Oxera report suggests CityFibre’s anchor-tenant approach can significantly contribute towards unlocking increased investment to achieve the UK Government’s broadband targets


Oxera report suggests CityFibre’s anchor-tenant approach can significantly contribute towards unlocking increased investment to achieve the UK Government’s broadband targets

19 February 2013

CityFibre and Oxera have today published a report that assesses the feasibility of a shared fibre access model in UK towns and cities, and undertakes an economic review of CityFibre’s anchor-tenant model in comparison to the co-investment concept previously developed by Oxera.

The Digital Agenda for Europe has set targets for EU Member States to provide all Europeans with access to 30Mbps or faster broadband by 2020, and for 50 percent of households to subscribe to ultrafast services of 100Mbps or faster.

The UK government has placed emphasis on its goal to have ‘Europe’s best superfast broadband network by 2015’; but despite significant public funding, the UK continues to lag behind its European counterparts and there are increasing concerns that the status quo regime may not be delivering the desired outcomes. The CityFibre anchor-tenant model provides a viable way to access increased private investment to address current under-investment and help make the vision a reality.

The CityFibre anchor-tenant model seeks to address many of the issues associated with the UK’s incremental roll-out of NGA, by providing an alternative, yet complementary approach to incumbent telecoms networks. CityFibre builds, owns and operates shared fibre networks without the need for ownership participation by the incumbent or service providers. Instead, commitments to use CityFibre networks are obtained through contractual arrangements between CityFibre and anchor tenants, facilitating private investment. This model is unique in the UK and could transform the landscape of the industry.

Greg Mesch, Chief Executive Officer at CityFibre commented: “CityFibre is providing towns and cities with a real, future-proof, competitive alternative to an incumbent-led monopoly infrastructure. This report has emphasised the strength of our model, and the benefits it provides to all stakeholders. Importantly, cities will benefit from ubiquitous fibre infrastructure which puts the foundations in place for business growth and job creation, as indicated by other studies which estimate that a fibre-rich city can increase its annual GDP by up to 2%. In order to understand the potential of the model, you need only look at the success of the Google Fiber project in Kansas City, and Gigler in Bournemouth. True gigabit level services are just around the corner, if service providers have the courage to see what’s inevitable.”

Oxera’s report is a continuation of the research undertaken on the co-investment model (NetCo), and strengthens Oxera’s contribution to the wider debate on the funding of ultrafast broadband networks, with a particular focus on alternative investment models.

The report published today shows that there is a strong economic case for CityFibre’s investment model, and appropriately implemented, presents the same risk-reducing, pro-competitive features envisaged in the NetCo model. The CityFibre model represents a variant of co-investment, and builds on principles consistent with the NetCo model. The design of contracts is key to replicating mechanisms of NetCo’s equity-led model, while reducing the threshold of participation of service providers with limited resources for large-scale CAPEX commitments. Furthermore, CityFibre’s model is based on the principle of non-discrimination and can therefore provide significant benefits for the economy and to a wide range of industry stakeholders including service providers, local authorities, policy-makers, investors and consumers.

The report also suggests that the CityFibre model can be a catalyst that could result in a longer-term reshaping of the industry towards a NetCo-like structure, providing significant ultrafast network coverage in the UK.

Felipe Flórez Duncan, Oxera Managing Consultant, added: “There has been overwhelming interest in the co-investment idea since our ‘NetCo’ report was published. As companies such as CityFibre demonstrate, variants of risk-sharing business models are emerging, building on economic features similar to those of the NetCo model. Policy-makers can play a role in encouraging these innovative investment models, given EU and national objectives for the deployment of future-proof broadband infrastructure.”

The report can be downloaded here: http://www.oxera.com/Publications/Reports/2013/A-shared-fibre-access-model-in-UK-towns-and-cities.aspx


CityFibre Media Contact: Alex Henshall / Caroline Hitchen Good Relations Regional T. 01625 500800 E. cityfibre@Insightmkt.com

About CityFibre

CityFibre (www.cityfibre.com) is one of the UK’s leading fibre optic infrastructure providers. By building dedicated fibre optic networks for the public and private sectors, we empower data-hungry users throughout the country, by unleashing unlimited speeds on future-proofed technology.

Our transformational fibre infrastructure projects comprise point-to-point connections, metro rings and Fibre-to-the-Premises networks that make possible Next Generation Access and gigabit level services direct to local authorities, businesses and homes.

CityFibre manages over 100 private fibre projects and seven separate metropolitan fibre rings under long-term contracts with local authorities, police forces, healthcare organisations and universities. With almost 30,000km of fibre in the ground, connecting more than 350 sites and data centres across the UK, we are the country’s largest independent provider of fibre in secondary cities.

In Bournemouth, CityFibre owns the largest FTTH project in the UK. With over 21,000 homes in marketing now, the network enables service providers to deliver unprecedented superfast broadband with speeds of up to one gigabit per second.

Notes to Editor

Oxera combines the most rigorous economic thinking and quantitative methods with a practical business approach to advise clients on matters in completion, finance and regulation.

What sets Oxera apart is:

- our reputation for credibility and integrity with policy-makers, regulators and legal authorities, which is of critical value to our clients and has been created through our long-standing emphasis on quality and independence;

- our experience and unique ability to combine the fields of competition, financial, regulatory and quantitative economics, which together with in-depth sector knowledge, provide the ingredients for respected economic advice.

If you would like further information about the findings of this report or any other information about Oxera, please contact:

Tessa Burrows Business Development Manager Oxera T. 01865 253013 E. tessa.burrows@oxera.com