8/8/2019 IRU-Based Customer Right to General Use of Telecommunication

http://slidepdf.com/reader/full/iru-based-customer-right-to-general-use-of-telecommunication 1/13

IRU-based customer right togeneral use of

telecommunication infrastructurewith cost-based upgrade.Olaf.Schjelderup@uninett.no

Workshop on CEF Networks,Praha, may 2005

8/8/2019 IRU-Based Customer Right to General Use of Telecommunication

http://slidepdf.com/reader/full/iru-based-customer-right-to-general-use-of-telecommunication 2/13

UNINETT ± a nordic perspective

8/8/2019 IRU-Based Customer Right to General Use of Telecommunication

http://slidepdf.com/reader/full/iru-based-customer-right-to-general-use-of-telecommunication 3/13

« more close look

8/8/2019 IRU-Based Customer Right to General Use of Telecommunication

http://slidepdf.com/reader/full/iru-based-customer-right-to-general-use-of-telecommunication 4/13

UNINETT main topology

8/8/2019 IRU-Based Customer Right to General Use of Telecommunication

http://slidepdf.com/reader/full/iru-based-customer-right-to-general-use-of-telecommunication 5/13

Norway ± some figuresPopulation: 4 554 000 (Jan 2003)Coastline: 25 148 kmArea: 385 155 km^2Shortest distance north/south: 1 752 km (approx 3 daysby car ;-))Lot of mountains, fjords, islands and widespreadpopulation gives high infrastructure costs; both roads,railways and telecom.Two nation-wide Telecom Carriers; BaneTele andTelenor. A lot of smaller local or regional TelecomCarriers in the bigger cities.4 universitiesAbout 40 regional university colleges

8/8/2019 IRU-Based Customer Right to General Use of Telecommunication

http://slidepdf.com/reader/full/iru-based-customer-right-to-general-use-of-telecommunication 6/13

8/8/2019 IRU-Based Customer Right to General Use of Telecommunication

http://slidepdf.com/reader/full/iru-based-customer-right-to-general-use-of-telecommunication 7/13

H istory of UNINETT¶s networkIn the beginning, from 9,6 kbps to 2Mbit/s.1992: 34 Mbit/s capacity between universities (Telenor)1995: Transition to 34 Mbit/s ATM (Telenor)1997; Upgrade to 155 Mbit/s ATM, with some colleges on lower capacityVCs. (Telenor)

1998/99: UNINETT-owned or -leased fiber established from severalcolleges/universities to railway stations and power plants gave access toseveral well-priced 155 Mbit/s SD H from the new carriers BaneTele andEniTel.2000: Call for Tender; Leased 2.5 Gbit/s Trondheim-Oslo (Telenor), severalleased 34/155Mbit/s SD H -links. Tendency towards acceptable pricing.2001/2002 H uge fiber ring project in Tromsø, co-funded by UNINETT.

Participants; local community, municipality, University, College, hospital. 14km ring structure , 96 fibers, abt 15 drops. Price: 1.5 MEuro. Other similar and smaller projects in Bergen and Trondheim.2002: EniTel bankrupt and assets bougtht by BaneTele. Now only twonational carriers; duopoly, increased cost on leased lines. Depressing «

8/8/2019 IRU-Based Customer Right to General Use of Telecommunication

http://slidepdf.com/reader/full/iru-based-customer-right-to-general-use-of-telecommunication 8/13

Rethinking the situation ..Our own fibers had earlier helped us a lot gaining competion in themarket.There must be a weak point in the duopoly situation that we can takeadvantage of, but which? Need for capital?Given Norway¶s geographical distance, it¶s costly to own national fibreinfrastructure by oneself. One also need access to local technical

knowledge all over the country to fix broken fibers etc.Longterm agreement do give lower prices ± our main presence point(universities and colleges) are geographical very stable in a long timescale.There exists a lot of unused fiberpairs in current national infrastructure ±not used because of marketing judgements. Why etstablish new fibreinfrastructure when this already exists?We¶re a private company, which allow us to loan money in a bank.There is a need for a clever strategy here «

8/8/2019 IRU-Based Customer Right to General Use of Telecommunication

http://slidepdf.com/reader/full/iru-based-customer-right-to-general-use-of-telecommunication 9/13

Call for tender, summer 2002, a

new modelSuggested a 10-15 year agreement with upfrontpayment (IRU=Irrevocable Rigths of Use)Suggested an initial topology and capacitySuggested cost based capacity upgrade and possibletopology additions/changes.Invitated to infrastructure cooperation, not competion.Clearly defined UNINETTs user groups and market.Result: Telenor negative. BaneTele willing to discussfurther. Negotiations for nearly 6 months.

8/8/2019 IRU-Based Customer Right to General Use of Telecommunication

http://slidepdf.com/reader/full/iru-based-customer-right-to-general-use-of-telecommunication 10/13

Agreement with BaneTele, april

2003Initial IRU amount + yearly O&M cost. 15 years + 5optional years duration.55 initial lines (2.5 Gbit/s wavelengths/transmission,local/regional fibers, 155 Mbit/s). Initial topology defined.

Cooperation for maximum redundancy. All fiber paths areexamined.To implement the agreement nearly 30 new local fibreloops widespread along Norway was established byUNINETT, BaneTele, local power plant companies, other 3rd-party during 2003. A lot of hectic work (pheew « ;-))Upgrade to cost of equipment (share of cabinet, linecards,switch, regenerators, etc.) and an administrative fee.Fiber/Duct-exchange agreement with pre-agreed-uponprice for fiber. Cooperation in new fiber projects,telehousing, issues regarding new infrastructure etc.

8/8/2019 IRU-Based Customer Right to General Use of Telecommunication

http://slidepdf.com/reader/full/iru-based-customer-right-to-general-use-of-telecommunication 11/13

Negotiation strategyInclude as much infrastructure as possible in theIRU for as long time scale as possible.The IRU must does not demand significantinvestments for the provider in order to negotiatethe price downwards. Important to know theproviders infrastructure in much detail.Focus on ´rights to communication´.Calculate risk of investment/bankruptsy.Be a non-profit organization and define your market as academic sector and not as acompetitor to your provider.

8/8/2019 IRU-Based Customer Right to General Use of Telecommunication

http://slidepdf.com/reader/full/iru-based-customer-right-to-general-use-of-telecommunication 12/13

Current situationUNINETT has gained more predictable costs the comingyears. More initial costs now, also a 5 year bank loan, butthis will result in significantly reduced cost after end of bankloan.The 15 year IRU break-evens after short time versus leasedlined in the market. Cost of leased infrastructure are still notfalling.The network has more capacity and redundancy than ever before. (By an agreement with the Norwegian Space Agencywe also bouth 30 years rigths to155Mbit/s to Svalbard in

january 2004. Upgrade to Gigabit Ethernet late summer 2004 included.)More upgrade gives a even more beneficial model versusmarket price.

And, we¶re upgrading quite a lot .

8/8/2019 IRU-Based Customer Right to General Use of Telecommunication

http://slidepdf.com/reader/full/iru-based-customer-right-to-general-use-of-telecommunication 13/13

Q uestions?