Local network industry 'missing out' with NBN

Construction of the $43 billion National Broadband Network may be a boon for the services economy, but local networking providers feel left out with two companies saying the government-owned business isn’t doing enough for industry development.

Last week the Australian-owned Broadband Network Communications (BBNC) announced it is introducing broadband deployment technology which could be used by the NBN to save upwards of $10 billion.

At Melbourne-based networking equipment vendor Haliplex, CTO and founder Anthony Merry says local companies could have been engaged with more during the NBN planning stages, but “the whole thing was a secretive exercise”.

“There was really no forethought for local networking companies,” Merry said. “With the NBN there was real opportunity to develop the local industry. The whole thing kicked off as a political stunt to bring Telstra to the table, so I don’t think they thought about Australian companies.”

Merry said Haliplex’s position is to not spend a lot of time trying to sell to local companies or government departments as it’s “too hard”.

“I don’t want this to sound like sour grapes, or discourage investment in local companies, but there is definitely some bias towards multinationals in big deals,” he said.

He said many Australian companies are keeping their “lips buttoned” as they may not agree with government policy, but don’t want to rock the boat.

“Whether that’s real or not, I don’t know. A lot of money is being invested in projects like the NBN, but there is a lot of R&D here that is winding down and local companies are selling overseas.”

Haliplex is focused on utility networks where there is “less competition” from the big global vendors, Merry says.

“We could do regional broadband networks and there are a number of Australian companies that could get together and tackle the regional broadband problem,” he said.

In 2005, Computerworld interviewed the then CEO of Haliplex, David Drew, on how the company had developed technology capable of consolidating the infrastructure required to deliver regional broadband, making it more cost-effective.

The advent of the NBN has changed the rural broadband market significantly, with big name networking vendors being chosen to supply equipment.

Earlier this year, Alcatel-Lucent scored a regional broadband deal and, more recently, was chosen to supply GPON equipment for the NBN in a deal worth $1.5 billion.

Haliplex manufactures locally, but Merry said such companies have been in decline for years.

“Quite a few companies were born in the golden days of Telstra, but that changed when Telstra started buying from multinationals,” he said. “When the NBN started I think most local companies assumed they wouldn’t get a look in. A lot of it was behind closed doors and I would have thought a prudent strategy for the government would be to encourage local companies to pool their resources together and contribute to the NBN.”

Merry said local providers will probably see some business on the passive side of the network, but the active side will go to multinationals.

While the company doesn’t make the type of PON equipment the NBN based on, Merry said the Australian model is a revolution, but there is an alternative: Migrate older circuit-switched networks.

“That’s where we are getting a lot of traction overseas – migrating to packet networks [and] it’s a lot more sane,” he said.

Haliplex is doing joint development projects with European countries for packet switching over circuit networks.

“We have so much business migrating networks in Eastern Europe and all over the place,” Merry said. “The people that need their networks to be up all the time place a lot of emphasis in longevity – from 30 to 40 years of lifespan – and many are annoyed at having to replace equipment so rapidly.”

A spokesperson for the NBN Co said all equipment suppliers go through an open, competitive process and while it does not specifically favour local companies, all potential suppliers are asked to declare their proposals around local participation.

“If a supplier meets all criteria in a bid it gets serious consideration against other suppliers, but the final decision is based on getting the best outcome for the business,” the spokesperson said. “All suppliers have an equal opportunity to win.”

The spokesperson said most of the NBN work is being done in Australia so the majority of expenditure will be “across the many people who will work on getting the network built”.

Merry, however, said the “level playing field” argument won’t help Australian companies which must compete with products made in China.

“We seem to be more respected overseas. For example, our products are OEM’d by big names like Nokia Siemens and Motorola,” he said.

“One thing the opposition could do is, if it wanted to invest in an NBN, it could use it as a stimulus for local industry. Most I know in local industry are sniffing around edges trying to find crumbs.”

While Haliplex’s production volumes are “nowhere near” those required for an NBN, Merry said it could ramp up to NBN production levels easily.

“We will see more continuity if we looked at migration strategy, not a replacement strategy,” he said.

NBN deployment work will be going past about 4000 homes every day over the eight year project.

Rodney Gedda is Editor of TechWorld Australia. Follow Rodney on Twitter at @rodneygedda. Rodney's e-mail address is rodney_gedda@idg.com.au. Follow TechWorld Australia on Twitter at @Techworld_AU.

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