FTTH/FTTx Deployment Strategyin SwitzerlandApril 24th, 2012Dr. Peter KempfSwisscom (Schweiz) AGWholesaleStrategic Business Development
Scope of this presentation 2 24.4. 2012 • Market situation IQPC FTTx Summit, London • Regulator, anti-trust authority, and politics • Design principles for FTTH networks • FTTH partnerships • Summary and conclusions
N et he 0 5 10 15 20 25 30 35 40 Sw rl a i tz nds er la D nd en mSource: OECD ar Ko k r N ea or w a Fr y an U c ni Ic e te ela d Ki nd ng G dom er m Sw any Lu ed xe e m n bo u Be rg lg iu C m an ad U Fin a ni t e l an d d St at es Broadband penetration N ew Ja pa Ze n al an Au d st r ia DSL Is ra Es e l to Au ni a st ra li a Sp Sl a in ov Cable en ia Ita l Ir e y la G nd re e H ce un ga C ze Po r y ch rtu Fibre/LAN R ga ep l ub Sl l OECD average ov P i c a k ol a R nd ep ub Switzerland on rank 2 of OECD countries lic C hi M le OECD Fixed (wired) broadband subscriptions per 100 inhabitants, by technology, June 2011 Other ex ic Tu o rk ey 3 IQPC FTTx Summit, London 24.4. 2012
FTTH is the end game No other technology is able to deliver the bandwidths needed in the long term 5 24.4. 2012 100 Mbit/s IQPC FTTx Summit, London Future Applications 50 Mbit/s Super HDTV Multi-room HDTV 20 Mbit/s 10 Mbit/s Web TV HDTV E-mail Web 1.0 Web 2.0 1 Mbit/s 1992 1997 2002 2007 2012
Scope of this presentation 6 24.4. 2012 • Market situation IQPC FTTx Summit, London • Regulator, anti-trust authority, and politics • Design principles for FTTH networks • FTTH partnerships • Summary and conclusions
Telecom stakeholders agree on joint standards for FTTH Results of “Fibre Round Table” moderated by regulator 7 24.4. 2012 • The multiple fibre model prevails IQPC FTTx Summit, London - Avoiding parallel networks - Competition is ensured • The fibre optic network is open to everyone - Network and service providers have access under the same conditions and to various network levels - Consumers are free to choose their telecom provider • Uniform standards - Operators use the single connector type for plugs in homes - Customers shouldnt encounter any problems when switching providers (Project ALEX “Active Line Exchange”). Conclusion of the 4th FTTH roundtable of 5 October 2009 Standards open way to FTTH investment co-operations
Antitrust authority with a different view of things No exemption from sanctions was granted 8 • Swisscom and partners voluntarily submitted the co-operation contracts 24.4. 2012 to WeKo (Swiss anti-trust authority). • WeKo issued a report for five of the co-operations in September 2011 IQPC FTTx Summit, London and criticized a couple of clauses as anti-competitive agreements: – L1 exclusivity (partners can sell unbundled fibre exclusively) – investment protection (right to change from investment partnership to rental) – compensation payments (if market share of one of the partners deviates very much from his investment share) – right of first refusal (if one of partners wants to sell fibre network) • The contracts were negotiated taking into account the critical points. • WeKo issued a report for another two of the co-operations in February 2012. • The assessment of critical points with partners is still on-going.
Influence of politics Local and regional governments push for FTTH 9 CH: Confoederatio Responsible for sector regulation Owns 57% Helvetica and anti-trust surveillance of 24.4. 2012 Federal Universal govern- BAKOM (telco) service ment ELCOM (electricity) IQPC FTTx Summit, London obligation WEKO (anti-trust) Ownership of 26 cantons regional electricity companies CantonalElectorate govern- Mandate to roll out FTTH ment Responsible for maintaining and Ballot about FTTH roll-out improving local J700 infrastructure and Ownership of electricity 2596 municipalities location factors local electricity companies companies Local govern- ment Mandate to roll out FTTHNot all activities are co-ordinated with Swisscom roll-out plans
Scope of this presentation 10 24.4. 2012 • Market situation IQPC FTTx Summit, London • Regulator, anti-trust authority, and politics • Design principles for FTTH networks • FTTH partnerships • Summary and conclusions
Priorisation of FTTH roll-out areas FTTH cannot be rolled out economically everywhere 11 10000 24.4. 2012 IQPC FTTx Summit, London Rural areas Too expensive to build FTTH Costs per household Agglomerations Cities 0 FTTH roll-out is economically feasible 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 11000 12000 13000 14000 15000 Number of households in residential zones
Customer needs Bandwidth demand increases rapidly 12 29.2.2012: Channels of Swiss national 24.4. 2012 broadcast company are available in 100 Mbit/s High Definition only IQPC FTTx Summit, London Future Applications Bandwidth Demand FTTH penetration 50 Mbit/s Vectoring Super HDTV Multi-room 30% HDTV 20 Mbit/s VDSL HDTV 10 Mbit/s Web 10% TV E-mail Web 1.0 Web 2.0 1 Mbit/s 1992 1997 2002 2007 2012 2017
Infrastructure FTTH is only part of optical fibre expansion 13 • The overall optical fibre network consists not only of the 24.4. 2012 access network between the local exchange in the neighbourhood and the individual home. IQPC FTTx Summit, London • For years, Swisscom has been laying fibre cables to the neighbourhoods, (Fibre to the curb/neighbourhood – FTTC; aka VDSL). • In 2012, Swisscom continues to invest in the FTTC expansion and will connect more than 300 communities with VDSL. • Swisscom also investigates the use of other technologies to bring higher broadband speed to the customer. – VDSL with Vectoring – Fibre To The Distribution Point (FTTDP)
VDSL push continues Swisscom enables 80% of households for HDTV 14 100% broadband coverage according to basic service provision ( 1 Mbit/s) 24.4. 2012 98% ADSL coverage 89% VDSL coverage IQPC FTTx Summit, London 80% HDTV enabledEoY 2011
Fibre To The Distribution Point Mini node in the manhole (pilot) 15 24.4. 2012 IQPC FTTx Summit, LondonSource: Berner Zeitung, 23.11.2011
Ultra-broadband roll-out in Switzerland Choice of technology dependent on costs and competition 16 24.4. 2012 IQPC FTTx Summit, London
Scope of this presentation 17 24.4. 2012 • Market situation IQPC FTTx Summit, London • Regulator, anti-trust authority, and politics • Design principles for FTTH networks • FTTH partnerships • Summary and conclusions
Dynamics of fibre roll-out Partnerships already exist in 14 cities, municipalities, regions and cantons 18 Swisscom only Riehen Weinfelden Cooperation 24.4. 2012 Basel Pfyn St. Gallen Winterthur Partnership agreement Zurich Dietlikon Teufen signed Solothurn Uster Herisau Küsnacht IQPC FTTx Summit, London Adliswil Biel Derendingen Zug Erlenbach Berne Ebikon Herrliberg Lucerne Meilen Köniz Fribourg Chur Yverdon-les-Bains Thusis Thun Lausanne Nyon Gland Upper Valais Geneva Sion Bellinzona Lugano Today: > More than 364,000 homes and businesses have been connected by optical fibre to the basement at the end of year 2011 (more than 90% in co-operation areas). Goal: > End of 2015: More than 1 million homes and businesses connected to the basement (1/3 of the households).
Financial benefits Co-operations help Swisscom to reduce the FTTH capex per household 19 24.4. 2012 Areas where one partner FTTH capex per household started to build alone IQPC FTTx Summit, London 100% Letter of Intent Signed in 2012 • Bellinzona J 60% • Derendingen • Gland Negotiations on-going with other potential partners Capex Capex for build-alone in co-operation More co-operations to come
Multi-fibre architecture Co-operation is possible at the manhole or at the PoP/CO 20 24.4. 2012 2 Share of investments: 40 % IQPC FTTx Summit, London OMDF 1 Partner Partner Network Network Share of investments: 40 % Share of investments: 20 %
Summary & Conclusion 21 Only one technology provides sufficient bandwidth in the long term: FTTH 24.4. 2012 • 364T homes passed at EoY 2011. • About 170T additional homes planned for 2012. IQPC FTTx Summit, London Bandwidth demand is increasing rapidly • FTTC roll-out in parallel. • Vectoring and other interim technologies under investigation, until FTTH is available everywhere. Capex for FTTH must be strictly managed • Priority list based on construction costs and competition. FTTH roll-out in co-operations preferred • Reduction of capex per household.
Thank you very much for your attention! 22 24.4. 2012 Questions? Comments? Suggestions? IQPC FTTx Summit, London Peter.Kempf@swisscom.com
Short Profile of Peter Kempf 23 Dr. Peter Kempf 24.4. 2012 Senior Strategic Marketing Manager Swisscom Switzerland AG, CH-3050 Bern IQPC FTTx Summit, London Email: firstname.lastname@example.org Peter is responsible for special and strategic projects within Swisscom Wholesale - with special emphasis on the strategic implications of commercial and regulatory pricing. Peter focuses on the development of cooperation and pricing models for Swisscom’s FTTH roll-out and is involved in the negotiations with potential FTTH co-operation partners. Peter joined Swisscom in 2003. He acted as “Head of Pricing” for Swisscom Mobile until December 2007. Before joining Swisscom, he was a consultant with Boston Consulting Group and PA Consulting Group where he focused on the telecommunications industry and worked on a broad range of projects related to strategy & business development, costing, and M&A. Peter holds a Ph.D. in physics from the Technical University of Braunschweig and a Master of Science from SUNY Albany.