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Two-horse race for building new broadband network - May 06, 2008 (BT)

BackMay 06, 2008

The Straits Times / The Business Times News On SPH

Two-horse race for building new broadband network

OpenNet - a newly-minted joint venture (JV) between Canada's Axia Netmedia, Singapore Telecommunications (SingTel), Singapore Press Holdings (SPH) and Singapore Power subsidiary SP Telecommunications - tossed its hat into the ring yesterday.

By Winston Chai
May 06, 2008
The Business Times

The battle to land a mammoth government contract for laying Singapore's new broadband foundation has gone from a possible 10-cornered fight at the start to become a two-horse race between consortiums involving all three local telcos.

At the close of its tender submission yesterday, the Infocomm Development Authority of Singapore (IDA) confirmed that it received only two Network Company (NetCo) bids.

OpenNet - a newly-minted joint venture (JV) between Canada's Axia Netmedia, Singapore Telecommunications (SingTel), Singapore Press Holdings (SPH) and Singapore Power subsidiary SP Telecommunications - tossed its hat into the ring yesterday. The four partners have respective stakes of 30 per cent, 30 per cent, 25 per cent and 15 per cent in the JV.

A proposal had earlier been submitted by the Infinity Consortium, a group made up of local telcos MobileOne (M1) and StarHub, along with Hong Kong's City Telecom.

The NetCo tender marks the first step in IDA's ambitious plan to build a new, nationwide Internet infrastructure capable of delivering access speeds of 1 Gbps (gigabit per second) and beyond to all homes and offices by the year 2015 - a tenfold improvement from the fastest Internet package available today.

The winning consortium will lay the foundation for this new broadband highway by putting in the required infrastructure such as new ducts and high- speed cables. To help defray the costs of rewiring the island, the telecommunications regulator has previously said it will set aside a maximum NetCo subsidy of $750 million.

'OpenNet's plan is to leverage SingTel's existing extensive high-quality network of ducts and the work we have already done in the rollout of an ultra-fast broadband network,' said Allen Lew, CEO of SingTel Singapore. The consortium hopes to deliver the network more than two years ahead of schedule, with Axia having worked on similar projects in Canada and France.

As for Infinity, M1 CEO Neil Montefiore said it has 'a unique blend of solid track records in Singapore and Hong Kong, and the essential qualities, to commit to building a world-class and future-proof broadband network for Singapore'.

Both consortiums are recommending a similar approach called fibre-to-the- home (FTTH) to fulfil Singapore's broadband ambition. Fibre cables use light pulses to transmit data at lightning speeds and this is widely seen as the most viable way of meeting a country's bandwidth demands for the next 25 years or more. The United States, Japan, Korea and Hong Kong are among the countries that already use FTTH networks to provide consumers and businesses with blazing access speeds.

Singapore's rejuvenated broadband vision has generated tremendous buzz in the local IT sector since it was first unveiled by Prime Minister Lee Hsien Loong in 2006. The government sees this new high-speed network as a critical component for boosting Singapore's competitiveness by powering everything from new electronic commerce solutions to Internet television services and research and development.

Ten companies had initially been sanctioned by IDA to lead individual NetCo bids but six of them eventually decided to team up and form two separate joint ventures instead. M1 partnered City Telecom and StarHub to form the Infinity Consortium. SingTel, on the other hand, joined hands with fellow pre-qualified bidders Axia and SP Telecommunications, and also roped in SPH to boost its bid.

These alliances have largely been sparked by an IDA mandate which bars existing telcos from taking full ownership of the NetCo - a move designed to level the broadband playing field and attract more players to join the market.

Four companies - Alcatel-Lucent, BT Singapore, Nokia Siemens Networks and Singapore Computer Systems - did not submit bids even though they had pre-qualified for this exercise.

'The NetCo bid comprises mainly the laying of fibre optic cables, and involves a significant amount of civil works, such as the digging of roads and so on. This type of work is better suited to companies that have such experience in Singapore,' said Alex Tan, country director of Nokia Siemens Networks Singapore.

Alcatel-Lucent said it hopes to provide equipment to the winning bidder instead of spearheading a bid itself.

The two other companies could not be reached for comment.

IDA is currently studying the two NetCo proposals and expects to pick a winner by the third quarter of this year.