Economic crisis fueling open network interest

This open network approach is generally gathering momentum in Europe and Asia, according to Budde’s report. “Incumbents in the Netherlands and elsewhere, the CEOs of these companies are starting to understand that the future of broadband is becoming much bigger, that there are many more opportunities,” he said. “[They] won’t be able to control all of it anymore as they did in the past, but most of the incumbents in Europe and Asia are starting to understand you can’t forever run these monopolistic networks. There is still a long way for Verizon and AT&T to go, but it will happen in the US. A year ago, you couldn’t even whisper the words ‘open network,’ but now it is part of the broadband stimulus.”

The Obama Administration will have to take a strong leadership role to make this happen, Budde said, especially in a country where a strong duopoly of cable and telco networks have made broadband a competitive service where it is commercially viable. Budde believes that duopoly will not bring the same kind of applications to the broadest possible base of customers.

“If there was this superb competition, why is the US trailing in broadband penetration, why is there the need for economic stimulus to bring broadband to other parts of the country, who do we have all these municipal networks – it clearly shows that competition is not working,” Budde said.

Health care reform could be a catalyst for an open broadband network in the U.S., Budde said.

“I think one way or another, the US will have to use electronic means to source some of its education and health care,” Budde said. “It is nearly impossible, if you have all these people going into retirement, to build enough nursing homes. Already in many places, the US is running out of nurses. At a certain point in time, there will be this push for e-heath. That might be the catalyst that actually then starts making these changes.”

The Federal Communications Commission’s review of its broadband policies may also be an avenue for greater change. The FCC is scheduled to announce a national broadband policy by early 2010.

“I ’m not saying one model fits all – America will have a different model from Australia and the Netherlands, but you need to have that vision whereby you say this one network can do much more than bringing you TV, it can bring health care, the smart grid, education,” he said. “Maybe Verizon could offer a structurally separated network on a wholesale basis, but continues to offer retail. There needs to be a separation between the infrastructure and the services.”

Other global analysts, such as the Yankee Group’s Benoit Felten, have also argued that the fastest way to prove in the investment required for FTTH is to offer wholesale services. Budde believes the U.S. will be left behind those nations who do have a single fiber infrastructure when it comes to delivering better health care and education and more efficient energy services as well.