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Co-investment in Next Generation             Access Networks                           The Italian modelBudapest, March 3r...
Why is co-investment crucial to match the digital agendaAvoid duplication and increase the footprintDrive down the capex, ...
The multi - fibre approach One operator deploys the access network allowing spare capacity and other ops may acquire fiber...
An alternative co-investment approach: FiberCo A co-investment based    on the set up of a  FiberCo - separated   from the...
The FiberCO project: on the field                                                                                • First c...
Return on investment depends on migration speed andthe participation of all players in the project                        ...
The agreement for a public-private partnershippromoted by the Italian governmentFollowing several months of discussion bet...
The network topologyAn FTTH passive infrastructure enabling both a P2P and a GPON topology:      The Newco will develop a...
The forecast investment fiber loops to end-users                            12.678.000                            househol...
Open pointsThe footprintThe footprint of the Newco intervention will be defined: areas where operators may haveinterest in...
How the regulatory environment has an impact on thecapability to invest and to push towards cooperation                   ...
Thank youenrico.pietralunga@fastweb.it                                PG. 12
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All for broadband budapest 3 march 2011 fastweb

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All for broadband budapest 3 march 2011 FASTWEB

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All for broadband budapest 3 march 2011 fastweb

  1. 1. Co-investment in Next Generation Access Networks The Italian modelBudapest, March 3rd 2011 Enrico Pietralunga - Fastweb PG. 1
  2. 2. Why is co-investment crucial to match the digital agendaAvoid duplication and increase the footprintDrive down the capex, improving NGA business caseInfrastructure competition not an end in itself, the real results to achieve are: widespread availability and take up of UBB a sustainable competition at service levels. PG. 2
  3. 3. The multi - fibre approach One operator deploys the access network allowing spare capacity and other ops may acquire fiber loops as IRU based on areas or blocs of subscribers, connecting the access network to its own facilities …but...  it may not work where market shares are unbalanced as Altnets would bear a cost for the infrastructure that it is not proportional to their market share  it requires a specific know how on managing own network  reduced capex but increased opex for the parallel running of several networks  a closed model: it’s not at all a given that the co-investors will compete providing bitstream access to third party, if not mandated. They may not have the incentive or the technical capability PG. 3
  4. 4. An alternative co-investment approach: FiberCo A co-investment based on the set up of a FiberCo - separated from the operators providing downstream services - in charge of rolling out and managing passiveinfrastructures betweencustomer premises and local exchange and providing wholesaleservices to third parties  Cost effective: single point-to-point infrastructure minimize both capex and opex  Open: LLU to be provided to any alternative provider, whether or not involved in the co- investment Non discriminatory: FiberCO operates exclusively at wholesale level, therefore its mission is to provide LLU at equal conditions to all players, whether or not they have taken part to the investment PG. 4
  5. 5. The FiberCO project: on the field • First connection July 2010 • All 7350 u.i. passed in 2010 Main distribution Frame collecting ca. Outside 10.000 fibers and colocation room in Distribution less than a shop PointCollina Fleming isa pilot with realcustomers of a uniqueand open network PG. 5
  6. 6. Return on investment depends on migration speed andthe participation of all players in the project • Maximum FTTH network efficiency if all 10 years costs and investments per Line (€) customers migrate to fibre in a short period 1.490 • Total migration creates certainty on 915 payback time thus minimizing the risk 871 • overall cost of developing NGA would be lower than the cost of maintenance of existing copper network • To speed up migration, the fibre LLU fee Copper Line FTTH line adopted by FTTH line 50% of customers adopted by all should be at the same level of copper LLU fee (maintenance costs) (building costs + maintenance costs) PG. 6
  7. 7. The agreement for a public-private partnershippromoted by the Italian governmentFollowing several months of discussion between operators and the Ministry ofEconomic Development, an agreement was reached between the ministry and themajor fixed and mobile operators for the set-up of a public-private partnership incharge of developing infrastructures for NGAN.The aim of the partnership is the roll out of a neutral, open and future-proofpassive infrastructure, including civil infrastructures (ducts), dark fibre andODF ensuring NGA for 50% of the national population, in line with the objectives ofthe Digital Agenda: a Newco to be created so to coordinate participation to the project of private operators as well as Government and municipalities public intervention based on the principle of the “market economy investor”, therefore excluding, in principle, the intervention as public aid. an executive committee will define within 3 months the business plan and the governance of the Newco PG. 7
  8. 8. The network topologyAn FTTH passive infrastructure enabling both a P2P and a GPON topology: The Newco will develop a single fibre per household up to the secondary network and the optical node From the secondary network up to the ODF, the infrastructure will be partly P-to-P and partly GPONThe partnership will cover the costs connected to shared network elements that will be used by all operators: P2Pterminating segment and secondary network up to an aggregation point + P2P/GPON infrastructure up to the ODFexhange.Elements pertaining specifically the GPON (e.g. splitters, Optical termination box) of the P2P (MDF in the local exchangeand more fibers in primary network) technology will be covered by operators PG. 8
  9. 9. The forecast investment fiber loops to end-users 12.678.000 households 10.477.000 50% of population business 2.201.000 Buildings 3.180.000Investments (M€) per HH (€)Primary 1200 95Secondary 3313 261Vertical 3787 299Total 8300 661 7400 Shared infrastructure 300 Specific to GPON architecture 400 Specific to P2P architecture PG. 9
  10. 10. Open pointsThe footprintThe footprint of the Newco intervention will be defined: areas where operators may haveinterest in investing on their own will be excluded by the scope of the public-privatepartnershipThe migration planNot yet clear whether there will be an overlay period or incentives will be introducedto allow a very short migration and a switch-offThe overall regulatory frameworkThe extent to which Altnets will be able to engage in such a project are strictlydependent from the regulatory environment and the safeguard of a sustainablecompetition PG. 10
  11. 11. How the regulatory environment has an impact on thecapability to invest and to push towards cooperation Overcompensation of the SMP for the existing copper network: Unjustified high • drains resources from Altnets hampering their capability to invest prices on copper • reduces competitive pressure on the incumbent and create a disincentive for SMP network operators to invest in NGA: SMP operator is only rolling out fiber defensively, in the areas where Fastweb has its own network. Inability of Altnets to reach economies of scale has a huge impact on NGA roll-out plans • Existing price test methodology not robust enough to capture margin squeeze: it may Weak not discourage SMP from engaging in anticompetitive behavior to increase its market implementation of share framework • Despite “virtual separation” and commitments, TI still engages in price and non price discriminatory behavior: high percentage of rejection is slowing down growth of alternative operators SMP operator has incentive to reduce the area of intervention off the NEWCO and selectively invest to preempt the market Implementation of • No cost-oriented and effective access to civil infrastructure (ducts, dark fiber ...) remedies not in • No fiber LLU obligations line with NGA recommendation • A WBA offer for SMP operator not yet available, although they have been already offering fiber connection as a “trial” • No clear procedure and timeline for migration from traditional to NGA networks PG. 11
  12. 12. Thank youenrico.pietralunga@fastweb.it PG. 12

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