19 Oct 2014

Superfast Broadband Highway to Socio-Economic Transformation

Herbert Merz, COO of Coriant explains how superfast broadband has significant effects on the socio-economic environment & how effective broadband can be implemented.

As reported by Radio Electronics, IDATE recently predicted that ultra-fast broadband revenues will grow by 95% over the next 5 years to reach 182 billion EUR in 2017.

According to the same report, Eastern Europe will see its take up rate increase from 28% to 49% in 5 years, much higher than in Western Europe which will grow from 21% to 32% by the end of 2017.

While national plans to increase broadband coverage and adoption vary widely, the common thread running through all of these plans is the fundamental belief in the power of broadband technology to spur economic development and transform delivery of social services such as education, healthcare and e-government.

Today there are over 100 countries striving to boost their economies and improve quality of life for their citizens by bridging the “digital divide.” They are doing this with government-sponsored broadband initiatives. In addition to the expected economic benefits of these initiatives (e.g., GDP per capita growth, job creation, increased tax revenues, etc.), enabling universal access to a fast and reliable broadband infrastructure will lay the 21st century foundation for a nation’s competitiveness and innovation.

Requirements

To realize the socio-economic benefits of national broadband strategies, however, there are a wide variety of challenges and dependencies that governments or regional authorities face regardless of the implementation model they choose. Building a reliable broadband infrastructure with universal access designed to serve diverse end-users across multiple geographic regions is a complex and costly undertaking. Key success factors for national broadband strategies include

  • Political will and vision.

  • A clear and comprehensive plan with realistic ROI and roll-out milestones.

  • Strong cooperation and coordination between government agencies and regulatory bodies.

  • Solid procurement and funding strategies.

  • Strategic partnerships with private sector companies, including telecom operators and technology suppliers with proven experience and expertise in deploying broadband infrastructure.

Regardless of the scope, scale or technology composite of a country’s broadband strategy, financing has been and will continue to be one of the most formidable challenges. Nationwide broadband projects are, by nature, capital-intensive and costly to implement and operate. To accelerate broadband deployment and adoption, it is incumbent upon governments to explore the full breadth of practical financing options available to them and applicable to their respective situation. It is also important to take a long term view toward return-on-investment (ROI), similar to the funding of traditional utility infrastructure projects, such as gas, electricity or transportation.

Fibre optics enables high speed global broadband

To date, financing options for national broadband initiatives have included government grants, device subsidies to stimulate end-user demand, operator incentives and subsidies, equity-based participation, tax breaks and discounts, stimulus plans, general taxation, and “in kind” support via government policies, rules and regulations. Preferential regulatory and policy approaches can play a significant role in lowering capital and operational costs associated with broadband deployment. These approaches include tax breaks and discounts, the sharing of infrastructure (e.g., utility networks), facilitation of access to rights of way, and the timely assignment of spectrum to enhance last-mile access in rural areas.

Examples of implementation

Germany, for example, has addressed the challenge of financing its comprehensive broadband strategy in part by creating a highly supportive regulatory framework (including preferential frequency policies) and by capitalizing on synergies in infrastructure across the country. The initial phase of Germany’s broadband plan is expected to be completed this year, and will be followed by a subsequent phase of “ultra-broadband” evolution planned for 2015-2020. An industry research report has estimated that Germany’s broadband initiative could generate some 968,000 jobs over a ten-year period (2010-2020).

Germany is one of many countries that adopted a Public-Private Partnership (PPP) implementation model as part of its national broadband strategy. This widely-utilized model is defined by the close cooperation between public and private stakeholders, and is largely founded on the mutual understanding that successful deployment of nationwide broadband projects requires a broad range of skills, expertise and resources.

Kenya, Tanzania, France, Malaysia, Thailand, and the UK are examples of other countries that have undertaken this cooperative model to accelerate implementation of their respective broadband strategies. While there are varying degrees of private sector participation in the PPP model, this approach typically involves a contractual service agreement between a public agency (e.g., at the Federal, state, or municipal level) and a private sector enterprise, such as a fixed line or mobile operator with existing telecom infrastructure. In many cases, governments have used the PPP model to cost-effectively expand broadband coverage via access to existing backhaul networks, international points of presence (POP), and submarine cables.

UK roll-outs

Certainly, UK rollouts are going well. The UK has clearly moved up the ranks of European countries making the greatest strides in superfast broadband rollouts and other European countries would do well to take a look at the consultation that Britain's Department for Culture, Media and Sport (DCMS) opened up in January of this year.

Australia’s national broadband strategy is an example of a government-ownership financing model. A wholly-owned Commonwealth company, NBN Co was established on 9 April 2009 to design, build and operate the National Broadband Network (NBN). As an Australian Government Business Enterprise, it is represented by Shareholder Ministers – the Ministers for Communications and the Minister of Finance. It is one of the most advanced, aggressive and closely-watched national broadband initiatives in the world. With the goal of delivering the first national wholesale-only, open access broadband network to all Australians, NBN Co has embraced a range of technologies including DWDM transport, Fibre to the Node and HFC (i.e., the cable broadband network), alongside

Fibre to the Premises, fixed wireless, satellite as well as future advances in telecommunications technology. In the area of advanced technologies, NBN Co recently completed a one Terabit per second (1 Tbps) super-channel transmission field trial over a 1,066 km fibre optic ring in its high-capacity optical transmission backbone network. This successful demonstration, conducted over existing transmission hardware, highlighted how NBN Co can easily and cost-effectively upgrade its optical backbone network to provide extra capacity as it expands coverage with services that provide access to voice and broadband services faster, cheaper and more efficiently to Australian homes and businesses no matter their location across the country.

One size does not fit all

There is no one size fits all when it comes to the selection and implementation of the technology required to build a nationwide broadband infrastructure. Each country has its own set of challenges. These challenges include affordability, maturity and/or availability of existing infrastructure (telecom but also power infrastructure), ICT knowledge within the government, private sector technology expertise, and the size and geographic distribution of the targeted subscriber base.

For many national broadband plans, wireless access via mobile broadband technologies (e.g., WiFi, 3G, 4G, etc.) has become an increasingly important tool to help governments cost-effectively extend coverage to underserved and un-served segments of the population. In addition to extending the reach of the physical infrastructure, national plans must also include strategies and programs designed to stimulate end-user demand and serve as a catalyst for broadband service uptake.

Taking a “Build it, and they will come” approach is a recipe for disaster. Many government plans already factor in strategies for expanding broadband usage and increasing digital literacy, especially among students and low-income populations. In Argentina, for example, the government initiated a program in 2010 to fund distribution of Netbooks to students and teachers at public secondary schools. Over 1.8 million netbooks have been distributed to children across the country.

The more homes, schools, businesses and government agencies we connect to the Broadband Internet, the more powerful and beneficial our information society and knowledge economy will become – locally, nationally, and globally.

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About the author

Based in Munich, Herbert Merz is a Board Member of BITKOM, a federal association representing the ICT industry in Germany that was instrumental in the implementation of Germany’s national broadband strategy. Herbert Merz is also President and Chief Operating Officer of Coriant.

Coriant, founded as an independent company in 2013, is an industry-leading supplier of dynamic metro-to-core transport solutions. It serves over 500 customers globally, including 90% of the world’s top 50 service providers. Its end-to-end product portfolio and software-defined networking solutions enable mobile and fixed lined operators to reduce network complexity, increase service velocity, and improve resource utilization as transport networks scale in response to a new generation of high-bandwidth services and applications. The company operates worldwide in more than 48 countries, with R&D centres in Asia, Germany, Portugal and the United States, as well as a state-of-the-art production centre in Berlin, Germany.

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