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All Rights Reserved © Alcatel-Lucent 2009Alcatel-Lucent Special Customer Operations
Gabrielle Gauthey – Executive Vice-President Global Government & Public Affairs
Broadband Forum Poland, Warsaw
November 24, 2010
Very High Speed in France &International BB Plans
All Rights Reserved © Alcatel-Lucent 2010• 2 | Broadband Forum| November 24, 2010 - rh
Agenda
Very high speed broadband deployment: the French Case
• The Role of the Law
• The Role Regulation
• The Role of Public Policy
– Local Authorities
– “Caisse des Depots”
– “Grand Emprunt”
International Examples & Conclusion
All Rights Reserved © Alcatel-Lucent 2010• 3 | Broadband Forum| November 24, 2010 - rh
Very high speed deployment: the French CaseHigh Speed Deployment in France – International Comparison
0
5
10
15
20
25
30
35
40
Nethe
rland
s
Denm
ark
Switzer
land
Norway
Korea
Icela
nd
Sweden
Luxe
mbo
urg
Franc
e
Ger
man
y
Canad
a
Unite
d Kin
gdom
Belgiu
m
Finlan
d
Unite
d Sta
tes
Japa
n
Austra
lia
New Z
eala
nd
Austri
aSpa
inIta
ly
Irelan
d
Portu
gal
Hunga
ry
Gre
ece
Czech
Rep
ublic
Polan
d
Slova
k Rep
ublic
Chile
Mex
ico
Turke
y
Source: OECD
DSL Cable Fibre/LAN Other
OECD Fixed broadband subscribers per 100 inhabitants, by technology,December 2009
OECD average• OECD Average
All Rights Reserved © Alcatel-Lucent 2010• 4 | Broadband Forum| November 24, 2010 - rh
Very High Speed Deployment: The French CaseRegulation: Combination of LLU and Bitstream (1)
Competition through active infrastructures has been the main driver behind the development of broadband:
• Geographic extension of competition has encouraged France Telecom to equip all of its MDF (Main Distribution Frames) for ADSL
• France has joined European leaders in terms of penetration…• …and is in good place for "triple play"
Three major drivers have made this increase in investments possible:
• Dynamic operators, both incumbent and new entrants• Regulation : LLU first, bitstream as a complement• Local authorities intervention has been crucial in the expansion of
broadband coverage
Where do we come from in Broadband deployments?Where do we come from in Broadband deployments?
All Rights Reserved © Alcatel-Lucent 2010• 5 | Broadband Forum| November 24, 2010 - rh
Very High Speed Deployment: The French CaseRegulation: a Combination of LLU and Bitstream (2)
Growth of the broadband access base (March 2010)
2002 2003 2004 2005 2006
24M
b/s
8M
b/s
1M
b/s
512
kb/s
1st TV/DSL offer
1st telephony/DSL offer
1st fixed-mobileConvergent
offer
ADSL ADSL2+
Evolution of broadband technologies and services
1st broadband/DSL offer
1999…
DSL coverage as of March 31 2010:98% of the population
2007 2008/2009
FTTH
100
Mb/s
1st Very high speed FTTH offer
All Rights Reserved © Alcatel-Lucent 2010• 6 | Broadband Forum| November 24, 2010 - rh
Very High Speed Deployment: The French CaseThe new FTTH: Three Public Policy Levers
Legislative Lever – „Loi de modernisation de l‘economie“ – August 2009
• Sharing of the fibre last drop through mandatory agreements between operators and landlords
• „Right to Fiber“• Mandatory fiber pre-cabling for new buildings
Regulatory Lever – Market 4 analysis of July2009
• Asymmetrical regulation (duct access)• Symmetrical regulation (last drop and in-house wiring)
Public Policy Lever
• „Caisse des Dépôts“ mandate• „Grand Emprunt“• Intervention of local authorites
All Rights Reserved © Alcatel-Lucent 2010• 7 | Broadband Forum| November 24, 2010 - rh
Very High Speed Deployment: The French CaseLegislative Measures Adopted to Facilitate the Roll-Out of FTTH in the buildings
The LME (Loi de Modernisation de l‘Economie) adopted in August 2009 deals with the deployment of fiber and sharing of the last part of the local loop among operators:
• A „right to fiber“ has been instituted in order to facilitate the roll-out of fiber networks inside the building
• In return, any operator that rolls-out fiber within a building has to give access to this fiber network to other operators: point of sharing is located outside the private property
• A contractual agreement necessary for the relations between property owners and operators – ARCEP issued a draft agreement
• In new buildings, pre-equipment standards have evolved to include fiber
The LME sets the rule of symmetrical regulation, in anticipation of article 12 Framework Directive
The LME grants ARCEP the power to define the technical and tariff related terms of the shared access and guarantee operators respect them
All Rights Reserved © Alcatel-Lucent 2010• 8 | Broadband Forum| November 24, 2010 - rh
Very High Speed Deployment: The French CaseRegulation FTTH Roll-Out in Very Dense Areas
ARCEP decision on FTTH deployments in very dense areas ( 5 Millions households)
– After 2 years of consultations and field trials, ARCEP published its final decision on January 17th 2010;
– Duct Reference Offer available;
– Fiber flexibility point (« point de mutualisation », PM) is located in the public domain and by exception in the private domain for buildings with more than 12 flats;
– Arcep encourages co-investment in the last drop (i.e. in the building): prior to installing fibers in a building, every operator must notify its plans to other operators who are entitled to request a dedicated fiber (and bear associated costs);
– Last drop will be multifibre in case of co-investment and mono-fibre otherwise;
– All operators have published their commercial reference offers.
© Alcatel-Lucent 2009 All Rights Reserved 9 | Capri Between’s Conference Oct 2010
Very High Speed Deployment: The French Case Regulation: FTTH roll-out in medium/low density areas
Medium density urban areas represent around 10 Millions households and low density 10 million households
Fibre Flexibility Points (FFPs)
Last drop is shared from the flexibilty point till the end user
First operator deploying in a given area builds the FFP
FFPs concentrate a minimum of 300 fibres (average 1 000)
Mono vs Multifibre
In very dense areas, multibre is required at operator’s request
In less dense areas, a single fibre is the general rule for the last drop
Active equipment installation in the FFP
• Active equipment ( e.g. OLT, Ethernet switch) may be located at the FFP
• In case of technical or economical impossibility, FFP owner is required to provide dark fiber backhauling
All Rights Reserved © Alcatel-Lucent 2010• 10 | Broadband Forum| November 24, 2010 - rh
Very High Speed Deployment: The French CaseRegulation: NGA - Active Infrastructure Competition Model
Very dense areas :
• Fiber flexibility point at building basement by exception (if MDU has more than 12 DUs)
• Multi-fibre in the terminating segment (in-house wiring) in case of co-investment
• Duct accessLess dense areas :
• Fiber flexibility point at cabinet level ( min 300 fibers)
• Shared mono-fibre in terminating segment and in-house wiring
• Duct access
All Rights Reserved © Alcatel-Lucent 2010• 11 | Broadband Forum| November 24, 2010 - rh
Very High Speed Deployment: The French CaseLocating the Fibre Flexibility Point (FFP) Accomodates both Technologies
“There are technology-agnostic architectures”“Positioning of the Fiber Distribution Point”
Operator 1
Operator 2
Optical patch panel(Passive)
Fiber
Distribution
Point
Optical Network Terminals from operator
Operator 1 stream
Operator 2 stream
Big Buildings
Suburbs
Rural areas
All Rights Reserved © Alcatel-Lucent 2010• 12 | Broadband Forum| November 24, 2010 - rh
Very High Speed Deployment: The French CaseNGA Roll-out in France – FTTH and FTTB deployments
All Rights Reserved © Alcatel-Lucent 2010• 13 | Broadband Forum| November 24, 2010 - rh
Very High Speed Deployment: The French Case NGA Roll-out in France – ARCEP Figures as of June 31 2010
ARCEP estimates that, as of June 31, 2010 more than 4.5 million homes were located in an area where fiber has been rolled out in the access network.
A total of 40 000 buildings – accounting for 980 000 homes) - are equipped with optical fibers and connected to the network of at least one operator.• Of which 83 000 via fiber sharing agreement
All Rights Reserved © Alcatel-Lucent 2010• 14 | Broadband Forum| November 24, 2010 - rh
Very High Speed Deployment: The French CaseLocal Authorities Interventions in Telecom Infrastructures in the Past 10 years
Legal form
• Mainly DSP (« concessions »);• Choice by local authorities of one operator/delegator;• Wholesale offers negociated with local authorities;• Coverage imposed by local authorities;• Maximum 70% subsidy (=> operational risk left to the private delegator);• Network remains local authority’s property.
Operating mode
• Graduation of intervention according to the density and the presence or absence of operators
• Passive infrastructures in denser areas (mainly open fiber backhauls) with the objective to connect a maximum of NRF’s and wireless BTS
• Equipement of business parks;• Activated whosesale offers in the less dense areas;• In some rural areas : retail operators
All Rights Reserved © Alcatel-Lucent 2010• 15 | Broadband Forum| November 24, 2010 - rh
Other Selected TopicsOpen Wireline Backhaul key for both Mobile and Fixed Traffic Growth
Typical telecommunications network architecture
Role of backhaul networks:
Cost effective coverage of medium and low density areas;
Stimulate competition and innovation;
Anticipate bandwidth demand increase for all access technologies (fibre, LTE, Wimax,…);
Future proof investment for public initiatives particularly for local authorities;
Enhanced connectivity for public services (schools, hospitals, universities,…) and business parks
All Rights Reserved © Alcatel-Lucent 2010• 16 | Broadband Forum| November 24, 2010 - rh
Very High Speed Deployment: The French CaseLocal Authorities have Played a Crucial Role in Broadband Coverage
• In recent years, local authorities have played a key role in the digital development of their regions in partnership with operators
• Arcep first impact assessment:– 86 projects – 60 of which are running
– 2.7 billion € invested (approx.50% public
funds)
• Major consequences :– Less expensive coverage of rural areas
– Expansion of LLU, and wireless coverage
– Fostering of local operators development
– Preparation of the future of FTTx
All Rights Reserved © Alcatel-Lucent 2010• 17 | Broadband Forum| November 24, 2010 - rh
Very High Speed Deployment: The French Case Role of Local Authorities - Private Companies Operating Public Networks
All Rights Reserved © Alcatel-Lucent 2010• 18 | Broadband Forum| November 24, 2010 - rh
NGA roll-out : role of local authorities
Their role could be decisive :
Encourage the sharing of ducts when granting rights of way
Lay ducts and rent them to operators
Avoid inefficient duplication of basic infrastructure (ducts and even dark fibre) on reduced geographical areas which can be shared among operators
Have a lever effect on private investments
Promote the choice of a common optical loop topography by operators
Ensure a fait opening of the new optical loop
29 registered local authorities engaged in FTTH roll-out
All Rights Reserved © Alcatel-Lucent 2010• 19 | Broadband Forum| November 24, 2010 - rh
Very High Speed Deployments: French case study Policy lever : Precautions for local authorities intervention
Precautions taken to avoid concerns and risks mentioned in the recent US GAO Governmement accountability Office) report
Competition distortion : Maps, agreements with existing networks, …
long term investment sustainability : privately run networks
handle networks interoperability : few wholesale providers, common standards implemented
Public broadband infrastructure projectsTypical project structure
SpecialPurposeVehicle
Public Contract •Caisse des Dépôts
30%•Project sponsors
70%
Shareholders
Local authorityOther local authorities /
subsidiesSubsidies
Equity
Sponsor 1 Sponsor 2
Telco
Operation & Maintenance
Design & Build
Client
The Role of „Caisse des Dépôts“The Role of „Caisse des Dépôts“
All Rights Reserved © Alcatel-Lucent 2010• 21 | Broadband Forum| November 24, 2010 - rh
Very high speed deployment: the French CaseGovernment Role
• Investment mandate to the “Caisse des Dépôts”
• French state loan:
– 2 B€ for very high speed networks
– Long terms loans in medium dense areas
– Subsidies for rural areas
– 2,5 B€ for content, application and services (Web2.0, e-health, e-government, gaming software, …) applications development
All Rights Reserved © Alcatel-Lucent 2010• 22 | Broadband Forum| November 24, 2010 - rh
Worldwide Trends and Conclusion
EMEA EMEA
AMERICAS AMERICAS
• Active infrastructure based competition prevails, favoring operator’s vertical integration – passive infrastructure sharing encouraged - bit stream wholesale being considered as a second best except in UK (VULA)
• EU Digital Agenda : universal bb coverage, bandwidth increase, national BB strategies required
• State Aid scope has been broadened for fiber networks in suburban and remote areas – may accelerate fibre PPPs
APACAPAC
• US : Stimulus funds allocated through RUS focus on unserved and underserved areas – mainly for middle-mile projects ( interstate backhaul networks)
• CALA : Broadband plans are heating up, focus on mobile open access and open backbones
• Functional separation (i.e. “shared access”) combined with bitstream wholesale and heavy regulation are leading network transformation (Singapore, Australia, NZ) aka NBNs – Open backbones in India.
• Testbed for next generation bitstream wholesale and virtual unbundling
All Rights Reserved © Alcatel-Lucent 2010• 23 | Broadband Forum| November 24, 2010 - rh
All Rights Reserved © Alcatel-Lucent 2010• 24 | Broadband Forum| November 24, 2010 - rh
Public driven InitiativesA global trend
French digital plan
2 B € for very high speed BB roll-out in grey and white areas
2,5 b € for services/applications
FTTH roll-out regulation (geographic segmentation)
Digital dividend release
Digital Britain
• 2 Mb/s universal broadband access service in 2012
• 200 M£ NGA fund
German Broadband Plan
100% bb coverage by end 2010
75% of hh access at 50 Mb/s by end 2014
Spectrum allocation for LTE
+ Draft bradband plans in Greece, Italy, Poland, Russia,...
China’s recovery plan
4 Trillion RMB 09-10
ICT included in pillar industries program
India National Backbone
4,5 B fiber backbone
90% of population bb coverage by 2013
Australian National Broadband Network
100 MB/s to 90% of subscribers
43 B A$ ( 23 B€)
New Zealand “Broadband Investment Initiative”
1.5 B NZ$ investment plan announced in March 09
Connecting America Broadband Plan
Foster competition, innovation and investments
Ensure Spectrum availability
Universal broadband service
Develop broadbadn based services (e-health, e-education,...)
Brazilian “Plano Nacional de Banda Larga”
Connectivity for 50% of urban hh and 15% of rural hh
60 M mobile access
41 M $ capex (1/3 public, 2/3 private)
Europe’s Digital Agenda EU countries to adopt national VHS broadband strategies 100% BB coverage in 2013 30 MBs connections for all in 2020 with 50% of EU citizens
connected at 100 MBs
All Rights Reserved © Alcatel-Lucent 2010• 25 | Broadband Forum| November 24, 2010 - rh
Impact on unbundling
913
773
988
CO unbundling : alternative carriers backhaul networks
CO unbundlig : alternative carriers backhaul networks + France Telecom dark fiber rental
CO unbunling : local community bakchaul network
14,4 M households
2,4 M households
4,3 M households
21,2 M households
Number of unbundled CO’s according to backhaul network ownership
40 % of French central offices are unbundled through Local Communities backhaul networks
by end 2009
All Rights Reserved © Alcatel-Lucent 2010• 26 | Broadband Forum| November 24, 2010 - rh
Broadband Penetration by Technology
All Rights Reserved © Alcatel-Lucent 2010• 27 | Broadband Forum| November 24, 2010 - rh
Very high speed deployment: the French CaseRural Deployments in France
Despite the homogeneous need of telecommunication services in rural and dense areas, there is a mismatch in BB deployment (PC penetration in rural zones is higher as PC penetration in intermediary zones):
In rural zones Orange is clearly the dominant operator (market share of Orange inversly proportional to the size of the agglomeration), namely:
• 64% of the communities with less than 5‘000 inhabitants• 34% in bigger communities• 32% in Paris and Paris region
Source: ARCEP 2010
All Rights Reserved © Alcatel-Lucent 2010• 28 | Broadband Forum| November 24, 2010 - rh
Very high speed deployment: the French CaseBroadband Access Market Growth and Competition
Situation July 2010: 20 M broadband connections (residential and professional services) of which more than 19 M in ADSL• 10.3 M access lines commercialized by alternative operators, 7.14 millions total
unbundling• 80% of the competitive offers take advantage of full unbundling
All Rights Reserved © Alcatel-Lucent 2010• 29 | Broadband Forum| November 24, 2010 - rh
Selected Examples of Deployments in France (1)Fiber Backhauling Availability in Moselle Department
• Public Initiative backhauling network connect most of incumbent’s central offices to enable copper unbundling
• France Telecom’s dark fiber offer (not regulated) is not available everywhere ( red : not available, black : available)
• France Telecom dark fiber offer is commercially driven. It’s tariffs do not reflect a territorial digital policy. It’s architecture serves FT’s internal needs (central offices interconnexion)
• Public Initiative backhauling networks may connect business parks, business districts, company offices, public buildings, poles and masts where base stations require backhaul facilities ( 3G, LTE,…)
All Rights Reserved © Alcatel-Lucent 2010• 30 | Broadband Forum| November 24, 2010 - rh
Selected Examples of Deployments in France (2)Manche Numérique
• Backbone network (1200 km) managed as « affermage »/public concession by LD Collectivités (private company)
• Total cost: 79 M€, of which:• 24 M€ public sector (16 M€ from the Department)
• 2008 : FTTh extension to Saint Lô and Cherbourg : 12 M€ 100% private funding.
• Results :• 40 business districts connected to fibre backhaul
• Unbundling of all incumbent’s central offices (6 competing operators cover 35% of the population; 2 competing opérators in all rural central offices)
• White zones wireless coverage: 4 M€ (210 WiFi spots)
• 26 000 FttH homes passed
• National operators presence : Neuf Cégétel, Colt, Complétel; Free
• Local operators : Nomotech, RMI Adista, Idylle Télécom