broadband investment models - government
DESCRIPTION
Models of investment for broadband interventionTRANSCRIPT
18800-392
Guide to broadband investment
Presentation for QITCOM 2012
5th March 2011 • Pat Kidney
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Introduction to Analysys Mason
Aims of the guide to broadband investment
Stages of investment planning
Choice of investment model
Overall recommendations
Contents
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RefNo | Commercial in confidence
Analysys Mason has considerable global experience in undertaking
and assessing national broadband plans
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Ireland 2006-12:
Design, procurement and
implementation support
for the EUR 234m
National Broadband
Scheme
UK 2001 onwards: Broadband
planning for regional development
agencies on the UK
UK 2005-2006: Development of
broadband scenarios for the BSG
in the UK
UK 2008 onwards: support
to Cornwall council in its
Next Generation Broadband
project
UK 2008: Broadband stakeholder
group models for efficient public
sector interventions in next
generation broadband
Wales 2004 -2010: Commercial and
technical strategy, business planning,
procurement and implementation
support as part of National fibre
broadband initiative
Malta 2011: Techno-economic feasibility of
a national FTTH network
Wales 2006: Study to
promote public intervention
in “second generation
broadband” market
UK 2010 onwards: Cost modelling
of next-generation broadband and
regional funding allocations
Italy 2001-2002: Analysis
of government intervention
mechanisms and
prioritisation for broadband
task force
US 2002-2003 : Study of US
broadband policy for TechNet
India 2010: Strategic
road- mapping and
assessment of drivers for
the deployment of a
national fibre- optic
backbone in India
Chile 2007-2009: Broadband
promotion study in Chile
Malaysia 2002-2003: National
broadband policy development
Gulf 2010: Regulatory support
in major Gulf country to define
three- year internet
development plan New Zealand 2010 - 2011:
Technical and cost reviews
underpinning the Government’s
national Ultra-Fast and Rural
Broadband strategies
Australasia 2010- 2011: Operator
support to become national partner
for ultra- fast broadband solution.
Subsequently carried out review of
solution and identification of global
best practice
European Commission 2010-
2011: Developed a guide for
investment in broadband
infrastructure, covering small
regional roll outs and national
interventions alike
Norway 2002: Assessed
the potential social and
economic benefits from a
scheme to provide
broadband to selected
public sector sites
Singapore 2005-2006:
Provided support on Next
Generation Broadband
Network Initiative
Western Europe 2004:
Analysis of Internet
access prices in
Western Europe
Thailand 2009:
Development of
national broadband plan
Brunei 2009-2010:
Development of
national broadband
strategy
Lesotho 2012:
Development of
national
broadband plan
EMEA 2011: National
broadband market
assessment,
benchmarks and
forecasts
Australia 2009: STEM
license, training and
modelling assistance for
National Broadband
project
Israel 2011: Technical audit of national
broadband solution used to evidence
international competitiveness and
sufficient investment capability to the
Government Egypt 2008: Provided
commercial and technical fixed
licence bid support addressing
i.a. national broadband
requirements.
Libya 2009: Provided
commercial and technical fixed
and wireless licence bid support
addressing i.a. national
broadband requirements.
EU 2011 onwards: Socio-economic
benefits of broadband in 27 EU
countries and private sector funding
analysis
Morocco 2011:
National action plan
for the development
of broadband
18800-392
The guide provides best practice in planning a broadband investment
Affordable, good quality and open ICT
infrastructure for all will support
cohesion, innovation, and social,
economic and political change
details planning and procurement issues
that must be considered for broadband
infrastructure investment
Important resource for meeting
broadband targets
Essential for managing authorities to
prioritise the long term socio-economic
benefit of citizens over short term private
financial gain
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The guide sets out seven key questions for planning a broadband investment
5 Stages of investment planning
Why should I invest in
broadband?
What type of network
infrastructure should I invest in?
How should I invest?
How do I manage/monitor the
outcome?
What can be done to ensure
demand for services?
What can be done to reduce the
cost and manage risks?
What are the next steps that need
to be taken?
Contribute to hitting the DAE targets by using EU
funds quickly and effectively
Include measures to reduce costs and manage risks
Understand the commercial case and your potential
role on the demand side
Ensure successful delivery and operation, and
provide evidence for audit
Understand the merits of each investment model
and what might work best for you
Understand the costs and benefits of different kinds
of infrastructure
Define project aims to tackle market failures and/or
deliver socio-economic benefits what and why?
18800-392
Five investment models provide a broad spectrum of funding options
6 Choice of investment model
5 models
Bottom-up
Private
design build
and operate
Public
outsourcing
Joint
venture
Public
design build
and operate
Group of end users oversee the
contract to build and operate
their own local network
Managing
Authority
provides a
grant to
private sector
to assist in
deployment of
new network
Single contract for construction and
operation of network, but public sector
retains ownership and some control
Ownership of the network is split
between the public and private
sector
Public
sector
owns and
operates a
network
without any
private
sector
assistance
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Model Advantages Disadvantages Recommended use
Bottom up • Long term, non-
profit view
• Focuses demand
• Localised
deployments
• Differing technologies
• Targeting localised areas
• Leveraging small scale
funding
Private DBO • Larger scale
• Low public burden • Funding threshold
• Limited control • Sufficient funding to attract
operators
• Effective transferral of risk
Public
outsourcing • Public financial
stability with private
expertise
• Greater control
• Reduced benefit to
private sector
• Additional
bureaucracy
• Requirement for on-going
control
• More conservative
operators
Joint Venture • Risk sharing • Potential conflicts of
interest • Public/private interests
closely aligned
Public DBO • Public organisation
has full control • Size and scope limited
by public expertise • Requirement for absolute
control
• Inspirational investment
Summary of pros and cons of investment models
Choice of investment model
Each investment model will be applicable in different situations
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The guide is illustrated with findings from operational projects
8 Choice of investment model
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Overall recommendations are focused on delivering maximum benefit to end users
Socio economic benefit must be managed alongside project
sustainability to deliver long term benefits
Long term control by public sector can protect end user benefit,
however the private operators can bring invaluable expertise
Sustainability is critical as socio-economic benefits will take time
The bottom up model may suit small scale fibre projects
Long term non-profit view of end users suits the fibre business
case, but this may be difficult to leverage on a large scale
Small investments can provide a catalyst through partnerships
Open and non-discriminatory access to infrastructure supports
effective competition
However, the investment requirements for passive and active
access must be carefully considered
9 Overall recommendations
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The guide also covers funding, state aid and the steps to broadband delivery
10 Overall recommendations
Preparation
and
planning
EU funding
application
Procurement
design
State aid
compliance
Procurement
activity
Contract
award
Broadband
delivery
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Contact details
11
Pat Kidney
Senior Manager, Head of Ireland
Analysys Mason Limited
Suite 242, The Capel Building
Mary's Abbey
Dublin 7, Ireland
Tel: +353 1 602 4755
Fax: +353 1 602 4777
www.analysysmason.com
Registered in Ireland IR304061
18800-392
Bottom-up model
Overview of model
Group of end users oversee the contract to build and
operate their own local network
12 Investment model summary
Advantages
Long-term, non-
profit view, suitable
for high-cost
infrastructure (e.g.
FTTH)
Focuses demand
and encourages
local social cohesion
Disadvantages
Difficult to replicate
local “intensity” on a
large scale
Localised
deployments, with
risk of differing
technologies
Recommended use
For targeting
localised areas and
for gaining the most
benefit from small
amounts of funding
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Private design build and operate model
Overview of model
Managing Authority provides a grant to private sector to
assist in deployment of new network
13 Investment model summary
Advantages
Larger scale (than
bottom up)
Low public burden,
which can lead to
faster deployments
Disadvantages
There is a minimum
funding threshold to
attract private
interest
Limited control over
operations may
reduce the socio-
economic impact
Recommended use
Larger-scale
Where the level of
funding attracts
private interest
Where the network
operations (and risk)
can be transferred to
private sector
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Public outsourcing model
Overview of model
Single contract for construction and operation of network
but public sector retains ownership and some control
14 Investment model summary
Advantages
Public financial
stability with private
expertise
Greater control (than
private DBO)
Disadvantages
Reduced financial
benefit to private
sector (compared to
private DBO)
Additional
bureaucracy
Recommended use
Where Managing Authority requires a high level of control over the network
Where private operator has a more conservative view of risk than the private DBO model
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Joint venture model
Overview of model
Ownership of the network is split between the public
and private sector
15 Investment model summary
Advantages
Potential financial benefit for both parties
The use of special-purpose vehicles can make the model very scalable, and allow alternative investment sources
Disadvantages
Potential conflicts of
interest may block
creation / successful
operation of the JV
Few examples of
implemented JVs to
indicate best
practice
Recommended use
Where the interests
of the public and
private sectors can
be closely aligned
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Public design build and operate model
Overview of model
Public sector owns and operates a network without any
private sector assistance
16 Investment model summary
Advantages
Managing Authority has full control to promote competition and enforce standards
Managing Authority can ensure socio-economic benefits are prioritised
Disadvantages
Size and scope
limited by public
expertise
Potentially excludes
private sector
expertise
Recommended use
Where a Managing Authority needs absolute control over network operations
Where targeted investment will inspire investment from private sources