MEASURING THE IMPACTOF INNOVATION IN FIBERDESIGN ON FTTH COSTSOF DEPLOYMENT

Stéphane Lelux, General Managerstephane@diffractionanalysis.com

Research sponsored by

Methodology

1

2

3

Interviews with Vendors and their Customers

Building a set of hypotheses for benefits

Applying the benefits to real-life deploymentscenarios

4 Analyzing the results

Benefits of Fiber Innovation in the Access

CompactnessLatest Innovation in fiber core &

coatings allow for smaller diameterfiber with no quality loss

Some vendors markets fiberswith 200 micron diameters

as opposed to the standard 250.

Smaller diameter cableslead to a lower occupancy

in ducts.

LongevityLatest Innovation in fiber benda-bility & coating allows for more

future proof fiber

Using superior fiber today willmean no need for replacementwhen higher spectrum bands

are put in use.

Fiber is compatible with1625 band

(WDM in Access)

LowerAttenuation

Innovation in fiber core production,bendability & coatings allow for

fiber with lower attenuationLonger reach for the fiber.

More customers can beconnected to a

given central office

Nature of Innovation Consequence Theoretical Impact

Model and Hypotheses

• Tactis and Diffraction Analysis modelled the cost of deployment in three areas of France:Inner-City Marseille (dense urban), Chennevières (suburban) and the Jura region (rural) forroughly 7500 homes in each case.

• The models are based on accurate geo-mapped data and duct occupancy information fromactual field surveys. They include the costs of a double backhaul route.

• In the model, the base scenario applies when regular fiber is used, the high quality scenarioapplies when innovative fiber designs are used.

Mod

el

• Compactness: 20% smaller cables lead to lower duct rental costs overall and lower need fordigs when duct space is not available.

• Longevity: Base model assumes 20% of fiber needs to be replaced after 15 years (5% and 50%also tested) . Using high quality fiber brings this down to 0%.

• Attenuation: Attenuation performance is comparable or better than standard fiber designsdespite improved compactness or higher bendability. H

ypot

hese

s

In order to establish a level comparison basis, all costs and gains wereactuated over the life of a project (25 years with a 12.5% WACC)

Model #1: Marseille

• On 87% of the route, one Ø 45 duct is freeand available. On the remaining 13%, at least 2Ø 45 ducts have 50% space available.

• On the overall route, 23.7km require a single720 fiber cable at most and will run in existingduct space and 2.5km require more than one720 fiber cable.

• Of these 2.5km, existing duct capacity isenough to cover 1.3km. Digging is required forthe remaining 1.2km.

• Using cable with 200 micron fiber instead of250 micron, an additional 0.6km of existingducts can be used, requiring only a 0.6km dig.

• Base scenario horizontal deploymentcost (25 yr actuated): 349k€

• 25 year actuated CAPEX savings fromusing high quality fiber: 59k€ (17%)

CAPEX

• Base scenario: Annual rent cost fromincumbent 144k€/year

• 25 year actuated OPEX savings fromusing high quality fiber: 211k€ (21%)

OPEX

Model #2: Chennevières sur Marne

• On 100% of the route, one Ø 45 duct is free and available.

• On the overall route, 50.6km require a single 720 fiber cable and run in existing ductspace and 3.8km require morethan one 720 fiber cable.

• Of these 3.8km, existingduct capacity is enoughto cover 1.5km. Digging isrequired for the remaining2.3km.

• Using cable with 200 micronfiber instead of 250 micron, anadditional 1km of existingducts can be used, requiringonly a 1.3km dig.

• Base scenario horizontal deploymentcost (25 yr actuated): 644k€

• 25 year actuated CAPEX savings fromusing high quality fiber: 64k€ (10%)

CAPEX

• Base scenario: Annual rent cost fromincumbent 282k€/year

• 25 year actuated OPEX savings fromusing high quality fiber: 389k€ (21%)

OPEX

Model #3: Jura (52 towns & villages)

• Horizontal deployment is 119km buried and 544km aerial.

• Available duct space inthe buried section issufficient to accomodateall but 5m of cable.Those 5m require adig.

• Using cable with 200micron fiber instead of250 micron allows forthese 5m to be buriedusing existing ducts.

• Base scenario horizontal deploymentcost (25 yr actuated): 13 254k€

• 25 year actuated CAPEX savings fromusing high quality fiber: 0k€ (0%)

CAPEX

• Base scenario: Annual rent cost fromincumbent 2 831k€/year

• 25 year actuated OPEX savings fromusing high quality fiber: 536k€ (3%)

OPEX

Longevity

• Our basic longevity model assumes that 20% of the lines need to be replacedafter 15 years. The table below shows the isolated impact of longevity (ie. notthe cumulated impact of longevity and compactness.)

Marseille

Chennevières

Jura

25 YR ACTUATED GAIN

349k€362k€ 3.4%

Base High Quality %

634k€659k€ 3.8%

13 254k€13 861k€ 4.4%

0.9%

%

1.0%

1.1%

8.1%

%

9.1%

10.3%

5% re

plac

ed

50%

repl

aced

Introducing Cost

• Using these new fiber designs has an added cost compared to using standardfiber. It’s not possible to point to an exact cost differential, but our estimatebased on interviews is 10-20% increase on the cost of fiber.

• For clarity’s sake, we modelled a surcharge of 2€ per linear meter per cable.

Marseille 49k€

Chennevières 97k€

Jura 185k€

25 YR ACTUATEDSURCHARGE

Putting it all together

17% 15% 3%

8.9€ 6.8€ 1.4€

% gain

gain / linear meter

A Few Conclusions

• Using the new generation of fiber has a clear financial impact on cost ofdeployment in urban and suburban deployments. The impact in ruraldeployment is much more limited as most of the deployment is aerial.

• Using France as a playground may be minimising some of the impactavailability of ducts in France is significant. Countries where less ducting isavailable might see a more significant impact. Variance may also be driven bydifferent wholesale pricing models for duct access.

• Our model assumes the fiber route is the same in the base and the highquality scenarios. In some instances, it might be possible to optimise routes onthe basis of lower occupancy in particular with increased impact.

•Our model only looks at the direct impact of the fiber, not at cable innovationwhich would certainly also have positive impacts:

• Connectorized fiber cables• Extractible cables

ThankYou!