PLDT, Globe in new bidding war for BayanTel’s fiber optic backbone

Smart Communications and Globe Telecom have taken their rivalry to a new front – this time, over who gets to get to use the expanded capacity of the national data transmission network (NDTN) fiber optic backbone facility majority owned by Bayan Telecommunications (BayanTel).

The STAR learned that in order to have a back-up for its own fiber optics backbone network (FOBN), Globe approached Bayantel on the possibility of utilizing the 10-gigabit per second expanded capacity of NDTN.

According to industry sources, when the PLDT group learned of Globe’s offer, the former made a counter-offer to BayanTel.

In exchange for using part of NDTN’s expanded capacity, Globe and the PLDT group have offered to allow BayanTel to also use part of the capacity of their respective fiber optic networks. PLDT has its nationwide digital fiber optic network (DFON) while Globe has FOBN. All these networks are used to transmit voice (both landline and cellular) and data.

"It seems that the PLDT group wants to get in because Globe wants in. PLDT’s fiber optic network was designed as a loop so that it has its own built-in back-up. If the other side does not work, the traffic can be routed to the other side, unlike that of Globe which is designed as a straight line so that if anything happens to the network, everything stops. But maybe, PLDT just wants an extra back-up by having a restoration capacity with NDTN," one source said.

The NDTN is owned by the Telecoms Infrastructure Corporation of the Philippines (TelicPhil), a consortium of seven franchised telecom operators with Bayantel owning 86 percent share of the original project cost of $70 million (and a corresponding 86 percent of the capacity). The other consortium members include Smart, Globe, Express Telecommunications (Extelcom), Eastern Telecommunications (ETPI), Philippine Telephone & Telegraph Co. (PT&T), and Digital Telecommunications (Digitel) which shared the remaining 14 percent.

The main objective of the NDTN project was to have another backbone facility as an alternative to the transmission facility owned by PLDT, the reason why the latter was not part of the NDTN. When NDTN was started, Smart was not yet owned by PLDT.

When the capacity was expanded last year, Bayantel spent for 96 percent of the $6.2-million cost and the remainder was participated in only by Digitel and ETPI. The rest backed out of the upgrade project.

The NDTN expansion completed in January last year provided for two 10 gigabits per second capacity. It was to be utilized by Bayantel (96 percent of the capacity) and the remainder by Digitel and ETPI which is the one being eyed by the PLDT group and Globe.

It is expected that the 10 gigabits being used by the NDTN co-owners Bayantel, Digitel, and ETPI will be used up by next year. However, because of new technology, instead of spending $6.2 million, only $1 million will be spent to add another 10 gigabits of capacity. Already, the four percent share of Digitel and ETPI have long been used up so that they are buying retail capacity from Bayantel’s 96 percent share.

Using the dense wavelength division multiplexing (DWDM) technology, the NDTN upgrade became much cheaper since by just installing one fiber, the capacity can be multiplied. For instance, one fiber can be expanded by up to 32 10-gigabit capacity. The latest NDTN expansion involved only two 10-gigabit capacity.

The first fiber, already in service, has a capacity of 2.5 gigabits per second or the equivalent of approximately 30,000 voice circuits, and is the one shared by the original NDTN members. The second fiber, which costs only $6.2 million, now uses the DWDM technology so that capacity can be multiplied up to 32 times at 10 gigabits per second each (or an additional 120,000 voice circuits per) using one fiber.

Bayantel’s chief consultant Tunde Fafunwa earlier said the upgrade was mainly intended to accommodate future commercial and home-based demand for broadband Internet connections. He said commercial establishments in the cities of Cebu and Davao have been inquiring about the availability of broadband infrastructure.

"Business process outsourcing (BPO) industry, animation, online gaming and voice-over-IP are all growing in these areas. I expect that the 10-Gb connection will reach full capacity in five years," Fafunwa said.

Bayantel‚s investment in the NDTN is a bargaining chip for the company to get into data services, predicted to grow this year as demand pours in from BPO’s, managed services and the online gaming industry.

Fafunwa said that with Bayantel as the lead owner, the higher bandwidth from the NDTN expansion would serve as the foundation from which it will build the Internet protocol (IP) infrastructure that it is undertaking.

"Once completed, we can now deliver voice, data, video and Internet/IP services at faster speeds and higher reliability at any point nationwide from a single network. This enhanced capability will allow business and residential customers to benefit from new services and applications including VoIP, video-conferencing, multi-branch communications, among others," Fafunwa added.

TelicPhil president Henry Galingan said the expansion was brought about by the dramatic increase in traffic traversing the network driven by increased telephone density, the boom in cellular phones, and high internet utilization all over the country, which stretched the network’s capacity to almost maximum by the end of last year.

With the increased capacity at lower cost, even people living outside Metro Manila can experience real speed and broadband access just as affordably. The NDTN expansion particularly would benefit data traffic between Manila and Cebu as well the Lucena-Tigbauan, Dumaguete-Cebu, Manila-Lucena, and Dumaguete-Cagayan De Oro routes.