Authors: Stephan Jay, Thomas Plückebaum
Summary
Civil works or trenching investment is the most important cost driver for deployment of fixed telecommunication access networks. In order to reduce the cost of new fibre based broadband networks and to come closer to realizing the broadband targets of the German government, trench sharing of new fibre access networks with other infrastructures is a relevant option. In 2012 Bundesnetzagentur published guidelines for joint deployment of fibre networks with new or renewed electricity networks. This guideline sets the framework for joint deployment and cost allocation between the two networks. The goal of such joint deployment is to reduce the civil works cost for both networks through cost sharing. This also promises to broadens the scope of profitable Fibre-to-the-Home (FTTH) deployment. The guideline also clarifies the how the cost of such joint deployment may be considered when determining the regulated transmission fees of the energy network. This prevents cross subsidisation between telecommunication and electricity networks.
This study hypothetically assumes that the full roll-out of fibre access is conducted as joint deployment with the renovation of electricity networks. While this is in its whole extend not the reality it describes the potential of the joint deployment approach and thereby also enables direct comparisons with our previous fibre analysis from 2011.
In order to quantify the economic impact of joint deployment this study first analyses different cost sharing rules and selects one rule for the modelling analysis. Considering the additional cost of bigger trenching the effective investment into civil works cost for the fibre network should decrease by about 30% with an overall reduction of 20% per access line. Savings are also relevant for electricity networks but these have not been considered in this study.
The WIK NGA-model is applied for comparative cost calculations using most of the parameter set of WIK’s previous analysis of investment and subsidy requirements for a nationwide fibre roll-out in Germany. With modified investment values taking account of the cost reduction through joint deployment the following results were obtained:
- The investment for the pure passive infrastructure of a nationwide FTTH Point-to-Point access network is lowered from 53 bn € to 41 bn €. On average this is slightly below 1000€ per "home passed".
- The total investment at 70% penetration decreased from 73 bn € to 56 bn €, an average investment of about 1900€ per active subscriber ("home connected").
- The FTTH deployment can be profitably realized for the first 15 clusters which resembles 75% of German lines (previously profitability ended in cluster 7, ~35%).
- 4 bn € are required as one-time investment subsidy to support a nationwide roll-out; 3 bn € of these are required for the last two clusters (originally the one-time investment subsidy amounted to 14 bn €). In the least dense cluster 20 this means about 1.400€ per home connected in subsidy payments (originally 2.300€)
- Sensitivities quantified the effect of a lower ARPU (Average Revenue Per User) on investment and subsidies. At an ARPU of 36€ instead of 38€ the number of profitable clusters decreases from 15 to 11 and the subsidy requirement increases from 4bn € to 5,5bn €.
Discussion Paper is available for download.
