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

“Backhaul is the bane of our life. One, we can’t get it, and two, we can’t afford it,” said Kevin Wood, team leader for Cybermoor, a community network in Cumbria. Cybermoor currently has around 360 users on a wireless network sharing 5 Mbit/s of backhaul. “We’ve got a very clever bandwidth management package that keeps most users happy,” he added, “But we’ve decided that if we’re going to put new kit in, we can’t carry on like this.”

A three-year service provider contract to establish 10 Mbit/s of backhaul capacity would cost £295,000, according to Wood. Instead, Cybermoor has decided to install its own microwave backhaul link. This involves raising a new 25-metre-high mast, and putting in a relay station in order to reach the network of neighbouring County Council Northumberland. “It’s quite a lot of work,” he adds, proving himself to be master of understatement.

Even FTTH networks in the UK appear to have backhaul bottlenecks. West Whitlawburn is a housing co-operative that has installed fibre to a new-build social housing estate in Glasgow; it has just been given the go-ahead to extend its network to six existing high-rise blocks on the same site. The fibre network has around 100 subscribers, which probably makes it the largest FTTH network in the UK (BT’s FTTP pilot site at Ebbsfleet is believed to have around half that number of end-users). All 100 homes on the West Whitlawburn network are being serviced by a 20 Mbit/s bonded-line DSL connection, although an upgrade to 100 Mbit/s should be complete in the next few weeks.

Lack of backhaul capacity has other ramifications. “Until you get decent backhaul, you don’t have to worry about open access. Service providers aren’t going to want to offer their services on your network if they have to pay to get to it,” said Jez Willcox, senior network consultant for Allied Telesis, the firm supplying new Ethernet equipment for Cybermoor’s upgrade.

“We’re putting 100 Mbit/s into houses, we shouldn’t be in the position where we’re struggling with 10 Mbit/s of backhaul,” he concluded.