Tuesday, March 25, 2008

Singpore on the move in the three-layer model

Does it pay to operate the passive layer of an FTTH network? I think it does, but it will be different from both running the active layer and providing services.

Last week I spoke with Marcel Jansink (Wavin) and Niclas Mika (Reuters) on this perennially vexing subject. There is a risk of building 'too wide a highway', so it all comes down to usage. I will try to elaborate in future posting and give actual numbers, using Marcel's input (the TNO model).
Needless to say, I strongly believe in the return of the 'Field of Dreams' ("If you build it, he will come.").

Anyway, one condition must be that we build a single infrastructure. Things look a lot more troublesome, both from a financial and a regulatory point of view (duct access, MDU access, etc.), when everybody starts digging.
This entails three things:
1. Separation, but the natural monopoly at the passive layer requires some form of regulation.
2. The ability to attract state funding for the passive layer, as there is no competitor (at the passive layer) to make objections.
3. Changing insights at operators. They must learn to value all their potential roles (network operator, service provider) and be willing to split them.

As I have written before, things are definitely moving in that direction. Separation is all over the EU; governments are increasingly valuing the benefits of FTTH; operators are saying goodbye to running (parts) of their networks.

Singapore may provide a great example of the above: separation into three layers; state funding; operators voluntarily adopting separation and focus on playing a role in one of the three layers.
Singapore's IDA today has a deadline for RfPs (request for proposals) for building the city's Next Generation National Broadband Network. A consortium of City Telecom, M1 and StarHub plans to submit a proposal for building the passive layer.
We will track who else will reply to the RfP.

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