CapEx/user - what are the actual figures for hi speed broadband?
I believe the CapEx (capital expenditure) figures for rolling out hi speed broadband will vary substantially based on...
* the speed requirement (what speed do you really need - for the services that are used and will be used tomorrow?)
* the country in question (geography, population and cost level will heavily influence on the chosen roll out solution)
* the chosen technique (DSL, cable, fibre or mobile broadband)
I believe it is of utmost importance to have a solid grip on these factors and figures before jumping to roll out conclusions.
In Norway (where I come from) we have Europe's highest cost level, a geography with mountains and fjords, and large areas scarcely populated.
The CapEx per new subscriber (fibre) is averaging 6.000 Euro (!) - some are as high as 10.000 Euro per new user... - which for many operators lead to negative P&L figures. If settling for xDSL the comparable figure is some 1.000 Euro.
--> Does anyone have an overview of actual CapEx-figures for various (European) countries? I have a hard time finding such....?
Examples for CapEx/subscriber (fibre roll out) that I have obtained are ...:
* France - 800 Euro
* UK - £ 1200
* USA - $ 1.500
* a German 2010-report indicate a spread from Euro 600 and up to > 4.000 - depending urban/rural differences
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I will touch on the "need for speed" issue in another blog entry...
See you in Brussels!
Tore Aarønæs
tore@teleinfo.no
www.teleinfo.no
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Comments
I think your comment
I think your comment highlights some very fundamental issues: your estimate of the cost of connection in the UK is probably closer to the truth and yet the UK Government has set a maximum figure of £600 per connection which means matched state aid of only £300.
I believe that the time for debate over the appropriate connection speed and the technology choice has passed. Even if one could agree what is needed now and what might be needed in the future the experience of the shortcomings of DSL technologies strongly suggests that further investment now is a waste of public money. Here in the UK there is significant concern over the "up to" nature of DSL offerings. The fall off in network performance due to the distance of the connection and the quality of the medium means that, particularly in rural areas, a state aid subsidy is being used for technology which in reality does not meet the definition of super fast broadband. In my view we need to set our sights on fibre to the home irrespective of an opinion of what is "needed" now and what might be "needed" in the future. In so doing we remove the barrier of last mile network capacity from any innovation potential.
Totally agree Paul. Anything
Totally agree Paul. Anything other than fibre in rural areas is a total waste of money. The incumbents are saying they will cover 90% and everyone sits back and thinks they will be fine. Many rurals won't. Far better to tell them the truth, that they can't have it than to waste taxpayers money on a stop gap. This brings out the David and Goliath in most people! That will then motivate rural people to dig where they live, and the funding would be the seed corn they need to get started. It will take brave decisions to make this happen, but its vital if we want every citizen digital. I cannot see where most member states will get the money to do it all with funding. I think community effort will be needed. Therefore new networks will be formed, to provide competition to the incumbents and it turns into a win win situation, with real choice for consumers. The new rural networks with their high capacity, resilient and modern networks will start to harvest profitable urban fringe customers as soon as they are built. Its a leap of faith, but if we don't make it we will pay the price many times over in the future.
Thank you for commenting on
Thank you for commenting on my entry. I guess you are partly agreeing?? - but also partly skipping the important "cost issue".
I would like to see the calculations documenting "The new rural networks with their high capacity, resilient and modern networks will start to harvest profitable urban fringe customers as soon as they are built"...
In my country (Norway) we quickly see price tags of 8-10.000 Euro for connecting a rural home by fibre - with recent analysis indicating that capacity exceeding 10 Mbit/s primarily is used for television/video and P2P file sharing - the desire to put gov't money into such projects is decreasing... At the same time - we already enjoy 100% broadband coverage, but still some 30% of the households are still not connected...
In some areas of Norway, local government is now putting money on the table to promote mobile broadband coverage.... An interesting alternative....?
Tore I look forward to
Tore I look forward to meeting you at DA12 and having an interesting discussion
I haven't seen any
I haven't seen any calculations for "harvest profitable urban fringe customers as soon as they are built" - but its common sense really. If there is a choice between a throttled and contended old world network and a modern high speed one costing the same per month the customers will vote with their feet.
Mobile coverage in the UK is very patchy. If it was better than the current wired solution many would migrate to it. That is probably why the regulator has stalled the 4g auction. Mobile is not the solution, mobile should sit on top of an ubiquitous fibre backbone. Mobile is for mobile users. Cells could never cope if everyone was on it.
I can understand the government's reluctance to provide high speed access for tv etc, but that is just the cherry that gets people online. Our goal is to get everyone online, and to do that we need cherries.
The applications of the future need high capacity. Telepresence, health, education, social. Its all part of a bigger picture, and the only thing missing is the fat pipes. Investment in them now will deliver a reward in the future.
Thank you for posting
Thank you for posting comments!
I see two trends that seems to cloud up these discussions...:
1. The prime focusing on technical solutions - ie fibre vs ..... There are no disagreements on the superiority of fibre when it comes to speed - Mercedes and Porches are also a high quality cars... but not everyone needs or uses this alternative (or can afford it...) But his is not the discussion!
The technical solutions must match future service demand/usage - including customers willingness to pay for the cost of using these services - so that they can be profitable for both operators and society....... So a key question here is "how far ahead" of today's demand and usage should the broadband operators (an government sponsors) be? And which target speeds should be in focus?
2. The lack of solid documentation on future needs - services, usage, bandwith, capacity - and the slightly euforic positions on future needs for bandwith.
This was one of the main reason behind "Do we need Superbroadband"-report. We thoroughly examined all major/widespread services - and collected 3rd party assessment of necessary bandwith for these serivces to operate well.
- Two examples to illustrate this issue..:
Education
We all agree that an increasing portion of this will go on line. The largest "education machine" today is YouTube (several thousand universities are already here..) - YouTube is today delivered into the network at speeds between 0,5 - 5 Mbit/s - ie no need for killer speeds to enjoy YouTube (at home).... The key (technical) challenge will probably be in the backbone network.
Health services
Home based health services will require major bandwith... - probably not correct. Home based health services normally consist of two elements - video communication with patient - and medical surveillance of patient. The first service can be solved by off the shelf videophone systems - Cisco can deliver this today - bandwith requirement ca 5 Mbit/s. Surveillance systems require a fraction of this....
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So "common sense" doesn't always cut it here.. Decision makers and opinion makers should have a more solid information platform to base themselves on...?
Also look at my other blog entry - about geographically varied CapEx-figures - which should influence this discussion...
Sorry, but common sense still
Sorry, but common sense still cuts it here. Look at an average family. Streaming tv, films, youtube, all in different rooms more often than not, on many machines. The current connections most people have can't deliver. The throttling and contention stop much going on at peak times. The scarcity model which is declared in the UK as 'open access' means ISPs resell an expensive commodity, one which should be cheap. People always go for the cheaper ISPS then moan when its slow. ISPs have to throttle and cap, and have high contention because they are being overcharged by the monopoly and have to make a profit to survive. The main reason for getting fibre is to build something that works, at a price people can afford. The current infrastructure was not designed for NGA and can't deliver it. Unless you're in lab conditions with unlimited backhaul. Do you suggest a family owns five connections? or 10? Should everyone move out of the rural areas and cluster round exchanges?
In the UK they say the backbone is now all fibre. Most exchanges are fibre fed. Its the last mile (or often 5 miles) to the customer where the main issues are. And of course in the old exchanges where everything gets clogged up. Its such an old fashioned way of doing it. We need to move with the times, as other countries are doing. If copper was that good they would be using it, but they aren't , they are laying fibre. Videophone is one thing, telepresence is another. Medical examinations need exceptionally high quality. Streaming open heart surgery to young doctors in another country can't be done on skype... (well it has been done over skype in an emergency but HD is the way to go)
You can't rely on medical surveillance kit working for granny if the kids are all streaming hd movies. The killer app is families, and businesses wanting to do many things at once. They need fat pipes.
Thank you again for
Thank you again for commenting. Some quick notes on a Sunday afternoon..:
* If the hi speed / fibre networks in your country are profitable without gov't subsidies - your views are relevant. Then nobody is bothered when teenagers or others utilize this access for P2P og video/tv download. But from most discussions within the scope of EU DA it seems like gov't money is a central element - if taxpayers' money is involved, then it must be relevant to have an analytical/critical view on how gov't money is spent, and what values society gets in return - ie this is becoming a political question.
* We need to differ between professional users and private households - and entertainment and not entertainment services/utility services. The chances for positive socio-economic benefits are probably a lot higher in the professional segment? In Norway the ratio between the professional mkt and the private mkt is 1:10 - how is this in the UK? Enabling hi speed accesses for the professional mkt is probably not very controversial... - if the demand is there... But whether additional rolling out of hi speed accesses to the private homes also is beneficial to society, that seems to be the key questions in this debate... - in the Norwegian case, this question was put to Vista Analyse (see above) - and the answer was NO.... Any comparable analysis for the UK?
* Medical examinations requiring hi speed access - are they done in the homes, or in the hospitals / medical institutions in your country?
* From Oftel statistics I see that the broadband share of UK households are some 70%+ - and that the average broadband speed in the UK is some 7 Mbit/s - in other very similar to Norway. In our country we have est 100% broadband availability - how is this in the UK? And why do you think that 1/4 of UK households still have not installed fixed broadband at all?
* Are there many profitable fibre operators in your country - in Norway there are almost none....
Looking forward to continue this discussion in Brussels...
In our country our regulator
In our country our regulator says we have 99.8% broadband availability, but statistics show that a third of those are very poor, and we have many notspots still on dial up or satellites. That is why the broadband share is 70%. Many remain analogue because of limited or poor service, which costs as much as a good service.
It is only common sense to roll out high speed service to everyone, it doesn't take massive market analysis to know it is the future. Making excuses constantly and finding statistics to back it up is a waste of brain power. Its time to move forward, or admit defeat. Not cover it up by pretending that a phone network can deliver the future to everyone, which is what is happening at the moment. We Want Truth. Not stats. Not hype. Either we do it or we don't, and if we are going to do it we all need to work together. Yes, looking forward to the discussions too, but also as Charles and others pointed out earlier on this forum, we have been talking about this for many years, the time has come for action.
Thank you for your last
Thank you for your last comments,
I guess it is not a surprise that we are disagreeing on your two initial statements....:
1) "It is only common sense to roll out high speed service to everyone"
2) "It doesn't take massive market analysis to know it is the future"
If one of the key problems in the UK is poor coverage in rural areas - there are many alternatives - you don't have to go for the (most expensive) Rolls Royce solutions right away. Often broadband pick up rate is also lower in the rural districts - compared to the urban areas, so rolling out fibre network still might not attract enough "super users" throughout the rural districts? I would actually be surprised if poor coverage quality is the key reason for the 30% non-user density in the UK - is this assumption supported by facts?
In my country the broadband density has had a very slow growth from 65% and up to today's 70%+ - in spite of est 100% coverage... Our company performed an analysis on "Why are people not buying broadband?" for the Ministry of Government Administration, Reform and Church Affairs in 2008 - (Norwegian version only).
http://www.regjeringen.no/upload/FAD/Vedlegg/IKT-politikk/Rapport%20fina...
The key findings on the user side was lack og competence, fear for technology and lack of interest..... The non users often had no children and had a low income. It also showed that the IT industry had little knowledge of the non users, and showed little interest for this segment. One of the elements in this project was a survey including some 1200 respondents that went through a 50 question survey. The results were matched with similar questions presented to the broadband industry operators.
By the way - what is the estimated price tag for a fibre roll out throughout the UK? And how is the corresponding fundig package composed?
Looking forward to discuss this with you and others this week.
To get a connection to the
To get a connection to the rurals needs fibre. It is the only way. We have tried all the others. Its not a rolls royce, its a tractor. There is no point in using something to dribble a feed up to them, its a waste of money. Do the job properly, or admit it can't be done.
The estimated cost for full FTTH roll out in the uk is twice the price of the olympics or less than the price of a high speed train link. The only place you need to roll out FTTH is in rural areas, the most expensive in distance but cheaper in dig costs. The urban areas can take care of themselves, cos the telcos won't want to lose them and will up their game.
There will be lack of competence in areas without connectivity, i agree, that's pretty obvious really.
The IT industry has little knowledge of the non users. On that we can agree.
I also maintain you can make statistics say whatever you want them to for the customers you want to sell your surveys to.
The incentive for investing
The incentive for investing in a network infrastructure is determined by the potential Return On Investment (RoI) in the infrastructure over the lifetime of investment. This depends on the difference between the revenues generated from the services delivered and the cost (capital, operating, and maintenance) of delivering the services over the infrastructure.
The revenue from the access network depends on the services that can be delivered over the network. These services include regulated voice (telephony-PATS), TV (CATV); and data (broadband and superfast broadband) services. The NGA infrastructure should deliver all these service, and NOT only voice or television or data. Currently (2012), telephony (voice) generates the highest revenue, and it is regulated under the Universal Service Directive.
The cost of the access network consists of civil work and communication system cost. The cost of civili work is the same for nearly all technologies deployed in the fixed networks which can be copper, coaxial or optical fibre. In fact, the cost per metre of an optical fibre cable is less than a copper cable.
The cost of communication system consists of telecommunication equipment at the telephone exchange, street cabinet, and the customer premise. The cost of fibre cable is actually lower than the cost of copper. However, the cost of terminal equipment and powering to maintain service availability will depend on the choice of technology. The cost of currently standardised terminal equipment over copper is lower than the cost of currently standardised optical terminal equipment, especially in the case of delivering telephony as a Universal Service. The cost of upgrade will depend on the services delivered over the infrastructure. The cost of delivering very high bandwidth services (more than 20 Mbps) over distances of more than 2 km will require fibre in all cases. The upgrade of optical systems to deliver broadband service can be lower than copper based system, but current standardised optical equipment is higher than copper.
Obviously, if a technical solution is invented that delivers telephony over optical fibre at similar cost to delivering it over copper, then the roll-out of optical fibre will be accellerated to deliver telephony. The fibre infrastructure can then be upgraded to deliver superfast data and HDTV services to exploit the more than 30,000 GHz of optical fibre infrastructure.
This needs a new standard for optical technology for FTTH.