A Business Model Based On Ftth Infrastructure Neutral Operator To Provide Service To Several Operators

UFINET

A Business Model Based on FTTH Infrastructure Neutral Operator, to Provide Service to Several Operators

FTTH Council Europe Conference Bella Center, Copenhagen, Denmark. 11-12 February, 2009.

Agenda

Company overview

Business approach

Network topology

Field trials FTTH Infrastructure Neutral Operator 2

UNION FENOSA overview • UNION FENOSA is an integrated energy group that operates in 15 countries in the gas and electricity markets. Main figures Millions of euros

2007

REVENUES

6,011

CONTRIBUTION MARGIN

3,104

EBITDA

2,062

EBIT

1,466

GENERATION 11,699 MW of own installed capacity DISTRIBUTION 9.1 million gas & electricity customers SUPPLY 59,016 million KWh electricity suplied 38,044 million KWh of gas invoiced

COSTA RICA

EBITDA by business *

8% 5%

Dist. 23%

GENERATION & DISTRIBUTION GAS/COAL GENERATION, DISTRIBUTION SUPPLY AND GAS

MOLDOVA REPUBLIC EGYPT

GUATEMALA Inter. 26%

Gas 16%

SPAIN & PORTUGAL

DOMINICAN REPUBLIC

* Excludes “other”

Gen. 35%

DISTRIBUTION

MEXICO

986

ATTRIBUTABLE NET PROFIT

GENERATION

Mexico

13%

Central America & Other

Colombia

OMAN

NICARAGUA PANAMA COLOMBIA

KENYA SOUTH AFRICA

FTTH Infrastructure Neutral Operator 3

UFINET overview

• UNION FENOSA Redes de Telecomunicacion (UFINET), is the telecommunications company created by UNION FENOSA, with the objective of providing advanced, high quality telecommunications services and infrastructures. • Business areas: – Telecommunications infrastructure provision to Operators. – Design and supply of specialized telecommunication services to operators and corporations. – Integral telecommunications solutions supply to Union Fenosa Group and to business holdings corporations. • International presence in Panama, Colombia, Guatemala and Nicaragua.

FTTH Infrastructure Neutral Operator 4

UFINET overview II

• Network figures: – 11,100 fibre optics kilometers. – 850 network sites. • Economical figures EBIT (thousands of euros) 14000 12000 10000 8000 6000 4000 2000 0 2004

2005

2006

2007

2008

FTTH Infrastructure Neutral Operator 5

UFINET services

Infrastructure Management

• Dark fibre leasing • Colocation • Rights of way

Virtual fiber and transmission capacity

• SDH, IP and Ethernet transmission services. • Virtual Fibre solutions (DWDM) . • MPLS solutions.

Satellite services

• Real Time Communications Telecontrol, Telemetering, Telemanagement, ATM, etc. • IP & VPN´s Connectivity for Intranet access. • Internet Access.

Corporate services

Provision and management of all the telecommunications services for UNION FENOSA Group

FTTH Infrastructure Neutral Operator 6

Business approach • Why UFINET in FTTH? – Experience in fibre optic networks deployment and management. – Sinergies with the utility for infrastructure deployments. – Committed to incorporate innovation solutions to the telecommunication market. FTTH, A BUSINESS OPPORTUNITY

ACTIVE EQUIPMENT PASSIVE INFRASTRUCTURE

SP 1

VERTICAL OPERATOR

SP 2 SP N

NETWORK OPERATOR

SP 1 SP N NETWORK OPERATOR

VERTICAL SP 1

SERVICES

VERTICAL SP 1

• Business type?

INFRASTRUCTURE OPERATOR

FTTH Infrastructure Neutral Operator 7

Business approach OUR MODEL NEUTRAL INFRASTRUCTURE OPERATOR

WHY?

WHAT?

• EXPERIENCE AND KNOW HOW Consolidated dark fiber provider

• PON vs ETHERNET P2P?

•SINERGIES WITH UTILITY Infrastructure deployments, civil works, ducts. •BUSINESS EXPANSION: From core to access •A NEW ACCESS INFRASTRUCTURE: Promote competition in access

HOW? PON

• PON FITS BETTER: Smaller cable size - easier maintenance Less space demanding - reuse of Utility substations. •ADDITIONALLY … HYBRID MODEL Point to point links for corporate customers

• OPEN ACCESS NETWORK The more customers, the more business • WHOLESALE MODEL: Our customers remain as customers, not as competitors. • ‘DARK FIBER LOCAL LOOP’ Similar to ULL model in Spain for ADSL market.

• ALTERNATIVE OPERATORS DEMAND: A solution to overcome access infrastructure deployments barrier FTTH Infrastructure Neutral Operator 8

Network topology

• FTTH access network is pasive, based on PON architecture. – Additionally, hybrid network deployment. Co-existence of PON topology and point to point links. • Network deployment runs from UFINET local colocation site to optical outlet at end-user premises. • Each area is covered with 3 PON trees in parallel, one per operator. • PON trees allocated to different operators are independent each others. – Operators can install their preferred PON equipment (ONT’s y OLT’s). – Operator independency for service definition.

FTTH Infrastructure Neutral Operator 9

Network topology

UFINET fibre optic network Operator #1 customers Operator #2 customers Operator #3 customers

PON 1 PON 2

PON 3

UNION FENOSA site

Operator #1 backhaul

Op.#1 equip. Op.#2 equip. Op.#3 equip. Colocation space for operators equipment

Operator #2 backhaul

Operator #3 backhaul

FTTH Infrastructure Neutral Operator 10

Network topology Building #1 Building #2

Building #N

ONE INFRASTRUCTURE,

Access point 2nd splitting stage

THREE INDEPENDENT NETWORKS

Riser cable Local colocation site - UFINET 1st splitting stage Access cable OLT OP1

Distribution point at UFINET site

Backhole

OLT OP2

Backhole

OLT OP3

Backhole

Feeder cable

FTTH Infrastructure Neutral Operator 11

Commercial model • UFINET commercial approach: fibre optic local loop rental model, similarly to the regulated ULL model for copper pairs local loop. • UFINET provides operators with a wholesale access service, from the local colocation site to end user’s home. • Main invoicing items are : OBA

UFINET - FTTH

COLOCATION

Space rental for colocation of alternative operators devices at incumbent’s Central Office

Space rental for colocation of alternative operators devices at Utility substation.

LOCAL LOOP

Copper pairs local loop rental per unbundled user.

Fibre optic to the home rental per connected user.

AVAILABILITY

User connectivity availability per passed area.

• The cost for each operator varies with the number of customers connected.

FTTH Infrastructure Neutral Operator 12

Advantages for the alternative operators • An alternative FTTH access network independent from the incumbent’s one. – Commercial rollout not tied to incumbent’s deployment. Opportunity in areas not covered by the incumbent. • Solution for main barrier to entry : access infrastructure deployment. • Efforts focused on the network management and the definition and commercialisation of innovative retail services • Alternative operators to use their active solution: service differentiation. • Commercial model: – Market relationship, not regulated relationship. – Minimization y variabilization of rollout costs. – Minimization of the impact in the existing internal procedures. FTTH Infrastructure Neutral Operator 13

Field Trials • Two field trial in Madrid. • Objectives: – For UFINET: • To test different passive network components: splitters, splice boxes, connector housings, risers, optical outlets. • To verify and tune network design criteria. • To collect information as an input for the business model.

– For operators: • To test different FTTH technology providers according to their requirements. • Service definition and commecialization within the field trial areas

– For UFINET and operators: • To define end-user provision procedures and FTTH network maintenance procedures.

• Two areas representing different urban environments: – New area with common telecommunications infrastructure. – Old area without common telecommunications infrastructure. FTTH Infrastructure Neutral Operator 14

Field Trials. Vicalvaro Location

Vicalvaro (Madrid)

Tyoe of area

New area

Urbanization passed

14

Home passed

2179

Architecture

Passive, PON

Operators

3 (at the most)

OLT colocation

Vicalvaro subs.

FTTH Infrastructure Neutral Operator 15

Field Trials. Chamberi Location

Chamberi (Madrid)

Type of area

Old area

Block passed Building passed Home passed Architecture Operators

5 46 792 Passive, PON 3 (at the most)

OLT colocation

Norte Substation

FTTH Infrastructure Neutral Operator 16

Field Trials

SPLITTERS AT SUBSTATION

SOME PICTURES

DISTRIBUTION CABINET AT BUILDING BASEMENT Splitter 1

INDOOR FLOOR BOX

Splitter 2

FTTH Infrastructure Neutral Operator 17

UFINET

THANK YOU FOR YOUR ATTENTION

RAFAEL SAORIN [email protected]