New Code, New Challenges for the Gigabit Society Brussels, October 15th 2019 QUESTIONS…
Does the new Code imply a shift from competition to industrial policy goals?
Competition no longer an absolute value, sharing of resources and infrastructures is encouraged.
Does a wholesale only model risk leading to a re-monopolization vs losing advantages of infrastructure based competition?
Can 5G FWA be a cost effective alternative to FTTH in urban areas?
Does a favour for co-investment imply a single access network?
Does co-investment justify ex ante de-regulation?
FASTWEB C2 – INTERNAL USE 2 NGA Coverage in Italy
NGN proprietary coverage 2018 (Families/Businesses, Millions) Announced Additional NGA Coverage
22.01 22.01
8.0 16.0 (5.0 FTTH, 3.0 FTTC, 8 FWA)
1.32 2.32 Additional Coverage by OF Black Areas 9.52 White Areas 7.0-8.02 17 Mln of which 7-8 State Aid
3.02 <2 3.0
0.0 mn 0.0 mn
Source: 1TIM, Presentation FY 2018, 2Vodafone, Presentation 3Q 2019/2019
3 Infrastructure based competition & ladder of investments have proven effective
Access lines by technology (Mln) % of Access Lines by Speed
0,31 0,34 0,44 0,62 0,69 0,76 0,85 0,96 95,5 90,0 0,55 0,56 1,31 2,48 82,5 0,77 4,72 0,91 5,29 5,79 6,38 6,90 65,7 1,10 62,0 58,6 51,5 1,14 1,18 54,9 1,23 1,24 45,1 48,5 38,0 41,4 19,03 34,3 17,82 16,54 14,15 13,35 12,67 11,75 18,4 20,5 10,98 17,5 14,3 16,4 10,0 12,5 5,7 4,51,0 1,6
Mar-15 Mar-16 Mar-17 Mar-18 June-18 Sept-18 Dec-18 Mar-19 Mar-15 Mar-16 Mar-17 Mar-18 June-18 Sept-18 Dec-18 Mar-19
Copper FWA FTTC FTTH Under 30 Mbit/s Over 30 Mbit/s and up to 100 Mbit/s Over 100 Mbit/s Market Share Access Lines >=100 Mbit/s
2,6 0,8 0,7 2,7 Fastweb
Vodafone
Wind Tre 19,7 39,3 Tim
Tiscali
Eolo
Altri (Others) 34,3
FASTWEB C2 – INTERNAL USE 4 CO-INVESTMENT HAS HELPED SPEED UP NGA DEPLOYMENT Phase I of coinvestment (2013-2016) Phase II of coinvestment (2016-2020) Cost sharing from local exchange to FTTC Cabinet FTTH from cabinet to HHs 2 parallel networks, 2 separate cabinets
FASTWEB C2 – INTERNAL USE 5 FLASH FIBER JOINT VENTURE
29 cities 3 Mln Households completion expected by end 2020 80% 20%
A new special purpose entity acting established in 2016 as exclusive vehicle to develop secondary and vertical segments: ➢ 2 parallel independently managed infrastructures, one vertical cabling ➢ Rationale: quicker time to market, cost sharing & roll out synergies
FTTC Cabinets
FASTWEB C2 – INTERNAL USE 6 NEXT STEP OF NGA EXPANSION WILL BE 5G FWA
Fastweb has carried out first 5G Fixed Wireless Access trial in Italy and commercial deployment in 2019 in at least 2 cities
Performance Download speeds up to 1 Gbps with a maximum distance of 500 meters
Deployment Flexibility and speed of deployment by limiting need for civil works
Installation A single receiving equipment installed on the balcony or roof according to type of building
7 …WITH FIRST USE CASE OF 5G: FIXED WIRELESS ACCESS…
Fixed Wireless Access is the first significant application of 5G, a flexibile and more efficient alternative to FTTH which allows the provision of speeds up to 1 Gbps
26-28 GHz Band Spectrum Equipment receives FWA 5G signal from antenna and distributes it to modem
Antenna installed on balcony or roof Performance up to 1 Gbps Up to 500 m
To obtain UBB performance up to 1 Gbps 26-28 GHz 5G millimetric spectrum is required Fastweb has participated in 5G auction in 2018 and has acquired 200 MHz @ 26 GHz
8 …AND THAT IS ALREADY A COMMERCIAL SERVICE IN ADVANCED MARKETS
5G Fixed Wireless Access will be the first real use case for 5G
✓ Commercial service launched in october 2018 on millimetric band in 4 cities ✓ Sacramento Indianapolis Performance of at least 300 Mbps and up to 1 Gbps Louisville Raleigh Los Angeles Charlotte Oklahoma City Atlanta ✓ Commercial service launched in december 2018 in 12 cities Dallas
Waco Jacksonville ✓ Hotspot mobile San AntonioHouston New Orleans
✓ FWA 5G services for business segment business launched by main 3 operators in december 2018 ✓ Commercial launch for consumer segment with national coverage announced by end 2019
9 …ON THE WHOLESALE ONLY MODEL
Art. 80 may allow NRAs in some cases to impose on che wholesale only operator «fair and reasonable» prices without cost orientation obligation, even if the wholesale-only operator has signed «exclusivity deals» with providers and/or has a de facto monopoly position in certain areas.
Incentive towards the creation of a wholesale only approach implies that there is a belief that wholesale only operators will invest more in the network but through the possibility of asking higher prices for network access versus who will then be transferred inevitably to end users, thus hindering take up.
In current framework, it has been proven that lower wholesale access prices (which in any case allow cost recovery and reasonable rate of return) by incumbent operators have fostered competition, NGA development & take up.
10 …INFRASTRUCTURE SHARING AGREEMENT WITH WIND-TRE FOR 5G NETWORK ROLL OUT
Fastweb and Wind Tre have announced in June 2019 a strategic agreement, which based on specific assets of each operator, will allow to accelerate the deployment of a 5G nation wide network.
The agreement will allow the realization of a shared 5G network between the 2 operators, with the objective of providing new generation mobile services with state of the art performance to Fastweb and Wind Tre customers.
The shared 5G network will include both macro sites and micro-cells, connected by Fastweb’s fiber infrastructure, and will have 90% national coverage by 2026. Wind Tre will manage the 5G network, whereas the 2 companies will remain completely independent, both for commercial and operational aspects in the use of the new shared infrastructure.
In the agreement, Wind Tre will progressively provide Fastweb with roaming services on its network for 4G and precedente technologie) in order to allow Fastweb to have a national coverage for the provision of mobile services.
At the same time Fastweb will provice Wind Tre wholesale access to its FTTH and FTTC network, increasing Wind Tre capabilities to offer UBB services to their fixed clients.
FASTWEB C2 – INTERNAL USE 11 5G co-investing represents final step of Fastweb’s FMC strategy
5G Co-investment Mobile roaming
▪ Co-investment 1 ▪ Combined 80 MHZ 5G Spectrum 3 ▪ Provision by WIND Tre of 4G roaming services to ▪ National macro sites coverage Fastweb ▪ Small cells layer for densification ▪ Lower MVNO costs than today ▪ One single physical infrastructrue, 2 virtual slices
Fiber back-hauling UBB Wholesale
▪ Provision by Fastweb of dark fiber connections ▪ Provision by Fastweb of wholesale wireline UBB to Wind Tre’s BTS in selected areas 4 services to Wind Tre 2 ▪ New revenue stream ▪ New revenue stream ▪ Enabling 5G performance in terms of capacity ▪ Tangible step to becoming a leading wholesale and latency services
Four industrial streams optimizing use of both companies’ assets
FASTWEB C2 – INTERNAL USE 12 KEY MESSAGES
1. Infrastructure based competition and ladder of investment strategy has proven successful in NGA development in Italy
2. Infrastructure based competition allows for efficient technological choices
3. 5G FWA allows 1 Gbps connectivity and greater roll-out efficiencies vs FTTH, must be considered in the definition of VHCN
4. Co-investment models can be an accelerator for 5G and NGA but do not justify de-regulation «per se». Co-investments should not imply a single network in contrast with current regulation which encourages infrastructure based competition and competition between independent operators as much as possible.
5. Network sharing and co-investment are not an objective «per se» to justify deregulation but are tools that operators voluntarily (already) use to reduce costs. Deregulation should be allowed based on «on field» results of co-investments and not as an ex-ante justification just because a co-investment proposal has been announced.
6. Relying on a wholesale access model without infrastructure based competition may not be the most efficient solution for technological choices for NGA deployment and end users in terms of slow deployment and high end user prices.
7. There should continue to be no trade off between competition and investments, since it is only competition which drives investments and ultimately end user benefits.
13 FIBER IN THE AIR Thank you