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How to guarantee profitability of your FTTH network with a comfortable margin?


 

“In order to ensure that the FTTH is deployed in the most efficient manner, a competition for the market could be introduced to choose the most efficient FTTH network operator at the local level.

When this model is applied in France, total investment needed including connection to each accommodation is estimated at €36 billion that is supposed to pay off within 35 years with the same level of profitability as the copper network at 10.4%by ISPs would be at €15.00/line/month excluding tax vs. €9.00/line/month for the copper network. Given geographic averaging, 20 million lines, or 60% of the total, would cost lower than their average price and thus incur a profit of €800 million/year that would compensate the loss arising from the 12 million loss-making lines (see figure 2 below). For ISPs’ consumers, the retail fibre monthly rental charge would then stand between €38 and €39/line/month, equivalent to a 20% price increase compared to the standard broadband over copper monthly rental charge. In return, these consumers would enjoy symmetric internet access at a higher speed of up to 50 times and the possibility to choose any ISP and to have access to any internet service regardless of where they live. “

Cost ave price and subsidy for efficient FTTH deployment“The European Commission issued an NGA Recommendation in 2010 that requires regulator to take into account an investment risk premium to allow for an increase in wholesale access price to the new fibre network. Also the European Telecommunications Network Operators’ Association (ETNO) and the European Competitive Telecommunications Associations (ECTA), two emminent trade associations in telecoms, have proposed contradicting measures. While ETNO recommended the same pricing method for both the fibre and copper network, ECTA indicated that access price to copper should be cut substantially to create enough incentive for incumbents to invest in fibre. However if the efficient model presented above had been chosen, these questions would be irrelevant since migration would be automatic for all households, plus profitability of FTTH network would be guaranteed with a comfortable margin.”

Source: http://www.teraconsultants.fr/assets/publications/PDF/From_copper_to_fibre_an_optimal_regulatory_policy.pdf 

In the UK there has been an apparent shift by OFCOM which DOUBLES the time to breakeven for the competitors compared with the incumbent??

read more…. Geo’s exit from NGA leaves questions for Ofcom by Ian Grant

revenue……reduction pushes tenants’ potential break-even period to 20 to 25 years. This is double BT’s expected break-even period for its Infinity fibre to the cabinet programme.

Is this happening in your country? 

Is the competitors’ access to the networks being opened up by the incumbent operators without fear or favour?

Please tell us what you see happening in your region.

 

 

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