An intercity and metro fibre-optic project developed by the HERA utility consortium in the Emilia-Romagna region of Italy is evolving into one of Europe's most ambitious public broadband plans, thanks to a EUR120-million investment by the regional government.
The consortium's operating company, Acantho, which has more than 600 route-km of its own installed metro fibre-optic cable and more than 100-km leased intercity fibre, is building the networks for Acantho's own operations that target businesses and public institutions and to support the Emilia-Romagna region's Telematic network, which Acantho will manage. When completed in 2005, Acantho's IP-based network will have more than 2,000-km of fibre-optic cable.
The broadband project in Emilia-Romagna, an affluent region in northern Italy with a high number of small-to-medium-sized enterprises, is the latest in a series of government-subsidized broadband initiatives being launched at a time when private communications companies are scaling down and restructuring. Emilia-Romagna and the other regional governments in Europe are funding the projects to stimulate economic development through the development of broadband distribution networks.
Unlike the private companies, the government-controlled network builders have money. They also have extensive rights of way and utility infrastructure allowing them to deploy fibre at lower costs and faster than traditional telecommunications companies. Acantho, controlled by 11 utilities that are owned by 137 municipalities, plans to invest EUR70 million through 2006 for its own commercial telecoms operations that include major greenfield metro Ethernet over fibre networks. Under the agreement, announced last January, the Emilia-Romagna provincial government will give approximately EUR8 million to HERA for network construction. The rest of the EUR120 million will be used to bring broadband connectivity and services to 200 small municipalities.
HERA received a real show of support on June 25 when its IPO was oversubscribed. Some 40% of HERA, which is now traded on the Milan stock exchange, will be publicly held.
Acantho, originally called Casa Web, was started by four utilities in the Emilia-Romagna region that came together in late 2000—at the end of the Internet boom—to build a fibre network. They were later joined by other utilities. Their plan attracted the attention of venture capitalists and private sector investors such as B2, the Swedish broadband company. The utilities kept a 51% share in the project and the private sector investors the remaining stake.
B2, which was already working with Cisco Systems, recalls Acantho chief executive Luciano Frascà, advised the consortium to use the vendor for the Emilia-Romagna launch. Acantho decided to deploy Metro Ethernet directly into fibre with no intermediate systems and deployed Cisco Catalyst switches in the metro networks, together with Cisco routers at or near the customers' premises, to provide end-to-end Ethernet right up to the socket in the customer's office block.
But the public-private project ended when the private investors pulled out in August 2001 at the end of the dot-com boom, explains Frascà, and the utility consortium decided to take full ownership of the new venture. That guaranteed Acantho the necessary investments for network growth and at the same eliminated the short-term return on investment pressures from the private partners.
Acantho launched its broadband services in May 2002, offering 100- and 10-Mbit/sec connectivity to business customers in the cities of Bologna and Imola. Not long afterward, Acantho interconnected its metropolitan-area networks in the region. Services for the commercial market include Internet access, Web hosting, application-service-provider and other data-center services, packet telephony, virtual private networking, and videoconferencing.
Acantho has built more than 600 km of metro networks in the cities of Bologna, Imola, Forli, Cesena, Ravenna, and Rimmini. Acantho connects the cities with an intercity backbone built using fibre acquired from Edisontel. The intercity fibre runs along regional highways.
Acantho uses utility ducts to connect customer buildings. The access part of the network is installed whenever there is work done on the utilities' ducts, which greatly reduces costs. The company uses two different fibre deployment strategies. In urban areas such as Bologna and Imola, Acantho installs its distribution network using a "build and fill" strategy. Fibre is installed at the same time as utility work before customers sign up for service. However, in the semi-urban and rural areas, Acantho signs up customers first before installing fibre under a strategy called "fill and build."
For the Telematic plan, which was launched last January, Acantho will install an additional 1,400 route-km of fibre-optic network. Some 660 km of intercity cable will be installed in duct running along water pipelines belonging to Romagna Acque, a water utility. The remaining 640-km of cable will be installed using other member utility rights of way.