Open Access Networks 20121128

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created for Vancouver Lawn Tennis & Badminton Club - Regeneration group - Nov 28, 2012

created for Vancouver Lawn Tennis & Badminton Club - Regeneration group - Nov 28, 2012

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  • Canada's telecommunications industry has been historically dominated by telephone and cable companies with regional monopolies and protection from external competition by virtue of restrictions on the foreign ownership of telecommunications companies imposed by the Canadian government. This anti-competitive and restrictive environment has changed, and is continuing to change, significantly. Companies which held regional monopolies have expanded into non-traditional markets in Canada to compete with the incumbent CSPs in these new areas of the country. The regulatory environment has changed to permit new entrants, facilitators, aggregators and resellers to enter the telecommunications market. Further, on June 29, 2012, the federal government amended the Telecommunications Act to remove the application of the Foreign Ownership Restrictions to Smaller Telecommunications Companies. The removal of the foreign ownership restrictions is expected to allow Smaller Telecommunications Companies to access foreign capital and will increase competition by allowing new US and international entrants.
  • Open Access is a fibre optic network topology (and our business model) that separates physical layer network (ducts, manholes, cables) from managed circuits.  The same open access network is used by multiple service providers, carriers, or private network operators who pay for use of specific fibres within the network as well as operations and maintenance services.  The incumbent telcos and cablecos’ network could be considered ‘vertically integrated’ as a comparison.  The actual networks of the telcos and cablecos used to be very different (twisted pair vs. coaxial) but are becoming more similar (GPON, HFC) as fibre as a network medium, and IP as a network protocol, become more common.  Theoretically, one high-count fibre network could provide enough capacity to meet the needs of any number of service providers,  including the incumbents .  If a service provider can guarantee that they will be the only one to provide consumers with communications products, then the cost to build their own cable network (and keep everyone else out) can be justified.  If they can’t guarnatee a captive audience, then they need to lower the cost to build the network that supplies their customers.  Higher revenue (my herd) and higher cost or lower revenue (competition) and lower costs.
  • With respect to fixed wired broadband, according to the Organization for Economic Co-operation and Development (OECD), Canada ranks 13th in the number of subscribers per 100 inhabitants by technology for industrialized countries. An analysis by technology indicated, however, that this ranking is based upon DSL and conventional cable (COAX/copper) technologies. Optical fibre is a superior next generation technology and is replacing these older broadband deployment technologies. As broadband demands accelerate beyond the physical limits of copper-based technologies, Canada must deploy significantly more fibre to maintain a competitive position with other industrial nations in fixed wired broadband.
  • The largest fibre networks in Metro Vancouver are owned by large incumbent telephone and cable companies and former regional monopolies. Generally, these carriers are not interested in leasing dark fibre to their competitors as it is not in their economic interest to do so ( Source: Telecom Decision CRTC 2008-85 ). When these carriers do allow competitors to access their fibre networks, it is through provision of managed circuit services for transport of their communication services rather than through provision of access to dark fibre. Managed circuit services are significantly more expensive compared to the cost of leasing dark fibre. The Company does not expect these incumbent carriers and out-of-market incumbent carriers to lease dark fibre to competitors in the foreseeable future, and then only if and when their managed circuit customer base is significantly impacted by open access networks. To enter into or compete in the Metro Vancouver market, most out-of-market incumbent carriers, new entrants and private network operators must therefore either build their own networks or use the incumbent carriers' networks managed circuit services for transport of their communication services.
  • Fibre-optic technology involves the use of light to transmit voice, video and data signals at high data rates over long distances. Today’s sophisticated fibre-optic systems are basically flexible glass (or plastic) pipes used in fibre-optic communications , which permit transmission over longer distances and at higher bandwidths (data rates) than other forms of communication. The main benefits of deploying fibre in place of traditional coaxial cable or copper wire include greater capacity, increased functionality, smaller size and decreased requirements for periodic amplification signals. These factors contribute to lower installation and maintenance costs and increase the variety and quality of service offerings. Consequently, newly constructed fibre networks provide a superior platform for delivering high speed, high capacity communication services as compared to systems based on copper wire or coaxial networks.
  • State of the Art Technology – The Network will offer virtually unlimited bandwidth and our infrastructure supports the latest high capacity DWDM systems, providing a superior platform for delivering high speed, high capacity voice, video and data. Access to our high bandwidth network enables businesses to optimise application performance, increase productivity (sharing information seamlessly and instantly and accessing applications via the cloud) and enhance security. The Company may standardize on either 100 Mbps or 1 Gbps (1,000 Mbps) Ethernet services. However, the physical Network (fibre optic strands within cable sheaths) has virtually unlimited bandwidth capabilities. (Source: www.technologyuk.net) Comparative bandwidth of Internet access technologies
  • Global IP traffic has increased eightfold over the past five years, and will increase threefold over the next five years. Overall, IP traffic will grow at a compound annual growth rate (CAGR) of 29 percent from 2011 to 2016. ( Source: Cisco Visual Networking Index, May 30, 2012 ). Annual global IP traffic will surpass the zettabyte threshold (1.3 zettabytes) by the end of 2016. In 2016, global IP traffic will reach 1.3 zettabytes per year or 109.5 exabytes per month. The projected increase of global IP traffic between 2015 and 2016 alone is more than 330 exabytes, which is almost equal to the total amount of global IP traffic generated in 2011 (369 exabytes). ( Source: Cisco Visual Networking Index, May 30, 2012 ).
  • Utilizing a2b Fiber’s dark fibre puts you in the driver’s seat for the growth and development of your network. It provides you with freedom for The availability of unlimited, unmetered bandwidth at a fixed cost. The necessary infrastructure for added capacity, flexibility, security, and reliability. The ability to utilize technological advances without having to rely on your incumbent carrier to add services.
  • The recent trend towards storing data in the cloud is one that all businesses should explore. Traditionally, the need to store vast amounts of data meant additional capital expenditures by adding servers and reserving enough office space to meet IT room or data centre requirements. The other option is to lease a co-location environment, a hands-off solution but also more expensive over the long run. However, the ability to store data in the cloud can reduce some of the IT capital expenditures by diminishing the need to design and manufacture in-house data storage solutions. The challenge with cloud services is that businesses that transfer a great amount of data need networks capable of supporting this distribution. These networks have to be fast, reliable, scalable and secure. As an industry leader in cloud services, Amazon Web Services (AWS) recently announced a  partnership  with AboveNet, a provider of bandwidth connectivity solutions. As one of the first AWS Direct Connect Solution Providers, AboveNet will be able to provide customers with high bandwidth access as they move applications to the cloud. AWS Direct Connect will enable customers to establish connectivity between AWS and their data centres, offices, or co-location environments. From an industry perspective this is a big step forward. One of the biggest drawbacks of storing information in the cloud was moving large amounts of data. This quote from Treb Ryan, CEO of OpSource (a cloud service provider) sums it up:  “The toughest part of cloud computing is getting large amounts of data in and out of the cloud, [it] is almost impossible no matter how fast your network connection is…the fastest way to transfer 3TB to 5TB of data is still FedEx”. .
  • Facebook announced on Wednesday its plans to build a 30,000 sq m ‘green’ data centre in the small city of Lulea, Sweden. This is a significant move as the facility will be Facebook’s first outside of the US and will handle all data processing for Europe, the Middle East and Africa. The city of Lulea won out after a lengthy selection process that saw Facebook engineers visit nearly 40 potential sites in Sweden alone. There has been a strong trend towards building data centres in colder environments as it can cut costs substantially when natural air can be brought in as opposed to using air conditioners. Combined with an abundant supply of cheap hydro-electric power and a dense fiber network, Sweden is an ideal location for Facebook. In many respects, Canada is well primed as a location for large data centres. Politically stable, fairly cheap power and, as any Canadian will attest, we certainly have the cold weather. However, one key factor that Canada is lacking compared to Sweden is the dense fiber network to transport data. In Vancouver, for example, moving data south of the border on a dedicated fiber connection is difficult. Unlike Australia’s National Broadband Network, Canada does not have a national broadband strategy which means it will be up to the private sector to sustain Canada’s information and communications technology (ICT) development.
  • A prevalent misconception about fixed broadband (fibre) is that demand for fixed broadband will decline as wireless broadband becomes more popular. Wireless market sector revenues were the largest component (45%) of total telecommunications revenues in Canada in 2011. ( Source: CRTC Communications Monitoring Reports – July 2011 and September 2012 ). Certain Canadian wireless carriers are currently seeing data traffic increase by 5% per week , meaning that wireless data traffic may increase by more than 1,000% in 2012. (Source: Canadian Wireless Carriers are Seeing Data Traffic Increase by 5% per Week by Knowlton Thomas, June 6, 2012, http://www.techvibes.com/blog/canadian-wireless-carriers-are-seeing-data-traffic-increase-by-5-per-week-2012-06-06).
  • As mentioned above, prevalent misconception about fibre is that demand for fixed broadband will decline as wireless broadband becomes more popular. All voice, video and data sectors of the broadband spectrum are demanding more bandwidth, particularly among wireless providers. This is because the amount of backhaul (bandwidth cell to network as opposed to cell to consumer) is related to the amount of use (MOU or minutes of use) as well as the type of use (e.g. iPhone applications). MOU continues to trend upwards.
  • These devices enable a growing number of applications that require a large amount of wireless bandwidth. Ultimately, every cell site will require fibre and even this will not provide enough bandwidth at the movable (consumer) edge of the network. Distributed antenna systems, FemtoCells, WiFi interoperability and the like will continue to decrease the distance between the device and the network. All of these fixed network locations will require fibre. We believe that small cell base stations are essential to the deployment of 4G (LTE networks).
  • The signal transport capacity of a single strand of optical fibre is significant. Most CSPs require a limited amount of dark fibre (usually less than 12 strands). Building fibre optic networks with even a limited amount of dark fibre is very expensive; we estimate that 90% of the cost of building a network may be attributed to planning, designing, engineering, permitting, licensing and physical construction costs. Management of the Company believes that the cost of building a 432F network is only marginally greater than the cost of building a 12F network and would give rise to similar permitting, municipal access and Underlying Rights requirements. Similarly, management believes that the cost of impositions, operations and maintenance of a 432F network is the same as, or marginally higher than, the cost of impositions, operations and maintenance of a 12F network.

Transcript

  • 1. a2b Fiber is a builder of next generation open access fibre optic networks providingdark fibre to communications service providers and private network operators in BC Presenter: SCOTT JAMIESON Executive Vice President, Chief Technology Officer and Director November 28th, 2012 a2b Fiber Inc. (http://www.a2bfiber.com/)
  • 2. Today’s talking points• Business vs technology lingo • What is dark fiber?• No acronyms! • Big cables and little cables• Telecom landscape in Canada • Bandwidth – so what?• Return on Investment (ROI) • Economics of construction• The world is flat • How to build a network• Barriers to entry • Problem = Opportunity
  • 3. Telecom landscape• Historically dominated by regional monopolies• Companies which held regional monopolies have expanded into non-traditional markets• On June 29th, 2012, the feds amended the Telecommunications Act to remove the application of the Foreign Ownership Restrictions to Smaller Telecommunications Companies.
  • 4. ROI means…• Open Access is a fibre optic network topology that separates physical network (ducts, manholes, cables) from the circuits.• The same network is used by multiple service providers, carriers, or private network operators.
  • 5. ROI means…• The incumbent telcos and cablecos’ network could be considered ‘vertically integrated’ as a comparison.• The actual networks of the telcos and cablecos used to be very different (twisted pair vs. coaxial) but are becoming more similar.
  • 6. ROI means…• Theoretically, one high-count fibre network could provide enough capacity to meet the needs of any number of service providers, including the incumbents.• If a service provider can guarantee that they will be the only one to provide consumers with communications products, then the cost to build their own cable network (and keep everyone else out) can be justified.
  • 7. ROI means…• If they can’t guarantee a captive audience, then they need to lower the cost to build the network that supplies their customers.• Higher revenue (my herd) and higher cost or lower revenue (competition) and lower costs.
  • 8. The world is flat: read ‘oh oh’…
  • 9. Barriers to entry• Carriers are not interested in leasing dark fibre to their competitors as it is not in their economic interest to do so.• To enter the Metro Vancouver market, most out-of-market incumbent carriers, new entrants and private network operators must either build their own networks or use the incumbent carriers managed circuits.
  • 10. What is dark fiber anyway?• You can think of dark fibre as an unplugged electrical extension cord. The cord is ready to transport electricity - it just needs to be attached to a power source.• When dark fibre connects locations and is “lit” by adding communications electronics, it becomes the medium by which your communications and data traffic is transmitted.
  • 11. Big cables and little cables• Copper technology subject to attenuation (loss) and interference (noise)• Bulky and thieves steal it• Fiber technology provides much less loss and almost no noise• Much smaller diameter cables possible
  • 12. Bandwidth: read ‘capacity’• Unlimited bandwidth provides a superior platform for delivering high speed, high capacity voice, video and data.• High bandwidth networks enable businesses to optimise application performance, increase productivity and enhance security.
  • 13. That’s cool – so what?• Global IP traffic has increased eightfold over the past five years, and will increase threefold over the next five years. Overall, IP traffic will grow at a compound annual growth rate (CAGR) of 29 percent from 2011 to 2016• The projected increase of global IP traffic between 2015 and 2016 alone is almost equal to the total amount of global IP traffic generated in 2011
  • 14. Video ServicesWhat can you do with it? SAN Extension Disaster Recovery Collaboration• Dark fibre enables the growth and development Applications of differentiated services networks Synchronous Replication• The availability of unlimited, unmetered Data Center bandwidth at a fixed cost Interconnect Mainframe Extension Internet Peering Corporate Intranet Cloud Services
  • 15. Video ServicesWhat can you do with it? SAN Extension Disaster Recovery Collaboration• The necessary infrastructure for added capacity, Applications flexibility, security, and reliability Synchronous Replication• The ability to utilize technological advances Data Center without waiting for the carrier to add services Interconnect Mainframe Extension Internet Peering Corporate Intranet Cloud Services
  • 16. Bandwidth = Cloud• The ability to store data in the cloud diminishes the need to design and manufacture in-house data storage solutions• The challenge with cloud services is that large data transfers need fast, reliable, scalable and secure networks• “The toughest part of cloud computing is getting large amounts of data in and out of the cloud, [it] is almost impossible no matter how fast your network connection is…the fastest way to transfer 3TB to 5TB of data is still FedEx”.
  • 17. Cloud = Data Centre• 30,000 sq m ‘green’ data centre in the small city of Lulea, Sweden• Trend is towards building data centres in colder environments• Canada is politically stable, has fairly cheap power and cold weather• Canada is lacking the dense fiber network required to transport large amounts of data• Canada does not have a national broadband strategy
  • 18. Prevalent misconceptions
  • 19. Prevalent misconceptions• Fixed broadband will decline as wireless broadband becomes more popular. TRUE or FALSE• False, because the amount of backhaul needed is related to the amount, and type, of use• Certain Canadian wireless carriers are currently seeing data traffic increase by 5% per week
  • 20. Prevalent misconceptions• Ultimately, every cell site will require fibre and even this will not provide enough bandwidth at the movable (consumer) edge of the network• Distributed antenna systems, FemtoCells, WiFi offloading and the like will continue to decrease the distance between the device and the network• All of these fixed network locations will require fibre
  • 21. Economics of Building FibreNetworks• Most CSPs require a limited amount of dark fibre• 90% of the cost of building a network may be attributed to planning, designing, engineering, permitting, licensing and physical construction costs• Cost of building a 432F network is only marginally greater than the cost of building a 12F network
  • 22. How to build a fiber network
  • 23. How to build a fiber networkPermitting • CRTC Common Carrier • Structure Agreements • ROW Agreements • Access Agreements
  • 24. How to build a fiber networkConstruction • Civil and aerial placing
  • 25. How to build a fiber networkConstruction • Civil and aerial placing • Change orders
  • 26. How to build a fiber networkConstruction • Civil and aerial placing • Change orders • As builts
  • 27. How to build a fiber networkConstruction • Civil and aerial placing • Change orders • As builts • Inside plant
  • 28. How to build a fiber networkManagement • Structure attachments • Cable splices & FOSCs
  • 29. How to build a fiber network “The underlying combinatorial explosion makes optimal “The underlying combinatorial explosion makes optimal pricing a complex problem and specialized scientific pricing a complex problem and specialized scientific approaches are necessary to achieve profit maximization approaches are necessary to achieve profit maximization and operational efficacy.” – Ph.D. (Math) and operational efficacy.” – Ph.D. (Math)
  • 30. The Problem: read ‘opportunity’