cost benchmark ftth switzerland - italy final 3 · 2012. 5. 7. · pwc april 2012 the swiss part of...

Cost Benchmark FTTHSwitzerland - ItalyAssessment of an analysisperformed by Swisscom

www.pwc.com

performed by Swisscom

April 2012

1 Management Summary 1

2 Introduction and background 5

PageSection

Table of Contents

3 Objective of the analysis 7

4 Scope of the analysis 9

5 Assumptions of the analysis 11

6 Approach used by PwC to assess the analysis 13

7 Description of the analysis 15

8 Results of the analysis 28

9 Conclusion 32

10 Glossary 3410 Glossary 34

Appendices

1 Assessment details 36

Section 1Management Summary

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Cost Benchmark FTTH Switzerland - Italy • Assessment of an analysis performed bySwisscom

Objectives and approach

Swisscom has performed an analysis of the different cost drivers The analysis of cost differences is illustrated in a cost waterfall

Management Summary

Section 1 – Management Summary

Swisscom has performed an analysis of the different cost driversfor FTTH construction between Switzerland and Italy. The costinformation is leveraged from reference information of the SwissFTTH rollout and from a representative sample of cost,environment, technology and architecture information from theItalian rollout project performed by the Italian subsidiaryFastweb. The analysis has leveraged on managers with extensiveexperience in rolling out networks in Switzerland and Italy.

The task of PwC was to assess the objectivity of the data andcalculation methods used by Swisscom.

The following report presents the final results of the Swisscomanalysis and the procedures performed by PwC.

The analysis has been performed by Swisscom on actualised costpositions and on key cost influencing factors. The differences

The analysis of cost differences is illustrated in a cost waterfallgraph by attributing the differences to the key cost influencingfactors.

Swisscom has collected the data and defined the cost comparisonstructure, while PwC has challenged the approach used andassessed the objectivity of the assumptions and the validity of thedata and formulas.

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positions and on key cost influencing factors. The differencesbetween Switzerland and Italy on a structural level, the FTTHmodel as well as in the underlying cost collection structure havebeen taken into account. Thus by applying the Italian coststructure to the Swiss FTTH environment, it can answer thequestion “How much would it cost to build the Swiss FTTHinfrastructure if Italian building and civil work standards, labourcosts and architectural constraints had to be applied?”.

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Cost differences - Drivers

The costs required to build the Swiss FTTH network if Italian • Furthermore, Italian cities' urban structure tends towards

Management Summary


The costs required to build the Swiss FTTH network if Italianassumptions and standards were applied amount to approxi-mately one third (39%) of those costs actually incurred inSwitzerland and are mainly caused by the key drivers describedbelow:

• Compared to Italy, labour costs in Switzerland are 80% to120% higher.

• In Italy different standards of workmanship in undergroundconstruction cause lower costs in regard to materials andlabour.

• Bringing the fibre termination further into the apartments inSwitzerland causes higher costs than the termination at theapartment entrance in Italy.

• In Switzerland a higher percentage of households will be

• Furthermore, Italian cities' urban structure tends towardsmultiple-family homes, i.e. with a relative high number ofapartments to each building which causes further differencesin costs per household.

• Finally, the multi-fibre model (4 fibres per household) in placein Switzerland is designed to increase competition at theservice level and therefore causes a higher price.

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• In Switzerland a higher percentage of households will beconnected to FTTH (higher rollout level) than in Italy, causinghigher costs per household, since a higher number of smallerbuildings will be included in the coverage.

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Cost difference – Results of Analysis

Applying the Italian cost structure to the Swiss FTTH environment, the analysis

Management Summary


Applying the Italian cost structure to the Swiss FTTH environment, the analysisshows the impact of every key driver.

• The lower labour costs in Italy would reducethe costs by 23%.

• Making the cabling in the apartment lessuser-friendly would lower costs by 13%.

• Reducing the number of fibre optics to belaid (from multi-fibre model to single fibre)would reduce cost by another 9%.

• Applying the Italian standards for

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• Applying the Italian standards forunderground construction would reducecosts by 8%.

• The different density of apartment buildingstogether with the different rollout levelaccount for 8% of the cost difference.

Section 2Introduction and background

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FTTH is the acronym for “Fibre-To-The Home“ and representsthe deployment of fibres from central offices up to the apartmentof the customer in order to provide the ultra high speed next

Costs in this area can mostly be shared among differenthouseholds.

Introduction and background

Section 2 – Introduction and background

of the customer in order to provide the ultra high speed nextgeneration access for digital services.

Swisscom has been deploying fibre to the home for several years.To eliminate the duplication of work, the deployment isperformed with a certain degree of cooperation betweenSwisscom and various local utilities.

Fastweb, the Italian subsidiary of Swisscom, is currently theleading provider of fibre access services in Italy.

Creating the optic fibre connection usually differs between theaccess to the building part and the in-house installation part.

In both parts there are some differences between the countries:

• The overall building connections where entire buildings areconnected to the fibre optic network. Key cost differentiators

• The riser zone or in-house zone is the connection of eachindividual apartment to the building's main connector (BEP)to the fibre optic plug (OTO). A key differentiator of thedeployment in this area is that in Switzerland four fibres areinstalled, mainly to support future competition at servicelevel. Costs in this area cannot be shared among households,increasing the cost per household.

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connected to the fibre optic network. Key cost differentiatorsbetween the countries are the ownership of ducts as inSwitzerland or the leasing as in Italy (e.g. Fastweb fromTelecom Italia) and the architecture and technology used toimplement the connection. These differences have been takeninto account in the comparison by choosing a project in Italy,which was comparable to the Swiss FTTH deploymentstandards.

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Section 3Objective of the analysis

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The analysis should contribute a fair view on the discussionaround costs regarding the deployment of FTTH.

Objective of the analysis

Section 3 – Objective of the analysis

The analysis will show where the major cost differences are in theFTTH deployment between Switzerland and Italy.

It is also an objective of the analysis to understand and quantifythe factors influencing the cost differences and evaluate theirimpact.

Swisscom has defined a comparison framework, collectedinformation, identified differences and performed an analysis onthe drivers of the cost differences.

Different deployment objectives for the FTTH rollout inSwitzerland and Italy, local constraints combined with differencesat structural, technological and market levels, different dataavailability and different costing structures can make a costcomparison difficult. It is therefore important to identify

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comparison difficult. It is therefore important to identifycomparable items for the analysis and to compare them in theappropriate context. The task of PwC has been to assess theobjectivity of the comparison framework (assumptions, data andcalculation methods) used by Swisscom.

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Section 4Scope of the analysis

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The comparison has been performed on thecost to deploy FTTH from the central office up

Scope of the analysis

Section 4 – Scope of the analysis

to the termination point in the apartment(OTO).

The connection to the building (access) coversthe feeder from the central office to thedistribution point in the neighbourhood andthe drop part from the neighbourhood to thebuilding.

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The Swiss part of the comparison encompasses all information on the FTTH rollout of Swisscom available at the end of March 2012.

For the Italian part of the comparison, data was collected from the Fleming project, a project which encompasses a recent deploymentof FTTH on an entire neighbourhood. The reason for choosing this project was the availability of good quality data and the similaritiesto Swiss rollout projects. The Fleming project was one of the few FTTH Point to Point projects in Italy and has been running as a jointproject with other alternative operators, which reduces differences to Switzerland and therefore increases comparability. Technologyand architecture used in the Fleming project are similar to the Swiss FTTH rollout, for example making a real unbundling as inSwitzerland possible.

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Section 5Assumptions of the analysis

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The comparison has been performed using actual costs.

The exchange rate used was 1.25 CHF for 1 €.

The quality of work has been considered equal in Italy andSwitzerland with the exception of civil work. Civil work isdifferent and depends on quality controls outside the scope of a

Assumptions of the analysis

Section 5 – Assumptions of the analysis

The exchange rate used was 1.25 CHF for 1 €.

Data and formulas used have been assessed by PwC. Underlyingdetailed information has been validated where possible, otherwiseit has been challenged with the Swisscom and Fastweb networkexperts.

Actual costs collected within the Fleming project and not thehistorical costs for fibre deployment have been used for Italy.That is because the Fleming project costs have been consideredmore consistent and representative for the analysis to beperformed.

In Switzerland costing items were calculated using actual pricelists and the Swisscom cost monitoring tool, which leverages onexperience gained during the rollout and on the usage of newtools to correct historical average quantities of well known

different and depends on quality controls outside the scope of atelecom, so they have been considered separately. Thecomparison has been performed using standard costs that wouldbe required to perform the same activity in both countries (e.g.digging 1m of road, deploying ducts and restoring the pavement)and not using costs incurred.

The structural parameters related have been considered bynormalising costs in Italy to Swiss environment, e.g. recalculatingthe costs on household basis and reducing the number ofhousehold density from Italian to Swiss values. The guidingprinciple of the comparison has been to identify the cost elementsin both countries, to calculate the cost drivers, to apply the Italiancost structure to Swiss environment and then to calculate theimpact for the different cost drivers.

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tools to correct historical average quantities of well knownreference projects. For example the number of holes to be dug inthe reference projects has been reduced in the calculation by theusage of newly introduced robots to pull cables.

Basic historical information of reference projects has beenconsidered accurate.

impact for the different cost drivers.

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Section 6Approach used by PwC to assess theanalysis

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• We have acquired the costing structure that includes all costsrelated to the construction of FTTH access network fromSwisscom and Fastweb.

Approach used by PwC to assess the analysis

Section 6 – Approach used by PwC to assess the analysis

Swisscom and Fastweb.

• The first activity we performed was to understand if the twocosting structures were comparable and representative of thesame items.

• Through discussion with Swisscom and Fastweb managementwe have analysed the analysis framework and understoodmain elements and cost drivers in order to identify which ofthese are the key influencing factors that generate the costdifference between Switzerland and Italy.

• We identified that the two costing structures are different.Therefore a common level of details was defined. This level ofdetail is an aggregation of single cost elements and drivers.

• Once we understood the costing analysis performed, we

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• Once we understood the costing analysis performed, weassessed its adequacy through a comparison with publiclyavailable information. We challenged the completeness of theanalysis and verified that in both costing approaches the sameelements were taken into consideration.

• Once the above steps had been completed, we validated maincost elements and drivers through supporting documentationand publicly available information.

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Section 7Description of the analysis

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7.1 Cost calculation

Swisscom has collected and calculated all costs related to the The most relevant key cost positions are:

Description of the analysis

Section 7 – Description of the analysis

Swisscom has collected and calculated all costs related to theFTTH rollout projects and for the Fleming Project performedby Fastweb according to the following costing structure:

The most relevant key cost positions are:

• For connecting buildings (access):The cable itself (fibre optic), the cable pulling, theunderground construction and mounting the fibre opticbox into the buildings

• For the riser and in-house zone:The cable itself (fibre optic), the cable pulling, theinstallation and if necessary the replacement of ducts forthe cables

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7.2 Cost calculation for the Swiss FTTH rollout



Swisscom costValidated by PwC

Supplier contracts for:- Acquisition- Access- In-house

Price data:- Labour- Material

Cost calculation(time * quantity andaggregation of costpositions)

Expected costs perBEP (calculated) SAP system

Average per BEP ofcumulated historicalcosts (SAP)

Swisscom costcalculation tool

The Swisscom FTTH costing calculation tool utilisesactual information on prices for labour and materialon one side and actualised structural information(quantities) from well known reference projects on theother side to calculate the average costs per householdfor the reference areas. Actualisation of the historical

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1) Structural parameter datafrom rollout phase, e.g.:

- Average cable length- Average number of holes

2) Statistical data, e.g.:- Households/BEP- BEP/km2

Rules to actuali-se structuralparameters(quantities)based on rolloutexperience

Experience basedon rollout phase

structural parameters takes into account experienceand usage of new tools. For example the usage ofrobots reduces the number of holes to be dug.

The aim is to have a value of the average cost perhousehold based on actual costs and not on historicalcosts eventually biased by the learning curve.

Differences between cumulated historical costs andcalculated costs are monitored and used together withactualised structural information to correct rules toactualise structural parameters.

7.3 Cost calculation for the Italian FTTH Fleming Project



The Fastweb (Fleming Project) FTTH costingcalculation is mainly based on internal projectreports produced as follows. Quantity value

Validated by PwC

Supplier contractsand price list for:- Acquisition- Access- In-house

Price data:- Labour- Material

Cost calculation(unit price * quantity)

Project report

Fleming Project costcalculation tool

Parameter costsextracted fromproject report

Fleming Project cost structure

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reports produced as follows. Quantity valueresults from GIS system (network ERP) whereasunit costs are extracted from supplier contractsand price lists. Both data types run withincustomized excel tools generating aggregateamounts (unit price * quantity).

Some adjustments can be an input in order tobetter compare the Fleming Project costing withthe Swiss scenario.

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1) Structural parameter datafrom reference areas, e.g.:

- Average cable length- Average number of holes

2) Statistical data, e.g.:- Houesholds/BEP- BEP/km2

GIS

Price list (fromtender year 2011) Estimate and

adjustment (manualinput or fromexternal sources)

7.4 Cost drivers

The cost structure was built up with Swiss and Italian data and



7.4.1 Labour costs

Labour costs influence the costs on several tasks: cable pulling,The cost structure was built up with Swiss and Italian data andcost differences were identified for every position. To explainthese differences the analysis has been extended to the underlyingcost drivers, which are:

• Labour costs

• Different construction standards in underground construction

• Different implementation standards in the riser zone or in theapartments

• Rollout level

• The urban structure, i.e. the number of apartments in eachbuilding

• Implemented FTTH model

Labour costs influence the costs on several tasks: cable pulling,underground construction, mounting the fibre optic box,installation in-house and replacement of ducts.

In the analysis the labour costs for civil work (undergroundconstruction) has been considered separately since this activity isstructurally very different between Switzerland and Italy. Labourcosts for activities that are specific in Switzerland and notperformed in Italy (e.g. the different position of the terminationin the apartment) have also been considered separately.

An international comparison1 shows that cost of labour inSwitzerland in the construction industries vary between 1.8(external construction) and 2.1 (in-house construction). This costdifference has been confirmed with information obtained fromthe FTTH rollout projects in Switzerland and Italy.

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The cost drivers have been separately investigated and theirimpact on the overall cost difference between Switzerland andItaly has been calculated.

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the FTTH rollout projects in Switzerland and Italy.

The impact of labour costs has been calculated by extracting theamount of labour in every cost position utilising Italian costallocation information (e.g. 73% of drop costs were labour costs)and the calculated labour hours have been multiplied by thehourly cost difference relative to that cost position.

1 http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-SF-10-064/EN/KS-SF-10-064-EN.PDF

7.4.2 Underground constructions

Connecting entire buildings entails a large amount of civil



of a comparable activity (creation of new ducts). This approach isConnecting entire buildings entails a large amount of civilengineering in underground construction. This includes thecreation of new ducts and the access to existing ducts by means ofaccess holes.

When constructing a fibre optic network, the crew always tries touse already existing ducts. However, it depends on localcircumstances if already existing ducts can truly be used for afibre optic network. The more existing ducts that can be used, theless digging has to be done which also influences the costsfavourably. It is more likely to find existing ducts in the feederarea. The Fleming Project showed that costs for undergroundconstruction have different allocations on average for the dropand feeder area compared to Switzerland. This is becausedistribution structures in Switzerland are different.

of a comparable activity (creation of new ducts). This approach isin line with the overall structure of the cost analysis, where theItalian building and civil work standards, labour costs andarchitectural constraints of Italy are used to calculate the costs ofdeploying FTTH in Switzerland.

The costs for civil work for Italy have been calculated to be 50% ofthose in Switzerland and they have been represented separately inthe analysis from the other cost positions in the feeder and droparea.

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The structural differences and the different quality of work andrequirements (different road layers, different security measures,different cost of labour) influence the costs in such a way that thecost comparison cannot be performed on the total actual costs ofthe rollout in Switzerland and the Fleming Project in Italy. Theanalysis has then been performed on the actual costs

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7.4.3 Riser zones – In-house cabling

The tasks on FTTH initiated by the Swiss Federal Communication



The relevant cost differences related to vertical cabling have beenThe tasks on FTTH initiated by the Swiss Federal CommunicationCommission (ComCom) and by BAKOM have worked out somerecommendations for a coordinated installation of the fibre opticnetwork all the way to the households. It was also determinedwhere the termination for the connection (OTO) should be withinan apartment (in the living room) 2.

The positioning of the OTO in the living room in Switzerlandcompared to the positioning at the apartment's main door in Italyis one of the major cost differentiators, as this increases thelabour hours for every single household. This aspect has beentaken into consideration by separating the costs of bringing thefibre to the apartment entrance from the additional costs to bringthe fibre to the living room.

Another key difference between Switzerland and the Fleming

The relevant cost differences related to vertical cabling have beenmapped to labour cost (refer to labour cost explanation) and tofibre costs (all other costs are negligible).

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Another key difference between Switzerland and the FlemingProject in Italy regarding the in-house area is the vertical cabling.In Switzerland every household has its own cable with four fibres,while in Italy one cable carries all fibres, one per household.

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2 http://www.bakom.admin.ch/themen/technologie/01397/03044/03046/index.html?lang=de&download=NHzLpZeg7t

7.4.4 Rate of households connected (1/2)

Deployment of FTTH is generally not linear and occurs first



the first step of the announced plan, where the cities of Rome,Deployment of FTTH is generally not linear and occurs firstwhere it is easier and cheaper, e.g. ducts exist, more buildings andhouseholds are grouped together (i.e. higher density areas). As aresult the connection costs per household tend to be lower at thebeginning of a rollout than at a later stage. The difference incoverage planned between Italy and Switzerland thereforeimpacts the cost difference.

The study conducted by WIK on behalf of BAKOM3 showed thatfinancially it is not feasible to roll out the network to everyhousehold in Switzerland. Swisscom and various utilitycompanies are planning to connect about 35% of Swisshouseholds to fibre optics within the next years (FTTH). Thecurrent coverage rate is 12%.

In Italy, about 10% of all households are already connected to

the first step of the announced plan, where the cities of Rome,Torino, Napoli, Brescia, Genova, Palermo, Bari, Bologna, ReggioEmilia, Padova, Bergamo, Verona and Milano will be connected.

This rollout is considered to be the most comparable to the Swissrollout.

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In Italy, about 10% of all households are already connected tooptic fibre4.

Recent announcements in Italy5 outlined a plan to reach 20% ofall households but this plan is not yet concrete. The analysisassumes that in Italy about 3.5m households (14%) will beconnected in the medium term. This rollout would correspond to

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3 Szenarien einer nationalen Glasfaserausbaustrategie in der Schweiz, Dezember 20094 http://www.ftthcouncil.eu/documents/Reports/Market_Data_December_2011.pdf5 http://www.milanofinanza.it/upload/doc/TMFI/201203142201223052/Audizione_CdD_14_MAR_2012.pdf

7.4.5 Rate of households connected (2/2)



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Graphic 1: Difference in connection rate to FTTH

The higher FTTH rollout level in Switzerland results in higher costs. The impact has been considered by determiningthe different household densities (refer to next point).

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7.4.6 Urban structure (1/3)

A significant factor for the FTTH construction is the urban



With a higher rollout level in Switzerland the average densityA significant factor for the FTTH construction is the urbanstructure. Both, the density of buildings (i.e. the number ofbuildings per km2) and the distance between buildings and theexchange are of relevance. However, the number of apartmentsper building as a cost driver is by far more important. The densityof buildings has not been considered, since the additional accesscosts for FTTH to a building due to a lower density can be splitbetween the households in the building and planning theconnections to the buildings smartly can also reduce the impactof the building density on the costs considerably.

The number of households per building has a differentdistribution between countries and has to be considered by thetelecoms when planning the rollout and the costs. In Italy theaverage number of apartments per building is for the coverageconsidered in this analysis higher than in Switzerland.

With a higher rollout level in Switzerland the average densitydecreases. This decrease has to be added to the difference causedby the different urban structure between Switzerland and Italy.

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considered in this analysis higher than in Switzerland.

The rate of households connected in both countries (see above)can be linked to the urban structure.

Areas with a higher average number of apartments tend to beconnected first.

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Using the data available for Switzerland and the statistics for Italy6 it is possible to compare the urban structures. Rollouts tend tocover the areas and cities with a higher density of households per building first. The following diagram shows how the averagenumber of households decreases by incrementally adding areas/cities with lower household density.



number of households decreases by incrementally adding areas/cities with lower household density.

The comparison shows:

• The average density of households in Switzerlandat the end of the first realistic deployment phaseis lower than in Italy due to two reasons:

- Lower density of households

- Larger coverage of households planned

• The average density of households in Italy wouldbe lower than in Switzerland if the rolloutcoverage reached Swiss level. In this case the

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coverage reached Swiss level. In this case thecost gap per household would be reduced.

Note: The points on the diagram indicate thehousehold coverages of the planned rollouts.

6 http://dawinci.istat.it/MD/dawinciMD.jsp


The different apartment density between Italy and Switzerland



The different apartment density between Italy and Switzerlandhas been accounted for in the cost analysis by normalising thecosts in Italy related to accessing buildings to the same referencedensity as in Switzerland. This reference density correspondsessentially to the planned Swiss rollout. The in-house costsrelated to an apartment were predominantly not affected by thenormalisation.

Costs collected using an average household density of 13.3 in theFleming Project were recalculated first using a density of 9, whichrepresents the density for the current planned Italian rollout (14%coverage) and then for a density of 6 which corresponds to thedensity for the Swiss rollout.

The cost differences obtained between the two calculations

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The cost differences obtained between the two calculations(density of 9 and density of 6) represent the impact of thedifferent densities between Switzerland and Italy and has beenpresented separately in the analysis.

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7.4.9 The FTTH model

The major differences in the deployed FTTH models between



The multi-fibre strategy has a direct impact on the costs byThe major differences in the deployed FTTH models betweenSwitzerland and Italy are:

• In Switzerland P2P FTTH technology has been deployed,while in Italy the technology has changed throughout thedifferent stages of evolution of the network. Italy’s technologywas initially based on a metro ring like technology, then aP2P pilot was deployed in Rome, the Fleming area. Currentlyit is forecasted that in Italy the future deployment is based onGPON.

• In Switzerland 4 fibres per apartment are deployed for in-house and drop cabling and 2 fibres per apartment for feedercable. While in Italy only a single fibre optic network is beingbuilt.

Switzerland currently benefits from competition relating to

The multi-fibre strategy has a direct impact on the costs byincreasing the number of fibres but also forcing some moreexpensive architectural constraints (refer to the vertical cablingdifferences in in-house).

The cost differences due to multi-fibre have been isolated and areshown separately in the cost difference analysis.

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Switzerland currently benefits from competition relating tonetworks and infrastructure. Cable networks, Swisscom and nowalso the utility companies are investing in fibre optics. In order toeliminate the duplication of work while maintaining the basis forcompetition a multi-fibre strategy has been chosen. This optionincreases the deployment costs for FTTH on one hand but shouldreduce the cost for services on the other hand.

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Section 8Results of the analysis

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8.1 Data validation

Relevant cost positions in the costing structure have been

Results of the analysis

Section 8 – Results of the analysis

Relevant cost positions in the costing structure have beenconfirmed for the Swiss and the Italian costs.

Total access costs in Italy have been validated by using publiclyavailable data (from AGCOM: ISBUL program7 and from thecommunication ministry: ”Tavolo tecnico Romani”8).

The total costs for Swisscom used in this analysis have beenchecked for reasonableness with historical costs from theaccounting system.

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7 http://www.progettoisbul.net/Home/work-packages/wp-2-2--finanziamento-delle-reti-di-nuova-generazione--ngn8 Ministero dello sviluppo economico: Infrastrutture a anda Ultra larga per “Itallia Digitale” Versione 3.1 -28 ottobre 2010

8.2 Drivers of the cost differences (1/2)



Total costs per household for access and in-house in the Fleming Project have been calculated to be 39% of the corresponding costsper household in the whole Swisscom FTTH rollout project. The 61% cost difference has been mapped to the identified cost drivers asfollows:

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Labour cost differences account for almost 40% of thedifference. Civil work has been considered separately andthe work quantity is considered equal in Switzerland and

8.3 Drivers of the cost differences (2/2)

the work quantity is considered equal in Switzerland andItaly for the given project. The ratio of the average cost perhour calculated in both environments is in line with thestatistical information from international studies.

In-house cost differences account for more than 20% ofthe difference and are driven by the additional workneeded to deploy the OTO in the living room inSwitzerland.

The higher number of fibres used in Switzerland fromCentral office up to the OTO account for 15% of the costdifference.

Civil work: Civil work in Italy is performed usingdifferent quality requirements than in Switzerland. This isoutsourced and has been identified to cost in Switzerland

The cost differences are split among the different drivers as follows:

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outsourced and has been identified to cost in Switzerlandon a per metre basis twice as much. It accounts for 14% ofthe differences of the costs.

Household density: The costs are based on the FlemingProject, which has an average household density of 13.3.These costs have been recalculated by mapping them firstto the household density of the planned Italian rollout andthen to the density of the Swiss FTTH rollout. Theresulting cost difference between the two calculationsaccounts for 13% of the whole cost difference.

Section 9Conclusion

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The difference in costs between Switzerland and Italy, based onactual costs and taking into account the planned rollout, issignificant, with the costs in Italy being around 40% of the Swiss

Conclusion

Section 9 – Conclusion

significant, with the costs in Italy being around 40% of the Swisscosts. The difference of the building costs is determined byinfluencing factors that are partially structural to the countriesand partially related to quality requirements.

In particular the cost influencing factors related to structuralcountry differences are:

• Lower labour costs as in Italy would reduce the costs inSwitzerland by 23%.

• Simpler standards for underground construction wouldreduce costs in Switzerland by another 8%.

• The different urban structure and different rollout plansreduce the costs in Italy by another 8%.

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The cost differences related to different quality and competitionexpectations on the Swiss market are:

• Making the in-house cabling less user-friendly would lowercosts by 13%.

• Reducing the number of fibre optics to be laid would reducecosts by another 9%.

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Section 10Glossary

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AGCOM “Agenzia per le comunicazioni”, Italian OFCOM

BAKOM “Bundesamt für Kommunikation“, Swiss OFCOM

Glossary

Section 10 – Glossary

BEP Building Entry Point

COMCOM Communication Commission

CPE Customer Periferal Equipment

DP The Distribution Point is usually located in the neighbourhood. Here the fibres feeded from the central offices are routed to thedifferent buildings.

FTTH Fibre-To-The Home

GPON Gigabit Passive Optical Network (PON) is a point-to-multipoint fibre to the building in which unpowered optical splitters are usedto enable a single optical fibre to serve multiple buildings.

ISBUL “Infrastruttura e Servizi a Banda Larga e Ultra Larga”, program study on infrastructure and services for broadband and ultra

broadband by AGCOM

OTO Optical Telecommunications Outlet, the termination connector for fibres in the apartment

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Appendix 1Assessment details

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Appendix - Assessment details

Appendix 1 – Assessment details

The appendix with the detail documentation of the verification isnot attached to this report and will be delivered separately toSwisscom.Swisscom.

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cost benchmark ftth switzerland - italy final 3 · 2012. 5. 7. · pwc april 2012 the swiss part of...

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