Summary
Governments across the region are investing large sums in new telecommunications networks to ensure their markets’ continued economic success. These “next generation networks” will be Internet Protocol (IP) based and will provide high speed (and in some cases ultra-high speed i.e. 100 MB/s and above) broadband access to the general public.

These investments are qualitatively different in that governments are incentivizing operators to build “ahead of demand” rather than leaving it to the market, to ensure that their respective countries stay ahead or at least remain competitive with developments overseas, and also stimulate new markets. These investments come with “strings attached” in the form of enhanced open access regulatory requirements, to ensure that the investments benefit the market at large rather than just the selected operators.

For lawyers, apart from the benefits we will enjoy as users (since bandwidth and high quality video conferencing will become more affordable), the spin-offs will be multiple. There will be more work for the operators and numerous equipment vendors and contractors involved, work for new entrants (like the broadcasting and media companies who will have an alternative channel to the market) and work for existing players who will take advantage of the new infrastructure sharing possibilities. In Singapore for example, the Government is expecting new high-definition video conferencing, telemedicine, Grid Computing-on-Demand, security and immersive learning applications, to be available on its Next Gen NBN from about 2010.

Singapore Next Gen NBN
Singapore’s tender for its Next Generation National Broadband Network is in full swing. The Request for Proposals for the NetCo (who will design, build and operate the passive infrastructure layer of the Next Gen NBN) and the OpCo (who will design, build and operate the active network layer of the Next Gen NBN) have now been published and tender submissions are due this year. The Government has announced that up to S$750 million of government funding will be available to the NetCo to help it rollout the nationwide network, which is expected to scale up to 1 Gbps eventually. The NetCo race is likely to be particularly interesting now that Starhub, M1 and Hong Kong’s City Telecom have joined forces to bid against SingTel.

Apart from the NetCo and OpCo having to provide certain mandated services to other operators at regulated prices, Singapore has decided to adopt separation between the different levels of the Next Gen NBN to achieve effective open access. The NetCo will thus have to be structurally separated from all other operators and the OpCo will have to be operationally separated from its affiliates. This is intended to create a more vibrant and competitive broadband market. The Minister has also announced that “If necessary, the Government is also prepared to consider legislation to achieve such effective open access for downstream operators in the next generation broadband market”. Singapore will join the UK and New Zealand in having separated operators.

Australia
The previous Liberal Government announced last year that $958 million of Australia Connected funding would be awarded to the Opel consortium (a joint venture between SingTel Optus and Elders) to fund a regional wholesale broadband network. This project was terminated on in April 2008. The new Labour Government has announced its own A$4.67 billion Fibre-to-the-Node (FTTN) project, with the appointment of a Panel of Experts in March 2008, who will help shape the RFP, assess proposals for the network build and recommend the policy framework. The network is expected to deliver a minimum of 12 Mbps to 98% of the population, and the new tender will allow for “modular bidding” for different areas in Australia. The Government has also announced that it will legislate to gain confidential information from existing operators, that will be shared with the FTTN bidders to help them optimize their proposals.

Malaysia
The Malaysian government similarly announced last year that Telekom Malaysia has been awarded the RM15.2 billion high speed broadband services project to be rolled out to 2.2 million premises under a public-private partnership with the Government, with the Government investing a third of the amount. In announcing the award, Deputy Prime Minister Datuk Seri Najib Tun Razak said that "We want the service to be rolled out quickly, in a cost-efficient manner so that Malaysia would not be left behind in terms of competitive edge. The Government is committed to ensuring this materialises in the shortest possible time and the best way is choosing TM as our partner as TM's existing infrastructure means that additional investment would be done on a lower cost basis and at faster speed”. The Government indicated that the service would offer competitive rates to encourage more users.

 

Comparisons
Australia, Malaysia and Singapore are all investing large sums of public money in these new networks, with Singapore markedly increasing its open access controls as a condition of the funding. In contrast, the US has moved in an opposite direction, relaxing access obligations i.e. granting regulatory forebearance in return for increased fibre investment by the private sector. However, the US has different underlying circumstances in that it already has a vast network of cable broadband providers who are unregulated and not subject to the same rules as the ‘smaller’ broadband telecom providers.

Which approach will turn out to be better is anyone’s guess but clearly Singapore and Malaysia had to take steps to kick start further investment to remain competitive. With South Korea, Hong Kong and Japan having the highest penetration of fibre-to-the-home / building + LAN rates in the world (according to the February 2008 rankings by the Fibre-to-the-home Council) and the US moving up the global rankings, Singapore (in 14^th place), Malaysia and Australia (both unranked with less than 1% penetration) have some catching up to do.

 

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