CommsDay 1

CDM cover Oct.indd 1 9/18/10 1:19 PM

CommsDay 2
 A new periodical
I n the year two thousand and
ten, why launch a new maga-
zine for an industry that has seen
much of its trade press die a pro-
tracted death in recent years?
The reason is simple.
Telecommunications is no
longer just another industry: it has
become an integral part of society
and life. And as such it is now
occupying—and, in some cases,
vexing—public policy officials, poli-
ticians, economists, business plan-
ners and the private sector.
As the recent Australian national
election showed, there is an urgent
need for more analysis, more re-
flection and more contemplation
of telecommunications, not less.
The modern age has seen infor-
mation flows move to a real time
basis. Twitter, blogs, message
boards, Facebook and lowly re-
sourced online news websites now
all form a major part of the infor-
mation ecosystem that fuels how
the telecommunications industry
looks at itself and defines itself to
the broader community.
This is all great.
But as Richard Chirgwin notes
in a column in this issue, this can
lead to serious distortions in
“common wisdom”: for example,
the urban myth now circulating
through online debates about na-
tional broadband networks that
fibre “decays” after a few years.
As a leading publisher of tele-
com news and analysis for both
the Australasian market and the
broader international capacity
market for the past 17 years, we
believe we are well placed to bal-
ance the “always on, not always
correct” news culture with a longer
form, more contemplative periodi-
cal such as what you are reading.
CommsDay magazine features
some of the industry’s best writers.
For example, our Auckland based
writer Bill Bennett has deep ex-
perience in IT publishing dating
back to the 1980s when he pio-
neered the idea of magazine cover
mounted discs in the UK.
Our New York City writer Dave
Burstein is regarded as perhaps the
world’s foremost commentator on
the supply and demand chain
flows that influence the broad-
band market.
Our Melbourne writer Geoff
Long has extensive experience
writing about telecommunications
in developing markets, following
lengthy stints at the Bangkok Post
and Tele.com Asia.
And our Hong Kong writer Tony
Chan not only has extensive ex-
perience reporting on the sector
for Telecom Asia and Wireless
Asia, but he has also worked in
the industry itself for Asia Netcom
(later to become Pacnet).
Joined by our regular Comms-
Day editors Petroc Wilton, Miro
Sandev and William van Hefner,
we believe that CommDay maga-
zine boasts world-class reporting.
We do make one concession to
the sensibilities of 2010 media.
CommsDay magazine is not a
print publication, but a magazine
inspired by the promise of the
emerging digital tablet culture.
Whether you choose to read us
as an immersive experience on an
iPad device, as a downloaded PDF
or as a Flash-style magazine online,
we aim to combine the advantages
of digital delivery with the contem-
plative qualities that define the
print medium.
CommsDay magazine will ini-
tially be published 5 or 6 times a
year and aims to complement the
thought leadership of our regular
conferences in Sydney, Mel-
bourne, Singapore and Auckland.
Our next congress occurs in Mel-
bourne on 12 and 13 October
and, as always, we boast a strong
line-up of the leading lights in
Australian and regional telecom-
munications.
Happy reading and hope to see
you in Melbourne.
Grahame Lynch,
CommsDay founder

ABOUT COMMSDAY MAGAZINE Mail: PO Box A191 Sydney South NSW 1235 AUSTRALIA. Fax: +612 9261 5434
Internet: www.commsday.com COMPLIMENTARY FOR ALL COMMSDAY READERS AND CUSTOMERS. For special subscrip-
tion arrangements, contact Sally Lloyd at sally@commsdaymail.com. Published up to 6 times annually. Editorial inquiries
email Petroc Wilton at petroc@commsdaymail.com CONTRIBUTIONS ARE WELCOME
WRITERS: Petroc Wilton, Tony Chan, Bill Bennett, Miro Sandev, William van Hefner, Grahame Lynch, Dave Burstein,
Richard Chirgwin, Bob Fonow
ADVERTISING INQUIRIES: Sally Lloyd at sally@commsdaymail.com
EVENT SPONSORSHIP: Veronica Kennedy-Good at veronica@mindsharecomms.com.au
ALL CONTENTS OF THIS PUBLICATION ARE COPYRIGHT. ALL RIGHTS RESERVED
CommsDay is published by Decisive Publishing, 4/276 Pitt St, Sydney, Australia 2000 ACN 13 065 084 960

CommsDay 3
Customers, Devices and Applications:
Bermuda Triangle for Network Operators?
The Bermuda triangle is famed as
being a place where it is possible to
disappear without a trace. The Customers
triangle between customers, devices
and applications could be the
Bermuda Triangle for network
operators – a place where operators
disappear from the customer’s sight.
es

The iPad and Kindle illustrate how

operators are slipping off the palm-top
Devic

s
and even disappearing. You have to
a t ion
look hard to see the SIM or signal
p lic
strength of the operator on an iPad, Ap
and won’t find them on a Kindle.

These new devices do provide

additional opportunities to sell
connections, but also illustrate the
battle that operators will face to stay
relevant to retail customers. How many buttons or icons does the operator have on an iPhone’s up to eleven “home
screens”, or on a palm-top? The answer is probably two, related to traditional communications offering, “Phone” and
“Messages”. How many do others offer? Perhaps ten or twenty. And how many offer competing call and messaging
services?

To maintain relevant customer relationships and grow new revenues, operators must learn to navigate in the triangle –
especially given that nowadays the triangle is often filled with the clouds of “cloud computing” that allow any business to
deliver services anywhere.

Behind nearly every application icon on modern devices is a service delivered from “a cloud”, and behind that, a business.
For example, a frequent flyer can download an application for their device that allows them to book flights from an airline by
gaining access through the push of an application icon or button. Applications such as these work just the same whether
you are at home, at work, on the road or at an airport. They typically exist and work entirely independent of existing operator
networks.

Customers love the simplicity and flexibility of this application model. The world is now being delivered into the palm of their
hands. Operators themselves need to embrace application icons for their interactions with customers – it’s more convenient
than a web site, closer than a shop and faster than calling a call centre.

Operators have always helped businesses connect with their customers and this is another channel that operators can help
make even simpler, more reliable and more secure.

Adapting to this new model requires changes to the way operators interact with the customer. Over time, there will be a
greater focus on on-line and on-device interactions rather than in-shop or call centre interactions. IT and network
infrastructure will deliver the “cloud” services that power the icons or buttons. New revenues will be grown from the things
customers do over networks, for example buying a pizza. This is a lot to ask, but is the alternative for operators to disappear
in the Bermuda triangle – all but unseen and unappreciated by retail customers?

Nokia Siemens Networks have the people and solutions that support network operators in dealing with the complexity of
current network systems and are then able to translate this into a tangible benefit for customers. Learn more about our
experience, solutions and insight at www.nokiasiemensnetworks.com

CommsDay 4
 INSIDE THIS ISSUE

COVER STORY

19 Are NBNs too much of a good thing?

By Grahame Lynch +
24 Why the NBN’s payoff will be slow
By Dave Burstein

NEWS ANALYSIS

09 What now for NZ’s UFB plan?

By Bill Bennett
10 Australia’s high speed broadband election
By Petroc Wilton
12 Equinix CTO Lane Patterson
By Tony Chan

FEATURE ARTICLES

26 The Internet’s date with destiny

By Geoff Long
30 How RIM is fighting back on the Blackberry bans
By Miro Sandev
32 Why the US campaign against Huawei is unfair
By Bob Fonow
26 Behind LightSquared’s wholesale LTE carrier model
By Tony Chan

OPINION COLUMNS

03 A new periodical
By Grahame Lynch
07 Why reverse auctions are good for broadband
By Dave Burstein
29 The strange case of perishable fibre
By Richard Chirgwin
26 The importance of customer service
By Christophe Bur
38 Death by telephone
By William van Hefner

CommsDay 5
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Deliver what we promise.

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Outsourcing organisations within the global Telecom sector. TCS assists our clients to boost revenue, optimise
business processes and maximise their technology investments.

Success in today's business environment is characterised by convergence, smart technology, thriving digital
communities, high customer churn rates and changing regulatory demands. This requires Telecom companies to
have flexible business processes and robust infrastructure. TCS offerings include solutions in the areas of Business
and Operations Support Systems, Communication and Network Solutions, Pervasive Computing as well as
Systems Integration, Application Development and Maintenance as well as Business Process Outsourcing. A
partnership with TCS can assist your organization to build and implement innovative strategies and solutions
quickly and effectively.

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CommsDay 6

Reverse auctions yield big savings .. sometimes
S ometimes auctions work. 12
million subscriber Chunghwa
in Taiwan was paying $US30 to 50
per port for DSLAMs while Veri-
zon and AT&T were paying $50-
70 for the same equipment.
DSLAM vendors win million
line contracts and draw attention
from buyers around the world
with good bids.
For standard equipment avail-
able from many sources, auctions
nearly always produce lower prices.
In 2005, when most carriers
were paying over $US100 per cus-
tomer for VDSL gear, XyZEL suc-
cessfully bid $66 to provide gear
for 230K lines at Chunghwa.
New Zealand’s Crown Fibre
network will almost certainly cost
less because it took bids. Paul Rey-
nolds’ Telecom NZ is highly likely
to win, Bill Bennett predicted the
success of Telecom’s “Dirty Harry
approach” in a recent Commsday.
James Watts of InspireNet is
telling Computerworld: “The gov-
ernment has been heading down
the 'hand it all to Telecom‘ path
for quite a while."
Along the way, the Regional
Fibre Group led by the electric
and gas companies made a credi-
ble bid that forced Telecom to
make concessions.
Telecom had refused to spend
for 100 meg fiber home, instead
opting for 10 meg cabinets. Tele-
com is now offering a full
demerger and a larger investment
in fibre. The government may
demand more before the sched-
uled October decision because the
Regional Fibre Group could still
be chosen.
Scott Wallsten, chief economist
for the U.S. broadband plan, says
DAVE BURSTEIN
.
auction results show that competi-
tion can reduce the cost of univer-
sal subsidies. In one 2005 auction
in India, in 38 of the 81 regions
many mobile operators bid zero,
asking for no subsidy. In 15 re-
gions, India's biggest operator,
Bharti Airtel, even offered to pay.
The fund saved nearly $600M
US. The U.S. broadband plan
includes a provision for auctions.
Incumbents are fighting back
hard, knowing that losing in an
auction could bankrupt them.
India has almost a dozen wire-
less companies, in less competitive
markets auctions with too few
bidders often fail.
In 2000, the Australian govern-
ment set up reverse auctions to
distribute universals service subsi-
dies. None of Telstra’s competitors
bid to provide service in the pilot
regions.
In Switzerland in 2006, Swiss-
com faced so little competition for
the universal service tender they
demanded premium pricing of
$US67 for a basic phone line and
600kbps Internet.
Auctions don’t need to be pub-
lic to be effective. China Telecom
buys as many as 10m lines of
CommsDay
broadband each year, almost a
third of the world market. So com-
panies like Alcatel, Huawei and
ZTE reduce their margins to win a
share. Bids are not formally re-
leased, but Wei Leiping of China
Telecom recently disclosed they
were paying $US100 a line for
GPON, far lower than the same
vendors charge European and
American customers.
The low margin on Chinese
sales is one reason Huawei and
ZTE are working so hard to sell
abroad.
The U.S. broadband plan rec-
ommended running better auc-
tions for the schools and libraries
e-Rate program possible from act-
ing as a sophisticated buyer. One
suggested step was a central listing
of all open requests, making it
easier for low cost providers to
find opportunities. I discovered
how well this can work years ago
while working for a large printer.
I was excited when the U.S.
Government Printing Office be-
gan posting the open bids from
many agencies and we became
regular bidders.
To my amazement, the govern-
ment received prices far below
market because so many compa-
nies went for the work.
Putting all the contracts—and
the winning bids—on the web
would make it easier to expose the
abuses.
Nothing less than thoughtful
purchasing is good enough for
government work.
Dave Burstein is the New York
City-based editor of Fast Net
News and DSL Prime
7
CommsDay 8

What now for Telecom NZ’s UFB plan?
T elecom NZ’s broadband
hopes took two step back
when Crown Fibre Holdings an-
nounced the start of negotiations
with three regional Ultra-Fast
Broadband network bidders.
Never mind that the three bid-
ders account for just 15% of the
UFB total. CFH rejected Telecom
NZ’s plan for a centrally-managed
national network embracing towns
and rural New Zealand.
There were two consolation
prizes. First, Telecom NZ is on
CFH’s shortlist along with 14 re-
gional companies. The settled bids
leave 85% of the project up for
grabs. Moreover, the still contest-
able areas include all major cities,
where networks are relatively easy
to build and likely to offer a better
return.
CFH’s official statement said:
“All shortlisted parties remain
important contenders for future
negotiations of binding agree-
ments. CFH is open to either a
Telecom, New Zealand Regional
Fibre Group solution, or some
form of combination for the bal-
ance of the UFB project.”
It may not be that simple.
When CommsDay interviewed
CFH Chairman Simon Allen and
CEO Graham Mitchell on Thurs-
day, we asked if bids for other
regions are likely to be added to
the three already announced in
the near future. Allen said: “There
are some we could add to the list,
but we have quite a lot on our
plate to negotiate with these
three.”
While that doesn’t name names,
the answer implies CFH is still
examining bids on a region-by-
region basis. The words don’t
make it sound as if CFH plans to
offer Telecom NZ “the balance of
the UFB project.” At best they
sound as if Telecom NZ might end
up with some regions.
Telecom NZ’s second consola-
tion prize was comments by Allen
NEWS ANALYSIS
on how CFH looked favourably
on the company’s media statement
issued shortly after the UFB an-
nouncement. He noted how Tele-
com NZ said it would be willing to
work with others.
Again, nothing specific was said,
but listening to the music as well
as the words, it seems CFH would
be happy if Telecom NZ were to
combine forces with the New Zea-
land Regional Fibre Group mem-
bers already in negotiation and
those still on the shortlist.
If the CFH announcement
represents two steps back for Tele-
com NZ, it also represents a step
forward.
Telecom NZ is now the only
national bidder. Axia Netmedia’s
non-compliant bid was dropped.
The Rural Broadband Initiative
(RBI) is looking for a national bid.
With the main course of the UFB
project off the table, Axia is
unlikely to hang around for the
RBI dessert. Other groups may
combine to submit a rival RBI bid,
yet Telecom NZ is well placed for
the project.
At this point things get compli-
cated. Telecom NZ CEO Paul
Reynolds previously said he wants
everything, the entire UFB and
RBI projects or he won’t play.
A press statement from the com-
pany reiterated this point and
went on to explain Telecom NZ’s
proposal of “profound change”
CommsDay
includes structural separation,
integration of the UFB with the
RFI, legislative change and new
industry regulations.
All of this is beyond CFH’s re-
mit. The Crown Fibre Holdings
team’s job is to negotiate the best
deal to get a spanking new, fast
fibre network rolled out to 75% of
New Zealand by 2019. It can’t
negotiate new laws or regulations.
It can’t integrate the UFB with the
RBI. It can’t decide on how Tele-
com NZ is divided up in order to
get this all done.
If “profound change” is Tele-
com NZ’s only proposal to CFH,
then it’s as non-compliant as Axia
Netmedia’s proposal and is likely
to meet the same fate.
Clearly Reynolds is appealing
over the head of CFH to the Min-
ister of Communications, maybe
to the Prime Minister or even to
their employers: the New Zealand
people. Is anyone listening? Steven
Joyce’s bland statement following
CFH’s Thursday announcement
reveals little of his thinking.
Joyce is a political newcomer.
He still needs runs on the board.
Halting the UFB process to negoti-
ate new terms would put the pro-
ject on hold. Telecom NZ expects
“profound change” negotiations to
take a year – structural separation
won’t happen until July 2011.
That creates a whole new set of
problems for the minister.
By this time next year New Zea-
land will be in the middle of the
Rugby World Cup, shortly fol-
lowed by an election. After watch-
ing Australia’s “broadband elec-
tion” from the sidelines, it’s
unlikely any New Zealand politi-
cian relishes the thought of head-
ing to the polls with the UFB un-
resolved.
Telecom NZ’s press statement
talked of a “challenging time-
frame”. How apt.
Bill Bennett
9
CommsDay 10

Australia’s high speed broadband election
I n the final weeks before the
Australian federal election, the
nation’s telecommunications in-
dustry appeared to be facing its
Ragnarök: a confrontation whose
outcome would irrevocably deter-
mine the future shape of the sec-
tor. And just as in that myth, key
figures from the industry came
forth to make their stand on one
side or the other – many of whom
had previously distanced them-
selves quite determinedly from the
political arena.
This was perhaps unsurprising,
as it became apparent that, for the
first time, communications policy
would not just be affected by the
result of the election but would
play a key part in determining it.
One of the first, and certainly the
most well-publicised, of the indus-
try figures to venture into political
territory was NBN Co CEO Mike
Quigley, the man charged by the
Labor government with building
its predominantly FTTP network.
In the two weeks before 21 Au-
gust, Quigley released news that
the NBN could deliver 1Gbps to
end user premises, following up
with a speech that systematically
addressed the weaknesses of non-
fibre access technologies.
The timing and content of these
forays into the media drew a bar-
rage of criticism from observers
who felt he’d crossed the line into
partisanship – and, as head of a
government-owned enterprise,
violated pre-election caretaker
conventions as well.
But other key voices within the
industry quickly followed Quig-
ley’s example in that last frantic
fortnight, with the stark contrast
between the NBN and the Coali-
tion’s much cheaper, much slower
hybrid alternative essentially divid-
ing much of the comms sector
along party lines. Organisations
like the Internet Industry Associa-
tion and the Australian Informa-
tion Industry Association reiter-
NEWS ANALYSIS
ated a very blunt message of sup-
port for the fibre NBN that in
context came across like a direct
appeal to voting preferences.
On the other side of the fence,
Pipe CEO Bevan Slattery – well-
established as an NBN critic –
blasted Quigley’s Charles Todd
speech as “misleading and littered
with factual misrepresentations,”
Mike Quigley
while the IIA’s messaging
prompted Vocus CEO James
Spenceley to essay a public warn-
ing against its “dangerous assump-
tions and rhetoric,” adding that “a
$43bn [network] with no business
case is a mistake we can't afford to
make.”
Even The Australian came out on
the eve of the election with a piece
predicting massive NBN cost blow-
out at the consumer premise level,
widely perceived as an usually ve-
hement attack on the project.
Appropriately, perhaps, in the
wake of a minority government
and likely changes to the rollout
schedule and funding model to
accommodate independents with
the balance of power, the prevail-
ing tenor is one of uncertainty –
and few afflictions are as poison-
ous to investment in the private
sector. Ask Telstra; a number of
CommsDay
analysts and asset management
firms have opined that election
uncertainty, combined with the
telco’s recent set of mixed annual
results and dismal guidance, has
made it hard to recommend the
tumbling Telstra stock.
In particular, a lot of that uncer-
tainty centres on the question of
overbuild. Labor’s NBN is predi-
cated on the assumption that very
little “good” infrastructure exists
and that a lot of what’s out there
now will need to be replaced.
Quigley has said on several occa-
sions that he doesn’t intend to
build where he can buy or rent,
but the still-tentative heads of
agreement with Telstra to lease
their pit and pipe remains the only
clear example of this sort of ar-
rangement. Otherwise, anyone
owning existing infrastructure
must surely be looking at the ex-
tensive NBN coverage maps with a
certain amount of trepidation.
DSLAM players may be okay for
now – the low cost of kit in that
market offers a rapid ROI when
measured against 8-year NBN
timeframes – but smaller regional
wireless players, for example,
might be getting nervous, as might
current backhaul operators.
This general malaise of anxious
uncertainty has already coalesced
into a new industry body: the Alli-
ance for Affordable Broadband,
formed by Slattery and Spenceley
alongside a diverse group of other
sector stakeholders including
BigAir CEO Jason Ashton, firmly
grounded in the fixed wireless
world, and Polyfone CEO Paul
Wallace, whose company operates
a terrestrial microwave network in
Queensland.
The Alliance has put forward its
own idea for a national network,
which heavily emphasises a mix of
public and private investment and,
perhaps unsurprisingly shies away
from the infrastructure overbuild
that could see its members’ assets
11
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CommsDay 12

stranded.
Slattery and his colleagues are
not the only members of the sec-
tor to have been goaded into tak-
ing a public position.
The way in which NBN Co has
consulted with industry before
drawing up its plans and conclud-
ing its tender processes has
sparked anger from various sec-
tions of the sector, particularly
smaller players in the passive elec-
tronics, design and construction
areas who feel they’ve been effec-
tively ignored.
While most of the industry ap-
peared to be backing the network
to the hilt, such voices were under-
standably muted. Now that the
NBN’s future is fluid, a growing
number of dissidents are making
their opinions heard.
The Coalition has gleefully
seized on the similarities between
its own policy and the Alliance’s
version, but to focus on this align-
ment misses a key development in
the broader landscape.
It has taken the threat of a pol-
icy and investment vacuum, cre-
ated by the knife-edge election
leadup and the uncertainty of the
outcome, to goad a growing por-
tion of the industry into putting
forward its own concrete vision for
a broadband future. Key movers
and shakers in Australian telecoms
are starting to adopt the view that
– to quote the Alliance’s mani-
festo – “markets are better manag-
ers of capital and technology risk
than government.”
The prolonged uncertainties of
Australia’s telecoms Ragnarök
have already wrought this funda-
mental change in industry mind-
shift: telco leaders are manifestly
less likely than ever to sit back and
let a government dictate the de-
sign of a national broadband net-
work, and whichever political
party emerges victorious must be
prepared to deal with the resulting
challenges.
Petroc Wilton
NEWS ANALYSIS
A chat with Equinix
CTO Lane Patterson
E quinix has played a pivotal
role in the expansion the
Internet. By providing the key
interconnection points for the
global network infrastructure,
Equinix has helped shaped much
of what we know as the Internet
today, from interconnecting to-
gether regional networks with
their global peers, to facilitating
those network connections to criti-
cal content overseas, Equinix has
emerged as the operator of key
hubs that glue together the global
information fabric. Now
the company is leveraging
its experience and business
model to move into the
Carrier Ethernet and en-
terprise networking space.
Here’s what Lane Patter-
son, CTO of Equinix,
thinks, as told to Tony Chan.
Singapore as a hub city
“ Singapore is a great example of
what we call our global service
delivery platform, which is really
the concept that we need more
hub cities, both for Internet and
for Carrier Ethernet WAN ser-
vices around the world. We need
more functional market places, or
hub cities, to do that kind of trans-
action, because fundamentally, it
is about saving money and provid-
ing better economics to the end
consumer of telecoms services.
And you can’t do that if you are
backhauling from, say Thai-
land, to the US, or Thailand to
Tokyo to get back to Vietnam. So
Singapore is providing an incredi-
ble economic efficiency for all of
South East Asia, and that’s why it
is growing so fast.
Hong Kong, obviously has been
in that role for a much longer time
CommsDay
for this region, as well as Tokyo,
not only for the Japan market, but
for the region of Asia and for a lot
of traffic that ends up going to the
US, Tokyo is right on that path.
How VPLS will change
enterprise networking
“ We eat our own dog food. In
this region, we have moved our
backbone from IP VPN to Carrier
Ethernet and we looked at several
different carriers and there’s a lot
of competitive options. VPLS
seems to be very popular. VPLS is
many-to-many, it’s like IP
VPN. The other way to do
Ethernet is point-to-point
VLANs.
Here’s why people are
going to adopt to VPLS –
it has nothing to do with
the technology, and every-
thing to do with how peo-
ple pay for the bandwidth. With a
private VLAN model, you have to
pay for each private VLAN to each
other city based on the mileage to
that city. With VPLS, you say, ‘I
want to have a port that has, say a
Fast Ethernet port – so a 100Mbps
port, with say a 30Mbps commit.
That 30Mbps can be shared
across any of those cities. If you at
night want to do your backup
from Sydney, and an hour later
when that is done, you turn
backup on in Tokyo, and then
another hour later, you turn the
backup on from Singapore.
You can share that bandwidth
across that whole mesh.
It’s much more flexible and
elastic, whereas when you lock in
with those private VLANs, each of
those has a committed rate that
you are stuck with. VPLS is not
something that people talk about
very much, but that’s really what is
driving Carrier Ethernet.
13
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CommsDay 14

COMMS DAY_v1.indd 1 2/9/10 7:42:20 PM


Why 100G won’t arrive in the
backhaul for some time
“ If you look at the standard for
100G [100 metre multi mode
fibre] in the data centres, it is not
as innovative as you would think.
The first iteration of 100G is actu-
ally 24 fibre strands on multi-
mode. And they are using 10 x
10G signals, so just compacted 10
x 10G signals into a single optics
package – all it is, is 10 x 10G in
parallel and presented to the user
as if it is a single 100G port.
The second step that I think will
be prevalent is going to be a 10km
single mode standard on 100G.
This one is going to be a little
more innovative. It’s going to be
using Coarse Wave Division Mul-
tiplexing to put either 10 x 10G
waves on a single pair of fibre, or
it will have 4 x 25G waves.
That’s great if you have a piece
of fibre going across you data cen-
tre, connecting a switch to another
switch or router, but the moment
you move that to the backhaul and
plug it into the DWDM gear, you
are still using 4 wavelengths in-
stead of one, so it is really not
giving me the best spectrum effi-
ciency that I want.
And that’s why I say that 100G
is going to take a while to solve
any problems in the long haul.
Why Equinix needs 100G
sooner rather than later
If you look at globally, Equinix is
going almost a terabit of traffic on
our Internet Exchanges between
US, Asia and Europe.
Our customers are using 10G
ports like they are going out of
style. We have one customer that
has 16 x 10G ports with us in one
location. And that’s becoming
more and more common.
Their bandwidth is still going
up 70% year over year. If we are
going to still use 10G ports for
that customer next year, they are
going to need 30 some ports. The
physical effort to manage 30 some
10G ports is just not worth it.
NEWS ANALYSIS
The silver lining of 100G,
cheaper 10G ports
“ The nice thing about that is
that it further commoditises
the price of 10G as well. The guys
out there solving 100G on
switches and routers, sure, the
100G will be a little bit expensive
for a while, but the 10G ports just
got a heck of a lot cheaper. I’ve
seen 10G price per port – it’s very
different depending on the class of
equipment you are using, whether
it’s a Layer 2 switch verses a Layer
Our customers are using
10G ports like they are
going out of style.
3 router, but it’s literally dropped,
for a Layer 2 switches, from
$5,000 to $6,000 a port just a cou-
ple of years ago, now we have ven-
dors out there saying they are sell-
ing switches for $500 per port.
Enterprise WAN hubs
If you look at just the general
major companies, we’ve had
phenomenal success and some
really interesting case studies with
companies like Bechtel, where
they realised they, as a major con-
struction company, have 25,000
subcontractors they work with all
the time – they have a sprawling
CommsDay
global network because they have
jobs going on all over the world –
they realised they could put, what
we called, an enterprise WAN
hub, move it out of their major
office locations and move them
into carrier neutral facilities.
They are eliminating the local
loop costs and then they are ac-
cessing the long haul bandwidth at
more of a wholesale competitive
price, whereas if someone is giving
you your WAN service, you are
locked into a local loop with them.
If you look at a typical Fortune
500 company, their WAN is pretty
complex. We are trying to show
them that when they come to a
carrier neutral place, they have the
freedom to pick the best carrier
within a given region.
You don’t have to one large
carrier and do a global WAN out-
sourcing contract with them –
yeah, they are going to take care of
all those problems for you, but you
are going to pay a pretty high rate.
You have the ability to say, hey
for my Asia headquarters, from
the Equinix data centres, I can
have access to, especially with our
focus on Carrier Ethernet, they
are going to have access to a large
list of choices, just for carriers that
specialised in serving Asia, and
then they can do the same thing in
North America, and they can do
the same thing in Europe.
Tony Chan
15
12-13 October 2010: Langham Hotel

COMMSDAY MELBOURNE CONGRESS

• MINORITY GOVERNMENT: How it impacts telecoms PLATINUM SPONSOR
• BROADBAND FUTURES: The business model challenge
• INTO THE CLOUD: Building & marketing cloud communications
• DATA CENTRES: Key infrastructure for the gigabit age
• THE FUTURE BUSINESS USER: Addressing their needs
• OTHER TOPICS: IPTV, Customer service standards, mobile bb

SPEAKERS INCLUDE GOLD SPONSORS

Shadow NBN Co
communications chief executive
minister Mike Quigley
Malcolm Turnbull

Institute for a
Victoria
Broadband
state ICT minister
Enabled Society
John Lenders
exec director
Dr Kate Cornick
Optus director, Telstra GMD
Victoria & public policy &
corporate affairs, communications
gov’t Maha David Quilty
Krishnapillai
Pacnet Juniper Networks
Australia NZ CEO global business leader,
Deborah cloud computing
Homewood Dean Sheffield

OTHER TOP SPEAKERS INCLUDE

Communications Alliance CEO John Stanton • Pottinger joint CEO Nigel Lake OTHER SPONSORS
Ovum research director David Kennedy • Professor Reg Coutts
Qualcomm SE Asia & Pacific MD John Stefanac • BBY’s Mark McDonnell
Nokia Siemens Networks ANZ MD Kalevi Kostiainen • BigAir CEO Jason Ashton
Telstra Wholesale executive director for products and marketing Terry Scerri GOLD SPONSORS
Ericsson Australia NZ MD Sam Saba • Internode’s John Lindsay
Shirlaws Consulting partner Ben Ramsden • MFJ’s Barry Lyons
CombiTel managing director Eugene Razbash • Kordia’s Peter Robson
Gilbert+Tobin partner Cameron Whittfield • eIntellego CEO Skeeve Stevens
C-Cor’s Dermot Cox • Goldman Sachs + Partners Aust analyst Christian Guerra
Norton Rose partner Nick Abrahams • plus other speakers

SILVER SPONSORS

COMMUNICATIONS DAY 2 August 2010 Page 11

CommsDay 16
Where Australia’s telecom leaders meet
COMMSDAY MELBOURNE CONGRESS
Langham Hotel, Melbourne Tues 12, Wed 13 October 2010
Get a discount rate of $275 a night at the venue.
Use promotion code MIN12OCT when booking. Offer
is subject to availability

Great rates for Commsday readers

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Wednesday 13 October 8am: Energise your network breakfast

The Nokia Siemens Networks ‘Energise your network’ breakfast is an opportunity for CommsDay Con-
gress attendees to re-energise on the second day of their conference experience. Attendees will be
treated to the empowering sounds of a live cultural band over breakfast and have freshly squeezed
juices for their enjoyment. Following breakfast, attendees will be given an ‘Energise’ pack from Nokia
Siemens Networks that will energise their day further.

CommsDay 17
The line-up
TUESDAY OCTOBER 12
Chairperson Anne Hurley
9.00 OFFICIAL OPENING: Victorian ICT Minister John Lenders
9.15 Former NBN expert panellist Reg Coutts: “NBN policy in international context”
9.35am Telstra senior exec TBC
9.55am Institute for a Broadband-enabled Society executive director Kate Cornick: “Enabling a broadband society”
10.20am Juniper Networks Global Business Leader for Cloud Networking Dean Sheffield:
“Trusted Cloud Builders: A Winning Infrastructure Strategy”
10.45 Morning tea
11.10 Ericsson Australia NZ MD Sam Saba: “2020: 50 billion connected devices”
11.35 Optus director Victoria and corporate & government affairs Maha Krishnapillai
12.00 Kordia Australia MD Peter Robson
12.25 Qualcomm SE Asia and Pacific president John Stefanac
12.50 Lunch

2 Gilbert+Tobin partner Cameron Whittfield

2.20 Ovum analyst David Kennedy: “Impact of mobile broadband on FTTH networks”
2.40 Oracle Communications senior director Raghu Prasad: “LTE: Beyond the Network Investments”
3.00 Shirlaws Consulting partner Ben Ramsden: “Telco customer service - raising the bar”
3.20 Afternoon tea
3.40 Amdocs regional vice president Ananda Subbiah: “The transformation of the broadband market”
4.00 ACCAN deputy CEO Teresa Corbin
4.20 AARnet e-research director Guido Aben

4.40 PANEL SESSION

"The future of the telco business model" with BigAir CEO Jason Ashton, MFJ principal Barry Lyons, eIntellego CEO Skeeve Stevens
and Cloud Plus’ Jules Rumsey

5.15 Drinks

WEDNESDAY OCTOBER 13
8am Breakfast
9am Communications Alliance CEO John Stanton “The NBN migration debate”
9.25am NBN Co CEO Mike Quigley
9.50am Nokia Siemens Networks ANZ MD Kalevi Kostiainen: “Reinventing telco for the broadband era”
10.15 Alliance for Affordable Broadband spokesman Bevan Slattery (TBC)
10.40 Morning Tea
11.00 Shadow communications minister Malcolm Turnbull
11.25 Tata Consultancy Services head of communications & network solutions practice,
telecoms Vimal Kumar: “Telecoms 2015 and beyond”
11.50 Pottinger joint CEO Nigel Lake: “A financial markets and investor view of the future broadband environment”

12.10 PANEL SESSION

“CAPITAL PERSPECTIVE: How markets view telecoms” with Goldman Sachs + Partners Australia analyst Christian Guerra,
Pottinger CEO Nigel Lake and BBY telecom analyst Mark McDonnell. Moderated by Grahame Lynch
GOLD SPONSORS
12.35 Ciena speaker VP & GM Asia Pac Anthony Mclachlan: “Intelligent, Automated, High-Capacity Core Networks – Is There An
App For That?”
1.00 Lunch

2.00 Telstra Wholesale Executive Director for Products and Marketing Terry Scerri: “Telstra's Data Evolution Program”
2.25 Norton Rose partner Nick Abrahams: “The A to Z of data centre deals”
2.50 C-Cor director Dermot Cox: “Where to next for our HFC infrastructure”
3.15 Combitel MD Eugene Razbash: “IPTV: Thinking outside the pay TV box”
3.35 Afternoon tea
3.55 Pacnet ANZ CEO Deborah Homewood: “The 2010 broadband barometer”
4.15 Tellabs’s Yee Soon: “Enabling mobile enterprise services”

4.35 PANEL SESSION

“INDUSTRY FUTURES & STRUCTURAL CHANGE” with Telstra exec dir David Quilty, Internode carrier relations manager John Lind-
say, telecom analyst Kevin Morgan and Primus regulatory manager John Horan. Moderated by Grahame Lynch

5.10 CLOSE

CommsDay 18

Are NBNs too much
of a good thing?
NBN advocates say that $43 billion is a bargain for technology whose benefits will
outweigh the costs. But what if the actual costs and end prices of pervasive
100Mbps service have been massively underestimated? Grahame Lynch reports.
A ccording to the Australian
fibre optic academic and
government expert panelist Profes-
sor Rod Tucker, there is a good
reason why pervasive 100Mbps
enabling fibre access networks are
much superior to broadband wire-
less networks. “Wireless spectrum
is already approaching its capacity
in urban areas, and in order to
achieve the required bandwidth, a
proliferation of wireless towers
would be needed,” he says. “A city
such as Melbourne would have
required up to 100,000 new wire-
less towers. Incidentally, every one
of these towers would need to be
connected via fibre and the towers
would consume 200 megawatts
more electricity than a fibre-to-the-
home network.”
“To provide ultra-fast broad-
band in urban areas, wireless tow-
ers will be needed to be placed at
least every 100 metres on every
street.”
And with that repudiation of
wireless comes an interesting in-
sight into the level of demand that
NBN advocates believe pervasive
fibre will generate. In the fine
print of Tucker’s counter-factual
COVER STORY
he assumes an LTE network with
every household in its cell range
using 100Mbps of capacity simul-
taneously.
Given that most broadband
networks today operate at conten-
tion ratios of 1-in-20 to 1-in-50
and up to 1-in-100 for discount
offerings, it’s clear that FTTH-
enabled NBNs involve more than
a mere massive upgrade of the last
mile. To achieve the speed goals
defined by policy makers, they will
also require massive upgrades in
backhaul and transit capacity—
which of course, don’t fall in the
purview of the NBN’s own offer-
ings but must be accommodated
by the gross margins generated by
retailers.
75MBPS DEDICATED
Under the proposed Australian
NBN topology, 32 premises will
share a 2.4Gbits GPON fibre link,
effectively dedicating somewhat
less than 100Mbits per user, more
in the realm of 75. But where it
gets more interesting is in the
backhaul: Australia’s 10m prem-
ises will be effectively demarcated
between 200 points of intercon-
CommsDay
nect or 50,000 per POI. To ensure
a dedicated 75Mbps of capacity
beyond the POI, retail service pro-
viders would have to commission
the equivalent of 750 million
megabits of capacity—750 terabits—
of backhaul. Australia’s current
Internet capacity to the entire
world barely reaches 5 terabits:
less than 1% of this.
Backhaul and transit services
aren’t cheap in the Australian part
of the world, particularly exacer-
bated by the fact that as a linguis-
tic cousin of larger North Ameri-
can and European markets, well
over two-thirds of Australian Inter-
net traffic traverses an undersea
cable.
According to Vocus CEO James
Spenceley, whose company spe-
cialises in wholesale transit, a dedi-
cated megabit of capacity to the
Internet at large currently costs
around A$100 per month.
This sounds a lot and it is— but
for the fact that Australians are
relatively modest downloaders of
data. Latest Australian Bureau of
Statistics findings suggest that the
typical Australian broadband user
downloads about seven gigabytes
19

of data per month. But under a
scenario painted by NBN Co Mike
Quigley in an August speech, typi-
cal data downloads might increase
into the two terabyte range—an
implied data requirement of
nearly a megabyte per second.
At today’s transit costs, when
combined with the implied NBN
wholesale tariff of $60 or more for
highest speed services plus retail
overheads, its clear that the type of
highly utilised connections envis-
aged as the desirable end goal by
NBN advocates might cost con-
sumers well over hundreds of dol-
lars per month.
That is without dedicated mini-
mum speeds.
Early experiences with initial
Singapore NBN prices point to the
transit cost issue.
Singapore, like Australia, is
heavily reliant on international
connections. As a small market of
4m people, much of the most de-
sirable English, Chinese and In-
dian language content that broad-
band users consume is served off-
shore. And this is reflected in pric-
ing plans released as part of its
initial FTTH rollout, expected to
cover around 40% of the nation
by year’s end.
The country’s largest retail telco,
SingTel, offers an entry level
FTTH plan at S$86 (A$70) per
month. This boasts headline
speeds of 150Mbps downstream
and 75Mbps upstream. Truly im-
pressive stuff. But international
downloads—which account for the
vast majority of usage today—are
capped at a mere 15Mbps. Major
rival StarHub is offering a similar
plan, priced to within $2 of the
SingTel offering.
This basic reality of hard speed
limits on anything requiring an
international link can already be
observed today.
JP Morgan Research found an
incredible similarity in interna-
tional speeds across various wire-
less, HFC and DSL platforms of-
fered by Singapore carriers today–
using the most popular global site
COVER STORY
YouTube and its speed test func-
tionality as the “control”.
Across all wireless and fixed
platforms, the actual speed never
exceeded 2Mbps.
FASTER MEANS SLOWER
According to the firm’s Singapore
telecom analyst James Sullivan,
“the surprising conclusion is that
no matter what speed package you
subscribe to, your actual average
download speed for US content
ranged from 1.15-1.94Mbps, and
ironically the faster the package
you signed up for, the slower your
Professor Rod Tucker
actual download speeds for US
content.”
He claimed of Singapore, "70-
80% of content accessed is Inter-
national: We spoke with several
Singapore telecom operators, and
all put the percentage of interna-
tional content accessed at over
70%. Therefore, a user’s experi-
ence 70-80% of the time using
their Singapore broadband con-
nection is at speeds significantly
lower then advertised package
speed and average of only 8% of
advertised speeds for higher end
packages.”
According to Sullivan, the basic
truth is that NBNs won’t matter to
customers without more interna-
tional bandwidth.
“Our view is simple…the cus-
tomer experience in an English
speaking market with a preponder-
ance of foreign content like Singa-
CommsDay
pore is defined by the interna-
tional link. Government data
shows clearly that at present users
in Singapore are getting 1-2Mbps
service to US websites no matter
what package taken.”
In a conclusion for his clients,
Sullivan wrote: “We believe the
market is under estimating the
potential cost increase involved
with high speed broadband ser-
vices. Markets with a heavy con-
centration of international con-
tent (Singapore, the Philippines,
Malaysia to a lesser degree) will see
the overall user experience defined
by the international link bottle-
neck. This implies significantly
higher expenses on either interna-
tional links or local caching opera-
tions.”
Which begs the question: is the
push for ubiquitous 100Mbps and
even 1Gbps services via fibre ac-
cess infrastructure simply too
much of a good thing if not ac-
companied by commensurate in-
creases in transit, backhaul and
international capacity? And given
the experiences of 2001—when
major undersea cable operators
went bust and sold for cents in the
dollar—because they over-estimated
demand and the preparedness to
pay for increased capacity, is the
same mistake repeating itself with
last mile infrastructure invest-
ment? That it simply moves the
bottleneck to another point at the
network, while adding much
greater cost into the system for a
less than commensurate payoff in
terms of user speed and capacity.
The newly appointed shadow
communications minister in Aus-
tralia, Malcolm Turnbull, certainly
makes the comparison.
“In the late nineties, there were
tens of billions of dollars, possibly
hundreds of billions of dollars,
spent on subsea cable, broadband
capacity if you like, around the
world. It was a classic case of
’build it and they will come’ – the
result was a massive destruction of
shareholder value, and all of those
assets ended up getting sold for
20
 CHINA

IRAN PAKISTAN NEPAL

SAUDI INDIA MYANMAR

LAOS
ARABIA OMAN
THAILAND VIETNAM
PHILIPPINES

MALAYSIA

PAPUA NEW GUINEA

INDONESIA

AUSTRALIA

NEW ZEALAND

CommsDay 21

cents in the dollar. We’re using
them [now], but there was a mas-
sive destruction of wealth,” he told
ABC radio.
“I am passionately in favour of
broadband, I am a notorious inter-
net junkie... and I’m very commit-
ted to the amazing things that we
can do with technology. But I’m
also committed to not wasting tens
of billions of dollars of taxpayers’
money... if the government says
I’m wrong, and they do, where is
the financial analysis, where is the
business plan, where is any of the
evidence that would justify this
investment?”
Turnbull has a point: there is
yet to be any detailed modelling of
real wholesale prices for the Aus-
tralian NBN (early Tasmanian trial
offers are based on free retail con-
nections and free wholesale tar-
iffs), nor has there been any analy-
sis of direct and indirect costs and
benefits for the project.
This rankles economist and
academic Henry Ergas whose early
modelling of NBN costings and
demand found that end user tar-
iffs for higher speed services might
need to exceed $150 for the pro-
ject to be commercially viable.
Ergas was pilloried by the pro-
NBN forces including communi-
cations minister Stephen Conroy
and FTTH consultant Stephen
Davies, who came out with his
own range of estimates pricing the
NBN at half or less of the pro-
jected $43 billion concluding that
today’s tariffs could be grand-
fathered into the NBN environ-
ment.
But Ergas could claim vindica-
tion as NBN Co’s Mike Quigley,
communications minister Stephen
Conroy and Rod Tucker subse-
quently articulated a vision for the
NBN as enabling a highly interac-
tive video-based usage profile for
the broader population. They talk
of video conferencing sessions
between doctors and patients,
distance education via virtual class-
rooms to the masses, multiple
HDTV streams per household and
COVER STORY
the like. NBN Co itself employs
the moniker “Endless Entertain-
ment” in its promotions, suggest-
ing a heavy role for capacity-
hungry video.
COSTS BEYOND THE POI
This profile creates a need for
costly dedicated bandwidth be-
hind the POI and upholds one of
Ergas’ assumptions: that a genuine
high speed service would require
relatively high committed informa-
tion rates when compared with
today.
Ergas says his critics often make
Henry Ergas
the mistake of counting only the
$43b capex cost of the NBN when
figuring out retail pricing, while
neglecting the expense of all the
backhaul, transit and overseas
capacity required to condition a
raw last mile NBN offer into a
complete Internet and telephony
access retail package.
He notes that his methodology
isn’t that alien to the actual NBN
itself: after all, his original costings
were partly compiled by Dieter
Schacdt who is now a pricing man-
ager with NBN Co.
According to Ergas there is a
real risk of the same type of mar-
ket failure which saw the 1999 to
2001 wave of American and Euro-
pean bandwidth projects collapse
under weak demand and sold for
cents in the dollar to Indian, Sin-
gaporean and Chinese buyers.
CommsDay
“But there is, to my mind, a very
substantial difference, which is
that this time, taxpayers can be
forced to cover the bill, so it
won’t be equity holders who, how-
ever misguided, chose to put their
funds at risk who will cop the loss,
but Australian mums and dads,
who have been given no choice
and less product disclosure than
securities regulators would require
if you tried to on-sell a govern-
ment bond,” Ergas says.
NBN advocates say that critics
such as Ergas and Turnbull don’t
get the indirect benefits—the exter-
nalities—which can be generated
by high-speed broadband.
These will more than pay for the
actual costs of the NBN in ways
that can’t be easily quantified or
measured.
Making this point, Rod Tucker
explains: “There are enormous
opportunities in areas such as tele-
health, aged care, remote distance
learning, social networking for
isolated communities, online sup-
ply chain management, environ-
mental monitoring and smart me-
tering, and water resource manage-
ment. The list goes on.”
“Overseas studies have shown
that large economic and environ-
mental benefits can flow from tele-
working for office workers, and
substantial greenhouse gas reduc-
tions can be achieved by replacing
business travel with high-quality
video conferencing.”
“The opportunities afforded by
ubiquitous high-speed broadband
are limited only by one’s imagina-
tion. The NBN will place Australia
at the forefront of developments
in these areas. It will not only pro-
vide the bandwidth needed for a
rich variety of applications, it will
provide opportunities for entrepre-
neurs to develop new technologies
and services and bring these to
market.”
But critics of the NBN concept
charge that pervasive fibre-based
high speed services will not deliver
the wider social benefits claimed
for them if they are simply too
22

costly for end users and taxpayers.
This is one of the central
charges of the Alliance for Afford-
able Broadband— a group of nine
fibre, transit, DSL and wireless
operators—who believe that an
affordable ‘safety net’ broadband
network could be offered using
LTE or a similar platform for less
than 10% the cost of national
FTTH. The Alliance was formed
hurriedly in late August in direct
response to a speech by NBN
CEO Mike Quigley which found-
ing CEOs felt contained many
misrepresentations regarding the
viability and claimed superiority of
fibre.
WORLD GOES WIRELESS
AAPT CEO and Alliance member
Paul Broad thinks the fibre-bias in
NBN policy is misguided when
compared to global developments.
“You go into China and what
they’re focused on is the third
world. And the third world isn’t
talking fibre, they’re talking wire-
less. And they’re talking about
efficiency of spectrum, so how do
you deliver up speed efficiently
within the spectrum range we
have? And how do you optimise
that? And how do you actually run
out these smaller devices where
you basically hang off the side of a
building and plug in to the power
outlets that are already in build-
ings, so you change the economics
of towers?”
“And what they’re talking about
is some of the infrastructure we
now have sitting in building base-
ments where you think you’re ...
different cars that allow you to
deliver up different products in a
seamless way. I mean, you and I
know, I’m completely wireless in
this building, completely wireless.”
Another Alliance member, Paul
Wallace of south Queensland
wireless operator Polyfone, goes
further, accusing the NBN forces
of deliberately “hobbling” their
own planned wireless service, pre-
sumably to advantage the case for
fibre’s efficacy.
COVER STORY
NBN Co’s plans call for a 4G
LTE-type service covering around
half a million or so Australian
households outside the fibre print
in sparsely populated regions, but
Wallace questions why it is speci-
fied as a fixed wireless service
capped at 12Mbps only, when
current LTE technologies are
ramping up to 100Mbps-1Gbits
peak speeds with full mobility. He
also accuses NBN Co of misunder-
standing wireless broadband by
specifying Ethernet when every
commercial system today uses IP.
“Ethernet adds network and man-
agement overhead and takes a big
AAPT’s Paul Broad
chunk out of performance. No
one else in the world would con-
template it,” Wallace said, adding
that this particularly adds pressure
on network performance in physi-
cal locations where backhaul is
also a major cost issue.
CAPTURED BY FTTH LOBBY?
Which raises another question in
the mind of NBN critics. The
original goal of the Australian
government and minister Stephen
Conroy was to promote affordable
and accessible broadband, particu-
larly for those who don’t have it or
had a slow version of it. Has this
original vision been captured by
fibre-to-the-home industry advo-
cates and lobbyists who instead
prefer an over-engineered, future-
proof and comparatively expensive
monopoly fibre infrastructure, to
the detriment of existing access
infrastructure and alternate tech-
nologies that could do much of
the same for considerably cheaper?
NBN proponents such as Tucker
CommsDay
and Conroy repeatedly promote
the need for an NBN to facilitate
such things are remote video,
smart grids and distance learning
even when in the here and now,
the same government is funding
smart grid and e-health initiatives
that will make use of existing Wi-
MAX and other technologies.
Notably many of these e-service
delivery mechanisms require con-
siderably less than 100Mbps ca-
pacities and in some cases are actu-
ally advantaged by mobility: smart
grids are largely facilitated by te-
lemetry applications that require
nothing more than mobile SMS
functionalities.
Which leads to another ques-
tion: even if the NBN becomes
widely adopted for improved
broadband services at the sub-
25Mbps level, what will policymak-
ers do if 100Mbps uptake fails to
eventuate because of the lack of
relatively affordable transit and
backhaul?
What if there is a commensu-
rate lack of productivity or innova-
tion benefits for Australia on the
basis that broadband usage has
only incrementally increased off a
far greater cost base than was the
case in pre-NBN times?
Will this be deemed another
market failure leading to billions
of dollars of even more govern-
ment investment in nationalising
and underpricing those services?
Or will the national FTTH net-
work simply take the same massive
write-downs seen on previous fi-
bre-heavy Australian private invest-
ments and end up in the hands of
a private owner for cents in the
dollar of its build costs?
These are all legitimate ques-
tions that sincere NBN advocates
could do well to address.
Grahame Lynch
Grahame Lynch is the founder of
CommsDay. He was the editorial
director of America’s Network in
Los Angeles throughout the 1999-
2001 undersea cable boom and
bust
23

Why the NBN’s payoff will be slow
W hen Bob Katter lined up
behind Tony Abbott, I
started writing the obituary for the
Australian NBN. It would have
been sad, but nothing like the
economic and job disaster some
predicted. I’m glad Oakeshott and
Windsor went the other way; in
the long run Australia will be bet-
ter off with a great Internet. But
the facts are clear: the best inde-
pendent scholars find expanding
broadband has, at most, a very
modest income or job effect.
Nearly all the “studies" that found
enormous benefits were paid for
by carriers or those seeking govern-
ment money, and were over-
optimistic. Common sense has
been lost as geeks lusted after fast
connections and businesses looked
for government favours. Essen-
tially everyone in countries like
Australia and the US can connect
at megabit speeds today at a price
in reach of just about any business
or middle class family. Fewer than
10% have really slow connections,
including satellite. Even satellite is
perfectly functional for most busi-
ness purposes, including applying
to jobs, managing a web site or
looking up information.
The NBN will be 10 or 100
times faster than what most of us
have today, a pleasure. But experi-
ence from countries that already
have fast connections is that appli-
cations used change little. Tens of
millions have fibre and DOCSIS
connections at 50 meg or faster
today. They are great, especially if
you want to watch multiple HD
videos. But faster connections
change very, very few people’s
lives. No one has suggested a plau-
sible reason why 50 meg connec-
tions have wildly more economic
impact than 3 meg connections.
The scholars discovered what
every unemployed book seller,
newspaper reporter, and record
company executive knows: broad-
band has a downside as well as
benefits. In February 2009, Raul
COVER STORY
Katz of Columbia University tried
to estimate the induced job effect
of the U.S. stimulus, and discov-
ered it might well be negative.
Because the data was uncertain,
he offered different scenarios with
both positive and negative net job
impact, with a positive midrange.
If broadband makes local busi-
nesses more efficient, they might
need fewer workers. What hap-
pens to local educators if distance
learning becomes more popular.
Four million Americans are taking
university classes remotely already.
Local doctors could lose patients
to far away specialists. Indian radi-
ologists are already taking work
away from radiologists in many
other countries. Initially, the mar-
ket was U.S. hospitals on the night
shift when no radiologist wanted
to work. Now, the competition is
for daytime work as well.
LIMITED BENEFITS
Jed Kolko of the Public Policy
Institute of California did the
most thoughtful paper on the eco-
nomic benefits of broadband I've
read. He looked at broadband
availability in many areas and time
periods. Some of his results were
positive, but he also found
“economic benefits to residents
appear to be limited. Our analysis
indicates that broadband expan-
sion is also associated with popula-
tion growth and that both the
average wage and the employment
rate—the share of working-age
adults that is employed—are unaf-
fected by broadband expansion.”
Shane Greenstein, the Elinor
and Wendell Hobbs Professor
Management and Strategy at
Northwestern University, calcu-
lated impacts likely 70-90% less
than paid advocates in D.C.
Bob Crandall, who led the first
studies that found a major impact,
by 2009 called the typical job pro-
jection “a gross overestimate.” He
added “There is a great deal of
overstatement in most of these
CommsDay
studies.” Greenstein explained
why the earlier studies, even if
solid, can’t predict what will hap-
pen today. “The experience of
Manhattan in 2005 has no rela-
tionship to the experience in West
Texas” today. If he were Austra-
lian, he could have compared Syd-
ney with the outback.
Those with the most to gain from
broadband are nearly all among
the 70% already connected.
Reaching everyone is good so-
cial policy, but the economic im-
pact will be different. There will
be a return, but it’s more likely to
be in the 5-15% range. Private
companies aren’t interested in that
rate of return unless competition
drives them to it, so privately fi-
nanced fiber home builds are un-
common except where competi-
tion is fierce. Verizon built FiOS
because Cablevision was taking
30% of the voice lines and a ma-
jority of broadband. Bell Alliant in
eastern Canada is doing fibre to
the home because Eastlink Cable
is clobbering them.
Governments, on the other
hand, can take the long view. Aus-
tralian government bonds yield 4-
6%. If the project is efficiently
run, the net impact should be
positive. Quigley's a good manager
but his spending estimates worry
me. Builds like Verizon have been
done for less, and the cost of fibre
gear has dropped to $US100/
home in China. I expect him to
get the job done for less than
$43b, especially if the details of
the Telstra deal prove out.
If the NBN has a net return
after borrowing costs of 5% on a
$40b investment, that's about $2b,
or a quarter of 1% of Australia’s
GDP. With 8-10 years required for
much of the impact, that’s so
small it would be hard to conclu-
sively measure.
I’d still prefer a 100 meg con-
nection, however, even if the eco-
nomic payoff is small.
Dave Burstein
24
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CommsDay 25
 The Internet’s date with destiny
It’s been forecast for nearly 15 years but the time for the exhaustion
of IPv4 numbers is nigh. Geoff Long examines what will likely happen
P ut this date in your diary: 4
June 2011. That’s the date
that the main Internet body for
allocating IP addresses – the Inter-
net Assigned Numbers Authority
(IANA) – is predicted to exhaust
its pool of unallocated
IPv4 addresses. And
while you’re at it, put this Sun
date in your diary as well:
4 February 2012. That’s 5 6
the date the body for 12
allocating addresses in
19
this region – the Asia
Pacific Network Informa- 26
tion Centre (APNIC) –
will have doled out the last of its
unallocated IPv4 addresses. Once
that happens, there simply won't
be any more IPv4 addresses to give
out.
That news will most likely trig-
ger a few alarm bells for organisa-
tions, government agencies and
companies that have become ac-
customed to a continuous supply
of IP addresses to fuel their opera-
tions. So should we be scared?
And how come more alarm bells
haven’t been sounded? After all,
an IP address is the lifeblood of a
huge amount of global trade, of a
wealth of new Internet services
that are created every day, and of
the future stable operation of our
carriers and ISPs. Yet we’re down
to the last 5 percent of unallocated
IPv4 addresses, exhaustion in less
than a year and no-one seems to
be too bothered.
So to cut to the chase, yes, you
should be afraid. Be very afraid.
The more interesting question is
how could it get to this point with-
out a transition plan to the next-
generation of Internet Protocol,
IPv6? After all, the well-tested IPv6
has been around for well over a
decade already and would solve
the issue emphatically – the 128-
June 2011
Mon Tue Wed Thu
1 2
7 8 9 10
13 14 15 16
20 21 22 23
27 28 29 30
bit IPv6 space, while not infinite,
would have enough addresses for
every man, woman, child and pet
and still plenty left over for
Stephen Conroy’s broadband-
enabled dishwashers.
STUNNING SILENCE
The dates for the exhaustion of
IPv4 addresses above come from
Geoff Huston, currently chief sci-
entist at APNIC but also one of
the pioneers behind the Internet
in Australia from his early days
with AARNet. They’re also fairly
close to other dates that have been
nutted out by people in the Inter-
net community and there’s very
little disagreement on the time-
frame. As Huston states, it's not
like we haven’t known this day
would come. In fact, it’s been fore-
cast since the early 1990s.
“Here we are, with this massive
industry supporting a huge
amount of wealth and currently
expanding by a million new work-
ing services every day and we seem
CommsDay
to be doing nothing. From where I
sit the silence has been stunning,”
Huston said.
Not that he thinks that the sky
is about to fall down on the Inter-
net – far from it. There are
kludges available
that will keep the
Fri Sat Internet up, even if
3 4
it will mean patchy
11 service and an inabil-
17 18 ity for some new
services to get off the
24 25
ground. And it
won’t even mean
that businesses can’t
get their hands on any more IPv4
addresses. It will be just a matter
of how much they’re willing to
pay.
“There is no such thing as no
more addresses – it's all about
price,” Huston points out. “It's
pretty obvious to all of us that the
folk who are most desperate for
IPv4 addresses will have to pay.”
At its most recent annual confer-
ence on the Gold Coast in August,
APNIC presented its plans that
will free up the trade in IPv4 ad-
dresses. Once the remaining ad-
dresses are gone, it's a question of
waiting to see how much people
are willing to pay to acquire one.
We’ll have gone from a scenario
where an IP address is the least
significant part of any new service
to one where it is a key factor.
Of course the other option is
that Internet world will see sense
and move to IPv6.
TRANSITION TIME
In terms of core Internet infra-
26
structure, most of the major ven-
dors have been IPv6-ready for
quite some time. Tim Nagy, a sys-
tems engineer with Juniper Net-
works, said that IPv6 capability is
being demanded on more tenders
these days, but its actual use in the
network is very much in its in-
fancy, with any deployment typi-
cally using a IPv4/IPv6 dual stack
solution. And while Juniper could
introduce IPv6 in service provider
networks “fairly quick”, Nagy said
that the demand hasn't eventuated
yet, much to his and many other's
surprise.
“We aren’t at the stage that Ju-
niper thought we'd be at in 2010,”
he said, noting that there was mo-
mentum for IPv6 a few years ago
when the US Federal government
mandated it as a requirement for
all future network builds, but
since then he said momentum had
actually slowed. And according to
research from Huston and others
in the Internet community, today
only a very small percent of end
points, perhaps 2-3 percent, can
now run IPv6.
In the commercial world, the
main problem is that there is no
financial benefit to service provid-
ers in upgrading.
The users won’t know the differ-
ence in any case, so it's simply an
extra expense that the company
has to add for no return. However,
Nagy expects there will be a lot
more migration activity once IPv4
depletion does hit. And that's
when the fun might start.
One thing that most people are
fairly sure of is that there will be
some disruption once we hit ad-
dress depletion and start to move
to IPv6, the only issue is how
much. Nagy expects that new users
might have to put up with delays
in getting their new services, while
some services won’t get deployed
and others won’t work as well as
they do today.
He also thinks that there will be
a two-tier Internet – some services
on IPv4, others on IPv6 – for as
long as a decade or two. And while
Vocus CEO James Spenceley
most core network infrastructure
on the market is IPv6-ready, a lot
of the gear in consumer homes
and small offices is not.
Home gateways, mobile phones
and PCs, VoIP gear are just some
of the items that will likely not
work and need to be replaced.
James Spenceley, CEO of whole-
sale carrier Vocus and an APNIC
executive council member, is even
less optimistic about the prospects
for a smooth transition to IPv6,
arguing that the time has now
passed for an orderly migration
and it is now a question of mini-
mising the impact.
“It's definitely too late now. The
end of the world is here – how are
we going to deal with it? We need
to work out ways to lessen the
impact when we do run out.”
“When you're looking at pro-
viding services to end-users, in
reality most of the end-user CPE,
your wireless modem router etc,
has to go . . . that's a massive
amount of inertia,” he said. “And
you can’t just convert them over,
you need to have both [protocols]
running. And then you need to
slowly migrate every web site, every
BitTorrent client, every mail server
on the Internet . . .and then you
can turn off IPv4. That's 10 years!”
THE NAT ARGUMENT
There are those who continue to
say that the whole issue is a beat-
up, pointing to a string of media
stories in the past about the pend-
ing doom that the Internet is run-
CommsDay
ning out of Internet addresses.
And they’ll also point to work-
arounds such as Network Address
Translation (NAT) that will allow
carriers and large companies to
offers services to many people
from just a few IP addresses.
Juniper is one of the vendors
that offers so-called “carrier-grade
NAT,” but according to Nagy it is
typically only seen as an interim
solution that can mitigate some of
the problems before a full migra-
tion to IPv6. He says that among
the services providers, most see
NAT as a short-term necessity at
best but it’s not the ideal solution.
He claims that ultimately users are
unlikely to put up with NAT-based
services, which can affect the work-
ing of a number of Internet proto-
cols, most notably VoIP, and don't
allow for end-to-end connectivity.
However, there’s also a more
concerning issue with the use of
NAT. As APNIC’s Geoff Huston
explains, once IPv4 addresses are
depleted, it could open up an op-
portunity for a brokered service
that will allow a new type of pro-
vider to offer connections – for a
fee, of course.
For example, technologies such
as IMS coupled with NAT could
be used to create a virtual Internet.
“In a world of sparse addresses,
those providers get a new lease of
control,” he suggests. “The Inter-
net stops being innovative and
becomes hideously controlled. Not
everyone sees it in their interest to
have the same abundant supply of
addresses. Some see constraint as a
means of control.”
While the control scenario is at
one end of the extremes of what
might happen, the thing that can't
be disputed is that we are running
out of IPv4 addresses. Rapidly.
And that's a scenario which no-
one has faced before. Lets hope
that the issue passes with as little
disruption as possible, because as
Huston says, the Internet is “too
valuable to trash.” In the mean-
time, mark your diaries for June
next year.
27
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CommsDay 28

The strange case of perishable fibre
L ooking at website comments,
it seems that there’s a bit of
confusion out there: is the life of a
fibre 15 years, or 25 years?
Since this gives me a chance to
indulge myself – telling a factual
story instead of grubbing around
in politics – I decided to do some
reading, and I came across a gem.
Well, it’s a geeky kind of gem: a
technical paper that I’ll crib for
you here.
In 1999, a couple of researchers
decided to test a field-aged optical
fibre, and the one they picked was
a beauty. Installed in Oregon in
1987, the cable experienced tem-
peratures ranging from -17 to +37
Celsius; average annual snowfall of
20 cm; annual flooding; and mud-
slides.
One of those mudslides exposed
the cable; the carrier involved de-
cided to replace (and reroute) it,
Kevin Houser of Corning and
Shirley Chahanovich of Pirelli
decided to test it.
The battery of tests included
microscopic examination, stress
tests, and optical tests (to measure
the effect of inks and coatings on
the integrity of the glass over more
than ten years).
For those who like the gory de-
tails, the stress tests included
“cable twist, flex, compression and
impact, water penetration, cable
jacket shrinkage, tensile elonga-
tion of the outer jacket, and fiber
stripability” – in other words, mis-
treating both the fibres and the
other cable components – and the
authors’ regret was that with only
about 26 metres of cable available,
they couldn’t run any other physi-
cal tests!
Their conclusion?
The fibre was pretty much iden-
Richard Chirgwin
.
tical to the day it was installed –
or, in the more measured termi-
nology used in works like this,
“there exists no significant degra-
dation in the optical fibre cable’s
performance, which verifies labo-
ratory testing and speaks to the
true reliability of optical fibre ca-
ble.” (Verification of Optical Fiber
Cable Reliability, Houser and Chi-
hanovich, 1999).
The watch took a licking, but it
kept on ticking.
Fibres in a cable now 23 years
old and suffering extremes of heat,
cold and mistreatment was indis-
tinguishable from a new fibre –
and there are people who think
today’s fibre has a lifetime of just
fifteen years? How can this be?
After trawling around other pa-
pers, documents, and Google
searches, I have come to the con-
clusion that some people, at least,
are mistaking the depreciation life
of a fibre (be it 10, 15 or 25 years)
for its physical endurability.
A hint is in the divergence be-
tween peoples’ belief about the
lifetime: they’re getting data from
the same source, depreciation
models published by Technology
Futures Inc, one dating from 2003
(10 to 15 years), the other from
2008 (20 to 25 years).
The TFI model is an actuarial
exercise – it sets a reasonable pe-
riod over which the fibre owner
can reduce the book value of the
CommsDay
asset (and claim the relevant tax
deductions) towards zero.
It does not define the physical
life of the cable, although this is
factored into the model. It also
sets costs like repair and mainte-
nance against the asset value, and
factors in whether future technolo-
gies are likely to render the fibre
obsolete (it’s so hard to find good
candidates that TFI even includes
BPL in the list).
The reason that commenters
and commentators seem confused
about whether the life of a fibre is
15 or 25 years is, I suspect, down
to Google: it’s easier to find the
2003 data (15 years) than the 2008
data (25 years), unless you’re pay-
ing attention.
What people don’t understand
is that the “25 year depreciation
cycle” assumes that most of the
network will still be functioning at
the end of that period.
If it were otherwise, then a car-
rier with fibre in the ground
would need to build its new net-
work while still depreciating the
old one; a state of affairs which
would be unacceptable to network
owners, investors and govern-
ments alike.
And when someone on a news
site trots out “ten to fifteen years”
as the life cycle of the fibre you
can safely ignore them.
29
 How RIM is fighting back against
the Blackberry bans
Research in Motion faces a dilemma in its effort to overturn bans on the Blackberry—
acquiescence to governments harms its reputation. Miro Sandev reports
A uthorities in the United
Arab Emirates were tense
after Hamas leader Mahmoud al-
Mabhouh was assassinated in Du-
bai in January. One of the theories
peddled had Israeli Mossad com-
mandos carrying out the hit with
the use of their Blackberry devices.
The tension was recently
unleashed in a wave of arrests,
which saw authorities also detain
protesters who were allegedly us-
ing the Blackberry Messenger ser-
vice to plan a protest against the
price of petrol.
The orchestrator of the rally had
only been caught after giving him-
self away unwittingly by sending
his Blackberry PIN out in a bulle-
tin board message.
Now the United Arab Emirates
has threatened to ban several
Blackberry services lest they im-
pede future security efforts.
It seems that the governments of
some of the world’s developing
countries don’t share Westerners’
enthusiasm for the device affec-
tionately termed the ‘Crackberry’,
because of its potent addictive
qualities. On 2 August the UAE
Telecommunications Regulatory
Authority issued a statement that
it proposed to suspend Blackberry
messenger, email, and web-
browsing services from 11 Octo-
ber. Since then? A cavalcade of
bans and proposed bans world-
wide including in Saudi Arabia,
India and Indonesia.
On the back of this worldwide
clampdown, RIM stocks fell heav-
ily. The regulatory onslaught
prompts the obvious question –
what is it about the device that is
making some governments so un-
easy? Put simply, RIM’s sin has
been to offer a securely encrypted
device that prevents the company
or any other third party, including
government agencies, from moni-
toring messages and emails to the
level of detail some request. “The
Blackberry platform architecture
relies on dedicated data centres
(NOCs) which handle all Black-
berry data traffic over a secure,
encrypted connection the NOC
and the handset,” Ovum analyst
Tim Renowden said.
“Some governments are uncom-
fortable with the solution because
they have little or no visibility into
Blackberry data traffic, and are
concerned that Blackberry hand-
sets may be used for criminal pur-
poses.”
The company also boasts that it
could never be pressured into pro-
viding copies of customer’s encryp-
At no time does RIM or any
wireless network operator or
any third party ever possess
a copy of the key
tion keys “since at no time does
RIM or any wireless network op-
erator or any third party ever pos-
sess a copy of the key,” the com-
pany says on its website. “This
means that customers of the Black-
berry enterprise solution can main-
tain confidence in the integrity of
the security architecture without
fear of compromise.”
CommsDay
What differentiates the Black-
berry system is the fact that the
data from communications is
stored in the Blackberry enterprise
server in Canada, rendering it
outside of the ambit of jurisdic-
tions that may seek to impose
harsh surveillance laws. According
to Dr Steve Hodgkinson, public
sector IT research director at
Ovum, other device operators
have located their servers outside
of the country of origin. “I believe
that is more the standard pattern,”
he told CommsDay. “Blackberry
has attempted to differentiate it-
self on the basis of having a global
secure email system. One of the
big sticking points for the adop-
tion of Blackberry services by Aus-
tralian government departments
and corporations in Australia
when it was first introduced was
that the emails were hosted in
Canada. People had their security
staff vet the whole thing and even-
tually came to be comfortable with
the security.”
This closed network is one of
Blackberry’s main advantages as
business executives, politicians,
journalists and others who prize
the inscrutability of their informa-
tion will attest. “The difficulty for
RIM is that security has been a key
selling point for BlackBerry and
acquiescing to government de-
mands would significantly under-
mine its security credentials, par-
ticularly with business and public
sector customers,” Renowden ex-
plains. There are myriad legitimate
reasons for wanting data encryp-
tion and privacy, and Renowden
30
senses a perception in the market
that if RIM compromises with one
government then others will de-
mand the same level of access.
RIM has been adamant that it
will not yield to government
threats and customise its services
in some countries, vowing in a
statement in August that it will
not compromise the integrity and
security of the BlackBerry. “There
is only one BlackBerry enterprise
solution available to our custom-
ers around the world and it re-
mains unchanged in all of the
markets we operate in,” the com-
pany said. “RIM cooperates with
all governments with a consistent
standard and the same degree of
respect. Any claims that we pro-
vide, or have ever provided, some-
thing unique to the government of
one country that we have not of-
fered to the governments of all
countries, are unfounded.”
However, Hodgkinson is not
convinced RIM will stay true to its
word and warns that this could
have disastrous implications for its
reputation. “They appear already
to have [struck a compromise] in
the UAE and Saudi Arabia and
discussions seem to be coming to
some kind of conclusion in India,”
he said. RIM seems to have ap-
peased the Saudi authorities as the
country’s government has now
said it would allow messenger ser-
vices to continue, but the UAE is
standing by its decision to put the
kibosh on the messenger, web-
browsing and email services start-
ing from 1 October. Hodgkinson
believes there is a slippery slope
that could run between RIM’s
compromise in one jurisdiction
and a significant puncturing of
user confidence world-wide.
“The problem for RIM is that
those markets are so big, particu-
larly India, that in the end they
will have to comply with the regu-
lations of the country, whether
they would like to or not,” argues
Hodgkinson. “And that will have
consequences for their positioning
as a global provider of secure
email. That’s the conundrum they
have.”
India is the world’s fastest-
growing mobile phone market,
with some reports suggesting the
sub-continent is adding new sub-
scribers at a rate of 20 million per
month. RIM clearly values the
market, as evidenced by its deci-
sion to give Indian authorities
limited access to its messenger
service starting from 1 September.
The company has also agreed to
lead an industry forum in develop-
ing ways to balance customer pri-
vacy demands against the authori-
ties’ security requirements.
“Finding the right balance to
address both regulatory and com-
mercial needs in this matter is an
ongoing process and RIM has as-
sured the Government of India of
Crucial to its decision will
be whether it can get Google
and Skype onside
its continued support and respect
for India’s legal and national secu-
rity requirements,” the company
said in a statement. RIM did not
point to any other technology or
communications companies that
could join the forum but refused
to be singled out as the only firm
to use resilient encryption. “The
use of strong encryption in wire-
less technology is not unique to
the BlackBerry platform. It is un-
questionably an industry-wide
matter,” RIM said. “Banning such
CommsDay
strong encryption-based informa-
tion and communications services
would severely limit the effective-
ness and productivity of India’s
corporations.”
Just days ago, Indian authorities
announced that they will delay
firm bans to the Blackberry mes-
senger services for at least 2
months after the firm agreed to
provide “some technical solutions”
for local security agencies to moni-
tor its email service. Indian gov-
ernment officials would not be
drawn on the details of these solu-
tions but explained that the De-
partment of Telecommunications
will begin assessing them immedi-
ately and that the government will
make a decision in sixty days time
as to their adequacy. The govern-
ment has now also demanded
access to data that flows across
Google and Skype servers.
The question for Blackberry
ultimately will be whether it stands
to lose more customers from the
devaluation of the secure commer-
cial email service it offers or from
being denied access to large emerg-
ing markets such as India and
Indonesia.
Crucial to its decision will be
whether it can get Google and
Skype onside and form a commer-
cial troika that will have greater
leverage in negotiations with the
authorities.
One can bet that all three com-
panies are doing some serious
analysis right now.
31
 Why the campaign against Huawei
Technologies is unfair & wrong
A recent letter by US senators casting aspersions on Huawei Technologies shows a lack of
knowledge of the positive role it has played in Iraq reconstruction, argues Bob Fonow.

T hose who follow the geopoli-

tics of international telecom-
munications will be aware of the
obstacles confronted by Huawei in
gaining access to large network
contracts in the United States. No
doubt Huawei can take care of its
own interests, but lately the politi-
cal objections have taken a moral-
istic tone that maligns Huawei
with accusations based on inaccu-
rate evidence and hearsay.
The most dramatic attack came
in August in a letter from a group
of conservative US senators sent to
high Administration officials.
The senators’ letter is available
as a .pdf file on the Internet for
those who want to read the whole
thing. That letter demands a re-
sponse from someone familiar
with international and Iraqi tele-
communications.
Huawei has a good
story to tell the American
people but this is being
lost in the noise of elec-
toral politics. To set the
record straight I submit
the following highlighted
paragraphs from the let-
ter, followed by my responses. As a
disclaimer, I currently reside in
Beijing, but have had no contact
with Huawei since May 2008.
The above refers to an article in
2001. That is ten years after the
Iraqi telecom system, as far as one
existed in the country, was de-
stroyed the first time in 1991 in
the First Gulf War, and two years
before the Coalition obliterated
the civilian infrastructure in
March 2003, leaving the US Army
and State Department in control
of a country without any civilian
communications for their own use
or for reconstruction.
The evidence for this paragraph
is at least seven years out of date.
Since 2003, the international
telecommunications company
most re-
sponsible
for facilitat-
ing recon-
struction in
Iraq is Huawei, not an American,
European or Japanese company,
though each country contributed.
Many western companies would
not send engineers to Iraq for
security reasons. Huawei has 200
engineers and support personnel
spread out around the country
with minimal security helping the
Iraqi national telecommunications
company rebuild its national tele-
communications grid.
Huawei was deeply involved in
the planning
and reconstruc-
tion of Iraqi
telecommunica-
tions including
discussing their
plans with the
US Embassy on
more than one occasion from
2006. Had the US military and
State Department engaged Huawei
earlier, especially in the period
2003-2005, reconstruction would
have occurred much faster in Iraq,
perhaps limiting some of the con-
ditions that fostered the insur-
gency. A functioning national
telecommunications system is a
pre-requisite for all other eco-
nomic development.
The surge and much conse-
quent stability in Iraq was facili-
tated by the technical foundation
established by Huawei engineers.

CommsDay 32
 One does not have to peel too
many layers from the onion to
figure that out.
The reconstructed telecoms
network was one of the key factors
in stabilising Iraq. As a conse-
quence, Huawei saved American
lives. The company should be
awarded a medal by the US gov-
ernment instead of being ma-
ligned by senior politicians.
Should I be troubled that
AT&T is a major provider of tele-
communications services to the
Pentagon, and that over many
years several AT&T
executives, in charge
of government rela-
tions, were former
senior officers in the
US military? This is
also true of Sprint and most major
telecommunications companies in
the United States.
In Iraq, it was common to find
reserve majors and colonels on
active duty who were also execu-
tives in US telecom companies,
which suggests that AT&T, Sprint
and Verizon employees have direct
ties to the US military. It may even
be possible that some of these
American companies collaborate
with the Pentagon on research &
development. Could this happen
in the USA, like in China?
It’s a fact that certain parts of
every national telecommunications
infrastructure are more closely
related to national security than
others. And it is the job of highly
skilled electronics intelligence
experts to deal with this, and in
my experience, they do so very
effectively.
I will go out on a limb here and
say that the British have also inves-
tigated the French, the French
have investigated the Americans,
the Chinese have investigated the
Indians, ad nauseum.
In many countries around the
world, the Internet has outpaced
the ability to control the services
on it and the people who use it.
Like many things in China, what
is shiny and space age on the out-
side looks a bit different on the
inside. Any experienced telecom-
munications professional will be
skeptical of claims that place
China near the top of the cyber-
war and cyberse-
curity – or cy-
berespionage –
league tables. I
wouldn’t rank
the country in
the top 10. But the country pro-
duces so many mathematicians
and engineer that this will change.
The first sentence may be true. I
have often thought — though I
have no evidence — that Huawei
operates as an instrument of Chi-
nese foreign policy, and the most
important goal of that policy is
access to minerals deposits and oil
in developing countries. If Chi-
nese policy makers can gain lever-
age with a free or cheap Huawei
network, that’s on the negotiating
table, and one supposes this is
subsidised in some way. If the
senators are really concerned there
are several trade treaties and nu-
merous bi-ateral discussions to
deal with questionable practices.
However, if Huawei or any
other foreign company becomes
critical to the supply chain of the
US military, law enforcement and
private sector it’s because there are
very few US telecoms and IT
equipment suppliers left. Perhaps
the senators can remember that
US politicians, financiers and cor-
porate executives made a con-
scious economic decision to move
US manufacturing to China over
the last twenty years. This created
CommsDay
the supply chains and volume effi-
ciencies in southern China that
enabled Huawei to become a
global supplier of equipment so
quickly. It is the same supply chain
that is used by Apple, HP, Cisco
and Dell.
The senators should also con-
sider that Huawei engineers will
remain in Iraq and Afghanistan
when the United States departs,
whether that is next year, or if
these conflicts become “multi gen-
erational” — as it’s becoming fash-
ionable to describe them in some
Washington circles. What an in-
heritance. To ameliorate this pros-
pect it might be worthwhile to
include Huawei in discussions of
stabilisation and reconstruction,
and treat them as potential part-
ners, and dare I
say, even allies
in helping to
improve the
economic and
political infra-
structures in conflicted countries.
Huawei is a commercial tele-
communications company with
connections to the PLA. It would
be more surprising if it didn’t.
This makes Huawei no different
than other technology companies
in the United States, Asia and
Europe that supply their national
defense communications systems.
International safeguards are long
established where security is neces-
sary. Huawei should have open
access to the United States net-
work equipment market, on the
basis of continued access for
American companies to markets
in China.
Bob Fonow is the Managing Di-
rector of Revenue Growth Inter-
national Ltd, a turnaround con-
sulting firm with offices in North-
ern Virginia and Beijing. He was
the US State Department Senior
Consultant to the Minister of
Communications in Iraq from
2006-2008.
33

The acute importance of customer service
L ike millions of others around
the world, I am an Apple fan
who knowingly and happily pays a
premium for my iPhone.
The user interface is fun and I
get outstanding support. When it
broke just last week, I took my
iPhone to the Apple store and got
it fixed on the spot.
This kind of enjoyable customer
experience, which not only gives
me what I expect but delights me
by giving more, is the Holy Grail
for our industry; yet we all know
that engineering (or harder still,
re-engineering) the business and
technology processes to support its
delivery, is incredibly complex.
Recent research by RightNow
supports this, claiming 59 per cent
of Australians have had a poor
customer experience when pur-
chasing from a telco, while 44 per
cent have had the same dispiriting
time with an ISP.
There are too many instances
where we start the customer ex-
perience transformation journey
without completing it. Where do
we come unstuck?
Firstly, supplier size is too fre-
quently blamed as the barrier.
This is a misnomer. It is cus-
tomer–facing complexity which we
need to reduce; in the business
processes charged with enabling
the vision.
This is the most direct route to
achieve organisation-wide consis-
tency in customer experience.
Though not easy, it is possible
to create a direct link between
identifying areas for process sim-
plification and taking rapid im-
provement actions. Vodafone
Netherlands undertook a 12 week
project to analyse its customer
CHRISTOPHE BUR
.
experience and define, accelerate
and deliver 27 quick win initia-
tives which also, in parallel,
yielded considerable experience
improvement – and cost savings.
Secondly, enhancing the cus-
tomer experience does not need to
be expensive; in fact the opposite
is true. Mapping the customer
journey gives us a much better
understanding of what is truly
valued by consumers and, by defi-
nition, areas for eliminating costs
which don’t contribute to repur-
chase.
Low-cost airlines have enjoyed
much success, not by offering com-
plimentary meals or headsets, but
by delivering an expected experi-
ence at the right price. TPG – with
its crystal clear product proposi-
tion and price point – is a stellar
example of a company doing this
well in our industry.
In another example, a major
European carrier approached this
by defining value in the eyes of the
customer and then removing any-
thing within a business process
that didn’t deliver it. The chal-
lenge was to be brutally honest
about what value from a customer
perspective actually meant. Defin-
ing this value proposition can be
quicker than you think, and al-
though the implementation jour-
CommsDay
ney may be longer, it is worth the
investment; in this case an A$
150m+ uplift in EBITDA over
three years.
Finally, incrementally improving
vertical technology systems is often
identified as a silver bullet. While
fixing the provisioning or billing
system will improve one touch-
point in the customers’ experi-
ence, it does not fundamentally
change how they interact with it.
Only an end-to-end approach
that considers the entire process
from the consumers’ perspective,
and remains true to a consistent
value proposition which the cus-
tomer expects (and wants), will
yield targeted results.
Encouragingly, there seems to
be a critical mass of players which
now demonstrate an acute appre-
ciation of the importance of defin-
ing and designing the ‘ideal cus-
tomer experience’. Following the
customer thread all the way
through from first contact to re-
newal is now well understood as a
valuable defence against structural
commoditisation of our industry
and lingering GFC pressures.
Christophe Bur is the VP of
Telecommunications and Media
at Capgemini Australia
34
CommsDay 35
 The business case behind the
world’s first wholesale-only cellco
US start-up LTE operator LightSquared plans an unprecedented wholesale-only
business model. Tony Chan examines its rationale
L ightSquared is now well on its
way to rolling out the world’s
first wholesale LTE network.
While wholesaling capacity on
wireless networks isn’t exactly a
new concept, given MVNOs have
existed for many years now, the
concept of just building and run-
ning a wireless network purely to
sell to other operators has so far
never been attempted.
Given the tremendous capital
requirement in building a mobile
network – estimated at US$7 bil-
lion over 8 years to build Light-
Squared’s ambitious nationwide
LTE network that will cover 92%
of the US population by 2015,
what is the rationale behind the
business model?
To understand LightSquared’s
vision, it is important to take into
account where the company is
coming from.
Basically, it was a satellite opera-
tor that had access to a chunk of
nationwide spectrum - 59MHz in
the 1400MHz band across the
whole of the US. From there, it
successfully convinced the FCC to
allow it to use that spectrum for
next generation mobile broadband
– LTE— giving it the enviable
position of being able to roll out a
nationwide 4G infrastructure.
The timing of LightSquared is
also very important. It is getting
off the ground when market de-
mand, technology evolution, as
well as the nature of the mobile
industry, are approaching or hit-
ting key transition points.
First, traffic on mobile network
is growing exponentially due to
the success of smartphones and
new applications [and business
models] like the Amazon Kindle.
Secondly, LTE, with its flat IP
architecture, is enabling a cost
effective, high performance net-
work akin to in-the-ground fibre.
Lastly, the emergence of net-
work outsourcing and wholly-
managed mobile networks from
markets such as India now allows
LightSquared to really drive down
its costs as well as operational com-
plexity. In this area, LightSquared
has selected Nokia Siemens Net-
works to build and operate its
entire network.
When all these factors are com-
bined, LightSquared already has a
There isn’t an attractive
wholesale offer in place for all
the companies looking to
participate in wireless services
pretty compelling proposition. It
will have a highly cost-competitive
network infrastructure with next
generation capabilities, in a mar-
ket where demand is accelerating.
But LightSquared won’t be stop-
ping there.
Instead of going to market and
competing with established players
in the market, the company
elected to push forward with one
final innovation in the mobile
space – pure wholesale.
CommsDay
WHY WHOLESALE?
According to Frank Boulben, chief
marketing officer at LightSquared,
limiting the company’s business to
wholesale means it can now ad-
dress a vastly bigger market oppor-
tunity.
“Given the characteristics of the
US market – you have many wire-
less operators without 4G spec-
trum, or without 4G spectrum
nationwide, you have wireline
operators and cable operators who
have introduced wireless services,
and you have other players in the
retail area, device manufacturers,
also beginning to offer wireless
services, so it looks like there was
an untapped opportunity for an
attractive wholesale offering in the
market,” Boulben said.
In so doing, LightSquared can
supplement the coverage of other
wireless carriers either by offering
high capacity spot coverage, or
extended coverage into rural areas.
It can also serve the wireless net-
work requirements of new players,
such as fixed and cable operators,
or retailers such as Amazon.
“There is really a demand for
our model. First, there is spectrum
scarcity in the US market, so our
capacity will be needed overall in
the market place to satisfy de-
mand. Secondly, there isn’t an
attractive wholesale offer in place
for all the companies looking to
participate in wireless services.
Those two things combined create
a lot of traction for us,” Boulben
said. “If you look at analyst fore-
36
casts in the US, the most conserva-
tive predict a 40-fold increase over
the next five years, so exponential
growth.”
SIX MONTHS AHEAD
The business model seems to be
working so well that Boulben says
LightSquared is some six months
ahead of its original business plan.
“We are now in discussion with
more than now 35 companies in
the last few months. We are now
in advanced negotiations with 8 of
them, so we see the demand for
capacity growing much faster than
we anticipated,” he said.
“Now it is all about execution
and getting customers on the net-
work. On that front, we have had
very good surprises. As we started
to engage companies about our
situation a few months ago, we
were not expecting so much appe-
tite, and we are now in a situation
where we are now finalizing with
some companies already – we had
expected to be in that stage in the
first half of next year.”
In fact, LightSquared has al-
ready announced its first partner –
smart grid solutions provider, Air-
span, who has entered a deal
where it will “exclusively market
LightSquared’s 1.4 GHz wireless
spectrum,” to the utilities industry.
CHALLENGES
That’s not to say LightSquared’s
business plan is without chal-
lenges. As the first and so far,
only, operator on the 1400MHz
band, LightSquared will have to
convince a lot of people to join its
ecosystem.
The good news, according to
Boulben, is that the company has
already taken a number of compa-
nies onboard, including three
chipset manufacturers, five device
manufacturers, as well as two Tier
1 and three Tier 2 OEMs.
The official announcement for
those agreements will come later
this fall, he added.
Yet, the success of LightSquared
will depend on much more than
A LightSquared promotional still
just getting devices that support its
network.
At least part of its business
model is to wholesale capacity to
other wireless operators, which
would mean that these operators
will have to support Light-
Squared’s devices, as well as to
convince their customers to take
on those devices, which might be
more expensive – due to the need
to support an extra radio band,
and offer less choice – since Light-
Squared’s platform will be starting
off from scratch.
On a positive note, there will be
a whole generation of new devices,
such as e-Readers, digital cameras,
smart meters, and other such de-
vices with built in wireless connec-
tivity, that won’t be impacted by
the handset ecosystem.
As these are custom-built to the
specifications of a service provider
or retailer, they can be manufac-
tured to work with LightSquared’s
network – although they will
probably still suffer from some
economy-of-scale disadvantages
due to the initial volume of
1400MHz chipsets.
The other uncertainty is its pric-
ing model. While LightSquared
has adopted a simplified pricing
CommsDay
model of charging per Gigabyte of
usage – with discounts on large
volume – to its customers, it has
basically committed to building a
network consisting of some 40,000
base stations without a concrete
idea of actual demand.
No doubt LightSquared will
work closely with NSN to config-
ure and optimise the network to
deliver the margins on its eventual
pricing, there is no guarantee that
the demand will materialise, espe-
cially in rural areas.
UNIQUE POSITION
At the end of the day, it’s not hard
to see the potential of Light-
Squared’s business model given
the continual growth of mobile
data. On the other hand, it is also
plainly clear that the company has
an unique position in an unique
market.
Not many companies hold the
distinct advantage of having na-
tionwide spectrum where many of
its peers don’t. And not many
markets are like the US, where the
addressable demand is big enough,
where the playing field is diverse
enough – both geographically and
commercially, to support a pure
wholesale play.
37
 Teleconfidential by William van Hefner
Death by telephone
F ew consumer electronics prod-
ucts over the years have been
maligned more than the humble
telephone. Whether it be a hard-
wired landline type or the latest
wireless device, a variety of hoaxes,
urban legends and half-truths have
conspired to make using the tele-
phone a practice regarded as only
slightly less dangerous than play-
ing with a loaded handgun.
We’ve all heard the classic sto-
ries of people being electrocuted
while talking on the phone during
a lightening storm. While this
might be technically possible, the
odds of it actually happening are
slimmer than... well, your odds of
being hit by lightening.
Advances in technology and
safety practices have unfortunately
done nothing to lessen the danger
of telephone use in the public's
mind. In fact, the advent of the
wireless phone only seems to have
launched phone paranoia into
overdrive. Like most urban leg-
ends, there is often a kernel of
truth behind the myths, but some
are so ridiculous that it's difficult
to see how anyone could take
them seriously.
Let’s take exploding cell-
phones, for example. Nowhere,
have I been able to find a legiti-
mate case of anyone being killed
by any exploding cellphone (or its
battery). Although there have been
several cases of cheap, aftermarket
batteries bursting into flames, only
a few minor injuries have resulted,
despite a large South Korean news-
paper reporting that a man died
when a cellphone in his chest
pocket exploded and killed him
instantly. It wasn’t true, and the
paper had to retract the story.
.
Of course, there are also a truck-
load of conflicting studies showing
that cellphones can cause cancer
or brain tumors.
The evidence is hardly conclu-
sive though, and the risk of using
a product that transmits using
only a fraction of a Watt hardly
compares to the levels of radio
frequency emissions we are all
invisibly exposed to on a daily
basis from broadcast television,
radio stations, shortwave and
household wireless devices. A typi-
cal TV or radio station transmits
using tens or even hundreds of
thousands of Watts.
Shortwave stations can use well
in excess of a million Watts. U.S.
Military Scientists in Alaska are
broadcasting radio frequencies
into the atmosphere using what
probably amounts to many billions
of Watts. Closer to home, your
next door neighbor is allowed to
transmit using up to 1,500 Watts
if he is a licensed amateur radio
operator. Yet, the public seems
intent on blaming devices that
typically only transmit using
around .3 Watts.
In the United States, notorious
hacker and phone phreaker Kevin
Mitnick was not allowed to make
any phone calls while he was being
CommsDay
held in federal prison, because the
prosecutors feared that he had the
ability to trigger a nuclear war,
simply by whistling varies frequen-
cies into the mouthpiece. Proba-
bly one of the most ridiculous
wireless phone hoaxes to ever
come to my attention happened
earlier this week in Kenya. It
seems that someone was sending
out hundreds of SMS messages,
which informed the caller that if
they accepted a call from a certain
number, it would trigger a brain
hemorrhage and they would die,
instantly.
Yes, I know it sounds insane,
but it caused a small panic in the
African country and had to be
addressed in the local newspapers
by members of both the phone
companies and the government in
order to reassure the population
that their heads wouldn't suddenly
explode if they picked up the
wrong phone call.
The article noted that the hoax
SMS has now started spreading
throughout Asia.
It’s a mystery to me how we
never seem to hear stories of DVD
players, TVs, remote controls,
light bulbs or most other con-
sumer electronics items suddenly
killing their respective owners, but
scary stories about telephones
never seem to die. What has the
telephone done to deserve this
reputation as a killing machine?
We will probably never know.
William van Hefner is the editor
of CommsXpress.com and the
former editor of The Digest for
the US Long Distance Industry
38
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