Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level pt © Ericsson AB 2009ASTEL annual conferenceMay Open Networks Why? When? How? Ivan Dimitrov, BA Broadband Networks, Ericsson

Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level pt © Ericsson AB 2009ASTEL annual conferenceMay Agenda Broadband for all What is an Open Network? Why invest in Open Networks? When to start investing in Open Networks? How to invest/build Open Networks? Summary & Conclusions

Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level pt © Ericsson AB 2009ASTEL annual conferenceMay Broadband for all

Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level pt © Ericsson AB 2009ASTEL annual conferenceMay Viviane REDING Member of the European Commission responsible for Information Society and Media KPN Annual Event Brussels, 14 January 2008 "How we treat next generation access is (…) the single most important policy question in the telecoms sector today. We have to create incentives for investment whilst making sure that no-one (and I insist on this no-one), can be in a position to foreclose the market. Regulation will have a role to play to keep networks open and to guarantee progress, efficiency and choice Point-to-point fibre deployment (...) is in fact the only fully future proof approach in terms of ability to deliver more and more capacity as techniques improve and as demand grows. Moreover it is the only approach to next generation access that permits a completely open access policy. ……….initiated by municipalities, in cities such as Stockholm

Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level pt © Ericsson AB 2009ASTEL annual conferenceMay Addressing the needs for all….. Care for the elderly Public Safety & Security Services for disabled citizens Advanced services for citizens VoIP, Video & TV State-of-the-art ICT infrastructure for businesses Health Services (e-health) e-Government Education (e-learning) Broadband can help overcome the challenges

Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level pt © Ericsson AB 2009ASTEL annual conferenceMay A historical perspective - Electricity - Privately owned companies started deploying power plants in piecemeal fashion in late 1800s - Investments were mainly concentrated in profitable markets - Serving large cities, established businesses & wealthy homes Initial Market Development Consequences - Large segments of the markets, especially rural and low income areas were left in the dark - High degree of market concentration in the hands of small number of vertically integrated companies monopolies Eventual Industry Structure - Establishment of publicly owned municipal electric ultility companies

Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level pt © Ericsson AB 2009ASTEL annual conferenceMay The Case for Municipal Broadband - The drivers Market Failure Economic Development The drivers for municipal broadband today are the same as were for municipal electricity, a century ago 1- Failure on part of private companies to invest in specific geographic areas that do not meet the investment criteria of quicker ROIs 2- Tendency towards natural monoply due to high capital intensity and low marginal returns - Lower marginal cost, leads to low prices/profitability and eventual consolidation 1- Broadband, an essential public service and not a luxury 2- Sate-of-the-art broadband infrastructure, critical to improve communitys economic vitality - Attract/retain investments - Creation of jobs - Retain and attract new citizens - Foundation for knowledge based economy 3- Eliminate the digital divide 4- Sustainability

Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level pt © Ericsson AB 2009ASTEL annual conferenceMay What is an Open Network?

Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level pt © Ericsson AB 2009ASTEL annual conferenceMay In telecommunications, Open Network, or Open Access to Communication resources, means that anyone, on equal conditions with a transparent relation between cost and pricing, can get access to and share communication resources on one level to provide value added services on another level in a layered communication system architecture. Open Network definition:

Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level pt © Ericsson AB 2009ASTEL annual conferenceMay Generic Open Network Model City Network Customer Service cost Property Network Property Network Service Portfolio Property Network Property Network Public sectorEnterpriseTelecom Operator Other operators Open on infrastructure level Open on service level Com.operators

Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level pt © Ericsson AB 2009ASTEL annual conferenceMay Open Networks - Why?

Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level pt © Ericsson AB 2009ASTEL annual conferenceMay Alternative Infrastructure Ownership SP Service Provider SP Service Provider SP Service Provider Active Infrastructure Passive Infrastructure Active Infrastructure Passive Infrastructure Active Infrastructure Passive Infrastructure Inf Owner Pros: - Suitable for traditional commercial services Cons: -Infrastructure based competition - Not suitable for public and new type of commercial services Pros: -Better asset utilization through sharing -Easier classification of assets based on risk class -Shift of competition from infrastructure to services Cons: - Need for open/common interfaces Pros: -Better asset utilization through sharing -Easier classification of assets based on risk class -Shift of competition from infrastructure to services Cons: - Need for open/common interfaces

Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level pt © Ericsson AB 2009ASTEL annual conferenceMay Open Access Benefits Municipality owned fiber infrastructure used by different service providers –Deployment & operations cost split among different entities –Better utilization of assets/infrastructure through sharing Shift of competition from infrastructure to services –Consumers have access to competitive service offerings from various service providers –Higher service take-up No co-ordination problems –Same streets do not need to be digged every time a new telco enters the market –Fiber deployment is part of city planning, rather than Telcos market strategy Open Access, a key enabler for municipal broadband

Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level pt © Ericsson AB 2009ASTEL annual conferenceMay Open Networks - When? Now!

Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level pt © Ericsson AB 2009ASTEL annual conferenceMay Infrastructure Content and Services Prices (affordable) Supply Demand Modernized enterprises Modernized Public Administration IS literacy Critical success factors

Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level pt © Ericsson AB 2009ASTEL annual conferenceMay Europe Commision Broadband performance index

Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level pt © Ericsson AB 2009ASTEL annual conferenceMay Open Networks - How?

Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level pt © Ericsson AB 2009ASTEL annual conferenceMay City networks in Sweden Swedish City Networks Association 153 City networks (of 290 munic) Most started as branches of munic owned power companies Today direct munic owned or separate companies 95 % offer dark fiber 60 % of all fiber lease in Sweden through city network. Co-operate to provide crossover connections

Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level pt © Ericsson AB 2009ASTEL annual conferenceMay Network levels

Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level pt © Ericsson AB 2009ASTEL annual conferenceMay Generic Open Network Model City Network Customer Service cost Property Network Property Network Service Portfolio Property Network Property Network Public sectorEnterpriseTelecom Operator Other operators Open on infrastructure level Open on service level Com.operators

Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level pt © Ericsson AB 2009ASTEL annual conferenceMay Sweden leading the FTTx deployments in Europe

Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level pt © Ericsson AB 2009ASTEL annual conferenceMay A new perspective Population density People/Sq.km Revenue/Home Connected Cost/home passed High Low Deployment Cost Low High Commercially viable Requires Government Intervention Traditional Operators New operators Municipalities, Utility companies, real estate etc Structural funding available from EU/Local Public authorities* Subsidies, infrastructure re- use, lower cost of capital, longer depreciation Municipalities are the key players in the value chain Cost/home passed Profit Loss Profit

Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level pt © Ericsson AB 2009ASTEL annual conferenceMay Available business models RSP = Retail Service Provider, providing the services C.O. = Communication Operator, investing in and operating the active layer N.O. = Network Operator, investing in and operating the passive layer Single Operator All-in-a-box C.O. & N.O. RSP N.O. RSP C.O. N.O. RSP & C.O. RSP N.O. C.O.

Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level pt © Ericsson AB 2009ASTEL annual conferenceMay Services Provider Services Provider Fiber Provider Fiber Provider Communication Provider Communication Provider FTTC FTTH MBB FTTB FTTC FTTH MBB FTTB Density Penetration + Business strategy and deployment strategy But how do we proceed

Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level pt © Ericsson AB 2009ASTEL annual conferenceMay Services Provider Services Provider Fiber Provider Fiber Provider Comm. Provider Comm. Provider FTTC FTTH MBB FTTB FTTC FTTH MBB FTTB Density Penetration + Layered approach and nationwide deployment strategy FTTH Services Provider Services Provider Services Provider Services Provider Comm. Provider Comm. Provider Comm. Provider Comm. Provider Fiber Provider Fiber Provider Fiber Provider Fiber Provider FTTH/FTTC FTTB/FTTHMBB

Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level pt © Ericsson AB 2009ASTEL annual conferenceMay SP#3 Ericsson Managed Access Business Consulting Managed Services Technology/ Solutions Municipality/Investor jointly own infrastructure SP#2SP#1 Ericsson offerings Ericsson facilitating for Neutral Governance Municipa lity Ericsson HW/SW Services Entity Private Investors/ Telcos Private Investor Infrastructure Entity - Bring in the investor partners - Setup Ericsson Services entity for managing operations -Develop applications/web portals for public services -Setup service contracts covering SLAs/KPIs to ensure quality on e2e connectivity -Provide uniform business processes/procedures for gaining access to network -Provide customized connectivity solutions to the Service Providers - Provide broadband technology & solutions - Provide Network design and turnkey roll-out services e-Health e-Gove-Learning Public Service Portals/Servers

Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level pt © Ericsson AB 2009ASTEL annual conferenceMay Ericsson´s FTTH offerings Passive solutions Micronet Ribbonet Active solutions Home environment Access and site solutions Metro and IP edge Services Technology Consultation Deployment System Integration Business Consulting Managed Operations

Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level pt © Ericsson AB 2009ASTEL annual conferenceMay Summary & Key take aways Broadband is no longer a luxury, but rather a utility Broadband is critical for the economic vitality of the communities and nations Deployment of broadband entails huge capital outlays with tendency for natural monopoly Municipalities are therefore ideal entities for undertaking deployment of broadband infrastructure State-of-the-art infrastructure can help municipalities overcome their challenges by generating additional revenues, reducing their administrative costs and by better serving the citizens Municipal Broadband, a key enabler for driving economy

Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level pt © Ericsson AB 2009ASTEL annual conferenceMay