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Zitius OPCO "Experiences from the Swedish Market" Sören Fernström, co-founder ”It’s not about technology it’s about relations and business models

Zitius new zeeland 2012

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Open Access Networks, presentation of broadbandservices presentation from New Zealand 2012

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Page 1: Zitius new zeeland 2012

Zitius OPCO "Experiences from the Swedish Market"

Sören Fernström, co-founder

”It’s not about technology it’s about relations and business models”

Page 2: Zitius new zeeland 2012

Can you imagine?

Page 3: Zitius new zeeland 2012

Imagine an airport…

… with one Airline: … with many Airlines:• Limitless destinations• Huge competition• Fair prices!• Freedom of choice

• Limitation of destinations• No competition• Fair prices?• Slow development

Page 4: Zitius new zeeland 2012

100/10 Mbps, NZD 331000/100 Mbps, NZD 37VoIP, NZD 6 IPTV (18 channels), NZD 24100Mbps Triple play, NZD 53(VoIP, IPTV, 100/10)

An airport for RSP:sThe universe of Zitius

• Freedom of choice

• Many RSPs

• Limitless variations of services

• Huge competition

• Change RSP whenever you want

• Fair prices UNCAPPED !!!!

RSP’s

NetCo=Infrastructure owner

OpCo=Lessee+manager of airport

Page 5: Zitius new zeeland 2012

• In 1994 it was estimated that the need for fiber infrastructure in Sweden exceeded 250 000 km to reach out to 99% of the population, to a sum of €10 billion.

• The “Home PC” project ensured everyone could get a computer from their employer, with high tax subsidy.

• The target for Swedish strategic Broadband service today is “before 2020 , 90% of all Swedish citizens and company's should have >100 Mbps access”. Today we have reached >10 Mbps.

• The City Networks around Sweden got huge government subsidies, under the precondition that they also had to open up their networks for competition. Today they are even forced to climb down in the food chain and stop distribute their own broadband services.

Actions taken by the Swedish Government

Page 6: Zitius new zeeland 2012

• Fixed voice - Mobile Network – Skype

• Future?

• Freedom of Choice - Competition

• Problem, challenge or business opportunity?

The world is changing fast!From monopoly to freedom of choice

Page 7: Zitius new zeeland 2012

Subscriber

A simple business model

RSP

OpCo

NetCo

Revenue stream

The subscriber receives a single invoice per month from their RSP

The OpCo invoices the RSP

The NetCo invoices the OpCo

Page 8: Zitius new zeeland 2012

Subscriber

A simple business model

RSP

OpCo

NetCo

Sweden

Subscriber

RSP

?

NetCo

New Zealand

Page 9: Zitius new zeeland 2012

A close call

• We travelled all over Sweden (twice as big as New Zealand) for two years to meet NetCos who where in big need for a helping hand

• Instead of signing contracts and do high margin business with Landlords next door

• Those mistakes almost cost us our business

Page 10: Zitius new zeeland 2012

Council/State Landlord•18% after 12 month

•25% after 24 month

•35% after 60 months

•Competition from Cable and DSL

Facts we didn´t have

Average broadband penetration in Sweden = 54%

(Excluding retirement homes, and services accommodation)

Houses/Condominiums•60% after 12 month

•70% after 24 month

•>80% after 60 months

•Competition from Cable and DSL

Private Landlord•25% after 12 month

•35% after 24 month

•55% after 60 months

•Competition from Cable and DSL

New Houses/Condominiums•85% after 12 month

•87% after 24 month

•>87% after 60 months

Page 11: Zitius new zeeland 2012

If we had the facts

Customers ranked by ROI

1.New Condominiums/Houses

2.Condominiums/Houses

3.Private Landlords

4.Council/State Landlords

Customers with the most need

1.Council/State Landlords

2.Private Landlords

3.Condominiums/Houses

4.New Condominiums/Houses

Page 12: Zitius new zeeland 2012

Conclusion

• Go for the deal with the highest margin, not the biggest need

• Educate your customer

• Simplicity is far better then being unique

• Ensure Longevity, long relations is the key to success

• Do your homework, don´t ignore the facts like we did

Page 13: Zitius new zeeland 2012

Who will be the first Zitius in New Zealand?

“Internet is perhaps the most democratic medium in human history. Therefore, it is the democratic state's responsibility to work for all

citizens in one way or another to access the Internet”