MonetizingtheNBNStrategiesServices.docxVIP

Monetizing the NBN: Strategies Services TextStart By Nigel Bruin, Director Business Consulting, NBN Competence Center, Singapore National Broadband Networks (NBNs) are being planned and rolling out around the world, promoted by a strong convergence of interests, with governments looking for macroeconomic benefits and telcos looking to satisfy their subscribers’ demands for improved services. The problem for telcos is how to cover the costs of building these next-generation networks. The foundations matter The structure of a national fiber broadband network and the regulations that govern it have a big influence on the opportunities for revenue-generating services. The broadest marketplace is always going to be based on an open-access or wholesale model supporting many service providers. There are different structural models and the choice is usually dictated by the practical and necessary concerns of the existing operators, perhaps including a state-controlled incumbent. There is no single regulatory structure suitable for all situations, but the most important layer is that which provides wholesale network access to the retail service providers (RSPs). This is where innovation and competition drive the large-scale benefits. Managing CAPEX The biggest financial issue is the high capital cost of network construction, especially the civil works. Digging roads is expensive, aerial wiring less so, but last-mile connections will still account for around 50% of the project cost; money that is spent in advance of any revenue earned. Government grants, subsidies, or loans designed to promote the project have the strongest effect here. The other major factor affecting the return on investment is the take-up rate by subscribers; sharing the cost of the last-mile infrastructure as widely as possible lowers the per-connection costs dramatically. The competitive environment influences take-up rates but so does regulation of elements such as the decommissioning of legacy infrast