Fiberizing Europe The FTTH Council Europe Costing Model

Albert Grooten

FTTH Council Europe

FTTH Council Europe Costing model

Summary

• A costing model was generated to calculate the total expected cost of achieving the DAE broadband target (100% of homes passed and 50% of homes with subscribers) for the EU27 countries.

• Model assumes a completely new build and that no access fibre networks exist (optical cables are overlayed)(optical cables are overlayed)

Using real deployment data and country topology analysis (averaged topologies)

Homes passed and homes activated (= subscribers) are calculated separately

• Introducing modest levels of duct infrastructure sharing and reuse can drive 10’s of billions of Euros savings

• Benefits from strong coordination of infrastructure sharing available to Member States at low cost

Project Team

FTTH CouncilAlbert Grooten (Project Manager)Hartwig Tauber

Comsof (Network Data and Cost Calculations & Extrapolation Model)

Raf MeersmanLuc De HeynLuc De Heyn

Atesio / Draka (Network Data and Cost Calculations)

Roland WessälySebastian OrlowskiDick van den Dool

Telage (Eurostat Data Collection)

Tony Shortall

Outline

1. Context – Project Objectives

2. Project approach• Cost calculation per sample area – real networks• Extrapolation of cost to EU27• Extrapolation of cost to EU27

3. Results of Calculations and Extrapolation

4. Summary

Context – Project Objectives

What is the total investment needed to reach the Di gital Agenda Europe (DAE) Broadband targets for the EU 27 countries with thei r 500 million inhabitants?

• EU Target = by 2020 half of European households should subscribe to a bandwidth of at least 100Mbps, and 30Mbps should be available to all Europeans.

• The headline cost is calculated to meet the above target• The headline cost is calculated to meet the above target

• But the model has been generated that can calculate the cost to deploy FTTH networks for varying % of homes passed (HP) and varying % of homes activated (HA) [= subscribers].

• Estimate the impact of reusing infrastructure in public and private domain.

Project approach

1. Determine relation between cost and density Comsof and Atesio optimised 15 EU areas

real GIS data – varying densities – varying populationTwo technologies considered: P2P and PONMicroduct OSP technology appliedDetailed bill of material

� trendline that estimates the cost of a FTTH-project based on density

2. Extrapolation for a total of 1303 regions covering EU27Eurostat databases have been used to retrieve data for:•Area sizes and Population of the 1303 regions, •Land use (correction for non populated forests, rivers, etc,) •Persons per household, to transfer population density to number of households (= subscribers) and the Labour cost index for the 27 countries

Calculation per sample area

Unit prices of 70 different network components

• 3 cost components Labour civil, labour install and material costs

• 7 cost categories for homes passed (HP) and homes activated (HA) [= subscribers]1. Active – POP HA1. Active – POP HA2. Passive – POP HP3. Passive – OSP public domain – cables and ducts HP and HA4. Passive – OSP public domain – nodes HP5. Passive – OSP private domain (drop) HA6. Passive – in building HA7. Active – Customer premises HA

Optimal network designed by Comsof and Atesio

� Detailed and exact calculation (based on real live data, where available) for cost per home passed (cost/HP) and cost per home activated (cost/HA)

� In total 711.000 households were simulated with a FTTH deployment.

Result of a network calculation (1)

Home connected cost represented in 7 categories

Home connected (HC) cost = Cost for home passed (HP) + cost for home activated (HA).Three examples: different densities, different technologies

Result of a network calculation (2)

Home connected cost represented in labour civil, la bour install, material

Labour civi l = cost of digging trenches, manholes, closure holes, housing of street cabinets, building entriesLabour install = Equipment installation in the POP, Building basement and customer premises, ODF installation in the POP and in the street cabinet, Duct laying, Cable and microduct blowing, splitter installation and fibre splicinglaying, Cable and microduct blowing, splitter installation and fibre splicing

Result of a network calculation (3)

Trenches and cables

Illustration of calculated figures of two network densitiesTrenching and cable length includes feeder, distribution and drop.

Number of Total trench

Density

Number of

households

Total trench

length Total cable length

high 33k 749km 6038km

medium 14k 425km 2866km

The trendlines

Trendline adjustment for Labour Cost

Labour Cost Index (LCI)

Cost / HP = ∑cost (labour civil,labour install, material)

Cost / HA = ∑cost (labour civil,labour install, material)

Labour costs are country specific.Labour costs are country specific.=> New trendlines using this index – calculated for each country

0

0,2

0,4

0,6

0,8

1

1,2

1,4

1,6

1,8

2

The extrapolation - NUTS

NUTS = Nomenclature of Units for Territorial Statistics

Current NUTS classification27 countries at NUTS 0 97 regions at NUTS 1271 regions at NUTS 21303 regions at NUTS 3

The extrapolation – basic info

Data extracted from Eurostat databases:1. Area of the regions2. Population by sex and age groups – NUTS level 3 regions 3. Average number of persons per household 4. Labour cost, wages and salaries4. Labour cost, wages and salaries

Eurostat source file names:1. demo_r_d3area2. demo_r_pjanaggr3 3. lfst_hhantych4. lc_n08cost_r2

The extrapolation – populated area

Exclude unpopulated area (forests, rivers, agriculture fields, …) from area size for density statistic to align with trendline samples

Land use overview divides area in 5 categories:1. agriculture 2. forestry hunting and fishing 3. heavy environmental impact 4. services and residential 5. no visible use

Area size of the 1303 areas can be corrected

� Population density is more according to actual situation

∑(area)≠ ∑(area)

∑(homes)= ∑(homes)

Cost < Cost

The results – Total Costs for 0-100 % EU Coverage

DAE target = 50% adoption = 50% HA= 50% subscribers

The results – Total Costs (0-100 % EU Coverage)

DAE target = 50% adoption = 50% HA = 50% subscriber s)

100% HP (210.1M households)

Expected Cost value: €192bn

Cost reducting by reusing (duct) infrastructure (1)

Considering 2 factors (area dependent)• The amount of available duct infrastructure in Access Networks, both in

public OSP (Feeder and Distribution) and in private OSP (Drop)• The cost of reusing this infrastructure

Estimate the % reuse for each type of area. Reuse saves costs for trench digging Estimate the % reuse for each type of area. Reuse saves costs for trench digging and duct laying.

Cost of reusing includes local repair of ducts, additional fibre closures and splicing etc

Cost reducting by reusing (duct) infrastructure (2)

Estimated impact of duct sharing would be a saving of 12% on total investment

•Based on DAE (100%HP, 50% Subscribers) and only considering duct sharing

•Dense urban areas have more existing ducts, but labour costs for reuse are higher •Rural areas have far less existing ducts, but labour costs for reuse are lower

•Scenario: Extended reuse of duct infrastructurePublic OSP: 25% reuse (low density areas) – 35% reuse (medium

density areas – 50% reuse (high density areas)Private OSP: 35% reuse

Note: higher savings are possible if other infrastructures are shared

FTTH Council Europe Costing model

Summary of initial Results

• Total expected cost of achieving the DAE broadband target (100% of homes passed and 50% of homes with subscribers) is €192bn

• Model assumes a completely new build and that no local fibre networks exist (optical cables are overlayed)

Using real deployment data and country topology analysis (averaged Using real deployment data and country topology analysis (averaged topologies)

Homes passed and homes activated are calculated separately

• Introducing modest levels of infrastructure sharing and reuse can drive 10’s of billions of Euros savings

• Benefits from strong coordination of infrastructure sharing available to Member States at low cost

Thank you for your attention!