In the case of the next generation IN tender, it is with a company called Kapsch-jNetX, Ericsson and Alcatel and in the case of the IP multimedia sub-system it is with Ericsson, Alcatel and Whaway. We started out with six vendors in each case and across 15 months they were whittled down to three. We are at the stage of best and final offer.
The next generation business support architecture is the resystemisation of the customer care, billing and order handling system — essentially the IT that supported those standardised processes in the last diagram. The tender process for that is complete. We have been tendering for two years. The full project scoping work has started and we are at the point of signing a contract with IBM Amdocs. The NGN and the next generation access work is in progress.
I will now outline the drivers for the next generation network. We have seen a demand for higher band-width connectivity to meet Enterprise customers needs as they move to embrace the IP and the digital world. There is a demand for increased geographic reach of fibre backbone connectivity. We must capitalise on the intrinsic cost benefits of NGN to deliver high band-width services cost effectively. This is a broadband network built from the start rather than bolted on the side with the compromises and the cost tariffs that come with that. A key feature of the next generation network will be its ability to address the backhaul contention issues in a broadband environment, by utilising different technologies in a more cost effective way. Other applications that arise from putting high band-widths deep into the community are medical imaging, shipping X-rays from one side of the country to the other, which supports the concept of medical competence centres, e-Health, the remote monitoring of people. It could apply to the remote monitoring of security applications, collaboration without travel, via video conferences, remote working, sharing content, virtual call centres and web-native applications. Call centres are not necessarily centralised in a particular place but can involve people working from home as part of a call centre, the calls being distributed to them as though they were sitting in a call centre. Web-native applications such as Salesforce.com allow sales forces to be remotely managed. There is a need for the SME sector to increase its use of ICT. Key to that is having high bandwidth access to application hosting centres provided by companies such as HP, IBM, Eircom and others.
In the consumer space there is a demand for faster less contended speeds for unicast services. These are services that are one-to-one such as video on demand, streaming, YouTube, time-shift TV, Internet TV. In other words people have the capability of consuming media when they want to consume it, not when a broadcast channel wants to send it to them. There will be an increase in broadband use as applications "hold" users.
If we look at the growth in traffic across the customer base, in the consumer space we can see the number of DSL ports has steadily increased in recent years and is running at approximately 650,000 customers with an average connection rate tipping back up to 2,000 a week. We can also see that the traffic per working line is increasing, rising from 10 kb per user as an average to more than 35 kb over the past three years. In the business space the number of IP VPN ports has risen and the number of very high bandwidth Metro-Ethernet ports, the ones that run at between 100 and 500 megabits per second, has increased dramatically since we launched them in 2006. All of that leads to a consequent core network growth, shown on slide No. 19, pretty much doubling every year.
We are building the next generation core network to support that and recognise that reality. Where we are with it is a key question. Phase 1A is Dublin, which is 49 sites. The build is almost complete. There are some space issues in that physically there is no space at Foxrock and Nutley exchanges so we have to move equipment and, in the case of Foxrock, build a little extension to it. The commissioning is ongoing with 30 or 31 sites ready for service at the moment. It is carrying live traffic. It is carrying our Meteor 3G traffic. It also carries dial-up traffic in the Dublin area and will, from this month, start carrying broadband traffic in the Dublin area.
I have a graphic of that which shows where the roll-out is. There are essentially three parts to the architecture. The important bit is where the blue nodes are. Those are the connection points to the network. The edge nodes are the control points. They have connection points collocated with them so there is a comprehensive coverage in Dublin on our existing exchange base.
Phase 1B is the major regional sites. There are seven optic rings being built where our existing fibre is being enhanced by technology. Instead of putting one colour down that fibre it puts eight, 16 or, in extreme cases 160, to boost dramatically the capacity of the fibre that is in the ground. We have seven of those rings that support phase 1B. The Midland and Drogheda rings are currently in build. The other five rings have been ordered and we will take delivery of those in the summer. Effectively by the end of Q3 this is the footprint of our NGN as we have put it out. We are driving to reach deep into all corners of the country.
Phases 2 and 3 essentially build on the provincial build of the transmission systems and infilling. By the end of phase 3 which is scheduled for June 2011 which is the end of our financial year our NGN footprint will be prevalent in the Irish marketplace. This project is fully approved at board level and capital financed. This is a project that is in execution, in full flow. It has taken about a year to get the flywheel going but the flywheel is now going and we are dropping those sites in quite fast.
The key benefits are increased coverage of high speed data services, faster speeds, availability of much higher bandwidths, particularly in the business environment, up to 10 GBit/s access nationally at 100 sites, up to n X 1 GBit/s nationally at 238 sites, fast broadband nationally at 917 DSL sites that are in plan and, equally, 100 Mb services nationally at those 917 sites. The key to all of this is that the backhaul is migrated from the legacy transmission types to the new IP-centric transmission types. Essentially there is an intrinsic cost efficiency in that which allows us move to take contention and backhaul contention out of the equation for the customer. A key thing to note is that this is a strategic build so we are not building to order. If a big builder wants a fibre connection into one of our nodes we build it to order. Right now we are building this out to 240 sites nationally on the belief that the demand is there. That will significantly reduce response times to customer requirements and enable us to deliver service faster. That is as much as I was going to say about the NGN core programme that is in progress.
I will move to our NGN access programme. I will explain what it is we are referring to when we talk about access network. Effectively it is the infrastructure that is outside of our exchange buildings, the cabinets and the distribution points. We do this because we see there is a demand for 25 Mb and upwards copper-based broadband product for small to medium enterprises and a deeper fibre penetration to meet enterprise and Government needs at the smaller locations. There is also a requirement for the high speed links to allow ICT hosting to be extended into the SME sector cost effectively so that a SME can benefit from these services on its existing copper rather than needing additional fibre. In the consumer space, we saw the bandwidth consumption profile, our experience is that consumers consume the bandwidth that is available to them and bandwidth and speed has become the third leg of the equation that is processing capacity, memory capacity and speed. The applications that are evolving change every year and evolve every year. Key for us is to have a platform to compete with cable TV, particularly in some of the urban areas.
To frame the access network technologies we have in place, looking at the basic telephony network, which is shown on the left hand side of page 22 of the PowerPoint presentation, one sees the local exchange interconnected by copper to a cabinet. I will give an idea of what the cabinets typically look like. One sees that green roadside furniture all over the country. There is a picture of it closed on the left hand side and open on the right. The terminations come from the exchange and are relayed on to distribution points further down in the network. The cabinets typically aggregate between 200 and 400 customers. Those are then relayed on smaller cables to distribution points which are significantly closer to peoples' homes. A typical distribution point has a cable that has come underground, up the side of the pole and is distributed to a maximum of ten houses. The types of speeds one gets on that network are dial-up speeds, 56 kb. Typically that allows e-mail type access to services and basic telephony services.
If we look at first generation broadband, effectively what we did was put new electronics in the exchange. Those electronics drive a broadband signal out through the existing cabinet and DPs to the home, with speeds of up to 8 megabits down and up to 1 megabit up. The reason I use the phrase, "up to", is that in the same way that radio waves do not travel endlessly, neither do the waves that carry broadband down those copper pairs. There is a limit to how far those signals propagate. The mechanism for delivering higher speed broadband is to use higher frequencies but intrinsically the laws of physics are that the higher frequencies go even shorter distances.
A second generation of broadband is in the exchanges. It uses those higher frequencies to deliver up to 24 megabits speeds but where the first generation could deliver out to 5 km, the second generation takes that out to about 6 km. However, the 24 megabits is only really available inside of about 2 km, that is, 1 km to 2 km of the exchange.
We are using the existing exchange infrastructure to deliver broadband. What is becoming clear as we look at where applications are going is that one and eight megabit broadbands really will not be where the applications that people want to use on-line will evolve. This pushes us to look at an access network. In the first instance we are looking at fibre to the cabinet. This is where we take the electronics that provide broadband and which are in the exchanges today and put them into the cabinet. This drives a different flavour of DSL out to the home. The distance requirement does not change so that is the reason the electronics must be placed closer to the home. Typically, the cabinet speeds are 60 megabit speeds but those will fall off quite dramatically as one moves away from the cabinet. We are targeting a 25 megabit service that is actually 25 megabit and not up to 25 megabit. This is the kind of service we think we can get. On average our cabinets are around 700 m from people's homes. We are focusing on seeing if we could sustain a 25 megabit service with probably a 5 megabit upstream service in those environments. I will talk about this work later.
With regard to types of service which this kind of environment would support, these would be very high speed Internet, basic telephony, multiple standard definition TV channels and one or possibly two, high definition TV channels or applications of that scale.
The second type of next generation is a fibre to the home and this is essentially a replacement of the existing copper network with fibre running all the way from the exchange to the home. In our trial the types of bandwidths were up to 80 megabits down, 40 megabits up. That is sufficient to support the high speed Internet, phones, standard definition TV and multiple high definition TV screens.
I will explain about the architecture. The red boxes shown in the presentation are the cabinets. Today big copper cables go to the cabinets and smaller copper cables go to businesses and homes. In the case of the fibre to the cabinet environment, we have fibre cabinets that complement the copper cables to the cabinets and copper tails that connect to the homes.
The scale of our cabinet build is not the kind of project one would undertake as a big programme without understanding the implications. In mid-2007 we initiated a technology trial to identify the cost, feasibility and how we would do it. We are replacing 50 existing copper cabinets with next generation-compatible cabinets. We are connecting power and fibre to those cabinets and we want to see whether we can see a 25 megabit broadband offer that we could stand over as a proposition to our own retail customers and also to the wholesale customer base as resale opportunity. The reason we are being careful is that once we say that those cabinets can do 25 megabits, people will build other products around those so we need to be sure we can stand over it. The key objectives are to work out how we would do it, how much it would cost and to develop the different ways and methods to do it.
The areas we chose for the trial were Dundrum and Stillorgan. Dundrum, roughly speaking, is bounded by Milltown and Ballinteer and I have highlighted the Taney Road, the N11 and Blackrock, the general Stillorgan area, in the presentation. The green cabinets are the ones we are changing and the red cabinets are being left unchanged. This is not an effort to provide this service in Dundrum and Stillorgan but rather it is about understanding the cost and feasibility of doing it. We decided on a statistically feasible sample of 50, spread across a couple of representative areas within a span of control.
The cabinet has been designed by our access design team in Cork and it is being manufactured by Tyrone Fabrication in Aughnacloy. A key factor is that it needs to be a piece of street furniture; it cannot be the size of a container. It needs to be unobtrusive and it will need to be covered by way-leave legislation rather than lengthy planning permission processes. It needs to be unobtrusive and it cannot be massively bigger than the existing green cabinets because these cabinets are on the street and equally there is a case of physical implementation.
The cabinets need to be energy-efficient. Below 2kW hours we have unmetered access to ESB which simplifies the build and the cost. In reality this is a big civil engineering project with electronics put into the final housing. The design is complete, the fibre network build to all the cabinets in the Stillorgan and Dundrum areas have been built. All the cabinets are carrying the traffic so we have cut the old green cabinets out of the network and it is running across the white cabinets as shown in the presentation. The power build is complete. We are putting electronics in ten representative cabinets so that we can validate whether or not we see the 25 megabits. The speed trial started this month and the speed at the front door of that white cabinet is 60 megabits down, 30 megabits up but this will decay significantly as one moves hundreds of metres away from the cabinet.
Although it is not a planning process there are lead times involved in obtaining way-leaves. We are striving to see just how fast we can get this done and what kind of pipeline could be built and having permission is key. In many cases we have to dig the road to get the ESB connection and there can be delays in connecting the power.
We have concluded that the fibre net cabinet project is a future-proof solution to providing higher speeds to our customers. It prepares us for a broadband variant to voice and not voice-delivered as we do today, but voice-delivered over the broadband network rather than as a separate network. This positions us for an eventual fibre to the home deployment. We are leaving enough fibre at those cabinets so that we can splice them and bring fibre solutions out further to the edge. There is a high up-front cost associated with the cabinet deployments including digging in the cables, both our own and the ESB cables, replacing the plinth and the process of deployment. The top 65% of the exchanges which cover about 1 million lines would cost between €400 million and €500 million. This would take about 600 people five years to execute, subject to having a new approach to the third party dependencies of way-leave and power. We think we could probably hit a run rate of deploying around 1,000 cabinets a year.
That is the first of the access technologies and the second access technology is fibre to the home. There is the existing copper network, as described. In this network we supplant the copper completely and take fibre out to splitters which are now housed in the cabinets and distribute the fibre to each individual home.
We initiated a trial. The nature of fibre to the home is that it suits relatively densely populated areas, and the trial was conducted in a building, Belarmine Hall, Sandyford. We want to deploy a complementary fibre solution, and this building has both copper and fibre. Because it is a trial we have turned it down so that people are back on the copper network. The purpose is to provide telephony and broadband services over the fibre and see what type of speeds we can get. Again, the objectives are the same — to understand how we might do this, how long it would take and what it would cost.
The actual building has 109 homes in it, the voice service is being provided over the fibre and there is in-home equipment supporting telephony and broadband. In this environment we are much more involved with the initial construction of the building, because fibre is a more sensitive material than copper. Copper is an extremely robust material. We are therefore far more involved in the build and finishing process of the building than we would be with copper. On the right-hand side one can see the type of appearance one would have in a home. Coming out of that would be the phone line and multiple connections for PCs, and wireless LAN to remotely connect the PCs.
As regards a comparison of speeds, copper-based broadband based on where Belarmine Hall is and its distance from its copper exchange in Sandyford, typically we see 5.3 Mb down and 839 kb up. In the fibre-based broadband we saw 55.7 Mb down and 41.18 Mb up, but actually the speeds coming out of the building were so high that we did not want to flood the back haul load of Sandyford exchange, so in fact the speeds would be higher. The other significant thing to note in the diagram is the ping time, where the implicit latency of the connection is about half that of a copper broadband. This matters because, for example, in a game someone using a copper line will get shot by whoever is using a fibre line, if they are drawing at equal times. There are more significant implications to that, however.
Our conclusions from the fibre to the home trial confirmed that it is the end game for high speed broadband and is absolutely future proofed. There is a high up-front cost, however, associated with deployment. In the case of Belarmine Hall, it was in excess of €2,000 per home covered. That trial was initiated in 2006 and for various construction related issues it only happened in 2008. Significant evolutions have taken place in both the in-home termination equipment and in how the distribution is done.
Looking at the cost to retrofit fibre into existing homes, we find there is a cost of between €2,000 and €2,500 per home. Again, taking the top million homes, it effectively means that in those areas costs can be upgraded to fibre fit homes. Density of conurbation is a function in this equation in terms of the unit costs of the fibre equipment, which tend to be lower — but only in high densities. Effectively the cost would be of the order of €2.5 billion to upgrade the top million homes.
That is where I propose to finish and hand back to Mr. Galvin, who will summarise.
