Broadband deployment: Comparative approaches between Europe, UK, and Australia

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Colin Long of Olswang discusses the marked difference in terms of national broadband policy between Europe and Australia.

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Broadband deployment: Comparative approaches between Europe, UK, and Australia

  1. 1. International Institute of Communications Telecommunications and Media Forum Communications Infrastructure and Services: Europe and Australia 1 December 2009 Colin Long
  2. 2. Contrasting approaches <ul><li>European Union: </li></ul><ul><ul><li>Encouraging national broadband strategies; stimulus packages mainly country-specific </li></ul></ul><ul><ul><li>Broadband gap policy </li></ul></ul><ul><ul><li>Encouraging and ensuring wholesale access to NGA </li></ul></ul><ul><ul><li>State Aid funding to respect competition rules </li></ul></ul><ul><li>UK: </li></ul><ul><ul><li>Laissez-faire or benign neglect: infrastructure owners holding back and no apparent business model that works </li></ul></ul><ul><ul><li>Token contribution through universal broadband commitment and proposed telephone line tax </li></ul></ul><ul><li>Australia: </li></ul><ul><ul><li>US$34bn FTTH national broadband government project 2009 </li></ul></ul>
  3. 3. European Union: Plans and incentives <ul><li>Lisbon strategy for growth and jobs: fundamental role of telecoms/broadband development, especially for overall economic recovery </li></ul><ul><li>Pan-EU target of 100% broadband internet penetration by 2010 – 2013 </li></ul><ul><li>Broadband rural development: US$1.5bn funding from EU agricultural fund between 2009-13 </li></ul><ul><li>New regulatory package: national regulators mandated to promote efficient investment and innovation in infrastructure </li></ul><ul><li>NGA: access obligations to take account of investor risk; infrastructure ownership with SMP to offer cost-oriented terms for access to fibre loops and wholesale broadband services </li></ul><ul><li>‘Digital dividend’ to be employed to expand wireless-enabled services and choice within EU; 3G to be accelerated </li></ul>
  4. 4. European Union: Germany <ul><li>60% of households using broadband services; 21 of 23 million broadband connections are DSL lines </li></ul><ul><li>Federal Government broadband strategy: full nationwide broadband (1MB/s) access no later than end 2010; 75% of population to have high speed broadband access of at least 50Mb/s by 2014 </li></ul><ul><li>DT currently building out VDSL network; DT NGN plans on hold </li></ul><ul><li>FTTP/FTTH initiatives mainly on local level, v. limited </li></ul><ul><li>Various smaller municipalities planning broadband </li></ul><ul><li>Debate on pricing for third party access to new networks – balancing risk, reward, obligations </li></ul>
  5. 5. European Union: France <ul><li>France Telecom the first European incumbent to announce FTTH strategy; access market technologies differentiated by density of population, thus mix of fibre optics, cable and DSL or wireless </li></ul><ul><li>Regulator has mandated access to France Telecom’s civil infrastructure, ducts, pipes, etc. on cost-oriented basis. No fibre access obligation as yet, but subject to review against whether effective competition is meanwhile established </li></ul><ul><li>Last month, EU approved $100m subsidy for $600m very high speed broadband for 829,000 thousand homes in region near Paris: largest Government-backed FTTH project in Europe </li></ul><ul><li>Public debate on best model for fibre access deployment - Government agency, municipality or private commercial operator </li></ul>
  6. 6. European Union: United Kingdom: Policy and Regulation <ul><li>Digital Britain report 2009: UK government woke up to importance of having active industrial policy for sector next generation infrastructure. Very interventionist. </li></ul><ul><li>‘Mixed bag’ of recommendations and proposals: limited public financial support </li></ul><ul><li>Headlines: </li></ul><ul><ul><li>Universal service (broadband) commitment (tech-agnostic): 2mbps to virtually every UK household by 2012 </li></ul></ul><ul><ul><li>£200m (US$320m) funding from digital switchover surplus etc. </li></ul></ul><ul><ul><li>Next Generation Fund – broadband ‘tax’ (on fixed lines) at $10/line p.a. – to produce $300m approx. Could continue to 2017 </li></ul></ul><ul><ul><li>UK elections may cause re-think and further delay in execution </li></ul></ul>
  7. 7. European Union: UK (2) <ul><li>Major private sector infrastructure development plans </li></ul><ul><li>Virgin: upgraded fibre/coax cable network offering 50mbps reaching 50% UK homes currently; Docsis 3.0 offering <200mbps to customers by 2012 </li></ul><ul><li>BT: pledged US$2.47bn fibre investment FTTH/FTTC; still mainly DSL driven </li></ul><ul><li>Various regional/municipal public/private next generation digital networks </li></ul><ul><li>Banks and VCs however not convinced of economic case for NGA investment; new business model needed </li></ul>
  8. 8. European Union: UK (3) <ul><li>Regulatory policy – Ofcom and super-fast broadband </li></ul><ul><li>Ofcom primary approach as regulator: benign enabling </li></ul><ul><li>Promotion of competition through two main wholesale service options: active products (using infrastructure owner’s electronics) and passive products (using only owner’s physical assets) </li></ul><ul><li>Ofcom see greater industry interest in active products, though having inherent limitations on innovation and differentiation </li></ul><ul><li>Ofcom price regulation principles concentrated at wholesale level: price flexibility for active products and cost-orientation for passive products </li></ul>
  9. 9. Australia: contrast <ul><li>Abandoned plans for national broadband network using $3.7bn Government subsidy </li></ul><ul><li>Replaced by $34bn NBN project for FTTH to 90% homes by 2017 </li></ul><ul><li>To deliver 100mbps cities, 12mbps rural areas </li></ul><ul><li>Joint venture public/private (51/49 structure) </li></ul><ul><li>Completion in 8 years projected </li></ul><ul><li>Plus review of regulatory framework </li></ul>
  10. 10. European approach: conclusions <ul><li>European Commission has defaulted industrial policy to Member States; no ‘one size fits all’ </li></ul><ul><li>Mixed bag of initiatives: political ideology and credit crunch big factors </li></ul><ul><li>Some countries (e.g. UK) propose only modest State funding through special levy. Others (e.g. France) look to public/private ventures and central, regional and local government subsidy </li></ul><ul><li>EU State Aid rules have to be followed - ?whether UK’s next generation fund/tax will pass muster </li></ul><ul><li>Developing into a multi-speed Europe, with leaders and laggards </li></ul><ul><li>Details and economics of access to new infrastructure yet to be worked through to a model across EU </li></ul>
  11. 11. Thank you! <ul><li>Colin Long +44 20 7067 3179 [email_address] </li></ul><ul><li>3929993-1 </li></ul>

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