FTTH Conference 2009 Ovum Fibre Socio Economic Benefits

Fibre: the socio-economic benefits socio economic Charlie Davies, Senior Analyst, Ovum Consumer , y, Practice charlie.davies@ovum.com charlie davies@ovum com www.ovum.com © Copyright Ovum 2007

Agenda A d 1. Study: i 1 St d aim and scope d 2. Key findings 2 K fi di 3. Conclusions 3 Concl sions 2 © Copyright Ovum 2007

What benefits does fibre bring? Study scope and components d •history of fibre •significant fibre penetration 1) Choose an appropriate market •smaller towns with fibre SWEDEN: outside Stockholm •exclude entertainment e.g. HDTV ld t ti t 2) Focus on social and economic •look at: impact on business/local economy impact •impact on services and community •end-user survey •face to face interviews 3) Combination of research tools •analysis of previous study on Eindhoven (N th l d ) Ei dh (Netherlands) 3 © Copyright Ovum 2007

Key Findings www.ovum.com © Copyright Ovum 2007

How does the benefit of fibre differ across the country? Focus outside of urban areas •Lindefallet: 227 inhabitants •No school/hospital •Self installation of fibre •Hudisksvall town: 15k pop. 16k HH, 37k pop over 27 sq miles •Outlying villages yg g •Declining population 10 years Village ago •Links to Uppsala university Kilafors •Below average education Lindefallet •Jonkoping area Small town 60k HH and 125k pop. •Grown by around 2000/year Hudiksvall •10th largest town in Sweden •Low unemployment Medium-size town Jonkoping Dense city Stockholm 5 © Copyright Ovum 2007

Telecom costs and education services Tl dd i i own-build fibre networks between public buildings/municipalities Significant Si ifi t 1 cheaper costs due to technology reduction in telecoms costs adoption of open access model leading to more competitive prices “Market deregulation provided Norbotten: Telecoms cost savings: Jonkoping: Saved 10-15 % on annual an opportunity for 50% reduction and x50 times telecoms costs. Aound Euro 400k/year. municipalities to bring their faster connection for health Price per meg is now a 20th of what it is. telecoms costs down by services 500KR down to 25KR per meg. building their own networks where there was an undersupply of NGA” Enables video-based e ea ab es deo based e-learning for home stude ts g o o e students Improvements in 2 educational Key to development of “digital schools” strategy facilities and services pooling of educational resources/budget “The educational level in Hudiksvall: developed digital school Norbotten region: Inter-school teaching Hudiksvall is below average: strategy, videolinking schools/adult in rural schools: pooling teaching we see fibre investment and ed. Colleges. All classrooms have 100 resources via virtual learning between assoc ated projects associated p ojects as a way ay Mbps integrated into teaching small schools of improving this” 6 © Copyright Ovum 2007

Healthcare and l H lh d long-term care Fibre enabling much larger/faster connections between hospitals Improved healthcare: new 3 More efficient sharing of larger range of vital information services; increased efficiency Remote diagnostics “The challenge for more The ubiquitous telemedicine is how it Norrbotten: 5 hospitals, 33 health centres National: All X-ray images now digitised is financed. The first step is fibre- and 34 dental clinics connected. and shared via national fibre network. based comms between hospitals Digitised patient records, X-rays, digital Much faster transmission and reduced and surgeries. Fibre is essential prescription and video communications costs for HD videoconferencing Then videoconferencing. you need to link healthcare into private homes Remote monitoring of chronic health conditions Improved care and 4 “Care in place” – co-ordination/delivery of care for elderly reduced care costs Improved quality of life for long-term sick “It took time to get carers to use Hudiksvall: Old@Home and Open Care Norrbotten: estimated Euro 30,000/year the equipment and services. But projects. Developing new services for savings by caring for elderly at home once they did were enthusiastic remote care: positive trials and p rather than care homes adopters and would not g back p go feedback from users to old system. Now they are training others and communicating benefits” 7 © Copyright Ovum 2007

Business and l Bi d local economy l Increase in population/businesses in local area Positive impact in rural/lower GDP 5 Attracting key verticals dependent on high bandwidth/cheaper costs areas with specific verticals Attracting small businesses/remote workers “Its common knowledge or Hudiksvall: Number of companies in Lindefallet/Kilafors: population increase even common sense that the region has grown between 6 and by 7%. Number of home-working having an advanced fibre- 14% y/y since 2004. Developing as individuals in verticals like content based infrastructure is fibre-optic industry hub production attractive to companies” companies Fibre expected as “standard” for larger businesses: no differentiation standard Negligible in areas already thriving 6 Economic growth driven by location of manufacturing businesses with specific verticals High level of education and geographical location key factors “Jonkoping has a history of entrepreneurs and low Jonkoping::logistics hub in Southern Jonkoping: Existing level of high unemployment. South of town, Sweden: number of manufacturing employment before fibre. Population there’s an area with a lot of companies located here like Electrolux p g growing by 2000/year before extensive gy y small businesses that have a and VHM. Home-working rare. fibre rollout history of collaboration” 8 © Copyright Ovum 2007

Hudiksvall: b i H dik ll businesses i more d il in detail…. • Nonin Medical American medical technology Sverige Bygger. Company se g Co pa y selling • g ygg company b based i Pl d in Plymouth, Mi th Minnesota t construction information categorised producing instruments to check patient status in into databases. Sells internationally, medical settings, with 200 employees. Acquired but retains office and staff in Hudiksvall based Medair, company engaged in Hudiksvall. For example, for development and sale of equipment to monitor expansion t N i to Norway, hi d hired breathing i A b thi in August 2006. t 2006 Norwegian sales people stationed in Hudiksvall. Original intention was to retain production only in Sweden. But following visit by American team to Hudiksvall decided to Doubled turnover between 2000 and make town European headquarters due to 2004. “We are leading in our market advanced telecoms infrastructure and thanks to the fibre infrastructure in value-add of region. The worksforce is Hudiksvall. It made it possible for us expected to g p grow tenfold in coming y g years. to offer our services online at four “The Fiber Optic Valley environment times the speed of our competitors, clearly played an important role. Now at a lower cost. It gave us a clear we’re responsible for managing all of technical advantage”, Roger Svensk, Nonin’s sales, marketing and service former President of Sverige Bygger. throughout Europe”, CEO M d i Si th h tE ” Medair, Sigvardd Weisbjerg. 9 © Copyright Ovum 2007

Common view that there are wider benefits of fib b fi f fibre St u ates closer collaboration between u c pa t es, pub c bod es a d Stimulates c ose co abo at o bet ee municipalities, public bodies and communities Over 150 municipalities in Sweden have built out their own fibre networks and are linking these up in regional networks to provide a platform for new business opportunities and more networked public services Fibre efforts in smaller communities join individuals services. around a common goal and stimulate new relationships (business and social) Important role in wider innovation/R&D in developing ICT for industry Fibre has been an important ingredient in overall investment and regional strategies to grow knowledge economy and ICT industries. For example, partnerships between Ericsson, Hudiksvall municipality and other ICT companies New services dependent on very-high speed broadband stimulate new working practices Development of new services dependent on high-speed broadband in sectors like health hit substantial non-technical barriers. These projects thereby force new collaboration and stimulate adoption of new ways of working exemplified in the Old@Home project Rollout of high-speed broadband stimulating further innovation in public services Hudkisvall/Gavle region: started new forum/network called Niuo to develop new services and innovation in care for the elderly: future could see private companies joining and using it as test-bed. Number of new services in Norbotten region. 10 © Copyright Ovum 2007

Limited impact of fibre to the home on services ( i (excluding entertainment) l di i ) No new services dependent specifically on fibre Services like e-learning and remote care delivery require high-speed, reliable broadband connections to the home, but not necessarily fibre. In a number of cases they are running over xDSL/cable broadband Increased competition/lower consumer tariffs due to adoption of open access model The majority of fibre rollout has been via an open access model This has model. resulted in increased consumer choice and overall, lower broadband tariffs from national ISPs like Bahnhof (Euro 12/month for 100 Mbps) and local ISPs Noticeable difference in TV (HD) quality and upstream performance TV quality is significantly better over fibre. One end-user has 5 TVs connected. Traffic analysis shows higher P2P usage amongst fibre users Improved performance of services dependent on high-speed b db d I d f f i d dt hi h d broadband e.g. distance-learning, video communications However, top-end fibre (i.e. above 40 Mbps) delivers higher-speed Internet and better quality video conferencing Performance differences evident for video-conferencing. users of bandwidth hungry and QoS sensitive applications. 11 © Copyright Ovum 2007

This was backed up by our end-user survey 30% No major differences in the kinds 25% of non-entertainment services accessed between fibre and non- 20% fibre users 15% 45% Other 10% 40% FTTH 35% 5% 30% 0% Local Local Education View Working Accessing Video g g authority 25% telephony service health from online or gov. s e.g. home services video sites library 20% 15% But fibre users report higher 10% usage of these services. For 5% example, most p p who work p people 0% from home do it more often Working Accessing Video Education Local Local health telephony services from authority services home or gov. e.g. library 12 sites © Copyright Ovum 2007

The impact of fibre varies according to geographic and economic factors Public/community funding Village Kilafors Lindefallet Small town Investment model Hudiksvall Medium-size town Jonkoping Dense city Stockholm Market/ Private investment Socio-economic impact of fibre Low High 13 Urban Rural © Copyright Ovum 2007

What h Wh have we l learnt? I summary…. ? In 1. 1 The provision of fibre at a municipal level is regarded as having positive benefits on health, education and other public services. These benefits range from reduced telecom costs to more efficient and new services. This is particularly true in rural areas where limited resources and distance are barriers to service quality 2. There is a strong belief that there are a number of indirect benefits derived from fibre rollout. These range from bringing communities closer rollout together to stimulating new ways of working. This is particularly true in more isolated areas 3. To date, there is very limited evidence of any distinct social or economic benefit on any significant scale from fibre provision to individuals’ homes. Today, there are virtually no services that can only be delivered over fibre- based b db d B t fib i regarded as essential f f t b d broadband. But fibre is dd ti l for future-proofing fi 4. However, there are a handful of cases where FTTH is linked to improvements specifically in rural areas where very high-speed areas, high speed broadband is key for remote workers in certain verticals or the relocation of higher GDP individuals who are fibre advocates 14 © Copyright Ovum 2007

FTTH Conference 2009 Ovum Fibre Socio Economic Benefits

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FTTH Conference 2009 Ovum Fibre Socio Economic Benefits — Presentation Transcript