To: James M. Bash who wrote (14741 ) 11/23/2000 11:11:00 PM From: Don Hand Read Replies (1) | Respond to of 21143 Further Civic Video update - about half way down it.fairfax.com.au Canberra the prize in $150 million gamble By JENNY SINCLAIR Tuesday, November 21, 2000 A DAVID-SIZED bid to sneak in behind the backs of the major telecom carriers is about to reach a critical stage in the nation's capital. Over the next two years, the entire population of Canberra will be brought within reach of the world's fastest to-the-home information network in a $150million gamble by local startup TransACT. The first permanent connections will be turned on in the first half of next year in a five-stage rollout. Backed by the local power and water utility, ACTEW, and its business partners, it expects to offer Internet and direct data connections of up to 52 Mbps. TransACT's chief architect, Robin Eckermann, said the company compared the strategy to an evolutionary ploy of being clever and just a bit sneaky instead of competing for breeding partners on the open battlefield. "You've got a few big players slugging it out ... while that's happening, we're quietly wrapping up Canberra in a shroud of fibre ... and we'll see whose genes propagate." By limiting the length of copper connections to no more than 300 metres, TransACT expects to be able to get speed tens of times as fast as ADSL (Asynchronous Digital Subscriber Line) connections, using a protocol called VDSL (Very High Speed Digital Subscriber Line). Telstra copper cables are being used to carry ADSL traffic in about 200 exchanges across the country activated for the digital service only this year. All 100,000 homes in Canberra will be within reach of the TransACT network within two years. The network will branch out from an optical fibre ring around the city to local fibre terminals connected to new dedicated copper lines. Eckermann said it would be the largest and fastest network of its type in the world; he claimed the nearest thing was a network of 20,000 homes at about 26Mbps in Phoenix, Arizona. Globally, there was "a lot more talk than action" on local networks, he said. Canberra's population - already the most Internet-connected community in Australia - was an ideal testbed, he said. The population is economically well-off, computer-literate and extremely information-hungry. By last year, 35per cent of homes in the ACT had Internet connections, compared to a national average of 22per cent. He said the own-your-cables model used so far in the broadband market did not make sense. In established infrastructures like the electricity market, "no one in their right mind would propose a second set of wires". By providing a bandwidth-rich environment, TransACT hopes to attract application and service developers to Canberra. Target markets include entertainment, medical applications, games, education and government. The highest profile partner to sign up is the national video rental chain, Civic Video, which plans to offer video on demand to connected households. "To a partner like Civic Video, Canberra looks like a 300,000-bed motel - and they don't have to spend money wiring it up," Eckermann said. TransACT is also in talks with potential e-commerce providers for smart card readers and the Multos smart card system, which is being adopted by the ACT Government for numerous public transactions. TransACT has leased a two-storey building next to its corporate offices to house its partners' hardware. Eckermann said the strategy would allow any content provider or ISP to partner with TransACT, moving the focus to content delivery. He said this would avoiding "splitting the revenue" in the way duplicate Pay-TV networks have done. Because of the network's architecture, users will be less affected by bottlenecks when multiple users are online, although slowdowns due to backbone size were a significant potential constraint. He predicted that technical advances would allow TransACT to increase its speed to 100 Mbps eventually. VDSL is essentially a next-generation version of the digital subscriber line technology being widely used to adapt existing copper wires. While some have questioned the investment in infrastructure, he believes that cables will continue to have an advantage over wireless, providing "surgical accuracy" and greater efficiency of signal delivery. TransACT is sinking $150million into the project, with no expectation of reaching profitability for six or seven years. Thirtyper cent of the money is borrowed, with the rest coming from institutional investors in exchange for equity. It has already been several years in the planning, and Eckermann noted that demand and network growth was tracking original predictions. He said the base cost of the connection, including a special modem and set-top box, would be $18 a week for access to the movie service. To recoup $150million in five years, TransACT would have to make $1500 from every household in Canberra. Residents of the test suburbs had been asking TransACT for the service to be reconnected constantly, he said. Eckermann said the rental would be the primary revenue stream, but a toll for content and services would supplement it. If the Canberra venture succeeds, TransACT has similar networks in mind, but not the major cities as yet.