Broadband moves to top of the agenda

Friday 14 May 2010 | 13:03 CET | Background

Broadband is high on the agenda in a number of organisations, from incumbents to challengers, regulators to governments. The discussion covers a number of themes: roll-out, overcoming the 'digital divide', regulation and open access. We look at the recent developments around these three themes.

Roll-out acceleration

In Italy, Fastweb (82% Swisscom), Wind (part of Weather) and Vodafone unveiled a plan to roll out FTTH to the 15 largest cities, for a cost of around EUR 2.5 billion. The operators would like to work with Telecom Italia, but apparently don't see this as necessary (See our commentary 'Telecom Italia 'forces' competition into FTTH initiative').

Vodafone is also participating in a FTTH project in New Zealand. Together with Canada-based Axia NetNedia, the company is bidding in the government's ‘Ultra-Fast Broadband Initiative’ worth NZD 1.5 billion to deploy an open-acess network (only passive elements, so access at the active layer = Layer 2). The government will announce in late June the winner which together with Crown Fibre Holdings will roll out the network. Other candidates are reportedly Telecom NZ and a consortium of energy and smaller telecom companies.

In Australia, the ‘National Broadband Network Implementation Study’ was published. This found that the planned AUD 43 billion for the network can be cut by AUD 5 billion, the participation of incumbent Telstra is not critical to the project and the government will need to invest AUD 26 billion over seven years. The open access FTTH network, which will provide access at Layer 3 (= services layer), will serve around 93 percent of the population, with the remaining 7 percent covered by a combination of mobile and satellite. The plan assumes the network will be completed in 2020 and by that time around 60 percent of the population should susbcribe to services. The report, produced by KPMG and McKinsey, is open for public comment until 27 May.

FCC and ITU target universal access

The FCC published a report (OBI Technical Paper nummer 1) that estimates the cost of closing the ‘broadband gap’ at USD 23.5 billion. The aim is coverage for the 7 million households that are outside the reach of current broadband networks, with access of at least 4Mbps over DSL, 4G or satellite.

The ITU and UNESCO have formed the Broadband Commission for Digital Development, which in September will present its report on how to roll out broadband more quckly across the world and stimulate related services. In addition to Carlos Slim, currently the world's richest man and owner of a range of telecom and media assets, executives from Telefonica, Bharti Airtel and Ericsson are on the commission alongside representatives from countries with leading broadband services, such as Singapore, Finland and Australia.


Regulation and open access

The FCC is also stepping up its activities since the Obama administration took office. After the regulator lost a lawsuit over whether it could regulate Comcast's traffic management techniques, it has come back at the market with a tougher approach. in the 'net neutrality' suit with Comcast, the judge ruled that the FCC did not have the authority to intervene, as internet is not a regulated activity. Comcast was using traffic management to limit BitTorrent users on its network. Internet access is defined as an 'information service' in the US (Title I), and not a ‘telecommunications service’ (Title II). To everyone's great surprise, the FCC quickly pulled a new solution out of its hat, what it calls a 'third way': internet will remain a Title I service, but will be subject to a certain number of Title II rules. Of the 48 rules, only six will apply, without including regulations over open access or tariffs. The FCC chose to adopt only the 'transmission' elements of the Title II regulations. Verizon, AT&T, Comcast and others have expressed concern about the FCC developing a more interventionist approach. They also belong to the school of thought that investment is discouraged when an 'open access' regulatory approach is implemented. The FCC plans do not go this far yet. The regulator's proposal focuses on 'net neutrality' and the reform of the universal service fund in order to pay for bringing broadband to uneconomic areas.



As mentioned earlier, broadband is high on the agenda in all sorts of organisations. The next months will be critical for making headway, with the results of market consultations on net neutrality also coming out in the US and Europe. It's clear that it's not the incumbents taking the lead in the discussion, but the regulators and governments, as well as the challengers. This underlines that it's not always about difficult business cases, but also resistance from incumbents. In Australia and the US, Telstra, Verizon and AT&T are ntorotious, old-school telcos, which don't believe in open access. Telecom Italia is a case apart, as it's also dealing with a mountain of debt. It will be interesting to see then if in the coming months Telstra, Telecom NZ and Telecom Italia join the broadband projects led by government and challnegers. In all three cases, the adoption of open-access principles is required in order to participate. It would mean a small revolution if it did indeed go this way. And the FCC would have even more reason to regulate the internet in the coming years.

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