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Economic issues of (broadband)
access networks
C. Courcoubetis
Economics of access - 2C. Courcoubetis
Topics
Broadband access networks*
Economics of deployment*
Municipal access networks
Πρόσκληση 93
* WIK Consult: The economics of NGA
Economics of access - 3C. Courcoubetis
The importance of access networks
For providers: it is the most expensive portion of their infrastructure, thus making the right access architecture investment is critical to their ongoing business success
Wireline networks: cost for trenching, ducting, strands of copper/coax/fibre,… to customer premises
Wireless networks: license for spectrum, antennas, …
– Less cost but limited bandwidth
For regulators: open access to the incumbent’s “last mile” is critical for competition to flourish
LLU (Telecom Act of 1996),…
“Investment Ladder” concept
For users: traditionally it poses performance constraints to those that expect advanced services
Architecture
Economics of access - 5C. Courcoubetis
Broadband access network architecture
FTTC - VDSL
FTTH Passive Optical networks (PON)
FTTH Point to Point (P2P)
Economics of access - 6C. Courcoubetis
NGN/NGA architecture
Economics of access - 7C. Courcoubetis
FTTC-VDSL
Economics of access - 8C. Courcoubetis
FTTH-PON model
Economics of access - 9C. Courcoubetis
WDM PONs
Economics of access - 10C. Courcoubetis
FTTH Point-to-Point model
Economics of deployment
Economics of access - 12C. Courcoubetis
Economic issues for NGA
NGA technologies considered: FTTC, PON, P2P
Interesting business cases: what are the conditions
under which NGA deployment is viable?
Under what conditions it is replicable? (second mover)
Standalone operators acting as first movers
Second movers
Different assumptions of regulatory intervention (% of
shared infrastructure with first mover)
Key factors: market share (cost per subscriber depends
on population density), ARPU (average revenue per
user)
Economics of access - 13C. Courcoubetis
Cluster definition
The model will determine the minimum market share/cluster
Economics of access - 14C. Courcoubetis
Example: Germany
Economics of access - 15C. Courcoubetis
Results
Economics of access - 16C. Courcoubetis
Results
Economics of access - 17C. Courcoubetis
Germany
Economics of access - 18C. Courcoubetis
Itally
Incumbent
Second mover
Economics of access - 19C. Courcoubetis
Europe
Economics of access - 20C. Courcoubetis
Analysys reportGeneric model of ROI fro an operator in a typical European country 10m
Business models for municipal access
networks
Economics of access - 22C. Courcoubetis
Municipal access networks
The ultimate goal from a public sector point of view is to create a
situation in which access and services are offered by a number of
competing service providers, driving down costs for consumers and
businesses and generating a broad range of high-quality, innovative
broadband services.
Broadband is a “moving target”; currently can be considered as
symmetric connectivity at 4Mbps or over
Economics of access - 23C. Courcoubetis
Factors to be considered
The geological/geographical situation of the city or region (e.g. rural mountain area vs.metropolitan area);
Demographics and concentration of population / businesses in given geographical areas;
The amount of dark fiber infrastructure already in the ground and/or the availability of civil infrastructure which can host fiber (e.g. pipes and ducts used for water, gas or electricity);
Local expertise in operating broadband infrastructure, managing access and providing services;
The degree of existing competition in telecommunication services and the strategy of the main telecommunication provider in relation to the provision of real broadband;
Economics of access - 24C. Courcoubetis
Broadband Building Blocks Building Block 1: Passive Infrastructure is the
physical infrastructure that is used to provide the broadband connectivity and may consist of fiber optic or copper cable.
Building Block 2: Active Infrastructure consists of the elements used to transmit, forward and route information data packets over fiber optic or copper cables. The main elements are switches and routers
Building Block 3: Service Offerings are the actual services offered to customers.
Building Block 4: Operating Company is the company that maintains and operates the active and passive network elements.
Building Block 5: Existing Telcos and Content Providers
Building Block 6: Public Sector, Residential and Business Customers
Economics of access - 25C. Courcoubetis
Equal Access
City utility builds passive infrastructure
Active elements are added and operated by an operator
Providers of services and content buy (wholesale) access service
Low barriers to entry stimulates competition and creation of advanced services
Economics of access - 26C. Courcoubetis
High Level Functional Diagram of Equal
Access Business Model
Operating company maintains a portal of available service and content offerings
Customers select offerings from portal and billing data are passed to the respective provider
Customers pay their provider directly
Economics of access - 27C. Courcoubetis
Variations of the Equal Access Model
Public-Private Partnerships –
PPPs orchestrated
•City utility acts as the coordinator
and adds infrastructure where
needed
•A joint venture manages the
aggregated passive infrastructure
as a single asset
•Case-study: Amsterdam city (NL)
Public Sector Telco
•Public sector takes responsibility
for the active infrastructure as
well as providing the passive
infrastructure
•Case study: Catalonia (ES)
Economics of access - 28C. Courcoubetis
Sole Private Service Provider
City utility builds passive infrastructure
Operating company does both network management and service provision
Temporary solution until critical mass of customers is achieved
Case study: Stockholm (SE)
Economics of access - 29C. Courcoubetis
Full Public control through Public-
Private Partnerships –PPPs
Public involvement in all aspects of the project including the infrastructure (passive, active) and services.
The case for remote or rural communities, where no service providers is willing to invest
Case study: Siena (ITA)
Economics of access - 30C. Courcoubetis
Four Stage Roadmap for a Broadband City
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