Roger de Salis rides again with Opto Network

Broadband service for rural areas uses FX Networks' backhaul

FX Networks founder Roger de Salis will formally launch his new company, Opto Network, next month to offer broadband solutions to the rural sector.

According to the Companies Office, Opto Network was registered in August. Its major shareholder is another company, Datalight, which is in turn owned by de Salis and Roger MacDonald.

De Salis retains a relationship with FX Networks, which will provide the backhaul for Opto. He says he moved on from FX because he wanted to do something different.

“Once you set a ship on its course it is hard to turn. I wanted to go to a different part of the market,” de Salis says.

He believes the government has been a bit misguided in its thinking about rural broadband, but is starting to sort it out.

“It’s a fabulous game being played between Telecom and the Ministry of Economic Development. What does broadband really mean? It doesn’t mean 32 bit DSL; it means 10Gbit fibre.

“My thinking when I set up FX Networks was that IT could be done in a more interesting space. Network operators understand only one thing [and that’s] faster and cheaper. There was a huge opportunity to drive price up the performance curve.”

De Salis says he negotiated a good arrangement with FX Networks when he left the company.

Opto Network has been running rural trials, which he describes as wildly successful.

“We’ve built eight spurs in seven North Island rural areas and in one South Island rural area.”

The spurs are a 50-50 mixture of fibre and wireless.

“We’ve found in each case some location of economic value and then asked the local rural community if they would like to connect.

“Telecom won’t let anyone connect to their optical cables. We will let anyone connect.”

He says there are potentially 400 to 500 spurs that could be built in rural New Zealand.

Opto has been running its trials for six months and will be fully fledged over the next 12 months, de Salis says.

“We’ve got a totally friendly partnership with FX Networks. We’re each going for different parts of the market.

“We can deliver 1Gbit/s to farmers. The fact is that it can be affordable and you don’t lose your shirt. The answer is delivering economies of scale.

Telecom’s estimate of rural fibre is laughable, he says.

“The Opto proposition for farmers within two kilometres of the cable will cost $2000 for the fibre, which they plough in themselves, then $500 for the installation.

“We’re giving them dark fibre,” de Salis says. “This will create a bunch of ISPs in rural areas. They’ll form their own little buying clubs.”

FX Networks, meanwhile, has lodged a submission with the Ministry of Economic Development supporting the government’s $300 million rural broadband initiative (RBI), but expressing doubt about the proposal to focus directly on connecting rural schools.

“Connecting a rural student to the world while at school, yet keeping them disconnected from the world at home, will not achieve the objective of the RBI – making a significant contribution to economic growth,” the submission says in part.

“If the RBI focus is on schools only, then a major opportunity is lost to provide high-speed access to rural medical centres, rural hospitals, rural businesses, local government and, most important, rural homes.”

In its submission, FX Networks claims focusing on rural schools, runs a risk of lining the pockets of existing broadband providers because, more than likely, it will be an existing provider that will build the fibre to the school. This would be in direct conflict with the stated principle of “avoiding entrenching the position, or ‘lining the pockets’ of existing broadband network providers”.

“Investing in fibre to rural schools exclusively, with spill-over from the school location, has the potential to turn a rural school into highly concentrated radio towers to facilitate the desired spill-over, with the consequent social/community backlash.”

FX Networks goes on to say that a balanced approach is essential and is a lower-cost option than the proposed focus on fibre to the school.

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