1. Construction and operation of NGA networks from
the perspective of non-telecommunications
companies
Dr. Igor Brusic
DiALOG 2011 Telekommunikation
Frankfurt, 9 June 2011

2. Contents
1 Introduction
2 Old and new business models
3 Non-telecom companies
4 Financing
5 Summary and outlook
2

3. Next Generation Access
Definition / Starting point  NGA = fibre access network (FTTH)
 Because a powerful infrastructure is the basis for the
Why? development of the information society ...
 ... and related to the development of the needs all other
technologies are only an interim solution ...
 ... so that every 2-3 years one has to deal with the same
subject once again, because there will always be „white
spots“.
Consequence  The expansion of fibre networks is a pure strategic
decision!
3

4. FTTH/FTTB EU Ranking 2010
Economies* with the highest market penetration of Fibre-to-the-Home/Building + LAN * At least
Lithuania 200.000
Sweden households
Norway
Slowenia
Slovakia
Denmark
Estonia
Bulgaria
(blue) Fibre-to-the-Home customers
Finland (grey) Fibre-to-the-Building customers
Netherlands
Latvia
Russia
Romania
Italy
France
** Economies with a
Portugal penetration of > 1%
Czech
Republic
0% 5% 10% 15% 20%
Percentage of households**
Source: FTTH Council Europe, June 2010
4

5. Broadband availability in Germany 2011
> 95 - 100 %
> 50 - 95 % > 95 - 100 %
> 10 - 50 % > 50 - 95 %
0 - 10 % > 10 - 50 %
0 - 10 %
nicht besiedelt
nicht besiedelt
0 10 20 30
Kilometer
0 10 20 30
Kilometer
Landline ≥1 Mbit/s Landline ≥50 Mbit/s
The map for „landline = fibre connection would
hardly contain green parts
Source: BMWI, Breitbandatlas auf www.zukunft-breitband.de, 2011
5

6. Challenges of the fibre network
" Existing networks are specialised for certain services
" Currently only a few services require symmetrical connections
" Currently users are satisfied with the bandwidth offered
" Fibre networks compete with existing networks for services which do not yet
exist
" … but are measured by existing services (requirements)
" To build a business model with services that do not yet exist is for the private
sector (almost) impossible
" „Regulatory uncertainty “ because fibre networks in the access area are a
natural monopoly
" … so that the focus is less on new business models in the old environment
but more on new business models in the new environment
6

7. „Market failure for FTTH?
 No mass market for FTTH (yet)
Demand in Germany  Innovators ( technology acceptance model)
 Companies such as planning offices, laboratories, etc.
The (non)-supply  Downward spiral: If rural areas are neglected ...
 ... businesses/ residents move to better supplied (urban)
areas…
 ... so that the rural areas become even less attractive for
investment!
 … and regions are decoupled in terms of competitiveness
 Whoever wants to demonstrate that fibre is not necessary
Discussion will find arguments.
 Whoever wants to demonstrate that fibre is necessary will
find arguments as well!
7

8. Contents
1 Introduction
2 Old and new business models
3 Non-telecom companies
4 Financing
5 Summary and outlook
8

9. Telecommunications networks
 Service development
Services  Developers do not have to invest in passive or active
infrastructure
 Very short cycles (< 1 year)
 10-15% of total costs
 Active network infrastructure
Operation  Router, switches and other active components
 OSS / BSS
 Lifespan of equipment between 3 and 5 years
 10-15% of total costs
 Passive network infrastructure
Infrastructure  Cable channels, pipes, cables, cabinets and buildings
 Diggings and rights of way
 Lifespan more than 20 years
 70-80% of total costs
9

10. Business models
Diversity of Services Diversity of Use Indirect profitability
€
€ € € € €
€
Passive Infrastructure
Vertically
integrated Open
business model Access
10

11. Vertically integrated business model
Diversity of Services
€
Passive Infrastructure
Vertically
integrated
business model
 Strong focus today
 Cooperation with Google, Amazon, Ebay etc. ?
 IMS (IP Multimedia Subsystem)
 QoS (Quality of Service) / Net neutrality
11

12. Open Access
Diversity of Use
€ € €
Passive Infrastructure
Open
Access
 Open Access and Revenue Sharing: ISP, Smart Meetering, e-Health, TV, Security-
Services, etc.
 Infrastructure owners without retail offers (= they do not compete with service providers!)
 The fewer obstacles on the part of infrastructure owners, the more rapid the
development
 But – chicken-egg problem!
12

13. Profitability
Indirect profitability
€
€
€
Passive Infrastructure
 Economic location factor
 Competitive advantages
 Creation of new jobs
 Stops the migration of the population
 Attractive location for private customers (new development areas)
 Attracts investors
13

14. Contents
1 Introduction
2 Old and new business models
3 Non-telecom companies
4 Financing
5 Summary and outlook
14

15. Energy suppliers
 Experience in construction and operation of electricity-, gas-,
Affinity for physical and water-networks
infrastructure
 Often supply of telecommunication services for internal
purposes
 Increasing role of the convergence of utility networks and
services with telecommunications applications (Smart Grids)
Affinity for the business  Long-term investments
model  Possible focus on „network area
 Direct access to all potential customers
 Possibility for combining the supply of various
infrastructures/services
 Telecom/Broadband as „supply concept
But – also new  Dynamic retail market
challenges!
 Increasingly service-oriented end-users
 Technology competition (cable, mobile, telecom)
 Cooperation strategy as an option
15

16. Local Governments
1. Value proposition 2. Value chain structure 3. Revenue model
 What are the benefits of  What benefits are offered in  How is money earned?
FTTH for the community ? which markets? How and in
which configuration will the  Direct revenue through rental
 The supply of broadband performance be created of lines (Dark Fibre)
infrastructure as an essential (product-/market-strategies)?
 Connection fees of
factor for the economic and subscribers
social community  Passive infrastructure is
development  Revenue-sharing models
offered to all network with service providers
 Prevents the migration of operators with the same
companies and favours the conditions  Indirect revenues (stable
return of young people after value of properties, reduction
 Non-discriminatory access to of migration, business
their training or study the subscriber for all service settlements)
 Prevents the decay of prices providers
of real estate and  CO2-emission trading (low
 Every subscriber can use power consumption,
construction areas services of any provider in teleworking, micro-trenching)
 Is an advantage over any combination
communities without fibre
16

17. Contents
1 Introduction
2 Old and new business models
3 Non-telecom companies
4 Financing
5 Summary and outlook
17

18. FTTH Financing
 Examples: Australia, Singapore, Qatar
Public Funding  EU: Funding must be notified
 Conditions
 Example: CityNet Amsterdam
Public-Private Partnership  Sharing of risks
 Improvement of planning, marketing and business model for
fibre-optic networks
 Example: CIF
Infrastructure Fund
 Infrastructure and pension funds that view FTTH as long-
term investment with secure return options
 Example: Burlington (USA), Blons (Österreich)
Self-Financing  Bond of the local government
 Association fees
18

19. Contents
1 Introduction
2 Old and new business models
3 Non-telecom companies
4 Financing
5 Summary and outlook
19

20. Summary and outlook
 Expansion is left to the market economy
FTTH in Germany  Currently broadband requirements can be met with
conventional networks
 Broadband connection as the primary requirement for the
General selection of location
 Increasing broadband demand/ symmetric bandwidth
requirement
 Simultaneous use – school, education, entertainment,
telework, e-government, shopping, communications,
information
 Different business models depending on the documented
Outlook
value-added step and financing
 No ready solutions – individual projects
 Large consulting potential
 SBR with expertise in business, law and technology
20

21. Epilog
„Arthur C. Clarke knows exactly, which phases new ideas pass through.
First, it is: "It can't be done.
Later on: "It probably can be done, but it's not worth
doing.
And finally the initial doubters mean
"I knew it was a good idea all along!"
Source: http://www.spiegel.de/wissenschaft/weltall/0,1518,381747,00.html
21

22. Contact
SBR Juconomy Consulting AG
Nordstraße 116 Parkring 10/1/10
40477 Düsseldorf 1010 Wien
Germany Austria
Tel: + 49 211 68 78 88 0 Tel: + 43 1 513 514 0 15
Fax: + 43 1 513 514 0 95
Fax: + 49 211 68 78 88 33 URL: www.sbr-net.com
URL: www.sbr-net.com
E-mail: brusic@sbr-net.com
22

23. INDUSTRY FOCUS
Both firms, SBR Juconomy Consulting AG and SBR Schuster Berger Bahr Ahrens
Attorneys-at-Law, specialise in questions of commercial and regulatory law
They are clearly focused on the ICT and network industries
In these segments, we address the following issues in particular:
- Mobile radio | Fixed network | Internet
- Regulation
- Market analyses
- Comparative market studies
- Cost accounting
- Network access | Interconnection
- Project development & management
- Frequency management
- Fibre optic upgrades | FTTx
- Strategy
- Business Planning

24. EXPERTISE
SBR Juconomy Consulting AG
Business Technology Law & Regulation
 Market analyses  Carrier Management  Regulation
 Feasibility studies  Network access  Telecommunications
 Cost accounting  Interconnection  Broadcasting
 Cost models  Collocation  Post, energy, railways
 Studies | Expert opinions  Business plans based on  Wholesale | retail regulation
 Benchmarks technical operating perspective  IT | telemedia law
 Business planning  Coordination and selection of  Internet | multimedia | data
 Price strategies | negotiations network equipment providers protection law
 Network planning  Competition law
 Quantitative | qualitative
analyses  Frequency planning  Commercial law
 Outsourcing  Numbering plans  Company law
 Regulatory policy | Lobbying  Project management  Contract law
 Corporate strategy  Fibre optic networks  Administrative law
 Business Cases  Next-generation networks  Outsourcing
 Intelligent networks  Contract management
 IMS  (International) arbitration
proceedings
 Tender/Procurement processes

25. FIELDS OF ACTIVITY
SBR Juconomy Consulting AG provides comprehensive advice to:
- Companies
- Regulatory authorities
- Institutions
- Ministries
- Regional and local authorities
Among the clients of SBR Juconomy Consulting AG are:
- PICOM | Ministre des Télécommunications, des Postes et de la Communication (Madagascar)
- TRA | Telecommunications Regulatory Authority (Bahrain)
- TRA | Telecommunications Regulatory Authority (Oman)
- ATRA | Afghanistan Telecom Regulatory Authority (Afghanistan)
- CITC | Communications and Information Technology Commission (Saudi Arabia)
- Minpostel (Ministry for Post and Telecommunications, Cameroon)
- Orange
- 1&1 Internet AG
- Telecom Italia
- RomTelecom
- Ghana Telecom
- QSC
- Cell One
- INT | Instance Nationale des Télécommunications (Tunisia)
- TRA | Telecommunications Regulatory Authority (United Arab Emirates)
- Kabel Baden-Württemberg
- Associations in the German and Austrian market (BREKO, VATM, VAT ISPA)
- RTR GmbH (Austria)
- International Telecommunications Union (ITU)
- Swisscom
- Utilities in Germany and Austria (TeleMark GmbH, TeleData Friedrichshafen, Wienstrom)
- ORS (Österreichische Rundfunkservice GmbH)
- 1&1 Internet AG
- HAKOM (Regulatory Authority of Croatia)
- Tele2 Telecommunications GmbH

26. FIELDS OF ACTIVITY – Companies
SBR Juconomy Consulting AG advises telecommunications companies operating in the fixed
network, mobile and Internet sectors. Our consulting activities encompass:
Regulation: We represent companies in matters concerning regulatory authorities, including in
regulatory proceedings, especially concerning charges and interconnection.
We provide support by way of expert opinions, position papers and comments in the context of
interconnection, market definition and market analysis procedures
Benchmarks: We produce national and international comparative analyses concerning a variety of
issues, including interconnection charges, collocation, unbundling, value-added services etc.
Market analyses: On behalf of our clients, we examine both international telecommunications
markets in general, and product and service markets in particular, while providing support with market
analyses concerning significant market power (SMP)
Cost accounting and cost modelling: We develop cost models, conduct cost assessments and
perform monetary business evaluations of strategic options
Network access and interconnection: We assist companies with interconnection negotiations,
collocation and the joint use of technical equipment
Network upgrades: We assist companies with the technical and economic planning of network
upgrades, in particular for fibre optic and next-generation network / access (FTTx)
Strategy and Business planning: SBR develops business plans and draws up business strategies
with respect to the deployment and rollout of networks and the provision of services, specifically in the
area of next generation access.

27. FIELDS OF ACTIVITY – Public authorities
SBR Juconomy Consulting AG advises regulatory authorities, institutions and ministries on all
issues concerning regulatory processes, tenders, and procedural arrangements and implementation,
and on aspects of telecommunications law and regulatory policy
Regulation and regulatory policy: We advise on the development and formulation of regulatory
directives and ordinances (e.g. on roaming, access, rights of way, joint use) and of regulatory
proceedings, including their implementation and execution
Organisation: We offer advice on public authorities' structural and procedural organisation
Training: We offer extensive training on all aspects of regulation
Standard offers: We give advice on the conception and creation of standard offers (interconnection,
leased lines, collocation and joint use, submarine cable landing stations, wiring conduits, data
products etc.)
Network access and interconnection: In this context, we provide support with implementing the
requirements arising from standard offers and with the development and design of processes for
offering access products (final mile, collocation, access to wiring conduits and cable ducts) in the
upstream segment
Cost accounting and cost modelling: We develop cost models, conduct cost assessments and
implement cost accounting regimes
Frequency policy & management: We offer advice concerning frequency policy and management
arrangements and on the allocation of spectrums

28. FIELDS OF ACTIVITY – Regional and local authorities
SBR Juconomy Consulting AG advises regional, district and local authorities on the
following issues, among others:
Broadband expansion: We support communities who are without or have only inadequate
broadband access at present
Support options: In connection with the expansion of broadband, we indicate the opportunities
available for financing, support and cooperation
Network planning and upgrades: We offer technology-neutral solutions for building future-
proof and sustainable network infrastructure
Cost accounting and cost modelling: We develop cost models, conduct cost assessments
and perform monetary business evaluations of strategic options
Lobbying: We use our contacts in business, companies, institutions and politics in our clients'
interests