Could super-fast wireless make the national broadband network obsolete? Kohler

The global GSM Association made a remarkable prediction over the weekend that should have an explosive impact on the tender for Australia’s new national broadband network (NBN).

The GSMA represents about 750 3G mobile phone operators around the world, so it’s not unbiased. Its director of technology, Dan Warren, said he believes mobile broadband will reach speeds of 100 megabits per second before fibre optic does – that is, in about two years.

Meanwhile, back on earth, the Australian Communication Minister, Stephen Conroy, has said the new fibre-to-the-node network (FTTN), that will get $4.7 billion of Government money and will probably take two years to build, must deliver 12Mbps to 98% of the country.

In fact Telstra’s 3G network, called NextG, is already capable of operating at 14.4Mbps to 98% of Australia’s premises, but the devices – both mobile handsets and stationary modems for the home – are limited to 7.2Mbps at the moment.

Netcomm, which sells the modems, says it expect to have 14.4Mbps modems in the market in about three months.

Telstra CEO Sol Trujillo, meanwhile, has said he expects to lift the speed of the NextG network to 21Mbps next year, but while the semi-conductors are already working at that speed, the devices will take a few months longer.

Nevertheless, it’s fair to say that Telstra or Optus could both operate universal wireless broadband networks in a few months that would exceed the minimum speed requirement laid down by Stephen Conroy, with modems that would replace existing ADSL modems in homes.

The extra traffic would require a big upgrade to fibre backhaul capacity to the mobile phone towers scattered around Australia, but that would definitely be cheaper than installing thousands of new nodes around the suburbs of the nation.

Up to now the assumption has been that high speed broadband must involve getting optic fibre as close to each home as possible and terminating it at a neighbourhood node, before using existing copper the rest of the way, with VDSL technology aboard (it’s the next generation of asymmetric digital subscriber line, or ADSL).

To a large extent the speed of the network depends on the number of nodes; more of them means the fibre is closer to each house, and the slower copper wire is shorter. It is a linear cost/speed equation.

If Dan Warren is right, all that changes. In fact he said over the weekend: “Tests show LTE (long term evolution, which is the acronym of choice for this technology) can produce speeds up to 186Mbps.”

He said: “The places we expect to see it first are Japan and South Korea in early 2010 and Arun Sarin [formerly of Vodafone] said he expects to see the technology in the European market by 2012.” If that’s right, it means super fast wireless broadband will appear before 100Mbps fibre.

Whether or not Conroy accepts wireless as a replacement technology in the tender for the NBN (he has said it has to be fibre), the potential for the losing bidder to compete effectively with the winner using wireless potentially destroys the economics of an FTTN network. And there is no way that could be prevented.

If Telstra loses to the Terria consortium of its competitors, it could simply upgrade the NextG network, lower the price and blow it out of the water with 21Mbps broadband across Australia. If Terria loses, Optus or Vodafone could do the same.

At the very least we would get stiff competition between superfast wireless and fixed line broadband, with the fixed line part-owned and subsidised by the Government.

In other words, the bidders for the Government’s NBN tender can’t assume in their business plan they will be operating a monopoly.

By the way, Conroy showed last week he is by no means prejudiced against wireless broadband. He trekked out to the Minlaton Town Hall on the Yorke Peninsula in South Australia, and congratulated the locals on their Wimax broadband network across the peninsula.

He proudly declared in his speech that 97% of the residents on the Yorke Peninsula now get up to 6Mbps broadband via Wimax wireless spectrum, funded by the Government’s Australian Broadband Guarantee.

This article first appeared on Business Spectator