The Australian National Broadband Network’s request for capability statements from “active network” vendors is now out — and not a moment too soon for vendors.

After all it is now over four years since Telstra first proposed its Fibre-to-the-node network upgrade, and let’s be frank, not an awful lot has actually been built since.

This week, Federal government figures along with a cast of scores of government service delivery types will converge on the University of NSW to talk high-speed broadband. Communications minister Stephen Conroy will triumphantly note that not only is a Tasmanian fibre build underway, but the specifying process for the mainland has now kicked off.

Given Her Majesty’s Opposition lacks even an official shadow comms minister currently, there is no doubt that Conroy and the government will get some substantial political momentum from this.

Of course while Conroy and co will be thinking in political terms, the vendors will be finally thinking in real financial terms. The decision making process for NBN equipment purchase has started and the rewards for the lucky winners could be substantial.

The initial modest Tasmanian rollout of 5,000 homes is budgeted at $38m — of course with all the attendant start-up costs this is likely to be the most expensive 5,000 homes built for the NBN but at a starting price of A$7,600 per connection this will still be a lucrative bounty when scaled and expanded to millions of lines. Conroy might be the political winner but with the scale of this proposed project he might just have saved the hide of a few global vendor executives as well!

It’s no stretch of the truth to observe that the last few years have been fundamentally hellish for the traditional Western vendors. Alcatel and Lucent and the fixed telecom divisions of Nokia and Siemens have been driven by tightening market conditions into each others’ arms, Nortel has been dismembered and Motorola is looking to follow with a spin-off of its iconic handset unit. Even Ericsson, with its supremacy in the GSM infrastructure world, has suffered, with its stock price just half its level of two to three years ago.

So again it’s no exaggeration to suggest that these Western vendors would have been extremely encouraged by the mushrooming of NBN plans across the world — especially in Europe.

Just as Asian vendors had benefited tremendously from similar policies in the likes of South Korea and Japan, the Western vendors too would presumably have had advantages in their own backyard in securing and profiting from the bounty on offer.

Unfortunately the financial reality of escalating deficits is conspiring to delay these fibre projects.

DELAYS IN GREECE, ITALY: For example, what is possibly the “talisman” European project — the Greek proposal to spend nearly $US3 billion on fibre-to-the-home in the major cities — has reportedly been pushed back by one year.

According to the Broadband Prime blog, “Minister of Infrastructures & Networks Dimitris Reppas officially confirmed recent rumors and executives sayings (sic) that the national FTTH plan will be postponed for one year.”

“It is worth noting that the FTTH plan is one of the few projects of the previous government that the (recently elected) Socialists intend to carry on forward. The largest and most ambitious ICT project of the country is kept in high priority by the ministry, however, according to the high-rank official, the tender for the FTTH project will be issued in 2011.”

Similarly, it seems that plans in Italy to divert over one billion dollars of public funds into 20Mbps+broadband deployments have been delayed. There is less clarity on the Italian delays but the prime minister’s office has been quoted in the press as stating ““Funding for the development of broadband will be released when the economic and financial crisis is over.” At best it seems the finding will now be released in incremental instalments in coming years instead of in one hit.

Over in the UK there also seem to be question marks over the future of public funds for broadband, this time for a more prosaic reason — the government that is backing them to set to be voted out and replaced by an opposition that currently opposes the policy.

The so-called “broadband tax” plan which would raise about 50p a month from each fixed line bill is likely to be confirmed later this week, according to reports. But the opposition opposes the tax — saying it doesn’t like the idea of taxing old technology to help fund the deployment of new technology. With the opposition ahead in the polls and likely to sweep to power in general elections scheduled for next year, it seems that plans for new national broadband infrastructure in the UK might also be delayed.

This is all bad news for vendors, especially where every billion dollar contract can mean the difference between survival and oblivion.

Imagine how much better the bottom lines of vendors would have looked if Telstra, for example, had proceeded with its $9 billion plans for metropolitan fibre networks back in 2005. That said, the wait might be worth it — Australia’s NBN Mark 2 could place billions of dollars more on vendor bottom lines over the next decade. That’s counting on the prospect that the government and private sector happily cough up the required capital and don’t put it off for another day as has happened in Italy and Greece.

Grahame Lynch