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What are the Key Success Factors for viable and
enticing FTTH deployment in Europe?
Dorian OrtollandConsultant at Capgemini
3,5 million FTTH connections in service in Europe (October 2010)
Nearly 75% of FTTH subscribers are located in Sweden, Italy, France, Norway, the Netherlands and Denmark
8 millions FTTH subscribers forecast for 2012 The total number of households passed which has nearly tripled
in 2 year, from 5,8 to more than 18 million
FTTH: European market overview
SFR, Free, Orange, Noos:
22 FTTB/H public projects
KPN : FTTx projects 40 Local FTTH
projects
DONG Energy/TDC
14 FTTH projects done mostly by local utilities
Fastweb: FTTH since 1999
Telecom Italia: FTTB/C
B2 and Bostream: FTTH since 1999 150+ Local FTTH
networks
Dispersed market with over 410 FTTx projects
FTTH market forecasted growths
FTTH forecasts from 2007 to 2013 in terms of thousand households connected
The development of FTTH in each European country Depends on: The importance operators give to
VDSL and other broadband technologies.
The competition level on the market and the role of public authorities
Cities and regions ambitions in terms of FTTH deployments
FTTx deployments in Europe as of October 2010 shows that
the FTTH market in Europe continues to grow
Technologie: GPON vs P2P
◦ Users aggregated in the OSP (passive outside plant) This considerably reducing fiber in the
CO (central office). ◦ An optical splitter which is a
passive device is set up in OSP High stability, low failure rates and no
requirements for cooling or powering.
◦ Ethernet-based technology The direct fiber access to individual
subscribers Future proof solution which allows virtually
unlimited bandwidth per customer A kind of network showing higher flexibility
and allowing more subscriber management.
◦ Allowing also more scalability by the easy replacement of end devices in case of the use of another technology
PtM PON (Passive Optical Network) P2P AON (Active Optical Network)
Technologie: GPON vs P2P PtM PON (Passive Optical Network) P2P AON (Active Optical Network)
◦ Speeds up to 2,5 Gbps for downstream and up to 1,25 Gbps for upstream.
◦ PON infrastructure mostly used for mass-scale deployments Low total cost of ownership (TCO) Passive outside plant (OSP) and long reach.
◦ “Fiber troubleshooting” is simple with P2P
◦ Strategic possibility to include or exclude some operators. Interesting for operators trying to improve
their position within the market.
The bandwidth shared among all users on the tree.
A strong encryption required to prevent security failures.
Corrupt one CPE can impact the entire PON tree.
The maximum number of customers per tree is rarely reached
The LLU is also virtually impossible
GPON would bit less relevant for Greenfield scenarios
PON inconveniences.
Passive Optical Network Architecture
Technologie: GPON vs P2P
Requires much more fibers and OLT ports (One port per homes)
Need for a deployment of active equipment in the outside plant
the CO consumes 3 times of what consumes PON’s CO
More complicated to implement on aerial cabling
PtP inconveniences.
Home Run Fiber Architecture
Technologie: GPON vs P2P
Multi-fiber Model for PON and P2P architecture
Multi-fiber architecture deploys more than one single fiber per home. Multi fiber enable several operators in parallel to get access to the same customers The multi-fiber model generates more competition at deeper level than service wholesales.
Multi-fiber Model for PON and P2P architecture
Higher number of fibers per customer leads to additional works Total investment for a multi-fiber network is between 10 % and 20% higher than for the comparable single fiber networksBut in term of relative value, a multi-fiber approach with two operators reduces investment per operator by about 40 % to 50 %
Multi-fiber Model for PON and P2P architecture
The highest increase in investment results especially for P2P. The effect is higher for P2P, because the more fibers are deployed, the lower is the incremental investment per fiber
FTTH network‘s organisational choice
Network operator
Service Providers
End users
Network owner
Network
infrastructureNetwork operation Commercialisation
Owns and operates the nework and resell capacity to service providers
Owns the passive layer. A private company opereates the active layer and resells dark
fiber and capacity to service providers
Owns, operates and provide services over the network
FTTH organisational choices
Direct subsidy
Charging Users
Compensation Fund
Local government pays for passive network Management of active layer concedes to
private carrier‘s carrier Pay back from active layer resell
Financed by access charges Each user pay for his access to the fiber We usualy see price from 300 to 3000 euros
Sector-Internal Financing by a Compensation Fund
All market participants contribute Complement of Govn‘t fundings
Coverage of local govt needs
Local govt owns the network
Easy to implement
Cheapest way
A Mix of public/private fundings
Impact on local taxes
State aid
Can reduced network usage
Needs 40% FTTH penetration
I f the base is small, rates will become too high.
Financing Network Deployment strategy
Co-Investment
Local government invests as a private player (through a venture deploying the network)
No state aid Local govt
shares the risk of failure
Need to find private partners to invest
Key actors for FTTH deployment in Europe
High investments Regulation on SMP and
unbundling of their infrastructure
Key Actors
Incumbents involvement
Government
Ultra-high broadband strategies Public subsidies
Municipalities and local authorities
Involvement of energy utilities controlled by municipalities
Local initiatives in rural areas against a lack of private investments
Regulator
Adequate rules and regulatory framework
ISPs
Fair, transparent non discriminatory access to key infrastructures
Clients
SMEs: access to affordable Ultra-Broadband and competitive offers
Private: decline on tariffs
EU commission
Measures to facilitate access to physical infrastructure
Creation of BEREC, the European regulator
Implication of government and public authorities Several countries presented a government involvement under national broadband
strategies or specific regulations
Broadband Action Plan
€200 Mio investment €67 Mio government
subsidies Aid for rural areas
only for OAN
Government strategic orientation
Law 32/2009 to regulate the access to infrastructure
Creation of a central data base of ducts and infrastructure
€800 Mio credit to support a €1 Bio investment by 4 main operators
French regulation and investment
Dedicated regulation according the type of zones
Grand Emprunt in 2009: €2 Bio
Call for FTTH pilots project: €500.000 per projects
Public authorities often involved in rural areas More than 173 power utilities controlled by municipalities involved in a FTTH deployment in
Sweden More than 70 active corporations which build and operate fiber networks in Norway
The involvement of the government and public authorities could have a strong leverage effect for the deployment of FTTH under OAN model
Role of public authorities and utilities
Municipalities and utilities are still the main category of players involved in FTTH deployments in Europe as they
represent 58% of total number of projects.
◦ Reasons Guaranteeing economic prosperity Allowing the retention of existing businesses ,the attraction of new
ones. Territories becoming more attractive Enabling innovative e-services for inhabitants and businesses
Speeds and scope of FTTH deployments closely linked with regional authorities’ involvement.
Utilities and FTTH
Assets and advantages from utilities for FTTH deployment ◦ Assets allowing them to easily enter the telecoms
market Owning energy network supporting the deployment of new
telecommunication infrastructure. Putting fiber on the high, medium and low voltage ,very
much cheaper than digging an underground network. The building costs considerably reduced by using existing
resources and the planning could be done faster Knowledge of existing networks and topology often already
overtaken into a GIS (Geographic Information System)
◦ Some utilities teaming up directly with operators in order to reduce the investment costs related to the
FTTH investment. Utility’s image and credibility facilitating the commercialisation
among the end users
Open Access Network‘s Organisation
Network operator
Service Providers
End users
Network owner
Equal conditions access to the broadband telecoms network
Network
infrastructure Network operation Commercialisation
Choice and creation of the carriers’ carrier
!
Based on three main principles
NeutralityNon-
discriminationTransparencyPublic availability of essential information
related to the OAN infrastructure and its
operation
Guarantee of neutrality related to
geography and technology oriented
issues
Treatment of all service providers or entitled entities requesting access to the Open Access network in equal conditions
Open Access can help alleviate specific barriers to develop FTTH, increasing competition, reducing costs and allowing public authorities to operate into the
telecom market
Open Acces and FTTH
A valuable alternative model Open access offers, lowers the financial
barriers to entry for operators, but also increases the profitability in the upper layers of the market and can also serve more efficiently the local communities.
What are the benefits? Bring faster payback period on the fiber
investment Accelerate service take-up for faster ROI Comply with regulations for open &
competitive access Allow innovation and faster introduction
of new services Support a competitive retail environment Promote flexible end-user choices
Methods used to enable Open Access for FTTH
Methods employed will vary from country to country, regulator to regulator as local market conditions are taken into account.
Open Access methods into two main groups, service access and fiber access.
Service AccessA wholesale service offered by the infrastructure provider whereby the
competitive provider has no equipment co located with the infrastructure provider but the
customers will have access to their content and services via the fiber access network.
Fiber AccessAwholesale service whereby the CP will co-
locate network elements at some point in the fibre access network. This could be at the CO
or further towards the customer premises.
OPEN ACCESS refers to the situation where multiple retail service providers may use the FTTH Network on an equable base by connecting at a packet layer interface and compete to offer their Services to end users
OPEN ACCESS refers to the situation where multiple retail service providers may use the FTTH Network on an equable base by connecting at a packet layer interface and compete to offer their Services to end users
But OAN not a concern by public authorities only
Incumbents could be reticent regarding Open Access◦ More competitors◦ Less customers, less direct revenues◦ Utilization of their capacity of investment by alternative operators without taking the
risks However, some incumbents see specific chances with the model
Multifiber model in partnership with municipal utilities At least 1 fiber dedicated to Swisscom to provide its own services Generate revenue from the fiber renting
Joint Venture Model Agreement with the regulator OPTA to implement the concept of Open Network
Some incumbents promote Open Access for their deployment, with or without specific regulation, principally for the high revenue from the leasing of the fibers but also to become a key infrastructure provider
Probably choose as the only operator for the Strategy for Ultra-High broadband
Incitement to deploy multi-fiber network
French cooperation between SFR and the incumbent
Agreement between SFR and Orange (incumbent) to test co-investment in a trial
Investments will be shared and every holder owns the network depending on their investment
Roll-out in two municipalities (Bondy and Palaiseau)◦ SFR will build network in Bondy and Orange in Palaiseau
SFR and Orange plans to form a company open to any operators who wish to join it
Bondy
Sharing point
Palaiseau
Between 100 and 1000 HH
Orange‘s fiberSFR‘s fiber
Nobody can deploy the fiber without Orange. But no more that Orange can make it alone.
SFR communication
Orange is changing its mind from closed to open network. Covering rural areas is really difficult without the help of the investment capacities of the incumbent,
thus Open Network become an adequate solution
In this presentation, we aimed to indentify the key success factors for a viable and enticing FTTH deployment in Europe.
The key elements are: ◦ Regulatory framework and governmental incentives◦ The local authorities and utilities involvement. ◦ The Private Public Partnership option◦ The organizational choice (3 layers)◦ The network access, Open/Close Access ◦ The technological and architectural choice
Criteria for FTTH new project assessment
Thank you for listening
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