NEXTGEN09, LEEDS — What’s the best way for local authorities to encourage the roll out of next-generation broadband without distorting competition? The French experience, recounted by Gabrielle Gauthey, senior vice-president for public affairs at Alcatel-Lucent, seems to suggest that investing in backhaul would be a smart move.
Gauthey is uniquely qualified to talk about public investment in broadband networks. Before joining the giant optical equipment vendor, she was a member of ARCEP, the French telecoms regulator, and prior to that was responsible for regional digital development strategy at government-owned bank Caisse des Dépôts.
Eight years ago France was seriously lagging behind in broadband adoption, she says. The EU regulation on local loop unbundling (LLU) had just come into force, requiring France Telecom to allow other operators access to the copper cables that run from the customers premises to its telephone exchanges, but this had failed to stimulate broadband competition. France is a very rural country, and expanding their networks into low-density areas of population simply wasn’t looking attractive to alternative operators.
Realizing that market forces alone would not provide the level of broadband adoption that it desired, the French government decided that the Caisse des Dépôts could provide loans at reduced rates to local authorities for broadband development. But these loans had strings attached — local authorities could invest in broadband infrastructure, but were not allowed to act as telecommunications operators.
Local authorities were getting impatient with the market; they wanted to step in and invest, but they weren’t allowed to. In 2003 they eventually they got their own way when the French Parliament passed a new law enabling local authorities to be wholesale operators, and even retail service providers if there were no other available broadband providers.
As a result, a little over €2 bn was invested in local authority projects, mainly in fibre backhaul — the networks that connect local telephone exchanges to the national backbone. About half the money came from the public sector, the remainder from private investment.
In each project the local authority partnered with the wholesale arm of a second-tier telecoms operator, setting up a délégation de service public — what we would call a public-private partnership. Critics of the scheme thought that it would result in small, scattered operators, but in fact there are only four or five operators of these local authority networks, according to Gauthey. SFR set up LD Collectivités, Free set up Axione, Axia set up Covage, and so on.
Impact assessment
At the end of 2008, ARCEP was asked to provide an assessment of the impact of the local authority projects. 86 projects had been initiated, mainly by départements, of which 53 are currently running, covering roughly two-thirds of France.
Gauthey believes that the local authority investments achieved what they set out to do — enabling more cost-effective broadband coverage in medium and low-density rural areas. The evidence is in ARCEP’s data, which shows that LLU surged when these new backhaul networks were built; about 37% of central offices have been unbundled through the use of local authority backhaul networks.
There was also a positive impact on the uptake of mobile broadband, says Gauthey. “France issued mobile broadband licenses while I was at the telecoms regulator, and the only places where this worked were where the local authority backhaul was available,” she contends.
Local authority backhaul has also had an economic benefit for local businesses because it fostered the creation of profitable retail service providers dedicated to smaller businesses and local enterprise. “We had a problem that small companies were not very much on the internet,” Gauthey commented. “Now these companies are the ambassadors for taking up of internet services by SMEs.”
The best part? Backhaul networks are a future-proof investment that will continue to provide value as France tackles an even greater challenge: how to use public money to accelerate the deployment of high-speed broadband and next-generation access (NGA).
Speaking of NGA, recent reports say the French government has decided to invest €2 bn in fibre-to-the-home projects. A formal announcement is expected in December
Public money and broadband in France
Gauthey is uniquely qualified to talk about public investment in broadband networks. Before joining the giant optical equipment vendor, she was a member of ARCEP, the French telecoms regulator, and prior to that was responsible for regional digital development strategy at government-owned bank Caisse des Dépôts.
Eight years ago France was seriously lagging behind in broadband adoption, she says. The EU regulation on local loop unbundling (LLU) had just come into force, requiring France Telecom to allow other operators access to the copper cables that run from the customers premises to its telephone exchanges, but this had failed to stimulate broadband competition. France is a very rural country, and expanding their networks into low-density areas of population simply wasn’t looking attractive to alternative operators.
Realizing that market forces alone would not provide the level of broadband adoption that it desired, the French government decided that the Caisse des Dépôts could provide loans at reduced rates to local authorities for broadband development. But these loans had strings attached — local authorities could invest in broadband infrastructure, but were not allowed to act as telecommunications operators.
Local authorities were getting impatient with the market; they wanted to step in and invest, but they weren’t allowed to. In 2003 they eventually they got their own way when the French Parliament passed a new law enabling local authorities to be wholesale operators, and even retail service providers if there were no other available broadband providers.
As a result, a little over €2 bn was invested in local authority projects, mainly in fibre backhaul — the networks that connect local telephone exchanges to the national backbone. About half the money came from the public sector, the remainder from private investment.
In each project the local authority partnered with the wholesale arm of a second-tier telecoms operator, setting up a délégation de service public — what we would call a public-private partnership. Critics of the scheme thought that it would result in small, scattered operators, but in fact there are only four or five operators of these local authority networks, according to Gauthey. SFR set up LD Collectivités, Free set up Axione, Axia set up Covage, and so on.
Impact assessment
At the end of 2008, ARCEP was asked to provide an assessment of the impact of the local authority projects. 86 projects had been initiated, mainly by départements, of which 53 are currently running, covering roughly two-thirds of France.
Gauthey believes that the local authority investments achieved what they set out to do — enabling more cost-effective broadband coverage in medium and low-density rural areas. The evidence is in ARCEP’s data, which shows that LLU surged when these new backhaul networks were built; about 37% of central offices have been unbundled through the use of local authority backhaul networks.
There was also a positive impact on the uptake of mobile broadband, says Gauthey. “France issued mobile broadband licenses while I was at the telecoms regulator, and the only places where this worked were where the local authority backhaul was available,” she contends.
Local authority backhaul has also had an economic benefit for local businesses because it fostered the creation of profitable retail service providers dedicated to smaller businesses and local enterprise. “We had a problem that small companies were not very much on the internet,” Gauthey commented. “Now these companies are the ambassadors for taking up of internet services by SMEs.”
The best part? Backhaul networks are a future-proof investment that will continue to provide value as France tackles an even greater challenge: how to use public money to accelerate the deployment of high-speed broadband and next-generation access (NGA).
Speaking of NGA, recent reports say the French government has decided to invest €2 bn in fibre-to-the-home projects. A formal announcement is expected in December