Hello! And welcome to the first posting at the Nordic Broadband Blog. Lots of interesting telecoms-related stuff happens in the Nordic countries, and the objective of this blog is to share some of it with people who do not speak any of the Nordic languages. My ambition is to write a small piece every month or so.
I spend most of my time advising telecom operators, but we also work for regulators and various government entities. Last year we were asked by the The Norwegian Ministry of Administration and Reform (who is responsible for formulation of the Norwegian broadband policy) to look at the following questions:
1. What is the broadband coverage today?
2. What will future capacity needs look like?
3. What will the rollout costs for the new networks be?
The answer to questions 1 and 3 depends on your definition of what broadband is. Today, the official policy is that everyone should have access to a broadband line with a speed of 640 Kbit/s. And clearly, that is not going to enough when looking a few years into the future. James Enck recently co-wrote an insightful paper which (among plenty of other things which I hope to blog about next month) looked at the need for energy. When the first electricity networks were built, there were few uses for electricity (think light bulbs). But over time the energy networks changed our lives in lots of ways and were possibly the single most important driver for growth during the last century. And the analogy to capacity needs in broadband networks is intuitive and, I think, true. My own favorite broadband definition is that “Broadband is three times your current capacity”.
We built two scenarios for future capacity needs: One primarily based on mobile broadband (LTE) capable of 8 Mbit/s downstream and 1 Mbit/s upstream per customer, and another primarily based on fibre networks capable of more than 50 Mbit/s downstream and 10 Mbit/s upstream per customer (And you may notice that upgraded CATV networks also may be able to deliver 50/10 Mbit/s. For areas that are not covered by fiber or CATV networks, I think it is most likely that they will eventually be covered by fiber networks.) The biggest difference between the two scenarios is video distribution. The LTE scenario depends on a separate network (e.g. satellite, digital terrestrial) for the delivery of broadcast TV. The fiber scenario can cope just fine with video also.
The rollout costs depend on both capacity needs and government policy. Full coverage with 50 Mbit/s for the 30% or so of households without commercial coverage will cost between two and three billion Euros. We calculated the cost per installed customer to be between €5000 and €7500. This is much higher that other estimates we have seen, but keep in mind that this is the cost for covering rural households in a country filled with mountains and fjords….. In order to arrive at the estimate we simulated a network rollout in 15 counties (with quite different topologies and demographics) and discussed the estimates with installers and fiber network operators.
An important variable for the cost estimates is the availability of ducts and trenches – a government policy where a fiber rollout is planned for when digging for other reasons (such as electricity or water pipes) will greatly reduce rollout costs.
8 Mbit/s mobile broadband coverage cannot deliver all the services that fiber access can, but will cost much less. We calculated to cost to be between €100 and €260 million. (But keep in mind that this is just the cost for covering the 10% or so that will not have commercial coverange). The cost varies with the radio frequency used. In order to minimize the cost it is important to use low radio frequencies with good coverage capabilities. And here’s the good news: The Norwegian government finally decided last fall to allocate an attractive slice of radio spectrum (the so called Digital Dividend spectrum) for mobile broadband use. Well done.
If you read Norwegian, you can download the report here.