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BroadcastEngineering Services 17 Millrose Drive Malaga WA 6090 Phone: +61 8 9248 7000 Fax:: +61 8 9249 8858 Email: mail@bes-aus.net 
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Industry Development Plan West Coast Radio P/L, trading as Broadcast Engineering Services, was granted Registered Carrier Status on December 22nd 1999 and became Australia’s thirty third and Western Australia’s second licensed Carrier. Prior to this, the following Industry Development Plan was approved by the Minister for Communications, Information Technology and the Arts, Senator Richard Alston, MP. Further information regarding this plan, and related matters are available by contacting – Mr Graham Bowman General Manager Broadcast Engineering Services Unit 7, 9 Vale Street, MALAGA, W.A., 6090 Phone - +61 8 9248 7000 Fax - +61 8 9249 8858 E-mail: gbowman@bes-aus.net INDUSTRY DEVELOPMENT PLAN Introduction Introduction The purpose of this report is to firstly briefly review activities undertaken by Broadcast Engineering Services (BES) during the period from the initial granting of our Carrier's License on December 22nd, 1999 through December 21st, 2000 and secondly to provide information concerning our proposed activities for the coming year. Review As was stated in our initial IDP BES telecommunications activities are primarily related to the provision of Cable Modem data delivery services (mainly high speed internet access) - principally within residential areas serviced by pre-existing, privately owned, underground HFC (Hybrid Fibre Coax) cable networks. BES have now successfully completed, on behalf of the management group of the Ellenbrook Estate, the installation of head-end broadband equipment and the upgrade of the Estate's HFC Cable System infra-structure to facilitate connection of high speed Cable Modem equipment throughout the development. The project has ultimately been able to incorporate the entire Ellenbrook Estate - rather than simply the third stage (Coolamon) village as was suggested in our original IDP. Practical completion was achieved in early 2000 with a number of selected residences acting as test sites on a non-commercial basis through to June 30th. Commercial services commenced July 1st 2000. Ellenbrook is a newly developing community within the Perth north-metropolitan area and is currently Western Australia's largest residential development. It will eventually become home to 30,000 people on 10,500 homesites during the next fifteen years. Together with adjoining developments in the Vines (5,000 residents) and Egerton (15,000 residents) it will form a new regional centre of 50,000 people. Ellenbrook is a Joint Venture between the State Government's Homeswest Authority and the LWP Property Group - formerly the Sanwa Property Group. The benefits of Cable Modem technology to the users of the system now include:- The facilities have already, or will in the near future, also provide a springboard to many other services and benefits including:- In December BES was also involved with other parties in the demonstration of a "Video-on-Demand" system during the official opening of Ellenbrook's Coolamon precinct by the Premier of Western Australia, the Honourable Richard Court. During his address Mr. Court made specific mention of the technology infrastructure being installed at Ellenbrook and its benefit to the community at large. Whilst all of the technical and general industry development objectives outlined in our initial IDP have been achieved the take-up with subscribers, while steady, has been a little slower than was originally hoped. A number of initiatives aimed at improving availability to residents are now planned and are detailed elsewhere in this report. Period of the Plan This Industry Development Plan renewal is submitted to the Department by West Coast Radio P/L trading as Broadcast Engineering Services of Unit 7, 9 Vale Street Malaga, Western Australia, 6090. It constitutes the first review of our annual IDP after its initial approval in December 1999 and is intended to now cover the period through to December 21st, 2001. Statement of Ownership "Broadcast Engineering Services" is a Western Australian registered trading entity (#0059329W), wholly owned by West Coast Radio P/L (ABN 65 009 090 671). The structure and ownership of the company remain largely unchanged from our original IDP. Mr. Ian Willock, one of the Company's founding Directors has retired, and is replaced Mr. Anthony Kiernan. Details are presented below. "Broadcast Engineering Services" operates as an independent division of West Coast Radio Pty. Ltd. from premises at Unit 7, 9 Vale Street, Malaga, Western Australia. West Coast Radio P/L's head office is located at 141 - 143 Mandurah Terrace, Mandurah, Western Australia, 6210 from which it also operates radio stations 6MM (AM) and Coast FM servicing the Peel region approximately 100 km's to the south of Perth. The Current board members are :- Ian Harold Basset-Scarfe - Chairman of Directors and proprietor of Basset-Scarfe Realty, with offices in Mandurah and Falcon. Also Chairman of Pleasant Grove Pty Ltd and a former Vice President of the Real Estate Institute of W.A. (REIWA). Lance Garnet Rock – a former board member of the Retravision Group (Electrical Retailers) and proprietor of a Mandurah based franchise. Lance is currently owner of Murray Television Services. Owen Hobart Tuckey – a farmer with property situated in the Pinjarra region south of Perth. Together with his directorship of West Coast Radio Owen is the former Chairman of both the Peel Inlet Management Authority and Peel Development Authority. Anthony Kiernan - Appointed to the board of West Coast Radio in September. Mr. Kiernan is a Solicitor of many years of experience in private practice including a number specilising in Broadcast and Media related matters. Strategic Statement The strategic outlook of BES remains unchanged from our original IDP and is reiterated below - Mission Statement Broadcast Engineering Services (BES) has for many years been at the leading edge of media production, transmission and reticulation technologies in W.A. Entering the new millennium we are now very much focussed on both the evolution of these existing technologies and the manner in which they are being applied to, and complimented by modern multi-media techniques. We now seek means whereby they might be applied to the benefit of both our individual clients and the communications industry generally. General BES Strategy and Objectives Having been closely involved with the initial planning and installation of the fundamental HFC Cable Systems in many private residential land developments it is now the objective of BES to continue to expand and enhance the capabilities of these systems to include a variety of "value-added" communication and technology based services - hopefully to the benefit of both the individual residents and the communities at large. Construction of all of these broadband systems, has from the outset, allowed for the possibility of return path (two-way) signals so as to provide for non-broadcast uses such as:- Corporate Summary Broadcast Engineering Services has operated in Western Australia for seventeen years and provided services in a variety of radio, television and general broadcast applications. It remains this state's only specialist private provider of such services and has, since its inception, held high standing in the national broadcast industry. Whilst not directly related to our Carrier activities it is perhaps appropriate to note that, during 2000, BES was contracted to design, install and maintain seven of the ten Western Australian Television Transmission services under the SBS analogue network extension programme. Activity Summary BES is currently involved in the on-going roll-out and project management of over 30 estate cable networks, (up from 18 at the time of our original IDP) currently serving approximately 10 thousand homes with a total ultimate capacity of around 40,000. It is highly probable that these figures will continue to increase as further estates, presently in their conceptual planning stages, begin construction. A number of estates, including many of those that were initially cabled simply for the purpose of distributing free to air television, are now considering a number of "value added" services that might utilise the considerable spare capacity available on the underground HFC cable systems. Whilst there are a number of different services that are currently being considered our primary focus relates to the provision of high speed data connectivity through Cable Modem Equipment - a system that provides a more effective and efficient alternative to conventional dial-up services and that is very cost competitive relative to the ADSL services now being offered. In some instances this is being done in conjunction with the developer who has identified various needs or potential benefits for their residents and who may well have specific requirements. In others BES will, where commercially viable, install services independently. Further, it is now the intention of BES, where complimentary to developers longer term outlooks, to acquire ownership of these networks and further develop their capabilities either in our own right or in conjunction with third party services / content providers. Preliminary negotiations are currently taking place in respect of BES acquiring several such systems in the Mandurah region south of Perth. During the course of 2000 BES acquired seven small cable systems from Telstra that were not part of their main HFC network. It is now the intention of BES to expand and upgrade these facilities in line with the needs of the local residents. Financial Summary BES is, certainly relative to the Major Carriers, an organisation of a rather modest scale. Its gross annual turnover over the last few years has been around 2.5 to 3 million dollars with nett profits in the order of 10 to 15 percent of those figures. Whilst the granting of "Licensed Carrier" status has provided the opportunity to provide the services and facilities described in this document and thus increase revenue potential it is very much recognised that there will be no rapid transformation and that growth will ultimately only come at some reasonable and sustainable pace - and as a result of careful planning and a focussed business ethic. Given that the services described were not commercially released until July 1st carrier related income to June 30th was effectively nil. This has been reflected in our USO eligible revenue returns to the ACA. Note that certain aspects of this return, particularly in respect of areas that may or may not be "eligible income", are currently being discussed with the ACA. Revenue Projections An arrangement has been agreed between BES, Ellenbrook Estate (the land developer), and iiNet (the ISP) whereby BES would provide on-going maintenance and management of the system for a fee of (approximately) $5 per month per connected subscriber - to be paid by the ISP, and which represents around 10% of their charge to the end user. On this basis, and using conservative estimates of the number of subscribers to take up the service in the initial stages, revenue expectation would be around $12,000 p.a. based on average of two hundred subscribers being connected over the period of the current year. Importantly it should also be noted that whilst the Ellenbrook Project only has been used for the purpose of developing these figures there are now additional projects, in other developments, currently in the early stages of discussion and/or design, that may be added. The recently released Dallyelup Estate, south of Bunbury, is one that we have already commenced installation works and that expected to be on-line in early 2001. Subscriber numbers will initially be rather modest but are expected to grow with the Estate. Whilst no other firm arrangements exist at this point, and thus can not be included in this document, BES will undertake to inform the Minister, through his Department, of any significant developments as soon as is reasonably possible. Additionally it is also possible that other services, not immediately planned to be included, may be added at some future point. In this respect the same undertaking is provided. Acquisition of Telecommunications Technology Overview The systems and infrastructure that have been described are the first of their type installed in Western Australia. Commissioning of the system has, by world standards, positioned us on the front line of available practical technology. IT and other Capital Procurement During the initial phases of the Ellenbrook project approximately $200,000 was expended on capital equipment which included - BES contracted Philips' Broadband Networks Division, based in Melbourne, to supply the majority of system hardware and control software including, specifically, a Cisco 7200 series Cable Modem Router unit which forms the heart of the system. Downstream of the installation proper Philips, and others, have also supplied a quantity of their latest generation, DOCSIS compliant, Cable Modem units to be installed in subscriber premises. Importantly it should be noted that the above mentioned figure relates only to the provision of the Cable Modem System and its peripheral equipment - as it is primarily this "component" of the overall cable system which is directly relevant to the "Carrier" services to be provided. The total investment in the HFC cable system infrastructure being installed throughout the entire development, which forms the connection medium upon which the Cable Modem equipment is reliant, now totals well over two million dollars. Further, it is expected, that there will be multiplier effects of capital expenditure on communications infrastructure from this project in as much as - The capital expenditure in existing and currently planned Developments (other than Ellenbrook) is difficult to accurately forecast at this time but is potentially several million dollars. During the period of this plan (i.e. the next twelve months) BES expects to install over one million dollars of HFC cable infrastructure. At the time of submitting our original IDP (December 1999) BES was involved with approximately twenty residential cable systems. As at June 30th that total had increased to over thirty - seven of which are now owned by BES. It is our intention to further expand our activities beyond simply providing engineering / carrier services in to this network ownership and development area during the current period. Capital expenditure on IT related products and services within these new Estates is expected to be of similar nature to the Ellenbrook project. The level and timing of expenditure will ultimately be determined by the rate of lot sales by the relevant developers. Industry Development Strategic Commercial Relationships Through projects of this type considerable benefit and experience is accruing to not only BES but also to its participating partners, contractors and suppliers. Equipment and support services have, as far as practically possible will continue to be, procured through local enterprises to maximise local involvement and content. Virtually all design and development, at systems level, is being carried out in Australia. BES has contracted Philips' Broadband Networks Division, based in Melbourne, to supply the majority of system hardware and control software. Philips are well established and respected suppliers within the Australian Communications Industry and have locally undertaken a considerable amount of the development of the equipment that has been used in the Ellenbrook project and is now being applied to others. At the ISP level BES is continuing its relationship with iiNet Pty. Ltd. - Western Australia's largest single provider of such services. Together with their high profile and excellent reputation within the industry they have also demonstrated an eagerness and enthusiasm for the success of our projects. iiNet have made considerable investments in the supply and installation of Head-end computer and link equipment during the early stages of the projects. A further aspect of this, and other projects, has involved the laying of cable conduits, the pulling of cables and the provision of connection pits. These civil engineering works form a significant portion of overall costs - on occasions as much as 50% - which, through the course of the Coolamon Village phases of the Ellenbrook project, amounted to approximately $250,000. A number of smaller owner-operator contractors continue to be involved - primarily in providing connection and termination from the street cables to individual households. At a connection cost of approximately $300 per residence many hundreds of thousands of dollars will be available to these Contractors. Generally BES will continue to ensure that there is opportunity for a range of locally based companies and individuals to become involved in these "leading edge" technology projects and to gain relevant experience and expertise. Research and Development Given that these are the first projects of their type to be undertaken in Australia, it is recognised that there is considerable experience to be gained in their practical implementation - and in the further development of practices, systems and equipment better suited to the unique requirements of the system(s) to be installed. Probably the single most distinguishing characteristic of cable systems used for cable modem reticulation is simply that they need to be bi-directional - i.e. be able to carry data in both directions - unlike the distribution of Subscription TV services for example which are, by their very nature, uni-directional only. There are a variety of issues that arise from this requirement but one particular area that has been of special interest to BES, and potentially others, is the manner in which cable connections are made to households from the main distribution (street) cable. Whilst Austel regulations provide broad guidelines, primarily aimed at necessary safety related issues, there are a number of other areas that need to be more fully researched, developed and refined to provide best possible performance and reliability at reasonable cost. These include areas such as - The latter two items are particularly critical areas that, if not properly controlled, can not only affect the cable modem unit at the interference source but also potentially the entire system by virtue of their common return path. Some work has been carried out in the U.S. relating to this problem but, as yet, no definitive solutions have been proposed. Research in this area may well also contribute to the further general development of EMC practices as defined in the Australian C-tick requirements. BES has addressed the issues mentioned above as a component of the overall project and, primarily during the course of installing both head-end and customer equipment, been able to test and evaluate the relative merits of a variety of practices. During the course of the calendar year BES staff devoted several hundred man hours in this area - at an effective expenditure of around $30,000. Given the relatively modest scale of BES operations and available resources a cooperative arrangement was formulated between Philips and others to maximise our effective R&D return. Philips assisted with laboratory based development, testing and reporting at their facilities in Melbourne which were complimented by BES field development. It is intended that this arrangement be continued both in respect of the areas previously and possibly others currently being discussed. Further, a local organisation primarily involved in EMC and associated testing, have provided a brief to us to carry out a series of detailed qualitative tests involving a budget of around $10,000. These tests are expected to be conducted during the course of the current period. No government assistance has been sought, or provided, in respect of our R & D activities. During the course of the current year it is intended that BES, in conjunction with relevant authorities, will make application for "Networking the Nation" funding to potentially be applied to provide high speed internet access in a number of regional areas (estates) that have suitable base HFC network infrastructure. Export Development The nature of our activities inherently does not provide for "conventional" export opportunities. It is however hoped that the experience gained from this project, perhaps together with a degree of suitable "exposure" that might be generated, may ultimately create opportunities to export the expertise that will be gained in the form of consultancy services and/or project management. A number of near SE Asian regions, currently in the process of expanding and enhancing their communications infrastructure, may represent possible markets at some future time. This is to be further investigated. Employment and Training Given the innovative nature of this project, and the general nature of the technology to be employed, there was an inherent need for both a substantial amount of training and for the direct and indirect employment of additional staff. Prior to the commencement of this project BES employed only one specialist cable systems engineer who was supplemented, as required, by other general technical staff. Since that time - Following the successful implementation of the Ellenbrook Cable Technology Bonus Project, an exhaustive assessment is currently being undertaken in conjunction with Ellenbrook management in respect of the further needs of the increasing customer base and the growing network infrastructure. This report, titled 2020NOW, is expected to be completed early in the first quarter of 2001 and propose significant and wide-ranging initiatives for the further development of the communications network and related products and services. BES is committed to ongoing technical education of its staff, suppliers and contractors and is determined to maintain its existing high levels of technical expertise. Services for the Disabled Inherent in the commissioning of services described in this document have been significant benefits and increased opportunities for the disabled. The previously described advantages offered by high speed, permanent data connectivity to the general population become even more relevant where individuals might have limited mobility and/or capacity to access current services. Those who are reliant on these services will be direct beneficiaries of the speed and efficiencies that will be provided. Additionally BES and its partners have provided a number of no-charge connections at the local schools, colleges and similar institutions including and innovative "Business Incubator" project being sponsored jointly by the Ellenbrook Developers and the local TAFE College. Reporting and Consultation Broadcast Engineering Services undertakes to provide further reports for the Minister's consideration as follows - Conclusions Broadcast Engineering Services is hopeful that the achievements outlined in this report, although of a relatively modest nature, have none the less provided an important contribution to the Australian Telecommunications Industry in an area that has, to date, not been widely developed but in which there is considerable further potential. Most importantly, Broadcast Engineering Services is also hopeful that the continuing introduction of these services will significantly improve the effectiveness and efficiency of network access to the general telecommunications user.
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