|Open Fiber to 90% of Greek Homes|
|Written by Dave Burstein|
|Sunday, 23 November 2008 16:58|
90+% of Greek homes will have 100 megabit service within 7 years. The cost estimate is 2,3B euros, some from the government, some from the companies involved. The remarkable thing is that a conservative, business-oriented government is demanding that the network be open to all ISPs.
As the experience in Britain shows, competition at the retail level can dramatically drive down prices.
The timetable is deliberately slow, with the next year devoted to planning. I've included the announcement below with details (in Google Translation) that has a timetable and details of the planning. The country will be divided into three regions, so that no one company (like BT) will control it all. It's designed to take Greece from one of the most broadband backward countries in the traditional EU to one of the most advanced.
The decisionmaker is a respected economics professor with a Ph.D from the London School, Alogoskoufis Georgios, now Finance Minister. His website features how many state companies he's sold off, but on the natural monopoly he intends to maintain serious oversight. He is strongly resistant to regulation but aware it's necessary if you don't ensure competition. Unlike his U.S. counterparts (mostly lawyers,) he understands that market don't work well with numerous players. Kevin Martin used to say, "You can't have competition without competitors," but after the Triennial never lived up to that.
The experience at Qwest, Verizon, and AT&T is that the first two years have to be planned as rampup. The systems need to be debugged, the operating procedures developed, and above all the crews trained. An install that takes 2 hours with one crew can take 6 hours with another, Qwest learned in Phoenix. The cost becomes brutal. Verizon's FIOS customers are the most satisified I've ever met in telecom (except billing and back office) because Verizon decided to spend the money/install hours to get things right. They also took four years from trial to the planned run rate of 3M/year. If things go well after two years, the timetable can be reduced. Verizon does 3M every year and is holding back for capex, not technical reasons.
Structural separation currently is looking to fail badly in Britain, after an important initial success in opening the retail market and bringing down prices from exorbitant to not so bad and spurring enormous growth. The weaknesses are now becoming visible. BT Wholesale has a reinforced monopoly of the local loop, so requires stronger than ever regulation. The loop charge alone is more than the total charge in some other regions. Richards is now talking about raising the monopoly price, an indirect way to bail out BT for losses in global, etc.
More seriously, Britain is set to have an Internet that will be 50-90% than most of France and now Greece. If you believe a competitive nternet is crucial to a nation, that's clearly a market failure.
The difference in cost to build fiber is real but small in relation to overall telco spending. Verizon's additional capex for FIOS is about 3% of revenue. Verizon has 12M lines in and remains enormously profitable despite essentially no subsidy. They face strong cable competition, so felt they have to invest. AT&T's decision not to invest has not made them more profitable, and they could be clobbered by DOCSIS 3.0 if the pricing is aggressive. Randall and Ed decided to chance cutting investment in half in 2002, and have done well so far, with IPTV (finally) working even better than expected. By then, the technology choices - fiber, fiber + DSL, DOCSIS 3.0 - were pretty clear. Building something so inferior to DOCSIS 3.0 was a risk they would lose the entire wireline business, which their technical people should have known and told them.
British Telecom instead has cable competition only in half their territory. The cable company has gone broke recently, and is so stretched now they have already restructured the debt. Ian Livingston isn't afraid they will lose the customers even if they do only a modest upgrade of their copper lines. So they fighting with everything they have to keep the copper valuable for many years. As long as the companies can make money on copper, they have enormous incentive to not upgrade. Verizon, France Telecom, KPN and others facing competition can't think like that. If the didn't replace copper with fiber, they would be clobbered.
Greece's OTE, now controlled by Deutsche Telecom, has little cable competion and hence similar economics to BT. Their natural course of action would be to milk the copper as long as possible, just as they blocked DSL to maintain dial-up Internet revenue.
Georgios and I assume Karamanlis decided a second rate Internet was not acceptable for their country. Without the government move, that would have been the likely path of OTE. So a Finance Minister dedicated to privatization and a conservative government have introduced one of the most ambitious Government efforts.
Here's the details. They are currently vague, probably because the decisions haven't been made.
September 3, 2008
STATEMENTS OF YME K. CHATZIDAKI
AFTER MEETING WITH YPOIK C ALOGOSKOUFI
FOR «NEXT GENERATION NETWORK ACCESS»
Today announce a very important initiative. It is a large-scale investment in the country to new technologies. We are talking essentially yperleoforous for modern telecommunications. Greece decides to follow a strategy overrun. From the point now, instead of going to intermediate modern technologies, go to the most modern in the world. Following in the footsteps of other countries such as Japan, Korea, Sweden. And follows the strategy also other European countries like France and Great Britain, recently announced that they are moving in this area. Το έργο είναι πολύ σημαντικό. The project is very important. And for our daily lives and for the development of the country. It is not just something interesting for those working with new technologies. Because as you rightly said Mr Alogoskoufis, with a phone can connect to TV channels we have what we want in our house, we can have services tele-education and telemedicine, we can to have video telephony services, to talk-and seeing the contact-us, we can do trade with banks and the government. This is changing our daily life and gives impetus to the development process in our country.
So we move through close cooperation between the two ministries, and to study carefully so that work can be carried out with absolute success.
I want to say that we did a survey recently explaining the technical features of the project and asking the opinion of citizens:
-People in overwhelming percentages are in favor of the project and is ready, if you like, be a small inconvenience in order to reach optical fiber at home and change their daily lives.
Alogoskoufis said the financial details of the project. We refer to the technical characteristics, in some institutional issues and timetables.
Who will be the role of the Greek State
The Greek government will give incentives to which the Minister of Economy, but will have a catalytic role in the implementation of this project, which will be done will be implemented by the private sector by private investors. The role of the State is active at three levels:
Financial-aid - in which Mr Alogoskoufis.
-Legislative and regulatory interventions and
-Define technical requirements and specifications
It is a difficult process, but when we will be ready to proceed with the next phase of the project all these issues will be strictly regulated.
Compared with the technical specifications: It is currently in the final stage is the Joint Ministerial Decision to establish the technical requirements for internal networks. The setting of technical standards will include a comprehensive guide home installations of optical fiber networks and ensure the installation process fiber optic networks in existing and new - anegeiromena buildings.
Also, describing all the technical specifications concerning matters such as:
I would also like to refer to the schedule of next steps in this project.
By the end of 2008 we take appropriate measures to:
Be prepared a dossier for the European Commission which will negotiate on the compatibility with Community law and aid from the ECAC
We will follow the adoption of the Project by the Interministerial Committee of the PPP.
In the first half of 2009 will prepare the necessary procedures to move the PPP Advisor Competition Award, in collaboration with the Ministry of Economy and the Secretariat of the PPP.
In the second half of 2009 we will be ready to launch the International Project on so soon after the end of the selection procedures to immediately start construction of fiber optic networks.
I would like once again to note that it is work, which concerns us all, whether we live in large cities, or remain in the province, because the project will cover two million households, Athens, Thessaloniki and 50 major Greek cities. In preparing all public ministries, high speed networks, covering the entire Greek region.
New technologies are at the heart of developments, Socially and economically. Greece does not want simply to follow these developments, wants to be among the pioneers. And for this reason we choose this strategy. The strategy for the promotion of fiber optic networks new generation. It is a strategy overrun, is a strategic leadership. It is a strategy for the development of the site.
I am really happy, along with George Alogoskoufis presenting this plan today, which in a moment when time started to be implemented, all will see how things will change in our country ».