Back in September I did an entry on the IDA’s IN2015 (Intelligent Nation 2015) initiative. Quoting from their website: “The Next Generation National Infocomm Infrastructure (Next Gen NII) is Singapore’s new digital super-highway. Next Gen NII comprises complementary wired and wireless networks to ensure Singaporeans enjoy seamless connectivity. The wired broadband network or Next Generation National Broadband Network (Next Gen NBN) will deliver ultra-high broadband symmetric speeds of 1Gbps and above, to all homes, offices and schools, while the Wireless Broadband Network (WBN) will offer pervasive connectivity around Singapore.”
The Next Generation National Broadband Network (Next Gen NBN) RFP was released on 11th Dec. Of note is the clear separation of the passive infrastructure (NetCo) from the OpCo that runs the active components. RSPs (Retail Service Providers) buy wholesale services from the OpCo, and the OpCo rents passive connectivity (fibre) from the NetCo. It’s similar to the UK model where BT Openreach provides the copper, BT Wholesale puts DSL modems on either end and then sells wholesale services to the broadband ISPs (Internet Service Providers). However, there are two critical differences:
- The copper infrastructure is already there, most home-owners are already connected so there is little build requirement on BT Openreach rather maintenance; and
- The fibre infrastructure may not be point to point, rather use a passive splitter (point to multi-point) to mitigate the financial burden of the fibre access (about 80% of the total network build cost).
The need to build a new infrastructure and the potential complexity of the fibre access is going to require the NetCo and OpCo to work very closely. It’s going to take sophisticated regulation, unless the NetCo builds out a fibre infrastructure with virtually 100% coverage. Given Starhub (already providing 100 Mbps to customers) and SingTel (will depend on its role, but lets assume its competitive) are not going away anytime soon, this makes the majority of the infrastructure redundant in a perfect competition model. Even with a S$750m grant, a quick back of the envelope calculation shows that the NetCo will need to wait a long time for payback (>10 years) and is wholly dependent on the performance of the NetCo which does not shoulder any of this financial risk.
Of note in the UK, BT has launched a wholesale product called GEA (Generic Ethernet Access) with rates up to 25 Mbps, definitely enough to provide HDTV and high speed internet access. So the OpCo and NetCo are bundled together which mitigates some of the operational challenges in rolling-out GPON infrastructure.
In my experience Singapore has a vibrant and extremely competitive mobile market with just 3 competitors. A simple option could be to license a 3rd broadband service provider to compete with Starhub and SingTel to replicate the success achieved in mobile communications.