Transcript ASTEL annual conference

Open Networks
Why? When? How?
Ivan Dimitrov,
BA Broadband Networks, Ericsson
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Agenda
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Broadband for all
What is an Open Network?
Why invest in Open Networks?
When to start investing in Open Networks?
How to invest/build Open Networks?
Summary & Conclusions
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Broadband for all
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KPN Annual Event
Brussels, 14 January 2008
Viviane REDING
Member of the European Commission responsible
for Information
Society and Media
"How we treat next generation access is (…) the single most important policy question in the telecoms sector
today. We have to create incentives for investment whilst making sure that no-one (and I insist on this no-one), can be
in a position to foreclose the market.”
“Regulation will have a role to play to keep networks open and to guarantee progress, efficiency
and choice
“Point-to-point fibre deployment (...) is in fact the only fully future proof approach in terms of ability to deliver more
and more capacity as techniques improve and as demand grows. Moreover it is the only approach to next generation
access that permits a completely open access policy.
“……….initiated by municipalities, in cities such as Stockholm”
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Addressing the needs for all…..
Public
Safety &
Security
Advanced services
for citizens
VoIP, Video & TV
Health
Services
(e-health)
Care for the
elderly
e-Government
State-of-the-art
ICT infrastructure
for businesses
Education
(e-learning)
Services
for disabled
citizens
Broadband can help overcome the challenges
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”A historical perspective”
- Electricity
Initial Market
Development
- Privately owned companies started deploying power plants in piecemeal
fashion in late 1800s
- Investments were mainly concentrated in profitable markets
- Serving large cities, established businesses & wealthy homes
- Large segments of the markets, especially rural and low income areas were
left in the dark
Consequences
Eventual
Industry
Structure
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- High degree of market concentration in the hands of small number of
vertically integrated companies ”monopolies”
- Establishment of publicly owned municipal electric ultility companies
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The Case for Municipal
Broadband - The drivers
1- Failure on part of private companies to invest in specific
geographic areas that do not meet the investment criteria of
quicker ROIs
Market
Failure
2- Tendency towards ”natural monoply” due to high capital intensity
and low marginal returns
- Lower marginal cost, leads to low prices/profitability
and eventual consolidation
1- Broadband, an essential public service and not a luxury
2- Sate-of-the-art broadband infrastructure, critical to improve
community’s economic vitality
- Attract/retain investments
- Creation of jobs
- Retain and attract new citizens
- Foundation for knowledge based economy
Economic
Development
3- ”Eliminate” the ”digital divide”
4- Sustainability
The drivers for municipal broadband today are the same as were for municipal
electricity, a century ago
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What is an Open Network?
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Open Network definition:
In telecommunications, Open Network, or Open Access to
Communication resources, means that anyone, on equal
conditions with a transparent relation between cost and
pricing, can get access to and share communication
resources on one level to provide value added services on
another level in a layered communication system architecture.
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Generic Open Network Model
Service cost
Customer
Com.operators
Public sector
Enterprise
Other operators
Telecom Operator
Service
Portfolio
Property
Property
Network
Network
Property
Property
Network
Open on service level
Network
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Open on infrastructure level
City Network
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Open Networks - Why?
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Alternative Infrastructure Ownership
Service
SP
SP
Provider
Service
SP
SP
Provider
Active
Infrastructure
Inf Owner
Active
Infrastructure
Active
Infrastructure
Passive
Infrastructure
Passive
Infrastructure
Passive
Infrastructure
Pros:
-Better asset utilization
through sharing
-Easier classification of
assets based on risk class
-Shift of competition from
infrastructure to services
Cons:
- Need for open/common
interfaces
Pros:
-Better asset utilization
through sharing
-Easier classification of
assets based on risk class
-Shift of competition from
infrastructure to services
Cons:
- Need for open/common
interfaces
Pros:
- Suitable for traditional
commercial services
Cons:
-Infrastructure based
competition
- Not suitable for public and
new type of commercial
services
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Service
SP
SP
Provider
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Open Access Benefits
 Municipality owned fiber infrastructure used by different
service providers
– Deployment & operations cost split among different entities
– Better utilization of assets/infrastructure through sharing
 Shift of competition from infrastructure to services
– Consumers have access to competitive service offerings
from various service providers
– Higher service take-up
 No co-ordination problems
– Same streets do not need to be digged every time a new
telco enters the market
– Fiber deployment is part of city planning, rather than Telco’s
market strategy
Open Access, a key enabler for municipal broadband
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Open Networks - When?
Now!
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Critical success factors
Demand
Supply
Infrastructure
IS literacy
Content and Services
Modernized enterprises
Prices (affordable)
Modernized Public
Administration
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Europe
Commision Broadband performance index
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Open Networks - How?
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City networks in Sweden
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153 City networks (of 290 munic)
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Most started as branches of munic owned power
companies
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Today direct munic owned or separate
companies
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95 % offer dark fiber
Lokala Bredbandsnät
2006 - Ägande
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60 % of all fiber lease in Sweden through city
network.
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Co-operate to provide crossover connections
Saknar
(114)
Kommunalt(139)
Privat
(16)
Blandat
(21)
Swedish City Networks Association
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Network levels
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Generic Open Network Model
Service cost
Customer
Com.operators
Public sector
Enterprise
Other operators
Telecom Operator
Service
Portfolio
Property
Property
Network
Network
Property
Property
Network
Open on service level
Network
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Open on infrastructure level
City Network
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Sweden
leading the FTTx deployments in Europe
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A new perspective
High
Requires
Government
Intervention
Commercially
viable
Cost/home passed
Subsidies,
infrastructure reuse, lower cost of
capital, longer
depreciation
Loss
Revenue/Home
Connected
Profit
Deployment
Cost
Profit
Cost/home passed
Traditional
Operators
Low
Structural funding
available from EU/Local
Public authorities*
”New operators”
Municipalities, Utility companies,
real estate etc
High
Low
Population density
People/Sq.km
Municipalities are the key players in the value chain
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Available business models
RSP RSP RSP
RSP RSP RSP
RSP RSP RSP
C.O.
C.O. C.O. C.O.
N.O.
N.O.
RSP & C.O.
Single
Operator
”All-in-a-box”
C.O. & N.O.
N.O.
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RSP = Retail Service Provider, providing the services
C.O. = Communication Operator, investing in and operating the active layer
N.O. = Network Operator, investing in and operating the passive layer
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Business strategy and deployment strategy
Penetration
Services
Provider
FTTC
FTTH
Density
Communication
Provider
+
MBB
FTTB
Fiber
Provider
But how do we proceed
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Layered approach and nationwide deployment strategy
Penetration
Services
Services
Services
Provider
Provider
Provider
FTTH
FTTH/FTTC
FTTC
FTTH
Density
Comm.
Comm.
Comm.
Provider
Provider
Provider
+
MBB
MBB
FTTB
FTTB/FTTH
FiberFiber Fiber
Provider
Provider
Provider
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Ericsson Managed Access
Ericsson offerings
Municipality/Investor jointly own infrastructure
Private
Investors/
Telcos
SP#1
SP#3
SP#2
Business
Consulting
Services
Entity
Ericsson
e-Health
e-Gov
e-Learning
Public Service Portals/Servers
Municipa
lity
Private
Investor
Ericsson
HW/SW
Services
Infrastructure
Entity
Managed
Services
Technology/
Solutions
- Bring in the investor partners
- Setup Ericsson Services entity for managing
operations
- Develop applications/web portals for public services
- Setup service contracts covering SLAs/KPIs to
ensure quality on e2e connectivity
- Provide uniform business processes/procedures for
gaining access to network
- Provide customized connectivity solutions to the
Service Providers
- Provide broadband technology & solutions
- Provide Network design and turnkey roll-out services
Ericsson facilitating for Neutral Governance
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Ericsson´s FTTH offerings
Services
Business Consulting
Active solutions
System
Integration
Managed
Operations
Home environment
Access and site solutions
Metro and IP edge
Technology
Consultation
Passive solutions
 Micronet
 Ribbonet
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Deployment
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Summary & Key take aways
 Broadband is no longer a luxury, but rather a utility
 Broadband is critical for the economic vitality of the
communities and nations
 Deployment of broadband entails huge capital outlays
with tendency for ”natural monopoly”
 Municipalities are therefore ideal entities for
undertaking deployment of broadband infrastructure
 State-of-the-art infrastructure can help municipalities
overcome their challenges by generating additional
revenues, reducing their administrative costs and by
better serving the citizens
Municipal Broadband, a key enabler for driving economy
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