fibreco overview - au, nz, sg
TRANSCRIPT
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Overview of FibreCo Model in AU, NZ and SG
A brief for BridgeAsia Thailand
Prepared by Jieh Tan, Sept-12
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Australia ModelItems Descriptions
Programme National Broadband Network (NBN)
Objective/ Chartered NBN Co is to connect 93% of Australian homes, schools and businesses with FTTP technology providing broadband speeds of 100Mbps. All remaining premises will be served by a combination of next generation fixed wireless and satellite technologies providing at least 12Mbps.
Funding Framework and Cost
Government funding of AUD$30.4bil over ten years, additional AUD$13.7bil to be funded by debts. Total peak funding of AUD$44.1bil. NBN cannot be owned privately.Capex of AUD$37.4bil, Opex of AUD$26.4bil and the remaining to be cover by revenue of AUD$23.1bil.
Timeframe By 2022
Background Prior to NBN, both Telstra and Optus operates HFC networks. However majority of these last mile connections are cooper based and FTTN are not fully implemented.
NBNCo (NetCo/Wholesale)
NBN to purchase legacy cooper and HFC infrastructure from Telstra and Optus, Telstra and Optus customers are expected to switch over to NBN fibre network when fibre infrastructure are in place. Entry level wholesale pricing start from AUD$24/SIO/month with bandwidth of 12/1Mbps. Furthermore NBN Co wholesale prices are frozen for the next five years (2012-17). Both Telstra & Optus are banned from directly competing with NBN (including Wholesale Wireless & Satellite services). There are 121 PoIs distributed across Australia. Theoretically any RSP can provide national footprint however the monthly cost is prohibitive. This in turn allow large RSPs to offer wholesale white label product and aggregation services. NBN is expected to achieve payback by 2033, cashflow positive by 2022 and IRR of 7.1%.Legacy cooper (Backup battery) and some part of HFC network to be superseded by fibre.
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New Zealand ModelItems Descriptions
Programme Ultra Fast Broadband (UFB) & Rural Broadband Initiative (RBI)
Objective/ Chartered
UFB: 75% of NZ homes (FTTH), 100% of schools and hospital will have 100/50Mbps fibre connections. RBI: 97% of NZers to be connected via Fixed Wireless and/or LTE with 5Mbps throughput. Remaining 3% to be service by Satellite Broadband and 1Mbps Fixed Wireless.
Funding Framework and Cost
Public-Private Partnership partnership with Crown Fibre Holding (CFH)UFB: NZD$1.35bil funded over ten years + private co-investmentsRBI: NZD$300mil funded over ten years, funding only covers layer one and two. Remaining NZD$150-$200mil to be funded by private partnership.
Timeframe By 2020
Background Prior to UFB & RBI, New Zealand already have FTTN network in place; built by Telecom NZ prior to demerger as part of LLU initiative. A prerequisite for Chorus to win the network building tender, it has to demerge and structurally separate from Telecom NZ.
Chorus (NetCo/Wholesale)
Chorus was formerly the network arm of incumbent Telecom NZ. Chorus won 70% of the UFB initiatives (twenty four towns and cities) and is awarded NZD$969mil over ten years. Chorus is expected to invest up to NZD$350mil to complete the build. Entry level residential connection (30/10) wholesale for NZD37.50/month; this is capped until 2015 and will increase by $1.00 per annum thereafter. RBI further extend UFB into rural areas. Chorus will provide fibre to schools and hospital, VFNZ provides the wireless infrastructures via fibre backhaul. Legacy cooper network will be utilise for premises without fibre and POTS (Able to provide communication services during power outage). CFH by large, has looked to NBN for guidance and keeping modus operandi similar where possible.
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Singapore ModelItems Descriptions
Programme Next Generation National Broadband Network (NGNBN)
Objective/ Chartered To have 95% of premises connected to ultra-fast broadband (1Gpbs) by mid-2012 and OpenNet will assume universal service obligations after 2013. Singapore NGNBN comprise of three distinct layers for effective open access.
Funding Framework and Cost
Public-Private Partnership: Government funding of SGD$750mil over five years for NetCo, $250mil for OpCo. Plus private funding (not disclose).
Timeframe By 2012
Background Singapore already has FTTH network in place, majority of premises are able to connect to 100Mbps.
OpenNet Consortium (NetCo/Wholesale)Structural Separation
Consortium consist of Axia (30%), SingTel (30%), Singapore Press Holdings (25%) and Singapore Power Telemedia (15%); were awarded Singapore passive network tender in 2008. SingTel will transfer existing ducts, manholes and exchanges to AssetCo and sell down its stake in that entity by 2014. OpenNet will own and deploy all the fibre optic cables, and offer wholesale dark fibre services to qualifying operators on a non-discriminatory basis (Basically Layer 1). Residential Entry pricing starts at SGD15/month (1:24 contention ratio) and SGD$50 for businesses (1:16 contention ratio). Plus additional one off installation fee and cabling beyond 15meters.
OpCo Operational Separation
The electronics will be offered to Opco who will operate the Layers 2 and 3 of the network and the Opco will resell to RSPs (Open Access). Four classes of service from “best effort” to “real time”. Residential Entry price additional SGD$6/month and SGD$25 for business. Price varies accordingly to throughput and class of service.
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Appendix – Telstra & NBN(Incumbent)
Sourced: NBN Co and Telstra Sign Binding Definitive Agreements, http://www.nbnco.com.au/assets/media-releases/2011/nbn-co-and-telstra-sign-binding-definitive-agreements-23-jun-11.pdf
NBN brought Telstra & Optus legacy cooper and HFC networks,
and will decommission these network overtime. Condition of
purchase prohibit Telstra & Optus to compete with NBN in the
wholesale wireless space.
NBN will “rent” infrastructure
(Exchanges, ducts, cabinets, etc.) from
Telstra & Optus.
Reportedly Telstra is expecting to receive AUD$11bil over ten
years and AUD$800mil for Optus. This
includes rental & relevant services
Foxtel is a provider of pay TV in Australia. www.foxtel.com.au
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Appendix – NBN Business Model
Sourced: NBN Co Corporate Plan 2011 - 2013, Exhibit 2.2, http://www.nbnco.com.au/assets/documents/nbn-co-3-year-gbe-corporate-plan-final-17-dec-10.pdf
Small scale operators, regional
RSPs
Large scale operators with
nationwide reach
NBN with 121+ PoIs throughout
whole of Australia
Exit Strategy? The current Labour Government is very unlikely to privatise the NBN, however the liberal may have a different view. Furthermore, NBN will be the sole provider of fibre infrastructure (monopoly), an exit will require strong ACCC approval as it would hinder competition under the Trade Practice Act
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Appendix – NBN Pricing Model
Sourced: NBN Product and Pricing Overview for Service Providers Dec-11, Figure 4, http://www.nbnco.com.au/assets/documents/product-and-pricing-overview-dec-11.pdf
AVC (Mpbs)
Monthly Recurring
12/1 $24
25/5 $27
25/10 $30
50/20 $34
100/40 $38
250/100 $70
500/200 $100
1000/400 $150
CVC Monthly Recurring
1 Mbps $20
NNI(per PoI)
Monthly Recurring
1Gbps/10km $200
10Gbps/10km $500
1Gbps/40km $400
10Gbps/40km $1000
NNI(per PoI)
One off Setup Fee
1Gbps/10km $1,000
10Gbps/10km $7,000
1Gbps/40km $5,000
10Gbps/40km $35,000RSPs baked in
contention ration assumption here. Ranging from 1:30 to 1:100 or more.
Small RSPs generally use high contention ratio to remain competitive. High NNI cost (there are 121 PoIs) creates opportunity for large operators to provide aggregation services.
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Appendix – NBN Fixed Wireless
Sourced: NBN Fixed Wireless Factsheet, http://www.nbnco.com.au/assets/documents/n-p/nbn-co-fixed-wireless-factsheet.pdf
LTE Network
NBN Co Fixed Wireless is engineered to deliver services to a fixed number of premises within each coverage area. Thus bandwidth per premise is designed to be more consistent than mobile wireless.
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Appendix – NBN Forecast Financial
Sourced: NBN Co Corporate Plan 2012 - 2015, Exhibit 9.4, http://www.nbnco.com.au/assets/documents/nbn-co-corporate-plan-6-aug-2012.pdf
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Appendix – NBN Forecast Funding
Sourced: NBN Co Corporate Plan 2012 - 2015, Exhibit 9.10, http://www.nbnco.com.au/assets/documents/nbn-co-corporate-plan-6-aug-2012.pdfSourced: NBN Co Corporate Plan 2012-2015, Section 9.11.2, http://www.nbnco.com.au/assets/documents/nbn-co-corporate-plan-6-aug-2012.pdf Sourced: Budget 2012-13, Broadband, Communication and the Digital Economy, http://www.budget.gov.au/2012-13/content/ministerial_statements/rural_and_regional/html/rural_and_regional-05.htm
The Australia Government has currently set a budget of AUD$20.1bil to FY15/16 as equity injection for NBN. Any additional equity above and beyond that will have to be funded by issuing Australia Infrastructure Bond. NBN Debt funding is not required until FY15, NBN will seek external funding from banks and financial markets without explicit guarantees from the Shareholder Ministers as early as possible. No assurances can be given that such debt-raising requirements will be met, the capital structure and debt issuance decisions will be determined at the time by the Shareholder Ministers.
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Appendix – NZ Fibre Network
Sourced: Telecom Demerger Scheme Booklet, http://media.corporate-ir.net/media_files/IROL/91/91956/SchemeBooklet.PDF
New Zealand already have FTTN network deployed during LLU
initiative
Effectively, PoIs
equivalent to NBN
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Appendix – NZ RBI
Sourced: RBI Auckland Year 2 update, http://chorus.co.nz/file/3403/auckland-final.pdf
Chorus will provide the fibre connections throughout all of New
Zealand ‘s schools, and hospital. VFNZ build additional 3G
base stations funded and agreed with the
government.
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Appendix – NZ Crown Fibre Holdings
Sourced: Crown Fibre Holdings, http://www.crownfibre.govt.nz/crown-partners/agreements-with-ufb-partners/ Sourced: CFH Invitation to Participate, http://www.crownfibre.govt.nz/media/4824/invitation-to-participate.pdf
Items Descriptions
What is CFH About? CFH is established to manage the NZ Government’s NZD$1.35bil investment in UFB infrastructure. CFH will managed the government’s investment in networks, facilitate and, where appropriate, lead the development of operational and technical standards for LFCs. CFH will also monitors LFC fibre rollout targets. CFH is operated by group of seasoned executives. The government has already set a reserve for UFB.
PPP Framework CFH will entered into a Joint-Venture with private companies that won the tender, and setup LFCs to build the network. Each LFCs will tender for their hardware and ensure its interoperate with other LFCs technologies. LFCs are expected to comply with Open Access Requirements. Layer 2 services are not funded by the Government, however LFC can choose to provide Layer 2 Services with CFH consent. LFC will operate independently of its shareholders, premises, staff and operations systems. LFC is expected to own its network infrastructure and is expected to manage and direct the operation and maintenance of its network.
Local Fibre Companies(UFB Coverage)
Northpower Fibre (1.6% ) - Owned by Northpower Limited Ultrafast Fibre (13.7%) – Owned by WEL NetworksEnabled Services Networks (15.3%) - Christchurch City Holdings LimitedChorus (69.4%) – Listed Company, formerly Telecom NZ Network arm.
LFC Overriding Objectives
1) Maximise the availability of fibre infrastructure and Layer 1 Services within the LFC Coverage Area2) Generate widespread uptake of services delivered on the fibre infrastructure within the LFC Coverage Area, including by residential end-users
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Appendix – NZ UFB & RBI Funding
Sourced: RBI Funding, http://media.nzherald.co.nz/webcontent/document/pdf/ruralbroadband.pdf Sourced: UFB Funding, http://www.treasury.govt.nz/budget/2012/suppestimates/suppest12commun.pdfSourced: Invitation to Participate, Appendix 2, Exit Mechanism, http://www.crownfibre.govt.nz/media/4824/invitation-to-participate.pdf
Items Descriptions
UFB UFB is expected to be funded by reserve dedicated for it.
RBI RBI is expected to cost the NZ government $300mil. The government is expected to fund $48mil from it’s budget and the remaining $258mil from the Telecommunication Development Levy through TSO
Exit Strategy?Both CFH and their respective partners have the rights to exit from their LFC holdings. However CFH has agreed to not received any dividend as part of this joint venture, all dividend will attribute to the CFH partners for 10 years. CFH has the option to dilute it’s share in LFCs to their respective partners. However the government still hold the rights to prohibit any changes to the provisions in LFC’s constitution by mean of a single government share in all LFCs. The sales of LFCs shares would not undergo the similar level of scrutiny by ComCom when compared to the Australia NBN. As there are multiple LFCs and government prohibit any changes to LFCs’ constitution
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Appendix – Singapore Model
Sourced: http://www.ida.gov.sg/Infrastructure/20090731125844.aspx
OpenNet Singapore
Nucleus Connect,
SingTel, M1, ViewQuest
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Appendix – Demographics New Zealand Australia Singapore
Population 4,434,680 22,700,300 5,183,700
Land Area (km2) 270,534 7,702,466 710
Population Density per km2
16.39 2.95 7,300.99
Mobile Penetration Rate 124.3% 129.5% 149.6%
Fixed Broadband Penetration per 100 inhabitants Dec-11
26.9 24.6 24.9
OECD Broadband Ranking 17 21 N/A
GDP/Capita(USD$ Nominal)Sourced: IMF 2011
$36,648 $65,477 $49,271
Number of Households 1,659,800 9,117,033 1,146,200
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Appendix – AcronymsItems Descriptions
PoIs Point of Interconnects
VFNZ Vodafone New Zealand
FTTP Fibre To The Premises
FTTN Fibre To The Nodes
HFC Hybrid Fibre Coaxial
RSP Retail Service Provider
NetCo Network Company (Infrastructure)
OpCo Operating Company
LLU Local Loop Unbundling
ULL Unbundled Local Loop
SIO Services In Operations (Subscriber)
Items Descriptions
AVC Access Virtual Circuit
CVC Connectivity Virtual Circuit
NNI Network-Network Interface
ACCC Australia Competition and Consumer Commission
ComCom Commerce Commission (NZ)
PPP Public Private Partnership
LCF Local Fibre Companies
USO Universal Service Obligation
TSO Telecommunications Service Obligations