Tuesday, June 5, 2007

Possible backhaul problem

I was gathering up information to take with me to my meeting with the mayor this week when I ran across some pricing information for connecting to the fiber backhaul(Yvelines Numeriques). I read through their literature and realize that I may have a problem using their network.

Our Department had the right idea about creating a fiber optic backhaul network that runs throughout our area. We've seen similar rollouts work well all over the world. The government comes in, helps fund the backhaul, and then lets the private sector take over - typically with open access rules.

The only problem here is that they've seemed to have decided ahead of time who they want on the network - and new operators are not part of that group. Their own website states:

FRENCH: Le Conseil Général des Yvelines ne cherche pas à favoriser l’éclosion d’un nouvel opérateur de télécommunications. Il cherche en revanche à attirer les opérateurs existants.

[ENGLISH: The General Council of the Yvelines is not looking to promote the development of a new telecommunication operator. Instead, it is looking to attract existing operators.

Essentially the goal is to bring in existing operators to use France Telecom's existing copper lines to homes - not create new ones.

I believe that this reveals a lack of a longer-term vision when they developed the project. From what I understand they've had trouble attracting the big operators to come and rent capacity to reach the local exchanges. To make matters worse, a French colleague of mine explained that they're locked into the terms of the contract for the 20 years of the "concession".

This seems to be their plan. They built the network mainly to help with local loop unbundling. Operators can lease fiber backhaul to local telecommunication exchanges and then rent copper lines directly to homes from there. The costs are probably too expensive for smaller operators.

They gave some of the pricing on the web. The entry-level price for a fiber strand is EUR 0.70 per meter per year. I initially wanted to run a connection back into Paris but that would be over 20 KM - if they even go that far. I did a few calculations and figured that I'd really need a much larger subscriber base even make the backhaul pay for itself. The minimum cost of taking a fiber from our village towards Paris would be EUR 14,000 per year. We'd have to spread that among a large number of households to make it even start to pay for itself - and that doesn't include the other costs of our own network or transit at the Internet exchange.

I may need to start looking into whether it would be possible to either buy capacity from a larger player or have them come to us.

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