INTERCONNECT
COMMUNICATIONS
Norfolk County Council
Analysis of Options for Norfolk
Open Link
Final Report
DRAFT
Version: 2.1
18 January 2008
Merlin House
Chepstow
NP16 5PB
United Kingdom
Telephone:
Facsimile:
Email:
Internet:
+44 1291 638400
+44 1291 638401
info@icc-uk.com
www.icc-uk.com
Options for Norfolk Open Link - DRAFT Final Report
Norfolk County Council
Notice
This document is provided in good faith and is based on InterConnect’s understanding of the
recipient’s requirements. InterConnect would be pleased to discuss the contents of this document
particularly if the recipient’s requirements have in any way changed.
InterConnect is a wholly owned subsidiary of Telcordia Technologies Inc.
All rights reserved.
Copyright © InterConnect Communications Ltd, 2007
InterConnect Communications Ltd
Merlin House
Station Road
Chepstow
NP16 5PB
United Kingdom
Telephone:
+44 1291 638400
Facsimile:
+44 1291 638401
www.icc-uk.com
DOCUMENT RELEASE HISTORY
Version
Release Date
Notes
V1.0
23 November 2007
Internal Draft
V1.1
21 December 2007
Draft for NCC review
V2.1
18 January 2008
Final Version
Persons to contact in relation to this document:
Hugh Collins
Director of Economic Regulation
Mob: +44 777 047 6788
Tel:
+44 1291 638400
Fax:
+44 845 280 5003
Email: hughcollins@icc-uk.com
Options for Norfolk Open Link - DRAFT Final Report
Norfolk County Council
Norfolk County Council
Analysis of Options for Norfolk Open Link
Final Report
Contents
1.
Introduction....................................................................................................... 1
1.1
Summary.............................................................................................................. 1
1.2
Legal Requirements and Intervention protocols.................................................... 1
1.3
Future Options for NOL ........................................................................................ 2
1.4
Review of economic and policy benefits ............................................................... 2
1.5
Business analysis of Options................................. Error! Bookmark not defined.
1.6
Objectives of the NOL pilot project ....................................................................... 3
1.7
Achievement of NOL Pilot Objectives ................................................................... 4
1.8
Future Demand for Wireless Access Services ...................................................... 6
2.
Method for the Assignment ............................................................................. 7
3.
Objectives for Future Development of NOL .................................................... 8
3.1
Central Government Broadband Policy ................................................................ 8
3.2
NCC Strategic Objectives ..................................................................................... 9
4.
NOL - Technical Aspects and Feasibility .......................................................10
4.1
NOL - Users and Levels of Use .......................................................................... 10
4.2
NOL Network Overview ...................................................................................... 10
5.
Competition in the Norfolk WiFi Market .........................................................14
6.
Demand for WiFi Services in Norfolk .............................................................15
6.1
Imperial College Market Survey ......................................................................... 15
6.2
Types of Demand ............................................................................................... 15
6.3
Forecasts of future usage ................................................................................... 18
7.
Costs of Radio Access network provision.....................................................20
8.
NOL Options for Future Development ............................................................21
8.1
9.
Technology used ................................................................................................ 23
Evaluation of Options for NOL Development ................................................24
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9.1
Option 1: Convert NOL into a commercial service with similar coverage ........... 24
9.2
Option 2: Develop NOL into a wireless data system with greater coverage ....... 25
9.3
Option 3: Develop NOL to deliver both wireless mobile and fixed broadband
services ............................................................................................................. 28
9.4
Option 4: Close NOL down ................................................................................ 29
10.
Annex A: Procurement and Operation Issues ..............................................30
10.1
Adherence to state aid and competition policy.................................................... 30
10.2
Intervention protocols ......................................................................................... 31
10.3
Options within this framework ............................................................................. 31
10.4
Ownership and Feasibility - who will take it on, how and when? ......................... 32
11.
Annex B: Digital Connectivity Policy Priorities ............................................33
11.1
Underlying principle ............................................................................................ 33
11.2
Economic impact ................................................................................................ 33
11.3
What are the gaps, how important are these and will the market provide? ......... 33
11.4
Three types of digital connectivity....................................................................... 33
11.5
Most important gaps from point of view of regional economies ........................... 34
11.6
How important is wireless/ mobile connectivity? ................................................. 34
11.7
Priority for the economy ..................................................................................... 35
11.8
Revenues ........................................................................................................... 35
11.9
The need for intervention ................................................................................... 35
11.10 Support of Public Policy Goals ........................................................................... 36
12.
Annex C: Competition in the Norfolk WiFi Market ........................................38
13.
Annex D: Summary of Imperial Market Survey .............................................41
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1.
Introduction
1.1
Summary
Norfolk County Council required advice on future planning during the final phase of the
Norfolk Open Link Project (“NOL”). The assignment has consisted of evaluation and
analysis of the NOL Project, its impact and outcomes including the development and
evaluation of options for the future which are legally compliant, technically viable and likely
to be financially sufficiently attractive that ongoing operating subsidy would not be required.
1.2
Legal Requirements and Intervention protocols
Any public sector action will need to adhere to the intervention policy protocols:

public sector should focus on enabling/ supporting private sector to deliver and
only if this fails, to step in with more direct intervention – market displacement
rules

public sector action should not benefit any one undertaking over and above
others, but should benefit all equally – state aid rules.

in particular, public sector action should not displace existing or future private
sector activity and investment – this does not just relate to BT and Virgin Media,
and the national BWA operators, but to small local providers (of which there is at
least one providing fixed wireless connectivity)
In light of this, the public sector should focus on enabling the private sector to develop the
project to meet the required objectives, but in a way that gives all of the private sector
equal opportunity to participate.
In the case of determining NOL’s future, there are a number of ways forward (options) to
consider:
Private sector-led and public sector facilitates
Public sector sets out the project’s objectives in terms of service levels required, target
populations and broad timeframe, then does no more than bring potential private sector
players together and enables/ facilitates discussions, with the aim of encouraging purchase
of and appropriate investment in the existing platform such that it continues to deliver a
WiFi service, but also fills 2nd generation broadband gaps and starts to deploy 3rd
generation access. Private sector parties may include the major telcos, existing wireless
operators, local providers and potential new entrants. Public sector may be able to soften
the costs by committing anchor revenue, but this may raise state aid issues.
Public sector procures
If this does not work, then public sector will need to take further action. Public sector would
seek to procure an open access wholesale service covering the target populations that
would be open to all retailers on an equal footing – and at least two options are available to
do this:

Public sector places the service requirement out to tender via a fully competitive
OJEC process (“OJEU competitive dialog process”). The bidder or consortium
proposing an appropriate solution and requiring the least financial gap funding
would be selected. Public sector may reduce the gap funding requirement by
committing anchor revenues and/or revenue guarantees. The winning consortium
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would own and run the network, providing the service level and coverage
required. It could then also use the network for other purposes. Public sector
would also need to build into the contract appropriate claw back arrangements.

Public sector considers establishing a special purpose vehicle and puts this to the
market for investment in return for shares. The vehicle would act like a utilities
provider rather than a telco, seeking long term investment at utility rates rather
than the shorter much higher returns usually required by telcos. It would be open
to investment by telcos, large and small, ordinary companies and residents.
Public sector may need to gap fund the vehicle, at least in the short term. Long
term infrastructure investment funding could be sought from European Investment
Bank (competitive source of loans).
In the evaluation of the options considered we summarise the type of procurement which
should be used to move NOL to a commercial footing.
1.3
Future Options for NOL
The objectives of NCC and more general public policy objectives suggest four options for
NOL development:
Option 1: Convert NOL into a commercial wireless data service with similar
coverage and technology as the NOL pilot, with NCC’s role being that of ‘anchor
tenant’.
Option 2: Develop NOL into a commercial wireless data service with greater
coverage to support public sector applications and to provide a commercially viable
service to the public at large (this would almost certainly require migration to a new
radio system such as mobile WiMAX) with NCC’s role again being that of ‘anchor
tenant’.
Option 3: Develop NOL to deliver both wireless mobile and fixed broadband
services to businesses and households, filling gaps not addressed by existing
providers. This option would address much broader digital connectivity goals - the
challenge would be to find a way to fill the provision gaps in a timely and costeffective way. NCC’s role would again be that of ‘anchor tenant’.
Option 4: Close NOL down - allow commercial suppliers to provide services as
they see fit.
1.4
Review of economic and policy benefits
The following table summarises the main economic and policy impacts and benefits of
each Option. It assesses the options in terms of usage, benefits, economic and wider
policy impacts.
Options appraisal – usage, benefits, economic and wider policy additionality
Option
Usage
additionality
Option 1:
Continue with NOL
network and
service as is
Low: some growth
in paying user
numbers, offset by
loss of non-payers
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Benefits
additionality
Low
Economic
additionality
Low
Wider policy
additionality
Continuing
support of
Norwich as a
good place to
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Option
Usage
additionality
Benefits
additionality
Economic
additionality
Wider policy
additionality
live and work
Option 2: Extend
NOL coverage and
services
High: strong
growth in paying
user numbers,
provision of
service to NCC
and other public
sector
organisations,
“free” service
through
advertising
support, etc.
High - provides
public access
across a wide area
which has not been
served by existing
commercial
operators.
Supports
numerous public
sector applications
High - economic
benefits of fixed
and mobile
connectivity flow
to many areas,
people and
organisations
Strengthened
support of
Norwich and
Norfolk as a
good place to
live and work.
Option 3: Build on
Option 2 to
address the ‘2nd
generation
broadband divide’
by, introducing
additional
technology to
provide fixed
bandwidth to
households and
businesses further
than 2.5 kms linelength from their
serving exchanges
Very High: As
Option 2 but with
major additional
usage from
widespread
broadband
provision in rural
areas
Very High:
provides private
and public access
across a wide area
which has not been
served by existing
commercial
operators.
Benefits to public
and private
sectors, and to
personal users
Very High economic
benefits of fixed
and mobile
connectivity flow
to many areas,
people and
organisations
Strengthened
support of
Norwich and
Norfolk as a
good place to
live and work.
Option 4: NOL
Close down
None
None
None
None
1.5
Addresses
current digital
divide issues
across a wide
area of Norfolk
Addresses
current and
future digital
divide issues
across a wide
area of Norfolk
Objectives of the NOL pilot project
The objectives of the NOL pilot project have been to evaluate whether there is enthusiasm
amongst people, businesses and public sector organisations to make use of convenient
Internet access in public areas and selected covered buildings and homes in Norwich and
South Norfolk, and to test the technical feasibility of deploying and operating an access
network for Internet based on wireless technology in both city and rural areas. The
particular access technology chosen was WiFi.
Commercial aspects have not been tested directly in the pilot, since it was decided to offer
the pilot service free of charge. However, a recent user survey has thrown some light on
the potential revenues from a commercial wireless access service.
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1.6
Achievement of NOL Pilot Objectives
1.6.1
Public Reaction to NOL
The NOL wireless network service has been operational for over 12 months and the level
of use from the general public and business sector has grown steadily. The project is the
first to offer free wireless access to the general public, the first to combine both general
public and public sector usage and the first to cover both urban and rural communities and,
as a result, has attracted high levels of interest locally, nationally and internationally.
A survey of NOL users and non-users was carried out in November 2007 by Imperial
College. In brief summary NOL is perceived very favourably. Users believe that it
improves their productivity - 62% stating that they gained between 1 and 2 hours or even
more productive work each week. Users also report that NOL improves their quality of life
and significantly enhances the attractiveness of Norwich as a place to live and work. As
many as 88% of user respondents stated they would prefer to live or work in city with such
services, either to a great or very great extent. However, it was also concluded that only a
small minority of users (only around 1 in 10) would readily pay for the NOL service. NOL is
seen as very nice to have, but not something which the great majority would be willing to
pay for on a regular basis.
Further, public leaders such as the local MPs see a strong benefit to the quality of life and
attractiveness of Norwich and Norfolk brought by the easy availability of wireless internet
access across the city and in other population centres.
We conclude NOL is perceived as making a strong positive contribution to the image and
quality of life in Norwich and in the selected villages in South Norfolk where it has been
deployed.
1.6.2
Public Sector Applications
Public Sector Applications are of two main types - the use of NOL by public sector
employees and other applications (e.g. for data collection and device control, CCTV
cameras, etc.), and the use of NOL to reduce the “digital divide”1.
While NOL has been seen by policy makers in local and national government as a
‘pathfinder’ project which will inform the role that the public sector should play in the
delivery of ubiquitous wireless networks, the impact of the NOL pilot on public sector users
and services has been very small, principally because it is a pilot with a defined operating
timescale. There is considerable interest in the radio access service for a wide range of
applications, but no public sector bodies have developed or transferred such applications
because the time and money required was not judged worthwhile in the context of a pilot
only. A further reason for non-use by the public sector has been the lack of coverage
offered by the NOL pilot. To be a serious communications option for mobile workforce,
CCTV cameras, etc. a high level of effective coverage of at least populated areas is seen
as necessary.
1
The “digital divide” could be reduced by providing Internet access to selected households or
individuals who would not otherwise have access to Internet but would nevertheless benefit from it
for educational or economic reasons. Presumably such service would need to be fully or partially
subsidized.
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Norfolk County Council’s ‘Digital Challenge’ bid included a proposal to develop the concept
of the ‘free’ wireless service to targeted communities/users and even though it was not
successful, there is still support from the partner organisations for some form of joint
investment in a shared wireless service for public sector users. However, again no formal
development of public sector schemes to provide Internet access to disadvantaged groups
has been developed using NOL, for the same two reasons - NOL’s pilot status and lack of
coverage.
However, we should not reach the conclusion that wireless access is of little use to the
public sector. Rather, the conclusion to be reached is that with a clear commitment to offer
the service for an extended period, and with defined extensive coverage of populated
areas, numerous beneficial applications could be developed.
1.6.3
Technical Feasibility
The Norfolk Open Link Project has delivered a WiFi wireless access service on a pilot basis
to over 15 km2 of urban Norwich and 20 rural villages in South Norfolk. The network is built
up of about 260 WiFi access points, linked to servers and thence to the Internet by a
combination of WiFi mesh networking and radio backhaul links.
Initially numerous technical teething problems were encountered which interfered with the
proper functioning of the service. However, the supply contractor Synetrix has worked to
address these problems, and the service is now running well.
WiFi technology is widely and cheaply available, but it has an inherent problem with regard
to applications such as that of the NOL network, which cannot easily be overcome; the
range of each base station is very limited (90 metres is often quoted, but obstructions such
as walls can reduce this dramatically to 20 metres or less). Such a range is fine for
‘hotspots’ such as coffee shops, hotel foyers, airport lounges etc. but it is very difficult to
achieve continuous coverage across any significant area such as a city centre. A
technology with a greater range and ability to penetrate buildings would be preferable
provided the costs of network deployment and of terminals were acceptable.
The network has also demonstrated that there are technical differences between urban and
rural areas. While NOL has provided substantial though not complete coverage in Norwich
City through overlapping hotspots, achieving coverage in rural areas using WiFi cannot
reasonably go beyond a model of isolated hotspots. This had been achieved in about 20
villages in South Norfolk, but practical use in the villages requires the user to move to the
covered building or its immediate surrounds, so the convenience of the service is reduced
when compared with the situation in Norwich City. Further, lower numbers of potential
users in rural areas would severely hinder any attempt to economically increase coverage
in rural areas using WiFi.
1.6.4
The Immediate Future
Legal and funding constraints mean that this pilot project is planned to finish by March
2008, though if a decision is taken to commercialise the service, to it can be continued until
August 2008 to allow time for the transition, assuming additional operating funding were to
be made available. At present there is no future commitment to the NOL wireless network
from NCC, EEDA or any of the partners.
Early monitoring of the service, feedback from users and intelligence from similar projects
all show that under the right circumstances it should be possible to create a sustainable
service based on the initial investment of the pilot project and some form of charging
model.
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1.7
Future Demand for Wireless Access Services
The results of a recent survey of NOL users and non-users undertaken for NCC have been
reported separately (ref) but it is worth summarising the main findings here:

Users of the NOL pilot like the service, stating it is convenient and improves
their productivity

There is a wide perception that NOL provides good support for Norwich and
Norfolk as a good place to live and work.

Two groups of users identified:

Using NOL as a free alternative to, or truly because of affordability

Those out and about making personal or business using of NOL mobile access.

Overall less than 10% of users are likely to convert to a paid subscription in
practice. While people say they are delighted with the service, they are not
prepared to pay for it.

For mobile workforces, both businesses and public sector organisations have a
non-negotiable requirement for ubiquitous coverage.

Plenty of potential public sector applications were discussed, and it emerges that
there is a need for a common platform across all public sector applications.
This is another indication of the trend towards multi-functional front line staff.

The initiative, as a pilot, is applauded by the general public, private firms and
public organisations. Nevertheless, there is a general aversion from the private
sector to see the public sector operating such a network on a full-scale and long
term basis.
We have identified the following six sources of demand for WiFi services which form actual
or potential revenue streams for a commercialised NOL.
Sources of Demand and Revenue for NOL
Retail WiFi users (personal and business subscribers and occasional users)
Wholesale users - those whose subscription is to another service provider, but who ‘roam’ onto
NOL)
Advertising Revenues
Sponsorship Revenues
Revenues from public sector operational use
Revenues from public sector projects in the fields of social inclusion etc
We discuss the potential of each revenue source in Section 6 below.
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2.
Method for the Assignment
To establish the objectives for the assignment we have had extensive discussions with
Norfolk County Council, and a representative from South Norfolk. The key objectives of the
assignment are to:

Assess the success of the current project so far, in terms of impact (economic
and social) and value for money (given that the project is grant funded)

Identify future options for the project, focussing on achieving financial viability (i.e.
identifying if there is a viable business case for the continuation of some form of
large-scale wireless service following the completion of the pilot project and to
define and recommend a legally compliant way forward for the ownership and
operation of the service in future.
We have also reviewed usage data and system descriptions and maps supplied by
Synetrix, and prepared technical options for network and system development.
With regard to the outline business plan we have developed a set of potential revenue
sources, and estimated the number of users, volume of use and prices which could be
charged, based on competing offers.
Options for the future of the Norfolk pilot have been developed and reviewed. The
evaluation of options has been a key part of the assignment. The evaluation of the options
demonstrates how the implementation of a sustainable operating model could be achieved
which would continue to deliver wireless access service following the conclusion of the pilot
project. Options are presented in the form of outline business cases that define the
potential benefits, service options and the costs of expanding and operating the service.
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3.
Objectives for Future Development of NOL
The objectives for the NOL pilot were set in the context of public policy for digital
connectivity and the options for the future of NOL have been developed assuming that
these public policy objectives will continue. In this section we identify how the project
currently does and potentially could contribute to key digital connectivity policy objectives.
3.1
Central Government Broadband Policy
The national political environment is encouraging - recent announcement by the Minister
for Competitiveness, Stephen Timms has put emphasis on “Broadband Britain”:
Speaking at the 2007 Parliament and the Internet Conference in Westminster on 18
October 2007, Timms said a growing demand for flexible working meant that the
national telecommunications infrastructure needed an upgrade to fibre [with the
important addition of wireless, satellite and 3G].
Although the "backbone" of the nation's infrastructure is already fibre-based, the
connections between local exchanges and homes themselves are almost always
based on copper, thus restricting access speed. Ofcom, the communications
regulator, is currently consulting on how to overcome this bottleneck, with the most
significant questions being those of demand and who will pay for the upgrade.
"UK broadband is in a leading position in terms of availability and use — it's already
made an important contribution to UK economic success," said Timms on Thursday.
"Data traffic has become more intense. We want to support new access to
technology, and not encourage the digital divide."
Timms pointed out that high-speed networks would in any case be needed to
support the widespread uptake of high-definition TV, but he also singled out the
growth in flexible working as a justification. "A growing number of people are
working from home who will need high-quality, two-way video conferencing [and
advanced audio]," he said. "The quality of graphics applications is pushing up
bandwidth needs."
If Ofcom is serious about fibre-optic broadband for all, it must first break the
commercial logjam...
"Effective use of technology enables economic growth," Timms continued. "We
have hardly any fibre-to-home connections. As far as I'm aware, we have none.
There are 900,000 in the US and eight million in Japan. We're not suffering yet, but
communications applications with higher [bandwidth] needs are not far behind. We
need timely take-up."
Part of Ofcom's consultation involves looking at alternatives to wired access, but
Timms claimed that wireless and satellite-based technology was "not enough to
support our future bandwidth". "The infrastructure needs to be able to deliver highspeed broadband to all, based around fibre rather than copper, with the important
addition of wireless, satellite and 3G," he said.
We have reviewed with NCC and EEDA the implications of central government policy for
the future development of the NCC NOL pilot.
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3.2
NCC Strategic Objectives
Objectives for future NOL development need to be in line with NCC’s emerging Strategic
Ambitions:

A Vibrant, Strong and Sustainable Economy

Aspirational People, with High Levels of Attainment and Skills

An Inspirational Place with a Clear Sense of Identity.
These ambitions are pitched at a strategic level and are fundamental to the overall
economic, social and environmental well-being of Norfolk. They are important areas where
NCC wants to bring about a step change for Norfolk. They build on Norfolk’s focus on
excellent services, which underpins these ambitions, and continues as a given.
NCC is also streamlining its corporate objectives. These maintain the same area of focus
for County Council work but they are more streamlined. These have still yet to be finalised
and agreed by Cabinet in January but they are likely to be to:

lead a strategic approach to the development of the Norfolk economy

improve travel and transport

help make Norfolk a safe place to live and work

improve educational attainment and help children to achieve their ambitions

improve the health and well-being of Norfolk's residents

improve opportunities for people to learn throughout life

protect and sustain the environment

build vibrant, confident and cohesive communities

improve and develop Norfolk's cultural heritage and resources.
Norfolk County Council is aware that there is a range of operational service models
currently being employed and evaluated for wireless network projects throughout the world
and that these include:

fully public sector funded and managed approaches

public/private partnerships

commercial/market led models.
All technically feasible and legally compliant options have been considered.
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4.
NOL - Technical Aspects and Feasibility
This section describes the technical aspects of the NOL system and network, and confirms
that NOL has demonstrated the technical feasibility of building and operating an Internet
access network for public use based on WiFi technology.
NOL network installation was started early in 2006 and the network has been in operation
since September 2006. Several teething problems were encountered, from unreliable
network links to software problems precluding the connection of convenient user terminals
such as PDAs. We understand these problems have now largely been solved, and the
NOL network provides a convenient and reliable service, always provided the user is in
close proximity to a base station.
4.1
NOL - Users and Levels of Use
NOL has significant numbers of users - around 2,300 users and over 30,000 user sessions
each month on average. Synetrix have produced detailed reports each month on the use
being made of NOL. Based on these data we have identified that while there are
significant seasonal differences, overall there as been a gradual upward trend in usage.
This has occurred despite there having been minimal promotion of the NOL service.
NOL Usage Trend
35,000
30,000
NOL Sessions per Month
25,000
20,000
Actual
Trend
15,000
10,000
5,000
0
Oct-06
4.2
Nov-06
Dec-06
Jan-07
Feb-07
Mar-07
Apr-07
May-07
Jun-07
Jul-07
Aug-07
Sep-07
NOL Network Overview
This section is copied from the Norfolk Openlink Service Description Document, section
2.1.
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Sector 4
NCC-SS4-APM300-GWc
172.20.14.4
NCC-SS4-APM300-GWb
172.20.14.3
Client DHCP
192.168.14.65/26
Norfolk Openlink Project
Network Diagram
NCC-SS4-APM300-GWd
172.20.14.5
Client DHCP
192.168.14.128/26
Client DHCP
192.168.14.192/26
Sector 8
NCC-SS8-APM300-GW
172.20.18.2
VLAN 14
VLAN 14
PoE
VLAN 14
PoE
PoE
2
3
4
5
6
7
8
9
10
11
12
13
Client DHCP
192.168.18.0/24
Catalyst 2950 SERIES
10Base-T/100Base-TX
1
SYST
14
15
16
17
18
19
20
21
22
23
NCC-SS4-APM300-GWa
172.20.14.2
24
RPS
STRT UTIL DUPLXSPEED
MODE
10.0.10.43
NCC-SS4-2950-2
Comms Rm
100BaseFX
VLAN 10,14
Roof
PoE
2
3
4
5
6
7
8
9
10
11
12
13
PoE
Client DHCP
192.168.14.0/26
VLAN 14
VLAN 18
Catalyst 2950 SERIES
10Base-T/100Base-TX
1
SYST
14
15
16
17
18
19
20
21
22
23
24
RPS
STRT UTIL DUPLXSPEED
MODE
Catalyst 2950 SERIES
10Base-T/100Base-TX
1
SYST
10.0.10.42
NCC-SS4-2950-1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
172.20.15.2
10.0.10.41
VLAN 10,14
Forum Trust
NCC-SS3-APM300-GW
172.20.13.2
5
6
7
8
9
10
11
12
Client DHCP
192.168.19.0/24
14
LES10LR
2
3
4
5
6
7
8
9
10
11
12
13
14
15
MC
PoE
16
17
18
19
20
21
22
23
24
RPS
NCC-SS6-2950-1
VLAN 10,16
VLAN 13
MC
VLAN 20
PoE
30Mbps
P2P
Catalyst 2950 SERIES
10Base-T/100Base-TX
1
SYST
STRT UTIL DUPLXSPEED
NTE
Client DHCP
192.168.20.0/24
VLAN 19
PoE
NTE
13
172.20.20.2
10.0.10.81
MODE
10.0.10.62
PoE
Catalyst 2950 SERIES
10Base-T/100Base-TX
1
SYST
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
Catalyst 2950 SERIES
10Base-T/100Base-TX
24
1
RPS
SYST
STRT UTIL DUPLXSPEED
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
RPS
STRT UTIL DUPLXSPEED
MODE
MODE
10.0.10.92
NCC-SS9-2950-1
NCC-SS10-2950-1
VLAN 10,19
10.0.10.102
VLAN 10,20
Catalyst 2950 SERIES
10Base-T/100Base-TX
4
Sector 10
NCC-SS10-APM300-GW
172.20.19.2
VLAN 16
VLAN 10,15
VLAN 15
3
Sector 9
NCC-SS9-APM300-GW
NCC-SS8-OS-NCH
Orthogon
Spectra
10.0.10.40
2
24
Sector 3
NCC-SS4-AN50-NNUH
1
23
VLAN 10,18
Client DHCP
192.168.16.0/24
18Mbps
P2P
PoE
SYST
22
PoE
NCC-SS6-APM300-GW
172.20.16.2
NNUH
Client DHCP
192.168.15.0/24
21
10.0.10.82
NCC-SS8-2950-1
Sector 6
NCC-SS4-AN50-UEA
20
MODE
Sector 5
NCC-SS5-APM300-GW
19
RPS
STRT UTIL DUPLXSPEED
15
16
17
18
19
20
21
22
23
24
RPS
Catalyst 2950 SERIES
10Base-T/100Base-TX
1
STRT UTIL DUPLXSPEED
SYST
MODE
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
RPS
STRT UTIL DUPLXSPEED
MODE
NCC-SS5-2950-1
10.0.10.52
NCC-SS3-2950-1
10.0.10.32
NCC-SS6-AN50-NCH
Client DHCP
192.168.13.0/24
NCC-SS3-AN50-UEA
NCC-SS9-AN50-NCH
10.0.10.61
City College
Earlham Library
UEA
49Mbps
P2MP
NCC-SS10-AN50-NCH
10.0.10.101
Broadlands Council
10.0.10.80
VLAN 11
10.0.10.90
PoE
1
SYST
2
3
4
5
6
7
8
9
10
11
12
13
14
16
17
18
19
20
21
22
MODE
10.0.10.2
1
PoE
SYST
RPS
MASTR
STAT
DUPLX
SPEED
STACK
MODE
172.20.11.2
VLAN 10,17,21
2
3
4
5
6
7
23
Client DHCP
192.168.12.0/24
24
PoE
VLAN 12
NCC-CORE-2950-1
NCC-CORE-3750-1
8
9
10
11 12
13 14
15 16
17 18
19 20
21 22
Catalyst 3750 SERIES
23 24
1X
11X
13X
23X
2X
12X
14X
24X
1
10.0.10.1
Alvarion
SU54
2
PoE
NOL
Backhaul
NCC-SS2-APM300-GW
172.20.12.2
VLAN 100-145
Alvarion
SU54
BBL Managed
Backhaul
Sector 7
VLAN 10,19,20
Catalyst 2950 SERIES
15
RPS
STRT UTIL DUPLXSPEED
GigE
NCC-SS7-APM300-GW
172.20.17.2
Sector 2
PoE
10.0.10.30
10Base-T/100Base-TX
NCC-SS1-APM300-GW
NCC-SC2-AN50
NCC-SC1-AN50
VLAN 10,13,14,15,16
Client DHCP
192.168.10.0/24
49Mbps
P2MP
NCC-SS8-OS-FT
Orthogon
Spectra
VLAN 10,18
Sector 1
Client DHCP
192.168.17.0/24
10.0.10.91
Lancaster House
10.0.10.31
Norfolk County Hall
Sector 11
SNDC
Backhaul
NCC-SS11-APM300-GW
172.20.21.2
VLAN 21
VLAN 17
PoE
PoE
Alvarion
SU54
Orthogon
Spectra
PoE
PoE
VLAN 10,17
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
Client DHCP
192.168.21.0/24
VLAN 10,21
Catalyst 2950 SERIES
10Base-T/100Base-TX
1
SYST
Catalyst 2950 SERIES
10Base-T/100Base-TX
24
1
RPS
SYST
STRT UTIL DUPLXSPEED
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
RPS
STRT UTIL DUPLXSPEED
MODE
MODE
NCC-SS7-2950-1
10.0.10.72
NCC-SS11-2950-1
Grovesnor House
10.0.10.112
Open Youth Trust
Stoke Holy Cross
Name
Date
Client
Version
Matt Davies
24072006
NCC
3.0
Fig 3 Network Architecture Overview
This section of the Service description provides an overview of the technical architecture,
with detailed descriptions of the network and system elements of the service.
The Norfolk Openlink network provided by Synetrix offers geographically limited IEEE
802.11b/g WiFi connectivity within the selected sub-sector areas of Norwich to users of
compatible devices such as laptop computers and PDA’s (capable of supporting a java
based web browser).
The diagram above provides an overview of the Norfolk Openlink network architecture.
The South Norfolk locations are not shown. These are accessed via a backhaul network
provided by Beanstalk Broadband Limited (BBL). The BBL backhaul network is accessed
through the Stoke Holy Cross radio tower using Alvarion 5.8GHz lightly licensed backhaul
connections. The Stoke Holy Cross radio tower has also been used to provide backhaul to
additional city centre locations (Open Youth Trust and Grosvenor House).
The WiFi access is provided through the deployment of Moovera F-SERIES access points
mounted on street furniture, buildings, dedicated steel bracket work and masts and where
appropriate. The WiFi traffic is aggregated within sub-sectors and backhauled to Norfolk
County Hall.
The wireless backhaul infrastructure is centred on Norfolk County Hall. County Hall also
provides the location for:

A central ISP feed, based on a 100Mb/s fibre bearer from NTL, with 40Mbps
overall capacity to support all phases of the project including South Norfolk
communities.
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
Central resources including core Ethernet switches, firewall and authentication
servers
The wireless backhaul network connects these central resources out to the sub-sectors of
F-Series, using a range of options:

2 x Redline AN50e units deployed in a point to multi-point mode, operating at
49Mb/s and connecting County Hall to:

City College

UEA

Lancaster House

Broadlands District Council

1 x Redline AN50e unit deployed in point to point mode and operating at 18Mbps,
connecting Norfolk and Norwich Hospital to UEA

1 x Orthogon Spectralink 5.8GHz wireless backhaul point to point link, connecting
County Hall with the Forum, operating at 30Mb/s

1 x LES 10LR circuit connecting Earlham Library via UEA, for onward link back to
County Hall or by leased lines where necessary.

2 x Alvarion SU54 units, connecting County Hall to the Stoke Holy Cross Mast.
These two links are used to connect :

Open Youth Trust and Grosvenor House and

Provide backhaul into the core Norfolk Openlink network for South Norfolk
community links

9 South Norfolk locations are using ADSL for backhaul, as they were not
accessible via the BBL backhaul network.
The solution offers connectivity for any standards compliant clients using the IEEE
802.11b/g wireless LAN standards. This connectivity is subject to the client being within
range of the RF access element of the network and that the signal to noise ratio (SNR) is
sufficient to provide an acceptable link in line with receive sensitivity figures contained
within the manufacturers product specifications. The quality of the RF link between the
client and the serving access point will also specify the maximum raw data rate possible. If
the quality of the link deteriorates then the modulation rate will drop back down in stages to
the minimum 1Mb/s for 802.11b standard after which the link will fail.
4.2.1
Access Points
The existing access points use IEEE 802.11b/g (WiFi) technology. This is fully compatible
with all existing wireless LAN cards that one would expect to find in IT equipment (including
computers, games machines, mobile phones and so forth). There is only one current
development to this technology which is gaining any favour with manufacturers and this is
IEEE 802.11n. IEEE 802.11n delivers connections with speeds of up to 108 Mb/s through
the use of multiple-input, multiple-output (MIMO) technology. However given that:

802.11n devices are backwards compatible with IEEE 802.11b/g, thus all new
devices will still cooperate with the existing hotspots;
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
the benefits of additional bandwidth at the access point alone are negligible (54
Mb/s as provided by IEEE 802.11g is more than sufficient given the capacity of the
backhaul network and internet connection speeds); and

there would be significant costs associated with replacing all the hotspot equipment,
our judgement is that the benefits of a change to this technology would not be worthwhile.
Other technologies which may eventually deliver services to end users (such as WiMAX,
iBurst, IEEE 802.20 and others) whilst offering long term potential for enhanced throughput
suffer from a lack of ubiquity in comparison to WiFi and further that they will most likely
require access to licensed spectrum meaning the cost of their deployment will be
significantly increased compared to licence-exempt techniques such as WiFi. Whilst such
technologies may become more widespread and more common over the next 5 to 10
years, there would be significant dis-benefit in terms of ease and universality of end-user
access if they were adopted in the NCC pilot before user terminals were widely available at
reasonable prices.
4.2.2
Distribution Network (Norwich)
The hotspots in Norwich are laid out in a series of meshes. Within the meshes,
connectivity is provided through dual-band 5.4/2.4 GHz WiFi units. The connectivity
between the meshes and the central hub is provided using a variety of proprietary
technologies using lightly-licensed frequencies at 5.8 GHz, some of which are WiMAX
compatible or WiMAX compliant.
4.2.3
Distribution Network (South Norfolk)
At present, connectivity to hotspots in South Norfolk is delivered via a combination of
wireless and wired (ADSL) connections. Given the sparser distribution of sites in this area
and the relative cost and reliability of the different connections, a move to a fully ADSL
based connection would have the benefits of:

reducing reliance on BBL;

simplifying and standardising connectivity;

enabling connectivity at a wider range of locations by simplifying the installation of
new sites.
However, where such connections are at a distance from any exchange, and due to
restrictions of ADSL technology, the potential speed of a wired connection may be
restricted beyond that which would offer a like-for-like connection at all sites. Usage
statistics for the South Norfolk sites, however, indicate that the number of connections is
lower and hence a reduced total connection speed for such sites may not adversely impact
user experience of the service. If higher speeds were to be offered, however (i.e. above
the speed available through the ADSL connection), an alternative technology may be more
appropriate.
End of extract from Norfolk Openlink Service Description Document.
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5.
Competition in the Norfolk WiFi Market
We have reviewed the competitive offers available in the Norfolk Internet radio access
market. We conclude that NOL offers far greater coverage and availability than any
competing supplier. The information gathered has also been used to inform assumptions
about prices and volumes in the business modelling.
We have reviewed the competitive offers, including internet cafes, commercial wireless
offerings e.g. BT Openzone, T-Mobile, etc., GSM and its data derivatives GPRS and
EDGE, the 3G operators’ data service offerings, and any other available services,
summarising coverage, service parameters, prices, etc.
The companies already in the market could potentially be future partners in the
development of the Norfolk access network; we have had discussions on this matter with
several of them during this project.
It is notable that during the NOL pilot the number of WiFi hotspots in Norwich and other
parts of Norfolk has grown significantly. NOL has not noticeably suppressed the
development of supply.
Details of the competitor review are provided in Annex C.
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6.
6.1
Demand for WiFi Services in Norfolk
Imperial College Market Survey
The results of a recent survey of NOL users and non-users undertaken for NCC are
reported separately in the Imperial College report, and it is worth summarising the main
findings here.
The survey of NOL users and non-users was carried out in November 2007 by Imperial
College. In summary NOL is perceived very favourably. Users believe that NOL improves
their productivity - 62% stating that they gained between 1 and 2 hours or even more
productive work each week. Users also report that NOL improves their quality of life and
significantly enhances the attractiveness of Norwich as a place to live and work. As many
as 88% of user respondents stated they would prefer to live or work in a city with such
services, either to a great or very great extent. However, it was also concluded that only a
small minority of users (only around 1 in 10) would readily pay for the NOL service. NOL is
seen as very nice to have, but not something which the great majority would be willing to
pay for on a regular basis.
Further, public leaders such as the local MPs see a strong benefit to the quality of life and
attractiveness of Norwich and Norfolk brought by the easy availability of wireless internet
access across the city and in other population centres.
The Imperial College team concluded that NOL is perceived as making a strong positive
contribution to the image and quality of life in Norwich and in the selected villages in South
Norfolk where it has been deployed.
Further details of the results of the market survey are provided in Annex D.
6.2
Types of Demand
We have identified the following six actual and potential sources of demand and revenue
for WiFi and other wireless access services. These form actual or potential revenue
streams for a commercialised NOL.
Sources of Demand and Revenue for NOL
Retail wireless access users (personal and business subscribers and occasional users)
Wholesale users - those whose subscription is to another service provider, but who ‘roam’ onto
NOL)
Advertising Revenues
Sponsorship Revenues
Revenues from public sector operational use
Revenues from public sector projects in the fields of social inclusion, etc.
We discuss the potential of each revenue source in turn below.
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6.2.1
Retail services
In general there are problems of both volume and price for WiFi services. A problem with
WiFi services which are required to make a commercial return is to aggregate sufficient
volume of demand to make a return across all base stations sites, and to be able to charge
users enough to make the return. Hotspots such as those at airports or busy railway
stations may be able to generate enough volume and to charge a high enough price to
make a very attractive return. However, in the situation in Norwich, there are a few such
high-demand sites, and the great majority of the sites do not generate enough demand,
based on retail services alone.
Analysis of the usage data provided by Synetrix shows that the number of individual users
per month has risen to a fairly steady level of 2,000 to 2,500 individual users and 25,000 to
30,000 sessions per month. Currently of course the service is available free-of-charge, and
given the findings of the Imperial College survey that less than 10% of users would be likely
to make a regular payment for the service, this means that only about 250 at most of the
current customers would become regular paying users of the service. However, we judge
that now the service is bedded in and teething problems have been overcome, with further
marketing and promotion of the existing NOL service could achieve say 600 to 800 paying
users in the near term.
Coverage is a major issue for users. If the coverage were significantly increased, then we
estimate that retail user numbers could be significantly increased to around 4,000 users or
more in the near term. To put this figure in context, it represents only around 1% of the
population of Norfolk aged 16-60. Other users could also be added under digital inclusion
schemes - see below.
Analysis of alternative suppliers’ WiFi offerings suggests that monthly subscriptions (excl.
VAT) of around £5 per month for personal users and £10 per month (excl. VAT) for
business users could be feasible, provided NOL was linked into a national WiFi or other
wireless access service.
6.2.2
Wholesale Services
The UK market for WiFi-based services has evolved to emphasise trading between service
providers and network operators. Thus major players such as BT Openzone, The Cloud
and T-Mobile all own and operate WiFi networks and offer retail services. However, they
also trade with each other at the wholesale level - for example where BT does not have its
own base stations, it may offer retail service using base stations owned and operated by
The Cloud, and vice versa.
Given that this trading model is already well established, as the operator with by far the
most WiFi base stations in Norfolk, NOL would be an attractive regional partner offering
wholesale service to the retail service providers. While this might reduce to some extent
the potential for NOL to sell occasional use service directly to inbound travellers, the
convenience for such travellers finding they have good coverage from their existing service
provider in Norwich, and the resulting usage of NOL, would considerably outweigh the lost
opportunity for NOL to make direct sales. While the wholesale price will be considerably
below the retail price, there are compensating savings in selling and service costs, so the
wholesale activity can be quite profitable.
6.2.3
Advertising Services
There are several different models for advertising revenues, but only a few of these would
result in revenue flowing directly to NOL. A good example is provided by Free-
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Hotspot.com, whereby users of WiFi services can receive the service free-of-charge in the
form of an ad-supported Internet access service. The model is similar to that of
commercial television, with the advantage that the advertisements presented can be
focused depending on the current web activity of the service user. For example, a user
searching restaurant listings can be shown advertisements for local restaurants. FreeHotspot have made a presentation to NCC and have estimated that some £52,000 to
£94,000 per annum of advertising revenue could be generated on the existing NOL
network, of which 40% would flow to NOL itself. These estimates are based on 5,000
individual users and 40,000 sessions per month.
6.2.4
Sponsorship Revenues
A number of major private sector organizations based in Norfolk were interviewed in the
Imperial College survey, and some expressed favourable attitudes towards sponsorship;
they could envision the marketing benefits of promoting themselves over the service,
especially where they could use the service to support their own staff. In the business
plans we have developed, we have not relied heavily on sponsorship revenues, as we feel
that unless the service attracts significantly larger numbers of users and revenues than it
has done during the pilot, sponsors will not be interested to support it. In our view
sponsorship could be a minor but useful source of funds - which we estimate could amount
to between 5% and 10% of total revenues.
Further, if there is an advertising supported element to the service, it may be difficult to
enlist sponsors also.
6.2.5
Revenues from Norfolk public sector bodies as users of NOL
This could be a very significant source of revenue for NOL, provided NOL’s coverage,
reliability and quality of service are sufficient for the often ‘mission-critical’ applications
envisaged. Feedback from the public sector workshop showed that public sector bodies
had not been willing so far to develop applications which would use NOL for two main
reasons - its pilot nature and its patchy coverage and indifferent service quality. However,
there was significant interest in using it if these issues were to be overcome. There are
about 30,000 public sector employees in Norfolk as a whole.
If coverage issues are not overcome, and NOL continues with the present coverage, then
we have estimated that at most 400 public sector individual subscriptions would be taken
out. It is worth noting that only non-time critical applications could be supported - those
that would depend on store-and-forward types of communications whereby a mobile worker
would carry a terminal which would automatically send stored messages or data and
receive messages or synchronise with a server when in coverage.
If the coverage were to be significantly improved, for example to cover all of Norwich City
and significant areas in Norfolk as a whole, then a number of public services could be
properly and efficiently supported by the network. In this case we would expect a much
higher level of usage, and have postulated that up to 900 individual public sector users
could be connected.
We note that Edinburgh for example uses a similar radio access network for traffic
enforcement mobile cameras and checking tax discs etc., and in Milton Keynes for
example schools have been cost-effectively connected to the Internet using a WiMAX
network.
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With enough coverage and capacity in Norfolk, organisations such as health centres or
schools (we note that Norfolk schools have their own centrally run network) could be
connected, as could CCTV cameras, parking meters etc., further increasing demand.
6.2.6
Revenues from public sector projects in the fields of social inclusion
As reviewed above, public policy towards social inclusion and the provision of public
services such as education and health is increasingly reliant on “digital inclusion”. While
digital inclusion schemes can and do take many forms, there are already many examples
around the country of public intervention to address market failure. For example,
broadband access may be offered on a subsidized basis in remote areas to provide a basis
for home-working or sustainable small businesses, schemes are being developed to
provide access for school students to educational resources from home. For Norfolk, we
have assumed that some form of subsidized broadband access service would be provided
to individuals or households identified as being in need. Whether only the communications
part, or home computers as well would be provided remains to be determined under the
details of such schemes. Since commercial developments of NOL would address primarily
the communications part, we have restricted ourselves to consideration of the
communications part only.
Clearly for the wireless access to be used for these purposes the network would need to be
accessible and to cover the homes requiring service. Therefore we have assessed that
only under Option 2 would significant numbers of home users be served. The existing
service reaches only a small minority of homes in Norfolk.
6.3
Forecasts of future usage
The Imperial College survey provides the principle data source for the forecasts. Forecasts
of future customer numbers and usage have been prepared based on the results of these
surveys. Forecasts are presented for two cases - the existing network continuing with its
existing coverage and capacity (Option 1), and a greatly increased coverage provided by
WiMAX or a similar radio technology, reaching the majority of the populated areas in
Norfolk, and covering approximately 25% of the surface area (Option 2).
We are aware that while usage has grown to a reasonable level, the existing NOL network
is only approximately 11% loaded at busy times, and the number of individual users is quite
small, suggesting that there is plenty of room for growth if the right market segments can
be attracted.
Based on the user surveys and the existing user data, we forecast the number of future
users of NOL service as follows:
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User Summary (000s)
Option 2: BWA and WiFi Case
Business Users
Personal Users
Occasional Users
“Digital Inclusion” users (subsidised)
Public Sector Individual Users
Public Sector sites
Option 1: WiFi Only Case
Business Users
Personal Users
Occasional Users
“Digital Inclusion” users (subsidised)
Public Sector Individual Users
Public Sector sites
2008
2009
2010
2011
1.4
2.0
7.0
4.0
0.3
0.1
1.8
2.5
9.1
7.0
0.5
0.2
2.2
3.1
10.9
10.5
0.7
0.2
2.5
3.5
12.6
13.7
0.9
0.2
0.3
0.4
1.3
0.5
0.1
-
0.3
0.4
1.6
0.6
0.2
-
0.4
0.5
1.8
0.7
0.3
-
0.4
0.6
2.0
0.8
0.4
-
As can be seen, the numbers of users of the NOL network as it stands (Option 1) are
forecast to remain at low levels, reflecting the feedback from the user surveys that while
many individual users are happy with the service and would like to see it continue, only
around 10% are likely to subscribe, and the feedback from the public sector that these
organisations require much greater coverage before converting applications.
However, we forecast a much higher take-up if the perceived problems with the existing
system (coverage, reliability and access speed) are solved through additional network
investment, as discussed under Option 2. In particular it would be possible to reach the
great majority of the population and public sector sites, facilitating “digital inclusion”
schemes and the connection of sites such as health centres, libraries, offices and schools.
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7.
Costs of Radio Access network provision
Regardless of the specific technology used, the costs of providing a radio access service
fall into two categories - capital expenses and operating or recurrent expenses. To
ascertain which options, if any, for NOL development are likely to prove viable, we have
built a forecasting model to estimate the revenues and costs of each option.
The cost components of the model include the following:
Capital Cost Items
Operating Cost Items
Network Management System
Network management
Service Infrastructure
Network maintenance
Backhaul
Backhaul
Total Internet Peering Link
Internet capacity
Radio Sites
Site rental and power
Customer service and billing system
Insurance
G&A and Technician PCs
Selling costs
Maintenance Spares
Customer service and billing
Design and Engineering
Depreciation
The cost elements of the business model have been developed to cover each of these cost
areas, and to include the revenues, hence to calculate the possible rate of return under
various scenarios for NOL development.
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8.
NOL Options for Future Development
The objectives of NCC and more general public policy objectives suggest four options for
NOL development:
Option 1: Convert NOL into a commercial wireless data service with similar
coverage and technology as the NOL pilot, with NCC’s role being that of ‘anchor
tenant’.
Option 2: Develop NOL into a commercial wireless data service with greater
coverage to support public sector applications and to provide a commercially viable
service to the public at large (this would almost certainly require migration to a new
radio system such as mobile WiMAX) with NCC’s role again being that of ‘anchor
tenant’.
Option 3: Develop NOL to deliver both wireless mobile and fixed broadband
services to businesses and households, filling gaps not addressed by existing
providers. This option would address much broader digital connectivity goals - the
challenge would be to find a way to fill the provision gaps in a timely and costeffective way. NCC’s role would again be that of ‘anchor tenant’.
Option 4: Close NOL down - allow commercial suppliers to provide services as
they see fit.
The following table summarises and compares the four Options for NOL development. It
specifies the options in terms of geographic coverage, service offering, technical
specification and regulatory requirements.
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Options Specification – geographic coverage, service offer, technical specification and
regulatory requirements
Option
Geographic
coverage
Option 1: Continue
with NOL network
and service as is.
Parts of Norwich
City, plus about 20
village hotspots in
South Norfolk.
WiFi access to
Internet.
WiFi access with
mixed backhaul
(WiFi mesh and
WiMAX).
As today.
Option 2: Extend
coverage and
services.
WiFi coverage as is
(consider replacing
South Norfolk with
WiMAX).
WiFi Internet
access.
WiFi access with
WiMAX access
overlay.
Availability of
WiMAX
spectrum
suitable for
mobile access.
WiMAX overlay
extending to all
major population
areas (approx 25%
of the area of
Norfolk).
Service
offering
WiMAX Internet
access.
Support of
applications
such as CCTV
cameras, traffic
control systems,
etc.
Technical
specification
Backhaul using
combination of
available
technologies.
Regulatory
requirements
Radio data
services for
health centres,
libraries, offices,
schools and
other sites.
Option 3: Build on
Option 2 to address
the ‘2nd generation
broadband divide’
by, introducing
additional
technology to
provide fixed
bandwidth to
households and
businesses outside
of 2.5km line-length
from local
exchange.
As Option 2 plus
mix of additional
broadband wireless
access capacity
and fixed network
capability e.g.
build-out of ADSL
DSLAMs to bring
rural areas within
the 2.5 kms of
DSLAM locations.
Option 4: NOL
Close down.
None.
WiFi Internet
access
WiMAX Internet
access
Support of
applications
such as CCTV
cameras, traffic
control systems,
etc.
Radio data
services for
health centres,
libraries, offices,
schools and
other sites
Broadband
access for rural
and urban
Norfolk.
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None.
WiFi access with
WiMAX access
overlay
DSLAM network
with high speed
capability in
multiple rural
locations
Availability of
sufficient
WiMAX
spectrum
suitable for
mobile and fixed
access.
Backhaul of
sufficient
capacity using
combination of
available
technologies,
including radio
and fibre.
None.
None.
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8.1
Technology used
Technical issues and questions include:

how much backhaul will be needed and can this be procured?

what wireless technologies and spectrum will be needed and which are available?
At the time of designing the pilot project, the mix of technologies deployed in the NOL
network was appropriate and cost effective for delivering the hotspot type of service which
was required for the service. However, requirements for connectivity are broader than just
hot-spot service. Professional and public sector users and applications will require much
greater levels of coverage than can be provided economically using WiFi only, and other
uses such as economic access services for schools etc can be added if coverage and
capacity are expanded. Radio technology has developed in the 18 months or so since
NOL was designed, so technologies such as WiMAX and iBurst could now provide
alternative or additional access connectivity options. As far as backhaul is concerned, the
radio solutions used are good but greater adoption of ADSL connections where they are
available and where no connectivity to any of the meshes or the central hub is possible,
would allow for wider deployment of the service at reasonable cost.
Options 2 and 3 are predicated on using an appropriate mix of network technologies to
achieve the required coverage and service delivery in an economic way.
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9.
Evaluation of Options for NOL Development
The evaluation of the Options for NOL development has included:

Support of public policy goals

Costs, revenues and financial return

Review of economic and policy benefits

Technology used

Adherence to competition policy

Ownership and Feasibility - who will take it on, how and when?
The evaluation of the Options includes estimates of the revenues and costs for different
future options to deploy and expand the network and compared them, for inclusion in the
outline business plan. Since Option 3 is not favoured for various qualitative reasons, and
Option 4 only requires a close down, the detailed financial analysis has been concentrated
on Options 1 and 2.
We have modelled the first two options in detail to determine which would be financially
feasible, and hence which would likely attract a commercial bidder to take over the system
without the need for ongoing financial support. The model also enables an estimate of the
ongoing subsidy required to fund a given option, if any.
9.1
Option 1: Convert NOL into a commercial service with similar coverage
The Imperial user survey findings, the consultations and research the team has undertaken
and reviewed all suggest that it is either hard to or not appropriate to charge users very
much or anything at all for WiFi hotspot service – there may be some revenue opportunities
from WiFi but by and large, these are limited both in numbers of paying customers and in
the amount each would pay per month.
Internal local authority and public service markets may provide significant sources of
revenue - NOMAD projects etc. But it is clear from the public sector workshop that
coverage would need to be significantly improved to support CCTV, mobile workers,
remote monitoring, auto caretaker, etc.
Instead, it is more appropriate that major stakeholders in ‘the place’ should sponsor the
project, because it adds to the offer of the place, which in turn is of fundamental benefit to
them – free WiFi as standard will increasingly be expected by tourists, inward investors,
global knowledge workers, staff and students of universities. We’ve already identified a
handful of strategic organisations/ stakeholders in the area that fall into this category and
who should/could/might sponsor some of the operating costs.
Key issues for achieving Option 1 are:

whether to continue in current ownership, or to sell, or to bring in a joint venture
partner/ investor

how to increase revenues and particularly sponsorship, given the place-value of
WiFi.
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9.1.1
Option 1: Legal and Procurement Requirements
If commercialized, the procedure used should follow the OJEU competitive dialog process.
We recommend this since as can be seen from the financial analysis, it is expected that an
ongoing subsidy of the service from public sector funds would be required.
9.2
Option 2: Develop NOL into a wireless data system with greater
coverage
Under Option 2, the coverage of NOL would be expanded considerably, and capacity
would be added to provide connectivity not only for mobile and nomadic users, but for
applications such as connecting CCTV cameras, schools and other public sector
organisations and sites. There are a number of technical options for doing this. Simply
expanding the WiFi coverage is probably not an economic solution. WiFi is good for
providing ‘hotspots’ at reasonable cost, but if continuous coverage is required over a large
area, then WiFi provides a very poor solution.
9.2.1
The WiMAX option
WiMAX (being standardised by the IEEE as 802.16) is a suite of wireless technologies
which aim to deliver broadband connectivity to a variety of different users and for a variety
of different uses. At present, focus is on the delivery of fixed or nomadic2 services rather
than for providing full mobility, though a fully mobile variant is being finalised. Big name
providers such as Intel, AT&T and Nokia are pushing for WiMAX services to be licensed
and rolled-out and as such there is significant momentum for its implementation.
One of the claimed benefits of WiMAX is its ability to provide connectivity ‘beyond line of
sight’, that is to say that the units connected to the network do not have to be able to
physically see each other, which is a requirement of most existing broadband access
technologies with ranges more than a few hundred metres. However, the throughput of
WiMAX connections falls rapidly as distance and the number of obstructions increases.
WiMAX is a high power radio technology and the expectation is that commercial WiMAX
services will be deployed only in licensed spectrum bands, meaning there may be
significant cost associated with the licensing of the service. The fact that a variant of
WiMAX has recently been adopted as one of the ITU’s core 3G technologies points
towards the aspirations of WiMAX as a competing licensed, commercial technology rather
than a low-cost hotspot enabling one.
WiMAX provides a promising route forward for NOL as the requirement for coverage
greater than that which can be economically provided by WiFi alone is significant among all
three major user groups - business, government and personal. A business model which
adds WiMAX access to the existing WiFi network infrastructure (which already includes
some WiMAX compatible and compliant equipment) would provide the additional coverage
required.
Option 2 is therefore based on continuing the WiFi in the city centre areas where it is
appropriate, and adding an overlay of WiMAX or a similar radio access technology which
would provide good coverage to fixed and mobile terminals at reasonable cost. The option
studied includes provision of 45 area coverage base stations. Assuming an effective radius
2
Nomadic in this sense referring to users who move from one location to another and who require
connectivity over a wide area but who do not use their equipment whilst on the move.
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of 3 kms for each base station, this would provide for coverage of an area of 1,272 km 2,
which is some 25% of the total area of Norfolk. This would allow coverage of the great
majority of the City, towns, and other larger inhabited areas in Norfolk.
With expanded NOL coverage and capacity, the services offered will become significantly
more attractive to both public and private sector organisations and to personal users, as
well as supporting public sector digital inclusion aims.
9.2.2
Public Sector Applications supported by Option 2
A number of public sector applications could be carried by an expanded NOL network,
which generate revenues, save costs, or improve productivity, e.g.:

traffic enforcement, parking

mobile working, e.g. housing repairs

replacement of leased lines with wireless links, for example for health centres,
libraries, offices, and schools

Telecare and other medical applications.
9.2.3
Private Sector Applications supported by Option 2
A number of public sector applications could be carried by an expanded NOL network,
which generate revenues, save costs, or improve productivity, e.g.:
Non-Commercial Applications Providing Social Benefits

Provision of free or discounted internet access to defined social groups.
Commercial Applications

Public internet access

Residential services (e.g. voice services, internet access) which may generate
revenues from users or advertisers or a combination of the two

Services to SMEs (e.g. voice services, internet access).
9.2.4
Benefits of Option 2
The essence of Option 2 is to convert NOL from a pilot into a commercially viable service.
There would be full coverage of Norwich City enabling applications there to be supported
on a city-wide basis.
There would also be a much enhanced continuing stream of benefits for the rural areas in
Norfolk such as South Norfolk provided by the much greater coverage of the proposed
WiMAX overlay system. Because the service would be on a commercial footing, providing
a more reliable service and much better coverage would not only be feasible but also
essential to meet the requirements from the public sector as ‘anchor tenant’ Other benefits
of the service would then flow in the covered areas. The danger that rural population
centres would not be served could be avoided by making defined levels of rural coverage a
requirement in the service contract.
In effect, through the anchor tenant role and the revenues flowing from that, NCC could
provide the mechanism whereby the profits generated in Norwich City could be used in part
to fund coverage of specific under-provided places or areas.
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9.2.5
Option 2: Legal and Procurement Requirements
As the financial analysis shows, Option 2 should allow a commercial operator to make an
adequate return. Therefore under this Option NOL could be offered to commercial bidders,
to be operated under a contract in which NCC acted as ‘anchor tenant’. The procedure
used would be competitive tendering to acquire the NOL system, together with a supply
contract specifying minimum levels of service and coverage to be achieved to support
defined public sector requirements.
Of course the successful bidder would be free to exceed these minimum requirements if it
saw a commercial opportunity in doing so.
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9.3
Option 3: Develop NOL to deliver both wireless mobile and fixed
broadband services
Demand for broadband access is growing, both in terms of numbers of access services,
and the speed required. Sources of supply to meet this demand are generally labelled as
‘Next Generation Networks’ (NGN) with high-speed access being called ‘Next Generation
Access’ (NGA) in Ofcom terms. As discussed in section xxx below, Government is
concerned that without appropriate intervention, a new kind of digital divide may emerge,
such that the more rural and remote areas of the country will lag significantly behind in the
move to NGA. The most important digital connectivity gap, across the UK regions,
including in Norfolk will be in the provision of 2nd and 3rd generation broadband. Thus
Government priorities are to:

Fill 2nd generation gaps – these will likely occur just as much in Norwich as in the
rural areas – in this respect the network could provide circa 8 Mb/s to businesses
and households too far from their local exchange to get this level of bandwidth

Deploy near ubiquitous 3rd generation broadband (NGA) in the near future.
Failure to address these issues is expected to have significant adverse economic and
social consequences.
We have explored as Option 3 the concept that NOL should be developed specifically to
address these broadband access priorities. However, there is a concern that in reality such
a broadband project should be developed and managed separately as it would not be
sufficiently closely related to NOL as it stands, and the coverage, capacities and
technologies required would be very different. While there may well be a need to launch
such a project in Norfolk in the near-term, it was felt at this stage that linking the
development of NOL to such a project would not be helpful at this stage, since the timings
do not coincide.
The principle points in favour of pursuing Option 3 now or in the near future are:

Providing broaderband access services will be of the most economic importance
to the region, whether all in the region know this yet or not

Exploring how to leverage both the physical platform and experience of operating
NOL, to provide wireless (and possibly some non-wireless) fixed 2nd/3rd
generation connectivity to the area, will be of particular policy and political
interest.
9.3.1
Alternative Connectivity Technologies for Option 3
In addition to the various proprietary microwave link and ADSL technologies currently in
use for connectivity between hotspots and the central hub, a number of possible alternative
technologies exist (or are in a stage of standardisation) which may proffer additional means
of linking the network.
WiMAX
WiMAX is a suite of wireless technologies which aim to deliver broadband connectivity to a
variety of different users and for a variety of different uses. The details of WiMAX
technology are described above under Option 2.
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Next Generation Networks
Telecommunications operators across the world are developing their core networks into
what is termed ‘Next Generation Networks’ (NGN). This entails replacing traditional circuitswitched networks oriented to voice telephony with IP-based infrastructure, oriented to
data. The advantage of such a change is that many traditional telecommunications
services (telephony, internet, data services, etc) and new services (video on demand, widearea LAN, etc.) can be transported over a single core network.
To the end user, the impact of the move to NGN will be the possibility of a wider range of
services, delivered at significantly higher speed (10-100 Mb/s), and at lower cost. There
are also significant benefits of NGN for the operators in terms of greater flexibility and lower
unit costs.
As far as access networks are concerned, the development of NGN is expected to come
first in larger city environments where the density of demand is greatest. This would lead
to a new urban rural digital divide, which thus raises the opportunity for this Option 3, a
project similar in principle and objectives to NOL to be launched in Norfolk in the near
future to mitigate this problem by focused development of broadband access in Norfolk.
9.3.2
Option 3: Legal and Procurement Requirements
While a full analysis has not been undertaken, Option 3 should also allow a commercial
operator to make an adequate return. Therefore, if Option 3 were pursued, NOL could be
offered to commercial bidders, to be operated under a contract in which NCC acted as
‘anchor tenant’. The procedure used would be competitive tendering to acquire the NOL
system, together with a supply contract specifying minimum levels of service and coverage
to be achieved to support defined public sector requirements.
Of course the successful bidder would be free to exceed these minimum requirements if it
saw a commercial opportunity in doing so.
9.4
Option 4: Close NOL down
Option 4 is the fall-back Option, which is only relevant if no other feasible development of
NOL can be found. Option 4 would only have net benefits if it avoided the need for ongoing
subsidy by NCC (or other agencies such as EEDA). Since it appears that Option 2 will be
commercially feasible, and will provide a route whereby NOL could be run by a private
sector entity, then the need to close NOL down is avoided.
9.4.1
Option 4: Legal and Procurement Requirements
There would be no legal or procurement requirements, simply a close-down of the existing
pilot contract.
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10.
Annex A: Procurement and Operation Issues
10.1
Adherence to state aid and competition policy
As noted above it is necessary under state aid rules to commercialise (or close) the NOL
system at the end of the pilot period.
We have established through the financial and technical analysis tat under some options at
least it is likely that a private sector operator would be willing to acquire the pilot system.
The NOL pilot is provided under as arrangement whereby NCC has a contract with ADIT
North East, and the supplier (Synetrix) also has contract with ADIT North East.
The requirements for commercialisation differ depending on the final ownership of the
network.

If the network is sold to a private sector operator and the public sector has no further
interest in the network, then the only issue will be the method of disposal (i.e.
ensuring a fair and fully open sales process to avoid creating a state aid, usually
achieved via advertising in the OJEU). Regarding future operation, this will then be
a solely private sector issue. The requirements will be those that apply to any and
every privately owned network, as directed by Ofcom.

If however public sector remains in ownership, retains a stake in the network, or
imposes operational and service requirements on the purchasers, then it will be
necessary to comply with State Aid requirements and Competition policy.

The disposal stage (or bringing in an investment partner) will need to follow the
same open and fair OJEU process, in order to avoid any one undertaking being
given unfair advantage

Then, regarding operation as a retail service, the future network must avoid
under-cutting other networks (thus distorting the market and future investment).
This is best achieved as follows: in areas where there are similar competing
services, the advice is to match the price and service level; in areas where there
are as yet no similar competing services, the advice is to offer services at the
estimated market price (often benchmarked against areas in Europe where
similar services are provided

The ideal however will be to operate the network as an ‘open access wholesale
service’, enabling any and every retailer to deliver services over the network to
end-users on an equal basis. The network owners may themselves also offer a
retail service over the network, but it must be on the same basis as that available
to other retailers. There are a number of existing public sector networks that do
so and some major projects are under development. We understand that these
have been approved by Brussels (DG Comp). The most high profile scheme in
this regard is the North and South Yorkshire NGA project. Such a approach can
include the “anchor tenant” concept whereby NCC would require that the new
operator provides defined services, to defined coverage and quality standards, for
the use of NCC itself, other public service entities, and for use by individuals
under digital inclusion programmes for example.
State aid regulations and competition policy are essentially complex legal areas. The
above advice is only a guide based on practical experience. Our team does not include
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legal advisers. It is essential that NCC takes advice on these issues from its appointed
legal advisers.
10.2
Intervention protocols
Any public sector action will need to adhere to a set of intervention policy protocols:

public sector should focus on enabling/ supporting private sector to deliver and
only if this fails, to step in with more direct intervention – market displacement
rules

public sector action should not benefit any one undertaking over and above
others, but should benefit all equally – state aid rules.

in particular, public sector action should not displace existing or future private
sector activity and investment – this does not just relate to BT and Virgin Media,
and the national BWA operators, but to small local providers (of which there is at
least one providing fixed wireless connectivity)
10.3
Options within this framework
In light of this, the public sector should focus on enabling the private sector to develop the
project to meet the required objectives, but in a way that gives all of private sector equal
opportunity.
There are a number of ways forward (options) to consider:
Private sector-led and public sector facilitates
Public sector sets out the project’s objectives in terms of service levels required, target
populations and broad timeframe, then does no more than bring potential private sector
players together and enables/ facilitates discussions, with the aim of encouraging purchase
of and appropriate investment in the existing platform such that it continues to deliver a
WiFi service, but also fills 2nd generation broadband gaps and starts to deploy 3rd
generation access. Private sector parties may include the major telcos, existing wireless
operators, local providers and potential new entrants. Public sector may be able to soften
the costs by committing anchor revenue, but this may raise state aid issues.
Public sector procures
If this does not work, then public sector will need to take further action. Public sector would
seek to procure an open access wholesale service covering the target populations that
would be open to all retailers on an equal footing – and at least two options are available to
do this:

Public sector places the service requirement out to tender via a fully competitive
OJEC process (“OJEU competitive dialog process”). The bidder or consortium
proposing an appropriate solution and requiring the least financial gap funding
would be selected. Public sector may reduce the gap funding requirement by
committing anchor revenues and/or revenue guarantees. The winning consortium
would own and run the network, providing the service level and coverage
required. It could then also use the network for other purposes. Public sector
would also need to build into the contract appropriate claw back arrangements.

Public sector considers establishing a special purpose vehicle and puts this to the
market for investment in return for shares. The vehicle would act like a utilities
provider rather than a telco, seeking long term investment at utility rates rather
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than the shorter much higher returns usually required by telcos. It would be open
to investment by telcos, large and small, ordinary companies and residents.
Public sector may need to gap fund the vehicle, at least in the short term. Long
term infrastructure investment funding could be sought from European Investment
Bank (competitive source of loans).
Partly depends on the wider region’s approach to NGA
The choice of option will partly depend on the approach taken across the remainder of the
region to NGA deployment.

The Norwich project could act as a pilot and role model for addressing market
failure in other rural/ low density parts of the region

And, rather than being stand alone, could potentially be subsumed into a wider
regional initiative which may enable cross subsidy from the more profitable parts
of the region.
10.4
Ownership and Feasibility - who will take it on, how and when?
This will be dependant on the points made in the previous two paragraphs. We suggest
the following process:

First public sector should decide what policy objectives it wishes the network to
serve/ contribute towards – we would recommend all three

The broad scale/ quantum and financial implications of these then need to be
worked up and factored into the business plan, indicating whether sale will generate
a positive value of whether the network will require a degree of gap funding. If the
latter, either appropriate gap funding provision needs to be made or the policyorientated SLA watered down to the point where the sale value is likely to be positive

Then public sector should decide if it wishes to retain a stake in the network, or to
sell it (subject to the policy objectives set out in a service level requirement)

The network can then be put out to the market via a fully open and competitive
OJEC process.
We have considered the possible ownership and control options and their implications are
summarised in the main report.
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11.
Annex B: Digital Connectivity Policy Priorities
This Annex summarises emerging national Government policy for the provision of highspeed digital connectivity and the avoidance of “digital divides”.
11.1
Underlying principle
The underlying principle is that digital connectivity and particularly higher speed digital
connectivity is becoming more and more essential for businesses to remain competitive
and for residents to fully engage in economic and community life. Those businesses and
those residents, and more broadly, those areas, that are not able to access competitive
digital connectivity, will increasingly be disadvantaged.
11.2
Economic impact
In our work for EEDA, we were able to estimate that the optimisation of ICTs by the
region’s businesses (of which competitive broadband services of a leading specification are
an important element) would result in a £3.4 billion gross value-added (GVA) uplift over the
next three to five years.
11.3 What are the gaps, how important are these and will the market
provide?
The key questions for policy makers are therefore:

To what extent will the telecoms industry provide the digital connectivity required?

In so far as it is unlikely to, what would be the resulting digital connectivity gaps?

How important will any gaps in digital connectivity be to realising the optimisation
of ICTs and hence the realisation of the full potential GVA uplift?

What are the most appropriate and most feasible actions that public sector might
take to help fill any digital connectivity gaps in an efficient and affordable way?
11.4
Three types of digital connectivity
The first step in answering this is to define, in simple terms, what we mean by digital
connectivity. We devised a simple but powerful categorisation for the EEDA Board, as
follows:

Leased lines – specialist, synchronous, high capacity, costly, therefore mainly
used intensively by larger businesses and organisations – increasingly fibre
based.

Public Internet Access (PIA) – what most people mean when they talk about
broadband:

1st generation broadband 0.5-2 Mb/s downstream, 0.25 Mb/s upstream - 95%
plus of businesses and households can access 1st generation broadband mainly
via ADSL (although some via cable).

2nd generation broadband circa 8 Mb/s downstream, and 1 Mb/s upstream –
now being deployed by BT over their copper networks but only 50% of
customers are located close enough to their local exchange to access the
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higher bandwidths. As a result, a new digital divide is opening up, and not just
in rural areas, but also in urban areas.


11.5
3rd generation broadband (Next Generation Access (NGA) in Ofcom terms) –
25, 50, or even 100Mb/s both downstream and upstream – two thirds of Europe
is currently deploying this either via Fibre-to-the Curb (FTTC) or Fibre-to-thePremises (FTTP). The UK as yet does not have large scale deployment plans
but the Government is worried that the UK could fall behind and loose
competitiveness. Thus Minister Steven Timms has charged the RDAs with
considering the issues and possible solutions for each of their regions.
Wireless/mobile

Main source is data via 2G and increasingly 3G mobile phone networks – limited
bandwidth but very wide coverage and usage potential. Following a recent
decision by Ofcom, the BWA (3.5 GHz) operators such as UK Broadband are to
be allowed to offer service to mobile users.

Ad hoc wireless hotspots – bandwidth varies, a few are free, many are relatively
expensive for limited period of use

City-wide/ area-wide WiFi grids of which NOL is an example (there are relatively
few of these).
Most important gaps from point of view of regional economies
The most important digital connectivity gap, across the UK regions, including in Norfolk is in
the provision of 2nd and 3rd generation broadband. The priorities are to:

Address the 2nd generation broadband gap which is not just a rural issue, but also
occurs in urban areas

Deploy near ubiquitous 3rd generation broadband (NGA) in the near future.
As briefly hinted in section 11.2 above, failure to address these will have significant
adverse economic (and social) consequences.
11.6
How important is wireless/ mobile connectivity?
2G/3G Mobile phone coverage and associated data services are important but current
availability of 2G services is already good in the majority of places in Norfolk, and 3G
services are becoming more widely available.
WiFi hotspots/ grids, in contrast are probably of only limited value/ importance except for
cities/sites/locations that want to be world-class locations. Since other approaches such as
3G data cards are becoming more widely available, hotspot WiFi networks will increasingly
need to offer high capacity wireless connectivity across the campus/ city, either free, or at
competitive prices.
Technologies such as WiMAX or iBurst, particularly those versions which support mobile or
nomadic use, have significant potential as they combine the right mix of coverage and
capacity, and promise to be cost effective means for delivering high-speed access services
at least when a mass market for terminals is developed. WiMAX is already used as a
means of delivering internet access at speeds up to 4Mb/s in Milton Keynes, for example,
but this uses stand-alone rather than integrated transceiver/modem units. Cheap
integrated WiMAX terminals are expected to be made available within the coming year or
so.
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11.7
Priority for the economy
The priorities for the regional economy are therefore addressing the 2nd generation PIA gap
and deploying 3rd generation access, since the former will enable the latter these will to a
large extent be linked programmes. It is likely that the network investment required to
enable near ubiquitous 2nd generation access, such as fibre in the access network will also,
with relatively limited additional investment, enable deployment of 3rd generation access.
The key question is therefore, if left to the market, will 2 nd generation broadband gaps be
filled and/or near ubiquitous 3rd generation connectivity be deployed within an acceptable
time?
11.8
Revenues
Ordinary businesses and households will and are paying consumer prices for PIA:

Adoption is growing, thus generating more revenue for current 1st generation
services

But also, as higher bandwidth becomes more essential, it is anticipated that
customers will pay more for this, but within the parameters of consumer rather
than leased line pricing e.g. £50-100 per month3, for a 50Mb/s service.
Discuss bundling issues here - more and more WiFi services are sold as part of a bundle,
increasingly including a mobility element. Attractive to big players to increase usage.
WiFi services will increasingly be seen more as part of the offer of the place, making the
place special. Visitors and nomadic workers increasingly expect WiFi to be free as part of
a bundle (coffee shop, hotel, library, etc), and will get annoyed when it’s not available or if
they are asked to pay for it separately, often as today at inflated prices. In this
circumstance WiFi is positioned more as a free utility. More appropriate for ‘the place’ to
fund a largely free service. While NOL’s approach during the pilot has been to offer a free
service, this was done to achieve consistency with state-aid matters and the pilot goals
rather than a long-term objective.
11.9
The need for intervention
If left to the market, the current thinking, of Ofcom, of DEBR, of BT and other players is that
NGA deployment will be patchy, with some customers getting 100 Mb/s and some getting
only 1 Mb/s. There is a common view that it will also take a long time – possibly up to 1015 years. Yet, the deployments in Europe are nearly all market led, so the market may well
provide in the not too distant future, in part at least.
RDAs are discussing with DEBR and Ofcom what they can do to speed/ease the process.
And the Home Office is expressing interest in security the use of city networks for security
purposes.
But, regarding rural areas, the broad consensus is that whatever the overall regional/
national solution, the hard to reach, remote, low population density areas will be left to last,
or left out altogether.
3
While this is the tariff range being suggested by the NGA deployments in Europe set out in the
Ofcom consultation paper, it’s our belief that prices in a lower range for the comms part only will
need to be achieved before the mass market is reached.
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These areas will require special support – projects which are already piloting this, or which
provide a platform for this are therefore of particular interest at the moment.
11.10 Support of Public Policy Goals
Any future network based on a development of NOL could therefore serve three sets of
public policy goals at both the national and regional level:

Digital connectivity goals

Public sector’s own connectivity requirements

Connectivity supporting specific policy initiatives.
Digital connectivity goals – public sector, either via retaining a stake in the network or
imposing service level requirements, can ensure that the network expands to provide 1st
and 2nd generation digital connectivity to homes and businesses, across a larger footprint,
particularly to those businesses and households more than 2.5km from their local
exchange. In this way the project will contribute towards the policy objective of ubiquitous
competitive broadband access. If WiMAX or another high capacity higher coverage radio
technology is provided, in so far as suitable spectrum is available, the network would be
able to offer various speeds up to a 4 Mb/s down, 2Mb/s up service4 which would represent
a marked improvement in currently available DSL speeds in Norfolk. Further increases in
speed might also be possible in future.
Public sector’s own connectivity requirements – public sector may choose to use the
network where appropriate, for fixed and mobile access. By public sector we mean not
only the local authority but education, health, social services, police, fire and other services.
For example:

public sector may choose to procure fixed connections from the network, because it
offers more competitive broadband access services or provides services not
available (other than via dedicated lease line services). An example of this is where
schools in Milton Keynes have switched to their local wireless network as it provides
cheaper/ better services than previous providers

public sector workers may use the mobile aspects of the service whilst on the move
– e.g. care workers and others who work in the community

public sector may use the network to provide more/ better CCTV coverage/ traffic
control etc
Connectivity supporting specific policy initiatives - public sector may pay for or
subsidise services for certain target groups – e.g. those requiring home care and/or
deprived/ excluded communities/ workless groups. Examples of this include a project in
the Northeast which provides wireless connectivity (and basic IT kit and support) to
households with no fixed phone line, to enable children to remotely access the school
network and wider internet; and a project in Manchester which provides wireless
connections (and basic IT kit and support) to households with no fixed phone line in
communities with high numbers of workless people, enabling them to starting trading online
via eBay
Each of these has financial implications. For example:
4
Based on current commercial offer of WiMAX service in Milton Keynes
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
Public sector can impose provision of these services (free or at a subsidized rate) as
part of the network disposal service level agreement. The purchaser will then reflect
this in the price they are prepared to pay for the network. If the requirements are
substantial, this will result in a negative sale value (which can also be seen as a form
of gap funding by public sector)

Public sector can commit to pay the full rate for each and every service, which will
represent a revenue stream for the future network. Again, the purchaser will reflect
this in the price they are prepared to pay for the network

Or, a combination of both may be appropriate. The North and South Yorkshire
projects have followed this course. In South Yorkshire, the four local authorities
have bundled up their connectivity spend into a 10 year contract which provides the
future network with a major anchor revenue stream, but in return are seeking
connectivity cost savings plus significant network foot print ensuring a ubiquitous
service to households and businesses.
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12.
Annex C: Competition in the Norfolk WiFi Market
We have reviewed the competitive offers available in the Norfolk Internet radio access
market. We conclude that NOL offers far greater coverage and availability than any
competing supplier. The information gathered has also been used to inform assumptions
about prices and volumes in the business modelling.
We have reviewed the competitive offers, including internet cafes, commercial wireless
offerings e.g. BT Openzone, T-Mobile etc, GSM and 3G operators’ data service offerings
and any other available services, summarising coverage, service parameters, prices, etc.
The companies already in the market could potentially be future partners in the
development of the Norfolk system - we have had discussions on this with several of them
during this project.
It is notable that during the NOL pilot the number of WiFi hotspots in Norwich and other
parts of Norfolk has grown significantly. NOL has not noticeably suppressed the
development of supply.
Details of the competitor review are provided in the table below.
Provider
The Cloud
Number of
Hotspots
in Norwich
50+
Tariffs
Monthly Tariffs:
£9.99 – unlimited access
for any number of devices
(owned by one person,
not transferable)
Has a roaming agreement
with BT
£6.99 – unlimited access
tied to a single device
(laptop / PDA, etc.)
Suppliers’ Description of
Service Offered
“The coverage from each
location
will
vary
enormously depending on
the type of location, but
with the exception of any
payphones,
these
are
indoor
hotspots
in
individual locations like
coffee shops.”
£3.99 – unlimited access
for the iPod touch.
Voucher prices:
1 hour - £4.50
3 hours - £6.99
24 hours - £9.99
SMS Voucher Prices
30 mins - £4.00
60 mins - £6.00
180 mins - £9.00
KeZone
5
- Has a roaming agreement
with BT Openzone
Monthly Tariffs:
£10 - 250 minutes
£20 – 2000 minutes
£30 – 4000 minutes
Voucher prices:
1 hour - £6
4 hours - £10
10 days - £20
30 days - £40
InterConnect Communications Ltd
Two
levels
of
WiFi
coverage are offered:
'External Set-Up' which
costs a little more can
cover “over 2kms in ideal
conditions”.
A basic
hotspot can cover “up to
about 90 metres” in ideal
conditions.
“There is
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Provider
Number of
Hotspots
in Norwich
Tariffs
Suppliers’ Description of
Service Offered
obviously no way any WiFi
service provider can offer
100% coverage, however
we do our best by
completing structured and
informed site surveys to
ensure that our hotspots
are
placed
in
ideal
locations to offer the best
connectivity.
We use
Cisco based systems as
we know they offer the
greatest reliability, speeds
and coverage.”
“The maximum speeds
that our end users can
reach are on business
lines (significantly lower
contention) with 8 Mb/s
down
and
832kb/s
upstream.”
“It is impossible for us or
anyone
to
accurately
calculate what speed our
individual
users
are
connecting at, however we
use
the
KeConnect
backbone on all our
hotspots, so we know that
even in busy periods, our
networks are never over
contended.”
T-mobile
Website:
http://hotspot.t-mobile.com/
19 (3 are
BT
Openzone
payphones)
Monthly
Tariffs:
£20 – unlimited use
£10 (existing customers
only) – unlimited use
These both include 300
minutes to use at BT
Openzone WiFi locations)
Vouchers:
£ 5 – 1 hour
£10 – 24 hours
£40 – 30 days
Mobile charges:
75p for 10 minutes
BT Openzone
15
www.btopenzone.com
(there are
actually 75
InterConnect Communications Ltd
Monthly
Tariffs:
£10 – 250 minutes
£25 – 4000 minutes
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Provider
Vodafone
Partnered with
BTOpenzone
Suppliers’ Description of
Service Offered
Number of
Hotspots
in Norwich
Tariffs
hotspots by
BT
Openzone
but
the
operator is
not
BT
Openzone,
it’s
either
Cloud,
Kezone, TMobile or
iBAHN.
Vouchers:
£6
-1
£10
24
£27
10
£40 - 30 days
16 – (5 are
BT
Openzone
payphones)
Once you’ve registered,
charges are added to your
Vodafone Mobile Connect
bill or mobile phone bill at
the following rates:
www.online.vodafone.co.uk
hour
hours
days
Per minute (for less than
2
hours
a
month):
20p a minute (ex VAT)
30 minutes - £3.50
60 minutes - £6.00
120 minutes - £9.00
Surf and Sip – Coffee
Shops
Number in
Norfolk not
known
Annual
Membership
£30 per month, with a one
year agreement
Monthly
£40 per month
Pay-As-You-Go
£10
–
24
£30
–
7
£50
–
30
£150 – 365 days
hours
days
days
Prepaid Internet cards
30 minute and 120 minute
cards - £5 per hour
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13.
Annex D: Summary of Imperial Market Survey
The results of a recent survey of NOL users and non-users undertaken for NCC have been
reported separately (ref) but it is worth summarising the main findings here.
The survey of NOL users and non-users was carried out in November 2007 by Imperial
College. In brief summary NOL is perceived very favourably. Users believe that it
improves their productivity - 62% stating that they gained between 1 and 2 hours or even
more productive work each week. Users also report that NOL improves their quality of life
and significantly enhances the attractiveness of Norwich as a place to live and work. As
many as 88% of user respondents stated they would prefer to live or work in city with such
services, either to a great or very great extent. However, it was also concluded that only a
small minority of users (only around 1 in 10) would readily pay for the NOL service. NOL is
seen as very nice to have, but not something which the great majority would be willing to
pay for on a regular basis.
Further, public leaders such as the local MPs see a strong benefit to the quality of life and
attractiveness of Norwich and Norfolk brought by the easy availability of wireless internet
access across the city and in other population centres.
The Imperial College team concluded that NOL is perceived as making a strong positive
contribution to the image and quality of life in Norwich and in the selected villages in South
Norfolk where it has been deployed.
“Our analysis is based on a combination of telephone interviews, a workshop bringing
together different public sector organisations based in Norfolk and a survey of 218 people
(151 Openlink existing users and 67 non-users). Openlink is perceived very favourably.
Respondents who use the service believe that it improves their productivity - 62% stating
that they gained between 1 and 2 hours or even more productive work each week. They
also reported that it improves their quality of life and that it significantly enhances the
attractiveness of Norwich as a place to live and work. 88% of user respondents stated they
would prefer to live or work in city with such services, either to a great or very great extent.
We have identified two groups of users:
Those who use Norfolk Open Link as a free alternative to subscribing with a service
provider, or truly because of affordability,
Those who are out and about, and need mobile access to the internet for personal or
business applications.
The willingness of existing users to pay for a similar service in the future is around 40%, but
this figure combines those stating they are likely to subscribe to a fee based service to
some extent, a great extent or a very great extent. When we discount those who state to
“some extent” we see that less than 10% are likely to convert in practice. This is
consistent with surveys in other cities such as our survey for the City of London. The
likelihood of taking out a subscription does not vary depending on general attitude,
employment, demographics, or frequency of usage. While people say they are delighted
with the service, they are not prepared to pay for it. Even among those who access the
Internet exclusively through the Open Link and use it almost continuously, only 20% state
that they are most likely to pay for the service.
Both firms and public sector organisations in Norfolk are experiencing a growth in the
number of mobile or field based staff. There is evidence of a trend towards multi-functional
front line staff, especially for public service workers. A number of private sector
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organisations have undertaken trials or pilots of mobile applications with various devices
over various networks, typically mobile cellular network. They report that they are unlikely
to rush to WiFi as a technology, and move from existing mobile service providers as they
have a non-negotiable requirement for ubiquitous coverage, as well as a need for
simplicity in their contractual relationships.
They do not want to fragment their
communications needs to multiple service providers based on the technology of the
network, but instead have one vendor who makes the technological base of the network
transparent to the user. Their need is for ubiquitous and seamless coverage, regardless of
technology, and simplicity in vendor relationships.
This means that if a private firm takes the Open Link over, it would need to develop
partnership with other service providers to ensure seamless roaming over its
infrastructure. Moreover, due to the nature of their business, the organisations we talked to
have strong concerns over privacy and security.
From a public sector perspective, there is a need for a clear strategy about coverage. This
would allow organisations to set their expectations and start experimenting with trial
applications. Plenty of potential applications were discussed, and it emerges that there is a
need for a common platform across all public sector applications. This is another
indication of the trend towards multi-functional front line staff as we found with private
sector organisations. Free access in public buildings such as hospitals, city halls, and
libraries, would also provide a medium to deliver message to the general public such as
health and safety, or fire prevention messages.
The initiative, as a pilot, is applauded by the general public, private firms and public
organisations. Nevertheless, there is a general aversion from the private sector to see the
public sector operating such a network on a full-scale and long term basis. The public
sector could play a role without being involved in operational matters. A number of private
sector organisations had favourable attitudes towards sponsorship; they could envision the
marketing benefits of promoting themselves over the service, especially where they could
use the service to support their own staff. This should be further explored.”
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