pere alemany - the municipal initiatives. an alternative to the no option access to nga

Ghent, October 24th 2011

Workshop on Municipal Fiber Networks

About our company

• Aggaros is an International consulting company that offers solutions of business, strategy and technology in the environment of the telecommunications and information systems.

• We apply our experience along all the life cycle of a project.

STRATEGY

PROJECT

CREATION

FEASIBILITY

PLAN

TENDER

MANAGEMENT

SOFTWARE SOLUTIONS

SUPPLY CONSTRUCTION

NETWORK AND

SERVICES

MANAGEMENT

PROJECT MANAGEMENT

REGULATION

We work with public administrations and stakeholders to define and implement the best strategy for the Optical Fiber network

development and management.

• Spanish people pays the most expensive access to the traditional BB in Europe area

LA VANGUARDIA - Tuesday 28th June 2011

The most expensive broadband on OCDE

3th May 2011

NRA will adopt measures to reduce the gap with other EU countries

“There are competitive offers in the market, but the Telefonica prices are higher that the Europe average. We need to regulate de wholesale prices as the key to improve the end customer market prices ”

BB access prices are 21% higher than the best offers average on the EU

Source: CMT June 2010, Comparativa Int. de ofertas Comerciales EU/España

Best offer in EU 2 to 10Mbps No one is the incumbent


Best incumbent offers in EU 2 to 10Mbps


• And regulation is not enough

The most significant measures

• Broadband wholesale access service up to 30Mbps. – Obligation to supply BB wholesale access services (up

to 30Mbps) to all new entrant operators.

– Transparency obligation on BB wholesale service supply.

– Open a public offer cost oriented.

– No discrimination obligation on BB wholesale service supply.

– Obligation to sent to the CMT (ANR) the BB wholesale offer quality parameters.

Regulation measures do not succeed on NGA development

Xarxa Oberta State Aid N407/2009 EU Resolution

• State Aid is the appropriate instrument

(97) Demand-side measures in favor of broadband could be an instrument of public intervention. However, these measures do not solve the illustrated problems on the supply side. As regards regulation, despite its crucial role in ensuring competition and supply in the market for electronic communications, evidence shows that in some areas of Catalonia regulation has not fully been able to ensure effective competition in some of the markets for electronic communications and has not led to sufficient investments to bridge the digital divide affecting certain areas. Regulation is, indeed, a necessary, but not a sufficient instrument for the development of broadband services …

• Regional and municipal initiatives

Different typology of public administrations initiatives.

• Public funds direct to operators

– Galicia

– Plan avanza

• Public operator creation – Asturias – Barcelona 22@ – Navarra

• PPP – Public Private Partnership – Extremadura – Xarxa Oberta – Consell Comarcal del Maresme

• PIP – Private Investor Principle – Viladecans

Municipal and regional initiatives

Source: FEDEA Observatory of NGN in Spain. August 2010

2

3 1. Asturcon - Asturias 2. Viladecans 3. Xarxa Oberta 4. 22@ 5. Cablex Extremadura 6. Miguelturra 7. Quintanadueñas 8. Ribaroja

Operational Networks

1. CC Maresme 2. Menorca

Projects

1 2 3

1

• Three cases: Asturias, Viladecans and Xarxa Oberta

• 1,1 M Inhabitants, 490 k homes.

• Services and Industry.

• Internet access penetration: 25,6%.

• Broadband Internet access: 55,6%.

• 12 Broadband lines per 100 inhabitants

• 3 Mobile Operators, covering >95% population

• 2 Main Wireline Operators: Telefónica and Telecable.

Asturias situation - 2004

Asturcon – Project Scope

Asturias Viladecans Xarxa Oberta

Geography Regional network Municipality Regional

Typology Public funds for rural areas

Private Investor Principle - PIP

State Aid – PPP

Technology FTTH FTTH Gb Ethernet

Municipalities 46 1 105

Investment 47,5 M€ 688.223.-€ 85 M€

Coverage 57.832 HP 2.535 HP -----

Customers 9.625 492 -----

Penetration 17% 19,4% -----

3 Services providers • Telecable: www.telecable.es:

• RF TV: Over 40 channels • Voice using POTS • High Speed internet: 4Mbps, 10Mbos and

20Mbps

• Adamo: www.adamo.es : • High Speed Internet: 20M/100Mbps and

100/100Mbps • VoIP

• Orange: www.orange.es

One unique portal for customers and ISP: http://www.gitpa.es/en/the-asturcon-network/suppliers-and-services.html .

http://www.telecable.es/





http://www.adamo.es/





http://www.orange.es/





http://www.gitpa.es/en/the-asturcon-network/suppliers-and-services.html










Asturcon - Project Economics 1

3,4

%

14

,8%

18

,6%

17

,0%

18

,2%

21

,4%

23

,8%

25

,9%

27

,8%

29

,3%

30

,6%

31

,8%

32

,5%

33

,2%

33

,8%

34

,2%

34

,5%

34

,7%

35

,0%

35

,0%

2

00

7

20

08

20

09

20

10

jul-1

1

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

Average subscriber penetration

Customers penetration over the total homes passed.

Number of homes passed increase in years 2010 and 2011.

Viladecans Situation – FTTH coverage

Three most significant initiatives





State Aid – PPP



Investment 47,5 M€ 688.223.-€ 85 M€

Coverage 57.832 HP 2.535 HP -----

Customers 9.625 492 -----


Viladecans - Project Scope

• The Viladecans local government develops the project under the Private Investor Principle, considering the following circumstances: - VIGIP, the public company that manages the municipality

projects, receives 688.221€ as main capital. - Fixes a 6,88% WACC required and a IRT minimum. - All funds supplied should be returned in similar period like a

private investor. - VIGIP will cover the peak financing in the capital market - VIGIP as infrastructure operator pays to the local government for

the use of municipal infrastructures (essentially ducts and right of way) the same price than other private operators.

- Multifiber architecture network

- Two ISP: Adamo and Orange - Adamo pays for capacity. (Model MN2) - Orange, rent dark fiber circuits. (Mode MN1)

Viladecans - Project Scope

Concept Value

Anual Consumer Index Price increase 2,8%

Taxes 18%

Receiving payment period 30

Payment period 30

Taxes over company profit 25,00%

Interest on available cash 1,50%

Bank credit interest 3,50%

WACC 6,88%

• The Business plan considers the following parameters.

Viladecans – 2011 situation

• After the first 6 months of operation, the results are better than the initial forecast on the following parameters

Forecast May 2012 Results Oct 2011

Penetration 16,5% 19,4%

Total customers 418 492

IRT 10,69% 12,17%

ANV 253.849 381.218

Mix of services 70% MN1 / 30% MN2 43% MN1 / 57% MN2

Operating cost 20% lower

Three most significant initiatives





State Aid – PPP



Investment 47,5 M€ 688.223.-€ 85 M€

Coverage 57.832 HP 2.535 HP -----

Customers 9.625 492 -----


Xarxa Oberta Catalunya – Spain

Autonomous community in the Northeast corner of Spain Wealthy Spanish jurisdiction Area: 32.106 km² Population: 7,3M of inhabitants 947 municipalities and 42 counties, Barcelona is the capital GDP (Gross domestic product) Y2010: 209.7273 M€ GDP per capita (Y2009): 26.831 € Companies: 619.678 (Y2010) Broadband Access: 21 subscribers per 100 inhabitants (Y2009)

The Generalitat is the institutional system around which Catalonia's self-government is politically organized.

Y2011 budget: 33.033M€

Around 6.000 offices

Around 180k public employees

GENERALITAT OF CATALUNYA (Catalan Regional Government)

Xarxa Oberta – Project Objectives

Build a PPP contract with private company for the development, construction and operation of a local and urban backbone wide band optical network, to:

• Connect to optical transport level of and layer 2 Ethernet, the Generalitat de Catalunya (Regional Government) 1.040 sites and,

• Take advantage of the excess of capacity of the Network to facilitate the connectivity for the wholesale market.

Specifically, the Project considers the following:

• Provide connectivity services to the public regional administration actual and futures sites in each municipality

• Have of a point of presence of optical fiber in the current and future municipalities.

Contract Signature

Service Start-up

Nov 2010 Jan 2011 Apr 2011

Service Operations

Operations Start-up

Project Start-up

Deployment Plan and main issues

• PPP 20 Years connectivity service contract.

• 5 Years deployment • 1.040 sites • 105 municipalities • 1.234 Km existing

infrastructure included in the contract

• 586 km network to be built • Total network: 2006 km • Total Contract Value:206M€ • 85 M€ Investment • Wholesale services on open

access scheme

Key questions on Xarxa Oberta project

• How will be the project executed? – Under a Public Private Partnership. Rent or Mortgage model.

• The state aid estimation. – The existing public infrastructures evaluated as State Aid.

• The European Commission evaluation – The Spanish administration presented de project to be evaluated by the

DGComp. Concluding that the project, even if it disturbs the competence is compatible with the TFEU.

• Only NGA – EC considers only the 4 main cities as black zones for NGN. 943 other

municipalities are considered grey and wite.

• Wholesale price services mechanism. – According to the N407/2009 EC resolution prices should be fixed according to the

competitive areas.

• What if, the wholesale market is higher than the expected initially?. Over-compensation mechanism. – The contract includes overcompensation mechanism

THANKS FOR YOUR CONSIDERATION

Contact: [email protected]