dieter elixmann dr. karl-heinz neumann andrej schöbel wik-consult (germany) berlin, 07.09.2004
DESCRIPTION
ITS 2004 Session 6.4. - Infrastructural Bandwidth to the Customer Building up Fiber Infrastructures: International Analysis and Assessment. Dieter Elixmann Dr. Karl-Heinz Neumann Andrej Schöbel WIK-Consult (Germany) Berlin, 07.09.2004. Overview. - PowerPoint PPT PresentationTRANSCRIPT
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ITS 2004Session 6.4. - Infrastructural Bandwidth to the Customer
Building up Fiber Infrastructures: International Analysis and Assessment
Dieter Elixmann Dr. Karl-Heinz Neumann
Andrej Schöbel WIK-Consult (Germany)
Berlin, 07.09.2004
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Collecting empirical evidence: Features of the WIK-Consult study
Main results
Example: FTTx activities of Swedish cities
Building up fiber infrastructures: issues to be discussed
Conclusions
Overview
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FTTx: Fiber to the …
- Home
- Building
- Curb
- Premise
- Cabinet
- …
i.e. solutions bringing fiber optic access lines nearer to the customer
Study performed on behalf of Alcatel SEL Stiftung
Collecting empirical evidence: Features of the WIK-Consult study (1)
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Identification and evaluation of FTTx activities in the world
Main focus on projects in France, Japan, Sweden and the U.S.
Objectives
- Highlight characteristic features of FTTx projects
• Main actors
• Motives and driving forces
• Technical and economic characteristics
• Investment and financing
• (Planned Business Case
• Legal, regulatory and policy frame
- Assessment of activities
Collecting empirical evidence: Features of the WIK-Consult study (2)
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Collecting empirical evidence: Features of the WIK-Consult study
Main results
Example: FTTx activities of Swedish cities
Building up fiber infrastructures: issues to be discussed
Conclusions
Overview
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Main results (1)
Numerous FTTx activities worldwide
Japan is leading worldwide FTTx penetration (FTTH)
- More than 1 mill. subscribers today
- By 2006: 7.7 mill. subscribers
Level and dynamics mirror country specific factors
Implementation of FTTx virtually in ist infancy…
… yet, plans and activities already started underline serious commitments and obviously viable business cases
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Main results (2)
Main players (varies across countries and projects)
- Telecommunications carriers
- (Energy) Utilities
- Jurisdictions (regions, cities, villages)
- Real estate companies
Level of FTTx activity of telco incumbents varies across countries
- France (France Télécom): low
- Japan (NTT East, West; KDDI): high
- Sweden (Telia-Sonera): low
- U.S. (RBOCs): still low, however, ambitious plans
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Main results (3)
Basically, two different business models regarding FTTx
- Business Model 1:
• Deployment and operation of infrastructure as well as service provision by one single entity
• Examples: usen, NTT in Japan; Fastweb in Italy; RBOCs and regional carriers in the U.S.
- Business Model 2:
• Deployment and in parts also operation of fiber infrastructure by one entity
• No service offerings to end users
• Neutrality with regard to carriers and service providers
• Examples: Swedish and French cities
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Main results (4)
A priori, the government has different options regarding FTTx
Legal and regulatory frame, political promotion: Usually, government involved in setting the frame and establishing specific broadband support programmes
Player
- Active role of jurisdictional entities as player high e.g. in France and Sweden, in the U.S. and Japan relatively low with respect to market at large
- Primary motives for governmental activities: Increase regional competitiveness, care for future generations
Financing
- Corporate shareholder, credits, tax reliefs, etc.
- Support programmes to safeguard universal service objectives (in rural areas, e.g. in Sweden and Japan), often not technology-related (without FTTx-specification)
Demander: increase demand for services e.g. by e-government solutions
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Collecting empirical evidence: Features of the WIK-Consult study
Main results
Example: FTTx activities of Swedish cities
Building up fiber infrastructures: issues to be discussed
Conclusions
Overview
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Example: FTTx activities of Swedish cities (1)
Basic motives and incentives for FTTx-activities
- Mission (of the Swedish Urban Network Association)
• Give the city an open infrastructure for everyone
• Stimulate the market by offering capacity at below new operators‘ costs
• Reduce digging in the streets
• Create an own network for the city
- Expectation that future bandwidth/capacity needs are dramatically increasing
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Out of 290 municipalities in Sweden 200 have already an own network
Plans are discussed with several regional players to link their network with those of others to reach a broader regional coverage
Schools, libraries, hospitals, city administartive sites etc. are especially hooked upon the local networks
Example: FTTx activities of Swedish cities (2)
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Business model
- Deployment of infrastructure; focus of marketing FTTx infrastructure: primarily dark fiber
- Usually also operator of a network for the local administration
- Carrier neutral
- Local pricing policy
- Often exclusive arrangements between municipally owned energy utility and municipally owned real estate company; opens up control of a significant portion of the value chain of providing broadband services
Example: FTTx activities of Swedish cities (3)
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Example: Stokab (1)
Owners: 91 % City of Stockholm, 9 % Stockholm County Council
FTTx activity: Infrastructure provider in the Greater Stockholm area
Single dark fiber infrastructure provider in this area, i.e. only Stokab has a licence to deploy fiber
Customers: Network operators, companies with a high communications budget (like banks and insurance companies)
Example: FTTx activities of Swedish cities (4)
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Example Stokab (2)
Financing: benefits from usage of municipal funds
Motives for FTTx-extension by Stokab
- Idea that network provider generate lower costs for infrastructure, if they buy dark fiber from Stokab instead of deploying own facilities, because of shared costs characteristics for important assets
- Avoidance of extensive digging activities
- Competition policy with the goal of lower (affordable / decreasing) prices (Wettbewerbspolitik mit dem Ziel der Förderung niedriger Preise)
Example: FTTx activities of Swedish cities (5)
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Reaction of market players (e.g. Bredbandsbolaget)
- Basically existence of infrastucture as input is positively appreciated
- Local provider neutral networks are local monopolies and therefore a-priori a case for regulation and competition policy, this holds particularly true, if a municipal utility places an exclusive contract with a city owned real estate company
- Overall missing standardisation for broadband networks; FTTx-activities of cities etc. should be limited to the provision of dark fiber
- Decentralised deployment (i.e. limited to a particular city) entails diseconomies of scale; room for regional cooperation
- FTTx activities of cities etc. should rest on a legal basis
- Activities of cities should mirror long run business model, clear market driven deployment policy, depreciation periods over 25 years
Example: FTTx activities of Swedish cities (6)
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Collecting empirical evidence: Features of the WIK-Consult study
Main results
Example: FTTx activities of Swedish cities
Building up fiber infrastructures: issues to be discussed
Conclusions
Overview
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Building up fiber infrastructures: issues to be discussed (1)
Regulatory and competition policy frame
- Rights of way
- Access to premises and buildings
- FTTX infrastructure essential facility?
- Conformity with national and EU wide rules with respect to granting exclusive right to an entity deploying infrastructure
- Is public financing (nationally, EU funds) in accordance with the State Aid rules?
Technical aspects of infrastructure deployment and operation
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Building up fiber infrastructures: issues to be discussed (2)
Demand side factors, e.g.
- Who are the (potential) demand(ers) for FTTx infrastructure (a-priori incumbent, OLOs, cable TV operators, (facilities based) Internet Service Providers, non-facilities based Service Providers, cellular operators
- Variables that impact decision behaviour
Competitive situation within the market, e.g.
- Deployment status of competing infrastructures
- How do the “traditional“ telcos react? E.g. in USA Qwest (incumbent) announced, to undertake massive efforts to stop UTOPIA.
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Building up fiber infrastructures: issues to be discussed (3)
Cost considerations, e.g.
- Deployment
- Economies of scale regarding procurement?
Factors driving demand for services provided via FTTx, e.g.
- Willingness to pay
- Price level, pricing policy
- Media budgets
- Socio-cultural aspects
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Building up fiber infrastructures: issues to be discussed (4)
Financing issues, e.g.
- Appropriate legal status
- Availability of capital, access to capital markets
- Who are potential investors?
- Expectations and risk perception of investors
- Eligibility for EU funds
Role of the State
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Building up fiber infrastructures: issues to be discussed (5)
Carrier neutral deployment model? Concept:
- Let physical infrastructure be deployed by a neutral investor…
- …investor, however, is not operating it
- Wholesale model
- Neutraliy with regard to service provision, i.e. foster service competition (innovation, technology mix, marketing mix…)
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Collecting empirical evidence: Features of the WIK-Consult study
Main results
Example: FTTx activities of Swedish cities
Building up fiber infrastructures: issues to be discussed
Conclusions
Overview
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Conclusions
Status of worldwide FTTx deployment mirrors the fact that FTTx is viewed as superior and future proof compared to other access technologies
In many countries unambigous tendency
- It is no longer an issue if FTTx is reasonable at all and can be a viable business case …
- … rather, the focus is on identifying challenges for FTTx deployment on the basis of country specific conditions and …
- …to derive a concept of an appropriate deployment plan and means to secure financing
Broadening the scope of broadband discussion in Germany indispensable
Carrier neutral deployment model: Carry out a model calculation with “real world data“ for Germany in order to assess the economics behind and the challenges ahead (“Synthetic Business Case“)
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