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Dialog_2011_Construction and operation of NGA networks from the perspective of non-telecommunications companies


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  • 1. Construction and operation of NGA networks fromthe perspective of non-telecommunicationscompaniesDr. Igor BrusicDiALOG 2011 TelekommunikationFrankfurt, 9 June 2011
  • 2. Contents 1 Introduction 2 Old and new business models 3 Non-telecom companies 4 Financing 5 Summary and outlook 2
  • 3. Next Generation AccessDefinition / Starting point   NGA = fibre access network (FTTH)   Because a powerful infrastructure is the basis for theWhy? development of the information society ...   ... and related to the development of the needs all other technologies are only an interim solution ...   ... so that every 2-3 years one has to deal with the same subject once again, because there will always be „white spots“.Consequence   The expansion of fibre networks is a pure strategic decision! 3
  • 4. FTTH/FTTB EU Ranking 2010 Economies* with the highest market penetration of Fibre-to-the-Home/Building + LAN * At least Lithuania 200.000 Sweden households Norway Slowenia Slovakia Denmark Estonia Bulgaria (blue) Fibre-to-the-Home customers Finland (grey) Fibre-to-the-Building customersNetherlands Latvia Russia Romania Italy France ** Economies with a Portugal penetration of > 1% Czech Republic 0% 5% 10% 15% 20% Percentage of households** Source: FTTH Council Europe, June 2010 4
  • 5. Broadband availability in Germany 2011 > 95 - 100 % > 50 - 95 % > 95 - 100 % > 10 - 50 % > 50 - 95 % 0 - 10 % > 10 - 50 % 0 - 10 % nicht besiedelt nicht besiedelt 0 10 20 30 Kilometer 0 10 20 30 Kilometer Landline ≥1 Mbit/s Landline ≥50 Mbit/s The map for „landline = fibre connection would hardly contain green parts Source: BMWI, Breitbandatlas auf, 2011 5
  • 6. Challenges of the fibre network"   Existing networks are specialised for certain services "   Currently only a few services require symmetrical connections "   Currently users are satisfied with the bandwidth offered"   Fibre networks compete with existing networks for services which do not yet exist "   … but are measured by existing services (requirements)"   To build a business model with services that do not yet exist is for the private sector (almost) impossible"   „Regulatory uncertainty “ because fibre networks in the access area are a natural monopoly"   … so that the focus is less on new business models in the old environment but more on new business models in the new environment 6
  • 7. „Market failure for FTTH?   No mass market for FTTH (yet)Demand in Germany   Innovators ( technology acceptance model)   Companies such as planning offices, laboratories, etc.The (non)-supply   Downward spiral: If rural areas are neglected ...   ... businesses/ residents move to better supplied (urban) areas…   ... so that the rural areas become even less attractive for investment!   … and regions are decoupled in terms of competitiveness   Whoever wants to demonstrate that fibre is not necessaryDiscussion will find arguments.   Whoever wants to demonstrate that fibre is necessary will find arguments as well! 7
  • 8. Contents 1 Introduction 2 Old and new business models 3 Non-telecom companies 4 Financing 5 Summary and outlook 8
  • 9. Telecommunications networks   Service development Services   Developers do not have to invest in passive or active infrastructure   Very short cycles (< 1 year)   10-15% of total costs   Active network infrastructure Operation   Router, switches and other active components   OSS / BSS   Lifespan of equipment between 3 and 5 years   10-15% of total costs   Passive network infrastructure Infrastructure   Cable channels, pipes, cables, cabinets and buildings   Diggings and rights of way   Lifespan more than 20 years   70-80% of total costs 9
  • 10. Business modelsDiversity of Services Diversity of Use Indirect profitability € € € € € € € Passive Infrastructure Vertically integrated Open business model Access 10
  • 11. Vertically integrated business modelDiversity of Services € Passive Infrastructure Vertically integrated business model   Strong focus today   Cooperation with Google, Amazon, Ebay etc. ?   IMS (IP Multimedia Subsystem)   QoS (Quality of Service) / Net neutrality 11
  • 12. Open Access Diversity of Use € € € Passive Infrastructure Open Access  Open Access and Revenue Sharing: ISP, Smart Meetering, e-Health, TV, Security- Services, etc.  Infrastructure owners without retail offers (= they do not compete with service providers!)  The fewer obstacles on the part of infrastructure owners, the more rapid the development  But – chicken-egg problem! 12
  • 13. Profitability Indirect profitability € € € Passive Infrastructure  Economic location factor  Competitive advantages  Creation of new jobs  Stops the migration of the population  Attractive location for private customers (new development areas)  Attracts investors 13
  • 14. Contents 1 Introduction 2 Old and new business models 3 Non-telecom companies 4 Financing 5 Summary and outlook 14
  • 15. Energy suppliers   Experience in construction and operation of electricity-, gas-,Affinity for physical and water-networksinfrastructure   Often supply of telecommunication services for internal purposes   Increasing role of the convergence of utility networks and services with telecommunications applications (Smart Grids)Affinity for the business   Long-term investmentsmodel   Possible focus on „network area   Direct access to all potential customers   Possibility for combining the supply of various infrastructures/services   Telecom/Broadband as „supply conceptBut – also new   Dynamic retail marketchallenges!   Increasingly service-oriented end-users   Technology competition (cable, mobile, telecom)   Cooperation strategy as an option 15
  • 16. Local Governments 1. Value proposition 2. Value chain structure 3. Revenue model  What are the benefits of   What benefits are offered in   How is money earned? FTTH for the community ? which markets? How and in which configuration will the   Direct revenue through rental  The supply of broadband performance be created of lines (Dark Fibre) infrastructure as an essential (product-/market-strategies)?   Connection fees of factor for the economic and subscribers social community   Passive infrastructure is development   Revenue-sharing models offered to all network with service providers  Prevents the migration of operators with the same companies and favours the conditions   Indirect revenues (stable return of young people after value of properties, reduction   Non-discriminatory access to of migration, business their training or study the subscriber for all service settlements)  Prevents the decay of prices providers of real estate and   CO2-emission trading (low   Every subscriber can use power consumption, construction areas services of any provider in teleworking, micro-trenching)  Is an advantage over any combination communities without fibre 16
  • 17. Contents 1 Introduction 2 Old and new business models 3 Non-telecom companies 4 Financing 5 Summary and outlook 17
  • 18. FTTH Financing   Examples: Australia, Singapore, QatarPublic Funding   EU: Funding must be notified   Conditions   Example: CityNet AmsterdamPublic-Private Partnership   Sharing of risks   Improvement of planning, marketing and business model for fibre-optic networks   Example: CIFInfrastructure Fund   Infrastructure and pension funds that view FTTH as long- term investment with secure return options   Example: Burlington (USA), Blons (Österreich)Self-Financing   Bond of the local government   Association fees 18
  • 19. Contents 1 Introduction 2 Old and new business models 3 Non-telecom companies 4 Financing 5 Summary and outlook 19
  • 20. Summary and outlook   Expansion is left to the market economyFTTH in Germany   Currently broadband requirements can be met with conventional networks   Broadband connection as the primary requirement for theGeneral selection of location   Increasing broadband demand/ symmetric bandwidth requirement   Simultaneous use – school, education, entertainment, telework, e-government, shopping, communications, information   Different business models depending on the documentedOutlook value-added step and financing   No ready solutions – individual projects   Large consulting potential   SBR with expertise in business, law and technology 20
  • 21. Epilog„Arthur C. Clarke knows exactly, which phases new ideas pass through.First, it is: "It cant be done.Later on: "It probably can be done, but its not worth doing.And finally the initial doubters mean "I knew it was a good idea all along!" Source:,1518,381747,00.html 21
  • 22. ContactSBR Juconomy Consulting AGNordstraße 116 Parkring 10/1/1040477 Düsseldorf 1010 WienGermany AustriaTel: + 49 211 68 78 88 0 Tel: + 43 1 513 514 0 15 Fax: + 43 1 513 514 0 95Fax: + 49 211 68 78 88 33 URL: www.sbr-net.comURL: E-mail: 22
  • 23. INDUSTRY FOCUSBoth firms, SBR Juconomy Consulting AG and SBR Schuster Berger Bahr AhrensAttorneys-at-Law, specialise in questions of commercial and regulatory lawThey are clearly focused on the ICT and network industriesIn these segments, we address the following issues in particular: -  Mobile radio | Fixed network | Internet -  Regulation -  Market analyses -  Comparative market studies -  Cost accounting -  Network access | Interconnection -  Project development & management -  Frequency management -  Fibre optic upgrades | FTTx -  Strategy -  Business Planning
  • 24. EXPERTISE SBR Juconomy Consulting AG Business Technology Law & Regulation  Market analyses   Carrier Management   Regulation  Feasibility studies   Network access  Telecommunications  Cost accounting  Interconnection  Broadcasting  Cost models   Collocation  Post, energy, railways  Studies | Expert opinions   Business plans based on   Wholesale | retail regulation  Benchmarks technical operating perspective   IT | telemedia law  Business planning   Coordination and selection of   Internet | multimedia | data  Price strategies | negotiations network equipment providers protection law   Network planning   Competition law  Quantitative | qualitative analyses   Frequency planning   Commercial law  Outsourcing   Numbering plans   Company law  Regulatory policy | Lobbying   Project management   Contract law  Corporate strategy   Fibre optic networks   Administrative law  Business Cases   Next-generation networks   Outsourcing   Intelligent networks   Contract management   IMS   (International) arbitration proceedings   Tender/Procurement processes
  • 25. FIELDS OF ACTIVITYSBR Juconomy Consulting AG provides comprehensive advice to: -  Companies -  Regulatory authorities -  Institutions -  Ministries -  Regional and local authoritiesAmong the clients of SBR Juconomy Consulting AG are: -  PICOM | Ministre des Télécommunications, des Postes et de la Communication (Madagascar) -  TRA | Telecommunications Regulatory Authority (Bahrain) -  TRA | Telecommunications Regulatory Authority (Oman) -  ATRA | Afghanistan Telecom Regulatory Authority (Afghanistan) -  CITC | Communications and Information Technology Commission (Saudi Arabia) -  Minpostel (Ministry for Post and Telecommunications, Cameroon) -  Orange -  1&1 Internet AG -  Telecom Italia -  RomTelecom -  Ghana Telecom -  QSC -  Cell One -  INT | Instance Nationale des Télécommunications (Tunisia) -  TRA | Telecommunications Regulatory Authority (United Arab Emirates) -  Kabel Baden-Württemberg -  Associations in the German and Austrian market (BREKO, VATM, VAT ISPA) -  RTR GmbH (Austria) -  International Telecommunications Union (ITU) -  Swisscom -  Utilities in Germany and Austria (TeleMark GmbH, TeleData Friedrichshafen, Wienstrom) -  ORS (Österreichische Rundfunkservice GmbH) -  1&1 Internet AG -  HAKOM (Regulatory Authority of Croatia) -  Tele2 Telecommunications GmbH
  • 26. FIELDS OF ACTIVITY – CompaniesSBR Juconomy Consulting AG advises telecommunications companies operating in the fixednetwork, mobile and Internet sectors. Our consulting activities encompass:Regulation: We represent companies in matters concerning regulatory authorities, including inregulatory proceedings, especially concerning charges and interconnection.We provide support by way of expert opinions, position papers and comments in the context ofinterconnection, market definition and market analysis proceduresBenchmarks: We produce national and international comparative analyses concerning a variety ofissues, including interconnection charges, collocation, unbundling, value-added services etc.Market analyses: On behalf of our clients, we examine both international telecommunicationsmarkets in general, and product and service markets in particular, while providing support with marketanalyses concerning significant market power (SMP)Cost accounting and cost modelling: We develop cost models, conduct cost assessments andperform monetary business evaluations of strategic optionsNetwork access and interconnection: We assist companies with interconnection negotiations,collocation and the joint use of technical equipmentNetwork upgrades: We assist companies with the technical and economic planning of networkupgrades, in particular for fibre optic and next-generation network / access (FTTx)Strategy and Business planning: SBR develops business plans and draws up business strategieswith respect to the deployment and rollout of networks and the provision of services, specifically in thearea of next generation access.
  • 27. FIELDS OF ACTIVITY – Public authorities SBR Juconomy Consulting AG advises regulatory authorities, institutions and ministries on all issues concerning regulatory processes, tenders, and procedural arrangements and implementation, and on aspects of telecommunications law and regulatory policy Regulation and regulatory policy: We advise on the development and formulation of regulatory directives and ordinances (e.g. on roaming, access, rights of way, joint use) and of regulatory proceedings, including their implementation and execution Organisation: We offer advice on public authorities structural and procedural organisation Training: We offer extensive training on all aspects of regulation Standard offers: We give advice on the conception and creation of standard offers (interconnection, leased lines, collocation and joint use, submarine cable landing stations, wiring conduits, data products etc.) Network access and interconnection: In this context, we provide support with implementing the requirements arising from standard offers and with the development and design of processes for offering access products (final mile, collocation, access to wiring conduits and cable ducts) in the upstream segment Cost accounting and cost modelling: We develop cost models, conduct cost assessments and implement cost accounting regimes Frequency policy & management: We offer advice concerning frequency policy and management arrangements and on the allocation of spectrums
  • 28. FIELDS OF ACTIVITY – Regional and local authorities SBR Juconomy Consulting AG advises regional, district and local authorities on the following issues, among others: Broadband expansion: We support communities who are without or have only inadequate broadband access at present Support options: In connection with the expansion of broadband, we indicate the opportunities available for financing, support and cooperation Network planning and upgrades: We offer technology-neutral solutions for building future- proof and sustainable network infrastructure Cost accounting and cost modelling: We develop cost models, conduct cost assessments and perform monetary business evaluations of strategic options Lobbying: We use our contacts in business, companies, institutions and politics in our clients interests