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Key Findings in Donegal Jukka-Pekka Joensuu February 12, 2013

Key Findings in Donegal Jukka-Pekka Joensuu February 12, 2013. Background and ways of building HSB in rural areas . Traditional telco building the network on market basis

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Key Findings in Donegal Jukka-Pekka Joensuu February 12, 2013

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  1. Key Findings in Donegal Jukka-PekkaJoensuu February 12, 2013

  2. Background and ways of building HSB in rural areas • Traditionaltelcobuilding the network on marketbasis • Thiscanbeachieved in areaswithRate of Returnabove 15 % orthere is a strongmarketincentive to build a nextgenerationnetworks. This is achievedwithvastfinancialresourcesprovidedbytraditionaltelco and withminimumpublic intervention. Notlikely to happen in ruralareaswithoutsignificantpoliticalpressure.. • There is a Newco (new company) set upinitiatedby the localcommunity and structured as cooperative and localmunicipalityorregionprovidingfinancialsupportbymeans of guarantees, loansorotherfinancialsupport • There is a Newco set upstarted and initiatedby the municipalityormunicipalities. Thiscanbeseen as a regionaldevelopmentfund to initiate ICT investments in localareas • There is a public –privatepartnershipmodelwhichcanbe a combinationwithmodels 1+3 or 2+3 or 1+2 • For a pure networkcompany the aim for rate of return is between 5-8 % • The incentive of buildingsuchnetworkbymeans of nonprofitcorporation is the idea of boostingdevelopment and innovationswithbuilding HSB and the profitscome via employment and development in the region

  3. Four critical factors in successful rural broadband roll-out • Make a viable investment plan • HSB business model is a investment-driven business model with vast sunk costs. This makes investment planning crucial part of business plans and the roll out has to be planned in controlled manner • Regional planning of broandband investments has to be user driven and also network topology planning has to follow different users, such as households, masts for the mobile operators, community buildings and corporate areas • Pricing of connection fees • Pricing of set up fees and monthly recurring charges is basis for investment payback times, interest rates, penetration rates and risk allocation with the previous factors • Penetration schemes related with pricing are crucial • Business-like planning • Revenue allocations and cost structure together with streamlined organisational structure for basis for profitable investment schemes and help in preparing for viable business plan and investment structure • Even for the municipalities run networks in a non-profit organisations business planning is a key factor • Strategic view on tomorrow´s society and digital needs justify the necessary investments • There are direct implications to the overall competitiveness in rural areas and strategic thinking in relation to the decision-making process; in tomorrows society HSB is a key strategic choice and regional development factor

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