Business Models for Municipal Metro Networks: Theoretical and Financial Analysis

Business Models for Municipal Metro Networks: Theoretical and Financial Analysis

Vagia Kyriakidou (University of Athens, Greece), Aristidis Chipouras (University of Athens, Greece), Dimitris Katsianis (University of Athens, Greece) and Thomas Sphicopoulos (University of Athens, Greece)
DOI: 10.4018/978-1-60566-707-2.ch010
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Abstract

In Europe initiatives towards the development of optical networks infrastructures’ have undertaken in order to address the need of faster and more telecommunications services. Consequently, the implementation of appropriate business model seems to be meaningful tool for infrastructures as it could ensure commercial viability and limit investment’s risks. Although, the variety of forms characterizes a business model, there are some aspects that networks owners or decision makers should consider in each case. The purpose of this book chapter is to highlight the main issues that should be considered from the main actors involved in the business models like telecom operators, fiber optical constructors as well as municipalities that own the main part of the infrastructure.
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Introduction

From dial-up connections to xDSL Internet users demand continuously higher bit rate in order to enjoy new offered services like Video on Demand, Voice over IP and more speed stream. Nowadays, people enjoy broadband communications trough xDSL, FTTx and other technologies. High speed stream Internet turn to be a necessity for modern people that causes a continuous increase in the demand for higher bandwidth (Zukerman, Mammadov, Tan, Ouveysi, & Andrew, 2008).

Fiber optics networks seem to be the solution in this problem. The transmission capacity of optical fibers depends on the fiber length, type and transmitter technology (Cloetens L., 2001). However, optical fibers can achieve data rates up to 10 Gbps or more. Without this capacity we couldn’t have real broadband services.

There are many areas where fiber optics networks have constructed, as such kind of networks are considered as the most future-proof access technology (Green P.E., 2004). Fiber optics networks seem to be a reliable solution for broadband access as well as for real broadband services. These services have a variety of applications in all aspects of daily life. They can be offered to business and residential costumers. There are applications like e-education, e-health, e-games etc, providing many options to all subscribers.

These infrastructures should be operated in an effective way so that business modeling must be applied. Talking about business models, we must make clear that we are going to analyze the operation of fiber optics networks, which players appear, the obligations they have and the relationships between them (Parr Rud O., 2001).

Differentiations among societies don’t allow a strict deployment for optical networks. There is a variety of political, technological and economic drivers behind the development of this kind of networks. A deep study of these drivers could give answers and lead to the best practice for each case. Engineers and decision makers should keep in mind that each network is a different case (Michalakelis, Varoutas, & Sphicopoulos, 2008).

However there could be a basic standardization in networks’ deployment. The collection of data from many cases and classification would lead to these standards.

The rest of this chapter is structured in the following way: In “Case Studies” optical MANs (Metropolitan Area Networks) from all over the world are discussed in order to overview practices that have already employed. In the section “Business Models’ analysis”, the proposed models are presented based on SWOT analysis. Next section “Technoeconomic analysis for Business Model “Private Initiative in Active Layer””, deals with the financial results and the viability of the networks based on a specific business scenario. Finally, in the last section, conclusions based on the main results reached from previous sections are presented.

Case Studies

This section presents and validates the existing deployments in optical infrastructures from Europe as well as worldwide. Many countries invest on fiber optics networks and so far many towns all over the world enjoy broadband services through that kind of networks. Through this study, useful information according to the international practices can be acquired and based on them benchmarking can be employed in areas where such kinds of initiatives start. The following cases have some similarities, although, their differences are more interesting for this chapter. The most important information is the ownership of the network, the decision makers who administrate it, and the population of considered Municipalities. Population is a substantial factor regarding to that decision, because, combined with broadband penetration, determines the potential users.

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