Ensuring effective regulation of NGA networks in Austria

26.01.2011 IIR Interconnection World Forum 2011 Page 1

Ensuring effective regulation of NGA networks in Austria

Kurt ReichingerAustrian Regulatory Authority for

Telecommunications and Broadcasting

The opinions expressed in this presentation are the personal view of the author and do not prejudge decisions of the Austrian regulatory authorities.


Agenda The Regulator’s dilemma

Life between hard-core SMP and soft law regulation

The Austrian Unbundling market as an example From the ladder of investment concept to accepted products on the market

Virtual unbundling A universal wholesale product or a useless remedy more?

Final Considerations


The regulator‘s dilemma


The regulator‘s dilemma

Hard-core SMP regulation Regulation often means definition of general conditions or a framework

Efficient regulation means that total benefits to some exceed total costs to others Regulation as an ex ante or ex post procedure

Market analysis procedure Definition of relevant markets Analysis of competitive situation Occurrence of

significant market power (?) Imposition of appropriate remedies

Soft law regulation EC recommendations like the one on NGA regulation EC general strategies like the Digital Agenda BEREC common positions National topics


Trying to bridge the gap

Safeguardingcompetition

Promotinginnovation


Competition, innovation and investment

Safeguarding competition Mandating appropriate wholesale products (remedies) from SMP operator Incentivising OLOs climbing the ladder of investment Allowing sufficient margin for alterative and SMP operator

Promoting innovation Promoting innovation from incumbent operator with financial strength Promoting innovation from alternative operators

Incentivising investment Making investment scenarios attractive while safeguarding competition But: Investors usually want return not regulation


The Austrian unbundling market as an example


Access to physical network infrastructure

Austrian market definition Only metallic loops included Not included: Fibre, cable, mobile technologies But ancillary services like access to ducts and dark fibre included

Austrian market analysis Copper access network of A1 Telekom Austria as „bottleneck“ 100% market share of A1 Telekom Austria Disadvantages for alternative operators – also for broadband roll-out A1 Telekom Austria has significant market power

Now, what remedies to choose?


Deployment scenarios

Yesterday: Copper only ADSL2+: ~ 16 – 20 MBit/s VDSL@CO: ~ 25 – 30 MBit/s

Today: Copper and fibre FTTC: ~ 30 – 40 MBit/s FTTB: ~ 50 – 80 MBit/s

Tomorrow: Fibre only FTTH: > 100 MBit/s

ADSL2+ / neu: VDSL2

VDSL2Glasfaser

VDSL2Glasfaser

Glasfaser


EC‘s recommendation on NGA regulation (2010)

Addressing the challenge of managing competing (and sometimes conflicting) drivers in the implementation of broadband

1. Securing investment in infrastructure and roll out, Past and future investment in active and passive infrastructure Both from incumbent and alternative operators

2. Promoting competition both at the infrastructure and service layers, Promotion of competition on both infrastructure and service edge possibly conflicting

3. Relaxing regulation where there are sufficient levels of competition, and Relaxing regulation on market fully based on regulation may be dangerous Signals of relaxing regulation important for investment decisions

4. Designing a framework for the transition from copper to fibre.


Basics of Austrian decision M 3/09

Promote alternative operator investment in VDSL@CO VDSL2 from the „Central Office“ (VDSL@CO) allowed as a first step Compensation for frustrated investment by A1 Telekom in case of future FTTx roll-out

Promote alternative operator investment in FTTC/B Better data delivery for FTTC/B-Planning transparency Access to ancillary services duct / dark-fibre Negotiation possibilities for deploying new infrastructure (Cabinets)

Allow for A1 Telekom Austria investment in FTTC/B No obligatory „spectrum shaping“ under specific conditions Planning meeting,

compensation payment, Migration to virtual unbundling, … Prioritising more advanced technologies VDSL@CO < FTTC < FTTB < FTTH

26.01.2011 IIR Interconnection World Forum 2011 Page 12 04/12/23 Seite 12

Basics of Austrian decision M 3/09

Access to ducts – for backhauling Cost savings – civil works Attractive access conditions – better than general rule acc to Telecoms Act Nationwide offer – not only in NGA areas Fees – similar to general rule

Access to dark fibre – for backhauling Cost savings – civil works Attractive access conditions – better than general rule acc to Telecoms Act Nationwide offer – not only in NGA areas Fees – similar to general rule BUT: only available in case of ducts not available or not economically viable


MDF CAB

Remedies available so far

Full unbundling of copper line Sub-loop unbundling of parts of copper line Co-location Access to ducts Access to dark fibre

CAB


The NGA problem

MDF


The NGA problem

MDF

CAB

CAB

CABCABCAB

CAB

CAB

CAB CAB

CAB CAB


Basic considerations of Austrian decision M 3/09

Economies of scale will be harder to achieve in NGA scenario For incumbent operator and – even harder – for alternative operators Alternative operator roll-out of FTTC/B/H rather not expected on larger scale Classical unbundling at the MDF will become less attractive Sub-loop unbundling never has been a success

Introduction of a new remedy In addition to traditional remedies on unbundling market Keeping alternative operators competitive Providing a substitute wholesale product for classical unbundling Introducing an active product (layer 2 bitstream) on a passive market( infrastructure) Virtual unbundling

European Commission Accepted the new remedy as an intermediary wholesale product


Virtual unbundling


Virtual unbundling - cornerstones

1. Possibility for a grade of innovation comparable with passive access

2. Highest possible transparency for higher layers

3. Possibility for multicast services

4. Technological neutrality

5. Flexibility for choosing CPE (white list)

6. Service hand-over at MDF (or similar PoP in the NGA)

7. Third-party service hand-over

8. Configuration access for all relevant connection parameters or non-overbooked bandwidth between customer and PoI

9. To be offered in NGA areas only


Technical Concept of VULL Reference Offer

Bandwidth (HP/LP)Netz ANB

CPE

CPE

CPE

CPE Bandbreite

Bandbreite

Bandwidth

Bandbreite

DSLAMBandbreite

Bandbreite

Bandwidth

Bandwidth

Bandwidth

NetworkOLO

POI


Reference Offer by A1 Telekom Austria Modular layer 2 bitstream product based on Ethernet technology

Access part: VDSL2 on copper loop with 3 bandwidths to choose from (8/20/30 MBit/s) Ordered per customer

Backhaul part: Ethernet with 16 bandwidths to choose from (2 … 800 MBit/s) allowing OLOs to choose

degree of overbooking – even allowing non-overbooked services Ordered per DSLAM

Quality of Service: Service priorisation of Ethernet Frames using p-Bit p=5: Voice / p=4: Video / p=1: Business Internet / p=0: Residential Internet 50% of Link: high priority quality guaranteed / Remainder: low priority quality

Customer Premises Equipment (VDSL2 Modem/Router) No modem included – to be chosen by OLO Minimum modem requirements defined Modem whitelist with modems tested, being qualified as properly working and guaranteeing

defined service performance parameters


Reference Offer by A1 Telekom Austria

Service hand-over for several DSLAMS at MDF location in NGA roll-out areas 1 GbE and 10 GbE

Service hand-over to third party provider possible Transparency for multicast services Pricing issues

Margin squeeze free


Final considerations


Final considerations

The telecoms landscape is changing – so are regulatory interventions Some of yesterday‘s remedies may not be appropriate any longer Such remedies may have to be phased out with new remedies being

carefully introduced order to support today’s regulatory intentions Virtual Unbundling is such a new remedy that could even replace several

of today’s remedies in a medium to long term perspective, e.g. Classical Unbundling Classical Bitstreaming Terminating Segments …

… which could make life easier for incumbents, alternative operators, customers and regulators alike … leading to …


… a happy ending !!


Ensuring effective regulation of NGA networks in Austria

Kurt ReichingerAustrian Regulatory Authority for

Telecommunications and Broadcasting

The opinions expressed in this presentation are the personal view of the author and do not prejudge decisions of the Austrian regulatory authorities.

Ensuring effective regulation of NGA networks in Austria

Documents

austrian unbundling

dark fibre mdf cab cab

future investment

investment decisions

a1 telekom austria investment

general rule access

frustrated investment

market virtual