The document discusses fiber optic deployment in Europe and regulatory models, and considers their applicability to broadband deployment in the United States. It finds that open access networks are more economically viable, and that neither duopoly nor vertically integrated private investment alone will achieve nationwide next-generation broadband access within 3-5 years without a profitable wholesale model. An "NGA-style" net neutrality approach of guaranteed wholesale capacity could enhance service competition.

1. A World of Fiber Benoît Felten Principal Analyst [email_address]

2. France and the United States: A Love Story

4. Fibered Europe Sources: Fiber to the Home Council – End 2008 Sweden 910k homes passed 400k subscribers 200+ municipal networks 450 Service Providers over Open Access Model Norway 275k homes passed 180k subscribers Vertically integrated utility networks Incumbent (Telenor) stepping up deployment Finland 420k homes passed 50k subscribers Incumbent (Elisa) deploying selectively Some municipal networks Denmark 620k homes passed 90k subscribers Energy companies deploying aggresively Netherlands 575k homes passed 170k subscribers Municipal networks in large cities Incumbent (KPN) planning open access deployment France 4500k homes passed 180k subscribers Incumbent, two competitors and cableco deploying Spain 300k homes passed 30k subscribers A few regional projects. Incumbent (Telefonica) cautiously rolling out Portugal 200k homes passed ~15k subscribers Competitive operator rolling out Germany 280k homes passed 60k subscribers Municipal projects in Cologne, Munich and more Incumbent deploys VDSL2 Slovakia 430k homes passed 20k subscribers Incumbent (Orange) rolling out Slovenia 280k homes passed 50k subscribers Incumbent (Telekom Slovenje) and competitive operator rolling out

5. Regulatory Models Infrastructure Competition with sharing of in-building deployment Unbundling of the fiber-loop with no bitstream obligation Infrastructure Competition with n regulatory oversight of >30Mb/s market for the next two years Bitstream only delivery model over FTTN and FTTH infrastructure Pole and duct sharing, no open access obligation over fiber Regulatory approach Significant debate over the nature of in-building deployment: single fiber (Orange) or multi-fiber (Free) slows down deployment. In addition, KPN subsidiary Reggefiber is offering bitstream access wherever the network is deployed already. Despite favorable conditions, Telefonica deployment is still uncertain. Bitstream FTTN model is still not clearly defined. OFCOM working on Active Line Access product which would be a form of Ethernet Bitstream. Duopoly has maintained high price levels and limited service penetration (Verizon has ~20% take-up) Comments

8. Incumbents embracing Open Access? << In hindsight, KPN made a mistake back in 1996. We were not too enthusiastic to be forced to allow competitors on our old wireline network. That turned out not to be very wise. If you allow all your competitors on your network, all services will run on your network, and that results in the lowest cost possible per service. Which in turn attracts more customers for those services, so your network grows much faster. An open network is not charity from us, in the long run it simply works best for everybody. >> Ad Scheepbouwer (CEO, KPN)

10. Exploring a new Open Access Model? Vertical Integration Unbundling Bitstream Active Wholesale Services Passive Access Infrastructure Services ? Network Services Passive Access Infrastructure Services Active Wholesale Services Active Wholesale ? Wholesale Services Passive Access Infrastructure Services Services Services Services

15. In Conclusion 1 2 3 Open Access makes economic sense for private players everywhere in the world Vertically integrated NGA deployment will not happen with private money in a 3-5 year investment timeframe Designing a profitable wholesale model for broadband is crucial to NGA deployment 4 Net Neutrality, NGA style is a first step to ensuring service competition .

16. Please visit our website: www.yankeegroup.com Thank you for your interest! Benoît FELTEN [email_address] M: +3 618 243 189