18800-392 guide to broadband investment presentation for ec open day 12 october 2011 andrew daly
TRANSCRIPT
18800-392
Guide to broadband investment
Presentation for EC open day
12 October 2011 • Andrew Daly
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Introduction to Analysys Mason
Aims of the guide to broadband investment
Stages of investment planning
Choice of investment model
Overall recommendations
Contents
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We have shaped landmark broadband policy and delivery initiatives
Unique mix of bespoke telecoms strategy consulting supported by leading-edge research
Independent and impartial
Over 230 staff in 12 offices
New Delhi opened recently
In business for over 25 years, advising clients in over 100 countries
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Digital Agenda for Europe ‘benefits of bandwidth’ study
UK fibre costing (defined Digital Britain’s “final third”)
National broadband plans in, Brunei, Ireland, Malta, Morocco, Singapore, Thailand and Wales
Business case for three applications for broadband stimulus funding in the USA
Numerous NGA regulatory projects (OPTA, Ofcom and others)
Introducing Analysys Mason Examples of our work
About Analysys Mason
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The guide provides best practice in planning a broadband investment Affordable, good quality and open ICT infrastructure for all will
support cohesion, innovation, and social, economic and political change
The guide details planning and procurement issues that must be considered for broadband infrastructure investment
Targeted at all Managing Authorities in the EU
Important resource for meeting DAE targets, especially for states with the facility to use funds from the 2007-2013 and 2014-2020 programmes
Essential for managing authorities to prioritise the long term socio-economic benefit of citizens over short term private financial gain
4Aims of the guide
Due for publication end of October
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The guide sets out seven key questions for planning a broadband investment
5Stages of investment planning
Why should I invest in broadband?
What type of network infrastructure should I invest in?
How should I invest?
How do I manage/monitor the outcome?
What can be done to ensure demand for services?
What can be done to reduce the cost and manage risks?
What are the next steps that need to be taken?
Contribute to hitting the DAE targets by using EU funds quickly and effectively
Include measures to reduce costs and manage risks
Understand the commercial case and your potential role on the demand side
Ensure successful delivery and operation, and provide evidence for audit
Understand the merits of each investment model and what might work best for you
Understand the costs and benefits of different kinds of infrastructure
Define project aims to tackle market failures and/or deliver socio-economic benefits
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Five investment models provide a broad spectrum of funding options
6Choice of investment model
5 models
Bottom-up
Privatedesign build and operate
Publicoutsourcing
Joint venture
Publicdesign build and operate
Group of end users oversee the contract to build and operate their own local network
Managing Authority
provides a grant to
private sector to assist in
deployment of new network
Single contract for construction and operation of network, but public sector retains ownership and some control
Ownership of the network is split between the public and private sector
Public sector owns and operates a network without any private sector assistance
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Model Advantages Disadvantages Recommended use
Bottom up • Long term, non-profit view
• Focuses demand
• Localised deployments
• Differing technologies
• Targeting localised areas• Leveraging small scale
funding
Private DBO • Larger scale• Low public burden
• Funding threshold• Limited control
• Sufficient funding to attract operators
• Effective transferral of risk
Public outsourcing
• Public financial stability with private expertise
• Greater control
• Reduced benefit to private sector
• Additional bureaucracy
• Requirement for on-going control
• More conservative operators
Joint Venture • Risk sharing • Potential conflicts of interest
• Public/private interests closely aligned
Public DBO • Public organisation has full control
• Size and scope limited by public expertise
• Requirement for absolute control
• Inspirational investment
Summary of pros and cons of investment models
Choice of investment model
Each investment model will be applicable in different situations
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The guide is illustrated with findings from operational projects
8Choice of investment model
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Overall recommendations are focused on delivering maximum benefit to end users Socio economic benefit must be managed alongside project
sustainability to deliver long term benefits
Long term control by public sector can protect end user benefit, however the private operators can bring invaluable expertise
Sustainability is critical as socio-economic benefits will take time
The bottom up model may suit small scale fibre projects
Long term non-profit view of end users suits the fibre business case, but this may be difficult to leverage on a large scale
Small investments can provide a catalyst through partnerships
Open and non-discriminatory access to infrastructure supports effective competition
However, the investment requirements for passive and active access must be carefully considered
9Overall recommendations
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The guide also covers funding, state aid and the steps to broadband delivery
10Overall recommendations
Preparationand planning
EU fundingapplication
Procurementdesign
State aidcompliance
Procurementactivity
Contract awardBroadband
delivery
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Contact details
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Andrew DalyLead Consultant
Analysys Mason LimitedBush House, North West WingAldwych, London WC2B 4PJ, UKTel: +44 (0)845 600 5244Fax: +44 (0)20 7395 9001www.analysysmason.comRegistered in England No. 5177472
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Bottom-up model
Overview of model
Group of end users oversee the contract to build and operate their own local network
12Investment model summary
Advantages
Long-term, non-profit view, suitable for high-cost infrastructure (e.g. FTTH)
Focuses demand and encourages local social cohesion
Disadvantages
Difficult to replicate local “intensity” on a large scale
Localised deployments, with risk of differing technologies
Recommended use
For targeting localised areas and for gaining the most benefit from small amounts of funding
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Private design build and operate model
Overview of model
Managing Authority provides a grant to private sector to assist in deployment of new network
13Investment model summary
Advantages
Larger scale (than bottom up)
Low public burden, which can lead to faster deployments
Disadvantages
There is a minimum funding threshold to attract private interest
Limited control over operations may reduce the socio-economic impact
Recommended use
Larger-scale
Where the level of funding attracts private interest
Where the network operations (and risk) can be transferred to private sector
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Public outsourcing model
Overview of model
Single contract for construction and operation of network but public sector retains ownership and some control
14Investment model summary
Advantages
Public financial stability with private expertise
Greater control (than private DBO)
Disadvantages
Reduced financial benefit to private sector (compared to private DBO)
Additional bureaucracy
Recommended useWhere Managing Authority requires a high level of control over the network Where private operator has a more conservative view of risk than the private DBO model
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Joint venture model
Overview of model
Ownership of the network is split between the public and private sector
15Investment model summary
AdvantagesPotential financial benefit for both partiesThe use of special-purpose vehicles can make the model very scalable, and allow alternative investment sources
Disadvantages
Potential conflicts of interest may block creation / successful operation of the JV
Few examples of implemented JVs to indicate best practice
Recommended use
Where the interests of the public and private sectors can be closely aligned
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Public design build and operate model
Overview of model
Public sector owns and operates a network without any private sector assistance
16Investment model summary
AdvantagesManaging Authority has full control to promote competition and enforce standardsManaging Authority can ensure socio-economic benefits are prioritised
Disadvantages
Size and scope limited by public expertise
Potentially excludes private sector expertise
Recommended useWhere a Managing Authority needs absolute control over network operations Where targeted investment will inspire investment from private sources