Telecommunication Infrastructures in Australia 2001

Telecommunication Infrastructures
in Australia 2001
A Research Report
prepared for
ACCC
Technology Applications Group
BIS Shrapnel
Global marketing intelligence and forecasting
BIS Shrapnel Pty Limited December, 2001

The information contained in this report is the property of BIS Shrapnel Pty
Limited and the ACCC.
While every effort has been taken to ensure that the information set out in this
publication is accurate, the ACCC and BIS Shrapnel do not accept any
responsibility whether in contract, tort, equity or otherwise for any action taken as
a result of reading any part, or all, of the information in this publication or for
any error in or omission from this publication.
All rights reserved.
Contact persons:
Kevin McDonald
Director & General Manager
Technology Applications Group (TAG)
BIS Shrapnel Pty Ltd
Level 24, Rialto North Tower
525 Collins Street
Melbourne VIC 3000
Australia
Tel. (03) 9614 0011
Fax (03) 9614 0033
Email: bis@bis.com.au
Job no. TG3794/JL/KMc/sl
Joe Leong
Senior Consultant
Telecommunication Infrastructures in Australia 2001
CONTENTS
1.
2.
3.
4.
5.
Report Highlights ........................................................................................................1

1.1
Telecommunications Market in Australia........................................................................... 1
1.2
Telecommunication Network Operator ............................................................................... 3
1.3
Telecommunication Technology Overview .......................................................................... 6
1.4
Customer Access Technology (Local Loop Network).......................................................... 12
1.5
Backbone Transmission Technology (Trunk Network)...................................................... 23
PSTN Copper Network..............................................................................................28

2.1
General Overview ............................................................................................................. 28
2.2
PSTN Network Infrastructure and Coverage.................................................................... 29
2.3
PSTN Copper Network Improvement ............................................................................... 31
ISDN Network.............................................................................................................33
3.1
Technology Overview ........................................................................................................ 33
3.2
The Deployment of ISDN in Australia .............................................................................. 35
3.3
ISDN Network Rollout...................................................................................................... 37
3.4
ISDN Service Applications and User ................................................................................ 41
3.5
Market Perspective ........................................................................................................... 45
Conditioned PSTN Technology DSL Network ..................................................49

4.1
DSL Technology Overview ................................................................................................ 49
4.2
The Deployment of DSL in Australia ................................................................................ 53
4.3
DSL Network Rollout........................................................................................................ 56
4.4
XDSL Service and User..................................................................................................... 64
4.5
XDSL Market Perspective in Australia............................................................................. 69
Fibre OPTIC Network ...............................................................................................73

5.1
Technology Overview ........................................................................................................ 73
5.2
The Deployment of Optic Fibre in Australia ..................................................................... 79
5.3
Optic Fibre Network Rollout ............................................................................................. 81
5.4
Fibre Network Service and User ....................................................................................... 88
5.5
Fibre Market Perspective in Australia.............................................................................. 92
Technology Applications Group, December 2001
iii
6.
7.
8.
9.
Hybrid Fibre Coax (HFC) Network.........................................................................95

6.1
Hybrid Fibre Coax (HFC) Technology Overview ............................................................... 95
6.2
The Deployment of HFC Network..................................................................................... 97
6.3
HFC Network Deployment................................................................................................ 99
6.4
HFC Market Perspective................................................................................................. 102
Cellular Mobile Network ........................................................................................104

7.1
Cellular Technology Overview ........................................................................................ 104
7.2
The Development of Cellular Mobile Network in Australia ............................................ 110
7.3
Cellular Network Rollout................................................................................................ 112
7.4
Cellular Mobile Service and User.................................................................................... 118
7.5
Cellular Market Perspective in Australia ....................................................................... 121
Microwave Network ................................................................................................125

8.1
Microwave Technology Overview .................................................................................... 125
8.2
The Deployment of Microwave Network in Australia ..................................................... 127
8.3
Microwave Network Rollout............................................................................................ 129
8.4
Microwave Service and User ........................................................................................... 133
8.5
Microwave Network Market Perspective in Australia .................................................... 135
Broadband Wireless Network (LMDS and MMDS) ...........................................138

9.1
Broadband Wireless Technology Overview ..................................................................... 138
9.2
The Deployment of Broadband Wireless LMDS and MMDS in Australia ....................... 140
9.3
LMDS and MMDS Network Rollout................................................................................ 142
9.4
LMDS/MMDS Service and User...................................................................................... 144
9.5
LMDS/MMDS Market Perspective in Australia.............................................................. 145
10. Satellite Network .....................................................................................................151

10.1 Technology Overview ...................................................................................................... 151
10.2 The Deployment of Satellite Technology in Australia ..................................................... 154
10.3 C&W Optus Satellite Network ....................................................................................... 156
10.4 Market Perspective ......................................................................................................... 166
iv
Bibliography................................................................................................................Biblio-i
Appendix A: Comparative Cost of ISDN Services...................................... Appendix A-i
Appendix B: xDSL Technologies Discussed................................................ Appendix B-i
Appendix C: Selected DSL Products and Services .................................... Appendix C-i
Appendix D: Satellite Operators Profile ..................................................... Appendix D-i
Appendix E: The Phase Out Analogue Network ........................................ Appendix E-i
Appendix F: Participant List......................................................................... Appendix F-i
LIST OF EXHIBITS
Exhibit 1-1:
Exhibit 1-2:
Exhibit 1-3:
Exhibit 1-4:
Exhibit 1-5:
Exhibit 1-6:
Exhibit 1-7:
Exhibit 1-8:
Exhibit 1-9:
Exhibit 1-10:
Exhibit 2-1:
Exhibit 2-2:
Exhibit 2-3:
Exhibit 2-4:
Exhibit 3-1:
Exhibit 3-2:
Exhibit 3-3:
Exhibit 3-4:
Exhibit 3-5:
Exhibit 3-6:
Exhibit 3-7:
Exhibit 3-8:
Exhibit 4-1:
Exhibit 4-2:
Exhibit 4-3:
Exhibit 4-4:
Exhibit 4-5:
Exhibit 4-6:
Exhibit 4-7:
Exhibit 4-8:
Exhibit 5-1:
Exhibit 5-2:
Exhibit 5-3:
Exhibit 5-4:
Exhibit 5-5:
Exhibit 5-6:
Exhibit 5-7:
Exhibit 5-8:
Exhibit 5-9:
Exhibit 6-1:
Exhibit 6-2:
Exhibit 6-3:
Exhibit 6-4:
Exhibit 6-5:
Exhibit 6-6:
Exhibit 6-7:
Exhibit 7-1:
Exhibit 7-2:
Exhibit 7-3:
Key Telecommunication Indicators in Australia (1996-2000) .......................... 2

Telecommunication Carrier Licensees ............................................................. 3
Telecommunication Technology Overview ....................................................... 6
Telecommunication Technology Overview and Comparison ............................ 8
Local Access Network Operator Overview ..................................................... 13
Carriers with Networks in Capital City CBDs (inc. planned)........................ 17
Customer Access Networks in Capital Cities (Metro areas) .......................... 20
Local Access Network Providers in Regional Australia ................................. 22
Backbone Transmission Network Operator Overview ................................... 23
Carriers with Networks between Major Capital Cities .................................. 25
Telstras Services in Operation at 30 June 2000 (millions)............................ 28
Telstras Exchange Sites (by State) ................................................................ 29
Telstras PSTN Network Coverage National............................................... 30
Telstras PSTN Copper Network .................................................................... 32
Access Tails Joined to a Service Providers Network ..................................... 34
Telstras ISDN Network Overview ................................................................. 35
Telstra Digital Data Equivalent Lines ........................................................... 36
Telstras ISDN Network Migration from an Overlay Network
to a Composite Network ................................................................................. 38
ISDN Deployment by Sites and Services at 1997-1999.................................. 40
Telstra Basic Rate ISDN Demand Forecast (Microlink and On Ramp)......... 44
Maturity Curve for DSL Technologies............................................................ 47
Telstras ISDN User Forecasts ....................................................................... 48
Copper Access Transmission Technologies (DSL) .......................................... 50
Maturity Curve for DSL Technologies............................................................ 51
ADSL Access Network.................................................................................... 52
XDSL Operator Overview............................................................................... 54
XDSL Network Overview ............................................................................... 56
XDSL Network Traffic and Application (2001 to 2003).................................. 66
XDSL Coverage Focus and Target User ......................................................... 68
XDSL Forecasts .............................................................................................. 72
Four Basic Parts of a Optic Fibre System ...................................................... 74
Optic Fibre Network Operator Overview ....................................................... 80
Backbone Fibre Optic Network Rollout.......................................................... 82
Backbone Fibre Optic Network Incumbent Operators
(Telstra, C&W Optus and PowerTel).............................................................. 83
Backbone Fibre Optic Network New Operators
(Amcom, Nextgen, AFN, Reef Network and Nava Network) ......................... 84
Local Access Fibre Optic Network Rollout ..................................................... 86
Local Access Fibre Optic Network Coverage.................................................. 87
Target User and Service by Fibre Backbone Network Operator.................... 89
Target User and Service by Fibre Local Network Operator........................... 91
HFC Architecture ........................................................................................... 96
HFC Network Operator Overview.................................................................. 98
HFC Network Rollout................................................................................... 100
Sydney HFC Network................................................................................... 101
Melbourne HFC Network ............................................................................. 101
Brisbane HFC Network ................................................................................ 101
HFC Network User Overview....................................................................... 103
Cell Coverage in a Cellular Network............................................................ 104
Cellular Network Operation ......................................................................... 105
Evolution of Cellular Systems ...................................................................... 106
vi
Exhibit 7-4:
Exhibit 7-5:
Exhibit 7-6:
Exhibit 7-7:
Exhibit 7-8:
Exhibit 7-9:
Exhibit 7-10:
Exhibit 7-11:
Exhibit 7-12:
Exhibit 7-13:
Exhibit 7-14:
Exhibit 8-1:
Exhibit 8-2:
Exhibit 8-3:
Exhibit 8-4:
Exhibit 8-5:
Exhibit 8-6:
Exhibit 9-1:
Exhibit 9-2:
Exhibit 9-3:
Exhibit 9-4:
Exhibit 9-5:
Exhibit 9-6:
Exhibit 10-1:
Exhibit 10-2:
Exhibit 10-3:
Exhibit 10-4:
Exhibit 10-5:
Exhibit 10-6:
Overview on the Cellular Operators in Australia ........................................ 110

Successful Bidders for the 3G Service Licenses ........................................... 111
Cellular Network Overview.......................................................................... 113
Cellular Network Coverage Map Telstra................................................... 114
Cellular Network Coverage Map C&W Optus........................................... 115
Cellular Network Coverage Map Vodafone ............................................... 116
Cellular Market Segmentation (Residential/Small to Medium
Business/Corporate)...................................................................................... 118
Traffic Volume of Mobile Phone Network..................................................... 120
Cellular User Base in Australia (1992-2001) ............................................... 121
Cellular Market Share 2000 ......................................................................... 122
Cellular Penetration Table (Selected Countries).......................................... 124
Microwave Network Operator Overview ...................................................... 128
Microwave Network Overview...................................................................... 129
Microwave Network Coverage Map Incumbent Operators
(Telstra, Macrocom and Soul Pattinson) ...................................................... 131
Microwave Network Coverage Map New Operators
(ntl, Telecaster and Datafast)....................................................................... 132
Microwave Backbone Network User............................................................. 133
Microwave Local Network User.................................................................... 134
Types of Broadband Wireless System........................................................... 138
LMDS/MMDS Network ................................................................................ 139
Broadband Wireless Operator Overview ...................................................... 141
LMDS and MMDS Network Overview ......................................................... 143
LMDS and MMDS Coverage Map ................................................................ 143
Market Development Scenario for Broadband Wireless .............................. 150
Satellite Operator Overview......................................................................... 155
C&W Optus Existing Satellite Network ...................................................... 158
C&W Optus Earth Station Access ............................................................... 159
C&W Optus Satellite Network Target User ................................................ 164
C&W Optus Satellite Network Traffic......................................................... 164
Network Capacity Utilisation....................................................................... 165
vii
1.
REPORT HIGHLIGHTS
1.1
Telecommunications Market in Australia

The development of telecommunications in Australia has been dominated
by the need to provide services to a population congregated in cities
separated by long distances, while reaching remote areas with basic
services and linking the cities with high capacity trunk services.
Over the last decade, the Australian telecommunications industry has
evolved from a single carrier to a dual carrier and finally a multiple
carrier and carriage service provider structure. Since deregulation in
1997, the telecommunications market in Australia has experienced a
period of rapid growth. The removal of certain carrier and technology
restrictions have made way for a more competitive market environment.
The competition has been fuelled by the entry of new players. This
includes service providers purchasing infrastructure from carriers and
on-selling it to their own customers. The competition, both at carrier and
service provider level has provided consumers with more choice and more
competitive telecommunication prices.
The telecommunications industry in Australia generated revenues of
A$26bn p.a. in 1999. The industry as a whole has been growing at a rate
of 15% a year with the market size reaching A$30bn by the year 2000.
The cellular mobile phone market has been growing at an impressive rate
of 33% for the past year, with a cellular penetration rate reaching 54%
compared to fixed teledensity of 60% in the year 2000.
The data transmission component of the sector is a significant area of
growth which is estimated to be growing at almost 30% per annum. An
independent report by KPMG Consulting (2000) has estimated that the
total accessible Australian market for fibre optic cabling in metropolitan
and regional centres will be worth around A$3.8 billion in 2000/2001.
Exhibit 1-1 provides an overview of key telecommunication indicators in
terms of market size and user base in Australia.
Exhibit 1-1: Key Telecommunication Indicators in Australia (1996-2000)

1996
1997
1998
A$18.3bn
A$20.0bn
A$22.5bn
Local telephone service
A$3.3bn
A$4.0bn
A$4.5bn
A$4.7bn
Long distance telephone service
A$4.3bn
A$4.5bn
A$4.7bn
A$4.9bn
A$5.0bn
to A$5.5bn
International call service
A$1.6bn
A$2.0bn
A$2.2bn
A$2.4bn
A$2.5bn
Cellular service
A$3.3bn
A$4.0bn
A$5.4bn
A$6.5bn
A$7.2bn
Paging service
A$0.1bn
A$0.1bn
A$0.1bn
A$0.1bn
A$0.1bn
Value Added service
A$3.0bn
A$3.0bn
A$5.1bn
A$6.0bn
A$7A$7.5bn
A$10.0bn
A$10.2bn
A$10.8bn
A$11.2bn
A$12.0bn
TELECOMMUNICATION
SERVICE REVENUE
1999
2000
A$26bn
A$30bn
Service Revenue (by market)

A$5bn
Service Revenue (by service)

Fixed voice
Mobile
A$3.32bn
A$4.0bn
A$5.4bn
A$6.5bn
A$7.2bn
Data
A$2.7bn
A$3.2bn
A$4.2bn
A$5.3bn
A$7.0bn
51%
53%
55%
57%
59%
Telephone (fixed)
9.3m
9.5m
9.9m
10.4m
10.7m
Cellular mobile phone
4.5m
5.2m
5.9m
7.7m
9.3m
Pager
0.30m
0.27m
0.25m
0.22m
0.20m
Internet Access (household)
0.3m
0.5m
1m
2m
2.7m
TELECOMMUNICATION USER
BASE (TELEDENSITY)*
User Base (by service)
Fixed Telephone User Base (by segment)

Residential Metro
4.1m
4.2m
4.4m
4.6m
4.8m
Residential Country
2.4m
2.4m
2.5m
2.6m
2.7m
Business Metro
1.8m
1.9m
2.0m
2.1m
Business Country
0.9m
1.0m
1.05m
1.1m
Business SME
2.4m
2.5m
2.7m
2.8m
Business Corporate
0.36m
0.37m
0.39m
0.42m
Source: BIS Shrapnel, Productivity Commission, ABS and Paul Budde

*Teledensity = fixed telephone penetration per 100 population.
1.2
Telecommunication Network Operator

The telecommunications legislation in force from 1 July 1997 opened up
the opportunity for new carriers to build and operate communications
infrastructure. The legislation removes the past legislative barriers to
market entry, as well as a number of artificial regulatory distinctions,
such as between mobile and fixed carrier licences.
A carrier licence authorises the operation of specified facilities (called
network units) to supply telecommunications services to the public.
Licence conditions oblige carriers to meet a number of specified
requirements including contributing toward the cost of universal service
provision, fulfilment of industry development plans and compliance with
the telecommunications access regime. However, it is not necessary to
have a carrier licence to provide the public with some carriage services
(such as phone or Internet access), or content services (such as an
electronic newspaper or pay television). Service provider licences with
appropriate conditions will cover these activities, and the legislation
provides some general rules.
Since the market deregulation in 1997, the number of license carriers has
increased from 14 in 1997 to 70 in year 2000. Exhibit 1-2 profiles the list
of carrier licences in Australia.
Exhibit 1-2: Telecommunication Carrier Licensees
No.
Carrier Licence Granted To:
Licence
Granted:
AAPT Limited (formerly AAP Telecommunications Pty Ltd)
1 Jul 1997
AARNet Pty Ltd
27 Nov 2000
ACN 008 889 230 Limited (formerly Neighbourhood Cable Ltd)
17 Dec 1999
Agile Pty Ltd
15 May 1998
Agility Networks Pty Ltd
21 Nov 2000
AirNet Commercial Australia Pty Ltd
Amcom Telecommunications Pty Ltd formerly Amcom Pty Ltd)
28 Jul 1998
ARBT Pty Ltd (Heartland Communication)
9 Aug 2000
Australia-Japan Cable (Australia) Limited
11 Dec 2000
May 2000
10
Australian Network Company Pty Ltd
9 Jan 2001
11
Boeing Australia Ltd
12
Broadband Access Pty Ltd
2 May 2000
13
Cable & Telecoms Pty Ltd (formerly Commcord Pty Ld)
29 Jun 1999
27 Nov 2000
The Guide to Carrier Licence and Nominated Carrier Declaration Issue No. 2, August 1999, under the
Telecommunications Act 1997.
No.
Licence
Granted:
14
Cable and Telephone Limited
15
Central Exchange Limited
1 May 2000
16
Chariot Internet Limited
25 Jan 2001
17
Chime Communications Pty Ltd (formerly iiTel Pty Ltd)
18
Datafast Carrier Services Pty Ltd

(formerly Wideband Access Pty Ltd)
19
Davnet Telecommunications Pty Ltd (formerly Davnet Pty Ltd)
20
ECOM Communications Pty Limited
16 Jan 2001
21
Eftel Radio Pty Ltd (trading as Radiowan)
20 Dec 2000
22
ETSA Utilities
13 Nov 2000
23
Global Dial Pty Ltd
17 Feb 2000
24
Horizon Telecommunications Pty Ltd
25
Hutchison Telecommunications (Australia) Ltd
26
Ipera Pty Ltd
3 Apr 2000
27
Iridium South Pacific Ltd

(carrier licence surrendered 16 June 2000)
2 Apr 1998
28
Macquarie Corporate Telecommunications Network Carrier Services

Pty Ltd
27 Oct 2000
29
Macrocom Pty Ltd
18 Dec 1997
30
MCI WorldCom Australia Pty Limited

(formerly WorldCom Australia Pty Ltd)
24 Mar 1998
31
National Power Services
25 Jan 2001
32
Netcare Telecommunications Pty Ltd
33
NetComm Limited
34
NewTel Networks Pty Ltd

(formerly Xinhua Telecommunications Pty Ltd)
35
Nextgen Networks Pty Limited
36
Northgate Communications Australia Ballarat Pty Ltd

(carrier licence surrendered 8 March 2000)
37
nti Telecommunications
13 Nov 2000
38
OMNIconnect Pty Ltd
19 Aug 1997
39
One.Tel GSM 1800 Pty Ltd
25 Mar 1999
40
Opentec Pty Limited
1 Jun 2000
41
Optus Mobile Pty Ltd
1 Jul 1997
42
Optus Networks Pty Ltd
1 Jul 1997
43
Optus Vision Pty Ltd
1 Jul 1997
44
Oz Telecom Pty Ltd
2 Mar 1998
45
Ozitel Network Pty Ltd

(formerly Communication Site Rentals Pty Ltd)
46
Pacific Telco Australia Ltd
47
Pahth Communications Limited
9 Feb 2001
48
PanAmSat Asia Carrier Services Inc
1 May 1998
49
PowerTel Ltd (formerly Spectrum Network Systems Ltd)
6 May 1998
50
Primus Telecommunications Pty Ltd
51
Pulsat Communications Ltd
52
QALA (Australia) Pty Ltd
11 Sep 2000
8 Mar 2000
6 Jul 1999
1 Sep 1998
25 Jul 1997
30 Sep 1998
9 Aug 2000
18 Oct 2000
2 Jun 1998
11 Sep 2000
3 Dec 1997
1 Jul 1999
17 Nov 2000
1 Jul 1997
7 Jan 2000
21 Dec 2000
No.
Licence
Granted:
53
RequestDSL Ltd
2 May 2000
54
SCCL Australia Ltd
55
Smart Radio Systems Pty Ltd
56
Soul Pattinson Telecommunications Pty Ltd
57
Swiftel Communications Pty Ltd
58
Telecasters Communications Pty Ltd
59
Telstra Corporation Ltd
1 Jul 1997
60
Telstra Multimedia Pty Ltd
1 Jul 1997
61
Third Rail Australia Pty Ltd (formerly AMX Communications Pty Ltd)
11 Sep 2000
62
TransACT Capital Communications Pty Limited
11 Sep 2000
63
TransAct Carrier Pty Ltd
26 Feb 1999
64
UE Comm Pty Ltd

(formerly United Energy Telecommunications Pty Ltd)
27 Aug 1997
65
Ue Comm Operations Pty Ltd
11 Oct 2000
66
Victorian Rail Track (trading as VicTrack)
20 Sep 2000
67
Vodafone Pacific Pty Ltd (formerly Vodafone Pty Ltd)
68
West Coast Radio Pty Ltd
69
Windytide Pty Ltd
70
XYZed Pty Ltd
22 Sep 1998
3 Apr 2000
19 Mar 1999
8 Mar 2000
27 Nov 2000
1 Jul 1997
22 Dec 1999
4 Sep 1997
23 Jun 2000
Source: ACA
1.3
Telecommunication Technology Overview

This research report covers a whole range of telecommunication
technologies, both wired or wireless in the local access networks and long
distance backbone transmission networks in Australia.
Exhibit 1-3: Telecommunication Technology Overview
Technology
Wired
Wireless
Network
Chapter
PSTN Copper
Access and Backbone
Chapter 2
ISDN
Access
Chapter 3
Conditioned PSTN Copper (DSL)
Access
Chapter 4
Optic Fibre
Access and Backbone
Chapter 5
HFC(Hybrid Coaxial Cable)
Access
Chapter 6
Cellular Mobile
Access
Chapter 7
Microwave
Backbone
Chapter 8
Broadband Wireless
(LMDS and MMDS)
Access
Chapter 9
Satellite
Access and Backbone
Chapter 10
Network infrastructure installed by carriers to provide

telecommunications services, can be seen as having two components
backbone carriage networks and access networks. The entire network
(backbone and access), available for use by the general public, is called
the Public Switched Telephone Network (PSTN).
First, there is the extensive customer access network (CAN), comprising
the cables (usually copper wire pairs) that connect customer premises to
their local exchange. Some of the network mainly in parts of rural and
remote Australia uses technologies such as radio or satellite. This
network, also known as the local loop or the last mile, is predominantly
owned by Telstra with other carriers connecting to it.
Second, there is the backbone, or trunk, network, predominantly
composed of optical fibre cables, which connects exchanges within and
between cities and states. Backbone carriage networks operate between
switching centres (exchanges) operated by the carriers. These may be
copper wires, radio links, fibre-optic cables, microwave or satellite links,
or a combination of these technologies.
There are also private networks which may also interconnect with the
public network.
With the rapid development of many new network technologies there are
opportunities to install new infrastructure that is more cost-effective and
better suited to the communications needs of regional, rural and remote
communities. Examples of rapidly developing options include satellite
technologies, and various kinds of wireless, land-based systems.
Each technology, wired or wireless, has its own set of advantages and
disadvantages in the customer access or backbone networks. It is
expected that over time, there will be a coexistence of the different
technologies, rather than the complete displacement of one by another.
In the fixed telecommunications arena, there are competing wireline
technologies for broadband delivery. Fibre to the home might ultimately
be the best solution but there are cost and implementation issues.
HFC is well suited to TV and broadcast style applications but more
limited in two-way interactivity potential. DSL systems on the other hand
are ideal for interactive applications with each user having their own
non-shared capacity. However, conventional DSL approaches face
problems because of the variation in length and condition of existing
copper loops. Most telcos are now experimenting with some variant of
ADSL although struggling to offer even 1.5Mbps to their customers at
present. In addition, ADSL falls well short of the bandwidth needed to
meet even the demand of near-term applications (such as HDTV and
medical imaging).
Chapters 2 to 10 provide a detailed discussion of each of the technologies
listed in Exhibit 1-3.
Exhibit 1-4 provides a summary of the advantages and disadvantages of
each of the technology.
The private networks which is not part of the PSTN network are not covered in the study. These are usually
dedicated (unswitched) connections over private lines used by the corporate and government sectors using
technologies (wired and wireless) that allow higher bandwidth than conventional copper wire.
Exhibit 1-4: Telecommunication Technology Overview and Comparison

Technology
PSTN Copper
wired
32Kbps
bandwidth
Advantages
Mature technology.
Low data speed at 32Kbps.
Ubiquity being a mature technology,

copper network is well established,
covering 99% of the Australian
population.
Low bandwidth.
As the copper network is well

established, the cost involved in
optimisation and improvement is
relatively low.
ISDN
wired
64Kbps
bandwidth
Disadvantages
Being a mature technology, it is more

widely available. About 96% of
Australia population is covered by
ISDN.
A reliable and mature technology
which is proven to support a multiple
of services. Unlike DSL, it is not a
distance sensitive technology.
Copper network is used primarily for

voice but is not suitable for high-speed
data and multimedia applications.
Low bandwidth 64Kbps, which is

only twice of that of ordinary dial up.
High equipment cost with expensive
customer premises equipment.
Global interoperability.
DSL
wired
1.5Mbps to
8Mbps
bandwidth
High bandwidth with about 1.5Mbps,

it is able to support high-speed
Internet and video services.
DSL require no new wiring as it works
on existing copper/fibre lines.
Multiplexer and modem are installed at
the supplier and user sites.
Dedicated connection unlike cable
architecture, DSL user has a
dedicated copper connection and
receives only the information they
request.
Scalability and cost effective unlike
HFC, MMDS, and optic fibre, which
must be installed on an area wide
basis, DSL installation require a
modest investment to equip serving
centres with multiplexer. DSL access
is scalable and can be deployed one
subscriber at a time as demand
increases.
Need to acquire access to the tail

ends or exchanges of incumbent
operators. This could involve time,
interconnection and operational cost.
Limited range (2km to 5km) and DSL
is not available to areas where
exchanges are out of range. Only 90%
of population in Australia is accessible
to DSL.
The performances of some DSLs
(ADSL and VDSL) are distance
sensitive. The DSL connection work
better when users are closer to
exchanges.
Sharing the copper medium which
leads to restrictions in technology and
speeds, and issues relating to
interference.
Technology
Optic Fibre
wired
10Gbps to
100Gbps
bandwidth
Advantages
Disadvantages
Greater bandwidth 10Gbps which is

unmatched by other technology. It is a
long-term solution for the future
bandwidth hungry information
superhighway society.
High deployment cost digging

trenches and laying cable involve high
costs in terms of material and labour.
Scalability and capacity with

enabling technologies like SDH and
DWDM, capacity can be increased (up
to 100Gpbs) without having to lay new
fibres.
Unlike wireless technology which is
susceptible to weather condition, there
is minimal interference in cable
technology as it is buried
underground.
HFC (Cable
Modem)
wired
768Kbps to
30Mbps
bandwidth
Provide high speed (5MHz to

450MHz) and always on service using
cable TV lines.
Cost effective a single pipe for the
delivery of all services (voice, data and
TV video).
Unlike wireless technology which is
susceptible to weather condition, there
is minimal interference in cable
technology because it is buried
underground.
Able to support network speeds
comparable to those of DSL.
Costs of building the network are sunk

before any users are connected.
Slow deployment applying for
access duct, council permit and work
involved in laying cable are time
consuming. Hence, a slower return in
investment.
Being a broadcasting technology, the

network speed upstream to Internet
will be slower than downstream to the
home or office.
Unlike some DSL services, which offer
dedicated local bandwidth, cable
modem service involves locally share
bandwidth. This means the realised
performance of a users cable will
depend on the number of user in a
particular local area.
High deployment cost digging
trenches and laying cable involve high
costs in terms of material and labour.
Costs of building the network are sunk
before any users are connected.
Slow deployment applying for
access duct, council permit and work
involved in laying cable are time
consuming. Hence, a slower return on
investment.
Technology
Cellular
wireless
9.6Kbps
bandwidth
Advantages
It provides communications on a
mobile basis. Users can take their
phones everywhere with them to make
or receive calls.
International roaming users are able
to make/receive calls while overseas.
Cellular technology can provide a
large capacity service in an area
(30km2) compared to other wireless
technology.
Microwave
wireless
35Mbps
bandwidth
Mature technology
Lower cost of deployment than wired
technology in terms of materials and
labour.
Disadvantages
Low data capability rate (9.6Kbps).
Cellular is designed mainly for voice
with limited capability for high-speed
data and video application.
High deployment cost, as it must be
installed on an area wide basis to
provide service coverage.
The need of line of sight means

coverage is dependent on geography,
weather and the density of building.
Poor weather condition (rain and
snow) could affect performance.
Speedy deployment faster network

deployment than wired technology
without the need to duct tranches and
lay cable. Hence, a rapid return on
investment.
Performance is distance dependant, to

increase network reliability; stronger
transmitters need to be located
closely.
Greater scalability unlike wired

technology where capital costs of
building the network are sunk before
any users are connected, cost only
incurred until the user is connected in
a wireless network.
Compared to Fibre (10Gbps), it has a

low bandwidth of about 35Mbps to
155Mbps.
Customer misconception that the

performance of wireless technology is
inferior to fixed technology.
Flexibility equipment can be

redeployed if customers change their
services.
Broadband
Wireless
(LMDS and
MMDS)
wireless
100Mbps
bandwidth
Lower cost of deployment than wired

technology in terms of materials and
labour.
Speedy deployment faster network
deployment than wired technology
without the need to dig trenches and
lay cable. Hence, a rapid return on
investment. A new user site can be
connected within 10 days.
Ease of deployment unlike wired
network, it requires minimal
infrastructure consists of an antenna
and NIU which are installed on the
users rooftop. It requires no rewiring
and has minimal impact on user sites.
High bandwidth which is able to
provide up to 100Mbps.
incurred until the user is connected in
a wireless network.
Flexibility equipment can be
redeployed if customers change their
services. For cable network, cost is
sunk at the moment of deployment.
The need of line of sight means

coverage is dependent on geography,
weather and the density of building.
Poor weather condition (rain and
snow) could affect performance.
Limited range (about 5 km) and the
distance is dependence on
geographical and climatic condition.
New and unproven technology which
lack test bed result, international
standard and reliability. This impairs
user acceptance.
Customer misconception that the
performance of broadband wireless is
naturally inferior to wired technologies.
Being a new technology, the
equipment cost could be high due to
the lack of mass production.
Antennas require professional
installation to work effectively, which
can increase the cost of services
significantly.
Cost involved in spectrum license
acquisition could be high.
10
Technology
Satellites
wireless
0.6Gbps
bandwidth
Advantages
Greater coverage with the potential of
covering 100% of Australian
population.
Unlike DSL and LMDS, its
performance is not distance
dependant and its suitable for rural or
remote areas.
Dedicated connection unlike cable
architecture, user has a dedicated
connection and speed wont drop
when others use it at the same time.
incurred until the user is connected to
the satellites network.
Disadvantages
High deployment cost.
Low bandwidth 0.6Gbps, compared
to fibre (10Gbps).
As a broadcast technology, which is
not designed for 2 ways
communications, satellite access
generally requires an extra line and
modem for outgoing traffic.
It is suitable to provide access
services to users 20km beyond local
exchanges. Satellite is more
expensive to deploy in metro areas
than other technologies.
Section 1-4 and Section 1-5 provide an overview of the various

technologies deployed in the customer access and backbone networks.
11
1.4
Customer Access Technology (Local Loop Network)
1.4.1
The Players
Like many countries in the Asia-Pacific, the major bottleneck in
telecommunications continues to be the link between the user and its
local telephone exchange the so-called last mile or local loop. Consisting
mostly of twisted copper pairs, these connections have offered relatively
limited speeds and data-carrying capacities.
Since the early 1990s, a wide range of new technologies have been used to
provide local access to the end-user, including optic fibre, broadband
wireless (LMDS and MMDS), DSL and laser.
Market opportunity in the local access market in Australia is sizeable
($6bn), representing about 60% of the total fixed telephone revenue.
Being an incumbent, Telstra has 90% of the access market, followed by
C & W Optus with 6%.
The declaration of the unconditioned local loop (ULL) access by the
ACCC, the spectrum auction for MMDS, LMDS and WLL, and the
increasing maturity of satellite technology, have opened up options for
new telecommunications carriers and service providers to gain access to
the customer local loop market.
Exhibit 1-5 provides an overview on the local access technologies deployed
by telecom operators in Australia.
12
Exhibit 1-5: Local Access Network Operator Overview

Technology
Operator
Launch
Coverage
PSTN Copper
Telstra
Since 1900
Nationwide (99.5% of population covered)
PSTN Copper
TransACT
1999
A local network in Canberra
DSL
AAPT
2001
CBDs in Sydney, Melbourne, Brisbane(c),

Adelaide(c), Perth(c) and Hobart(c)
60 Metro cities (2002/3)
DSL
Agile
2001
CBD areas in Adelaide
DSL
C&W Optus
(XYZed)
2000
6 CBDs (Sydney, Melbourne, Brisbane, Canberra,

Adelaide and Perth)
DSL
Davnet
Late 2000
CBDs in Melbourne and Sydney
DSL
ecom
2001
CBD and metro areas in Sydney, Melbourne and

Brisbane (constructing)
DSL
Flowcom
2001/02
Metro areas in Melbourne, Sydney, Brisbane and

Perth (planning)
DSL
iiNet
Reseller
iiNet is currently reselling Telstras ADSL service
DSL
Macquarie
2001
CBD areas in Melbourne and Sydney
DSL
Netcomm
2002
Metro areas in Melbourne and Sydney (Planning)
DSL
One.Tel
2001
Metro areas in Sydney and Melbourne (planning for

Adelaide, Perth and Brisbane)
DSL
Pacnet
Reseller
Pacnet is currently reselling Telstras ADSL service
DSL
Pahth
2002
Perth CBD (2001/2)
DSL
Primus
Early 2001
DSL
Qala
2002
CBD areas in Sydney and Melbourne (planning)
DSL
RequestDSL
Late 2000
Metro areas in Melbourne, Sydney, Perth, Brisbane

and Adelaide
DSL
Telstra
1999
Urban areas in Sydney, Melbourne, Canberra,

Brisbane, Adelaide, Perth, Darwin and Hobart,
Toowoomba, Launceston and Bunbury (40 regional
towns)
DSL
TransACT
Early 2001
Canberra Metro and Urban areas
Optic Fibre
AAPT
Optic Fibre
Agile
2000
Adelaide CBD
Optic Fibre
Amcom
(Fibertel)
1998
4 CBDs (Adelaide, Darwin, Perth and Hobart)

30 cities excluding Melbourne & Sydney in 2003
Optic Fibre
C&W Optus
1993
9 CBDs (Sydney, Melbourne, Brisbane, Canberra,

Adelaide, Perth, Darwin, Hobart and Launceston)
Optic Fibre
Davnet
1999
4 CBDs (Melbourne, Sydney, Brisbane and Perth)

Others CBDs (Hobart and Adelaide) in 2003
Optic Fibre
Ipera
2000
Newcastle Metro
Optic Fibre
PowerTel
1999
CBDs (Sydney, Melbourne, Brisbane, Gold Coast,

Canberra(p) and Newcastle(p))
6 CBDs (Sydney, Melbourne, Canberra, Brisbane,

Adelaide and Perth)
3 rural cities in Victoria (2002)
13
Technology
Operator
Launch
Coverage
Optic Fibre
Primus
2000
Optic Fibre
Smart Radio
System
2000
Cooma
Optic Fibre
Swiftel
2000
Perth CBD
Optic Fibre
Telstra
1990
CBD in Sydney, Melbourne, Brisbane, Canberra,

Adelaide, Perth and Hobart
Optic Fibre
TransACT
1999
Canberra Metro
Optic Fibre
Ue Comm
1999
CBDs (Sydney, Melbourne, Brisbane, Gold Coast

and Perth)
Optic Fibre
WorldCom
2000
Sydney CBD and Melbourne CBD
HFC
Austar
(Windytide)
1999
Darwin
HFC
C&W Optus
1995
Metro and Urban areas in Sydney, Melbourne and

Brisbane.
HFC
Neighbourhood
Cable
1999
Mildura, Ballarat, Bendigo(c) and Albury-Wodonga(c)
HFC
Telstra
1995
6 Metro and Urban areas (Sydney, Melbourne,

Brisbane, Gold Coast, Adelaide and Perth)
HFC
West Coast
Radio (iiNet)
2000
Perth (Ellenbrook area)
Cellular
AAPT
2001
(terminated)
Network deployment was terminated in 2001
Cellular
Hutchison
2000
Sydney, Melbourne, Brisbane, Perth and Adelaide
Cellular
One.Tel
2001
(terminated)
Sydney, Melbourne, Brisbane, Perth and Adelaide
Cellular
C&W Optus
1993
Nationwide (94% of population covered)
Cellular
Telstra
1987
Nationwide (96% of population covered)
Cellular
Vodafone
1993
Nationwide (93% of population covered and 100%

coverage with Globastar Satellites)
LMDS
AAPT
Early 2001
6 CBDs (Sydney, Melbourne, Canberra, Brisbane,

Adelaide and Perth)
3 rural cities in Victoria (2002)
LMDS/MMDS
AUSTAR
2001
Adelaide, Melbourne, Sydney, Brisbane, Canberra

and Perth (planning)
LMDS
C&W Optus
(XYZed formerly
Agility)
2001
CBD areas (where complimentary to its DSL and

fibre coverage) in Sydney, Melbourne, Brisbane,
Adelaide, Perth and Hobart
LMDS/MMDS
Akal
2001
Metro areas and regional Australia (planning)
Microwave
AAPT
1998
CBD and metro areas in Melbourne, Sydney,

Brisbane, Adelaide, Perth and Canberra
Microwave
Airnet
1999
A small network in Adelaide
Microwave
Agile
2000
Adelaide and regional areas in SA
Microwave
BushTel
2000
Rural and remote areas
Microwave
Datafast
2000
Melbourne CBD
Microwave
Davnet
1999
CBD and metro areas in Sydney, Melbourne, Perth

and Brisbane
14
Technology
Operator
Launch
Coverage
Microwave
Netcare (Paladin
Resources)
2000
Perth
Microwave
ntl Telecom
2000
Providing regional access in country VIC and NSW
Microwave
OMNI connect
Microwave
Pulsat
2000
Metro areas in Perth, Melbourne, Sydney and

Brisbane
Microwave
Third Rail (AMX

Resources)
2001
Tamworth
Satellite
C&W Optus
Since 1992
Rural and remote areas in Australia
Satellite
Austar
1999
Regional areas in Australia
Satellite
Bincom
Satellite
Heartland
Melbourne CBD
Rural areas in Perth

2000
c = constructing p = planning
Note:
Not all of the operators listed above have succeeded in rolling out their
network. Some operators like Heartland, Cellular One/AAPT and One.Tel
have delayed or terminated their network rollouts.
15
1.4.2
New Access Technologies

The access regime and market deregulation has resulted in the
development of access-based and facilities-based competition in the
telecommunications market. The mix of these two forms of competition
reflects the underlying characteristics of the markets where they have
developed. Looking forward, falling infrastructure costs and higher-value
services might be expected to tip the balance in favour of greater
infrastructure investment.
One of the most important developments in access technology in
Australia at the moment is digital subscriber line (DSL) technology,
offering speeds of up to 8Mbps significantly faster than existing modem
technology. DSL works by separating digital traffic from regular calls.
Equipment is installed at the exchange and the subscribers premises,
allowing data traffic to bypass the switches and achieve higher speeds.
Telstra and a host of start-up operators are launching their DSL
networks mainly in the metropolitan areas targeting business users.
(see Chapter 4)
Another local access technology gaining popularity, particularly among
new market entrants, involves providing alternative local loop access
using broadband wireless systems like LMDS and MMDS. This is
particularly attractive for new players, as it allows them to completely
avoid incumbent networks and reach customers directly. (see Chapter 9)
The ACA (2000) has found in its process of assessing the efficient costs of
providing USO services that fixed copper networks and wireless
networks were suited to providing services to customers within 20kms of
local exchanges. Satellite is suited to provide services to customers 20km
beyond local exchanges. It is therefore generally suitable for providing
telephony and data services in rural and regional areas. Satellite is
considerably more expensive to deploy in CBD and metropolitan areas
than copper and wireless local loop networks.
The declaration of the Local Loop in 2000 was a positive sign for the
industry in the context of fair access to the last mile. However, based on
the prices set for customer access to ULL copper, it is currently
uneconomical to launch a broadband access product to the residential
market segment, and of questionable feasibility to the low end of the
Small to Medium business segment.
16
1.4.3
CBD Access Network

The most intensive deployment of networks by new carriers has been in
CBDs, mainly to provide bandwidth for corporate users of data and
Internet services. Just as most backbone infrastructure has centred on
the Melbourne-Sydney-Brisbane corridor, similarly many new carriers
have built infrastructure in the CBDs of these cities (Exhibit 1-6). The
less populous cities of Adelaide and Perth have also attracted eight or
more CBD network providers, and together with the network
deployments of TransACT in the CBD of Canberra provide some
competition to Telstra and C&W Optus.
Exhibit 1-6: Carriers with Networks in Capital City CBDs (inc. planned)
Operator
Sydney
Melbourne
Brisbane
Adelaide
Perth
Hobart
Canberra
Darwin
Telstra
C/O/D
C/O/D
C/O/D
C/O/D
C/O/
D
C/O/D
C/O/D
C/O/D
C&W
Optus
O/D/W
O/D/W
O/D/W
O/W
O/D/
W
O/W
O/W
O/W
AAPT
O/D/W
O/D/W
O/D/W
O/D/W
O/D/
W
Primus
O/D
O/D
PowerTel
WorldCom
Ue Comm
O*
O*
Swiftel
TransACT
Macrocom
C/O/D
D/W
D/W
D/W
Agile
D/W
O/D/W
Davnet
O/D/W
O/D/W
O/D*/W
Pulsat
AirNet
Request
DSL
O/D/W
O/D*/
W
W
W
D
D*
D*
Netcare
D*
W
ecom
D*
D*
Macquarie
D*
D*
One.Tel
C = copper O = optic fibre

* Nearing completion
D = DSL
D*
D*
D*
D*
W = Wireless Technologies (including microwave, LMDS and MMDS)
17
The coverage and technology of the CBD networks deployed differ

between carriers. For example, some carriers (like C&W Optus and
AAPT) have rolled out fibre optic rings in one or more CBDs, others (like
Davnet and Ue Comm) have wired individual buildings, while others
have built LMDS (microwave) or mixed (fibre and microwave) networks to
service CBD customers.
There are also some niche operators which provide direct high-speed
telecommunications connection for CBD buildings through an integrated
communications infrastructure. Davnet, Ue Comm and Primus are some
of the companies focussing on the so-called building-centric local
exchange carrier (BLEC) or the in-building carrier. Such companies
provide broadband connectivity to major commercial buildings by special
arrangement with building management.
The BLEC market in Australia has been growing at about 20% to 30% for
the past two years. The growth of Internet and the increased demand for
high bandwidth applications are the major factors contributing to the
market growth.
The major dampening factors for the BLEC industry is the difficulty in
gaining access to buildings and the high access fees charged by building/
property managements in Australia.
However, since early 2001, ACIF (Australian Communications Industry
Forum), the Property Council of Australia and Telecommunication User
Groups have jointly developed a solution to look into the standardised
process for the installation of telecommunications infrastructure in multitenanted buildings. (The Building Access Operations and Installation
DR ACIF C571 is available at
http://www.acif.org.au/OCRP_WC20/dksplay/DOCUMENTS)
18
1.4.4
Metro and Urban Access Network

Telstras ubiquitous copper network serves virtually all Australian homes
and most Australian businesses. To provide for the uptake of broadband
services (such as high speed Internet, video on demand, and pay TV),
infrastructure providers are deploying a range of cable-based and
wireless networks in capital cities and major regional centres.
Both Telstra and C&W Optus have rolled out HFC cable networks, which
are now being used to deliver services other than pay TV. These services
include telephony and high speed Internet in Melbourne, Sydney and
Brisbane, Adelaide and Perth.
In Canberra, TransACT is rolling out a fibre optic network which is
planned to pass approximately 100,000 homes and 14,000 businesses
throughout the ACT (by 2001/02).
WA-based carrier. West Coast Radio has rolled out an HFC network in
the new housing estate of Ellenbrook in Perth which will eventually
have 10,500 homesites and 30,000 people in the next 15 years.
AAPT has obtained spectrum in the 28-31GHz range, and is building a
wireless LMDS network to provide high speed data services in major
metropolitan (and regional) areas where buildings are difficult to access
and deployment of fibre is uneconomic. Most recently, Agility Networks
(now XYZed, a subsidiary of C&W Optus) acquired spectrum in the
27GHz bandwidth, which it will use to roll out a LMDS customer access
network across Australia, focussing on the business districts of most
capital cities metropolitan areas and many regional centres.
Other new carriers such as Akal and AMX Communications (Third Rail
Australia) have also chosen to deploy wireless networks.
Telstra and a number of other carriers are in the process of rolling out
DSL networks to provide high-speed services over the existing Telstra
copper local loop. Most of the DSL service providers are targeting the
business market in the CBD areas. Telstra is aiming for the broadest
geographic coverage, offering wholesale and retail services, and supplying
business and residential customers, covering 90% of Australian
population by 2002.
This section is based on the report Telecommunications Competition Regulation, (www.pc.gov.au).
19
Exhibit 1-7 provides an overview on the customer access networks in the

metro areas.
Exhibit 1-7: Customer Access Networks in Capital Cities (Metro areas)
Type of Network
Carrier
Network Summary
Copper wire
Telstra
A ubiquitous fixed wire local loop network in all capital cities

and regional towns (100% coverage in metro areas).
Hybrid fibre
coaxial (HFC)
Telstra
Cable network passing 3 million homes including most of

Sydney, Melbourne, Brisbane, the Gold Coast, plus parts of
Adelaide and Perth.
C&W Optus
Cable network passing 2.2 million homes in Sydney,

Melbourne and Brisbane.
Windytide (Austar)
Cable network in Darwin (including the adjacent town of

Palmerston) passing 18,000 homes.
West Coast Radio
Rolling out a cable network in WAs largest new residential

development (Ellenbrook in Perth).
iiNet (iiTel)
Plans to jointly develop cable networks in Perth residential

estates with West Coast Radio (Broadcast Engineering
Services).
TransACT
Rolling out a fibre optic network in Canberra, with fibre to the

curb (FTTC) network architecture and VDSL technology,
passing 100,000 homes.
Ipera
Newcastle
AAPT
Rolling out a LMDS network in major metropolitan and

regional areas.
Pulsat
Metro areas in Melbourne, Perth, Brisbane and Sydney.
XYZed
(C&W Optus)
Deploying a LMDS network in metro areas of capital cities

(where complementary with DSL and fibre deployment).
Netcare
Planning to install microwave links in metropolitan area of

Perth and in the southwest region of WA.
AMX (Third Rail)
Planning to deploy a nationwide microwave network, using a

wireless local loop (WLL) for last mile delivery.
Telstra
Rolling out national ADSL services from August 2000,

targeting wholesale and retail markets.
XYZed
(C&W Optus)
Planning a national DSL rollout offering wholesale DSL

services in metro areas of Australia.
Primus
Launched ADSL services during 2000 to business (BizJET)

and residential (HomeJET) customers.
Agile
Trialing ADSL in Adelaide and Port Augusta.
RequestDSL
Rolling out DSL services in Perth and ultimately nationwide.
Flowcom
Metro areas in Melbourne, Sydney, Perth, Brisbane and

Perth.
Macquarie
Corporate
Planning to roll out DSL services in selected markets.
NetComm
Planning to roll out DSL services in selected markets.
Fibre optic
Wireless
DSL over Telstras

copper wire
Source: Productivity Commission and BIS Shrapnel.
20
1.4.5
Regional and Rural Access Network

While most of the new network infrastructure has been deployed in intercapital backbone routes, CBDs and metropolitan areas of the capital
cities, some newer carriers (like Austar, Neighbourhood Cable, Heartland
and SPT) have targeted regional and rural areas to build infrastructure.
Several carriers are rolling out HFC or fibre optic customer access
networks to deliver broadband services for example,
Neighbourhood Cable in Mildura and Ballarat and Smart Radio Systems
in Cooma.
There are also some examples of plans to deploy wireless networks and
wireless local loop solutions to deliver broadband services for example,
Akal and AMX Communications. Some other organisations have also
announced plans to roll out services in regional Australia, including:
COMindico plans to deploy Australias first pure IP network by
installing nodes in all 66 Telstra call charging areas throughout
Australia, to provide converged voice, data and multimedia services.
COMindico and Pulsat have entered into a memorandum of
understanding under which COMindicos intelligent network services
will be delivered over Pulsats wireless local loop network.
Bush Telegraph (BushTel) plans to use non-line-of-sight wireless local
loop equipment interconnected to the COMindico pure IP backbone
network to provide telephony and high speed Internet access to
regional centres in WA and the NT.
BinCom Satellite Systems based in Perth, BinCom is planning to use
a satellite-based network and VSAT equipment to provide telephony
and broadband services to rural Australia. BinCom recently announced
that it had cancelled its initial public offering because the minimum
subscription amount it was seeking to build the rural VSAT network
had not been received by the offer close date.
SouthTel is planning a fibre backbone from Sydney to Bega with
microwave extensions to Eden and smaller centres along the route.
Exhibit 1-8 provides an overview on the local access network providers in
regional Australia.
This section is based on the report Telecommunications Competition Regulation, (www.pc.gov.au).
21
Exhibit 1-8: Local Access Network Providers in Regional Australia

Type of Network
Carrier
Network Summary
Copper wire
Telstra
Fixed wire local loop networks in all regional cities and towns
(99.7% coverage in regional Australia).
Cable
Neighbourhood
Cable
HFC cable networks in Mildura and Ballarat and plans for

other regional Victorian cities, including Bendigo and AlburyWodonga.
Smart Radio
Systems
Rolling out a fibre optic network in Cooma using a fibre-tothe-home (FTTH) architecture.
Soul Pattinson
Microwave network linking Sydney and Brisbane, with

spurring to regional centres along the route.
Pulsat/Comindico
Building a nationwide wireless network to provide high quality

services to regional Australia.
Agile
Deploying a microwave network to provide broadband

services to the Coorong region, south-east of Adelaide.
iiTel
Deploying mainly wireless technologies to deliver services in

remote, regional and suburban centres in WA.
Swiftel
Plans a wireless network to service regional areas of WA and

a fibre optic rollout in Perth.
AAPT
Plans to target regional and other users with a new LMDS

network.
Netcare
Planning a microwave rollout in rural and regional areas of

WA.
AMX
Planning to deploy a nationwide microwave network, using a

wireless local loop for last mile delivery.
C&W Optus
B3 satellite is dedicated to TV broadcast. Commenced

construction of C1 satellite to provide TV, Internet, telephony
and high bandwidth data communications.
Austar
Offers a customer access network based on satellite and

wireless technologies to deliver pay TV and Internet services
to regional Australia.
AirNet
Offers an integrated satellite/wireless network (via a strategic

alliance with Auspace) to deliver high speed Internet and
other services to rural Australia
ARBT (Heartland
Communications)
Plans to provide telephony and broadband services to rural

and regional Australia using satellite technologies.
Wireless
Satellite or
combined
satellite/wireless
Source: Productivity Commission and BIS Shrapnel
22
1.5
Backbone Transmission Technology (Trunk Network)
1.5.1
The Players
Most backbone networks in Australia are now fully digital and employ a
range of transmission technologies, including optical fibre cable,
microwave radio and satellite. The long distance backbone networks
connect exchanges between cities and states.
Since 1997, many companies have established backbone optical fibre and
microwave networks, not only on the major inter-capital routes, but also
on a number of thinner regional routes. New backbone networks are
important because they provide increased bandwidth and lead to
competition among suppliers of bandwidth. Such competition would also
lower the operating costs of regional service providers.
The switching and transmission market is estimated to account for about
25% of the total fixed telephone revenue ($12bn) at around $3bn to $4bn.
Telstra is believed to capture about 65% to75% of the market, followed by
C&W Optus and AAPT.
Exhibit 1-9 provides an overview on the backbone transmission
technologies deployed by telecommunications operators in Australia.
Exhibit 1-9: Backbone Transmission Network Operator Overview
Technology
Operator
Launch
Coverage
PSTN Copper
Telstra
Since 1900
Nationwide (99.5% of population covered)
Optic Fibre
Amcom (FiberTel)
2001/2002
Melbourne-Adelaide-Perth
Optic Fibre
Nextgen
(Macquarie)
2002
Brisbane-Canberra-Sydney-Melbourne-AdelaidePerth.
(with regional coverage in VIC and NSW)
Optic Fibre
C&W Optus
1993
Sydney-Canberra-Melbourne
Sydney-Brisbane
Melbourne-Adelaide
Adelaide-Perth
Darwin-Palmerston (outsourced)
Brisbane-Cairns (outsourced)
Optic Fibre
PowerTel
1998
Sydney-Melbourne-Brisbane
Brisbane-Gold Coast
Optic Fibre
Telstra
Since 1980
13 inter-capital city routes
Optic Fibre
Reef Network
2001
Brisbane-Cairns
Optic Fibre
Australian Fibre
Network (AFN)
2002
Brisbane-Sydney-Canberra-Melbourne (with
regional spurs)
23
Technology
Operator
Launch
Coverage
Optic Fibre
Nava Network
(International
operator)
2002
Perth-Melbourne-Sydney
Optic Fibre
SouthTel
2000
Sydney-Bega (with microwave extension to Eden

and smaller centres).
Microwave
AUSTAR
2000
Regional and rural areas
Microwave
Datafast
1998
Melbourne-Geelong-Colac-CamperdownWarnambool-Portland-Mt. Gambia
Melbourne Sydney (Constructing)
Ballarat-Bendigo (Constructing)
Northern & North East VIC (Planning)
Eastern & South East VIC (Planning)
Microwave
ntl Network
2000
Cairn to Hobart (with regional spurs)

Regional towns in NSW and VIC (Tamworth,
Mildura, Dubbo, Albury-Wodonga and Griffith)
Microwave
Soul Pattinson
1999
Brisbane-Sydney-Melbourne
Brisbane-Cairns (Planned)
Microwave
Telecaster
2001
Brisbane-Townsville-Cairns
Spurs to Gold Coast and regional towns Qld
(2003)
Microwave
Macrocom
(Flowcom)
1998/9
Satellites
C&W Optus
Since 1992
Satellite
PanAmSat
(c) = constructing
Melbourne-Canberra-Sydney-Brisbane
Adelaide-Melbourne (planned)
Australia wide service
(p) = planning
According to the Productivity Commission (2001), if these planned

network deployments come to fruition, there will be eight backbone
network providers on the heaviest traffic routes Sydney-Melbourne and
Sydney-Brisbane. However, it would also mean four facilities-based
carriers on the Melbourne-Perth route, four on the Brisbane-Cairns route,
and even three providers of connectivity between the mainland and
Tasmania. While such deployments clearly provide scope for considerable
facilities-based competition, the viability of the new networks is based
upon predictions of very substantial growth in demand for bandwidth.
However, analysts are now warning of an oversupply of backbone
capacity in telecommunications infrastructure. They warn the countrys
east coast could be saturated with new telephone networks while
Australias remote areas continue to miss out. Many participants in the
study believe that some of these networks might not eventuate into fullyfledged backbone networks due to the huge investment involved.
24
Exhibit 1-10 provides an overview on the backbone networks which

connect the major inter-capital cities in Australia.
Exhibit 1-10: Carriers with Networks between Major Capital Cities
MelbourneCanberra
CanberraSydney
MelbourneSydney
SydneyAdelaide
SydneyBrisbane
MelbourneAdelaide
PerthAdelaide
Telstra
O/W
O/W
O/W
O/W
O/W
O/W
C&W
Optus
Macrocom
(FiberTel)
W*
(2002)
W*
Nextgen
O* (2002)
O*
(2002)
O*
(2002)
O* (2002)
O*
(2003)
ntl telecom
W* (2001)
W*
(2001)
O* (2001)
O*
(2002)
Operator
PowerTel
SPT
O* (2002)
W*
(2001)
O (via
Canberra)
W* (2001)
Amcom
(FiberTel)
Nava
O* (2002)
Datafast
O = Optic fibre
W*
W = Wireless Technologies (including microwave and satellite)
* Under construction or pre-construction
25
1.5.2
Backbone Network in the Eastern Seaboard

Exhibits 1-9 and 1-10 indicate that there has been a building boom in the
telecommunication industry in Australia since the market deregulation in
1997. New telephone networks to cope with the explosion in mobile and
Internet use, are thriving throughout Australias eastern seaboard.
The capacity of fibre optic networks in Australia is far outstripping
demand. The Australian Government conducted a National Bandwidth
Inquiry (2000) into Australias bandwidth capacity in mid 2000. The
inquiry found that up to 80% of optical fibre cable was not being used.
The most extensive network is that of the original incumbent Telstra,
which has fibre optic and microwave networks linking all capital cities
and main regional centres. Optus, the second largest network owner, has
a national fibre optic backbone stretching from Brisbane to Perth via
Sydney, Canberra, Melbourne and Adelaide. PowerTel, the third major
infrastructure owner, has completed its fibre optic link between
Melbourne, Sydney and Brisbane, and has also rolled out fibre optic
networks in these three capital cities.
Despite the fact that there is an oversupply of backbone network capacity,
especially in the eastern seaboard, many new operators are deploying
their respective trunk network in these areas.
Leighton which traditionally has focused on the building sector has
teamed up with Macquarie Bank Ltd and Lucent Technologies in a
$850m project to build the 8,400 kilometre network between Brisbane
and Perth.
In addition, regional operators like ntl Telecom, Datafast and Telecaster
are also expanding their microwave network in the eastern seaboard,
connecting major cities and regional towns.
International broadband developer Nava Networks is moving forward
with a US$645 million fibre network linking Singapore, Jakarta, Perth,
Melbourne and Sydney which will be completed in 2002.
26
1.5.3
Backbone Networks in Regional Australia

Other new players such as PowerTel Ltd have rolled out fibre optic cable
networks along the east coast of Australia. Perth-based
telecommunications group FiberTel/Amcom is also rolling out its fibre
network in Darwin, Perth and Adelaide. It is now pushing ahead with
plans for a high-speed east-west intercapital link.
However, regional based companies like Datafast, Austar, SouthTel and
ntl network are constructing their networks to the rural and regional
areas.
While the most extensive trunk networks are fibre optic, some carriers
(Macrocom, Soul Pattinson and ntl Telecom) have constructed microwave
backbone networks linking capital cities and some regional centres in
Victoria, NSW and Queensland.
ntl Telecommunications, announced in late 2000 it would build a
$165 million telecommunications network from Cairns to Hobart. The
network will be used for digital television and offer wholesale bandwidth
to other carriers and Internet service providers.
SouthTel (South Coast Telecommunications Consortium) comprises of
the Eurobodalla and Bega Valley Shire Councils, the Shoalhaven City
Council and the South Coast Education Network in an unincorporated
association. The consortium has formed an alliance with Access1 and
Alcatel to roll out a regional network in rural areas in New South Wales.
Satellites are not widely used to provide backbone network capacity as
they have limited total capacity in relation to optical fibres. According to
the NBI (2000) report, the capacity of each C&W Optus satellite covering
the whole of Australia is 0.6Gbps compared with the average potential
capacity from all sources into individual small towns of 160Gbps. This
trend should continue for the next five years, as the potential future
capacity of optical fibre links is likely to increase significantly faster than
future satellite capacity.
27
2.
PSTN COPPER NETWORK
2.1
General Overview
Telstras copper network consists of telephone lines between exchanges
and customer premises.
Once upon a time, Telstras telephone system was entirely analogue, and
the whole system ran over copper. However, network modernisation
completed in 1999 has fully digitalised Telstras network.
Optical fibre first introduced in 1980s, was used to link exchanges, which
left Telstra with large bundles of redundant inter-exchange copper wire.
Telstras copper network currently covers more than 99.75% of the
Australian population in the six states and two territories. The remaining
0.25% is served by radio-based telephone service in remote areas.
Australias 18.5 million people use about 10 million phone lines. Of these,
about 493,000 lines serve rural and remote areas.
Telstra uses copper wire to serve all but some 20,000 or so most isolated
customers. It serves those customers mainly with digital radio
concentrator system (DRCS), and high capacity radio concentrator
systems (HCRC) which are a microwave technology. (see Chapter 8)
Exhibit 2-1 provides an overview of Telstras telephone line in service by
area.
Exhibit 2-1: Telstras Services in Operation at 30 June 2000 (millions)
1997-98
1998-99
1999-00
Metro
Country
Total
Metro
Country
Total
Metro
Country
Total
6.242
3.523*
9.765
6.329
3.449*
9.948
6.491
3.576*
10.242
*including remote areas
28
2.2
PSTN Network Infrastructure and Coverage

Telstras copper network connects telephone lines from exchanges to
customer premises. At the end of 2000, Telstra had about 5,000 exchange
sites (about 1,000 of them are served by pair gain systems). There are
about 20 exchanges in the six major CBDs in Australia.
Exhibit 2-2 provides an overview on Telstras exchanges in various major
cities in Australia.
Exhibit 2-2: Telstras Exchange Sites (by State)
State
NSW
No. of Exchange Sites

1,579
NT
45
Telephone Lines
3.5m (including ACT)
Not Disclosed
QLD
922
1.9m
SA
517
0.8m (including NT)
TAS
201
Not Disclosed
VIC
1,101
WA
649
ACT
20
Total Australia
CBD
5,034
2.7m (including TAS)

1m
Not Disclosed
10m
20
Melbourne
Sydney
Adelaide
Brisbane
Perth
Canberra
29
Exhibit 2-3: Telstras PSTN Network Coverage National
Source: Telstra
30
2.3
PSTN Copper Network Improvement

It was reported in The Australian, October 1998 that Telstras copper
network was valued at about $14bn.
Since 1999, Telstras 10 million-line copper network is being revamped as
part of the companys plans to cope with the expected boom in demand for
second residential phone lines for Internet access and to meet new
competition for basic telephone services to home and businesses.
To facilitate the deployment of copper based xDSL technologies, Telstra
announced in mid 1999 (Asia Pulse, 25 June 1999) that it will spend
$1.8bn over the period to 2002 on its copper wire network.
DSL technology will turn Telstras copper wire phone network into a
high-speed data transfer system, allowing it to move data at speeds of
about 2Mbs, compared with only 56Kbps through a standard modem
connection. (see Chapter 4)
Telstra has set aside $600 million a year for capital expenditure on the
copper network over a three-year period. About $400 million will be
allocated over three years to repair about a quarter of the network, which
is badly degraded (AAPS News, 25 June 1999).
Telstras Consumer and Commercial Division has let $350 million worth
of contracts to 11 suppliers for the construction and maintenance of
Telstras copper network.
Exhibit 2-10 provides an overview on Telstras PSTN copper network.
31
Exhibit 2-4: Telstras PSTN Copper Network

1999
2000
2001
2002
Coverage
Nationwide
(99.7%
population)
Nationwide
(99.7%
population)
Nationwide (99.75%
population)
Nationwide (99.75%
population)
Infrastructure
4150 exchanges
4150 exchanges
4150 exchanges
4150 exchanges
680,000km cable
680,000km cable
680,000km cable
680,000km cable
9.75m lines
10m lines
10.1m lines
10.2m lines
Investment
$14bn (estimated
value
accumulative)
$600m
($1.8bn = 20002003)
$600m
($1.8bn = 20002003)
$600m
($1.8b = 20002003)
Equipment
supplier
Alcatel, Philips,
Ericsson, Lucent,
NEC, Siemens,
Cisco, Pirelli and
Nortel
Alcatel, Philips,
Ericsson, Lucent,
NEC, Siemens,
Cisco, Pirelli and
Nortel
Alcatel, Philips,
Ericsson, Lucent,
NEC, Siemens,
Cisco, Pirelli and
Nortel
Alcatel, Philips,
Ericsson, Lucent,
NEC, Siemens,
Cisco, Pirelli and
Nortel
Service and
Application
Voice and Data
Voice and Data
Voice and Data
Voice and Data
Bandwidth and
Data Speed
0.3 to 3.4KHz
0.3 to 3.4KHz
0.3 to 3.4KHz
0.3 to 3.4KHz
Strategy and
Focus
All users in all

areas in Australia
All users in all

areas in Australia
All users in all areas

in Australia
All users in all areas

in Australia
32
3.
ISDN NETWORK
3.1
Technology Overview
ISDN stands for Integrated Services Digital Network. The ISDN is a
digital communications network service which uses the same copper wire
lines used for standard (analogue) telephone services. ISDN services
enable end-users to send and receive information at faster speeds and
with greater reliability than is possible using the standard telephone
service. ISDN services are used for the carriage of information such as
voice, data, high quality sound, text, still images and video.
ISDN was designed around the notion of separate channels at 64Kbps.
This number springs from the fact that 64Kbps is essentially the data
rate at which the analogue lines are sampled at (8000 samples per
second, 8 bits per sample) for the phone companys ISDN. ISDN is
essentially combinations of these channels, and also slower 16Kbps
channels, used only for signalling. The 64Kbps channels are called
B channels. The 16Kbps channels are called D channels.
There are two main interfaces Basic Rate and Primary Rate. The Basic
Rate Interface is intended for home use, and Primary Rate is intended for
businesses. The Basic Rate Interface (BRI) is designed to carry the most
data consumers can possibly send to the home through existing copper
phone lines. The Primary Rate Interface is designed for businesses with
larger data needs, or with the need to set up their own local phone
system. It is generally just a much faster connection to the phone
company, with several B channels.
Applications for ISDN services include:
data transfer
telephony
Internet access
PABX networking
video conferencing, and
telecommuting.
33
How Does an ISDN Network Work?

Telstra supplies ISDN services to both end-users and service providers.
Where service providers have access to their own transmission networks,
they purchase short distance ISDN services to use as customer access
tails. The access tail services supplied to service providers are similar to
the eligible ISDN services. In essence, they are carriage services using
that part of the network which connects end-users premises to an
exchange (that is, the customer access network). They are joined with the
service providers networks to create an end-to-end service as shown in
Exhibit 3-1.
Exhibit 3-1: Access Tails Joined to a Service Providers Network
Source: ACCC (1998)
The early days of ISDN saw the evolving technology developed along
proprietary lines. In the US the two competing camps were AT&T with its
5ESS switch and Northern Telecom and the DMS100. Both products were
rolled out at approximately the same time with similar features and
options. As the product was placed on the network there were some
compatibility issues.
The Australian ISDN was implemented in 1988 prior to the presence of a
second carrier. Australians have therefore been fortunate to have a single
set of protocols and interfaces from any location in which ISDN is
provided, thus avoiding some of the problems associated with
incompatibility, in certain other countries. Unfortunately, the set of
protocols used were different to every other ISDN service. Recognising
this as a major impediment to the industry, Telstra migrated its platform
towards the European ETSI ISDN standards, called Euro-ISDN, in 1995.
34
3.2
The Deployment of ISDN in Australia

ISDN is a digital communications service which enables the end-user to
send and receive information at faster speeds and with greater reliability
than is possible using the analogue carriage service of the PSTN network.
Telstra operates the only ISDN in Australia. Telstra has expanded its
ISDN capacity in line with the licence conditions under s.66 of the
Telecommunications Act 1997. Specifically, the licence condition requires
Telstra to be in a position to make available:
within 90 days of a request, a carriage service that provides a digital
data capability broadly comparable to that provided by a data channel
with a transmission speed of 64kilobits per second supplied to endusers as part of the designated basic rate ISDN service:
by 1 July 1997 to at least 93.4% of the Australian population; and
by 31 December 1998 to at least 96% of the Australian population.
Exhibit 3-2 below provides an overview on Telstras ISDN network.
Exhibit 3-2: Telstras ISDN Network Overview
Operator
1999
2000
2001
2002
2003
Coverage
CBD, Metro,
Urban and
Rural areas
CBD, Metro,
Urban and
Rural areas
CBD, Metro,
Urban and
Rural areas
CBD, Metro,
Urban and
Rural areas
CBD, Metro,
Urban and
Rural areas
Population
Covered
1998 (95%)
1999 (96%)
96%
96%
96%
96%
ISDN Circuit
(basic rate
only)
95,000*
128,000*
130,000 to
160,000*
Not disclosed
Not disclosed
ISDN Channel
or User (both
basic and
primary rates)
1998
(600,000)
1999
(850,000)
1,100,000
1,300,000
(estimated)
1,350,000
1,350,000 to
1,400,000
Bandwidth
Capacity
Basic Rate
(2x64kbps,
1x16kbps)
Primary Rate
(2Mbps)
Basic Rate
(2x64kbps,
1x16kbps)
Primary Rate
(2Mbps)
Basic Rate
(2x64kbps,
1x16kbps)
Primary Rate
(2Mbps)
Basic Rate
(2x64kbps,
1x16kbps)
Primary Rate
(2Mbps)
Basic Rate
(2x64kbps,
1x16kbps)
Primary Rate
(2Mbps)
Investment
$200m (by
1994)*
$300m (19952000)*
$600m $700m*
(accumulatively)
Network
Equipment
Supplier
Ericsson and
Alcatel
Ericsson and
Alcatel
Ericsson and
Alcatel
Ericsson and
Alcatel
Ericsson and
Alcatel
*BIS Shrapnels estimates
35
Number of ISDN Services at 1999-00

The number of Telstra basic rate ISDN services installed at
30 March 2000 was 125,013, compared with 73,028 services installed at
30 June 1998. Very few basic rate ISDN services are utilised by
residential customers.
Telstra has provided a separate measure of ISDN service penetration
the number of installed digital data equivalent lines (Exhibit 3-3). This
measure is derived by multiplying the number of ISDN services in
operation by a factor based upon the number of 64Kbit/s data channels
provided by the type of ISDN service. For example, a basic rate ISDN
service (OnRamp 2 and Microlink) is multiplied by two as it provides two
64Kbit/s channels, whereas a primary rate ISDN service (OnRamp 30 and
Microlink) is multiplied by a higher figure, owing to the greater number
of 64Kbit/s channels provided by primary rate ISDN services.
Exhibit 3-3: Telstra Digital Data Equivalent Lines
State/Territory
Number of digital data equivalent lines as at June 30 2000
NSW/ACT
419,169
Vic/Tas
278,300
WA
98,593
SA/NT
79,076
Qld
Total
173,670
1,048,808
Source: Telecommunications Performance Report (2000)
This section is based on Telecommunications Performance Report (2000).
36
3.3
ISDN Network Rollout

The Deployment of Telstras ISDN Network
Telstra was one of the first telecommunications carriers in the world to
introduce ISDN starting in 1988. The initial introduction of a primary
rate service called Macrolink was followed by the introduction of
Microlink, a basic rate service providing two 64Kbit digital channels and
a 16Kbit signalling/packet data channel.
Telstras ISDN services are offered using two distinct networks namely,
the overlay network and the ETSI network. Each network is described
below.
The overlay network is based on a discrete network (separate from the
PSTN). This network has been in operation since 1989 and, as at mid1998, provided connections to over 400,000 PSTN basic access line
equivalents. It is to be phased out in 2000.
The ETSI network, on the other hand, is integrated with the existing
PSTN infrastructure. It is designed according to the standards of the
European Technical Standards Institute (ETSI) and was introduced in
1997 as OnRamp.
With each network, terminal adaptors are located at customer premises
in order to enable end-users to send and receive information over the
network. As the overlay network is phased out, terminal adaptors which
are not compatible with the ETSI network will need to be replaced.
These services are provided by a $200m overlay exchange network which
extends out to user exchanges using a custom designed remote server
known as a BMUX, connected by a 2Mb/s primary rate access to the
overlay network node. The BMUX can only be provided at exchanges with
digital transmission available to the rest of the network. In addition, on
cost grounds, a BMUX is usually not installed until at least 5 orders have
been received for Microlink ISDN service at that exchange.
By 1996, there were over 36,000 Microlink Services (basic rate ISDN)
connected via 3,900+ BMUXs and more than 8,100 Macrolink Services
(primary rate ISDN) in operation on the overlay network. The number of
BMUX based services peaked in mid 1997 and has declined thereafter, as
the ETSI based OnRamp substituted Microlink in the market.
37
Following OnRamps introduction, new ISDN customers are being served

primarily by the new Future Mode of Operation (FMO) network and ETSI
based ISDN service capabilities. Also existing Microlink customers have
progressively migrated from Microlink to the OnRamp ISDN service.
Migration from Microlink to OnRamp requires a telephone number
change for the customer. In addition, a modification to the customer
premises equipment to allow for compatibility with the new OnRamp
Service may have been required in some cases. It is our understanding
that the migration is due to be completed by 2001/2002.
The Migration of ISDN Network to ETSI Standard
As part of Telstras strategic planning process, it created a vision for the
future which it called its Future Mode of Operation (FMO). The FMO
incorporates fundamental changes to its Present Mode of Operation.
As a result of this network infrastructure, managing, operating and
extending ISDN had become complex and expensive. The FMO directly
addressed these concerns by creating a composite network in which a
single network of switches will support both telephone and ISDN
services.
Telstras ISDN service had been developed as a separate network to the
PSTN. At certain locations there were connections between the two
networks in order to enable interoperability. This dual/integrated
network is sometimes called an overlay network ISDN overlays the
existing telephone network but they remain two separate networks.
Exhibit 3-4: Telstras ISDN Network Migration from an Overlay Network
to a Composite Network
Source: ACCC (1998)
This section is based on the Telstra ISDN Review (1998)
38
Telstras existing ISDN network was further complicated by the fact that
basic rate access Microlink, was not provided directly from the ISDN
exchanges. Basic rate is provided by a purpose-built device called a
B-MUX which was connected to the exchange via Primary Rate Interface
(PRI). Each B-MUX supports up to fourteen Basic Rate Interface (BRI)
ports.
In December 1994, the Telstra Board approved $300 million to rebuild its
ISDN network over the next five years. The decision was based on the
recognition that Telstra needed to expand its network and move to
international standards to meet the rising demand for ISDN services.
From 1996, new switches provided ISDN services based on international
ETSI standards, Macrolink and Microlink services continued to be
supported by Telstra to 2000 and existing customers were being migrated
to ETSI ISDN progressively.
The major benefit of the network upgrade to Telstra was that it would be
better positioned to satisfy market needs and demands more costeffectively. In particular, the Composite Node network enabled Telstra to
provide ISDN wherever there is a telephone exchange. Previously, it
required either a special ISDN exchange or a B-MUX to be within about
5 kilometres of the customer and this often cannot be cost-justified. As a
result, the penetration of ISDN had been restricted.
By supporting international ETSI standards, Telstra made it less costly
for international CPE manufacturers to make their products available in
Australia. Increased competition in the CPE environment has lowered
prices and increased the number of applications which can use ISDN.
The national network deployment profile of FMO, ETSI ISDN and BMUX
as at 1999, as provided by Telstra, is summarised in the Exhibit 3-5. This
is based on the accelerated FMO program that has been agreed between
Telstra and the Government. This shows that by July 1997, 25% of
exchange sites nationally, representing 58% of PSTN lines were equipped
to provide ETSI ISDN (On Ramp service) within normal provisioning
periods.
39
Exhibit 3-5: ISDN Deployment by Sites and Services at 1997-1999

% of sites at
1997
% of
services at
these sites
1997
% of sites
1998
% of
services
at these
sites 1998
% of Site
1999
(estimated)
% of
Service
1999
(estimated)
FMO sites with

ETSI ISDN
25%
58%
72%
86%
90%
95%
FMO sites
without ETSI
ISDN with
BMUX
17%
9%
8.5%
2%
2%
0,5%
non FMO sites

with BMUX
2%
2%
0.6%
0.6%
Nil
Nil
Total sites
offering basic
rate ISDN
44%
69%
81%
89%
95%
97%
FMO sites
without ETSI
without BMUX
25%
13.6%
12.5%
3.3%
1%
0.5%
non-FMO sites
without BMUX
but with digital
transmission
16%
14.5%
5.5%
7.5%
1%
0.5%
Total sites with

digital
transmission
but no ISDN
capability
41%
28%
18%
11%
5%
3%
Sites without
digital
transmission
16%
3%
1.4%
0.3%
Nil
Nil
Total sites/
services
5037
9.539m
5027
10.020m
5,000
10.40m
Source: Telstra ISDN Review (1998) and BIS Shrapnels estimates.
40
3.4
ISDN Service Applications and User
3.4.1
Telstras ISDN Service Offering

ISDN services enable end-users to send and receive information at faster
speeds and with greater reliability than is possible using the standard
telephone service. ISDN services are used for the carriage of information
such as voice, data, high quality sound, text, still images and video.
Telstras ISDN services are targeted at the business sectors, especially
large corporate. At the end of December 1998, Telstra had 648,000 ISDN
channels in operation, which increased by 48% during 1999 to reach
964,000 channels.
The service had been largely marketed to business customers, such as the
corporate and government sectors. However since early 1999, in view of
the growth of Internet, Telstras ISDN service has began to address the
small and medium businesses.
Telstras ISDN provides a range of voice and data business solutions
including telephony, fax, file transfer, Internet access, access to the
corporate LAN and video conferencing.
Voice Communication
OnRamp supports voice communication by phones or phone systems providing fast call connections and clear voice quality. OnRamp provides
features such as Direct Indial, Multiple Number, Easycall features like
Call Waiting and Line Hunt that help users manage their calls.
For the small home office, an OnRamp service with Multiple Number
provides extra phone numbers to differentiate between business and
personal calls. One OnRamp service provides two digital lines for two
simultaneous phone conversations - or talk on one line and still receive a
fax or access the Internet on the other. Larger businesses can use larger
OnRamp services with 10 digital lines or more for phones and data
requirements.
41
Internet Access
The Internet has been called information at your fingertips, yet as the
Internet moves increasingly to sound, image and video content, standard
modem connections are proving too slow. At 128 Kbps, OnRamp can
provide Internet access much faster than conventional modems, which
means less time waiting for connection to the internet or files to download
and more time available for working.
Telecommuting
In addition to its telephone and fax facilities, OnRamp provides high
speed access to central office resources for regional offices and
telecommuters, enabling all employees to share the same facilities and
function better as a team.
Video Conferencing
Video conferencing provides the facilities for live full colour video and
audio communication between people situated in two or more locations.
Image Transfer
OnRamp provides fast data transmission to industry sectors with such
applications, specifically the pre-press graphics industry, the health
sector and construction industry.
LAN Interconnection
Office Local Area Networks (LANs) have become part of the modern
working environment with their ability to help staff share information
and work better together, but their advantage can be lost as a business
expands to new locations.
Staff working from home (telecommuters) and channel partners are also
disadvantaged by the loss of access to shared information.
OnRamps high speed digital transmission and instantaneous call set-up
speeds up the flow of information and allows all staff whether
telecommuters or channel partners - to work together more effectively.
42
3.4.2
Telstras ISDN Users

Corporate User
A study by STM Consulting and Bellcore (1998) showed the percentage of
services in operation that belong to Corporate & Government (C&G)
customers. C&G customers are Telstra customers with a total Telstra bill
size exceeding a specified amount. At the end of 1999, more than 95% of
the ISDN customers belonged to the commercial, business and
government sectors. Residential users accounted for less than 5%.
It is a common understanding in the Australian market that the skewing
of basic rate ISDN demand to corporate customers relates to its use
almost entirely for intra-corporate communications (eg, semi-permanent
connections and LAN/WAN connectivity). The same is believed to apply to
commercial customers; these tend to be larger multi-site customers with
internal/inter-site communications requirements. For this reason, at this
stage basic rate ISDN demand tends to occur only at centres which are
large enough to have branch offices of large corporates and medium sized
enterprises.
In Australia, as in other countries, Internet access requirements are
expected to stimulate demand for basic rate ISDN in the residential and
small business sectors, which today effectively have no real application
for ISDN. However, the pricing of ISDN is prohibitively high for small
business and residential users.
However, with the introduction of xDSL technology in 2000/2001, with its
faster access speeds (up to 8Mbps) and the ability to use existing copper
infrastructure, ISDN has a formidable competitor. In addition, HFC,
LMDS and FTTC are also some of the competing technologies for ISDN as
a high-speed access network solution.
In fact, Telstra has introduced xDSL as migration path for ISDN. ADSL
(asymmetric digital subscriber line) promises 8Mbps Internet access to
anybody within 1.5km of a telephone exchange.
In June 2000, to fight the entry of xDSL, Telstra launched a new ISDN
data service. It targets small office home office (SoHo), micro-business,
and residential users.
43
Exhibit 3-6: Telstra Basic Rate ISDN Demand Forecast (Microlink and On Ramp)
1996
(actual)
1997
(actual)
1998
(actual)
1999
(actual)
Microlink
36,330
44,358
30,000
10,000
300
OnRamp
27,825
70,000
90,000
128,000
130,000 to
160,000
36,330
72,183
90,000
100,000
128,500
130,000 to
160,000
Annual growth
percentage
60%
99%
30%
12%
30%
15%
Percentage of C&G
services
78%
72%
65%
60%
55%
50%
Total
2000
2001
0
Source: STM Consulting, Telstra ISDN Review (1998) and BIS Shrapnels estimates
Data Applications
Data applications (in terms of call minutes) account for more than 85% of
the ISDN network traffic. However, in terms of number of calls, voice
accounts for 75% of the total calls made.
Inter-business applications (such as videophone and videoconferencing)
which use 64Kb/s (or nx64Kb/s) end-to-end connectivity, have yet to be
adopted on a significant scale.
Telstra considers further disaggregation of its traffic volume of ISDN
network to be commercially sensitive.
Rural ISDN Demand
Anecdotal evidence was presented to suggest that existing ISDN services
in rural areas are exclusively in larger towns and are most likely to be
part of the telecommunications facilities of a large corporate or
government organisation. Such demands only occur in larger towns where
there are government institutions such as hospitals and educational
facilities, and branches of large businesses, such as banks and the post
office. This reflects the current dominant application of basic rate ISDN
which is for intra-corporate communications.
Data from Telstra on the deployment of BMUX and Microlink shows that
rural penetration of Microlink is about 0.2% of telephone services in rural
areas, about half the national total (0.4% of services). Furthermore about
three quarters of rural Microlink services are in exchanges having more
than 1,000 lines (ie, the larger rural centres). The 77% of rural exchanges
which have less than 500 lines in total have only 34 Microlink services
(1.2% of the rural total).
44
3.5
Market Perspective
3.5.1
ISDN is a Service for Large Corporate Pre Internet Boom

Back in the late 1980s and early 1990s, ISDN was heralded as the highspeed access network technology of the information superhighway, with a
maximum non-compressed data speeds of up to 128Kbps.
However, it was mainly utilised by large corporates, government units
and businesses for their inter-office and LAN connections. It lacks the
applications for small business and residential users. In addition, the
value proposition for ISDN benefit compared to price resulted in
limited take up by the small to medium businesses, let alone residential
consumers. The fact that Telstra operates the only ISDN network in
Australia has also prevented competition in delivery of the service.
Despite network coverage of 96% by 1998, ISDN has failed to achieve
wide adoption.
In 1998, the ACCC said ISDN prices in Australia were high by
international standards, citing the Asia-Pacific Telecommunications
Index from the National University of Singapore that indicated Telstra
ranked first for IDD pricing but eighth for its ISDN pricing. However,
Appendix A provides an overview on ISDN pricing in various countries
which suggested that Telstras ISDN pricing is reasonable.
Telstra competes with other carriers and service providers in
international traffic but no carriers have the underlying network to offer
a different ISDN tariff.
The ACCC report (1998) also quoted from a study by Siemens, a German
electronics corporation, which showed that Australia had a penetration of
0.61% of ISDN in 1997, compared with Germanys 8.69%, Switzerlands
5.3%, the Netherlands 3.08%, Japans 2.57%, Frances 2.54% and the
UKs 2%.
45
3.5.2
Internet Boom Drives ISDN Adoption

However, with the arrival of the Internet in the mid 1990s, demand for
higher bandwidth has breathed a new life into the ISDN service,
especially in the small and medium business.
Since early 1999, Telstra has been addressing the need for an ISDN
service in the small and medium businesses. The number of ISDN
channels (both basic and primary rates) in operation increased by 48%
from 648,000 channels in 1998 to 964,000 channels in 1999.
xDSL and other technologies now provide competition for ISDN.
3.5.3
Competing Technologies DSL and LMDS

In fact, Telstra has introduced xDSL as a migration path for ISDN while
competitors are introducing xDSL services. Some xDSL operators believe
the 30,000 or so ISDN users (mostly SME) are likely to convert to ADSL.
(see Chapter 4)
In June 2000, to fight the entry of xDSL Telstra has launched a new
ISDN data service. It targets small home office (SoHo), micro-business,
and residential users. The remodelled OnRamp Business Highway was
launched on 19 June 2000. ISDN voice and data calls are fixed at
Australian local rates, with a flat rate of A$1 an hour for data calls, timed
per second, and a A$0.15 connection fee. Previously all calls were charged
by time and distance. Telstra is cutting ISDN costs to better compete in
the small-end data market against new high-speed copper-wire
technology, ADSL, and cheaper cable Internet services.
However, Telstra is confident that ISDN still has a future, despite
competition from other access network technologies. An attraction of
ISDN is that it is an all rounder because it can enable so many
applications and is well suited for international data traffic and video
conferencing.
PC Week Australia (17/7/2000) page 22.
46
Some of the advantages of ISDN technologies are:

wide coverage (96% population covered)
high quality of service (unlike xDSL technology which is distance
sensitive)
guaranteed data throughput
global interoperability.
However, ISDN loses its appeal when compared to the advanced
technologies like xDSL, LMDS and fibre optic which boast a higher
bandwidth (2Mbps to 1Gbps).
According to Telstra (as per Exhibit 3-6), the market grew strongly in
2000 with a growth rate of 30%. However, being a mature product with
competition from new technologies like xDSL, Telstra expects the market
to level off in 2001/2002. The diagram below provides an overview on the
maturity curve for DSL technologies.
Exhibit 3-7: Maturity Curve for DSL Technologies
ISDN
HDSL
M
a
r
k
e
t
ADSL
VDSL
Emerging
Growing
Mature
Declining
Source: RHK 2000
Future development of ISDN service will be on capacity expansion rather

than product expansion since ISDN is a mature product. The exhibit
below provides an overview on Telstras ISDN forecasts.
47
Exhibit 3-8: Telstras ISDN User Forecasts

ISDN User (both
basic and primary
rate)
1600
1,300
1,350
1,350
1,100
1200
850
800
600
400
0
1998
1999
2000
2001
2002
2003
Source: RHK (2000) and BIS Shrapnel
48
4.
CONDITIONED PSTN TECHNOLOGY

DSL NETWORK
4.1
DSL Technology Overview

Digital Subscriber Line (DSL) is the generic name for a technology that
uses complex modulation schemes to extend wideband and broadband
services over copper pairs. Copper-based wideband service delivery
systems are highly attractive to operators because of its universal
deployment. Unlike HFC, MMDS, and FTTC systems, which all must be
installed on an area-wide basis, DSL installations require a modest
investment to equip serving wire-centres with a digital access
multiplexer/concentration (a DSLAM). DSL access then occurs one
subscriber at a time. This allows network operators to delay committing
dollars to wideband service provisioning until demand for these services
has been demonstrated by subscribers.
The DSL family tree includes two main branches symmetric and
asymmetric. Symmetric DSL services provide identical data rates
upstream and downstream; asymmetric DSL provides relatively lower
rates upstream but higher rates downstream.
As xDSL technology continues to evolve to support emerging applications,
the list of new service delivery technologies continues to grow. The most
important xDSL standards are:
ISDN (Integrated Services Digital Network) or IDSL
an established single-pair technology, providing 128Kbps over a single
pair. (see Chapter 3)
HDSL (High-speed Digital Subscriber Line) a well-established
and successful two-pair technology, providing T1 circuits over copper at
twice the standard T1 repeater spacing distance. HDSL provides
circuits over loops up to 3k without repeaters, and up to 8k with
repeaters.
SDSL (Single Line Digital Subscriber Line) or SHDSL
a technology that delivers the same data rates and distance as HDSL,
but on a single copper pair. It is desired for any application needing
symmetric access (such as services and power remote LAN users).
49
ADSL (Asymmetrical Digital Subscriber Line) as its name

implies, ADSL transmits an asymmetric data stream, with much more
were going downstream to the subscriber (2Mbps) and much less going
back/up (768Kbps). It is really intended for the last leg into a
customers premises. It targets asymmetric applications like VOD,
Internet access and home shopping.
VDSL (Very-high-rate Digital Subscriber Line) VDSL is an
asymmetric transceiver at data rates higher than ADSL but over
shorter lines (1.5km). Its downstream speed could be as high as
13-52Mbps while its upstream speed is 1.6-2.3Mbps.
Exhibit 4-1 provides an overview on the functions and capability of the
various DSL technologies.
Exhibit 4-1: Copper Access Transmission Technologies (DSL)
ISDN (IDSL)
Data rate
160Kbps
HDSL
SDSL
ADSL
VDSL
1.5-2Mbps
(Upstream)
1.5-2Mbps
(Upstream)
768Kbps
(Upstream)
1.5-2.3Mbps
(Upstream)
1.5-2Mbps
(Downstream)
1.5-2Mbps
(Downstream)
2-8Mbps
(Downstream)
13-52Mbps
(Downstream)
Mode
Symmetrical
(Duplex)
Symmetrical
(Duplex)
Symmetrical
(Duplex)
Asymmetrical
Asymmetrical
Distance
6km
Up to 5km
Up to 4.5km
Up to 2km
Up to 1.5km
Typical
Applications
ISDN, voice and

data
communications
T1/E1 service,
WAN & LAN
access,
Service access,
Internet access,
Connection of
cellular base
stations, video
conferencing
Same as
HDSL plus
premises
access for
symmetric
services
Internet
access, Video
on demand,
Interactive
multimedia
Full service
access (same
as ADSL plus
HDTV and
medical
imaging)
Source: RHK (1999)
Appendix B provides a wider range of DSL technologies and their

characteristics.
50
DSL technologies are expanding at different paces

Although techniques are similar for all DSL modems, products have
emerged in the marketplace at different rates. Exhibit 4-2 illustrates the
relative maturity of the main DSL technologies: ISDN is mature, HDSL is
growing, ADSL is evolving, and VDSL is in its infancy.
Exhibit 4-2: Maturity Curve for DSL Technologies
IDSN
HDSL
M
a
r
k
e
t
ADSL
VDSL
Emerging
Growing
Mature
Declining
Source: RHK (2000)
The more mature HDSL is currently being deployed by many operators in

Australia, including Telstra, XYZed and Primus. Being a symmetric
system with 1.5Mbps-2Mbps both upstream and downstream, HDSL is
primarily for business connectivity services (PBX network connection,
cellular antenna station, private data network).
ADSL was trialled by operators at Telstra exchanges since early 2000. It
is being deployed by Telstra, RequestDSL and AAPT in metro areas in
major capital cities. ADSL, being an asymmetric system, is more suitable
for high-speed Internet access and some video applications. Although
ADSL is also suitable for broadband Internet for the residential and
consumer users, current perceived high ULL pricing may deter ADSL
adoption in these segments, according to operators who participated in
the study.
This section is based on RHK (2000) Access Network System
51
SHDSL attempts to improve on HDSL by requiring only a single line and

by integrating low-level services of interest to small business. It suits the
market for individual subscriber premises, which are often equipped with
a single telephone line. XYZed and RequestDSL are planning to install
SHDSL by the end of 2001. The SHDSL technology is considered more
appropriate for business grade services, voice applications, point of
presence (POP) applications and is also ideal for tails from exchanges to
points of presence.
VDSL is a next generation, high bandwidth access technology currently in
deployment. It is capable of providing full service access (same as ADSL)
plus HDTV and medical imaging service. TransACT, a Canberra based
company, is the only operator in Australia that is taking a quantum leap
in deploying a VDSL network.
How does an ADSL Network Work
Telstras ADSL architecture is depicted in the following diagram. The
equivalent to a modem rack for ADSL is something called a Digital
Subscriber Line Access Multiplexer (DSLAM) which is a rack of ADSL
line cards with data multiplexed into a backbone network interface/
connection (T1, OC3, DS3, ATM or frame relay). Telstra utilises an
Alcatel DSLAM for ADSL access. (Note: ADSL equipment is different to
HDSL equipment.)
Exhibit 4-3: ADSL Access Network
Source: Telstra
Section 1.3 provides an overview on DSL technology for

telecommunications network in comparison to other technologies.
52
4.2
The Deployment of DSL in Australia
4.2.1
The Launch of DSL

Telecommunications in Australia, since deregulation in 1997, has
undergone a dramatic transformation from an industry with limited
choices of service provider to one in which there are now more than
70 ULL licensed carriers.
On 4 August 1999, the ACCC declared access to Telstras local network,
the last part of Telstras original network monopoly, allowing competitors
direct access to its copper lines that connect customers to local telephone
exchanges. The decision was made to enable Telstras competitors to
provide local and long-distance services as well as advanced high-speed
services to customers at lower prices.
In August 2000, Telstra opened its telephone exchanges to any carrier
wishing to deploy equipment facilitating high-speed data transmission
over copper wire. Although Telstra fully owns the copper network, the
ACCCs declaration requires Telstra to rent it out as unconditioned local
loop (ULL) which means without a dial tone, to ADSL competitors.
Unbundling of the local loop was perhaps the most important
development in the local access market not only for the
telecommunications industry itself but also for Australian businesses and
residential users.
Since late 2000, the DSL market has developed with Telstra announcing
the first commercial deal which allows access to the companys copper
customer phone lines. RequestDSL became Telstras first wholesale ULLS
(unconditioned local loop service) customer in September 2000.
Many new companies are rushing to compete with Telstra in the
estimated $2 billion market for high-speed access. C&W Optus subsidiary
XYZed launched its wholesale DSL service nationwide, and
Primus Telecommunications launched its DSL service in August 2000.
Exhibit 4-4 provides an overview on the xDSL local access network
deployment in Australia.
53
Exhibit 4-4: XDSL Operator Overview

Operator
Development Status
Trial in late 2000
AAPT
Standard
Coverage
ADSL
CBDs in Sydney,
Melbourne, Brisbane(c),
Adelaide(c), Perth(c) and
Hobart(c).
60 metro cities (2002/3)
Deployment in early
2001
Agile
Launched in early 2001
ADSL
Adelaide CBD
C&W Optus (XYZed)
Deployment in late 2000
HDSL, SDSL and

ADSL,
Sydney CBD
Service was launched

early 2001
Melbourne CBD
Brisbane CBD
Perth CBD
Davnet
Deployment in 2000
HDSL
Melbourne CBD and

Sydney CBD
FlowCommunications
(Macrocom)
2001/02
ADSL
Metro areas in Melbourne,

Sydney, Brisbane(p) and
Perth(p)
IiNet Limited
Reseller
Netcomm
Reselling Telstras ADSL

service
ADSL
Service to be launched
in mid 2001
Sydney CBD (2001)

Melbourne CBD (2001)
Other capital cities
(2002)
One.Tel
Planned to construct
DSL network in 2001
which was terminated in
mid 2001
Pacific Internet
(Pacnet)
Trial in late 2000
Pahth Telecom
Plans to construct DSL

network in 2001
ADSL
Perth Metro (2001)

Adelaide (2002)
Primus
Constructing DSL
network in 2001
HDSL
ADSL
Sydney CBD
Qala
2002
ADSL
Sydney and Melbourne
RequestDSL
ADSL and SHDSL

Sydney, Brisbane,
Adelaide and Perth
ADSL

Sydney, Adelaide(p),
Perth(p) and Brisbane(p)
Reselling Telstras ADSL
service
Reselling Telstras
service in early 2001
Service was launched

early 2001
Melbourne CBD
Telstra
Launched in 1999
ADSL and HDSL
Urban areas in Sydney,

Melbourne, Canberra,
Adelaide, Perth, Darwin
and Hobart, Brisbane,
Toowoomba, Launceston
and Bunbury (60 regional
towns)
TransACT
Deployment in early
2001
VDSL
Canberra Metro
(c) = constructing (p) = planning
54
There are also some non-exchange based DSL services that are offered by
Davnet, Intelligent Public Networks and Smarter DSL. These utilise the
old Telstra service PAPL (Permitted Attached Private Line).
Although many companies are expressing interest in entering the local
access market utilising xDSL technology, many indicate they will not be
actually deploying their own networks. This is claimed to be the case for
the following reasons.
Firstly, the xDSL equipment is costly and many of start-up companies do
not have the appropriate funding levels to finance the network roll out.
Secondly, the ULL pricing is too high for participants to make a business
case, at this stage.
Thirdly, many of these companies do not have the critical mass to secure
the user base necessary to break even.
It is therefore believed Telstra will remain the major player in the xDSL
network with access to exchanges and an established user base. XYZed,
which has installed DSLAM in more than 100 exchanges, is expected to
be the major competitor to Telstra. RequestDSL with 88 exchanges (by
end of 2001) is also a major DSL service provider.
55
4.3
DSL Network Rollout

The deregulation of the local access network with the unbundling of the
local loop in late 1999 has attracted a list of carriers to invest in the
broadband local access market. Aspirant carriers have been conducting
trials and testing DSL equipment in Telstras exchanges in Sydney and
Melbourne since early 2000.
Major existing carriers including C&W Optus, Primus and RequestDSL
have launched their respective DSL networks since early 2001. In
addition, a host of new start up companies including ecom, Pacnet,
Netcomm and Qala are also in the process of deploying their XDSL
networks.
Some of the operators like Primus and Macquarie will have their own
network as well as reselling Telstras service. However, due to the huge
investment cost, the claimed lengthy process in gaining access and the
increased competition, not many of the aspirant operators are expected to
roll out their networks. They may become resellers, like iiNet and Pacnet.
Exhibit 4-5 provides an overview of the XDSL network deployment in
Australia.
Exhibit 4-5: XDSL Network Overview
Operator
Standard
Investment
AAPT
ADSL
FlowCommunications
(Macrocom)
ADSL
Netcomm
ADSL
$30m**
100 exchanges (by 2003)**
C&W Optus (XYZed)
HDSL, SDSL and

ADSL
$150m* (2000-2001)
50 exchanges (2000)
ADSL
$500,000*
Pahth Telecom
$250m** (2000-2003)
Infrastructure
50 to 90 exchanges
(2001-2003)
10 exchanges**
103 exchanges (2001)

1 exchange (2002)
2 exchanges (2003)
Primus
HDSL and ADSL
$350m* (2000-2001)
32 to 55 exchanges
(2001-2003)**
RequestDSL
ADSL
$50m
($250: 2000-2003)*
5 exchanges (2000)
50-88 exchanges (2001)
Telstra maintains that there are necessary procedures and testings involved to facilitate access and
interconnection.
56
Operator
Telstra
Standard
HDSL and ADSL
Investment
$450m* (2000-2002)
Infrastructure
1100 exchanges (2002)**
1300 exchanges (2003)**
TransACT
VDSL
$80m
($160m: 2000-2003)*
2 exchanges
Davnet
HDSL
$50m (2000-2002)**
18 to 30 exchanges
(2001-2002)**
Agile
ADSL
One.Tel
ADSL
15 to 30 exchanges (2001)
35 to 50 exchanges (2002)
* sourced from media publications

** sourced from BIS Shrapnels estimates
Based on the submission from operators, BIS Shrapnel estimates that

more than $1.9bn will be invested by companies in their DSL network in
Australia in the next three years (2001-2003). According to XYZed, the
DSL market revenue is believed to be $2bn annually.
According to recent press releases and media publications, Telstra plans
to spend around A$440m on its ADSL network in the next two years
(2001-2002). Primus has indicated that it plans to invest A$350m in
2000/01, while TransACT is committing $160m to a VDSL network.
ULL access pricing is the most important factor to the growth of xDSL
deployment in Australia, according to XYZed and Macquarie. This has
effectively slowed down the growth of xDSL services. In addition,
entrants must negotiate access to Telstra exchanges and meet the
technical requirements required to ensure the integrity of Telstras
network. Many aspiring xDSL operators might not be able to launch their
networks as a result of the expensive DSL equipment (DSLAM) and the
cost related to gaining access.
57
According to many xDSL operators interviewed during the study, the

current ULL price is too high. The current average Telstra asking price of
$40 to $60 per month for Zone 1 and Zone 2. In the short term, many
operators are not considering any major network expansion unless the
ULL pricing is reduced below $20.
For example, XYZed has already identified the profitable exchange sites
(103) for its xDSL deployment taking into consideration the cost, demand
and ease of deployment. These exchanges cover only the main business
areas in the major cities, which are not accessible to most residential
users.
ADSL Network Coverage in Australia
The maps below provide an overview on the proposed ADSL network
coverage by Telstra.
Victoria
Source: Telstras website
58
New South Wales
59
South Australia
Western Australia
60
Queensland
61
Tasmania
Australian Capital Territory
62
Northern Territory
63
4.4
XDSL Service and User
4.4.1
Service Application
Access speeds using DSL modems can be up to 140 times faster than a
56kbps dial-up modem. DSL modems allow transfer of bigger data
packets and are not affected by waiting times or dropouts because users
have their own designated line. DSL technology enables and supports a
wide range of access connectivity services and broadband services.
HDSL
HDSL is considered a better way of transmitting T1 or E1 over twisted
pair copper lines. It uses less bandwidth and requires no repeaters. Using
more advanced modulation techniques, HDSL transmits 1.544Mbps or
2.048Mbps in bandwidths ranging from 80kHz to 240kHz, depending
upon the specific technique.
Typical applications include PBX network connections, cellular antenna
stations, digital loop carrier systems, inter-exchange POPs, Internet
servers, and private data networks. As HDSL is the most mature of DSL
technologies with rates above a megabit, it will be used for early-adopter
premises applications for Internet and remote LAN access.
ADSL
ADSL followed on the heels of HDSL, but is really intended for the last
leg into a customers premises. As its name implies, ADSL transmits an
asymmetric data stream, with much more going downstream to the
subscriber and much less coming back.
The preponderance of target applications for digital subscriber services
are asymmetric. Video on demand, home shopping, Internet access,
remote LAN access, multimedia access, specialised PC services all feature
high data rate demands downstream to the subscriber, but relatively low
data rates demands upstream. MPEG movies with simulated VCR
controls, for example, require 1.5 or 3.0Mbps downstream, but can work
quite satisfactory with no more than 64Kbps (or 16Kbps) upstream.
64
SHDSL
The single-pair, high bit-rate Digital Subscriber Line (SHDSL) technology
allows network operators to offer leased-line services to business
customers over existing copper wire networks more efficiently. With a
wider coverage (about 5km) SHDSL transmits data, voice and video over
distances not available from other forms of symmetric DSL technology.
The standard, called G.991.2, approved by ITU in late 2000 permits data
rates from 192Kbps to 312Kbps. It can also carry T1 (1544Kbps),
E1 (2048Kbps), ISDN (integrated services digital network), ATM
(synchronous transfer mode) and Internet Protocol signal modes.
G.991.2 is designed to eliminate interference with other DSL systems
operating on the same cables. The ability of SHDSL to handle different
signal modes is settled at the start of a data transmission, through the
use of the ITUs G.994.1 handshake protocol.
VDSL
VDSL was developed to support exceptionally high-bandwidth
applications such as High-Definition Television (HDTV). It is not as
widely deployed as other forms of DSL service. However, VDSL can
achieve data rates up to approximately 51,840Kbps, making it the fastest
available form of DSL.
Like most DSL technologies, the performance of VDSL depends
significantly on the physical distance traversed by phone wiring shorter
distances mean faster networking.
DSL Network Service and Application
Market inquiries indicated that certain services tend to be regarded as
residential services (eg, high bandwidth carriage services supplied using
ADSL), whereas others tend to be regarded as business services (eg, high
bandwidth carriage services using HDSL).
The major traffic on DSL networks in Australia will be data, accounting
for about 80% and 90% network utilisation.
Exhibit 4-6 provides an overview on the xDSL network traffic and service
application.
65
Exhibit 4-6: XDSL Network Traffic and Application (2001 to 2003)

Operator
Standard
Traffic
Application
AAPT
ADSL
Voice (10%)
Data (90% including layer
2 data-video)
High speed Internet, VoDSL,

FR, IPVPN,
layer 2 services (ISDN,
Megalink, Ethernet)
FlowCommunications
(Macrocom)
ADSL
Data (80%)
Voice (15%)
Video (5%)
C&W Optus (XYZed)
HDSL, SDSL
and ADSL,
Data (93%)
Voice (5%)
Video (2%)
T1 and E1 connectivity, Internet

access and leased services.
Pahth Telecom
ADSL
Primus
HDSL
ADSL
Voice (33%)
Data (66%)
Video (1%)
Voice, data, high speed Internet

and video
RequestDSL
ADSL
Voice (20%)
Data (80%)
Voice, Data, Multimedia, ATM,

FR and Ethernet
Telstra
HDSL and
ADSL
High speed Internet, VoD,

interactive TV and multimedia
services
TransACT
VDSL
Telephone, data, Internet, VoD,

interactive and multimedia
services
Davnet
HDSL
Voice (10%)
Data (80%)
Video (10%)
66
4.4.2
Target User
The target market of DSL services is not the home, but the small to
medium-size enterprises (SMEs) which are stuck in the analogue copper
age. Currently, the only increased bandwidth option for those businesses
is ISDN, but even for businesses with 10 or more telephone lines, ISDN is
still too expensive. (see Section 3.5). The first pricing programs are
beginning to emerge for DSL services and they are significantly cheaper
than ISDN and faster.
Many of the xDSL service providers including XYZed Optus, Davnet and
Request XDSL are targeting large corporate and medium business users
in CBD and Metro areas in the capital cities.
Apart from Telstra, not many operators believe the current environment
is right for market development of the residential sector due to the ULL
pricing structure. Telstras ADSL is targeting at the residential users.
Some xDSL operators believe that 30,000 or so ISDN users (mostly SME)
are likely to convert to ADSL.
There is a market demand from small businesses. The needs of about
1 million small businesses have until recently been largely ignored by
existing carriers building broadband networks. Companies such as
Davnet, FlowCom, Netcomm and Macquarie Corporate
Telecommunications have all focussed on the corporate market.
Some start-up and niche companies like eCom and Pahth are looking into
the small to medium enterprises and small-office-home-office (SOHO)
markets. However, in short to medium term, xDSL deployment will
remain in the city CBD and metro areas with large business users.
According to Neighbourhood Cable, rural and regional users are unlikely
to enjoy the new DSL service as the new broadband DSL technologies
deployed by Telstra and other operators cannot work effectively in the
rural and regional areas. The DSL technologies are distance sensitive
which perform better within a range of 2km to 3km from telephone
exchanges.
However, in the rural and regional areas, the distances between
exchanges are likely to be more than 5km apart. In addition, the quality
of the copper underground will also have an impact on the performance of
xDSL technology.
67
Exhibit 4-7 provides an overview on the xDSL target user and coverage
focus.
Exhibit 4-7: XDSL Coverage Focus and Target User
Operator
Standard
Target User
Coverage Focus
AAPT
ADSL
Corporate and SME business
CBD areas
FlowCommunications
(Macrocom)
ADSL
Large business
CBD and metro areas
C&W Optus (XYZed)
HDSL, SDSL
and ADSL,
Large corporate, retail carrier and

medium business
Metro areas
Pahth Telecom
ADSL
SME business and large local

companies
CBD and metro areas
Primus
HDSL
ADSL
Large to medium businesses

(HDSL)
CBD and metro areas
SME business (ADSL)

RequestDSL
ADSL
Large corporate and retail carriers
CBD areas
Telstra
HDSL and
ADSL
SME and residential
Metro and urban

areas
TransACT
VDSL
Government, business and

residential users
Davnet
HDSL
Corporate and large business
CBD areas
68
4.5
XDSL Market Perspective in Australia
4.5.1
Market Overview
In Britain, businesses have been angered by the failure of the countrys
telecommunications regulator, Oftel, to introduce sustainable competition
to the market. Oftel has primarily come under attack because the country
lacks high-speed access networks such as ADSL. In Australia, the
Australian Competition and Consumer Commission is also coming under
pressure to establish a healthy competitive environment.
As mentioned earlier in August 2000, the ACCC mandated access to
Telstras ULL service. This might have been the catalyst for Australia to
join the rest of the world in the uptake of broadband, defined as services
providing speeds of 2Mbps or faster. However, disagreements over the fee
that Telstra charges for access to copper continue and administrative
delay have perpetuated the uncertainty of the ultimate cost of broadband
service and its adoption in Australia.
Australia is behind in DSL compared to other countries. For example, the
Korean administration mandated the rollout of broadband across the
country in 1998/99, and has more than one million lines of DSL installed.
The US had about 2.2m DSL lines in use at the end of 2000, compared to
10,000 in Australia.
According to many market participants the high price of DSL services is
one of the major inhibiting factors for DSL adoption in Australia. Data in
Appendix C indicates the price of ADSL services provided by Telstra are
relatively high compared to those offered by telecommunications
companies in several other countries.
69
4.5.2
Drivers and Inhibitors

Drivers
The principal driver for broadband enabling technologies like DSL
services is the scarcity of bandwidth in the access network. The
expectation of strong market demand for bandwidth intensive services
such as data applications and multi-link voice services (voice over DSL or
voice over IP) has also contributed to the growing deployment of DSL in
Australia.
According to XYZed, DSL service is the ultimate high-speed access service
for business. It offers scalability, security, bandwidth and service
availability assurances. It is also substantially more cost effective than
current market offerings including FTTC and HFC based services. New
companies will compete for business against alternative high-speed
services such as DDS and ISDN. Some of these operators will also extend
the market for broadband services by targeting businesses that do not
have access to optical fibre, or find the costs associated with current
products too high.
Inhibitors
Equipment for xDSL is costly and many start-up companies require
extensive funding to finance network roll out. At present ULL pricing is
perceived to be too high for investors to make a reasonable return on their
investments. Telstra will remain the major player with access to
exchange and established user base.
In addition with many competitors some will struggle as price sensitivity
puts pressure on profitability.
On top of the perceived high ULL cost, new operators are also required to
pay Telstra TEBA cost (cost related to floor space and the relocation of
equipment at Telstras exchange sites).
In addition, the installation of RIMS (Remote Integrated Multiplexer) will
restrict DSL network deployment in certain exchanges.
70
As part of its network modernisation plans, Telstra is reducing the

amount of copper in the network. Particularly, it is installing RIMs and
IRIMs at points between the former exchange building and customer
premises, linking the RIM/IRIM to the exchange building by means of
optical fibre.
Given that xDSL technology is designed for copper wires, where Telstra
has introduced a RIM or IRIM, service providers would no longer be able
to interconnect at the former exchange building but would need to
interconnect at the street based housing containing the RIM/IRIM.
During the interview program in the study, many companies, like
Macquarie and XYZed said negotiating access to Telstras unconditional
local loop was a difficult process. According to them, it normally takes
about three to six months to finalise the interconnection and site colocation. However, Telstra points out that the process can be completed in
a time as short as two months depending on circumstances.
4.5.3
XDSL Forecasts
ADSL is set to become the de facto standard for high speed Internet
access in the future, as it offers end-users from 20 to 200 times faster
Internet access, as well as offering ISPs and carriers a way to bundle
services such as Video on Demand (VoD), gaming and Application Service
Provider (ASP) access. Recent studies by RHK (2000) indicate that the
worldwide market for xDSL technology could be worth US$1.2 billion per
year and that the Asia-Pacific region alone has potential for around five
million users by 2003.
According to IDC (2000), the DSL subscriber base will easily outpace
cable adoption and will quadruple the size of the cable market by 2004
with a user base of 2.1m. The forecast was based on the assumption that
DSL would expand beyond the business market. IDC estimated that there
were 20,000 DSL users in Australia at the end of 2000.
71
However, the US based Strategis Group is more conservative in its DSL

forecasts. According to the Strategis Group (1999), DSL will encounter
challenge from cable modems in the residential high speed Internet
access market. Combined DSL and cable modem penetration of total
households will reach 10-30% by 2003 in several markets, including
Australia, Canada, The Netherlands, Singapore, Sweden and the US,
with DSL expected to account for about 30% of the broadband market.
Cable modems have the current lead because they enjoy a first-to-market
advantage, and are more popular than DSL in almost every country.
On the other hand, according to Computerworld, 11 December 2000,
Telstra forecasts that it would have 650,000 ADSL customers by 2005,
which is regarded as very conservative by many operators.
By 2005, BIS Shrapnel forecasts around 1.7m Australians will use highspeed digital subscriber line (DSL) technology to connect to the Internet.
The forecasts take into consideration the competition from cable modem
the pricing barrier for the residential market.
Exhibit 4-8 provides an overview on the forecasts of DSL user in
Australia.
Exhibit 4-8: XDSL Forecasts
User
2,000,000
1,700,000
1,200,000
1,000,000
700,000
250,000
0
10,000
80,000
1999
2000
2001
0
2002
2003
2004
2005
Year
Source: BIS Shrapnel and RHK.
72
5.
FIBRE OPTIC NETWORK
5.1
Technology Overview
Fibre optic network is a technology that uses glass (or plastic) threads
(fibres) to transmit data. A fibre optic cable consists of a bundle of glass
threads, each of which is capable of transmitting messages modulated
onto light waves.
Fibre optics use light rather than electricity to transmit data. The
original electrical signal is converted to light and sent down the fibre
optic cable, in which the light bounces off the inner silica shield, called
cladding. A receiver converts the light back to electricity at the other end.
Fibre optics has several advantages over traditional metal
communications lines:
Fibre optic cables have a much greater bandwidth than metal cables.
This means that they can carry more data.
Fibre optic cables are less susceptible than metal cables to interference.
Fibre optic cables are much thinner and lighter than metal wires.
Data can be transmitted digitally (the natural form for computer data)
rather than analogically.
Section 1.3 provides an overview on the fibre optic technology for
telecommunications network in comparison to other technologies.
There are several different types of fibre cable:
Singlemode: Singlemode fibre is a single, tiny strand of fibre optic
glass, usually 7.1 or 8.5mm in diameter, that is used in telephone
applications, cable television, or campus backbones. It only allows a
single ray of light to pass through the fibre at a time. This type of cable
lends itself to very long runs.
Multimode: Multimodes fibre optic core is much larger, usually
62.5mm in diameter, than that of the singlemode fibre. This type of
fibre can accommodate many rays along its core simultaneously lending
itself to voice and data applications. Telephone companies typically use
this type of fibre because it can accommodate hundreds of phone
conversations along one fibre.
73
How Does a Fibre Optic Network Work

A lightwave system consists of a transmitter, fibre optic cable,
regenerators, and a receiver.
The first is the light source in the transmitter, which can be a light
emitting diode (LED) or a laser. This source is modulated, that is, turned
on or off in a digital system to represent the binary digits (1s and 0s) it
receives from an electrical transmission system.
The next is the fibre optic cable, which can consist of a single strand of
specially manufactured glass or multiple strands bundled together. Each
fibre optic strand is as thick as a human hair, but the actual cable may
measure a quarter inch to 1 inch in diameter after the strands have
been wrapped in protective coverings.
The third part of the lightwave system is the regenerator. As a photonic
signal travels through a fibre optic strand, it attenuates, beginning to
loose its shape. If it isnt regenerated periodically, the signal wont be
recognizable at the receiving end. These regenerators can either be
optical-electrical-optical devices, usually found in terrestrial systems, or
all-optical systems found in undersea lightwave systems.
The fourth part of the system is the photodetector in the receiver, which
takes the optical signal from the fibre and converts it into an electrical
signal for transmission through the non-optical portions of a network.
Exhibit 5-1: Four Basic Parts of a Optic Fibre System
Source: All About Network
74
5.1.1
The Deployment of Optic Fibre Network

Since the 1980s, digital lightwave systems rapidly began replacing
analogue microwave transmission facilities in long distance networks
throughout the world, and later began to replace the digital copper wire
T1 facilities in the local networks. Today, a number of systems are being
evaluated to provide lightwave connectivity in the subscriber line, that
portion of the telephone network that uses copper wire, called twisted
pair, to connect homes and small businesses to local switching offices.
According to the National Bandwidth Inquiry (2000), the information
carrying capacity of one optical fibre strand is undergoing a revolution. In
the mid 1980s one Telstra fibre strand between Sydney and Melbourne
could carry either 140 to 565Mbps (equal to 0.14 or 0.565Gbps). Today the
same fibres routinely carry 40Gbps and could easily be upgraded to
80Gbps. In early 2000, Fujitsu, has announced a 320Gbps system based
on one fibre. In late 2000 Nortel released a 1.5Tbps (1600Gbps) system.
To significantly increase bandwidth on terrestrial land based optical fibre
networks to meet increasing demand, network providers are faced with
three possible responses:
install more optical fibres
increase the bit rate and therefore the capacity of existing fibre using
time division multiplexing (TDM) based on SDH system
increase the capacity of existing fibre using wave division multiplexing
(WDM).
75
5.1.2
Cable Installation and Dark Fibre

Dark fibre refers to unused fibre-optical cable. Many companies lay more
lines than whats needed in order to curb costs of having to do it again in
the future. The dark fibre could be lit or utilised by connecting them to
electronic equipment.
Fibre cables are available in many sizes and types. The selection of cable
size and type depends on business strategy, demand forecasts, network
architecture, type of installation and many other factors. The cable
selection decisions are a complex mix of business analysis and network
design. In general, cable sizes being used for networks are increasing,
driven by the rapidly increasing and uncertain demand for bandwidth,
and reflecting the low marginal cost of additional fibres.
Cable sizes are usually provided in modular quantities, typically in
bundles of 12 fibres. Typical fibre counts are 12, 24, 36, 48, 60, 72, 90,
120, 144, 240. Some of these are special sizes for select customers and
may not be generally available.
While 24 and 36 core cables used to be the norm in intra-city links, the
trend is now to larger cables and fibre counts of 60 and 120 fibres or more
are being used for metropolitan and even suburban installations. Cable
capacities in these situations may have an element of dark fibre capacity
for use in customer service provision but are unlikely to have any
allowance for wholesale provision of dark fibres to other service providers.
For national long distance routes, 12, 24 fibre cables are used and 36 fibre
cable is used in some cases if an omnibus, that is a country town add and
drop, network is being established. Even higher fibre counts (48 fibre)
may be used on some sections of long distance routes.
The dark strands can be leased to individuals or other companies who
want to establish optical connections among their own locations.
In this case, the fibre is neither controlled by nor sonneted to the phone
company. Instead, the company or individual provides the necessary
components to make it functional. According to the National Bandwidth
Inquiry (2000), Telstra and C&W Optus have substantial dark fibre (70%
to 80%) in their network, which can be utilised as required.
76
5.1.3
SDH (Synchronous Digital Hierarchy)

SDH, short for Synchronous Digital Hierarchy, is an international
standard for synchronous data transmission over fibre optic cables. The
North American equivalent of SDH is SONET.
A synchronous mode of transmission means that the laser signals flowing
through an optical fibre system have been synchronised to an external
clock. The resulting benefit is that data streams transmitting voice, data,
and images through the fibre system flow in a steady, regulated manner
so that each stream of light can readily be identified and easily extracted
for delivery or routing. SDH based on TDM increases the capacity of a
fibre by slicing time into smaller intervals at the electronic layer, thereby
increasing the frequency of laser flashes and this enables more bits (data)
to be transmitted per second. Traditionally, this has been the industry
method of choice to increase the transmission capacity of existing and
new optical fibre networks.
In addition, SDH system is also known for its capacity to operate in selfhealing rings that offer network redundancy and protection against
faults. It also provides the ability to add and subtract capacity on a fibre,
to create network meshing or serve a population centre via a spur or ring
off a main route.
Many fibre optic network operators have deployed SDH system. These
include Telstra, C&W Optus, AAPT, Primus, PowerTel and Swiftel.
5.1.4
WDM (Wavelength Division Multiplexing)

WDM is another more recent multiplexing technology which can
significantly increase the capacity of existing optical fibre. Dense
Wavelength Division Multiplexing (DWDM) is an optical technology used
to increase bandwidth over existing fibre optic backbones.
DWDM works by combining and transmitting multiple signals
simultaneously at different wavelengths on the same fibre. In effect, one
fibre is transformed into multiple virtual fibres.
These sections are based on the National Bandwidth Inquiry (2000).
77
A key advantage to DWDM is that its protocol is bit-rate independent.

DWDM-based networks can transmit data in IP, ATM, SONET/SDH, and
Ethernet, and handle bit-rates between 100Mb/s and 2.5Gb/s. Therefore
DWDM-based networks can carry different types of traffic at different
speeds over an optical channel. (see Appendix B Bandwidth)
DWDM can usually be installed on existing in-ground fibre without
digging it up and at a cost which is only a fraction of installing new fibre.
This technology has led the network providers to use a new just-in-time
capacity provisioning model. For example, one fibre pair on an older
12 pair cable can be upgraded to 16 colour DWDM and carry more
capacity than the whole original cable. As and when demand increases, a
second pair could be upgraded to more than double capacity again. The
lead time for such upgrades is a few weeks to a few months, meaning that
network providers can be assured that on optical fibre routes, a large
excess of capacity an be made available in a relatively short time and at
relatively low cost.
Over the next five years the capacity of DWDM systems is set to
dramatically increase. For example, Nortel announced in mid 1999 the
development of a 160-channel DWDM product called OPTera 1600G
which will provide 160 channels each of 10Gbps or 1.6Tbps. The
technology was made commercially available in 2000. In early 2000
Nortel announced that it had successfully demonstrated a 480kms long
test system carrying up to 6.4Tbps on one fibre. The system uses an
80Gbps transmission platform on up to 80-channel DWDM. The product
should be commercially available in 2001 and existing OPTera 1600G
installations will be capable of being scaled up to the new capacity.
Companies like Telstra, PowerTel and C&W Optus have deployed DWDM
to boost their fibre optic network capacity. Operators including Nextgen,
Amcom and Swiftel are also in the process of deploying DWDM
technology.
However, for local access centric small operators like Ipera and Primus,
there is no immediate need to install DWDM technology. They have
sufficient network capacity as more than enough fibres (dark fibre) have
been laid when they constructed their networks in 2000.
78
5.2
The Deployment of Optic Fibre in Australia

Telstra has already laid 140,000km sheath of broadband optic fibre cables
in the ground in Australia while C&W Optus Limited has 8,700 km of
cable laid, across Australia. In addition, PowerTel has completed its east
coast network deploying over 2,400km of cable.
Fibre optic cabling was a focus in Australia in 1999/2000, with a
multitude of companies deploying their fibre optic networks as both local
access as well as backbone transmission solutions.
Since 1999, a host of new companies like AAPT, Amcom, Nextgen and
PowerTel has been rolling out the optic fibre networks in the eastern
seaboard.
If these planned network deployments come to fruition, there will be eight
backbone network providers on the heaviest traffic routes SydneyMelbourne and Sydney-Brisbane. However, it would also mean four
facilities-based carriers on the Melbourne-Perth route, four on the
Brisbane-Cairns route, and even three providers of connectivity between
the mainland and Tasmania.
However, regional companies like Swiftel, SouthTel and Ipera are
deploying their optical networks to the rural and regional areas.
Due to the demand of Internet and broadband services, optic fibre has
also been deployed in the local access networks in CBD areas in major
cities including Sydney, Melbourne, Brisbane, Canberra and Perth.
Apart from Telstra and C&W Optus, business and large corporate centric
operators like Davnet, Primus and WorldCom have deployed small local
optic fibre access networks in the CBD areas in Melbourne, Sydney and
Brisbane.
BIS Shrapnel estimates that about $4bn will be invested by operators in
their optic fibre networks in Australia in the next three years
(2000-2002).
Nextgen and Amcom are investing about $850m and $165m in rolling out
their respective networks. According to the Daily Telegraph, 29 June
2000, PowerTel has invested $250m in its optic fibre network.
BIS Shrapnel estimates that Telstra has spent about $500m in expanding
its optic network for the past two years.
79
Exhibit 5-2 provides an overview on the deployment of optic fibre in the

local access network as well as backbone network in Australia.
Exhibit 5-2: Optic Fibre Network Operator Overview
Operator
Operational
Status
Local Network
AAPT
2000
CBDs in Sydney, Melbourne,

Brisbane, Adelaide, Canberra and
Perth(p)
Agile
2000
Adelaide CBD
Amcom
1998
Perth CBD, Adelaide CBD, Darwin

CBD(c) and Hobart CBD(c)
Australia Fibre
Network
2000
C&W Optus
1993/4
Backbone Network
Perth-Kargoorlie
Adelaide-Melbourne
Adelaide-Kargoorlie(p)
Brisbane-Sydney-CanberraMelbourne (with regional spurs
to Adelaide, Gold Coast and
Geelong)
9 CBDs (Sydney, Melbourne,

Brisbane, Canberra, Adelaide,
Perth, Darwin, Hobart and
Launceston)
Sydney-Canberra-Melbourne
Sydney-Brisbane
Melbourne-Adelaide
Adelaide-Perth
Darwin-Palmerston (outsourced)
Brisbane-Cairns (outsourced)
Davnet
1999
CBDs in Sydney and Melbourne
Ipera
2000
Newcastle metro
Nava Network
2002
Sydney-Melbourne-PerthSingapore
Nextgen
(Leighton/
Macquarie)
2002
Melbourne-Sydney
Sydney-Brisbane(c)
Melbourne-Adelaide(c)
Adelaide-Perth(p)
PowerTel
1999

Brisbane and Gold Coast(c),
Newcastle(p) and Canberra(p)
Primus
2000
CBD areas in Sydney, Melbourne,

Brisbane, Adelaide, Canberra and
Perth(c)
Reef Network
2001
Brisbane-Cairns
SouthTel
2001
Regional areas in NSW(c)

(Eurobodalla, Bega, Bateman
Bay, Cooma and Penrith)
Swiftel
2001
Telstra
Since 1980
Melbourne-Sydney-Brisbane
Brisbane-Gold Coast(c)
Perth CBD and regional WA(p)

Brisbane, Adelaide, Perth,
Canberra and Hobart
TransACT
2001
Canberra metro
UE Com
1999
CBD and metro areas in Sydney,

Melbourne and Brisbane
WorldCom
2000
Sydney CBD and Melbourne CBD
13 inter-capital city routes
Notes: (c) = constructing; (p) = planning
80
5.3
Optic Fibre Network Rollout
5.3.1
Fibre Backbone Network Rollout

The capacity of fibre optic networks in Australia is far outstripping
demand. The Australian Government conducted a national bandwidth
inquiry (NBI) into Australias bandwidth capacity as at 23 May 2000. The
NBI (2000) has found that up to 80% of optic fibre cable is not being used.
Many operators who participated in this study also said that Telstra is
holding onto spare bandwidth and has pushed new operators to lay their
own cable networks.
Telstra and C&W Optus have 52 fibre pairs on the Sydney-Melbourne
route between them, but only a handful are lit or equipped to carry
traffic. The rest are dark awaiting commissioning when the carriers
deem that its justified by demand or competitive threat.
The Nextgen network, the fledging optic fibre operator is building a
backbone network which will have 40-times the capacity of C&W Optus
fibre optic cable. The 8400km network with a cost of $850m will link
regional centres to State capitals as it winds its way south from Brisbane
to Sydney, then to Melbourne, Adelaide and finally Perth.
Amcom and PowerTel have rolled out their fibre backbone networks in
eastern seaboard.
International broadband developer Nava Networks backed by
Dolphin Communications Partner is moving forward with a
US$645 million fibre network linking Singapore, Jakarta, Perth,
Melbourne and Sydney. Nava-1s 9,000km cable system will be both
submarine and terrestrial. A submarine link will connect Perth and
Singapore with a branching unit into Jakarta. Another submarine system
will link Perth and Melbourne, while a terrestrial loop, built in
conjunction with an Australian terrestrial carrier, will connect Melbourne
and Sydney.
Construction on the network is scheduled to begin in June 2001, with the
system-availability data set for August 2002. Nava has already
commissioned Fujitsu Ltd. (Tokyo) to provide the undersea cable portion
of the network.
81
Exhibit 5-3 provides an overview on the fibre backbone network in

Australia.
Exhibit 5-3: Backbone Fibre Optic Network Rollout
Operator
Amcom
Coverage
1. Perth-Kargoorlie
2. Adelaide-Melbourne
Investment
Infrastructure
$165m (20002003)*
Fibre Length=3875km
- 850km (2001)
- 2,500km (2002)
- 3,800km (2003)
3. Adelaide-Kargoorlie(p)
Capacity
40Gbps
(by 2002)
Australia
Fibre
Network
Brisbane-Sydney-CanberraMelbourne (with regional spurs

to Geelong, Adelaide and Gold
Coast)
$200m (20002003)*
Fibre length =
4000km (by 2003)
Nextgen
(Leighton/
Macquarie)
1. Melbourne-Sydney
- $300m (01)
- $300m (02)
- $200m (03)
(total investment
$850)*
Fibre length=8,400km
- 2,169km (2001)
- 5,747km (2002)
- 8,440km (2003)
10Gbps
Fibre length=8,825km
(2001)
10Gbps
40Gbps
(2001/02)
2. Sydney-Brisbane(c)
3. Melbourne-Adelaide(c)
4. Adelaide-Perth(p)
C&W
Optus
1. Sydney-CanberraMelbourne
2. Sydney-Brisbane
3. Melbourne-Adelaide
4. Adelaide-Perth
5. Darwin-Palmerston (JVP)
6. Brisbane-Cairns
(Reef Network)
Telstra
13 intercity routes
$0.6bn (99)
$0.7bn (00)
(estimated)**
Fibre length
140,000km
40Gbps
80Gbps (2002)
2.5Gbps to
40Gbps
PowerTel
1. Melbourne-SydneyBrisbane (2200km)*
$250m*
(1998-2000)
$100m (2001)
Fibre Length=2400km
- 2200km (2000)
- 2400km (2001)
10Gbps
2. Brisbane-Gold Coast
(200km)*
Reef
Network
Brisbane-Cairns
$80m (by 2001)*
Fibre length =
1800km
Nava
Network
Sydney-Melbourne-PerthSingapore
US$645m*
Fibre length =
9000km
2560Gbps
JVP = Joint Venture Project

*Sourced from media publications
**Sourced from BIS Shrapnels estimates
82
Exhibit 5-4: Backbone Fibre Optic Network Incumbent Operators

(Telstra, C&W Optus and PowerTel)
Darwin
Cairns
Broome
Karratha
Alice Springs
Brisbane
Gold Coast
Newcastle
Perth
Tamworth
Sydney
Adelaide
Telstra
C&W Optus
Canberra
Wangaratta
Melbourne
PowerTel
Hobart
Source: Telstra, C&W Optus, PowerTel and BIS Shrapnel
83
Sin
ga
po
re
Exhibit 5-5: Backbone Fibre Optic Network New Operators

(Amcom, Nextgen, AFN, Reef Network and Nava Network)
Jerriderie
Amcom
Nextgen
Reef Network
AFN
Nava Network
Source: Amcom, Nextgen, AFN and BIS Shrapnel
84
5.3.2
Fibre Local Access Network Rollout

Fibre in the loop system (or local access network) extends the
transmission capacity of optical fibre into the residential and business
distribution plant (FTTC), as well as to the home (FTTH). Although fibre
local network technology currently outperform most other technologies
(eg, xDSL and LMDS) in terms of bandwidth, the cost of deployment
remains very high.
Unlike the US and some other Asian countries, where FTTH and FTTC
have been deployed, fibre local access networks are only available in
major CBD areas targeting corporate and business users.
Telstra and C&W Optus have installed 32,000km and 1,800km of fibre
respectively in CBD areas in major cities. AAPT and Primus have
deployed their fibre local networks in the major cities including Sydney,
Melbourne Adelaide and Canberra.
There are also some niche operators which provide direct high-speed
telecommunications connection for CBD buildings through an integrated
communications infrastructure. Davnet, Ue Comm and Primus are some
of the companies focussing on the so-called building-centric local
exchange carrier (BLEC) or the in-building carrier. Such companies
provide broadband connectivity to major commercial buildings by special
arrangement with building management.
At the next level, Australia has a myriad of smaller regional networks
like Agile, Ipera and TransACT and Smart Radio Systems (Cooma based)
which are building fibre-optic networks in the regional cities.
Some of these local networks (eg, Ipera) are designed as fibre rich,
technology poor by laying a large number of fibres. It is more economical
in the long run to deploy 144 fibres as to 48 fibres on a local loop. These
unused dark fibres can be utilised by connecting them to electronic
systems depending on market demand and on an as need be basis.
Exhibit 5-4 provides an overview on the fibre local network in Australia.
85
Exhibit 5-6: Local Access Fibre Optic Network Rollout

Operator
AAPT
Coverage
Investment
Sydney, Melbourne,
Brisbane, Adelaide,
Canberra and Perth(p)
Infrastructure
Fibre Length
- 350km (2000)
- 670km (2001)
Capacity
165Mbps to
2.4Gbps
Building wired*
- 150 units (2000)
- 250 units (2001)
Agile
Adelaide CBD
Amcom
Perth CBD, Adelaide

CBD, Darwin CBD(c) and
Hobart CBD(c)
$30m (19992002)
Fibre Length
- 310km (2000)
- 500km (2001)
- 610km (2002)
Building wired
220 units (2000)
270 units (2001)*
Davnet
CBDs in Sydney,
Melbourne, Brisbane and
Perth
$35m**
(by 2000)
($12m per 100
buildings)
Building wired
- 70 units (2000)
- 120 units (2001)
- 300 units (2002)
10Mbps to
1Gbps
Ipera
Newcastle CBD
$1m*
Fibre Length
- 4km (2000)*
- 8km (2001)
72Gbps
(including dark
fibre)
C&W Optus
9 CBDs (Sydney,
Melbourne, Brisbane,
Canberra, Adelaide,
Perth, Darwin, Hobart
and Launceston)
Fibre length
- 1,750km (000)
- 1,783km (2001)
- 1,810km (2002)
155Mbps
CBD areas in Sydney,

Canberra, Adelaide,
Perth and Hobart
Fibre length =
32,000km
Telstra
PowerTel
Sydney, Melbourne,
Brisbane, Gold Coast,
Newcastle(c) and
Canberra(c)
Building wired
- 1,200 units (2000)
- 1,230 units (2001)
- 1,300 units (2002)
155Mbps
Building wired =
5,500 units (as at
2001)
$250m
(including trunk
optic fibre
network)
Fibre Length
- 195km (1999)
- 480km (2000)
- 600km (2001)
- 650km (2002)
N x 155Mbps
Building wired
- 200 units (1999)
- 320 units (2000)
- 400 units (2001)
Primus
CBDs in Sydney,
Adelaide, Canberra and
Perth(c)
$30m (2000)**
$20m (2001)**
Fibre length
- 100km (2000)
- 150km (2001)
620Mbps
86
Operator
Swiftel
Coverage
Investment
Perth CDB
$4m (2000)
$2m (2001)*
Infrastructure
Fibre length
- 15km (2000)
- 20km (2001)
- 25 to 30km (2002)
Capacity
2.5Gbps
Building wired
- 20 units (2001)
- 30 units (2002)
TransACT
Canberra metro
$80m (including
DSL network)
Reaching 100,000
homes in Canberra
UE Com
CBD areas Sydney,

Melbourne and Brisbane
$32m*
(2000-2001)
Fibre length
- 1100km (2000)
- 2000km (2001)
- 2500km (2002)
2.5Gbps
Building wired
- 255 units (2000)
- 300 units (2001)
- 400 units (2002)
WorldCom
CBD areas Sydney and

Melbourne
$100m*
15km (1999)
2Mbps to
1Gbps
* sourced from media publications

** sourced from BIS Shrapnels estimates
Exhibit 5-7: Local Access Fibre Optic Network Coverage

Operator
Sydney
Melbourne
Brisbane
Adelaide
Perth
Hobart
Canberra
Telstra
Darwin
C&W
Optus
Darwin
AAPT
Primus
PowerTel
WorldCom
Ue Comm
Swiftel
Gold
Coast,
Newcastle
TransACT
Agile
Davnet
Other
O
O
Amcom
O
O
Ipera
(c)
Darwin
Newcastle
O = Operating
C = Constructing
P = Planning
87
5.4
Fibre Network Service and User
5.4.1
Fibre Backbone Network Service and User

According to KPMG (2000), the so-called wholesale long-distance data
market, that is, for big corporates, Internet service providers and secondranked phone companies is now worth about $4 billion.
Many companies like Nextgen and PowerTel decided to take on Telstra
and C&W Optus by building their own backbone to link the metropolitan
networks.
These latest entrants are not niche players and are aiming to reshape the
wholesale market in the country by joining the race to criss-cross the
country with new cable networks, which promises to deliver broadband
services at reasonable prices.
The new players are promoting themselves as independent network
operators serving domestic and international telecom providers, ISPs,
and corporate and government users.
Inter-city transmission network is highly in demand due to the business
concentration in this area. According to some operators interviewed
during the study, inter-city prices quoted by the incumbent carriers were
much higher than comparable US prices. The quote on the SydneyBrisbane route was as much as a dozen times costlier than the busy
Los Angeles-San Francisco corridor.
Nextgen believes large customers will shy away from small backbone
network operators because they do not have their own back-up network.
The perspective is that there are only going to be three networks with the
quality, redundancy and assurance-level guarantees to which carriers
and big corporations are going to commit themselves. However, some of
these smaller backbone operators are leasing redundant capacity for
emergencies.
Exhibit 5-8 provides an overview on the services and users targeted by
fibre backbone network operator.
88
Exhibit 5-8: Target User and Service by Fibre Backbone Network Operator
Operator
Amcom
Target User
Coverage Focus
Service
Wholesale to carrier and

service provider only (No
retail at this stage)
Melbourne-Adelaide
(850km)
Australia Fibre
Network
Wholesale to carriers,
service providers and large
businesses.
Major population and

business centres along
the East Coast of
Australia
Nextgen
carriers carrier
East and West Coasts of

Australia (70 populated
centres with 95%
population)
Wideband solutions for

wholesale customers
155Mbps to 10Gbps
wideband solutions for

wholesale customers
telecom carrier, ISP,
international carrier,
large companies and
government agencies.
Adelaide-Perth (2950km)
Voice, data, video, internet,

multimedia, pay TV, ATM,
FR and Ethernet
C&W Optus
Large corporates, telecom

carriers and government
agencies.
Routes linking Australian

capital cities except
Darwin and Hobart
All services
Telstra
Wholesale and retail

markets
Australia wide
All services
PowerTel
Corporate, large business,

telecom carrier,
government and wholesale
sectors in major cities
Major population and

business centres along
the East Coast of
Australia
Voice, Data, Video,

Internet, Pay TV,
Broadcasting, ATM, FR
and Ethernet
89
5.4.2
Fibre Local Network Service and User

Despite the current frenzy in DSL technology as a local access solution,
service providers recognise the value of placing fibre as deep into the loop
as possible. High bandwidth capacity and improved reliability combined
with potential opportunities for advanced services revenue are among the
benefits that motivate some operators to continue deploying FTTL
systems. Although ADSL is now the primary focus, FTTL deployments
continue, albeit at a conservative pace.
According to C&W Optus and PowerTel, fibre local network was deployed
(and continue to be deployed) to suit the need of large corporate and
medium businesses which demand higher bandwidth and greater
reliability.
Like Amcom, Swiftel is building major intra-city networks. But the
companies strategies differ, with Amcom linking its city networks and
Swiftel forging links with overseas carriers. This will allow Swiftel to
generate traffic revenues from intra-city and city-to-overseas locations
while Amcom is concentrating on intra-city and city-to-city traffic
revenues.
The metropolitan networks in Perth, Darwin, Adelaide and soon Hobart
in conjunction with network access agreements being negotiated with
eastern seaboard carriers for Sydney, Melbourne and Brisbane would
position the company to provide a national carriage service to wholesale,
corporate and government customers.
According to the operators taking part in the study, it is currently
uneconomical to launch a broadband access product to the residential
market segment, and of questionable feasibility to the low end of the
Small to Medium business segment. Most of the optic fibre networks are
targeting at large business and government agencies in the CBD and
metro areas.
Exhibit 5-9 provides an overview on the services and users targeted by
fibre local network operator.
90
Exhibit 5-9: Target User and Service by Fibre Local Network Operator
Operator
Amcom
Target User
Corporate, business
user and ISP in CBD
areas.
Wholesale market.
Coverage Focus
Perth, Adelaide, Darwin,
Hobart and other cities
excluding Melbourne and
Sydney
Service
Leased Lines Service
Frame Relay Service
ATM Service
AAPT
Corporate and large

business
CBD areas in Sydney,

Melbourne, Perth,
Adelaide, Brisbane and
Canberra
Davnet
focusing on the so-called

building-centric local
exchange carrier (BLEC),
by providing broadband
connectivity to major
commercial buildings by
special arrangement with
building management
CBD areas in Melbourne,

Sydney, Perth and
Brisbane
Business services and LAN

centric services
Ipera
SME business
Newcastle CBD.
Voice, Data, High Speed

Internet, Ethernet, FR,
ATM, IP, VPN
C&W Optus
Corporate and large

businesses
CBD and inner metro

areas.
Telstra
Large and medium

businesses
CBD and inner metro

areas.
All services
PowerTel
Corporate, large business,

telecom carrier,
government and wholesale
sectors
Sydney Metro, Brisbane

CBD, Melbourne CBD,
Gold Coast CBD
Voice, Data, Video,

Internet, Pay TV, ATM, FR
and Ethernet
Primus
The CBD fibre optic network is being to link up Primus DSLAM exchanges in its xDSL
networks.
Swiftel
Wholesale market
(Carriers carrier)
Perth Metro and

regional towns in WA
Voice, Data, High Speed

Internet and Video
Overseas carriers
Targeting large
corporate, government
agency and ISP
TransACT
Government, Business,
Residential
Canberra
Telephone, data, Internet,

Video on demand,
Interactive TV and
Multimedia service.
Ue Comm
Corporate carrier (reseller),

large business and
government agencies in
metro areas
Metro areas in Sydney,

Adelaide(p) and Perth(p)
LAN-LAN connectivity,
ATM and SDH network
services, Direct Access
Lines and Telehousing
WorldCom
Targeting three markets in

Australia; corporates,
Internet service providers
and wholesalers
To service its overseas

clients in Sydney and
Melbourne
91
5.5
Fibre Market Perspective in Australia

Competition Abound
Telstra has the largest network with 140,000km sheath of cable while
C&W Optus has built an 8,800km cable network. In third place is
PowerTel, a company backed by Williams Communications and
DownTown Utilities, which has rolled out 2,400km of cable. Nextgen is
planning to build a 8,800km fibre backbone network in the eastern
seaboard which will be completed in 2002.
At the next level, Australia has a host of smaller regional networks.
Typical is Ipera, Agile and SouthTel, building fibre-optic networks in
regional cities of Victoria, SA and NSW, providing a range of telecoms,
data transmission, and cable television services. All of them are chasing
what seems to be skyrocketing demand for bandwidth capacity, but the
question remains as to whether there is enough to ensure profitability for
all the players.
However, some industry analysts say Australia is in danger of rolling out
too much cable, too soon. The number of projects, existing and planned,
will mean supply outstripping demand, leading to lower profit margins
and, inevitably, consolidation within the industry. Merrill Lynch (2000)
has forecast bandwidth prices will fall in Australia by 40% a year over the
next five years.
Increased Demand
However, some operators (PowerTel and Nextgen) are optimistic that
bandwidth price drop will encourage broadband services and in turn
increasing traffic and demand. According to the US experience, price cuts
stimulate disproportionate volume increases in the market. According to
Nextgen, Lucent has predicted that a 10% price cut triggers a 15%
volume increase in bandwidth demand.
Due to the pent up demand and previously highly priced bandwidth (by
incumbents), businesses are beginning to utilise greater bandwidth as the
price is dropping almost three fold (according to PowerTel).
92
Bandwidth purchases have been minimal, as companies perceive large

bandwidth consumption to be prohibitively expensive.
However, according to PowerTel and Nextgen, many companies are now
demanding more than a standard link. They include computer services
firms seeking big data pipes; a health-care company seeking a huge pipe
for X-Rays; and a Perth biomedical concern wanting a fast connection to
CSIROs supercomputer in Melbourne. Some companies are asking for
scalable connection due to uncertainty in bandwidth demand.
Price Drop
Bandwidth price is expected to drop by 40% over the next three years.
With its conservative financing and huge planned capacity, Nextgen,
billing itself as Australias first broadband carriers carrier, is slashing
its bandwidth price.
However, Telstra and C&W Optus are also reacting to the competition by
price reduction. According to Merrill Lynch (2000), if the market takes
longer than expected to develop, and pricing deteriorates, the start-ups
may have to merge to survive.
Alliance and Market Consolidation
Incumbents enjoy a sunk cost advantage because, with the basic
infrastructure in place, new technology can be utilised to expand their
systems.
The so-called dense wave division multiplexing (DWDM) allows carriers
such as C&W Optus and Telstra to expand capacity by a factor of 40, and
there are emerging technologies that can expand it by a factor of 1,000.
With sunk cost already invested in laying cable on the ground, the
incumbents are able to expand their networks with relatively small
investments, which give them the competitive edge over new operators.
As a result, new operators are establishing alliances with one another to
pool their resources to compete with the incumbents.
PowerTel has forged network sharing alliances with Ue Comm and
Amcom. Meanwhile, ntl is upgrading its national microwave TV
distribution network to carrier standard and establishing itself as a
potential alliance partner for the regions.
93
The Renaissance of Fibre Deployment in CAN

Many operators believe that DSL will take the focus off CAN cable
deployment for a short period, however the existing copper cable resource
is very limited, particularly in dense areas such as CBDs, and Telstra will
dominate these areas with their ADSL product. However, xDSL is not a
true broadband service (with 1.5Mbps bandwidth) and is limited in
application compared to optic fibre. It will come as a bit of a shock to nonTelstra DSL providers that there is a lot of pair gain systems in the CAN
and that the copper network is not always up to carrying DSL services.
Frustration will force service providers who can afford it to look back to
cable deployment options.
Some commentators claim, that DSL is almost a past technology in the
US, and FTTH is becoming fashionable in places. This should allow
customer terminal equipment to fall in price. In telecommunications,
Australia tends to follow the trends set in the US by around three years.
Therefore, many operators predict that fibre deployment in the CAN will
increase rapidly in the next three years.
94
6.
HYBRID FIBRE COAX (HFC) NETWORK
6.1
Hybrid Fibre Coax (HFC) Technology Overview

Hybrid Fibre Coax is a way of delivering video, voice telephony, data, and
other interactive services over coaxial and fibre optic cables.
An HFC network provides the necessary bandwidth for home broadband
applications, using the spectrum from 5MHz to 450MHz for conventional
downstream analogue information, and the spectrum from 450MHz to
750MHz for digital broadcast services such as voice and video telephony,
video-on-demand, and interactive television.
In an HFC network the distribution to customer premises via a coaxial
with signals and transmission to and from customers on the coaxial cable
being broadcast to all customers. Addressing information in the signals
ensures that only the intended customer responds. Transmission to and
from the local access switch is via optical fibre cable.
How an HFC Network Works
A HFC network consists of a headend office, distribution centre, fibre
nodes, and network interface units. The headend office receives
information such as television signals, Internet packets, and streaming
media, then delivers them through a SDH ring to distribution centres.
The distribution centres then send the signals to neighbourhood fibre
nodes, which convert the optical signals to electrical signals and
redistributes them on coaxial cables to residents homes where network
interface units send the appropriate signals to the appropriate devices
(i.e. television, computer, telephone).
Systems classified as HFC have the following characteristics:
The physical media are fibre and coaxial cable, as shown in Exhibit 6-1.
The fibre connects the centralised equipment, eg, hubs, or headends,
with the distribution nodes. The transition to coaxial cable takes place
in the distribution node. Coaxial cables connect the distribution node to
the subscriber service units. Network Interface Units (NIUs) serve
single homes, while Multiple Dwelling Units (MDUs) serve multiple
customers in either a business or residential environment. The
subscriber service units support telephony, video, Ethernet and other
services.
95
The following figure is a simplified representation of the major types of

components and the interconnections in the HFC architecture. Actual
HFC deployments are quite complex.
Exhibit 6-1: HFC Architecture
Source: RHK
96
6.2
The Deployment of HFC Network

Hybrid Fibre Coax (HFC) combines the increased transport capacities of
fibre-optic systems with the classical coaxial TV-type distribution
architecture. HFC systems are being successfully deployed by cable
companies to support digital video, cable telephony, and cable data
services. This embedded base of networks and current subscribers makes
HFC systems attractive for delivering new telecommunication services to
existing customers.
In the capital cities on the eastern seaboard, the hybrid optical fibre and
coaxial cable (HFC) networks of Telstra and C&W Optus pass millions of
homes and businesses. These networks already offer pay television, cable
modem access and, in the case of C&W Optus, telephony as well.
Telstras hybrid fibre coax (HFC) cable network which passes 2.5 million
homes was completed in 1997. It is a state of the art, 2-way 750MHz
network. In addition to the pay TV channels, it provides the capability for
data channels with a shared 30Mbit/s downstream and 768Kbit/s
upstream.
This cable is Telstras first choice for delivering broadband services. The
rollout of this network was targeted at particular demographic areas
(mainly urban residential), and provides very high quality interactive
capability.
Through the companys acquisition of Optus Vision, C&W Optus has a
broadband local network, which has passed about two million addresses
in Sydney, Melbourne and Brisbane. It provides premium TV, local
telephony, full two-way high-speed transmission and other digital and
interactive services.
However, neither Telstra nor C&W Optus has any immediate plan to
expand their HFC networks.
On the other hand, regional companies like Neighbourhood Cable,
West Coast Radio and Austar are also deploying their HFC network in
the rural and regional areas. Neighbourhood Cable Ltd saw the niche
telecommunications market capabilities of large rural towns like Mildura,
Ballarat, Bendigo and Albury-Wodonga, and quickly moved to supply
hybrid fibre-optic and coaxial (HFC) cable infrastructure capable of
delivering both broadband Internet and payTV along with the usual
local and long-distance telephone services.
97
Exhibit 6-2 provides an overview on the HFC network operators in

Australia.
Exhibit 6-2: HFC Network Operator Overview
Operational
Status
Operator
Coverage
Telstra
1997
Urban areas in Melbourne, Sydney, Gold Coast,

Brisbane, Adelaide and Perth.
C&W Optus
1997
Urban areas in Sydney, Melbourne and Brisbane
Neighbourhood Cable
2000
Mildura, Ballarat, Bendigo(c), Albury-Wodonga(c)

and other regional towns in VIC(p).
Austar (Windytide)
1999
Darwin
West Coast Radio

(iiNet)
2000
Perth (Ellenbrook area)
(c) = constructing
(p) = planning
98
6.3
HFC Network Deployment

In 1994, Telstra commenced rollout of its broadband HFC network. By
December 1997, the network passed 2.5 million homes (excluding
businesses), instead of the four million planned. Telstra initially aimed to
provide broadband cable to more than two-thirds of Australia with an
investment of $4 billion. Network rollout was stopped in 1999.
C&W Optus broadband network rollout began in February 1995,
following electricity lines to homes, primarily via overhead lines.
C&W Optus has agreements in NSW with Energy Australia,
Sydney Electricity and Integral.
The original rationales for building the HFC network were:
reduction of interconnection charges paid to Telstra for local telephony
access and
provision of broadband multimedia services (video, data and voice) to
residential and small business customers through a single pipe.
The rollout in Adelaide was placed on hold in August 1997. In 1998,
C&W Optus indicated to the ACCC that it would commit itself to a
further rollout of broadband under the right regulatory conditions.
By the end of 2000, about 21,000km coax cable (0.625 coaxial) and
5,500km fibre cable (single mode optical fibre from 24 to 144 fibres per
sheath) had been laid around the suburban residential areas in Brisbane,
Melbourne and Sydney.
However, regional operators, Neighbourhood Cable and Austar are
building their HFC networks in regional Australia, leaving Telstra and
C&W Optus to compete in the State Capitals.
Exhibit 6-3 provides an overview on the HFC networks rollout in
Australia.
99
Exhibit 6-3: HFC Network Rollout

Operator
C&W
Optus
Coverage
Urban areas in
Sydney
Melbourne
Brisbane
Investment*
$3bn
Infrastructure
30 nodes covering
2m households
21,000km coax
cable
Capacity
5-65MHz (up link)
85-700MHz (down
link)
5500km cable
Telstra
Urban areas in
Melbourne
Sydney
Gold Coast
Brisbane
Adelaide
Perth
$4bn
Nodes = 279
5-65MHz (up link)
Hubs = 4172
85-750MHz (down
link)
40,000km cable
(covering 2.5m homes)
64 Analogue TV
Channels
200MHz Digital
Services
768Kbps (up link)
30MKbps (down
link)
Neighbour
hood
Cable
Mildura, Ballarat,
Bendigo (c), AlburyWodonga (c)
$8m
140 nodes
250km cable
(120,000 homes)
Austar
(Windytide)
Darwin
covering 27,000
homes
West
Coast
Radio
(iiNet)
Perth (Ellenbrook)
covering 10,000
homes (planning)
768Kbps
30MKbps
(c) = constructing
* estimates
The following section provides an overview on C&W Optus HFC network

coverage.
Sydney metropolitan area 3 exchanges;
Melbourne metropolitan area 2 exchanges;
Brisbane metropolitan area 1 exchange.
100
Exhibit 6-4: Sydney HFC Network
Thornleigh
Belrose
Blacktown
Carlingford
Artarmon
Fairfield
Waverley
Liverpool
Randwick
Riverwood
Miranda
Exhibit 6-5: Melbourne HFC Network
Broadmedows
Lower Plenty
Thomastown
Chirnside Park
Sunshine
Kew
East Burwood
South Melbourne
Werribee
Ferntree Gully
McKinnon
Braeside
Dandenong
Frankston
Exhibit 6-6: Brisbane HFC Network
Fitzgibbon
Kelvin Grove
Rochedale
Ipswich
Hillcrest
Source: C&W Optus
101
6.4
HFC Market Perspective

C&W Optus abandoned its HFC network rollout in Adelaide in 1997.
Both Telstra and C&W Optus had decided not to expand their HFC
networks in 1998/1999. This decision was driven by their HFC network
duplication in various cities in Australia.
C&W Optus alleged that the current regime that allows carriers such as
Foxtel, to sign up exclusive content is also an inhibiting factor on growth.
On 30 August 1999 the ACCC issued its report declaring analogue
subscription television broadcast carriage services under part XIC of the
Trade Practices Act 1974. If a carriage service is declared, a provider of
that service (effectively Telstra and C&W Optus) must supply that
service to an access seeker, subject to certain exceptions.
In justification of its decision, the ACCC said that it was very unlikely
that additional broadband cable networks capable of delivering Pay TV to
residences will be constructed where there are already cable networks in
place.
Neither Telstra nor C&W Optus has any immediate plan to expand their
HFC networks.
According to the Telecommunications Performance Report prepared by
ACA (2000), the ACCC considered that declaration would promote
competition in downstream markets, reducing entry barriers and
allowing niche Pay TV service providers the opportunity to offer an
alternative range of programming to those offered by Foxtel and
Optus Vision.
Earlier in 2001, the ACCC made interim determination in arbitration
involving Telstra, Foxtel, TARBS and Seven Network that gave access to
some parts of Telstras network. AAPT indicated that it has plans to offer
Pay TV services to its 600,000 retail customers during the next
12 months, and may eventually consider seeking access to the broadband
networks of Telstra and C&W Optus.
102
Exhibit 6-7: HFC Network User Overview

Cable TV User
Homes passed
1998
1999
2000
3m
320,000
500,000
630,000
2.2m
186,000
210,000
350,000 (2000)
500,000 (2001)
Austar
27,000
215,000*
300,000*
400,000*
Others
N.A.
N.A.
N.A.
N.A.
Total
5.3m
730,000
1,100,000
1,400,000
Foxtel (Telstra)
C&W Optus
*including satellite base cable TV users
103
7.
CELLULAR MOBILE NETWORK
7.1
Cellular Technology Overview

Cellular networks provide wireless communications on a mobile basis.
Users can take their mobile phones everywhere with them to make or
receive calls within the network coverage areas.
The genius of the cellular system is the division of a city (or an area) into
small cells. This allows extensive frequency reuse across the same area,
so that millions of people can use cell phones simultaneously. In a typical
GSM cell phone system, the cell phone carrier receives about 900
frequencies to use across the coverage area. The carrier chops up the area
into cells. Each cell is typically sized at about 10 square miles (26 square
kilometres). Cells are normally thought of as hexagons on a big hexagonal
grid, as shown in Exhibit 7.1.
Exhibit 7-1: Cell Coverage in a Cellular Network
Source: All about Network
As cell phones and base stations use low-power transmitters, the same
frequencies can be reused in non-adjacent cells. In Exhibit 7-1, the two
shaded cells can reuse the same frequencies.
Each cell has a base station that consists of a tower and a small building
containing the radio equipment.
104
7.1.1
How a Cellular Network Works

The cellular approach requires a large number of base stations in a city
(or an area) of any size. A typical large city can have hundreds of towers.
Each carrier in each city also runs one central office called the Mobile
Telephone Switching Office Centre (MTSO). This office handles all of the
phone connections to the normal land-based phone system, and controls
all of the base stations in the region.
All cell phones have special codes associated with them. These codes are
used to identify the phone, the phones owner and the service provider.
As a user moves toward the edge of call coverage areas, the base stations
will note that the signal strength is diminishing. Meanwhile, the base
station in the cell that the user is moving toward is listening and
measuring signal strength increasing. The two base stations coordinate
themselves through the MTSO, and at some point, the users phone
receives a signal on a control channel instructing it to change frequencies.
This hand off switches the users phone to the new cell.
Exhibit 7-2: Cellular Network Operation
Source: All about Network
105
7.1.2
The Evolution of Cellular Mobile Phone Technology

Exhibit 7-3: Evolution of Cellular Systems
Source: Wireless Asia (2000)
The First Generation Analogue

In 1987, Telecom Australia (currently known as Telstra) introduced the
first mobile telephone in Australia based on the analogue AMPS network.
The analogue network is voice centric with limited data capability of less
than 300bps. The analogue mobile phone service is generally known as
the first generation cellular mobile standard. The analogue AMPS
network was phased out in 2000. (see Appendix D)
The Second Generation Digital
A second generation of mobile service based on digital GSM was
introduced by C&W Optus in 1993 followed by Telstra and Vodafone. The
benefits claimed from this analogue phase-out and the switch to a digitalonly network include:
more vigorous competition in digital
more efficient use of radio spectrum
greater message security
better service quality with data capability of 9.6Kbps.
106
In 1999, Hutchison, One.Tel and AAPT (Cellular One) were awarded

licenses to provide digital mobile phone service. However, by June 2001,
only Hutchisons CDMA network is operating while One.Tel closed down
its GSM1800 network due to financial difficulty and Cellular One
abandoned its CDMA network rollout.
The phasing out of Australias only analogue telephone network operated
by Telstra commenced in 1999 and by end of 2000 all analogue users had
migrated to the digital GSM and CDMA networks. (see Appendix D
The Phase out Analogue Network.)
Telstras CDMA network which was completed in July 2000 provides a
wider coverage (95%), especially in rural and regional Australia.
The 2.5 Generation Enhanced Digital
Existing second generation (2G) mobile networks were conceived about
ten years ago, before the advent of the Internet, and primarily designed to
extend fixed network services into the mobile environment at a maximum
speed of 9600bps. Since the introduction of 2G services, there has been a
phenomenal growth in the volume of data being transacted across fixed
networks, such that it now nearly exceeds the volume of voice traffic. The
Internet has been a major factor in this change.
New two and a half generation technologies such as Wireless Application
Protocol (WAP), General Packet Radio Services (GPRS) and Enhanced
Data Rates for Global Evolution (EDGE) have been designed to provide
mobile users with access to the Internet and to increase the rate of data
communications. GPRS effectively increases the signalling speed by
allocating more of the available capacity for this purpose. The 2.5G is a
transitional technology before the arrival of 3G.
GSM-centric operators have the option to implement GPRS and/or EDGE
prior to 3G rollout. GPRS provides a relatively easy upgrade of existing
2G networks to support higher bit rates. Commonly considered a 2.5G
technology, GPRS offers a theoretical maximum 171.2Kbps bit rate, when
all 8 time slots were used, significantly lowering the actual bit rate. In
addition, initial GPRS deployments would only provide point-to-point
support, meaning that subscribers can only communicate with one party
at any one time. At present, some European operators have announced
commercial GPRS rollouts this year. Telstra has launched the first GPRS
system in Australia in early 2001. Mobile data services are likely to take
off with the advent of higher bit rates offered by GPRS.
107
Beyond GPRS, operators have the option of implementing EDGE or

migrating directly to W-CDMA. EDGE enhances GPRS and offers bit
rates of up to 384Kbps through the use of a more efficient modulation
technique. Another advantage of EDGE over GPRS is support for pointto-point communication. Operators without 3G licenses may be able to
offer GPRS or EDGE instead. However, some operators may prefer a
direct 3G implementation over additional infrastructure costs in
association with EDGE. Also, a significant challenge facing GSM
migration is handset compatibility. New handsets will be required for
every migration step, GPRS, EDGE, as well as W-CDMA.
In Australia, Telstra, C&W Optus and Vodafone are launching their
respective GPRS networks in mid 2001. However, full commercialisation
of the GPRS services have yet to materialise due to the lack of GPRS
enabled handset on the market.
The Third Generation Broadband Digital
3G is in a different category of mobile services as it is based on broadband
technologies, whereas 2G technologies are based on narrowband
technology. The widening of the bandwidth will enable greater volumes of
data to flow to mobile receivers, thereby enabling full broadband services
such as:
full colour screens
video conferencing
full motion video
picture e-mails
full web facilities.
Unlike 2G and 2.5G, 3G equipment is small, simple and cheap. All
applications will not necessarily be built into the handset with programs
being downloadable when required. All application software required by
3G operators will be available off the network with download times
expected to be approximately three seconds.
To ensure a smooth transition from 2G to 3G, the IMT2000 was
established by the International Telecommunications Union (ITU) to
harmonise the different proposed 3G standards. To date, the ITU has
decided on a flexible standard with the choice of multiple access methods
(CDMA, GSM, TDMA and a hybrid CDMA/TDMA). CDMA is perceived to
be the predominant interface.
108
Two 3G standards wideband CDMA (W-CDMA), supported by current

GSM-centric countries) and CDMA2000 (supported by current CDMAcentric countries) have emerged as the most prominent contenders.
Although both technologies are CDMA-based, major differences exist
between them. W-CDMA systems work on a RF bandwidth of 5MHz,
much wider than the cCDMA2000 carrier size of 1.25MHz. The wider
bandwidth serves to enhance performance under multipath environments
(the receiver can better separate the different incoming signals) and
increase diversity. Its carriers may be spaced 4.2 to 5.4MHz apart in
200MHz increments. The larger spacing is more likely to be applied
between operators than within one operators spectrum. This will help to
reduce inter-operator interference. W-CDMA also offers seamless interfrequency handover, a useful feature in high-subscriber density areas.
In March 2001, 3G operating licenses were auctioned to Telstra,
C&W Optus, Vodafone, Hutchison, 3G Investments (Qualcomm) and
CKW Wireless. 3G mobile service is expected to be launched in 2003.
109
7.2
The Development of Cellular Mobile Network in Australia

Telstra introduced Australias first cellular mobile phone based on
analogue technology AMPS in 1987. In 1993 C&W Optus and Vodafone
commenced their cellular services when the cellular mobile market was
deregulated.
The cellular market was further deregulated in 1999 when the ACA
auctioned off spectrum in the 1.8GHz and issued three new licenses.
Exhibit 7-4 provides an overview on the cellular operators in Australia.
Exhibit 7-4: Overview on the Cellular Operators in Australia
Operator
Telstra
Cellular
Standard
Launch
Coverage
Analogue AMPS
1987 (terminated in
2000)
Nationwide (94% pop)
GSM/GSM1800
1993
CDMA
2000
C& W Optus
GSM/GSM1800
1993
Vodafone
GSM/GSM1800
1993
Hutchison
CDMA
2000
Melbourne, Sydney, Perth,

Brisbane, Adelaide
AAPT
CDMA
Launch was
abandoned in 2001
One.Tel
GSM1800
2000 (terminated in
June 2001)
Melbourne, Sydney, Perth,

Brisbane, Adelaide
After 19 rounds of bidding in early 2001, the auction of 1.9GHz spectrum

for 3G mobile phone service concluded in March 2001. The auction
brought about A$1.16bn for the Federal Government, well short of the
budget forecasts of A$2.6bn.
The successful bidders for the 3G service licenses are profiled in
Exhibit 7-5.
110
Exhibit 7-5: Successful Bidders for the 3G Service Licenses

Operator
Launch
Spectrum
Coverage
Telstra
2003
A$302m
(15MHz paired spectrum in all
capital cities)
(10MHz paired spectrum in
regional areas)
(5MHz unpaired spectrum in all
capital cities).
National coverage
C&W Optus
2002/3
A$253m
capital cities)
regional areas)
(5MHz unpaired spectrum in 5
cities)
National coverage
Vodafone
2002/3
A$196m
capital cities)
regional areas)
(5MHz unpaired spectrum in all
capital cities)
National coverage
Hutchison
2003
A$196m
Melbourne and Sydney)
(10MHz paired in Brisbane,
Adelaide and Perth)
5 major cities
(Sydney, Melbourne,
Brisbane, Adelaide and
Perth)
3G
Investments
(Qualcomm)
2003
(cdma2000)
A$159m
capital cities)
8 major cities
(Sydney, Melbourne,
Brisbane, Adelaide,
Perth, Hobart, Darwin
and Canberra)
CKW
Wireless
(Arraycomm)
A$95m
capital cities)
Source: ACA
111
7.3
Cellular Network Rollout
7.3.1
The Current 2G Cellular Network

Cellular mobile service has been the fastest growth market in the
Australian telecommunication industry, accounting for 25% of the total
telecommunication service revenue.
To capitalise on the growing market in view of expanding user base and
new applications, a substantial investment (some $7.5bn) has been
invested in the cellular networks.
Hutchison and One.Tel are planning to invest about $1.6bn each for their
networks (2000-2002). However, One.Tel terminated its GSM1800
network operation in June 2001 due to financial difficulty while AAPT
has decided not to roll out its CDMA network.
The mobile telecommunications infrastructure covers in excess of 94% of
the population, with an estimated 6,000 base transceiver station (BTS) in
place, some with antenna on obtrusive towers but increasingly mounted
on the sides of buildings and other structures. These BTS are divided
almost equally between the three current GSM players. At the present,
Hutchison is building a 800MHz CDMA network, rolling out new
coverage mainly in Sydney and Melbourne. It is expected that Hutchison
will need at least 1000 sites for its network and while attempts are being
made to collocate with existing carriers it is inevitable that many new
sites will be needed.
According to Paul Budde (2000), GSM base transceiver station (BTS)
costs depend on their traffic capacity and typical prices range from
$60,000 for a base station designed for outdoor mounting to $500,000 for
a fully equipped central site. Added to the cost of each site is the backhaul
of information from the BTS which can be provided by landline or more
typically a microwave link. In the latter case costs would be between
$40,000 and $50,000. In addition associated civil works for each site
including a tower and power could increase costs by up to another
$100,000.
Exhibit 7-6 provides an overview on the cellular network roll out by
operators in Australia.
112
Exhibit 7-6: Cellular Network Overview

Operator
Standard
Investment**
Infrastructure
User Capacity
Telstra
AMPS
$1.6bn (by 2000)
1400 BS (Phased
out)
2,000,000 (Phased
out)
Telstra
GSM
$2bn (by 2000)
3400 BS (2000)
4.5m (2000)
3550 BS (2001)
5.5m (2001)
3800 BS (2002)
Telstra
CDMA
$0.8bn
1500 to 2500 BS
(2000-2001)**
1m
Optus
GSM
$2bn (by 2000)
1550 BS (1999)
2m (1999)
2220 BS (2000)
3m (2000)
2800 BS (2001)
4m (2001)
5m (2002)
Vodafone
Hutchison
GSM
CDMA
$1.5bn
$0.5bn
($1bn = 2000-2003)
850 BS (2000)
3m (2000)
900 BS (2001)
3.5m 2001)
500 BS (2000)
700 BS (2001)
1000 BS (2002)
One.Tel
AAPT
GSM1800
$1bn (planned)
CDMA
$0.5bn (planned)
820 (planned)
1,000,000 (planned)
network abandoned in 2001

* Telstra spent about $0.5bn and $0.6bn in its mobile networks in 1999 and 2000 respectively
**sourced from BIS Shrapnels Mobile Communication Services.
113
7.3.2
Cellular Network Coverage Map

Exhibits 7-7 to 7-9 provide an overview on the cellular network coverage
maps by the three national cellular operators.
Exhibit 7-7: Cellular Network Coverage Map Telstra
Source: Telstra and Telecommunications Service Inquiry (1999)
114
Exhibit 7-8: Cellular Network Coverage Map C&W Optus
Source: C&W Optus
115
Exhibit 7-9: Cellular Network Coverage Map Vodafone
Source: Vodafone
116
7.3.3
Investment in 3G Cellular Network

An equal amount of money is expected to be outlayed to roll out the costly
3G network.
It is estimated that in terms of 3G network investment, the next 3 to
4 years will see some US$70bn invested in the Asia-Pacific, costing at
least U$3.3bn per country. (The Europe market is more than double this
amount, at around US$165bn).
Depending on the size of the country as well as the population density, on
average, it will cost an operator US$0.8bn to roll out a first phase 3G
network (for the first 3 years).
Some operators say it will cost US$350 (per user) to provide for a 3G
mobile phone line about 45% higher than the current 2G GSM cost of
U$230 per user.
Of course for countries like China and Japan, the market for 3G network
investment is likely to be considerably higher (may be more than
US$10bn). NTT DoCoMo which plans for the first 3G in May 2001 give a
figure of US$8bn for 3G investment.
For countries like Hong Kong and Singapore with small but dense
population, the cost of a 3G network is around US$0.6bn. BIS Shrapnel
estimates it will cost an Australian operator around US$1bn to roll out a
3G network, in consideration of the size of the country as well as the
density of the population.
117
7.4
Cellular Mobile Service and User
7.4.1
Cellular Mobile User Segmentation

Use of cellular mobile telephones used to be almost the exclusive domain
of business people. However, over 50% of mobile telephone subscribers
are residential users. It has also been established that more than 80% of
all new mobile telephone connections are originating from the residential
market.
Australian cellular market segmentation has continued to change since
1995, with the residential mobile phone users share increasing mainly
due to mobile service affordability (through discounted service plans and
prepaid services). The continued uptake of cellular mobile telephone
services in the consumer/residential segment has seen the user share
with in the corporate and small business segments continue to depreciate
as set out in Exhibit 7-10.
Exhibit 7-10: Cellular Market Segmentation
(Residential/Small to Medium Business/Corporate)
User
1995
1996
1997
1998
1999
2000
Corporate
20%
16%
15%
14%
13%
11%
Small/Medium Business
53%
49%
46%
43%
40%
37%
Residential
27%
35%
39%
43%
47%
50%
*About 80% of new subscribers in 1999/2000 originated from the residential market.
Residential Market
Research conducted for the mobile telephone manufacturer Nokia
indicated that for the vast majority of people, the key reason for buying a
mobile telephone is lifestyle considerations, such as keeping in touch with
friends, or juggling a busy social life.
The mobile phone has become an essential part of everyday Australian
life with people not only using them for convenient communications but
also for the safety aspect. Ownership of mobiles crosses most
demographic segments with 55% of mobile phone users being women,
42% are under the age of 25 and 69% are under the age of 35.
Approximately 72% of Internet users own a mobile phone. Teenagers and
older people have been the latest groups being targeted for mobile use.
Prepaid mobile phones offered teenagers and their parents security while
avoiding large bills. More older people are becoming attracted to using
mobile phones because of the inherent personal security.
118
A major growth area in Australias cellular market has been in the

advent of prepaid mobile phone services, which accumulated between
30% of all Christmas mobile phone sales in 1999 and 2000. Another
interesting trend is the increasing sale of mobile phones at nontraditional retail outlets, such as petrol stations, stationery shops, and
cash converter shops. Direct sales of mobile phones through the Internet
will increasingly have an impact on traditional mobile distribution
channels.
Business Market
Industry sources estimate that about 60% of self employed people use a
mobile telephone. An estimated 25% of business calls are made on
mobiles and 75% on fixed lines. The general feeling within the industry is
that these figures probably will be reversed within five years.
The widespread use of cellular mobile systems as well as the current
boom in data communications (such as the Internet) has a profound
impact on the mobile data market in general. In Scandinavian countries
applications such as messaging, call waiting, forwarding, are seen as the
best suited value added services. However, customers are only interested
if these services are made available for free or at very low costs.
In the business market, mobile data systems have features that are very
well suited to specific niche applications for sales and field staff.
Applications like SMS, WAP and mobile banking are on the increase
amongst business users.
According to C&W Optus, each year 69% of Australian workers spend
time out of the office travelling. These business travellers spend around
$420 million each year on telecommunications this is the same group
that will be the prime target for mobile data.
119
7.4.2
Cellular Mobile Services

Cellular mobile communication was previously used for voice services.
The data element chiefly served to support the main voice function.
However, the recent boom in data communications and Internet is having
a profound effect on the market in cellular mobile phone services.
Mobile phones are no longer used exclusively for voice services and are
increasingly being used to transmit data.
Short Messaging Services (SMS) have been available since the mid-1990s.
SMS is a data protocol that enables text messages to be transmitted over
GSM and CDMA mobile handsets. Inter-handset messages have
increased dramatically following an agreement by the major carriers to
connect their SMS services in April 2000.
Mobile data over Wireless Application Protocol (WAP) has also been
commercially available since late 1999. WAP is a protocol standard for
mobile Internet access that enables mobile phones to access special web
pages at a download rate of 9.6Kbps. WAP is superior to SMS in that it
provides greater scope for interactivity.
Take-up rates for WAP are expected to increase following the completion
of the rollout of General Packet Radio Service (GPRS) networks and the
advent of commercially available GPRS handsets. GPRS overlays the
GSM networks, and enables data to be sent in discrete packets at speeds
of up to 115Kbps.
Exhibit 7-11 provides an overview on the traffic volume of mobile phone
network in terms of voice, data and video.
Exhibit 7-11: Traffic Volume of Mobile Phone Network
1998
1999
2000
2001
2002
2003
Voice
98.5%
97.5%
96%
92%
86%
80%
Data
1.5%
2.5%
4%
8%
14%
19%
Video
0%
0%
0%
0%
0%
1%
With the introduction of GPRS and 3G which enable the delivery of

streaming video services on mobile phone services at a speed of more than
115Kbps video traffic on cellular network will take off in 2003. While data
and video traffic began to increase in the year 2002/2003, voice traffic will
be reduced to some 80% by the year 2003.
120
7.5
Cellular Market Perspective in Australia
7.5.1
Cellular Growth and Market Share

The Australian mobile telephone market has experienced phenomenal
growth in little more than 10 years. From 1993 to 1994, mobile telephone
subscriptions jumped from about 765,000 to 1,744,000. By 1995, the
number of subscribers had risen to 3,314,000; in 1996, to 4,448,000; to
5,210,000 in 1997 and at the end of 2000 to 10.2 million subscribers. One
of the most significant drivers of the mobile telephone market in recent
years was the introduction of service plans (including pre-paid services)
which opened up consumer markets enabling non-business customers to
enter the market more easily.
The number of cellular subscribers in Australia had increased from 7.7m
in 1999 to 10.2m in 2000, representing a 30% growth. The current user
base of 10.2m as at end of 2000 represents a cellular penetration level of
54% of the Australian population. Exhibit 7-12 provides an overview of
growth of the Australian cellular user base for the past 10 years.
Exhibit 7-12: Cellular User Base in Australia (1992-2001)
1992
511,000
1993
765,000
1,744,000
1994
1995
3,314,000
1996
4,448,000
1997
5,210,000
5,900,000
1998
1999
7,722,000
2000
10,200,000
2001
0
6,000,000
12,000,000
(projected)
12,000,000
No. of Subscribers
It is expected that the number of cellular users in Australia will reach

15m by the year 2005, representing a 78% penetration rate.
121
7.5.2
Market Competition
As at the end of December 2000, Telstra remained the leading cellular
service provider in Australia, with 47% of the total cellular market share,
followed by C&W Optus (33%) and Vodafone (18%). New operators who
entered the cellular market in early 2000 including Hutchison, One.Tel
and AAPT cellular only accounted for 2% of the market share.
Exhibit 7-13 outlines the total cellular market share in Australia as at
December 2000.
Exhibit 7-13: Cellular Market Share 2000
Vodafone
18%
Others
2%
Telstra
47%
C&W Optus
33%
*Total cellular subscriber was 10.2 million as at December 2000.
The mobile phone industry currently generates approximately A$7 billion

a year. The large majority of that is soaked up by the existing major
cellular network operators Telstra, C&W Optus and Vodafone in that
order. Telstra is believed to earn over A$3 billion of its A$18 billion in
annual revenue (2000) from cellular services while C&W Optus also
achieved cellular revenues of A$3 billion in 2000.
Until late 2000 the three existing players engaged mostly in non-price
competition, using marketing, distribution and handset finance plans to
differentiate themselves. Price competition, where the main marketing
emphasis is on delivering mobile calls at a cheaper rate, was not a feature
of the market.
In 2000, three new mobile market entrants AAPT, Hutchison Orange and
One.Tel, started operating cellular mobile telephone services in
competition with the big three incumbents. Despite the fact that the cost
of mobile phone calls has not fallen greatly in five years, the big three
maintain that competition is fierce. The arrival of the new players, with
fresh ideas and product plans, is expected to put that claim to the test.
However, One.Tel has already disappeared as a source of competition.
122
All of the newcomers will be keen to quickly reach critical mass about
half a million subscribers so that operating cash flows can begin to pay
off the network establishment costs. As all of the new networks have
comparable networks to the established players, price competition
appears likely to be a key strategy. Falling prices which will threaten the
margins enjoyed by the three mobile phone incumbents.
The ability of the new entrants to win clients over from the incumbents
will however also depend on Mobile Number Portability (MNP). MNP
will allow customers to change their service whilst keeping the same
mobile phone number. According to the Australian Communications
Authority (ACA), MNP will be introduced in 25 September 2001.
7.5.3
International Perspective
According to Mobile Asia Pacific (2000), the cost of a mobile phone service
in Australia has been the highest in the Asia Pacific region.
The average cost of a mobile call in Australia is now about US$0.30 per
minute compared with about US$0.15 per minute in Europe and the
United States, with some calls available for little as 10 cents a minute. In
addition, Australian mobile call prices, on average, fell by 10% in 2000,
while they dropped by 40% in the United States and 50% to 80% in
Europe.
It was expected that the arrival of new operators in 2000 such One.Tel,
AAPT and Hutchison would lead to a sharp fall in prices and faster
growth. The evidence to date suggests that there has been only a
marginal decline in prices. In fact by mid 2001, AAPT has decided to
abandon its CDMA network while One.Tel was in financial difficulty,
with its customers being acquired by existing operators.
Exhibit 7-15 provides some indications of cellular penetration (per 100
population) in Australia, in comparison to other countries.
Telstra argued that the cost of mobile phone handset should also be taken into consideration in order to make a
fairer comparison of mobile service costs between different countries. The prices of mobile phone handsets are
comparatively low in Australia due to handset subsidies offered by operators to secure long service contracts from
users.
123
Exhibit 7-14: Cellular Penetration Table (Selected Countries)

Cellular Penetration
(per 100 Pop)
1998
1999
2000
2001
2002
2003
Australia
31%
40%
49%
64%
70%
73%
Hong Kong
43%
59%
76%
82%
86%
88%
Singapore
27%
37%
58%
70%
78%
83%
Taiwan
19%
50%
75%
83%
87%
90%
USA
26%
32%
39%
48%
57%
66%
Finland
53%
59%
66%
73%
79%
83%
France
19%
34%
48%
60%
70%
77%
Italy
32%
47%
61%
71%
78%
81%
Netherlands
22%
43%
63%
74%
79%
83%
Sweden
42%
51%
61%
70%
77%
81%
Norway
44%
56%
66%
74%
80%
83%
UK
22%
40%
60%
73%
79%
83%
Source: BIS Shrapnel and Strategy Analytics
124
8.
MICROWAVE NETWORK
8.1
Microwave Technology Overview

In 1959, the first broadband telecommunications link in Australia was
opened for traffic. It was a microwave radio link between Melbourne and
Bendigo in Victoria, and it was the beginning of a quiet revolution in
Australian telecommunications.
Like coaxial cable systems, microwave is called broadband links because
they carry a very large volume of communications using a much broader
range (or band) of frequencies compared to earlier systems. A single
broadband bearer can carry hundreds or even thousands of telephone
calls simultaneously by using a principle called frequency-division
multiplexing.
In a microwave radio system, telecommunications traffic is transmitted in
the form of directed beams of microwaves. Microwaves are a kind of
electromagnetic radiation like light or like radio waves used in ordinary
broadcasting, but of a frequency intermediate between these.
Like light, microwaves normally travel in a straight line. For this reason,
it is necessary to set up microwave repeating stations within line-of-sight
of each other. And because you can see further the higher you are,
microwave transmitting and receiving antennas are set on tall towers.
These antennas are usually parabolic dishes, which are the same sort of
shape as the mirrors in powerful searchlights, and for the same reason.
A light placed at the focal point of such a mirror will be reflected by it into
a parallel beam. Similarly, a microwave source placed at the focus of a
dish of such a shape will be reflected into a tight parallel beam. In the
reverse direction a parallel beam coming into a parabolic dish will be
focussed together at one point. On microwave antennas, there is a hoodshaped hollow tube at the focus of the dish which emits or receives the
microwaves.
Along a microwave route, a series of towers are set up at reasonably
regular intervals, usually about every forty kilometres, but depending on
the terrain. Each tower must be within sight of the top of the towers on
either side of it, and there must be no intervening obstacles.
125
The route for the towers has to be chosen very carefully. Radio
propagation tests are carried out along the proposed path for the
microwave link. To see whether there will be any effects which could
interfere with the reception of radio signals. Another problem in
Australia is that the rapid heating up of the desert surface during the
day, and its equally rapid cooling at night, tends to cause serious bending
of the microwave beam. Similarly, problems can be caused by reflections
of microwave beams off water and other objects.
The equipment at each repeater station must be kept operational by some
source of electrical power. Wind and solar powers have been used to
source energy for repeaters in remote areas.
126
8.2
The Deployment of Microwave Network in Australia

Microwave networks are deployed primarily to provide customer access as
well as trunk intercity connection in rural and remote areas.
Since the extensive fibre network roll out with greater capacity and
reliability, Telstra is scaling back the use of microwave technology in the
core trunk network. Since 2000, Telstra has been actively removing its
major inter-capital microwave links.
However, regional operators like ntl Telecom, Datafast and Telecaster are
continuing to deploy microwave network in rural and remote areas.
ntl Telecommunications plans to utilise the 560 tower sites to provide
telecommunications services. ntl Telecommunications is building the
largest microwave radio network in the world using these transmission
towers.
In the local access network, microwave offers data operators the promise
of faster and cheaper Internet and data access, bypassing the local loop of
the incumbent carrier, Telstra.
Established and start-up carriers using microwave include Pulsat,
Davnet, Austar, AAPT and Datafast Telecommunications. Local access
microwave networks are deployed in the CBD and metro areas in major
It is estimated that microwave can offer cost savings of up to 40%
compared to a fixed network. The benefit is not the high bandwidth, but
the mobility, speed of deployment and flexibility it provides the user.
Exhibit 8-1 provides an overview on the microwave technology in
Australia.
127
Exhibit 8-1: Microwave Network Operator Overview

Operator
Operational
Status
Local Network
Backbone Network
Plans to deploy long haul network
linking regional towns in VIC in 2002
AAPT
1998
CBD and metro areas in

Melbourne, Sydney, Brisbane,
Adelaide, Perth and Canberra
Agile
2000
Adelaide and regional areas in

SA (Coorong District)
AirNet
1999
A small network in Adelaide
Austar
2000
BushTel
2000
Datafast
2000
Melbourne CBD
Melbourne-Geelong
Geelong-Colac-CamperdownWarnambool-Portland-Mt
Gambia(c)
Melbourne-Sydney(c)
Ballarat-Bendigo(c)
Northern & Eastern VIC(p)
Davnet
1999
CDB and Metro areas in

Sydney Melbourne
Melbourne Canberra Sydney
Brisbane
Macrocom
(Flowcom)
Hobart Melbourne Canberra

Sydney Brisbane (2001)
(including regional centres in
NSW, Queensland and Victoria)
Adelaide Hobart Melbourne
Canberra Sydney Brisbane
Rockhampton (planned)
Netcare
(Paladin)
2000
Perth
ntl Telecom
2000
Regional towns in NSW and

VIC (Tamworth, Mildura,
Dubbo, Albury-Wodonga and
Griffith)
OMNIConnect
Cairn to Hobart (with regional spurs)
Melbourne CBD
Pulsat
2000
Metro areas in Sydney,

Melbourne, Perth and
Brisbane
Soul Pattinson
1999
Brisbane-Sydney-Melbourne
Brisbane-Cairns (planned)
Telecaster
2001
Brisbane-Townsville-Cairns (with
spurs to Gold Coast and other
regional areas)
Telstra
Since 1970
Customer access in rural and

remote areas Australia wide
Third Rail
(AMX)
2001
Tamworth
Trunk network between remote

country towns Australia wide
(c) = constructing (p) = planning
128
8.3
Microwave Network Rollout

Telstra, Macrocom and Soul Pattinson Telecommunications (SPT) have
existing microwave networks. Datafast Telecommunications, Telecasters
Communications, ntl Telecommunications and Agile Communications are
currently rolling out their new microwave networks.
ntl Telecom is building its microwave network utilising its broadcasting
assets to reach the whole of the eastern seaboard and will eventually
stretch from Cairns right the way through to Hobart. It will also go out to
regional towns like Tamworth, Mildura, Dubbo and Wagga where there is
a lack of facilities-based competition.
Although the microwave network is physically a trunk network linking
major cities and towns in the Eastern seaboard, ntl Telecom views it as
almost an access network.
Exhibit 8-2 provides an overview of the microwave network in Australia.
Exhibits 8-3 and 8-4 provide detailed coverage of microwave networks in
Australia.
Exhibit 8-2: Microwave Network Overview
Operator
Coverage
Investment*
Infrastructure
CBD and metro areas

in Melbourne,
Sydney, Brisbane,
Adelaide, Perth and
Canberra
$200m (2000 to
2003)
Agile
Adelaide and regional

areas in SA (Coorong
District)
$2m by 2000
($5m by 2002)
10 radio towers
34Mbps
Austar
Rural and regional

Australia
Datafast
MelbourneGeelong
$5m (2000-2003)
29 radio towers
34Mbps
$3m (2000-2003)
20 lines
40 transmitters
34Mbps
AAPT
150 fixed links
Capacity
3Gbps
(maximum)
34Mbps
(expected)
Geelong-ColacCamperdownWarnamboolPortlandMt Gambia(c)
Melbourne(c)
Sydney
Ballarat-Bendigo
(c)
Northern & Eastern

VIC(p)
Davnet
CDB and Metro areas

in Sydney Melbourne
129
Operator
Macrocom
(Flowcom)
Coverage
Melbourne
Canberra
Sydney Brisbane
Investment*
$55m
Infrastructure
Capacity
2,000km route (2000)

4,800km route
(2002/02)
Hobart
Melbourne
Canberra
Sydney Brisbane
(2001)
(70% business
market)
Adelaide Hobart
Melbourne
Canberra
Sydney Brisbane
Rockhampton
(planned)
ntl Telecom
Cairn to Hobart (with

regional spurs)
Regional towns in
NSW and VIC
(Tamworth, Mildura,
Dubbo, AlburyWodonga and Griffith)
Pulsat
Metro areas in
Sydney, Melbourne,
Perth and Brisbane
Soul
Pattinson
Brisbane-SydneyMelbourne
$100m for 1st

phase investment
(2001-2002)
$150m for 1st and
2nd phase
investment (20012003)
150 radio towers
6 x 155Mbps
5,500km route
covering 40 towns
$20m
55 transmitters
16Gbps
(maximum)
$25m (2000-2003)
34 transmitters and 9
switchers
6 x 155Mbps
Brisbane-Cairns
(planned)
Telecaster
Telstra
Brisbane-TownsvilleCairns (with spurs to

Gold Coast and other
regional areas)
Trunk network
between remote
country towns
Australia wide
Customer access in
rural and remote
areas Australia
wide
(950,000 population)
25,000 towers (CAN)
6000 towers (btw
towns)
2Mbps (CAN)
140 & 155Mbps
(btw towns)
(less than 1% of
population)
(30,000 user links)
*Sourced from media publications
130
Exhibit 8-3: Microwave Network Coverage Map Incumbent Operators

(Telstra, Macrocom and Soul Pattinson)
Darwin
Cairns
Broome
Karratha
Mackay
Alice Springs
Rockhampton
Brisbane
Maryborough
Gold Coast
Lismore
Newcastle
Perth
Tamworth
Adelaide
Macrocom
Telstra
Soul Pattinson
Mildura
Dubbo
Griffith
Sydney
Canberra
Wangaratta
Mount Gambier
Melbourne
Hobart
Source: Telstra, Soul Pattinson and Macrocom
131
Exhibit 8-4: Microwave Network Coverage Map New Operators

(ntl, Telecaster and Datafast)
Mt Gambier
ntl
Datafast
Telecaster
Bairnsdale
Source: ntl, Telecaster and Datafast

*The map is based on ntls network map.
132
8.4
Microwave Service and User
8.4.1
Microwave Backbone Network

Microwave networks provide transmission services for companies and
telecom carriers in regional areas.
There are a number of telecom carriers that have built infrastructure
covering CBD and inter-city routes. Microwave backbone network
operators can provide transmission access for these companies into the
regional areas.
On the other hand, there are other regional telecom companies that are
starting up local networks in regional areas. Microwave operators can
bring their network traffic back into the cities and distribute the calls for
them.
In addition, microwave backbone networks can also provide services to
the mobile operators which have very large fixed infrastructures where
they have to backhaul the calls from the mobile base stations to their
switches.
Apart from these telecom carriers, microwave networks also provide
connections to emergency service companies and other radio based
customers.
ntl Telecommunications offers distribution services to broadcasters,
wholesale bandwidth to telecoms carriers and ISPs throughout regional
Australia and the capital cities. Unlike Macrocom which is mainly intercity based, ntl Telecommunications is targeting regional Australia. At the
moment, ntl has no intention to enter the residential market.
Exhibit 8-5 provides an overview of the target user and area of focus for
microwave backbone network.
Exhibit 8-5: Microwave Backbone Network User
Area of Focus
Regional and remote areas
Target User
Telecom carrier, regional companies, radio
based companies and mobile carrier.
133
8.4.2
Microwave Local Access Network

Microwave networks are also being adopted by local access operators as a
wireless access solution in local loop networks. The driving factor to
deploy radio systems is the demand for quick establishment of services.
Most of these operators are using microwave technology as a supplement
to their local fibre optic access and DSL networks. In addition, it also
avoids carriers having to gain access to Telstras exchanges.
Davnet utilises microwave technology for longer tail connections which
are not viable through xDSL and optic fibre.
AAPT deploys fixed point-to-point microwave links to provide customer
access circuits and small capacity backhaul to the AAPT central offices in
six capital cities. AAPT initially used microwave links for data and voice
access circuits to connect AAPT customers to the local switch. The service
is targeted at corporate and SME users in CBD, metro and regional
areas. It is currently used for last mile access in those areas where AAPT
fibre is not in place, by providing immediate high-speed access to
business. In addition, it is also used in non-metro and regional areas with
a low density of users. It provides more cost effective access than LMDS.
LMDS is more suitable to CBD areas with high density of users.
Exhibit 8-6 provides an overview of the target user and area of focus for
microwave network operator in the local loop.
Exhibit 8-6: Microwave Local Network User
Area of Focus
High rise buildings in CBD areas.
Target User
Large corporate, in building
telecommunication service operator and
local access operator.
134
8.5
Microwave Network Market Perspective in Australia
8.5.1
A Mature and Low Bandwidth Technology

Microwave technology is a mature radio technology in which
telecommunications traffic is transmitted in the form of a microwave
beam between antennae set on tall towers.
Although it is capable of providing a bandwidth of up to 135Mbps, in
practice, its average optimum capacity is about 35Mbps. As a result, it is
regarded as a poor cousin to fibre in terms of capacity and reliability. In
addition, weather conditions (rain and heat) can also impair the
transmission of microwave networks.
Microwave technology is being deployed by operators as trunk backbone
network linking country towns in remote areas where wired technologies
are not accessible.
Since the extensive fibre network rollout with greater capacity and
reliability, Telstra is scaling back the use of microwave technology in the
core trunk network. Since 2000, Telstra has been actively removing the
major inter-capital microwave links.
8.5.2
The Resurrection of Microwave Networks

With the notable exception of Telstras scaling back of its core trunk
network, microwave network deployment in Australia has experienced a
revival over the past few years due to the advance in technology and the
improvement of microwave engineering.
Properly engineered microwave can provide equivalent reliability to fibre.
In some deployments of older systems the hop links were too long, and
the radio technology was not of the same standard as modern radios.
ntl Telecom has chosen conservative hop links and the type of radio that
it is using is specifically designed to give very high levels of availability.
Modern radios have a lot of error correction inherent in their design.
One of the major driving factors for microwave network deployment is the
ease of spectrum licensing. Microwave operators have to acquire
individual frequencies from point-to-point transmission on the apparatuslicensing basis. A speedy and well-organised microwave spectrum
management by the ACA has enabled operators to access to microwave
frequencies readily.
135
Regional operators like ntl Telecom, Datafast and Telecaster are

continuing to deploy microwave network in rural and remote areas.
For greater network reliability, microwave networks are also being used
to supplement or provide redundancy to fibre routes.
In the local access network, microwave offers data operators the promise
of faster and cheaper Internet and data access, bypassing the local loop of
the incumbent carrier, Telstra.
It is estimated that microwave can offer cost savings of up to 40%. The
benefit is not the high bandwidth, but the mobility, speed of deployment
and flexibility it provides the user.
8.5.3
Market Potential
The installation of point-to-point microwave backbone networks is
sometimes comparatively cheaper per unit of capacity than installing a
new optical fibre network or launching satellites. This is particularly the
case if existing towers, perhaps used for broadcasting or cellular
telephony, can also be used to support the microwave equipment.
However, the capacity of such systems is limited by the availability of
spectrum and their reliability can be at risk from adverse weather
conditions and/or malicious damage. Access to good tower sites is also an
issue for network operator in regional areas.
While the capacity of microwave systems is likely to expand over the next
five years as the result of technological developments, the rate of that
expansion will be very small in relation to the likely rate of capacity
increases available on optical fibre networks. For longer term, fibre optic
will be the preferred solution for broadband application; therefore,
microwave network may have its niche market in the regional areas.
Regional Australian towns are typified by long reaches with low
population. Compared to fibre optic, microwave is more suitable network
solution to these areas.
136
The key feature of these backbone microwave networks is that it

addresses the regional areas where there is a lack of facilities-based
competition.
ntl Telecom, Telecasters and Austar (with their regionally distributed
broadcast transmission asset) recognised the gap in the market. It was a
very logical step for them to develop a telecoms network utilising those
broadcasting assets and addressing the regional areas.
At the moment, ntl Telecom is building the largest microwave network in
rural and remote areas utilising 560 towers.
Like ntl Telecom, Telecasters plans to become a carriers carrier by
providing microwave trunk transmission to the regional cities in
Queensland for TV companies, broadcasters, telecommunications carriers
and SME businesses.
By using the microwave network and leveraging its broadcasting asset,
Telecasters has been able to enter the telecommunications market.
137
9.
BROADBAND WIRELESS NETWORK

(LMDS AND MMDS)
9.1
Broadband Wireless Technology Overview

Deploying a fixed link for broadband network access to customers
premises is difficult and expensive. However, the new generation of
higher-frequency and broadband wireless technologies is changing the
face of the converging telecoms and entertainment markets, as it
provides:
lower deployment cost (than wired solution)
speedy network rollout
multiple applications.
The broadband wireless system consists of a radio transmitter which
sends signals on a combination of channels to numerous receivers,
including homes and businesses. There are various names for broadband
wireless systems, the commonest being
MMDS (multi-channel multipoint distribution system)
LMDS/LMCS (local multipoint distribution/communication system)
MVDS (microwave video distribution system).
They are roughly defined by the frequency range at which they operate,
as shown in Exhibit 9-1. LMDS operates in various frequency bands, from
24GHz to 38GHz. MMDS has historically been used to deliver one-way
pay TV broadcasts, but is now seen as a way of providing two-way digital
broadband access. It operates at a lower frequency than LMDS (1GHz to
2.7GHz) allowing much greater range. There is talk of higher frequency
systems being developed (60GHz and 120GHz) but these are still a long
way from market. As a general rule, at higher frequencies there is more
spectrum available (less demand) but coverage is increasingly limited and
components are more expensive.
Exhibit 9-1: Types of Broadband Wireless System
System
Frequency
Coverage
MMDS
2-4GHz
60km
LMDS
27-29GHz
5km
MVDS
40-42GHz
1.5km
Section 9.1 is based on Ovums Broadband Wireless report.
138
How does a LMDS Network Work

Local Multi-point Distribution System (LMDS) is a broadband wireless
technology that enables point to multi-point connectivity through high
frequency radio transmission. LMDS technology is proven and secure,
with the bandwidth capacity to deliver a range of voice, high speed
Internet access and data services.
LMDS technology is used to offer service providers and ISPs last mile
connectivity between their fixed networks and customer sites. Network
coverage is increased by connecting the existing carrier network to a Base
Transceiver Station (BTS) through a Customer Interface Point. This
connection is extended, using high frequency radio transmission, to an
antenna located at the customers premises. In essence, LMDS provides
wireless broadband connection between the carriers network and its
customers.
A major advantage of LMDS technology is that it can be deployed quickly
and inexpensively. Unlike existing fixed wire networks. LMDS requires
minimal infrastructure for deployment, and a new end-user site in a cell
coverage area can be connected within as little as 10 days where the
building has direct line of sight to the BTS and building owner approval
has been obtained. As well as being easy to deploy, LMDS has minimal
impact on end-user sites. The equipment consists of an antenna and
Network Interface Unit (NIU), both of which are small, unobtrusive and
installed on the customers rooftop.
Exhibit 9-2: LMDS/MMDS Network
Source: Agility Network
139
9.2
The Deployment of Broadband Wireless LMDS and MMDS in Australia

28GHz Broadband Wireless
The ACA auctioned national 28GHz licences in February 1999, with
major players including Telstra and C&W Optus excluded from the
bidding process. AAPT eventually took on the spectrum and is now rolling
out LMDS services for the wireless provision of data services.
27GHz Broadband Wireless
In September 2000, the 27GHz spectrum was auctioned in 21 market
areas, broken up into six blocks. The band was initially touted as a
technology for pay television and wireless local loop services, but market
patterns now suggest corporate data provision is the primary use for
LMDS. On 28 November 2000, C&W Optus successfully bid for 500MHz
on the 27GHz broadband, costing the company A$37m. XYZed (formerly
Agility), which is wholly owned by C&W Optus, will operate the network
as part of a national strategy to provide a multi-point distribution service
network. The only other bid to secure part of the spectrum, costing
A$93,000, was from Shin Satellite Public Company.
3.4GHz Broadband Wireless
The Federal Governments 3.4GHz spectrum auction closed in
October 2000 with newcomer AKAL winning the lions share of spectrum
on offer. The auction netted the Federal Government $112 million, with
AKAL spending $95.2 million to buy licences across metropolitan and
regional Australia.
Existing regional pay TV provider Austar paid $14 million for spectrum
in Adelaide, Melbourne and Sydney. However, just before bidding closed,
Austar also announced it had purchased spectrum from rival payTV
company Television and Radio Broadcasting Services (TARBS). Austar
paid $140 million to buy TARBs 2.3-2.4GHz MMDS spectrum, which will
give Austar 98MHz of bandwidth in Sydney, Melbourne, Brisbane,
Canberra, Adelaide and Perth.
New Zealand telco Walker Wireless was the only other successful bidder,
spending $2.8 million for a small slice of spectrum in regional areas.
140
The 3.4GHz spectrum, which is ideal for wireless broadband and local
loop services, is broken into 482 lots, in the state capitals, major eastern
state regional cities, and five larger regional areas covering most of
eastern and southern Australia. Over 95% of the spectrum on offer
attracted successful bids.
Other spectrum in the range of 24GHz and 38GHz are expected to be
allocated for broadband wireless applications in the future as demand
arises. Exhibit 9-3 provides an overview on the potential broadband
wireless operators in Australia.
Exhibit 9-3: Broadband Wireless Operator Overview
Operator
Operational Status
Standard
Coverage
AAPT
Operating since
2000
LMDS
CBD areas in Melbourne,

Sydney, Brisbane, Adelaide,
Perth and Canberra
AUSTAR
Operating in 2001
MMDS
60 towns and cities

(Albury, Bendigo, Mackay,
Rockhampton, Gold Coast and
Townsville)
Datafast
planning (no
spectrum has been
acquired)
MMDS or LMDS
XYZed (formerly
Agility)
Operating since
2001
LMDS
Metro areas of capital cities
Akal
Spectrum acquired
($95m)
MMDS
Network is yet to be rolled out.
Walker Wireless
Spectrum acquired
($2.8m)
MMDS
Regional areas network is yet

to be rolled out
Other operators especially those who have microwave networks, including

Agile, Datafast and Davnet are interested in deploying LMDS or MMDS
networks in the future.
However, unlike microwave spectrum which is based on apparatus
licensing, LMDS spectrum (28GHz to 34GHz) are normally auctioned.
The limited spectrum coupled with cost and technology immaturity are
considered as some of barriers to entry for new operators in the
broadband wireless sector.
141
9.3
LMDS and MMDS Network Rollout

Local multipoint distribution systems (LMDS) and multi-channel
multipoint distribution systems (MMDS) are two forms of wireless local
loop. LMDS represents the newest type of broadband wireless network
and is set up on the hub-and-spoke model with a base station antenna
transmitting to and receiving from individual subscribers.
AAPT, the first broadband wireless operator, plans to extend its LMDS
services by rolling out 40 nodes across Australia in 2002, providing
coverage to CBD and metro areas in 6 capital cities.
Optus subsidiary XYZed (formerly Agility) has selected Alcatel to roll out
its $150m LMDS network in CBD and metro areas in Sydney, Melbourne,
Perth, Brisbane, Adelaide and Hobart, where it complements existing
infrastructure.
Since mid 2000, the new high-speed fixed wireless services are being
developed in rural Australia. Unlike other services, MMDS and LMDS
will provide wireless local services where cable operators cannot go. As
LMDS and MMDS are capable of transmitting high-speed data services,
rural dwellers will gain access to high-speed Internet connections and
pay-television services.
Regional operator, Austar, has formed a strategic alliance with
ADC Telecommunications to develop and deploy what Austar claims will
be one of the largest MMDS systems to date in the world. Two-way
transmission facilities will provide high speed Internet and telephony
services to more than sixty Australian towns and cities, commencing in
2001 and targeting business and government users.
Akal is also rolling out its MMDS network in 2001, covering 14 large
towns, 7 capital cities and 5 large regional areas in Australia.
Exhibit 9-4 provides an overview on the LMDS and MMDS deployment in
Australia.
142
Exhibit 9-4: LMDS and MMDS Network Overview

Operator
Standard
AAPT
LMDS
AUSTAR
MMDS
C&W Optus
(XYZed)
LMDS
Akal
MMDS
Investment
$60m (1st phase)
$250m (2nd phase)
$37.5m
Infrastructure
Capacity
20 BS (2000)
120 to 200 BS
(2001-2002)
200 links (2001)

400 t0 600 links
(2002-2003)
43 POP (covering
1.5m houses)
51 transmission sites
300Kbps-1Mbps
15 BS (2000)
50 BS (2001)
150 BS (2002)
320 E1 2Mb pipes
BS = Base station or transmission sites
Exhibit 9-5: LMDS and MMDS Coverage Map
Source: Agility Network
143
9.4
LMDS/MMDS Service and User
9.4.1
LMDS/MMDS Service
LMDS is a high frequency broadband access technology that offers point
to multi-point connectivity. It allows large numbers of end-user sites to be
connected with nxE1 services from a single hub point. LMDS supports a
comprehensive range of services including voice, high speed Internet
access and data products.
The fixed wireless customer access technology can support the delivery of
the following services:
Voice/telephone (POTS and digital PABX)
Internet access (E1 or Nx64Kbps)
LAN bridging
High speed data (2Mbps dedicated link, Nx64Kbps link, STM1 ATM
link)
Video (video conference and VoD).
At the moment, LMDS is primarily used to provide point to multi-point
connectivity for business applications as listed above.
9.4.2
LMDS/MMDS User
Most of the LMDS applications currently are targeting the corporate,
government and small to medium enterprise (SME) market segments.
Applying the technology to residential uses, such as the delivery of payTV and other broadcast applications, will come later.
XYZed (formerly Agility) will roll out the network in metropolitan areas
of capital cities and use it to offer new and competitive broadband access
alternatives to communications carriers, service providers and ISPs.
144
9.5
LMDS/MMDS Market Perspective in Australia
9.5.1
The Emergence of LMDS and MMDS

In essence, LMDS is a technological variation of 2GHz MMDS, which is
an established medium of television transmission. MMDS works well and
there is an established body of radio engineers around the world. LMDS
operates further up the band at 28GHz, promising much greater capacity.
LMDS was originally conceived in the early nineties as a means of
delivering video content to residential subscribers, just as was MMDS,
but it quickly proved unsuitable. The equipment turned out to be
prohibitively expensive to manufacture for consumer applications, and, in
any case, severe line of sight requirements ruled out mass deployments
serving whole neighbourhoods.
By 1998 when the first auctions took place, most of the business plans
positioned the new services as data Local Exchange Carriers (LECs)
serving up high speed access to individual business subscribers. The
original notion was that the networks would assume hub and spoke
architectures with single base stations serving up to several hundred
subscribers. Its multi-megabit capacity would allow unlimited video
capacity to the home, and it would be done with a wireless infrastructure,
avoiding all the cost of fibre rollout to the kerb or home.
A few years ago, fibre networks were still unrealistically expensive,
costing several thousand US dollars per home passed. Data services over
DSL and HFC networks were yet to be seen as a viable opportunity.
LMDS and MMDS were considered to be a wireless solution for
broadband wireless.
Broadband wireless, driven by these factors, has the potential to open up
the broadband local access bottleneck currently a stranglehold of
incumbent telcos and cable companies. New digital systems promise to
offer digital television, interactive services, fast Internet access and
commercial data networking services.
145
The broadband wireless market is driven by:

liberalisation and competition
the demand for new services
the need for operators to deliver flexible bandwidth
the development of new wireless technologies
the low cost of radio-based solutions versus other technologies.
9.5.2
The Slow Take-Off of LMDS Technology

Spectrum has been allocated in Canada, New Zealand, Australia,
the Philippines, Poland and the United States. However, there is no
operator yet offering a mass wireless broadband service using the
technology. There have been some trial test-beds and commercial
trials. Few have provided any meaningful or conclusive results. In this
region, Nortel and Newbridge are trailing LMDS with New Zealand
carrier Clear Communications.
But in most markets, LMDS is taking a long time to establish itself.
Canada led the world with its LMDS spectrum allocations in 1996. But
full commercialisation is yet to be realised.
One year ago (2000), Hong Kong was home to quite possibly the worlds
most enthusiastic new LMDS licensees. Operators such as mobile
provider SmarTone, US-based PSINet and Teligent were promising
aggressive rollouts and low prices, starting from mid-2000.
Today the CCT-Teligent network comprises eight hubs and does not plan
to offer service until the middle of this year. By the end of February 2001,
only SmarTone and HK Broadband, a subsidiary of IDD specialist CTI,
were underway commercially. SmarTone has 1,000 customers. Operators
in Hong Kong blame the problems on the major real estate developers
many of whom own rival firms, including SmarTone and Hutchison
Telecom claiming they are blocking access to office blocks and high-rise
apartments.
LMDS opportunity seems to be in areas where fixed broadband is limited
or very expensive.
This section is based on Wireless Asia (2001) LMDS and Beyond.
146
Most analysts think the Hong Kong operators are applying the wrong
technology to the wrong market segments. Corporate users are already
well-serviced by the many international operators based in the territory,
while consumers and small businesses are served by a cable operator and
an expanding ADSL network. That doesnt leave much for the wireless
broadband players.
LMDS spectrum was auctioned in the US last year, and a number of
operators there expect to launch services over the next year. The mass
deployment in the US will drive the equipment cost down and wider
adoption may follow.
9.5.3
Problems Related to LMDS Adoption

The main barriers to the development of the broadband wireless market
are:
constraints of the current technology
regulatory constraints (spectrum licensing and allocation)
the low availability and high cost of digital equipment
competing technologies (DSL and cable)
low user acceptance due to the misconception of the reliability of
wireless technology
lack of commercial credibility beyond TV distribution.
One of the big problems for the innovators of LMDS is deciding exactly
which market they want to pursue. It is important for LMDS operators to
define their services and target markets from day one or face expensive
re-fits. Analogue one-way video broadcast has a limited appeal. The most
obvious market for a technology which supports data speeds of up to
155Mbps is high-end corporate broadband.
But LMDS is an immature, untested technology compared to established
fibre connections. In the past few years, fibre in city business districts has
become a reality for example, virtually all of the top 100 business
centres in Australia have access to fibre. In these places, LMDS may have
missed its opportunity.
147
One perspective is that the real opportunity for LMDS lies in the next tier
of the market medium-sized businesses and high-density residential
areas. Bosch Telecom argues that high-end customers should usually be
served with direct microwave links. Medium to small businesses and
multi-dwelling unit-based residential tenants may be the initial point-tomultipoint deployment.
In the case of small businesses, some analysts point out that it is difficult
for them to implement their own private network solutions. In the case of
multi-dwelling units, their broadband needs are constantly increasing but
they are not currently being targeted by wired broadband services.
Most intending LMDS providers have been vague about which market
segments they aim to attack. Philippines operator GHT Network secured
LMDS spectrum in March 1998 and announced that it would be providing
cable television services. Cellular Vision in US plans to offer Internet
service to residential market.
9.5.4
Broadband Wireless in Australia

As in other countries, LMDS and MMDS are in the earlier stage of
development in Australia. XYZed (formerly Agility), AAPT, Austar and
Akal are the four major companies which have obtained the appropriate
spectrum for broadband wireless.
However, the competition amongst these operators is expected to be low
as the broadband wireless deployment strategy of these companies vary.
The new Cable & Wireless subsidiary, XYZed, was set up as an LMDSbased bandwidth wholesaler. It paid A$37 million for spectrum in the
27GHz band in November 2000, and started service in early 2001. It now
has at least one Base Transceiver Station in every capital city and four
regional centres, targeting the 60% of the business profit that derives
from the access layer of which Telstra holds 90%.
XYZed is focussing on metropolitan areas of capital cities.
148
In addition, low deployment cost is also helping XYZed. It says

installation cost is under US$520,000 per cell (around A$1 million), each
typically serving about 50 customers. A 100Mbps base station costs
$300,000. By comparison a terrestrial fibre link could cost more than
$10 million, plus $200,000 per building.
Australian operator AAPT secured all of Australias LMDS spectrum in
auctions 1999 for US$44 million (around A$80 million) the highest percapita rate paid for 28GHz spectrum anywhere in the world.
AAPT already has a well-advanced fibre loop deployment program in the
central business districts of major Australian cities. It sees LMDS as
initially serving secondary business districts with voice and data, such as
the commercial centres of Australias sprawling suburbs.
In the second phase of its deployment, AAPT sees LMDS as
complementing its central city fibre network where connections may be
needed more quickly.
AAPT says that LMDS enjoys tremendous cost advantages over fibre.
With LMDS, AAPT can wire up a building within two to five days at a
cost of around A$10,000 compared to several weeks for traditional fibre
bearing a price tag of between A$40,000 and A$50,000.
Exhibit 9-6 provides an overview on the projected market development
scenario for broadband wireless in Australia.
149
Exhibit 9-6: Market Development Scenario for Broadband Wireless
Adoption
Application
User type
Cost
Now (2000-2003)
Future (2004-2007)
Deployment of digital MMDS will

continue slowly for TV distribution
and Internet access services.
MMDS will continue to be used in

some countries, but continued
deployment will be halted by
substitute technologies (MVDS).
Digital LMDS will be deployed by

new operators in Australia.
LMDS will be used by major

operators to complement their
fixed telecom.
Digital MMDS supports many

more TV channels and
asymmetric two-way services; for
example, high-speed Internet
access.
MMDS not developed further.
Early digital LMDS/MVDS

implementations will be used for
business services (for example,
T1/E1 links and Internet access).
Digital LMDS/MVDS expands to

support interactive video, data and
voice services, as well as TV
distribution, interactive multimedia
services.
MMDS and analogue

LMDS/MVDS will continue to be
used primarily by residential
users.
Residential users of basic

services will migrate to other
solutions.
Digital LMDS/MVDS early

services are attractive to small
businesses and large
corporations.
Larger businesses will migrate to

fibre-based solutions.
Costs of digital equipment will

begin to fall as components
become more widely available
and commercial production
begins. Prices acceptable to
business subscribers.
Further price falls, as mass

production progresses. CPE
prices make digital services viable
for residential subscribers.
Source: Ovum and TelecomAsia
150
10.
SATELLITE NETWORK
10.1
Technology Overview
With its capacity for expansive geographic coverage and multiple-service
capabilities, satellite-based telecommunications can be characterised as
the big brother of the cellular and personal communications services
industries.
Depending on the altitude of the satellite, these systems are termed as
Low Earth Orbit (LEO) at 600-1500km or Medium Earth Orbit (MEO),
Geostationary Earth Orbit (GEO) at 36,000km above earth.
Satellite-based communications system, offers an attractive alternative
for many developing countries like the archipelagos of Indonesia and the
Philippines with many islands or a vast country like Australia which is
inaccessible by fixed line network.
The actual capacity of a satellite footprint will depend on the application
and the receiver equipment in use. Applications vary from one-to-many
broadcasting and data transmission to large point-to-point links. In
addition, the footprint is a shared resource between all receivers and if
links are dedicated to one transmitter and receiver, the number of such
links is strictly limited.
The satellite bandwidth provided by the geostationary (GEO) satellite is
expressed in megahertz. The satellites could be considered as analogue
devices as they are receiving and re-transmitting radio frequency signals
(which often carry digital services such as digital television). The digital
equivalent of a satellites analogue capacity, that is the efficiency of the
satellite spectrum utilisation, would, as described above, depend on the
services provided. For example two-way 140Mbps service would require
2x72MHz of satellite bandwidth, two-way 45 or 34Mbps would use
2x36MHz of satellite capacity, while two-way 64Kbps would need
2x100KHz.
Satellite technology can be used for both backbone and local access
networks.
151
10.1.1
Satellite Technology for Backbone Network

Satellites are not widely used to provide backbone network capacity as
they have limited total capacity in relation to optical fibres. According to
the NBI (2000) report, the capacity of each C&W Optus satellite covering
the whole of Australia is 0.6Gbps compared with the average potential
capacity from all sources into individual small towns of 160Gbps. This
trend should continue for the next five years, as the potential future
capacity of optical fibre links is likely to increase significantly faster than
future satellite capacity.
However, a new generation of satellites (eg, LEO and MEO) will
challenge the role of the geostationary systems (eg, Telstras Satcom and
C&W Optus MobileSat) that have dominated for so long the remote
delivery of broadcast and communications services.
The new systems promise almost ubiquitous service, reaching out into
areas poorly served by traditional terrestrial networks, providing cheaper
and easier to use services than those delivered via geostationary
satellites.
New technology expected to become available within three years will
make satellites a far cheaper and more powerful option for connecting
rural homes or businesses to the Internet at high speed.
At the heart of the advances is so-called multibeam or spot-beam
technology, which will give satellites far greater capacity to relay unique
data streams to different users on Earth. Satellites power will double in
the next two to three years.
In terms of backbone technology, satellite is not as capacity rich as fibre
optic. As a myriad of optic fibre networks are deployed in the eastern
seaboard, satellite might have limited applications in this area. However,
in the rural and remote regions, especially in the Western and Northern
parts of Australia, satellite networks will provide an alternative backbone
solution.
According to The Australian, 4 August 2000, Telstra is considering
utilising Skybridge satellites (which will be available in 2002/2003) as a
complementary technology to its terrestrial backbone. Appendix D
provides an overview on the Skybridge satellites.
152
10.1.2
Satellite Technology for Local Access Network

By their very nature, satellites are best suited to point-to-multipoint
broadcast type applications. They also have a significant niche
application as part of the customer access network, in situations where
alternative terrestrial technologies are not cost affective or not available,
such as many rural and remote areas and areas where xDSL technology
is not practicable. These are likely to remain the most significant satellite
applications in the customer access network over the next five years.
The capacity available from satellite technologies is limited by the
available spectrum. They are not able to service large numbers of users in
one location as they depend on the sharing of a relatively limited
bandwidth between all the users. However, in sparsely populated areas or
perhaps as fill in for terrestrial cellular systems satellites will provide
good service coverage.
Many satellites have some coverage over Australia, but C&W Optus and
PanAmSat have geostationary satellites with Australian dedicated
footprints. Based on these footprints, operators are beginning to provide
broadband services direct to the user, usually in 64Kbps steps. However,
as satellite transponder capacity is limited by spectrum availability,
C&W Optus and PanAmSat are capable of serving perhaps only tens of
thousands of customers with an equivalent 64Kbps dedicated link.
The ACA has found in its process of assessing the efficient costs of
providing USO services that fixed copper networks and wireless
networks are suited to providing services to customers within 20kms of a
local exchange. Satellite is best suited to provide services to customers
20km beyond local exchanges. It is therefore generally suitable for
providing telephony and data services in rural and regional areas.
Satellite is considerably more expensive to deploy in CBD and
metropolitan areas than copper and wireless local loop networks.
153
10.2
The Deployment of Satellite Technology in Australia

Direct to user communications based on geostationary satellites have
been in use for many years, with Inmarsat being the first and now one of
the largest global providers. These services have, for the most part, been
narrowband voice and data. Within Australia, land based Inmarsat
services and services based on the C&W Optus satellites traditionally
followed this trend.
Many satellites (mostly US based) have some coverage over Australia, but
C&W Optus and PanAmSat have satellites (GEO) with Australian
dedicated footprints.
Satellite technology is used for both backbone network transmission and
local access network in Australia.
With limited bandwidth capacity (compared to fibre), satellite is used
mainly as alternative backbone transmission technology in rural or
remote areas where terrestrial networks (fibre and copper) are not
available. Telstra is considering to use Skybridge as a wireless technology
to complement its terrestrial backbone network.
More recently, satellite based services in the low end of the broadband
range have begun to appear for the local access market. For example, the
Telstra MiniSat MultiMedia service based on the Inmarsat M4 project
with ISDN (integrated services digital network) capability. Telstra also
offers BigPond Advance with 400Kbps individual download speed and up
to 3Mbps for multicast file delivery using the PanAmSat 2 satellite.
They also have a significant niche application as part of the customer
access network, in situations where alternative terrestrial technologies
are not cost effective or not available, such as many rural and remote
areas and areas where xDSL technology is not practicable. These are
likely to remain the most significant satellite applications in the customer
access network over the next five years.
In view of the introduction of LEO and MEO with new multibeam
technology, satellites will provide an affordable and powerful option for
connecting rural homes or businesses to broadband service.
154
Exhibit 10-1 provides an overview on the satellites technology

deployment in Australia.
Exhibit 10-1: Satellite Operator Overview
Operator
Satellites
Launch Date
Investment
Ownership
Australian
Alliance
Inmarsat
GEO
(9 satellites)
1980
MobileSat
GEO
(4 satellites)
1992
PanAmSat
GEO
(21 satellites)
1997
ICO Global
(New ICO)
MEO
(12 satellites)
2000
(Delayed)
(Merging with
Teledesic in
2001)
US$2.8bn
US billionaire,
Craig McCaw.
Telstra
Iridium
LEO
(73 satellites)
1999
(Bankrupted in
2000)
US$3.4bn
US based,
Motorola led
consortium.
Link Telecom
GlobalStar
LEO
(56 satellites)
2000
US$3bn
US based Loral
Corp and
Qualcomm
Vodafone is the
Australian service
provider
Sky Bridge
LEO
(80 satellites)
2002
US$4bn
France based
consortium led by
Alcatel
Telstra
Teledesic
LEO
(288
satellites)
2003
US$9bn
US based
consortium led by
Craig McCaw,
Bill Gates and
Boeing.
A$800m*
British based
international
organisation
Telstra is the
Australian service
provider
Australian based
C&W Optus
C&W Optus
81% owned by US
based Hughes
Inc.
Appendix D will provide an overview on the satellite operators above.
Australias satellite market has been liberalised since 1997, but so far
C&W Optus remains the only domestic player. International operators
such as PanAmSat and GlobalStar have also been offering services in the
country. Optus four satellites Optus A2, A3, B1 and B3 cover
Australia, Papua New Guinea and the Southwest Pacific islands. Both
the Optus A and Optus B series carry 15Ku-band transponders, including
four high-power Ku-band beams, while the Optus B series carry two
additional L-band transponders for the companys MobileSat satellite
phone service.
155
10.3
C&W Optus Satellite Network
10.3.1
C&W Optus Satellites

The C&W Optus satellite business was originally established in 1981 by
the Australian Government. CWO acquired AUSSAT and its satellites
(and associated customers) when it became Australias new
telecommunications carrier in January 1992. C&W Optus has continued
this existing business and grown the business by attracting new
customers.
C&W Optus uses its satellites to provide broadcast services to large
customers such as Foxtel and Austar. It also provides interactive and
telephony services to remote areas for large business customers (eg, Ford
dealerships) and government agencies.
The C&W Optus satellite fleet was the first component of its network
after the fledgling company gained three satellites in its acquisition of
Aussat in late 1991. The satellites carry all or part of most of the
television signals seen throughout Australia, including direct-to-home
free to air services to rural and remote users, and Pay TV services to
Austar and Foxtel customers. The satellites are used by Air Services
Australia for a country-wide air traffic network, the Defence Forces for
fixed and mobile services and over 8,500 users of the MobileSat mobile
satellite telephone system.
156
10.3.2
C&W Optus Satellite Network Infrastructure

CWO owns or leases the following satellites at the following orbital
locations:
A3 inclined orbit at 164 degrees East
B1 geostationary at 160 degrees East
B3 geostationary at 156 degrees East (hotbird).
CWOs existing satellites provide a footprint over continental Australia,
Tasmania and New Zealand, with limited coverage to Papua New Guinea,
Norfolk Island, Lord Howe Island, Cocos Island and Christmas Island.
CWO owns or leases the following earth stations:
Belrose (Sydney): 6 antennas accessing A3, B1 and B3. Also provides
TT&C functions
Oxford Falls (Sydney): 5 antennas accessing Intelsat and other nonCWO satellites
Perth: 9 antennas accessing A3, B1 and B3 and Intelsat and other nonC&W Optus satellites
Brisbane: 3 antennas accessing A3, B1 and B3
Canberra: 1 antenna accessing B1
Melbourne: 3 antennas accessing A3, B1 and B3
Adelaide: 3 antennas accessing A3, B1 and B3
Hobart: 1 antenna accessing B1
Darwin: 2 antennas accessing A3 and B1
Auckland: 1 antenna accessing B1
Wellington: 1 antenna accessing B1 (not used).
157
Current Satellites Network Deployment and Coverage (Australia)

The satellites network consists of:
eight Major City earth stations in Australia (Adelaide, Canberra,
Brisbane, Darwin, Launceston, Melbourne, Perth and Sydney)
two Major City earth stations in New Zealand (Auckland and
Wellington)
two Major City earth stations in Papua New Guinea (Lae and
Port Moresby)
one A-series satellite in operation
two B-series satellites in operation
one C-series satellite being built (due for launch early [or Q1] 2002).
The $500 million C1 satellite to be launched in Q1 2002 will provide
C&W Optus with coverage into Australia, NZ coverage plus East Asia
and Hawaii. In early 1998 it modernised the platform on the B3 satellite,
Australias hotbird, replacing the 15-year-old analogue format with a
digital format, investing more than $20 million in the project. (Hotbird
is the term applied to the satellite located at 156E that has more than
750,000 satellite dishes pointed at it and carries a suite of services.)
Exhibit 10-2: C&W Optus Existing Satellite Network
Source: C&W Optus
158
Exhibit 10-3: C&W Optus Earth Station Access

A3
B1
B3
TT&C
INTL
Sydney
Perth
Adelaide
Melbourne
Canberra
Brisbane
Darwin
Auckland
Hobart
Source: C&W Optus
C&W Optus satellites network currently has 46 transponders which will

be increased to 70 by 2002 with the launch of C1 satellite
(24 transponders). The A series satellites have a bandwidth capacity of
45MHz while the B series satellites have 54MHz.
About $10m was spent annually in 1999 and 2000 by C&W Optus on its
satellite network investment. Satellites need to be replaced every
15 years at a cost of $400m. It takes two years to deploy a new satellite.
In October 1999, C&W Optus signed a contract with Mitsubishi Electric
Company, Melco and its partner Space Systems Loral for a new C1
satellite. This is the first satellite to be designed by C&W Optus, the A
and B series were designed by Aussat. With the commitment from the
Department of Defence to approximately half of the satellite capacity the
C1 satellite will provide additional capacity over Australia and provide
new capability for services into Asia, as well as providing a broad range of
capability for Australias Defence Forces.
The satellite will be launched by an Airanespace rocket in early 2002. The
total program cost for the satellite is around $500 million.
159
10.3.3
C&W Optus Satellites Services

C&W Optus supplies broadcast services, VSAT services and other
satellite services using its own fleet of satellites and international
satellites, such as Intelsat, PanAmSat and Asiasat, in addition to the
Companys fibre cable network.
Broadcast Services:
RemoteCast A full time point to multipoint satellite broadcast
service designed to deliver free-to-air public and commercial broadcast
services to remote areas of Australia. Transmission is encrypted by the
Aurora Conditional Access system to ensure that services are only
received by customers entitled to do so. Transmission includes video,
teletext and related radio services.
MultiCast A full time and part time point to multipoint satellite
broadcast services designed for narrowcasting to all areas of Australia.
Transmission is encrypted by the Aurora Conditional Access system
and includes video, teletext and related sound services. Examples
include services provided to Sky Channel and the NSW Education
Services.
AudioCast A full time point to multipoint satellite audio broadcast
service designed for narrowcasting to all areas of Australia.
Transmission is encrypted by the Aurora Conditional Access system
and can include radio, related data services and CD quality sound
services. Examples include Woolworths in store and Community
Broadcasting Foundation services.
HomeCast A full time point to multipoint satellite and terrestrial
based video service for the delivery of subscription television. This
product is designed specifically for pay-TV via satellite.
VideoConnect The provision of video contribution and distribution
services. The service can be provided point to multipoint or point-topoint. Transmission includes video and associated audio services and is
intended for carriage of TV network signals between studios or between
studios and re-transmission sites. C&W Optus also provides this
service on to and from international destinations. (see Other Satellite
Services Global VideoConnect).
160
VSAT Services:
DataReach Provides two-way data service between corporate head
office and remote branches using VSAT terminals. DataReach is a star
topology network designed for interactive applications in the finance
and banking, manufacturing, retail and government markets.
FastData Provides one-way data transmission from customer
computer centres to remote receiver devices. It is applicable for
corporate transfer of data either as an automatic feed or as feed on
receipt of request for information.
Other Satellite Services:
MobileSat A mobile switched telephone service using a satellite
telephone for voice, data and fax transmissions. It was launched as the
worlds first commercial mobile land-based satellite telephone system
in August 1994. It is designed for special purpose users, such as
operators in remote locations, typically in mining and agriculture,
fishing. It allows users to make and receive telephone calls and
transmit and receive fax or data anywhere in Australia (including all of
the land mass not covered by terrestrial mobile networks) and up to
200 kilometres out to sea. The service can be used as both a mobile and
fixed service. There are approximately 8,500 MobileSat customers.
Global VideoConnect C&W Optus provides VideoConnect services
on an international basis where it has access to international satellites,
an example being contribution feeds from the USA to Optus Television
for programme sourcing.
Transponder Services These are full time services, which utilise
only a full or partial C&W Optus satellite transponder. Services
occupying a full transponder are managed by the customer who must
conform to CWOs transponder plan parameters. Services carried can
be voice, data or video and radio programmes. A customers transmit
earth station equipment must be approved by CWO and meet its
interface specifications.
161
Transponder products include:

Austlink point to point or point to multipoint, one-way or two-way
voice or data transmission. The uplink or downlink must be provided
by a C&W Optus earth station.
Omnicast point to multipoint medium to high-speed data
distribution, used for data and sound services. Data transmission rates
are between 64Kbps and 2Mbps in increments of 64Kbps and over
2Mbps in increments of 256Kbps. An example is Hutchisons paging
data broadcast service.
Tracking, Telemetry and Control (TT&C)
CWO Satellite provides TT&C services for its own A3, B1 and B3
satellites, for PanAmSat-4 under a 15-year contract and for other satellite
operators. Satellites are controlled from tracking facilities in Sydney,
with redundant facilities in Perth. CWO also operates a series of major
city earth stations (MCES) in each Australian capital and at a number of
other sites. C&W Optus employees operate these earth stations and all
tracking facilities. CWO provides launch support for other satellite
operators using these facilities.
Remote Area Broadcasting Service (RABS)
Over the 15 years C&W Optus (Austar) has been supplying remote area
broadcasting services it has grown the service to the point where
50 national, commercial and community broadcasting services are
transmitted digitally from the Aurora satellite.
The television services available from the RABS service are:
five services for the Australian Broadcasting Corporation (ABC),
four services for the Special Broadcasting Services Corporation (SBS)
a service for Golden West Network
a service for Imparja
a service for WIN corporation
a service for Telecaster Australia Ltd (for Queenslands Seven Central
Channel)
business and ethnic TV.
162
Users receive signals either directly from the satellite via a satellite dish
or the signal is received in their community and retransmitted
terrestrially to their homes through a television antenna. Both national
and community radio broadcasters use the service to transmit their signal
throughout Australia. These broadcasters include:
all ABC (classic FM, JJJ, Radio National and local ABC)
SBS corporation radio
religious radio for print handicapped.
Free to Air TV
For 15 years C&W Optus has had long term satellite contracts with the
national commercial broadcasters Channels 7, 9, and 10 and ABC. The
services provided are contribution (field to studio), interchange (studio to
studio) and distribution (studio direct to homes and for regional
retransmission). Free to air TV service is used for transmitting digital
television signals as the commercial and national networks convert to the
digital standard.
In addition, C&W Optus provides a global video connect service to take
television broadcast feeds into and out of Australia for a range of
television like sporting events and news.
Department of Defence
The Department of Defence, the largest single user of communications in
Australia, has been a satellite customer with C&W Optus and its
predecessors since 1985. C&W Optus has been tailoring specific
communications solutions for the Department since 1994, providing a
significant portion of the forces satellite and terrestrial communications
backbone. C&W Optus Defence Mobile Communications Network
(DMCN) supported defence forces in Bougainville and East Timor, with
the experience in East Timor re-confirming satellite as a cost-effective
ubiquitous communications system for a modern defence force.
DMCN is a uniquely Australian technology based on the C&W Optus
MobileSat system. It is a secure network that can transmit voice and data
to anywhere in Australia and up to 200 nautical miles out to sea, and is
an extension of a non-secure network Defence previously leased from
C&W Optus. Its best application is for manoeuvres in very isolated
conditions in rural and remote Australia.
163
Airservices Australia
C&W Optus has been a long-term supplier of satellite services to
Airservices Australia, the authority responsible for airspace and air
traffic flow management, navigation services, fire fighting and search and
rescue alerts at airports. Under a contract made with Airservices (signed
in May 2000), C&W Optus is providing a sophisticated combination of
satellite, optical fibre cable and frame relay services to link more than
30 locations around Australia, including the major airports, over a
six-year period. C&W Optus will also be responsible for the
communications infrastructure that supports Airservices air traffic
control system.
10.3.4
Target Users and Network Utilisation

Exhibit 10-4: C&W Optus Satellite Network Target User
Location (CBD, city, urban or rural)
Market (Business, Residential, Reseller, etc)
Regional and rural.
Business, corporate, government.
The C&W Optus satellite solution is ideally suited to companies or

government departments with multiple offices in rural and regional areas
of Australia. These companies want a telecommunications provider that
has Australia-wide network coverage. C&W Optus is able to use its fixed
network and satellite network together to provide an effective solution for
these customers.
Exhibit 10-5: C&W Optus Satellite Network Traffic
1999
2000
2001
2002
2003
Voice
25%
23%
22.6%
21%
20%
Data
10%
12%
13.2%
15%
18%
Video
65%
65%
64.2%
64%
62%
Total
100%
100%
100%
100%
100%
(*Voice traffic volumes includes radio traffic.)
Voice traffic on C&W Optus satellite network is likely to remain the

same. Video and data traffic volumes are likely to increase due to the
increasing importance of multimedia applications. C&W Optus has also
sold two transponders worth of capacity to the ABC for television
transmission which will increase future video traffic volumes over the
C&W Optus satellite network.
164
The C1 satellite will be launched in Q2 of 2002. At this stage it is

unknown how the existence of this satellite will impact on the breakdown
of traffic volume.
Exhibit 10-6: Network Capacity Utilisation
Network Capacity
(total transponders available)
Capacity used (%)
Re-sell capacity (%)
Idle capacity (%)
2000
2001
2002
2003
46
46
70
57%
57.6%
45%
55%
0%
0%
0%
0%
43%
42.4%
55%
45%
C&W Optus currently has 26.5 transponders in permanent use. Another

four transponders are used occasionally. The remaining 15.5
transponders are not currently being used. The majority of unused
capacity is on the A3 Satellite which requires tracking antennas to access
it.
C&W Optus does not resell satellite capacity. Although C&W Optus
leases capacity over the satellite to its customers, C&W Optus retains
control over the operation and functioning of the satellite capacity at all
times.
165
10.4
Market Perspective
The ACA has found in its process of assessing the efficient costs of
providing USO services that satellite is suited to provide services to
customers 20km beyond local exchanges. It is therefore generally suitable
for providing telephony and data services in rural and regional areas.
Satellite is considerably more expensive to deploy in CBD and
metropolitan areas than copper and wireless local loop networks.
Satellite Based Internet Service
Iridium, backed by Motorola Inc., was the first victim, filing for
bankruptcy protection in mid-1999. Two weeks later, ICO Global
Communications Ltd., a spinoff of UK-based Inmarsat Ltd., also sought
bankruptcy protection.
In 2000, GlobalStar Telecommunications Ltd., backed by Loral Space &
Communications Ltd., faced the possibility of severe cash-flow problems.
Rather than Internet access, all of these ventures proposed to offer
globally usable mobile phones.
Tarnished by the multibillion dollar bloodletting investors have suffered
at the hands of satellite-phone companies like Iridium, the satellite
industry is looking to the niche of broadband Internet-access to rebuild its
telecommunications credibility.
At the heart of the advances is so-called multibeam or spot-beam
technology, which will give satellites far greater capacity to relay unique
data streams to different users on Earth. Satellites power will double in
the next two to three years. Multibeam technology also provides cheaper
and easier-to-use equipment for linking a personal computer or office
network directly to the orbiters.
New technology expected to become available within three years will
make satellites a far cheaper and more powerful option for connecting
rural homes or businesses to the Internet at high speed.
166
New initiatives were taken in July 2000 to establish a satellite-based

communications network to master the distances of rural Australia. The
failure of the anywhere-in-the-world satellite-based communications
scheme of the American company, Iridium Incorporated, has not
dampened enthusiasm for this technology platform. In Australia, the
parties involved in projects of this sort include Globalstar, Telstra,
Vodafone, C&W Optus, and lobby groups such as Internet-In-The-Bush.
According to The Australian, 4 August 2000, Telstra has taken a further
step toward providing regional broadband satellite services under the
$4 billion Skybridge project. Telstra signed an agreement in principle
with Skybridge L.P., gaining the first option to become an equity partner
and Skybridges service provider for Australasia and Southeast Asia.
Skybridge, owned by a consortium led by Alcatel S.A. of France, plans to
launch a fleet of 80 satellites in 2001 to offer global high-speed wireless
Internet and multimedia services in 2002/2003
In late 2000, Telstra announced that it would introduce broadband
Internet access in early 2001 to rural Australia via a satellite belonging to
Hong Kongs Asia Satellite Telecommunications Ltd.
In addition, Alcatel Australia and C&W Optus have teamed up to deliver
satellite-based services to rural and regional Australia, announcing an
agreement in late 2000 to make use of the Optus B3 satellite and existing
Alcatel access technology to create a nationwide network.
167
Mobile Satellite Service Market in Australia

In the mobile satellite service, competition in Australia has intensified in
the last few years with four competitive services now vying for market
share: Optus MobileSat, Inmarsat Mini-M, GlobalStar and Iridium.
MobileSat is currently the market leader in terms of both connections and
revenue; however, lower cost handsets/terminals and greater portability
have allowed GlobalStar and Iridium to exploit new market segments
within Australia. Ultimately whether these systems are successful in the
medium to long term will depend on their ability to generate earnings on
a global level.
According to C&W Optus, the Australian market is viable for 2, perhaps
3, active mobile satellite suppliers. Growth is limited by:
low population levels in rural areas
low usage in new market segments, particularly recreational/
emergency use customers
alternative technologies (HF and VHF radio).
Handheld mobile satellite services are enjoying some initial success as
they enter new market segments due to portability and relatively low cost
handsets.
In the land mobile market, demand is strongest in the in-vehicle segment,
however the greater portability of handhelds is winning business in the
emergency use segments. Reliability of terminals/mobile systems and
terminal prices are also key influencers to market adoption in both the
land and maritime markets.
If the handheld mobile service survives the next 2-3 years, higher levels
of global production of handsets should lead to reduce upfront costs to
users (a key barrier to market adoption). However, call costs are not
likely to fall significantly.
Data usage is increasing in some key segments. However, development of
broadband Ka-band mobile data systems is limited by a lack of
investment dollars, with the investment community now sceptical about
the viability of these global, portable systems.
168
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Biblio-ii
Appendix A: Comparative Cost of ISDN Services

Exhibit A-1, based on the Telecommunications Performance Report (2000)
contains a comparison of the respective components of ISDN charges and
costs for a selected group of countries.
Exhibit A-1: International Basic Rate ISDN Comparison at July 2000 (A$)
Country
ISDN provider
ISDN product
Connection
Annual
rental
Average
annual fixed
costs
United States
Bell Atlantic
(Maryland)
ISDN BRI
$199.07
$831.72
$898.08
United States
Pacific Bell
Personal ISDN
$196.98
$694.96
$760.62
Canada
Bell Canada
Microlink ISDN
$233.86
$1,348.77
$1,426.73
United
Kingdom
BT
ISDN 2e
$498.50
$1,382.77
$1,548.93
New Zealand
NZ Telecom
ISDN BRA
$136.09
$1,045.18
$1,090.55
Singapore
Singapore
Telecom
ISDN-d-way
$0.00
$113.68
$113.68
South Africa
Telkom SA
ISDN 2
$104.91
$571.39
$606.36
Australia
Telstra
OnRamp 2
$324.50
$660.00
$768.17
Australia
Telstra
Home Highway
$32.50
$514.80
$622.97a
Australia
Telstra
Business Highway
$32.50
$792.00
$900.17b
Source: Company websites, Communications Research Unit analysis.

Notes:
a Call allowance of $5.50 per month; b Call allowance of $22.00 per month
Prices exclude taxes Australian prices include GST.
20 hours of local calls calculated at 30x1 min calls. 30x4 min calls. 15x15 min calls. 14x30 min calls and 9x45
min calls.
Currency conversion from Australian Financial Review published buy rate at 30 June 2000, sourced from
Westpac 29 June.
Telstra OnRamp Home Highway and OnRamp Business differ from OnRamp 2 in having different (cheaper)
modem requirements, resulting in an approximate reduction of $500 in the start-up cost. This is not a reduction
in the connection fee.
= All call costs are included.
Appendix A-i
Appendix B: xDSL Technologies Discussed

The characteristics of the various DSL standards are summarised below.
IDSL ISDN Digital Subscriber Line
The term DSL was originally used to describe transport of basic rate
ISDN. With ISDN, xDSL transmits duplex data at 160Kbps over copper
lines of up to 18,000 feet of 24Ga. wire. 2B1Q line coding was invented for
this application. The multiplexing and demultiplexing of this data stream
into two B channels (64Kbps each), a D channel (16Kbps), and
maintenance overhead takes place in the attached ISDN network
termination and terminal adapter. IDSL describes products or
implementations that sidestep ISDN switching issues and adapting ISDN
transport to deliver 128Kbps fixed access to ISPs and subscribers.
HDSL High Data Rate Digital Subscriber Line
HDSL is an improved method of transmitting T1 or E1 over twisted pair
copper lines. It uses less bandwidth than earlier AMI coding and seldom
requires repeaters. Using more advanced modulation techniques, HDSL
transmits 1.544Mbps or 2.048Mbps in bandwidths ranging from 80kHz to
240kHz. HDSL provides T1/E1 rates over liens up to 12,000 feet in length
(24 Ga.). This distance is sufficient to cover a carrier serving area (CSA),
but this is accomplished by using two pairs for T1, each operating at half
speed. Typical applications for HDSL include campus data extensions,
PBX-to-network connections, cell site-to-base station controllers, digital
loop carrier systems, interexchange POPs, Internet servers and private
data networks.
Appendix B-i
HDSL2 Generation 2 High Data Rate Digital Subscriber Line

PairGain Technologies, ADC Telecommunications, and Level One
Communications are collaborating to develop HDSL2, a new standard for
high bit-rate digital subscriber line technology. HDSL2 will deliver full T1
performance over a single twisted pair cable, with the same reach,
robustness, and spectral compatibility of todays two-pair HDSL. HDSL2
will use 2B1Q line coding to deliver either 1.544Mbps or 2.048Mbps over
single twisted pairs at distances up to 12,000 feet, the same as HDSL. A
central component of the new standard is a spectrally shaped waveform
that does not interfere with existing T1, HDSL, or ADSL lines, while
providing good performance even in worst-case environments containing
a mixture of other signals. The partners claim that there is enough noise
margin to operate simultaneously in a 50-pair cable bundle with crosstalk
noise from the other services.
SDSL Single Line (or Symmetric) Digital Subscriber Line
SDSL is a single line version of HDSL, transmitting up to T1 or E1
signals over a single twisted pair, and (in most cases) operating over
POTS, so a single line can support POTS and T1/E1 simultaneously.
SDSL has an important advantage over HDSL for residential
applications, which are often equipped with only a single telephone line.
SDSL will be applied to any application needing symmetric access (such
as servers and power remote LAN users), and it therefore complements
ADSL (see below). SDSL in current implementations will not reach
beyond 10,000 feet, a distance over which ADSL is currently achieving
rates above 6Mbps.
VDSL Very High Data Rate Digital Subscriber Line
VDSL will be asymmetric with transceivers at data rates higher than
ADSL, but over shorter lines. Upstream rates fall within a suggested
range from 1.6Mbps to 2.3Mbps. While no standards exist for VDSL,
discussion centres around the downstream speeds listed in Exhibit B-1.
Exhibit B-1: VDSL Downstream Speeds
Data Rate
SONET Equivalent
Loop Length (feet of wire)
12.95Mbps
(1/4 STS-1)
4,500
25.82Mbps
(1/2 STS-1)
3,000
51.84Mbps
(STS-1)
1,000
Source: ryan hankin kent
Appendix B-ii
Because of the short loop lengths supported, VDSL is not considered to be

a stand-alone technology. Rather, it is the last kilometre technology
used to provide broadband services to the home from FTTC-type systems.
In many ways VDSL is simpler than ADSL. Shorter lines impose far
fewer transmission constraints, so the basic transceiver technology is less
complex, even though it is ten times faster. VDSL allows passive network
terminations, enabling more than one VDSL modem to be connected to
the same line at customer premises, in much the same way as extension
phones connect to home wiring for POTS.
ADSL Asymmetric Digital Subscriber Line
ADSL delivers a high-speed downstream channel to subscribers and a
lower-speed upstream channel to the network, independent of the
existing POTS. ADSL transmits data asymmetrically to match the
asymmetric nature of interactive multimedia such as Web surfing. ADSL
is capable of downstream throughputs from 1.544Mbps to 9Mbps over
standard telco loops and has two major attractions for U.S. LECs:
Operators believe that 70% of existing subscriber lines in
North America can be upgraded to wideband service using ADSL.
ADSL allows upgrades to occur on a line-by-line basis, which paces
equipment investment to emerging customer demand for wideband
services.
Individual ADSL modems today incorporate a variety of speed
arrangements, from a minimum set of 1.544/2.048Mbps downstream and
16Kbps upstream, to a maximum set of 9Mbps downstream and 640Kbps
upstream. All operate in a frequency band above the basic POTS line,
leaving POTS service-independent and undisturbed, even if a premise
ADSL modem fails or the overall high-speed service goes down.
Appendix B-iii
ADSL Lite (G.Lite)

This latest approach is a variation of ADSL that will eliminate the need
for a splitter at the subscriber premise. The trade-off for easier
installation is a reduction in speed: downstream speeds will be up to
1.5Mbos and upstream speeds, up to 256Kbps. While ADSL Lite will be
slower than the existing ADSL standard, it may make it easier for
computer manufacturer to bundle ADSL modems into computers, just
like standard dial-up modems. This will provide a useful first step for
consumers seeking faster Internet access. The challenge is to ensure that
it is compatible with higher-speed xDSL to ensure a smooth migration
path for upgrade to even faster broadband access.
CDSL
Consumer Digital Subscriber Line is a splitterless design that provides
up to 1Mbps downstream and 384Kbps upstream. Nortel and Rockwell
have partnered to develop this modem transceiver using the Rockwell/
Broadcom QAM modulation technique that is used in cable modems.
MSDSL
Another technology now emerging in the HDSL family Multi-rate Single
Pair Digital Subscriber Line (MSDSL; also known as MSDSL) uses one
pair of copper wires, and enables symmetrical transmission from 272Kbps
to 2.32Mbps. As its name implies, MSDSL operates at a variety of rates,
which is an important improvement over HDSL. MSDSL provides an
extended coverage area in conjunction with the subscribers required data
rate. For services at 256Kbps, MSDSL technology extends the maximum
range up to 8.8km. By contrast, the maximum range for HDSL is 3.5km
(with 2.048Mbps signal over 24AWG).
Appendix B-iv
Appendix C: Selected DSL Products and Services

Company
Product
(Offering
Installation
Price
Modem
Price
Monthly Price
Speed
(Downstream/Upstr
eam
Ameritech
(USA)
Ameritech
SpeedPath
(ADSL)
US$150
US$199
US$49.95
includes $US6
UUNET service
1.0Mbps/1.28Kbps
Bell Atlantic
(USA)
Infospeed
(ADSL)
US$198
US$325
All prices are in

USD
640Kbps/
90Kbps
$39.95
1.6Mps/90
Kbps
7.1mbps/6
80Kbps
$59.95
$109.95
Target
Market
Residential
Residential
and
business
Bell South
(USA)
Fastaccess
(ADSL)
US$299.90
US$100 plus
tax (special
offer)
US$59.95
(includes
unlimited
Internet access
1.5Mbps/256Kbps
Residential
British
Telecom
(UK)
High Speed
Data Service
(ADSL)
150
N.A.
35
512Kbps-2Mbps/
256Kbps
Wholesale
Cincinati
Bell (USA)
Zoomtown
(ADSL)
US$150
(Free with
12 months
contract
Value to
US3$50
(Free with
12 months
contract)
All prices are in

USD
768Kbps/384Kps
Residential
Zoom Town:
$39.95 (includes
Internet Access);
1.5Mbps/768Kbps
768Kbps/384Kbps
ZT TurboSpeed:
N.A;
ZT HyperSpeed:
N.A.
Concentric
(USA)
Concentric
DSL (ADSL,
IDSL, SDSL)
US$225
(Free with
12 months
contract)
US$299
(Free with
12 months
contract)
All prices are in

USD:
384Kbps/125Kbps
(ADSL)
$69
768Kbps/384Kbps
(ADSL)
$89
$124
$149
$169
$169
$199
$199
$359
$359
$359
$399
$300
$499
Residential,
Business,
Resale
144Kbps/144Kbps
(IDSL)
160Kbps/160Kbps
(SDSL)
192Kbps/192Kbps
(SDSL)
200Kbps/200Kbps
(SDSL)
384Kbps/384Kbps
(SDSL)
416Kbps/416Kbps
(SDSL)
768Kbps/768Kbps
(SDSL)
784Kbps/784Kbps
(SDSL)
1.5Mbps/384Kbps
(ADSL)
1.04Mbps/
1.04Mbps (SDSL)
1.1Mbps/
1.1Mbps (SDSL)
15.5Mbps/
1.5Mbps (SDSL)
Appendix C-i
Company
Product
(Offering
Installation
Price
France
Telecom
(France)
Wanadoo
Netissimo
(ADSL)
N.A.
GTE (USA)
GTE
Network
Services
DSL (ADSL)
US$340
(Free for
limited
period)
SingTel
(Singapore)
Southwest
Bell (USA)
Magix
(ADSL)
DSL
Packages
(ADSL)
Modem
Price
N.A.
Monthly Price
345 francs
1,445 francs
US$199
Singapore
$30
connection
charge;
PC/Mac
installation
fee not
stated;
install
included
with LAN
service
All prices
are in S$
PC: $249
(Promo $88)
Mac: $150
(Promo $48)
LAN: $1500
US$299
(Free with
one year
contract
US$198
All prices are in

USD
Bronze+:
$32.50,
Silver: $53,
Gold: $68,
Platinum: $95,
Platinum+: $215
One year
contract required
All prices are in

S$ and include
Internet Access:
$35
$60
$120
Speed
(Downstream/Upstr
eam
a) Up to 1.5Mbps/
Not stated
Residential
b)Up to
2.25Mbps/
Not stated
Bronze:
768Kbps/ 128Kbps,
Silver:
384Kbps/384Kbps,
Residential,
SOHO,
Business
Gold:
768Kbps/768Kbps,
Platinum:
1.5Mbps/768Kbps,
Platinum+:
1.5Mbps/768Kbps
(Multi-user)
512Kbps/
512Kbps-13hrs
512Kbps/
512Kbps-30hrs
Residential
and
Business
512Kbps/
512Kbps-60hrs
(Promo $1500)
512Kbps/
512Kbps
unlimited
All prices are in

USD
384Kbps1.5Mbps/128Kbps
$39
(contract)
1.5Mbps6Mbps/384Kbps
$2000
Target
Market
Residential,
SOHO,
Business
$59 (monthby-month)
$129
(contract)
$149 (monthby-month)
US West
(USA)
MegaBit
(ADSL)
US$149.95
(Plus
activation
fee of
$US69)
US$295
All prices are in

USD:
256Kbps/256Kbps
(no guarantees)
$19.95
256Kbps/256Kbps
29.95
512Kbps/512Kbps
$62.40
768Kbps/768Kbps
$76.80
1.0Mbps/1.0Mbps
$120
4.0Mbps/1.0Mbps
$480
7.0Mbps/1.0Mbps
Residential,
SOHO,
Business
$840
Telstra*
(Australia)
BigPond
ADSL
US$115US$240
US$55
256/64
US$61
512/128
US$80
1500/156
US$58
256/64
US$65
512/128
Residential
and
Business
Source: Shara Evans, Managing Director, Telsyte Pty Ltd, as published in CommsWorld January 2000, except for
Telstras prices. Some of the prices may have changed.
* Telstras prices are based on the detailed ADSL service charges outlined in the following table. These prices have
applied since late 2000. They have been converted to US$ at the exchange rate at January 2000.
Appendix C-ii
Since late 2000, Telstra BigPond ADSL offers the following types of
contract.
Contract Length
Installation Fee
3 months
A$399.00
12 months
A$259.00
18 months
A$189.00
During the term of the contract, uses can choose any of the following
monthly plans. Note, all prices are in A$.
Plan
Monthly fee
without
preselection
Monthly fee
with
preselection
MB
allowance**
Speed*
Additional
users #
Rate per
Mbyte after
allowance
Residential & Business

Blast Off
$89.50
$73.00
250MB
256/64
Business
Standard
$100.50
$84.00
500MB
512/
128
Business
Deluxe
$132.50
$116.00
500MB
1500/
256
Freedom
Standard
$94.50
$78.00
Subject to
Acceptable
Use
Policy**
256/ 64
Freedom
Deluxe
$105.50
$89.00
Subject to
Acceptable
Use
Policy**
512/
128
Up to 7
additional
users
18.90 cents
per MB up to
5Gb and
17.50 cents
per MB after
5Gb
Up to 2
additional
users
Not applicable
Residential Only
* Speeds are presented in downstream/upstream format eg: 256/64 represents up to 256kbps downstream/64 kbps
upstream.
**MB allowance means combined upload and download data transfer (except for some traffic provided from time to
time by Telstra at no cost).
# Each additional user is charged at $11.00 per user per month.
^ Preselection refers to Telstra being pre-selected for long distance call on the telephone number used for ADSL.
Appendix C-iii
Appendix D: Satellite Operators Profile

SkyBridge
SkyBridge proposes to offer broadband services through 80 low earthorbit satellites starting in 2002 and serving some 20 million users by
2007. It would offer connections to homes and offices through small
satellite dishes, and link with providers through bigger earth stations.
Because of their low orbit, it can handle the uplink from customers as
well as the downlink.
SkyBridge is based in the US but controlled by Alcatel SA of France.
Besides Alcatel, investors include Loral Space & Communications Ltd.,
Canadas COM DEV International Ltd and Japans Mitsubishi Electric.
SkyBridge LP, a $4 billion satellite project that plans to offer high-speed
Internet and video services, has signed up Australias Telstra. to provide
SkyBridges services in Australia, New Zealand and Southeast Asia.
SkyBridge plans to launch its global broadband service for telecom
operators in 2003.
While SkyBridges satellites could not distribute pay television
economically, they were much more cost effective than geo-stationary
satellites in delivering interactive services such as the Internet.
In both rural and urban communities the lack of high bandwidth links at
sufficiently low cost is proving the main barrier to exploiting the full
potential of the Internet and the latest high power PCs to deliver highly
graphic content and interactive high bandwidth applications.
It predicts subscribers in remote or non-urban areas will be able to install
all the equipment they need for $700 (795 euros) in the case of private
homes and around $2,000 for enterprises. Operators will be able to offer
the service to home customers for $30 a month and to enterprises for $200
to $300 a month.
Appendix D-i
For this, customers will get an Internet connection where none might
otherwise be possible in the Australian bush, on an oil rig, or on the
Tibetan plateau. The service could also find demand in well-populated
suburban areas lacking upgradeable telephone infrastructure. And its a
two-way connection. To date, satellites have been a seldom-used option
for Internet access not only because of cost, but because of their relative
inability to handle two-way data transmission.
During the conference in April 2000, SkyBridge announced it would build
a local presence and work towards delivering satellite-based broadband
services to rural Australia. The company has already signed an inprincipal agreement with Telstra and will set up offices with its parent
company Alcatel in Sydney, New South Wales. Telstra says that
SkyBridge would complement its terrestrial backbone.
Exhibit D-1: SkyBridge Satellite Network
Attribute
SkyBridge
Cost of space segment
US$4.8 billion
Commence services
2002
Number of satellites
80
Uplink capacity
2Mbps residential
10Mbps commercial
Downlink capacity
20Mbps residential
100Mbps commercial
Uplink frequency
12.75GHz-14.5GHz
Downlink frequency
10.7GHz-12.75GHz
Waveform propagation
TDMA
Orbit
Circular at an altitude of 1 469kms
Satellite type
Bent pipe
Appendix D-ii
Inmarsat (Australian Service Provider Telstra)

Inmarsat (International Maritime Satellite Organisation) an
international organisation owned by 83 member countries called was
formed in 1979 to provide global mobile satellite communications. The
British-based Inmarsat currently operates five communications systems
known as Inmarsat-A, Inmarsat-B, Inmarsat-C, Inmarsat-Aero and
Inmarsat-M. These systems offer a range of voice, data and telex
communications services for applications on the land, sea and in the air.
The communications services supported by these systems are provided
globally and in Australia they are provided by Telstra Mobile Satellite &
Radio Services. These services are branded Satcoms using the same alpha
suffix as the Inmarsat systems that they use.
All communications to and from all Inmarsat Mobile Earth Stations
(MES) are at L-Band frequencies (1.5-1.6GHz). All systems offer
MES-MES calls as well as interconnect to and from conventional
terrestrial networks (telephone, telex & data).
Telstra currently offers satellite mobile service operated by Inmarsat,
which provides maritime and aeronautical services via its global satellite
system. Telstra satellite phones are either fitted to a car or supplied in a
briefcase. It operates by beaming high frequency signals up to geostationary satellites orbiting over Australia.
Appendix D-iii
Global Star (Vodafone)

Globalstar, based in San Jose, California, was founded by Loral Corp and
Qualcomm Inc. It also includes France Telecom, Hyundai, Alcatel
Alsthom, AirTouch Communications, Deutsche Aerospace, and DaimlerBenz Aerospace among others. It plans to have a system of 56 low earth
orbit satellites launched to provide services by the year 2000. The project
is expected to cost US$2.8 billion with a life span of 7.5 years. The system
is designed to give customers in over 100 countries voice communications,
data transmission, paging and facsimile services. Customers would use
hand-held, vehicle mounted or fixed site handsets.
Globalstar says it is fully funded with US$2.6 billion. Globalstar planed
to have 44 satellites in the sky by the 1998, ready for service to customers
early next year. It also has back-up launches for spares in 1999.
Globalstar is expected to complete its $US2.8 billion network of 56
satellites in late 1999.
Globalstar will locate all its processing on the ground, using up to 200
earth stations, to reduce satellite costs. The service will provide handheld as well as fixed mobile handsets and will target developing countries
where the terrestrial phone system is inadequate. Globalstar hopes to
sign up 2.7 million subscribers by 2002.
GlobalStar is one step closer to launching its satellite telephone network
with the award of manufacturing contracts worth US$353 million for the
production of 300,000 handheld and fixed satellite telephones. The
successful companies are Ericsson OMC, Qualcomm and Italian supplier
Telital. Ericssons contract, worth US$204 million, is for the manufacture
of dual-mode satellite phones which will include GSM networks and
GlobalStar system, car and vehicle kits and fixed phones. Qualcomms
contract is worth US$117 million.
Vodafone in Australia have purchased the southern hemisphere rights to
Globalstar. Handset costs are expected to be in the A$950 range, but
these will be dual terrestrial-satellite handsets which can be used with
the American CDMA cellular system. The call rates are about $1.50 a
minute. The company has A$385 million committed to this project and
built an earth station near Dubbo, NSW.
Appendix D-iv
In Australia, the system will provide coverage to the 10-15 % of the

population living in remote areas who will not be serviced by Vodafones
GSM digital terrestrial network. From a geographic point of view,
Globalstar will also cover the 90% of Australia not serviced by the
terrestrial network.
Users will access the LEO satellites via low-powered, hand-held or
vehicle-mounted dual mode handsets which will also provide access to the
existing GSM networks.
There are 21 gateways in operation around the Globe. Ground stations or
gateways at Dubbo, Mount Isa, and Meekatharra are now providing
roaming capability for Canadian customers, covering 100% of the
Australian continent and Tasmania with coverage up to 200 nautical
miles off the mainland.
Appendix D-v
Appendix E: The Phased Out Analogue Network

Analogue Network (1987-2000)
In 1981, (then) Telecom Australia (now Telstra Corporation) introduced

the countrys first automatic mobile telephone service in Sydney and
Melbourne. The analogue service was introduced in 1987. Before its
official closure on January 1 2000, Telstras mobile services covered 94%
of the Australian population. At its heights it was using more than 1,300
base stations and over 45,000 radio channels. Over $1.3 billion worth of
AMPS (Advanced Mobile Phone Service analogue) infrastructure was
installed in Australia. In 1996, the Government reaffirmed its intention
to start closing the network and to shut it down completely by the year
2000. The Government did set 5MHz of spectrum aside for rural users
until they have an alternative. This allocation also comes in handy for
overseas visitors who will visit Australia during the Olympic Games.
Analogue users from North America will thus be able to use their phones
in Australia.
Exhibit E-1 shows the analogue network at its heights.
Exhibit E-1: Dimensions of MobileNet AMPS (1993-1996)
1996
1995
1994
1993
40
30
30
24
Mobile base stations
1,260
1,100
872
715
Voice channels
53,000
45,000
31,500
23,400
2,600,000
1,800,000
1,020,000
635,700
1%
4%
4.4%
3.7%
240 million
175 million
115 million
72 million
$870 million
$690 million
85%
83%
Mobile service switching centres
Mobile services in operation

Growth rate per month
Answered calls per month
Capital employed
$1,200 million
Coverage
91%
88%
Source: Paul Budde Communication, Telstra, other industry sources
In December 1996, the first signs appeared that the analogue network
stopped growing. Since then, subscriber numbers started to drop. Usage
of the Telstras analogue network peaked in late 1995. By 1999, the last
year of full operation, the AMPS network consisted of 41 switches and
1,349 base stations, covering 94% of the population. The analogue
network was closed down in December 2000.
Appendix E-i
Appendix F: Participant List

Organisations consulted and submissions provided to the ACCC (unless
non-disclosure was required).
1.
AAPT Ltd
2.
Agile Communications
3.
Agility Network
4.
Amcom Telecommunications
5.
Australia Fibre Network (AFN)
6.
C&W Optus
7.
Cellular One
8.
Davnet
9.
Ipera Pty Ltd
10. IPI (Australia) Pty Ltd

11. Macquarie Corporate Telecommunications
12. Nextgen
13. OMNI Connect
14. Pahth Telecommunication Ltd
15. PowerTel Ltd
16. Primus Telecom
17. RequestDSL
18. RHK Ltd
19. StrategyAnalytics
20. Swiftel
21. Technology Applications Group (TAG), BIS Shrapnel Pty Ltd
22. Telecaster Australia Ltd
23. Telstra Corp
24. TransACT Communications
25. Ue Comm
26. Vodafone Pacific Pty Ltd
27. XYZed Pty Ltd
Appendix F-i

Telecommunication Infrastructures in Australia 2001

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Job no. TG3794/JL/KMc/sl