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NEWS ANALYSIS: Telco wrap-up 2011

NEWS ANALYSIS: Telco wrap-up 2011

It has been an eventful year in the telco space to say the least! Here's are some of the highlights.

It has been an eventful year in the telco space to say the least. ARN explores some of the notable telco topics of 2011.

NBN in 2011

Since it was first announced in 2009, the National Broadband Network (NBN) has been relentlessly covered by the media.

But 2011 has been particularly special for the NBN as it hit several key milestones. That’s not to say it wasn’t marred by controversy.

The year began with NBN Co CEO, Mike Quigley, fending off allegations of bribery during his tenure as a senior executive at Alcatel-Lucent.

The communications vendor had been fined $137 million to settle a bribery case initiated by US authorities. It was accused of paying-off foreign officials in various countries to nab lucrative contracts.

While Quigley has repeatedly maintained he was not involved the bribery scandal in any way, he was hounded about the issue for months and still have to fend off questions about it every now and again.

The NBN hit a major hiccup in April when NBN Co revealed it had suspended all construction contract tenders with 14 companies due to possible price gouging which threatened to delay the network rollout.

This problem wasn’t resolved until June when NBN Co inked a construction agreement with Silcar for the NBN rollout in NSW, ACT and QLD. NBN Co has since signed construction agreements for the rest of the country.

Over the years the NBN has attracted many detractors but in 2011, they really came out in force.

Earlier in the year, NextDC CEO and founder of Pipe Networks, Bevan Slattery, said the NBN was turning “toxic”. He was displeased with a number of backflips by the Federal Government on key NBN promises.

Telco executives such as former AAPT CEO, Paul Broad, and TransACT CEO, Ivan Slavich, have all expressed some discontent towards the way the NBN is currently heading.

But the NBN’s number one enemy is, of course, Shadow Communications Minister, Malcolm Turnbull. He has decried the NBN at every possible chance this year - granted that’s partly his job as a member of the Opposition – which has resulted in vociferous responses from Communications Minister, Senator Stephen Conroy.

Then there were claims of a possible budget blowout from the Joint Committee on the NBN after a parliamentary enquiry on the $36 billion network.

On a more positive note, 2011 saw the NBN make several key achievement which really gave the impression the rollout is making great progress.

The first five mainland NBN trial sites were systematically switched on throughout the years beginning with Armidale, NSW. In September, the final of the five sites, Townsville, QLD, was lit up.

While a mass commercial rollout is still quite far away, it was yet another signal the NBN really is becoming a reality.

The first locations to receive fixed-wireless services were also announced. Across Australia, 93 per cent of premises will be touched by a fibre-based NBN while the rest will be serviced by a fixed-wireless or satellite connection.

Locations include Tamworth, NSW, Ballarat, VIC, Toowoomba, QLD, Geraldton, WA and Darwin, NT.

So what about the ISPs that will be operating on the NBN?

A number of the major players in the telco space have already released their retail pricing for NBN services although Telstra is still keeping mum.

Not everybody was happy though. Internode’s pricing were noted as rather high, which was an intentional sort of protest against NBN Co’s high charges for ISPs to use a connectivity virtual circuit (CVC) at each of the 120 points-of-interconnect (PoIs), which.

NBN Co eventually listened to the concerns, offering rebates on wholesale charges on the NBN. A month later, Internode lowered its NBN service prices.

As the year draws to a close, NBN Co is still fending off criticism from ISPs with the latest concern being the final version of its Wholesale Broadband Agreement (WBA). After five drafts and extensive consultation with the ISP industry, you’d expect NBN Co to get it right. But ISPs are worried about several issues including lack of regulatory oversight on the NBN.

NBN Co said it will continue consulting the industry over the WBA.

Will 2012 be as eventful for the NBN as 2011? It’s hard to say at this point. But with several years to go before the network is completed, let’s hope so.

The year of LTE?

It is safe to say a lot more people know more about LTE than they did a year ago.

As we come to the end of the year, the ‘big three’ telcos have all lifted the curtains on their LTE ambitions.

For those that have been living under a rock for the past 12 months, LTE is the successor of 3G networks which can provider faster speeds at higher capacities over longer distances.

These kinds of network improvements are needed now more than ever as data consumption worldwide has skyrocketed thanks to the popularity of portable Internet devices and wireless broadband. 3G networks simply can’t keep up with the demand for data which has put a strain on many telco networks.

While LTE has been labelled 4G, whether that is the case is still a disputed topic.

It was Telstra which kick-started the swathe of LTE announcements in the telco space.

In February, Australia’s biggest telco said it would bring out a 4G LTE network by Christmas. Subsequently, Vodafone, Optus, NBN Co and vividwireless have all talked about their LTE plans.

Here is a brief summary of what each telco have been up to:

Telstra – The telco is refarming its 2G 1800MHz spectrum for its new 4G LTE network which would be integrated with its 850MHz HSPA+ service. Telstra partnered with Ericsson for the rollout. Announced in February, the 4G network was trialled by select customers in August and was given a limited release in September.

Telstra is using FD-LTE technology.

Vodafone – After being hammered by bad press, Vodafone issued an apology to customers that have suffered poor network coverage and committed to a $1 billion network upgrade in February. The upgrade involves Huawei LTE-enabled hardware although Vodafone has yet to disclose when it will switch its LTE network.

Huawei is a vendor heavily invested in TD-LTE.

vividwireless – The ISP boasted to have deployed the first ‘4G’ network in Australia last year through WiMax technology last year although whether that can truly be classified as 4G is a debatable topic. vividwireless, in May, said it was keen to do a nationwide rollout of its LTE network by end of the year though there is still no work on that at this point.

The network would use TD-LTE.

NBN Co – The Government-owned company responsible for the National Broadband Network (NBN) rollout, NBN Co, signed Ericsson on a $1.1 billion contract to help plan and deploy an LTE fixed-wireless network for rural and remote areas. NBN will cover 93 of premises with fibre and the rest with fixed-wireless or satellite technology. NBN Co recently announced the first fixed-wireless release sites.

NBN Co’s network would use TD-LTE.

Optus – In September, Optus announced it was rolling out its 4G LTE network with services expected to be available from April 2012. Like Telstra, Optus will be deploying the network in the 1800MHz spectrum although ideally the telco would like to move into the lucrative 700MHz band. Optus has started 700MHz trials in Bendigo, Victoria.

FD-LTE is the favoured technology of the telco.

Movers and shakers

There was a lot of movement in the telco space in 2011 with some big names bowed out of their roles with some making dramatic shifts to other industries.

In June, AAPT revealed then-CEO, Paul Broad, had tendered his resignation with general manager of network and technologies, David Yuile, taking over the role.

Broad was with the company for four years after AAPT’s acquisition of wholesale telco, PowerTel, where he worked as the CEO. A few weeks after the announcement of his departure from AAPT, Broad became the inaugural CEO of the Government-founded industry body, Infrastructure NSW.

With Broad gone, an outspoken telco commentator was lost.

Another vocal figure of the telco space also passed the baton this year. Primus Telecom CEO, Rhavi Bhatia, announced his retirement a month after Broad’s resignation after having been with the company for over a decade.

Bhatia had, in fact, been with Primus since it began life in the Australian market in 1995. He watched as the telco space evolved since that time and wasn’t afraid to speak out when it came to issues in the industry.

If Bhatia’s tenure at Primus is considered long, then outgoing Telstra’s CFO, John Stanhope’s time at his company would be prehistoric.

Stanhope joined Telstra in 1967 – that’s 44 years ago - and became, in effect, the CFO in 1995. Having grown with the company from privatisation to the finalisation of the $11 billion deal with NBN Co, he saw it as a good time to signal his retirement in June.

August saw M2 Communications founder, Vaughan Bowen, step down from his post as chief executive after 12 years, passing the reigns to Geoff Horth. He had driven tremendous growth in the company for several years and remains at M2 albeit in a different capacity.

One of the more surprising telco moves came in November, with Optus director of government and corporate affairs and telco industry veteran, Maha Krishnapillai, leaving the company at the beginning of the month, citing family commitments.

By the end of the month, Krishnapillai had moved to Australia Post, joining the postal company’s retail services division to drive its telco business.

Australia Post has been selling prepaid mobile telco services for years and it will be interesting to see how Krishnapillai will shape the company’s telco strategy.

Prior to his three-year tenure at Optus, Krishnapillai worked at Macquaire Telecom for 10 years. He was a regular spokesperson for Optus during his time with the telco.

Notable mentions:

$11 billion Telstra-NBN deal approved - After numerous delays, the agreement was passed by shareholders in October.

iiNet v AFACT court battle continues - Three years and two victories to iiNet later, the Australian Federation Against Copyright Theft (AFACT) has appealed to the High Court over a copyright infringement case it launched against the Perth-based ISP. No decision has been made yet.

Optus and Internode big birthdays - In 2011, both telcos celebrated 20 years in the industry.


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Tags HuaweiaaptinternodeiiNetTelcoNextDCTelstraTransActAFACTpowertelnbn coVodafoneNational Broadband Network (NBN)VividWirelessoptusTelecommunicationsPipe Networksmacquarie telecom

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