Economic crisis fueling open network interest

The economic crisis is prompting countries such as Australia and the US to rethink their broadband strategies and to consider open network infrastructures that will support applications from multiple sectors such as health care, education and energy, according to a new report by Australian consultant Paul Budde Communication. But while the US is embarking on a small-scale $7.2 billion broadband stimulus program that takes a piecemeal approach to boosting broadband, Australia’s government has placed a $43 billion bet that has even brought incumbent service provider Telstra to the table in the effort to build a national wholesale fiber-to-the-home (FTTH) network.

This open network approach, as described in “Global Next Generation Telecoms - FttH and Trans-Sector Strategies,” will enable trans-sector participation in applications that ride the broadband pipe into the home, including telemedicine, smart utility grids and distance learning, Budde said.

“The industry has, for a long time, agreed that fiber is the next-generation network,” Budde said in an interview. “If you start making investments in infrastructure under the stimulus, you cannot say it’s just because you want Internet or HDTV that you build fiber-to-the-home. But if you start talking about the broader benefits of this area – scaled education, e-health, smart grids, then it make sense. Up until now, government and these industries have worked in silos, each trying to solve a particular problem. This is doomed to failure, unless you create a trans-sector approach that brings the various industries together, and get a multiplier effect.”

Budde believes it takes strong government leadership to put an open network approach in place, which is what Australia has done, and to bring together the multiple industries that can use an open broadband network. President Barack Obama, whose transition team got a report from Budde on broadband, could lead the US in this direction, Budde said, although it will take much more than the $7.2 billion proposed to date for broadband.

“Previously the [Australian] government had proposed spending $5 billion, but Telstra laughed at that, the way AT&T and Verizon laughed at $7.2 billion,” Budde said. “The government finally said, ‘Enough is enough – we are going to over-build you’ and put $43 billion on the table. That sent shockwaves through the industry and company.”

Telstra is now working with the Australian government, and one proposal involves Telstra as a stakeholder in the separate company that is going to run the national broadband network, contributing Telstra’s network assets to the effort, Budde said. Australia has also invested $100 million in a National Energy Efficiency Initiative (NEEI) Smart Grid, Smart City project.

“The idea is that you don’t have to pay for Internet to get a health care application over this network, or a smart grid application,” Budde said. Those applications would ride the national broadband network separate of any Internet access or video content service, which could be a commercial offering. Health care organizations, energy companies, school districts and governments will be able to leverage the national broadband investment for their own applications, he said. Services will be paid for in different ways—consumers may purchase Internet access, insurance companies could fund remote health care monitoring and governments may fund others, Budde said.