OptiComm FTTH rides first home buyers boom

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OptiComm FTTH rides first home buyers boom

OptiComm wants five of Australia’s top ten ISPs offering retail services on its wholesale fibre network before the end of the year.

The company, which is a 50/50 joint venture with Hills Industries, builds and operates fibre-to-the-home networks in ‘greenfield' housing estates.

It already counts Internode, Adam Internet and Cirrus Communications among the retail ISPs selling services on its network - and is expected to finalise negotiations with several more within months.

"There's a number of other major ISPs we're in negotiations with in Sydney, Perth and Melbourne," general manager Phil Smith said.

"The challenge for us has been bringing retail service providers on because when you start an estate, there's only a handful of customers going on [to the network] at any one time.

"We believe by the end of the year we'll have five out of the top 10 ISPs as providers on our network. We've set our wholesale prices to attract ISPs, not to send them away."

It is still relatively early days in terms of the rollout of the OptiComm network. Six estates nationally have FTTH (fibre to the home) operational and another 20 are anticipated to begin network construction this year.

"We've gone from zero to quite a large rollout plan within 12 months," Smith said.

Although Smith said he is seeing widespread development of housing estates nationwide to cater to a "major pent-up demand", NSW, Victoria and South Australia are leading the boom, while demand in WA and potentially Queensland is tailing off.

Much of the current housing boom has been attributed to stimulus incentives such as the first home buyer's grant, but the future of such incentives beyond June is unknown.

Smith said he believed OptiComm had limited exposure to a potential reduction in greenfield developments if the incentive scheme was to be discontinued.

"We've built our business model to cope with the starts and stops of the new housing market," he said.

"As to whether greenfield developments will be cut back if the Government doesn't extend the current incentives, my personal view is I they might extend the program but they're being tightlipped about it."

Regardless, OptiComm is looking at a potential market of 50,000 sites - with growth in that number "every day", according to Smith.

Despite its investments in FTTH, Smith did not believe OptiComm would be ‘punished' by the rollout of the NBN. An NBN announcement is hotly anticipated some time this week.

"We haven't been directly involved in the NBN but being in the industry and fibre-to-the-premises market we've been talking to people about it," Smith said.

"Whoever wins will be very focused on brownfield [older sites] rollout and I think they'll leave us alone for some time as a result. The good side of the NBN for us is that we'll get better access to other fibre backhaul."

Smith said the ACCC had examined OptiComm's business model and pricing structure. OptiComm operates a wholesale, open access model for its network.

The network is also set up to allow residents to have multiple service providers on the same connection - a principle that forms part of other international next generation networks such as the UK's Ofcom.

"We're a wholesale access carrier. We are not now and never intend to be a retail service provider," Smith said.

"The government land agencies like Landcom, Land Management Corporation and VicUrban are really pushing this barrow of open access fibre-connected communities. It's good that it's a different level of government that is mandating this.

"To some degree we've set up a model that the NBN is trying to emulate."

OptiComm recently inked a gigabit passive optical network (GPON) equipment deal with NEC Australia. It will compliment an existing supplier arrangement for similar kit from the US-based Alloptic.

"We have a two-supplier policy for active equipment," Smith said.

"The majority of broad-acre rollouts will start using NEC equipment from now on, whereas fibre-to-the-business and some other smaller estates will continue to use Alloptic [kit] because there is some flexibility that Alloptic gives us over NEC."

Smith said OptiComm has also just inked an agreement with Juniper Networks to supply core router networking equipment in the back-end.

It is also looking at product from Tyco, in addition to existing supplier arrangements with Hills, Optical Cable Services and Corning.

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