3 QITCOM 2012 - Patrick Kidney (Next Gen Broadband)


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Guide to broadband investment

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3 QITCOM 2012 - Patrick Kidney (Next Gen Broadband)

  1. 1. Presentation for QITCOM 2012 Guide to broadband investment 5th March 2011 • Pat Kidney18800-392
  2. 2. 2 Contents Introduction to Analysys Mason Aims of the guide to broadband investment Stages of investment planning Choice of investment model Overall recommendations18800-392
  3. 3. 3 Analysys Mason has considerable global experience in undertaking and assessing national broadband plansWales 2004 -2010: Commercial and Ireland 2006-12: Malta 2011: Techno-economic feasibility of UK 2008: Broadband stakeholder UK 2005-2006: Development oftechnical strategy, business planning, Design, procurement and a national FTTH network group models for efficient public broadband scenarios for the BSGprocurement and implementation implementation support sector interventions in next in the UKsupport as part of National fibre for the EUR 234m UK 2001 onwards: Broadband generation broadbandbroadband initiative National Broadband planning for regional development Wales 2006: Study toEuropean Commission 2010- Scheme agencies on the UK UK 2008 onwards: support to Cornwall council in its promote public intervention2011: Developed a guide for EU 2011 onwards: Socio-economic Next Generation Broadband in “second generationinvestment in broadband benefits of broadband in 27 EU project broadband” marketinfrastructure, covering small countries and private sector funding Thailand 2009:regional roll outs and national analysis Development ofinterventions alike national broadband planWestern Europe 2004: Brunei 2009-2010:Analysis of Internet Development ofaccess prices in national broadbandWestern Europe strategy Singapore 2005-2006:UK 2010 onwards: Cost modelling Provided support on Nextof next-generation broadband and Generation Broadbandregional funding allocations Network Initiative Malaysia 2002-2003: National broadband policy developmentUS 2002-2003 : Study of USbroadband policy for TechNet Gulf 2010: Regulatory support in major Gulf country to defineChile 2007-2009: Broadband Morocco 2011: three- year internetpromotion study in Chile National action plan development plan New Zealand 2010 - 2011:Libya 2009: Provided for the development Technical and cost reviewscommercial and technical fixed of broadband underpinning the Government’sand wireless licence bid support national Ultra-Fast and Ruraladdressing i.a. national Broadband strategiesbroadband requirements. Italy 2001-2002: AnalysisNorway 2002: Assessed EMEA 2011: National Israel 2011: Technical audit of national of government interventionthe potential social and broadband market broadband solution used to evidence mechanisms andeconomic benefits from a assessment, international competitiveness and Australasia 2010- 2011: Operator prioritisation for broadbandscheme to provide benchmarks and sufficient investment capability to the support to become national partner task forcebroadband to selected forecasts Government for ultra- fast broadband solution. Egypt 2008: Provided India 2010: Strategicpublic sector sites commercial and technical fixed Lesotho 2012: Australia 2009: STEM Subsequently carried out review of road- mapping and licence bid support addressing Development of license, training and solution and identification of global assessment of drivers for i.a. national broadband national modelling assistance for best practice the deployment of a requirements. broadband plan national fibre- optic National Broadband RefNo | Commercial in confidence project backbone in India
  4. 4. 4 The guide provides best practice in planning a broadband investment Affordable, good quality and open ICT infrastructure for all will support cohesion, innovation, and social, economic and political change details planning and procurement issues that must be considered for broadband infrastructure investment Important resource for meeting broadband targets Essential for managing authorities to prioritise the long term socio-economic benefit of citizens over short term private financial gain18800-392
  5. 5. Stages of investment planning 5 The guide sets out seven key questions for planning a broadband investment Why should I invest in Define project aims to tackle market failures and/or broadband? deliver socio-economic benefits what and why? What type of network Understand the costs and benefits of different kinds infrastructure should I invest in? of infrastructure Understand the merits of each investment model How should I invest? and what might work best for you How do I manage/monitor the Ensure successful delivery and operation, and outcome? provide evidence for audit What can be done to ensure Understand the commercial case and your potential demand for services? role on the demand side What can be done to reduce the Include measures to reduce costs and manage risks cost and manage risks? What are the next steps that need Contribute to hitting the DAE targets by using EU to be taken? funds quickly and effectively18800-392
  6. 6. Choice of investment model 6 Five investment models provide a broad spectrum of funding options Group of end users oversee the contract to build and operate Bottom-up their own local networkPublic Public Private Managingsector design build design build Authorityowns and and operate and operate provides aoperates a 5 models grant tonetwork private sectorwithout any to assist inprivate deployment ofsector new networkassistance Joint Public venture outsourcing Ownership of the network is split Single contract for construction and between the public and private operation of network, but public sector sector retains ownership and some control18800-392
  7. 7. Choice of investment model 7 Each investment model will be applicable in different situations Summary of pros and cons of investment models Model Advantages Disadvantages Recommended use Bottom up • Long term, non- • Localised • Targeting localised areas profit view deployments • Leveraging small scale • Focuses demand • Differing technologies funding Private DBO • Larger scale • Funding threshold • Sufficient funding to attract • Low public burden • Limited control operators • Effective transferral of risk Public • Public financial • Reduced benefit to • Requirement for on-going outsourcing stability with private private sector control expertise • Additional • More conservative • Greater control bureaucracy operators Joint Venture • Risk sharing • Potential conflicts of • Public/private interests interest closely aligned Public DBO • Public organisation • Size and scope limited • Requirement for absolute has full control by public expertise control • Inspirational investment18800-392
  8. 8. Choice of investment model 8 The guide is illustrated with findings from operational projects18800-392
  9. 9. Overall recommendations 9 Overall recommendations are focused on delivering maximum benefit to end users  Socio economic benefit must be managed alongside project sustainability to deliver long term benefits Long term control by public sector can protect end user benefit, however the private operators can bring invaluable expertise Sustainability is critical as socio-economic benefits will take time  The bottom up model may suit small scale fibre projects Long term non-profit view of end users suits the fibre business case, but this may be difficult to leverage on a large scale  Small investments can provide a catalyst through partnerships  Open and non-discriminatory access to infrastructure supports effective competition However, the investment requirements for passive and active access must be carefully considered18800-392
  10. 10. Overall recommendations 10 The guide also covers funding, state aid and the steps to broadband delivery EU funding application Preparation Procurement Procurement Contract Broadband and design activity award delivery planning State aid compliance18800-392
  11. 11. 11 Contact details Pat Kidney Senior Manager, Head of Ireland pat.kidney@analysysmason.com Analysys Mason Limited Suite 242, The Capel Building Marys Abbey Dublin 7, Ireland Tel: +353 1 602 4755 Fax: +353 1 602 4777 www.analysysmason.com Registered in Ireland IR30406118800-392
  12. 12. Investment model summary 12 Bottom-up model Overview of model  Group of end users oversee the contract to build and operate their own local network Advantages Disadvantages Recommended use  Long-term, non-  Difficult to replicate  For targeting profit view, suitable local “intensity” on a localised areas and for high-cost large scale for gaining the most infrastructure (e.g.  Localised benefit from small FTTH) deployments, with amounts of funding  Focuses demand risk of differing and encourages technologies local social cohesion18800-392
  13. 13. Investment model summary 13 Private design build and operate model Overview of model  Managing Authority provides a grant to private sector to assist in deployment of new network Advantages Disadvantages Recommended use  Larger scale (than  There is a minimum  Larger-scale bottom up) funding threshold to  Where the level of  Low public burden, attract private funding attracts which can lead to interest private interest faster deployments  Limited control over  Where the network operations may operations (and risk) reduce the socio- can be transferred to economic impact private sector18800-392
  14. 14. Investment model summary 14 Public outsourcing model Overview of model  Single contract for construction and operation of network but public sector retains ownership and some control Advantages Disadvantages Recommended use  Public financial  Reduced financial  Where Managing stability with private benefit to private Authority requires a expertise high level of control sector (compared to over the network  Greater control (than private DBO)  Where private private DBO)  Additional operator has a more bureaucracy conservative view of risk than the private DBO model18800-392
  15. 15. Investment model summary 15 Joint venture model Overview of model  Ownership of the network is split between the public and private sector Advantages Disadvantages Recommended use  Potential financial  Potential conflicts of  Where the interests benefit for both interest may block of the public and parties private sectors can creation / successful  The use of special- operation of the JV be closely aligned purpose vehicles can make the model  Few examples of very scalable, and implemented JVs to allow alternative indicate best investment sources practice18800-392
  16. 16. Investment model summary 16 Public design build and operate model Overview of model  Public sector owns and operates a network without any private sector assistance Advantages Disadvantages Recommended use  Managing Authority  Size and scope  Where a Managing has full control to limited by public Authority needs promote competition absolute control expertise and enforce over network standards  Potentially excludes operations  Managing Authority private sector  Where targeted can ensure socio- expertise investment will economic benefits inspire investment are prioritised from private sources18800-392