According to European 2020 Digital Agenda and the Strategy for high-speed broadband defined by Italian Government, Open Fiber is carrying out an extensive FTTH project that will reach more than 9.5 million homes for the main 271 Italian cities, as a first step. This plan will contribute to reducing the gap of Italy in broadband access speed compared with other main European countries. "This is an effort that will be rewarded because fiber infrastructure is future-proof and will enable future ultra-broadband services," says Domenico Angotti who is responsible for Access and Transport Engineering at Open Fiber, speaking to ZTE Technologies about the company's project plan and approach to 5G. Open Fiber is a "wholesale only" operator owned by multinational Enel and state lender CDP (Cassa Depositi e Prestiti).
What's the driver of the FTTH uptake in Italy?
Our Ministry of Economic Development (MISE) is publishing in its insight an observatory tool, which monitors the current broadband situation in Italy. It turns out that just 35.4 percent of the Italian population has a broadband speed of over 30 Mbps and just 11 percent has a broadband speed of over 100 Mbps. These numbers are evolving because the FTTH market is changing rapidly in Italy. Our mission is to accelerate broadband development and to enable Italy to fill the gap compared with other much more evolved broadband markets. The goal set by the European Digital Agenda is that 85 percent of the Italian population should have at least 100 Mbps broadband speed and all the Italian population at least 30 Mbps broadband speed by 2020. Offices and public buildings (particularly schools and hospitals) should be covered with at least 100 Mbps. The Italian government set a strategy following this agenda and Open Fiber is making all possible efforts to comply with these guidelines. The Italian Strategy for high-speed broadband is only the first step of a wider project that incorporates European Digital Agenda objectives, invests in future-proof infrastructure and, thanks to the development of services, creates a fully inclusive digitized society.
What's Open Fiber's fiber deployment plan?
We've released a phased plan because Italy has complex demographics, highly distributed among many small, medium and big municipalities. We declared that by 2022 we will bring 1 Gbps FTTH to 271 municipalities, involving about 9.5 million dwellings. This comes with an announced investment of 3.7 billion euros and about 4 million kilometers of fiber optics. With the acquisition of Metroweb, Open Fiber already has 1.2 million dwellings covered with FTTH in big cities like Milan (0.8 million), Turin and Bologna. This is the current picture today. Our goal is to cover at least 2.5 million households at the end of this year, expanding our coverage to other cities. This plan is for the main Italian areas, so-called Cluster A and B according to Infratel naming.
We participated in a public auction for the white areas or market failure areas (for example, rural areas where nobody decides to invest in a massive way). According to the auction guidelines, in the white areas grouped in Cluster C, implementation of infrastructure that can support connectivity services will take place, guaranteeing a stable, continuous and predictable connection speed higher than 100 Mbps downstream and at least 50 Mbps upstream to every customer in 70% of REUs and a connection speed of at least 30 Mbps downstream and at least 15 Mbps upstream to each customer in the 30% of the remaining REUs.
In the white areas grouped in Cluster D, infrastructure that can support connectivity services will be implemented, guaranteeing a stable, continuous and predictable connection speed of at least 30 Mbps downstream and at least 15 Mbps upstream to each customer in all REUs.
The first auction involves six Italian regions. Open Fiber won this auction with more than 4 million dwellings to be covered. This means that apart from the residential areas we will also cover industrial areas, public administrations and schools. This is a huge task for us because it is quite challenging to enter these smaller and remote areas. In parallel, Open Fiber is participating in the second auction of the government for other 11 regions, involving 4.6 million households.
What's the impact of your plan?
A huge expectation has been arisen among our partners, telcos, service providers and content providers. They are interested in our plan because they see it as a big opportunity to offer a wider service portfolio to their customers and to support the evolution of the ultra-broadband services over fixed as well as the wireless networks, efficiently leveraging on a shared infrastructure. No one can have at this point a clear picture of the evolution of the market but the outlook is very promising and we are confident that it will be a successful project.
Open Fiber partners ZTE for FTTH deployment. Why did you choose ZTE?
We think that ZTE is among the worldwide leading vendors and can significantly contribute for the innovation we need for the evolution of our network. ZTE for us is a reliable partner with strong R&D areas and is also steadily increasing its market and technical footprint in Italy. We are confident that in the future ZTE can support us in product and service evolution, and development of our network plan. As an expectation of ours, we would like that ZTE could further develop its local organization and gain a wider local technical competence.
What challenges do you foresee for the project?
The FTTH project is very complex from different perspectives. I am involved in the engineering of active services. At the moment the biggest challenge of our company is developing the basic physical passive infrastructure. We think that this is an effort that will be rewarded because the infrastructure we are building is greenfield and future-proof. Not dealing with legacy system draws many advantages. On top of this passive infrastructure, you can develop the active network architecture leveraging on fiber high bandwidth, performance and very low line attenuation.
Specifically on the access layer we are developing the FTTH infrastructure using ZTE GPON products. This is just the first step. FTTH has a clear technological roadmap and GPON is only the first step for us. We will evolve to other FTTH steps, such as 10-Gigabit-capable XG-PON and 40-Gigabit-capable NG-PON2, as the demand for bandwidth is expected to increase over the next few years.
What's your plan for bandwidth?
Based on the feedback from our customers, we will decide how to scale up the capacity of our network. For the moment, GPON is the right choice because it is robust, well-proven and reliable. It seems enough for the market requirements we have received so far. We will be able to upgrade the network and scale up the capacity according to the market demands.
What will be the key applications for FTTH in Italy?
IP traffic is increasing at a high speed and is already representing the vast majority of the traffic. We believe that video will be the content contributing most and is expected to account for the highest proportion of all the traffic on our network. Research data shows that there is a strong correlation between the evolution of the broadband speed and the minutes of video spent by households. We see that the volume and throughput demand specifically for video will increase in the next few years. The most challenging thing is that traffic intensity during busy hour will increase more rapidly than daily traffic volume, and therefore network should be flexible and capacity should efficiently scale-up without jeopardizing our TCO. Other applications such as virtual reality (VR) and augmented reality (AR) have in our country just few early adopters and will demand both a huge bandwidth and a very reduced latency. We are very interested in the surveys among these early adopters to understand how long it will take for VR and AR to gain momentum, scale up and which will be the most promising marketing segments such as gaming, watching video, education, shopping, tourism, social interaction, retail and real estate.
How will Open Fiber accelerate the return on investment?
As a wholesale operator, we have a particular advantage here. We know we are building a costly infrastructure but we are sharing this infrastructure among other players, which can accelerate the return on investment, resulting in a win-win solution. If such big infrastructure is just for one player, that would be inefficient considering the competition on the service prices. Our goal is to share as much as possible, particularly active network. We are not building something intended only for one partner.
What is the role of FTTH in 5G development?
One of the assumptions of the project is that fiber infrastructure is one of the pillars to enable the three use cases defined by ITU, including enhanced mobile broadband, ultra low latency and massive machine type communications. Our network infrastructure can be a valuable asset for enabling 5G in synergy with wireless operators. 5G will support multi-tenancy models, enabling operators and other players to collaborate in new ways, and a new open architecture is required, overcoming traditional network vision and constraints, getting connectivity, content and computing closer to the end user. We believe that the sharing of our infrastructure goes in the right direction also because of the need of operators to find more efficient solutions for deploying their 5G networks.
What's your approach to 5G?
We see 5G as a technology that can really boost the fourth industrial revolution according to World Economic Forum and Industry 4.0 framework whose pillars are Advanced Automation, Seamless Connectivity, Sophisticated Data Analysis and Industrial Cybersecurity, and it will also enable social and economic growth, and moreover new business models and sustainability.
In its Action Plan for the 5G, the European Commission called on Member States to identify at least a city for 5G testing by 2018, with a commercial launch of 5G in 2020. Our government has recently issued a tender, for a trial that will last until 2020, with three lots: the first concerns the territory of the city of Milan; the second will include the city of Prato and LAquila; and the third Bari and Matera. This auction requires bidders to present not only a technical solution but also use cases for the pre-commercial phase.
We are observing the evolution of this process and the outcomes and opportunities it can create on the wholesale market. At the moment we have not set a clear strategy on 5G but at this stage we cannot avoid exploring business opportunities with any player of the 5G ecosystem (telcos, service providers, utilities, industries, etc) that will be interested in synergies with our network infrastructure.