Australian firms commit to pushing fiber deeper
Whereas American telecommunications companies are moving methodically and cautiously in implementing broadband and fiber-in-the-loop architectures, Australian telecommunications companies have taken the opposite track by proposing daring plans to push fiber deeper and to deliver multimedia services faster.
In the United States, albeit in a government-regulated environment, the telephone companies prefer to test-trial fiber-delivered services in select communities. They generally make limited fiber-loop connections to a small number of users, deliver a single service, and run long-term technical and financial analyses of the entire project. Investment pay-back rather than technology, network and service advancements, usually govern network plans.
In contrast, Australian companies are committing billions of dollars to building hybrid fiber/coaxial-cable and fiber-loop connections to millions of homes and offering advanced services. They are committing extensive resources without assurances of customer acceptance. Their market approach is to build premium broadband networks, connect them as closely as possible to homes and businesses, and provide useful services--without customer commitment. With a high-performance communications infrastructure available, the Australian companies anticipate that customers will come in droves.
Most Australian industry experts agree. They point to the highly concentrated areas of population, the rapid market acceptance by users of telecommunications and electronic devices and the successful small-scale launch of limited pay-television services by minor cable operators.
Not surprisingly, therefore, this potentially lucrative market has attracted U.S. companies as minority partners in support of their Australian counterparts. In this way, U.S. companies are able to check out new network deployments, service deliveries and content programming technologies at low risk. Successful networking experiences and results are certain to be reflected in other Australian and U.S. endeavors.
The Australian state-owned carrier, Telstra Corp. Ltd., and rival Optus Vision, for example, are deploying widespread hybrid fiber/coaxial-cable broadband networks. Sometime later this year, both companies are expected to initially offer pay-television services. Then, they will move as soon as practical to interactive multimedia services.
Telstra and News Corp. Ltd. have combined forces in a joint venture known as Foxtel. An all-digital pay-television service, Foxtel also includes pay-TV operator Australis Media Ltd., in which Tele-Communications Inc. has a 25% stake.
The partnership plans to invest $2.7 billion in hybrid fiber/coaxial-cable and fiber-loop digital networks throughout Australia during the next five years. It intends to pass more than 4 million homes--approximately two-thirds of Australia`s homes--by 1999. These networks will not replace Telstra`s existing telephone copper plant at this time. They are being installed in and near Sydney, Melbourne, Adelaide and Brisbane on the country`s southeast coast--the Golden Triangle--where nearly 90% of Australia`s 16 million people live.
Telstra`s chief executive, Frank Blount, says, "The Foxtel broadband network will provide a platform on which numerous applications and services can be developed. This national cable network will deploy leading-edge digital technology for greater channel capacity, intelligence and picture and sound quality."
The competing broadband network deployer, Optus Vision, is a joint venture of Optus Communications, Continental Cablevision and Publishing Broadcasting Ltd. It serves as the network services provider for Optus Communications, which is partly owned by BellSouth Corp., Cable & Wireless, and an Australian consortium known as Optus Pty.
This partnership plans to match Telstra`s budget--approximately $3 billion--in new fiber-coaxial-cable networks within Australia. To date, Optus Communications has focused mainly on cellular, long-distance and international telephone services. It is expected to add local telephony services in conjunction with the new networks.
Optus is first installing its broadband networks around Melbourne and Sydney. It intends to pass approximately 100,000 homes by year`s end and almost 3 million homes by 1999. A large portion of the Optus fiber-coaxial-cable network cabling is following the power lines of electric utilities.
Starting this autumn, Optus network services will include voice telephony and one-way pay television. Interactive services have been postponed for now because of high start-up costs.
Telstra`s network and service plans are more ambitious. The company is going to deploy fiber-to-the-home networks and a variety of multimedia services in many areas. The first service will be cable TV, which will help pay for rapid deployment of the infrastructure.
Such interactive services as education, telemedicine, banking, shopping, online directories and telecommuting will follow, as will pay-sports, news and subsidized movies. Other future services will include the Olympic Games, which will be held in Sydney in the year 2000. The company intends to use all this experience to deliver broadband networks and services across the Asia-Pacific area.
In either joint ventures or on its own, Telstra will also develop online operations in new business areas of information, entertainment, transaction and communications. One such online service--On-Australia--is a joint venture with U.S. software powerhouse, Microsoft Corp. Telstra is structuring the Microsoft Network over its existing telephone lines, which will allow computer users who have Windows` software to access numerous online services. In all ventures, though, Telstra will maintain ownership and management.
According to Peter Kaliaropoulos, vice president for sales and marketing in Telstra`s North American global customer division, the new network investments will supplement an existing $2.24 billion modernization program aimed at digitizing Telstra`s national broadband networks, which exceed 1.7 million fiber-kilometers.
Gaining the edge
Commenting on Telstra`s fiber-in-the-loop network strategy, Kaliaropoulos states, "We are using technology to give us a competitive edge. We know it`s a big gamble to go all the way to the home with fiber, but we feel that if you make the service available, people will use it."
As for the cost of deploying fiber to the home, Telstra is planning to provide local access at a decreasing rate over time. During the next five years, the company predicts the cost of providing fiber to the home should rapidly decline.
Adds Kaliaropoulos, "It is expensive to go straight to the home with fiber. But, sooner or later, we would have to upgrade the infrastructure and pay that cost anyway. So, why not do it sooner and stimulate usage now, rather than wait? It is a bold move, but it`s our commercial decision. Yes, it does carry risks to invest all that money in the local access loop."
Telstra`s strategy focuses on providing access to customers rather than to points of concentration. Major cities in Australia are already connected to fiber over fully redundant synchronous digital hierarchy networks. In those cities with fiber-optic backbones, the fiber is linked from the curb to the doorstep. However, in sparsely populated areas, asymmetric digital subscriber line copper-wire technology is being used for the last link.
Comments Bob Platt, Telstra director of customer network planning, North America global customer division, "We follow SDH and International Telecommunications Union-sanctioned technologies and standards closely with our high penetration of fiber into densely populated areas of homes and businesses. We now have 8.5 million subscribers. They have been all digitized in the last four years."
Because Telstra is a national and international carrier and not a local carrier or an interexchange carrier as designated in the United States, it is not burdened by regulations and territorial restrictions. Kaliaropoulos acknowledges fiber to the home would be too expensive to install for a local carrier in the United States.
Telstra`s mission is to act as both systems and service integrator and provider; it does not make communications equipment. Its business charter is to sell, maintain and service networks: It buys the network equipment mostly from European and American suppliers. For the Foxtel project, the suppliers have not yet been selected, but equipment trials are underway. However, the singlemode and multimode fiber cable is being supplied by Alcatel Australia.
By the end of 1994, Telstra had passed 100,000 homes using hybrid fiber/coaxial-cable networks. The company is also conducting tests on fiber-to-the-home networks in several cities. This year, it also plans to test video-on-demand and pay-per-view using limited asymmetric-digital-subscriber-line technology over its copper-wire telephone networks. Because the country`s population is nearly 100% telephone-wired, the company claims video and interactive services could be more economically delivered to remote areas over the existing copper infrastructure. n