Economic and social implications of fibre deploymentFTTH ConferenceWorkshop: Standardisation and Economic Impact

Agustin DIAZ Milan, 8 February 2011

The views expressed in this presentation are solely those of the author anddo not necessarily reflect the opinions of the OECD or its membership.

Broadband:General purpose technology

Fibre applications: e-learning/telework

• Access to digital learning resources• Communication among schools, teacher and

students• Professional education/research networks• Need to download and UPLOAD content

Fibre applications: e-Health

• Ageing population• Videoconferencing applications (latency, jitter)• Large file transmission• Symmetric connectivity• Security/privacy concerns

Fibre applications: smart grids

Smart meteringConnectivity requirements currently supported

by DSL/cable networksEnergy efficiency

Fibre applications: Intelligent Transport Systems

Broadband elements

Why Fibre to the Home?

• Future-proof technology• …complemented by wireless• Upload speeds - symmetric connectivity

14.25

28.44

100.57

2.60 2.56

57.45

0.00

20.00

40.00

60.00

80.00

100.00

120.00

DSL Cable FTTH

Average download speeds

Average upload speeds

Costs – National Fibre-to-the-Home P2P Network

• National P2P FTTH network• Four sectors: electricity, health, transportation,

education• Cost savings between 0.5% and 1.5% in each of

the four sectors over 10 years could justify the cost

• Potential spillovers have to be considered• Innovation!

Private investment decisions

Privaterolloutcost

Private expected

return

Yes

Privaterolloutcost

Private expected

return

No (but should socially)

Uncapturedsocial

benefits

(spillovers)

Governments increasingly step in to cover the difference

COMPETITION

Fibre deployment

Once in a generation upgradeHeavy investments involvedMarket structure of the next decade(s)Will copper-based competition remedies still be

valid?Unbundling? Wholesale? Infrastructure

competition?

FTTH current status

0% 10% 20% 30% 40% 50% 60%

Ireland

Germany

Finland

Switzerland

Turkey

Poland

Italy

Netherlands

Portugal

United States

Iceland

Hungary

Czech Republic

OECD

Denmark

Norway

Sweden

Slovak Republic

Korea

Japan

Percentage of fibre connections in total broadband subscriptions, June 2010

DSL58%

Cable Modem29%

Fibre + LAN12%

Other1%

OECD Fixed (wired) broadband subscriptions, by technology, June 2010

Total subscribers: 294 millionSource : OECD

Topology concerns

VDSL Point to multipoint fibre Point to point

Exchange Exchange Exchange

Topology and competition - unbundling

• Fibre upgrade: most critical change since copper network deployment

• “Old” competition remedies may not work now• P2P:

– Easier to share, may be “unbundled” like copper LLU– Deployments costs: studies point at 20% more expensive that

P2MP

• P2MP: – No local loop unbundling– Sub-loop “unbundling”: not always economically feasible– Other options: WDM, wholesale, Ethernet

Sources: IDATE for the FTTH Council Europe, FTTH Council North America, FTTHCouncil Asia Pacific, European Communication Committee, primary research

Country Homes Passed FTTH FTTB Main Topology % Main Topology Largest party deploying

Australia 40,000 100 0 PtMP 100% GovernmentAustria 63,000 80 20 PtP 90% MunicipalitiesBelgium 3,750 na na na na IncumbentCanada 280,000 na na PtMP na IncumbentChile 20,000 na na PtMP na IncumbentCzech Republic 195,000 20 80 PtMP 100% AltnetsDenmark 795,300 75 25 PtP 85% UtilitiesFinland 544,000 20 80 PtP 100% Incumbent(s)France 1,383,588 100 0 PtMP 55% IncumbentGermany 560,000 20 80 PtP 70% UtilitiesGreece 5000 0 100 PtP AltnetsHungary 215,000 100 0 PtMP 100% IncumbentIceland 33,000 100 0 PtP 80% UtilityIreland 16,900 80 20 PtP 95% AltnetsItaly 2,245,500 5 95 PtP 100% AltnetsJapan 46,000,000 60 40 PtMP 80% Incumbent Korea 16,000,000 20 80 PtMP 100% IncumbentLuxembourg 56,000 100 0 PtP 100% IncumbentMexico 100,000 na na PtMP na IncumbentNetherlands 662,500 90 10 PtP 90% IncumbentNew Zealand 50,000 50 50 PtMP na AltnetsNorway 381,700 100 0 PtP 100% UtilityPoland 90,265 100 0 PtP 95% UtilityPortugal 1,470,000 100 0 PtMP 100% IncumbentSlovakia 615000 38 62 PtMP 95% IncumbentSlovenia 310,000 100 0 PtP 100% AltnetsSpain 412,500 90 10 PtMP 100% IncumbentSweden 1,464,500 50 50 PtP 90% AltnetSwitzerland 212,500 100 0 PtP 90% IncumbentTurkey 200,000 100 0 PtP na AltnetsUnited Kingdom 138,000 100 0 PtP na AltnetsUnited States 19,676,200 na na PtMP na Incumbent

P2P vs. P2MP

Fibre deployment: future communications at issue?

• Fibre upgrade: most critical change since copper network deployment

• Costly investments – uncertain return• Future market structure • Multi-fold perspective:

– Socio-economic benefits– Current market structure– Wealth/density/etc.

Infrastructure competition?– 2/3 players in dense, urban areas– One at best in sparsely populated areas– Strong case for state intervention

Fibre deployment: regulatory options• No intervention:

– Re-monopolisation?– No upgrade?

• Wholesale remedies (LLU, bitstream)– Will LLU be possible? Network topology– Investment incentives?– Transition

• Facilitating deployment:– Symmetrical remedies– Ducts/conduits, etc.– Dark-fibre/open access

• Functional/structural separation (UK, Sweden) • State-funding: Australia’s NBNCo

Australia: NBNCo

• History – geography• Public funding of a National Broadband Network• Wholesale-only, open access, high-speed

broadband network• AUD 35.9 billion (gov. equity, AUD 27.5 billion)• FTTP (93%), rest (wireless, satellite)• Legislation passed in Parliament/deal with

Telstra on infrastructure take-over

• Remonopolisation…• and/or…ensuring Australia’s future?

Fibre deployment and standards (I)

Facilitates deployment: • Common protocols specifications• Avoid the risk of fragmented solution, “de facto”

standards • Guarantee interoperability• Stimulate competition• Some examples: cables, fibres, connectors, passive

elements, etc.

Fibre deployment and standards (II) Impact on competition

o Connectors: Interconnection devices/operators, Multiple fibres, allowing switching, etc.

o Passive elements Wholesale access to passive infrastructures

Examples: o France: strong support for multi-fiber, standard

connectors, symmetric obligations, access to conduits, etc.

o Japan: fibre unbundling (main terminal line, branch terminal line, single star) – only 10% of the market-focus on infrastructure competition

o Netherlands: Unbundling for ODF access

Conclusions• Broadband as the “new electricity”

• Once-in-a-generation upgrade

• Focus on competition

• No “one size fits all” solution

• Standards should facilitate deployment

Thank you