Fibre tipped to put heat on wireless firms

By PETER GRIFFIN


Emerging wireless broadband vendors such as Woosh Wireless and Wired Country have a few years to make their mark before Telecom strikes back by extending fibre cables "deep into the neighbourhood", says telecoms commentator Paul Budde.

The Sydney analyst believes Telecom will get serious about fibre-optic cable to homes in the next few years as it seeks to develop a network capable of delivering video on demand and high-speed interactive services.

Telecom mostly delivers high-speed internet and voice services to home users via copper lines at present. But it is investing hundreds of millions of dollars in conjunction with technology partner Alcatel to develop a core network based entirely on internet protocol (IP) standards.

Budde, who was in Auckland yesterday to release his latest annual report on the New Zealand communications industry, said the fledgling wireless providers needed to establish large customer bases to meet the challenge of fibre.

"Fixed-line is the way to go. In five years' time when Telecom has rolled out fibre, the question is, what will the wireless operators do? They need an exit strategy."

Budde suggested the wireless operators could build their own limited fibre networks to work in conjunction with their wireless networks, much as Counties Power has done in South Auckland, or negotiate access to Telecom's cables.

Telecom is extending fibre to roadside cabinets in new housing subdivisions. Mini DSLAM units, which allow high-speed data to be carried over copper lines, are installed in the cabinets to cover the last hop to customers' homes.

But chief operating officer Simon Moutter said the Jetstream digital subscriber line (DSL) technology and increasingly faster versions of it would continue to be the mainstay of Telecom's residential network rather than new fibre circuits.

"It's difficult to foresee any data applications that will require more than two to three megabits per second of speed (Mbps). Already you can watch DVD-quality video at about 1Mbps. I've seen it."

Because of the "high marginal cost" of installing fibre, Telecom would prefer to share such infrastructure with other carriers, he said.

While Budde was generally sceptical of the growing activity in the 3G mobile space, he saw potential for it as a "fixed-wireless" alternative for delivering broadband to homes, rather than just for cellphone communications.

Such a move by TelstraClear, which was thwarted in its attempts to extend fibre to Auckland suburbs, would compel Telecom to break with years of under-investment in the access network, said Budde.

Elsewhere in his report he continued to suggest Telstra would eventually take over Telecom.

More regulation would be imposed next year, potentially in the area of cellphone pricing, and Budde predicted the type of extensive network outsourcing deal Telecom had sealed with Alcatel would extend to equipment vendors having total control of operators' networks.

"I estimate that, in this way, telcos could cut costs by approximately 30 per cent."