NextGen 2011 Crister Mattson ACREO

17/11/2011 # 1 Part of Swedish ICT

crister. [email protected]

Socio-economic impact of FTTH in Sweden

17/11/2011 Crister Mattsson Acreo


44 per cent of all households and businesses in Sweden have access to at least 100 Mbps broadband 34 % of the homes have possibility to connect to fiber

Fiber coverage 0- 83 % 40 municipal. have less than 1 %.


Business Models

Single Operator

OPCO

NetCo

RSP

RSP

RSP

Netco

OPCO

RSP

RSP

RSP

Netco

OPCO

OPCO

OPCO

RSP

RSP

RSP

Traditionel


Urban Networks with competition

85

74

63

45

10

20

30

40

50

60

70

80

90

2010200820062004

Procen

t

År

Per

cent

Year



Do we need Fiber ?




Investment decisions

Roll out cost

Telco

roi Roll out cost Telco

return

Un-captured

values

yes No, but should be yes


increased use of

ICT servic

es

Competition betwe

en SPs

reduced

forced migrati

on ICT

competenc

e HR pool

Ease to do business

FTTH deployment

Very high access speed

New infrastructur

e

Direct economic

activity True cloud computing HD and

3D TV VoD

Videoconf

Telepresenc

e E-

health E-government

Logistics, prod, manageme

nt

Sensor

networks

Democracy strengthene

d

transparenc

y in PA

efficiency

in PA

Distance

working

reduced

traffic congestion

Network

gaming

Dev. of

new technologie

s

Customers for

new servic

es

corruption

discourage

d

lower publ

spending

higher tax

revenue

productivity

learning

curves

lower

prices

for services

lower

entry

barriers

low upfro

nt investment for NP and SP

Functional

separation

new business

model possible highe

r employme

nt

Virtual labour mobili

ty

entrepreneurs

hip

e-learni

ng

Profitability of NP and SP

Profitability

Of PIP

RoW revenues

reduced ènvironment

impact

GDP

lower burde

n of

bureaucrac

y

Perceived

quality

of life

Video surveillance

Power grid

efficiency

New ICT and traditional companies

New/better services

Education

quality and cost

ICT Maturit

y: digital natives

Increased

market

value


Is it possible to calculate the value of broadband for the society ? • Cost for Ftth deployment

• Effects of the Investment


o Boundary conditions: •  Cost dependent on time, learning curves, technological

developments, regulation, etc. •  Passive infrastructure dominates upfront investment

•  Active equipment dependent on technology choice, is dominated by opex and needs to be installed/upgraded whether fibre or copper is used

o Hence, assumptions: •  Indicative average cost figures from the industry; no

considerations on inflation and cost of capital, calculations in SEK 2011

•  Passive infrastructure only

Cost of FTTH deployment


o How: fast-deployment scenario •  Year 1: 40% •  Year 2: 30% •  Year 3: 20% •  Year 4: 10%

o What: all households not yet connected •  18 kSEK (€2000) to connect a SDU •  10 kSEK (€1100) to connect a household in a MDU •  30% home connected in 2011

o  39 billion SEK (€4.2 billion) o  source: PTS, companies active in FTTH installation in Sweden

Cost of FTTH deployment


•  calculated year by year, 1–5 years:

o  economic activity directly related to construction Method: input-output multiplier approach

Source: Katz et al. for broadband upgrade in Germany

Return on investment


o  savings in the municipal and regional-government costs for data and telecommunications:

•  Around 50% savings when FTTH is deployed Sources: Stockholms kommun, Jönköpings kommun, IT

Norrbotten , Stockholms län •  Yearly cost conservatively estimated to 1.5 billion SEK; •  Total savings around 540 million SEK (€59 million)

yearly at full deployment Method: linear extrapolation (first-order approximation)



o  increased GDP due to increased employment •  Short-term effect can actually be measured •  Data for all of Sweden’s 290 municipalities

Method: multivariate regression analysis

Sources: SCB, PTS



o  added value for end users •  Proxy available: agreement between tenant association and

housing companies on increased value of apartment •  46 SEK per household connected •  1.6 billion SEK (€175 million) per year

Method: extrapolation of rates



Other effects… o Enhanced population growth is also quantified, but is not

translated in terms of economic returns. o Longer-term induced effects harder to measure as of today

Causality was taken care of by introducing a time delay between fibre deployment and observed effects



ROI on FTTH investment

Summing up the effects analysed in the pre-study o Direct ROI at year t

o  Indirect- and induced-effect ROI at year t

o Total ROI at year t


0

2000

4000

6000

8000

10000

12000

14000

16000

18000

år 1 år 2 år 3 år 4 år5

AVKASTNING

INVESTERING


0

2000

4000

6000

8000

10000

12000

14000

16000

18000


"IND. AVK."

"DIREKT AVK."


0

10000

20000

30000

40000

50000

60000

70000


"ACK. AVKASTNING"

"ACK. INVESTERING"


In Suburban Stockholm, the municipal

Sundbyberg have 83 % fiber Arvidsjaur ( small municipal.) in remote north of

Sweden have 67 %.


Conclusions Increased fiber penetration gives significant impact

on severel indicators as population and employment

Municipalities and regions can lower the costs for

communications We need the champions MDU are drivers

News & Politics

NextGen 2011 Crister Mattson ACREO