Open Access Networks 20121128

a2b Fiber is a builder of next generation open access fibre optic networks providing dark fibre to communications service providers and private network operators in BC

Presenter:

SCOTT JAMIESONExecutive Vice President,Chief Technology Officer and Director

November 28th, 2012

a2b Fiber Inc. (http://www.a2bfiber.com/)

Today’s talking points

• Business vs technology lingo• No acronyms!• Telecom landscape in Canada• Return on Investment (ROI)• The world is flat• Barriers to entry

• What is dark fiber?• Big cables and little cables• Bandwidth – so what?• Economics of construction• How to build a network• Problem = Opportunity

• Historically dominated by regional monopolies

• Companies which held regional monopolies have expanded into non-traditional markets

• On June 29th, 2012, the feds amended the Telecommunications Act to remove the application of the Foreign Ownership Restrictions to Smaller Telecommunications Companies.

Telecom landscape

ROI means…

• Open Access is a fibre optic network topology that separates physical network (ducts, manholes, cables) from the circuits.

• The same network is used by multiple service providers, carriers, or private network operators.

ROI means…

• The incumbent telcos and cablecos’ network could be considered ‘vertically integrated’ as a comparison.

• The actual networks of the telcos and cablecos used to be very different (twisted pair vs. coaxial) but are becoming more similar.

ROI means…

• Theoretically, one high-count fibre network could provide enough capacity to meet the needs of any number of service providers, including the incumbents.

• If a service provider can guarantee that they will be the only one to provide consumers with communications products, then the cost to build their own cable network (and keep everyone else out) can be justified.

ROI means…

• If they can’t guarantee a captive audience, then they need to lower the cost to build the network that supplies their customers.

• Higher revenue (my herd) and higher cost or lower revenue (competition) and lower costs.

The world is flat: read ‘oh oh’…

Barriers to entry

• Carriers are not interested in leasing dark fibre to their competitors as it is not in their economic interest to do so.

• To enter the Metro Vancouver market, most out-of-market incumbent carriers, new entrants and private network operators must either build their own networks or use the incumbent carriers' managed circuits.

What is dark fiber anyway?

• You can think of dark fibre as an unplugged electrical extension cord. The cord is ready to transport electricity - it just needs to be attached to a power source.

• When dark fibre connects locations and is “lit” by adding communications electronics, it becomes the medium by which your communications and data traffic is transmitted.

Big cables and little cables

• Copper technology subject to attenuation (loss) and interference (noise)

• Bulky and thieves steal it• Fiber technology provides

much less loss and almost no noise

• Much smaller diameter cables possible

Bandwidth: read ‘capacity’

• Unlimited bandwidth provides a superior platform for delivering high speed, high capacity voice, video and data.

• High bandwidth networks enable businesses to optimise application performance, increase productivity and enhance security.

That’s cool – so what?

• Global IP traffic has increased eightfold over the past five years, and will increase threefold over the next five years. Overall, IP traffic will grow at a compound annual growth rate (CAGR) of 29 percent from 2011 to 2016

• The projected increase of global IP traffic between 2015 and 2016 alone is almost equal to the total amount of global IP traffic generated in 2011

• Dark fibre enables the growth and development of differentiated services networks

• The availability of unlimited, unmetered bandwidth at a fixed cost

What can you do with it?Video ServicesSAN ExtensionDisaster RecoveryCollaboration ApplicationsSynchronous ReplicationData Center InterconnectMainframe ExtensionInternet PeeringCorporate IntranetCloud Services

• The necessary infrastructure for added capacity, flexibility, security, and reliability

• The ability to utilize technological advances without waiting for the carrier to add services

What can you do with it?Video ServicesSAN ExtensionDisaster RecoveryCollaboration ApplicationsSynchronous ReplicationData Center InterconnectMainframe ExtensionInternet PeeringCorporate IntranetCloud Services

Bandwidth = Cloud

• The ability to store data in the cloud diminishes the need to design and manufacture in-house data storage solutions

• The challenge with cloud services is that large data transfers need fast, reliable, scalable and secure networks

• “The toughest part of cloud computing is getting large amounts of data in and out of the cloud, [it] is almost impossible no matter how fast your network connection is…the fastest way to transfer 3TB to 5TB of data is still FedEx”.

Cloud = Data Centre

• 30,000 sq m ‘green’ data centre in the small city of Lulea, Sweden

• Trend is towards building data centres in colder environments

• Canada is politically stable, has fairly cheap power and cold weather

• Canada is lacking the dense fiber network required to transport large amounts of data

• Canada does not have a national broadband strategy

Prevalent misconceptions


• Fixed broadband will decline as wireless broadband becomes more popular. TRUE or FALSE

• False, because the amount of backhaul needed is related to the amount, and type, of use

• Certain Canadian wireless carriers are currently seeing data traffic increase by 5% per week


• Ultimately, every cell site will require fibre and even this will not provide enough bandwidth at the movable (consumer) edge of the network

• Distributed antenna systems, FemtoCells, WiFi offloading and the like will continue to decrease the distance between the device and the network

• All of these fixed network locations will require fibre

Economics of Building Fibre Networks• Most CSPs require a limited

amount of dark fibre • 90% of the cost of building a

network may be attributed to planning, designing, engineering, permitting, licensing and physical construction costs

• Cost of building a 432F network is only marginally greater than the cost of building a 12F network

How to build a fiber network


PermittingPermitting

• CRTC Common CarrierCRTC Common Carrier

• Structure AgreementsStructure Agreements

• ROW AgreementsROW Agreements

• Access AgreementsAccess Agreements


ConstructionConstruction

• Civil and aerial placingCivil and aerial placing




• Change ordersChange orders





• As builtsAs builts





• As builtsAs builts

• Inside plantInside plant


ManagementManagement

• Structure attachmentsStructure attachments

• Cable splices & FOSCsCable splices & FOSCs


“The underlying combinatorial explosion makes optimal pricing a complex problem and specialized scientific

approaches are necessary to achieve profit maximization and operational efficacy.” – Ph.D. (Math)

“The underlying combinatorial explosion makes optimal pricing a complex problem and specialized scientific

approaches are necessary to achieve profit maximization and operational efficacy.” – Ph.D. (Math)

The Problem: read ‘opportunity’