NZ government could create new last-mile monopoly with UFB

, posted: 23-Aug-2010 17:48

Orcon CEO Scott Bartlett warned recently that the consequences stemming from changes to the government's Ultra Fast Broadband (UFB) project could end up "cementing the [Local Fibre Companies] as 'one big, nasty monopoly per region'" and he may well end up being right.

Originally, the UFB Invitation to Participate or ITP stressed that it would be mandatory for the LFCs above to provide access seekers with "dark fibre" - that is, access to fibre-optic circuits that could be lit up by say an ISP according to the services it wanted to provide to customers. Having access to Layer 1 of the fibre-optic network would enable access seekers to create a range of service options, that could then be retailed or wholesaled. This could be 100Mbit/s or 1Gbit/s options, and maybe even multiple such connections, with their own service level commitments to differentiate from other players in the market.

Access seekers would use their own gear, and it'd be similar to Orcon, Vodafone, Telecom, TelstraClear, Compass and Callplus using their choice of DSL modems and DSLAMs on LLU.

Now however, full access to Layer 1 or dark fibre is closed to at least end of 2019. While Layer 2 service provision was marked as "optional" in the first version of the ITP, this is now a "must provide". Layer 2 is where the LFC adds its equipment to the ends of fibre-optic circuits, and resells the services it creates. Access seekers get to buy what the LFC provides, be it 10, 100 or in unlikely cases, 1Gbit/s, dimensioned according to the LFC and with the service levels it offers.

This isn't as limited as ISPs buying bitstream services from Telecom Wholesale currently but obviously, it's a much less flexible option than lighting up the fibre yourself in terms of defining service options and pricing. The LFC will instead define the baseline here.

Dark fibre or L1 access is still on the "must provide" list for LFCs. This will only be for business customers or end-users seeking "premium quality services (likely up to 1Gbps)." In other words, L1 access will be expensive as its aimed at business customers and deemed to provide premium quality services. General access for everyone to L1 in LFC networks won't be available until January 1, 2020.

Obviously, the government is aware that pushing access seekers towards L2 and making L1 access expensive could have nasty, anti-competitive side-effects. Prior to 2020, the LFCs have to ensure that there is space in the ducts and dark fibre-optic circuits to accommodate additional access seekers, and that there is no discrimination and "equivalence of inputs" (ie. the LFC can't charge access seekers more for L1 access than it pays itself for it.)

2020 is a decade away. Is it realistic to expect that there will be any access seekers at the time wanting to enter a market where customers have already taken up L2 or similar service from other providers? We're talking about public funding here.

Not that L1 access is likely to be important in the future, if the last mile of the UFB is passive rather than active. This is hard to explain so I borrowed the below illustration from Wikipedia:


What you see above are two different models: one where the physical network essentially reaches the end customer (active) and another where the signal is split near customer premises, to serve 32, 64 or 128 end users (passive).

Passive optical networks are deployed because they're a little bit cheaper - ten to twelve per cent is the figure I've seen - compared to point-to-point active ones.

The UFB has now been modified to say that it "won't be mandatory for LFCs to provide unbundled access to 'point-to-multipoint' layer 1 services" until January 1, 2020. LFCs can do so if they choose, but unbundling passive optical networks isn't easy. UK's OFCOM covered just that topic and found that unbundling GPON networks isn't feasible. [Warning: link goes to a PDF file.] Come 2020, maybe it will be economical and possible to unbundle PONs, but we don't know that.

Unbundling AONs however is possible, even to the point of having multiple service providers on the same connection with different wavelengths. You could have data from one provider, TV and movies from someone else, and phone service from a third supplier.

If you think this sounds as if a PON-based UFB is may end up recreating the closed copper network of today, you're right. Add to that the fact that PONs are contended networks, where the 32, 64 or 128 premises share the 1Gbit/s or 2.5Gbit/s bandwidth down, around half of that up and things are looking distinctly DSL with laser beams instead of electric signals. The UFB promise is 100Mbit/s down and 50Mbit/s up of dedicated, not shared bandwidth, for three-quarters of New Zealanders.

I'm with Dr Ross Patterson, the Telecommunications Commissioner on this. "As part of the public investment in the network, we need to remember the lessons we have learnt from copper," says Dr Patterson. [Warning: link goes to a PDF file.]

If the UFB we put in now is going to be around for fifty years or so, let's do it right from the beginning. Otherwise it's a waste of money.

Other related posts:
Wikileaks keeps publishing despite Assange's arrest
Letter to Simon Power, minister of commerce re: Copyright (Infringing File Sharing) Amendment Bill
PublicACTA posts the Wellington Declaration. Sign it if you value your rights

comments powered by Disqus


Google News search
IT News
PC World New Zealand
Computerworld NZ
PC World and Computerworld Australia
PC World US
Computerworld US
NZ Herald
Virus Bulletin

Content copyright © Juha Saarinen. If you wish to use the content of my blog on your site, please contact me for details. I'm usually happy to share my material as long as it's not for spamblogs and content farms. Please attribute with a link back to this blog. If you wish to advertise on my blog, please drop me an email to discuss the details.
Comments policy All comments posted on this blog are the copyright and responsibility of the submitters in question. Comments commercial and promotional in nature are not allowed. Please ensure that your comments are on topic and refrain from making personal remarks.