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FTTH Conference 2009 Cisco FTTH Conference 2009 Cisco Presentation Transcript

  • Building a Sustainable and Fibre-intensive Future Ft 12 Feb 2009 Paolo Campoli pcampoli@cisco.com pcampoli@cisco com 1 pcampoli © 2009 Cisco Systems, Inc. All rights reserved. Cisco Confidential
  • FTTH in Europe - Overview: Global Figures June 2008 more than 1 3 Million FTTH/B 2008, 1.3 subscribers in the EU 31 and around 8.8 Million Homes Passed A growth of 52% in terms of subscribers and 129% in terms of Homes Passed compared to June 2007 Subscribers Homes/Buildings passed Europe Europe June 2007 June 2008 Growth June 2007 June 2008 Growth Total without VDSL, FTTN/C/LA 878 139 1 332 331 52% Total without VDSL, FTTN/C/LA 3 863 589 8 840 890 129% Total FTTx + VSL + FTTLA 1 065 189 1 877 074 76% Total FTTx + VSL + FTTLA 14 975 639 23 564 155 57% Source: IDATE for FTTH Council Europe p 2 Cisco Confidential © 2009 Cisco Systems, Inc. All rights reserved.
  • Bandwidth growth is not slowing down 10000000 1000000 100000 10000 1000 100 DSL Limit 10 1 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 quot;High-speed connection,quot; actual Straight line extrapolation assuming acceleration from 2004 Straight line extrapolation Source: Heavy Reading report “FTTH Worldwide Market & Technology Forecast, 2006-2011” 3 Cisco Confidential © 2009 Cisco Systems, Inc. All rights reserved.
  • EURO-IX member IXP exponential traffic growth 2005 - 2009 Year 2008 Source: EURO-IX 4 Cisco Confidential © 2009 Cisco Systems, Inc. All rights reserved.
  • Fiber optics – EU principles More regulatory clarity Expected Recommendation in Q1 2009 E t dR d ti i Basic principle: Regulators should provide access to the networks of dominant operators at the lowest possible level A “must” : regulated access to ducts of incumbents Other obligations if access to ducts not technically or economically feasible (e.g. dark fibre) Access to quot;bitstreamquot; shall be maintained provided lower level remedies do not sufficiently address distortions of competition Regulated prices but with a “risk premium” Migration path required 5 5 Cisco Confidential pcampoli © 2008 Cisco Systems, Inc. All rights reserved. 2009 Cisco Confidential
  • Fiber Optics - National approaches Indoor FIBER WHOLE Country Key principles DUCTS cabling UNBUND. SALE • Ofcom is still considering ducts access Based and SLU ? • Ofcom supports industry-led Ethernet bitstream development of Ethernet based active line access product • Current regulatory obligations do not cover Dark Only if VDSL – DT expected to announce bitstream fiber VDSL over VDSL at Cebit MDF to substitute •CCooperation agreements f deploying FTTC ti t for d l i cabinet to ADSL SLU and VDSL • Regulated access to ducts Only up √ √ • Wholesale regulation on NGA only up to NO to 30 30 Mbps Mbps • Symmetrical indoor cabling regulation • Assymetrical Ducts Regulation √ • Right to fibre √ NO NO • Symmetrical indoor cabling regulation • Sharing point still undecided Dark √ • TI equal access undertaking for duct Ethernet fiber access and dark fiber based • Ethernet based bitstream over NGA bitstream 6 Cisco Confidential © 2009 Cisco Systems, Inc. All rights reserved.
  • P2P vs PON: the Capex approach Ethernet technology is very cost- effective due to high volume manufacturing Modern Ethernet switches provide high port density Fiber is cheap Very dense fiber management solutions reduce space requirements Only ports for paying subscribers need to be installed => take rate! Cost difference to PON only significant where existing ducts are Source: Corning & FTTH Council Europe “just big enough” for PON => civil works f p2p i il k for 2 7 pcampoli © 2009 Cisco Systems, Inc. All rights reserved. Cisco Confidential
  • Project cost comparison 8 pcampoli © 2009 Cisco Systems, Inc. All rights reserved. Cisco Confidential
  • Why such a minimal difference Step 3: Step 2: Connect the building Connect the ~35% of capex 35% customer t ~50% of capex Step 1: Roll out in the region p g ~15% of capex Only for step 1 there are any differences resulting from access network architectures Source: Cisco IBSG 9 pcampoli © 2009 Cisco Systems, Inc. All rights reserved. Cisco Confidential
  • High FTTH density drives demand for symmetrical services ( (JAPAN)) Number of High/Ultra-High-Speed Internet Service Users 16,000,000 16 000 000 March 2006 DSL 14,013,248 14,013,248 14,000,000 March 2007 March 2008: 12,000,000 Total broadband subscriber: 28.7 million 10,000,000 10 000 000 FTTH 8,803,898 8,803,898 13.47% 8,000,000 42.27% 6,000,000 CATV 44.21% 3,609,625 4,000,000 3,609,625 Source: Ministry of Internal Affairs and Communications 2,000,000 FWA 11,632 11,632 11 632 0 3 6 9 3 6 9 3 6 9 3 6 9 3 6 9 3 6 9 3 12 12 12 12 12 12 12 01/ 01/ 01/ 02/ 02/ 02/ 03/ 03/ 03/ 04/ 04/ 04/ 05/ 05/ 05/ 06/ 06/ 06/ 07/ 00/ 01/ 02/ 03/ 04/ 05/ 06/ 10 Internet Business Solutions Group 10 Copyright © 2008 Cisco Systems, Inc. All rights reserved.
  • UltraBroadband (UBB) Service Honk Kong: 100Mbit/s services achieve strong 100Mbit/s+ revenue profile and meaningful market share Interview with PCCW (Hong-Kong), September 2008 PCCW Ultra BB infrastructure is a Metro Ethernet FTTx network targeted to high density residential areas of Hong-Kong. UltraBB was launched by PCCW in 2008 as a defense move Use of P2P services, symmetric capabilities, and very fast Internet surfing are the two main reason to get UltraBB While UltraBB services (above 100Mbit/s) are considered expensive in Hong-Kong (2x-3x traditional BB and flat rate price Hong Kong (2x 3x with no consumption quota), they have reached ~ 5% market share in 1 year Internet Business Solutions Group 11 Copyright © 2008 Cisco Systems, Inc. All rights reserved.
  • UltraBroadband (UBB) Service Korea: UltraBB initially a residential service, service moving to Soho and SMB Interview with Korea Telecom, September 2008 UBB service was launched to the consumer segment originally, but are now available to Soho and SMBs Priced as flat fee with no boundaries on traffic consumption As of September 2008 UBB, defined as ≥50Mbit/s 2008, UBB downlink, has ~70% market share. UBB market share decreases to 30% if we consider only 100Mbit/s service Internet Business Solutions Group 12 Copyright © 2008 Cisco Systems, Inc. All rights reserved.
  • UltraBroadband (UBB) Service Korea: Customers value symmetric service, where available Interview with Korea Telecom, September 2008 Symmetric service is valued by customers for: Peer-to-Peer applications User-Generated-Content: upload of videos and broadcasting to the Web Storage services IPTV with High Definition and Multiroom High-Definition UBB marketing communication focused on: Actual speed (in advertising) Stability of BB service (always working) Additional VAS available on-top such as Parental Control Additi l il bl t h P t lC t l Internet Business Solutions Group 13 Copyright © 2008 Cisco Systems, Inc. All rights reserved.
  • UltraBroadband (UBB) Service Korea: UltraBB had a positive impact on churn rate at introduction and on profitability Interview with Korea Telecom, September 2008 It i ith K Tl Stb Churn rate initially reduced by 10% from the introduction of UltraBB (churn rate has reverted to original levels with additional competition) Ultra BB price premium (about 30%) sustained over time since launch Introduction of Ultra BB had a positive impact on profitability thanks to the reduction of maintenance cost (over fibre infrastructure) and of churn rate Suggestions for the launch of UltraBB: Keep the price premium between Ultra BB and traditional BB Do not launch immediately Ultra BB at top technical speed but keep increasing speed over time Internet Business Solutions Group 14 Copyright © 2008 Cisco Systems, Inc. All rights reserved.
  • Web 2.0-Enabled Services Example of Web 2.0 enabled services: Personal Broadcasting in Korea B d ti iK Afreeca web site service Af bi i Share instant and live information Use a camcorder & connected laptop pp Internet connection thru Broadband Wimax access Relay live scenes over the web y « Web quality » video Popular items: live scenes in the streets, protests, on-line game ,p , g competitions Users have access to a mosaic channels list and can see what’s available right now in live streaming “Instant aspect” creates audience traction: users and connected time, increasing advertising revenues g g Internet Business Solutions Group 15 Copyright © 2008 Cisco Systems, Inc. All rights reserved.
  • FTTH financials Financials, P2P, Differentiated retail Financials, GPON, Base case 80 80 60 60 40 40 on on 20 20 € millio € millio 0 0 008 010 012 014 016 018 020 022 008 010 012 014 016 018 020 022 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 -20 20 -20 20 -40 -40 Revenues EBITDA Revenues EBITDA -60 -60 Capex Cum. DCF Capex Cum. DCF Note: Scenarios represent a challenger deploying in a single European city Source: IBSG Economics Practice 16 pcampoli © 2009 Cisco Systems, Inc. All rights reserved. Cisco Confidential
  • NPV differences 17 pcampoli © 2009 Cisco Systems, Inc. All rights reserved. Cisco Confidential
  • One Glance at the Impact of Broadband “For every dollar invested in broadband For broadband, the economy sees a tenfold return on that investment.” Memo on Stimulus Plans, U.S. Congress January 2009 Cisco Confidential Internet Business Solutions Group 18 Copyright © 2009 Cisco Systems, Inc. All rights reserved.
  • The “expanded” business case: Smart Work Center “A SSmart W k C t (SWC) i an office t Work Center is ffi center within a close proximity of a residential community, that allows workers to be y, positioned centrally and pervasively within the context of their work, their peer work groups and relevant work processes with the help of innovative IT solutions and high-end connectivity, and offers them flexible work stations embedded in a socially conducive service setting. By doing so, workers can benefit by avoiding physical traffic, which in turn means f t fewer C 2 emissions and a more Co2 ii d efficient use of time and resources.” 19 pcampoli © 2009 Cisco Systems, Inc. All rights reserved. Cisco Confidential
  • CUD Vision: a Network of Smart Work Centers for Amsterdam Region: physical traffic substituted through virtual presence & e-work by means of a network of SWCs Purmerend Almere Haarlem Amsterdam Utrecht/A2 20 pcampoli © 2009 Cisco Systems, Inc. All rights reserved. Cisco Confidential
  • Smart Work Center Concept 21 pcampoli © 2009 Cisco Systems, Inc. All rights reserved. Cisco Confidential
  • 22 pcampoli © 2009 Cisco Systems, Inc. All rights reserved. Cisco Confidential
  • SWC ICTArchitecture Broadband Provisioning for Telepresence and high-end Internet Connectivity Almere Other SWCs, TP f S ilitiC and W facilities d connected organizations Fiber, Fiber 100 MB Connection, Provisioned by UNET 23 pcampoli © 2009 Cisco Systems, Inc. All rights reserved. Cisco Confidential
  • A Viable 21st Century Community Greatest Access for All to Education, Healthcare, Work, Work and Information Connected and Connected and Viable Sustainable Sustainable Environment for Smart Energy Mobility Buildings, Homes, New Business Networks Ecosystem and Offices and Innovation Internet of People – Internet of Things Broadband Platform IP-enabled Homes and Offices, Roads, Utilities, Workplace Design Cisco Confidential Internet Business Solutions Group 24 Copyright © 2009 Cisco Systems, Inc. All rights reserved.
  • Broadband: Projected Impact GDP increase : 10x value of total of broadband investments 1% increase in broadband in a state = employment increase by 0.2 to 0.3% per year New jobs: 1.000.000 on a 30 billion investment Smart grid: electricity transport loss: -30%, 250.000 jobs 31% productivity increase in private sector Cisco Confidential Internet Business Solutions Group 25 Copyright © 2009 Cisco Systems, Inc. All rights reserved.
  • Speed & Symmetry / Functionality Research Applications, 1-10 Gb 1 10 Gbps Live Event Digital (NLR, I2) Cinema Streaming, Remote Supercomputing 100 – 1Gbps p HD Telemedicine, Telemedicine (Residential Offering Immersion Gaming, Full in Hong Kong) IPTV Channel Support 10 -100 Mbps Telemedicine, Broadcast Symmetric Video, High quality video (Residential Offering communications, Smart in Lafayette, LA) Bldg Control 5 -10 Mbps, Telecommuting, Video Symmetric S ti on Demand, HD Video Downloading, Gaming 1 to 5 Mbps Web Browsing, Remote Surveillance,, (Standard DSL Modest File Sharing Offering in US) <1 Mbps, VoIP, SMS, Asymmetric Basic Email, ) Streaming Music g ( (FCC Standard) Functionality Source: California Broadband Task Force Final Report Cisco Confidential Internet Business Solutions Group 26 Copyright © 2009 Cisco Systems, Inc. All rights reserved.
  • 27 Cisco Confidential © 2009 Cisco Systems, Inc. All rights reserved.