I have good news to share and it’s really important for the RSPs. It also has implications for the regulator.Hello, my name is Dermot and I’d like to start our session today with a question.Imagine we are just only one year from now.
The rejuvenated NBNCo is finalising negotiations with Telstra on access to copper and constructing, ever so slowly. Here is my question. Why do the policy makers expect you to politely wait to 2021 for superfast broadband?It’s a question that they haven’t begun to ask.Lets dive in.
Good NewsSo, what is the good news?The market demand for superfast 100Mbps services market is an emerging segment. In the absence of access to wholesale open cable broadband the vast majority of the RSPs can’t generate new differentiated broadband offers – such as superfast 100Mbps down speed broadband because they are limited to a maximum of 24Mbps from ADSL2+. This means that the two largest cable Access Providers have exclusive access to this segment in the major metropolitan markets until the NBN is constructed by 2021.
The ScorecardIf we look at how cable is going in USA, we see AT&T launched U-Verse with ADSL2+ technology: but they got lots of bad press because the customer broadband experiences weren’t so good. So they just added VDSL last year to keep pace with the cable operators. Because of the distance hyper-sensitivity of VDSL they deploy new services with caveats on performance against the availability of two bonded pairs of copper wires. Verizon found that their FTTP business case wasn’t delivering the financial returns as they struggled with a market downturn and against the cost advantages of the cable operators.The USA cable operators seem to have both a cost advantage and just quietly add broadband improvements selectively to add competitive tension. Cable doesn’t have the distance sensitivities as the technology delivers a comparable superfast performance across the medium for 6km from the node.Here in Australia, the policy makers crafted their NBNCo plans to take-out the cable networks knowing they had both presence and cost advantage which had to be nulled. In six years, broadband policy has stifled industry investment with the exception of the NBNCo. In four years, the NBNCo has connected 33,000 households and passed 130,000. This compares to over 2 million households passed for Optus and 2.7m for Telstra which were mostly built in two years. The NBNCo Board can only dream to get these metrics.These networks can deliver 100Mbps today and with small technology upgrades – not rip and replace – can go even faster and improve latency to smash ADSL2+ and beat VDSL.
PropositionI made a submission to the ACCC, the first of its kind.I formally asked for cable broadband to be a declared service.In the context of the communications sector undergoing massive structural change and being in transition, I recommended that the ACCC move towards the declaration of the wholesale cable broadband data service under Part XIC of the Competition and Consumer Act 2010. The Paper is on their website.The point is to mandate wholesale open access off the HFC (aka cable) broadband platform to make a step change in the corporate plan for NBNCo. Do it now, I say.
As the RSPs gain access to superfast cable broadband, they’ll be able to launch their product offers in to the market and compete head-to-head with the Access Providers. So rather than being precluded from offering superfast broadband services they can compete now and build their customer base rather than sitting back waiting for the construction of the NBN. So, they’ll acquire customers in 2014 then seamlessly migrate their customers across to the NBN sometime in the period 2016-21.
Cables not closed: the policy is.I say that cable broadband can be declared an open platform: alas, the current Government and ACCC policy is closed.So, please consider the following three bytes.Cannibalisation is a major product management issue for Access Providers - it stifles internal initiatives to invest;Declaring HFC will remove an impediment within the Access Providers and transfer investment decisions to the RSPs: they can choose to invest to connect a new customer; and,It’s myopic to rationalise that cable doesn’t reach a national market: today 7 million Australians are within the existing HFC footprint with a high propensity to buy superfast broadband.
1. Cable isn’t closed: the policy is
18 November 2013
2. Why do the policy makers expect
you to politely wait to 2021 for
3. The market demand for superfast
100Mbps services market is an
4. In 4 years, the NBNCo connected
33,000 households and passed
This compares to over 2 million
households passed for Optus and
2.7m for Telstra built in 2 years.
ACCC declare wholesale cable
broadband data service under
Part XIC of the Competition and
Consumer Act 2010
6. RSPs Get Superfast Now
Build your customer base.
Migrate customers to the NBN.
7. Cables not closed: the policy is
Declaring HFC will remove product
cannibalisation conflict of the
Transfer investment decisions to