Abstract

Upgrading telecommunications access networks requires large investments in deploying new optical infrastructure, especially in terms of construction works and costs to reach the end-user, which seem only affordable in densely populated areas. By evaluating a cost-benefit analysis for the deployment of a point-to-point dark fiber infrastructure, this paper investigates how the economic risk of dark fiber deployment can be estimated and/or reduced in different settings. By applying the model on specific scenarios, which differ in area type, demand uptake, and revenue scheme, it is concluded that the business case is only viable in a dense urban area with an aggressive take-up. In the other scenarios, the paper investigates possibilities and opportunities to improve the business case and hence decrease the investment risk. Examples of this improvement include prolonging the planning horizon, ensuring revenue from the start of the project by performing demand aggregation, or examining where public funds might help.

© 2014 Optical Society of America

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2013 (1)

European Commission, “EU guidelines for the application of State aid rules in relation to the rapid deployment of broadband networks,” Official J. Eur. Union, vol. 56, no. C 25, pp. 1–26, 2013 [Online]. Available: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2013:025:0001:0026:EN:PDF .

2012 (2)

S. Jay, K.-H. Neumann, and T. Plückebaum, “The cost of nationwide fibre access in Germany,” Commun. Strategies, vol.  85, pp. 169–188, 2012.

T. Rokkas, I. Neokosmidis, D. Katsianis, and D. Varoutas, “Cost analysis of WDM and TDM fiber-to-the-home (FTTH) networks: A system-of-systems approach,” IEEE Trans. Syst. Man Cybern., Part C Appl. Rev., vol.  42, no. 6, pp. 1842–1853, 2012.
[CrossRef]

2011 (1)

M. Van der Wee, C. Mattsson, A. Raju, O. Braet, A. Nucciarelli, B. Sadowski, S. Verbrugge, and M. Pickavet, “Making a success of FTTH learning from case studies in Europe,” J. Inst. Telecommun. Prof., vol.  5, no. 4, pp. 22–31, 2011.

2010 (2)

N. Ghazisaidi and M. Maier, “Techno-economic analysis of EPON and WiMAX for future fiber-wireless (FiWi) networks,” Comput. Netw., vol.  54, no. 15, pp. 2640–2650, 2010.
[CrossRef]

C. Christodoulos, C. Michalakelis, and D. Varoutas, “Forecasting with limited data: Combining ARIMA and diffusion models,” Technol. Forecast. Soc. Change, vol.  77, no. 4, pp. 558–565, 2010.
[CrossRef]

2008 (1)

K. Casier, S. Verbrugge, R. Meersman, D. Colle, M. Pickavet, and P. Demeester, “A clear and balanced view on FTTH deployment costs,” J. Inst. Telecommun. Prof., vol.  2, no. 3, pp. 27–30, 2008.

2007 (1)

European Commission, “Commission recommendation of 17 December 2007 on relevant product and service markets within the electronic communications sector susceptible to ex ante regulation in accordance with Directive 2002/21/EC of the European Parliament and of the Council on a common regulatory framework for electronic communications networks and services,” Official J. Eur. Union, vol. 50, no. L 344, pp. 65–69, 2007 [Online]. Available: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2007:344:0065:0069:en:PDF .

2004 (1)

B. T. Olsen and K. Stordahl, “Models for forecasting cost evolution of components and technologies,” Telektronikk, vol.  4, pp. 138–144, 2004.

2003 (1)

T. Monath, N. Kristian, P. Cadro, D. Katsianis, and D. Varoutas, “Economics of fixed broadband access network strategies,” IEEE Commun. Mag., vol.  41, no. 9, pp. 132–139, 2003.
[CrossRef]

2002 (1)

B. Flyvbjerg, M. Holm, and S. Buhl, “Underestimating costs in public works projects: Error or lie?” J. Am. Plann. Assoc., vol.  68, no. 3, pp. 279–295, 2002.

1981 (1)

O. Williamson, “The economics of organization: The transaction cost approach,” Am. J. Sociol., vol.  87, no. 3, pp. 548–577, 1981.
[CrossRef]

Braet, O.

M. Van der Wee, C. Mattsson, A. Raju, O. Braet, A. Nucciarelli, B. Sadowski, S. Verbrugge, and M. Pickavet, “Making a success of FTTH learning from case studies in Europe,” J. Inst. Telecommun. Prof., vol.  5, no. 4, pp. 22–31, 2011.

Broberg, A.

A. Broberg, “Challenges for an open physical infrastructure provider,” presented at the ECOC Conf., Amsterdam, The Netherlands, Sept. 2012.

A. Broberg, “Stockholm IT-infrastructure,” presented at the OASE Plenary Workshop, Stokab, Stockholm, Feb. 2011.

Buhl, S.

B. Flyvbjerg, M. Holm, and S. Buhl, “Underestimating costs in public works projects: Error or lie?” J. Am. Plann. Assoc., vol.  68, no. 3, pp. 279–295, 2002.

Burger, W.

W. Burger, The Reggefiber model: Key elements of Reggefiber’s strategy in The Netherlands, 2012.

Cadro, P.

T. Monath, N. Kristian, P. Cadro, D. Katsianis, and D. Varoutas, “Economics of fixed broadband access network strategies,” IEEE Commun. Mag., vol.  41, no. 9, pp. 132–139, 2003.
[CrossRef]

Casier, K.

K. Casier, S. Verbrugge, R. Meersman, D. Colle, M. Pickavet, and P. Demeester, “A clear and balanced view on FTTH deployment costs,” J. Inst. Telecommun. Prof., vol.  2, no. 3, pp. 27–30, 2008.

C. M. Machuca, K. Wang, S. Verbrugge, K. Casier, M. Kind, R. Hülsermann, and S. Krauß, “Cost-based assessment of NGOA architectures and its impact in the business model,” in Conf. of Telecommunication, Media and Internet Techno-Economics (CTTE), Athens, Greece, 2012.

M. Tahon, J. Van Ooteghem, K. Casier, S. Verbrugge, D. Colle, M. Pickavet, and P. Demeester, “Improving the FTTH business case—A joint telco-utility network rollout model,” Telecomm. Policy, to be published.
[CrossRef]

Christodoulos, C.

C. Christodoulos, C. Michalakelis, and D. Varoutas, “Forecasting with limited data: Combining ARIMA and diffusion models,” Technol. Forecast. Soc. Change, vol.  77, no. 4, pp. 558–565, 2010.
[CrossRef]

Colle, D.

K. Casier, S. Verbrugge, R. Meersman, D. Colle, M. Pickavet, and P. Demeester, “A clear and balanced view on FTTH deployment costs,” J. Inst. Telecommun. Prof., vol.  2, no. 3, pp. 27–30, 2008.

M. Tahon, J. Van Ooteghem, K. Casier, S. Verbrugge, D. Colle, M. Pickavet, and P. Demeester, “Improving the FTTH business case—A joint telco-utility network rollout model,” Telecomm. Policy, to be published.
[CrossRef]

Demeester, P.

K. Casier, S. Verbrugge, R. Meersman, D. Colle, M. Pickavet, and P. Demeester, “A clear and balanced view on FTTH deployment costs,” J. Inst. Telecommun. Prof., vol.  2, no. 3, pp. 27–30, 2008.

M. Tahon, J. Van Ooteghem, K. Casier, S. Verbrugge, D. Colle, M. Pickavet, and P. Demeester, “Improving the FTTH business case—A joint telco-utility network rollout model,” Telecomm. Policy, to be published.
[CrossRef]

Eijgenraam, C.

C. Eijgenraam, C. Koopmans, P. Tang, and A. Verster, Evaluatie van Infrastruurprojecten. Leidraad voor Kosten-Batenanalyse. Den Haag: CPB, 2000.

Flyvbjerg, B.

B. Flyvbjerg, M. Holm, and S. Buhl, “Underestimating costs in public works projects: Error or lie?” J. Am. Plann. Assoc., vol.  68, no. 3, pp. 279–295, 2002.

Ghazisaidi, N.

N. Ghazisaidi and M. Maier, “Techno-economic analysis of EPON and WiMAX for future fiber-wireless (FiWi) networks,” Comput. Netw., vol.  54, no. 15, pp. 2640–2650, 2010.
[CrossRef]

Holm, M.

B. Flyvbjerg, M. Holm, and S. Buhl, “Underestimating costs in public works projects: Error or lie?” J. Am. Plann. Assoc., vol.  68, no. 3, pp. 279–295, 2002.

Hülsermann, R.

C. M. Machuca, K. Wang, S. Verbrugge, K. Casier, M. Kind, R. Hülsermann, and S. Krauß, “Cost-based assessment of NGOA architectures and its impact in the business model,” in Conf. of Telecommunication, Media and Internet Techno-Economics (CTTE), Athens, Greece, 2012.

Jay, S.

S. Jay, K.-H. Neumann, and T. Plückebaum, “The cost of nationwide fibre access in Germany,” Commun. Strategies, vol.  85, pp. 169–188, 2012.

S. Jay, K.-H. Neumann, and T. Plückebaum, “Comparing FTTH access networks based on P2P and PMP fibre topologies,” in Conf. of Telecommunication, Media and Internet Techno-Economics (CTTE), Berlin, Germany, 2011.

Katsianis, D.

T. Rokkas, I. Neokosmidis, D. Katsianis, and D. Varoutas, “Cost analysis of WDM and TDM fiber-to-the-home (FTTH) networks: A system-of-systems approach,” IEEE Trans. Syst. Man Cybern., Part C Appl. Rev., vol.  42, no. 6, pp. 1842–1853, 2012.
[CrossRef]

T. Monath, N. Kristian, P. Cadro, D. Katsianis, and D. Varoutas, “Economics of fixed broadband access network strategies,” IEEE Commun. Mag., vol.  41, no. 9, pp. 132–139, 2003.
[CrossRef]

Kind, M.

C. M. Machuca, K. Wang, S. Verbrugge, K. Casier, M. Kind, R. Hülsermann, and S. Krauß, “Cost-based assessment of NGOA architectures and its impact in the business model,” in Conf. of Telecommunication, Media and Internet Techno-Economics (CTTE), Athens, Greece, 2012.

Koopmans, C.

C. Eijgenraam, C. Koopmans, P. Tang, and A. Verster, Evaluatie van Infrastruurprojecten. Leidraad voor Kosten-Batenanalyse. Den Haag: CPB, 2000.

Krauß, S.

C. M. Machuca, K. Wang, S. Verbrugge, K. Casier, M. Kind, R. Hülsermann, and S. Krauß, “Cost-based assessment of NGOA architectures and its impact in the business model,” in Conf. of Telecommunication, Media and Internet Techno-Economics (CTTE), Athens, Greece, 2012.

Kristian, N.

T. Monath, N. Kristian, P. Cadro, D. Katsianis, and D. Varoutas, “Economics of fixed broadband access network strategies,” IEEE Commun. Mag., vol.  41, no. 9, pp. 132–139, 2003.
[CrossRef]

Machuca, C. M.

C. M. Machuca, K. Wang, S. Verbrugge, K. Casier, M. Kind, R. Hülsermann, and S. Krauß, “Cost-based assessment of NGOA architectures and its impact in the business model,” in Conf. of Telecommunication, Media and Internet Techno-Economics (CTTE), Athens, Greece, 2012.

Maier, M.

N. Ghazisaidi and M. Maier, “Techno-economic analysis of EPON and WiMAX for future fiber-wireless (FiWi) networks,” Comput. Netw., vol.  54, no. 15, pp. 2640–2650, 2010.
[CrossRef]

Mattsson, C.

M. Van der Wee, C. Mattsson, A. Raju, O. Braet, A. Nucciarelli, B. Sadowski, S. Verbrugge, and M. Pickavet, “Making a success of FTTH learning from case studies in Europe,” J. Inst. Telecommun. Prof., vol.  5, no. 4, pp. 22–31, 2011.

Meersman, R.

K. Casier, S. Verbrugge, R. Meersman, D. Colle, M. Pickavet, and P. Demeester, “A clear and balanced view on FTTH deployment costs,” J. Inst. Telecommun. Prof., vol.  2, no. 3, pp. 27–30, 2008.

Michalakelis, C.

C. Christodoulos, C. Michalakelis, and D. Varoutas, “Forecasting with limited data: Combining ARIMA and diffusion models,” Technol. Forecast. Soc. Change, vol.  77, no. 4, pp. 558–565, 2010.
[CrossRef]

Monath, T.

T. Monath, N. Kristian, P. Cadro, D. Katsianis, and D. Varoutas, “Economics of fixed broadband access network strategies,” IEEE Commun. Mag., vol.  41, no. 9, pp. 132–139, 2003.
[CrossRef]

Neokosmidis, I.

T. Rokkas, I. Neokosmidis, D. Katsianis, and D. Varoutas, “Cost analysis of WDM and TDM fiber-to-the-home (FTTH) networks: A system-of-systems approach,” IEEE Trans. Syst. Man Cybern., Part C Appl. Rev., vol.  42, no. 6, pp. 1842–1853, 2012.
[CrossRef]

Neumann, K.-H.

S. Jay, K.-H. Neumann, and T. Plückebaum, “The cost of nationwide fibre access in Germany,” Commun. Strategies, vol.  85, pp. 169–188, 2012.

S. Jay, K.-H. Neumann, and T. Plückebaum, “Comparing FTTH access networks based on P2P and PMP fibre topologies,” in Conf. of Telecommunication, Media and Internet Techno-Economics (CTTE), Berlin, Germany, 2011.

Nucciarelli, A.

M. Van der Wee, C. Mattsson, A. Raju, O. Braet, A. Nucciarelli, B. Sadowski, S. Verbrugge, and M. Pickavet, “Making a success of FTTH learning from case studies in Europe,” J. Inst. Telecommun. Prof., vol.  5, no. 4, pp. 22–31, 2011.

Olsen, B. T.

B. T. Olsen and K. Stordahl, “Models for forecasting cost evolution of components and technologies,” Telektronikk, vol.  4, pp. 138–144, 2004.

Pickavet, M.

M. Van der Wee, C. Mattsson, A. Raju, O. Braet, A. Nucciarelli, B. Sadowski, S. Verbrugge, and M. Pickavet, “Making a success of FTTH learning from case studies in Europe,” J. Inst. Telecommun. Prof., vol.  5, no. 4, pp. 22–31, 2011.

K. Casier, S. Verbrugge, R. Meersman, D. Colle, M. Pickavet, and P. Demeester, “A clear and balanced view on FTTH deployment costs,” J. Inst. Telecommun. Prof., vol.  2, no. 3, pp. 27–30, 2008.

M. Tahon, J. Van Ooteghem, K. Casier, S. Verbrugge, D. Colle, M. Pickavet, and P. Demeester, “Improving the FTTH business case—A joint telco-utility network rollout model,” Telecomm. Policy, to be published.
[CrossRef]

Plückebaum, T.

S. Jay, K.-H. Neumann, and T. Plückebaum, “The cost of nationwide fibre access in Germany,” Commun. Strategies, vol.  85, pp. 169–188, 2012.

S. Jay, K.-H. Neumann, and T. Plückebaum, “Comparing FTTH access networks based on P2P and PMP fibre topologies,” in Conf. of Telecommunication, Media and Internet Techno-Economics (CTTE), Berlin, Germany, 2011.

Raju, A.

M. Van der Wee, C. Mattsson, A. Raju, O. Braet, A. Nucciarelli, B. Sadowski, S. Verbrugge, and M. Pickavet, “Making a success of FTTH learning from case studies in Europe,” J. Inst. Telecommun. Prof., vol.  5, no. 4, pp. 22–31, 2011.

Rokkas, T.

T. Rokkas, I. Neokosmidis, D. Katsianis, and D. Varoutas, “Cost analysis of WDM and TDM fiber-to-the-home (FTTH) networks: A system-of-systems approach,” IEEE Trans. Syst. Man Cybern., Part C Appl. Rev., vol.  42, no. 6, pp. 1842–1853, 2012.
[CrossRef]

Rood, H.

H. Rood, “Very high speed broadband deployment in Europe: The Netherlands and Bulgaria compared,” in TPRC, 2010.

Sadowski, B.

M. Van der Wee, C. Mattsson, A. Raju, O. Braet, A. Nucciarelli, B. Sadowski, S. Verbrugge, and M. Pickavet, “Making a success of FTTH learning from case studies in Europe,” J. Inst. Telecommun. Prof., vol.  5, no. 4, pp. 22–31, 2011.

Stordahl, K.

B. T. Olsen and K. Stordahl, “Models for forecasting cost evolution of components and technologies,” Telektronikk, vol.  4, pp. 138–144, 2004.

Tahon, M.

M. Tahon, J. Van Ooteghem, K. Casier, S. Verbrugge, D. Colle, M. Pickavet, and P. Demeester, “Improving the FTTH business case—A joint telco-utility network rollout model,” Telecomm. Policy, to be published.
[CrossRef]

Tang, P.

C. Eijgenraam, C. Koopmans, P. Tang, and A. Verster, Evaluatie van Infrastruurprojecten. Leidraad voor Kosten-Batenanalyse. Den Haag: CPB, 2000.

Väätämöinen, H.

H. Väätämöinen, “What solution providers need to know about FTTH?” presented at the 5th BICSI Southeast Asia Conf., 2007.

Van der Wee, M.

M. Van der Wee, C. Mattsson, A. Raju, O. Braet, A. Nucciarelli, B. Sadowski, S. Verbrugge, and M. Pickavet, “Making a success of FTTH learning from case studies in Europe,” J. Inst. Telecommun. Prof., vol.  5, no. 4, pp. 22–31, 2011.

Van Ooteghem, J.

M. Tahon, J. Van Ooteghem, K. Casier, S. Verbrugge, D. Colle, M. Pickavet, and P. Demeester, “Improving the FTTH business case—A joint telco-utility network rollout model,” Telecomm. Policy, to be published.
[CrossRef]

Varoutas, D.

T. Rokkas, I. Neokosmidis, D. Katsianis, and D. Varoutas, “Cost analysis of WDM and TDM fiber-to-the-home (FTTH) networks: A system-of-systems approach,” IEEE Trans. Syst. Man Cybern., Part C Appl. Rev., vol.  42, no. 6, pp. 1842–1853, 2012.
[CrossRef]

C. Christodoulos, C. Michalakelis, and D. Varoutas, “Forecasting with limited data: Combining ARIMA and diffusion models,” Technol. Forecast. Soc. Change, vol.  77, no. 4, pp. 558–565, 2010.
[CrossRef]

T. Monath, N. Kristian, P. Cadro, D. Katsianis, and D. Varoutas, “Economics of fixed broadband access network strategies,” IEEE Commun. Mag., vol.  41, no. 9, pp. 132–139, 2003.
[CrossRef]

Verbrugge, S.

M. Van der Wee, C. Mattsson, A. Raju, O. Braet, A. Nucciarelli, B. Sadowski, S. Verbrugge, and M. Pickavet, “Making a success of FTTH learning from case studies in Europe,” J. Inst. Telecommun. Prof., vol.  5, no. 4, pp. 22–31, 2011.

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Figures (9)

Fig. 1.
Fig. 1.

Adoption curves for the scenario studies.

Fig. 2.
Fig. 2.

Overview of the passive infrastructure in a P2P network.

Fig. 3.
Fig. 3.

TCO for the PIP, cumulative and discounted over 20 years (for likely adoption curve).

Fig. 4.
Fig. 4.

Cumulative costs, revenues, and NPV for the physical infrastructure for the reference scenarios.

Fig. 5.
Fig. 5.

Revenues needed per subscriber per month for the physical infrastructure for the reference scenarios.

Fig. 6.
Fig. 6.

Cumulative costs, revenues, and NPV for demand aggregation of 20%–40% on top of the aggressive adoption curve.

Fig. 7.
Fig. 7.

Impact of small and large reuse of available ducts on the TCO of the PIP.

Fig. 8.
Fig. 8.

NPV curves for a prolonged planning horizon of up to 40 years.

Fig. 9.
Fig. 9.

Needed revenues per home connected for different combinations of combined improvements for the business case for the PIP.

Tables (2)

Tables Icon

TABLE I Parameters for the Area Types

Tables Icon

TABLE II Unit Costs for Different Parameters, Possibly Varying Over Area Types

Equations (1)

Equations on this page are rendered with MathJax. Learn more.

i=12012*X*A(i)*1(1+r)i=TCOover20years,