Gabrielle Gauthey NextGen 09

NGAs : which public policies to foster investments and accelerate deployments? Gabrielle Gauthey – Senior Vice-President Public Affairs Leeds - November 17, 2009

Summary  Very High Speed broadband market overview  Broadband policies and local authorities intervention in France  Next generation Access networks policies and regulation  Next Generation Access networks & public/private initiatives 2 | NGA policies & Public Private Partnerships | November 2009 © Alcatel-Lucent 2009 All Rights Reserved

Very High Speed broadband is a booming market Number of residential subscribers worldwide Growth of FTTH/B* and VDSL** subscribers around the world between 2008 and 2014 Source: IDATE – September 2009  A market of 140 million subscribers in 2014 (vs. 31 million in 2008)  Western Europe on a par with North America with more than 20 million residential subscribers * Fiber-to-the-home (FTTH) et Fiber-to-the-building (FTTB)  A great opportunity for Europe ** Fiber-to-the curb (FTTC) et Fiber-to-the-node (FTTN) 4 | NGA policies & Public Private Partnerships | November 2009 © Alcatel-Lucent 2009 All Rights Reserved

Figures on Very High Speed broadband in Western Europe Very High Speed deployments per types of Number of FTTH/B subscribers in key architecture – end of 2008 European countries – end of 2008 66% 32 % 66 % 7% 24 % 9% 34 % 14 % 14 % 34% Sw eden Italy France Norw ay Netherlands Denmark Source: IDATE and FTTH Council Europe VDSL FTTH/B  FTTH/B are the prevailing architectures for Very High Speed broadband in Western Europe  6 countries represent 81% of the installed base 5 | NGA policies & Public Private Partnerships | November 2009 © Alcatel-Lucent 2009 All Rights Reserved

European FTTH market breakdown : the weight of municipal networks in access FTTH market shares in Europe: 80.0% 60.0% 40.0% 20.0% 0.0% ILEC CLEC Muni/Utility 2007 8.5% 21.4% 70.2% 2012 43.0% 23.0% 34.0% Sources: IDATE & Heavy Reading, 2008  According to forecasts, municipalities and power utilities will still have - in Western Europe - 1/3 of fiber access market share by 2012 Note: FTTH (Fiber-to-the-Home) = fiber to the boundary of the home living space or business office space (FTTH Council definition) ILEC = former incumbent monopoly telco (PTT) CLEC = competitive or alternative telco or broadband provider Muni/Utility = network built by municipal local authority or by a power utility 6 | NGA policies & Public Private Partnerships | November 2009 © Alcatel-Lucent 2009 All Rights Reserved

The key drivers of a successful Broadband policy in France Competition through active infrastructures has been the main driver behind the development of broadband:  Geographic extension of local loop unbundling has encouraged France Telecom to equip all of its MDF (Main Distribution Frames) for ADSL  France has joined European leaders in terms of penetration…  …and is in first place for "triple play" Three major drivers have made this increase in investments possible  Dynamic operators, both incumbent and new entrants  Regulation : LLU first, bitstream as a complement  Local authorities intervention has been crucial in the expansion of broadband coverage 8 | NGA policies & Public Private Partnerships | November 2009 © Alcatel-Lucent 2009 All Rights Reserved

Dynamic of the French broadband market Growth of the broadband DSL coverage as of June 30 2009 access base 1999… 2002 2003 2004 2005 2006 2007 2008/2009 1st fixed-mobile 1st TV/DSL offer Convergent offer 1st broadband/ 1st Very high speed DSL offer 1st telephony FTTH offer /DSL offer 100 Mb/s 512kb/s 24Mb/s 8Mb/s 1Mb/s ADSL ADSL2+ FTTH Evolution of broadband technologies and services 9 | NGA policies & Public Private Partnerships | November 2009 © Alcatel-Lucent 2009 All Rights Reserved

French local authorities have played a crucial role in Broadband coverage  In recent years, local authorities have played a key role in the digital development of their regions in partnership with operators  Arcep first impact assessment: Réseaux d'initiative publique à fin juillet 2008 (projets couvrant plus de 60.000 habitants) Projets régionaux L.1425-1 Hors DOM 1) Etudes préalables (3) Oise 2) Appel public à candidatures (0)  86 projects – 53 of which are running Val-d'Oise 3) Délégataires retenus (2) 4) Offres commercialisées (2) CU Dunkerque CU Dunkerque CA Valenciennes Projets départem entaux L.1425-1 CU Arras CU Arras CU Arras CU Arras CU Arras CU Arras Hors DOM Hauts-de-Seine CA Amiens CA Caen la Mer CA Caen la Mer CA Caen la Mer CA Caen la Mer CA Caen la Mer CA Caen la Mer SI Sipperec (Irisé) 1) Etudes préalables (10)  2 billion € invested CA Le Hav re Yvelines CA Seine Eure CA Seine Eure CA Seine Eure CA Seine Eure CA Seine Eure CA Seine Eure SI Sipperec (CPL) SI Sipperec (CPL) SI Sipperec (CPL) SI Sipperec (CPL) SI Sipperec (CPL) SI Sipperec (CPL) 2) Appel public à candidatures (7) Somme Seine-et-Marne 3) Délégataires retenus (14) Seine-Maritime Ardennes SAN Sénart (Ville Nouv elle) 4) Offres commercialisées (11) Régie du Pay s chartrain Oise Manche Projets infra départem entaux L.1425-1 Calv ados Eure Val-d'Oise Meuse Moselle Hors DOM CR Bretagne Finistère Y v elines Bas-Rhin Meurthe-et-Moselle 1) Etudes préalables (3) Orne Essonne Côtes-d Armor Seine-et-Marne 2) Appel public à candidatures (5) CR Alsace CA Quimper Ille-et-Vilaine Haute-Marne 3) Délégataires retenus (14) Sarthe Haut-Rhin 4) Offres commercialisées (10)  Major consequences : Loiret SM Belfort Montbelliard Héricourt SM Belfort Montbelliard Héricourt Marchés de services départem entaux Maine-et-Loire CA Rennes Métropole CR Bourgogne Hors DOM Nièv re Doubs Cher CA Chalon Val de Bourgogne Jura 4) Offres commercialisées (4) Indre CA Vannes Vendée MARTINIQUE MARTINIQUE MARTINIQUE MARTINIQUE  Less expensive coverage of rural areas CA Tours CU Le Creusot Montceau Charente-Maritime Loire CA Angoulême CR Limousin CR Auv ergne CA Voiron CA Perigueux CA Clermont Ferrand CA Clermont Ferrand CA Clermont Ferrand CA Clermont Ferrand CA Clermont Ferrand CA Clermont Ferrand REUNION REUNION REUNION CU Bordeaux Ardèche REUNION REUNION REUNION  Expansion of LLU Lot CR Aquitaine Lot-et-Garonne Av ey ron CA Bay onne Anglet Biarritz Gard Tarn Hérault Haute-Garonne Py rénées-Atlantiques  Fostering of local operators GUADELOUPE GUADELOUPE GUADELOUPE GUADELOUPE GUADELOUPE GUADELOUPE Ariège CA Pau Py rénées-Orientales CA Aix en Provence CA Aix en Provence CR Corse CU Grand Toulouse CA Sicov al CA Sicov al CA Sicov al CA Sicov al CA Sicov al CA Sicov al CA Castres Mazamet GUY ANE GUY ANE GUY ANE GUY ANE GUY ANE GUY ANE 10 | NGA policies & Public Private Partnerships | November 2009 © Alcatel-Lucent 2009 All Rights Reserved

Impact of local authorities backhaul networks on unbundling in France 37% of French central offices are unbundled through Local Communities backhaul networks 20,9 M households CO unbunling : local 988 4,0 M households community backhaul network CO unbundling : alternative carriers backhaul networks 773 2,4 M households + France Telecom dark fiber rental CO unbundling : alternative carriers backhaul networks 913 14,4 M households Number of unbundled CO’s according to backhaul network ownership 11 | NGA policies & Public Private Partnerships | November 2009 © Alcatel-Lucent 2009 All Rights Reserved

Open Wireline backhaul networks are key to handle both mobile and fixed access traffic growth Typical telecommunications network architecture Role of backhaul networks: Cost effective coverage of medium and low density areas; Stimulate competition and innovation – on DSL first and fibre next; Anticipate bandwidth demand increase for all access technologies (fibre, LTE, Wimax,…); Backhaul networks are future proof investments - can be easily funded through PPPs; Enhanced connectivity for public services (schools, hospitals, universities,…) and business parks 12 | NGA policies & Public Private Partnerships | November 2009 © Alcatel-Lucent 2009 All Rights Reserved

Which competition model for NGA ? How to promote investments? No doubt Very High Speed broadband is the technological evolution in the medium term  To meet growing demand for content  To assist the concomitant rise in speeds All countries are facing the challenge. Some are ahead like Japan and the US. In the EU major players have announced fiber deployments Investments are huge – 10 to 20 times copper broadband - and will need to be spread over several years  Several hundred euros per connectable home  Investments will happen differently according to country specificities and legacy networks topography (FTTN, FTTH) The questions are:  How to promote investments and allow reasonable return?  How to adapt regulation and public intervention to market, risk and policy driven areas?  How to prevent regression of competition and even foreclosure of the market? 14 | NGA policies & Public Private Partnerships | November 2009 © Alcatel-Lucent 2009 All Rights Reserved

NGA deployments : investment model according to geographical segmentation Private investments will prevail in “market driven” whereas public intervention will be needed in low density “policy driven” areas 15 | NGA policies & Public Private Partnerships | November 2009 © Alcatel-Lucent 2009 All Rights Reserved

Europe trends for NGA roll-out : Public Policy levers to foster NGA investments and PPPs Legislative lever in many countries (France, Spain, Italy, Portugal, …)  Sharing of the fiber last drop through mandatory agreements between operators and landlords  “right to fiber”  Mandatory fiber pre-cabling for new buildings Regulatory lever  Regulator’s concern is to make sure competition is preserved on the active part of the network to stimulate differentiation and innovation  Asymmetrical regulation (duct access)  Symmetrical regulation (last drop and in house wiring)  Bitstream as a complement in low density areas Public policy lever  Economy recovery package  Digital Economy plans  Intervention of local authorities (PPPs) 16 | NGA policies & Public Private Partnerships | November 2009 © Alcatel-Lucent 2009 All Rights Reserved

How to encourage investments and competition through active infrastructures while tackling economical and operational concerns? The last drop : an essential infrastructure- but where from? Sharing of in-house wiring at the level of the building and access to ducts alone will not be sufficient to guarantee sustainable competition in low density areas:  it is useless and too costly to roll out serial networks inside and towards each building  the natural monopoly is not limited to the fiber within the building  risk of an irreversible situation Having a point of sharing higher up in the network raises a few issues :  in terms of technology, it has to be compatible with different technologies : PON and point-to-point  the physical location of the point of sharing depends of the topography, of the density and of the architecture of the operator’s network point of sharing higher up in the network copper copper MDF SC ducts ducts availability of ducts offer 17 | NGA policies & Public Private Partnerships | November 2009 © Alcatel-Lucent 2009 All Rights Reserved

How to combine public and private initiatives?  Transition from broadband to Next Generation Access networks is a revolution which represents a dramatic change in the level of investments: 250 to 300 B€ will be required to roll-out NGA in the EU, 23 B€ in Australia.  Risk of broadening the digital gap between regions is high and this is why many nations have decided to put this issue high on their recovery agenda and digital economy plans.  From a policy perspective the key driver of NGA success is a close collaboration between all stakeholders -incumbents and new entrants, national and local government, vendors and users.  From an NGA investment perspective, Public Private Partnerships are gaining worldwide traction both at national and local level if they allow :  Anticipation of the future by rolling-out of backhaul capacities  Cost-effective roll-outs in lowering market entry barriers, preserving diversity and innovation  More competition and differentiation  Acceleration of NGA coverage in grey and white areas 19 | NGA policies & Public Private Partnerships | November 2009 © Alcatel-Lucent 2009 All Rights Reserved

South Yorkshire Digital Region SYDR Thales, Alcatel-Lucent and Kingston Communications Alcatel-Lucent is the design authority Alcatel-Lucent also responsible for all equipment, network management platforms one of the largest public sector-led open OSS and majority of BSS, installation, broadband infrastructure initiatives in the commissioning, and maintenance of the world. network  Covering the urban and rural populations of 54 exchange sites, 1589 Street Cabinets Sheffield, Doncaster, Barnsley and Rotherham VDSL based, but with 1,200 km of fibre  a brand new, high speed open-access (700km new dig) infrastructure Multiple Service Providers to the same end Covers majority of homes and businesses in user the region - some 1.2 million people. “Businesses in South Yorkshire will be able to increase their competitiveness, develop new products and business models and use IT in a variety of different ways as a result of this initiative – something we can be proud of as a catalyst for this project.” Trevor Shaw, Executive Director of Finance for Yorkshire Forward 20 | NGA policies & Public Private Partnerships | November 2009 © Alcatel-Lucent 2009 All Rights Reserved

The Baltic Business Quarter – a model for the future for Gateshead Council Gateshead technology innovation  A unique business model for the UK  Designed from the start to give the highest levels of built-in resilience  Capable of offering flexible and tailored services  Fair and open access to all service providers  Alcatel-Lucent to deploy a blown fibre  A compelling business case for everyone solution to link individual buildings  The BBQ network to operate as an Open Access  Services with bandwidths of up to 10Gb/s available within the business park and up to Network & to provide last mile backhaul 2.5Gb/s off park services “The launch of this new partnership is an exciting and ground breaking step forwards in our continuing drive to bring more top quality businesses and jobs to Gateshead” Councillor Mick Henry, Leader of Gateshead Council 21 | NGA policies & Public Private Partnerships | November 2009 © Alcatel-Lucent 2009 All Rights Reserved

Overview of Recovery, Digital Economy plans & Public Private initiatives worldwide EU recovery plan Achieve 100% broadband coverage in EU by 2010 1 B € earmarked for rural broadband Creation and/or upgrade of access, backhaul and passive infrastructure China’s recovery plan 4 Trillion RMB 09-10 ICT included in pillar industries program Australian National Broadband Network American Recovery and Reinvestment Act Greek FTTH Public-Private Partnership 100 MB/s to 90% of subscribers 7.4 B $ to provide broadband to rural, 2.1 B€ investment 43 B A$ ( 23 B€) unserved and underserved areas Target : 2 million homes passed by 2012 New Zealand “Broadband Investment Initiative” 4.5 B$ for electric grid modernization Digital Britain (“smart grids”) 1.5 B NZ$ investment plan announced in March •2 Mb/s universal broadband access service in 2012 09 2 B $ for health IT programs •200 M£ NGA fund is created to speed-up deployments 29 B $ for transportation programs (highways safety, fraffic monitoring,...) Italian broadband plan 800 M€ to be allocated to achieve broadband coverage in Italy French digital plan 750 M€ will be invested by CDC to roll-out shared optical loops + German BB plan and coming bradband plans in Poland, Russia,... 22 | NGA policies & Public Private Partnerships | November 2009 © Alcatel-Lucent 2009 All Rights Reserved

Gabrielle Gauthey NextGen 09

by Marit Hendriks on Nov 23, 2009

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Gabrielle Gauthey NextGen 09 — Presentation Transcript