Charles Watt - The argument for supporting Open Access to incumbent shareholders
2 likes438 views
The document outlines initiatives by Charles Watt and the European Broadband Portal for enhancing ICT in Europe, aiming for beneficial outcomes in various sectors. It discusses the complexities of broadband infrastructure funding models, public-private partnerships, and the need for stakeholder engagement to improve broadband access. Key recommendations include community involvement, strategic planning, and securing funding for broadband solutions to stimulate economic growth.
Charles Watt - The argument for supporting Open Access to incumbent shareholders
- 1. Charles Watt moving from policy to practice
- 2. What we do • Independent, not for profit, partner, focused on major EU ICT and FI initiatives • Creating beneficial outcomes for citizens, businesses, patients and learners across Europe • Improving the role and contribution of ICT enabled Government and Public Services • Working with over 10,000 organisations and individual contacts across Europe • Services include : Knowledge Management, Collaborative Projects, Marketing and Communications Support, Events, Thought Leadership, Research
- 3. Key issues about FTTx projects • Separate infrastructure from services • Argument is not about competition on services but who does Civil Works (sewers, roads, water) • 70% of cost is civil works • Service providers operate in a heavy fixed cost environment (that’s why they want to “sweat the assets”) • Disruptive technologies eliminate competitive advantage • We are re, re, re re inventing the wheel (EBP) • Workshops • Wherever possible get the Service Providers on board • Customise your messages for different audiences 12 October 2009 3
- 4. EUROPEAN BROADBAND PORTAL
- 5. EBP Broadband Blueprint – concept diagram Set up the initiative - Manage Stakeholders and Strategy Understand the roles & Create our goals & organise Measure and report on relation ships with resources to achieve them progress / manage audit stakeholders 12 October 2009 5
- 6. Bottom-up broadband blueprint – concept diagram (to be read “bottom-up”) Develop the solution – diagnostic “where you are in the process” and “what to do next” – supported by knowledge resources 2. Economic 4. Develop a 7. Understand 8. Define the “2b” 1. Clarity of 3. Engage 5. Define the 6. Develop the 9, Develop the 10, Develop the rationale to invest communication current supply & technical purpose Stakeholders operating model overall plan financial plan (s) commercial model in context plan demand architecture Manage Stakeholders and Strategy Understand the roles & Create our goals & organise Measure and report on relation ships with resources to achieve them progress / manage audit stakeholders 12 October 2009 6
- 7. Bottom-up broadband blueprint – concept diagram (to be read “bottom-up”) Infrastructure Services Resources Finances Regulation Management Implement / Operate the solution – build the capacity, capability and structure to deliver Commercial know how Service delivery know how Marketing know how Operating know how Develop the solution 2. Economic 4. Develop a 7. Understand 8. Define the “2b” 1. Clarity of 3. Engage 5. Define the 6. Develop the 9, Develop the 10, Develop the rationale to invest communication current supply & technical purpose Stakeholders operating model overall plan financial plan (s) commercial model in context plan demand architecture Manage Stakeholders and Strategy Understand the roles & Create our goals & organise Measure and report on relation ships with resources to achieve them progress / manage audit stakeholders 12 October 2009 7
- 8. Bottom-up broadband blueprint – concept diagram (to be read “bottom-up”) Manage Customers My needs are I’m aware of I’m inspired and I sign up for I enjoy great My issues are I keep pace with understood opportunities engaged services services resolved improvements Marketing access and services Infrastructure Services Resources Finances Regulation Management Implement / Operate the solution Commercial know how Service delivery know how Marketing know how Operating know how Develop the solution 2. Economic 4. Develop a 7. Understand 8. Define the “2b” 1. Clarity of 3. Engage 5. Define the 6. Develop the 9, Develop the 10, Develop the rationale to invest communication current supply & technical purpose Stakeholders operating model overall plan financial plan (s) commercial model in context plan demand architecture Manage Stakeholders and Strategy Understand the roles & Create our goals & organise Measure and report on relation ships with resources to achieve them progress / manage audit stakeholders 12 October 2009 8
- 9. Public Sector DBO Joint Private Ventures / Sector PPP’s DBO Emerging models Public Bottom Up Sector Broadband Outsource
- 10. Description – Tactical programmes funded by public investments where the market cannot provide. Often focused on more Public sub-urban / rural areas Sector DBO Scale – Investment in €bn’s. Wide range of scale from municipal, to regional and national investments Pro’s – Wide coverage, enforced and sometimes “visionary” standards and open access for services. Can focus on social benefits Con’s – Limitation of public sector expertise, poorly marketed / take-up lower, prone to later “sell off” to private sector
- 11. Description – Large programmes funded by private investment and underpinned by grants. More interest in urban / high profit areas Private Scale – Investment in €bn’s. Sector Large scale / national Investment DBO Pro’s – National programmes, wide coverage, private sector expertise, low public burden Con’s – Typically not ‘open access’, cherry picking / slow roll-out, shareholders interests come first
- 12. Description – Public owned but operations outsourced to private sector. Focus on a good urban / rural mix as fast ROI is less of an issue Scale – Investment in €100m’s. Wide range of scale from local to regional operations Pro’s – Can enforce “open access” with infrastructure ownership remaining in public hands. Combines private sector expertise and innovation with public sector funding stability Con’s – Time to commission work and added Public bureaucracy. Less incentive for private sector Sector profit Outsource
- 13. Description – typically long term / not for profit, community led deployment that focuses on an Urban or Rural community. Filling in (or accelerating the development of) the white spots left behind by private or government programmes. Scale – Investment in €100k’s. Smaller scale often very localised initiative. Pro’s – Mainly “open access” with infrastructure ownership remaining in community hands. Focused on local needs and provision of local services Con’s – Hard, but not impossible to Bottom Up scale up. Broadband Fragmented so risk of incompatible technologies. hard to get funding. Demands local expertise / leadership
- 14. Description – Rare, highly scalable, partnerships delivered through Special Purpose Vehicles that bring together expertise and funding from public and private sources Scale – Investment in €100k’s to €bn’s Can equally apply to local up to international initiatives Joint Ventures / Pro’s – Would hopefully support “open PPP’s access”, and brings together expertise from multiple industries Con’s – Hard to establish / needs to build on closely aligned public and private sector interests.
- 15. Conclusions from analysis of Public models Sector •Funding application process DBO •Very large scale (Public / Private DBO) -Typically not ‘open access’ Joint Private •Remaining 3 meet requirements Ventures / Sector •Public Sector outsource – sweep PPP’s Emerging DBO up unused funds models •Bottom-up Broadband plug Rural / Urban gaps •Joint Ventures / PPP’s models for the future Public Bottom Up Sector Broadband Outsource
- 16. Would have a payback period of x years and an NPV of y Revenues and EBITDA Margin Revenues EBITDA Margin 754 800 Launch 571 599 636 673 713 50 600 Year 1) 418 498 40 354 400 229 30 200 137 20 0 10 Free Cash Flow Free Cash Flow Cumulative Cas 84 Flow 100 67 71 72 53 65 75 18 35 0 0 -100 Payback -200 -183 -165
- 17. Would potentially deliver a 12% growth in sector NPV, x Billion in GDP increment and would add value to “Telco” Sector Benefits Government Royalties Sector NPV Incremental Yearly Broadband Penetration & (2010 - 2015) Contribution to GDP (2015) License Fees (2015) (2010 - 2015) Assuming a 2% +12% +20% GDP Multiplier +8% on GDP 45.8 92% 5.0 4.1 40.8 4.6 77% 0.0 Base Case NGN Base Case NGN Base Case NGN Base Case NGN Higher revenues (higher broadband penetration, stabilization of broadband ARPU) Lower CapEx (limited or no deployment of Telco would experience a Key Benefits access - cost shifted to OpEx) positive impact on NPV Ability to diverge investment to other strategic priorities 17 17
- 18. Reasons why Service Providers should embrace FTTx • Alternative is to go out of business profitably • Move from fixed cost to variable cost • New larger and growing market • Higher margins 12 October 2009 18
- 19. Risks • Loss of market share (versus zero market share) • Greater competition • New market (canal operator or train company) 12 October 2009 19
- 20. What we need to do… •Bring together key stakeholders to discuss the opportunities from fast broadband solutions at a local, regional or national level. •Create the local vision and get government, business and citizen buy-in •Build awareness with consumers while appointing your leadership team to “make it happen” •Consider the regional or national ROI. Build the outline business case •Seek for appropriate funding support •Initiate your plan
- 21. Help is at hand… •Through the European Broadband Portal we can support local initiatives with: •Assessments •Facilitated Stakeholder Workshops •Support to access funding / develop funding applications •Help with marketing and communications to get your project underway •Further research into investment ROI
- 22. moving from policy to practice Join us on: Subscribe to our newsletter via news@erisa.be Erisa Office 24, Boulevard de l’Empereur, B-1000 Brussels Tel: +32 2 230 03 25 – Fax: +32 2 230 92 01 E-mail: info@erisa.be - www.erisa.be