2

Introduction:The Partnership for Lebanon

Broadband Strategy

Introduction:The Partnership for Lebanon

Broadband Strategy

3

The commitment of the Partnership for Lebanon

www.partnershipforlebanon.org

5 companies, 5 workstreams, over 15 projects

4

The Partnership Vision for Lebanon With the most advanced communications infrastructure of the Middle-East, Lebanon could transform

• Education and knowledge into innovation • Ingenuity and entrepreneurship into

sustainable growth and wealth• Its worldwide Diaspora into a connected global

leading community• Individualism and tradition into creative cultural

diversity and social cohesion

5

OECD, UN, World Bank, WEF all recognize the power of broadband connectivity to accelerate economic growth and social inclusion

For social inclusion

To boost productivity and economic growth

For government efficiency and effectiveness

• Education for all• Healthcare for all• Universal Connectivity

• Increase competitiveness• Attract private investment• Generate Innovation• Reduce transaction costs

• Better Services for citizens and businesses

• Cost-savings • Security, safety and

transparency

6

Connectivity is a need not a luxury

a)Insignificant costs compared to other infrastructures

b)For Lebanon the most powerful lever to leapfrog

7

Table extracted from the 2006 European Innovation Scoreboard

8

Broadband subscribers per 100 inhabitants, by technology (Source OECD, June 2007)

Source: OECD

0

5

10

15

20

25

30

35

Source: OECD

DSL Cable Fibre/LAN Other

OECD Broadband subscribers per 100 inhabitants, by technology, June 2007

OECD average

9

CRL* Team

Robert PepperDirector, Global Policy

Government Affairs

Peter GruetterDistinguished Fellow

IBSG

Monique MorrowDistinguished Engineer

Consulting Engineering

George AkikiProgram Director, Partnership 4 Leb

Corporate Affairs

Salam YamoutProgram Manager, Partnership 4 Leb

Nicola VillaDirector, Public Sector

Diogo VasconcelosDistinguished Fellow

Chris RebergerManager, Solutions Center

Russ GyurekConsulting Engineer

Others

Hosein Badran

Robert Grossman (IBSG)

Paolo Campoli (Business Dev)

Selim Edde (BDM)

Mawaheb Kabbara (SE Mgr)

Michael Truskowski (CE)

* Connected Republic of Lebanon

10

TRATRA

11

Regulatory and MarketFramework

Regulatory and MarketFramework

12

0%

20%

40%

60%

80%

100%

Roles for Public and Private Sectors in Technology Adoption

Supply

Time

% Adoption

Closing the Gaps:Policies for Digital Inclusion

Government as Catalyst:• Market stimulation• Pre-commercial R&D

}}Demand}}

13

Connectivity in Lebanon today• Weak infrastructure No IP NGN backbone

• Low speed 256 KBPS (recently introduced DSL maximum speed 2 Mbps)

• International Bandwidth Limited

• Coverage Limited

• Expensive service $50 (urban, DSL)$200 - $400 (rural, leased)

Sound regulatory framework and private investment are key to put Lebanon on the road towards pervasive broadband connectivity

14

Role for TRA

• Telecom Regulatory Authority (TRA)– Establish regulatory framework

– Issue licenses

– Monitor, investigate, enforce

– Alternative dispute resolution (ADR)

15

Role of Council of Ministers

1. Public ownership and access to ducts for licensed service providers

2. Unbundling of the local copper loop

3. Ducts in new buildings

Council of Ministers decisions to support the regulatory and market framework for attracting investment in sustainable broadband infrastructure and fast deployment in urban areas:

16

Regulatory-Market Framework• Developed by Cisco’s “Connected Republic of Lebanon” team

in consultation with the TRA

• Based upon technical, market and regulatory analysis

• Aims at attracting investment in sustainable broadband infrastructure for Lebanon in 2008

• Many ways to reach the goal. Philosophy of regulation:– simple– transparent / explicit– rely on the market wherever possible– narrowly targeted regulation

17

New Broadband Licenses (1)

• Core Type License– Market could support up to three– Auction if competing applications– Coverage requirements / Nationwide service with 8 nodes– Option to construct international gateway– High level technical requirements for speed, latency, jitter, etc based on

international standards.– 15 year license with presumption of renewal

18

• Metro/Access Type License– Issued upon application– No limitation on number– No build out requirement for new entrants– 10 year license with presumption of renewal– Technology neutral– Use or lose requirement for spectrum license– No restrictions on the applications that can be run on the network– Allows two-way satellite broadband directly to subscribers

New Broadband Licenses (2)

19

Interconnection Requirements

• Interconnection for Core licenses– New core licensees have access to international gateway at fair, reasonable

rates– Allowed to interconnect at international gateway, national nodes, IXPs– Alternative dispute resolution at TRA if complaint

• Interconnection for Metro/Access licenses– Metro/access license holders able to interconnect with Core networks on

commercial basis– Interconnection of last resort with Ogero (Liban Telecom) metro/access

network– Alternative dispute resolution at TRA if complaint

20

Additional Requirements

• New fiber network investment– No initial local loop unbundling for metro/access licensees who deploy

new fiber– Assessment to unbundle after 10 years

• Legacy copper local network– Unbundled on fair and reasonable terms and conditions– TRA resolves complaints with ADR

• “Duct Management Desk”– Guarantee equal access to ducts– Expedite and coordinate new duct construction– Establish and enforce duct standards– Maintenance and access of existing ducts

21

Network ArchitectureNetwork Architecture

22

Overall Network Architecture

• Delivers a scalable hierarchical network• Network Components: IGW/IXC, Core, metro, access

– Core: IPNG cores– Metro: Metro Ethernet connections– Access: xDSL, FTTx, Wi-Max, 3G/4G, Satellite

23

Architecture Details: Core

Core Details• IP/NG core network• Each core will have a peering point to IXC• Eight core nodes connected via

Redundant/protected 10GE links• High availability. Power back-up, redundant

equipment architecture, ability to support variety of QoS parameters

• Scalable architecture for much higher data rates per growth

24

Network Architecture: Core

Jou nie h

Tyre

Saida

Zahle

Beirut

Na bat iyeh

Tr ip oli

BEI-1

BEI-2

BEI 1 and BEI-2 fullymeshed for redundancy

Internet Gateways at BEI-1and BEI-2 also

High Level Core Router LayoutIP/MPLS Provider Routers Only

n x 10-40 GbpsBEI-1 and 2 CoreAggregationCapability

10 Gbps WAN Capabilty

Urban areas / should be able to connect businesses located here with 100MBPS on a per need basis

Metro / High density po pulation / Intense Economic Activity

8 cities

Beirut Mount Lebanon

25

Architecture Details: Metro/Access

• Metro: Includes Business Parks & High Density population areas

• Combination of rings and wireless coverage around major cities

• IP Carrier class network• Meet minimum BB data rate (DS and US)• Suggested requirements:

– No service manipulation– QoS to support Video– Availability (limited downtime)

• Quad-play service capable

26

                                                                                                        

300m

3Km5Km

Down: 1 – 8 Mb/sUp: 0.384 – 1 Mb/s

Down: < 1.5 Mb/sUp: 0.122 - 0.384 Mb/s

Down: 25 – 50 Mb/sUp: 1 – 6 Mb/s

CO

DSL Assumptions for metro/access

27

Not All Bits Are Created Equal“Speed” and Latency

Bandwidth

Low

High

HighLow

TelepresenceVoice

HD-IPTV

Sensitiveto Latency

StreamingAudio

Gaming(LD)

Gaming(HD)

Email

DownloadVideo

StreamingVideo

28

Architecture: What to Expect

In Three Years (Conservative):• 3 competitive core networks. • Metro business parks and MDUs in dense populated regions to

have a combination of DSL and Wi-Max coverage. Expect 40% availability of BB

• Fiber rings around the eight large metro areas • Rural and less populated areas beginning to have DSL

availability, potential for Wi-Max and 3G/4G. Expect 15% availability

• Demand increasing, demand for Internet devices• SP plans to start FTTH

29

Architecture: What to Expect

In Three Years (Optimistic):• 3 competitive core networks• Multiple Metro Fiber rings in major cities• In-band Video options, SDV, PPV, etc• Metro business parks are fibered: access to 100Mbps/1GE• Downtown coverage is upwards of 50%• Metro areas have Wi-Max blast • The major Rural CO’s equiped with DSL capability• SP deploying FTTH to “Greenfield” developments

30

Business CaseBusiness Case

31Broadband business case

• Positioning the business case– Private sector outcomes without public support– Seen as a first step to connected Lebanon and

precludes no developmental option– Delivers NGN-IP backbones, robust connections– Conservative bias in market forecast and player

revenues– Macro economic model– New entrant is an integrated player competing

nationally against 2 others– Application revenue excluded

32Broadband business case

• Total market and new entrant characteristics– With economic growth of 2.5% over next 10 years– Leads to a per capita GDP of ~$US 9,500– Competitive stimulus to the market

• 200,000 households subscribing in 2018. $US 40 month flat as speed increases (regression, check against HH income distribution)

• 16,000 leased lines in 2018. Prices decreasing 15% a year, going to UK levels, normalised on GDP.

– Numerous assumptions associated with churn, share of gross adds, long term equilibriums of 1/3 in core and access, take up curves, market sizing

33

Network Model Cost Assumptions

– Architecture is based on current NG available equipment (competitive)

– Costs are discounted to represent SP buying power– Estimate does not include “Services” (video servers, etc)– “Content” costs are not included– Model includes upgrades and scalability to equipment– Model includes maintenance expenses– Copper lease costs are included (Access)– Network exchange agreements are not included:

handoff, Access to Metro agreements

34

Broadband business case

• Consider one vertically integrated player– 10 year cumulative CAPEX/OPEX ~ $US 360 million– 10 year cumulative HH revenue ~ $US 342 million– 10 year cumulative Business revenue ~$US 90 million– NPV of ~ 6 million @ 15% (No TV)– Peak debt $US 52 million

Summary 2008 2009 2010 2011 2018

$US m Consumer/SMB broadband 5.6 18.0 26.9 31.3 39.1$US m Enterprise 0.0 1.2 6.0 9.5 7.2

Total 5.6 19.2 32.8 40.8 46.3

$US m Access 2.5 5.3 7.4 7.1 9.4$US m Metro/Aggregation 34.7 25.6 25.3 22.9 16.1$US m Core/Backbone 3.7 0.9 0.0 0.0 0.0$US m Global interconnect 0.8 0.8 0.8 0.8 3.1

Network 1.2 0.6 0.4 0.3 0.2$US m Total 42.9 33.2 34.0 31.1 28.9

$US m Total -37.3 -13.9 -1.2 9.7 17.4

35

36

Q & AQ & A