Ftth access regulation

We make ICT strategies work

Regulatory conditions

In-house FTTH access

Illustration of FTTH in-house access

For the purpose of the present analysis, “in-house FTTH access” refers to the network portion from the Distribution Point (DP) to the Optical Telecommunications Outlet (OTO).

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MPoP

Core network

Concen tration

network

Feeder segment Drop segment

Drop fiber cable

Limit of private property

Distribution Point(DP)

Accessnetwork

IP Ethernet (ATM) FTTH architecture (P2P or P2MP )

OTO

OTO

OTOFD

BEP

In-house segment

Home cablingIn-house cablingDrop

cabling

Vertical drop

Home installation BEP: Building Entry Point

FD: Floor Distributor

MPoP: Metropolitan Point of Presence

OTO: Optical Telecoms Outlet

= FTTH in-house access

The regulatory train for FTTH in-house access is in motion worldwide

In-house wiring is one of the key bottlenecks restricting FTTH deployment. Thus NRAs increasingly regulate sharing of in-house infrastructure to promote competition.

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Australien

Neuseeland

ARCEP

2009-2010 Multi-fiber Mandatory Symmetry Decree-

Law

2009 Multi-fiber Mandatory Symmetry

CMT

2009 Single or multi Mandatory Symmetry

House market

1999 BCP Program Voluntary Multi-fiber

TKG

2011 Symmetry Power for NRA Unspecified

ACM

2010 decision Unbundled fiber Mandatory Asymmetry

Swiss-com

2008 Multi-fiber Voluntary Symmetry

HAKOM

2009 Unbundled fiber Mandated Asymmetry

Main regulatory fields of action towards FTTH in-house deployment

In order to facilitate FTTH in-house deployment, regulatory measures essentially address estate/building owners and network operators.

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Main regulatory fields of action for

improved FTTH in-house deployment

Access to network operators Balance of rights between owner and tenant

Access of competitor to already existing infrastructure of network operator

Access of competitor to newly deployed infrastructure of network operator

Access of operator to private estate and building

Access of operator to existing infrastructure

Access of operator to newly created infrastructure

Mandatory standards for ducting systems via building laws

Cross-cutting fields of action4

Owner vs. tenant of building1

Network Operator vs. Competitor

2

Owner vs. Network Operator

3

Mandatory standards for cables via building laws

Key challenges related to in-house FTTH access

Essential regulatory area of concern regarding FTTH access is to mitigate investment risks without disturbing the level of competition on the market.

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Prerequisites for FTTH access Key challenges

Increases delay and costs of deployment

Increases delay and costs of deployment

Required consent of estate and building owner

Civil engineering is a key barrier to replicability

Unclear property right over building or estate

Imposed conditions by estate and building owner

Existing exclusivity requirements on owners

Delay or delay of deployment and lack of

investment security

Delay or delay of deployment and lack of

investment security

Product portfolio and marketing affected

Product portfolio and marketing affected

No connection of tenants willing to connect

No connection of tenants willing to connect

Higher retail prices complicate successHigher retail prices complicate success

Concerns on economic viability of FTTH accessConcerns on economic viability of FTTH access

In-house cabling ≈ 43% of total NGA CAPEX

Risk of de facto monopoly by “first moving operator”Risk of de facto monopoly by “first moving operator”

Access to buildings and in-house wiring

Drop segment deployment on private estate

House introduction of drop cabling

Use of existing in-house cabling or new deployment

Strategic options for regulating in-house FTTH access

Multi-fiber approach, single fiber unbundling and bitstream access are three prominent and complementary strategic options for competitive in-house FTTH access.

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Single fiber FTTH approach(“unbundled access”)

Single fiber FTTH approach(“unbundled access”)

One single fiber line is deployed from the Distribution Point to each end-user

premises

(access-based competition)

Multiple fiber FTTH approach

Multiple fiber FTTH approach

Several fibers are deployed from the Distribution Point to each end-user

premises

(infrastructure-based competition)

Complicates cooperation models

Only one operator can reach the end-user’s home

High sunk investments required Higher barrier to entry Increased penetration risks for non

SMP operators Only up to 4 operators reach users

Bitstream accessBitstream access

Access to customers via active electronic interfaces at all nodes of the

concentration/core network

(service-based competition)

Proven long track record in Europe

Lower market entry risk and CAPEX

Number of competitors is determined by the market

Can be implemented wherever fiber rollout is economically viable

Fiber replicability at lower costs

Facilitates a cooperation model

Secures freedom of choice for user

Several operators reach the end-user’s home in parallel

Deepest level of end-to-end control

Lowest market entry risk and CAPEX

Access at all network nodes of the concentration and core network

DSLAM, Ethernet or IP Bitstream

No infrastructure control by access seeker

Limited product and price innovation and differentiation

Wholesale operator manages connections

The 3 options are not mutually exclusive, but rather complementary

Description

Pros

Cons

Key success factors for in-house FTTH access

Regulatory measures must target owners of real estate and buildings as well as “first moving operators” in order to secure speedy and cost effective in-house FTTH access.

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Obligation towards operators Obligation towards competitors

Tolerate drop segment deployment on private estate

Provide access to drop cabling lines and infrastructures

Tolerate house introduction of drop cabling

FTTH accessindependent from

private owner’s consent

Shared use of FTTH access infrastructure mitigates

bottlenecks towards effective competition

Tolerate use of existing in-house cabling or new deployment

Provisions on financials:

Who bears costs of FTTH infrastructure deployment and

what can be included in the access pricing?

Provisions on financials:

Who bears costs of FTTH infrastructure deployment and

what can be included in the access pricing?

Provide access to existing physical infrastructure

Provide Information on all buildings connected

Provide information to existing physical infrastructure

Implement network topology that enables infrastructure sharing

Obligation towards building owner

Agreement on modalities for FTTH access deployment

Regulatory options chosen by countries: The example of “multi-fiber approaches”

Albeit slightly different, the multi-fiber approaches implemented in France, Switzerland and by the EU Commission are the most prominent cases for multi-fiber FTTH access.

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Multi-fiber options for in-house

FTTH access

Owner Main features of the approachNature of the approach

Mandatory approach (symmetry)

Mandatory approach (symmetry)

Voluntary approach of private sector (facilitated by NRA)

Voluntary approach of private sector (facilitated by NRA)

Voluntary approach, possible mandatory for SMP in the drop cable segment

(asymmetry)

Voluntary approach, possible mandatory for SMP in the drop cable segment

(asymmetry)

Source

NGA recommendation

(2010)

Legislation andDecisions

(2009-2010)

„Fibre suisse” model(2008)

Agreement between operator and owner In-house network up to Distribution Point No financial compensation to owner Operator installs up to 4 fiber lines per

building and bears costs of installation Access by other operators upon demand Access point outside private properties

Mutual agreement between competitors Invest installs 4 fibers per home Access point is outside private properties Option for sharing also feeder segment Swisscom responsible for drop segment Owner is responsible for in-house wiring

Applies only with regard to SMP operators Mandated access to the drop segment Voluntary deployment of multiple fiber

lines in the access network (+ in-house) Where legally possible under national law,

mandatory deployment of multiple fibers NRA sets location of distribution point

Single fiber option for in-house FTTH

access

Owner Main features of the approachNature of the approach

Mandatory approach“unbundled fiber”

(asymmetry)

Mandatory approach“unbundled fiber”

(asymmetry)

Source

SMP regulation in market n°4

(2010)

First moving operator and competitor share FTTH access infrastructure

Infrastructure use on an unbundled basis Asymmetric SMP regulation with

Reggefiber as SMP for FTTH access Mandated open access to passive fiber Access point is at the Optical Distribution

Frame (ODF) “ODF access” Collocation services and backhaul access Price caps on unbundling rates Transparency obligation (Reference Offer) Operational and functional separation of

passive infrastructure provider “Reggefiber FTTH” from active operator and service provider “KPN”

Mandatory approach“unbundled fiber”

(asymmetry)

Mandatory approach“unbundled fiber”

(asymmetry)

Obligation for incumbent Access to fiber-based local loop (P2P) Reference offer for unbundled access to

LL and related facilities Publish conditions, time limits and prices

SMP regulation in market n°4

Regulatory options chosen by countries: The “single-fiber approach” in the Netherlands

The unbundled fiber approaches in the Netherlands and Croatia are based on asymmetric regulation by NRA as a result of analysis of market n°4.

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Why Detecon

Having Detecon as partner means securing compliance of FTTH access deployment with regulatory conditions while avoiding mistakes made by other players.

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Client BenefitDetecon Leverage

HolisticTeam of expertsfrom all disciplines

PracticalReal-world solutions instead of “theory”

ImpactSolutions with lasting value

CustomizedInternational experience adapted

A dedicated project team brings together all regulatory, technical, commercial and financial expertise and experience related to FTTH access deployment in accordance with Client’s business strategy

Based on sound regulatory strategy, Detecon’s solutions have been implemented in practice for many Clients worldwide

Tangible solutions ready for implementation

Integration of in-house FTTH access within Client’s overall FTTH rollout strategy

Understanding of FTTH access challenges from NRA’s and operator’s perspective and staff involvement

Full understanding of Client’s reality of business and local market challenges

Project team knows Client’s business environment

Presence with a local office in Client’s region of operation

Regulatory bottlenecks of FTTH access are mitigated in the light of Client’s operational FTTH business imperatives

Benefit from hands-on strategic expertise while avoiding mistakes made by other operators worldwide

Coherence of regulatory approach to FTTH access with overall strategy

Ownership of Client’s staff over regulatory solution

Regulatory solutions designed for FTTH access are relevant to Client’s actual business needs

Selected References

The Client leverages Detecon’s lessons learned from similar assignments in regulatory strategy for FTTH in-house access, thus avoiding mistakes made in other countries.

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Client Reference Case

UAE

Germany

UAE

Slovak Republic

Turkey

NGA Bitstream strategyEtisalat has been imposed regulatory remedies for the provision of bitstream access based on fiber infrastructure. Detecon developed the BSA strategy and optimized the technical infrastructure setup.

Development of FTTX cooperation modelsDetecon defined complimentary FTTx rollout strategies and developed regulation friendly cooperation models with competitors to facilitate CAPEX efficient rollout.

NGA BSA, ULL, dark fiber reference offerDetecon developed a successful, optimal and sustainable access regime that enabled the operator (“du) to grow its customer base while protecting its current revenues.

Development of Reference Bitstream Access OfferDefined wholesale reference broadband access portfolio and setup a regulatory negotiation strategy based on state of the art costing and pricing strategies

BSA, LLU regulatory scenarios for Turk TelekomBenchmarking of tariff regulation regime and regulatory decisions in selected EU member states. Recommendations for Turk Telecom on rebalancing and retail tariff regulation. In-house cabling strategy

Your Contact Persons

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Dr. iur. Albert Njoume Ekango

Phone: +49 221 91611536Mobile: +49 160 475 80 58Fax: +49 221 91614824

e-Mail: [email protected]

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Dr. Arnulf Heuermann

Phone: +49 221 91611550Mobile: +49 171 225 42 17Fax: +49 221 91614630

e-Mail: [email protected]