3 qitcom 2012 - patrick kidney (next gen broadband)
DESCRIPTION
Guide to broadband investmentTRANSCRIPT
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Guide to broadband investment
Presentation for QITCOM 2012
5th March 2011 • Pat Kidney
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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
RefNo | Commercial in confidence
Analysys Mason has considerable global experience in undertaking and assessing national broadband plans
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Ireland 2006-12: Design, procurement and implementation support for the EUR 234m National Broadband Scheme
UK 2001 onwards: Broadband planning for regional development agencies on the UK
UK 2005-2006: Development of broadband scenarios for the BSG in the UK
UK 2008 onwards: support to Cornwall council in its Next Generation Broadband project
UK 2008: Broadband stakeholder group models for efficient public sector interventions in next generation broadband
Wales 2004 -2010: Commercial and technical strategy, business planning, procurement and implementation support as part of National fibre broadband initiative
Malta 2011: Techno-economic feasibility of a national FTTH network
Wales 2006: Study to promote public intervention in “second generation broadband” market
UK 2010 onwards: Cost modelling of next-generation broadband and regional funding allocations
Italy 2001-2002: Analysis of government intervention mechanisms and prioritisation for broadband task force
US 2002-2003 : Study of US broadband policy for TechNet
India 2010: Strategic road- mapping and assessment of drivers for the deployment of a national fibre- optic backbone in India
Chile 2007-2009: Broadband promotion study in Chile
Malaysia 2002-2003: National broadband policy development
Gulf 2010: Regulatory support in major Gulf country to define three- year internet development planNew Zealand 2010 - 2011: Technical and cost reviews underpinning the Government’s national Ultra-Fast and Rural Broadband strategies
Australasia 2010- 2011: Operator support to become national partner for ultra- fast broadband solution. Subsequently carried out review of solution and identification of global best practice
European Commission 2010-2011: Developed a guide for investment in broadband infrastructure, covering small regional roll outs and national interventions alike
Norway 2002: Assessed the potential social and economic benefits from a scheme to provide broadband to selected public sector sites
Singapore 2005-2006: Provided support on Next Generation Broadband Network Initiative
Western Europe 2004: Analysis of Internet access prices in Western Europe
Thailand 2009: Development of national broadband plan
Brunei 2009-2010: Development of national broadband strategy
Lesotho 2012: Development of national broadband plan
EMEA 2011: National broadband market assessment, benchmarks and forecasts
Australia 2009: STEM license, training and modelling assistance for National Broadband project
Israel 2011: Technical audit of national broadband solution used to evidence international competitiveness and sufficient investment capability to the Government Egypt 2008: Provided
commercial and technical fixed licence bid support addressing i.a. national broadband requirements.
Libya 2009: Provided commercial and technical fixed and wireless licence bid support addressing i.a. national broadband requirements.
EU 2011 onwards: Socio-economic benefits of broadband in 27 EU countries and private sector funding analysis
Morocco 2011: National action plan for the development of broadband
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The guide provides best practice in planning a broadband investmentAffordable, good quality and open ICT
infrastructure for all will support cohesion, innovation, and social, economic and political change
details planning and procurement issues that must be considered for broadband infrastructure investment
Important resource for meeting broadband targets
Essential for managing authorities to prioritise the long term socio-economic benefit of citizens over short term private financial gain
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The guide sets out seven key questions for planning a broadband investment
Stages 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 what and why?
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Five investment models provide a broad spectrum of funding options
Choice 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
Choice 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
Overall recommendations
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The guide also covers funding, state aid and the steps to broadband delivery
Overall recommendations
Preparationand
planning
EU fundingapplication
Procurementdesign
State aidcompliance
Procurementactivity
Contract award
Broadbanddelivery
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Contact details
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Pat KidneySenior Manager, Head of Ireland
Analysys Mason LimitedSuite 242, The Capel BuildingMary's AbbeyDublin 7, Ireland
Tel: +353 1 602 4755Fax: +353 1 602 4777www.analysysmason.com
Registered in Ireland IR304061
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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
Investment 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
Investment 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
Investment 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 use
Where 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
Investment model summary
Advantages
Potential financial benefit for both parties
The 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
Investment model summary
Advantages
Managing Authority has full control to promote competition and enforce standards
Managing Authority can ensure socio-economic benefits are prioritised
Disadvantages
Size and scope limited by public expertise
Potentially excludes private sector expertise
Recommended use
Where a Managing Authority needs absolute control over network operations
Where targeted investment will inspire investment from private sources