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DWS16 - Future networks forum - Gabrielle Gauthey, Groupe Caisse des dépots

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The document discusses various government initiatives to promote gigabit broadband access around the world. It notes that the gigabit race is more prevalent in countries where local and national authorities are directly involved, with the objective of ensuring powerful infrastructure coverage. Private sector players offering 1 Gbps plans do so to enhance their image as innovators. Gigabit access is available in certain areas of countries like New Zealand, Canada, USA, parts of Europe and Asia, while broader populations in Latin America and the Middle East only have basic broadband access.

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GOVERNMENT DRIVEN BROADBAND INITIATIVES
2 How 1 Gbps plans are evolving? Providing Gigabit access has become a goal in itself. The momentum has been largely influenced by Google’s initiatives, since followed by private sector operators and especially a number of cities. At the federal level, the Government and the FCC have announced new measures in support of city-led rollouts. The Digital Agenda (DAE) sets Europe’s connectivity targets: 30 Mbps for all, and 100 Mbps connections or more for at least 50% of European households by 2020. These appear very modest targets when compared to current technological possibilities, and the accelerated pace of the Gigabit race, which more and more ISPs seem willing to join. In Asia, selling Gigabit-speed access is a strategic choice for private sector operators. Government-led initiatives are more rare, with the exception of Singapore and New Zealand. In Latin America and the Middle East, just providing the entire population with broadband access is already a challenge, so Gigabit access is not really on the table as yet. But a few ISPs do offer ultra-fast plans, aimed at a very specific clientele. The Gigabit race is far more prevalent in countries where local and national authorities are more directly involved. One of the prime objectives for public sector players is to ensure their region, or the entire country, is covered by the most powerful infrastructure possible, taking a longer-term view than private sector players. Private sector players that do sell 1 Gbps plans (and up) are looking above all to enhance their image as innovators, at the leading edge of technology. Much rarer are those taking a commercially strategic approach and offering truly distinct services and features enabled by these faster systems. USA Europe Elsewhere around the world
3 Where are 1 Gbps plans available? Strong initiative from local authorities in support of Gb access Availability of 1 Gbps plans New Zealand Canada USA Caribbea n Portugal Latvia France Switerland Turkey Ukraine China South Korea Japan Hong Kong Singapore
4 INNOVATIVE APPROACHES TO FOSTER INVESTMENTS AND NETWORK DEPLOYMENTS AROUND THE WORLD Facing the scarcity of fund and spectrum, innovative regulatory thinking and investment models emerge in developing countries: •Reduce cost through infrastructure sharing and innovative management of some spectrum bands (DD) •Attractive investment model compatible with long-term infrastructure funds criteria •Leverage technology evolution (IP LTE, bitstream) allowing service differentiation and competition on top of a collaboratively built infrastructure •ectrum bands (DD) •Attractive investment model compatible with long-term infrastructure funds criteria •Leverage technology evolution (IP LTE, bitstream) allowing service differentiation and competition on top of a collaboratively built infrastructure
5 TYPOLOGIE DES INITIATIVES GOUVERNEMENTALES INFRASTRUCTURES • Open access backbones • Backhaul Fixe /mobile, transit • Couverture Nationale/rurale Brazil, Mexico, India, Kenya, Nigeria, Sri Lanka, Ghana, Colombia, Argentina, Venezuela, Peru, Cote d’Ivoire,… + Time-to-market + Perfromance ameliorée du Mobile et fixe + Optimisation des investissements - Bottleneck NATIONAL BACKBONES • Acces FTTX • modèle wholesale (passif & actif) • Separation (réseau d’accès) Australia, New Zealand, Singapore , Qatar + Performance/capacité des réseaux + investissements dans les technologies de pointe + Backhaul mobile et smalll cells - Capex – civil works - Time-to-market NEXT GEN ACCESS •open Access LTE •700/800 MHz bands (DD), 2.3 GHz • Couverture Nationale/rurale, Public Safety Rwanda, Mexico,,Kenya + Time-to-market + Couverture universelle + Data centric + Investissements reduits - Disponibilité du spectre OPEN WIRELESS ACCESS
6 LE MODELE NEO ZELANDAIS ULTRA FAST BROADBAND & RURAL BROADBAND INITIATIVE • The government’s ultra-fast broadband (UFB) initiative has been an important industry talking point since the November 2008 election. Key facts: – Government has committed to invest up to $1.35billion – Objective is to accelerate the roll-out of UFB to 75 percent of New Zealanders over 10-years – In the first six years, will concentrate on ‘priority broadband users’ such as businesses, health service providers and schools. – UFB is defined as a fibre-to-the-premise broadband service providing downlink speeds of at least 100 Mbps and uplink speeds of at least 50 Mbps. • The government’s complementary program for rural communities is called the Rural Broadband Initiative (RBI). Key facts: – Goal to deliver high speed broadband to the remaining 25 percent of the population – Within six years, 93 percent of rural schools will receive fibre, enabling speeds of at least 100Mbps, with the remaining seven percent to achieve speeds of at least 10Mbps – Over 80 percent of rural households will have access to broadband with speeds of at least 5Mbps, with the remainder to achieve speeds of at least 1Mbps.
7 POLOGNE : UN PPP REGIONAL ET UN BACKBONE OUVERT • Government procurements • TP signed a co-operation agreement with Hawe SA and Alcatel-Lucent to develop broadband infrastructure in Poland, which is now an SPV approved by EU • Set out a market solution • Propose consortium structure that meets stakeholder interests • Building the consortium business case • Core: passive WDM • Distribution: active IP/MPLS • Access: tbd by local telco service providers HAWE TP Teltech RESIDENTSBUSINESS SERVICE PROVIDERS SPV/NEWCO Government GOVERNMENT Remarks: CAPEX structure - 15% active network (nodes and PM) - 85% passive network (ducts and fibre) Asset contribution Start equity Flow of equity over time RetailService Provider RetailService Provider RetailService Provider Vertical Infrastructure Provider
8 ISRAEL GOES FOR UTILITY/PPP LIKE MODEL A Special Purpose Vehicle announced June 2013 New Telecommunication Company created to deploy a FTTH network in Israël Consortium formed by State owned Israël Electric Company (IEC) and private investors (ViaEuropa, Cisco, Tamares Telecom, Rapac, BATM, Bynet Data) which own 60% of the SPV Multi billion € investment over 20 years New company will act as “carrier of carriers” and wholesale fiber access to retail operators Objectives Network will be deployed over 20 years and will cover 65% of population by the 9th year Total fiber : 32 000 km Fiber To The Home technology – 1 Gb/s bandwidth as long term target Israël Electric Company will contribute with its existing fibre network (3000 Km) and sites (poles, ducts)
9 INITIATIVES EN AMERIQUE DU SUD Mexico “Backbone and Wireless open Access” • “Telecommunicaciones de Mexico” to roll out nation-wide fibre backbone •700 Mhz spectrum (APT Band) to be allocated to open access wholesaler Peru rural backbone •450 M€ backbone to cover Peru’s highlands Colombia « Vive Digital » •8,8 M HH with BB access by end 2014 •700 municipalities connected to National Fibre backbone Argentina « Argentina Conectada » •ARSAT to roll out of fibre backbone covering 97% population by 2015 •100% connectivity for public institutions (schools, public institutions)
10 LE PROJET MEXICAIN : UN RESEAU MOBILE OUVERT The underlying driver: Grow the Economy • Macro-economic indicators are excellent • With growth as absolute priority, the Mexican reform encompasses : education, transport, energy … • For Telecoms, this has been translated to give access to affordable Telecom services to all. The way to do it • Aim: bring mobile Broadband price as close as possible as Mobile Voice price • How: Reduce the network TCO by 20 times: • Allocate Digital Dividend • Generalize a wholesale model • Use PPP model and push other public supply side initiatives Project’s details • All 700 MHz will be allocated to one wholesaler with stringent coverage obligations • A lean, flat IP, low cost wireless bit stream factory will be built on top • A non discriminatory wholesaler who cannot commercialize in the retail market • Paradigm shift from infra based competition to service-based competition 98% coverage Active Sharing RetailService Provider RetailService Provider RetailService Provider Service Active Passive Regulation Regulated active wholesale MEXICAN DD LTE WHOLESALER
11 INITIATIVES AUX US Government Funded Broadband 1. Nationwide Public Safety LTE Broadband Network • $7 Billion in federal funding, and 20 MHz of spectrum, provided to the First Responder Network Authority (FirstNet) to build nationwide network in the 700 MHz Band. • Federal funding not sufficient; Public Private Partnership needed for success. • Moving very slowly: RFP expected to be issued in 2015, with timing for actual deployment unclear. • Local pilot projects possible in the short term, funded by states and localities. 2. Rural Broadband Projects and Municipally Funded Broadband • Broadband Experiments Fund: FCC proposing to allocate hundreds of millions of dollars to fund carriers, municipal utilities, and other entities for broadband expansion projects. Order defining application process expected in July. • ConnectED: FCC commitment to invest $2 billion over the next two years to dramatically expand high-speed Internet connectivity for schools and libraries. 3. Funding goes to schools and libraries that apply for projects. • FCC Proposal to Remove State Impediments to Municipal Broadband
12 INITIATIVES EN AFRIQUE AFRICA MENA KSA TRAZ SENEGAL LTE NETWORK E-GOV SOUTH AFRICA UFB KENYA LTE NETWORK BACKBONE BURKINA FASO E GOV MAROCCO UFB GHANA E GOV BACKBONE IVORY COAST BACKBONE CONGO BRAZZAVILLE BACKBONE MAURITANIA BACKBONE TUNISIA UFB
NGA ULTRABROADBAND: EU COUNTRY CASES
14 THE INVESTMENT WALL IN THE EU Assessment of total investment needed for fibre upgrade in Europe (EU 27) Russia (European part)Estonia Latvia Lithuania (to Russia) Denmark Norway Sweden Finland Austria Slovenia Croatia Macedonia Albania Romania Bulgaria Moldova Ukraine Hungary SlovakiaCzech Rep. Poland Belarus Bosnia and Herzegovina Serbia Andorra Italy France Switzerland FYR Germany Netherlands Luxembourg Belgium Spain Portugal Great Britain Ireland Greece Cyprus Malta Montenegro 73 to 221 bn€ Target: DA objectives (coverage)** with a single platform in a given area (Cable or fibre except in the Maximum scenario) 162 to 290 bn€ Target: 100% coverage with 50% to 100% FTTH complemented by VDSL 230 to 290 bn€ Target: 50% FTTH and 40% VDSL coverage EC’s digital agenda objectives (2020) 100% 30Mbps Internet coverage 2012: 50% target achieved 50% HH subscribing to 100Mbps + 2012: 2% target achieved
15 FRANCE : 10 ANS DE RESEAUX D’INITITIAVE PUBLIQUE •50% des regions et 2/3 des departments sont concernés: • Plus de 150 gros projets RIP ( > 30 K habitants) • Près d’1 région sur 2 et 3 départements sur 4 concernés •55 K km de fibre optique deployés • Plus de 3.5 B € d’investisssments publics/privés: •Investissements publics et subventions: €1.8 milliards • Investissments privés: €1.7 B milliards Operateurs de détail (Orange,SFR, Bouygues Telecom, Numericable, Free) Operateurs de gros (Altitude, Axione, Covage, SFR collectivités,..) Les opérateurs privés Possibilité d’exercer une activité d’opérateur[ Article L.1425-1, Code général des collectivités territoriales, 2004].  Etablir et exploiter des réseaux d’initiative publique (RIP) (Marché de gros uniquement) Les collectivités territoriales BILAN
16 Où en sommes nous: les infrastructures numériques Beaucoup de travail fait sur les RIP depuis 10 ans et des projets… mais la France à la traîne dans les classements européens et mondiaux FTTH council, 2015 Nécessité de financements privés de long-terme
17 Jeux d’acteurs sur le FTTH (vue schématique) Opérateurs multi-locaux : Adista, Knet, VideoFutur, Nordnet, Coriolis, Canal+, etc… Faible densité en ZTD Faible densité en zones AMII Zones très denses (5,5 millions de logements) Zones AMII (12 millions de logements) Zones d’initiative publique (15,5 millions de logements) Opérateurs de gros Opérateurs de détail Territoires sans initiative publique
18 Broadband: The French Case Local Authorities –Private Companies Operating Public Networks
19 Les deux écosystèmes en zone RIP à ce jour
20 TELECOM NETWORK STRUCTURE A LAYERED MODEL Services, Content & Apps (residential, public & business) Active Network (network equipments, business & operation support) Passive Infrastructure (trenches, ducts, fibre) End-user >200 B€ Investment needed Payback Few m-3 y 5-7 y 10-15 y 20% 80% Each layer has very a different financial profile and need to be addressed adequately
21 NO FIT BETWEEN INVESTMENT PROFILES AND INFRASTRUCTURE OPPORTUNITIES ROI Risk Infrastructure roll out Lack of investment in NGA networks Infrastructure Funds Telecom Operators Insufficient ROI: • Cherry picking • Digital Gap • Wait and see High risk : •No focus on Telecom • Wait and see COMPETITION AND INCENTIVE FOR INVESTMENTS Solution calls for: CAPEX reduction to increase ROI & long-term commercial agreements to lower risk
22 TELECOM INDUSTRY DOES NOT SEEM TO FULLY MEET THE REQUIREMENTS OF INFRASTRUCTURE FUNDS very low Indication of sectorial funds focus over the next two years 0 1 2 3 4 5 10.Infrastructure services 1.Energy 2.Roads 3.Rail/Metro 4.Ports 5.Airports 6.Water 7.Waste 8.PPP/PFI 9.Telecoms Conditions for infrastructure funds to invest  Investors seeking exposure to a periodic, stable and guaranteed cash flows  Need for a regulated market with contained competition and strong barriers to entry  Necessity to make investments fit with infrastructure funds’ risk profile:  Advocate for separation of passive layer vs. active and retail to lower risk on the passive layer part  Guarantee of a single fibre network in case of operating cable operators  Participation of the incumbent in the Netco preferred very high Source: Contribution, Deloitte 2010, Arthur D. Little COMPETITION AND INCENTIVE FOR INVESTMENTS
3 INITIATIVES
24 Vitis, new Triple Play operator on the French Market Vitis Objectives and ambition ► Accompany the profound change in consumer uses through high-speed broadband, with new video services and TV- cinema offerings that have "delinearized" and personalized ► Opening up the territories, and avoiding a new digital divide, VITIS is a new alternative operator, 100% fiber, 100% Consumer, 100% RIP ► VITIS capitalizes on VideoFutur brand, known by 33% French people Vitis, a new internet access provider - 100% fiber Total amount of the investment : 21 M€ Caisse des Dépôts part : 7 M€ Vitis shareholders are : Netgem : 54,8% Caisse des Dépôts : 33% Océinde : 11,9 % This “public interest” investment benefits directly the RIP. It makes it possible to increase their attractiveness, and indirectly benefit to national telecom operators by the market dynamics that the new company will initiate
25 Belvedere, a mobile coverage facilitator in France Belvédère objectives ► Belvédère is an industrial and financial vehicle, initiated by Caisse des Dépôts, associated with a TowerCo bringing its industrial know-how and experience in the construction and operation of infrastructure ► The purpose of this vehicle is to participate in the mobile coverage of the 268 town centers and the 1,300 strategic mobile sites announced by the Government, providing a global service, with the provision and maintenance of the pylons and “high points” ► A Positioning for local authorities and mobile operators ► The industrial and financial vehicle makes it possible to optimize the costs for the communities and the operators thanks to an industrial logic The current pattern of state subsidization of community projects does not satisfy all elected officials, leaving too much of the investment to be borne by the communities. Belvédère enables Caisse des Dépôts to position itself on the long term on this issue
26 European Broadband Fund • Caisse des Dépôts co-founder of this European Broadband Fund • This is a Fund for high-speed broadband Projects in Europe in the “White Zones” • Fund size: between 400 and 600 m € • Several investors such as NPBIs, European Commission, EIBI, private investors, FEIS (Juncker) • Why are we involded and enthusiastic ? • a complementary vehicle to the Caisse des Dépôts' equity activity in order to achieve the high speed broadband target for all in 2022 (in parallel with our other actions) • an encouragement for bank financing of "small projects" in France • a beautiful project that allows collaboration with our Italian counterparts (Casa de Depositi) and Germans (KFW) as well as the European Commission and the EIB

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DWS16 - Future networks forum - Gabrielle Gauthey, Groupe Caisse des dépots

  • 2. 2 How 1 Gbps plans are evolving? Providing Gigabit access has become a goal in itself. The momentum has been largely influenced by Google’s initiatives, since followed by private sector operators and especially a number of cities. At the federal level, the Government and the FCC have announced new measures in support of city-led rollouts. The Digital Agenda (DAE) sets Europe’s connectivity targets: 30 Mbps for all, and 100 Mbps connections or more for at least 50% of European households by 2020. These appear very modest targets when compared to current technological possibilities, and the accelerated pace of the Gigabit race, which more and more ISPs seem willing to join. In Asia, selling Gigabit-speed access is a strategic choice for private sector operators. Government-led initiatives are more rare, with the exception of Singapore and New Zealand. In Latin America and the Middle East, just providing the entire population with broadband access is already a challenge, so Gigabit access is not really on the table as yet. But a few ISPs do offer ultra-fast plans, aimed at a very specific clientele. The Gigabit race is far more prevalent in countries where local and national authorities are more directly involved. One of the prime objectives for public sector players is to ensure their region, or the entire country, is covered by the most powerful infrastructure possible, taking a longer-term view than private sector players. Private sector players that do sell 1 Gbps plans (and up) are looking above all to enhance their image as innovators, at the leading edge of technology. Much rarer are those taking a commercially strategic approach and offering truly distinct services and features enabled by these faster systems. USA Europe Elsewhere around the world
  • 3. 3 Where are 1 Gbps plans available? Strong initiative from local authorities in support of Gb access Availability of 1 Gbps plans New Zealand Canada USA Caribbea n Portugal Latvia France Switerland Turkey Ukraine China South Korea Japan Hong Kong Singapore
  • 4. 4 INNOVATIVE APPROACHES TO FOSTER INVESTMENTS AND NETWORK DEPLOYMENTS AROUND THE WORLD Facing the scarcity of fund and spectrum, innovative regulatory thinking and investment models emerge in developing countries: •Reduce cost through infrastructure sharing and innovative management of some spectrum bands (DD) •Attractive investment model compatible with long-term infrastructure funds criteria •Leverage technology evolution (IP LTE, bitstream) allowing service differentiation and competition on top of a collaboratively built infrastructure •ectrum bands (DD) •Attractive investment model compatible with long-term infrastructure funds criteria •Leverage technology evolution (IP LTE, bitstream) allowing service differentiation and competition on top of a collaboratively built infrastructure
  • 5. 5 TYPOLOGIE DES INITIATIVES GOUVERNEMENTALES INFRASTRUCTURES • Open access backbones • Backhaul Fixe /mobile, transit • Couverture Nationale/rurale Brazil, Mexico, India, Kenya, Nigeria, Sri Lanka, Ghana, Colombia, Argentina, Venezuela, Peru, Cote d’Ivoire,… + Time-to-market + Perfromance ameliorée du Mobile et fixe + Optimisation des investissements - Bottleneck NATIONAL BACKBONES • Acces FTTX • modèle wholesale (passif & actif) • Separation (réseau d’accès) Australia, New Zealand, Singapore , Qatar + Performance/capacité des réseaux + investissements dans les technologies de pointe + Backhaul mobile et smalll cells - Capex – civil works - Time-to-market NEXT GEN ACCESS •open Access LTE •700/800 MHz bands (DD), 2.3 GHz • Couverture Nationale/rurale, Public Safety Rwanda, Mexico,,Kenya + Time-to-market + Couverture universelle + Data centric + Investissements reduits - Disponibilité du spectre OPEN WIRELESS ACCESS
  • 6. 6 LE MODELE NEO ZELANDAIS ULTRA FAST BROADBAND & RURAL BROADBAND INITIATIVE • The government’s ultra-fast broadband (UFB) initiative has been an important industry talking point since the November 2008 election. Key facts: – Government has committed to invest up to $1.35billion – Objective is to accelerate the roll-out of UFB to 75 percent of New Zealanders over 10-years – In the first six years, will concentrate on ‘priority broadband users’ such as businesses, health service providers and schools. – UFB is defined as a fibre-to-the-premise broadband service providing downlink speeds of at least 100 Mbps and uplink speeds of at least 50 Mbps. • The government’s complementary program for rural communities is called the Rural Broadband Initiative (RBI). Key facts: – Goal to deliver high speed broadband to the remaining 25 percent of the population – Within six years, 93 percent of rural schools will receive fibre, enabling speeds of at least 100Mbps, with the remaining seven percent to achieve speeds of at least 10Mbps – Over 80 percent of rural households will have access to broadband with speeds of at least 5Mbps, with the remainder to achieve speeds of at least 1Mbps.
  • 7. 7 POLOGNE : UN PPP REGIONAL ET UN BACKBONE OUVERT • Government procurements • TP signed a co-operation agreement with Hawe SA and Alcatel-Lucent to develop broadband infrastructure in Poland, which is now an SPV approved by EU • Set out a market solution • Propose consortium structure that meets stakeholder interests • Building the consortium business case • Core: passive WDM • Distribution: active IP/MPLS • Access: tbd by local telco service providers HAWE TP Teltech RESIDENTSBUSINESS SERVICE PROVIDERS SPV/NEWCO Government GOVERNMENT Remarks: CAPEX structure - 15% active network (nodes and PM) - 85% passive network (ducts and fibre) Asset contribution Start equity Flow of equity over time RetailService Provider RetailService Provider RetailService Provider Vertical Infrastructure Provider
  • 8. 8 ISRAEL GOES FOR UTILITY/PPP LIKE MODEL A Special Purpose Vehicle announced June 2013 New Telecommunication Company created to deploy a FTTH network in Israël Consortium formed by State owned Israël Electric Company (IEC) and private investors (ViaEuropa, Cisco, Tamares Telecom, Rapac, BATM, Bynet Data) which own 60% of the SPV Multi billion € investment over 20 years New company will act as “carrier of carriers” and wholesale fiber access to retail operators Objectives Network will be deployed over 20 years and will cover 65% of population by the 9th year Total fiber : 32 000 km Fiber To The Home technology – 1 Gb/s bandwidth as long term target Israël Electric Company will contribute with its existing fibre network (3000 Km) and sites (poles, ducts)
  • 9. 9 INITIATIVES EN AMERIQUE DU SUD Mexico “Backbone and Wireless open Access” • “Telecommunicaciones de Mexico” to roll out nation-wide fibre backbone •700 Mhz spectrum (APT Band) to be allocated to open access wholesaler Peru rural backbone •450 M€ backbone to cover Peru’s highlands Colombia « Vive Digital » •8,8 M HH with BB access by end 2014 •700 municipalities connected to National Fibre backbone Argentina « Argentina Conectada » •ARSAT to roll out of fibre backbone covering 97% population by 2015 •100% connectivity for public institutions (schools, public institutions)
  • 10. 10 LE PROJET MEXICAIN : UN RESEAU MOBILE OUVERT The underlying driver: Grow the Economy • Macro-economic indicators are excellent • With growth as absolute priority, the Mexican reform encompasses : education, transport, energy … • For Telecoms, this has been translated to give access to affordable Telecom services to all. The way to do it • Aim: bring mobile Broadband price as close as possible as Mobile Voice price • How: Reduce the network TCO by 20 times: • Allocate Digital Dividend • Generalize a wholesale model • Use PPP model and push other public supply side initiatives Project’s details • All 700 MHz will be allocated to one wholesaler with stringent coverage obligations • A lean, flat IP, low cost wireless bit stream factory will be built on top • A non discriminatory wholesaler who cannot commercialize in the retail market • Paradigm shift from infra based competition to service-based competition 98% coverage Active Sharing RetailService Provider RetailService Provider RetailService Provider Service Active Passive Regulation Regulated active wholesale MEXICAN DD LTE WHOLESALER
  • 11. 11 INITIATIVES AUX US Government Funded Broadband 1. Nationwide Public Safety LTE Broadband Network • $7 Billion in federal funding, and 20 MHz of spectrum, provided to the First Responder Network Authority (FirstNet) to build nationwide network in the 700 MHz Band. • Federal funding not sufficient; Public Private Partnership needed for success. • Moving very slowly: RFP expected to be issued in 2015, with timing for actual deployment unclear. • Local pilot projects possible in the short term, funded by states and localities. 2. Rural Broadband Projects and Municipally Funded Broadband • Broadband Experiments Fund: FCC proposing to allocate hundreds of millions of dollars to fund carriers, municipal utilities, and other entities for broadband expansion projects. Order defining application process expected in July. • ConnectED: FCC commitment to invest $2 billion over the next two years to dramatically expand high-speed Internet connectivity for schools and libraries. 3. Funding goes to schools and libraries that apply for projects. • FCC Proposal to Remove State Impediments to Municipal Broadband
  • 12. 12 INITIATIVES EN AFRIQUE AFRICA MENA KSA TRAZ SENEGAL LTE NETWORK E-GOV SOUTH AFRICA UFB KENYA LTE NETWORK BACKBONE BURKINA FASO E GOV MAROCCO UFB GHANA E GOV BACKBONE IVORY COAST BACKBONE CONGO BRAZZAVILLE BACKBONE MAURITANIA BACKBONE TUNISIA UFB
  • 14. 14 THE INVESTMENT WALL IN THE EU Assessment of total investment needed for fibre upgrade in Europe (EU 27) Russia (European part)Estonia Latvia Lithuania (to Russia) Denmark Norway Sweden Finland Austria Slovenia Croatia Macedonia Albania Romania Bulgaria Moldova Ukraine Hungary SlovakiaCzech Rep. Poland Belarus Bosnia and Herzegovina Serbia Andorra Italy France Switzerland FYR Germany Netherlands Luxembourg Belgium Spain Portugal Great Britain Ireland Greece Cyprus Malta Montenegro 73 to 221 bn€ Target: DA objectives (coverage)** with a single platform in a given area (Cable or fibre except in the Maximum scenario) 162 to 290 bn€ Target: 100% coverage with 50% to 100% FTTH complemented by VDSL 230 to 290 bn€ Target: 50% FTTH and 40% VDSL coverage EC’s digital agenda objectives (2020) 100% 30Mbps Internet coverage 2012: 50% target achieved 50% HH subscribing to 100Mbps + 2012: 2% target achieved
  • 15. 15 FRANCE : 10 ANS DE RESEAUX D’INITITIAVE PUBLIQUE •50% des regions et 2/3 des departments sont concernés: • Plus de 150 gros projets RIP ( > 30 K habitants) • Près d’1 région sur 2 et 3 départements sur 4 concernés •55 K km de fibre optique deployés • Plus de 3.5 B € d’investisssments publics/privés: •Investissements publics et subventions: €1.8 milliards • Investissments privés: €1.7 B milliards Operateurs de détail (Orange,SFR, Bouygues Telecom, Numericable, Free) Operateurs de gros (Altitude, Axione, Covage, SFR collectivités,..) Les opérateurs privés Possibilité d’exercer une activité d’opérateur[ Article L.1425-1, Code général des collectivités territoriales, 2004].  Etablir et exploiter des réseaux d’initiative publique (RIP) (Marché de gros uniquement) Les collectivités territoriales BILAN
  • 16. 16 Où en sommes nous: les infrastructures numériques Beaucoup de travail fait sur les RIP depuis 10 ans et des projets… mais la France à la traîne dans les classements européens et mondiaux FTTH council, 2015 Nécessité de financements privés de long-terme
  • 17. 17 Jeux d’acteurs sur le FTTH (vue schématique) Opérateurs multi-locaux : Adista, Knet, VideoFutur, Nordnet, Coriolis, Canal+, etc… Faible densité en ZTD Faible densité en zones AMII Zones très denses (5,5 millions de logements) Zones AMII (12 millions de logements) Zones d’initiative publique (15,5 millions de logements) Opérateurs de gros Opérateurs de détail Territoires sans initiative publique
  • 18. 18 Broadband: The French Case Local Authorities –Private Companies Operating Public Networks
  • 19. 19 Les deux écosystèmes en zone RIP à ce jour
  • 20. 20 TELECOM NETWORK STRUCTURE A LAYERED MODEL Services, Content & Apps (residential, public & business) Active Network (network equipments, business & operation support) Passive Infrastructure (trenches, ducts, fibre) End-user >200 B€ Investment needed Payback Few m-3 y 5-7 y 10-15 y 20% 80% Each layer has very a different financial profile and need to be addressed adequately
  • 21. 21 NO FIT BETWEEN INVESTMENT PROFILES AND INFRASTRUCTURE OPPORTUNITIES ROI Risk Infrastructure roll out Lack of investment in NGA networks Infrastructure Funds Telecom Operators Insufficient ROI: • Cherry picking • Digital Gap • Wait and see High risk : •No focus on Telecom • Wait and see COMPETITION AND INCENTIVE FOR INVESTMENTS Solution calls for: CAPEX reduction to increase ROI & long-term commercial agreements to lower risk
  • 22. 22 TELECOM INDUSTRY DOES NOT SEEM TO FULLY MEET THE REQUIREMENTS OF INFRASTRUCTURE FUNDS very low Indication of sectorial funds focus over the next two years 0 1 2 3 4 5 10.Infrastructure services 1.Energy 2.Roads 3.Rail/Metro 4.Ports 5.Airports 6.Water 7.Waste 8.PPP/PFI 9.Telecoms Conditions for infrastructure funds to invest  Investors seeking exposure to a periodic, stable and guaranteed cash flows  Need for a regulated market with contained competition and strong barriers to entry  Necessity to make investments fit with infrastructure funds’ risk profile:  Advocate for separation of passive layer vs. active and retail to lower risk on the passive layer part  Guarantee of a single fibre network in case of operating cable operators  Participation of the incumbent in the Netco preferred very high Source: Contribution, Deloitte 2010, Arthur D. Little COMPETITION AND INCENTIVE FOR INVESTMENTS
  • 24. 24 Vitis, new Triple Play operator on the French Market Vitis Objectives and ambition ► Accompany the profound change in consumer uses through high-speed broadband, with new video services and TV- cinema offerings that have "delinearized" and personalized ► Opening up the territories, and avoiding a new digital divide, VITIS is a new alternative operator, 100% fiber, 100% Consumer, 100% RIP ► VITIS capitalizes on VideoFutur brand, known by 33% French people Vitis, a new internet access provider - 100% fiber Total amount of the investment : 21 M€ Caisse des Dépôts part : 7 M€ Vitis shareholders are : Netgem : 54,8% Caisse des Dépôts : 33% Océinde : 11,9 % This “public interest” investment benefits directly the RIP. It makes it possible to increase their attractiveness, and indirectly benefit to national telecom operators by the market dynamics that the new company will initiate
  • 25. 25 Belvedere, a mobile coverage facilitator in France Belvédère objectives ► Belvédère is an industrial and financial vehicle, initiated by Caisse des Dépôts, associated with a TowerCo bringing its industrial know-how and experience in the construction and operation of infrastructure ► The purpose of this vehicle is to participate in the mobile coverage of the 268 town centers and the 1,300 strategic mobile sites announced by the Government, providing a global service, with the provision and maintenance of the pylons and “high points” ► A Positioning for local authorities and mobile operators ► The industrial and financial vehicle makes it possible to optimize the costs for the communities and the operators thanks to an industrial logic The current pattern of state subsidization of community projects does not satisfy all elected officials, leaving too much of the investment to be borne by the communities. Belvédère enables Caisse des Dépôts to position itself on the long term on this issue
  • 26. 26 European Broadband Fund • Caisse des Dépôts co-founder of this European Broadband Fund • This is a Fund for high-speed broadband Projects in Europe in the “White Zones” • Fund size: between 400 and 600 m € • Several investors such as NPBIs, European Commission, EIBI, private investors, FEIS (Juncker) • Why are we involded and enthusiastic ? • a complementary vehicle to the Caisse des Dépôts' equity activity in order to achieve the high speed broadband target for all in 2022 (in parallel with our other actions) • an encouragement for bank financing of "small projects" in France • a beautiful project that allows collaboration with our Italian counterparts (Casa de Depositi) and Germans (KFW) as well as the European Commission and the EIB