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BROADBAND - UTILITEL

  1. Grant62

    4,706 posts.
    From time to time, the commentary of Paul Budde appears on HC.

    Paul is a respected telecommunications analyst who generally possesses good ideas about the future shape and direction of telecomunications in Australia.

    In recent times, Paul has been critical of wireless broadband, or 3G, saying that it will:
    1)
    never be viable or a success in Australia; or
    2)
    it cannot compete effectively with terrestrial broadband (ie: fibre or cable in the ground).

    In making these observations which generally have received wide media attention, Paul has been quoted, or presented forward, as an "independent telecommunications analyst". His involvement with the UtiliTel terrestrial broadband concept, however, has not been generally disclosed before today's SMH article.

    According to the SMH article which was written by Communications' Day, Natalie Aposolou:
    1)
    Paul is facilitator of the UtilitiTel concept which is designed to utilise the commercial and operational depth of Australia's utilities industry to develop a competing terrestrial broadband service;
    2)
    Paul has been working on this concept since mid-2001;
    3)
    a question arises as to why this interest and involvement has not been previously disclosed, akin to how reporters disclose their interests in stocks that they are writing about;
    4)
    UtiliTel counts amongst its members Western Power (WA), Aurora Energy (TAS), Energy Australia (NSW), Citipower (VIC), Transgrid (TAS), Hydro Tasmania (TAS) and Powercor Australia (VIC);
    5)
    most other members of UtiliTel remain confidential at this time, but appear to include PWT, UEC, TransAct and Bright Telecommunications; and
    6)
    UtiliTel intends challenging for the mantle of broadband supremacy in the future.

    The SMH story from this morning reads, as follows:

    ------------------------------------------------------
    A powerful force sizes up the broadband frontier
    By Natalie Apostolou
    May 14 2002
    Next

    As Telstra's market dominance continues to be scrutinised by the government, regulators and competitors, momentum is building in an ambitious project to construct a viable alternate national broadband infrastructure.

    A groundswell of interest has emerged from a powerful group of Australia's electricity utilities, which are uniting in a bid to seize the potential synergies and opportunities in using their combined existing infrastructure as a platform for a residential and business broadband network.

    UtilitiTel is the nascent concept, which was initially facilitated by telecommunications analyst Paul Budde. Budde, who has no financial stake in the project, has been working on the alliance since the middle of last year and has secured the interest of about 20 utilities.

    The utilities involved include Western Power, Aurora Energy, Energy Australia, Citipower, Transgrid, Hydro Tasmania and Powercor Australia. However, complete details of the membership of the group remain confidential until its next meeting this month, when the findings of a study conducted by multi-utility expert Mary Egan, of Clear Advantage, will be discussed.

    The group has drawn extensively on the experiences of other utility-based telecommunications carriers such as PowerTel, Uecomm, TransAct and Bright Telecommunications.

    Budde says the project is not about the retail services over the network.

    ''The network would be a true alternative to everybody who would like to offer services and content to homes and businesses," he says. ''By combining forces, the utilities could also increase their lobbying power."

    Budde says as the Australian Competition and Consumer Commission is analysing the future of the pay TV industry, utilities are also concerned about developments in the pay TV market. As electricity companies also increasingly need interactive access to meter boxes to monitor energy use and improve efficient use of energy, he says, adding a last-mile broadband customer access network to it is an example of synergy.

    ''Also, in relation to negotiating content with powerful media, entertainment and sport companies and organisations, a combined force makes sense."

    The multi-utility concept is not new, with companies such as United States wholesale telecommunications provider Williams Communications and Britain's Norweb employing a variation on the theme. However, if this project does go ahead, it will be the first of its kind to employ such a scale geographically.

    ''This is a long-term project if it comes off the ground," Budde says. ''We talk about a project that will affect the broadband infrastructure for our country for the next 20 years and more."

    In Australia the multi-utility crossover has had varying degrees of success and failure.

    ACTEW's telecommunications progeny TransACT, which also has backing from gas utility AGL, has been a successful example of the concept. However, funding problems in a difficult financial climate, and the reticence of Telstra to come to any content-sharing resolutions, have stifled its immediate success, but it remains a workable model that can be replicated in other regional cities.

    United Energy's multi-million-dollar foray into the telecommunications sector with Uecomm has produced unspectacular results. Its last full-year results yielded a net operating loss before tax of $58.6 million with revenues of $33 million. The company groaned through 2001 with a series of profit warnings, and the slowdown of its broadband rollout plans.

    PowerTel, backed by Williams and utility consortium DownTown utilities, is weathering the storm of a highly competitive corporate bandwidth market.

    Meanwhile, in Western Australia, Western Power is committed to rolling out a wide-scale broadband infrastructure project branded Bright Telecommunications.

    The utility, which has more than 810,000 customers, has teamed with vendor Alcatel to initially roll out a $5 million integrated voice, video and high-speed broadband network.

    Western Power telecommunications manager Kevan Penter, a former Telstra executive, says his company has a vision for a very advanced broadband network in WA, ''but we'll get there step by step".

    ''Broadband is a marathon, not a sprint, so to get effective broadband infrastructure we need companies who can go the distance," he says.

    Financial modelling on the project reveals that the utility doesn't expect a return on investment for more than 10 years. But, says consultant Mary Egan, this is why utilities can make the cross-over into telecommunications with less struggle than an emerging telco.

    ''They understand the management and construction of networks that stand the test of time," she says.

    She adds that utilities also tend to be modest about their capabilities and ''they have a good long-range view".

    This differs from many carriers' ambitions to get a quick return on investment. In terms of existing infrastructure, Egan says, several of these utilities have already used a great deal of fibre for the benefit of existing customers.

    ''If all this fibre was fully interconnected it would be Australia's third-largest network," she says.

    Natalie Apostolou is editor of Communications Day, a newsletter that covers Australian telecommunications.


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