© Copyright Ovum 2007 An International perspective on the status of Fibre investment in the access...

© Copyright Ovum 2007 www.ovum.com

An International perspective on the status of Fibre investment in the access layer

Stefano Nicoletti

[email protected]

+44 207 551 9178

14/12/2007

© Copyright Ovum 20072

Agenda

Some figures

FTTx plans

IPTV case studies

Level 3Some data on fibre



FTTP -10 leading countries –subscribers #

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Su

bscri

bers

(000s)

2005

2006

FTTP = FTTH or apartment + Ethernet LAN; VDSL excluded


FTTP – forecasts to 2011

0%

10%

20%

30%

40%

50%

60%

2005 2006 2007 2008 2009 2010 2011

Korea

Japan

Hong Kong

Sweden

US

Denmark

Russia

Taiwan

Italy

Norway

Figures in % of Households; Asia expected to widen the gap


Non-DSL connection vs FTTP as% of total broadband

0%

10%

20%

30%

40%

50%

60%

70%

Non-DSL FTTP

Infrastructure competition seems to favour FTTP take-up


Availability of high-speed services is an issue

Western Europe North America

Asia Pac Eastern Europe

Total Households

Households with copper access

Households that can get DSL

Households that can get DSL @ 2Mbps

Households that can get DSL @ 10Mbps

Key


Monthly fee relative to monthly disposable income

0%

5%

10%

15%

20%

25%

% o

f d

isp

osab

le i

nco

me

Lowest fee Highest fee

All countries except Russia and Norway have entry product below 3%; In line with prices of other technologies


IPTV ‘v’ consumer fixed voice

0

200

400

600

800

1000

1200

2005 2006 2007 2008 2009 2010

Re

ven

ue

(U

S$

)

IPTV revenues

fixed voice revenues

Hong Kong – most successful IPTV country in the world

0

2,000

4,000

6,000

8,000

10,000

12,000

2005 2006 2007 2008 2009 2010

Rev

enu

e (U

S$)

IPTV revenues

fixed voice revenues

France – most successful IPTV country in Europe


FTTx plans


FTTH plansCountry Operator/ aut

horityFTTH plans Current subscribers

(Q307)

Korea MIC 10M subscribers in Korea by 2010. 4.6M

KT

92% homes-passed by 2010 (~16.9M households). Cumulative CAPEX: FY07- US$435M;

FY08 – US$783M; FY10 – US$1.3B. 2.2M

Hanaro~US$120M in 2007, targeting 12.6M homes

passed by FY07. 1.3M

Powercomm 820k

J apan NTT20M subscriber target for FY2010. US$47B

budgeted for 2006-2010. 7.4M

Hong Kong HKBN2M homes passed (95% household coverage) by 2010. Total CAPEX budget for FY08 – US$22.5M. 220,000 (Q207)

US Verizon

18M homes passed by 2010. US$23B for 2006-2010, however this does not take account of a US$4. 9 B that would otherwise be required to

maintain traditional copper plant during the same period. 1.3M

Denmark DCAEst. US$1.3B by municipals, for a targeted 1M

subscribers.

Source: Ovum research


Korea and Japan

U-Japan (ubiquitous Japan)

2006-10 program by MIC, revised every year

Eliminate “zero broadband coverage” towns and villages by 2008

High speed broadband to cover 90% of population by 2010

Support investment through funding, tax relief, loans

Support competition through open access to poles, ducts and physical infrastructure

KII- Korean information Infrastructure

Plan started in 1995

As of 2000 –Govt and operators invested W11trillion

Broadband development in rural areas a main objective, KT forced to roll-out coverage in remote villages

Incentives to invest through cheaper finance or extended loans

Govt objectives to remove digital divide AS WELL AS improve broadband speed


Australia, Singapore, UK…public money on the way!

New Australian Labour govt.– broadband to the bush -

AUS $4.7billion ($4.1bn) to invest in FTTN infrastructure and cover 98%

Public private partnerships

Tender process to allocate the money: Telstra, G9 consortium, Deutsche Telekom; 6 months only!

Doubling Telstra money announced in its investment plan in 2005

UK – Stephen Timms – new minister for competitiveness

“Ultra-fast broadband …will allow our businesses to innovate, grow and create wealth. We need to be discussing today how we can put this new network into place, because delay could be a barrier to the future success of our economy.”

Estimated cost for FTTH in UK = £ 15 bn; FTTN £7bn (respectively 30 and 14bn$)

Singapore Government and two new RFPs

Netco to build and operate a Layer 1 passive infrastructure

Operating co.(Opco) to deploy electronics, switches and routers, and offer wholesale broadband access to downstream Service provider

Public funding for S$750mln ($520 mln)

Public money for FTTN and infrastructure upgrades is coming


The French fibre race

Aggressive plans from incumbents as well as competitors

Unique situation in Europe

Re-use of public infrastructure essential (e.g. Paris, Marseille)

Early start of LLU empowered competitors and provides financial strength for stepping the last step of investment ladder

Source: Ovum research

LLU

FT retail

Wholesale DSL


KPN and its NGA plan

KPN announces an all-IP investment plan in November 2005

From 21 local exchanges;1350MDF;28.000 street cabinets… …to14 central locations,150 Metro core exchanges, 24.000 street cabinets …and replacing copper with fibre in between the MDF and the street cabinets Plan To be carried out within 2011

This means

LLU will disappear (2011 but optimistic) and Sub loop unbundling will be introduced OPTA taking into account SDF investment but also

Revenues for selling MDF locations Savings from announced dismissal of 8,000 work force (about ¼ of KPN!!)

Future

prices for SDF expected to be in line with current MDF- Full LLU/Shared access OPTA assumes a 5 year pay back period for OAOs business cases for MDF, they have

opened a consultation and received business cases whose life span was 3-5 years. A minimum of 2 years for phasing out exchanges Functional separation ruled out

Is there a case for SDF access? OPTA considers option must be given


ADSL v FTTCab v FTTP

To deliver TV service over:

ADSL from the exchange: ~$200 per year

FTTCab: additional investment of ~$900*

FTTH: additional investment of ~$1,800*

If ROI is over a 3 year period, that is $25 and $50 per month

In some cases FTTx brings cost savings in other areas

Reduction in opex

Reduction in churn

* Based on Ovum’s modelling and operator financial reports


IPTV Case studies


Verizon – throwing technology at the problem

Fios TV built on FTTH technology

8.5 million homes passed, 18 million targeted by 2010.

As over Q3 2007, 717 thousand Fios TV customers

Probably the most technically advanced TV service in the world

Largest choice of HDTV channels

multi room PVR, up to 6 separate remote terminals

Video on demand, tV channels, pictures

Competes on price, quality, package flexibility and functionality , the whole package for around 60$ (different options

80% of Fios TV customers take triple play package

Pick and mix menu: basic package, plus premium entertainment, plus hardware


Now TV – a true media company

0

100

200

300

400

500

600

700

800

900

2004 H1 2004 H2 2005 H1 2005 H2 2006 H1 2006 H2 2007 H1

TV

su

bscri

bers

(000s)

PCCW

i-cable

- ARPU has increased from HK$57 to HK$166 in 3.5 years

- 68% are pay TV customers

- First to introduce HDTV

- Quickly catching the competition

- Exclusive content rights: UK Premier league, UEFA 2008,etc.

- Flexible payTV channels

-7 channels delivered on PCCW’s quadplay

-- pricing in between 20 -80 $ depending on the package


Creating interactive services around premium content

Sports Barker – viewers can watch promotional videos of sports programming and view live match fixtures of all now SPORTS channels

Live Match Info – head-to-head statistics, team line-up, player profiles, team fixtures,

Live match scores of all games availableat a glance

Player-of-the-Match Voting – instant voting and results available


“The future is Orange”

Build on existing satellitecontent

Expand to multi-screenexperience

Expand into content creationand production

Expand into consumerelectronics


Thank you !!

Stefano Nicoletti

[email protected]

+44 207 551 9178

14/12/2007


Non -Network neutrality al Grand hotel Brun!

© Copyright Ovum 2007 An International perspective on the status of Fibre investment in the access...

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