Diálogo Regional sobre Sociedad de la Información

Role of the state in NGN deployment in Europe

Review of European Digital Agendas

Miquel OliverMiquel Oliver, Albert Domingo, Albert Domingo

NeTS Research GroupNeTS Research Group

Universitat Pompeu FabraUniversitat Pompeu Fabra

““El papel del Estado en la promoción de la banda ancha”El papel del Estado en la promoción de la banda ancha” (Lima) (Lima)

18 de Mayo de 201118 de Mayo de 2011

Agenda

European context Europe 2020 digital agenda NGN in Europe Some case studies:

Portugal, Catalonia, Barcelona and Amsterdam Role of the public administration in Europe New NGN deployment models? Conclusions

European framework

The economic crisis resulted in a large loss in economic activity: millions of lost jobs and GDP reduction

Internet Usage in EU

The share of households with broadband internet access has doubled since 2006

Highlights in Internet Usage –EU-

More than half of individuals in the EU27 used the internet daily The lowest share of regular internet users was in the age group 55-74 years About four in ten unemployed internet users consulted the internet for

learning Nearly 60 % of internet users in the EU27 shopped online;

European markets share

Incumbents still dominate around one half of the market

Europe 2020 Approved in May 2010 Objective: exiting the crisis How?

Smart-Sustainable-Inclusive growth

EU targets for smart growth include:1. PP investment levels to reach 3% of EU's

GDP as well as better conditions for R&D and Innovation

2. 75% employment rate for women and men aged 20-64 by 2020–

3. Better educational reducing school drop-out rates below 10% and at least 40% of 30-34–year-olds with third level education

Europe 2020

How will the EU boost smart growth?Through 3 flagship initiatives:

1. Digital agenda for Europe Creating a single digital market based on fast/ultrafast internet and interoperable applications:

2. Innovation Union refocusing R&D and innovation policy on major challenges for our

society strengthening every link in the innovation chain

3. Youth on the move study abroad, equipping young people better for the job market improving all levels of education and training

Digital Agenda for Europe

Digital Single Market EU Single Market rules

for the digital era

Single area for online payments, and protection for EU consumers in cyberspace.

Fig. from A Digital Agenda for Europe

EU as a fragmented market

Legal downloads are not landing off in Europe Different content platforms in each country Complex copyright clearance, management and cross-border licensing

x4

Trust is important in e-Shopping

Fast and ultrafast Internet accessWe need very fast Internet for the economy to grow strongly and to create jobs

and prosperity, and to ensure citizens can access the content and services they want.

Still some work ahead to build FTTH infrastructures

Action Areas in EU2020

2. The action areas of the Digital Agenda2.1. A vibrant digital single market

2.2. Interoperability and standards

2.3. Trust and security

2.4. Fast and ultra fast internet access

2.5. Research and innovation

2.6. Enhancing digital literacy, skills and inclusion

2.7. ICT-enabled benefits for EU society

2.8. International aspects of the Digital Agenda

EU2020: Fast & Ultrafast Internet Access

We need very fast Internet for the economy to grow strongly and to create jobs and prosperity, and to ensure citizens can access the content and services they want.

(by 2013) (i) all Europeans have access to much higher internet speeds of above 30 Mbps and,

(by 2020) (ii) 50% or more of European households subscribe to internet connections above 100 Mbps

How? Developing a comprehensive policy focusing on two goals: to guarantee universal broadband coverage (fixed & wireless) with

internet speeds gradually increasing up to 30 Mbps and above

to foster the deployment and NGA in a large part of the EU territory, allowing ultra fast internet connections above 100 Mbps.

The implication of the different governments is crucial

NGN in Europe today

NGN in Europe today

3.9 M of fiber access subscribers (8.1 M if Russia is included)

Baltic countries (Lithuania, Sweden, Norway, Slovenia, Slovakia) are leading the fiber deployment

Portugal is moving fast in fiber roll out leaving the Netherlands, Finland or France behind

Some countries with long incumbent tradition does not appear or are in the lower part (Germany, France, Spain, Italy, Portugal, UK)

A relax in the regulatory frameworks incentives the FTTH roll out

“(…) Europe has still a long way to go” Chris Holden, President of FTTH Council Europe

Bucharest –Romania-, relax in telecom regulation

NGN Plans for Europe

NGN Plans for Europe

Most European Countries have defined their Digital Agendas according the EU2020 framework

Ambitious goals in terms of high-speed broadband and coverage are set for 2015-2020 period

Focus in rural and underserved areas: 100% of population coverage with basic broadband

A huge amount of resources (1.8 Billion€) are allocated to commit the EU2020 agenda.

Public funding is available in many countries with special focus on rural areas

"Smart investments into high and very high speed broadband infrastructures are crucial to create jobs, increase economic performance and to unlock the competitive potential of the EU in the long term. The Commission is committed to help EU countries to accelerate private and public investments in this sector." Joaquín Almunia, Vice-President in charge of competition policy European Commission

Portugal Case

Portugal Case Under Resolution of the Council of Ministers no.

120/2008 of 30 July, the Portuguese government has adopted investment in NGA as a strategic priority for the country, establishing as key targets the connection to NGA of:a) One million users by 2010;b) All primary and secondary schools and all public justice services

by 2010351;c) All public hospitals, health centres, museums and libraries and

all public institutions of higher and polytechnic education by 2009.

Forced to ensure open access to infrastructure Coordinate civil works

These objectives are in line with the approach adopted in the European Union, following the EC Communication "A European Economic Recovery Plan", Com (2008)

Portugal Case

Under Resolution of the Council of Ministers no. 120/2008 of 30 July, the Portuguese government has adopted investment in NGA as a strategic priority for the country, establishing as key targets the connection to NGA of:a) One million users by 2010;b) All primary and secondary schools and all public justice services by

2010351;c) All public hospitals, health centers, museums and libraries and all public

institutions of higher and polytechnic education by 2009.

Portugal Case

A commitment between operators and government was signed in January 2009. In this protocol, the government committed itself to:a) Promoting the formulation of appropriate legislative measures in order to

open ducts, regulate networks inside and outside of buildings and develop a centralized information system, enabling operators to obtain information about the location of ducts;

b) Creating a line of credit, available to all investors in NGA, with a minimum value of 800 million euros;

c) Generating incentives for investment in NGA.

Operators have committed to invest about 1 billion € and to bring forward, to 2009, the allocation of resources that make it possible for 1.5 million users to be connected to an optical fiber network.

Portugal Case

Special plans for rural areas:

The government launched 5 Public Tenders for the installation and operation of "High-Speed Networks in Rural Areas", covering 140 municipalities

Tender specifications:

Minimum coverage of 50% of the population of the geographic area within 24 months, and guarantee a minimum speed 40 Mbps per end-user.

Barcelona Case

1999 Barcelona authorities recognized the importance of NGAN and received a well accepted commitment by all operators

2003 The incumbent is the only operator that is able to deploy network after the technological bubble got bust

– Municipality decide to Deploy Telecommunications Infrastructure

2004 Barcelona municipality decides a PPP model joint with incumbent 2005 Barcelona Municipality : 5M€

Telefonica de España: 5M€ 2006 22@ Telecommunications investment:

– Civil Works-> 7.5 M€– Optical Fibre -> 1.8 M€

Barcelona 22@

10 M€ budget

Population: 1.619.337 Homes: 757.928Passed Homes: 84.000Deployment: ducts and dark fibre

2006 Ducts shared:

– 3 Ducts For Telefónica– 3 Ducts for Barcelona Municipality:

• 2 For new operators• 1 For Municipal use

Barcelona 22@

Core Network

2.975 m. -> 12 ducts (6 Telefónica)

11.962 m. -> 9 ducts (4 Telefónica)

12.624 m. -> 6 ducts (3 Telefónica)

Acces Network

12.209 m. -> 6 ducts (3 Telefónica) 12.209 m. -> 4 ducts (1 Telefónica)

Public private partnership in FTTX passive infrastructure deployment: the 22@BCN case . Infante, Jorge; Sagarra, Ramon; Macian, Carlos; Oliver, Miquel. International Journal of Management and Network Economics, Volume 1, Number 3, 24 December 2009 , pp. 327-342(16). Inderscience Publishers.

2010

Barcelona 22@

Source: Barcelona 22@ presentation

Operators in 22@:- Adamo- Orange- Telefónica- Vodafone

- Price for renting dark fibre inside 22@ around 6.000€/year - Any Point to point inside 22@ district

50% Discount . Number of blocks covered _ Number of blocks with fibre connection available

Encouraging operators deployment

2010

Barcelona 22@

- 100 Mbps / 20 Mbps (Adamo )- 1000 minutes phone calls within country 41,4 €/month

-50 Mbps / 5 Mbps (Telefónica)- Unlimited calls 54,8 €/month

-50 Mbps / 5 Mbps (Telefónica)- Unlimited calls- Imagenio HD TV ( 70 channels + 42 TDT channels + Gol TV included)

75,8 €/month

Amsterdam Case

• 2001 Amsterdam authorities recognized the importance of NGAN -> estimations to have a deployed network in 2010

• 2003 KPN is interested and no cable operators are interested so the plan was dropped

• 2004 Amsterdam municipality decides a PPP model• 2005 BBned won the contract to operate the electronic equipment• 2006 Glasvezelnet Amsterdam (GNA):

– The municipality -> 6 M€

– The housing associations -> 6 M€

– The private sector -> 6 M€

– Debt financing -> 12 M€

Amsterdam Citynet

30 M€ budget

Population: 762,000Size of network: 43,000 homes passed in 2.5 yearsConnected homes: 10,000Activated: 4000 at the end 2009Deployment: Point to PointDeployment method: direct buried cables and 96-fibre

2007 European Comission allows Amsterdam city to invest in the network as it met the terms of the Market Economy Investor Principle (considering NO STATE AID)

2009

KPN and Reggefiber group formed a joint venture in 2009

Amsterdam Citynet

Fiber to the Home: > 40,000 addresses2007/2008: to 10% of homes

Fiber to the Theater: 1 symm Gb/s2007: to 10 major theaters

Fiber to the School: 1 symm Gb/s2009: to 500 schools and non-profits

Source: Dirk van der Woude, Towards a smarter Amsterdam

2009

2010

Amsterdam Citynet

- 20 Mbps symmetric (Alice Comfort Plus )-unlimited phone calls within country- 39 TV channels - 25 radio channels

44,5 €/month

- 100 Mbps symmetric (InterNLnet) 119,5 €/month

City of AmsterdamHousing Associations

Reggeborgh & KPN

Reggefiber

Amsterdam Citynet 2011

2012

Close Future

Source: KPN Investor Day: Consumer wireline, London, 10 May 2011

Amsterdam target-> 100.000 new homes to be covered in 2012Amsterdam target-> 100.000 new homes to be covered in 2012

Source: KPN Investor Day: Consumer wireline, London, 10 May 2011

Xarxa Oberta -Catalonia Case-

Xarxa Oberta in Catalonia (Spain)

Spain arena in NGN: Low broadband penetration and high

prices (11% higher) Best offer of the incumbent is 71% higher

than in other countries Telefonica owns 55% of broadband lines “wait and see” strategy No national plans launched

Regional governments manage Health and Education expediture: Xarxa Oberta, approved by EU, is a

model of public intervention to promote NGN access in Catalunya

Deployment of High-speed Broadband Infrastructures during the Economic Crisis. The case of Regional Governments in Spain. JJ Ganuza… - Colección estudios económicos, 2010 - crisis09.es

Xarxa Oberta in Catalonia (Spain)

Catalonia:7,4M inhab.943 municipalities32.000 km270% pop. in 63 mun.

Motivation: Self-provision and Wholesale access on the same networking

infrastructure Open and neutral infrastructure to provide access to current

and future operators promotion of competition Funding, a realistic PPP model:

Regional government invests instead of spending Map of current public investments on fiber deployment Avoid overlapping with private investments

Tender process: Selection of the tender: three-step procedure New consortium won: 253M€ - 20years – 93 municipalities

EU intervention: To avoid State aid in private competition, Xarxa Oberta is only

allowed in “white areas” and in “grey areas” under certain conditions

New models for NGN: cooperative deployment

Güifi.net Well known case for Catalonia-> aim to expand all over the world IT seems the ONLY non-profit cooperative Structure: Private Foundation to get the management and staff paid. It

is also important to became an operator 18.950 nodes and 12500 operative ones

BEK Communications Cooperative 6.000 homes using it, all users are owners of the company, half with

FTTH already in 2010. Six countries in the States. Structure: 9 person board elected by all the users/owners

38

New models for NGN: cooperative deployment

They don’t sell fibre They all sell broadband, and with that the services of bundled

IPTV or the possibilities to expand your company They have seminars for their owners and attract more users by

this way. Deployments done at the minimum cost, no extra charges in

any of the services offered or installed Culture of community, help comes from your neighbour in first

term, then someone from the cooperative that can help, and in the last term both rises found to help some deployments.

39

Role of Public Administration in Europe

At European level: Consultations on NGN Guidelines for broadband roll out Europe 2020 and common digital agenda Recommendations for national regulatory bodies

At national/country level: Ambitious digital agendas with broadband for all as lemma Regional plans are more realistic and pragmatic PPP models to stimulate investments City projects more feasible to roll out NGN

Conclusions

Regulation is a key issue to facilitate NGN roll out: To enforce new actors coming into the picture To incentive real competition at all levels To ensure a broadband coverage, specially in rural areas

European Digital Agendas are a good excuse to start working on that

Innovative PPP models should mobilize current public assets like already deployed fiber

The role and attitude of incumbents does not see clear returns and the business models are reviewed

New models for NGN deployment are arising, but its is too early to evaluate them

References European Commission Docs:

EU2020. EC. Brussels, 26.8.2010. COM(2010) 245 final/2. A Digital Agenda for Europe EC, Brussels, COM(2011) 11 - A1/2, Annual Growth Survey: Progress report on Europe

2020 European Parlament, DG for Internal Policies. Next Generation Networks (NGNs). October

2009. Consultancy reports

BEREC. Next Generation Access – Collection of factual information and new issues of NGA roll-out. February 2011

FTTH Council Europe. Annual Report April 2010 – April 2011. Regulatory bodies:

CMT, www.cmt.es The Evolution of NGA. 01.02.2011. ANACOM

Papers Public private partnership in FTTX passive infrastructure deployment: the 22@BCN case.

Infante, Jorge; Sagarra, Ramon; Macian, Carlos; Oliver, Miquel. International Journal of Management and Network Economics, Volume 1, Number 3, 24 December 2009 , pp. 327-342(16). Inderscience Publishers.

Deployment of High-speed Broadband Infrastructures during the Economic Crisis. The case of Regional Governments in Spain JJ Ganuza. Colección estudios económicos, 2010 - crisis09.es

Neutral Networks: A real alternative to achieve both effective competition and social benefits?, Infante, J., M. Oliver, and C. Macian, ITS Conference on Regional Economic Development, Beijing, China, 06/2006.

Diálogo Regional sobre Sociedad de la Información

Horacio Urteaga 694Jesús María, Lima - PERU

Teléfonos: ( 51-1) 3326194 / 4244856Fax: (01) 3326173

info@dirsi.net www.dirsi.net

Role of the public administration in NGN deployment in Europe

Universitat Pompeu Fabra

Tànger 122-14008018 Barcelona -ESPAÑATeléfonos: (34) 935422910

miquel.oliver@upf.edu www.nets.upf.edu

www.upf.edu