Key Findings in Donegal

Jukka-Pekka Joensuu

February 12, 2013

PwC8. kesäkuuta 2012

1. Traditional telco building the network on market basis1. This can be achieved in areas with Rate of Return above 15 % or there is a strong

market incentive to build a next generation networks. This is achieved with vast financial resources provided by traditional telco and with minimum public intervention. Not likely to happen in rural areas without significant political pressure..

2. There is a Newco (new company) set up initiated by the local community and structured as cooperative and local municipality or region providing financial support by means of guarantees, loans or other financial support

3. There is a Newco set up started and initiated by the municipality or municipalities. This can be seen as a regional development fund to initiate ICT investments in local areas

4. There is a public –private partnership model which can be a combination with models 1+3 or 2+3 or 1+2

5. For a pure network company the aim for rate of return is between 5-8 %1. The incentive of building such network by means of non profit corporation is the

idea of boosting development and innovations with building HSB and the profits come via employment and development in the region

Background and ways of building HSB in rural areas

PwC8. kesäkuuta 2012

Four critical factors in successful rural broadband roll-out

1. Make a viable investment plan 1. HSB business model is a investment-driven business model with vast sunk costs.

This makes investment planning crucial part of business plans and the roll out has to be planned in controlled manner

2. Regional planning of broandband investments has to be user driven and also network topology planning has to follow different users, such as households, masts for the mobile operators, community buildings and corporate areas

2. Pricing of connection fees 1. Pricing of set up fees and monthly recurring charges is basis for investment payback

times, interest rates, penetration rates and risk allocation with the previous factors 2. Penetration schemes related with pricing are crucial

3. Business-like planning 1. Revenue allocations and cost structure together with streamlined organisational

structure for basis for profitable investment schemes and help in preparing for viable business plan and investment structure

2. Even for the municipalities run networks in a non-profit organisations business planning is a key factor

4. Strategic view on tomorrow´s society and digital needs justify the necessary investments 1. There are direct implications to the overall competitiveness in rural areas and

strategic thinking in relation to the decision-making process; in tomorrows society HSB is a key strategic choice and regional development factor

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