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Febrer 2007

Projectes municipals, situació del mercat i estadístiques. Estats Units. Jordi López i Benasat. Document de treball. Amb la col·laboració de: Carlos González Saavedra Pilar Sol i Adriana Alfonzo. Febrer 2007. I. Projectes municipals. Desembre 2006. Global situation.

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Febrer 2007

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  1. Projectes municipals, situació del mercat i estadístiques Estats Units Jordi López i Benasat Document de treball Amb la col·laboració de: Carlos González Saavedra Pilar Sol i Adriana Alfonzo Febrer 2007

  2. I. Projectes municipals Desembre 2006

  3. Global situation U.S. CITIES WEIGH BROADBAND ACCESS Monday, May 30, 2005 • Across the nation, suburbs, coastal beach towns and big cities all are debating the role government should take in making sure their citizens have access to the Internet. • Municipalities have taken notice. While some have chosen one route, others have gone the opposite direction, using varying technologies and hybrid business plans. • Furthermore, it found little competition to drive telecommunications and cable providers toward this goal. U.S. OPTICAL FIBER COMMUNITIES GROW 83 PERCENT Telecommunications Industry Association (TIA) • Now reaching 398 communities in 43 states.

  4. Global situation POLICY POSITION ON MUNICIPAL BROADBAND NETWORKS The High Tech Broadband Coalition (HTBC) 31-MARCH-2005 • HTBC believes that the overwhelming majority of such deployment will come from private sector investment. • However, governmental entities, pursuant to their mandate to advance or protect the public interest and public safety, may identify broadband needs that are best met through some form of governmental action or partnership with the private sector. • Nationwide, municipalities are considering ways to promote broadband networks in their communities with these goals in mind. • Municipalities can and should find solutions that are open, transparent, and reasonably competitively neutral. • In summary, HTBC opposes state laws that erect explicit or de facto barriers to municipal participation. Municipalities must be allowed to pursue broadband network solutions, and private sector firms must not be foreclosed from choosing to invest in and partner with municipalities.

  5. Global situation THE TRUTH ABOUT MUNICIPAL BROADBAND APRIL-2005 • Municipalities have a long history of building and maintaining critical infrastructure. • Municipal networks, or even the threat of municipal entry, provide the competition necessary to keep rates low and quality of service high. • Municipal systems increase investment in local communities. • Municipal systems do not “crowd out” private providers. • Local governments do not favor themselves. • The allegation that local governments are intrinsically incompetent and incapable of running complex broadband systems likewise defies history and the experiences of daily life.

  6. Global situation W2I DIGITAL CITIES CONVENTION MAY-2005 • More than 100 local-government professionals, representing 60 cities from 25 states and 8 countries. • Consensus emerged around: • the need to act to foster competition for services at the local level, • a process for building business cases involving partnerships between communities, government and the private sector, • the need for cities to be heard by state and federal legislative authorities. • Local authorities are also playing a vital role. Municipalities around the world are beginning to realize that when a huge chunk of their territories is not covered by broadband, their populations are at a disadvantage from an economic and social development standpoint. • Broadband has become a key infrastructure, or utility, and mayors believe it’s a service their citizens should not be denied. Consequently, economic development has emerged as a primary driver of deployments, along with the potential of broadband to improve municipal-worker efficiency and increase services to citizens.

  7. UTOPIA Network Utopia Network: A Municipal Fiber Project • In 2001, 18 Utah cities began planning Utopia, an optical-fiber broadband network. Eventually, 11 cities guaranteed an initial US $85 million bond issue to fund the network to finance the first phase of the project. The total cost for the system is $470 million. Each municipality will issue revenue bonds for its portion of the overall investment. • Utopia, known formally as the Utah Telecommunication Open Infrastructure Agency, is executing this project in northeastern Utah. • Utopia's business plan: • Cities sell low-interest bonds to fund the fiber network build-out. • The government builds the network, but only private companies can resell access to consumers. • Revenue is generated when ISPs pay the government a fee to access local customers. • Revenue pays off municipal bonds and operation costs. Source: http://www.spectrum.ieee.org

  8. UTOPIA Network SOURCES: DYNAMICCITY INC.; *2005 EST.,UTAH GOVERNOR'S OFFICE OF ECONOMIC DEVELOPMENT

  9. UTOPIA Network Source: http://www.utopianet.org/

  10. UTOPIA Network Source: http://www.utopianet.org/

  11. UTOPIA Network Source: http://www.utopianet.org/

  12. UTOPIA Network Source: http://www.utopianet.org/

  13. Philadelphia Wireless Philadelphia Business Plan The Wireless Philadelphia Executive Committee February, 2005 • Philadelphia proposes to capitalize on this potential by leading an effort to create a wireless network that will provide high-speed, broadband wireless connectivity to all points within the City. • Today’s patchwork of individual hotspots does not provide uniform coverage across the City. This lack of comprehensive and universal wireless access greatly limits the benefits of this new technology. It is here that the City can play the traditional role of government in providing the framework and initial investment needed to fully exploit this opportunity. • In US history, cities and government have often made the initial key investment to provide a new public service: the Internet, city-owned electric, water and sewer, gas utilities, etc. Often governments have taken this step because private industry does not have the resources, vision, or economic incentives to provide the needed service or because it is in the public interest to provide this service universally to all its residents. The Committee believes the public sector will need to serve as the catalyst to ensure that affordable broadband Internet access is widely accessible to all the residents of Philadelphia.

  14. Philadelphia Wireless Philadelphia Business Plan The Wireless Philadelphia Executive Committee February, 2005 Benefits: • Investing in the People of the City. A wireless network will be a strategic investment in the people of the City. It will provide an infrastructure that can assist in bridging the digital divide that prevents many individuals and families from obtaining the full measure of opportunities generated by the Internet because they can’t afford the cost of wired broadband Internet access. • A Competitive Location. The City must offer a competitive low-cost environment for firms. • Enhancing the Experience for Visitors. Citywide wireless access will become an essential component of a successful strategy to grow the hospitality sector of the economy. The benefits of this growth will include local employment and revenue for the City. • Delivering Public Services.

  15. Philadelphia Wireless Philadelphia Business Plan The Wireless Philadelphia Executive Committee February, 2005 Findigs: • There is a need for low-cost broadband Internet access in the City above and beyond what is available. • A comprehensive plan. • There is a potential market for broadband access (…) The demand must be paired with compelling applications. • It is unclear if, when, and at what price the private sector will provide such services and whether the services will provide universal or near-universal access. • The best-practices analysis shows that in the majority of cases, city governments have acted as the catalyst for projects to provide broadband access to residents. • The best-practices analysis also shows that there are successful examples and the chance of success is good. • Wireless access technology is maturing. • Partnering with private sector specialists rather than implementing this project on its own. • Private industry should play a major role in the funding, implementation, and ongoing operation. • There will need to be substantial involvement by the City.

  16. Philadelphia Wireless Philadelphia Business Plan The Wireless Philadelphia Executive Committee February, 2005 Return-on-Investment: • The proposed business model demonstrates that a $10 million investment to deploy a citywide wireless network will result in broadband access at dial-up prices and provide positive financial results. Through conservative assumptions, the model estimates that the nonprofit will break even in year four, build $4 million of working capital reserve for network upgrades and generate $5 million in free cash flow to support economic development and digital divide programs. • Business Model: • The nonprofit owns and operates a wholesale wireless network • SPs will provide the following: Customer marketing, customer billing, services features… • 135 square miles • Wi-Fi access nodes mounted on street lights and other structural assets • Support best-effort 1-Mbps or better symmetrical service

  17. Vermount Rural Broadband Project Vermont Rural Broadband Project • Vermont : 25 000 square kilometers in northeast USA. • 600 000 population. • Mostly rural and mountainous. • State goal : 100% broadband coverage by 2010. • Current coverage of broadband : 75% of population but <50% of geography. Source: Community Involvement in Broadband Deployment in Rural Vermont, USA. Duey Laura.2005

  18. Vermount Rural Broadband Project • Examples of local broadband efforts in Vermont : • Ascutney Area : The Southern Windsor County Regional Planning Commission, working with the towns of Reading and West Windsor, sponsored a project to bring broadband service to the area. The Commission has selected WaveComm to provide a wireless broadband service. • Brandon : The Brandon Area Chamber of Commerce completed a survey of local businesses to ascertain their need for broadband, and has successfully worked with Verizon to bring DSL to the town center. Brandon is also working with Teljet to provide wireless broadband service to the outlying areas. • Calais : Calais has formed a local project committee to address broadband issues and completed a survey of local broadband demand. They have joined other area towns to support a wireless system from the Cloud Alliance.

  19. Lenowisko projects Lenowisco projects • Total Cost: $6,255,000 (initial phase) -- Potential funding sources: Economic Development Administration (EDA), Rural Development (USDA), Virginia Tobacco Indemnification and Community Revitalization Commission, Private. • Development of advanced communications insfractucture serving LENOWISCO district. Initial phase will provide 125 miles of network, with additional 100 miles in subsequent phases. • Lenowisco Network Backbone It’s one of the most sophisticated networks in the United States, utilizing a combination of microduct and blown fiber, along with some conventional fiber cable. Source: LENOWISCO. Comprehensive Economic Development Strategy . Annual Ceds Report - 2003

  20. Lenowisko projects March 2005

  21. iProvo Projects iprovo projects • iProvo: A Public Private Partnership • The total bonding amount is expected to be $39.5 million iProvo's business model is unique. Provo City owns the infrastructure, a critical decision that assures fiber accessibility to every resident and business in Provo.The iProvo system is being built for the long term, using the public investment in the infrastructure as a means to opening the door to competitive, advanced telecommunication offerings by the private sector. • iProvo is designed to be part of a public-private partnership where the essential infrastructure is owned by the public, but the services are provided by private sector companies. Many telecommunications experts believe this model is the best way to provide advanced telecommunications services to homes and small businesses. • Provo will sell bonds to finance the project and repay the bonds with revenue from lease arrangements with private services providers. Zion’s Bank, the City’s financial advisor on the project recommend that the City issue Sales Tax Revenue Bonds to finance iProvo because it obtains the highest possible bond rating, the lowest premium for bond insurance and possibly eliminates the need for a funded debt service reserve, which if waived by the rating agency would lower the amount of bonds to be issued. They also examined other financial instruments in their review and determined these other options would leave the City with the same level of responsibility for the bonds while adding to the overall cost of the project. Source: www.iprovo.net

  22. iProvo Projects ─ Phase 1 ─ Phase 5 ─ Phase 6 ─ Phase 2 ─ Phase 7 ─ Phase 3 ─ Phase 4 ─ Phase 8 Source: www.iprovo.net

  23. The Lafayette Utilities System, also a municipal utility, suffered another legal setback in its bid to deploy FTTH in Lafayette, Louisiana. But even before being built, LUS’s fiber network is having a positive effect on the local economy. NuComm International, a Canadian outsourcer, has chosen Lafayette, Louisiana as the site of its largest customer contact center. The new site, scheduled to open for business this month, is poised to create up to 1,000 new contact center jobs for area residents, with a total economic impact of $115 million. Nucomm CEO Réal Bergevin was quoted as saying that local technological developments, including the FTTH project, made Lafayette a good place for NuComm to do business. Several other municipalities are now looking at citywide fiber plans. The City Council in Berkeley, California, has directed the city IT director to consider FTTH in the next draft of the municipal network plan, which had previously encompassed only wireless broadband. San Francisco also held a community meeting last month to receive public input on a fiber-tothe- premises feasibility study. Two new projects were announced in Scandinavia, which has one of the highest broadband connection rates in the world. Municipal fiber is alive and well in Philippi, West Virginia, where the city has installed a new fiberto- the- remises network, using equipment from Motorola (www.motorola.com) and Preformed Line Products (www.preformed.com). The network, which was installed by Cable Constructors, Inc. (www.cableconstructors.com) connects local government agencies, businesses, schools and homes and will provide high-speed Internet access, broadcast services, and video on demand to residents of the city and outlying areas. The deployment will also provide broadband access to county agencies such as law enforcement and 911 emergency services, and give citizens digital access to televised city council meetings and other town events. Latest Fiber-to-the-Home Deployments

  24. The case of New York The case of New York • New York has always been a leader in broadband deployment, dating back to the City’s emergence as the world’s modern-media capital and the development of the first real broadband format, television. The needs of media companies and those of New York’s other prominent industries, advertising and finance, necessitated the early adoption of broadband technologies that facilitated intra-office transactions and business-to-business commerce. • The City of New York is currently in the process of building one of the largest wireless broadband networks in the world – a citywide wireless network for public safety agencies (police, fire, etc…). With 95% coverage of the city, the Citywide Mobile Wireless network would be one of the largest municipal wireless broadband projects in the world. It is technically possible – and possibly desirable – for the city government to let other user groups access this network, including the general public, small businesses and nonprofits. City government would not necessarily have to provide retail service to the public (that is, direct Internet access). Instead they could sell bandwith at wholesale rates to private providers who would then provide a broadband connection and broadband services to the aforementioned groups.

  25. The case of New York The case of New York • Up to $2.5 million dollars in matching grants will be available to help small information technology (IT) businesses and other companies obtain broadband connectivity. Grants can include assistance of up to $ 75,000 for the installation of advanced telecommunications giving into and throughout existing buildings, and up to $ 200,000 for wireless community projects. The new funds ca be obtained through the state’s wired building program, which has been expanded to include wireless communities. • The grant program is divided into two categories: wired buildings and wireless Communities. Wired Buoldongs grant funding can be used to cover design/engineering, material and labor costs associated with upgrading a building’s telecommunications infrastructure to high-speed Internet. Such infrastructure include fiber optic cable, DSL cooper and coaxial cable. • Wireless Communities grant funding may be used to cover expenses incurred that are directly related to the design, material components, construction and installation of advanced point-to-point or multipoint wireless broadband telecommunications infrastructure on and within eligible buildings and structures and the operation of such a system. Source: www.empire.state.ny.us

  26. New York BRIEFING PAPER OF THE INFRASTRUCTURE DIVISION THE COUNCIL OF THE CITY OF NEW YORK June 10, 2005 • Involvement of City Government in Telecommunications: • Municipalities are Entering the Telecommunications Market • Over two hundred cities in the U.S. and around the world are currently considering or making major investments in broadband networks, both wireless and fiber optic. • There is evidence that municipal entry into the telecommunications market promotes competition. • Possible Policies for Broadband Task Force to Focus On: • Building New Citywide Broadband Networks • Allowing Access to Existing Municipal Broadband Networks • Using Franchises to Promote Equitable Buildout • Install Conduit in All New Residential and Commercial Buildings

  27. New York Is Brooklyn Business Suffering From A Broadband Gap? THE COUNCIL OF THE CITY OF NEW YORK January 10, 2004 • A Broadband Gap Exists in New York City • For Small and Mid-Sized Businesses Outside of Manhattan • Why the Broadband Gap Exists: • Antiquated Telecommunications Infrastructure • Lack of Competition • Demand Exists for Broadband but not a Critical Mass • Planned Actions: • Explore the feasibility of expanding portions of the NYSERNET New York City Dark Fiber Network to service key properties with not-for-profit tenants in high-priority development areas. • Continue to explore ways to expand the use of City property for the deployment of wireless network infrastructure. • Continue to work with providers to install lateral conduit for fiber as opportunities arise.

  28. New York Telecommunications and Economic Development in New York City: A Plan for Action A Report to Mayor Michael R. Bloomberg March, 2005 • New York lags behind several other world cities in deployment of broadband services. • Moreover, deployment of fiber optic infrastructure and availability of broadband vary considerably in communities outside Midtown and Lower Manhattan. The City has a vital interest in ensuring that high-quality broadband services are widely available to businesses that can profit from them. • The continuing development of wireless broadband technologies could be an especially important source of new opportunities for growth in the: • Development of the infrastructure required to support these new technologies; • Delivery of telecommunications services over that infrastructure; and • Production of information services and products – “content” – for wireless broadband users.

  29. The case of New York • New York State’s “Wired Building” program provides grants to encourage the wiring of non-Class “A” commercial buildings and business incubators in parts of the state “where such advanced telecommunications initiatives have not kept pace with the larger metropolitan areas.” While the program could help bridge the broadband gap in underserved business areas in the five boroughs, thus far only 1 of the 42 grant recipients is located in New York City. Source: New York’s Broadband Gap. December 2004

  30. The case of Los Angeles The case of Los Angeles • Los Angeles has released its report entitled “Fast and Easy: the future of Wi-Fi and beyond in the city of Los Angeles” • Fundamental recommendation in this report : the adoption by the Mayor and council of a coordinated plan, phased in over five years, that leverages the existing communications infrastructure to build and enhance broadband networks that take advantage of both licensed and unlicensed wireless/WiFi spectrum. • Under this plan the City would: • Encourage the adoption of a public/private partnership business model designed to deploy fast and easy broadband communications services in every neighborhood • As part of the first phase of the coordinated plan, conduct a citywide broadband survey to determine if there are any gaps in the availability of broadband services for residents and businesses in Los Angeles. • Do a review of the available City-owned physical assets in the City’s rights-of-way, including facilities, to determine the available “space that could potentially be used to construct broadband networks.

  31. The case of Los Angeles • Provide all City residents, and those doing business with the City, fast and easy access to the Net in all municipal facilities within three years. • Ensure that fast and easy communication services are available in key public places and commercial corridors. • Finance these activities through the use of securitized bonds (tax exempt of taxable depending upon the use of the proceeds), savings from cross-departmental and agency partnering, and grant funding for specific projects. Goal : Los Angeles become a “broadband city” both in reality and in global reputation within five years. Source : Los Angeles municipal wireless broadband report, 2006

  32. Los Angeles THE FUTURE OF WIFI & BEYOND IN THE CITY OF LOS ANGELES Mayor’s WiFi & Beyond Executive Advisory Panel April 25, 2005 The future of WiFi and Beyond (WAB) • We want Los Angeles to be a ‘broadband city’ both in reality and in global reputation. Values: • Affordability • Convenience • Technological Neutrality • Public/Privated Partnerships • Mission • Mayor’s goals of the City of Los Angeles, within the next five years: • Helping to close the digital divide, • Accelerating economic development, and • Making our City’s government more efficient and accessible.

  33. Los Angeles THE FUTURE OF WIFI & BEYOND IN THE CITY OF LOS ANGELES Mayor’s WiFi & Beyond Executive Advisory Panel April 25, 2005 Recommendations: • Under this plan the City would: • Encourage the adoption of a public/private partnership business model. • Conduct a citywide broadband survey • Do a review of the available City-owned physical assets • Provide all City residents, and those doing business with the City, fast and easy access to the Net • In addition, ensure that fast and easy communication services are available in key public places and commercial corridors used by visitors and travelers of all types • Encourage public/private partnerships that would create new e-government applications of benefit to the City of Los Angeles • Become a national and local champion of WiFi and future technologies.

  34. Chicago CivicNet Chicago CivicNet • Civicnet lerage $320million in city spending over ten years, and additional millions in existing city resources,to provide incentives to the private sector to accelerate the developmet of high-speed communications to chicago neighborhoods. • CivicNet - A City-Wide Condominium Fiber Project • connecting up 1600 public sector institutions • Oriented to Development of Backbone Infrastructure • With Gateways to Tributary Systems • More Fiber in More Places Faster • Ubiquitous, Pervasive: 1,600 Locations • E-Z High-Performance Low-Cost Internet Connectivity • Foundation = Existing City Fiber Builds Source: “Community Condo Fiber Networks”. The Customer Empowered Networking Revolution. Canarie

  35. Public Projects in Broadband Deployment The Dalles, Oregon • The Dalles, a city of 11,873 in the picturesuqe Columbia River Gorge, operate a 17-mile municipal fiber optic network. In2004, the Dalles received $200,000 in federal economic developmet and infrastructure funds to complete the network and connect it to NOANet (Northwest Open Access Network), a cooperative tha uses fiber owned by the bonneville power administration to operate a statewide telecommunication network linking schools, hospitals, government agencies and businesses. • As a direct result of the Dalles’s municial networking capabilities, Google in 2005 decided to purchase and industrial site in the Dalles for $1.87 million, to house high-tech equipmet that would be connected to the rest of the company’s network. Source: The Baller Herbst Law Group.The case for public Fiber-ti-the-User System.March 2006.

  36. Public Projects in Broadband Deployment Source: http://www.dailywireless.org

  37. Public Projects in Broadband Deployment OHIO-Ohio Broadband Initiative • Under the auspices of his $1.6 billion “Third Frontier” program, Ohio Governor Bob Taft created the Ohio Broadband Initiative, which is focused on providing businesses with widespread, affordable access to broadband. When he outlined this plan last fall, Taft emphasized that high-speed telecom is not an option, but rather a necessity for Ohio’s businesses,and argued that Ohio’s telecommunications network should be given as much priority as the state’s transportation infrastructure. • A central component of this plan is the Ohio Broadband Link (OBL), a statewide program run by the Department of Development. Under OBL, Ohio businesses aggregate their purchasing power to obtain more affordable rates for high-speed telecom. In conjunction • with the state’s Small Business Development Center network, another initiative trains small businesses in how to use e-commerce, lower telecom costs and formulate a strategic technology plan. Source: New York’s Broadband Gap. December 2004

  38. Public Projects in Broadband Deployment Wireless in Boston • The task fore recommends that the City facilitate the introduction of a revolutionary carrier-neutral, open access, and wholesale-only business model to the wireless broadband value chain. As illustrated in the figure, the City should identify a nonprofit corporation to own and operate a metro transport and wireless first mile access network in manner consistent with the City of Boston’s goals. Source: Wireless un Boston. Wireless Task Force Report. July 31,2006

  39. The case of Cedar Falls, IA- Waterloo, IA The case of Cedar Falls, IA- Waterloo, IA • Cedar Falls was the smaller of the two, with a population of just 36,000, but it’s the one that chose fiber • Waterloo was nearly twice as large, with population of 68,000. After Cedar Falls installed fiber, new construction outpaced that of Waterloo and needed fewer taxes to fund that growth. Source: BIG BROADBAND: Public Infrastructure or Private

  40. Seattle Task Force on Telecommunications Innovation MAY-2005 • The City of Seattle must act now to encourage the development of a robust broadband network capable of fast, simultaneous, two-way delivery of advanced voice, data, and video services. • 2015: Broadband for All. As first steps, we recommend that the City: • Work actively with incumbent telecommunications providers and other private companies, • Continue developing the City’s own broadband network, both to support municipal functions and possibly to serve as an open public network, should that become necessary. The City should study the feasibility of alternative means to that end: providing its own network for public and commercial use; or partnering with private enterprise, perhaps through use of the City’s fiber network. • Incumbent cable and phone companies do not provide, and have not presented plans to develop, the high-speed network that Seattle will need in the future. • The City of Seattle has substantial broadband resources and capabilities, and could play a leadership role in the development of public broadband systems by encouraging private investment or using City assets in a public network.

  41. Seattle Seattle is told it must rewire SEATTLE POST-INTELLIGENCER REPORTER May 24, 2005 • For Seattle to remain competitive, it must develop an advanced broadband Internet network that is capable of delivering voice, video and data to businesses and homes. And it must do so quickly, rolling out the high-speed system within the next 10 years.

  42. San Francisco Most-wired city sought by Ammiano The San Francisco Examiner October 23, 2003 • Promoting "a menu of options instead of the cartel of Comcast," Supervisor Tom Ammiano this week called for study on whether The City should create its own network for broadband video, voice and data. • The proposed study could take up to a year and would examine all aspects of installing fiber optic lines in conjunction with the sewer work. • Ammiano said city-owned lines could mean low costs for businesses and residents, and more access for underserved neighborhoods. • "Competition is a good thing and if you already own a monopoly it's not a good thing," Jackman said.

  43. San Francisco S.F. Joins List of Cities in Race to Provide Low-Cost Internet and Data Services to First Responders and Residents San Francisco Gov. September 29, 2004 • Fees for cable-TV and internet access are going through the roof. Meanwhile, telecomms are making it difficult for independent Internet Service Providers to reach customers. • As we plan to dig up City streets for our planned sewer rebuild, we should investigate options for Municipal Broadband Infrastructure leased on a wholesale basis to a range of competitors. • Dozens of cities across the United States are already instituting community wireless networks connected to municipal cable. If this effort is successful, the people of San Francisco will pay five dollars a month, not fifty dollars a month for high-speed internet.

  44. San Francisco S.F. closer to being digital San Francisco Gov. March 9, 2005 • San Francisco Public Utilities Commission approved a study that will measure the feasibility of laying down a citywide broadband network. • Funding for the $300,000 project will now have to be approved by the Board of Supervisors' Finance Committee. Newsom, whose "vision" for The City includes "bridging the digital divide".

  45. II. Situació del Mercat Febrer 2007

  46. The broadband market in USA is influenced by three major groups of players: Broadband Market Cable companies Telecommunications companies Alternative competing carriers • At the end of 2004, 99 percent of USA population had access to high speed Internet. High-speed internet subscribers increased by over 17 percent in the second half of 2004. • In 2004, USA had around 21.4 million cable modems and only 13.8 million DSL lines although the growth in DSL lines was 21 percent as compared to the growth in cable, which had been 15 percent. • The incumbent local exchange carriers (ILECs) accounted for 62 percent of the high speed Internet lines delivered to the customers. . Source: http://www.point-topic.com/content/operatorsource/profiles/USA%20Broadband%20Overview.htm

  47. As Traditional Telecom Revenues Declined, Attention in U.S. Turned to Broadband U.S. broadband Is dominated by cable modem services Bell company DSL services lagged behind cable modem services due to unbundling regulations As cable companies now move into VoIP, Bell companies face further revenue losses The cable threat and recent regulatory changes have led the Bell companies to invest heavily in fiber optic distribution networks in order to offer video services Cellular Wireless (Verizon’s EVDO), Fixed Wireless (WiFi), and even Satellite loom as competitive threats The Bell “Break-Up”Is Now Dead Even with the UNE-P, the independent long distance companies (AT&T, MCI, Sprint) were declining at double-digit rates due to competition from wireless, email, instant messaging, etc. Bell companies have bought AT&T and MCI; Sprint’s long distance service is disappearing No one seriously challenged the mergers because the long distance market is disappearing rapidly due to “The Death of Distance” Re-integrated Bell Companies, freed from excessive unbundling regime by courts, are investing heavily in advanced video networks Market Situation Source: U.S Broadband After Ten years of Confusing (and Confused) Regulatory Police. May 2005

  48. Cable MSOs and telecommunications companies continue to consolidate and severely cutback capital spending. CLECs remain heavily reliant on incumbent LEC loops and transport, particularly high capacity facilities. While nationally CLECs have made substantial investments in network infrastructure ($56 billion through 2001), this has not translated into a large number of local loop facilities. Most CLEC fiber facilities are long haul, intercity facilities instead of loops to customer premises. The availability and ubiquity of loop facilities, including high capacity facilities, has not increased significantly since 1999. CLEC fiber only connects to about 3% to 5% of the nation’s commercial office buildings (about 30,000 buildings). Most of these buildings are carrier hotels, ISP POPs, and very large office buildings where there is demand for several DS-3s or OC-n circuits. Thus, service to these buildings is not an indication of the general availability of CLEC facilities, including high capacity facilities. Market Realities

  49. With respect to fibre-optic cable deployment, USA was not able to meet its plan of deploying fibre to over 12 million homes. By mid 2006, only four million FTTH homes were passed of which a mere 670,000 had become active subscribers. The numbers of unrealised fibre projects have left the country trailing far behind Asia. Asian countries have surpassed USA in the deployment of FTTH infrastructure in terms of both geographic penetration and bandwidth Fixed-line penetration of the country stood at around 62 percent of the overall population and a subscriber base of around 181 million at the end of March 2006. Since the cable business in USA had an early start and high technical support, cable operators have the biggest installed base of broadband users in USA. DSL services are mostly provided by the regional Bell operating companies i.e., ‘RBOCs’. Each RBOC is an incumbent operator (or ILEC, incumbent local exchange carrier) in its home regions of America. The main DSL operators in USA are AT&T, Bellsouth, Broadwing, Covad, DSL.Net, Mpower, New Edge Networks, Qwest, SBC, Sprint and Verizon while the major cable operators are AT&T Comcast, Adelphia, Cablevision, Charter, Coz and Time Warner cable. Broadband penetration in USA reached 56.29 percent of the households and 81.56 percent of the business users in February 2005 Broadband Market Source: http://www.point-topic.com/content/operatorsource/profiles/USA%20Broadband%20Overview.htm

  50. There are a number of factors that impair the ability of CLECs to self- rovision loops: high cost of deployment, and closing of capital markets. Many of the CLECs that fueled the late-1990’s fiber construction are now in financial distress, or have declared bankruptcy. Those CLECs that have survived are finding it harder to get financing to continue deployment of their networks. There are other hurdles such as right-of-way and building access issues. Often CLECs are forced to use incumbent LEC special access services, which are priced well above UNE rates; they also endure protracted provisioning delays for such facilities because they have no alternative. Incumbent LECs have no incentive to aid retail competitors who are viewed as competitors, and taking market share. Incumbent LECs have the incentive to leverage their legacy network facilities and legacy, high-margin services. Thus, without competitive pressure, they have reduced incentives to deploy lower cost, higher capacity services, particularly where those services would risk eroding the high revenues obtained from existing broadband customers. Market Realities

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