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Oxford Road Corridor Project


  • pg 1
									Next Generation Broadband in the Oxford Road

An outline examination of the business case and technical feasibility for a pilot
demonstration project

Brian Condon,
Adrian Wooster,
Malcolm Corbett,
Shaun Fensom:
Community Broadband Network
Next Generation Broadband in the Oxford Road Corridor

1     Executive summary .................................................................................. 5
    1.1    Background ....................................................................................... 6
    1.2    Business Case .................................................................................... 6
    1.3    Implementation ................................................................................. 7
    1.4    Business Model ................................................................................... 8
    1.5    Sustaining the business model ................................................................ 9

2     Supporting regeneration with digital connectivity ........................................... 11
    2.1    The role of telecommunications ............................................................. 11
    2.2    The development of the UK broadband market on existing infrastructure ........... 11
    2.3    Supporting new high speed services will need new, modern infrastructure .......... 12
    2.4    Others are investing in Next Generation Architecture ................................... 12
    2.5   Incumbent telecommunications suppliers are cautious and driven by their
    shareholders‟ needs .................................................................................... 13
    2.6    Municipalities and communities increasingly see advantage in telecommunications 14

3     The Business Case for Next Generation Access ............................................... 17
    3.1    Impacting the economy through ICT Investments ......................................... 17
    3.2    Understanding why Next Generation Access is a „race‟ .................................. 19
    3.3    Generating value ............................................................................... 22
    3.4    Manchester‟s position as a world city-region .............................................. 23
    3.5    Fibre optics have less impact on the environment ........................................ 23
    3.6    Developing the Business Case ................................................................ 24

4     Pilot network ........................................................................................ 25
    4.1    Main Plan – “Phase 1” ......................................................................... 27
    4.2    Supplementary plan – “Phase 2” ............................................................. 29
    4.3    Engineering Considerations ................................................................... 30

5     Network Business Model ........................................................................... 34
    5.1    Open and vertically integrated models ..................................................... 34
    5.2    Four layer model ............................................................................... 35

Next Generation Broadband in the Oxford Road Corridor

    5.3    Which is the best model? ......................................................................35
    5.4    Why is competition important? ...............................................................37
    5.5    Types of open network business model .....................................................37
    5.6    Open Networks & Technology .................................................................38
    5.7    Layers for competition .........................................................................39
    5.8    PON and open networks........................................................................40
    5.9    Practical Considerations for Open Networks ...............................................41
    5.10   Developing the technical case ................................................................42

6     Operational Business Model and Sustainability ............................................... 43
    6.1    Appetite for Services ...........................................................................43
    6.2    The eSociety .....................................................................................44
    6.3    Example Services ...............................................................................45
    6.4    Engaging Service Providers at layers 3 and 4 ...............................................47
    6.5    Consumer Aggregation .........................................................................48
    6.6    Public sector aggregation......................................................................49

7     Organisational forms and business models .................................................... 51
    7.1    Third party operator-service provider ......................................................52
    7.2    Mutually-owned network, third-party service providers .................................53
    7.3    Mutually-owned network and service provider ............................................54
    7.4    Combining the approaches ....................................................................55
    7.5    An example structure ..........................................................................56

8     Conclusion and next steps ........................................................................ 60

Appendix A: About CBN ................................................................................. 61

Appendix B: Socially Aware Architecture ........................................................... 63

Next Generation Broadband in the Oxford Road Corridor

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Next Generation Broadband in the Oxford Road Corridor

1         Executive summary

This report looks at the business justification and technical feasibility of a project to provide
next generation broadband connectivity to employment centres and housing association stock
in the area known as the Oxford Road Corridor.
Next generation broadband is taken to mean very high capacity broadband, principally using
fibre optics brought all the way to the premises – so called fibre to the premises (FTTP),
which includes fibre to the home (FTTH). Such an infrastructure can be used to provide not
only very high speed connectivity to the Internet, but also digital television, voice telephony,
and many other services such as community TV, telecare, security and high definition video
conferencing. FTTH and FTTP are complementary to advanced wireless systems which provide
the mobile/nomadic aspect of a comprehensive next generation infrastructure. Extensive
fibre infrastructure can greatly simplify the deployment of wireless systems.
In some countries, such as Japan and France, next generation broadband has been made
available to a large part of the population, or is being rapidly deployed, by the private sector.
In the UK however, no significant projects have been started by the private sector, and none
of the larger players has any plans to start deployment. Indeed, much as they did during the
early stages of first generation broadband, they are arguing about the investment case.
This report then makes the case for deploying next generation access in Manchester as a
matter of urgency, and looks at ways that the public sector, and the City Council in
particular, can help bring this about. The report looks at ways that direct public sector
investment can kick-start the process by building a pilot network in the Oxford Road corridor,
and how consumer aggregation can be used to help create a sustainable and self-replicating
infrastructure. Such a pilot network would help demonstrate the advantages of such a
network, working as a “Living Lab”1, and would act as a catalyst for further investment across
the core of the city region.
This report brings together three important strands not normally considered together:
     The business case for next generation investment
     Technical considerations on how to implement and run a sustainable, replicable
        network in a way that fosters competition
     Consideration of the most appropriate organisational forms to recognise stakeholders
        and encourage user take-up and engagement.


Next Generation Broadband in the Oxford Road Corridor

1.1      Background
The notion that city regions need quality infrastructure to foster economic development and
attract inward investment has been well understood in the public and private sectors for
years. In the past “infrastructure” has been taken to mean roads, housing, schools etc. More
recently city regions have become increasingly aware that world class cities need world class
telecommunications as well, arguably more so if they want to develop into centres for the
“knowledge economy”. Businesses now cite the quality of telecommunications as one of the
three most important factors in evaluating cities where they could invest, and recent
evidence shows Manchester falling behind other European cities on this measure. Children and
young people are also key drivers of demand for access to telecommunications technologies
such as broadband and mobile, with key implications for education and the development of
the future economy.
Recent years have seen the widespread take up of broadband in the UK as well as
other countries. This has led to a rapid increase in the use of the Internet for business
and leisure, and there is considerable evidence that this has been an important driver
of economic growth. As connectivity has improved, so technologies have been adopted
which require more “bandwidth”, leading to a self-reinforcing cycle of technical
innovation and adoption.
In other countries a recognition of this has led to investment in deploying the “next
generation” of broadband, where the fibre-optic technology that is already used for
the “backbone” of telecommunications systems is brought right to the home or
workplace – so called FTTP or FTTH. But in the UK the biggest players such as the
incumbent operators have no plans to make such an investment, arguing that there is
insufficient evidence of demand in the market to pay for it. There is evidence that it
is in the short term interest of incumbent operators to resist the deployment of FTTH
in order to gain maximum benefit from existing infrastructure and the existing
telecommunications business model, which has seen spending on telecommunications
(and on telephony services in particular) grow relative to other items such as
consumer electronics.

The lack of a clear lead from major players in the telecoms sector has led to
heightened government concern. Both the Secretary of State for Business, John
Hutton and the Minister for Competitiveness, Stephen Timms, have made clear the
importance with which they view „Next Generation Access‟. Timms is on record as
saying that it will be his major priority in office. He is actively seeking pilot projects
that show how next generation access (NGA) can be delivered. He recently met with
the promoters of another next generation project CBN is advising in the West
Midlands, and he has highlighted the One Manchester plans for a next generation
digital city and a model of innovation.

1.2      Business Case
In the debate about the deployment of next generation access in the UK, industry figures
have focussed on the business case for so-called “triple play” (TV, telephone and Internet)
services. This short term and narrow view does not take account of the impact of broadband
development on GDP – for which there is evidence cited in this report – or the possibilities for
efficiency savings in the delivery of public services, and for the wider business sector.

Next Generation Broadband in the Oxford Road Corridor

In other countries a broader view is taken: deployment in Japan and Korea is so advanced
that DSL subscriptions are actually falling as users move to fibre. It has been argued in the UK
that Japan is an invalid comparison, and yet fibre deployment is also moving fast in the USA
and parts of Europe. There is a race on to deploy fibre, and the UK hasn‟t even set off.
Further evidence shows that it is precisely in the parts of the network nearest to the user –
the so-called “first mile” (or “last mile”) – that the congestion will be felt most. This is
particularly true where the network is contended (shared bandwidth): this has the effect of
exacerbating the congestion caused by increasing demands.
The existing networks are also badly equipped to cope with the move to social networking
and user generated content – relevant for businesses as well as people at home. This shift is a
cause of increased bandwidth demands (with applications like YouTube), but also offers
opportunities for new and innovative businesses to develop – an area that Manchester
businesses have been good at in the past. This point is not lost on the trade association
Manchester Digital which has publicly called for more bandwidth to be made available for its
members and their customers.
The public and health sectors have been an important source of applications that generate
huge costs savings, but require much greater bandwidth. This is an area which warrants
further investigation.
Next Generation Access is both a challenge for Manchester, which has seen its ranking as a
city for investment fall because of the perceived lack of state-of-the-art telecommunications,
and an opportunity because of its position as the leading player in the Digital Challenge group
of 10 on this issue.
There is also an environmental argument for deploying FTTH. It can entirely replace the
existing copper cabling and yet uses far less energy. Copper is also an increasingly scarce
resource. This too is a key issue for Manchester.
Further work could be done developing and strengthening the business case for next
generation access deployment in Manchester, but it is clear already that a pilot project as
outlined in this report could have tremendous benefits in demonstrating the advantages in a
full scale Living Lab, while taking the first steps towards a wider deployment in the city

1.3      Implementation
The report looks in some detail at a possible implementation of a FTTP project designed to
bring connectivity to a variety of different premises in the Oxford Road corridor, including
workplaces, houses and apartments, within a budget of approximately £500,000 for over 400
homes and 150 businesses connected. The plan uses different implementation techniques as
proof of concept and creates a backbone spanning the corridor from East to West, with
potential for many other homes and businesses to be connected at lower cost per connection
in the future. The network would become an example of a Manchester-led Living Lab

Next Generation Broadband in the Oxford Road Corridor

Manchester is fortunate in having three Internet “peering points” (locations where traffic
flows between ISP networks), the only major peering points outside London. All three are
within the Oxford Road corridor, making the area quite unique in the UK. This makes
Manchester a good place to build the UK‟s first urban next generation infrastructure, and
Oxford Road a good place to start. Access to the peering points means that service providers
can offer services over the network at low cost, and also enables what would otherwise be a
difficult section of the East-West backbone, across Princess Parkway to be skipped. Plans to
establish another peering point in Central Park, and the likelihood of peering taking place
somewhere in Media City, will greatly simplify the task of spreading next generation
connectivity throughout the city core.
The plan looks to the latest techniques for installing fibre and this keeps costs down. For
example, the use of blown fibre conduits means that extra fibres can be added to the
network in the future without the need to re-dig. This kind of conduit can be installed in soft
ground at a slow walking pace using a mole plough. A novel technique is proposed to connect
two tower blocks in the North West of the area, avoiding a difficult road crossing by sending
signals across a laser link between the towers, so called “free space optics”
As well as the fibre itself, the plan requires the construction of PoP‟s (points of presence),
small built units where the equipment which powers the fibres is installed, and where
different operators and service providers can install facilities to deliver services and content.

1.4      Business Model
There are two main network business models: a vertically integrated or “bundled” model
where one business operates and maintains the network and provides the services which users
can access through it – such as Internet access, telephone services and TV channels; and an
open or “unbundled” model where different businesses look after different “layers” of the
network. These layers can usefully be grouped into four:
        The physical network itself (which needs an owner and someone to install and
         maintain it)
        The signals that are transmitted on the fibres and the equipment that does this (which
         needs someone to operate it)
        The basic services which are delivered using this infrastructure, such as Internet
         access and telephone (which needs an ISP or similar service provider)
        The value-added services and “content” such as specific TV channels (which need
         content providers).
There are variations on the two business models, with the possibility for different operators
and providers covering one or more layers.
Which of these two business models is used on a network can affect the way the network is
designed, and has important implications for the ownership and sustainability of the network

Next Generation Broadband in the Oxford Road Corridor

Open networks necessarily allow competition between service providers at least in the
provision of services and content, and so offer consumers more choice. If they come about as
the result of public sector intervention they can be defended against an accusation of state
aid of one particular supplier. Vertically integrated networks are a more attractive
investment for the private sector because they allow one business to occupy more of the
value chain. However, while vertically integrated next generation (FTTH) networks are being
built by the private sector in other countries, they are not being built in the UK. Furthermore,
state regulators have spent time “unbundling” existing vertically integrated networks such as
the telephone networks operated by incumbents like BT and the cable networks, and it
probably does not make sense building new bundled networks that will need to be unbundled
The conclusion of this report therefore is that where there is public sector intervention,
an open network model is more appropriate and better achieves the objectives of that
There are also various technical implications for the way a network is built if the maximum
degree of competition is to be allowed for in the future. This means making provision for
different operators to be able to buy: “dark fibre” and space to install the equipment to run
it; access to different wavelengths of light on the fibre; “virtual LANs” using shared switching
equipment; or “IP” access to the network to provide content and services. Each of these
forms of access to the network in turn involves less commitment by the operator, and less
opportunity to create value and distinctive services.
In order to create such an open network and make it interoperable with other open networks
in other parts of the city (and so offer the best incentive for service providers), standards and
building codes are needed: it makes sense for the public sector authorities to lead in
establishing these codes.

1.5      Sustaining the business model
A look at the demographics of the Oxford Road area suggests that while there is significant
deprivation, there is likely to be real and growing demand for network services, and an open
attitude towards new technologies and ways of accessing those services.
To attract maximum take-up by the community and make the network sustainable, a
compelling “triple play” offering is needed. This means attracting service and content
providers to work with the network. Because the larger vertically integrated network
operators may see an open network as undermining their business model, this is likely to
mean working with smaller ISPs and service providers, and assisting them in making
appropriate arrangements with large content providers.
While some form of public sector intervention may help overcome initial barriers to
investment, ways need to be found to ensure the long term sustainability of the network, and
to allow for a continuing programme of investment.

Next Generation Broadband in the Oxford Road Corridor

A well established way of doing this is through consumer aggregation. This helped persuade
BT to deploy DSL services in exchanges where it was unsure of the investment risk. It also
forms the basis of the world‟s most successful broadband project in terms of take-up - the
community-owned network OnsNet in Nuenen2 in the Netherlands. Mutual ownership by
customers of parts of a network operation can help reduce the risk associated with the
investment, reduce the costs of some services by aggregating demand without the need to
add shareholder value, and attract customers by offering a way for them to engage with and
influence the services which are provided.
Public sector aggregation can also play an important role in making a next generation network
sustainable. By aggregating the demand of different public sector bodies over a number of
years and raising loan finance, it is possible to pay for significant network infrastructure
without the need for external private sector investment.
In order to combine public sector intervention with consumer aggregation and appropriate
community engagement, and to attract service providers and operators, organisational
models are needed that recognise each of these stakeholders. This can be a difficult
balancing act because the interests of the stakeholders don‟t always coincide.
The report looks at three example models.
         A vertically integrated network operated by the private sector: this has the
          disadvantage that it creates a local private monopoly which would be inappropriate
          use of public sector investment, and would give little return for community-led
          aggregation of demand.
         A vertically-integrated network owned and operated by some form of mutual or multi-
          stakeholder body: this does not create a private monopoly and would provide
          maximum scope for community engagement, but would nevertheless rule out
          significant competition for services.
         A layered model such as is used in Amsterdam where the public/mutual ownership is
          restricted to the lower layers of the network, and competition is encouraged for
          service and content provision: this is an open network, but restricts the capacity for
          meaningful community engagement and influence over the services they can access.
There is no simple way to answer all these demands at once. The report looks at one possible
compromise based on the layered Amsterdam model, but which seeks to create a viable
community-owned and operated service and content provider to compete along with private
sector businesses for customers. The existence of such a service provider may discourage
private sector providers, but would also guarantee a set of core services for the community,
and lead the way in developing community-focused services and content such as telecare and
community TV. It is also in the Manchester tradition of using cooperative enterprise to answer
market failure and accords with the notion of digital cooperatives advanced by the One
Manchester3 project.


Next Generation Broadband in the Oxford Road Corridor

2 Supporting regeneration with digital

2.1      The role of telecommunications
Modernising infrastructure is a key process in supporting economic and social regeneration. In
the past, public and private stakeholders have focused on regenerating physical infrastructure
such as housing, schools and colleges, business parks and transport infrastructure.
„Connectivity‟ has meant road and rail „connections‟. The provision of services such as utility
services and telecommunications has been ceded to large public companies, often operating
as local monopolies. Increasingly, City-regions have begun to realise that their „digital‟
connections to the wider world are an increasing differentiator. The availability of the most
flexible and affordable telecommunications infrastructure combined with skilled people able
to take advantage of the business opportunities which result is one of the foundations of this
economic development. Whatever policy makers mean when they talk about the need for the
UK to develop as a leading “Knowledge-based Economy” it is certainly true that world-class
competitive telecommunications infrastructure will be required.
It is also true that „world class‟ telecommunications infrastructure is based on optical fibre
technology – and that to gain most benefit from this technology the fibre needs to go right to
where the user is - to the home or to the business premises. This is called Fibre To The Home
(“FTTH”) or Fibre To The Premise (“FTTP”). Optical fibre technology is well known, has been
used for decades and forms the major „trunk roads‟ used by the global communications
networks for all forms of electronic communications such as voice calls, data and video.

2.2 The development of the UK broadband market on existing
In the UK, the focus in the past few years has been on driving up the penetration and use of
broadband services by citizens, and Britain has done well in the broadband revolution after a
slow start – with over 13 million households and businesses now using broadband based pre-
dominantly on the existing copper-based telephone and cable TV infrastructure. Increasingly,
citizens and businesses are using services that depend on broadband connections to shop,
trade, learn, access public services, communicate, be entertained and have fun. Evidence

Next Generation Broadband in the Oxford Road Corridor

from around the world is beginning to indicate the positive impacts on the economy of the
use of broadband-enabled networks and technologies. We are also beginning to see the use
of applications and content that require ever higher connection speeds.
It is a truism in technology markets that developers build applications and services which
make full use of all the available technical resources – hence we see the rapid evolution of
ever more powerful PCs capable of handling high quality audio, images and video, faster and
more sophisticated games and more compelling and exciting educational software. In
businesses and the public sector we see the increasing use of the internet to communicate
with customers and citizens.
As the use of these technologies proliferates in homes and businesses, increasing demands are
placed on the user‟s connection to the outside world; normally the internet but increasingly
private or other network connections based on peer-to-peer technologies. It is a fact that the
broadband connections most of us are currently using will eventually „run out of steam‟ and
be unable to support the demands for content and interactivity most users will require.

2.3 Supporting new high speed services will need new, modern
In April 2007, the national Broadband Stakeholder Group published a report „Pipe Dreams?
Prospects for Next Generation Broadband Deployment in the UK‟4 analysing the case for next
generation access and the barriers preventing the deployment of new infrastructure. The
current copper-based telecoms access network is capable of offering significantly higher
speeds to only around 50% of the UK population and very high speeds to only around 12%.
Since then there has been significant debate between industry, government and the regulator
OFCOM about how investment in NGA can be facilitated, including encouragement of
experimental public sector projects.

2.4       Others are investing in Next Generation Architecture
The market is moving on and demand for higher speeds is emerging; other countries are
investing rapidly in what we in the UK call „Next Generation Access‟ technologies.
Increasingly, in France, Holland and Scandinavia optical fibre is being installed closer and
closer to the customer. The most advanced projects in Europe provide fibre all the way to
the customer‟s premises (FTTH). While there are numerous commercial deployments of FTTH
in other European countries, BT currently sees no need for consumers to have access to the
types of services enabled by Next Generation Broadband. BT does have an advanced project
to provide a 21st Century Network5; but this is more focused on reducing BT‟s operating costs
by over a £1bn pa and enhancing the capacity of the company‟s own core network.
The arguments around Next Generation Access in the UK focus on the barriers to investment
and deployment which can be summarised as:
     uncertainty over consumer demand;

         uncertainty over the development of new high speed services; and,

    See www.broadbanduk.org

Next Generation Broadband in the Oxford Road Corridor

        uncertainty over the willingness of consumers to pay a premium for high speed access
         (many commentators agree that consumers are unlikely to be willing to pay a

The UK is therefore lagging behind other countries in Europe, North America and Asia-Pacific
in developing „next generation‟ broadband access services.

2.5 Incumbent telecommunications suppliers are cautious and driven by
their shareholders‟ needs

                                                 To understand why the UK is lagging behind
                                                 the competition, we need to examine the
                                                 motivations of the key players. In the chart,
                                                 we show the relative cost reductions in
                                                 Leased Lines (from OECD data) and Consumer
                                                 Electronics and Telephony Services (from UK
                                                 ONS data), indexed to 1996 = 100.
                                                 Leased Line costs are a useful guide to the
                                                 infrastructure costs of the telcos as they are
                                                 used as the building blocks that Internet
                                                 Service Providers and other
                                                 telecommunications providers use to build
                                                 their networks. Note that the cost reduction
curves of Leased Lines and Consumer Electronics are very similar. The sharp fall in Leased
Line cost in the period 1997/8 was due to the Internet bubble as the telcos invested in new
network capacity. However, when we examine the costs of Telephony Services, we find that
they do not fall in line with the fundamental infrastructure costs of building networks.

Next Generation Broadband in the Oxford Road Corridor

We have also examined the trends in spending patterns over a similar period, looking at the
relative „share of wallet‟ of different types of goods and services. Note that over a ten year
period, spending on Communications has consistently grown its share above all other types of
spending, even Health and Consumer Electronics. It should, of course, be noted that
Communications is still a relatively small part of household spending.
Yet it may be surprising to note that the average UK household spends over £92 per month on
communications services6; or over £1,100 annually. By comparison, the average UK household
spends approximately £900 per annum on heat and electricity.
Ofcom also estimates that revenue of over £50bn was generated in 2006 by a combination of
broadcasting and telecoms networks and services. And figures from the Office of National
Statistics suggest that in terms of Gross Value Added, telecoms, broadcasting and the
content-related components of the creative industries contribute over three times as much as
the UK‟s electricity, gas and water supply industries combined. If, as many observers believe,
Next Generation Access based on fibre is a „disruptive‟ set of technologies, then we can
perhaps understand why existing telcos are cautious and somewhat reluctant to invest.

2.6 Municipalities and communities increasingly see advantage in
Telecommunications infrastructure is now one of the top 3 factors businesses use when
evaluating the attractiveness of cities. A recent Cushman and Wakefield study highlighted
the importance of the availability of digital connectivity as a key factor in influencing
corporate investment and location decisions. Availability of staff and markets and
telecommunications infrastructure rank ahead of office space and transport. No UK cities
other than London were in the top 10 of “best cities in terms of quality of
telecommunications” and all the other UK cities listed had fallen in the rankings between
2006 and 2007. Manchester ranked as 18th.
Families with children also see value in access to telecommunications and the internet.
Ofcom research finds that over 60% of ten-year-olds own a mobile phone, rising to over 90% of
15-year-olds. Seventy per cent of ten-year-olds use the internet at home, rising to nearly 80%
of 15-year-olds. Mobile phones and the internet are essential to the way in which children
live their lives and define themselves. Around two thirds of children do not believe they could
easily live their lives without a mobile phone and the internet and claim that they would feel
„left out‟ if they had to do so.

    “The Communications Market Report 2007” published by Ofcom, August 2007

Next Generation Broadband in the Oxford Road Corridor

Households with children are more likely to have internet access than those without, and
those with internet access are more likely to have broadband (see Figure below). Levels of
internet access and broadband use also rise as children in the household get older, suggesting
that children‟s needs are a significant driver in the take-up of household internet services.
However, over a quarter of UK households with children do not have internet access. These
children, who generally have high speed access to broadband at school and who will have
even higher speed access at colleges and universities, are the future consumers of very high
speed services in the communities they will live and work in.

For businesses too, broadband connections are becoming critical to their development. The
ICT benchmarking survey covering SMEs in Yorkshire and the Humber7 links turnover growth to
speed of internet access (See pie chart). It is interesting to note that a significant proportion
of companies plan to get faster internet, which establishes that there is demand for higher
speed services – from more than 22,000 companies in Yorkshire Forward‟s area. However,
given that the SMEs concerned most likely have conventional broadband, speed increases are
not available – unless they are prepared to pay for significantly more expensive links based on
leased lines.

    Yorkshire Forward ICT Regional Benchmarking Survey 2005

Next Generation Broadband in the Oxford Road Corridor

As well as the demands of existing businesses, it is important to take account of the impact of
new businesses which can flourish when there is better connectivity. These include parts of the
creative industries, property developers, providers of non-telecoms infrastructures and so-called
„Long Tail‟ businesses. The “Selling on the Web” seminars run in conjunction with MDDA in
Manchester have demonstrated the appetite and potential in some of the most excluded
communities for new entrepreneurship using the net.

Next Generation Broadband in the Oxford Road Corridor

3        The Business Case for Next Generation Access

3.1      Impacting the economy through ICT Investments
There is compelling evidence that ICT investments have positive benefits for the economy and
society. Numerous studies cite the contribution to GDP growth of ICT, more recently studies
have focused on the impact of broadband on the economy. Approaches to date have used
highly theoretical statistical correlations generated by econometric models to estimate the
economic impacts.8 We reproduce a table from Lehr et al below noting that their results are
based on analysis of “conventional” (ie First Generation) broadband.

More recently, the Scottish Government has studied the links between broadband penetration
and GDP growth finding a positive correlation with a time lag of 3 years between the increase
in broadband connections and GDP growth (see chart).

   „Measuring Broadband‟s Economic Impact‟ by William H. Lehr et al, Presented at the
33rd Research Conference on Communication, Information, and Internet Policy (TPRC)
September 2005, Arlington, VA, USA. Revised January 2006.

Next Generation Broadband in the Oxford Road Corridor

The debate within industry has tended to focus on a narrow business case involving a triple or
quadruple play of voice telephony, data, TV and mobile services. Discussion about how next
generation infrastructure can help deliver public services more effectively and efficiently and
the likely impacts on local and regional economies has been relatively limited. In terms of
economic impacts the BSG report quotes studies from other parts of the world:
     In 2002 the Momentum Group and Brookings Institution forecast that „business and
        government efficiencies from broadband had the potential to produce US $500 billion
        in savings in the US by 2010‟

        In August 2002 Dataquest forecast that „true broadband (greater than 10 Mbps) could
         incrementally increase US GDP by up to US$500 billion for each of the next 10 years.‟

        A 2006 MIT study concluded that „communities in which mass-market broadband was
         available experienced more rapid growth in (1) employment, (2) the number of
         businesses overall, and (3) businesses in IT-intensive sectors‟.

        Closer to home, a 2007 report for the Scottish Executive concluded that the annual
         Gross Value Added (GVA) of Scotland‟s market sector in 2015 would be in the order of
         £2 billion to £6 billion higher due to business take-up of broadband than it would have
         been otherwise (at 2000 prices).

        In South Yorkshire the Digital Region project is planning to deploy a fibre to the street
         cabinet infrastructure throughout the sub-region. A report by Adit, the public sector
         procurement agency (2005) suggested that „conservative estimates indicate a £270m

Next Generation Broadband in the Oxford Road Corridor

          increase in GDP across South Yorkshire and 7285 new jobs will result over a 10 year

3.2       Understanding why Next Generation Access is a „race‟
Previous studies have focused on Japan and Korea as exemplars of the impact of Next
Generation Access. This is understandable given that they have led the way in deploying
FTTH networks with DSL (the type of broadband access most of us in the UK use) increasingly
being superseded by FTTH connections in terms of growth. According to the OECD
Communications Outlook 2007 report, DSL subscriptions have actually fallen in both Korea and
Japan as users upgrade to Fibre based connections. Fibre subscribers in Japan alone
outnumber the total broadband subscribers in 22 of the 30 OECD countries9. In the chart
below, we show the actual and likely progress of Fibre, DSL and Cable in Japan10, noting that
FTTH subscribers passed 10 million in number in July 2007.

In the UK, there has been scepticism that Japan and Korea can be used as credible cases or
exemplars for FTTH in the UK. The reasons cited for this are cultural differences and the
levels of state intervention involved in deploying FTTH in those countries. We do not use
Japan and Korea as exemplars in this report. However we note that similar arguments were
used to dismiss Japan‟s progress in the manufacture of motorcycles, cars and consumer
electronics. It seems illogical to assume that Japan‟s investment in FTTH is not related in
some way to the aspirations of Japan to be a major player in the global knowledge economy.
Case comparisons are more difficult to deny in nearby European countries and the USA where
FTTH schemes are being actively promoted. In the USA, growth is being driven by a
combination of investment by telcos in fibre (Verizon‟s FTTH solution, FiOS) and by private
developers particularly in new-build masterplanned housing developments. Recently, homes

    OECD Communications Outlook 2007 – ISBN 978-92-64-00681-2, OECD 2007
     “An overview of Fiber” Dirk van der Woude, November 2007

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passed by fibre in the USA exceeded 10 million with approximately 2 million homes being
connected11. Fibre deployments in the USA are widespread (see map below).

Strong growth is anticipated in FTTH equipped properties, in particular, over 45% of private
developments in the USA currently offer FTTH services. In the chart below we show the
actual growth in homes passed by fibre (mid 2007) and forecast growth to 2011.

The other aspect to consider in looking at FTTH is the issue of demand and the ability of the
network close to the user to meet that demand (the network close to the user is called the
„access network‟ and is generally regarded as that part of the network between the user‟s

     Source: Broadband Properties LLC

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premises and the local exchange). Somewhat controversial research by Nemertes12, has
attempted to model demand; difficult to do especially as many telcos and internet service
providers are reluctant to release traffic and demand data. Interestingly, Nemertes forecasts
that access line capacity will be a major barrier to innovations developed from new services,
indicating that the access network in North America is likely to run „out of steam‟ by 2011
(see graph below).

Nemertes also looked in detail at the North American market, using standard engineering
assumptions to estimate the likely performance of the network under real conditions. Many
of the technologies used to deploy access capacity are contention-based (this means that
users share the available bandwidth between them) and in contention-based environments,
the true capacity available is much lower than the overall capacity.
In contented environments, engineers strive to keep network utilisation under around 15%,
and in any event well below 30%. Nemertes assessed what happens at 15% and 30% of
available maximum capacity. Plotting the demand line against these two boundaries, the
following chart is the result:

  The Internet Singularity, Delayed: Why Limits in Internet Capacity Will Stifle Innovation on the Web, Nemertes
Research 2007

Next Generation Broadband in the Oxford Road Corridor

The implications of this are that as more and more bandwidth intensive applications are
adopted by users, the core of the networks will be more than able to cope but the access
networks may become „saturated‟. The internet, designed as a resilient „best efforts‟
network will cope with the situation by reducing the level of service to each user. From a
practical point of view, users will experience poor quality of service particularly for
bandwidth intensive applications.

3.3      Generating value
We are seeing the rapid adoption of video services (such as YouTube) and other services
which promote interaction and networking among communities of users (it is called „social
networking‟ though increasingly these types of networks are being adopted and developed by
business users). The rise of social networking and user generated content may be difficult to
fit in to traditional analytical models of consumers and the goods and services that they
consume but its impact on the scope and scale of the use of on-line services and the
bandwidth available is undeniable. The shift is all about consumers becoming active
producers of services and content as well as still being „consumers‟. Seeing users at the
centre of the network, creating the uses for the ‟first mile‟, and, therefore, creating social
value is an important part of this new equation. The implications for business and social
development are potentially very valuable and are worthy of experimentation as part of any
project in Manchester.
In many parts of the world demands from public sector and health providers are a key factor
in the case for faster broadband. In the Netherlands the major health insurance company
Achmea is playing a pivotal role in the development of the OnsNet FTTH network because it is
looking for ways to reduce expensive acute interventions. OnsNet offers a way of deploying
new health monitoring technologies and new ways of interacting with patients throughout the
community, thus improving services at the same or lower cost. A regional example is in the
county of Cheshire, which spends £60m per annum on residential care for 3,000 people -
£20,000 per year per person. If only 25% could remain in their own homes for one year longer
the savings would be enormous.

Next Generation Broadband in the Oxford Road Corridor

As more services such as television move onto internet platforms (IPTV) and related video
streaming services develop, and increasingly go „HD‟, then their distribution and use will
require NGA networks for delivery. Community based media services are growing rapidly in
the UK, but nowhere near as rapidly as in the rest of Europe or the US. We believe that these
will increasingly have „social value‟ as they develop.
We also note that Manchester Digital, the trade association representing more than 200 local
digital sector companies, has gone „on record‟ to highlight their concerns that the lack of NGA
is a serious constraint on their future growth and competitiveness. On 4th December 2007,
the Manchester Digital Board voted unanimously to highlight this issue as part of the recent
response to Ofcom‟s consultation on Next Generation Access).

3.4      Manchester‟s position as a world city-region
Manchester has a leadership position as part of the Digital Challenge process involving the 10
regional finalists and is active in looking at the impact of digital technologies on economic
development and society.
We cited the recent European Cities report by Cushman and Wakefield as providing useful
insights into the attractiveness of cities to businesses. The availability of qualified staff ranks
ahead of easy access to markets, customers or clients. The quality of telecommunications
increases in importance and is now placed third, ahead of national and international transport
links. More than half of Cushman and Wakefield‟s sample of 500 companies class these four
factors as absolutely essential when deciding where to relocate. In terms of rankings,
Manchester is placed 13th in terms of availability of qualified staff (up from 17th in 2006), and
is also 13th in terms of easy access to markets, customers or clients (up from 16th in 2006). In
quality of telecommunications, Manchester ranked 18th (down from 17th in 2006). In order to
be a „well-rounded‟ and attractive city for business relocation, it is worth considering
improving the perception and performance of Manchester‟s telecommunications

3.5      Fibre optics have less impact on the environment
In a recent survey13 of UK cities and their environmental impact, Manchester was ranked 18th
out of the 20 cities, which perhaps reflects the industrial past; Manchester's plans for the
future, however, ranked it as the 7th best “future-proofed” city. So it is clear that it is
important for the area to build on these green plans and to be seen as a leader in
environmental future-proofing. While the migration to fibre-optic telecommunications opens
up new bandwidth opportunities, it also helps improve the green footprint.

          See www.forumforthefuture.org.uk/files/sustainablecities07.pdf for the full report

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Once copper-based broadband speeds rise above the current Max DSL speeds, the electrical
power requirement rises significantly, especially if widespread coverage is required. In
contrast, optical systems consume significantly less energy than comparable copper-based
networks. A recent study showed, for example, that a traditional high-speed copper network
consumed more than 12 times as much energy as a comparable optical network. Further,
research carried out by BT14 has predicted that optical networks can reduce the power
consumption of new broadband (ie VDSL) networks by as much as 90%.
Additionally approximately a quarter of the world's copper production is used to make
electrical equipment and telecommunications wiring, second only to the building industry.
World production of copper amounts to 12 million tonnes a year and exploitable reserves
currently stand at around 300 million tonnes, which are expected to last for only another 25
years. Just 2 million tonnes a year are reclaimed by recycling.
In summary, migrating to a fibre-optic telecommunications system helps to improve the
overall environmental impact by reducing the power requirements and limiting the use of
scarce and costly copper wiring.

3.6      Developing the Business Case

There is scope for further work applying the understanding from other areas and studies to
the case in Manchester in order to continue to build the case for NGA deployment. The trials
and experiments proposed in this document will enable us to assess the demand and utility of
NGA for a wide variety of users in Manchester covering home and business users, employment
and training sites and the public sector. We envisage the development of a sustainable
business case as part of the implementation experiments we propose. Other projects we are
aware of in Europe use revenues generated by the sale of „triple play‟ services to consumers
to fund the development of the networks, aggregating consumer demand to generate a
sustainable position while delivering additional value to businesses and public sector in access
to the networks to generate additional value. Alternative models use the „Open Network‟
architecture to provide utility services to third-party service providers. We explore the
options for Manchester, together with our assessment of strengths and weaknesses in Section

         “Ultra low power optical feeder for VDSL” by Dudley, Quinlan, Henning, Walker (all of Essex University),
Davey, Payne and Boyd (of BT)

Next Generation Broadband in the Oxford Road Corridor

4          Pilot network

The aim of the pilot project is to test and demonstrate the viability of bringing fibre
connections to various types of premises using various techniques. The experience gained in
constructing the network would form part of a Living Lab15 experiment. This study presents a
possible plan for connecting a variety of premises with rough cost estimates, and names other
premises and areas that may be connected either as part of an alternative plan, or as next
steps if it is decided to extend the pilot.
The following approach was used:
Main Plan – “Phase 1”
          Start with named employment centres – in this case Cariocca and Firmstart
          Look for viable network routes to connect these centres
          See if any other employment centres can easily be reached
          See what housing groups could be connected without costly distortion of the routes
          See what public sector sites could easily be connected
Supplementary Plan – “Phase 2”
          See what other housing groups and employment centres could be reached with
           additional resources, but still making efficient use of the current routes


Next Generation Broadband in the Oxford Road Corridor

Next Generation Broadband in the Oxford Road Corridor

4.1      Main Plan – “Phase 1”
The principal locations connected are:
         Employment centres
         Carioca                                         110 units
         Firmstart, St Wilfrid                           20 units
         Firmstart, Cornbrook                            12 units
         Work for Change                                 31 units
         Housing Groups
         Northern part of Grove Village                  140 homes (approximately)
         Hulme Court Tower                               50 homes
         St Georges Court Tower                          78 homes
         Homes for Change                                75 homes
         Public Sector sites
         Manchester Royal Infirmary
         Various University of Manchester buildings
         Contact Theatre
         Trinity High School

A possible route has been planned connecting these premises and areas. The route has been
chosen to keep costs to a minimum, using soft ground where possible, and using existing fibre
connections for the middle section. See below for further details on possible techniques.

It is possible to make a rough estimate of costs for the Main Plan using rule-of-thumb costs, in
particular for digging and installing fibre over a distance, and rough cost per home for
connecting houses in a group or homes in a block:
        Rule of thumb cost to dig and lay fibre: £50/metre
        Rule of thumb to connect houses: £500 to £1000/home

Next Generation Broadband in the Oxford Road Corridor

Next Generation Broadband in the Oxford Road Corridor

Item                              Cost                  Homes Note
Backbone                           £ 160,000
Free-space Optics link             £   15,000
Hulme Court                        £   35,000             50
St Georges Court                   £   55,000             78
Homes for change                   £    5,000             75        Already networked
Grove Village                      £ 175,000             140
Installation                       £   60,000                       Subcontractors
Civil design and costing           £    2,000
Project Management                 £   30,000
Total                              £ 537,000             343

Cost per connected premises
It is important to recognise that the proposed network structure in the main plan is designed
to achieve two things, both of which increase the overall average cost per connected
        Use various digging methods to connect various types of premises including
         workplaces, houses and apartments in blocks
        Leave an extensible infrastructure that can connect other groups of homes or
         workplaces at a lower cost per connection.
It is also worth noting that this includes generous estimates for the cost of the backbone
digging and for the connections to individual homes in the blocks and Grove Village. If, as
seems entirely possible, these costs can be brought down, then more homes could be
connected in Grove Village - perhaps as many as 200.

4.2      Supplementary plan – “Phase 2”
In addition to the areas and workplaces passed in the Main Plan, there are various other
housing groups and workplaces in the Oxford Road corridor area which would make good
candidates for connection in subsequent phases of the project.
These could include:
        Homes managed by Moss Care in Moss Side
        The Windrush Centre in Moss Side
        The Great Places housing area in Longsight
        The Brunswick PFI project in Ardwick
        The Lowry Homes development and associated housing association developments
         (including Great Places) planned for the Maine Road site redevelopment

It is worth noting that a successful implementation of the Main Plan or Phase 1, would create
some momentum for the project and create the right conditions for expansion of the
network. A number of factors would make subsequent expansion very attractive:

Next Generation Broadband in the Oxford Road Corridor

        The example of the first network would encourage other communities to work for
         their own connection
        The backbone would have sufficient capacity to allow low cost connection of other
         housing groups and workplaces
        Other capital infrastructure such as TV and routing equipment would have capacity to
         serve larger number of users
        Any agreements with content and layer 3 service providers could be extended
        Consumer aggregation may encourage private investment to enable further build using
         less public resources, or even none at all (see section 6.5)

4.3      Engineering Considerations
It is too early in the project's cycle to define a detailed technical architecture. However, it is
useful at this stage to assess if there are any features of the locale which may assist or hinder
a project of this kind. For example, is there a housing type which makes delivering fibre optic
cables more expensive, or perhaps some features of the geography which assist the civil
This assessment is far from a formal plan; however there are some features which may help
the development of a fibre-optic backbone around the Oxford Road corridor area. The map
below highlights the area of interest and the key locations in the Main Plan. The pink zone
delineates the Grove Village area, and the red lines indicate a possible route a fibre backbone
might take in order to reach a viable sample of the target communities and projects.

Gateway to the World: Peering
At some point any useful public network needs to connect to the Internet. In most cases this
will require an expensive high-capacity leased circuit of some kind connecting either to an
Internet peering point, or to what is called a Tier 1 operator who is already in a peering
While network operators will all have their own networks linking their own customers
together, what constitutes the Internet itself may be considered to be the interconnections
which happen within peering points. Essentially these are neutral buildings containing
expensive network switches, where likeminded network operators agree to link their
networks together; in other words to peer together, creating “Inter-net” links.
Manchester is especially well served by internet peering points, with the Oxford Road area
alone containing three; Telecity, IFL1 and IFL2. This almost certainly makes the area unique
in the UK. There is thus a rare opportunity for a small public network to connect
inexpensively and directly into at least one Internet peering point since the proposed Oxford
Road Corridor network will need to pass right by Telecity and IFL2 locations.
In the aerial image on the next page, the red lines indicate the path of fibre to be installed,
while the pink line between the two peering points represents a possible transit opportunity
using links that already exist between the two locations, so reducing the level of civil works.

Next Generation Broadband in the Oxford Road Corridor

Beyond what might be called public peering, there are opportunities to develop private
peering arrangements. Initially this might be limited to the Net North West16 network,
providing defined access for both local government services and the university, and to the
The Internet hosting centre being planned for Central Park would be the fourth significant
carrier-independent hosting centre in Manchester, and so will be a likely location for further
peering between networks. Similarly operators will almost certainly want to peer at facilities
built as part of the Media City:UK development in Salford. Such developments will further
enhance Manchester‟s advantage as a location for next generation networks.
In the future, peering will allow neighbouring open network projects to connect directly with
each other, further reducing “transit” costs while encouraging the sharing of specialised local
services and reducing reinvention costs for on-net services. In essence, Manchester could
become a web of open networks, all adhering to a defined standard set of building codes and
so forth, with service relationships developed by a mutual organisation (see section 7)
representing the commercial interests of its member networks.

Fibre Installation

Installing a new infrastructure is almost by definition a labour intensive and disruptive
process. However, by sensitively selecting
routes and opting for less disruptive options of
deployment can significantly reduce the
impact and the cost.
The path highlighted in the aerial image above
has been chosen as an example of how a route
can be selected where unused and recreational
land has been used in preference to roads and
permanent thoroughfares. This reduces the impact on traffic, for example, but also means
alternatives to traditional digging can be used. For example, in the softer ground of a verge
or parkland it is possible to use “mole ploughs” (inset) to install fibre ducting directly into the
ground. These specialist machines plough a slot in the ground, and lay the cable into the slot
immediately, all in one continuous operation; the ground then closes, needing no re-
instatement. With installation at a slow walking pace, this is also a quicker method than
traditional labour intensive digging.
Where it is necessary to lay fibre into permanent surfaces, an alternative to digging can be
“slot cut” installation. Essentially a large rotary blade cuts a narrow slot in the road surface,
into which a specially formed fibre-duct can be installed. The slot can then filled and sealed
with bitumen, leaving only a narrow line along the road. Again, this can be done at a slow
walking pace, so it is typically a quicker process involving fewer people.


Next Generation Broadband in the Oxford Road Corridor

Other Opportunities
It is possible that other opportunities exist which may help to further reduce the level of civil
works. For example, if any of the old hydraulic system is intact and is in the area then it may
be possible to use it as a conduit to pull fibre ducting into. This was the method used by
Mercury Communications in the very early years of telecommunications deregulation which
allowed them to build a network at record speed within the City of London. Given that
Manchester's hydraulic network was more extensive, perhaps Manchester's industrial heritage
may become a major asset in the next revolution.

Blown-fibre for multi-phasing
The intention is that this project will form the pilot of a
larger and more ambitious plan, supporting many more
homes and organisations than the narrow route indicated.
If traditional fibre-optic cables are simply laid into the
ground then either sufficient for all future requirements
needs to be installed during the pilot, or the elements of
the civil works will need to be repeated to install
additional fibre.
An alternative approach is to install what is known as “blown fibre”, where specially formed
ducts are laid into the ground, made up of many smaller “blow tubes” (above). Fibre can then
be blown using a compressor at a central location as and when additional capacity if needed
without the need to revisiting the civil works. Each tube can carry several fibres, providing
considerable capacity with the flexibility to grow and evolve without re-digging.

Active Network
The active network consists of those elements that require power – the hub, switches and
routers. The characteristics of fibre provide much greater flexibility than a comparable
copper network does, primarily because connections can be made over several kilometres
without having to boost the signal. In the network proposed for the Oxford Road Corridor, this
means that to kick-start a scalable network for the area only three points of presence are
needed, where the fibre from individual homes and organisations terminates to be “lit” with
a service.

Next Generation Broadband in the Oxford Road Corridor

A POP is essentially a small room or building with reliable power and racks where the fibre-
optic cables can be terminated. Alongside these racks will be space for the active equipment.
In an open network much of this technology will belong to third-party operators and as such
the room design needs to ensure the equipment is safe and secure both from external access
and from service competitors.
In theory it would be possible to create a single POP for the whole area, but this might limit
future scalability and may require additional building costs. For example, the rationale
behind building POP's at both St George's and Hulme Court is that will not be necessary to lay
fibre across the main road as the inset map shows.

Instead, a wireless technology such as “free-space optics”17 might be used to take advantage
of the height of the two buildings' to beam a high-speed connection across the road. This uses
very similar laser technology to that in a fibre-optic network but is designed to pass safely
through the atmosphere rather than along a glass fibre. While this technology is not suitable
for whole networks, it is a good compromise where the cost of digging is too high or where it
simply isn't practicable. Success in using this technique in the pilot would be a useful proof of

          See en.wikipedia.org/wiki/Free_space_optics for more on free space optics

Next Generation Broadband in the Oxford Road Corridor

5        Network Business Model

5.1      Open and vertically integrated models
In providing network services there are essentially two basic business models: vertically-
integrated or “bundled”, and open or “unbundled”. Which of these two approaches to adopt
is a matter of huge importance when implementing a new network that is capable of carrying
many different types of service and content. There are technical as well as commercial
decisions to be taken which effectively determine which of the two network approaches can
be followed.
With a vertically-integrated or bundled network, only one service provider has access to the
network and the end-users connected to it. This service provider will normally bill customers
for a “bundle” of services, such telephone, television and Internet connectivity. The cost of
connection to the network itself is normally bundled into this charge. An example of this kind
of network is the Virgin Media cable network.
With an open or unbundled network, more than one service provider has access to the
network and the end-users connected to it. Users would receive bills from whichever service
provider they have signed up to. They may receive separate bills for different services
delivered over the same network – perhaps one for Internet access and a different bill from a
different supplier for telephone calls. There may even be a separately-billed fee for
connection to the network itself. An example of this kind of network is the conventional
public telephone network in the UK where users can buy their telephone calls, broadband,
line rental and TV services from different providers.
The business model for a vertically integrated network is fairly straightforward. The service
provider needs to ensure that the surplus from the various components of the service is
sufficient to make a reasonable return on the investment in the network infrastructure. So
long as enough users are prepared to sign up then the service will be viable and sustainable.
Service providers can afford to be less competitive on some services, providing they are more
competitive on others, since users are effectively forced to buy the bundled product. Where
the network has clear advantages over competitor networks – for example a cable or fibre
network which is competing with conventional copper – the integrated service operator does
not have any competition at the same level, and may be able to provide services (such as
HDTV) which the competitor network cannot, reducing its need to compete on price for
standard services. In some cases the services may not be entirely integrated vertically, and
the service provider will offer third party options as part of the bundle – Setanta sports for

Next Generation Broadband in the Oxford Road Corridor

The business model for an open network is much more complex. The network operator will
need to raise revenue from service providers or end users directly to cover the costs of
running the network and to make a return on the investment. Service providers need to sell
their services to end users in competition with others who have access to the same network
and technology and can offer services at the same level.

5.2       Four layer model
A useful way of analysing the different approaches is to see the service provision in terms of

      4    Content layer                    Value-added services such as specific TV channels,
                                            email boxes and web space, special telephone
      3    Service layer                    Service types or applications delivered over the
                                            network such as telephone, TV, Internet connectivity
      2    Network active layer             Signals sent over the network, connecting equipment
                                            at user end and in the exchange or PoP
      1    Network physical layer           Fibre, cable or copper in the ground, or wireless
                                            infrastructure. Exchange or PoP buildings.

Vertically integrated models allow one service provider to operate all the layers - vertically.
Open network models may have a single owner-operator at layer 1 or layers 1 and 2, but will
allow different service providers to offer services at layers 3 and 4.
A similar model has been used in Amsterdam, but merging the third and fourth layers in a
three-layer model18.

5.3       Which is the best model?
In order for it to be viable for potential network builders to build (or extend) a network, it is
often assumed that they will need to have control over all the layers, with exclusive access to
customers. This is the basis on which private companies have been prepared to invest in the
cable TV network and in the mobile phone networks in the UK. In Europe (including the UK),
conventional telephone services also developed as vertically integrated networks, usually
with a monopoly (state-owned) supplier installing the network and offering the telephone


Next Generation Broadband in the Oxford Road Corridor

However, European countries have had to spend a lot of time “unbundling” the conventional
telephone networks in order to create the conditions for a competitive broadband and
telephone market. In some European countries there is even discussion about forcing cable
operators to “unbundle” their services, and allow other service providers to offer telephone,
TV or Internet services over their cable networks.
Where new, next-generation networks have been installed by private companies, in France
for example, the effect has been to create mini-monopolies even though there is competition
between providers wishing to build networks. A company installing fibre in a particular
district or building will soon sign up most of the users who are pre-disposed to buying these
services and abandoning conventional services delivered by copper. While there is nothing to
stop a second company installing a parallel fibre network in the same district or building,
there is little incentive to do so because the easiest customers have already been taken. Thus
the users in that district or building have no choice in where they buy their services if they
want the advantages offered by the next generation network. In France this has caused some
landlords to resist investment by single network operators as they hold out for a better deal
for their tenants, and the French regulator is considering requiring “virtual mutualisation19”
whereby service providers effectively share costs of the initial investment with the network
Thus while a vertically integrated business model is more likely to persuade a private
operator to make the investment in next generation network in the first place, it is a
disincentive to any other operators, and thus effectively removes any competition.
In the UK so far, no private companies are investing in next generation access in any case –
except in extremely limited and isolated cases. Indeed, those most in a position to make this
sort of investment are effectively providing “vertically integrated un-networks”, barring
access to any potential service providers by refusing to build the bottom network layers. Thus
the argument that vertical integration is needed to sustain investment is null, there being no
investment in the first place.
This complete failure by the private sector suggests that some other mechanism may be
needed to generate or kick start the investment – such as an intervention by the public
sector, or using consumer aggregation to “de-risk” the investment. This is covered in section
If some form of public, mutual or social ownership or intervention is necessary, then the case
for an open network model is very strong, because it is the only way that consumers can have
the benefits of a competitive market where their money or commitment has been used to
create the conditions for investment.
Types of ownership or intervention include:
       a) Direct public investment and ownership
       b) Mutual or social ownership, possibly with some public sector investment
       c) Consumer and/or public sector aggregation to reduce commercial risk
Clearly in case a) the public sector has taken the risk, and it makes sense for consumers to be
offered maximum choice and the advantages of a competitive offering.
In case b) much the same argument applies, although there are different ways that the social
ownership vehicle may wish to interact with service providers.


Next Generation Broadband in the Oxford Road Corridor

Case c) is an interesting example because this is effectively what happened with the “trigger”
campaigns for DSL provision a few years ago. In that case the aggregated consumer demand
was used to persuade BT to invest, and while BT was required by the regulator to offer other
ISPs the opportunity to provide services over its network, it was almost always the main
beneficiary of the campaign, and there was often no competition at layer 2.

5.4      Why is competition important?

Competition at layers 3 and 4 has a number of important advantages for the
The technology is changing fast and there are opportunities to provide significant
improvements in value for money. Thus for example the spread of flat-rate “free” calls to
land lines, or VoIP calls. Mobile operators have until recently effectively suppressed VoIP
calling on their vertically-integrated networks.
Profit margins are tight and operators in near-monopoly situations can cut corners on less
visible aspects of the price/service balance such as customer service and technical support
which the customer only uses once they are locked in to the network.

Competition at layers 3 and 4 also has important advantages for the economy.
Smaller and more innovative technical and service provider companies have a route to market
using the latest network technology, enhancing the overall network offering for customers,
and – where the companies are local – encouraging local economic development.
Local content service companies have an opportunity to go straight to the consumer, or at
least some choice between different service provider partners. This can encourage the
development of community TV and other community-focused content.

5.5      Types of open network business model
Most open network business models assume one owner and one operator at layer 1. This could
be a private operator, a public sector agency or some form of mutual. The owner of the
network may outsource the operation and maintenance of layer 1, but is likely to maintain
the right to rescind and re-award that contract.
The same owner/operator of layer 1 may also operate at layer 2 and own the necessary
equipment to do so, either exclusively, or offering other companies the opportunity to do so.
Thus for example, BT owns most of the equipment in its exchanges, but allows other “LLU”
operators to install their own equipment as well and rent the copper loop from BT.
The city of Pau in France has installed, and now owns and operates a next generation fibre
network. It owns all the operational equipment at layer 2 and offers service providers the
opportunity to provide services at layers 3 and 4.
The Département de la Sarthe (72) in France has installed and now owns and operates a
“passive” fibre network connecting end users to the fibre backbone. Operators renting
capacity from the département have to install their own layer 2 equipment and operate at
layer 2 themselves.

Next Generation Broadband in the Oxford Road Corridor

There are many different ways in which publicly or socially owned or initiated networks can
interact with service providers. These are covered in section 7

5.6      Open Networks & Technology
Section 5.4 looked at the importance of openness and competition at the service provider
layers 3 and 4 was investigated. This section looks at the role and forms of competition at the
lower levels – the passive and active network, referred to as layers 1 and 2 in the table.
Getting this right can be critical to the long term success of a project; with a long term
business model and an asset dug into the ground with a serviceable life in excess of 20 years,
it is impossible to know what the market will look like so it is critical to consider the forms of
competition and what degree of flexibility can be incorporated into the physical network.
Getting this wrong may result in either an expensive rebuild of the network or a restricted
ability to deliver services and generate revenue in the future.
For example, at the beginning of the project it may be decided that the most pragmatic
approach is to select a single socially responsible supplier for the services but within the
lifetime of the infrastructure the market may support, indeed demand, open access with any
number of service providers.
With this in mind, the design of the physical network must ensure future technologies and
business models can be supported without an expensive root and branch upgrade. This section
considers the characteristics of such a flexible and future-proofed network, and benchmarks
the main technologies against this standard.
The pace of innovation in fibre technologies is such that a network with restricted access and
a limited market for layer 1 and 2 infrastructure services will soon fall behind those where
innovation and competition is encouraged and vibrant.
For anyone with fibre-optic cables in the ground today:
        100 Mbps is cheap
        1 Gbps is affordable
        10 Gbps makes sense in the core network but is getting cheaper
        100 Gbps is under development
        And multi-terabit is being researched in the labs20
All of these standards are designed to use the same single mode fibre that is commonly
installed today - the only change needed is in the shorter-lifespan active equipment. Without
a market imperative to invest in the active network, and a passive network with the
flexibility to support innovation, there is a danger than a network will languish at the initial
service offering. However, by encouraging infrastructure competition it should be possible to
deliver constantly evolving differentiated services and rolling customer upgrades as new
technologies becomes available and mature.

          See www.tech.co.uk/computing/internet-and-broadband/news/terabit-class-data-pipes-movies-in-an-

Next Generation Broadband in the Oxford Road Corridor

5.7      Layers for competition
There are four key levels within layers 1 and 2 at which competition on a fibre-optic network
can be encouraged and, for a truly open market, the more possible levels of competition, the
better for the long term investment, for subscribers individually and for the wider economy.
Those levels are:
        Network element - a dark fibre
        Optical - a reserved wavelength
        Physical - a reserved virtual local area network (VLAN)
        IP access - a reserved IP (Internet protocol) tunnel
Each of these layers has its own characteristics, which in some cases may make them
uneconomic to offer today but may become important over the lifetime of the investment.

Network Element
Offering dark fibres straight from the frame at the “exchange building” to end users permits
service providers to offer their choice of services as well as their choice of access technology,
customer devices, and speed - it generates technological competition in the first mile,
preventing a situation occurring as it has with today's copper network where the incumbent
operator dictates the technology, making their decisions based on retaining market share at
the lowest investment level.
The one issue with this model is that it gives a supplier exclusive access to a subscriber; once
a dark fibre has been allocated to a service provider, no other provider can access it,
removing any possibility of separating service offerings between multiple providers for

Optical unbundling
In the same way that copper frequencies have been unbundled to permit ADSL competition
with BT's exchanges, optical frequencies can be unbundled. This would permit multiple
wavelengths, or colours of light, to be delivered to subscribers, encouraging multiple
operators to compete for each customer.
For example, an ISP and a cable TV company could offer services to a single subscriber using
their own dedicated wavelengths, with each getting exclusive access to the bandwidth; the
ISP could offer 1 Gbps Internet access on one wavelength, and the cable company a full
multiplex of high-definition video services over another.

Virtual LAN's
On a modern network it is normally possible to create multiple “virtual networks” or VLANs
which would permit several operators to co-exist on the same physical network without risk
of interference. This gives service providers simple access to what appears to them as their
own first mile network at a low investment level.
This allows a service provider to select the optimum middle-mile network for their
commercial offering, without investing in first mile technology. However, the reduced
investment is likely to attract more competition with minimal differentiation.

Next Generation Broadband in the Oxford Road Corridor

While the VLAN dictates the physical network there is still an opportunity for this kind of
competition to co-exist with optical unbundling. The community network owner might offer a
VLAN service as a kind of semi-managed offering on one set of wavelengths, while still
reselling other wavelengths to other providers, encouraging as competition for the widest
range of services.

IP Access
This is much more akin to today's networks, where service providers are offered access using
standard Internet protocol (IP). It offers the lowest level of investment for a service provider,
generating the greatest number of competitors - albeit ones with no investment in the future
shape of the network, and with few opportunities to differentiate their services. In effect this
is as close to a total outsourced ISP service as it's reasonable to get.
With the least investment in the infrastructure, service providers at this level may also face
the greatest competition, not just from their peers but also from companies at the other
levels who have invested greater sums in their services, allowing them greater opportunities
to differentiate themselves.

In Summary
While some of these opportunities may not be commercially viable when the fibre is sunk into
the ground, it is important that the architecture permits their evolution in the future.
Development of photonics and optical networking is rapidly and dramatically improving. If the
network is designed in such as way as limit physical flexibility then future opportunities for
competition have been limited and may repeat the mistakes of the past, limiting
opportunities for innovation.

5.8      PON and open networks
Generally it is not good practice to exclude a particular technology when architecting an
open, future-proof network. However, the case of passive optical networks (PON) is a well-
founded exception.
The “traditional” default choice for many fibre projects is Passive Optical Network (PON)
technology, particularly projects led by incumbent operators. While PON is a broad family of
solutions and there is fierce debate about the pros and cons of particular family members,
there are certain traits which are common to them all which limit the options for creating
competitive markets at multiple levels.
Firstly, each member of the PON family is geared towards a particular architecture at the
next layer up. For example, EPON favours Ethernet. This limits future technology choices, and
may leave the future performance of the network solely in the hands of the fibre operator,
recreating the same market conditions which led to xDSL being the dictated choice for first
generation broadband; any broadband offering today has to work with the circuit-switched
network the incumbent specified all those years ago.
Secondly, PON is designed with contended services in mind; this is a physical trait whereby an
optical signal is split and shared among a number of subscribers. While this arguably reduces
the installation cost of the network (although this is less than clear), it permanently removes
any chance of offering differentiated low contention and uncontended services.

Next Generation Broadband in the Oxford Road Corridor

5.9      Practical Considerations for Open Networks
This project needs to be viewed as a starting place for a larger open network spanning many
more homes and organisations. It is, therefore, not enough to develop a basic architecture
which is fundamentally supportive of openly competing services if it can't scale to encompass
more of the neighbourhood and new building programmes. Service providers will want to
know, for example, that any future open networks in Manchester will adhere to the same
standards – that customers in all of Manchester have the same wall outlets, that the same
optical characteristics are adhered to, and so forth.
The most practical way of ensuring this is to develop a set of “building codes” which
encompass the essential elements of an open fibre project. These codes can then be used by
housing developers planning new projects as well as anyone wishing to address the existing
home and business markets. Until recently this would have been very challenging, but the
industry has matured sufficiently to permit a standard to be developed, which references
open or de facto standards. For example, there is a new IEC standard21 for “Microduct cabling
for installation by blowing” which would permit building codes to define minimum compatible
standards without specifying a required vendor.
A similar process was adopted by the Californian city of Loma Linda22, where the city
authorities now require all home builders to install an ICT infrastructure to a defined building
code in the same way they may require certain standards of insulation or access roads, for
example. The infrastructure is then adopted by the city's network management company.
While the Loma Linda building codes may provide a useful starting point for Manchester, they
have referenced largely ANSI standards and they are working within FCC regulations. A
localised version will be needed which draws in IEC and IEEE standards, and works within
rules set by Ofcom, the Local Government Act, and the EU. However, once written, such a
document would be essential to all city authorities in the UK planning similar ventures.

Business Rates & Social Enterprises
In the UK, telecommunications ducting is considered as “office space” for business rates
purposes; while ducting lies unused it can be zero rated, but as soon as services are provided
the duct carries business rates. This is often cited by operators as a key reason for not
investing in next generation access networks.
However, adopting a social enterprise model has the potential at least of reducing the level
of business rates. A charitable social enterprise may automatically be entitled to an 80%
reduction on business rates, and at the discretion of the local authority the remaining 20% can
be written off as well.
Other forms of non-profit social enterprises can, at the discretion of the local authority, also
have their rates bill reduced or written off if the organisation is philanthropic or is
“concerned with education, social welfare, science, literature or the fine arts”23. Some of the
organisational models looked at in section 7 could allow the City Council the option of
reducing or eliminating business rates and so improve the business sustainability of the

          IEC60794 part 5 – available from the IEC at webstore.iec.ch/webstore/webstore.nsf/artnum/036443
          See http://www.llccp.net/index.html for the Loma Linda “Connected Communities” programme.
          Source: Valuation Office Agency (VOA)

Next Generation Broadband in the Oxford Road Corridor

5.10 Developing the technical case
There is scope for further work on the best technical plan and costs associated with a pilot
project in the Oxford Road corridor. A closer look at areas within the corridor where the
network could be extended would give a better understanding of the full benefit of the initial
deployment. As part of the planning for an Oxford Road pilot it will be necessary to look at a
set of codes and best practice for city planners and developers who are already working in
the area.
In order fully to gain the benefits of NGA for the city and the city region it will be necessary
to develop a plan to expand the network further. This requires a robust and sustainable
business model, which is explored in the rest of this report. It will also require the
identification of appropriate areas to follow Oxford Road. Armed with this information,
intelligent and appropriate interventions can be made in planned new developments – such as
Media City:UK in Salford and Central Park in North East Manchester - to ensure that the NGA
expansion opportunity is not missed.

Next Generation Broadband in the Oxford Road Corridor

6          Operational Business Model and Sustainability

6.1        Appetite for Services

The Office of National Statistics collates various
sources of information on communities to create what
they call Living Environment Deprivation indices24.
Every neighbourhood in England and Wales has been
ranked on a range of topics, together with a 'Total
Deprivation' ranking. The table below contains the
rankings for the Oxford Road Corridor (based on
postcodes M14 and M15) – a rank of 1 indicates the
most deprived area.
                                                  (out of
Income Deprivation                                        814
Employment Deprivation                                    503
Health Deprivation                                        186
Education Deprivation                                   6,643
Barriers to Housing and Services                        1,846
Crime                                                   9,356
Living Environment Deprivation                          7,317


Next Generation Broadband in the Oxford Road Corridor

The community in the Oxford Road Corridor is ranked 611 out of 32,482 communities, inside
the top 5% of multiply deprived areas in England and Wales. If technology were to be used to
help improve the standing of this community then these tables suggest it might achieve most
if it were targeted at employment and inward investment opportunities, and in healthcare
programmes; this is especially true as the healthcare sector is also a major source of
employment for the area accounting for almost a quarter of people in work.
The community also has remarkably low levels of County Court Judgements compared to both
the Manchester and English averages; something which is not normally associated with similar
low-income communities. It is possible this can be attributed to strong Muslim influence in
the community, and the Fiqh al-Muamalat (Islamic rules on transactions) limiting the use of
many traditional financial products.
Often Muslim communities are a major source of small business creation. However, this
community, while not particularly deprived of education, has relatively low levels of self-
employment and business creation according to census information. These factors, do
however suggest that the community would be receptive to projects which encourage
entrepreneurial activity, especially where the community benefited.
Encouraging members of the community to develop their own novel local services may be
both a root to new employment and economic opportunities, and to making a next generation
broadband service in the area vibrant and attractive to the wider community.

6.2        The eSociety
Recently, the Centre of Advanced Spatial Analysis25 at the Universities of London and York
published a piece of research work funded by the Economic & Social Research Council, aiming
to profile neighbourhoods by their pattern of technology adoption.
The work identified a series of differing patterns of adoption across Britain's households,
which they have termed “e-types”; there are a total of 8 groups, further sub-divided into 23
types, ranging from “Group A: E-unengaged” to “Group H: Experts”. The work aims to
establish that geographic and demographic variables are useful in the interpretation of new
digital divides.
CBN has successfully used this model in other projects to develop seed ideas for local services
which may encourage the community to engage with a project and stamp their own identity
on it.
According to the Spatial Literacy research, this project area is classified as “C – Becoming
engaged” and type “C11 – Peer group adopters”. In the words of the study:


Next Generation Broadband in the Oxford Road Corridor

While basing a project too heavily on a stereotype such as this is always dangerous, this
model does provide some useful insight into the way a community might approach novel
In many ways communities that are becoming engaged, as the model suggests this community
is, will be more receptive to new ideas than either those who are yet to be engaged, a group
increasingly resistant to technology, or those who feel they already understand technology
and its role in their lives.
The view that the community is inclined to learn about technology from their peers is also
supportive of a community-led technology scheme; peer support groups and the development
of local services by and for community organisations will support the wider community's
adoption of technology.

6.3      Example Services
In order to engage the local community and local businesses, a next generation network
needs to provide a set of valued and compelling services to start with. There is then scope for
the stakeholders to develop and add community-focused services to suit their needs and so to
take maximum advantage from the infrastructure.
The generally assumed set of core services for next generation access is the “triple play” set:
        High speed Internet access
        Digital television
        Telephone

Next Generation Broadband in the Oxford Road Corridor

This is the same set as provided by cable providers such as Virgin Media. Fibre-to-the-home
(FTTH) services have the same advantage as cable in that they can completely substitute for
services normally delivered by telephone connection and broadcast. However FTTH services
have distinct advantages over cable.

Internet access speeds are very much greater
The maximum speed available from Virgin Media via a cable connection currently is 20Mbps
“down” (to the user‟s computer) and 768kbps “up” (from the user‟s computer). A service like
this which has different down and up speeds is called asymmetric. Cable is capable of
supporting higher speeds than this, but does not have the capacity of fibre26.

Typical fibre broadband services available on the continent are 100Mbps in both directions –
“symmetric”. Not only are the speeds much higher – something which will become
increasingly important as demand for rich Internet content grows – but the fact that they are
symmetric recognises the shift towards user generated content.

Scope for more powerful television services including HDTV
HDTV (High Definition TV) is set to replace conventional television over the next few years.
HDTV requires much more bandwidth than conventional TV – at least 20Mbps. This is why it
will not be available for broadcast until the analogue television signal is switched off, and
there are some doubts about how much can be made available even then.
Because it has less bandwidth, cable is also limited in the number of HDTV channels it can
carry. Virgin Media currently offers one HDTV channel and HDTV on demand. FTTH is capable
of carrying multiple HDTV channels, currently limited only by the equipment at each end.

Scope for more telephone services
FTTH telephone services use VoIP (voice over Internet protocol) technology. VoIP will
ultimately replace conventional analogue telephone services, and is already extensively used
inside the telephone operators‟ networks.
Because FTTH uses VoIP from the premises, it has a number of advantages over a
conventional telephone connection:
        One fibre can carry multiple telephone “lines”
        Users can have access to sophisticated “voicemail” and other services provided by the
         network operator (layer 4)
        Depending on the ability to sign peering arrangements with other VoIP providers, users
         could have access to very low cost or free calls.

  Cable speeds can be increased using recent technologies, such as the nascent DOCSIS 3, whereas open fibre
networks are typically built using Ethernet – now a very well tried and understood technology.

Next Generation Broadband in the Oxford Road Corridor

6.4      Engaging Service Providers at layers 3 and 4
In order to provide users with a good set of core services – in particular the triple play set,
the network will need to attract service providers operating at layers 3 and 4. The experience
of early movers in other countries suggests that it is important to ensure that the right
incentives are there. If an open network model is desired, this is the case whatever options
may be pursued for public or community ownership – see section 7.
Learning from international experience suggests that initially larger network operators,
especially incumbent operators, may resist joining a network which they see as undermining
their own vertically-integrated services. Large content providers are likely to take a different
attitude, seeing small networks as a useful channel to market, and sometimes offering
advantages over their normal form of delivery (satellite broadcasters can enhance
interactivity with broadband delivery). Smaller service providers may see a FTTH network as
an opportunity to reach new customers with exciting new services but they may typically also
lack the experience in offering a wider range of media services and dealing with the content
The temptation is either to fall back on community-ownership as an answer, or to accept that
the contested services will be somewhat bland and unimaginative. The former is in danger of
being little different from a traditional vertically-integrated closed-network monopoly, albeit
a community-owned one, while the latter is missing an opportunity to provide the community
with a service that meets all their needs: it merely offers essentially today's services, just
Overcoming this requires mechanisms for engagement both with the community and regional
internet providers to exploit the additional capabilities of a truly open network.
A simple gap analysis of the capabilities of typical regional service providers will show that
they have a sound understanding of delivering good internet services but they lack the skills
and knowledge to develop the “triple play” packages of the larger network operators. The
solution to this is two-fold.
Firstly a training and support programme to grow the capacity of organisations wanting to
offer new media services; technical training on how to deliver IP-TV for example.
Secondly, it is useful to have pre-negotiated “heads of terms” with content providers which
can be offered to service providers as the basis for agreeing deals with media organisations.
Thus regional service providers operating at layer 3 can be assisted in adding layer 4 services
by buying these in from large content providers. Often content owners are looking for
significant scale before considering licensing content to an operator, and small ISP's will
typically not have sufficient scale. However, agreeing a template agreement for the
community as a whole may provide the content owners with the scale they need, while
permitting sufficient latitude for service providers to fine tune the final contracts, ensuring
sufficient differentiation.

Next Generation Broadband in the Oxford Road Corridor

6.5      Consumer Aggregation
For many years cooperatives and similar organisations have been used as a mechanism to
aggregate consumer or purchaser demand in order to reduce costs and to bring within reach
something that can be shared, but otherwise could not be afforded. Well tried and tested
examples are the traditional consumer cooperatives such as the “coop” retail stores which
flourished in the latter part of the 19th and the earlier part of the 20th centuries largely
because of the cost advantage that aggregation brought, and agricultural cooperatives that
have brought farmers together to buy equipment – combine harvesters, grain storage, wine
bottling plants – that they can share, and that otherwise they could not afford.
In a situation where traditional market mechanisms have failed to create the investment
needed to provide next generation access, and where there is realisable (albeit latent)
demand, consumer aggregation can have a similar role to play. Firstly because it enables a
community to afford a facility which can be shared – a NGA infrastructure – but which no one
person can afford. And secondly because the long payback time for this form of investment
makes it difficult to support the higher profit margins that an investor with a short-term view
would consider acceptable.
In other words, consumers grouped together can raise large amounts of money to invest in
NGA infrastructure, and by aggregating their purchasing power after the investment, can
make the services more affordable than otherwise.
However, there is a third role that consumer aggregation can play in the implementation of
NGA schemes, and that is the mitigation of investment risk.
There are two well-known examples of this.

The BT DSL trigger campaigns
These mostly took place between 2002 and 2004. At this time BT had already enabled
exchanges for DSL services where it believed there was a clear demand, and there remained a
large number of un-enabled exchanges – generally in rural areas where it did not believe the
demand existed. For these exchanges BT set a “trigger level” of a number of customers who
would need to commit to buying an ADSL service in order for it to make economic sense to
enable the exchange. This led to a number of “trigger campaigns” organised by concerned
people in the local communities, many of which were successful. In some cases the
organisations spawned by these campaigns went on to organise their own broadband services,
sometimes on a cooperative model. BT in the end committed to enabling 99.9% of exchanges
in any case, but only after a great deal of the perceived risk had been eliminated by these
campaigns, and arguably after they had effectively made the case that it would be a safe
investment in the vast majority of cases.
It is interesting to note two things about this experience:
        That having organised the aggregation of their own demand many of the communities
         then forewent the other available benefit – reduction of cost – by simply buying from
         BT at standard prices.

Next Generation Broadband in the Oxford Road Corridor

That BT was arguing then that there was insufficient demand to justify investment in
improved net access, and the arguments about NGA now are very similar. Nuenen
The OnsNet (“our net”) in Nuenen in the Netherlands27 is now a widely examined and
reported example of a successful, sustainable NGA service that has come about almost
entirely because of consumer aggregation, principally as a means of reducing investor risk.
The example of Nuenen illustrates that, while simple aggregation of consumer capital
contributions could theoretically raise sufficient funds to make a straightforward investment
in a mutually-owned fibre infrastructure, it is much more viable to attract external funds for
the investment using the risk mitigation that consumer aggregation can provide. This is
because an FTTH infrastructure is likely to cost at around £1,000 per household, and while
these costs are falling, that would remain a significant barrier to many households for the
foreseeable future, particular in an area where incomes are lower.
It is important however not to forget the role that aggregation can play in making the services
affordable, particularly given the rational put forward by some potential investors in NGA
that it would be viable now if consumers were prepared to pay a premium for NGA, but that
the evidence is that they rather expect higher speeds and better service for the same price
that they pay for DSL or cable. It is likely that the premium that these providers would like
consumers to pay is needed only to finance the short term returns that they expect.
Lastly, consumer aggregation has the potential to create other important advantages if – like
Nuenen – the organisational model used to aggregate the demand is also used to promote
customer engagement, and encourage local content created by the community. This has been
an important – perhaps the most important – factor in Nuenen where what is called the “us
feeling” is seen as a key advantage in the competition with cable and DSL services. This
implies the creation of an explicitly mutual and democratic organisation – such as a consumer
or multi-stakeholder cooperative – able to provide services over the network, and at least in
some way seen to be in control or ownership of the network.

6.6       Public sector aggregation
As well as consumer aggregation – which can include small businesses – there are examples
where aggregation of public sector demand has made viable investment in network
infrastructure, including FTTP, where otherwise investment was not forthcoming.
This normally works by aggregating demand for existing services, such as telephony and
private data links, as well as Internet access, over an extended period of time. By adding the
total expenditure that public sector bodies would make over a period of, say, 10 years and
then getting those bodies to sign long term contracts with an aggregating body, it is often
possible to show a net gain by building a new network infrastructure and paying an
organisation to run and manage it.
This technique can work mostly because of the large amount of data transmission and
telephony within and between the participating public sector organisations, the marginal cost
of which falls to near zero when carried over a high speed network owned by the aggregating


Next Generation Broadband in the Oxford Road Corridor

A project which has used some of these ideas is the South Yorkshire Digital Region28 project.
This aims to aggregate spending from a number of local authorities in such a way as to
provide a substantial enough contract to enable “fibre to the street cabinet” to be built out
throughout the sub-region. As the first such project in the UK many useful lessons can be
learned from the project managers.
Aggregation projects have to deal with the phasing of contracts, where public sector bodies
may already have signed long term contracts with other providers, and have to find loan
finance to cover the investment given that the users don‟t expect to have to pay for ten
years‟ worth of communications in one go. In this sense public sector aggregation for NGA
projects is a technique for risk mitigation, or rather risk removal.


Next Generation Broadband in the Oxford Road Corridor

7          Organisational forms and business models

There are broadly three possibilities for the ownership, maintenance and control of the
network layers where the investment has been made following a consumer aggregation
process and/or public sector intervention.
    Third party operator-service provider: a single private entity, partnership or
       consortium owning and operating at all 4 layers.
    Mutually-owned network, third-party service providers: a mutual organisation owns
       and operates (or commissions the operation of) layers 1 and 2, and private entities
       provide services at layers 3 and 4.
       Mutually owned network and service provider: a mutual organisation owns and
        operates (or commissions the operation of) layers 1, 2 and 3, and buys in or provides
        itself layer 4.
These are only a rough guide, and there are possibilities for more complex arrangements
involving elements of more than one.

Types of Mutual
In this report, “mutual” is used to mean forms of shared ownership that involve key
stakeholders. Different functions of mutual ownership designed for different purposes can
involve different sets of stakeholder: the common thread is the notion of shared ownership
and use. For example:
          The mutual mechanism used in the Nuenen OnsNet is a consumer cooperative, owned
           by its users.
          The form of ownership suggested in the One Manchester report is a “multi-
           stakeholder” cooperative involving the local authority with businesses and the
           community as partners, similar to the form used for running leisure services in a
           number of local authorities29.
          In France mutualisation virtuelle30 is a mechanism being considered by the regulator
           Arcep31 allowing effective (virtual) shared ownership by service providers of the fibre
           cabling in apartment blocks.


Next Generation Broadband in the Oxford Road Corridor

7.1      Third party operator-service provider
It would theoretically be possible to use consumer aggregation simply as a means to persuade
an established private sector partner to invest in, operate and provide services over a NGA
network. As effectively happened with the BT DSL trigger campaigns, this is using consumer
aggregation as a means to overcome market failure by de-risking the investment. If it works,
it has the advantage that it is simple and should be sustainable.
(Public sector investment could also be used to subsidise a privately-owned vertically-
integrated network, but this is highly likely to be challenged on “state aid” grounds and
would probably be politically unacceptable in any case. So it is not considered here.)
However, there are important disadvantages with this approach.

It is likely not to work
FTTH for existing properties does not yet form part of the investment strategy of UK
operators. One of the reasons for this is that they need or want a fast payback on any fibre
investment they make, and currently perceive that this is not possible without charging a
premium over normal DSL, telephone and digital television services.
A high sign-up rate using consumer aggregation would reduce the need for a premium charge –
indeed, experience in OnsNet suggests that there would be no need for a premium charge.
However this assumes that the investors are prepared to accept a long payback time. This is
possible because of the reduced risk because of consumer aggregation, but it still does not fit
the business model of typical UK operators.

It will result in a closed, vertically integrated network
Operators will also look to vertical integration as a way to ensure fast returns on their
investment. However, this is likely to be incompatible with a consumer aggregation model.
The high success rate at OnsNet was partly due to the fact that people were being asked to
sign up to a service that they would own and could influence. They are likely to have a very
different attitude to an operator who is clearly viewing the project as a simple money-making
Even if the aggregation process does produce sufficient evidence of demand or commitment
to persuade an operator to make the investment, the users will be left with no real choice
once it has been built. If there are particular services which they want that the operator-
service provider does not offer – such as a particular TV channel – then they have no choice to
go elsewhere. If the operator-service provider is providing a poor level of customer service,
the users simply have to accept it. This is particularly important given the reputation that
ISPs and telcos have for poor customer service provision, long waiting times in call queues and
so forth.

It could cost the users more
Both because of the desire of most operators to get a return on their investment within a
relatively short timescale and because of their need to produce shareholder value, the
services from a third party operator-service provider are likely to cost more when compared
with similar services provided by a mutually-owned service provider. This is mitigated
however by the ability of large operator-service providers to keep costs of content and other
value-added services down through their buying power, and by the fact that any mutually-
owned service provider may have a limited range of content and value added services that it
can provide itself.

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7.2       Mutually-owned network, third-party service providers
This approach makes sense because it uses consumer aggregation (and/or public sector
investment) to resolve the biggest single problem – the risk involved in investment in the
network build – while preserving an open network approach, and leaving the more profitable
service provision to private sector providers. Mutual ownership structures tend to be
sustainable in the long term and can work well when there is no prospect of a short term
return on capital.
The separation of the investment problem according to network layers has been well
demonstrated in Amsterdam32 for example, where the public sector role was limited to an
investment in layer 1.By preserving a strict open network, it is made easier for the public
sector to play a role in the mutual ownership, perhaps as some form of multi-stakeholder
cooperative, because the clearly “level playing field” offered to service providers makes it
easier to show that public money is not being used to favour any one private sector provider.
The intervention by the public sector in the Amsterdam FTTH project has been well tested
against EU state aid rules, and a recent definitive ruling was that the investment in the open
network was non-discriminatory and on terms that a private investor operating under market
conditions would have accepted, and hence in accordance with the “market economy investor
A mutually-owned network would also qualify as a social enterprise, and offer the City
Council with an option to reduce or waive the business rates payable to the treasury on fibre
ducting – see section 5.9.
However, while it appears to work well, the model has some difficult problems.

Decoupled consumer commitment and return on investment
Consumer aggregation only mitigates investment risk if there is a reasonable degree of
certainty that users who have signed up will remain a source of revenue that can be used to
repay and provide a return on the investment. Any public sector involvement will also need
an “exit strategy” where the network becomes self-sustaining.
This means one of two things: either that consumers commit to paying some fee for the use of
the open network – in addition to the fees they pay to service providers (who most certainly
will want to have a direct relationship with the customer and do their own billing); or that
the service providers perform all the billing and commit to paying fees for network access.
However, in an open network situation, service providers may consider their ability to retain
customers to be limited, making it difficult to structure agreements that guarantee the
investor some known level of network usage and payback.

Problem of realistic user engagement
One of the biggest advantages of using consumer aggregation is the possibility of building a
mutual ownership structure that harnesses the energies of the users to generate content and
participate in the improvement of services, and that commands the loyalty of users who feel
less alienated by a service provided by something that is theirs, rather than belonging to
someone else who is trying simply to make a profit out of them – the so-called “Us Feeling” in


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However, if the only “service” they buy from the mutual is access to the network (at layers 1
and 2), there is arguably little incentive to get engaged. This is a familiar problem for some
cooperatives where the amount and variety of services provided by the cooperative to the
consumer is limited. Running a fibre network at layers 1 and 2 is a fairly straightforward affair
– it either works or it doesn‟t – and the decisions it needs to take, perhaps concerning
network expansion, or relations with service providers, tend to be of a more technical and dry
nature. The scope for involving competent and interested consumers in the governance and
direction of the enterprise is thus limited. The areas which would likely interest and motivate
the user members to get involved in running a community network – what value added
services to supply, the cost of these, the level of customer service and so forth – would
effectively be outside the scope of the mutual enterprise and solely the domain of the private
service providers.

7.3      Mutually-owned network and service provider
This approach gets round some of the problems of the other two approaches.
Where external funding has been raised, there is a direct connection between the
commitment of the users to pay for the services they receive and the ability of the mutual
body to repay the investment and provide an appropriate return.
Consumer membership would have real meaning. Members would have a say over what
services are provided and how. They would be able to contribute to decisions about the
balance of costs and service quality or scope. While some services at layer 4 – particularly
content – would necessarily be bought in by the mutual, members would still have a say in
what those services are, and could make choices about where they should be procured.
In the case of the Oxford Road corridor, the engagement of users in a membership
organisation would provide valuable extra material for the Living Lab study.
Sustainable mutual enterprises need to make profits to build reserves and to reinvest.
However they are not driven by shareholder value or dividends, and any significant surplus
can be returned to the members as a “divi” or in reduced costs. This advantage is worth a
great deal more when the mutual enterprise covers a larger part of the value chain.
However, there are some problems with this approach as well.
In its purest form, with one mutual enterprise providing all services at all layers, this
necessarily means a closed, vertically integrated network, albeit a mutually owned one.
Thus while user members would have a say collectively in the services provided and (where
external sources are used) where to procure them, they would have no choice individually.
Some people would argue that that is not in the interests of the users. The mutual enterprise
would be on a relatively small scale compared with big service providers, and would be
limited in its scope to invest in new services and content. Without the cooperation from other
service providers – see below – it would not be possible to buy services in either – service
providers who pursue a bundled vertically integrated business model are not generally
prepared to sell parts of their offering to other vertically integrated providers.

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If public money were involved, then there would be a danger that it would be seen as state
aid, either in the simple sense that the mutual enterprise is an enterprise competing in the
market with other enterprises, and as such is being favoured by the state; or in the more
complex sense that because the mutual necessarily buys services from other suppliers, those
suppliers are indirectly benefiting from public funds without an appropriate tendering
process. On the other hand there is a defence that because it is open to membership of the
entire community, and because it has a social rather than profit-making purpose, the mutual
is exempt from state-aid charges and a legitimate cause for public funding.
Insofar as they have no access to the network, service providers will see the mutual
enterprise as competition and will behave accordingly. This could hamper the ability of the
enterprise to provide services at layers 3 and 4. It is anecdotally reported that when OnsNet
first approached major ISPs for a peering arrangement, allowing the network to exchange
traffic with them and the rest of the Internet, they were refused. They were able instead to
make arrangements with smaller ISPs for “transit”, but this will have increased costs. More
serious would be any refusal by content providers to agree a supply arrangement, although
this would only happen if those see the network as providing competition for them below
layer 4. This would not normally be a problem for example with Sky, which is prepared to
work with third party networks, and which runs its own broadband networks mainly as a
complement to the TV services.

7.4      Combining the approaches
Each of the three approaches outlined above has its advantages and disadvantages. There is
no simple way to find a compromise or composite arrangement which discards all the
disadvantages while retaining all the advantages. However the problems can be mitigated
using a combined approach, and also by carefully separating layers and applying appropriate
methods at each layer.
A useful form of analysis when looking at organisational forms for mutual enterprises is to
look at the stakeholders.
The construction and extension of the physical network at layer 1 is a matter for the whole
community, and – if public money is available – is a suitable use for public sector investment
and influence because of its long term impact on economic development and the quality of
life for the citizens. If private funds have been invested then the continued operation and
viability of the network is of concern to the sources of those funds. It is possible to have one
or more operators using the network at layer 2, and these have a stake in the sustainability of
the physical network as well.
The effective and efficient operation of the network at layer 2 is mostly a concern for the
service provider or providers that use the network to supply services to their customers. It is
also a matter of concern for the customers themselves, but unless they pay directly for access
to the network, they are likely to view their service provider as responsible for the quality of
service they receive. Indeed, expecting end-users to make a distinction between a network
problem at layer 2 and a problem at layer 3 is quite unreasonable.
Insofar as any mutual enterprise is providing and billing for services to end users at layers 3
and 4 then the primary stakeholders are those users. If there are employees then they are
important stakeholders too. Third party suppliers of content would perhaps generally have a
pure contractual relationship with the main service provider or providers. Anyone with any
interest in the success of the project as a whole will be concerned that there are viable and
attractive service options being made available to the users.

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In summary then, different stakeholders are associated with different layers, and this can
help formulate an appropriate structure.

7.5      An example structure
The outline example structure below uses the stakeholder analysis in an attempt to remove
some of the problems with the three different approaches, while retaining the advantages of
The following assumptions are made:
        That there are some public funds available for capital investment
        That there should be a mechanism to enable and encourage private investment at
         some stage in order to extend the network, but that control should remain with
         stakeholders and not be ceded to investors
        That the principle of an open network should be maintained to maximise choice and as
         a defence against accusations of state aid
        That active user engagement in the management of services, particularly layer 3 and 4
         services, is desired as a way to encourage take up and as an aid to sustainability
        That certain technical elements of the operation and maintenance of the network are
         of little concern to individuals and the community, provided they are performed
         competently, and so are more appropriately managed at arm‟s length by major
         stakeholders, and outsourced if necessary.
The following entities are involved:
        The public sector in some form, perhaps a special purpose vehicle, or more directly
        One or more external investors
        A multi-stakeholder cooperative consortium created to own the network
        A consumer cooperative (or possibly multi-stakeholder) created to provide services on
         the network
        A number of companies providing technical services under contract
        A number of private service providers using the network to provide services to
The multi-stakeholder cooperative consortium:
        Receives public money for capital investment
        Receives investment from private sources in exchange for revenue share and without
         any shareholder voting rights
        Finances the construction of the physical network
        Hires contractors to construct the network
        Owns and controls the network at layer 1
        Operates, or hires contractors to operate, services at layer 2

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        Acts solely as a wholesaler, offering layer 2 (active) or layer 1 (passive) access to
         service providers for appropriate fees.
        Has institutional members with representation on its governing board, including:
                 Public sector
                 Private investors
                 The consumer cooperative
                 Service providers that use the network (above a certain level)
                 Employees
        Has a governing constitution binding it to public service aims and open network
         principles and preventing it from being controlled or acquired by private sector
        Applies any surplus firstly to the repayment of investors and secondly to investment in
         the improvement and extension of the network.
The Consumer Cooperative
        Offers a range of services at layers 3 and 4 directly to end users who must be
         members. These could include triple play services effectively in competition with the
         other service providers.
        Operates itself or buys in the services it offers
        Agrees to use the network services operated by the Consortium exclusively, and gains
         preferential access rates in return
        Is a member of the cooperative consortium, but independent from it.
        Is owned and controlled by its user members through a democratic structure

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         Has a governing board that includes non-executive experts and employee–appointed

Why use cooperatives?
The two cooperatives in this example structure both provide a mechanism for mutualisation
of control and ownership.
The cooperative consortium brings together the key stakeholders for the fibre network on an
equal basis, recognising the shared nature of the resource. Cooperative consortiums (or
consortia if you prefer) are a well-established mechanism for enterprises and organisations to
work together and share key resources34, avoiding shareholder forms of ownership that allow
one party to dominate. Multi-stakeholder cooperatives such as Greenwich Leisure35 have been
successfully used in a number of areas to run public services formerly run by the local
authority. These can be compared to a public-private partnership, but with direct community


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The consumer cooperative service provider allows users to play an active role in the way
network is run and the kinds of services it offers. The experience of Nuenen and other
community-owned networks shows that this kind of user involvement can greatly increase
take up levels: the consumer cooperative could be created as an output of a consumer
aggregation exercise at the beginning of the project. Using a cooperative ensures that users
have a genuine sense of ownership. Community ownership can foster the creation of
innovative community-focused services such as community TV and community portal sites,
services which are unattractive to ordinary private sector service providers. It is only through
creation of these services that the full value of a next generation network to a community
can be realised. In the One Manchester project, digital cooperatives were suggested as a way
to grow user-generated content by offering some form of dividend as an incentive: this is an
innovative and potentially important solution to the growing issue of user generated content
being used to generate revenues (mostly from advertising) which are not shared with those
A possible problem with the creation of a consumer-owned service provider is that it would
discourage private sector service providers who might fear they would not be able to
compete, and that the cooperative would have an unfair advantage. This is reminiscent of the
situation in the early 20th century when consumer cooperatives were viewed by some as being
a genuine threat to ordinary businesses. One way to mitigate this problem – if it arises – could
be to offer service providers the opportunity of partnering with the cooperative to provide

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8        Conclusion and next steps

In this report we have looked at the case for deployment of next generation access in
Manchester, and the reasons why this will not happen in the timescale required for
Manchester to gain maximum benefit without public sector intervention and leadership.
We have shown how the Oxford Road corridor offers an almost unique example of an area
suited to be the pilot for the first major urban deployment of NGA in the UK, and how that
pilot can be extended in the area, and further within the city. Such a pilot would offer an
opportunity better to understand the benefits and costs of NGA deployment, and so to plan
for deployment elsewhere in the city.
The report has looked at various ways in which a sustainable business model can be
constructed that is appropriate when using public sector intervention, and how consumer
aggregation offers an opportunity to make the maximum benefit flow from that intervention
by increasing uptake and mitigating investment risk. Various models have been examined that
seek to ensure business sustainability, engage service providers and other businesses, and
provide the community and local businesses with a genuine opportunity to become part of the
experiment, and develop a network to suit their needs and aspirations.
To follow this report we recommend additional work:
        To develop the business case further as a precursor to widening the project, looking in
         more detail at innovative uses by the public and health sectors for example.
        To determine in advance how best to use results from the pilot in developing the case
         for wider deployment
        To refine the technical plan as a way of better understanding costs and how to reduce
         them, again with a view to wider deployment
        To initiate the creation of codes and standards so that developments taking place in
         the city do not miss the next generation access opportunity.

Brian Condon
Adrian Wooster
Malcolm Corbett
Shaun Fensom
Community Broadband Network, December 2007

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Appendix A: About CBN

CBN (Community Broadband Network) was launched in January 2004 by the then Rural Affairs
Minister Alun Michael and Broadband Minister Stephen Timms.
First generation broadband was being deployed in the UK, and many communities –
particularly rural and deprived urban areas – were being left behind. CBN‟s aim was to
encourage and support communities who were interested in developing and running their own
networks. These mostly social enterprise and community-owned projects have played a
crucial role in bringing broadband to all parts of the UK, a fact recognised by Stephen Timms,
now minister for competitiveness.
Now the need for faster broadband is becoming urgent, and again the big operators are slow
to adopt the best technologies. Even when faster speeds become available, large parts of the
country will be left behind again.
CBN works with communities, local authorities and NGOs, both in the UK and internationally,
to help develop community-focused, sustainable broadband networks. It brings together some
of the UK‟s top experts in telecommunications strategy, business development, technical
implementation, and social ownership and mutual structures.
The team that delivered this study included:

Malcolm Corbett – CEO, Community Broadband Network
Malcolm led the team that set up CBN and has responsibility for CBN‟s key relationships in
government, regions and with clients. Prior to founding CBN Malcolm was a director of
Internet services co-operative Poptel where he gained extensive experience in the technology
needs of the private, public and voluntary sectors. He is active in the social enterprise sphere
and was the founding Chair of Social Enterprise London. In 1999 Malcolm co-invented the
global Internet domain .coop, thus creating the Internet identity for the world‟s co-operative
sector. Malcolm is a member of the Executive of the Broadband Stakeholder Group which
brings together major players involved in the broadband agenda from government, industry
and local communities.

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Shaun Fensom – Chair, Community Broadband Network
Founder of Poptel, the Internet services co-operative that from 1986 to 2004 specialised in
providing on-line services to the non-profit sectors. He subsequently became a senior
manager at the Phone Co-op, a successful social enterprise specialising delivering telephony
and broadband services. Since 2006 Shaun has been an independent consultant in broadband
and Internet services. He is an accomplished speaker and chairs CBN and Manchester Digital,
the trade association for digital industries in Manchester.

Brian Condon – Founder & MD, Complexity Group
Brian has over 15 years experience as a consultant and business developer. His work has
included negotiating telecoms joint ventures in Ukraine, scenario planning for business and
government at PA Consulting Group, and leading business development activity and client
relationships as Managing Director of Close Brothers Corporate Finance. In 2003, he founded
Complexity Group and joined the board of the CBN. He now works across the private and
public sectors, problem-solving and advising on decision-making in complex environments. He
specialises in strategy formulation and implementation, and in resolving the dilemmas
inherent in making strategy work in human terms. Brian has extensive knowledge of the
broadband scene internationally, and until recently edited the highly respected technology
review „Cook Report Europe‟.
Brian leads on CBN‟s relationship with the Dutch consultancy Close the Gap, responsible for
the hugely successful OnsNet project in Nuenen and Eindhoven. He has a PhD in Physics from
the University of St Andrews, Fife, Scotland.

Adrian Wooster – Founder of specialist consultancy GTC
Adrian specialises in next generation broadband strategy and architecture with almost 20
years experience in the international telecommunications industry, and actively involved in
the community broadband movement for the past few years.
In 2004 he formed GTC; an organisation which focuses on developing innovative technology
concepts for next generation infrastructures and novel community-led technology projects
from concept to delivery. Previously, Adrian has been the Global Communications Architect
for major Silicon Valley corporations, and provided product strategy work internationally for
major telecoms operators. Most recently Adrian has been responsible for managing CBN
projects in Scotland, Ghana, Malawi and Kenya.

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Appendix B: Socially Aware Architecture

This section of the report considers the role of the technology and how it is structured. At
this stage of the project it is too early to develop detailed plans of how a fibre infrastructure
might be built but, as with any sustainable technology solution, an understanding of the
requirements will have a critical impact on the nature of the technology and how it is
delivered. This section focuses on those macro impacts, starting with a reflection on the role
of technical architecture and how it has shaped some of the better known international

The Importance of Architecture
There is often a temptation in technology projects to begin with the technology and work
backwards, leveraging the solution and business plan around the limitation and characteristics
of the underlying technology. In reality successful projects do the reverse, starting with the
requirements and ultimately making technology choices based on a “proximity to the
Traditional network architects have a 7-layer model defining all the functions of the network
from the electrical signals to the interface with applications. However, for such deep-rooted
technologists its often useful to think of a network as an eight-layer model, adding an
essential “human interface” which incorporates a whole host of relationships like “customer”,
“business”, “community”, “consumer”. How a technology handles the eighth layer becomes
all important; regardless of how removed a technology is from exposure to people, if it‟s not
possible to relate to this “interface” then it‟s not adding value.
For an application developer this should be simple – they take a set of business requirements
and simply translate them into an electronic incarnation. The database manager supports the
application developer, so while they are a little removed, there is a good middle-man. The
server manager starts to have a few problems – they are two layers removed, and their
infrastructure is starting to be shared with possibly conflicting requirements. Last of all, the
network manager is totally removed from the business function and is trying to manage what
is, by definition, a completely shared domain with highly diverse requirements. How can the
network retain some proximity to the real world?
Designing and building a network requires the architect to find out about the needs and
demands of people and only then to work down through the layers, taking on an
understanding of how the applications behave and so forth.

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No network manager ever became a Chief Information Officer. This is almost entirely because
few try to couple their work with the value-chain of the business or to the people who will
ultimately pay for services.
This is as true of public broadband networks as it is of private business networks; users are
often considered to be a necessary evil who disrupt the smooth running of a network. In this
world, new product sets germinate from the smallest incremental change to an existing
environment, and considerable time and effort is spent trying to control the disruptive
influence of average users.
However, taking the effort to understand the real world needs pays dividends – the business
case for the often large build-costs of a network can be expressed as a valued investment in
the future rather than as a sunk cost, and the architecture moulds itself to the needs of
people rather than expecting the users and applications to squeeze into the limitations of the
network – a liberating experience for both technicians and users, making the imagination the
only real inhibitor to service delivery.
In the past technologies have been chosen for their ability to deliver great-speed, or to cover
great distances – it was a simple trade-off. However, an understanding of how people use the
services means technologies need to be selected from a 3D surface, where a balance is made
between speed, reach, and their use by people.
It is rarely possible with this approach to pick one technology and expect it to be a universal
solution. The traditional telecom's model of supporting a single technology, ADSL for
example, to the exclusion of all others simply to achieve crude economies of scale can never
bridge the gap between technology and the real world. Technologies today need to be
selected for their ability to deliver business, community, and customer benefit, demonstrably
showing the add value.
As a result the network design will always be the last phase of a telecom's project, rather
than the first, and is highly likely to incorporate a basket of open technologies carefully
selected to build on earlier work including business planning and service definition.
The necessity for open or globally de facto standards ensures that the network can evolve as
technologies develop and as suppliers come and go out of favour; proprietary or pre-selected
solutions risks a more troubled evolution or possibly even a foreshortened life.
The traditional approach which skips real world requirements, instead beginning with the
detailed engineering work is likely to lead to short investment cycles, and constrained users.
The UK is perhaps the archetype of the world's telecoms industry, so it is perhaps no wonder
that it also has one of the shortest investment cycles, expecting to make a return on new
broadband offerings in a matter of months.

In carefully linking network architecture to real world elements reduces the risks associated
with taking a longer view of the investment. The 7-pillars methodology (above) adopted by
CBN ensures the network architecture is tightly and inextricably coupled to the needs of the
community. This makes it possible to adopt a long-term utility investment model.

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In summary, to minimise the risks and optimise the benefits of a telecoms investment it is
essential to bridge the gap between the technical elements and the community requirements.
For this reason the technical architecture can be defined only after the community-level
requirements and the business goals have been defined.


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