8/14/2019 I Just Got a New Report Analyzing Deployment Costs for Three Different Types of Fibre

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I just got a new report analyzing deployment costs for three differenttypes of fibre-based infrastructure and technology that can be used todeliver the next generation of broadband services in the UK.

Extremely interesting. The report analyses the results of a cost model

that is based on a transparent approach that has been agreed by themembers of the BSG Executive. For each technology option, we haveexplored a base case scenario, and also a number of possiblevariations from that scenario, including different assumptions for therate of take-up of services and access to existing infrastructure.

In the base case, only existing BT infrastructure is assumed to beavailable for re-use. We have also quantified the potential cost savingsthat could be realised if the duct networks owned by Virgin Media andutilities (e.g. sewers) were available for re-use for next-generationbroadband infrastructure.

While it is possible to estimate the deployment costs with relativeconfidence, the lack of data on the operating costs of next-generationnetworks means that the operating costs are more difficult to quantify.For this reason we have only provided an indicative illustration of thepotential operational cost savings. The revenue potential of next-generation broadband services has not been quantified as it is subjectto much greater uncertainty, and is outside the scope of this work.

 The objective of this report is to provide a key quantitative input intothe independent review of next-generation broadband infrastructure

and services. The report is therefore intended to be used to inform thedebate surrounding various next-generation broadband issues.

 The cost model considers three different technological options for theprovision of next-generation broadband services:

FTTC/VDSL Fibre to the cabinet (FTTC) using very high bit-rate digitalsubscriber line (VDSL) involves laying fibre-optic cables to streetcabinets. Such cabinets are typically within a few hundred metres of the customer premises. Active equipment is then deployed in thestreet cabinet that connects to the customer premises using existing

copper cables. Depending upon the lengthof the final copper line, download speeds of 30-100Mbit/s can beexpected.

FTTH/GPON Fibre to the home (FTTH) using a Gigabit passive opticalnetwork (GPON) involves laying fibre-optic cables directly to thecustomer premises. Each fibre is theoretically capable of providing upto 2.5Gbit/s of download bandwidth to the customer premises.

8/14/2019 I Just Got a New Report Analyzing Deployment Costs for Three Different Types of Fibre

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However, this bandwidth is typically

FTTH/PTP Fibre to the home can also be deployed using point-to-point(PTP) fibre connections. By using this technology each customerpremises has a dedicated fibre that using current technology is capable

of supporting symmetric connections of up to 1Gbit/s. The first two of these technologies (FTTC/VDSL and FTTH/GPON) formthe basis of the recently announced next-generation broadbanddeployment from BT9, which is likely to be heavily weighted towardsFTTC/VDSL deployments.

FTTH has been considered in two distinct variations with differentcharacteristics: FTTH/PTP offers greater service flexibility thanFTTH/GPON and is more suitable for infrastructure-based competition,but deployment costs are higher.

 The main conclusions of this work has shown that the costs of deploying FTTH are of the order of five times the costs of deployingFTTC, and that the costs of deploying FTTH/PTP are around 15% higherthan for FTTH/GPON.

In a market where the business case for any of the technologies is notclear cut, and the availability of funds for investment is uncertain,FTTC/VDSL is likely to be the main technology in the medium term. Thisis consistent with the strategy announced by BT on 15 July 2008.For each of the three technologies, the deployment costs remainrelatively constant across all urban areas. For FTTC, the urban AFTTC

areas cover 58% of the population, and in the case of FTTH/GPON and FTTH/PTP the urban AFTTH areas cover 68% of thepopulation. The relativelyconstant costs for a large proportion of the population suggest that if the business case is attractive for one of the technologies it may wellbe attractive for all of the urban AFTTC/ AFTTH areas.

A number of sensitivities have been considered in the modelling work,some of which have a very large impact upon the costs. However, webelieve that the base case represents a reasonable view of the costs of deploying the three different technologies; the sensitivity tests provide

guidance on the magnitude of potential cost savings that could beachieved.

Case you are interested in additional info, just let me know.

Best

CVA