After a week of reflection, it’s becoming increasingly clear that the Federal Government’s Broadband Connect decision—despite many months in the making—is half-cocked
Exhibit A is Optus’s own statements of March 30, as filed with ACMA's wireless strategy study, which show that it doesn’t think much for the potential of wireless broadband at frequencies of above 2GHz, and neither does it really think that wireless broadband is a better use of spectrum than 3G or satellite usage.
Exhibit B is evidence of a mismatch between the government’s spiel on WiMax and Opel’s apparently more open mind—which may extend to using HSDPA instead of a new technology to provide broadband service.
Exhibit C is the fact that after two exhaustive inquiries in two years ACMA still seems little closer to a real plan to allocate new wireless broadband spectrum in usable frequencies while providing acceptable alternatives for displaced broadcast, defence and satellite users.
Clouding the issue is the somewhat hysterical attacks on WiMax as a platform—quite similar to the attacks lobbed on CDMA technology by the same people until it became a key technology component of 3G’s upgrade path. Surprise, surprise, the next upgrade of 3G—the so-called Long Term Evolution –calls for adoption of the WiMax air interface!
It’s all very well to dismiss WiMax as some type of foetal technology but that takes a bit of denial about its obvious momentum. America’s cellular father, Craig McCaw, a man who perhaps even Sol Trujillo and Phil Burgess might admire, is backing WiMax through his Clearwire global venture, as is Sprint Nextel in the US. WiMax and other wireless broadband technologies are also getting a big government and industry push in geographies as varied as South Africa and Malaysia.
BUZZ ON THE FUTURE: WiMax is real and its one case study in Australia gives us a window into the potential for the Opel business plan.
Buzz Broadband in Hervey Bay offers a genuine, bona fide WiMax service with full voice and a 2Mbps broadband service. It has already claimed about 25% of its 55,000 population market in a couple of years. It has pitched cheap voice as its main selling point, the data service is ancillary. Mass saturation local TV advertising has been required to achieve its market position.
The 2Mbps cap is a function of high backhaul costs, not capabilities. CEO Garth Freeman said in April that its technology can get 30Mbps speeds at 10-15km from a base station, but only with outdoor antennae. Indoor reception is uniformly poor, he says. Buzz uses 3.5GHz for customer access, 5.8 for backhaul. Unlicensed spectrum is so underutilised that it doesn’t pale compared to licensed spectrum, Freeman adds. This is all very interesting for the regional centres where Opel will be offering services. It suggests that the use of WiMax and 5.8GHz spectrum might be acceptable in the more densely settled towns. Then again Opel might well find that ADSL2+ - which presumably requires less initial capex cost—might be superior in these locations.
But 5.8 won’t be economically acceptable in terms of providing access to that last 600,000 people who represent the 96th to 99th percentile of the more remote Australian population. Especially when it is in competition with Telstra’s very strong HSDPA offering and the multitude of the 50 or so independent community based wireless networks dotting the nation.
Very simply, Opel is going to have to get better spectrum. Leasing spectrum from Austar could be one answer, there are also some 88 licenses available in the 1.9 GHz band across a bunch of significant regional markets according to an ACMA April release. And ACMA has also identified plenty of other bands—2.5 and 3.5 for example—which could be deployed. In doing so it picks risking fights with broadcasters and satellite firms, not necessarily a good look for an election year. Perhaps Optus might even want to deploy some of its 3G holdings to the task? Perish the thought!
But the simple fact is that the government’s announcement of last week could have been more politically bullet proof if it had anticipated and negated these objections. That there was no disclosure on the criteria used to actually select the winning proposal, nor any meaningful effort to support the winner with spectrum allocations suggests that this is wholly a political decision—driven more by Optus’ undoubted success at playing the process through its lobbying, political donations and municipal sponsorship strategies.
- Grahame Lynch
