Presentation of study results Broadband acceleration study ...
Transcript of Presentation of study results Broadband acceleration study ...
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Broadband acceleration study part 2:
methodology and supporting findings
Presentation of study results
2 February 2016 • Matt Yardley, Ian Adkins, Andrew Daly
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Contents
2
Our approach
Forecasting demand
Network scenario modelling
Socio-economic benefit
Results to conclusions
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3 Contents
Our approach
Forecasting demand
Network scenario modelling
Socio-economic benefit
Results to conclusions
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We would like to thank the wide range of stakeholders who provided input to the study
Chamber of Commerce (CoC)
Commission for the Protection of
Competition (CPC)
Cyprus Consumers Association
(CCA)
Department for Electronic
Communications (DEC)
Department of Information
Technology Services (DITS)
Electricity Authority of Cyprus
(EAC)
European Commission (EC)
4
Operators:
Cablenet
Cyta
Hellas-Sat
MTN
Primetel
Municipalities:
Idalion
Limassol
Strovolos
Union of Cyprus Communities
Our approach
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We undertook a structured approach
5 Our approach
Current situation Possible future
evolutions
Demand Supply Policy
Stakeholder
consultation Desktop research Analysis and modelling
We were supported by Shepherd and Wedderburn and Dr. K. Chrysostomides & Co LLC
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Our modelling work was designed to explore the wide range of options available to Cyprus
6 Our approach
Demand
forecast
Network
scenarios
Socio-
economic
benefit
Bound a range of sensible outcomes to manage uncertainty
Create a “do nothing” forecast based on demand drivers
Analyse different technologies and forms of competition
Consider the commercial viability of nationwide coverage
Consider the socio-economic benefit of NGA for Cyprus
Create comparisons between scenarios
Modelling aspect Aims of our approach
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7 Contents
Our approach
Forecasting demand
Network scenario modelling
Socio-economic benefit
Results to conclusions
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We considered the historical take-up of current- and next-generation broadband across Europe
8
Next-generation broadband First-generation broadband
Forecasting demand
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Ta
ke
-up
in c
ove
red
are
as
Years since launch
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Ta
ke
-up
in c
ove
red
are
as
Years since launch
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We ranked Cyprus against other countries for drivers showing some correlation with demand
9 Forecasting demand
Affordability Employment rate
0%
2%
4%
6%
8%
10%
12%
LT FI
IS FR
AT
SE
DE
PL
NL
UK
LU
CZ
SK
DK
EE
LV
EU
BE
NO SI
HU
EL IT
BG
MT IE PT
HR
ES
RO
CY
DESI human capital (digital skills)
-%
5%
10%
15%
20%
25%
FI
SE
DK
UK IS
NO
NL
LU IE BE
DE
EE
FR
AT
CZ
EU
SK SI
ES
LT
MT
HU
LV
PL
PT
HR IT
CY
EL
BG
RO
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
ISN
OS
ED
EN
LD
KU
KA
TE
EC
Z FI
LU
LV
LT
EU SI
FR
PT
MT
CY
BE
HU IE PL
BG
RO
SK
ES IT
HR
EL
Cyprus lies 39% of the
way between the bottom
and top values
Cyprus is at the bottom of
the range for affordability
Cyprus lies 24% of the
way between the bottom
and top values
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We used the demand driver analysis to guide where Cyprus could end up in the forecast range
10
Forecast of NGA take-up in covered areas
Forecasting demand
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Ta
ke
-up
of b
roa
db
an
d in
co
ve
red
are
as
Current generation trend, low Current generation trend, high
Next generation trend, low Next generation trend, high
Cyprus actual, next generation Cyprus forecast, pessimistic
Cyprus forecast, optimistic Cyprus forecast, steady
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11 Contents
Our approach
Forecasting demand
Network scenario modelling
Socio-economic benefit
Results to conclusions
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Scenario Technology for
national network Wholesale method
Long-term wholesale
market share
R1 FTTP-GPON Active only 65%
R2 FTTP-PTP Passive and active 76%
R3 FTTP-GPON,
FTTC-VDSL, LTE Active only 65%
R4 FTTP-GPON Active only 16%
R5 FTTP-PTP Passive and active 33%
R6 FTTP-GPON, LTE Active only 16%
Summary of “revised” scenarios used for detailed study
Network scenario modelling
We defined a list of six scenarios for detailed study, chosen from a longer list
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13
Comparison of viability of national network and 100Mbit/s coverage
Network scenario modelling
Our demand forecast and cost models combine to show viability against 100Mbit/s coverage
-20
-18
-16
-14
-12
-10
-8
-6
-4
-2
0
2
4
6
8
10
12
14
16
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100
R6, FTTP+LTE, Active, Small market share
R5, FTTP, Passive, Small market share
R4, FTTP, Active, Small market share
R3, FTTP+FTTC+LTE, Active, Large market share
R2, FTTP, Passive, Large market share
R1, FTTP, Active, Large market share
Premises coverage of 100Mbit/s-capable networks (%) from all networks in Cyprus
IRR
of m
od
elle
d n
etw
ork
at
na
tio
nw
ide
co
ve
rage
WACC
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14 Contents
Our approach
Forecasting demand
Network scenario modelling
Socio-economic benefit
Results to conclusions
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We used a framework agreed with the EIB which considers four areas of socio-economic benefit
15
Overview of approach to estimating socio-economic benefit
Socio-economic benefit
Financial analysis outputs
% of health budget savings
Health spending
Extension of e-gov savings
e-Government savings target
Consumer surplus
No. of households
Assumed broadband take-up profile
Net benefit per employee
Socio-economic
outputs
No. of SME employees
SME impact
Consumer
surplus
Government
Health
Input from project (country-specific value)
Socio-economic assumptions
Generic CBA model
Module within generic CBA model
Outputs of model (e.g. for ENPV, ERR, B/C ratio)
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Where possible we used Cyprus-specific inputs, including the outputs from our other models
16
Summary of socio-economic benefits model flow
Socio-economic benefit
Network
costing model
Demand
model
Other socio-
economic
inputs
Parameters
for four
benefit areas
Socio-
economic
calculations
Results
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Most of the benefit is derived from SMEs, with the mixed-technology option offering good value
17
Proportion of benefits,
scenario R3
Socio-economic benefit
81.8%
5.9%
3.1% 9.2%
Business employee benefits
Household consumer surplus
e-Government savings
Tele-health care benefits
Benefit–cost ratio by scenario
Scenario Benefit–cost
ratio
R1 2.58
R2 2.74
R3 3.89
R4 1.07
R5 1.59
R6 2.15
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18 Contents
Our approach
Forecasting demand
Network scenario modelling
Socio-economic benefit
Results to conclusions
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In making our recommendation, we considered the detailed aims of the project
19
The right
choice for
Cyprus
Deliver
social and
economic
benefit
Attract
investment
Promote
competition
Reflect
European
best
practice
Support
DAE
targets
Ensure the
approach is
feasible
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Our quantitative modelling was combined with qualitative assessments to compare scenarios
20 Scenario results
Key:
Green = good
Amber = fair
Red = poor
Scenario Attracting
investment Encouraging competition
100Mbit/s availability
Socio-economic
benefit–cost ratio
State-aid implications
R1 (FTTP,
active, large
market share)
-0.4% IRR Active only Full coverage
by 2020 2.58
Moderate
implications
R2 (FTTP,
passive, large
market share)
1.2% IRR Passive and
active options
Full coverage
by 2020 2.74
Moderate
implications
R3 (FTTP,
FTTC, LTE,
active, large
market share)
15.8% IRR Active only
Partial
coverage by
2020
3.89 Minimal
implications
R4 (FTTP,
active, small
market share)
-19.2% IRR Active only Full coverage
by 2020 1.07
Significant
implications
R5 (FTTP,
passive, small
market share)
-10.9% IRR Passive and
active options
Full coverage
by 2020 1.59
Significant
implications'
R6 (FTTP,
LTE, active,
small market
share)
-3.2% IRR Active only
Partial
coverage by
2020
2.15 Significant
implications
Ne
two
rk a
nd
co
mp
etitio
n s
ce
na
rio
s
Decision criteria
This scenario
involves a cost-
effective mix of
technologies
offering good
broadband
speeds, but falls
short of the 2020
targets (though
they would likely
be met in future
years)
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We aim to secure the benefits of market-led mixed technology networks, with a review by end-2017
21 Scenario results
2016 2017 2018 2019 2020
Market-led approach to
deploy infrastructure
Implement regulatory/
policy changes as
soon as practicable
Develop schemes to
increase take-up
immediately
Ongoing monitoring Ongoing monitoring
Continue with market-led approach
to deploy infrastructure
Consider value of public intervention to
deploy infrastructure against defined
criteria
YES
NO
Critical decision point at end of 2017:
are operators investing as expected?
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Thank you for your attention
22
Ian Adkins
Andrew Daly
Analysys Mason Limited
Bush House, North West Wing
Aldwych, London WC2B 4PJ, UK
Tel: +44 (0)20 7395 9000
www.analysysmason.com