confidential report

that BT's coverage area would be wider than only the most densely ...... for the rural NGA programme and the formulation of the 4G coverage obligation. It has.
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WIK-Consult x Report CONFIDENTIAL Study for TalkTalk

Estimating the cost of GEA

Authors: Ilsa Godlovitch Stephan Jay Dr Thomas Plückebaum Desislava Simeonova

WIK-Consult GmbH Rhöndorfer Str. 68 53604 Bad Honnef Germany

Bad Honnef, March 2013

I

GEA Cost Analysis

Contents List of Figures

III

List of Tables

IV

1 Executive Summary

1

2 Introduction

13

3 Modelling approach

14

3.1 Data source for approximating the network structure of BT's commercial FTTC roll-out

15

3.2 Investment and cost at the street cabinet

20

3.3 Investments into the feeder segment

21

3.4 Investments and cost at the exchange

23

3.5 Assumptions on the relation between bandwidth and cost

25

3.6 Further cost parameters

25

3.6.1 Indirect investments

25

3.6.2 Other OPEX

25

3.6.3 WACC

26

3.6.4 Common Cost

28

3.6.5 CAPEX and OPEX price trends

28

3.7 Timeframe, reinvestments, present value and economic depreciation 4 Penetration forecasts

29 32

4.1 Modelling approach

32

4.2 Market size

32

4.3 Market shares

33

4.4 NGA coverage

33

4.5 Overlap of NGA coverage

34

4.6 Potential customer-base for SFBB

35

4.7 Customer take-up of SFBB in served areas

35

4.8 Outputs

36

4.9 UK benchmarks

39

4.10 European benchmarks

41

5 Results of the calculation

43

II

GEA Cost Analysis

5.1 Results of the cost model

43

5.2 Comparison of results with Openreach price list

47

6 Review of comparable international wholesale prices

48

6.1 Overview of countries for benchmarking

48

6.2 Summary of findings

48

6.3 VDSL bitstream at the exchange

50

6.3.1 Belgium 6.4 Other comparable products

50 52

6.4.1 Netherlands

52

6.4.2 Sweden

53

GEA Cost Analysis

III

List of Figures Figure 1-1:

Generic Ethernet Access, schematic description

1

Figure 1-2:

Take-up of Super Fast Broadband by operator (year end figures)

4

Figure 1-3:

Percentage of customers taking Super Fast Broadband

5

Figure 1-4:

Super Fast Broadband lines by operator

5

Figure 1-5:

Number of subscribers under different penetration profiles (year-end figures)

6

Figure 1-6:

Summary of stand-alone sensitivities conducted

11

Figure 3-1:

Schematic overview of the considered network structure

14

Figure 3-2:

Different geotypes within an exchange area in the Analysys Mason report for BSG

16

Figure 4-1:

FTTx households passed (commercial)

34

Figure 4-2:

% eligible BB customers taking SFBB (base case)

36

Figure 4-3:

Percentage of customers taking Super Fast Broadband

37

Figure 4-4:

Super Fast Broadband customers as percentage of broadband customers in served areas

37

Figure 4-5:

Super Fast Broadband li