Terrapin Note- An interesting story today out of Australia that highlights some key points in the global wired broadband access markets in which both ADTN and ALU participate on the system level, and BRCM IKAN and NPTN participate on the silicon and optical component level.
The article describes a proposal to move Australia's National Broadband Network (NBN) plan from a focus on Fiber to the Premise towards Fiber to the Node, with expected saving in cost and time of around 50%. This is similar to the differing choices made by T (FTTN) and VZ (FTTP) in the US, and also highlights the increased competitiveness of FTTN networks with vectored VDSL2 capable of delivering a 100 Mb/s per household connection. The incoming governing coalition describes the current NBN project as beset by delays and cost overruns. Though we can't help but note that if Australia were to get with the program and print unlimited amounts of currency this trade off would't be quite as meaningful and its stock market would make new highs hourly versus lagging embarrassingly 25% off of all time highs.
This certainly appears to be the case for the Chinese, who have committed to a FTTP approach by fiat where NPTN' access exposure lies, though can pay for it with actual proceeds from a postive balance of payments. Thankfully, telecom operators in Europe most notably DT but also several others include early FTTP proponent BT, have to operate in the real world and with an advent of vectored VDSL2 have more toward leveraging their installed base of copper to deliver ultra broadband speeds
From an systems standpoint, suppliers such as ALU or ADTN are likely indifferent and in fact might benefit from a quicker overall rollout. The incremental expense in FTTP networks is construction and fiber related, and both ALU and ADTN supply both FTTP and FTTN systems. ALU has won the current NBN rollout and is also a leader in FTTN, with the real beneficiaries of this shift, outside of ADTN and its focus in Europe through its NSN acqusition, are the VDSL chip and technology suppliers. This includes market leader BRCM, which is also a leader in FTTP components, VDSL chip pure play IKAN, which we add at long 1 in this note, and private companies such as Assia, which issued a press release on the subject Monday
In terms of today's ADTN driven market action in the space, we felt like we saw a bit too much Tier 1 carrier spending enthusiasm in the likes of CIEN and JNPR. The ADTN results and outlook are foremost about access, with our view that bandwidth and investment in metro/core networks will lag wireline and wireless access investments over the next year or two, and about Europe, where the fruits of the NSN acquisiton are beginning to be felt. Market melt-up aside, we see more basis for strength in ALU as a result of all of these developments, and continue to like INFN and CSCO as alternatives to CIEN and JNPR, respectively.
Australia's Coalition party proposes new National Broadband Network plan
Australia's Liberal-National coalition political party has proposed an alternative plan for the country's National Broadband Network (NBN) that would use fiber to the node (FTTN), rather than fiber to the premises (FTTP) to deliver 25 Mbps speeds to the country's residents and businesses.
Opposition Leaders Tony Abbott and Shadow Communications Minister Malcolm Turnbull said their plan will cost only AUD 29 billion (USD 30.5 billion) versus the AUD 44 billion (USD 46.3 billion) to AUD 94 billion (USD 98.9 billion) for the current FTTP plan.
On a per-customer basis, the Coalition's plan will cost AUD 66 (USD 69.50) per month per household versus AUD 90 (USD 95.00).
Initially targeting regions that have little or no broadband options, users will be able to get 25 Mbps to 100 Mbps speeds by the end of 2016, with the minimum speed rising to 50 Mbps by the end of 2019 for 90 percent of existing wireline broadband subscribers.
"At the end of a first term of a Coalition government, there will be minimum download speeds of 25 Mbps. By the end of our second term, the vast majority of households will get access to 50 Mbps," Opposition Leader Tony Abbott said about the Coalition's broadband policy in Sydney on Tuesday. "We will be able to do this because we will build fiber to the node, and that eliminates two-thirds of the cost."
If the Coalition wins the election this upcoming September, it plans to bring FTTP only to 22 percent of Australia's premises, including those already being built by NBN Co., new housing developments, or where the copper plant was too degraded to support 25 Mbps. The other 71 percent of the market would get a FTTN connection via Telsta's (ASX: TLS.AX) existing copper facilities that are connected from the RT cabinet to the home or business.
Although the current NBN network is slated to be completed by June 2021, the Coalition says that the recent construction delays that NBN Co. reported last month due to a lack of qualified workers means that the network might not be completed until 2025.
Turnbull said that the FTTN network would require about 60,000 RT cabinets, adding that they would be able to renegotiate a new deal to gain access to Telstra's copper facilities quickly.
This plan, not surprisingly, was met with opposition from current Communications Minister Stephen Conroy who said that their proposal is "short-sighted."
"They don't think about the applications, the extra connectivity, the extra machines, the extra devices that will be connected up by all of you here, all of our children in the future; they don't think about that," he said.
- here's the Coalition party's proposal (.pdf)
Read more: Australia's Coalition party proposes new National Broadband Network plan - FierceTelecom http://www.fiercetelecom.com/story/australias-coalition-party-proposes-new-national-broadband-network-plan/2013-04-10#ixzz2Q7KeqgNi
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