investment framework

80% of Portuguese people outside of optical fiber

New Generation Networks (NGNs) will only be an economically viable investment for 20% of Portuguese households, located in large urban centers, and even for these it is necessary to create a regulatory framework that allows the sharing of infrastructures, defends a study today presented by Apritel, the Association of telecommunications operators.

The analysis of the economic viability of investments in NGNs was carried out by WIK Consult, a German market consulting company that analyzed six countries at the request of ECTA, the European association in which Apritel is also integrated.

According to the study’s conclusions, without regulation the creation of competing fiber networks is only economically viable for less than 4% of the population residing in the areas with the highest population density.

For less dense suburban areas and the interior of the country, which corresponds to around 60% of the population, the study indicates the need for “specific incentives” for these areas to be covered with good speed broadband.

“If the authorities do not act, we will have ultra-fast information networks available, at most, to 20 to 30% of our population. Nor can it be from these 20% or 30% of the population that we are going to ask for an effort to finance RdNG [Redes de Nova Geração] for the other 70% to 80%; the prices to be charged would render the services inactive “, says Luis Reis, president of Apritel. For Luis Reis the answer is a policy for the development of the Information Society that makes investment possible even in commercially less interesting areas.

As for the type of subsidies that could be created, Luis Reis argues that there are several ways to subsidize new generation networks and that “the absence of a clear policy for NGNs is perhaps the best way to subsidize the incumbent’s investment and create a new monopoly “, he warns.

Apritel has been arguing that it is necessary for Anacom and the Government to clarify the regulatory model that will be imposed on Next Generation Networks. “We are not asking for regulation, but transparency and clarification of the regulatory format”, explains Luis Reis.

The duplication of investments by several operators with the creation of several New Generation Networks is also considered a strategy to be avoided, the model advocated being that of sharing access to a single fiber network, functional separation or investment in a consortium.

This study cemented some of the ideas previously transmitted by the association, although for Luis Reis it has a surprising revelation, which is to show that the model of opening a new generation network, created by the incumbent, can improve his business scenario and reduce risk, an issue that Karl-Heinz Neumann, from WIT Consulting, considers especially important for Portugal.

Technologies for NGNsAmong the various possible technologies for the creation of NGNs, the study shows that in Portugal vDSL is the best alternative. Based on a mix of copper and fiber infrastructure, vDSL allows speeds up to 50 Mbps that can reach the suburbs of large cities, being economically viable for 39% of the Portuguese population, while fiber is only viable for 19.2%.

According to WIT’s analysis, investment in FTTH technology – Fiber To The Home (or fiber to the customer’s home) is five times higher than the investment required in vDSL. The study of the cost of the various technologies up to the customer’s home was done for the six countries analyzed (Germany, France, Italy, Spain, Sweden and Portugal) and while the installation of the Fiber technology up to home in shared networks would cost 1,548 euros per home, vDSL would cost just 218 euros.

investment framework

In some countries, such as France and Germany, investment is even higher.