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National Broadband Networks NBN Developments and Key Implementation Considerations

April 19th, 2012

NLA Business Consulting Department

WHY NATIONAL BROADBAND NETWORKS

2 KEY IMPLEMENTATION CONSIDERATIONS

1

3 CASE STUDIES

AGENDA0Agenda

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4 CONCLUDING REMARKS

+10%

Broadband penetration

+1.3%

GDP

+2-3%

Employment

Productivity + 5-10%

CO2emission

-5%

Stimulateinnovation

ECONOMICS AND ENVIRONMENTAL …AS WELL AS SOCIAL…ARE THE DRIVERS

1Why National Broadband Networks

NLA Business Consulting Department

Source: Several Consulting Groups

Total investment close to 36 billion Euros over ten years (2010-2020)

It would generate 968,000 incremental jobs541,000 are derived from construction of the network

427,000 job will be generated resulting from enhanced innovation and new business creation

Incremental economic growthNetwork construction would yield additional value added of 33.4 billion Euros

Network externalities 137.5 billion Euros

In total this results in 170.9 billion Euros of additional GDP (0.60 % GDP growth) in Germany

Source: Business Strategy Research, Columbia Institute for Tele-Information (CITI)

1Why National Broadband Networks

IMPACT OF NBN ON GERMAN ECONOMY AND JOB MARKET

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Objectives & Goals

U.S.2010-2020, $7.2B, 100M lines

BrazilPBNL, 7.2B$ in five year time in which 45% is in metro network

France2008-2012 100M, €2.68B

Germany2010-2014 50M, €0.15B, 75% coverage

Spain2007-2010, 100M, $1.42B

Finland2010-2015, €0.2B, 0.2M lines

UK2010-2017, 100M, ￡ 1.5B, 90% coverage

Poland2011-2013, € 1.58bn

KuwaitMOC, Planning

QatarQtel, National strategic investment, quick start

IranTCI, Billion project, in progress

U.A.E.ET, Leader in ME

Australia2009-2017, 100M, $30B, 93% coverage

Japan1996-2012, 100M, $30B, 100% coverage

Korea2003-2012, 1G, $0.94B, 100% coverage

Malaysia2007-2017, 10M+, $2.2B, 38% coverage

Singapore2009-2015, 1G, $0.7B, 100% coverage

NZ2009-2019, 100M, $1.3B, 75% coverage

Sweden2009-2013, €1B, 1M lines

Denmark2010-2015, €2B, 2M lines

South Africaplanning

Egyptplanning

Argentinaplanning

Greece, Hungary, Bulgariaplanning

Italia, planning

AS SUCH A GLOBAL WAVE OF NBN DEVELOPMENTS IS DEVELOPPING

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1Why National Broadband Networks

Source: Huawei Analysis

Infrastructure

Provider

Vertical integration Passive infra sharing Active infra sharing De-aggregated structure

Integrated

Network

Operator Infrastructure

Provider

Network

Operator

RSP RSP RSP RSP RSP RSPOperator

Operator

Operator

Provider

Provider

Provider

MARKET STRUCTURE(S) TO STRIVE FOR

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2Key Implementation Considerations

Services

Infrastructure

Operator to build NBN with government supports, saved investment by reusing existing infrastructure Investment by both government and operator—Malaysia provides 20% fund to TM.

Government totally invest or subsidy—Qatar supports Qtel for national FTTx.

Set up new entityGov sets up a new entity – Australia NBNCo

Operator sets up a new entity – Singapore Nucleus Connect

Passive Network

Provide Services

Provide Services

Provide Services

Passive Network

Active Network

Provide Services

Services Providers Communication

Provider Infrastructure

Provider

Wholesale Provider Services Providers

Infrastructure Provider

Communication & Service Provider

End-to-End Provider

Passive Network

Active Network

Passive Network

Active Network

2

CONSTRUCTION AND OPERATION MODELS

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Construction Model Operation Model

Provide Services

Active Network

Key Implementation Considerations

Cost analysis decides the demarcation of these technologiesAustralia NBN choose 93% fibre, 4% wireless and 3% satellite tech to reach 100% coverage

Source: Implementation Study for Australia NBN

TECHNOLOGIES SELECTION

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2

Each Technology has its Sweet Spot Investment Analysis

Source: Huawei Analysis

Key Implementation Considerations

Small to Medium Level of investment

Short Term payback (1-2 years)

Higher Risk High Return

Medium Level of investment

Medium Term payback (5-7 years)

Higher Risk Medium/High Return

Huge Investment and sunk costs

Long Term payback (20 years or More)

Low Risk Low Return

2

REASONABLE/SUSTAINABLE ECONOMICAL MODELKey Implementation Considerations

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Provide access to right of ways (e.g. sewers, poles, …) Synchronise civil work to reduce costs and TTM Mandatory fiber pre-cabling for new buildings

Public authority as an anchor tenant Deliver concession, Provide RoWs Subsidies, loan with low/no interest and tax incentives

Invest in part of the value chain (e.g. passive infrastructure) Develop PPP Establish new operator, new market structure

Asymmetrical regulation (e.g. duct access, fiber unbundling, …) Symmetrical regulation (e.g. last drop and in house wiring) Interconnection

Economy recovery package Digital economy plans, financial aid for non-economical areas Intervention of local authorities

Legislation

Investment

Create IncentiveReduce Risks

Regulation

Policy

2

SUPPORTIVE MEASURE(S) TO FOSTER NBN DEPLOYMENT

Content Availability ConvergenceOthers

Source: Huawei Analysis

Key Implementation Considerations

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Owner Total Budget:1,581M Services Solutions

Regional Broadband Networks

Regional Marshal Office

957 M Euro Broadband, Distribution

C:2C Networks

DWDM,IP Switching/Routing

BRASNetwork Management

8.4 Initiative SME sector, Non-profit NGO’s

200 M Euro Access NetworkLast Mile GPON, DSLAM, WiMAX, WIFI

8.3 Initiative Local governmentnon-profit NGO’s

364 M Euro Access LinesDSLAM,

Wireless 3G AccessComputers

RuralDevelopment

ProgramCommunies 60 M Euro Access Network

Last Mile GPON, DSLAM, WiMAX, WIFI

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POLAND3Case Studies

Area Owner Services Solutions

Zone 1High

economic impact areas

TM ( has entered into a public-private

partnership (PPP) with the government to roll

out high speed broadband in excess of 10 Mbps in this zone. )

High speed broadband

Multiple broadband technologies simultaneously

Zone 2Other

urban and semi urban

areas

Private initiatives Broadband ADSL , WiMAX

Zone 3 Rural areasSKMM (using Universal Service Provision funds)

Basic telephony

(through fixed and mobile network)

The cellular coverage in these areas will be widened by building more communication

towers funded through USP to facilitate the cellular operators to expand their coverage

to 97% of population

3Case Studies

MALAYSIA

NLA Business Consulting Department

Over 50 CountriesOver 100 Billion

USA

Speed

2015 2020

50M

100M

23billionUSD/3years

China

Australia

35billionUSD

New Zealand

1billionUSD

Malaysia

3.3billionUSD

Kuwait

500millionUSD/5years

France

18billionUSD/15years

Italy

11billionUSD/10years

Portugal

1billionUSD/3years

Brazil

6billionUSD/5years

NBN Wave

Enhance international position

and influence of the nation

Singapore

1billionSGD

10% increase in BB penetration,

employment rate increased 2-3%

10% increase in BB penetration , 1.3%

GDP increased

Innovation will induce much

revenues

4Concluding Remarks

COUNTRIES DO RECOGNIZE THE VALUES OF NBN…

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Source: ARCEP

Density is a Key Variable Heterogeneous Population Distribution

Black/Market driven area

Grey/Risk driven area

White/Policy driven area

4Concluding Remarks

…AS SUCH THE QUESTION IS NOT “WHETHER” BUT “HOW”

NLA Business Consulting Department

Source: FTTH Council Europe

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The information contained in this document is for reference purpose only, and is subject to change or withdrawal according to specific customer requirements and conditions.

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