hsb for donegal

RefNo | Commercial in confidence

HSB for Donegal

ENGAGE

12 Feb 2013 • Pat Kidney


3

Trends in the Irish market Mobile and FWA broadband services have become a major

feature of Ireland’s broadband market Fixed broadband speeds have increased from their previously low

level Service bundling and closer integration of fixed and mobile

services are increasingly prominent features of the market All mobile operators are engaged in network sharing multi-band spectrum auction in 2012 has raised EUR 854m 140

MHz of prime sub-2GHz spectrum The 2.3 GHz and 3.5GHz spectrum bands has potential to further

enhance competition and capacity for wireless broadband National Broadband plan has earmaked EUR175m for broadband


In the 2016 – 2018, a mix of technologies is expected in the Irish telecoms market…

LTE, DOCSIS3.0, and VDSL to

green areas (55% pop.)

LTE and ADSL2 to blue areas (35% pop.)

Only LTE in red areas (10% pop.)

Final 10%Rural 55-90%Urban 55%

VDSL

ADSL

LTE

DOCSIS3.0

UPC will have DOCSIS3.0 in urban areas, but may not reach 55% of pop.

In urban areas LTE will have fibre

backhaul to ensure high performance

In rural and remote areas the

LTE will have microwave backhaul to

reduce cost, at the expense of

performance

Eircom will use VDSL for high

speed broadband,

and will maintain its

existing ADSL services

outside urban areas


A comprehensive NGA solution may use FTTH, FTTC, cable, wireless and other technologies

Scenario 1: Fibre and wireless

Scenario 2: Cable, fibre and wireless

Scenario 3: VDSL and wireless

Cost of deployment by scenario

NationwideUp to 90%NSS

FTTH/GPON

FTTC

Wireless LTE

Cable


FTTC

Wireless LTE


FTTH/GPON

FTTC

Wireless LTE

Source: Analysys Mason

2,380

1,670

1,325

0

500

1,000

1,500

2,000

2,500

Fibre andwireless

Cable, fibreand wireless

VDSL andwireless

EU

R m

illio

n

FTTH FTTC LTE+fibre LTE+microwave


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The National Broadband Scheme brought basic broadband to unserved areas of Donegal

Source: DCENR, H3GI

Target area Actual coverage


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NGA is likely to be delivered through a variety of fixed and wireless technologies NGA consists of many networks – including FTTH/FTTC, cable,

and 4G – but how much of each should be built and where?

A combination of extending the reach of fibre, plus additional wireless sites will be required to satisfy our work and social

needs

Fibre networks Wireless networks

Rely on direct physical connections to the subscriber – capital expenditure generally increases in areas where access

distances are greater (typically rural areas)

Low-frequency spectrum from the Digital Dividend could extend the reach of LTE base stations and consequently

reduce the capital costs of providing next-generation wireless broadband in rural areas

FTTC and FTTH networks require the installation of new fibre links from the local exchange directly to,

or closer to, the subscriber.Optimal duct re-use can help reduce costs

In addition to wireless infrastructure costs, spectrum fees can be expensive. To support next generation access

speeds many base stations may also require high-capacity fibre backhaul links


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Urban Rural Very rural

Pro

porti

on o

f dig

cos

ts fo

r FTT

H

to premisefrom DP

to DPfrom cabinet

to cabinetfrom exchange

Why? ….dig costs make up around 65% of total FTTH costs

Final drop ~50m

Route out of exchange

~2km

~300m

The part of the route closest to the distribution point (DP) represents the highest proportion of costs

Breakdown of costs of civil works for FTTH



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We have analysed each measure from an individual cost–benefit perspective …


Magnitude of annual economic benefit (EUR million)

Cos

t of i

mpl

emen

tatio

n (E

UR

mill

ion)

Mandated access to infrastructureIn-building wiring

Infrastructure atlas

1 10 1000

0.01

0.1

1

10

1000

100

One-stop shop on rights of way and

admin. procedures

Co-ordination of civil works

1000

Performs most strongly in a cost–benefit analysis, but

may have limited impact in developed markets

Reduction to cable damage could lead to

significant benefits


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5 investment models…Choice of investment model

5 models

Bottom-up

Privatedesign build and operate

Publicoutsourcing

Joint venture

Publicdesign build and operate

Group of end users oversee the contract to build and operate their own local network

Managing Authority

provides a grant to

private sector to assist in

deployment of new network

Single contract for construction and operation of network, but public sector retains ownership and some control

Ownership of the network is split between the public and private sector

Public sector owns and operates a network without any private sector assistance


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Model Advantages Disadvantages Recommended use

Bottom up • Long term, non-profit view

• Focuses demand

• Localised deployments

• Differing technologies

• Targeting localised areas• Leveraging small scale

funding

Private DBO • Larger scale• Low public burden

• Funding threshold• Limited control

• Sufficient funding to attract operators

• Effective transferral of risk

Public outsourcing

• Public financial stability with private expertise

• Greater control

• Reduced benefit to private sector

• Additional bureaucracy

• Requirement for on-going control

• More conservative operators

Joint Venture • Risk sharing • Potential conflicts of interest

• Public/private interests closely aligned

Public DBO • Public organisation has full control

• Size and scope limited by public expertise

• Requirement for absolute control

• Inspirational investment

Summary of pros and cons of investment models

Choice of investment model

Each investment model has its place


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The focus is on delivering benefit to users Socio economic benefit must be managed alongside project

sustainability to deliver long term benefits- Long term control by public sector can protect end user benefit,

however the private operators can bring invaluable expertise- Sustainability is critical as socio-economic benefits will take time

The bottom up model may suit small scale fibre projects- Long term non-profit view of end users suits the fibre business

case, but this may be difficult to leverage on a large scale Open and non-discriminatory access to infrastructure supports

effective competition


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Contact details

Pat KidneySenior [email protected] Mason LimitedSuite 242, The Capel BuildingMary's AbbeyDublin 7, Ireland

Tel: +353 1 602 4755Fax: +353 1 602 4777www.analysysmason.comRegistered in Ireland IR304061

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