Amsterdam and FttH

real broadband, real sustainable growth

San Francisco, February 20, 2008Dirk van der WoudeCity of Amsterdam

dirkvanderwoude@gmail.com

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Lesson from the past: each industrial revolution is underpinned by new infrastructure

1875

1971

1829

1771

1908

THE AGE OF INFORMATION TECHNOLOGY

THE AGE OF OIL, THE AUTOMOBILE,PETROCHEMICALS

AND MASS PRODUCTION

THE AGE OF STEEL ELECTRICITY AND HEAVY ENGINEERING

THE AGE OF RAILWAYS, COAL AND THE STEAM ENGINE

THE “INDUSTRIAL REVOLUTION” IN ENGLAND

GLOBAL DIGITAL TELE- COMMUNICATIONS AND

ICT SUPPORT NETWORKS

ELECTRICITY, TELEPHONE, HIGHWAYS AND AIRWAYS

TRANSCONTINENTAL COMMUNICATIONS, STEAMSHIPS,

RAILWAYS AND TELEGRAPH

CANALS, TURNPIKE ROADS AND MAIL COACHES

RAILWAYS, PENNY POST AND TELEGRAPH

Source: Carlota Pérez

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Nothing new (1)Left: the highway project of HaFraBae.V. (1926)

Public access highways –or open networks- were a wise German invention(and by inspiring Mr Eisenhower lead to the US Interstate Highway System)

However, to build them overstretchedmarket vision and ability, in Germany, Holland as well as the USA

http://members.a1.net/wabweb/history/hafraba.htm

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A city and its assets

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4th in Europe – related to 40,000 jobs start: around 1250 AD

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4th in Europe – related to 100,000 jobs start: 1920 AD

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1st in the world – related to 50,000 jobs start: 1997 AD

Source: Henk Steenman, 2007

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Global hub…

Online: 85% of all Amsterdam pop.

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So Amsterdam counts three harbors…

arts media and entertainment creative business servicescontent hardware telecommunicationfinancial software consultancyOther

And the latest one strenghens the city’s attractiveness for innovative companies in telecom, creative media, Web & ICT

Now related to about 50,000 jobs– We wouldn’t mind more…

And we will try to capitalize even more withreal symm and open broadband

As well a base for sustainable growth

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Two curves

Source: Nemertes, Nov. 2007

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Conclusions Nemertes study (Nov. 2007)

The Internet Singularity, Delayed:

Backbones, switching & peering will not be the problemDemand for Internet and IP services grows exponentially, access investment proceeds linearly

– “we believe that this will happen possibly as early as 2010”

Impact of inadequate access infrastructure: – relatively mild for individual users, who will encounter Internet “brownouts”

or “snow days”– But overall, (…) this inadequate infrastructure will slow down the pace of

both technical and business innovation.

“Rather like osteoporosis, the underinvestment in infrastructure will painlessly and invisibly leach competitiveness out of the economy”

And there’s that IPv4 thingie too…

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Trouble is at the 1st mile – what to do? “given time an exponential curve always will cross a linear one”

Source: Nemertes, Nov. 2007

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 736

 722

1 603

58 591

1 840

8 619

8 993

77 120

Wireless

Cable

DSL

FTTx

Down

Up

OECD: Average advertised broadband speeds, by technology, Oct 2007

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1st mile in Japan: 280,000 new FttH… per month

Japan: FttH overtaking xDSL1999-2007 plus prognosis 2008

0

2.000

4.000

6.000

8.000

10.000

12.000

14.000

1999

.0320

00.03

2001

.0320

02.03

2003

.0320

04.03

2005

.0320

05.12

2006.0

320

06.06

2006

.0920

06.12

2007

.0320

07.06

2007

.0920

07.12

2008

.0320

08.06

2008

.09200

8.12

thou

sand

s

CablexDSLFttH

PrognosisFactual

March, 2008

10 million FttHJuly 4, 2007

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Muni fiber in Europe, some examplesKöln

NetCologne200,000 FttH/B

Vienna1 million

FttH(via sewer)

München450,000 homesFttH

Paris,4 SP’s

towards1 million

FttH

Hauts-de-Seine

(Sarko- fiber)FttH

Milan(1995)

FttB

Stock- holm

Dark fiber

Amsterdam

40,000 FttH

Role of city

(estimate)

Municipal invest- ment euro

125 million 150 million 300 million?

70 millionBy cheap use of municipal assets

Up to 70 million subsidy proposed.

100 million, now partly privatized

100 million, 10 years profit making

6 million in PPP construct

Network open?

No 3d layer 3d layer ? Neutral operator

No Yes Yes

PublicMarket

Support

Subsidy

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Amsterdam want FttH, point to point 40,000 meter boxes, 10% of Amsterdam

Why?– Data infrastructure is new essential foundation– Necessary for future competitiveness as well as

sustainable economic and social growth

Take advantage of existing assets– Ams-IX– world class back bone infrastructure (we only

need last few 100 meters)– strong media, ICT, new media sectors – high internet use (> 85% of population)– Internationally oriented multi-language population

Boroughs of Zeeburg (100%), Oost (part)

& Osdorp (part)

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Set up & revenue streams 40,000 adresses now – later 450,000

Passive infrastructure: GNA CV

33% municipal shares20% municipal euro’s

Wholesale operator sells open access

100% market

Service providers100% market

consumer/SME

Rent

Rent

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This gets into every meter boxTelephone (x 2)CoaxAll existing appliancesusable – plug & playNo set top boxes!

V-lan (x 4)- One port per service- Separate specifications- f.e. care, security, etc.

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What’s on offerOne high quality standard

– Henry Ford black Ford T, ‘redux’

Consumer– Several competing service providers– Single, double or triple play– Internet, symmetric, 10 to 100 Mb/s

– 9,95 euro single play telephone– 35 to 65 euro triple play incl. 20 to

30 Mb/s symmetric internet– 100 Mb/s internet single play: 99

euro– Competitive in price and quality– First connected customer: april 2007

SME– Varying offers by several competing

SP’s

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Ubiquitous broadband & Green IT

Wired vs. Wireless? No, they ‘re in love: “A wireless bit is a bit desperately in search of a wire” Ben Verwaayen, CEO BT

Cheap high bandwidth lowers one of wireless’ barriers: cheap backhaulOr: ubiquitous broadband

Green opportunities:– Smart traveling: PTA…– Physical travel more and more substituted by virtual travel– Green low energy personal IT: PC As a Service, Saas 2.0

Connecting & intelligizing can save lots of energy:

– waste chain– street lighting– consumer goods distribution– …

Image: thank you, Nico Baken

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A forward looking view…

An informed analysis:

Computing to follow pattern of energy– From local supply to ubiquitous utility

Computing from a wall socket – And wireless as well?

Large energy savings– Have professionals in charge of resources

– Works better than overbooking…

Strong need for regulation though!

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Nothing new (2)

La Fibre?

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No, 18th century WiFi…

1792Lille => Paris:• 15 stations• 36 characters in 32 minutes• all records broken, huge success

•And up to 1846 cause for the French to resist investing into a copper telegraphe network

•L’ histoire se répète…

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Image: thank you, Nico Baken

We and ‘Our’ Networks…

Questions?

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Alternative? Docsis 3.0

<= promise: “120 Mb/s over coax…”

…real world: shared bandwidth =>

(Xiamen, Jan. 2007)

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Alternative? VDSL2

http://www.lightreading.com/document.asp?doc_id=93103&page_number=4

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Source: OECD Broadband Statistics and others

Countries With Relative High Broadband

Penetration But Low Upload DSL Speed

DSL, average upload speed

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First mile today: % of services with down speeds <1Mbps or ≥5Mbps

Source: OECD Broadband Statistics and others

0% 10% 20% 30% 40% 50% 60%

> 5Mbps

Countries Where Majority is Below 1Mbps

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FttH first mile in Europe just a pick (2)

Vienna, Zürich (muni energy corp’s): FttH in whole city– Vienna, Sept. 24, 2007: start of roll out to 50,000 homes

Scandinavia– Norway: municipal energy corp of Oslo: Open FttH to 50% of whole

Norwegian population– Sweden: 200 of 289 communities own a fiber network– Denmark: energy corps, in 2006 – 2010 FttH to 50% of Danish population

Slovenia: incumbent– 85% of all households in country, 450 million euro (25% soft loan by

EU)

Latvia: incumbent, 50 K FttH

Andorra (!): incumbent, copper switch off in 2009/10

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FttH first mile in Europe just a pick (1)

The battle for France, starting with Paris– Iliad, Neuf Cegetel, France Telecom, Noos Numericable– Massive investments– Consumer price of 100 Mbit symmetric: 30 euro– Hauts-de-Seine: FttH in whole department (pop. 1.5 million, 100.000

SME’s, subsidy 50 to 70 million) Chairman & proponent: M Sarkozy– over 100 broadband projects France with government participation– Policy French government: 4 to ? million FttH in 2012

Germany: competitive telco’s deploying FttH– NetCologne: all of Cologne, to be followed by Bonn, Aachen?

(NetCologne = 100% GEW Köln AG = 100% City of Cologne)– Hamburg, Telecom Italia: 100,000 FttH in 2012– München, muni energy corp: > 60% of city FttH– Other projects in Schwerte, Norderstedt, Hamburg, Gelsenkirchen,

Dessau, Magdeburg

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Sharing of the last part of the local loop should be considered

option 1 option 2 option 3 option 4

Competition between 2 fiber networks Co investment Unbundling bitstream

Source: Mme Gabrielle Gauthey,ARCEP (14 Nov. 2007)

NB: ‘NRO’ is Noeud de Raccordement Optique – or Node

French questions, Amsterdam answers

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A business perspective

Layer Economic character Life cycle Cost per sub

ServiceLayer

Low CapEx, average to high OpEx 1 to x years ?

ActiveLayer

Average CapEx, low OpEx 5 to 10 years 300 – 500

PassiveLayer

High CapEx, very (very!) low OpEx 25 to 50 years 500 - 700

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Architecturethree-layer model

• Passive fibre infrastructure: Point-to-Point• Unbundled local loop of fiber = maximum competition at services

level in value chain• Largest capacity for future growth

• Active layer: Active Ethernet • Applications services layer, Service providers are being offered

transparent access:• with discrete virtual LANs (VLANs) for each service on a per user

basis• allowing multiple services to be delivered and invoiced to each

home in parallel (i.e. multiple ISP’s, Citywide Intranet, closed circuit IP-based surveillance, IP-TV, care and medical services etc.)

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FttH & broadband strategy of Amsterdam

Create a market entity (GNA) that rolls out fiber– With a minimal financial government participation– On equal market terms– No involvement in active network, services or pricing– In accordance with EU state aid rules

Open network, universal roll out– Start with first 10% of city, to be followed by rest of city

Roll out creates intricate network– Cheapily accessible– Ideal conditions for wireless networks as well

Final aim: ubiquitous broadband in all of AmsterdamSelective stimulation of services

– Using ideal living lab for innovative services

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Fast broadband & economic growth

Source: September 2007 The New Zealand Institute - www.nzinstitute.org

Estimated impact on GDP - Compound Annual Growth Rate in %(2007-2015)

0 0,2 0,4 0,6 0,8 1 1,2 1,4

Korea - Ministry of Info. and Comms ( ETRI,KSDNI, KT, SK Telecom, and LG Telecom)

Victoria - ACIL Tasman

USA - Momentum Group & Brookings Institution

NZ - Economist Intelligence Unit

NZ - NZ Institute**

Queensland - Allen Consulting

UK - BSG

Australia - Broadband Advisory Group

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Killer app?