Future proof strategies towards fiber to the home
Jan Van Ooteghem, Sofie Verbrugge, Koen Casier,
Mario Pickavet, Piet Demeester
3th MCM Meeting Limassol, Cyprus
3 Februari 2009
Paper presented at the Public & Private Interplay Next Generation Communications 2009
conference in Seville and published in the proceedings of the conference
Research question
� Formulation of the problem
� Slow rollout of fiber to the home in Europe compared to the rest of the world
� (Future) regulation concerning opening up access networks to competitors
� Research question
� Which technical competition model will lead to a future proof FttH network, taking into account uncertain future regulation and viability of the business model?
p. 2 Jan Van Ooteghem - COST605 Meeting - 03/02/09 - Limassol, Cyprus
TECHNICAL MODELS
Future proof strategies towards fiber to the home
p. 3 Jan Van Ooteghem - COST605 Meeting - 03/02/09 - Limassol, Cyprus
p. 4
3 different architectures for FTTH
Jan Van Ooteghem - COST605 Meeting - 03/02/09 - Limassol, Cyprus
p. 5
3 different architectures for FTTH
+
-
Cheapest network rollout
Start from existing situation
Passive components
Shared bandwidth
Competition
Telecom operators
Jan Van Ooteghem - COST605 Meeting - 03/02/09 - Limassol, Cyprus
p. 6
3 different architectures for FTTH
+
-
Competition
Bandwidth dedicated
Most future proof (HR)
Most expensive
Scalability issues
Community networks
Jan Van Ooteghem - COST605 Meeting - 03/02/09 - Limassol, Cyprus
ROLES & ACTORS
Future proof strategies towards fiber to the home
p. 7 Jan Van Ooteghem - COST605 Meeting - 03/02/09 - Limassol, Cyprus
FttH rollout rolesPEST
framework
Roles
p. 8 Jan Van Ooteghem - COST605 Meeting - 03/02/09 - Limassol, Cyprus
Main actors involved
p. 9
GovernmentsEurope
National / NRA
Local
Telecom
operatorsILEC - CLEC
Customers
Service / application
providers
Utility
companies
Jan Van Ooteghem - COST605 Meeting - 03/02/09 - Limassol, Cyprus
VALUE NETWORKS FOR COMPETITION MODELS
Future proof strategies towards fiber to the home
p. 10 Jan Van Ooteghem - COST605 Meeting - 03/02/09 - Limassol, Cyprus
Competition models
Models considered
Generic actors � PIP: Physical infrastructure provider
� NIP: Network infrastructure provider
� SP: Service provider
� AP: Application provider
RoW
Trench
Duct
Network layer
Application layer
Physical
layer
Physical - Trench Physical - Duct Physical - Fiber Data link (UNE) Network Application
Data link (UNE) layer
Fiber / λ
Communal
Competition
p. 11 Jan Van Ooteghem - COST605 Meeting - 03/02/09 - Limassol, Cyprus
Physical infrastructure based competition (trench)
� Full infrastructure
competition
� One or more private
infrastructure providers
(PIP)
� Multiple trenches
� Government: facilitating
role for stimulating rollout
p. 12 Jan Van Ooteghem - COST605 Meeting - 03/02/09 - Limassol, Cyprus
Physical infrastructure based competition (duct)
� One trench
� Competition at duct level
� Multi-use of trenches
� Combination of actors
involved:
� (Local) governments
� Utility companies
� Telco operators
p. 13 Jan Van Ooteghem - COST605 Meeting - 03/02/09 - Limassol, Cyprus
Physical infrastructure based competition (fiber)
� One trench / duct
infrastructure
� Competition at fiber level
� Incremental rollout of
multiple FttH networks
possible
� PIP actors:
� (Local) government
� Utility company
� Telco operator
p. 14
AN
DP
O
Jan Van Ooteghem - COST605 Meeting - 03/02/09 - Limassol, Cyprus
Data link layer based competition(UNE = fiber)
� One fiber infrastructure
� Competition at data link
layer
� Incremental rollout of
multiple FttH networks
possible
� NIP: choice of data link
layer technology
p. 15 Jan Van Ooteghem - COST605 Meeting - 03/02/09 - Limassol, Cyprus
Data link layer based competition(UNE = wavelength)
� One fiber infrastructure
� Competition at data link
layer (UNE = wavelength)
� 2 models:
� Wavelength per service
provider
� Wavelength per user
p. 16
OperationsPlan Deploy Service Prov.
SPSP
AP
NIP
PIP
AP
NIP
Inside plant
Physical cust. conn.
Network operations
Content
OP - Duct
OP - TrenchRollout planning
Network planning
Network operations
Netwerk planning
OP - Fiber
Customer
Financing
Financing
Right of way
Inside plant
OP - Equipment
OP - Wavelength
CRM Service provisioning
Jan Van Ooteghem - COST605 Meeting - 03/02/09 - Limassol, Cyprus
Network layer based (open access based) competition
� One outside and inside
plant infrastructure
� Competition at network
layer (IP)
� Proactive:
� Municipality initiative
� Reactive:
� Telco initiative
p. 17 Jan Van Ooteghem - COST605 Meeting - 03/02/09 - Limassol, Cyprus
Application layer based competition
� One (physical and
network) infrastructure
� One network and service
provider
� Competition at application
layer
� Municipality initiative
p. 18 Jan Van Ooteghem - COST605 Meeting - 03/02/09 - Limassol, Cyprus
Overview
p. 19
Competition
model
Techn. to
be used
Entry barrier
competition
Main (dis)advantages
Physical layer
All High Upgrade from current network situation possible (+)
Able to choose technology and network topology (+)
High investment costs for all parties (-)
Multiple fiber networks(-)
Switching SP for customers difficult and expensive (-)
Data link layer
Home run
WDM-PON
Medium Full vertical separation of physical and active infrastructure (+)
Limited choice of technologies to be used (-)
Difficult to implement (UNE = wavelength) (-)
Expensive WDM equipment required (-)
Network layer
All Low Single physical and network infrastructure (+)
All technologies and architectures can be used (+)
Easy solution for SP competition (+)
Increasing level of protectionism (-)
Application layer
All Low One PIP/NIP/SP, thus monopoly situation (-)
Increasing level of protectionism (-)
Lock-in situation (-)
Jan Van Ooteghem - COST605 Meeting - 03/02/09 - Limassol, Cyprus
CONCLUSIONSFUTURE WORK
Future proof strategies towards fiber to the home
p. 20 Jan Van Ooteghem - COST605 Meeting - 03/02/09 - Limassol, Cyprus
Conclusions
� Technical models
� Technologies
� Competition models at different layers
� Physical, data link, network and application layer
� Value networks for competition models
� Government should facilitate FttH rollouts by adopting clear communication regarding new regulation
� Split between infrastructure and service provisioning stimulates competition
p. 21 Jan Van Ooteghem - COST605 Meeting - 03/02/09 - Limassol, Cyprus
Future workIntroduction of real options analysis
� A real option is the right but not the obligation to undertake some business decision, typically the option to make, or abandon a capital investment.
� Examples:
� ILEC
� Installation of extra infrastructure during xDSL rollout
� CLEC
� Option to switch from LLU/bitstream to own network
� Utility companies (acting as PIP)
� Option to lease or sell their telecom infrastructure
p. 22 Jan Van Ooteghem - COST605 Meeting - 03/02/09 - Limassol, Cyprus
Future workCost allocation challenges
p. 23
A B C
service
A B C
service
A B C
service
cost
Direct Variable
Direct Fixed
Common Variable
Common Fixed
Shared Variable
Shared Fixed
Stand Alone
Cost
Fully Allocated
Cost
Incremental
Cost
Jan Van Ooteghem - COST605 Meeting - 03/02/09 - Limassol, Cyprus
Future work Cost allocation challenges
p. 24
A B C
1/5 4/5
0%
20%
40%
60%
80%
100%
FAC IC
Telecom Utility
0%
20%
40%
60%
80%
100%
FAC IC
Telecom Utility
0%
20%
40%
60%
80%
100%
SAC
Telecom
Trenching
Cost
allocation
Jan Van Ooteghem - COST605 Meeting - 03/02/09 - Limassol, Cyprus
Future work Cost allocation challenges
p. 25
A
B
CD
F
E
0%
50%
100%
150%
200%
250%
300%
350%
400%
450%
SAC FAC IC
Tota
l co
st r
ecu
pe
rati
on
NIP 3
NIP 2
NIP 1
PIP
Duct with
subducts
PIPNIP 3
NIP 2 NIP 1
Not realistic
Not viable
Cost based + margin tariffing
Jan Van Ooteghem - COST605 Meeting - 03/02/09 - Limassol, Cyprus
p. 26
Personal details:
Name:
Company:
Phone:
E-mail:
Website:
Jan Van Ooteghem
Ghent University – IBBT
+32 9 331 49 81
http://www.ibcn.intec.ugent.be/te/
Thank you for your attention
Questions?
Jan Van Ooteghem - COST605 Meeting - 03/02/09 - Limassol, Cyprus
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