This document discusses the role of entrepreneurial capital in delivering future-proof broadband infrastructure in Europe. It notes that Germany and the UK have very low fiber penetration rates, below 1%, and will require an estimated €80-100 billion to achieve ubiquitous fiber coverage. Current investment from incumbent providers is insufficient. Successful third-party broadband models from companies like Reggefiber, Hyperoptic, Gigaclear, CityFibre and BBP Glasfaserfonds mitigate construction and demand risks through pre-build customer commitment and guaranteed minimum utilization levels, attracting entrepreneurial capital to fill Europe's broadband investment gap.

1. The role of entrepreneurial capital
in delivering future-proof
broadband
James Enck
Budapest, 04/12/13

2. 
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Recovering sell-side analyst
Migrated to principal investing at Merrill Lynch
Corporate development consultant to CityFibre (UK) and
BB Glasfaserfonds (DE)
Analyst/advisory roles with OECD, KPN, Wentworth
Capital, Seim & Partner, Diffraction Analysis, and Telco
2.0
Principal recent activities around fiber infrastructure,
towers and datacenters
Produce occasional rants at eurotelcoblog.blogspot.com

3. Two notable names are missing – UK and
Germany, each below 1% penetration
Source: IDATE/FTTH Council Europe

4. Europe’s largest and strongest
economy
< 10%
10-50%
50-90%
> 90%
Consistent innovator in advanced
and precision engineering and
alternative energy technology
Excellent transport infrastructure
Very high levels of internet adoption
FTTH/B penetration in 2012 0.5%
Huge East/West and urban/rural
divides in availability of >50Mbps
broadband
Source: BBP

5. Principal global financial and media
center
European hub for international IP
transit and home to major
concentration of data centers
Highest level of economic reliance
upon the internet among the G-20
Very high levels of internet adoption
FTTH/B penetration in 2012 0.06%
Huge North/South and urban/rural
divides in availability of >24Mbps
broadband
Source: Point-Topic, Akamai, CityFibre

6. Delivering ubiquitous
FTTH/B in both Germany
and the UK estimated to
cost €80 – 100bn
Current levels of
incumbent investment
don’t come close
Cable networks patchy
and not expanding
footprints
The only answer is from
third party,
entrepreneurial capital

7. Reggefiber has invested c.€1.5bn over 10 years deploying FTTH networks in
smaller towns and cities in Holland. Network covers >20% of all households.
Company employs a successful pre-build demand aggregation program,
ensuring penetration is at least 30% at launch. Earlier projects now 50 – 80%.
Has drawn significant investment from the national incumbent and loans from
EIB/Dutch banks.
Source: Reggefiber

8. Hyperoptic (founded 2011)
Delivers up-to-gigabit services to
large-scale MDUs in major urban
centers
Anchor relationships with
landlords/tenant associations and
demand aggregation
Targets >500,000 households
connected over the next five years
Received £50m investment from
George Soros’ Quantum Strategic
Partners fund.

9. Gigaclear (founded 2011)
Delivers gigabit services to small
(but highly affluent) villages in rural
England, with poor DSL and no
cable
Replicates best practice in pre-build
demand aggregation from
Holland/Nordics
Active in nine communities today,
pipeline of hundreds
Agreement with wholesale platform
to increase service provider diversity

10. CityFibre (founded 2011)
Acquired legacy fiber assets in >50
towns and cities
Anchor contracts with systems
integrators serving the public sector
for transformational metro fiber
networks
York network (pictured) now covers
111km and serves 179 endpoints
Similarly-sized network now
contracted in Peterborough
Strong platform for FTTH/B
extension?

11. BBP a.k.a. BB Glasfaserfonds
(founded 2012)
Strong team of telco/SI/financial
veterans acts as fund manager
1,400 communities (limited cable,
poor DSL) fall into the investment
parameters, deployment hierarchy
driven by ROI
Significant buy-in from incumbent
service providers; ultimate goal is
wholesale migration of existing
DSL/PSTN customers
Significant mitigation of build risk
German population and communities by community size
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
187
1,389
32.8
>50.000
27.5
9,755
10.00049.999
0-9.999
21.5
Einwohner (Mio.)
Gemeinden

12. 
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Two of Europe’s leading economies lack broadband infrastructure
commensurate with their economic and political status
There is an investment gap of tens of billions of euro in delivering
ubiquitous fiber access to UK and German citizens and
businesses
Current infrastructure players face cannibalization risk, and can’t
finance a total refresh of their infrastructure, even if they wanted
to do it...
The gap will be plugged by third party, entrepreneurial
capital, targeting specific market niches
Successful models mitigate construction and demand risks by
locking in customer commitment pre-construction, and delivering
a guaranteed minimum utilization level which gives investors
comfort