Award of Network Company for Next Generation National Broadband Network

26 September 2008 - Opening Remarks By Dr Lee Boon Yang, Minister For Information, Communications & The Arts, At The Media Briefing For The Award Of Next Generation National Broadband Network Netco Request-For-Proposal, At MICA Building, Esplanade Room

Opening Remarks By Dr Lee Boon Yang, Minister For Information, Communications & The Arts, At The Media Briefing For The Award Of Next Generation National Broadband Network Netco Request-For-Proposal, On Friday, 26 September 2008, 5pm At MICA Building, Esplanade Room

1. Good afternoon and thank you for coming to this briefing. Today, we are entering the next phase of our Next Generation National Broadband Network or Next Gen NBN development. On 11th December last year, I launched the Request For Proposal (RFP) for the Next Gen NBN Network Company, or NetCo.

2. At the launch, I highlighted that for Singapore to remain competitive in the globalised and digital economy, we need to make careful and timely investments in our key economic infrastructure, including our infocomm infrastructure. While our existing broadband infrastructure has served us well, we need to develop a new network that can offer ultra high-speed broadband connectivity for business and residential users.

3. The NetCo RFP sought proposals from the industry to put in place the passive infrastructure of the Next Gen NBN to carry the growing digital traffic and services. The NetCo RFP closed on 5th May 2008.

4. At the closure, IDA received proposals from the Infinity and OpenNet Consortia. Both consortia included Singaporean and foreign partners. I thank the two consortia for their active participation in the RFP process. I appreciate the effort by each of the consortia to prepare and submit its proposal.  I also thank all other parties who have contributed valuable inputs to help shape Singapore’s Next Gen NBN.

5. Today, I am pleased to announce that the Government has selected the proposal from OpenNet Consortium to design, build and operate the passive infrastructure for the Next Gen NBN. This was after a holistic and rigorous evaluation of both proposals in accordance with the Analytic Hierarchy Process and evaluation matrix set out in the NetCo RFP. Government will provide OpenNet with a grant of up to S$750 million to support its rollout of the passive fibre infrastructure.

6. As required in the RFP, this network will be capable of delivering ultra-high speeds of up to 1Gbps and beyond. OpenNet’s proposed all-fibre network will offer pervasive and competitively-priced ultra-high speed broadband connectivity to homes, offices, institutions of learning and other locations.
7. In its proposal, OpenNet has committed to complete its fibre network rollout to 60 per cent of households and buildings by 2010. It will extend coverage to 95 per cent by 2012. OpenNet will meet the Universal Service Obligation set out in the RFP by 2013. This means that from 2013, OpenNet will meet all subsequent requests to install fibre access points in homes, offices and buildings throughout Singapore.

8. OpenNet has proposed wholesale prices of S$15 per month per residential fibre connection and S$50 per month per non-residential fibre connection. I would like to reiterate that these are wholesale prices for fibre connections provided to the Operating Companies or OpCos. The actual retail prices for consumers will be higher than these wholesale prices. The retail prices will depend on the price to be offered by the OpCo that will be appointed under the ongoing OpCo RFP and also Retail Service Providers. Nevertheless, I am confident that consumers and businesses can look forward to ultra-high speed broadband services at affordable and attractive prices compared to current broadband prices.

9. OpenNet will waive installation charges for home and building owners when the network first reaches their premises. This is required under the RFP to encourage take-up rate. I hope that all home and building owners will take advantage of this offer to connect their premises during the network rollout.

10. The NetCo RFP was structured to ensure that downstream operators have effective open access to the Next Gen NBN. The OpenNet proposal meets the effective open access requirements.

11. OpenNet will deploy and own all the fibre optic cables. It will offer wholesale dark fibre services to downstream operators on a non-discriminatory basis as set out in the RFP. OpenNet will make use of relevant existing underlying passive infrastructure assets, such as ducts, manholes and exchanges belonging to its partner, SingTel, to facilitate the deployment of its fibre network.

12. As part of OpenNet’s proposal, SingTel has committed to transfer these underlying assets to a neutral party within 24 months of the NetCo’s Contractual and Financial Close (CFC). The CFC will take place within seven months of today’s award. The neutral party, called the Asset Company or AssetCo, will be an independent and separately managed company. It will be owned by a registered business trust or will be structured in a similar manner to be approved by IDA.

13. SingTel, as a member of OpenNet, has also committed to reduce its stake in the AssetCo within five years of the CFC and seek the relevant shareholders’ and regulatory approvals, where required. As part of the successful CFC for the RFP, SingTel is also required to submit to IDA for approval, a detailed implementation plan on the formation of the AssetCo and subsequent partial divestment of its relevant underlying assets.

14. I had mentioned at the December 2007 launch of the NetCo RFP that Government views Effective Open Access through structural and/or operational separation as key to the achievement of a vibrant and competitive next generation broadband market. The RFP has achieved this outcome for the Next Gen NBN. Nevertheless, Government will continue to consider the need for legislation to entrench Effective Open Access in this market over the long term.

15. Today, we have arrived at a significant milestone for Singapore. The Next Gen NBN propels Singapore to the forefront of broadband development internationally. Soon Singaporeans will be able to enjoy a richer broadband experience with more choices and at affordable prices. Businesses, large and small, will find it cheaper and easier to access ultra-high-speed broadband, and be able to use infocomm more extensively to boost productivity and competitiveness. The Next Gen NBN will be a strategic enabler that will transform the way we work, live, learn and play.

16. To sum up, Singaporeans can look forward to the ABC of Next Gen NBN: Attractive prices for ultra-high-speed broadband; Benefits from innovative services; Coverage nationwide with minimal disruption during fast roll-out.

17. Finally, I would like to congratulate the OpenNet Consortium on being selected as the Next Gen NBN NetCo. I will now ask Assistant CEO from IDA, Mr Khoong Hock Yun, to take us through some of the details of the NetCo phase of the Next Gen NBN development, after which we will be glad to take your questions.

18. Thank you.

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