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The economic challenges of reaching broadband ubiquity

Speeding up NGN ubiquity: a pillar for digital growth. The economic challenges of reaching broadband ubiquity. Athens, 13 February 2014 • Dr Matt Yardley. Introducing Analysys Mason. EC – Digital Agenda (costs, benefits, funding models, incentive policies)

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The economic challenges of reaching broadband ubiquity

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  1. Speeding up NGN ubiquity: a pillar for digital growth The economic challenges of reaching broadband ubiquity Athens, 13 February 2014 • Dr Matt Yardley

  2. Introducing Analysys Mason • EC – Digital Agenda (costs, benefits, funding models, incentive policies) • ITU– PPPs for universal broadband • EIB – market development and funding models • Operators – NGA strategy • Governments – national broadband plans and state aid • Regulators – competition issues in NGA • Investors– NGA transactions

  3. Ubiquity costs • Source: Analysys Mason, typical fixed NGA cost analysis First 75% homes € N bn Last 25% homes € N bn

  4. Rural costs vary strongly depending on technology – fixed vs wireless … Fixed Indicative Cost Wireless % of homes covered

  5. … and these two critical aspects are highly market-dependent Fixed Indicative Cost Wireless % of homes covered

  6. The final 5% is now a hot topic in the UK

  7. UK FTTC speed variability is narrower than in1st gen. broadband – good news for the DA • Source: Ofcom data, 2013 38Mbit/s packages 76Mbit/s packages 3.0 3.3 3.5 3.5 3.5 81% of headline 3.4 78% of headline Speed (Mbit/s) Speed (Mbit/s) 33.1 64.2 30.9 30.6 60.4 59.3 Max 24 hours 8-10pm weekdays Max 24 hours 8-10pm weekdays Av variance Av variance Av min Av min

  8. Outcomes will also depend on how Member States implement policy • There is some latitude in interpreting the DA targets which will impact solutions across Member States • A very rigid view on 30Mbit/s, i.e. to all users under all conditions,would effectively eliminate wireless (by driving up costs to levels higher than fixed) • There is an inherent tension between playing it safe with incumbent operators vs stimulating new competition • The sustainability risks are greater in rural areas – driven by cash-flow issues more than set-up costs • Member States need to think hard about geographic carve-ups • This can have unintended consequences

  9. Public policy questions still remain • Funding: Our EC work suggests a funding gap of €60 billionto meet DA 30Mbit/s coverage & 100Mbit/s take-up targets • Demand-side: • Connecting “the unconnected” (see below) remains a major challenge, with multiple issues involved • Source: Ofcom CMR 2013

  10. These are exciting times! • Future of UHF radio spectrum (EC High Level Group) • Media consumption uncertainties: • Broadcasting to mobile networks • Prospects for linear TV distribution on fixed networks(e.g. using multicast) • Drivers for QoS in networks (e.g. cloud, public services) and business model implications • Growing day-to-day reliance drives need for resilience – perhaps less well understood that it should be

  11. Thank you

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