Gabrielle Gauthey - Alcatel Lucent - 20140508 inca-transform digital conference gg v1


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Transform Digital Conference 08-05-2014
broadband, technology, fibre, digital

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  • Alcatel-Lucent is refocusing to become an All-IP Networking and Ultra-broadband specialist.Alcatel-Lucent has the ability to build highly scalable all-IP platforms that provide multiple service to multiple users at the same time, without compromise performance or functionality. This recognized capability together with a continuous stream of innovation in routing, optical transport and platforms gives Alcatel-Lucent the legitimacy to address the Cloud IP networking market.Our differentiating assets in all-IP and the Cloud IP networking are our IP routing, NuageNetworks, IP optical transport (WDM) and selected IP platforms, such as Advanced Communications, Customer Experience Management and Cloudband - Alcatel-Lucent virtualized software platform. In particular, the integration of IP routing and optical transport will provide high value to customers because we will simultaneously drive the lowest cost per bit, and accelerate the processing and transport of data. In addition, we are moving into the data center space, which is facing major disruptions with the change in the Software Defined Networking architecture. We have already started serving enterprise customers with our Nuage Networks™ SDN solution. This puts us in a leading position in non-telco SDN/Data center transformation.Finally, this cross-domain experience in datacenters allows us to expand with our telco customers as they invest in their data centers. Our CloudBand™ virtualization platform, in addition to Nuage, will help the operators achieve more flexible and cost-efficient network services. Ultra-broadband (including LTE, Fiber and VDSL) is important to provide the bandwidth for rapid and reliable access to the cloud.We see a strong acceleration of the LTE adoption by operators. The first large scale deployment of Small Cells networks are being launched. LTE is now clearly established as the evolution of all 3G networks. It uniquely delivers high traffic growth at lower energy and financial costs than 2G/3G or mixed (Single RAN) approaches. Consequently, operators are capping their 2G/3G investment. We are at the forefront of this strategic shift with the leading edge Service Providers expanding fast in LTE overlay and we transition our wireless portfolio towards LTE and Small Cells. Fixed Access growth is picking up. Our strategy is to bring Fiber-To-The-Most-Economical-Point (also named FTTx). Some operators are choosing a fiber to extend the life of their copper plant such as Fiber-To-The-Node or Building or Distribution Point, while others in Asia Pacific and North America are leading the FTTHome market for the next years. New countries are also investing in FTTH for the long term. Therefore Alcatel-Lucent will continue to expand and leverage its leadership positions in both FTTN/FTTB/FTTDP (with VDSL2 & vectoring) and FTTH.
  • So which future for our industry?  The cloud IP networking will boost investments in critical areas such as high performance IP routing, transport and associated software platforms as well as for Very High Speed Broadband (FTTx, LTE) will grow ~15% market growth, to be compared to ~4-5% GDP growth from ‘13 to ‘14 Service Providers, being Telcos, Cable or web-scale companies, will need further differentiating — they succeeded the Broadband introduction, with service-aware IP networks, they are scaling Mobile Broadband with all-IP everywhere in all formats, they will be the infrastructure of reference for the Cloud Services by bringing together IT and IP in a new Cloud-IP integrated design. This does not stop at Services Providers but will expand to large enterprises and verticals investing in carrier-grade networks (reliable, resilient) to support their IT and network needs. This does not stop at IP routing but encompasses the full transformation of optical transport, network software platforms and related vendor services. And finally, business models and value chain in the industry will be affected. In particular, in the vendor community, it will critical to assert which DNA and focus will be most critical: be a successful IP player? Leverage a Wireless footprint? Come with an broad IT know-how, but limited network insight? Or be the cheapest whatever? 
  • 5. Montrer slide NatixisouAdlsurfonds long terme. Allantdans les autressecteurs
  • Gabrielle Gauthey - Alcatel Lucent - 20140508 inca-transform digital conference gg v1

    2. 2. 2 COPYRIGHT © 2013 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — INTERNAL PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION Ubiquitous BROADBAND and MOBILE access User-friendly DEVICES Compelling CONTENT, APPLICATIONS and VIDEO Always on, anytime, anywhere connectivity Creating the perfect storm to force change SMARTPHONE AND WIDESCREEN ADOPTION ARE THE KEY DRIVERS FOR DATA TRAFFIC GROWTH Source: Traffic Index, 2012 - Bell Labs modeling 2011- 2016 25 X MORE MOBILE DATA TRAFFIC SMARTPHONES 2.5bndevices by 2015 70% of the OVERALL TRAFFIC is mobile VIDEO COMMUNICATIONS 70% of the Internet traffic M2M 3 X growth in the next 5 years DATA EXPLOSION REQUIRES NEW INVESTMENTS IN ACCESS AND CORE NETWORKS
    3. 3. NETWORK: AN ESSENTIAL BRIDGE BETWEEN YOUR HAND-DEVICES AND THE CLOUD COMPUTING GAMING STREAMING STORING COMMUNICATING ULTRA-BROADBAND • FTTH, FTTx • LTE, Macro Cells, Small Cells CLOUD -IP NETWORKING • IP Routing and IP Transport • IP Platforms: IP Video, SDN, IMS, Cloud, Customer Care, Payment and Charging, Policy and Network Intelligence ULTRA-BROADBAND High Scalability High Reliability High Simplicity MPLS QoS, QoE Resiliency Equipment stability Management Automation Eth OAM Demarcation Synchronization High BW Dense platforms Management Suite Fast Troubleshooting Security IPv6
    4. 4. 4 COPYRIGHT © 2013 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — INTERNAL PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION A WALL OF INVESTMENT NEVER EXPERIENCED BEFORE DA: call for 200B€ min in NGA infrastructures New Competition Models (Telcos vs. OTTs) Other verticals seeking Carrier Grade performance (Government, Finance, Utilities, Transport…) Boost in CAPEX (15% CAGR in IP, optics, SW, FTTx and LTE) CLOUD-IP NETWORKING
    5. 5. COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. EU IS LAGGING BEHIND DA BB targets for 2020 - 100% Coverage of 30Mbps => 54% HH - 50% take-up rate of at least 100Mbps => 2% HH FTTH and FTTB have a combined share of 25.8% within NGA lines, and only 5.1% of all fixed broadband lines as opposed to 42% in Japan, 58% in South Korea and 9% in the US Average EU high-speed (min 30Mbps) BB penetration is below 5% Source: EU Scoreboard 2013
    6. 6. TELECOM NETWORK STRUCTURE A LAYERED MODEL Each layer has very a different financial profile and needs to be addressed adequately Services, Content & Apps (residential, public & business) Active Network (network equipments, business & operation support) Passive Infrastructure (trenches, ducts, fibre) End-user >200 B€ Investment needed Payback Few m-3 y 5-7 y 10-15 y 20% 80%
    7. 7. ROI Risk Infrastructu re roll out Lack of investment in NGA networks NO FIT BETWEEN INVESTMENT PROFILES AND INFRASTRUCTURE OPPORTUNITIES Infrastructure Funds Telecom Operators Insufficient ROI: • Cherry picking • Digital Gap • Wait and see High risk : •No focus on Telecom • Wait and see Solution calls for: CAPEX reduction to increase ROI, long- term commercial agreements to lower risk
    8. 8. very low Indication of sectorial funds focus over the next two years 0 1 2 3 4 5 10.Infrastructure services 1.Energy 2.Roads 3.Rail/Metro 4.Ports 5.Airports 6.Water 7.Waste 8.PPP/PFI 9.Telecoms TELECOM INDUSTRY DOES NOT SEEM TO FULLY MEET THE REQUIREMENTS OF INFRASTRUCTURE FUNDS Source: Contribution, Deloitte 2010, Arthur D. Little Conditions for infrastructure funds to invest  Investors seeking exposure to a periodic, stable and guaranteed cash flows  Need for a regulated market with contained competition and strong barriers to entry  Necessity to make investments fit with infrastructure funds’ risk profile:  Advocate for separation of passive layer vs. active and retail to lower risk on the passive layer part  Guarantee of a single fibre network in case of operating cable operators  Participation of the incumbent in the Netco preferred very high
    9. 9. All Rights Reserved © Alcatel-Lucent 2014•9 | RIP FRANCE THE FRENCH REGULATORY APPROACH: COMBINATION OF LLU AND BITSTREAM  Competition through active infrastructures on top of a common passive infrastructure has been the main driver behind the development of broadband: • Geographic extension of competition has encouraged France Telecom to equip all of its central Offices for ADSL • France has joined European leaders in terms of penetration… • …and is leading in "triple play“ and IPTV services  Three major drivers have made this increase in investments possible: • Dynamic operators, both incumbent and new entrants • Regulation : LLU first, bitstream as a complement • Local authorities intervention has been crucial in the expansion of broadband coverage through the RIP (Réseaux d’Initiative Publique – Public Authorities Networks) Where do we come from in Broadband deployments?
    10. 10. All Rights Reserved © Alcatel-Lucent 2014•10 | RIP FRANCE OPEN WIRELINE BACKHAUL IS KEY FOR BOTH MOBILE AND FIXED TRAFFIC GROWTH Role of backhaul networks: Cost effective coverage of medium and low density areas; Stimulate competition and innovation; Anticipate bandwidth demand increase for all access technologies and services (fibre, LTE, DTT,…); Future proof investment for public initiatives particularly for local authorities; Enhanced connectivity for public services (schools, hospitals, universities,…) and business parks
    11. 11. All Rights Reserved © Alcatel-Lucent 2014•11 | RIP FRANCE FRENCH LOCAL AUTHORITIES INTERVENTIONS IN TELECOM INFRASTRUCTURES IN THE PAST 10 YEARS  Legal form • Mainly DSP (« concessions »); • Choice by local authorities of one operator/delegator; • Wholesale offers negociated with local authorities; • Coverage and wholesale catalogue imposed by local authorities; • Maximum 70% subsidy (=> operational risk left to the private delegator); • Network remains local authority’s property.  Operating mode • Graduation of intervention according to the density and the presence or absence of operators • Passive infrastructures in denser areas (mainly open fiber backhauls) with the objective to connect a maximum of NRF’s and wireless BTS • Equipement of business parks; • Activated whosesale offers in the less dense areas; • In some rural areas : retail operators
    12. 12. All Rights Reserved © Alcatel-Lucent 2014•12 | RIP FRANCE FRENCH LOCAL AUTHORITIES HAVE PLAYED A CRUCIAL ROLE IN BROADBAND COVERAGE In the past 10 years, local authorities have played a key role in the digital development of their regions: • 50% of the regions and 2/3 of the departments are impacted • Around 150 RIP large projects ( > 30 K inhabitants) •55 K km of FO deployed • More than 3.5 B € of Public/Private investments: • 1.8 B € of public investment and subsidies • 1.7 B€ of private investment
    13. 13. All Rights Reserved © Alcatel-Lucent 2014•13 | RIP FRANCE 913 773 988 CO unbundling : alternative carriers backhaul networks CO unbundlig : alternative carriers backhaul networks + France Telecom dark fiber rental CO unbunling : local community bakchaul network 14,4 M households 2,4 M households 4,3 M households 21,2 M households Number of unbundled CO’s according to backhaul network ownership 40 % of French central offices are unbundled through Local Communities backhaul networks by end 2009 Summary of the Local Authroities (RIP) Projects Impacts Coverage/ Reduce the Digital Divide Gap ~ 2010: 98% of the population covered by ADSL Up to 2013: 1 out of 6 FTTH homes passed through RIP
    14. 14. All Rights Reserved © Alcatel-Lucent 2014•14 | RIP FRANCE Summary of the Local Authroities (RIP) Projects Impacts Foster Competition 2013 1. Ratio of unbundled lines (2013) 1. Ratio of unbundled Central Office (2013) 2. More than 10 operators available for 53% of the Local authorities networks (RIP)
    15. 15. All Rights Reserved © Alcatel-Lucent 2014•15 | RIP FRANCE Summary of the Local Authroities (RIP) Projects Impacts Reduce the Internet Access Cost – More affordability 2013 A tariff differential ranging from 8 to 64% on (Fiber To The Office) prices to the entreprises compared to Orange prices in 2013 More than 100 M€ of surplus purchasing power are distributed annually to households and businesses 60 € yearly savings per household for an ADSL subscription
    16. 16. All Rights Reserved © Alcatel-Lucent 2014•16 | RIP FRANCE Broadband: The French Case Local Authorities –Private Companies Operating Public Networks
    17. 17. European Policy • CEF now mainly focused on digital services — since downsizing from 9 to 1 B€ • TSM had incentives to infrastructure sharing, nothing on funding but now focused roaming and NN What would be beneficial for both investors and operators? - To be focused on reduction of market risk rather than subsidy - To increase liquidity by enabling project finance, and attract long term private equity and banks - To finance the construction phase separately from the operation phase EUROPE DOES NOT PROMOTE ANY INVESTMENT MODEL
    18. 18. • New access networks roll-out is not an evolution but more the building of a new essential infrastructure for the 40 years to come. On 70% of the EU territory, a single infrastructure is viable. • Need for more fibre, as deep as economically viable, which has all the characteristics of an essential infrastructure • Move away from the dogma of infrastructure competition, embrace the era of virtual/NG bitstream wholesale • Secure the investment through a long term “regulatory” contract guaranteeing return on investment and openness • The achievement of the ‘EC digital agenda targets’ requires new investment models • Intervention from long term investors would be a key enabler to improve current networks roll-out dynamics • National approach but regional implementation is often preferable CONCLUSION