This is the story of two broadband networks. Neither yet exists, but the success or otherwise of their rollout could set the pace for next-generation network construction worldwide.
NGN network tenders are now underway in the diverse markets of Singapore and Australia.
They're not the first in the region: Japan and Korea have already built out extensive fiber networks (see story NGN Definition page 20). But they're the first into which governments have put so much effort - and tax dollars.
If successful, they could represent a marked departure from the past 20 years of deregulation.
The joint private-public investment approach holds appeal especially to smaller and emerging telecom markets.
Large markets such as the US and Japan have the financial clout to carry through next-gen deployments on their own, but that's not the case in capital-scarce small and medium-sized economies.
As IDC New Zealand said in a recent research note, "If we rely on commercial and competitive incentives to drive fiber deployment we won't get the economic outcomes we require. The government has a critical role to play."
The winner of the Singapore and Australian tenders will be given exclusive rights to build a nationwide NGN and a large bucket of cash. It's "a natural monopoly," said Leong Keng Thai, deputy CEO of Singapore's IDA.
But the radically different nature of next-gen technologies also calls for the active involvement of telecom regulators.
It's very difficult to unbundle a fiber or VDSL network in the same way a copper DSL loop is resold today. Instead of selling access to a wire, network owners will most likely be selling bitstreams, says Amrish Kacker, head of Analysys Mason Singapore.
The most elegant solution, theoretically, is to separate out the network ownership and investment and sell services at arms-length. This has the added attraction to regulators of making the market vastly more competitive; if the last 20 years of deregulation have shown anything, it is that there is nothing harder than bringing competition into the local loop.
In the UK, BT imposed separation on itself in setting up a firm, OpenReach, that owns and operates the access network, but that's not a pill other incumbents would willingly swallow.
More likely is the Swedish approach, where the regulator had mandated a structurally separate carrier to build out dark fiber and on-sell it to carriers on an open access basis.
That's the model adopted by the Singapore government in its NGN tender. The network must be initially capable of 100 Mbps downstream and 50 Mbps upstream and up to 1 Gbps per household. Over time it is will become fully symmetrical. "Asymmetry is not going to serve in the future," said Leong.
It's not the first broadband network the Singapore government has commissioned. The first-gen broadband network SingaporeONE was built by SingTel and the then cable TV company SCV (now a part of StarHub) under a government-driven plan in the late 1990s.
The NGN is part of Singapore's digital "masterplan" over the decade to 2015, by which time it is intended to be available to all premises across the island.
Right now 81.1% of Singapore households subscribe to broadband, two-thirds of which have access to download speeds of between 2 and 10 Mbps, says Leong.
The project began with an announcement in the PM's budget speech two years ago and still has nearly a year to run.
To ensure separation between the network and operations, the IDA has broken the tender into two parts. Two bids have been received for the "NetCo", with the winner due to be announced in the third quarter. Tenders for the OpCo close on August 20 and will be decided by the first quarter of 2009, Leong said.
These tenders are part of a three-tiered industry structure. NetCo is the bottom layer, rolling out ducts and dark fiber. The OpCo will buy these wholesale and add the electronics. In turn it will sell bitstream services to service providers at the retail level.
As a sweetener, the IDA is holding out up to S$750 million to the successful NetCo bidder and S$250 million to the OpCo winner. Leong says it's because of the USO requirement. "We want this network to benefit everyone, not just businesses who can afford the high speed," he said.
Kacker of Analysys Mason says the presence of government cash is itself an argument for an open network "in some shape or form or you will have created a government-funded monopoly."
"The counter-argument from incumbents is that they will seek a regulatory holiday for a set period in order to recover investment. Otherwise, what is the incentive‾"
As one foreign telco observer told Telecom Asia in an email: "The iN2015 bid is in no way good for SingTel and StarHub and they know it. It will eat away at their monopoly of the market, as this new operating entity is supposed to create a fair and transparent market for SPs to play in."
The fact that SingTel is bidding with just 30% of a consortium tends to confirm this. It is not even the leader of its bid - that role is taken by Canada's Axia NetMedia, a specialist in running open access broadband nets with market cap of just $191 million.
At this stage it is not clear who will bid for the OpCo contract.
The Singapore tender, with one year yet to run, is a stately affair compared to the frantic Australian NBN project. The communications minister, Senator Stephen Conroy, issued an RFP on April 11. Under the original timetable, the tender was to close on July 25 and the contracts to be awarded by year-end.
After criticism from across the industry and business media, the minister announced bidders would be given a clear three months after Telstra releases its network information to submit their bids. That was welcomed by the bidding teams, but it still means an extraordinarily tight timetable to work up a business and technology for a $10 billion project.
"There is no justification for the rush, apart from politics," editorialized the Australian Financial Review. "Singapore consulted for two years before issuing a detailed request for tenders for a single, subsidized, national fiber to the premises network provider."
The government Is lending a hand by passing legislation forcing Telstra to provide information about its networks to rival consortia. It has also put A$4.7 billion ($4.3 billion) on the table - or roughly $200 per head of the population - compared with $160 per head from the IDA.
But the sheer vagueness of the RFP, as well as its ambitious timetable, has ignited controversy.
The Singapore tender mandates separate ownership of the network and operations companies. But Australian RFP merely stipulates "arrangements that allow all service providers access to the network on equivalent terms".
There is no detail on how this is to be guaranteed.
Telstra has not formally declared its position but in the past has made clear its opposition to any kind of formal separation.
Optus CEO Paul O'Sullivan said in an industry speech in April that structural separation was "an absolutely non-negotiable minimum condition".
Yet, despite the lack of mandatory separation, Optus will lead a bidding team of local telcos, known as G9.
Michael Simmons, newly-appointed managing director of G9, told Telecom Asia he was confident of structural separation because of the government's pre-election policy commitment.
But he said the bidders needed a good deal more detail in the RFP specs, "such as access prices and speed of deployment. These are the criteria that really affect the type of bid you are making and should be delineated."
Ovum Asia-Pacific research director David Kennedy believes the government is "waiting to see what bids come into the process".
"I think their strategy is to keep it as an option in the event that Telstra decides not to, or if it takes an intransigent position."
If that's not difficult enough, the government is at the same time preparing to write new laws to support the new network. It is concurrently running a consultation with bidders on the regulatory framework.
"The government has decided to completely collapse the two parts of the process together," said Kennedy. "That saves time, but also runs the risk that they may get requests which are unsustainable," he said. The outcome is almost certain to be a frenzy of last-minute negotiations, he said.
Analyst Paul Budde believes much will turn on whether Telstra submits a bid that complies with the separation requirements.
Telstra's offer "has to be equivalent to functional/structural separation," Budde said. "There is a strong indication that the government will accept a non-compliant bid [from other consortia] if Telstra's bid is unacceptable," he told Telecom Asia.
"If Telstra withdraws then it is likely that separation will be imposed on Telstra."
The other aspect of the Australian tender that has attracted industry comment is the apparently slender bandwidth requirement. The RFP calls for just 12 Mbps to 98% of Australia by 2013.
Kennedy expects bid teams will leap over that benchmark with ease. Network bidders are bound to offer far more than that, he said.
In the view of some, NGN means IP. Others take it to mean fiber deployment.
Actually it means both, and more.
Broadly, it involves upgrading the access network - typically from copper DSL to some form of fiber deployment, FTTx, though some markets are experimenting with wireless and other technologies. It means making the access network all-IP with the ability to support multiple services and different levels of QoS.
The official ITU definition says NGN is a packet-based multi-service network with QoS-enabled transport technologies "and in which service-related functions are independent from underlying transport-related technologies."
"It offers unrestricted access by users to different service providers. It supports generalized mobility which will allow consistent and ubiquitous provision of services to users," according to the ITU.
Alcatel-Lucent's Vince Pizzica, says: "NGN will be a broadband, multiservice network. It will support TV and video. It will not be a one network-per-service silo architecture. It will have service delivery capabilities at its core that are much more internet-oriented."
Functions like the service delivery platform will be "more centralized inside the network," "¨he said.
- Robert Clark
The Hong Kong exception
No one builds telecom networks like Hong Kong. The city of seven million has some 15 or so 2.5G and 3G mobile networks, four fixed-line telecom networks and a cable system.
Incumbent PCCW offers 1 Gbps downstream bandwidth to two-thirds of the territory. Rival Hong Kong Broadband delivers up to 1 Gbps upstream and downstream.
The obvious contrast is with rival business hub Singapore, whose population is likewise packed tightly into a small territory. But the Lion City has just has two fixed-line networks with a 100 Mbps maximum download that looks anaemic by comparison.
Hong Kong government officials of course point to their light touch regulation. It's certainly a critical factor. Singapore, whose economic development is firmly guided by the government, did not introduce full network competition until seven years after free-wheeling Hong Kong.
An obvious beneficiary is HKBN, which began as a callback IDD operator in 1992 and now has run fiber and metro Ethernet into many of the territory's housing estates.
But Hong Kong has two other characteristics.
Many of the city's citizens live in housing developments owned by a small number of conglomerates. These hongs, like Hutchison-Cheung Kong, Wharf, Sun Hung Kai and New World, also became the first to obtain network licenses. They had the financial strength to build extensive networks and - a particular beef to the regulator and competitors - the ability to exclusively wire up their own apartment blocks.
Hong Kong's other wrinkle is that it is the only part of China with a liberalized telecom market. If the Chinese government ever allows non-mainland carriers into the market, those that have already built and operated infrastructure on Chinese territory will be at the head of the queue. Enter Hong Kong's ever-willing hongs.
- Robert Clark