It has been quite a while since I wrote a post on this blog. Work, mostly, and other engagements have kept me away from the blog the last months. Anyway, I only mean to inform you about the publication of part of my research on FTTH to Taylor & Francis journal of Fiber Integrated Optics. My  paper is titled “The Impact of Cost and Demand Uncertainty to the FTTH Business Case” and attempts to explain the impact of some of the major uncertainty factors in FTTH rollouts. It does so by analyzing the impact of uncertainty on three core business models: dark fiber, capacity and retail provider.

The findings of the research suggest that demand side and supply side factors are equally important to the development of the FTTH market. The international discussion of improving the business case of FTTH should expand to cover more elements of the rollout and operations of the networks, such as construction delays, the city plan, average revenue per user, and take-up rates.

The paper is available through Taylor & Francis Online. Feel free to cite the article as: Costas Troulos (2013) The Impact of Cost and Demand Uncertainty to the Fiber-to-the-Home Business Case, Fiber and Integrated Optics, 32:4, 251-267, DOI:10.1080/01468030.2013.803636.

 

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Here is an interesting post by Craig Settles of Gigabit Nation at GigaOm. The point Craig makes is that city authorities ought to try and find local companies / broadband champions that would assist them in developing the high-sped connectivity vision for their local communities instead of waiting for the big players (such as Google Fiber or other network providers with local presence) to decide to make the investment. The fact of the matter is that we see more and more municipal authorities follow similar strategies and develop small and functional broadband access networks, driven by the necessities of the community. – And I plan to write more about this soon, so stay near.

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There is a new study of the socio-economic benefits of the broadband availability, prepared by Analysys Mason and Tech4i2 and commissioned by the European Commission. The study “Study on the socio-economic impact of bandwidth” discusses investments in broadband technologies that can support and deliver speeds of at least 30Mbps download rates.

It reviews over 200 studies on the socio-economic impact of broadband, with nearly 63% of them having been released in the last 4 years. Nine categories of potential socio-economic benefits emerge from this review: Community, public safety and online government services, education and skills, employment and economy, environment, equality and inclusion, finance and income, healthcare, and well-being. It features 4 main case studies: South Yorkshire Digital (UK), Krsko (Slovenia), OnsNet (Netherlands), and Asturias (Spain).

The socio-economic impact of broadband investment is done using two methodologies: input-output analysis (i.e. calculating the multiplier effect of investing in one industry that have economic spillover effects on other industries by using related tables already available) and consumer surplus analysis (i.e. calculating the collective financial benefit of the consumer/citizen due to the increased levels of supply and demand that (tend to) reduce retail prices).

These indicators are measures on the basis of three scenarios of public intervention: a) do nothing, b) modest intervention, and c) major intervention.

Here’s one of the tables summarizing some of the key conclusions of the study.

 EC Analysis Mason socio economic impact of broadband 1024x268 New study of the socio economic benefits from broadband investments (European Commission)

I have only diagonally read the study so far, so if you have an opinion about it, by all means feel free to share with the rest.

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The development of next-generation broadband access is an integral component of the telecommunications policy at the national and European level. The European Commission and the national regulators focus their efforts primarily in developing market conditions that encourage the private initiative and the collaboration among competitors.

These plans aim at the right direction. Collaboration (aka co-investment) in a market that exhibits strong characteristics of natural monopoly and special funding mechanisms, considering the instability of global financial markets, is a necessity in the European access market. In addition, the European Commission plans to increase the wholesale price of LLU (practically this means that the cost accounting tools for the copper plant will change) to provide extra incentive for alternative operators to deploy their own fiber access infrastructure. This makes sense.  However, an important issue with these plans is whether do incumbents fit in and where.

The epicenter of the European regulation in the last decade was the establishment of a regulatory regime that promoted xDSL as the technology of preference via (strongly debated) rules for unbundling the incumbent’s access networks. LLU (and bistream to a lesser extent) gives the incentive to alternative operators to select the cost-effective and much easier option of renting infrastructure instead of rolling out their own access networks. The vast majority of alternative operators today have committed enormous investments to leverage on the LLU provisions. The few exceptions come primarily from Eastern European countries where LLU is not available (or was made available relatively late). In these countries, FTTH/B became the technology of preference for alternative operators.

Incumbents have long sought for significant increases in the LLU prices and eventually their wish seems to materialize. However, this may be a threat in disguise for two reasons:

First, When an alternative operator builds its own infrastructure its customers will be transferred from the copper LLU service to the new fiber network. This would mean that the wholesale revenue of the incumbent will fall. If we factor in the possibility of synergies and collaboration between alternative operators, incumbent’s wholesale revenue will likely fall dramatically with no compensation from the retail market. Until today, the competition between alternative operators left the incumbents indifferent of the outcome – regardless of who is providing the retail service the retailer pays the LLU fee to the incumbent. At the best case scenario, if they won the customer they’d improve their top line, so they’d be better off.

Second, incumbents have a profound operational disadvantage when considering an FTTH rollout. When an incumbent’s FTTH/B network becomes available in an area, the incumbent has to maintain its copper network for its wholesale business. This means that they will have to maintain two networks instead of one. In the general case, incumbents that deploy VDSL continue to maintain their copper infrastructure in the backhaul due to their regulatory obligation towards their competitors. So, whether or not fiber is available to a neighborhood’s outdoor cabinet, the copper to the CO remains there, and must be supported and maintained. This would make it highly unlikely to see incumbents collaborating to a significant scale with any of their competitors to build FTTH.

The policy measures currently under consideration seem somewhat skewed towards alternative operators as they don’t improve the investment incentives for incumbents. Regulation should acknowledge the capacity of incumbents to drive the change and provide the grounds for them to be a part of it. Would the decommissioning of the copper access network be an option after the deployment of an FTTH network? Incumbents would be given a powerful incentive to roll out FTTH as it would realistically improve their cost baseline and the FTTH business case overall.

 

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Making the Internet Thrive in Greece

February 7, 2013

  Last year, I worked with the Foundation of Economic and Industrial Research ‘ΙΟΒΕ‘ and Google for a study to analyze the bariers that prevent the wider use of the Internet in Greece. The study also illustrates with examples and analysis the opportunities of the medium for businesses, citizens and the public sector. It was released last […]

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The 7 biggest myths about the Australian NBN debunked

December 4, 2012

I found an excellent presentation on the Australian NBN that address specifically the popular concerns about its viability and long-term contribution to the Australian society and economy. Broadband Plan Finder did a great job at demystifying these worries. Read the key findings of their study here if you want to know: How NBN compares with other financing plans […]

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Paul Budde on International Telecommunications

December 3, 2012

Paul Budde from Australia has been interviewed for the World Conference on International Telecommunications that is being held in Dubai this year. Paul spells it right and to the point. The challenges, the opportunities and the approach required for a balanced development of the international telecommunications infrastructure. Watch the video, it’s 6 minutes well spent. […]

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OTE launches VDSL, at last

November 26, 2012

After nearly 2 years of anticipation, OTE eventually launched its new VDSL service this morning. OTE has been postponing the service launch due to objections to the relevant regulatory provisions, with both OTE and EETT blaming each other (a lot and vigorously) for the delay. At any rate, the service is available as of today […]

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New regulations for in-building fiber access infrastructure in Greece

November 19, 2012

On the 15th October, the new set of regulations for in-building wiring and cable infrastructure was ratified by the Greek competent authorities. With the new regulation, all new building will be equipped with  special ducting systems to facilitate the installation of fiber cables from the basement to every home and apartment. Special provisions to facilitate […]

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Another day made of Glass

October 20, 2012

A follow up video by Corning on the improvements of fiber and glass technologies. You can watch the ‘first part’ there. I love these vids.

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