Australia places the bets on fiberCostas Troulos, Senior Analystcostas@diffractionanalysis.com
% who –q • Consultant with Diffraction Analysis• Over 15 years of experience in designing and operating telecommunications networks• Blogging about anything broadband: www.broadbandprime.com
A quick look at the Australian NBN Long‐term Goal Services•Replace the copper with fiber in the •Wholesale only, capacity (Layer 2) access network – bitstream equivalent ‐ services•Enable new services creation •Common pricing list for all services across Coverage Costs & Revenues•Network footprint is made of 93% •Public investment will reach $26 bn fiber, 4% wireless and 3% satellite in CAPEX. Annual OPEX: at $2 bn ‐•A total of 181k Km deployment with IRR: 7% 130k Km of road distances and 57k •Revenues: $20 bn Km of transit backhaul
Construction Costs & Service Revenues $10.000,00 $60,00 $9.000,00 $50,00 $8.000,00 $7.000,00 $40,00 $6.000,00 $5.000,00 $30,00 $4.000,00 $20,00 $3.000,00 $2.000,00 $10,00 $1.000,00 $‐ $‐ upper bound lower bound NBN Cos fiber access ARPU The cost per home passed stabilizes The ARPU is expected to grow by 52% after the 4th year of construction by the end of the construction period
Customer BaseRetail Service Providers Mobile Operators Content Providers Non‐telcos• Maintain or • Become • Leverage fiber • Public utilities and advance their independent from access broadband positions in the average quality DSL infrastructure for resellers broadband market for base station streaming content interconnections directly to end‐ • Improve operations• Move more users (e.g. smart aggressively into • Meet growing metering) delivering advanced demand for • Leverage national content services backhaul or global brand for • Use established bandwidth customer branding to expand• Meet growing end‐ acquisition service porrtfolio user demand for • Advance offerings bandwidth to fixed‐line • Save money on markets (picocells) telecoms and IT expenditures
Modular design and long‐term partnerships Clusters of Fiber Connectivity Point of Distribution Areas Serving Areas Interconnection Fiber Network Access Access Node Point Owners and real‐estate Leverage on ducts and Use 60% of the developers will build manholes of Telstra’s access collocation and internal cabling network (75%) interconnection facilities of Telstra Use lead‐in conduits Leverage on poles and ducts of from Telstra and own public utilities and other Lease dark fiber from them afterwards (100%) distribution networks (25%) Telstra when needed
Products & Services User Fiber Access Point of Premises Node Interconnection Access Network Backhaul Network Network Architectue Service Overlay User NetworkNetwork Access Virtual Circuit Connectivity Virtual Circuit NetworkInterface (AVC) (CVC) Interface• AVC: price tag starts at $20 for 12/1 speeds. Prices escalate moderately to encourage user to purchase higher speed services• CVC: price tag at $20 per Mbps, purchased on increments of 50 or 100Mbps.
Creating economic space for more businesses $40,00 $35,00 $30,00 $13,00 $8,00 $9,40 $5,42 $5,44 $5,88 $25,00 $20,00 $15,00 CVC Cost $10,00 $5,00 AVC Cost $‐ Base Local non‐ National A regional Regional Regional Scenario telco non‐telco utility niche new provider entrant The margin of cost per connection between an efficient large‐scale provider and a small niche provider creates opportunities for wholesale resale business models
Go‐to‐market strategy• Ink deals with the big boys – Telstra: Definitive agreement ensures copper disconnections and migration of HFC customers (estimated cost: $9 bn after tax) – Optus: Agreement for migrating HFC customers (estimated cost: $800 mn)• Connect end‐users without extra cost during the initial stage of deployment• Run workshops with Retail Service Providers• Showcase advanced applications (Healthcare)• CVC rebates: rebate the charges of the first 150Mbps if the service area has fewer than 30.000 homes passed
Positive reactions from the consumers and the industryHomes Passed Homes connecting Homes activated 14.000 50‐80% 800 2.200 greenfield areas applied: New applications: A sum of 176.000 premises 50 per week19 RSPs have signed up for 10 RSPs are already certified to connecting to NBN connect to the infrastructure
Current achievements & future issues Market is effectively separated: Telstra submitted a Structural Separation1 Undertaking and a draft migration plan for approval by ACCC. Uniform wholesale pricing: A major development for the Australian market. It2 implies subsidization between urban and rural users. Passing capital investments to operating costs may push back the investment3 returns and does not advance the business case of the network. The market is completely restructured making hard to comprehend how the new4 whoesale monopoly will influence business strategies and market development.
Lessons learned for fiber access providers• Reach out to the consumers; they are eventually your end‐customers• Synchronize your strategy to the needs of the market; Create a level playing field; Involve all stakeholders in your plans; match your business with your buyers’ business• Expand your customer base; Extend offerings to non‐ telco customers because disruptive technologies need greater audience to enhance penetration• Keep a low commercial profile: refrain from offering retail products and befriend to your buyers
“Something has to happen, before something is going to happen” Johan Cruyff
Thank You ! Costas Troulos (@ktroulos) email@example.com