A Business Model Based on FTTH Infrastructure Neutral Operator to Provide Service to Several Operators

A Business Model Based on FTTH

Infrastructure Neutral Operator, to

Provide Service to Several

Operators

UFINET

FTTH Council Europe ConferenceBella Center, Copenhagen, Denmark.

11-12 February, 2009.

2

FTTH Infrastructure Neutral Operator

Company overview

Business approach

Network topology

Field trials

Agenda

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UNION FENOSA overview

MEXICOMEXICOMEXICOMEXICO

COSTA RICACOSTA RICACOSTA RICACOSTA RICA

DOMINICANDOMINICANDOMINICANDOMINICANREPUBLICREPUBLICREPUBLICREPUBLIC

KENYAKENYAKENYAKENYA

GUATEMALAGUATEMALAGUATEMALAGUATEMALA

NICARAGUANICARAGUANICARAGUANICARAGUA

MOLDOVAMOLDOVAMOLDOVAMOLDOVAREPUBLICREPUBLICREPUBLICREPUBLIC

PANAMAPANAMAPANAMAPANAMA

COLOMBIACOLOMBIACOLOMBIACOLOMBIA SOUTH AFRICASOUTH AFRICASOUTH AFRICASOUTH AFRICA

EGYPTEGYPTEGYPTEGYPT

OMANOMANOMANOMAN

SPAIN & SPAIN & SPAIN & SPAIN & PORTUGALPORTUGALPORTUGALPORTUGAL

GENERATION

DISTRIBUTION

GENERATION & DISTRIBUTION

GAS/COAL

GENERATION, DISTRIBUTIONSUPPLY AND GAS

6,011REVENUES

3,104CONTRIBUTION MARGIN

2,062EBITDA

1,466EBIT

986ATTRIBUTABLE NET PROFIT

2007Millions of euros

Main figures

• UNION FENOSA is an integrated energy group that operates in 15 countriesin the gas and electricity markets.

* Excludes “other”

GENERATION11,699 MW of own installed capacity

DISTRIBUTION9.1 million gas & electricity customers

SUPPLY59,016 million KWh electricity suplied38,044 million KWh of gas invoiced

EBITDA by business *

5%13%

8%

Dist.

23%

Gen.

35%

Inter.26%

Gas

16%

MexicoColombia

CentralAmerica &

Other

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UFINET overview

• UNION FENOSA Redes de Telecomunicacion (UFINET), is the telecommunications company created by UNION FENOSA, with the objective of providing advanced, high quality telecommunications services and infrastructures.

• Business areas:

– Telecommunications infrastructure provision to Operators.

– Design and supply of specialized telecommunication services to operators and corporations.

– Integral telecommunications solutions supply to Union Fenosa Group and to business holdings corporations.

• International presence in Panama, Colombia, Guatemala and Nicaragua.

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UFINET overview II

• Network figures:

– 11,100 fibre optics kilometers.

– 850 network sites.

• Economical figures

0

2000

4000

6000

8000

10000

12000

14000

2004 2005 2006 2007 2008

EBIT (thousands of euros)

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UFINET services

Infrastructure Management

Virtual fiber and transmission capacity

• SDH, IP and Ethernet transmission services.

• Virtual Fibre solutions (DWDM) .

• MPLS solutions.

• Real Time Communications

Telecontrol, Telemetering, Telemanagement, ATM, etc.

• IP & VPN´s Connectivity for Intranet access.

• Internet Access.

Provision and management of all the telecommunications

services for UNION FENOSA Group

• Dark fibre leasing

• Colocation

• Rights of way

Satellite services

Corporate services

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Business approach

• Why UFINET in FTTH?

– Experience in fibre optic networks deployment and management.

– Sinergies with the utility for infrastructure deployments.

– Committed to incorporate innovation solutions to the telecommunicationmarket.

• Business type?

PASSIVE PASSIVE PASSIVE PASSIVE INFRASTRUCTUREINFRASTRUCTUREINFRASTRUCTUREINFRASTRUCTURE

ACTIVE EQUIPMENTACTIVE EQUIPMENTACTIVE EQUIPMENTACTIVE EQUIPMENT

SERVICESSERVICESSERVICESSERVICES SP 1 SP 2 SP N

VERTICAL SP 1

VERTICAL VERTICAL VERTICAL VERTICAL OPERATOROPERATOROPERATOROPERATOR NETWORK NETWORK NETWORK NETWORK

OPERATOROPERATOROPERATOROPERATOR

SP 1 SP N

NETWORK OPERATOR V

ERTICAL SP 1

FTTH, A BUSINESS OPPORTUNITYFTTH, A BUSINESS OPPORTUNITYFTTH, A BUSINESS OPPORTUNITYFTTH, A BUSINESS OPPORTUNITY

INFRASTRUCTURE INFRASTRUCTURE INFRASTRUCTURE INFRASTRUCTURE OPERATOROPERATOROPERATOROPERATOR

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Business approach

OUR MODEL

NEUTRAL INFRASTRUCTURE OPERATORNEUTRAL INFRASTRUCTURE OPERATORNEUTRAL INFRASTRUCTURE OPERATORNEUTRAL INFRASTRUCTURE OPERATOR

WHY?

• EXPERIENCE AND KNOW HOWConsolidated dark fiber provider

•SINERGIES WITH UTILITYInfrastructure deployments, civil works, ducts.

•BUSINESS EXPANSION: From core to access

•A NEW ACCESS INFRASTRUCTURE: Promote competition in access

• ALTERNATIVE OPERATORS DEMAND:A solution to overcome accessinfrastructure deploymentsbarrier

WHAT?

• PON vs ETHERNET P2P? PON

• PON FITS BETTER: Smaller cable size - easier maintenance

Less space demanding - reuse of Utility substations.

•ADDITIONALLY … HYBRID MODEL Point to point links for corporate customers

HOW?

• OPEN ACCESS NETWORKThe more customers, the more business

• WHOLESALE MODEL: Our customers remain as customers, not as competitors.

• ‘DARK FIBER LOCAL LOOP’Similar to ULL model in Spain for ADSL market.

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Network topology

• FTTH access network is pasive, based on PON architecture.

– Additionally, hybrid network deployment. Co-existence of PON topologyand point to point links.

• Network deployment runs from UFINET local colocation site to optical outletat end-user premises.

• Each area is covered with 3 PON trees in parallel, one per operator.

• PON trees allocated to different operators are independent each others.

– Operators can install their preferred PON equipment (ONT’s y OLT’s).

– Operator independency for service definition.

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Network topology

UFINET fibre optic network

Operator #1customers

Operator #2customers

Operator #3customers Colocation space

for operatorsequipment

Op.#2 equip.

Op.#3 equip.

OperatorOperatorOperatorOperator #1#1#1#1backhaulbackhaulbackhaulbackhaul



Op.#1 equip.

PON 1PON 1PON 1PON 1



UNION FENOSA site

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Network topology

ONE INFRASTRUCTURE, ONE INFRASTRUCTURE, ONE INFRASTRUCTURE, ONE INFRASTRUCTURE,

THREE INDEPENDENT NETWORKSTHREE INDEPENDENT NETWORKSTHREE INDEPENDENT NETWORKSTHREE INDEPENDENT NETWORKS

Distribution pointat UFINET site

Access point2nd splitting stage

Building #1 Building #2 Building #N

OLT OP3

OLT OP1

OLT OP2

Local colocation site - UFINET1st splitting stage

Feeder cable

Backhole

Backhole

Backhole

Access cable

Riser cable

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Commercial model

• UFINET commercial approach: fibre optic local loop rental model, similarly to the regulated ULL model for copper pairs local loop.

• UFINET provides operators with a wholesale access service, from the local colocation site to end user’s home.

• Main invoicing items are :

• The cost for each operator varies with the number of customers connected.

Space rental for colocation of alternative operators devices at incumbent’s Central Office

Space rental for colocation of alternative operators devices at Utility substation.

OBA UFINET - FTTH

COLOCATION

LOCAL LOOPCopper pairs local loop rental per unbundled user.

Fibre optic to the home rental per connected user.

AVAILABILITYUser connectivity availability per passed area.

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Advantages for the alternative operators

• An alternative FTTH access network independent from the incumbent’s one.

– Commercial rollout not tied to incumbent’s deployment. Opportunity in areas not covered by the incumbent.

• Solution for main barrier to entry : access infrastructure deployment.

• Efforts focused on the network management and the definition andcommercialisation of innovative retail services

• Alternative operators to use their active solution: service differentiation.

• Commercial model:

– Market relationship, not regulated relationship.

– Minimization y variabilization of rollout costs.

– Minimization of the impact in the existing internal procedures.

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Field Trials

• Two field trial in Madrid.

• Objectives:

– For UFINET:

• To test different passive network components: splitters, splice boxes, connector housings, risers, optical outlets.

• To verify and tune network design criteria.

• To collect information as an input for the business model.

– For operators:

• To test different FTTH technology providers according to theirrequirements.

• Service definition and commecialization within the field trial areas

– For UFINET and operators:

• To define end-user provision procedures and FTTH network maintenanceprocedures.

• Two areas representing different urban environments:

– New area with common telecommunications infrastructure.

– Old area without common telecommunications infrastructure.

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Field Trials. Vicalvaro

Location Vicalvaro (Madrid)

Tyoe of area New area

Urbanizationpassed

14

Home passed 2179

Architecture Passive, PON

Operators 3 (at the most)

OLT colocation Vicalvaro subs.

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Field Trials. Chamberi

Location Chamberi (Madrid)

Type of area Old area

Building passed 46

Home passed 792

Architecture Passive, PON

Operators 3 (at the most)

Block passed 5

OLT colocation Norte Substation

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Field Trials

SOME PICTURESSOME PICTURESSOME PICTURESSOME PICTURES

Splitter 1

Splitter 2

SPLITTERS AT SUBSTATION

DISTRIBUTION CABINET AT BUILDING BASEMENT

INDOOR FLOOR BOX

THANK YOU FOR YOUR ATTENTION

UFINET

RAFAEL SAORIN

[email protected]

Documents

A Business Model Based on FTTH Infrastructure Neutral Operator to Provide Service to Several Operators