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Broadband Success

Players for S’pore’s next-generation network must stay the course to reap rewards, says Ernst & Young study

SIGNIFICANT risks – new technology, an untested business and the ongoing financial crisis – await those companies hoping for a piece of Singapore’s next-generation broadband network.

But financial advisory firm Ernst & Young (EY) said players that are nimble, pay attention to changing trends and stay the course will be able to “mitigate: these risks and reap the rewards.

Last week, it released an analysis of the benefits and challenges that come with this new network.

Singapore is building a billion-dollar, next-generation network capable of speed 10 times faster than what broadband can offer today. To ensure that no one party can control priciing or access to this resource, the Infocomm Development Authority of Singapore has put caps on ownership and management control on the various parties building different parts of the network.

Such ” structural and functional separation”, said Mr Jonathan Dharmapalan, who heads E&Y’s global telcoms centre, is unprecedented “anywhere in the world”. However, it could add to the operational complexities.

Other risk factors include how these relatively new technologies will be used, said Mr Dharmapalan. Also, currently, few services are able to make the most of such unprecedented speeds.

Mr Dharmapalan said it would be a learning process for the firms involved, from those laying the fibre-optic cables, such as SingTel, to those trying to sell retail broadband services to homes or firms.

At this point, it is not clear if more resources will be required than expected, and adoption rates could be lower than forecast.

For those rolling out the infrastructure, one big challenge will be guessing how much bandwidth will be needed for which area – years into the future.

Put in too little and roads might have to be dug up to lay new cables. Put in too much and it could lie there unused. And once the cables are in the ground, there is “no chance of recouping” the costs, said Mr Dharmapalan.

Another wild card: the rate of adoption.

Many firms are overly optimistic when forecasting how fast a new technology will be adopted, said Mr Dharmapalan. This could hurt their business if customers fail to materialise as expected.

With new technology, he noted, there is usually an initial rush of early adopters, followed by a lull – some things many miss. When this happens, firms might “panic”, he said.

His advice: Stay the course.

Mass adoption could take a while, so those pulling the plug too early could miss out on potentially huge payoffs.

However, the ongoing financial cris, which EY has been ” looking at closely”, should not have a big impact on firms keen to get a piece of the network.

October 28, 2008 Posted by | IT News, Technology | | Leave a comment