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Monday, 18 June 2012 18:05

Analysys Mason FTTH report rings NBN alarms, says Coalition


Armed with a report from respected consultancy Analysys Mason The Coalition has delivered another attack on the Government's broadband policy but its arguments don't always apply to Australia.

"Analysys Mason have recently produced a detailed report which has some alarming findings for the Rudd Gillard Government's NBN," says Liberal MP Paul Fletcher.

"The report looks at the rollout of fibre networks around the world. It concludes that there are significant dangers for those countries which are adopting a pure Fibre to the Home (FTTH) approach; that such rollouts are susceptible to the faster roll out of upgraded wireless and DSL networks; and that countries where there is a focus on Fibre to the Node (FTTN) and VDSL will have a much higher take up of fast broadband in the next five years."

I'll have to take his word for that and rely instead on the Analysys Mason press release because the report  'FTTx rollout and capex in developed economies: forecasts 2012–2017' costs an alarming $US7999.

You might recall Analysys Mason. This is the firm that pronounced the design of the NBN Co's FTTH network "prudent and efficient"  but that was only in comparison to other ways of rolling out an FTTH network that might have been imprudent and inefficient. Analysys was not asked for their opinion on the prudence or otherwise of FTTH v FTTN.

However some of the arguments that Fletcher quotes from the Analysys Mason report don't seem to be applicable to the NBN.


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"Given the as-yet untapped potential of copper over short distances, we wonder whether it is really sensible at this stage to take fibre to people's homes," Fletcher quotes. "Sticking rigidly to FTTH runs the risk of delivering next-generation access to largely urban or well-to-do-elite, while delaying delivery to other users and potentially losing customers. This may come to look both commercially and politically unacceptable."

Surely Fletcher is aware that the NBN FTTH network is being rolled out first in regional areas that don't have the best broadband today and that there are no plans for prioritisation of wealthy suburbs?

Analysys Mason says: "Given the limited footprint projected for FTTH by 2017, the disproportionately high spend on this technology is highly problematic. It may come to be seen as inappropriate use of capital in the emerging competitive environment. Also, in some countries, it may become politically problematic if an urban elite is seen to receive ultra-fast services, at the expense of any upgrade for the rest."

Well of course in Australia there won't be any fixed network competition to the NBN - the Government has seen to that, and it is certainly making sure that the NBN won't serve only the "urban elite."

The report also questions the business case for FTTH operators. According to Analysys Mason's press release "[Report author Rupert] Wood argues that the perennial question of whether any set of consumer services justifies 100Mbps access speeds is ill-conceived. 'Supply of bandwidth probably will create demand, but not necessarily in ways that are helpful for operators' service-oriented approaches. Few real-time video services require anything like these bandwidths, but those simply wanting faster-than-real-time download and upload will always be happy with more speed.'


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"Some successful FTTH players now recognise this and have consciously positioned their services as non-value-add utility offerings, which leaves a wide space for over-the-top players to fill.'

That is exactly what NBN Co will be, a non-value add utility player, leaving scope for over the top retail service providers to add value.

The report also argues that "New enhanced DSL technologies such as vectoring and bonding will make it easier for operators to keep pace with cable competitors and one step ahead of any challenge from mobile operators to their core broadband businesses."

Of course the situation in Australia is not about a copper-owning operator trying to compete with cable and mobile: the copper-owning operator is the dominant cable operator and the leading mobile operator.

Lets' not forget that the rationale for the FTTH network was to break once and for all the stranglehold on the market that the operator was able to exert through ownership of the copper network.

In short - arguments against FTTH that apply in one market should be used with caution in another. Or taken with a pinch of salt by those on the receiving end.

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