The “FTTH Benefit Compendium” is a new study commissioned by the FTTH Council Europe and carried out by research firms iDATE and Yankee Group, which set out to map the FTTH ecosystem and look at the benefits of FTTH from the different perspectives – including homeowners and building managers, local authorities and utilities, ISPs and over-the-top network service providers.

Despite being present at the FTTH Conference in Lisbon last week when the study was unveiled, I struggled to get the complete picture. Only 15 minutes was allocated to the presentation of this report – an unfortunate necessity in a conference with such a packed timetable.

To put this right I called Benoît Felten, senior analyst with Yankee Group, who presented the study in Lisbon, to ask him about the objectives, the approach, and the key conclusions. What follows is in his own words:

BF: The first objective of the study was to highlight the issues around the perception of benefits: who benefits, who could benefit, who perceives the benefits, who doesn’t? The idea is not to say FTTH is good, or that FTTH brings social or economic benefits – it’s a much more down to earth thing. We need to be able to say, as a telco this is what you can expect in terms of benefits; as a landlord this is what you can expect; as a consumer this is what you can expect; as a whatever… this is what you can expect. We tried to address all of the players in the ecosystem, with the conscious exception of the vendors.

The final output of the report is formed around two questions: who misperceives the benefits and needs to be corrected in order to align them with FTTH deployment, and which inhibitors are out there that need to be countered.

For example, right now in countries like France or Sweden or the Netherlands, we see that landlords are blocking the way. They are absolutely slowing things down because they don’t understand what’s in it for them. There’s a ton of horror stories here in France: there’s a telco in Marseille who was getting so frustrated they actually gave the landlord some cash to get access to the building. The next day they had 50 calls from 50 landlords to say well if you give me the same cash you can get into the building. Suddenly the cost of wiring the building has gone up by 20% because of this one move.

The irony is that landlords have absolutely clear interests in doing FTTH because the value of their property goes up. There are service environments emerging in Sweden around services for the landlord. The crux of the problem is how you address the landlord as a customer rather than as a barrier. If you are in combative relationship, it’s never going to be easy. But if you can say we’ve done this calculation and you could save 20% of your operating costs every year in managing the building because we’re bringing fibre in there, why would the guy refuse?

I only highlighted three of the key messages [in my presentation in Lisbon], but there are probably five of them, and then there’s a ton of smaller things which are worth looking into.

There is a parallel aspect of the study, which deals with services. We keep talking about all of these services that could come on fibre but we’re not really justifying why they require fibre for the most part. So the idea was to have an outlook on what these services could be, when they could emerge, what level of connectivity we think they will require and why.

The report analyses services using a three-point matrix for each service: download, upload and latency. We said, well may be this service doesn’t require a lot of download, but it requires low latency – that would be the case for cloud computing, for example – and actually the level of latency it requires would be hard to deliver without at least FTTC and probably FTTH. For each service – there were eight – we went through that kind of reasoning.

The second part of the service aspect of the study was to highlight some of the revenue streams that might arise from these services. A lot of people assume that any revenues would be for telcos and we wanted to break that perception because it’s not true. In fact, this is actually becoming a core question for telcos. It’s not about which revenues can be derived, it’s about which revenues will be theirs ultimately.

We also tried to distinguish between the revenue streams for some services. In video communication, for example, we have two distinct revenue streams. One says the telco is providing the service, the other says a Google-type company is providing the service.

Looking at it from the telco’s point of view – and I’ve talked to probably 20 of them in Europe about this – the question that comes back again and again is this: if I provide 100Mbps symmetric service, why would the customer use my in-house video if he can just get it over the internet for free? It seems to me if we can’t answer that question, then the frankly slow industry dynamics that we’ve seen over the last two years are going to continue.

The complete report on the FTTH Benefit Compendium is due to be presented to the FTTH Council Europe at its General Meeting in April.

NGA projects are springing up all over the UK, from high-rise apartment blocks in Wembley to Alston, the most sparsely populated parish in the country. The end result is likely to be a “patchwork quilt” of community networks – a term coined by Brian Condon, director of Community Broadband Networks (CBN), and illustrated in this neat image made by Adrian Wooster, CBN’s chief technology officer.

The “patchwork quilt” is the preferred model of three scenarios describing how NGA might evolve in the UK. The alternatives were “Da Wo” (Big Me), which describes a new world based on one dominant network owner, and “islands of connectivity” a fragmented world with sub-scale isolated networks. Important work is under way at the newly formed Independent Networks Co-operative Association (INCA), and through the COTS (Commercial, Technical and Operational Standards) initiative, which aim to make sure that the UK ends up with the patchwork quilt scenario rather than just “islands of connectivity”.

With the enthusiasm of one still relatively fresh to blogging and the world of HTML/CSS, I thought it would be really cool to turn this into a clickable image map, with each area on the map linking to information about the project. Finally, I’ve found a few spare moments to pull it together. You can see the results by clicking on the thumbnail image of the patchwork quilt.

This is a map of community projects in the main, and so does not include BT’s recent fibre deployments, not Virgin Media’s cable network which is capable of delivering broadband at 50 Mbps or more. I still don’t have information for all the projects, so if you see a good web source about any of the projects, please email me or leave a comment, and I’ll add it to the map.

The image is © Adrian Wooster. I am grateful to Adrian for allowing me to use it.

For a written overview of NGA projects in the UK, I recommend this report from the Communications Consumer Panel.

The results echo findings from a study carried out earlier this year by Ofcom in conjunction with technical partner Samknows, which showed that actual broadband speeds in the UK are also substantially below advertised speeds – and consumer expectations.

According to the report from Telecompaper, the average download speed achieved in the Netherlands is 8.98 Mbps, compared to an average speed offered by the ISPs of 14.9 Mbps. Previous Telecompaper studies found the average actual download speed was 4.95 Mbps in December 2008, and 2.8 Mbps in November 2006. But while speeds have been improving in leaps and bounds, the gap between the service being advertised and the consumer’s experience has been maintained.

The tests were carried out by iPing’s software installed on the consumers’ computers, which automatically checks the speed of broadband. More than 2 million tests on 20,000 users were generated over the three month period from July to September. Owing to the set-up, the speed test checks the actual speed perceived by the end-user, which may include other factors like the wireless connection from the router to the home computer, explains Ed Achterberg, senior research analyst with Telecompaper and author of the report.

Many households in the Netherlands have a broadband connection in the utility closet – a point where services like gas, electricity and telephone lines enter the property. From that point the signal is delivered over a wireless network, and can be affected by the position of the computer in the house, and even by the type of concrete from which the building is constructed, he says.

Alex Salter from Samknows commented:

“I would stress that the only way to accurately measure a broadband provider’s performance is by running tests 24×7 whilst there is no other traffic from the home network. Only then are you actually testing the ISP rather than an individual’s home network, which may be being used by someone else in the house.”

Faster on fibre

One of the interesting things about the Dutch broadband study is that it collects speed data about fibre-to-the-home connections for the first time. Fibre lines achieved the best average download speed in the study by quite a wide margin, 40 Mbps, followed by cable with 14.43 Mbps and DSL with 5.81 Mbps. Fibre and cable also achieved the highest average performance ratios, delivering respectively 62 percent and 65 percent of average offered speeds, while DSL averaged just 55 percent of advertised speeds.

But wait a minute, isn’t fibre supposed to deliver the maximum speed available on the line? In this case it doesn’t appear to, and that could be related to the fact that the tests are performed at the computer. “We know that some providers deliver the maximum speed that is included in the package, but that’s not always received on the PC or desktop,” says Achterberg.

In Achterberg’s opinion, service providers need to be aware that the service they deliver depends on elements in the complete chain, which are outside their control but that impact upon the perception of the performance. Therefore, poor in-home wiring, or a badly positioned router or modem could be the undoing of a fibre-to-the-home users experience.

If you’re Dutch, then you may be interested in the fact that, like the UK study, cable operators seem to come out on top – at least as far as download speeds are concerned (upload and latency were not measured). Ziggo is most likely to provide speeds close to those advertised in the low-end segments of 0-1.5 Mbps and 1.5-3 Mbps, as well as in the 6-12 Mbps segment, according to the study. Meanwhile, UPC was most likely to deliver at high speeds, coming first in the 12-24 Mbps, 24-48 Mbps and 48+ Mbps segments, and tying with Tele2 for the best performance in the 3-6 Mbps segment.

This story also appeared on www.samknows.com.

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.

The discussion kicked off with one of the key questions facing potential community networks: what are the people in the community going to use the network for? The answers included the usual suspects: telephone, broadband and TV. Optional extras were a community-focused website, telehealth (monitoring heart patients remotely was given as an example), femtocells (a mini base station that picks up your mobile phone signal and pipes it over the broadband connection to boost reception at home), community video surveillance and smart metering.

The “killer app” in this myriad of possibilities is simply reliable broadband. (There’s a talk tomorrow about this, and the dangers of over-engineering the network with so-called value-added services.) The greatest demand for community networks comes from people who can’t get basic 2 Mbps broadband. However, the additional services can be an incentive for a public body such as a school or hospital to get involved, which creates a new source of income for the network, and a stronger social argument for obtaining funding.

The next piece in the puzzle is community engagement. A small but dedicated team will be needed to establish the viability of the project. The teams that have the greatest chance of success are those with a champion, someone who is absolutely passionate about the project, and has been there from the beginning. The rest of the team needs a variety of skills: accountant, lawyer, technical, marketing and communications, and market research.

Getting the support of the wider community is also key to success: not only does the business case depend heavily on getting end-users to sign up, landowners, local authorities and others need to be on-side when it comes time to roll out the infrastructure (more on that later).

Before that comes the planning stage. Good data on the copper access network is available from www.samknows.com, which can be combined with maps and other statistics to help build up a picture of the community’s requirements, says Adrian Wooster, technical director of CBN.

It’s important to understand the community, how many people there are, where they live, who they get their existing telecoms services from, and how much they’re prepared to pay; but asking the right questions can be tricky. “If you make it too easy for people to say yes, then when you need to get money out of them, [they’re not interested] and then the business model falls apart,” Wooster said.

Rutland Telecom, a small telecoms company that does sub-loop unbundling (installing its own equipment in a streetside cabinet), overcame this problem by asking customers for a deposit, which was held in escrow until the network became operational. “50 people [in Lyddington] gave us a deposit,” said Mark Melluish, co-founder of Rutland Telecom. “We made it pleasant, booked an evening in the village hall, provided canapés, and asked people to bring their chequebooks.”

Talk then turned to funding from a variety of possible sources, starting with the EU’s €1 billion for broadband, through national and local government, charities and the national lottery, banks and benevolent individuals, ending with the community itself, through a community shares program.

There were conflicting views on the subject of state aid. “It’s not a big deal to put public money in providing you have the right financial structure and the right network structure [open access],” said Steve Spillane, a director of CBN. But John Lloyd from Carmarthenshire County Council pointed to the FibreSpeed project to connect up businesses in Wales: 6 years, 11 months and 3 weeks were “spent arguing between lawyers and the Assembly in the EU”, and that’s why the project has progressed so slowly. It was planned in 2002; seven years later only four business parks have been connected. Others thought that now the precedents for public funding of fibre networks had been set, future state aid approvals would get processed much faster.

The final challenge in the pre-operational phase of the network is the actual network roll out. (Presumably somewhere along the line, a decision has to be made about what technology to deploy, but this fell outside the scope of the workshop.) Kevin Wood, team leader for Cybermoor, which is connecting a school into its network using fibre, described “how to dig holes and fill them in again” – in Cybermoor’s case they trained a local contractor, who was able to deliver the service much more cheaply than the national average. The technology for digging in the fibre or duct is well established, the problematic parts are planning the route, obtaining permissions and wayleaves, and dealing with unforeseen obstacles, says Wood.

I’d like to thank INCA for inviting me to NextGen09.

Five countries have amended their rural development plans to take advantage of the extra funding for broadband. They are Austria (€15.0 million), Cyprus (€0.9 million), Finland (€24.6 million), Italy (Toscana and Sardegna regions, together €11.3 million), and the UK (Northern Ireland region, €1.4 million). Grand total: €53.2 million.

Meanwhile, the European Investment Bank (EIB) has approved two loans for the deployment of next-generation access networks using fibre-to-the-home in Portugal. Incumbent telecoms operator Portugal Telecom will receive €100m, and cable TV company ZON Multimedia will receive an identical amount of €100m.

In a statement, the EIB says that “by supporting both the incumbent operator and its chief competitor, the EIB not only contributes to a substantial upgrading of telecom services in the country, but introduces a healthy degree of competition in the Portuguese telecoms market.”

The European Commission has given the green light to the largest ever government-backed fibre-to-the-home project in Europe.

THD92 is a €422 million (£386 million) project that will bring next-generation broadband to some 829,000 homes and businesses in the Hauts-de-Seine region of France. (THD stands for très haut débit, meaning “very high speed”, and 92 is the number of the Hauts-de-Seine département.)

The EC has approved a subsidy of €59 million for the project, paid for by the Conseil Général des Hauts-de-Seine. The subsidy is regarded as compensation for the cost of connecting homes that would otherwise be uneconomic to reach.

This is a landmark decision for fibre projects because the Hauts-de-Seine, in the western suburbs outside Paris, is one of the wealthiest areas in France, it has good first-generation broadband infrastructure, and there are already several operators rolling out fibre in the area.

The French project is the first to be assessed using the new European guidelines on the public funding of broadband networks. The EC concluded that “the public funding amounting to €59 million would be used to offset the cost of complying with the obligations of a service of general economic interest imposed following an open and transparent tendering procedure, and did not therefore constitute state aid.”

The decision also has a certain political significance: the Hauts-de-Seine département happens to be the home of French President Nicolas Sarkozy, who kick started the THD92 project back in 2004 when he was president of its council.

Like other municipal fibre projects in Europe, THD92 has taken a long time to get off the ground. The network was put out to tender in 2006, and the contract awarded at the end of 2007, before it became ensnared in red tape. And although the project has received a blessing from Brussels, other operators could still mount legal objections.

“The EC approval will allow work to start, even if it does not extinguish the other appeals against the project,” said Avicca, an organisation representing French local authorities, in a statement.

The tender to build and operate the network was won by Sequalum, a consortium that is majority-owned by cable TV operator Numéricable, along with the construction group Eiffage and high-speed network specialist LD Collectivités/Groupe SFR. Sequalum will act as an “operator’s operator” laying dark fibre in the ground (an optical fibre that is sold and installed but not connected to active equipment), and marketing that fibre to the firms that supply the end-user.

If all goes according to plan, the first subscribers could be hooked up as early as next year. The timetable calls for just over half the users to be connected within 3 years, and the network rollout to be completed by 2015.

In larger towns and cities, four operators — Orange, SFR, Free and Numericable — are deploying fiber-optic networks which has brought 4.5 million households within reach of a superfast connection. This might sound like a lot, but this represents less than 20% of homes in France.

At the opposite end of the scale are very isolated rural areas, where could be eligible for state aid, especially now that European guidelines have been clarified. In fact, earlier this month, French prime minister Francois Fillon proposed that the state-owned financial institution Caisse des Depots would invest €750 million (£685 million) over three years to support fibre rollout in areas of low population density (link in french).

“Grey areas” are the regions in between, which aren’t likely to attract investment from telecoms operators, but would fall outside the scope of state aid. To break the impasse, French policy makers are pushing the idea that the main operators should cooperate to build a single, shared network to cover these areas.

A joint venture between the four operators would prevent costly duplication of physical infrastructure, and thus reduce the financial burden on each operator individually. The estimated cost would be around €20 billion.

But can the country’s telecoms companies be persuaded to work together? France Telecom is opposed to the scheme, while alternative operator Free is in favour, according to Le Figaro. Watch this space!

The latest update to the FTTH global rankings has been released by the three FTTH Councils of Asia-Pacific, Europe and North America, and it holds few surprises.

The Asia-Pacific region still leads the global ranking with South Korea, Hong Kong, Japan and Taiwan taking the first four places, followed by the Scandinavian countries of Sweden and Norway. There is just one new entry in the list — Slovakia, a country with about 2.2 million homes (for comparison, the UK has around 25 million homes).

To be included in the FTTH global rankings, countries must have more than 1% of households connected with fibre, whether by fibre-to-the-home (FTTH), which requires a fibre connection to reach the boundary of the home, or fibre-to-the-building (FTTB), where the fibre terminates inside a multi-tenant dwelling, typically in the basement.

At the end of June 2009, 21 economies met this threshold. Indeed, all of the top 10 economies in the global ranking have more than 5% of their households connected with FTTH/B.

The message from the FTTH Councils is that it’s “business as usual” despite the recession. The global rankings may not have changed very much but a significant number of new fibre subscribers were added in the first half of the year.

On average fibre penetration increased 15% in the first six months of 2009, with more than 5.5 million new subscribers worldwide. The greatest number of new subscribers were added in China — nearly 2 million of them — bringing the total to 7.95 million. 1.38 million new FTTH/B connections were made in Japan; 795,000 new subscribers were hooked up in the US.

“Big countries like France, UK and Germany are still missing,” noted Karel Helsen, president of the FTTH Council Europe. “But even there we see further development and I expect France to be the first big European economy in the global ranking by end of this year as it is already very close to the 1 percent.”

In terms of raw subscriber numbers, France holds fourth place in Europe with about 250,000 fibre users at the end of June 2009, behind Sweden (478,900 subscribers) and Italy (about 315,000), according to IDATE, the analyst firm that compiles the figures on behalf of the FTTH Council Europe.

One interesting piece of new information is the metric of subscribers versus homes passed (see table), which shows that the uptake of fibre-based services is much lower in the so-called “major economies” in Europe compared to the Scandinavian leaders. Is this simply an consequence of a highly competitive broadband market, or could it be a lack of awareness of the benefits of fibre among the general public?