editor’s note Good News for Fiber Down Under – and Here By Steven S. Ross ■ Editor-in-Chief As of the end of March, more than 15 million US homes had been passed by fiber, and almost 4.5 million households had signed up. Some of the data is in our latest FTTH Primer in this issue. The data will be discussed at length at our <strong>Broadband</strong> Summit April 27-29, and the full story will be in our May issue. But for now, consider that while the pace of fiber installs has slowed, the growth is still substantial – 52 percent more customers year-over-year and 17 percent in the last six months. The slowing comes about because the greenfield sector has essentially disappeared, and new entrants to the field – mainly municipalities and small telcos that had been planning to build or extend fiber networks – are having trouble raising the money to do so. The automakers, newspaper industry, housing and just about any other sector we can think of outside of Hollywood should be so lucky. The good news is that the $7.2 billion promised in the stimulus package seems well on its way. So far, the process has been a model of speed and openness. Through a month-long mad dash of public hearings that attracted about 1,400 questions and formal comments (see www.ntia.doc.gov/broadbandgrants/ comments.cfm), the Commerce Department’s National Telecommunications and Information Administration, the Agriculture Department’s Rural Utilities Service, and the FCC kept their eyes glued to the final goal – defining areas, project types and grantees that would be eligible for funding. It is hard to believe that the stimulus bill passed so recently, on February 13! There’s more good news for FTTH advocates: Public officials have barely disguised their preference for fiber to the home, and for “middle mile” projects such as connections to the national network that would support fiber-borne bandwidth. The bad news is that the proposed rules, due in a few weeks and expected to be in final form in June, are almost certain to be challenged in court by companies who believe their ox will be gored by the competition. While we have no doubt that some grant applications will create unfair competition (and thus should be rejected), we worry about knee-jerk suits by incumbents designed to simply delay the inevitable. There have been many examples of such suits in the past five years. Although we are fans of local regulation, we’re also nervous about the dead hand of state governments, so often controlled by incumbents for the exclusion of others. AUSTRALIA RAISES THE BAR Think $7.2 billion is too much? How about $31 billion? (That’s in US dollars; it’s $43 billion Australian.) That’s what Australia has just committed to spend on broadband – and 90 percent of it will be 100 Mbps FTTH. (Read about that, and about Singapore’s commitment to 1 Gbps fiber, in this issue’s Deployment section, starting on page 10.) It is by far Australia’s biggest single commitment to public infrastructure. And it is, by far, the world’s largest single FTTH build – even larger in cost than Verizon’s and NTT’s. And those two companies lead the world in private capital expenditures. Australia is a rural nation; on average just 7 people per square mile. But 90 percent of the premises are in town settings where fiber can be justified given current economics. The rest of the country will have to settle for 12 Mbps point-to-point wireless. The backbone will be disproportionately expensive, and construction on it will begin shortly (as early as May). Fairly detailed plans already exist for the backbone and for the Tasmania section’s local networks. The economics involve a quantum leap of faith. There will be an Australian “National <strong>Broadband</strong> Corporation” to build the network and run it as an openaccess utility – just as localities build roads. Telstra, the major incumbent that has been investing in HFC and FTTN, will be able to get onto the road, but so will Optus and other competitors. This is both good and bad for Telstra. It has had trouble justifying the capital cost of advanced infrastructure in this vast, underpopulated country. But it will now have to compete on content for the first time. The Australian government is justifying the cost in part for its direct stimulus effect and in part by the value of telemedicine, tele-learning, a smart electrical grid, and the opportunity to compete more fiercely worldwide. In fact, there’s talk in Australia that telemedicine alone can generate a quarter of the network’s revenues. That seems unlikely. But there will be other revenues to fill the void. An existing Tasmanian State Government broadband initiative already is encouraging regional governments and companies, hospitals, and educational institutions to use the network that has been envisioned there. In the US, the Obama Administration has made no secret of its view that the $7.2 billion in the current stimulus package is a downpayment on bigger things to come. Maybe. But Australia has clearly raised the bar. Steve@broadbandproperties.com 6 | BROADBAND PROPERTIES | www.broadbandproperties.com | April 2009
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