1

ITU-D Forum Cairo, Egypt, 13 to 15 December 2010 Session 9_IS - 1

SessionSession 99

Case Study on Economic Impact Case Study on Economic Impact of Broadband Implementationof Broadband Implementation

Ignat StanevIgnat StanevHCTP/ITC, BulgariaHCTP/ITC, Bulgaria

ITUITU --D Regional Development Forums 2010 on D Regional Development Forums 2010 on

NGN and Broadband NGN and Broadband for the Arab Regionfor the Arab Region

““ NGN and Broadband, Opportunities and ChallengesNGN and Broadband, Opportunities and Challenges””

ITU-D Forum Cairo, Egypt, 13 to 15 December 2010 Session 9_IS - 2

Content of the presentation :Content of the presentation :

� Economic Impact of Broadband Implementation

� Problem 1 – Service bandwidth upgrade� on FTTH broadband access network

� on xDSL broadband access network

� Problem 2 – Selection of broadband access technology

� xDSL vs. FTTH for urban brownfield area

� FTTH vs. WiMAX for urban greenfield area

� xDSL vs. WiMAX for rural area

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ITU-D Forum Cairo, Egypt, 13 to 15 December 2010 Session 9_IS - 3

Problem 1 – Service bandwidth upgrade

There is a need to model the impact of upgrading the service bandwidth bandwidth, the service take rate and the service mix on the access network.

For a given market, the access network planners want to perform Bandwidth Upgrade Scenarios, Uptake Growth Scenarios, and Service Mix Scenarios

The access network planners have to dimension the required capacity of the access nodes, to optimize the access network and to calculate related costs to upgrade it.

ITU-D Forum Cairo, Egypt, 13 to 15 December 2010 Session 9_IS - 4

Speed and Speed and bandwidthstatistics related to statistics related to service upgrade service upgrade

Average advertised vs. actual download speed

Offered broadband connection – by price and speed

Source : OECD, TeleGeography,

Point Topic

Source : OECD 2009

3

ITU-D Forum Cairo, Egypt, 13 to 15 December 2010 Session 9_IS - 5

Service bandwidth upgrade – example I

Normal :

Upgraded:

Service:

Service:

Service:

Service:

Service utilization is presented by the Contention Ratio

ITU-D Forum Cairo, Egypt, 13 to 15 December 2010 Session 9_IS - 6

Service bandwidth upgrade – example I

<- Normal

Upgraded:

Bandwidth per service ( Mbit/s )

0

500

1000

1500

2000

2500

3000

3500

FTTH1

FTTH3

FTTH5

FTTH7

FTTH_2

FTTH_4

FTTH_6

FTTH_8

FTTH_10

FTTH_12

FTTH-BUS

FTTH-RES

Bandwidth per service ( Mbit/s )

0

1000

2000

3000

4000

5000

60007000

FTTH1

FTTH3

FTTH5

FTTH7

FTTH_2

FTTH_4

FTTH_6

FTTH_8

FTTH_10

FTTH_12

FTTH-BUS

FTTH-RES

FTTH – Home locations

4

ITU-D Forum Cairo, Egypt, 13 to 15 December 2010 Session 9_IS - 7

Service bandwidth upgrade - example I

Upgraded:

<- Normal

Bandwidth increase :

100 %

164622080

6000FTTH_12

0600FTTH_11

0400FTTH_10

3000FTTH_9

6000FTTH_8

0200FTTH_7

0400FTTH_6

6000FTTH_5

4500FTTH_4

0200FTTH_3

3000FTTH_2

1500FTTH_1

80500FTTH7

204100FTTH6

019000FTTH5

377500FTTH4

281900FTTH3

297200FTTH2

375000FTTH1

FTTH-ResFTTH-Bus

Data connectivity

Service Areas and Sites

329234160

12000FTTH_12

01200FTTH_11

0800FTTH_10

6000FTTH_9

12000FTTH_8

0400FTTH_7

0800FTTH_6

12000FTTH_5

9000FTTH_4

0400FTTH_3

6000FTTH_2

3000FTTH_1

160900FTTH7

408100FTTH6

038000FTTH5

755100FTTH4

563800FTTH3

594400FTTH2

750000FTTH1

FTTH-Res Upgraded

FTTH-Bus Upgraded

Data connectivity

Service Areas and Sites

Bandwidth per service ( Mbit/s )

ITU-D Forum Cairo, Egypt, 13 to 15 December 2010 Session 9_IS - 8

Service bandwidth upgrade - example I

<- Normal

(3 OLT, 17 Splitter 1:8,

89 Splitter 1:4)

Upgraded:

(3 OLT, 28 Splitter 1:8, 93 Splitter 1:4)

Access Network Dimensioning/ Optimization

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ITU-D Forum Cairo, Egypt, 13 to 15 December 2010 Session 9_IS - 9

Service bandwidth upgrade – example I

Costs :

Costs increase :

(relative to all costs) %1.16

10631547188824942809Maintenance

-971-682-1210-6295650Installation

12737-2388-10189-1779100082Acquisition

10/1/201210/1/201110/1/201010/1/200910/1/2008

Difference :

1429314256142081419814172Maintenance

74100255632651Installation

23187543721655072814089Acquisition

10/1/201210/1/201110/1/201010/1/200910/1/2008

Upgraded services :

1323012709123201170411364Maintenance

1045783123568527001Installation

104507825123546851714006Acquisition

10/1/201210/1/201110/1/201010/1/200910/1/2008

Normal services :

ITU-D Forum Cairo, Egypt, 13 to 15 December 2010 Session 9_IS - 10

Service bandwidth upgrade – example I

Costs :

CAPEX

0

100000200000

300000

400000500000

600000

700000800000

900000

2008 2009 2010 2011 2012

Normal

Upgraded

OPEX

0

2000

4000

6000

8000

10000

12000

14000

16000

2008 2009 2010 2011 2012

Normal

Upgraded

Difference Upgraded-Normal

-20000

0

20000

40000

60000

80000

100000

120000

2008 2009 2010 2011 2012

CAPEX

OPEX

6

ITU-D Forum Cairo, Egypt, 13 to 15 December 2010 Session 9_IS - 11

Service bandwidth upgrade – example II

Normal

Upgraded: Upgraded

Service:Service:

Service:

Service:

BUS

RES

ITU-D Forum Cairo, Egypt, 13 to 15 December 2010 Session 9_IS - 12

Service bandwidth upgrade – example IIAverage Bandw idth per Service (for 10/1/2008)

0

20

40

60

80

100

120

CC_01

CC_02

CC_03

CC_04

CC_05

CC_06

CC_07

CC_08

CC_09

CC_10

Service Areas and Sites

in M

bit/

s Data connectivity

Internet-bus

Internet-res

IPTV

POTS

POTS (ADSL)

VoIP

Average Bandwidth per Service (for 10/1/2008)

0

50

100

150

200

250

300

350

400

450

500

CC_01

CC_02

CC_03

CC_04

CC_05

CC_06

CC_07

CC_08

CC_09

CC_10

Service Areas and Sites

in M

bit/

s

Data connectivity

Data connectivity upgradex 2

Internet-bus

Internet-res

IPTV

IPTV Upgrade x 2

POTS

POTS (ADSL)

VoIP

<- Normal

Upgraded:

CC – Copper Cabinets

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ITU-D Forum Cairo, Egypt, 13 to 15 December 2010 Session 9_IS - 13

Service bandwidth upgrade - example II

1.4792.13354.2585401.6200.878.3104.4Total :

0.918000048.664.8CC_10

0.561000029.739.6CC_09

00.089250.178516.88.400CC_08

00.0510.097759.64.800CC_07

00.344250.688564.832.400CC_06

00.28050.56152.826.400CC_05

00.403750.80325763800CC_04

00.5781.156108.854.400CC_03

00.233750.4675442200CC_02

00.1530.30628.814.400CC_01

VoIPPOTS (ADSL)POTSIPTVInternet-resInternet-bus

Data connectivity

Service Areas and Sites

1.4792.13354.25851606.4200.878.3469.8Total :

0.918000048.6291.6CC_10

0.561000029.7178.2CC_09

00.089250.178567.28.400CC_08

00.0510.0977538.44.800CC_07

00.344250.6885259.232.400CC_06

00.28050.561211.226.400CC_05

00.403750.803253043800CC_04

00.5781.156435.254.400CC_03

00.233750.46751762200CC_02

00.1530.306115.214.400CC_01

VoIPPOTS (ADSL)POTS

IPTV Upgrade x 2Internet-resInternet-bus

Data connectivity upgrade x 2

Service Areas and SitesUpgraded:

<- Normal

298.0%

Bandwidth per service ( Mbit/s )

Bandwidth increase :

ITU-D Forum Cairo, Egypt, 13 to 15 December 2010 Session 9_IS - 14

Service bandwidth upgrade - example II

<- Normal

(3 MSAN)

Upgraded:

(5 MSAN)

Access Network Dimensioning/ Optimization

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ITU-D Forum Cairo, Egypt, 13 to 15 December 2010 Session 9_IS - 15

Service bandwidth upgrade – example II

1589527332943305334233743Maintenance

5466-410-230-730-6507486Installation

41524-4830-3250-8050-739065044Acquisition

Total:10/1/201210/1/201110/1/201010/1/200910/1/2008

Difference :

1376893276947276247275347274547273807Maintenance

53423137017601570144047283Installation

2030593130701686015070137201971873Acquisition

Total:10/1/201210/1/201110/1/201010/1/200910/1/2008

Upgraded services :

1360998274214273304272294271124270064Maintenance

47957178019902300209039797Installation

1989069179002011023120211101906829Acquisition

Total:10/1/201210/1/201110/1/201010/1/200910/1/2008

Normal services :

Costs :

Costs increase : (relative to all costs) %1.85

ITU-D Forum Cairo, Egypt, 13 to 15 December 2010 Session 9_IS - 16

Service bandwidth upgrade – example II

Costs :

CAPEX

0

500000

1000000

1500000

2000000

2500000

2008 2009 2010 2011 2012

Normal

Upgraded

OPEX

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

2008 2009 2010 2011 2012

Normal

Upgraded

Difference Upgraded-Normal

-20000

-10000

010000

20000

30000

40000

5000060000

70000

80000

2008 2009 2010 2011 2012

CAPEX

OPEX

9

ITU-D Forum Cairo, Egypt, 13 to 15 December 2010 Session 9_IS - 17

Extension of the service bandwidthupgrade studies

There is a need also to assess the cost for services in order to price products. Such study facilitatescomparison of multiple service costing scenarios for strategic decisions on product pricing.

Additional parameters are:• price per service/bundle of services• growth in customers from each service class• growth in customers from each speed package

The planner have to dimension the access network, to calculate all related costs and based on the expected revenue to providing insight into the Return-on-Investment and the profitability.

ITU-D Forum Cairo, Egypt, 13 to 15 December 2010 Session 9_IS - 18

Problem 2 – Selection of AccessTechnology

Aim is to investigate the techno-economical impact of various access technologies on the network for a given market

Multiple techno-economical studies are carrier out for the purpose to determine the optimum access technology for the network

Selection is done by comparison of the economical parameters for each access technology

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ITU-D Forum Cairo, Egypt, 13 to 15 December 2010 Session 9_IS - 19

BroadbandBroadband access technologiesaccess technologies

Source : OESD 2008

IP

Application of different broadband technologies

ITU-D Forum Cairo, Egypt, 13 to 15 December 2010 Session 9_IS - 20

Broadband access Broadband access –– market share by technologymarket share by technology

Source : Japan MIC

Broadband subscriptions in France

Source : ARCEP

Broadband subscriptions in Japan

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ITU-D Forum Cairo, Egypt, 13 to 15 December 2010 Session 9_IS - 21

Planning guidelines for broadband access Planning guidelines for broadband access technologytechnology

Low subscriber

base

*Wireless

Is area Greenfield

pocket within Brownfield?

OLT exists or planned?

FTTH

Is there high growth for

service demand?

Y

Y

Y

N

Extend network from MSAN

Y

N

Y

N

N

Temp BB wireless / Plan

OLT

N

Is existing MSAN

capacity &BB reach?

* *

Source : STC

Access Network Planning Roadmap

Access Network Planning Guidelines

Sample guidelinesSample guidelines

ITU-D Forum Cairo, Egypt, 13 to 15 December 2010 Session 9_IS - 22

Example I – urban area brownfield

xDSLxDSL vs. FTTH brownfield

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ITU-D Forum Cairo, Egypt, 13 to 15 December 2010 Session 9_IS - 23

Example I – urban area brownfield

FTTH

October 01,20127901

October 01,20111800

October 01,20107601

October 01,20091500

October 01,200830505Splitter 1:32 costSplitter 1:32 _3

October 01,2012900

October 01,2011900

October 01,20106701

October 01,2009600

October 01,200812202Splitter 1:32 costSplitter 1:32 _2

October 01,2012600

October 01,2011600

October 01,2010600

October 01,2009600

October 01,200812202Splitter 1:32 costSplitter 1:32 _1

October 01,20122504000

October 01,20112504000

October 01,20102504000

October 01,20092504000

October 01,200819226001OLTCO_Ubhur

DateTotal New Cost

Total Number Existing

Total Number NewDescriptionPart Number

Node DescriptionNode Name

List of material :

ITU-D Forum Cairo, Egypt, 13 to 15 December 2010 Session 9_IS - 24

Example I – urban area brownfield

UC_1_9a UC_1_1-3Net Present Value

-1000000

-500000

0

500000

1000000

1500000

2000000

2500000

3000000

10/1/2008 10/1/2009 10/1/2010 10/1/2011 10/1/2012

US

D UC_1_9a

UC_1_1-3

xDSL vs. FTTH brownfield

FTTHxDSL

13

ITU-D Forum Cairo, Egypt, 13 to 15 December 2010 Session 9_IS - 25

Example II – urban area greenfield

FTTH

FTTH vs. WiMAX greenfield

ITU-D Forum Cairo, Egypt, 13 to 15 December 2010 Session 9_IS - 26

Example II – urban area greenfield

WiMAX

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ITU-D Forum Cairo, Egypt, 13 to 15 December 2010 Session 9_IS - 27

Example II – urban area greenfield

FTTH vs. WiMAX greenfield

UC_1_9c UC_1_9bNet Present Value

-200000

-100000

0

100000

200000

300000

400000

500000

10/1/2008 10/1/2009 10/1/2010 10/1/2011 10/1/2012

US

D UC_1_9c

UC_1_9bWiMAXFTTH

ITU-D Forum Cairo, Egypt, 13 to 15 December 2010 Session 9_IS - 28

Example III (a) – rural area

xDSLxDSL vs. WiMAX rural area

15

ITU-D Forum Cairo, Egypt, 13 to 15 December 2010 Session 9_IS - 29

Example III (a) – rural area

WiMAX

ITU-D Forum Cairo, Egypt, 13 to 15 December 2010 Session 9_IS - 30

Example III (a) – rural area

xDSL vs.

WiMAX

rural area

Net Present Value

Rural area -Tskneti-WiMAX-b-Year2; IRR=86.4%; Rural area -Tskneti-xDSL-Year2; IRR=0%

-100000

-80000

-60000

-40000

-20000

0

20000

1 2

in E

uro Rural area -Tskneti-WiMAX-b-Year2

Rural area -Tskneti-xDSL-Year2

16

ITU-D Forum Cairo, Egypt, 13 to 15 December 2010 Session 9_IS - 31

Example III (b) – rural area

xDSLxDSL vs. WiMAX rural area

ITU-D Forum Cairo, Egypt, 13 to 15 December 2010 Session 9_IS - 32

Example III (b) – rural area

WiMAX

17

ITU-D Forum Cairo, Egypt, 13 to 15 December 2010 Session 9_IS - 33

Example III (b) – rural area

xDSL vs.

WiMAX

rural area

ITU-D Forum Cairo, Egypt, 13 to 15 December 2010 Session 9_IS - 34

Improvement of the selection of access technology studies

Present core network portion in the network expenses :• as additional average cost per customer• as total additional cost, related to the

uppermost access network node

Present additional costs related to running the business ( marketing of services, customer care, etc.) :• as additional average cost per customer• as total additional cost, related to the

uppermost access network node