An incumbent’s approach to a

financially feasible FTTH Strategy

Jess Julin Ibsen

Executive Vice President & CTO
Networks
TDC A/S

FTTH Council Europe Conference, Feb. 2009

Price decreases in the Danish
telecommunications market
“The health sector, restaurants and hotels as well as bread
and cereals, among others... are more expensive in Denmark than the
EU9 average. On the other hand, fish and communications (post,
telecoms equipment and telecoms services) are significantly less
expensive… Especially the price of telecoms services is lower than the
EU9 average.”
Competition Report 2007
Telephony prices Int ernet and Broadband prices
700 3000
600 2500
500

K ro ne r
2000
400
K ro ne r

300 1500
200 1000
100 500
0 0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 1998 2000 2002 2004 2006 2008
fastnet 900 min (kvartalspris)
År internet 600 min (kvartalspris) År
mobil 270 min (kvartalspris)
ADSL 512/128 (månedspris)
mobil 450 min (kvartalspris) ADSL 2048/512 (månedspris)

Kilde: ITST: Hallo, hallo, ved du hvad det koster? November 2008

11-02-2009 FTTH Council Europe Conference/Jess J. Ibsen, TDC A/S 2

Denmark is #1 in broadband penetration

Denmark
Netherlands DSL
Sw itzerland
Korea
Cable
Norw ay
Fibre/LAN
Iceland
Finland
Other
Sw eden
Canada
Belgium
United Kingdom
Australia
France
Luxembourg
United States
Japan
Germany
Austria
Spain
New Zealand
Italy
Ireland
Portugal
Czech Republic
Hungary
Poland
Greece
Slovak Republic
Turkey
Mexico

0,0 5,0 10,0 15,0 20,0 25,0 30,0 35,0 40,0

Source: OECD, June 2007

11-02-2009 FTTH Council Europe Conference/Jess J. Ibsen, TDC A/S 3

Focus on the customers’ needs…
The potential to achieve added value is not in the product
itself, but in what the Danish customers can use the product for in their
lives and businesses.

Our customers require content through Dual-play, Triple-play and

combinations with mobile telephony and mobile broadband. They DO
NOT care about the media or underlying solution (fiber/copper).

Currently few customers require 20 Mbit/s+ solutions

”We do get customers, but they are coming more slowly than we had expected. We have
not yet seen an increased demand for fiber based upon new services. So the sales of high
speeds and add-on services have disappointed compared to our original expectations”.

Flemming Poulsen, Chairman of the Board, Midt Vest Broadband A/S

11-02-2009 FTTH Council Europe Conference/Jess J. Ibsen, TDC A/S 4

Strategic intent – financial feasibility

ƒ A sound business case require:

ƒ Technology availability
ƒ Customer needs/requirements for content and services
ƒ Content/services must require the technology
ƒ How far ahead can we see the market development ? (price
erosion/technology development/technology degredation)
ƒ Fiber is the technology of the future
ƒ TDC develops our network reacting to customer requirements rather
than to technology blueprints
ƒ Sound ROI
ƒ Services delivered in a “hybrid model” optimizing the usage of as well
our fiber as our copper access networks (FTTC/FTTN)
ƒ TDC believe that the existing copper access network can deliver
sufficient bandwidths for 90 percent of all users for at least the next 5
years.

11-02-2009 FTTH Council Europe Conference/Jess J. Ibsen, TDC A/S 5

Architecture – functional

it’s about protocols... an incumbent’s challenge

IP Business Private Duét Service layer

centrex trunking VoIP

VoIP Landline
Mobile
IMS softswitch network Control layer

SDH Transport
WDM PDH ATM IP MPLS Ethernet

Cable Fibre SDH PSTN WiFi, Access

modem
xDSL PON Ethernet PDH ISDN 2G/3G Wimax etc.

Copper Physical media

Coaxial Fiber Radio
pairs

Terminals

11-02-2009 FTTH Council Europe Conference/Jess J. Ibsen, TDC A/S 6

Architecture – all-IP NGN
ƒ The challenge of managing a considerable set of legacy services and
platforms.
ƒ TDC operates all main NGN platforms today, thus realizing all-IP is
primarily a matter of decommissioning legacy platforms and migrating
legacy services.

11-02-2009 FTTH Council Europe Conference/Jess J. Ibsen, TDC A/S 7

The current status
ƒ TDC has more than 45,000 km trunk fiber to approx. 2,000 nodes –
more than 600 Gbps used capacity
ƒ More than 250,000 km of copper access network and 12,000 km of
fiber access network
ƒ TDC has access fiber network to more than 60,000 Danish households
ƒ TDC has more than 10,000 dedicated business access fibers
ƒ We expand the fiber access network to more than xx,000 new builds
yearly
ƒ And whenever we replace existing Copper Access connections, we do
it using fiber (hybrid cables)

But we do not believe that the market is

ready for us to deliver our services over fiber
– yet…. We would not currently have a
financially feasible business case for the
specific services delivered to end-users

11-02-2009 FTTH Council Europe Conference/Jess J. Ibsen, TDC A/S 8

Coverage is key
Exchange areas

ƒ TDC utilizes it’s existing exchange area

infrastructure and investments in
buildings and housing for GPON and
DSLAM deployments
ƒ All exchange areas and nodes are fiber
connected
ƒ Denmark is divided into 1,183
exchange areas (EAs). On average, the
exchange areas cover 30 sq km.

11-02-2009 FTTH Council Europe Conference/Jess J. Ibsen, TDC A/S 9

What we do: A compound build-out
strategy

ƒ TDC builds fiber for:

ƒ trunk/transport network
ƒ Distribution network (to DSLAM’s (FTTC/FTTN), GPON’s, mobile masts)
ƒ Business customers (FTTB) – P2P – more than 1,000 new customers
annually
ƒ Access network (hybrid fibers)
ƒ Replacement of degraded fiber (20 year old fiber turns milk-white)
ƒ TDC builds access:
ƒ TDC is currently deploying fiber to the node (FTTN)/fiber to the curb (FTTC)
ƒ GPON for the residential market
ƒ P-2-P fiber solutions for businesses
ƒ Clearly defined service road map:
ƒ Copper– 20 Mbit/40 Mbit/50 Mbit/80 Mbit/100 Mbit
ƒ GPON based residential services
ƒ Increased speeds on P-2-P FTTB solutions

11-02-2009 FTTH Council Europe Conference/Jess J. Ibsen, TDC A/S 10

TDC’s network structure, mid-2008

Trunk network Access network

Fiber to business Large distance to exchange,
customers Fiber to mobile masts limited bandwidth
E

X
X
X
E
X X X
Land development sites +
X maintenance/repair

Short distance to exchange, Land development sites

high bandwidth possible with hybrid fiber

Exchange building Fiber in the trunk

E with ADSL and VDSL2 network

Fiber in the access

X Fiber distribution point
network

Copper in the access

X Copper distribution point
network

~10,000
~12,000 km
~60,000
11-02-2009 FTTH Council Europe Conference/Jess J. Ibsen, TDC A/S 11
2008 – 2009: DSLAM’s – larger bandwidth on the
copper network, fiber closer to the customer

Trunk network Access network

Fiber to business Possibility of bandwidths
customers exceeding 20 Mbps
E New micro node
with VDSL2 and
fiber connection

M
X
X
E
X X X
Land development sites +
X maintenance/repair

Exchange building with Fiber in the trunk

E ADSL and VDSL2 network

Fiber in the access

X Fiber distribution point
network

Copper distribution Copper in the access

X point network

Micro node
M with VDSL2

11-02-2009 FTTH Council Europe Conference/Jess J. Ibsen, TDC A/S 12

2009- :Fiber closer to the customer – basis
of further development

Trunk network Access network

Fiber to business
customers
E Fiber to mobile masts

M
X
X
E
X X X
Land development sites +
X maintenance/repair

Introduction of fiber services

using GPON and splitters

Exchange building with Fiber in the trunk

E ADSL, VDSL2 and FTTH network

Fiber in the access

X Fiber distribution point
network

Copper distribution Copper in the access

X point network

Micro node with

M VDSL2

11-02-2009 FTTH Council Europe Conference/Jess J. Ibsen, TDC A/S 13

FTTH deployment strategy

GPON technology
ƒ Up to 64 customers on one fiber port
ƒ Passive optical split (1:64) in the primary distribution cabinets
ƒ 2.5/1.25 Gbps overall capacity per fiber port
ƒ 3,500-7,000 customers per rack

Two fibers per Two fibers

Exchange
customer
Fiber primary Customer
distribution cabinet
100-1,000 customers Splicing point

Main distribution network Distribution network Drop cable

GPON system Optical distribution frame Through-splicing of two fibers per

Modular splitters customer

typically 2-5 km typically 500-1,000 m

11-02-2009 FTTH Council Europe Conference/Jess J. Ibsen, TDC A/S 14

Services Strategy: Products ready to
launch when customers has the req’t.
ƒ 2009:
ƒ (Jan) TDC launches integrated Dual-play and Triple-play packages
ƒ 20 Mbit/s standard service offerings
ƒ 40 Mbit/s standard service offerings
ƒ Dual-pair service offerings doubles existing access speeds
ƒ Quad-play services
ƒ FemtoCell based services for Business and Residential markets

ƒ 2010-:
ƒ TDC launch of first fiber based services to the residential market (Dual-play,
Triple- play and Quad-play) on GPON when we see the commercial
requirement
ƒ 50 Mbit/s standard service offerings + dual-pair
ƒ Increased speed on FTTB solutions
ƒ Large amount of VOD services
ƒ Higher speeds on most platforms

11-02-2009 FTTH Council Europe Conference/Jess J. Ibsen, TDC A/S 15

Conclusion: “Build the Boat while sailing…”
ƒ Yes, fiber is the technology of the future – but the future is not today

ƒ What our customers wants are services – Dual-play, Triple-plays and

combinations with mobility

ƒ Our customers should not care about the underlying technology – as long
as speed, stability and quality meet their expectations

ƒ TDC questions the FTTH strategy employed by the Danish Utility

Companies – it is not financially feasible

ƒ TDC will launch the first fiber based services the moment our customers
has the requirements – and we can make a healthy business case

ƒ But we will continue to deliver high speed and high quality services on as
well fiber as copper for years to come

ƒ TDC strongly believes that combinations of FTTH, FTTB and copper based
solutions are the only financially feasible approach

Do it intelligently – this is Business – not Philanthropy

11-02-2009 FTTH Council Europe Conference/Jess J. Ibsen, TDC A/S 16