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Networks & Infrastructure
Building the fiber nation
Alcatel-Lucent VP identifies drivers to accelerate building of fiber networks
by Kendrick Struthers-Watson
It didn’t take much effort in listening at this year’s Broadband World Forum in Brussels to learn that one of the big buzzes in the air was the potential of the crossover between broadband and fiber technologies. Of course, broadband is well entrenched thanks to the recent advances in mobile broadband uptake. Fiber, which is also well accepted, has a different journey to make to reach more offices and homes.
Here at Broadband World Forum, we spoke to Jean-Pierre Lartigue, vice-president of Marketing and Communications, Fixed Access Division at Alcatel-Lucent to determine what the drivers were that were accelerating the building of the fiber nation.
“Operators’ attitudes to fiber in the access network have changed dramatically in the last 18 months. Once regarded as merely a high-end supplement to basic broadband services, deep fiber penetration is now seen by all as a fundamental enabler of next-generation broadband, with FTTH as the ultimate objective. Precisely for this reason, sovereign states around the world — albeit in varying degrees — are on the march to the Fiber Nation,” said Lartigue.
On the basis that existing ducts are used, the advance of fiber is made easier as there is so much less disruption through civil works, fewer road works and fewer traffic diversions due to road works.
“Although the picture at the global level is essentially uniform, there is no ‘cookie-cutter’ strategy at the national level,” Lartigue says. “Each nation’s next-generation access strategy — even while adopting the fiber to the most economical point principle — will be highly specific and reflective of local conditions.”
Some of these conditions are as follows, he continues:
Firstly, in pursuit of their fiber strategy, operators have to take fiber deeper and deeper into the access network. The civil engineering cost of the passive access infrastructure — ducts and dark fiber — is the major determinant of where, when and how far fiber rolls out. Approximately 60 per cent of the increased FTTH capital expenditure is in the ducts and trenching required to take fiber to the home; a further 10 per cent is reserved for the dark fiber itself.
As large as the overall capital expenditure for FTTH is, the CAPEX varies significantly with particular demographics. For example, the total CAPEX in a densely populated city center — where many subscribers live in multi-tenant units — is around €1000 per subscriber (for a take rate of based on 30 per cent. However, if one moves just a few kilometres outside of the city center, the cost doubles to €2000 per subscriber. In rural areas the cost is even higher; €6500, on average, per subscriber.
How to save money on the FTTH passive infrastructure by leveraging cost elasticity
Network operators think of themselves primarily as technologists; hence, they typically look to networking technology in order to achieve cost reduction and efficiencies. This, perhaps, is natural because, for 100 years or more, fixed-line operators have not had to contemplate any significant buildout of the passive infrastructure. In fact, in these circumstances, it is often easy to think of a trench or duct as “just another hole in the floor.” However, experience from around the world in the buildout of fiber provides compelling evidence of the merits of ensuring considerable elasticity in the cost of provisioning a new passive access infrastructure. Consequently, exploiting this elasticity is the critical success factor in securing a fiber access business case. Two examples illustrate this point.
The first example is the Aquitaine region of France, where the municipal authorities are motivated to ensure that any new civil work on existing utilities can accommodate future fiber deployment. The experience there suggests that the cost of the FTTH passive infrastructure can be reduced by as much as 65 percent.
The second example is New Zealand, where in preparation for FTTH buildout, the local authority has brought together all partners and stakeholders for a substantive pre-planning exercise. The focus is on R&D-related cost reduction, pre-agreed partnering criteria covering shared risks, responsibilities and revenues, and the use of shared, scarce resources such as technicians. It is anticipated that this collaborative strategy will result in 38 percent in savings, increase productivity, and lower the cost of fiber per meter, when compared to a non-collaborative, ad hoc approach. Both these examples illustrate clearly that costs are optimized when three practices converge: pre-planning, coordination and collaboration.
To achieve this convergence, local or municipal authorities have to assume a central role.
Key lesson
The cost elasticity inherent in passive access infrastructure can be effectively managed to deliver a 40 to 60 percent saving by anticipating the eventual deployment of FTTH via trenching, the reuse of existing ducts, and the careful engineering and optimisation of the FTTH architecture.
Furthermore, local communities need to take the lead in creating an inventory and managing the evolution of their passive infrastructure assets. Similarly, a proactive effort is required in order to cable multi-tenant buildings with fiber — a major roadblock for full FTTH. Addressing this issue requires the national promotion of FTTH, implementation of standards (contracts, cabling, operations) and legislation (new builds). While sharing via IP-level wholesale services (often named “Open Access”) has a role to play in addressing sparse or hard-to-reach populations with competitive network services, horizontal duct sharing remains the most vital component in reducing the build-out cost of a competitive network infrastructure. Fair competition can also be achieved and maintained with passive infrastructure Duct sharing allows complete operational autonomy between competitors (as they overlay fibers). Fiber sharing limits the joint operations at a purely passive “fiber connection point” deployed in the access loop. As noted earlier, Alcatel-Lucent has tested this approach and has implemented a new methodology — “Open Passive Infrastructure.”
Even so, moving forward, it would be risky to assume that a single solution for sharing will fit all countries and even all regions in one country. As a result, an optimum blend of sharing methodologies may well emerge across one territory. More specifically, market-driven areas may consist of a mix of in-building fiber and duct sharing; risk-driven areas may comprise a blend of in-building fiber, duct, and horizontal fiber sharing; and, policy-driven areas may provide end-to-end dark fiber sharing or IP/Ethernet wholesale.
Final words: galvanizing NGA public policies
Alcatel-Lucent’s analysis of current VHS broadband deployments shows that the Fiber Nation cannot be achieved in any meaningful way, or in any meaningful timescale without direct public intervention. For example, all sharing methodologies require some kind of intervention from the public sector at some level, although the nature and extent of this intervention may vary greatly from area to area. Only an appropriate national framework that is put in place by governments and regulators can enable the efficient coordination of the public-sector support. To do this, Alcatel-Lucent has closely observed and contributed to four key initiatives — across multiple countries — that have helped to establish national frameworks for building Fiber Nations:
Initiative #1. Launch national forum for next-generation access
Collaboration between stakeholders — incumbents and other operators, regional and local government, utilities, vendors and users — is a critical success factor. Consequently, every nation must bring stakeholders around the same table in order to take part in a structured consultation with the national government and the regulator. Ideally, this approach should result in research and recommendations, opinion, consensus and good will. All of these inputs can be carried forward into the negotiated process of developing a national Fiber Nation strategy.
Initiative #2. Design a national Very High Speed (VHS) strategy
Fiber Nations will not be created overnight; nor will they appear everywhere. Again, there is a significant risk that, without a guiding vision and strategy, the digital divide between Tier 1 inner cities and the rest of the world — smaller cities and rural areas — will persist. To address this issue, policies must be focused and segmented. Strategies, for instance, must be developed that segment the national territory, defining which VHS technology (i.e., FTTx, wireless) ought to apply to each area, while assessing the likely evolution in each case. In doing so, a viable strategy should take into account all the relevant local factors (such as competition, collaboration with municipalities and utilities, availability of structural funding) and global best practices. For instance, wireline and wireless access assessments ought to be conducted in tandem.
While wireless technologies (e.g., WiMAX, 3G, and satellite) continue to offer lower bandwidth than FTTH, they are nonetheless improving rapidly and can help to bridge the digital divide, particularly in areas of low population density.
Initiative #3. Translate VHS strategy into regulatory and political agenda
VHS broadband needs a major private investment, and that will only happen if and when investors clearly assess the business risk, and the nature and extent of public intervention. The key to certainty is policy and regulatory clarity. National regulators have the power to determine their nation’s definition of “competition” for VHS services, the number of separate infrastructures, duct and sharing rules, in-building cabling and sharing rules. Regulators can also provide clear guidelines for public-private ventures, which seek to bridge the digital divide between city centers and other regions, including suburbs and rural areas. In this respect, the regulator’s plans should dovetail nicely with the government’s legislative initiatives (i.e., forcing new building cabling) and public funding priorities. However, as practical experience shows, local (or regional) authorities remain the critical enablers of the Fiber Nation. They can trigger passive infrastructure awareness
programs, encourage synergies, control field assets, define roll-out plans, establish funding, set right-of-way tariffs, and initiate the delegation of authorities for sharing the passive infrastructure.
Initiative #4. Fix cost savings targets on passive infrastructure
Considerable savings can also be achieved on passive infrastructure costs; however, this requires detailed planning and tight coordination. Consequently, the power to achieve this goal is best devolved to regional and municipal authorities, possibly in conjunction with local, “open passive access” infrastructure providers. This devolution would more likely be achieved, if clearly quantified targets were set at the regional level for optimized engineering, infrastructure sharing, investor synergies and anticipation of future requirements.
In conclusion, the Fiber Nations are marching. Public authorities are mobilizing. What lies ahead is nothing less than a revolution in fiber infrastructure. We would do well to be ready for it.”
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