CityFibre and Oxera have today published a
report that assesses the feasibility of a shared fibre access model in UK towns
and cities, and undertakes an economic review of CityFibre’s anchor-tenant model
in comparison to
the co-investment concept previously developed by Oxera.

The Digital Agenda for
Europe has set targets for EU Member States to provide all Europeans with
access to 30Mbps or faster broadband by 2020, and for 50 percent of households
to subscribe to ultrafast services of 100Mbps or faster.

The UK government has
placed emphasis on its goal to have ‘Europe’s best superfast broadband network
by 2015’; but despite significant public funding, the UK continues to lag
behind its European counterparts and there are increasing concerns that the
status quo regime may not be delivering the desired outcomes. The CityFibre
anchor-tenant model provides a viable way to access increased private
investment to address current under-investment and help make the vision a
reality.

The CityFibre anchor-tenant
model seeks to address many of the issues associated with the UK’s incremental
roll-out of NGA, by providing an alternative, yet complementary approach to incumbent
telecoms networks. CityFibre builds, owns and operates shared fibre networks
without the need for ownership participation by the incumbent or service
providers. Instead, commitments to use CityFibre networks are obtained through
contractual arrangements between CityFibre and anchor tenants, facilitating
private investment. This model is unique in the UK and could transform the
landscape of the industry.

Greg Mesch, Chief
Executive Officer at CityFibre commented: “CityFibre is providing towns and
cities with a real, future-proof, competitive alternative to an incumbent-led
monopoly infrastructure. This report has emphasised the strength of our model,
and the benefits it provides to all stakeholders. Importantly, cities will
benefit from ubiquitous fibre infrastructure which puts the foundations in
place for business growth and job creation, as indicated by other studies which
estimate that a fibre-rich city can increase its annual GDP by up to 2%. In
order to understand the potential of the model, you need only look at the
success of the Google Fiber project in Kansas City, and Gigler in Bournemouth.
True gigabit level services are just around the corner, if service providers
have the courage to see what’s inevitable.”

Oxera’s report is a
continuation of the research undertaken on the co-investment model (NetCo), and
strengthens Oxera’s contribution to the wider debate on the funding of
ultrafast broadband networks, with a particular focus on alternative investment
models.

The report published
today shows that there is a strong economic case for CityFibre’s investment
model, and appropriately implemented, presents the same risk-reducing,
pro-competitive features envisaged in the NetCo model. The CityFibre model
represents a variant of co-investment, and builds on principles consistent with
the NetCo model. The design of contracts is key to replicating mechanisms of NetCo’s
equity-led model, while reducing the threshold of participation of service
providers with limited resources for large-scale CAPEX commitments. Furthermore,
CityFibre’s model is based on the principle of non-discrimination and can
therefore provide significant benefits for the economy and to a wide range of industry stakeholders
including service providers, local authorities, policy-makers, investors and
consumers.

The report also suggests that
the CityFibre model can be a catalyst that could result in a longer-term reshaping
of the industry towards a NetCo-like structure, providing significant ultrafast
network coverage in the UK.

Felipe Flórez Duncan, Oxera Managing Consultant,
added: “There has been overwhelming interest in the co-investment idea
since our ‘NetCo’ report was published. As companies such as CityFibre
demonstrate, variants of risk-sharing business models are emerging, building on
economic features similar to those of the NetCo model. Policy-makers can play a
role in encouraging these innovative investment models, given EU and national
objectives for the deployment of future-proof broadband infrastructure.”

The report can be downloaded here: http://www.oxera.com/Publications/Reports/2013/A-shared-fibre-access-model-in-UK-towns-and-cities.aspx


ENDS

CityFibre Media Contact:
Alex Henshall / Caroline Hitchen
Good Relations Regional
T. 01625 500800
E. cityfibre@Insightmkt.com

About CityFibre

CityFibre (www.cityfibre.com) is one of the UK’s leading fibre optic
infrastructure providers. By building dedicated fibre optic networks for the
public and private sectors, we empower data-hungry users throughout the
country, by unleashing unlimited speeds on future-proofed technology.

Our transformational fibre infrastructure projects comprise
point-to-point connections, metro rings and Fibre-to-the-Premises networks that
make possible Next Generation Access and gigabit level services direct to local
authorities, businesses and homes.

CityFibre manages over 100 private fibre projects and seven separate
metropolitan fibre rings under long-term contracts with local authorities,
police forces, healthcare organisations and universities. With almost 30,000km
of fibre in the ground, connecting more than 350 sites and data centres across
the UK, we are the country’s largest independent provider of fibre in secondary
cities.

In Bournemouth, CityFibre owns the largest FTTH project in the UK. With
over 21,000 homes in marketing now, the network enables service providers to
deliver unprecedented superfast broadband with speeds of up to one gigabit per
second.

Notes to Editor

Oxera combines the most rigorous economic thinking and quantitative
methods with a practical business approach to advise clients on matters in
completion, finance and regulation.

What sets Oxera apart is:

–       our reputation for credibility and integrity with policy-makers,
regulators and legal authorities, which is of critical value to our clients and
has been created through our long-standing emphasis on quality and
independence;

–       our experience and unique ability to combine the fields of competition,
financial, regulatory and quantitative economics, which together with in-depth
sector knowledge, provide the ingredients for respected economic advice.

If you would like further information about the findings of this report
or any other information about Oxera, please contact:

Tessa Burrows
Business Development Manager
Oxera
T. 01865 253013
E. tessa.burrows@oxera.com

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