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SINGAPORE : The OpenNet consortium, which includes telco SingTel, has won the bid to build the infrastructure for Singapore's Next Generation National Broadband Network.
The Next Generation National Broadband Network is part of Singapore's Intelligent Nation 2015 project to provide seamless connectivity.
OpenNet is led by Canadian firm Axia NetMedia Corporation, with Singapore Telecommunications (SingTel), Singapore Press Holdings and SP Telecommunications as the other members of the consortium.
SingTel and Axia each have a 30 per cent stake in the consortium, Singapore Press Holdings has a 25 per cent stake, while SP Telecommunications owns 15 per cent.
The consortium fended off the other contender Infinity consortium, which included telcos M1 and StarHub.
Analysts said the decision may have been swayed by OpenNet's rival, the Infinity consortium, losing its leader Hong Kong's City Telecom in the last few months.
SingTel's current infrastructure also gave OpenNet the edge.
Kenneth Liew, analyst, IDC, said: "This is quite expected by the market, because the other consortium - with City Telecom pulling out - actually lost a key partner in their bid for this tender.
"So SingTel, with its existing ducts, will have a better opportunity, and (it) will make it easier for them to lay out this network."
OpenNet expects to inject S$2 billion into developing the network, on top of a S$750 million grant from the government.
Shareholders are likely to have to contribute up to S$160 million to the project, in return for steady revenue streams.
Art Price, chairman and CEO, Axia NetMedia, said: "It is going to make commercial returns; we don't disclose the amounts of returns, and that varies on the market adoption. We are hopeful that the Singapore market is technically in tune, and interested in this kind of performance."
In two years, 60 per cent of Singapore's households and buildings will have access to ultra high-speed Internet connection - up to 1 gigabit per second or 10 times faster than what is available today.
And by 2012, this broadband coverage will go up to 95 per cent.
To encourage take-up rate, the consortium will waive installation charges for home and building owners during the network rollout.
But the actual fee consumers will pay for the broadband services has not been fixed.
However, it will be higher than the wholesale prices offered to network operators.
OpenNet has proposed monthly wholesale prices at S$15 for each residential fibre connection and S$50 for non-residential ones.
These prices will be reviewed by the Infocomm Development Authority (IDA) at three-year intervals to ensure they remain competitive.
Minister for Information, Communications and the Arts, Dr Lee Boon Yang, said: "Under the RFP (Request-for-Proposal) process, OpenNet has agreed to submit to a price regulation for dark fibre, and this is one of the requirements. So the wholesale price of dark fibre will be regulated.
"The first review will take place three to five years after the rollout has commenced. OpenNet assures IDA that between the first and second review, it will not raise its prices, but if in the review it shows that prices have fallen, it will reduce the price. In other words, the prices are kept for a minimum period of six years from rollout."
Under the proposal, OpenNet will make use of existing underlying infrastructure like ducts and manholes belonging to its partner SingTel, to facilitate the deployment of its fibre network.
IDA said SingTel will eventually transfer those fibre optic assets to a neutral party.
It will be independent, and separately managed, possibly under a business trust.
The market is now keenly awaiting the selection of the Operating Company. The Network Company will design and build the infrastructure, while the Operating Company will manage the flow of broadband traffic.
Industry players said that it is the Operating Company that will have more fruitful gains in the long-term, and SingTel has already pre-qualified for the bid.
Fong King Yew, analyst, Gartner, said: "The really lucrative (deal) would really be the OpCo license; the NetCo basically deals with the...infrastructure, which is basically the passive layer, and we certainly do not expect a lot of high growth or large profit margins associated with the NetCo business...The more value added or the economic value will lie further up the value chain with the retail service providers." - CNA/ms
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