Regulation « Broadband Prime

French Regulator Releases FTTH Last Mile Deployment Guidelines

On October 13, 2008 / Government, The Blog / Leave a comment

ARCEP has recently released the outcome of the public consultation on FTTH last mile deployment guidelines. In a statement Friday, Arcep said it recommends the first operator “to equip a building offers to install additional fiber” in the last part of the network “on behalf of other operators”. Read below the press release. You can download the recommendation, in English, by clicking here.

Fibre rollouts and sharing of the last part

Paris, 10 October 2008

To ensure that fibre rollouts take place under satisfactory competition conditions, following a public consultation with the players, ARCEP is publishing its preliminary recommendations, pursuant to the adoption of the Law on modernising the economy. ARCEP recommends the establishment of sharing of the last part agreements that include all operators, and which make it possible to test the different solutions in several large metropolitan areas. As an adjunct, ARCEP recommends a best practice whereby the building operator would offer to install additional last drop fibre on behalf of third-party operators. ARCEP has also published a sample agreement allowing joint property owners and social landlords to contract an operator to manage the fibre installation inside the premises.

The deployment of a new fibre local loop is a major technical, economic and competition challenge for our country. It represents a long-term investment over great many years and billions of euros, much as the deployment of the copper network did. As revealed in the responses to the public consultation, there are still a number of uncertainties concerning investment and operating costs, operational constraints and technological choices. These uncertainties are further accentuated by the inherent complexities of deploying a new local loop, in cooperation with competing operators.

Over the past 18 months, the Authority has led a series of technical and economic efforts aimed at establishing a framework that encourages investment in optical fibre local loops, while promoting a situation of lasting competition. A portion of these efforts have already entered the operational stage, while certain principles still need to be examined with respect to other issues. The public consultation launched before the summer, on the issue of sharing of the last part, helped deepen existing analyses. Through the elements being made public today, the Authority hopes that the first rollouts can be carried out with adherence to the principles of fair competition and technological neutrality.

Access to France Telecom ducts

On 15 September 2008, France Telecom published a reference offer for access to its civil infrastructure. This publication satisfies the obligation contained in the market analysis decision adopted by the Authority on 24 July of this year, which requires France Telecom to provide access to its civil infrastructure (ducts, manholes) under transparent and non-discriminatory conditions, and at cost-oriented tariffs.

The technical work and trials which began in autumn 2007 made it possible to create an operational offer, and confirmed a satisfactory level of available civil infrastructure. All operators, regardless of the technology they use, can now employ France Telecom ducts to deploy fibre.

Mutualising the last drop

The Law on modernising the economy, of 4 August 2008, introduces a principle of shared access to guarantee competition in the ultra-fast broadband market, without increasing the number of parties involved in installations on private property. The first operator to install fibre on the premises must thus satisfy all reasonable demands for access to the last drop of the network from third-party operators.

The implementation of this obligation encompasses several dimensions: methods for performing work on the premises, location of a shared access point, technical choices for the sharing of the last part process, informing third-party operators, etc. These are new issues to which the players are proposing a variety of solutions, and on which feedback from players with actual experience is still scarce.

For the launch stage, the Authority is in favour of allowing the players to find solutions, based on the recommendations being published today. The first agreements have already been signed, and still more will be required before all operators can begin their rollouts. The goal is to test the different solutions in several large metropolitan areas, in other words on a sufficiently large scale to obtain relevant results without undermining the subsequent stages.

In its recommendations, ARCEP supports a process whereby the first operator to equip a building offers to install additional fibre in the last drop on behalf of other operators. When applicable, this option would act as a complement to the other sharing of the last part solutions planned by the operators, and would be pre-financed by the interested parties. Because of the limited additional cost involved, and its compatibility with the technical choices of all operators, this constitutes a future-proof best practice.

Publication of a sample agreement

The Law stipulates that the installation of fibre be governed by an agreement between the building operator and the owner or manager of the property.

Thanks to the feedback obtained during the public consultation, the Authority is able to publish a sample agreement that satisfies the demands expressed by the players. This document includes the essential guarantees for property owners, while limiting the administrative burden on operators. It makes it possible to provide property owners and operators with a reference contractual framework that adheres to the principles set out in the Law. Players can already use the sample agreement.

The next stages

Technical work continues to be performed with the players on all of these issues, in an endeavour to fine-tune the principles to be applied to pioneer rollouts, and to prepare for subsequent stages based on actual experience. The Authority will also take full account of the recommendation on new access networks which is currently being drafted by the European Commission.

Before the end of the year, ARCEP will publish an ultra-fast broadband roadmap to track the progress being made by rollouts and sharing of the last part mechanisms, and the use of France Telecom ducts.

The Authority will be particularly vigilant to ensure that no single operator enjoys unjustified advantages in fibre rollouts, whether in terms of progress in their deployments, the capacity to lay fibre in civil infrastructure or access to premises and customers. The possibility for all operators to deploy fibre to the subscriber indeed provides the strongest incentive to invest in ultra-fast broadband, and the greatest guarantees in terms of competition and innovation.

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FTTx International Debates

On September 28, 2008 / Access, The Blog / Leave a comment

FTTx is a relatively new development in the telecom industry, with relatively small technology & architecture dependences and no historic record. Therefore, many issues relating to FTTx deployments, namely implementation, business models, economic case, technology etc are still open and are going through heavy international dispute. The previous generation of broadband access (ADSL & cable) didn’t face similar cross-fires since copper (the physical medium to reach the end customer) was already deployed and owned by the incumbent. Therefore, many of the issues were resolved by the incumbent’s choices, with the refinement of an ex-post and ex-ante regulation mix.

In an attempt to summarize the contemporary debates on FTTx here’s a short list depicting the most serious of them:

Technology Choice (PON vs. P2P technologies)
Incumbents, large telcos, and effective regional monopolies prefer to deploy PON instead of P2P. With PON, differentiation on speed is tough since the end-users served by the same optical coupler share equally the same CO link. PON however, provides a significant business advantage: It is difficult to regulate and makes the business case for the competitors requiring access to it harder. On the other hand, alternative operators prefer P2P for the exact same reasons. Societal concerns also push to the P2P end for the speed advantages and the ability to choose over more than one providers. NRAs don’t show a strong preference of one over another. Their preferences depend on how they approach another crucial issue, that of infrastructure-based competition or open access networks. See below. You can find some interesting pieces about this in fiberevolution.

Architecture (FTTH/B/C)
The same cyclical arguments surface the Architecture debate. Incumbents and regional monopolies want to build FTTC networks for two reasons: First, to continue capitalizing on their existing copper access network, by providing high-speed xDSL services (such as VDSL) over the last few hundreds meters of copper reaching from the intermediate node to the customer’s premises. Secondly, with an FTTC architecture unbundling is made more difficult and expensive for competitors (fiber can’t be unbundled, subloop unbundling requires large investments in fiber backhaul, space to keep active and passive equipment is required close to the intermediate node), thus leaving bit stream as the only realistic option for wholesale services.

Open Access vs. Infrastructure-based Competition
The choice of one option over the other is not an easy call and it has to be coordinated very carefully. None of them is the panacea to the investment debate and most likely the best solution can be found somewhere in the middle. Those who favor facilities-based competition prefer to let market dynamics to shape sustainable business models and market structure. By many economists, primarily US influenced, letting the market forces decide on the competition and market structure for NGANs is considered the most appropriate approach. On the other hand, those who favor open access public networks propose the establishment of one physical infrastructure operator (or equivalent schemes, i.e. one infrastructure owner and one communications operator) that will provide physical access services to all competing providers of the upper market layers. You can read more on a previous post “Facilities-based Competition vs. Open Access Networks“.

Separation of Incumbent’s Vertical Business
Incumbent is a vertical integrated firm and there is strong argumentation whether it should be split to 2 parts: A physical infrastructure owner/operator and a service provider. This would reduce incentives for discriminating over competitors. Those against vertical separation argue that separation reduces incentives for investments since a separated firm cannot leverage economies of scope. Tim, fellow fiber ring member has been writing a lot about it. Nevertheless, it is interesting to see how do European countries approach this dilemma. UK has created BT openreach giving it business rights over BT’s copper infrastructure. Sweden has also split Telia Sonera and have created TeliaSonera Skanova Access covering copper and fiber networks and multiplexing. The Netherlands however, have decided that the BT model is of limit relevnace to the Dutch market – KPN is in fact a forward-looking incumbent – but have reserved the right to change course in the future if required. Just last week, the European Parliament, by approving the report coordinated by Commissioner Reading endorsed a proposal requiring telecoms operators to split their network business from their retail services (Functional/Structural Separation). Nevertheless, they insisted that such a measure be only “exceptionally” applied, requiring approval by both the EU executive and the European regulatory body.

This reference list is not complete since criticality is a subjective preference. Debates not included in this list are Aerial vs. Buried FTTH Access, How many fiber by how many operators should enter a building, how these basement terminated fiber will be regulated, government funding of FTTx projects etc.

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Finland to Consider Government Funding for NGN

On September 20, 2008 / Government, The Blog / Leave a comment

While on the other side of the Atlantic voices are calling for governmental support to uplift broadband figures, Finland is yet another European country to publicly consider the government funding of NGNs. The cost of the investment would be EUR 200 million, of which the state would pay up to a third, municipalities, regions and the EU another third, and telecommunications companies at least one third. Under the model, the public support would be paid to the builders of the networks.

However, public money is not on offer for subscriber connections – that is, the two last kilometres. Bringing 100 Mb fibre optic, or radio link connections all the way to people’s homes would raise the costs by EUR 480-780 million. Connections between homes and the optical fibre network are expected to involve the traditional copper cables or wireless connections. Speeds of both copper and wireless connections are expected to increase considerably in the coming years to dozens of megabits a second.

Nevertheless, this is a historic decision since the Finnish government has traditionally avoided active involvement and preferred to let market forces to lead industry development. As said by Eselinen, Frank and Hirvonen in “Does strategy matter? A comparison of broadband rollout policies in Finland and Sweden“:

The Finnish broadband strategy proposal, published in December 2003 reflects the legacy of the general Finnish telecommunications policy. In contrast to its Swedish counterpart, it relies on market forces and emphasizes technological neutrality. According to its operational aims, by the end of 2005 the household penetration rate of broadband should be 40%, all citizens should have access to high-speed, easy-to-use and affordable data transfer, and Finland should be among the leading European countries measured by communication network demand and accessibility. These aims were pursued by means of 50 action points, putting most emphasis on measures promoting competition in the broadband markets, the provision of services and content in the networks, and strengthening the demand for broadband. The proposal also included action points for low-demand areas. These included recommendations for creating regional strategies for broadband deployment, increasing competition in local markets, and providing schools and libraries with public broadband connections. However, no government funding for broadband infrastructure investments was made available, which was against widespread expectations partly fuelled by the Swedish policy model.

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EC Public Consultation on NGANs Regulatory Guidelines

On September 20, 2008 / Government, The Blog / Leave a comment

European Commission has issued a public consultation for a set of proposals that are aimed to spur competition and encourage the development of FTTH. After the end of the consultation period (mid-Novemeber) the Commission will adapt the comments of the responders to a formal recommendation in 2009. [Press Release available]

Viviane Reding, the Commissioner for Information Society & Media have always tried to unify the regulation framework of Telecommunications in Europe. In this respect, EC announcement attempts to prevent dominant telecommunications companies from recreating monopolies in next generation fiber-optic networks by:

setting a risk premium for networks that will unbundle their ducts and fibers. Unofficially, the risk is estimated to be between 8-12% but it is expected to finalize above 12%. However, the announcement does not make reference of a specific figure.
describing a pricing methodoloty for calculating the fees that will have to be paid for new services
provisioning for bit stream access but only in the case where lower level remedies fail to address distortions of competition
pushing for more infrastructure competition (i.e. small companies to deploy their onw networks)

No side shows much of excitement for the proposal:

Incumbents argue that the proposal reduce their incentives to invest in NGAN. Their main lobby ETNO (European Telecommunications networks Operators Association) talks about “regulatory pressure” from Brussels.Instead they wish to share the risks of NGANs with the new entrant operators. “Considering that Europe is currently lagging behind other regions in fiber deployment and that investment effort is slowing down, the key focus of the recommendation should be on how to boost risky investment,” said ETNO director Michael Bartholomew.
ECTA (European Competitive Telecommunications Association),the Incumbent’s opposition lobby association argues that guaranteeing access to smaller operators is a must
NRAs via their association ERG (European Regulators Group) describe the pricing proposal as “overly prescriptive”

Needless it is to state that this proposal confronts already taken actions by at least German and Spanish regulators with both trying to grant some sort of regulation holiday to DT and Telefonica.

Full coverage at: EurActiv,Telecoms.com, Inquirer.net,
Opinions at: CommunicationsDirect News, Financial Times,
Background: EU pushes for high-speed internet for all, EU promises to act on high-speed Internet networks

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Code for Quality Indicators in Electronic Communication Services in Greece

On July 22, 2008 / Government, Greece, The Blog / Leave a comment

Following the recent public consultation [See EETT Consultation on Quality Indicators for Electronic Communications Services] on measurements and monitoring of a set of quality indicators, EETT has finally issued the Code for Quality Indicators in Electronic Communication Services. The code comprises of a strict set of rules to measuring and publishing a series of quality indicators:

Fixed Telephony Quality Indicators
Mobile Telephony Quality Indicators
Broadband & VoIP Services Quality Indicators
Directory & Information Services Quality Indicators
Customer Service Quality Indicators

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Code of Conduct in Electronic Communications Services in Greece

On July 22, 2008 / Government, Greece, The Blog / Leave a comment

Following the public consultation with all stakeholders, Greek NRA, EETT has adopted the Code of Conduct for the provision of electronic communications services to consumers on 15/7/2008.

The Code sets general principles, clarifies procedures and clearly defines the behavior and obligations of electronic communications services providers to their consumers.

The adoption (note: and future enforcement) of the Code has been sought for quite some time by Consumer Associations and individuals due to the increased consumer complaints and problems encountered in pre- and contractual relationships with the telecommunications providers.

For more information please read the press release or directly download the Code of Conduct (both in Greek).

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EMERG – European Mediterranean Regulators Group

On July 18, 2008 / Government, The Blog / Leave a comment

In Malta early July, the National Regulation Authorities of the countries in the Mediterranean basin agreed and signed the memorandum of EMERG, a network for Euro-Mediterranean Telecom Regulators. The group’s establishment and goals have been agreed with European Commission earlier this year.

The primary objectives shared by the regulatory authorities of electronic communications of Euro countries, which include both EU Member States and neighboring countries around the Mediterranean:

To create a viable market for electronic communications for the benefit of consumers and businesses, and
To bridge the digital divide, making the benefits of the information society accessible to all, especially by providing universal service

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Facilities-based Competition vs. Open Access Networks

On July 10, 2008 / Access, The Blog / 1 Comment

Facilities based competition versus open access public networks is a debate that seems to always surface in almost every fiber agenda. I will try to put in order some thoughts in a personal attempt to clear up things a bit. The choice of one option over the other is not an easy call and it has to be coordinated very carefully. None of them is the panacea to the investment debate and most likely the best solution can be found somewhere in the middle.

Facilities-based Competition

Those who favor facilities-based competition prefer to let market dynamics to shape sustainable business models and market structure. By many economists, primarily US influenced, letting the market forces decide on the competition and market structure for NGANs is considered the most appropriate approach.

Also, it must not be neglected that NRAs welcome facilities based competition since it generally makes their job a lot easier. When physical monopolies become thinner and more and more players have access to rare goods (e.g. land, soil, street subsoil, building basements, collocation facilities) there is evidently less need for regulation.

However, the economics of NGANs (based on international practice, construction costs and services pricing) suggest that business sustainability requires a substantial subscriber base, and (closely depended on the size of the market) significant market share. Facilities-based competition offers very limited options for clear product differentiation to the competing firms. Thus price competition is left probably the only form of differentiation that can have an immediate impact on consumer preferences. However, it also has an immediate (negative) impact to margins and profitability.

Open Access Networks

On the other hand, those who favor open access public networks propose the establishment of one physical infrastructure operator (or equivalent schemes such as one infrastructure owner and one communications operator) that will provide physical access services to all competing providers of the upper market layers.

They argue that a public network’s equal and open access offerings not only lowers the financial barriers to entry for operators, but also increases the profitability in the upper layers of the market and can also serve more efficiently the local communities.

Some even propose that no operator should have the right to dig to places where municipal networks are already present and provide network elements unbundling services. Others further extend these measures to the entire jurisdictional area of the municipal network arguing that if digging is required to serve a certain area of the city, municipal authorities/public operator must take care of it.

On the downside, permitting a single operator to manage the physical infrastructure without direct competition may bring significant social risks. The monopoly power given to the physical infrastructure operator (even if regulated) may have serious negative results as in the case of numerous physical monopolies in the past. For example, it can lead to increased services prices or to overspending of public money to support ineffective operations. If the physical provider is privately operated inefficient management can simply result to service termination and severely hurt public welfare with no short-time immediate alternatives. The presence of competition provides 1) the necessary efficiency incentives to the firms and 2) a sustainable market structure in case of malpractice or management inefficiencies.

Last, far more complex evaluation models are required to assess fiber investments of a publicly owned entity in terms of profitability, paybacks and returns. If we suppose that the principal strategic objective of a public physical infrastructure operator is the increase of local communities’ social welfare then advanced models will have to be designed, which will factor in social and municipal benefits, local economy indicators, public services efficiency, citizens satisfaction, life conditions etc.

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NGANs: Regulation to Avoid another Tragedy of the Commons

On July 9, 2008 / Access, The Blog / Leave a comment

A couple of weeks ago I received a call from a civil constructor asking assistance and opinion. He was installing new water pipes along a city district and to his surprise he came across a street where installation was impossible. The reason was that throughout the entire width of the street various fiber networks have already been installed.

This is probably much more serious than it looks at first hand. If there are streets already so congested that no other dug infrastructures can be installed think of what we are about to face in the next few years! Facilities-based competition may be a good thing for many but we may really want to handle the streets as a common good. In this respect, since street capacity for underground infrastructures is limited certain principles, rules and regulation have to be applied. Regulation is required to provide incentives for investments, promote competing firms collaboration and discourage free riders. If not we may soon experience a depletion of a common good (the street’s underground capacity) or as put in literature another tragedy of the commons [1], [2].

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3rd International Conference of EETT “Innovation in Broadband Networks & Services” – Part E

On June 10, 2008 / Expert Insight, Greece, The Blog / Leave a comment

Day 2 – Session 3: Innovation in Services

Andreas Anastasopoulos, President of Greek Licensed Telecommunication Providers Association (SATPE) discussed the opportunities and challenges of Mobile Virtual Network Operators (MVNOs). He argued that MVNOs is the next best thing for service innovation in the telecommunications industry. The core argument behind that is that services and products differentiation can retain customer base (of fixed-line operators). Market and prices comparisons were made amongst various European markets and the Greek market indicating the lack of competition in this field in Greece and the negative impact on services prices. He concluded that regulatory enforcement of MVNO business is obligatory for new innovative services development. He also sees a unique business opportunity for fixed operators to enter the MVNO market.

[I agree that enhanced service competition is required in the mobile market. But I don’t agree with the proposed strategy for fixed-line operators. Mobile services offerings might present in some respects a business opportunity for fixed-line operators, but this strategy totally neglects the key competitive advantage for fixed-line operators which is the enormous bandwidth they can offer to end-users, that Mobile Network Operators (MNOs) don’t have and probably never will. Besides, this is the reason why MNOs are starting to horizontally integrate via various forms of partnerships (mergers, coordinated marketing efforts, network leases etc) with fixed operators through out the world.]

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