Open Networks Why? When? How?
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Transcript of Open Networks Why? When? How?
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© Ericsson AB 2009 ASTEL annual conference May 20091
Open NetworksWhy? When? How?
Ivan Dimitrov,BA Broadband Networks, Ericsson
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© Ericsson AB 2009 ASTEL annual conference May 20092
Agenda
Broadband for all What is an Open Network? Why invest in Open Networks? When to start investing in Open Networks? How to invest/build Open Networks? Summary & Conclusions
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© Ericsson AB 2009 ASTEL annual conference May 20093
Broadband for all
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© Ericsson AB 2009 ASTEL annual conference May 20094
Viviane REDINGMember of the European Commission responsible
for InformationSociety and Media
KPN Annual EventBrussels, 14 January 2008
"How we treat next generation access is (…) the single most important policy question in the telecoms sector today. We have to create incentives for investment whilst making sure that no-one (and I insist on this no-one), can be in a position to foreclose the market.”
“Regulation will have a role to play to keep networks open and to guarantee progress, efficiencyand choice
“Point-to-point fibre deployment (...) is in fact the only fully future proof approach in terms of ability to deliver more and more capacity as techniques improve and as demand grows. Moreover it is the only approach to next generation access that permits a completely open access policy.
“……….initiated by municipalities, in cities such as Stockholm”
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© Ericsson AB 2009 ASTEL annual conference May 20095
Addressing the needs for all…..
Care for theelderly
PublicSafety &Security
Servicesfor disabled
citizens
Advanced servicesfor citizens
VoIP, Video & TV
State-of-the-artICT infrastructure
for businesses
HealthServices(e-health)
e-Government
Education(e-learning)
Broadband can help overcome the challenges
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© Ericsson AB 2009 ASTEL annual conference May 20096
”A historical perspective”- Electricity
- Privately owned companies started deploying power plants in piecemeal fashion in late 1800s
- Investments were mainly concentrated in profitable markets- Serving large cities, established businesses & wealthy homes
Initial MarketDevelopment
Consequences
- Large segments of the markets, especially rural and low income areas wereleft in the dark
- High degree of market concentration in the hands of small number ofvertically integrated companies ”monopolies”
EventualIndustry Structure
- Establishment of publicly owned municipal electric ultility companies
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© Ericsson AB 2009 ASTEL annual conference May 20097
The Case for Municipal Broadband - The drivers
MarketFailure
EconomicDevelopment
The drivers for municipal broadband today are the same as were for municipal electricity, a century ago
1- Failure on part of private companies to invest in specific geographic areas that do not meet the investment criteria of quicker ROIs
2- Tendency towards ”natural monoply” due to high capital intensityand low marginal returns
- Lower marginal cost, leads to low prices/profitability and eventual consolidation
1- Broadband, an essential public service and not a luxury
2- Sate-of-the-art broadband infrastructure, critical to improve community’s economic vitality
- Attract/retain investments- Creation of jobs- Retain and attract new citizens- Foundation for knowledge based economy
3- ”Eliminate” the ”digital divide”
4- Sustainability
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© Ericsson AB 2009 ASTEL annual conference May 20098
What is an Open Network?
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© Ericsson AB 2009 ASTEL annual conference May 20099
In telecommunications, Open Network, or Open Access to Communication resources, means that anyone, on equal conditions with a transparent relation between cost and pricing, can get access to and share communication resources on one level to provide value added services on another level in a layered communication system architecture.
Open Network definition:
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© Ericsson AB 2009 ASTEL annual conference May 200910
Generic Open Network Model
City Network
Customer
Service cost
PropertyNetworkProperty
Network
ServicePortfolio
PropertyNetworkProperty
Network
Pub
lic s
ecto
r
Ent
erpr
ise
Tel
ecom
Ope
rato
r
Oth
er o
pera
tors
Open on infrastructure level
Open on service levelC
om.o
pera
tors
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© Ericsson AB 2009 ASTEL annual conference May 200911
Open Networks - Why?
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© Ericsson AB 2009 ASTEL annual conference May 200912
Alternative Infrastructure OwnershipSPSPServiceProvider
SPSPServiceProvider
SPSPServiceProvider
Active Infrastructure
Passive Infrastructure
Active Infrastructure
Passive Infrastructure
Active Infrastructure
Passive Infrastructure
Inf Owner
Pros:- Suitable for traditional commercial servicesCons:-Infrastructure based competition- Not suitable for public and new type of commercial services
Pros:-Better asset utilization through sharing-Easier classification of assets based on risk class-Shift of competition from infrastructure to servicesCons:- Need for open/common interfaces
Pros:-Better asset utilization through sharing-Easier classification of assets based on risk class-Shift of competition from infrastructure to servicesCons: - Need for open/common interfaces
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© Ericsson AB 2009 ASTEL annual conference May 200913
Open Access Benefits
Municipality owned fiber infrastructure used by different service providers
– Deployment & operations cost split among different entities– Better utilization of assets/infrastructure through sharing
Shift of competition from infrastructure to services– Consumers have access to competitive service offerings
from various service providers– Higher service take-up
No co-ordination problems– Same streets do not need to be digged every time a new
telco enters the market– Fiber deployment is part of city planning, rather than
Telco’s market strategy
Open Access, a key enabler for municipal broadband
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© Ericsson AB 2009 ASTEL annual conference May 200914
Open Networks - When?
Now!
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© Ericsson AB 2009 ASTEL annual conference May 200915
Infrastructure
Content and Services
Prices (affordable)
Supply Demand
Modernized enterprises
Modernized Public Administration
IS literacy
Critical success factors
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© Ericsson AB 2009 ASTEL annual conference May 200916
EuropeCommision Broadband performance index
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© Ericsson AB 2009 ASTEL annual conference May 200917
Open Networks - How?
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© Ericsson AB 2009 ASTEL annual conference May 200918
City networks in Sweden
Lokala Bredbandsnät2006 - Ägande
Saknar (114)Kommunalt (139)Privat (16)Blandat (21)
Swedish City Networks Association
153 City networks (of 290 munic)
Most started as branches of munic owned power companies
Today direct munic owned or separate companies
95 % offer dark fiber
60 % of all fiber lease in Sweden through city network.
Co-operate to provide crossover connections
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© Ericsson AB 2009 ASTEL annual conference May 200919
Network levels
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© Ericsson AB 2009 ASTEL annual conference May 200920
Generic Open Network Model
City Network
Customer
Service cost
PropertyNetworkProperty
Network
ServicePortfolio
PropertyNetworkProperty
Network
Pub
lic s
ecto
r
Ent
erpr
ise
Tel
ecom
Ope
rato
r
Oth
er o
pera
tors
Open on infrastructure level
Open on service levelC
om.o
pera
tors
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© Ericsson AB 2009 ASTEL annual conference May 200921
Swedenleading the FTTx deployments in Europe
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© Ericsson AB 2009 ASTEL annual conference May 200922
A new perspective
Population densityPeople/Sq.km
Revenue/HomeConnected
Cost/home passed
High Low
DeploymentCost
Low
High Commerciallyviable
Requires GovernmentIntervention
Traditional Operators
”New operators”Municipalities, Utility companies,
real estate etc
Structural fundingavailable from EU/Local
Public authorities*
Subsidies, infrastructure re-use, lower cost
of capital, longer depreciation
Municipalities are the key players in the value chain
Cost/home passed
Profit
Loss
Profit
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© Ericsson AB 2009 ASTEL annual conference May 200923
Available business models
RSP = Retail Service Provider, providing the services C.O. = Communication Operator, investing in and operating the active layer N.O. = Network Operator, investing in and operating the passive layer
SingleOperator
”All-in-a-box”
C.O. & N.O.
RSP RSP RSP
N.O.
RSP RSP RSP
C.O. C.O. C.O.
N.O.
RSP & C.O.
RSP RSP RSP
N.O.
C.O.
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© Ericsson AB 2009 ASTEL annual conference May 200924
Services Provider
Services Provider
FiberProvider
FiberProvider
Communication Provider
Communication Provider
FTTC FTTH
MBB FTTB
FTTC FTTH
MBB FTTB
Density
Penetration
+
Business strategy and deployment strategy
But how do we proceed
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© Ericsson AB 2009 ASTEL annual conference May 200925
Services Provider
Services Provider
FiberProvider
FiberProvider
Comm. Provider
Comm. Provider
FTTC FTTH
MBB FTTB
FTTC FTTH
MBB FTTB
Density
Penetration
+
Layered approach and nationwide deployment strategy
FTTH
Services Provider
Services Provider
Services Provider
Services Provider
Comm. Provider
Comm. Provider
Comm. Provider
Comm. Provider
FiberProvider
FiberProvider
FiberProvider
FiberProvider
FTTH/FTTC
FTTB/FTTHMBB
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© Ericsson AB 2009 ASTEL annual conference May 200926
SP#3
Ericsson Managed Access
BusinessConsulting
Managed Services
Technology/Solutions
Municipality/Investor jointly own infrastructure
SP#2SP#1
Ericsson offerings
Ericsson facilitating for Neutral Governance
Municipality
Ericsson
Ericsson HW/SWServices
ServicesEntity
PrivateInvestors/Telcos
PrivateInvestor
InfrastructureEntity
- Bring in the investor partners- Setup Ericsson Services entity for managing
operations- Develop applications/web portals for public services - Setup service contracts covering SLAs/KPIs to
ensure quality on e2e connectivity- Provide uniform business processes/procedures for
gaining access to network- Provide customized connectivity solutions to the
Service Providers- Provide broadband technology & solutions- Provide Network design and turnkey roll-out services
e-Health e-Gov e-Learning
Public Service Portals/Servers
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© Ericsson AB 2009 ASTEL annual conference May 200927
Ericsson´s FTTH offerings
Passive solutions Micronet Ribbonet
v
v
Rack
Central Node
Active solutions
Home environment Access and site solutions Metro and IP edge
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Commercial in confidence Deep Fiber Business Case Workshop Teaser 2007-09-178
Service insights and revenue scenarios
Service Roadmap
Customer Interest
Revenue impact
Revenue Distribution
0
5 000 000
10 000 000
15 000 000
20 000 000
25 000 000
30 000 000
35 000 000
40 000 000
45 000 000
50 000 000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Years
EU
RO
Ancillary services
Invoicing
VoIP
IPTV
Monthly fees BB
Access fees BB
”Andersons”
3 x HDTV's 24 Mbit/s
P2P downloading 5 Mbit/s
Browsing 5 Mbit/s
Online gaming 2 Mbit/s
Voice 0.1 Mbit/s
Total Needed 36 Mbit/s
Application Needed
Speed Requirements Traffic volume requirements
NeededAverage User…
…without video11,6
Gbyte/month
…with video23
Gbyte/month
…with video1 & streaming IPTV3
51 Gbyte/month
…with video1 & streaming HDTV3
? Gbyte/month
100 000 subscribers 4 different housing types Closed Network
Services
TechnologyConsultation
Deployment
System Integration
Business Consulting
Managed Operations
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© Ericsson AB 2009 ASTEL annual conference May 200928
Summary & Key take aways
Broadband is no longer a luxury, but rather a utility Broadband is critical for the economic vitality of the
communities and nations Deployment of broadband entails huge capital outlays
with tendency for ”natural monopoly” Municipalities are therefore ideal entities for
undertaking deployment of broadband infrastructure State-of-the-art infrastructure can help municipalities
overcome their challenges by generating additional revenues, reducing their administrative costs and by better serving the citizens
Municipal Broadband, a key enabler for driving economy