IRU-based customer right to general use of telecommunication infrastructure with cost-based upgrade.

1. IRU-based customer right to general use of telecommunication infrastructure with cost-based upgrade. Olaf.Schjelderup@uninett.no Workshop on CEF Networks, Praha, may 2005

2. UNINETT – a nordic perspective

3. … more close look

4. UNINETT main topology

5. Norway – some figures • Population: 4 554 000 (Jan 2003) • Coastline: 25 148 km • Area: 385 155 km^2 • Shortest distance north/south: 1 752 km (approx 3 days by car ;-)) • Lot of mountains, fjords, islands and widespread population gives high infrastructure costs; both roads, railways and telecom. • Two nation-wide Telecom Carriers; BaneTele and Telenor. A lot of smaller local or regional Telecom Carriers in the bigger cities. • 4 universities • About 40 regional university colleges

6. UNINETT history • Research project from 1976 • Operational from mid 80’s connecting universities, research institutions and some colleges. • Government owned legal entity from 1993, 3 employees. • 2004; UNINETT consists of 4 companies, 55 employees.

7. History of UNINETT’s network • In the beginning, from 9,6 kbps to 2Mbit/s. • 1992: 34 Mbit/s capacity between universities (Telenor) • 1995: Transition to 34 Mbit/s ATM (Telenor) • 1997; Upgrade to 155 Mbit/s ATM, with some colleges on lower capacity VCs. (Telenor) • 1998/99: UNINETT-owned or -leased fiber established from several colleges/universities to railway stations and power plants gave access to several well-priced 155 Mbit/s SDH from the new carriers BaneTele and EniTel. • 2000: Call for Tender; Leased 2.5 Gbit/s Trondheim-Oslo (Telenor), several leased 34/155Mbit/s SDH-links. Tendency towards acceptable pricing. • 2001/2002 Huge fiber ring project in Tromsø, co-funded by UNINETT. Participants; local community, municipality, University, College, hospital. 14 km ring structure , 96 fibers, abt 15 drops. Price: 1.5 MEuro. Other similar and smaller projects in Bergen and Trondheim. • 2002: EniTel bankrupt and assets bougtht by BaneTele. Now only two national carriers; duopoly, increased cost on leased lines. Depressing …

8. Rethinking the situation .. • Our own fibers had earlier helped us a lot gaining competion in the market. • There must be a weak point in the duopoly situation that we can take advantage of, but which? Need for capital? • Given Norway’s geographical distance, it’s costly to own national fibre infrastructure by oneself. One also need access to local technical knowledge all over the country to fix broken fibers etc. • Longterm agreement do give lower prices – our main presence point (universities and colleges) are geographical very stable in a long time scale. • There exists a lot of unused fiberpairs in current national infrastructure – not used because of marketing judgements. Why etstablish new fibre infrastructure when this already exists? • We’re a private company, which allow us to loan money in a bank. • There is a need for a clever strategy here …

9. Call for tender, summer 2002, a new model • Suggested a 10-15 year agreement with upfront payment (IRU=Irrevocable Rigths of Use) • Suggested an initial topology and capacity • Suggested cost based capacity upgrade and possible topology additions/changes. • Invitated to infrastructure cooperation, not competion. • Clearly defined UNINETTs user groups and market. • Result: Telenor negative. BaneTele willing to discuss further. Negotiations for nearly 6 months.

10. Agreement with BaneTele, april 2003 • Initial IRU amount + yearly O&M cost. 15 years + 5 optional years duration. • 55 initial lines (2.5 Gbit/s wavelengths/transmission, local/regional fibers, 155 Mbit/s). Initial topology defined. • Cooperation for maximum redundancy. All fiber paths are examined. • To implement the agreement nearly 30 new local fibre loops widespread along Norway was established by UNINETT, BaneTele, local power plant companies, other 3rd-party during 2003. A lot of hectic work (pheew …;-)) • Upgrade to cost of equipment (share of cabinet, linecards, switch, regenerators, etc.) and an administrative fee. • Fiber/Duct-exchange agreement with pre-agreed-upon price for fiber. Cooperation in new fiber projects, telehousing, issues regarding new infrastructure etc.

11. Negotiation strategy • Include as much infrastructure as possible in the IRU for as long time scale as possible. • The IRU must does not demand significant investments for the provider in order to negotiate the price downwards. Important to know the providers infrastructure in much detail. • Focus on ”rights to communication”. • Calculate risk of investment/bankruptsy. • Be a non-profit organization and define your market as academic sector and not as a competitor to your provider.

12. Current situation • UNINETT has gained more predictable costs the coming years. More initial costs now, also a 5 year bank loan, but this will result in significantly reduced cost after end of bank loan. • The 15 year IRU break-evens after short time versus leased lined in the market. Cost of leased infrastructure are still not falling. • The network has more capacity and redundancy than ever before. (By an agreement with the Norwegian Space Agency we also bouth 30 years rigths to155Mbit/s to Svalbard in january 2004. Upgrade to Gigabit Ethernet late summer 2004 included.) • More upgrade gives a even more beneficial model versus market price. • And, we’re upgrading quite a lot .

13. Questions?