Lessons from Down Under

An article titled "Australia's Last Chance for Infrastructure Competition" describes failed opportunities as far as introducing competition in the wire line broadband market. This is said to be in stark contrast to the mobile telecoms segment where competition and innovation have flourished. The article states that the government is now looking to promote platform competition in high speed broadband.(HSBB)

I am always sufficiently wary of superimposing models from the developed world on to the Indian telecoms scenario because apart from many other aspects, regulatory structures and capacities and penetration levels are different, but I do believe that we can learn something from their experience.

I have written earlier under the same labels as this post in favour of a technology neutral and multi-operator, approach to high speed broadband penetration in India. Getting NOFN / BBNL off the ground in my view would be a Herculean effort whose success in the near future if at all is doubtful. The earlier USOF approach of tendering out region-wise HSBB network projects would work much better as it would allow many operators other than the incumbent to participate. Investment and innovation would take off and the roll out would be much quicker bringing much needed broadband to our young aspiring population,especially in rural India.

Previous USOF OFC schemes suffered from flaws such as overspecialization of technology but had several progressive features such as mandatory open access and even allowing the selected Universal Service Provider to complete the project by renting  bandwidth from existing players to  (rather than necessarily laying fresh OFC). USOF India needs to think beyond PSU led nation wide OFC networks if we are to progress. A technology mix in wire line broadband would be welcome. Please see my previous posts in this regard.

Fibre, Regulation & Competition

It may be noted that a common strain running throughout my blog is my concern with huge, national level roll out of incumbent centric state-sponsored fibre networks. In the enthusiasm for broadband and its inclusion as a key component of growth or stimulus plans, developed nations too seem to have relaxed their strict concern for competition or at least have had to modify competition/telecom regulation to accommodate these projects (NBN). Developing nations like India that have adopted a "me too" approach are perhaps even worse off for the lack of adequate regulation and almost complete lack of competition assessment at a policy and project level. (BBNL)

I have often warned that there would be problems ahead. Please see my posts under national broadband plans, broadband networks and competition and have suggested an alternative approach based on tendering and infrastructure sharing.

It is of interest that the fears surrounding fibre backhaul as a key, potentially bottleneck input are being articulated even in Europe with much more sophisticated regulation in place. These have led to plea for (re)regulation of access to especially backhaul owned by former fixed line incumbents.Please see the report on Vodafone lobbying for regulated fibre access,

Do we want to go back to the era of complicated (and often less than perfect) fixed line type of regulation or can we learn from the past?

National Broadband Plans- Cracks Emerge

Two interesting pieces of news that make me feel like a seer. 

First a post titled "Fibre fanaticism overrode proper NBN planning says report" that quotes Australia's   National Productivity councils draft report as follows,

 Early planning for Australia's National Broadband Network (NBN) focused on “how best to implement the government’s policy objectives, rather than considering the merits of different options.”

This implies that rather than exploring various options on how to provide high speed broadband to end users, a policy decision on fibre as the preferred mode  and the NBN  as a delivery mechanism was taken. This obviously restricted options.

Thus instead of "conducting a cost benefit analysis to ensure economic efficiency and value for money", an implementation study was conducted which "did not evaluate the decision to implement NBN via NBN Co" or the macroeconomic and social benefits of implementing a super fast broadband network.

This often happens in Government, but in fast changing field like telecommunications, such costly mistakes lead to long term regulatory headaches and negative consequences in terms of competition, growth and customer service. Please see my previous post on disruptive technology in this regard.

In the short term  NBN is already facing time and cost overruns.

Another news item  about USA's National Broadband Plan 2010, states that, "major U.S. carriers have started to seek relief from their vow to support the plan as its enormous costs become clearer...........They are persuading state legislatures and regulatory boards to quietly adopt new rules—rules written by the telecoms—to eliminate their legal obligations to provide broadband service nationwide and replace landlines with wireless. This abrupt change in plans will leave vast areas of the country with poor service, slow telecommunications and higher bills." 

Please see my previous posts on National Broadband Plans and Competition.

Is this what NOFN was Meant to Do?

Another article appeared today in the Economic Times about NOFN/BBNL  plans to acquire an ISP license to provide e-services based on Wi-Fi in rural areas.

I had written earlier about the proposal to provide Wi-Fi for India's rural local Government offices and my worries on this count. 

Firstly focusing energies on the Village Panchayat Telephone or Government sponsored Common Service Centres(for internet) has not met with notable success in the past. What has succeeded  is the creation of a conducive environment for services and applications to flourish on a commercial basis.

 Thus, in the pre-mobile revolution era, India's subsidised Village Public Telephones which were supposed to be the village life line were often found to be lying in disrepair or being used as private phones of rural elite but once wireless appeared on the scene, commercially run public phones did roaring business.

Secondly, I fail to understand why the Government must select the technology and service provider to deliver e-Government services to citizens. If this was bid out with desired specifications, the lease cost solution could be selected. This would be conistent with the regulations laid down for Universal Service Funding in India

Thirdly, public money (USOF) is being used to fund NOFN/BBNL's OFC roll out which was meant for areas that markets would not serve. Thus, the network was to provide high capacity backhaul from villages to blocks on a non discriminatory basis. NOFN was never meant to be a service provider. If the argument is that its viability is uncertain, well, that is exactly why it is being fully subsidised. If  USOF was to float another tender for broadband access in non viable areas, then the selected access providers would need  back haul and BBNL would get its business and revenues. Ignoring competitive neutrality today means a heavy cost in terms of poor telecommunications in the future. We have already seen this pan out in the case of fixed lines and rural broadband in India.Should we be repeating the same mistakes?

Please also see my posts on NBN and lessons for NOFN.

Limiting Public Funding to Access Gaps

It is reported that the fact Sing Tel Optus has plans to roll out fibre to the  "basements of apartment buildings and shopping complexes [ and use] [t]he existing copper wiring within the buildings .. to deliver faster, NBN-like broadband speeds is being seen as a threat to NBN's viability. There are apparently other operators with similar plans too.

My question is why should the Government sponsor/fund NBN like roll outs in cities where markets may (and will) serve customers? Why should NBN's business model have factored in markets where competition cannot be ruled out?

It has been stated that,

Breaking NBN Co’s business model could force it to be reclassified from a profitable investment to a multibillion-dollar expense on the federal budget... NBN Co’s entire business model ran on the assumption of a flat national price for all customers. Labor’s NBN was designed to act as a cross-subsidy system where the higher revenues generated by city users paid for broadband in the bush.

This business model was discarded with the onset of  competition in  erstwhile monopolistic and fixed line based telecoms markets across the world. I have written earlier about the flawed and "Back to the Future" feel of ambitious National Broadband Plans based on incumbent centric National Broadband Networks.

Again there are lessons for India's NOFN which is basing its arguments of veering way from its original mandate of strictly (actual access) gap filling based on similar fallacious business viability models.

The NBN Debate Continues-Lessons for India's NOFN?

It is reported that an independent review of NBN ordered by the new Coalition Government of Australia has found that NBN costs and time lines have been understated and revenues overstated.

The news report states that,

"'The  full cost of Labor's original National Broadband Network plans would blow out by $29 billion and be completed three years late, the strategic review has found.

Communications Minister Malcolm Turnbull released details of the review he started 60 days ago on Thursday.The review found the fibre-to-the-premises NBN under Labor would have cost $73 billion, $29 billion more than forecast, and not be completed until 2024.It also found the current NBN Co corporate plan had overestimated revenues from the network by $13 billion.While the review found the cost and timing of the original plans would blow out, Opposition communications spokesman Jason Clare challenged the review's findings.He released an internal government analysis of the Coalition's plans, which he said revealed the new government's plans were "the wrong approach", and would not achieve the promised speeds.

Mr Turnbull has pledged download speeds of 50mbps by 2019 under the Coalition's plan, which will rely on copper connecting to fibre nodes, rather than brining the higher-speed fibre direct to all homes.

But Mr Clare said the analysis should the two stage approach - with 25mbps promised by 2016, expanding to 50mbps by 2019 - was unworkable.

He said the government's fibre-to-the-node plan would lower revenues from the network by 30% and the actual cost of fixing the existing Telstra-owned copper network, and was "unknown".

But Mr Turnbull said the review found the Labor network was "never achievable", and the results of the review would be "a crucial input into government policy".

Clearly the debate can go on forever. Nevertheless a mid term policy/projectreview and corrective steps are a good idea for any ambitious national broadband network roll out. India's NOFN/BBNL is already in difficulties. Ironically though it is being heavily subsidized because it is supposed to be financially nonviable and the PSU SPV route was chosen to cut red tape in Right of Way and other such causes of delay; the three PSU implementation partners in charge of this project are now citing the very same reasons for their difficulties and delays. Time for a review of costs and revenue projections and last but not lease scheme design? 

National Broadband Plans-The Largely Un-examined Competition Debate

I recently came across a very interesting post on the subject of competition in OFC roll outs. This well written post by Paul Budde argues that (in the Australian context but extrapolating through examples to the international context) either we do not really need infrastructure competition in OFC infrastructure or at least it is not a very practical possibility. He cites USA and Europe as examples of lack of nation-wide fixed line competition.

It would take much more than a blog post to analyse his arguments but I would like to make one simple counter argument. Why must we have a nation wide network? In vast countries like India, USA and Australia even regional or sub regional fixed networks would be a feasible option. In non viable areas, competitive service provision may be seeded by Universal service funding. Please see my post on the Indian USOF model at Broadband Networks through the Infrastructure Sharing Route. This model did succeed in creating potential competition to the incumbent with USOF subsidy even in a remote region of the country. Other posts on infrastructure sharing could also be viewed. 

Perhaps the inability to fathom such a model comes from historical reasons wherein in almost every country the incumbent managed to protect its monopoly by harping on the economies of scale issue and the best option with the state was to regulate prices etc. Regulating monopolies cannot solve inefficiency and lack of drive to innovate that plagues all monopoly service provision. Readers are invited to read my previous posts on NBN and NOFN. Today both networks are delayed and mired in roll out problems. There is a news item about NOFN planning to impose heavy penalties on its vendors who are delaying roll out. Need I say more. I have written earlier cautioning against the faddish nature of national broadband plans and the fact that they are likely to recreate monopolies with the usual set of associated problems.

Also, unlike Mr Budde, I am not so sure that mobile networks can ever be considered perfect substitutes for fixed lines. European regulators seem to agree with me.  

I do agree that service level competition is very critical, but as far as competition in broadband goes, if it is there at every level-all the better. 

NBN-Changes Ahead

Australia's Financial Review carries an article titled "Coalition mulls NBN Co split to speed construction"
The new government is considering creating two separate entities -one in charge of construction and the other,operations. This article stats that,

The proposal comes as the NBN rollout struggles to ramp up and meet its targets. Under Labor, the NBN rollout missed several key construction targets. NBN Co’s 2012 corporate plan forecast it would pass 359,000 homes and businesses with fibre by June 30, 2013, but it only reached 207,500 premises.

The delays were frequently blamed on labour shortages, planning issues and a range of other problems that resulted in dissatisfaction among unions, contractors and sub-contractors.

Leaked internal forecasts showed NBN Co was set to miss its target of connecting fibre-optic cabling to 1.13 million existing homes and businesses by June 30, 2014, by 273,065 premises.

Service Stream, one of the key companies building the NBN, reported a 672 per cent fall in net profit as it pulled out of the project.


My views on massive  incumbent-centric state sponsored broadband roll outs can be seen under the labels National Broadband Plans, Broadband Networks. I believe lack of competition is a major concern in such initiatives. 

Avoiding the Recreation of Monopolies in the Age of Superfast Broadband

I have been writing about this subject quite often. I worry that in our enthusiasm to provide universal access to high speed broadband on an urgent basis, nations who are going in for incumbent centric OFC roll out are erring on the side of monopoly recreation and regulatory headaches apart from all the ill effects of non competitive service provision.

It would appear that similar concerns are being expressed vis-a-vis the rural roll of broadband network in UK. Lack of competition in selection of Universal Service Providers runs the risk of higher than required costs in the short run apart from the usual problems associated with monopoly service provision in the long run. Australia's NBN has been subject to similar criticism.

Quite predictably, Indian USOF's project whereby incumbent BSNL is to to roll out 2199 mobile towers in insurgency prone rural areas is reportedly  running into cost issues even before the project has taken off.

Please see previous posts on competition and National Broadband Plans and Competition. 

More on Broadband Networks & Ecosystems-New Zealand's Efforts

In a post titled "National Broadband Networks:Regulation, Universal Service, Competition & Monopolies," I had stated that while most of these these public/US funded OFC networks are slated to be open access networks, care should be taken to avoid displacing private investment and initiative which may have been forthcoming with the right regulatory environment or incentives. Use of public funds/universal service funds should ideally be restricted to areas where markets have failed and logically the best course is to bid out such network provision to allow a level playing field between private and public operators. This may lead to a more fragmented approach than one integrated network but contractual obligations can ensure seamless connectivity between and non-discriminatory open access to backbone networks owned by various entities.  (see previous blog post) Such a PPP approach rather than publicly/incumbent owned networks may prove to be more competition and growth friendly in the long run even if it entails more effort in the short term. The use of public funding in pockets where no operator will venture or where effective competition is unlikely in spite of effective regulation (akin to European Commissions white or grey areas) is however justifiable. 

The fact of the matter is that in many countries we are now rolling out state supported national broadband networks which often rely on the incumbent. My view on this is we should be careful about the trade off between short term expediency (time, cost and effort saved) and long term imoact by way of competition, innovation and growth. 

I once again reproduce below a quote from the ITU report on the State of Broadband 2012

"Broadband networks and services are more than simple infrastructure – they represent a set of transformative technologies that promise to change the way we communicate, work, play and do business.  It is essential that every country  takes  broadband  policy  into account to shape its future social and economic development and prosperity, emphasizing both the supply and demand sides of the market. Further, it is crucial to adequately evaluate the potential alternatives to be implemented in order to encourage private sector investment. A “one size fits all” policy to broadband roll-out could have negative implications for the ICT market. Finally, a detailed cost-benefit approach should be adopted when evaluating different public policies and regulatory options to promote the growth and development of broadband in different countries around the world."

In this context, in the same post I had placed links to comparisons of Australia's NBN with New Zealand, South Korea and Singapore's national broadband network efforts.

A comparison with USA's efforts can be seen at "NBN vs. the world: The American experience." It is accepted that USA relies on a more hands off approach favouring competition and that Australia is more dependent on its incumbent Telstra. Its interesting to note that NBN's Myers is quoted as saying that

the U.S. market structure has caused a problem of its own “It’s actually resulting in very much a patchwork network across the states.” Different companies deploy different technologies from each other, and even within their own footprint offer different speeds in different areas, he said. “There’s no consistency across the marketplace.”

Another viewpoint of  Rod Tucker, a professor at the University of Melbourne is that, 

“Verizon has rolled out an extensive fibre-to-the-home network in the US,” but hasn’t seen much take up, ..."This is because the Verizon fibre network runs alongside competing HFC and ADSL networks. The lesson that Australia can learn from this is that facilities-based competition can be inefficient."

I donot agree with this conclusion at all and in fact I believe relying on a single technology and single network is not prone to the same fallacious "telecom as a natural monopoly" argument that we encountered in the era of copper line access. It will most probabaly lead to the same regulatory headaches in the future.

A comparison with Korea is available at  "NBN vs the world: The Korean experience." The success  achieved through an emphasis on developing the entire broadband eco-system is evident.

"[Korea] developed e-health, e-learning and e-government services when it began constructing its broadband networks... which allowed the government to pinpoint early on where problems were and commercialise the technology earlier. This allowed citizens to become accustomed to online services such as online banking and e-trade."

Most importantly,

"The Korean government has also put in place a competitive environment to allow as many broadband operators as possible...We’re seeing a very aggressive campaign from their government... promoting and making broadband networks available. One thing that we can learn is that there is a place for government to put into place policies and best practice to ensure that operators are able to make available the services that the customers want" 

The Government in my view should do just that, promote through regulation and policy rather than get involved in actual roll outs.

A detailed description of New Zealands's  Ultra-Fast Broadband (UFB) initiative and the Rural Broadband Initiative (RBI) is available in an article titled, "NBN vs. the world: The New Zealand experience." The article 

Another article "NZ gov seeks submissions on telco regulation" describes the proposed review of New Zealand's Telecommunications Act 2001 which in its first phase will examine will examine "whether the current regulatory framework is adequate for New Zealand’s migration from legacy copper infrastructure to fibre networks and discuss pricing components of the current regulatory framework."

What I liked was the focus on "competition for end-users, how the commercial interests of access providers and seekers can be promoted and how to effectively encourage investment for the long-term benefit of end-users." and " innovation in the telco market and deregulation in instances where there is sufficient competition."

India needs to pay attention as we often review telecom policy from the technology end rather than focus on consumer benefits and work backwards. We also rarely commence our analysis with competition as the desirable end result.

Previous posts on Competition, Broadband Networks and National and National Broadband Plans may also be seen.

State Speared Fibre Roll outs-NBN

Australia's NBN is almost always in the news for political reasons. An article titled, "Quest for 21st Century Broadband: A Tale from Down Under" also mentions  problems of slow roll out and slow uptake apart fro  NBN being the subject of "political football."

Thus it is written therein that,

 "The project had only reached 207,500 homes at the end of June, well below its target of 341,000. And only 70,100 of those with access to the network had signed up as paying customers......

 ....Work had to stop earlier this year when deadly asbestos was found in the pits where workers were laying new fiber cabling, and some sections of the network had to be redone in the nation’s capital Canberra because of poor workmanship.  The latest blow came on Monday, when the the Government-owned NBN Co. announced it would have to find new contractors to install fiber cabling in homes in South Australia and Western Australia."

Perhaps the problem lies in the size of the venture being implemented by a single telecom operator. Readers may also like to see "Broadband Networks through the Infrastructure Sharing Route" where I have described projects for state/regional OFC network roll outs by USOF India where the implementing USP is selected through bidding. Also see posts on Broadband Networks

The Future of Australia's NBN: Technology Choices and More

I have written earlier about the technology debate centered around Australia's NBN i.e. Fibre to the Node versus Fibre to the Home.

Another news item from the Chicago Tribune on this issue titled "Australia election threatens shape of $34 billion broadband plan" would make it appear  that the views are polarized across political parties and vendor interests appear to play a role. Needless to say this is a bit surprising. One would hope that the telecoms and competition regulators' oversight would ensure adequate distance from such considerations. A revision in plans should normally be requited to be justified  on socio-economic grounds including consumer interests. Of course cost is a consideration in the above mentioned technology choice.

National Broadband Plans-Technology Choices

National Broadband Plans always involve technology choices. The fibre vs wireless debate is in my opinion rather unnecessary until the state decides to fund one and not the other. In India, the regulator came out in strong criticism of a USOF Wireless Broadband Scheme as it appeared to see this programme as a competitor to the National Optic Fibre Network. Though USOF tried its best to plead that the two were complementary and not mutually exclusive, the former has not seen the light of the day while the latter is being rolled out as BBNL. The result is that rural areas continue to have negligible broadband penetration and will have to wait patiently till fibre is laid up to the village panchayat and then (hopefully) access providers use this connectivity to bring them high speed broadband on wireless. It is a moot point why both could not have been achieved simultaneously. Please see my previous posts on this topic at

http://ictsforall.blogspot.in/search/label/National%20Broadband%20Plans and http://ictsforall.blogspot.in/search/label/Broadband%20networks

It is also interesting to read about the technology debate (fibre to the node plus wireless vs. fibre to the home) in the context of Australia's NBN. While, cost, bandwidth and speed do play an important role in how one perceives the relative benefits, I would also be concerned about platform and service competition. Please see "Lets not go back to the dark ages on technology" which argues for FTTH and "Future of broadband going down to the wire" that argues against it.