All Rights Reserved © Alcatel-Lucent 2009 Alcatel-Lucent Special Customer Operations Gabrielle...

All Rights Reserved © Alcatel-Lucent 2009Alcatel-Lucent Special Customer Operations

Gabrielle Gauthey – Senior Vice-President Public Affairs

Global Industry Leaders Forum (GILF)

Beirut November 9th 2009

Universal Access Policies toConnect the Unconnected

All Rights Reserved © Alcatel-Lucent 2009•2 | GILF Beirut | Nov 9 , 2009

How to connect the unconnected?

Fixed voice universal service

Mobile voice (2G) universal service

3G and beyond

Fixed broadband universal access policies

Next Generation Access networks

Wrap up


Fixed Voice Universal Service funding

Universal Service Fund, a cost-effective universal access solution for voice• Cost includes : tariff compensation, geographic equalization, public phones, social tariffs,

directories. Total cost is reduced by immaterial advantages.

0

50

100

150

200

250

300

1998 2000 2002 2004 2006 2008

Total US net cost in M€

Source Arcep Oct 2009


Mobile voice universal access : how to best achieve 2G coverage?

#1 : encourage coverage commitments when licensing spectrum

#2 : introduce coverage requirements when renewing licences

• e.g. 98% of population, coverage of transportation infrastructures;

#3 : achieve white zones coverage• where no operator is present…• through public funding;

#4 : foster competition in white and grey zones

• through private agreements and funding…• infrastructure sharing…• roaming agreements

White zones in Blue

Mobile Coverage

% Population

% Territory

White zones

Grey zones – 1 operator

Grey zones – 2 operators

Black Zones – more than 2 operators

Source : Arcep Report on Mobile Services – August 09


3G and beyond : mobile services universal access?

Include coverage obligations in the licensing process and monitor its effectiveness• e.g. in France 99.3% for SFR, 98% for Orange and 75% for Bouygues

Telecom

Manage spectrum allocation (lower bands allocation)• 3G - 900 MHz refarming• LTE – 800 MHz Digital dividend allocation + 2.6 GHz

Push for active infrastructure competition for both 3G and LTE• infrastructure (pole, masts) sharing• Improvement of backhauling capacity through public/private

partnerships


The key drivers of a successful Broadband universal access policy

Competition through active infrastructures has been the main driver behind the development of broadband:

• Geographic extension of local loop unbundling has encouraged France Telecom to equip all of its MDF (Main Distribution Frames) for ADSL

• France has joined European leaders in terms of penetration…• …and is in first place for "triple play"

Three major drivers have made this increase in investments possible

• Dynamic operators, both incumbent and new entrants• Regulation : LLU first, bitstream as a complement• Local authorities intervention has been crucial in the expansion of

broadband coverage


Dynamic of the French broadband market

Growth of the broadband access base

2002 2003 2004 2005 2006

24M

b/s

8M

b/s

1M

b/s

512

kb/s

1st TV/DSL offer

1st telephony/DSL offer

1st fixed-mobileConvergent

offer

ADSL ADSL2+

Evolution of broadband technologies and services

1st broadband/DSL offer

1999…

DSL coverage as of June 30 2009

2007 2008/2009

FTTH

100

Mb/s

1st Very high speed FTTH offer


Open wireline backhaul are key to handle both mobile and fixed access traffic growth

Typical telecommunications network architecture

Role of backhaul networks:

Cost effective coverage of medium and low density areas;

Stimulate competition and innovation;

Anticipate bandwidth demand increase for all access technologies (fibre, LTE, Wimax,…);

Future proof investment for local authorities;

Enhanced connectivity for public services (schools, hospitals, universities,…) and business parks


Local Authorities have played a crucial role in Broadband coverage

• In recent years, local authorities have played a key role in the digital development of their regions in partnership with operators

• Arcep first impact assessment:– 86 projects – 53 of which are running– 2 billion € invested

• Major consequences :– Less expensive coverage of rural areas– Expansion of LLU– Fostering of local operators

Vendée

Py rénées-Orientales

CU Bordeaux

CA Bay onne Anglet Biarritz

CA Perigueux

CU Grand Toulouse

CA Aix en ProvenceCA Aix en Provence

CA Rennes Métropole

CA Tours

Régie du Pay s chartrain

CA Seine EureCA Seine EureCA Seine EureCA Seine EureCA Seine EureCA Seine EureCA Seine EureCA Seine EureCA Seine Eure SI Sipperec (CPL)SI Sipperec (CPL)SI Sipperec (CPL)SI Sipperec (CPL)SI Sipperec (CPL)SI Sipperec (CPL)SI Sipperec (CPL)SI Sipperec (CPL)SI Sipperec (CPL)

SI Sipperec (Irisé)

SAN Sénart (Ville Nouv elle)

CA Amiens

CU ArrasCU ArrasCU ArrasCU ArrasCU ArrasCU ArrasCU ArrasCU ArrasCU Arras

CU DunkerqueCU Dunkerque CA Valenciennes

CA Le Hav reCA Caen la MerCA Caen la MerCA Caen la MerCA Caen la MerCA Caen la MerCA Caen la MerCA Caen la MerCA Caen la MerCA Caen la Mer

CA Quimper

CA Vannes

CA Angoulême

SM Belfort Montbelliard HéricourtSM Belfort Montbelliard Héricourt

CU Le Creusot Montceau

CA Chalon Val de Bourgogne

CA Clermont FerrandCA Clermont FerrandCA Clermont FerrandCA Clermont FerrandCA Clermont FerrandCA Clermont FerrandCA Clermont FerrandCA Clermont FerrandCA Clermont Ferrand

CA Sicov alCA Sicov alCA Sicov alCA Sicov alCA Sicov alCA Sicov alCA Sicov alCA Sicov alCA Sicov al CA Castres Mazamet

CA Pau

Val-d'Oise

Essonne

Seine-Maritime

Eure

Seine-et-Marne

Yv elines Meurthe-et-Moselle

Somme

Moselle Manche

Côtes-d Armor Finistère

Charente-Maritime

Jura

Loire

Py rénées-Atlantiques Haute-Garonne

Tarn

CR Aquitaine

CR Bretagne Calv ados

Haute-Marne

Orne

CA Voiron

Ardèche

Ardennes

Ariège

Av ey ron

Cher Doubs

Gard

Hérault

Ille-et-Vilaine

Indre

Loiret

Lot

Lot-et-Garonne

Maine-et-Loire

Haute-Marne

Meuse

Nièv re

Oise

Bas-Rhin

Haut-Rhin Sarthe

CR Bourgogne

CR Alsace

CR Limousin CR Auv ergne

CR Corse

Réseaux d'initiative publique à fin juillet 2008(projets couvrant plus de 60.000 habitants)

GUADELOUPEGUADELOUPEGUADELOUPEGUADELOUPEGUADELOUPEGUADELOUPEGUADELOUPEGUADELOUPEGUADELOUPE

GUYANEGUYANEGUYANEGUYANEGUYANEGUYANEGUYANEGUYANEGUYANE

MARTINIQUEMARTINIQUEMARTINIQUEMARTINIQUEMARTINIQUEMARTINIQUEMARTINIQUEMARTINIQUEMARTINIQUE

REUNIONREUNIONREUNIONREUNIONREUNIONREUNIONREUNIONREUNIONREUNION

Oise

Seine-et-Marne

Yvelines

Hauts-de-Seine

Val-d'Oise

Marchés de services départementauxHors DOM

4) Offres commercialisées (4)

Projets infra départementaux L.1425-1Hors DOM

1) Etudes préalables (3)2) Appel public à candidatures (5)3) Délégataires retenus (14)4) Offres commercialisées (10)

Projets départementaux L.1425-1Hors DOM


Projets régionaux L.1425-1Hors DOM



Impact on unbundling

913

773

988

CO unbundling : alternative carriers backhaul networks

CO unbundlig : alternative carriers backhaul networks + France Telecom dark fiber rental

CO unbunling : local community bakchaul network

14,4 M households

2,4 M households

4,0 M households

20,9 M households

Number of unbundled CO’s according to backhaul network ownership

37% of French central offices are unbundled through Local Communities backhaul networks


Which competition model for NGA ? How to promote investments and universal access?

No doubt very high bandwidth is the technological evolution in the medium term

• to meet growing demand for content• to assist the concomitant rise in speeds

All countries are facing the challenge. Some are ahead like Japan and the US. In the EU major players have announced fibre deployments

Investments are huge – 10 to 20 times copper broadband - and will need to be spread over several years

• several hundred euros per connectable home• Investments will happen differently according to country specificities and legacy networks

topography (FTTN, FTTH)

The questions are :

• How to promote investments beyond dense areas from start and allow reasonable return?• How to avoid useless duplication of non-essential infrastructures in reduced dense areas? • How to adapt regulation and public intervention to ensure universal access and avoid

increasing risk of digital divide?


NGA universal access : investment model according to geographical segmentation

All Rights Reserved ©Alcatel-Lucent 2008, XXXXX

Investment Model %

Investment model according to geographical segmentation

Socio-economic impact of fiber HighLow

Market Driven Policy DrivenRisk Driven

Stockholm

Dense city

Lindefallet

Village

Kilafors

JönkopingMedium-size town

Hudiksvall

Small town

Retail Services(residential, public & business)

Active Network(network equipments,

business & operation support)

Passive Infrastructure(trenches, ducts, fibre, labelling, pre-cabling)

Public

Private

Private investments will prevail in “market driven” whereas public

intervention will be needed in low density “policy driven” areas


Europe trends for NGA roll-out : Public Policy levers to foster NGA investments, coverage and PPPs

Legislative lever in many countries (France, Spain, Italy, Portugal, …)

• Sharing of the fiber last drop through mandatory agreements between operators and landlords

• “right to fiber”

• Mandatory fiber pre-cabling for new buildings

Regulatory lever• Regulator’s concern is to make sure competition is preserved on the active part of

the network to stimulate differentiation and innovation

• Asymmetrical regulation (duct access)

• Symmetrical regulation (last drop and in house wiring)

Public policy lever • Economy recovery package

• Digital Economy plans

• Intervention of local authorities (PPPs)


Overview of Recovery, Digital Economy plans & PPPs worldwide

Greek FTTH Public-Private Partnership

2.1 B € investment

Target : 2 million homes passed by 2012

Digital Britain

•2 Mb/s universal broadband access service in 2012

•200 M £ NGA fund is created to speed-up deployments

•Local Communities involvement in low density areas

Italian broadband plan

800 M € to be allocated to achieve broadband coverage in Italy

French digital plan

750 M€ will be invested by Caisse des Dépôts et Consignations to roll-out shared optical loops

+ German BB plan and coming bradband plans in Poland, Russia,...

China’s recovery plan

4 Trillion RMB 09-10

ICT included in pillar industries program

Australian National Broadband Network

100 MB/s to 90% of subscribers

43 B A$ ( 23 B €)

New Zealand “Broadband Investment Initiative”

1.5 B NZ $ investment plan announced March 09

American Recovery and Reinvestment Act

7.4 B $ to provide broadband to rural, unserved and underserved areas

4.5 B$ for electric grid modernization (“smart grids”)

2 B $ for health IT programs

29 B $ for transportation programs (highways safety, fraffic monitoring,...)

EU recovery plan Achieve 100% broadband coverage in EU by 20101 B € earmarked for rural broadbandCreation and/or upgrade of access, backhaul and passive infrastructure


US Broadband Funding via the“American Recovery and Reinvestment Act” (ARRA ) – Rural & Verticals

NTIA:

Broadband Technology Opportunities Program (BTOP)

Dept. of Commerce - $4.7 B to provide BB to un-served and underserved areas.

RUS (Rural):

$2.5 B to provide loans, loan guarantees, grants. At least 75% of each project‘s territory must be rural w/o BB

•Energy projects (4.5B$),

•Health IT (2B$),

•Transportation (29B$),

•Public Safety

NTIA Funding Breakdown

Source: Educase 2009


Australia and New Zealand PPP projects

Australian “National Broadband Network” PPP project announced April 09

– 100 Mb/s (FTTH technology) to 90% of Australian broadband subscribers and min 12 Mb/s for the remaining 10% of the population (DSL, HFC, Wireless technologies);

– A$ 43 B ( 23 B€) investment – network will be built, owned an operated by a PPP ( “NBN Corporation”) owned 51% by the Federal Government and 49% by private sector – spinoff to full private ownership foreseen within 5 years;

– “NBN Corporation” will act as a wholesale only company.

New Zealand “Broadband Investment Initiative” PPP launched March 09

– Government’s goal is to accelerate roll-out of ultrafast broadband to 75% of New Zealanders;

– Priority is given for the next six years to business users, schools, health services, greenfield developments and tranches of residential areas ;

– Government will invest 1.5 B $NZ alongside additional private sector investment.


United Kingdom “Digital Britain”: public funding for universal access and NGA

Digital Britain final report (June 16 09)

• Universal broadband access by 2012

– 2 Mb/s Universal access will de delivered by a mix of wired and wireless technologies - 200 M £ public funding

• Creation of a fund for investment in the next generation of superfast broadband to ensure it is available to the whole country

– 50 pence monthly tax on all fixed copper lines - 150/175 M £ per year

• Accelerating current and next generation mobile coverage and services

– Push for a rapid transition to next generation mobile (4G) and universal 3 G coverage– Highly competitive mobile market

Ofcom Report on Superfast broadband (March 09)

• BT/Openreach receives green light to invest in NGA (mix of FTTN and FTTH in greenfield areas)

• Mandates BT/Openreach to offer wholesale bitstream with pricing flexibility

• No duct sharing for the moment


Greece : € 2.1 B NGA PPP

• Governmental initiative launched en of 2007 with the objective to leapfrog traditional broadband and deploy very high speed connectivity in Greece :

– FTTH coverage target of 2 M households in 56 cities including Athens and Thesssaloniki;

– 2.1B€ investment budget within 2010-2017 for fiber passive infrastructure – PPP investment model

– PPP funding split : 700 M€ Greek State, 700 M€ European Investment Bank low-rate loan, 700 M€ private partners;

– PPP management will be granted to private partners for 30 years; – Project will be separated in 3 parts each part covering a distinct geographical

area of the country by a different PPP.

• Next steps – Public consultation and approval of the project by EU DG Comp in July 09– Legal framework to be adopted before end 09– PPP tender will be issued beginning of 2010


France : PPP will be key for NGA roll-out

• France Numérique 2012 report (Sept 08) aims at transforming France in a “best in class” digital nation - 4 priorities:

– 100% broadband coverage ( min 512 Kb/s) and speed up very high speed network rollout– Development of digital content and service offer– Promotion and diversification of digital usages by citizens, enterprises and public

administration– Improvement of digital economy public governance

• 750 M€ from “Caisse des Dépôts” to foster NGA/PPP investments:

– Caisse des Dépôts et Consignations (state-owned investment bank )announced in June 09 a 750 M€ investment plan from 2009 to 2011 in shared optical local loops

– Private operators and local communities are likely to co-invest with Caisse des Dépôts in order to speed up deployments

• French State bond emission (“Grand Emprunt”) Sept 09

– Digital projects could be eligible to funds collected through the bond emission– A share of these funds may be allocated to fibre networks roll-out

• Green Light from the EU Commission to CG 92 FTTH SGEI is likely to unleash private and public investments in similar projects


Key takeaways on Next Generation Access policies

• Transition from broadband to Next Generation Access networks is a revolution which represents a dramatic change in the level of investments: 250 to 300 B€ will be required to roll-out NGA in the EU, 23 B€ in Australia

• Risk of broadening the digital gap between regions is high and this is why many nations have decided to put universal access high on their recovery agenda and digital economy plans

• From a policy perspective the key driver of NGA success and universal access is a close collaboration between all stakeholders -incumbents and new entrants, national and local government, vendors and users

• From an NGA investment perspective, Public Private Partnerships are gaining worldwide traction both at national and local level as they allow :

– Anticipation of the future by rolling-out of backhauling capacities

– Cost-effective roll-outs in lowering market entry barriers, preserving diversity and innovation

– More competition and differentiation

– Acceleration of NGA coverage in grey and white areas


“Connecting the unconnected” wrap up Universal Access Policies toolbox and levers : no « one size fits all » solution

Universal Service Funds• Easy to manage• Plain service : no major QoS issue or service differentiation • Price equalization mechanisms can be introduced• Cost decrease in the long run• Not the solution for broadband

Licensing incentives & agreements• Licensing lever : link spectrum granting to coverage commitments,

introduction of coverage requirements in new licences• Policy lever : Operators, Local Authorities and Regulators agreements

to provide mobile services in white areas (masts and poles sharing, roaming) and open backhauling

• Regulatory lever : passive infrastructure sharing, digital dividend spectrum allocation

Regulated wholesale offers & PPPs• Copper Regulation : LLU for service differentiation , bitstream as a

complement• Fibre regulation : asymmetrical (duct access) and symmetrical (last

drop)• Local authorities intervention (open backhauls, PPPs)

Fixed Voice

Mobile Voice & Services

Fixed Broadband &

NGAs

All Rights Reserved © Alcatel-Lucent 2009 Alcatel-Lucent Special Customer Operations Gabrielle...

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