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Developing a broader network

BOLD words require bold actions to make the dreams into reality. And if your company lives and dies on the success, or otherwise, of a single business strategy, the actions assume even greater importance.

“Broadband will reshape our lives like the Internet has – it will reshape the way we live and work.”

Such are the bold words from a senior executive of a company that makes its living from the sale of broadband.

Are these words mere hyperbole, however? The Internet certainly has changed our lives, so perhaps super-fast access will change what we do in ways we haven’t yet considered.

The key to this is making high-speed access both physically and financially available to both residential and business users. Presently, other than development work by some of the second-tier players, Perth is experiencing a period of stagnation in terms of major work in this area.

While Telstra and Singtel Optus have declared their desires to bring broadband to the people, Perth’s small population (compared with Sydney and Melbourne) make it a less economically attractive proposition for those companies to lay more optic fibre or the hybrid coaxial-fibre cable used for pay-TV services. Instead, these companies appear likely to continue to rely on the copper wire-based ADSL as their main broadband product and, for Telstra, a source of much revenue from wholesale supply to other ISPs.

According to Optus chief operating officer Paul O’Sullivan, the worldwide cost of broadband-enabling modems is coming down substantially, but this alone would not be enough to draw Optus further into Perth. (Optus’s fully owned subsidiary XYZed is exclusively oriented towards the business market.)

“We’d love to do residential. The issue is that, at the prices you’ve got to pay for the wholesale access to Telstra’s network, there’s not an economic model today that allows you to put your solution on the exchange, put in a modem for the customer and make any money out of it,” Mr O’Sullivan said.

But if the big telcos aren’t particularly interested in expansion, and the smaller players are likewise concentrating on attracting sufficient customers to justify their past expenditure, the way is open for new players in the market.

Such new blood is taking the form of Australia’s electricity utilities, and in Perth that means Western Power.

Western Power has joined UtilitiTel, an as-yet informal group of numerous utilities across the country formed last year, to discuss how to use their infrastructure to develop their own broadband networks.

Last year Western Power confirmed it had rolled out optic fibre cabling to homes and businesses in South Perth and Como and was running a commercial pilot scheme to test consumer demand for broadband services through a subsidiary company, Bright Telecommunications.

A spokesman for Western Power said any progression beyond the pilot program depended entirely on the success of the commercial pilot, which is due to finish in December. If a decision was made to go beyond the pilot area, Bright would conduct market research to ascertain the level of demand for broadband services in the suburbs or locations in Perth that are fibre-ready – those that have already had conduit laid as part of the State Underground Power Project.

According to one industry consultant, deregulation of the traditional utility industries has forced these companies to look for growth opportunities outside their immediate expertise.

“Look, at the end of the day, they’re digging trenches, putting yellow pipe in the ground – hey, it’s easy to run fibre optic cable because that’s where the cost is – and filling the trenches in again, and that’s what those people do well,” the consultant said.

“I am sure that one day in the not-too-distant future, for instance, all our power meters, water meters and gas meters will be read electronically. It saves people going around and getting bitten by dogs or whatever.

“It is eminently doable, because there’s so much smart technology around these days.”

Both Western Power and Optus are independently interested in forming partnerships to share infrastructure and avoid duplication of services. But Mr O’Sullivan is not certain about the abilities of utilities to steal a large slab of broadband market share.

“I think what you find is those utilities tend to have great infrastructure capabilities on the backbone – the really big traffic between cities and between suburbs,” he said. “Connecting the last mile – getting from the backbone network to the house or business – tends to be a capability the communications companies have. There’s a whole core competency there that’s very different from utilities.”

Satellite and wireless carriers are also positioning themselves to attract more business.

According to Maureen Murphy, the chief executive of New Skies Networks Australia, Perth is the Asia-Pacific teleport for that company’s global enterprise. That is, three of the company’s six orbiting satellites (and two belonging to another company, PanAmSat) are controlled from New Skies’ Bayswater headquarters.

“Satellite access isn’t going to replace optic fibre but it will be cheaper in some cases, for example where it can reach multiple points at one time like mine sites. We don’t compete with fibre, we complement fibre,” Ms Murphy said.

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