Broadband Networks in Austria Models of Cooperation and

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Dec 12, 2013 (3 years and 7 months ago)

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Broadband Networks in Austria


Models of Cooperation and
Financing for the Deployment of Next Generation Access Networks


Dr. Ernst
-
Olav Ruhle

DI Wolfgang Reichl, Dipl.
-
Vw. Matthias Ehrler, Mag. Jörg Kittl, Dr. Igor Brusic


SBR Juconomy Consulting


Paper presented at 18
th

ITS Biennial Conference, Tokyo, 28

30 June 2010


12/12/2013

12/12/2013

2

Content

Financing

3

Austrian Broadband Market

4

Conclusions

5

Realization Concepts

2

Background

1

The Broadband Discussion

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3

Innovation

Competition

Sustainability

Welfare

Key aspects


Stakeholders


Financing


Regulation


Access to networks


Public intervention

Models


Open access


Vertical integration


Regulated access

Framework


Regulatory


Competitive


Geographical

Where?


Densely populated areas


Remote areas

Who?


Network operator


Public sector


Housing industry/society


Utilities

How?


Investments in passive
infrastructures


PPP models


Structural separation


National BB plans

What?


128 kbps, 10 Mbps, 100 Mbps or more

From Copper to Fiber

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4

Copper Access

network

Decision



Costs for operation and


maintenance of PSTN/ ISDN



Limited bandwidth



Bottleneck in the access net

Fibre optic

access network

Mobile

Broadband

(HSDPA, LTE, etc.)

Increase of bandwidth



shorter distances



smaller cells (Femto Cells)

Cable networks

(DOCSIS 3.0)

Increase of fibre

network elements

in the access part

Usage of other technologies

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5

Content

Financing

3

Austrian Broadband Market

4

Conclusions

5

Realization Concepts

2

Background

1

Vertical Integration

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6


Classical Network Operator


owns the infrastructure


administers / operates the network


provides services to end users


Revenue from products/Services contribute
to financing the infrastructure and the
operation


Wholesale possible on different levels


Investors require short term ROI


Different regulatory remedies

Company

Network

O&M

Distribution

Services

Vertical Integration


Open Access

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7

Dienste

Dienste

Dienste


Level 3: Retail Services


Each provider has (open) access at
non
-
discriminatory conditions


Digital market place

Network deployment

O&M

Network /

passive infrastructure

Network /

active infrastructure

Dienste

Services

Services

Development of

innovative

services


Level 1: Infrastructure (NetCo)


Use of existing infrastructures

(Dark Fiber, ducts, sewerage)


Optical fibre as natural monopoly?


Municipalities, Cities, Utilities as new
players


Level 2: Network operation (OpCo)


Lightening of the fibre and operation of
active equipment


Wholesale products for service
providers


No retail services!


Local utilities, Telecom operators

Horizontal Frontiers

Horizontal Frontiers

Elements of Value Chain

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8

Passive Infrastructure

Active Infrastructure

Services

Dark Fiber

Digital Market Place

Integrated Offer

NetCo

OpCo

RSP (Retail

Service Provider)

AB Stokab

ndix

Singapur

Schwerte

Provider

Provider

Provider

Provider

1

Many

Plenty

Plenty

1

1

1

Plenty

1

Cooperation Models & Drivers

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Boost for Innovation

Compatibility with Competition Law

Structure of Cooperation

Contribution to Broadband Achievements

Technology Neutrality

Significance and Contribution of Cooperation Partners

Implications for Competition and Market Structure

Regulatory Necessity

Regional Economic and Sociopolitical Impact

Transparency

Time for Implementation

Telecommunications
Operator &
Telecommunications
Operator

Real Estate Developer &
State Aid

Service Provider & Utility

Telecommunications
Operator & Co
-
investing
Enterprise

A Telecommunications Operator is a vertical integrated operator providing infrastructure and services.

International Experiences

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10

Project

City / Country

Business Model

Financing

NextGenNBN

Singapur

Open Access

PPP

ndix

The Netherlands / Germany

Open Access

Financial Institutions

AB Stokab

Stockholm

Dark Fiber

City

Ruhrpower

Schwerte (Germany)

Vertical Integrated

Utility

CityNet

Amsterdam

Open Access

PPP

Mälarenergi

Västeras (Sweden)

Open Access

Utility

Nuenen

Nuenen (The Netherlands)

Vertical Integrated

Private

HeliNet

Hamm (Germany)

Vertical Integrated

Utility

Burlington

Burlington (USA)

Vertical Integrated

City

Monticello

Monticello (USA)

Open Access

City

Aurora

Whittlesea (Australia)

Vertical Integrated

Housing Society

Hauts
-
de
-
Seine

Ile de France (France)

Vertical Integrated

Enterprises

Blizznet

Vienna

Open Access

Utility

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Content

Financing

3

Austrian Broadband Market

4

Conclusions

5

Realization Concepts

2

Background

1

Financing Strategy

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12


Financing through different stakeholders


“Classic” and alternative ways of financing


Lack of sustainable long term business case of
operators requires alternatives


Purely privately financed deployment not achievable


Project financing and/or PPP projects


Joint deployment of operators, utilities and others


Joint usage of passive infrastructure


Sharing of costs of civil works


Support by public institutions and/or local authorities


Municipalities


Developers / real estate


Standardized models do not exist

Main Aspects

Financial Scope vs. Realization

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13

Banks & Savings Banks

Telecom Operators

Public Spending Programs

PPP
-
Models

Private Investments

“State Aid” Banks

Cities & Municipalities

Debt capital

NO

NO

Equity

NO

NO

Debt capital

NO

NO

Equity

YES

YES

Both

NO

YES

Debt capital

NO

NO

Debt capital

YES

YES

Funds

Infrastructure
Deployment

Network
Operation

Institutions

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14

Content

Financing

3

Austrian Broadband Market

4

Conclusions

5

Realization Concepts

2

Background

1

Austrian Broadband Market

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15

Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
DSL (Incumbent)
598
602
604
643
725
738
766
818
872
895
926
967
Bitstream Access
124
122
119
108
92
89
69
67
63
63
57
55
Unbundling (Copper)
207
223
229
234
241
244
241
265
257
250
245
241
Cable TV
557
547
550
559
556
562
565
570
564
564
561
570
FWA
21
40
40
41
39
38
37
37
37
35
34
33
Mobile Broadband
273
362
505
607
665
731
813
970
1044
1088
1182
1291
Others
8
12
12
13
13
12
12
12
13
12
12
13
Broadband Access by
Technology
Number of Broadband Connections (Tsd.)
2007
2008
2009

Dynamic development since opening in 1998


Bitstream Access and Unbundling with less importance (and decreasing figures)


Consequently, competition based on fixed technologies is being reduced


Broadband via CATV has remain more or less static since Q1/2008


Fiber optic based broadband access de facto not yet available

Source: RTR

Austrian Broadband Market

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16


Mobile broadband has become the largest single technology for broadband access
but also cable operators in certain areas have become very strong


Austria leads Europe in terms of mobile broadband penetration


Development initiated by mobile broadband


heavy impact on fixed broadband


Telekom Austria reduced prices and launched new bundle products.
Effects:Telekom Austria regained market share, it is now the alternative Fixed ANO
who suffer.

Source: EU/RTR

Key Indicators

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17

Stakeholders

Regulation


Interaction between private enterprise and state as well as
political stakeholders


Regulatory framework as a precondition for successful
implementation


Adaptation of the regulatory framework


Regulatory remedies in case of lack of market access and
supply of services

Financing


Governmental participation


Higher risks of new investments require a risk premium or
higher cost of capital

Network Access


Sustainable approach required


Non
-
discrimination


Multiple
-
shift and common usage of infrastructures (ducts,
trenches etc.)

Current Situation

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18


Open Access approach has caused a controversial debate.


Incumbent is willing to enter into cooperative models to overcome the situation
of insufficient investment in access networks, but the degree of willingness is
unclear.


Willingness from other industry sectors to cooperate still not sufficient.


Cooperation between public and private sector is seen skeptically.


Low demand for NGA infrastructures, i.e. for fixed NGA broadband products, in
fixed networks has not yet led to substantial NGA investment.


In general mobile broadband is currently seen as satisfactory and is
appreciated by the users (but at a low price level)


Ongoing discussions regard a far going structural separation of the incumbent
to promote NGA networks.

The case of Austria shows a large discrepancy between the potential of cooperation and the
expectations regarding financing strategies as well as their implementation.

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19

Content

Financing

3

Austrian Broadband Market

4

Conclusions

5

Realization Concepts

2

Background

1

Conclusions and Outlook
-

General

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20


There is no way around fibre
-
roll
-
out in the access network. This NGA
infrastructure will form the basis for fixed network services but also for
wireless and cable networks.


The replacement of copper by fibre in the access network requires
considerable investment.
New, more diversified business models and
new players (municipalities,utilities)
will be needed to drive investment.


The applicability of regulatory tools like functional separation and new
business models like open access and co
-
operations are discussed by
the stakeholders. The analysis showed rather little awareness and
controversial positions.


Coverage of rural areas with broadband infrastructure is a critical issue.
Co
-
operation between municipalities and private enterprises is required.


Stakeholders are rather skeptical about the applicability of Public
-
Private
-
Partnerships for wide coverage with fibre access networks.

Conclusions and Outlook
-

Austria

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21


A national broadband plan could be a useful tool in order to make all
stakeholders aware of the political and economical priorities.


Where vertically integrated network operators are active with their NGA
investments a market analysis could be necessary in order to foster a
competitive environment.


Financing is and probably remains a problem. Different solutions
should be reviewed whereby a mix of different measures of investment
and the contribution of different stakeholders should be analysed.


Fostering open access models seems to be a good idea.


Functional or structural separation remains an issue which is also
relevant for the deployment of NGA.

CONTACT

Nordstrasse 116

40477 Düsseldorf

Germany

Tel:

+ 49 211 68 78 88 0

Fax:

+ 49 211 68 78 88 33

URL:

www.sbr
-
net.com


E
-
mail:

ruhle@sbr
-
net.com


lundborg@sbr
-
net.com


ehrler@sbr
-
net.com


Parkring 10/1/10

1010 Wien

Austria

Tel:

+ 43 1 513 514 0

Fax:

+ 43 1 513 514 0 95

URL:

www.sbr
-
net.com


E
-
mail:

reichl@sbr
-
net.com


kittl@sbr
-
net.com


brusic@sbr
-
net.com


SBR Juconomy Consulting AG