Competitive Positioning of 5GHz FWA systems WAG Meeting 6 th May 2003

1. Competitive Positioning of 5GHz FWA systems WAG Meeting 6th May 2003

2. Presentation Structure • Main potential markets: school connectivity, NHS, SME and community networks • Market drivers • Procurement / business models • Key criteria for technology choice • Prospects for 5GHz FWA

3. School connectivity: market drivers • Broadband connectivity policy for schools: 2Mbps primary; 8Mbps secondary by 2006 • Funds: • £71m (2003-04), £287m (2004-06) England • £204m Northern Ireland (incl. ICT) • £10m Wales (local access) • Content development initiatives: £50m e-Learning credits; £150m for digital content development • Future bandwidth requirements: • Video conferencing • Video streaming (subject teaching) • Interactive materials (subject teaching) • Improving ICT competence amongst teachers

4. Procurement models (1) • RBC/LEAs own the school network: • Low cost connection • Sustainable broadband provision • Control over the network • Cost-effective solutions sought (wireless) • ‘Hidden costs’ • Customer response/customer care? • Direct competitors to commercial operators? • Interconnect to SuperJANET?

5. Procurement models (2) • Leasing broadband capacity from a commercial operator + managed service • Defined performance criteria • RBC/LEA avoids ownership of network and associated costs • Sustainability beyond 2006? • …BT main provider, but wireless technologies being considered

6. Major wireless deployments • CLEO • Warwickshire • Somerset • Milton Keynes • Cheshire • North Yorkshire Fixed links + 2.4GHz

7. Criteria driving the choice of technology • Cost of deployment • On-going costs • Actual data throughput • Guaranteed QoS • Speed of deployment • Scalability • Sustainability of broadband provision

8. Prospects for 5GHz FWA • Current capacity insufficient in 2-3 years (PTP or PMP over 2.4GHz) • More cost-effective solutions sought • Separate frequencies for access and WLANs • Plans to migrate 2.4GHz connections to 3.4 or 5GHz • Extend networks to other public sector and SMEs • At least 10% of school connections over wireless by 2006 (up to 15% incl. other public sector and SMEs)

9. The NHS: market drivers (1) • Re-procurement of NHSnet (N3)- £2.3billion (2003 – 2005); infrastructure and ICT • N3: min 2Mbps between trusts, min 256Kbps GP practices • Best value for money • 10 year contract to 5 SPs • Frequent local contract re-competition over 10 years • Wales - Dawn 2 • NI, Scotland – part of overall public sector aggregation model

10. The NHS: market drivers (2) • Increase in bandwidth requirements in the next 2-3 years: • Integrated Care Record Services (electronic patient records, prescription transfer and appointment booking) • PACS (storing, archiving and transfer of clinical images)

11. Criteria driving the choice of technology • Security • Cost/value for money • Guaranteed QoS • Speed of deployment • Credibility of service provider

12. Prospects for 5GHz FWA • Bluetooth - common mechanism for connecting medical devices • Reluctance to use 2.4GHz for access (interference; less secure) • 2.4GHz as an interim local solution • 5GHz or 3.4GHz preferred • 10-20% of GP practices in England will be connected via wireless

13. Community and SME networks: market drivers • Lack of broadband infrastructure • Government’s broadband policy objectives • Availability of public funds: DTI Broadband fund, Wired-Up Communities • 20-30 community projects using FWA (2.4GHz + licensed fixed links) • Most use subsidies • 3-4 to 30 nodes; 10 to 100+ users

14. Business models (1) • Community-owned networks: • Driven by availability of funds • Sustainability? Will users pay £25-40 p.m.? • Cost of backhaul • Backhaul to school networks and SuperJANET

15. Business models (2) • Operator-driven networks: • Integrated network + service provision • Wholesale broadband capacity provider + ISP • Operator bears commercial risk

16. Criteria driving the choice of technology • Cost • Capacity versus demand • Speed of rollout / immediate access to spectrum

17. Prospects for 5GHz FWA (1) • Significant interest from operators deploying unsubsidised networks for SMEs • PMP and PTP (leased line alternative) • 5GHz for backhaul • No immediate perceived demand to migrate from current 2.4GHz links in community-run networks

18. Prospects for 5GHz FWA (2) Broadband take up: • 13% of households with Internet access (7% of UK households) • 19% of SMEs with Internet access (12% of UK SMEs) • 20-27% of households and businesses will have no access to ADSL/cable (c.20% at town edges and in rural areas)

19. Conclusions and common themes (1) • FWA over 2.4GHz seen as an interim solution for broadband connectivity to schools, NHS, SMEs (replacement within 5 years) • FWA have typically much lower on-going costs than BT leased line products (esp. in rural and remote areas) • Choice of wireless - trade-offs between: • capacity • cost of equipment • QoS • availability and ease of access to spectrum • risk of interference … for each specific market

20. Conclusions and common themes (2) • Access to 3.4GHz uncertain; higher equipment costs • Immediate demand for access to Band C by professional operators: • Timescales driven by government targets • Most contracts to be finalised in early 2004 • Separate frequencies for access and WLANs • Most cost-effective alternative for SMEs given less certain demand and limited ability of operators to raise funds