All Rights Reserved © Alcatel-Lucent 2009 Alcatel-Lucent Special Customer Operations Gabrielle Gauthey – Executive Vice-President Global Government & Public.

All Rights Reserved © Alcatel-Lucent 2009Alcatel-Lucent Special Customer Operations

Gabrielle Gauthey – Executive Vice-President Global Government & Public Affairs

Broadband Forum Poland, Warsaw

November 24, 2010

Very High Speed in France &International BB Plans

All Rights Reserved © Alcatel-Lucent 2010• 2 | Broadband Forum| November 24, 2010 - rh

Agenda

Very high speed broadband deployment: the French Case

• The Role of the Law

• The Role Regulation

• The Role of Public Policy

– Local Authorities

– “Caisse des Depots”

– “Grand Emprunt”

International Examples & Conclusion


Very high speed deployment: the French CaseHigh Speed Deployment in France – International Comparison

0

5

10

15

20

25

30

35

40

Nethe

rland

s

Denm

ark

Switzer

land

Norway

Korea

Icela

nd

Sweden

Luxe

mbo

urg

Franc

e

Ger

man

y

Canad

a

Unite

d Kin

gdom

Belgiu

m

Finlan

d

Unite

d Sta

tes

Japa

n

Austra

lia

New Z

eala

nd

Austri

aSpa

inIta

ly

Irelan

d

Portu

gal

Hunga

ry

Gre

ece

Czech

Rep

ublic

Polan

d

Slova

k Rep

ublic

Chile

Mex

ico

Turke

y

Source: OECD

DSL Cable Fibre/LAN Other

OECD Fixed broadband subscribers per 100 inhabitants, by technology,December 2009

OECD average• OECD Average


Very High Speed Deployment: The French CaseRegulation: Combination of LLU and Bitstream (1)

Competition through active infrastructures has been the main driver behind the development of broadband:

• Geographic extension of competition has encouraged France Telecom to equip all of its MDF (Main Distribution Frames) for ADSL

• France has joined European leaders in terms of penetration…• …and is in good place for "triple play"

Three major drivers have made this increase in investments possible:

• Dynamic operators, both incumbent and new entrants• Regulation : LLU first, bitstream as a complement• Local authorities intervention has been crucial in the expansion of

broadband coverage

Where do we come from in Broadband deployments?Where do we come from in Broadband deployments?


Very High Speed Deployment: The French CaseRegulation: a Combination of LLU and Bitstream (2)

Growth of the broadband access base (March 2010)

2002 2003 2004 2005 2006

24M

b/s

8M

b/s

1M

b/s

512

kb/s

1st TV/DSL offer

1st telephony/DSL offer

1st fixed-mobileConvergent

offer

ADSL ADSL2+

Evolution of broadband technologies and services

1st broadband/DSL offer

1999…

DSL coverage as of March 31 2010:98% of the population

2007 2008/2009

FTTH

100

Mb/s

1st Very high speed FTTH offer


Very High Speed Deployment: The French CaseThe new FTTH: Three Public Policy Levers

Legislative Lever – „Loi de modernisation de l‘economie“ – August 2009

• Sharing of the fibre last drop through mandatory agreements between operators and landlords

• „Right to Fiber“• Mandatory fiber pre-cabling for new buildings

Regulatory Lever – Market 4 analysis of July2009

• Asymmetrical regulation (duct access)• Symmetrical regulation (last drop and in-house wiring)

Public Policy Lever

• „Caisse des Dépôts“ mandate• „Grand Emprunt“• Intervention of local authorites


Very High Speed Deployment: The French CaseLegislative Measures Adopted to Facilitate the Roll-Out of FTTH in the buildings

The LME (Loi de Modernisation de l‘Economie) adopted in August 2009 deals with the deployment of fiber and sharing of the last part of the local loop among operators:

• A „right to fiber“ has been instituted in order to facilitate the roll-out of fiber networks inside the building

• In return, any operator that rolls-out fiber within a building has to give access to this fiber network to other operators: point of sharing is located outside the private property

• A contractual agreement necessary for the relations between property owners and operators – ARCEP issued a draft agreement

• In new buildings, pre-equipment standards have evolved to include fiber

The LME sets the rule of symmetrical regulation, in anticipation of article 12 Framework Directive

The LME grants ARCEP the power to define the technical and tariff related terms of the shared access and guarantee operators respect them


Very High Speed Deployment: The French CaseRegulation FTTH Roll-Out in Very Dense Areas

ARCEP decision on FTTH deployments in very dense areas ( 5 Millions households)

– After 2 years of consultations and field trials, ARCEP published its final decision on January 17th 2010;

– Duct Reference Offer available;

– Fiber flexibility point (« point de mutualisation », PM) is located in the public domain and by exception in the private domain for buildings with more than 12 flats;

– Arcep encourages co-investment in the last drop (i.e. in the building): prior to installing fibers in a building, every operator must notify its plans to other operators who are entitled to request a dedicated fiber (and bear associated costs);

– Last drop will be multifibre in case of co-investment and mono-fibre otherwise;

– All operators have published their commercial reference offers.

© Alcatel-Lucent 2009 All Rights Reserved 9 | Capri Between’s Conference Oct 2010

Very High Speed Deployment: The French Case Regulation: FTTH roll-out in medium/low density areas

Medium density urban areas represent around 10 Millions households and low density 10 million households

Fibre Flexibility Points (FFPs)

Last drop is shared from the flexibilty point till the end user

First operator deploying in a given area builds the FFP

FFPs concentrate a minimum of 300 fibres (average 1 000)

Mono vs Multifibre

In very dense areas, multibre is required at operator’s request

In less dense areas, a single fibre is the general rule for the last drop

Active equipment installation in the FFP

• Active equipment ( e.g. OLT, Ethernet switch) may be located at the FFP

• In case of technical or economical impossibility, FFP owner is required to provide dark fiber backhauling


Very High Speed Deployment: The French CaseRegulation: NGA - Active Infrastructure Competition Model

Very dense areas :

• Fiber flexibility point at building basement by exception (if MDU has more than 12 DUs)

• Multi-fibre in the terminating segment (in-house wiring) in case of co-investment

• Duct accessLess dense areas :

• Fiber flexibility point at cabinet level ( min 300 fibers)

• Shared mono-fibre in terminating segment and in-house wiring

• Duct access


Very High Speed Deployment: The French CaseLocating the Fibre Flexibility Point (FFP) Accomodates both Technologies

“There are technology-agnostic architectures”“Positioning of the Fiber Distribution Point”

Operator 1

Operator 2

Optical patch panel(Passive)

Fiber

Distribution

Point

Optical Network Terminals from operator

Operator 1 stream

Operator 2 stream

Big Buildings

Suburbs

Rural areas


Very High Speed Deployment: The French CaseNGA Roll-out in France – FTTH and FTTB deployments


Very High Speed Deployment: The French Case NGA Roll-out in France – ARCEP Figures as of June 31 2010

ARCEP estimates that, as of June 31, 2010 more than 4.5 million homes were located in an area where fiber has been rolled out in the access network.

A total of 40 000 buildings – accounting for 980 000 homes) - are equipped with optical fibers and connected to the network of at least one operator.• Of which 83 000 via fiber sharing agreement


Very High Speed Deployment: The French CaseLocal Authorities Interventions in Telecom Infrastructures in the Past 10 years

Legal form

• Mainly DSP (« concessions »);• Choice by local authorities of one operator/delegator;• Wholesale offers negociated with local authorities;• Coverage imposed by local authorities;• Maximum 70% subsidy (=> operational risk left to the private delegator);• Network remains local authority’s property.

Operating mode

• Graduation of intervention according to the density and the presence or absence of operators

• Passive infrastructures in denser areas (mainly open fiber backhauls) with the objective to connect a maximum of NRF’s and wireless BTS

• Equipement of business parks;• Activated whosesale offers in the less dense areas;• In some rural areas : retail operators


Other Selected TopicsOpen Wireline Backhaul key for both Mobile and Fixed Traffic Growth

Typical telecommunications network architecture

Role of backhaul networks:

Cost effective coverage of medium and low density areas;

Stimulate competition and innovation;

Anticipate bandwidth demand increase for all access technologies (fibre, LTE, Wimax,…);

Future proof investment for public initiatives particularly for local authorities;

Enhanced connectivity for public services (schools, hospitals, universities,…) and business parks


Very High Speed Deployment: The French CaseLocal Authorities have Played a Crucial Role in Broadband Coverage

• In recent years, local authorities have played a key role in the digital development of their regions in partnership with operators

• Arcep first impact assessment:– 86 projects – 60 of which are running

– 2.7 billion € invested (approx.50% public

funds)

• Major consequences :– Less expensive coverage of rural areas

– Expansion of LLU, and wireless coverage

– Fostering of local operators development

– Preparation of the future of FTTx


Very High Speed Deployment: The French Case Role of Local Authorities - Private Companies Operating Public Networks


NGA roll-out : role of local authorities

Their role could be decisive :

Encourage the sharing of ducts when granting rights of way

Lay ducts and rent them to operators

Avoid inefficient duplication of basic infrastructure (ducts and even dark fibre) on reduced geographical areas which can be shared among operators

Have a lever effect on private investments

Promote the choice of a common optical loop topography by operators

Ensure a fait opening of the new optical loop

29 registered local authorities engaged in FTTH roll-out


Very High Speed Deployments: French case study Policy lever : Precautions for local authorities intervention

Precautions taken to avoid concerns and risks mentioned in the recent US GAO Governmement accountability Office) report

Competition distortion : Maps, agreements with existing networks, …

long term investment sustainability : privately run networks

handle networks interoperability : few wholesale providers, common standards implemented

Public broadband infrastructure projectsTypical project structure

SpecialPurposeVehicle

Public Contract •Caisse des Dépôts

30%•Project sponsors

70%

Shareholders

Local authorityOther local authorities /

subsidiesSubsidies

Equity

Sponsor 1 Sponsor 2

Telco

Operation & Maintenance

Design & Build

Client

The Role of „Caisse des Dépôts“The Role of „Caisse des Dépôts“


Very high speed deployment: the French CaseGovernment Role

• Investment mandate to the “Caisse des Dépôts”

• French state loan:

– 2 B€ for very high speed networks

– Long terms loans in medium dense areas

– Subsidies for rural areas

– 2,5 B€ for content, application and services (Web2.0, e-health, e-government, gaming software, …) applications development


Worldwide Trends and Conclusion

EMEA EMEA

AMERICAS AMERICAS

• Active infrastructure based competition prevails, favoring operator’s vertical integration – passive infrastructure sharing encouraged - bit stream wholesale being considered as a second best except in UK (VULA)

• EU Digital Agenda : universal bb coverage, bandwidth increase, national BB strategies required

• State Aid scope has been broadened for fiber networks in suburban and remote areas – may accelerate fibre PPPs

APACAPAC

• US : Stimulus funds allocated through RUS focus on unserved and underserved areas – mainly for middle-mile projects ( interstate backhaul networks)

• CALA : Broadband plans are heating up, focus on mobile open access and open backbones

• Functional separation (i.e. “shared access”) combined with bitstream wholesale and heavy regulation are leading network transformation (Singapore, Australia, NZ) aka NBNs – Open backbones in India.

• Testbed for next generation bitstream wholesale and virtual unbundling



Public driven InitiativesA global trend

French digital plan

2 B € for very high speed BB roll-out in grey and white areas

2,5 b € for services/applications

FTTH roll-out regulation (geographic segmentation)

Digital dividend release

Digital Britain

• 2 Mb/s universal broadband access service in 2012

• 200 M£ NGA fund

German Broadband Plan

100% bb coverage by end 2010

75% of hh access at 50 Mb/s by end 2014

Spectrum allocation for LTE

+ Draft bradband plans in Greece, Italy, Poland, Russia,...

China’s recovery plan

4 Trillion RMB 09-10

ICT included in pillar industries program

India National Backbone

4,5 B fiber backbone

90% of population bb coverage by 2013

Australian National Broadband Network

100 MB/s to 90% of subscribers

43 B A$ ( 23 B€)

New Zealand “Broadband Investment Initiative”

1.5 B NZ$ investment plan announced in March 09

Connecting America Broadband Plan

Foster competition, innovation and investments

Ensure Spectrum availability

Universal broadband service

Develop broadbadn based services (e-health, e-education,...)

Brazilian “Plano Nacional de Banda Larga”

Connectivity for 50% of urban hh and 15% of rural hh

60 M mobile access

41 M $ capex (1/3 public, 2/3 private)

Europe’s Digital Agenda EU countries to adopt national VHS broadband strategies 100% BB coverage in 2013 30 MBs connections for all in 2020 with 50% of EU citizens

connected at 100 MBs

https://www.cia.gov/library/publications/the-world-factbook/flags/fr-flag.html


Impact on unbundling

913

773

988

CO unbundling : alternative carriers backhaul networks

CO unbundlig : alternative carriers backhaul networks + France Telecom dark fiber rental

CO unbunling : local community bakchaul network

14,4 M households

2,4 M households

4,3 M households

21,2 M households

Number of unbundled CO’s according to backhaul network ownership

40 % of French central offices are unbundled through Local Communities backhaul networks

by end 2009


Broadband Penetration by Technology


Very high speed deployment: the French CaseRural Deployments in France

Despite the homogeneous need of telecommunication services in rural and dense areas, there is a mismatch in BB deployment (PC penetration in rural zones is higher as PC penetration in intermediary zones):

In rural zones Orange is clearly the dominant operator (market share of Orange inversly proportional to the size of the agglomeration), namely:

• 64% of the communities with less than 5‘000 inhabitants• 34% in bigger communities• 32% in Paris and Paris region

Source: ARCEP 2010


Very high speed deployment: the French CaseBroadband Access Market Growth and Competition

Situation July 2010: 20 M broadband connections (residential and professional services) of which more than 19 M in ADSL• 10.3 M access lines commercialized by alternative operators, 7.14 millions total

unbundling• 80% of the competitive offers take advantage of full unbundling


Selected Examples of Deployments in France (1)Fiber Backhauling Availability in Moselle Department

• Public Initiative backhauling network connect most of incumbent’s central offices to enable copper unbundling

• France Telecom’s dark fiber offer (not regulated) is not available everywhere ( red : not available, black : available)

• France Telecom dark fiber offer is commercially driven. It’s tariffs do not reflect a territorial digital policy. It’s architecture serves FT’s internal needs (central offices interconnexion)

• Public Initiative backhauling networks may connect business parks, business districts, company offices, public buildings, poles and masts where base stations require backhaul facilities ( 3G, LTE,…)


Selected Examples of Deployments in France (2)Manche Numérique

• Backbone network (1200 km) managed as « affermage »/public concession by LD Collectivités (private company)

• Total cost: 79 M€, of which:• 24 M€ public sector (16 M€ from the Department)

• 2008 : FTTh extension to Saint Lô and Cherbourg : 12 M€ 100% private funding.

• Results :• 40 business districts connected to fibre backhaul

• Unbundling of all incumbent’s central offices (6 competing operators cover 35% of the population; 2 competing opérators in all rural central offices)

• White zones wireless coverage: 4 M€ (210 WiFi spots)

• 26 000 FttH homes passed

• National operators presence : Neuf Cégétel, Colt, Complétel; Free

• Local operators : Nomotech, RMI Adista, Idylle Télécom

All Rights Reserved © Alcatel-Lucent 2009 Alcatel-Lucent Special Customer Operations Gabrielle Gauthey – Executive Vice-President Global Government & Public.

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