Workshop on Municipal Fiber Networks      Ghent, October 24th 2011
About our company• Aggaros is an International consulting company that offers solutions  of business, strategy and technol...
•   Spanish people pays the most expensive    access to the traditional BB in Europe area
The most expensive broadband on OCDE          LA VANGUARDIA - Tuesday 28th June 2011
NRA will adopt measures to reduce the                                       gap with other EU countries3th May 2011“There ...
BB access prices are 21% higher than                                            the best offers average on the EUSource: C...
Best offer in EU 2 to 10Mbps                                                                 No one is the incumbentSource...
Best incumbent offers in EU                                                                            2 to 10MbpsSource: ...
•   And regulation is not enough
The most significant measures• Broadband wholesale access service up to  30Mbps.  – Obligation to supply BB wholesale acce...
Regulation measures do not succeed              on NGA development
Xarxa Oberta                         State Aid N407/2009 EU Resolution• State Aid is the appropriate instrument(97) Demand...
• Regional and municipal initiatives
Different typology of public administrations                                                     initiatives.• Public fund...
Municipal and regional initiatives                  1                                                                     ...
• Three cases:    Asturias,    Viladecans and    Xarxa Oberta
Asturias situation - 2004•   1,1 M Inhabitants, 490 k homes.•   Services and Industry.•   Internet access penetration: 25,...
Asturcon – Project Scope                         Asturias                  Viladecans     Xarxa Oberta                    ...
Asturcon - Project EconomicsAverage subscriber penetration                                                                ...
Viladecans Situation – FTTH coverage
Three most significant initiatives                        Asturias                  Viladecans            Xarxa ObertaGeog...
Viladecans - Project Scope• The Viladecans local government develops the project  under the Private Investor Principle, co...
Viladecans - Project Scope• The Business plan considers the following parameters.      Concept                            ...
Viladecans – 2011 situation• After the first 6 months of operation, the results are better than the  initial forecast on t...
Three most significant initiatives                        Asturias                  Viladecans            Xarxa ObertaGeog...
Xarxa Oberta                                                         Catalunya – SpainAutonomous community in the Northea...
Xarxa Oberta – Project ObjectivesBuild a PPP contract with private company for the development, constructionand operation ...
Deployment Plan and main issues              • PPP 20 Years connectivity                service contract.              • 5...
Key questions on Xarxa Oberta project• How will be the project executed?    – Under a Public Private Partnership. Rent or ...
THANKS FOR YOUR CONSIDERATION Contact: palemany@aggaros.com
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Pere Alemany - The municipal initiatives. An alternative to the no option access to NGA

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Presentation at the Workshop on Municipal Fiber Networks, October 24th 2011 in Ghent, Belgium. The workshop was organised by Ghent University - IBCN / IBBT. More information about this event can be found at http://http://events.ibbt.be/en/workshop-municipal-fiber-networks.

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Pere Alemany - The municipal initiatives. An alternative to the no option access to NGA

  1. 1. Workshop on Municipal Fiber Networks Ghent, October 24th 2011
  2. 2. About our company• Aggaros is an International consulting company that offers solutions of business, strategy and technology in the environment of the telecommunications and information systems.• We apply our experience along all the life cycle of a project. REGULATION SOFTWARE NETWORK AND PROJECT FEASIBILITY TENDER SOLUTIONS STRATEGY SUPPLY SERVICES CREATION PLAN MANAGEMENT CONSTRUCTION MANAGEMENT PROJECT MANAGEMENT We work with public administrations and stakeholders to define and implement the best strategy for the Optical Fiber network development and management.
  3. 3. • Spanish people pays the most expensive access to the traditional BB in Europe area
  4. 4. The most expensive broadband on OCDE LA VANGUARDIA - Tuesday 28th June 2011
  5. 5. NRA will adopt measures to reduce the gap with other EU countries3th May 2011“There are competitive offers in the market, but the Telefonica prices are higher that theEurope average. We need to regulate de wholesale prices as the key to improve the endcustomer market prices ”
  6. 6. BB access prices are 21% higher than the best offers average on the EUSource: CMT June 2010, Comparativa Int. de ofertas Comerciales EU/España
  7. 7. Best offer in EU 2 to 10Mbps No one is the incumbentSource: CMT June 2010, Comparativa Int. de ofertas Comerciales EU/España
  8. 8. Best incumbent offers in EU 2 to 10MbpsSource: CMT June 2010, Comparativa Int. de ofertas Comerciales EU/España
  9. 9. • And regulation is not enough
  10. 10. The most significant measures• Broadband wholesale access service up to 30Mbps. – Obligation to supply BB wholesale access services (up to 30Mbps) to all new entrant operators. – Transparency obligation on BB wholesale service supply. – Open a public offer cost oriented. – No discrimination obligation on BB wholesale service supply. – Obligation to sent to the CMT (ANR) the BB wholesale offer quality parameters.
  11. 11. Regulation measures do not succeed on NGA development
  12. 12. Xarxa Oberta State Aid N407/2009 EU Resolution• State Aid is the appropriate instrument(97) Demand-side measures in favor of broadband could be an instrument of public intervention. However, these measures do not solve the illustrated problems on the supply side. As regards regulation, despite its crucial role in ensuring competition and supply in the market for electronic communications, evidence shows that in some areas of Catalonia regulation has not fully been able to ensure effective competition in some of the markets for electronic communications and has not led to sufficient investments to bridge the digital divide affecting certain areas. Regulation is, indeed, a necessary, but not a sufficient instrument for the development of broadband services …
  13. 13. • Regional and municipal initiatives
  14. 14. Different typology of public administrations initiatives.• Public funds direct to operators – Galicia – Plan avanza• Public operator creation – Asturias – Barcelona 22@ – Navarra• PPP – Public Private Partnership – Extremadura – Xarxa Oberta – Consell Comarcal del Maresme• PIP – Private Investor Principle – Viladecans
  15. 15. Municipal and regional initiatives 1 Operational Networks 1. Asturcon - Asturias 1 3 2. Viladecans 2 2 3. Xarxa Oberta 3 4. 22@ 5. Cablex Extremadura 6. Miguelturra 7. Quintanadueñas 8. Ribaroja Projects 1. CC Maresme 2. MenorcaSource: FEDEA Observatory of NGN in Spain. August 2010
  16. 16. • Three cases: Asturias, Viladecans and Xarxa Oberta
  17. 17. Asturias situation - 2004• 1,1 M Inhabitants, 490 k homes.• Services and Industry.• Internet access penetration: 25,6%.• Broadband Internet access: 55,6%.• 12 Broadband lines per 100 inhabitants• 3 Mobile Operators, covering >95% population• 2 Main Wireline Operators: Telefónica and Telecable.
  18. 18. Asturcon – Project Scope Asturias Viladecans Xarxa Oberta 3 Services providersGeography Regional network • Telecable: Municipality www.telecable.es: Regional • RF TV: Over 40 channelsTypology Public funds for rural Private•Investor POTSState Aid – PPP Voice using areas Principle High Speed internet: 4Mbps, 10Mbos and • - PIP 20MbpsTechnology FTTH FTTH Gb EthernetMunicipalities 46 • Adamo: www.adamo.es : 1 105 • High Speed Internet: 20M/100Mbps andInvestment 47,5 M€ 688.223.-€ 100/100Mbps 85 M€Coverage 57.832 HP • VoIP2.535 HP -----Customers 9.625 • Orange: 492 www.orange.es -----Penetration 17% 19,4% ----- One unique portal for customers and ISP: http://www.gitpa.es/en/the-asturcon-network/suppliers-and-services.html .
  19. 19. Asturcon - Project EconomicsAverage subscriber penetration 35,0% 35,0% 34,7% 34,5% 34,2% 33,8% 33,2% 32,5% 31,8% 30,6% 29,3% 27,8% 25,9% 23,8% 21,4% 18,6% 18,2% 17,0% 14,8% 13,4% 2007 2008 2009 2010 jul-11 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025Customers penetration over the total homes passed.Number of homes passed increase in years 2010 and 2011.
  20. 20. Viladecans Situation – FTTH coverage
  21. 21. Three most significant initiatives Asturias Viladecans Xarxa ObertaGeography Regional network Municipality RegionalTypology Public funds for rural Private Investor State Aid – PPP areas Principle - PIPTechnology FTTH FTTH Gb EthernetMunicipalities 46 1 105Investment 47,5 M€ 688.223.-€ 85 M€Coverage 57.832 HP 2.535 HP -----Customers 9.625 492 -----Penetration 17% 19,4% -----
  22. 22. Viladecans - Project Scope• The Viladecans local government develops the project under the Private Investor Principle, considering the following circumstances: - VIGIP, the public company that manages the municipality projects, receives 688.221€ as main capital. - Fixes a 6,88% WACC required and a IRT minimum. - All funds supplied should be returned in similar period like a private investor. - VIGIP will cover the peak financing in the capital market - VIGIP as infrastructure operator pays to the local government for the use of municipal infrastructures (essentially ducts and right of way) the same price than other private operators. - Multifiber architecture network- Two ISP: Adamo and Orange - Adamo pays for capacity. (Model MN2) - Orange, rent dark fiber circuits. (Mode MN1)
  23. 23. Viladecans - Project Scope• The Business plan considers the following parameters. Concept Value Anual Consumer Index Price increase 2,8% Taxes 18% Receiving payment period 30 Payment period 30 Taxes over company profit 25,00% Interest on available cash 1,50% Bank credit interest 3,50% WACC 6,88%
  24. 24. Viladecans – 2011 situation• After the first 6 months of operation, the results are better than the initial forecast on the following parameters Forecast May 2012 Results Oct 2011 Penetration 16,5% 19,4% Total customers 418 492 IRT 10,69% 12,17% ANV 253.849 381.218 Mix of services 70% MN1 / 30% MN2 43% MN1 / 57% MN2 Operating cost 20% lower
  25. 25. Three most significant initiatives Asturias Viladecans Xarxa ObertaGeography Regional network Municipality RegionalTypology Public funds for rural Private Investor State Aid – PPP areas Principle - PIPTechnology FTTH FTTH Gb EthernetMunicipalities 46 1 105Investment 47,5 M€ 688.223.-€ 85 M€Coverage 57.832 HP 2.535 HP -----Customers 9.625 492 -----Penetration 17% 19,4% -----
  26. 26. Xarxa Oberta Catalunya – SpainAutonomous community in the Northeast corner of SpainWealthy Spanish jurisdictionArea: 32.106 km²Population: 7,3M of inhabitants947 municipalities and 42 counties, Barcelona is the capitalGDP (Gross domestic product) Y2010: 209.7273 M€GDP per capita (Y2009): 26.831 €Companies: 619.678 (Y2010)Broadband Access: 21 subscribers per 100 inhabitants (Y2009) GENERALITAT OF CATALUNYA (Catalan Regional Government)  The Generalitat is the institutional system around which Catalonias self-government is politically organized.  Y2011 budget: 33.033M€  Around 6.000 offices  Around 180k public employees
  27. 27. Xarxa Oberta – Project ObjectivesBuild a PPP contract with private company for the development, constructionand operation of a local and urban backbone wide band optical network, to:• Connect to optical transport level of and layer 2 Ethernet, the Generalitat de Catalunya (Regional Government) 1.040 sites and,• Take advantage of the excess of capacity of the Network to facilitate the connectivity for the wholesale market.Specifically, the Project considers the following:• Provide connectivity services to the public regional administration actual and futures sites in each municipality• Have of a point of presence of optical fiber in the current and future municipalities. Contract Project Operations Signature Start-up Start-up Service Start-up Service Operations Nov 2010 Jan 2011 Apr 2011
  28. 28. Deployment Plan and main issues • PPP 20 Years connectivity service contract. • 5 Years deployment • 1.040 sites • 105 municipalities • 1.234 Km existing infrastructure included in the contract • 586 km network to be built • Total network: 2006 km • Total Contract Value:206M€ • 85 M€ Investment • Wholesale services on open access scheme
  29. 29. Key questions on Xarxa Oberta project• How will be the project executed? – Under a Public Private Partnership. Rent or Mortgage model.• The state aid estimation. – The existing public infrastructures evaluated as State Aid.• The European Commission evaluation – The Spanish administration presented de project to be evaluated by the DGComp. Concluding that the project, even if it disturbs the competence is compatible with the TFEU.• Only NGA – EC considers only the 4 main cities as black zones for NGN. 943 other municipalities are considered grey and wite.• Wholesale price services mechanism. – According to the N407/2009 EC resolution prices should be fixed according to the competitive areas.• What if, the wholesale market is higher than the expected initially?. Over- compensation mechanism. – The contract includes overcompensation mechanism
  30. 30. THANKS FOR YOUR CONSIDERATION Contact: palemany@aggaros.com

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