Category: CommsDay Blog

Space & Satellite AU is the new weekly newsletter from the producers of the CommsDay daily and the Australasia Satellite Forum.

Australia and its surrounding Pacific region have long been an important market for global players such as Intelsat, Viasat and Eutelsat. Homegrown operations from NBN, Optus and Speedcast have become integral to the sector.

Now we see the rise of a local nanosat industry and increasing interest in the creation of an Australian space sector and government agency.

Space & Satellite AU is the publication of record for these developments. Don’t miss out.

Check out the first issue here

GRAHAME LYNCH COMMENTS:

Lots of historical revisionism on the NBN right now. One I keep seeing is that the Howard government is to blame for privatising Telstra without a plan for broadband investment. This is crazy: half of Telstra was privatised in 1997 and 1999 when there was no DSL yet, it didn’t release to the market until 2000. Blaming the government for not having a broadband plan in 1997 is simply not fair.

The other one I see is that the NBN was built because the privatised Telstra wouldn’t build a FTTN network. In 2005/6 it offered to build one, with prices that were regarded as radically high for the time, as they were a substantial increase on the low rates set by the ACCC for unbundled access to the Telstra local loop. The proposal ultimately foundered because Telstra said the ACCC wouldn’t let it charge a levy to subsidise its rural network, the ACCC said it wouldn’t do so because Telstra wasn’t proposing to build FTTN in rural areas. Interestingly such a levy has now been created for the NBN and it is valued at $7 per line per month. Telstra apparently sought something half that and anyhow, subsequently negotiated receipt of subsidies in the form of the USO equivalent to … you guessed it, $3 a month (about $300m annually across 8-9m lines).

Anyway in my old reading I came across an estimate from Citigroup from 2007 that Telstra could build out FTTN to 75% of the population and earn its investment back on $50 a month (the estimate wasn’t attempting to be generous to Telstra, it was an inferred criticism of its ambit claim for more). Which certainly suggests that NBN pricing on a network that is considerably more expensive because of its FTTH, wireless and satellite components might struggle on ARPUs of $43 a month. This is the heart of the problem. The ACCC effectively valued the Telstra CAN at under $20 billion and this is the building block on which wholesale and retail prices for DSL are set to this day. The various NBN proposals were “forecast” at $43-49 billion and of course we know the only way is up with these things. If you compulsorily replace something with something twice the cost and there is a substitute in the form of wireless (which is the case for the bottom half of internet users in terms of quotas, costs etc), something has to give. In this case it is the incentive for an RSP to sell you anything but the most basic product.

The fundamental cause of the whole NBN issue is simple. The ACCC underpriced access to the Telstra network, leading to a resistance from all quarters to meet the costs associated with a replacement. The NBN was the response and that in turn was infused with highly unrealistic expectations of what you could build (8m FTTH lines in 8 years for $43 billion) and even more unrealism about a willingness to pay for tariffs which inevitably have to rise to double or more. The industry is still in denial about this, handing out gongs to people who actually architected this policy as recently as this week.

Most people want nothing more than a steady 15-25Mbps connection. They are annoyed because even their modest 25Mbps connections are contended at 1:20, clearly not enough when a few others in the street are also streaming. The debate has, meanwhile, been hijacked by those who think 100-1000Mbps is necessary for all and have no concept of the costs required to achieve universal access to such a capability.

In just two weeks, CommsDay will be holding the tenth annual edition of its Melbourne Congress at the Langham Hotel (October 10/11)

I’ve put together what I hope you agree is a terrific expert-packed agenda for this year’s event.

OPERATORS: Headlining the event are C-suite speakers from telcos and DC operators such as NBN’s Dr Ziggy Switkowski, Telstra COO Robyn Denholm, Optus VP David Caspari, Vodafone director Ben McIntosh, Symbio CEO Rene Sugo, Wideband Networks CEO Philp Britt, NEXTDC COO Simon Cooper and Metronode MD Josh Griggs. We also have the global CEO of the world’s biggest Wi-Fi operator, iPass’ Gary Griffiths, joining our line-up.

POLICY & REGULATION: We also have a full complement of regulatory, political and policy perspectives. From the agency wing we have the ACCC’s Michael Cosgrave, ACMA’s James Cameron and the TIO’s Judi Jones. From the parliamentary arena, Victorian minister Philip Dalidakis, Federal NBN joint parliamentary standing committee chair Sussan Ley MP and shadow communications minister Michelle Rowland. Providing perspectives from industry and the consumer arena are Communications Alliance CEO John Stanton, AMTA CEO Chris Althaus and ACCAN CEO Teresa Corbin.

TECHNOLOGY: The Congress will also feature technology experts from worldwide leaders in telecom network supply: Netcomm Wireless, Cyient, Nokia, Cisco, Cradlepoint, Ruckus and Ciena. Learn what’s coming out of the labs and happening in the field.

The Congress will also feature the analysis and perspective of Professor Reg Coutts, Ovum’s David Kennedy, Bob James and Ian Martin.

All in all, two days of the sharpest telecommunications speaker line-up you will find in Melbourne this year.

Of course, there is also the benefit of not only hearing from industry leaders but meeting them. The Congress features two catered lunches, a cocktail session and several networking breaks. A fantastic opportunity to renew or establish industry contacts.

REGISTER HERE

US-headquartered broadband infrastructure provider Casa Systems is targeting opportunities with NBN and other major telco players in Australia, focused particularly on small cells and distributed, multi-access tech architecture, via its local partnership with C-Cor. Casa CEO Jerry Guo spoke exclusively to CommsDay on a visit to Australia along with C-Cor MD John Goddard.

As revealed by CommsDay, Melbourne-based telco equipment supplier C-Cor officially announced its ANZ-exclusive alliance with Casa in January this year after splitting with previous vendor partner Arris – one of NBN’s HFC suppliers and a direct rival to Casa. For Guo, ever-increasing and “insatiable” demand for bandwidth in Australia plus a trend towards fixed-mobile network convergence make the local market an interesting proposition.

“When we look at broadband infrastructure, we see three segments. We see the cable side of broadband infrastructure [such as] cable modems and CMTS converged cable access platforms; we see telco broadband infrastructure, optical and DSLAM; and the third segment is mobile. And we see that all three are actually converging,” he said.

“We as a company are providing solutions in all three segments and especially for the convergence of all broadband infrastructure, HFC, optical, and mobile networks. We are playing in cable infrastructure and optical routing infrastructure as well as small cells, picocells and 5G cells going forward [plus] the packet core side: the core networks which aggregate and control all the access networks.”

Casa and C-Cor believe there could still be opportunities in the NBN HFC supply chain, particularly with the forthcoming upgrade to DOCSIS 3.1, a technology in which Casa positions itself as a market leader. But they are particularly focused on the possibility of helping NBN expand its fixed wireless network via small cell deployment at the network edge.

“In fixed wireless infrastructure, there are opportunities with a company like NBN; it’s got that fixed wireless mandate, it can’t go mobile, but it does hold 2.3GHz [spectrum] and 3.4-3.7GHz as well. Clearly, there are opportunities there for it to… transform that fixed wireless network into a small-cell fixed wireless network,” said Goddard.  

“Part of that driver for that expansion [would be] the fact that their core customers, [such as] Telstra and Optus and Vodafone I guess, are currently expanding their mobile networks and their fixed mobile networks into small cell structures, particularly Telstra… we could see a situation where the other operators are competing against NBN for customers with a mobile infrastructure.”

However, the two companies are not restricting their overtures to NBN; they are also talking to other local fixed and wireless players, some of which are potential competitors to the national network.
“The opportunities we see in general [with] fixed broadband operators, not necessarily NBN specifically,” said Guo, “are that when they push the node closer, fibre deeper, we [can] basically build a hardware platform – a digital node – which can act as an HFC node, which can act as a 5G cell –”
“– but can also host DSL, can also host optics –” put in Goddard
“– so for some business services or new builds, they could put an optical line terminal in that digital node to provide optical service. It’s really about HFC, optical, as well as 5G or 4.5G cells going forwards,” finished the Casa CEO. “We can [also] help the mobile operators to extend their coverage or provide densification of their network by putting the cells into areas that macrocells do not cover well. So it’s both a fixed wireless opportunity as well as a mobile wireless opportunity.”

Guo’s trip to Australia has provided him and Goddard with the opportunity to engage in person with a range of potential customers. “We’re talking to all the big guys, the major players; all the major telcos, and the Tier 2s,” noted Goddard. “We’ve got a leading provider of ultra-broadband technology [in Casa], and the local supplier – us – with the feet on the ground, the local knowledge, the understanding of the deployment methods and methodologies [with] the capacity to customise product if required for localisation.”

Petroc Wilton

Communications minister Mitch Fifield has convened an emergency industry roundtable in Canberra on Monday afternoon to hammer out an action plan for resolving customer migration and consumer issues around the NBN.

Invitations for the roundtable were only issued earlier this week. Telstra CEO Andy Penn, Vocus CEO Geoff Horth, Optus CEO Allen Lew and TPG COO Craig Levy are expected to attend, along with Communications Alliance CEO John Stanton and representatives of NBN, the Australian Communications and Media Authority and Australian Competition and Consumer Commission. A source said the roundtable appeared to be designed to “knock some heads together”.

The roundtable comes following weeks of damaging media publicity about issues with NBN connection hassles and low speeds as a result of under-provisioning of bandwidth by retail service providers. Members of parliament and talkback radio hosts are also anecdotally reporting record amounts of correspondence from disgruntled broadband users about the NBN.

NBN CEO Bill Morrow has admitted that the firm’s own sampling shows that 15% of NBN customers are dissatisfied, while an Essential poll of over 1,800 voters released this week showed that just 18% thought the government was doing a “good job” implementing the NBN versus 46% who thought it was doing a “poor job.” In fact, of 12 issues sampled, the NBN was ranked the second worst for the government, just above high power prices.

NBN’s connection and activation issues were exacerbated in June as record numbers were added to the network. In the 5 weeks to 29 June – one day before the financial year end – NBN made 447,064 premises ready for service and 155,345 premises activated. Since the beginning of July that rollout pace has notably fallen off in favour of activations, presumably as NBN takes stock and seeks to resolve its backlog of issues. In the six weeks since the financial year began, NBN made 331,652 premises ready for service and 253,159 activated.

The Monday meeting is scheduled to take place across two and a half hours that afternoon.

NEW CORPORATE PLAN: NBN releases its new four year corporate plan on Thursday August 31. Speaking with business commentator Alan Kohler yesterday, NBN CEO Bill Morrow said that by adding 2021 to its forecasts, observers would get a better sense of its ARPU and cost forecasts.

“I think we only right now reveal kind of a four year view, we’re going to introduce on the 31st of August the new four year plan that will add in the 2021 year that had not necessarily been public in the past,” Morrow said.

CommsDay can reveal that US telco supplier Radisys is going after a foothold with major carriers in the Australian market, its particular business model setting it on course to both compete against and cooperate with entrenched vendors such as Nokia, Ericsson and Huawei.

Founded in 1987, Radisys has been focused on selling solutions into the fixed and mobile telco industry for a large part of its history – initially supplying compute and switching hardware for everything from basestations to gateways, then adding software elements such as media processing and access protocols, and also bringing in managed services. Until recently, the firm sold only to telecom suppliers and original equipment manufacturers. However, when current CEO Brian Bronson took on his role five years ago, Radisys began selling direct to large carriers as well; early beachhead wins included Verizon and LTE cellco Reliance Jio in India.

“We’re a disruptor [that] doesn’t have legacy baggage… if [carriers] want to replace a traditional hardware vendor, if they want to decompose a particular network element, if they want to embrace open source principles such as central office re-architected as a datacentre, or open source radio access network, we have all those capabilities,” Bronson told CommsDay, adding that trends such as open source and virtualised networking had opened fresh opportunities for newer, disruptive players. And while Radisys’ shift into direct carrier sales has meant a certain amount of ‘co-opetition’ with its vendor clients, he said there was sufficient business available with large telcos to make it work – particularly with those same carriers now moving away from the older paradigm of total vendor lock-in, even while still maintaining strong relationships with established suppliers.

“The best example I can provide is Nokia, which was by far and away our largest customer for over a decade; we shipped them, at one point, over $150 million of hardware-centric products that went into gateways, switches, basestation controllers. We then [told] them ‘we’re getting out of that business… but we will continue to supply our media processing software’… and a little later on, we started to compete with them with our telecom open compute rack,” he said. “What you’re finding in the ecosystem is this ‘coopetition’; one minute you’ll be a foe, one minute you’ll be a supplier, one minute you’ll be a partner… Nokia’s still a key channel partner for us [as is] ZTE in China… but in general, because of the way the economic model is changing, we’re largely going direct with operators.”

COMING TO AUSTRALIA: Now, Radisys is aiming to expand into Australia as part of a broader focus on specific geographies.

“We are in active dialogue with large carriers in Australia and the region,” said Bronson, adding that New Zealand and the Pacific Islands would be a natural area for expansion down the track.

Bronson has already brought in Angus Stuart-Adams (right) as country director for ANZ and the Pacific Islands, under Ruchir Srivastava as APAC VP, and Radisys is also working with Australian networking and IT distribution company Newgen. “Our next step will be hiring a systems engineer [to] go along with Angus, but really leaning on Newgen, that’s a local presence here,” he said. “Further [along], we’ll be looking to put onsite engineers in these operators as well – [although] not all of them would be Australian residents, but would be onsite, living here and helping disrupt.”

The CEO added that locally dominant vendors like Nokia, Ericsson and Huawei “would be the competitors/partners that we’d be cooperating with! It’s not always about competition; it’s about how we rewire the network for 5G, and to embrace open-source principles… the reality is we’ll be working with them to help the operators disrupt, with the concept being not just to displace them but to get the operators in a better position to get what they want.”

“Around the globe, you’ve got these incumbent vendors and telcos do want to remove some vendor lock-in; at the same time, they’re trusted partners and there’s a lot of risk in upsetting the network if you do too much. Radisys [presents] a perfect, low-profile way to have your cake and eat it too.”

Radisys is listed on the US NASDAQ and posted consolidated revenue of US$212 million in its most recent full-year results.