Singapore’s national broadband network – Analysis.
When the Singapore Government embarked on its plan to build what it called the Next Generation National Infocomm Infrastructure (Next Gen NII) project, and later the Next Gen National Broadband Network (NGNBN), it was no doubt setting out on a most ambitious path. It was not just an exercise in putting some massive amount of expensive telecoms infrastructure in place; the project was based on a ‘whole of concept’ approach that was set to tackle the operations, maintenance and customers service issues involved in such a network and also appeared committed to seriously confronting the market competition and regulatory issues involved.
The IDA mapped out a very clear strategy for the development of this strategic network. The Next Gen NBN was to comprise three key conceptual industry layers. Underpinning the whole Next Gen NBN was the Network Company (NetCo), which was to be responsible for the design, building and operation of the first layer – the passive infrastructure layer. Leveraging the Next Gen NBN NetCo’s passive infrastructure would be an Operating Company (OpCo) that would provide the second layer and be responsible for the design, building and operation of the active infrastructure to provide wholesale broadband connectivity to other operating companies and downstream operators, in particular, Retail Service Providers (RSPs). These RSPs would comprise the third layer and would in turn compete to provide innovative services to the end-users.
One more element was required to make this three layer strategy work: open access. For Singapore to fully benefit from the economic opportunities of this all pervasive, ultra-high speed infrastructure, it was essential that the Next Gen NBN be able to deliver to the downstream operators effective open access to the infrastructure. This would be necessary to create a truly vibrant and competitive broadband market. The government therefore decided, as a matter of policy, to adopt separation between the different layers of the Next Gen NBN to achieve this open access. The OpCo would be required to be ‘operationally separated’ from the downstream RSPs, in line with the industry structure envisaged for the Open Access Next Gen NBN. It was noted by the IDA that, compared to the ‘structural separation’ imposed on the NetCo, operational separation was a less stringent form of separation as the OpCo would be allowed to retain full shareholding ownership of its downstream operating units, such as RSPs. Nevertheless, the OpCo would be required to treat all downstream units equally and on a non-discriminatory basis. The OpCo would in fact need to operate on a standalone basis, separate from its affiliated downstream operating units, and be subject to various obligations, including being established as a separate legal entity and maintaining separate board, management and staff.
In addition to the operational separation requirements, the Next Gen NBN OpCo would also be obligated as follows:
- Price Control: The OpCo would be required to offer fair and non-discriminatory wholesale broadband services to other operating companies and downstream operators, such as RSPs, through an Interconnection Offer (ICO). The prices and terms and conditions of these wholesale offerings were to be regulated by the IDA.
- Universal Service Obligation (USO): The OpCo would be required to complement a similar obligation on the NetCo. It would be be obliged to meet all reasonable requests by any operating company or downstream RSP for access to a basic set of wholesale services offered under its ICO.
If one thing has characterised Singapore’s approach to implementing its national broadband network, it has been the fact that the authorities have kept fairly well to the announced timetable. So, by May 2009 we were starting to get a clear picture of how the various components of this project would finally fall into place. The Ministry of Information Communications & the Arts (MICA) had announced in September 2008 that the OpenNet consortium had won the tender to be the NetCo and consequently build the NBN.
OpenNet consisted of Axia NetMedia, the Canadian-based consortium leader, with a 30% stake in the consortium; SingTel, also with holding of 30%; Singapore Press Holdings (SPH), which owned 25%; and SP Telecom, 15%. Interestingly, SingTel was being limited to 30% of NetCo, even though it was providing most of the infrastructure. The government regulator was walking affine line here as it needed to find a way to deal SingTel but not handover too much power in the process. The fact is that SingTel being such a dominant player if it were not dealt in somehow it could derail efforts to use the NGNBN to foster more competition. As part of the deal, OpenNet would have IDA funding of up to S$750 million (US$518 million) from the IDA for its network construction.
It was announced by the IDA in April 2009 that StarHub had won the right to build and operate the wholesale broadband network across Singapore. In other words StarHub had won the OpCo contract component of the NGNBN, a deal which would see StarHub operate and manage the so-called active infrastructure in the proposed network. In this role, StarHub would be the link for RSPs looking to offer ultra high-speed broadband and services such as pay TV over the new network. It would also likely be the operator connecting terminators/modems to the fibre optic cables being laid by the NetCo to homes, schools and offices throughout Singapore.
Following on from the NetCo decision, it came as no surprise that StarHub, through its subsidiary Nucleus Connect, won the OpCo deal. This was described by some in the industry as the ‘consolation prize’ after StarHub had failed in its bid to claim the NetCo contract. For that bid, it was partnered for a time with Hong Kong’s CTI until that company withdrew before the bidding process was complete. Nucleus Connect has committed to spending S$1 billion over 25 years on the active infrastructure, with the IDA providing up to S$250 million (US$173) of the costs. Under the agreed terms, Nucleus was to start offering commercial services by the first half of 2010 and provide universal coverage by 2013.
Singapore is about to become an incubator for testing the practicality of a real-life open access national broadband network. Whilst the compact geographical nature of the island state makes the roll-out of infrastructure considerably easier, the market and regulatory issues will really be tested to the fullest and will no doubt provide serious input into the policy planning and strategic development of broadband networks in other countries. Apart from geographical compactness, another advantage Singapore has over other markets is it has been building steadily towards this latest strategy with a series of nationwide plans and projects – Singapore One, Wireless@SG, Intelligent Nation 2015 (IN2015), etc – which have provided a solid foundation for the launch of the NGNBN project and, most importantly, have helped develop sophisticated telecom planning skills in the island state. The world is watching Singapore.
See also:-
Peter Evans – Senior Analyst Asia, BuddeComm
May 19th, 2009 at 9:20 am
I don’t imagine that SNG government departments have an opt-out option regarding their use of this network – with the possible exception of the national security agencies (defence, spooks, police)