next generation broadband from pipe dream to reality ?
TRANSCRIPT
BROADBAND STAKEHOLDER GROUP From pipe dream to reality
Next Generation BroadbandFrom pipe dream to reality ?
Antony WalkerBroadband Stakeholder Group
www.broadbanduk.org
BROADBAND STAKEHOLDER GROUP From pipe dream to reality
Overview
• Broadband - looking back, looking forward• NGA – why it matters, why it is difficult, what it might
look like• The challenge ahead - getting it right
BROADBAND STAKEHOLDER GROUP From pipe dream to reality
Broadband – looking back, looking forward
BROADBAND STAKEHOLDER GROUP From pipe dream to reality
Looking back 2000 - 2008
Broadband development in the UK
0
20
40
60
80
100
2001 2002 2003 2004 2005 2006 2007
Percen
tage
of h
ouseho
lds
0
510
15
2025
30
3540
45
£ pe
r Mb pe
r mon
th
Broadband Coverage
Broadband Take‐up
Broadband Price £ per MB permonth (indicative)
Source: BSG, Ofcom, Point Topic
BROADBAND STAKEHOLDER GROUP From pipe dream to reality
European Commission Broadband Performance Index
BROADBAND STAKEHOLDER GROUP From pipe dream to reality
Actual and predicted compound traffic growth
Source: Cisco
BROADBAND STAKEHOLDER GROUP From pipe dream to reality
Future demand– 2006 BSG Green Paper suggested a level of demand from the
most bandwidth intensive households for both upstream and downstream services that would exceed the capability of existingaccess infrastructures
New video rich services will generate very short and intense bursts of demand for bandwidth, making peak access rates more important
BROADBAND STAKEHOLDER GROUP From pipe dream to reality
Business – future speed requirements [Source Point Topic]
Point Topic Broadband User Survey
BROADBAND STAKEHOLDER GROUP From pipe dream to reality
Capability and coverage of current broadband services
• ADSL coverage: 99.6% of premises– Headline speed: 8 Mbps down/ 0.8 Mbps up– Median speed: 5 Mbps down/ 0.7 Mbps up
• ADSL2+ coverage: (80% premises connected to an unbundled exchange)– Headline speed: 24 Mbps down/ 0.8 Mbps up– Median speed: 9-10 Mbps down/ 0.7 Mbps up
• Cable coverage: 49% of households– Docsis 2.0 Headline speeds 20 Mbps down– Docsis 2.0 Typical fastest speed 10 Mbps
• 3G coverage: 90% population live in postcodes with 75%+ coverage– HSPA headline speed – 7.2 Mbps down– HSPA typical speed – 1.3 Mbps down
BROADBAND STAKEHOLDER GROUP From pipe dream to reality
Reach of xDSL broadband
Source Ofcom
BROADBAND STAKEHOLDER GROUP From pipe dream to reality
Where the fibre is being deployed[Souce Point Topic]
BROADBAND STAKEHOLDER GROUP From pipe dream to reality
Fibre connections as % of total broadband, Dec 2007[Source OECD]
BROADBAND STAKEHOLDER GROUP From pipe dream to reality
Next Generation Access
Why it matters, why it is difficult, what it might look like
BROADBAND STAKEHOLDER GROUP From pipe dream to reality
NGA – Why it matters
• Significant social and economic value• Fundamental for a knowledge economy• Enabling a low carbon economy
BROADBAND STAKEHOLDER GROUP From pipe dream to reality
Value attributes of next generation broadband
Up 0.7Mbps
Down 9Mbps
Speed
Fibre (FTTH)
Symmetric 20Mbps or more
Copper (ADSL2+)
Pro
ba
bilit
y Quality not just speed
• Greater consistency• Higher upload and download• Greater reliability• Lower latency• Lower error rates• Freedom from radio frequency
interference
Improving user experience and service capability
BROADBAND STAKEHOLDER GROUP From pipe dream to reality
Private value
• Saving time doing existing things (efficiency)• Doing more existing things (expansion)• Doing new things (transformation)
BROADBAND STAKEHOLDER GROUP From pipe dream to reality
Wider economic value
• Non-appropriable private value• Externality• Piracy• Network effects• Spill-over and virtual agglomeration• Competition• Resilience and adaptability
BROADBAND STAKEHOLDER GROUP From pipe dream to reality
Wider social value
• Educated citizens• Informed democracy • Cultural undertsnading• Community and inclusion• Privacy• Social capital, resilience and trust
BROADBAND STAKEHOLDER GROUP From pipe dream to reality
Cost benefit framework
Private costs:
(i) FTTC(ii) FTTH (overlay)(iii) FTTH (replacement)
Private benefits:
(i) Saving Time
(ii) Doing More
(ii) Doing new things
Non-appropriable private
Externality
Piracy
Network effects agglomeration
Competition in telecoms sector and wider economy
Resilience, adaptability and policy options
Excess burden of taxation
Educated citizens
Informed democracy and freedom of expression
Cultural understanding
Belonging to a community and inclusion
Privacy
Social capital, resilience and trust
Pseudo externalities
Asset price changes (if already captured under private cost-benefit)
Employment effects
“Competitiveness”
Private Wider economic Wider social Pseudo (not counted)
BROADBAND STAKEHOLDER GROUP From pipe dream to reality
Indicative incremental annual costs and benefits
BROADBAND STAKEHOLDER GROUP From pipe dream to reality
Other qualitative incremental costs (-) & benefits (+)
BROADBAND STAKEHOLDER GROUP From pipe dream to reality
Can the UK afford not to be a world class low carbon knowledge economy?
BROADBAND STAKEHOLDER GROUP From pipe dream to reality
NGA – why it is difficult
• High costs• Uncertain revenues• Complex migration
BROADBAND STAKEHOLDER GROUP From pipe dream to reality
The deployment cost of NGA
-
5
10
15
20
25
30
35
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%Cumulative population
Dep
loym
ent c
osts
(GB
P b
illion
s)...
FTTC/VDSL FTTH/GPON FTTH/PTP
Total cost vs. percentage population coverage for FTTC/VDSL, FTTH/GPON and FTTH/PTP [Source: Analysys Mason for BSG]
BROADBAND STAKEHOLDER GROUP From pipe dream to reality
Deployment costs by area type
Source: Analysys Mason for BSG
BROADBAND STAKEHOLDER GROUP From pipe dream to reality
A difficult investment at the best of times
• demand side investment incentives are weak –mature DTV market in the UK
• current access based pricing models don’t reflect costs– tiered pricing – peak rates, volume, quality
• potential for non-access based revenues uncertain– vertical integration– third party affiliate payments – traffic prioritisation
• Impact of financial crisis on ability of operators to invest and consumer willingness to pay???
• But growing competitive pressure – cable and mobile broadband
BROADBAND STAKEHOLDER GROUP From pipe dream to reality
NGA – What it might look like
• Multiple technologies – copper, fibre, wireless• Multiple networks• Patchwork quilt• A widening bandwidth divide?
BROADBAND STAKEHOLDER GROUP From pipe dream to reality
Today’s broadband market (cable, copper and mobile)
Services
ISPsCable Mobile
Openreach
Cable
Fully vertically integrated. Owns and manages an HFC access network. Providing retail services to customers including on-net services such as VOD as well as high speed internet access
Openreach
Owns and manages the access network and provides LLU and WLR products to CPs on the basis of equivalence.
Internet Service Providers
Provide retail ADSL services to customers based LLU and WLR products from Openreach. Services can include on-net services such as VOD to a STB as well as high speed internet access. Six largest operators account for 95 % of the market
Mobile Operators
Five operators providing mobile broadband data services to customers via 3G HSDPA network. Although parts of the network are shared, MOs are primarily vertically integrated, offering on-net services as well as internet access.
Services
‘Over the top’ internet services provided by a multiple companies and organisations. Limited revenue flow between the service layer and the ISP layer.
BROADBAND STAKEHOLDER GROUP From pipe dream to reality
Tomorrow’s broadband market more complex?
Cable
NECable
wholesale
CPs
Mobile
Muni-wholesale
OpenreachMuni-
passive
BROADBAND STAKEHOLDER GROUP From pipe dream to reality
Getting it right
BROADBAND STAKEHOLDER GROUP From pipe dream to reality
Challenges
• Policy – Central government – Caio report• Regulation – Ofcom, EU – current consultations• Local action – Regional and local engagement
BROADBAND STAKEHOLDER GROUP From pipe dream to reality
So
• Broadband matters today and will matter in the future• NGA will be difficult, but we need to get it right• Will require concerted innovative thinking across the
private and public sector
BROADBAND STAKEHOLDER GROUP From pipe dream to reality
Acting now for long-term competitiveness