Monthly Archives: October 2012

ACMA chair: 60MHz emergency services 
spectrum package “almost unique” globally

The Australian Communications and Media Authority will make 60MHz of broadband spectrum available to public safety agencies to deploy nationally interoperable mobile broadband networks. It’s an allocation that chair Chris Chapman says is ‘almost unique” by international benchmarks.
The ACMA is opening up 10MHz of spectrum in the 800MHz band for PSAs, as well as an extra 50MHz in the 4.9GHz band. Initial reports on the allocation neglected to mention the 4.9GHz allotment, eliciting fierce criticism from both PSAs and state and territory governments, who’d previously been pushing for 20MHz of 800MHz spectrum. But according to Chapman, the complementary combination of spectrum in the different bands will provide PSAs with a unique opportunity.
“I’m not saying that 4.9GHz is substitutable for 800MHz, but it’s a bit like the digital dividend auction where we’re providing 700MHz and 2.5GHz… so you can get the most efficient outcome from complementary spectrum. It gives you both coverage, and penetration,” Chapman told CommsDay. “4.9GHz is short-range and extremely high capacity.” The ACMA suggested that the 4.9GHz spectrum could be used to provide spill-over capacity where major events caused a spike in traffic.
“It is by international benchmarks an almost unique, multifaceted dedication of spectrum for PSAs,” continued Chapman, adding that regulators in the US and Canada were looking to allocate a much smaller slice to their own agencies, between 10 and 20MHz. “We are dedicating 85MHz of spectrum, 60MHz in broadband LTE-configurable bands and another 25MHz [currently being allocated] in the narrowband 400MHz band… between all those, it’s a very impressive package. And we’re excited because it provides PSAs in Australia with an extraordinary opportunity to do great things in the public interest with spectrum that provides coverage, flexibility, scalability… it’ll drive interoperability, it gives them capacity for data, video and voice. And it’s within a harmonised framework.”
The saga of Australian PSAs’ bid for LTE-capable spectrum goes back years, with agencies initially aiming for a slice of prized 700MHz digital dividend spectrum but ultimately batted back. Earlier this year, the premiers of New South Wales, Victoria, Queensland and Western Australia petitioned prime minister Julia Gillard for “an absolute minimum” of two 10MHz blocks in 800MHz. They argued that this should be made available at no cost – and that the construction of a public safety network using the spectrum should be partly funded by some of the proceeds from the federal auction of 700MHz.
A new joint statement from attorney-general Nicola Roxon and communications minister Stephen Conroy, however, said that the spectrum will be offered to states at “a negotiated price” and conditional on factors including “the states and territories funding all costs associated with designing, building, equipping, maintaining and operating the capability.” Still, a spokesperson for Roxon told CommsDay that terms over who pays what are not yet set in stone, with the Commonwealth now set to kick off negotiations with states and territories ahead of the Standing Council on Police and Emergency Management in November.
The ACMA has said that PSA will likely be able to access their 800MHz allocation in 2015, in advance of the end of the regulator’s review into the broader 800MHz band.

Petroc Wilson

Devil in the chip details for Huawei’s
 cyber security proposal

A cyber security evaluation centre, like that proposed by Huawei, could be meaningless unless vendors open up not just their source code but the guts of their hardware – the application-specific integrated circuits. That’s the view of consultant Ross Halgren, who’s worked in the development of telecoms products from the integrated circuit level up through to the systems layer. But he warned that, with ASICs often representing proprietary technology purpose-built by individual vendors, the chance of them exposing that hardware for inspection would be pretty slender.
Halgren told CommsDay that in modern telecoms tech, with so much functionality embedded into ASICs, the devices themselves could be modified to hide security backdoors or other purpose-built vulnerabilities. “You’d basically have to get into the integrated circuit itself – cut it open and reverse engineer it to figure out exactly what it’s doing,” he said. “It’s not like software, where you can just basically go through the code, look at any line and say ‘there’s something anomalous here’. In integrated circuits, everything’s hardwired into silicon – you can’t just unscramble it like you can software code.”
That’s a problem because, according to Halgren, the expertise required to dig into the ASICs is very specific. He said that carriers, for example, would be unlikely to have access to the requisite skillsets, though they could at least ask vendors which ASICs they use and where. However, the relevant expertise does exist in-country.
“For example, we still have an ASIC design facility at Homebush, in New South Wales… it’s a high-class facility,” he said. “They’d have the kind of capability to know how to break a chip apart and reverse engineer it… and we have a lot of highly competent electronic engineers who could look at the algorithm level and look for flaws there.” The only alternative way to deep-search the chipsets themselves, continued the consultant, would be to user a supercomputer to exercise every single state of a given chip – but that could take an impractically long time.
Halgren was at pains to emphasise that the ASIC issue is not specific to Huawei. “It’s something that’s ubiquitous to the whole industry; you don’t know that anyone’s integrated circuit hasn’t got something in it like a trapdoor,” he said. “[But] given this possibility, it seems that setting up a centre to go and verify the code isn’t really solving the problem; the only way to solve the problem would be to set up a research facility somewhere, like the Department of Defence, which actually goes in and digs into integrated circuits. Which probably these companies would never let you do anyway, because of the proprietary knowledge that goes into them… especially if they’ve done their own ASICs. That’s what differentiates them from their competitors!”
With the proposed centre itself still very much at the conceptual stage, Huawei is not yet in a position to say whether it would be willing to open up its ASICs for scrutiny at such a facility. “While it is far too early to go into specific details, Huawei Australia has made it clear that we would be willing to offer open access to our source code and equipment by security-cleared individuals inside a secure environment,” said a spokesman.

Petroc Wilson

OPINION: No room for Huawei in Australia’s Asian Century

An old colleague of mine who worked in national intelligence makes three points about allegations the Chinese government could use Huawei—supplied NBN kit to spy on Australia.
First, why would they bother? Second, if they were intent on doing so we should be flattered. Third, it’s hardly a state secret that we have unseaworthy submarines and rust bucket warships. The matter of real interest to them—commodity prices—can be gleaned from sources other than the NBN.
Nevertheless, in a “reds under the beds” panic the federal government has banned Huawei from the NBN. And lest Huawei’s unlikely triumvirate of John Brumby, Alexander Downer and retired admiral John Lord make progress against the claims made about Huawei’s threat to the Australian way of life, there’s always a cold war warrior ready to warn of the dangers that lurk beyond the bamboo curtain.
Last week, in an opinion piece in The Australian newspaper, Labor member Michael Danby recounted the findings of the US House Intelligence Committee which warned US companies of the dangers of doing business with Huawei and ZTE.
The biggest danger was, of course, they wouldn’t get government contracts: a warning from a committee whose members are heavily reliant upon donations from the US electronics and defence sectors and the trade unions that represent workers in the US equipment industry.
The report cited no instances of Huawei or ZTE gear being the source of leaks or security scares although a confidential annexure purportedly provides more information.
The report overshadowed the parallel findings of a year long White House inquiry into Chinese manufacturers which found no grounds for the accusations.
But the real focus of Danby’s attack was Huawei’s complicity as “major telephony provider to the regime in Iran.”
Huawei does not operate a network in Iran. It is one of three vendors alongside Ericsson and Nokia Siemens that supplied equipment to the number two Iranian operator MTN Irancell . In common with ‘licencing’ requirements in every market, including Australia, that digital mobile networks must be open to ‘interception’, there was nothing unique in the kit and none of it was subject to sanctions.
Nevertheless, Danby accused Huawei of sanction busting and aiding the Iranian regime even though the specialised software used to intercept and record text messages was supplied by an Irish software company Adaptive Mobile Security. Indeed, right now, a South African police unit is investigating South African telco MTN which holds a 49% stake in Irancell over the supply of prohibited US equipment to Irancell. That investigation is proceeding despite MTN being chaired by former African National Congress stalwart Cyril Ramphosa who was ANC secretary general in the early 1990s.
To support his case, Danby claimed that at a recent Parliamentary Joint Committee on Intelligence and Security, committee members Senator Mark Bishop and independent MP Andrew Wilkie “recounted the crude boasts of Huawei salesmen that their equipment would assist Tehran leaders in intercepting and monitoring Iran’s population.” Even the most cursory glance at Hansard reveals that what was put to the Huawei representatives at the hearing was an unsourced quote from the Economist attributed to Huawei employees.
GERMAN BAN? Danby also stressed that it wasn’t just Australia and the US barring Huawei from contracts. He cited the decision by Deutsches Forschungsnetz, the German equivalent of AARNet, to bar Huawei from bidding for an upgrade of its network. Deutsches Forschungsnetz, has used Huawei gear since 2005 and did not cite any security ‘problems’ in its decision. Nor are the concerns widespread in Germany given Deutsch Telekom signed a memorandum a year ago with Huawei to cooperate in that most security sensitive of spheres, the cloud.
But according to Danby, Huawei’s conduct raises concerns other than just security as it has “generous access to “soft loans” -to the tune of $30 billion.”
The use of soft loans by Chinese manufacturers has been a matter of concern to the European Union who threatened sanctions in mid year against Huawei but backed off fearing it would escalate a trade war. Soft loans or in industry parlance vendor or ‘bridging’ finance are usually backed by the vendors respective national export agency and are a common feature of any deal.
In fairness to Danby, there is a war going on, though not of the ’cold ‘variety.It’s a trade war with the US intent on protecting its electronics sector. Alcatel Lucent recently shed 5000 jobs, Motorola Mobility 4000. The committee would be aware of this.
But with little left of large scale equipment manufacturing in Australia, jobs can’t be a real concern here. But at least on national security NBN Co is proactive. Seemingly once the bid came in from Huawei, NBN Co immediately sought advice from ASIO and informed its shareholder minister. NBN Co wasn’t going to be left signing a contract it couldn’t honour on national security grounds even if this left them in the uncomfortable position of currently only having one supplier for its $1.5 billion GPON contract. Coincidentally, Alcatel also seem to manufacture NBN bound gear in China but apparently under such different conditions that there are no security issues worth considering.

Kevin Morgan

View the PPTs from CommsDay Melbourne Congress 2012

CommsDay Melbourne Congress is over for another year with a record attendance of nearly 250 industry delegates and a lineup including Malcolm Turnbull and senior executives from Telstra, Optus, NBN Co, VHA and more.

We have now uploaded PPTs for many of the speakers (not all, as some requested we not publish their presentations). View them online





















Level 3 touted as contender for Nextgen assets

American networking powerhouse Level 3 may join the race against possible bidders TPG and iiNet to buy Leightons’ telecommunications assets NextGen Networks and Metronode.

CommsDay has learned that Level 3 is viewed as an ideal candidate to buy the assets.

Industry talk has it that the firm is a genuine contender. Comment has been sought.

Although it has a strong network and customer presence in North America, Europe and Latin America, it lacks a significant footprint in the Asia Pacific region.

Nextgen’s 19,000km fibre network connecting the major state capital cities and regional centres would be a logical fit for Level 3 which operates similar networks connecting cities in 23 European countries, most significant business centres in North America and other major business capitals across the world. But in Asia Pacific, it only has points of presence in Tokyo, Hong Kong, Singapore and Sydney.

Level 3 was originally spun off from a larger contracting company Kiewit Corporation, a similar ownership relationship as that between Leightons and Nextgen.

Since then the firm has been built on acquisition: its most notable was Global Crossing with other names such as Broadwing and Wiltel also absorbed over the past decade.

The firm currently has over US$700m of cash on hand with another $300m imminent courtesy of a debt issue.

Asked on a US conference call on July 25 about Level 3’s acquisition strategy, CEO James Crowe said “acquisitions have to be free cash flow accretive per share. They have to be credit accretive, and we’re not much interested in acquisitions that are not growth neutral to accretive.”

“And on top of that, we expect to buy at prices that are value-creating for our customers. And the result isn’t hundreds of opportunities today.”

“…in general, we tend to think maybe some places outside the U.S. might be more attractive than here in the U.S. where things look pretty pricey right now, particularly for the assets we’re interested in.”

Other potential buyers of Nextgen Networks include TPG and Pipe. Optus has also been nominated as a buyer but it may face issues with the ACCC.


The new issue of CommsDay magazine

Read about

  • The little-known Chinese mobile company that is emerging as a genuine rival against Apple, Samsung and Nokia
  • A superfast broadband success story in rural Cornwall
  • Why small cells are a big deal
  • Cashing in on white space
  • The need for the polyservice network
  • A candid insight into Huawei from its internal change agent

COMMENT: Onmipresence is not the same as omniscience

Stephen Conroy needs to be careful that he doesn’t become the personification of risk in the Australian telecom sector.

His comment last Monday to a small group of American industry and policy types that he enjoyed unfettered legal powers and that he could force all spectrum bidders to wear red underpants on their head if he so chose went viral on Friday afternoon, prompting its own Twitter hashtag and Internet meme. The resulting hilarity masked some more significant implications of his speech, ones that cannot be underestimated given he appeared to be taking the opportunity to speak candidly to an insider audience, unaware his remarks would leave the room.

Some official and unofficial apologists for Conroy attempted to wave away the “unfettered legal powers” remark as merely a truism reflecting his control of the spectrum plan. This diminishes what he meant. The remark was made in the context that many other countries could not emulate the Australian NBN plan because few have so much power vested in one place: namely the national ministerial office.

And this is true.

Notwithstanding all the general Commonwealth powers over telecoms, the minister has one very important tool to deploy over the incumbent telco: his ability to decree on what terms it must comply with NBN dictates in order to be allowed to bid for spectrum and remain in the pay TV business. Add in the various other legislated powers which crimp competition against the NBN as well as an apparently unlimited chequebook to over build and compensate the chosen two, and yes, we have a minister who can best be characterised by his omnipresence across most industry activities.

But one should never confuse omnipresence with omniscience—the ability of knowing everything.

For example, Conroy’s American speech gave a short version of the history that led to the NBN mark 2 policy: the financial crisis, the lack of good proposals for NBN mark 1 and, inevitably, the perceived failings of the dominant incumbent. In doing so he referenced the cable wars between Telstra and Optus and how this led to an unsatisfactory outcome in terms of only 28% homes passed by HFC.

But at least three times in his speech, he suggested that Telstra had driven its unnamed challenger “bankrupt”: presumably a reference to either Optus or Optus Vision. This is simply untrue and also unfair to the shareholders who took big write-downs on the chin while keeping their enterprise solvent at all times– and in doing so remained committed to a company that is now the most successful domestic challenger telco anywhere in the world.

Very simply, Optus was never bankrupt and if current policy is informed by the idea that as a business it is or was a commercial failure, then one wonders what other misapprehensions persist in Canberra.

Another Conroy gaffe was his comment he would build his own American cable if trans-Pacific prices didn’t come down, apparently ignorant they have fallen from over $100 per Mb to levels less than the NBN’s own proposed terrestrial CVC of $20 per Mb. It is perhaps the fastest deflating commodity in Australia and the least likely candidate for nomination as a “market failure.” To be fair, he almost immediately recognised the gaffe, pointing out he didn’t want to “leap” in the way of commercial investments.

There are three live proposals to build from Australia to Singapore (likely to be as significant an international hub for Australia in future years as California is now) and, as CommsDay reveals today, two to the US, including the Hawaiki cable which represents the best chance for impoverished Pacific nations and Australia’s own external territory of Norfolk Island to join the digital economy.

SMALL MARKET: Australia’s international bandwidth market is not a big one in terms of size today (probably only a few hundred million dollars annually) and investors do not need the threat of government overbuild hanging over their head. We’ve seen what that did to regional DSLAM and greenfields fixed network deployments in recent times and the results are not pretty.

That Conroy’s comment imperils the opportunity that the likes of Samoa, Wallis & Futuna and Vanuatu have to get a proper Internet connection to the rest of the world is nothing short of outrageous.

That he still seems to think that international bandwidth pricing is a major issue for the Australian broadband user when his own NBN policy is introducing a considerably more expensive and less cost-justified usage impost in the form of the CVC raises questions as to the quality of advice he is receiving.

I also wonder if the Department is aware that many of the major sources of content that Australians were traditionally compelled to surf across the Pacific to access—the likes of Google, Facebook, Twitter, Apple, Zynga, Microsoft—have bought or are actively buying bandwidth to Australian data centres and servers so they can respond to user requests in Australia and not from overseas. This trend directly reduces the impost on Australian broadband access prices for international transit and is also what is fuelling the seemingly marginal business case for new cables.

Conroy and his government colleagues are clearly sensitive to the charge that their policies are discouraging private sector investment in telecoms: look at their willingness to cut ribbons at telco data centre openings, for example. But as a telco executive quipped to me, “data centres are our get out of telco policy: they are a real estate play!”

And in formulating a programme for an upcoming event, one carrier executive remarked to me that I should convene a session on the increasing obligations and lack of incentives on operating a telco these days—not just with the NBN but with the proposed national security and data retention regime in mind. Omnipresence is fine, minister, but impotence is what results if capital, enterprise and innovation vacates the domain over which one deploys one’s “unfettered legal powers.”

And lest this be seen as a partisan bash, let’s not forget that upon a change of government, the next minister will have all those same powers.

Grahame Lynch


Slattery, Pretty now plan new US-Australia cable

Telecom entrepreneurs Bevan Slattery and Ted Pretty are set to expand on their planned new Perth-Singapore undersea cable, with Slattery revealing to CommsDay that he also has begun pre-planning for a new Sydney, Australia-US link.

CommsDay revealed in August that the two NEXTDC board directors were planning the Australia Indonesia Singapore Cable as a direct challenge to proposed cable builds by Leighton Holdings and Huawei Marine/Telstra.

Slattery later told the Australian Financial Review that the Singapore link would seek to raise money through a combination of private equity and a listing. To be built by TE Subcom, it would probably cost about $150m, he estimated.

Now Slattery and Pretty (pictured)—who has recently taken up the chief executive role at Hills Industries—plan a Australia-US link. Slattery told CommsDay “discussions are underway with suppliers and regarding permitting.”

But he emphasised the US link was still in pre-planning stage: “Ted and I are focused on getting Singapore to Perth underway.”

Slattery’s timing in revealing his plans was prompted by comments by communications minister Stephen Conroy that the Federal Government would build a new cable to the US if prices didn’t fall on the route. Slattery was the prime mover behind the build of the PPC-1 cable to Guam which provided direct competition to the Australia-Japan and Southern Cross Cables for the first time. He said that the new Asia and US cables would “deliver significant reductions to existing pricing.”

The new cable plans are a private collaboration between Slattery and Pretty and separate to their Hills and NEXTDC involvements, according to Slattery.

Grahame Lynch

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