Open Access is hot! While being big in Europe mainly it has been little traction for Open Access networks in the US. In recent years this has started to change, and in the last year or so, investors and tier1’s have announced investments of capital and efforts in Open Access Networks. Isak Finer was recently brought in as en expert on the topic on a Panel hosted by Broadband Breakfast.
As you have surely noticed, the interest in Open Access Networks is growing by the day, but there is still some confusion about what it really is. Therefore, we have teamed up with our friends at Connected America to arrange a pre-conference day focusing exclusively on Open Access. The program starts at lunch and ends with an Open (Access) Bar close to the venue.
The future of fiber is a digital society with Everyone and Everything relying on digital infrastructure. Paired with the current trends of consolidation, more expensive build costs and a race to invest in fiber roll out – all roads lead to shared infrastructure and open access. Mikael Philipsson, former CTO and CEO at one of the largest Open Access networks globally, IP Only (now Global Connect), led this journey on a national scale in Sweden, which has a fiber penetration of 98% today. He shares his insights on why Open Access is the right choice and how to structure the business case to make Open Access a success.
Gregg Shepperd, Senior Engagement Leader at Fujitsu Network Communications
Beni Blell, Vice President, Head of Sales and Marketing, Hexatronic
Gabe Gomez, VP Customer Experience, Syringa Networks
Pankaj Gulati, Head of Products and Platforms, Ubiquity
The key characteristics of an Open Access Network are the separation of the network infrastructure, the neutral operations of the network, and the independent service providers selling their services to subscribers. This panel will explain these different roles and show that you can run an efficient fiber network by working with specialized partners without doing everything yourself.
Phil Roberts, Chief Executive Officer at Valo Networks
Brian Hollister, CEO and Co-Founder at Bonfire Infrastructure Group
Dan Johnson, Product Manager, Connect Fast
Aaron Hildreth, Founder, Intellipop Internet Services
On an Open Access Network, all parties rely on each other for success. Internet Service Providers often have financial or workforce constraints limiting their ability to build fiber at a large scale. On an Open Access network, their Capex investment is minimal, and they can focus on providing high-quality services and support to their subscribers. But to be able to do this, they need a strong operator partner offering tools to efficiently sell, deliver, and troubleshoot on the shared network.
Robin Harder, Woven Product Lead at Arcadis
Sean Dundon, Director – Partner and Channel Development at VETRO FiberMap
Rob Laudati, VP – Product & Partnerships, Render Networks
Don Eben, CEO, Core Network Strategies
Despite the digital nature of fiber networks, a lot of legacy systems, technology, and manual processes are still in use. The Open Access model of sharing one infrastructure creates a whole different set of requirements and challenges that legacy technology can not solve. This panel explores the benefits of a “digital first” approach and how important integrations and automated workflows are becoming – especially in Open Access Networks.
Taking an infrastructure approach to the last mile is a natural development for enterprise networks. As the US aims to bridge the digital divide between rural and urban areas we should look at this natural progression of business models: Middle-mile and enterprise networks have long understood how to build a fiber infrastructure and with a wholesale approach partnered with a wide range of Service providers/ISPs (Internet Service Providers).
For those looking to accelerate growth and improve return on investments on fiber assets by fully monetizing their network, owning the infrastructure to the home and wholesaling to ISPs at the home is a natural next step with keeping full control of the asset and significantly improved margins.
In Sweden and many other countries in Europe, this business model has evolved over the past 10 years whilst fiber penetration has gone from around 50% to around 95% of all households having access to fiber-based broadband. It has been a natural development given that infrastructure investments are normally shared and the large number of service providers in the market. It has not only proven to be successful but also improved fiber asset operators’ financials and valuations for the last 10 years!
COS System’s CEO Mikael Philipsson was himself part of a Nordic network’s journey expanding from building and operating a backbone and middle mile network addressing the Enterprise market and other operators to adding FTTH with a wholesale approach to the existing business lines. Over 7 years revenue grew 500%, and EBITDA margins were over 80% which led to the enterprise valuation increasing 15 times.
If several ISPs operate on the same network you’re not dependent on one single service provider to be successful (or only your own ISP-service). This also lowers the risk for overbuilds as well as the competition with other technologies such as Wisps, cable operators, etc.
Ideally, instead of competing with them, you partner with these Service Providers so they can use (and pay for) your infrastructure in order to reach their customers with their own services and technology. The important part is that you keep control of the fiber termination in the house and the speeds/services available, and let the ISPs take care of the WiFi and in-house experience.
Takes rates for this business model are normally above 80%, whereas the average take rate on a single ISP network is somewhere around 30-50%.
If customers connected to the fiber network are unhappy they can easily switch providers and you would still get a wholesale fee, hence no churn.
The barriers are low for new service providers to enter the network as no capex needs to be spent and less networking competence is needed. This will fuel the Service Provider market and the assortment of services and providers will grow. This makes your network more attractive and in the end, improves customer satisfaction! Moreover, you stay in control of your fiber network with available services and can focus on optimizing the wholesale business and expanding your footprint.
A real-world example is a network built and operated by an electric utility that after 10 years of being their own service provider had managed to get a take rate of very respectable 52%. They decided to shift to a Wholesale FTTH model (and implement COS Business Engine), partnered up with all possible ISPs in the area, and sold their retail service revenue. As a result, they could focus on wholesale revenues/margins. After only three years their total revenue increased by almost 40%, their staff decreased by 25% and their Ebitda margin increased from 6% to 57%. Today, 10 years after the shift, the figures have been further improved.
With this strategy, the business dynamics are similar to a long-term infrastructure asset instead of a regular telco operating in a competing market. This generates valuations two-three times higher than a traditional telco and attracts infrastructure funds/investors.
The time to drive fiber deeper into our society is now. Federal and state funders have an obligation to create public-private partnerships and the open wholesale model drives more fiber to more homes. So make sure you don’t give away the gold!
We provide FTTH operators and network owners with software for automating and digitizing every aspect of their FTTH venture. From survey and demand aggregation, to sign up, deployment and billing – to help bridge the digital divide.