eu digital agenda for slovenia - ltfeeu digital agenda for slovenia optimal model for dae broadband...

© 2013 TELEKOM SLOVENIJE GROUP

EU DIGITAL AGENDA FOR SLOVENIA

Optimal model for DAE broadband

targets fulfillment in rural areas of Slovenia

Vitel, 27th Maj 2013

Matjaž Pogačnik, MBA

Telekom Slovenije



SHORT FACTS ABOUT SLOVENIA

• Area: 20.273 km²

• Population: 2.050.189

• Settlements: 6.030

• Cities over 10.000: 16 (2 over 50.000)

• No. of households: 813.531

• BB fix access: 69% HH *

* Source: APEK



TELEKOM SLOVENIJE GROUPTelekom Slovenije, d.d.

M-Pay, d.o.o. 50 %M-Pay, d.o.o. 50 %

GVO, d.o.o. 100 %GVO, d.o.o. 100 %

AVTENTA.SI, d.o.o 100 %AVTENTA.SI, d.o.o 100 %

TSmedia, d.o.o. 100 %TSmedia, d.o.o. 100 %

POGODAK TRAŽILICA d.o.o. u likvidaciji (Hrvaška) 100 %

POGODAK DOO BEOGRAD – u likvidaciji (Srbija) 100 %

IPKO Telecommunications d.o.o. (Kosovo) 93,11 %IPKO Telecommunications d.o.o. (Kosovo) 93,11 %

Ipko Net Albania, d.o.o. 100 %

Media Works, d.o.o. 100 %

DSN, d.o.o. 50 %

ANEKS d.o.o. Banja Luka (BiH, Republika Srpska) 70 %ANEKS d.o.o. Banja Luka (BiH, Republika Srpska) 70 %

Gibtelecom Limited (Gibraltar) 50 %Gibtelecom Limited (Gibraltar) 50 %

SIOL d.o.o. (Hrvaška) 100 %SIOL d.o.o. (Hrvaška) 100 %

SIOL B.V. in liquidation (Nizozemska) 100 %SIOL B.V. in liquidation (Nizozemska) 100 %

ONE DOO Skopje (Makedonija) 46,01 %

PRIMO Communications d.o.o. (Albanija) 75 %PRIMO Communications d.o.o. (Albanija) 75 %

DIGI PLUS MUTIMEDIA DOOEL Skopje (Makedonija) 100 %DIGI PLUS MUTIMEDIA DOOEL Skopje (Makedonija) 100 %

ONE DOO Skopje (Makedonija) 53,99 %ONE DOO Skopje (Makedonija) 53,99 %

SOLINE, d.o.o. 100 %SOLINE, d.o.o. 100 %

SIOL d.o.o. Podgorica (Črna gora) 100 %SIOL d.o.o. Podgorica (Črna gora) 100 %

SIOL d.o.o. Sarajevo (Bosna in Hercegovina) 100 %SIOL d.o.o. Sarajevo (Bosna in Hercegovina) 100 %



TELEKOM SLOVENIJE GROUP



STRONG INFRASTRUCTURE COMPETITION

4th Q 2012 situation

• BB market share of TS is ~38,5 % (from 100% in 2004)• Market share per technology:

– 51,7% DSL (62,2% TS)– 28,6% Cable (2,2% TS)– 17,3% FTTH (36,8% TS)

• Cable operators going for FTTH implementation• TS has 36,8% FTTH market share

BSA and LLU imposed on all Cu and FTTH infrastructure

FTTH in Slovenia: Telekom Slovenije is a follower

4.677 6.75720.214

37.325

54.358 62.50064.584 73.524 79.905

85.627

89.505

0 316 4.282 10.35519.871

23.977 25.919 30.687 32.265 32505

32.906

0

50.000

100.000

2007Q1

2007Q2

2007Q3

2007Q4

2008Q1

2008Q2

2008Q3

2008Q4

2009Q1

2009Q2

2009Q3

2009Q4

2010Q1

2010Q2

2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

RS

38,5%

17,4%13,8%

11,7%

14,3%

Market share fixed BB access

Telekom Slovenije

T-2

Telemach

Amis

Rotovž

Tušmobil

Others

Source: APEK, 2013



THE GOALS OF THE DIGITAL AGENDA

• 2013:

- All Europeans have access to broadband connection

• 2020:

- All Europeans have at least 30 Mbit/s connection to internet

- 50% of households use at least 100 Mbit/s connection to internet



The current status of 30 Mbit/s connections in Slovenia

TS network and OAN



The current status of 100 Mbit/s connections in Slovenia

TS network and OAN



Possibility of achieving the goals of DAE in Slovenia based on current BB situation

• 50% of households use at least 100 Mbit/s connection

to internet Due to well developed TS fiber network in urban areas, as well as other

alternative operators and cable suppliers, this aim is likely to be achieved

by 2020.

• All Europeans have at least 30 Mbit/s connection to

internetDue to lack of commercial interest in the construction of broadband

networks in rural and suburban areas, this goal cannot be reached without

a clear state strategy and public investment

A major challenge for the country!



The current BB situation in rural and suburban areas

• 97 % of Slovenian territory is rural and suburban• 81 % rural (73% of settlements, 23% of households)

• 16 % suburban (24% of settlements, 29% of households)

• 3 % is urban (3% of settlements, 48% of households)

• 418 700 (52%) of 814 000 households* are located in rural

and suburban areas

• Current state of copper TS fixed network (length of LL)

tehcnichally not possible 260 000 households (62%) in

suburban and rural areas to get 30 Mbit/s connection (Digital

Agenda) at the moment* Source: Statistical Office of Slovenia



How has Slovenia been solving this issue until now?

• In rural and most suburban areas there is no

commercial interest for the construction of broadband

networksThe reasons are extremely low population density and difficult terrain

• Co-financing the deployment of broadband network

with public funds OAN (Open Access Network) - project of constructing an open broadband

network of electronic communications in local communities:

the first tender in 2007, the second in 2011, technology neutral, BB

connections of at least 2 Mbit/s.



Results of OAN projects

• Public Investment: EUR 82 million

• The result: 29.000 planned connections

• Building local, disconnected, mostly fiber optic networks

• Operators do not have clear obligations regarding access to the network, service quality, response times, the information system

• High entry barriers for network and service providers - in most cases setting up their own equipment

• In some cases access for other operators is not technically possible (eg GPON solutions)

• Construction of a parallel network to the existing copper network of TS



Possible technical solutions to achieve the goal of DAE - 30 Mbit/s for all

• FTTx - adequate the implementation of P2P FTTH

• FTTH (P2P, xPON)

• FTTN, FTTC

• VDSL2 - adequate (FL and FTTx)

• MMDS - today's systems are not adequate due to splitting capacity

• Satellite systems - potentially adequate

• WiFi - limited adequacy - a shared capacity, QoS

• Cable Coax – DOCSIS - limited adequacy - depending on the topology

• Mobile (LTE 800 MHz) - suitable for sparsely populated areas with sufficient

density of BS



Optimal solution for achieving DAE goals:

• Feasibility study analysed all technical solutions in sense of :• possibility of access at all levels,

• equal treatment and

• costs per BB connection.

• Optimal technical solution: A combination of FTTN, FTTH, LTE.

Assuring technological neutrality, implementation depends on the optimal

reuse of existing infrastructure at the lowest price, speed of construction.

• Low price solution: Reuse and upgrade of existing TS network in areas

without commercial interest for construction.

• Quick and accurate solution: Comprehensive BB problem solving on

national/regional level, open access, equal treatment under regulated

conditions, service / infrastructure / retail competition, the same wholesale

price across entire territory of Slovenia.

• Avoidance of main bottlenecks of current approach: high price, individual

problem solving, restricted access solutions for infrastructure operators.



Detailed optimal technical solution

• FTTN: By re-using the existing infrastructure and shortening the

copper local loop to 1km we can build almost 40% of missing DA

connections.

• FTTH: Solution for areas with acceptable dispersion of population

FTTH resolves too long copper loops. Re-use of existing backhaul

fiber network and access fiber infrastructure is taken into account.

• LTE at 800 MHz: Open base station principle, suitable for

geographical areas with lowest population density, limited / shared

bandwidth.

BEST OF EACH APPROACH!



FTTN, FTTH and LTE using the same (existing) infrastructure of TS

• Starting point: Re-use of

existing network

• The individual household

addresses and accurate

infrastructure data have been

taken into account in the

analysis.

• Already existing infrastructure

is used for FTTN, FTTH and

LTE backhaul.



The level of investment in the optimal technical solution - a combination of FTTN, FTTH and LTE

• 260.000 connections need to be built.

• Estimated optimal investment to achieve 100 % coverage of households with 30 Mbit/s is 470 million €.

•Average cost per connection is 1.800 €.

number of

connections

CAPEX in

EUR

The total number of

connections /

average Capex

(weighted value) 260.000 1.800 €

The estimated

investment 470 MIO €



Comparing the OAN investment and suggested solutions

• The investment into TS network upgrade is more than 50% lower than existing OANapproach(combined public and private part).

• With the same amount of public funds, 2.3 times more broadband connections can be built by re-using network of TS.

• Technological solution that guarantees speed, open access to infrastructure, equal treatment, increasing competition.

CAPEX in EUR

Upgrading the

network of TS

(with no active

equipment)

OAN

investment

Capex / connection

(weighted value) 1.800 € 4.200 €

The estimated

investment 470 MIO € 1.092 MIO €



FTTN technical solution taking into account the use of new technology - vectoring

• Without vectoring solution:

– halving the coverage – doubling the number of FTTN– 50% greater investment in FTTN

•Precondition to use vectoring is the removal of SLU obligations where FTTN is implementing

•Operators use connections with BRO model from FTTN or LLU from CO



Vectoring: „alien“ cross-talk has significant impact

• A vector control entity has control of the individual line entities that

implement the vectoring technology on each pair

• Vectoring can be achieved for downstream or upstream or both flows on each

line

• Maximum performance is achieved when all lines in a cable group are

managed; below 90%impact reduced dramatically by the non controlled

„alien“ cross-talkers

1000m



Telekom Slovenije solution also affects to achievement of the 100Mbit/s goal:„50% of households use at least 100 Mbit/s“

Possibility of 100 Mbit/s broadband speed

will be achieved for approximately 120.000

connections (15% of all households)– 20.000 households (20% of FTTN solution) short

local loops with vectoring

That substantially increase chance to reach

100Mbit/s goal:

„50% of households use at least 100 Mbit/s“



Results of the analysis of financing possibilities

• Building a network with TS’s own resources

� No return of investment in the observed period of 50 years.

• The only feasible option for reaching the goals of DAE by upgrading TS’s

network is partial financing with public funds.

• Available sources of funds:

• Directly from EU - an instrument of Europe integrations (CEF: Connected

Europe Facility)

• Structural Funds - National tenders: Financial Perspective 2014-2020

• Private funds - Telekom Slovenije has the capability of private investment.



What can Telekom Slovenije offer

• Solution on State level (economy of scale of building a broadband network in a

larger area is better than in small municipalities).

• Keeping best practice from previous OAN tender national level planning,

priorities setting

• Eliminating previous OAN tender problems such access, communication,

network development, IT support, management (obligations on relevant markets 4

and 5).

• Significantly lower investment compared to the previous way of OAN

financing (at least 50%).

• Speed and quality of construction.

• Long-standing experience assure the quality of managing and maintaining.



Conclusions• The Digital Agenda Europe is a big challenge and opportunity for Slovenia

• Slovenia is small and mainly rural country, practically no commercial interest onthe rural areas

• The majority of households’ in rural areas are connected to TS copper network.

• Result of Feasibility Study: neutral, technologically and economically optimalsolution, is re-use of TS network with combination of different technologies -FTTN, FTTH and LTE (open base stations).

• Upgrading current TS network would mean equal treatment, equal conditions foraccess to the network at all levels to all players.

• The price of upgrading TS network would be 470 MIO EUR, with average priceper BB connection 1.800 EUR (vs 4.200 EUR).

• Partial public funding is required

• The goals are achievable in the case of a State level solution

• Appropriate legislative and regulatory environment is required

Telekom Slovenije proposal can resolve digital divide

between urban and rural areas



Thanks for your attention!

Questions?

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