The economic challenges of reaching broadband ubiquity
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Transcript of The economic challenges of reaching broadband ubiquity
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The economic challenges of reaching broadband ubiquity
Speeding up NGN ubiquity: a pillar for digital growth
Athens, 13 February 2014 • Dr Matt Yardley
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Introducing Analysys Mason
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▪ EC – Digital Agenda (costs, benefits, funding models, incentive policies)
▪ ITU – PPPs for universal broadband
▪ EIB – market development and funding models
▪ Operators – NGA strategy
▪ Governments – national broadband plans and state aid
▪ Regulators – competition issues in NGA
▪ Investors – NGA transactions
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Ubiquity costs
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First 75% homes
Last 25% homes
€ N bn
€ N bn
Source: Analysys Mason, typical fixed NGA cost analysis
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Rural costs vary strongly depending on technology – fixed vs wireless …
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70% 75% 80% 85% 90% 95% 100%
Wireless
Fixed
Cos
t
% of homes covered
Indic
ative
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… and these two critical aspects are highly market-dependent
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70% 75% 80% 85% 90% 95% 100%
Wireless
Fixed
Cos
t
% of homes covered
Indic
ative
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The final 5% is now a hot topic in the UK
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UK Government target
Government funding
Coverage (premises)
Broadband service specification
End 2017 target
£250m committed
95% Superfast (>24Mbit/s)
End 2018 target
Not yet committed
At least 99%
Not yet definedGovernment will explore how to solve this with industry using “more innovative fixed, wireless and mobile technologies”
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UK FTTC speed variability is narrower than in1st gen. broadband – good news for the DA
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Source: Ofcom data, 2013
0
5
10
15
20
25
30
35
40
Spe
ed (
Mbi
t/s)
8-10pm weekdays
30.6
3.5
24 hours
30.9
3.5
Max
33.1
3.0
Av min
Av variance
81% of headline
0
10
20
30
40
50
60
70
80
8-10pm weekdays
59.3
3.4
Spe
ed (
Mbi
t/s)
24 hours
60.4
3.5
Max
64.2
3.3
Av variance
Av min
78% of headline
38Mbit/s packages 76Mbit/s packages
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Outcomes will also depend on how Member States implement policy▪There is some latitude in interpreting the DA targets which will
impact solutions across Member States
–A very rigid view on 30Mbit/s, i.e. to all users under all conditions, would effectively eliminate wireless (by driving up costs to levels higher than fixed)
▪There is an inherent tension between playing it safe with incumbent operators vs stimulating new competition
–The sustainability risks are greater in rural areas – driven by cash-flow issues more than set-up costs
▪Member States need to think hard about geographic carve-ups
–This can have unintended consequences
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Public policy questions still remain
▪Funding: Our EC work suggests a funding gap of €60 billionto meet DA 30Mbit/s coverage & 100Mbit/s take-up targets
▪Demand-side:
–Connecting “the unconnected” (see below) remains a major challenge, with multiple issues involved
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Source: Ofcom CMR 2013
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These are exciting times!
▪Future of UHF radio spectrum (EC High Level Group)
▪Media consumption uncertainties:
–Broadcasting to mobile networks
–Prospects for linear TV distribution on fixed networks(e.g. using multicast)
▪Drivers for QoS in networks (e.g. cloud, public services) and business model implications
▪Growing day-to-day reliance drives need for resilience – perhaps less well understood that it should be
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Thank you
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Dr Matt YardleyPartner (UK)
+44 7766 058 242