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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. UNINETT – a nordic perspective. … more close look. UNINETT main topology. Norway – some figures.

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iru based customer right to general use of telecommunication infrastructure with cost based upgrade

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

norway some figures
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
uninett history
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.
history of uninett s network
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 …
rethinking the situation
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 …
call for tender summer 2002 a new model
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.
agreement with banetele april 2003
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.
negotiation strategy
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.
current situation
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 .