BT has recently announced that they will be investing GBP1.5 billion in a next-generation access (NGA) strategy to deploy a mixture of fibre-to-the-curb (FTTC) and (some) fibre-to-the-home (FTTH) to 10 million homes. This has moved the debate beyond the question of if NGA will happen, to exactly when and where it will be deployed. Although BT talks about supplying some of the more rural areas1, it is likely that this first wave of investment will have an urban focus because of the lower investment per line required.
It seems reasonable to assume that the higher investment required for more rural areas will lead to the public sector playing a role if NGA is to be deployed to these areas. Examples, of such interventions by the public sector include Asturias in Spain, Digital Region in South Yorkshire, Wilhelm.Tel in Germany, and OnsNet in the Netherlands. However, this approach brings issues of interconnectivity and can lead to a limited choice of retail providers – directly linked to the small scale of such networks. One example of this effect is the local incumbent in Hull, KCOM, whose infrastructure is not used by any other retail provider for broadband services. This is primarily a function of its small scale.
The potential models for public sector involvement were addressed in a recent report2 that Analysys Mason conducted for the Broadband Stakeholder Group (BSG). One of the major issues that this report highlights is a trend towards more localised networks emerging alongside larger-scale networks from existing operators. At present these networks are generally independent of each other.
To overcome these issues of scale, some public sector interventions have been aggregated such as the MANs in Ireland via e|net and the various networks aggregated by LD Collectivités in France. Aggregating networks, in order to minimise the barriers to adoption by multiple retail service providers, is one of the key recommendations in our report for the BSG. However, the organisation that would operate these aggregated networks could be either one of the new entrants, existing alternative operators, or the incumbent. This incumbent aggregation model is beginning to emerge in the Netherlands where KPN has been investing in Reggefibre, a private start-up in communications construction, operation and management, that have been aggregating a number of public sector interventions; as illustrated below.
Figure 1: Potential models for the operation of public sector broadband interventions [Source: Analysys Mason, 2008]
The extent to which the public sector will have to intervene to make NGA available to all is still uncertain. It is largely defined by a combination of market demand and the underlying geographical differences (e.g. population density) within a country. Analysys Mason are currently conducting some further work for the BSG, as part of the wider review commissioned by the Department of Business, Enterprise and Regulatory Reform (BERR) led by Francesco Caio, into next-generation broadband that will seek to identify how the cost of different NGA technologies varies by location. This work should help both the public and private sectors to decide how to deliver a suitable NGA technology to those areas that do not get NGA from purely commercial means.
1 http://www.btplc.com/News/Articles/Showarticle.cfm?ArticleID=efd7b1fa-52ed-45bb-b530-734fac577e94
2 http://www.broadbanduk.org/psi
