning the network, including long term rollout plans, capacity and technology. The members of SpeedReach would be all telcos which would use the network. However its board would comprise only "respected independent directors". It would have a "small high quality executive staff". SpeedReach would be charged with maximising the utilisation of the network. However, the prices charged for access to the network would be determined by the ACCC through the current access regime. SpeedReach would "take the key operational decisions on such matters as the bandwidth between the exchange and the node; the cards which are installed in the node, thus determining the characteristics of the services which can be offered from the node (bandwidth, symmetrical or asymmetrical etc); which equipment suppliers will be used; and so on." SpeedReach's role in provisioning of the FTTN build would include ensuring that individual nodes were capable of supporting services offered by a range of providers, and via a range of platforms (ADSL, VDSL and SHDSL). It would, for example, ensure that a reasonable number of business consumers and heavy residential consumers could be supported by the core infrastructure. It would also have an active role in forecasting and taking account of likely demand growth in particular geographies. At a technical level, it would oversee the process for: changing cards at the node; setting and changing contention ratios at the node; and provisioning the fibre from the node back to the local exchange, including the process of making changes to those provisions. Price for access to the network would be set by the ACCC using TSLRIC pricing principles in response to a special access undertaking lodged by SpeedReach on behalf of the network owner. This would be SpeedReach's first major task. This, the report claims, would be a much more straightforward process than a special access undertaking lodged by Telstra. The main requirement would be to achieve access pricing that would allow Fanoc to generate a rate of return sufficient to raise capital. A key factor in planning the rollout of the new network would be to maximise utilisation of existing DSLAMs, and to compensate the owners of those DSLAMs left 'stranded' by the network rollout. SpeedReach would develop five year forward plans for upgrading exchanges to FTTN, by consulting with all stakeholders including Telstra and ULLS users (DSLAM operators), by considering demand forecasts and other factors, and by developing a rational plan to upgrade on an exchange by exchange basis. DSLAM owners would be given a minimum of three years' notice of any given exchange being upgraded. Any provider that had built ULLS infrastructure before the plan was published would be compensated for its expenditure on that infrastructure, at an agreed rate, to be paid as a first claim on the access revenues generated from the FAN. The reports suggests that the Government could support investment certainty in the transition to FTTN by declaring, as a matter of government policy, that any provider that had installed DSLAMs prior to any plans for upgrading exchanges to FTTN, would be appropriately compensated. The report envisages the network being owned in part by Telstra, in part by other carriers and in part by investors. "We believe that investment in the FANOC would be considered by investors as an alternative to investment in other utility infrastructure investments such as gas and rail networks," it says. The report notes that such investments attract substantial support from a range of private investors, such as retail investors, superannuation funds, and specialist infrastructure investors, and its authors say: "We believe that Fanoc would be able to attract capital with a rate of return of between eight percent and 10 percent...Our view is that network users would readily be able to set prices sufficient to cover their costs, including the access price charged by the Fanoc, and still generate a sufficient return." The ideal solution for the consortium would be that Telstra agrees to share ownership of an FTTN rollout with other carriers under the SpeedReach mode. However if Telstra does not agree to this, the consortium suggests the model could equally be applied to a Telstra-owned network but without the additional funding, the reach would not be as great. If Telstra decides not do proceed with its FTTN rollout out, the consortium intents to seek infrastructure finance to build a network from scratch. It contends that, without the SpeedReach government model there should be no FTTN rollout in Australia. The complete report can be downloaded from here.
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