Telco alliance acting on self-interest: IDC

The members of the Alliance for Affordable Broadband, which last night released a manifesto with an alternative plan for a national broadband network, are looking out for their own interests and not those of the nation, according to IDC telecommunications analyst David Cannon.

"I respect them. I think they're good businessmen," Cannon told ZDNet Australia, "but I do not believe that they're doing it in the interests of the nation."

Telecommunications chief executives including AAPT's Paul Broad, Pipe Networks founder Bevan Slattery, Vocus Communications' James Spenceley, and others including BigAir's Jason Ashton, Allegro Networks' David Waldie, EFTel's John Lane and Polyfone's Paul Wallace are all part of the Alliance for Affordable Broadband.

The alliance's idea is that there is a need for a fibre-based network, closer to the Coalition's $6 billion proposal than Labor's $43 billion plan, but that it should only be rolled out where it is supported by a cost-benefit analysis or need.

The alliance's option, which it believes would cost $3 billion, involves a number of facets:

• 4G national wholesale network coverage, to 98 per cent of Australians, at up to 100Mbps;
• Fibre or equivalent high-speed broadband for backhaul, school, hospitals and most businesses, at speeds up to 1Gbps;
• A fibre-based solution (whether that be fibre to the premise or FTTN or a combination of both) for areas of demonstrated need via commercial return, or where there is a demonstrated and justifiable improvement in productivity and/or social equality to justify taxpayer contribution;
• Satellite for remote areas, at speeds up to 12Mbps.

However, Cannon doesn't think that the alliance's motivations are pure.

"The reality is ... they've never had a better time than right now in the market," he said, explaining that telcos now have regulated access pricing from the Australian Competition and Consumer Commission, which presented them a great business case for providing DSLAM-based broadband.

No new competitors were appearing as no-one else was getting into exchanges now, he said. Access was a key differentiator and the smaller players were taking market share away from Telstra.

These players didn't want that to change, Cannon believed. He also believed that the requirement in the plan that 4G wireless spectrum come with conditions attached was a sign of those players feeling they'd missed out on the wireless pie, which carriers such as Telstra and Optus currently enjoy.

Cannon didn't agree with the alliance's proposal of a national wireless network, saying that he was yet to see a wireless service that didn't fluctuate based on user load and line of sight. He also bagged the proposal that fibre should be rolled out where it was commercially viable or where there was a sufficient case. He said that everyone understood that this network wasn't about getting a commercial return; the return on investment is over 10 years, he said.

"It's not about today. It's a generational shift."

However, analysts such as independent telecommunications consultant Kevin Morgan, have said that the NBN is a Rolls Royce approach to broadband based on "over-hyped technology" and that wireless will be perfectly sufficient.

Ovum analyst David Kennedy said the alliance's ideas were sound.

"Just looking at the principles — none of these seem to be out of court," he said. "It makes perfect sense."

Kennedy said that it looks like the National Broadband Network will really have an uphill battle from here.

With hindsight, he said, the decision to rush through and implement a broadband network with no research and analysis was not a good one.

The alliance's proposal for a national broadband showed that the industry had as yet reached no consensus on what investment strategy was needed to support future needs, according to Kennedy.

"We haven't done the work to figure out where our broadband needs are going in the future," he said.

The Labor Government has rammed the National Broadband Network policy down everyone's throats, Kennedy said, which had meant it seemed inevitable so people sat back and waited.

Now, however, the balance of power has changed earlier than everyone thought.

"There is space for alternative debate that hasn't previously existed," Kennedy said.

He believed that the alliance was trying to influence the course of negotiations between the parties and independents, and said that was a good strategy.

"If you wanted to have your voice heard, now is the time to do it."

IBRS analyst Guy Cranswick agreed with Cannon that the proposal was self-serving, but also said that the idea had merit and raised questions about costing and feasibility.

Cranswick said it took aim at the failure of a business case, and provided a solution that had an implied business case by allowing the market to determine price and service.

The manifesto didn't, however, solve the problem of Telstra's control of the last mile, he said.

(Front page image credit: Rock series image by Stefano Tambolo, CC2.0)