Next Generation Access BT/ISPA: 27th July 2007


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Next Generation Access BT/ISPA: 27th July 2007

  1. 1. Next Generation Access BT/ISPA: 27 th July 2007
  2. 2. Agenda – BT’s latest thinking <ul><li>Overview </li></ul><ul><li>Bottlenecks & Points of Interconnection </li></ul><ul><li>Complexity </li></ul><ul><li>Risk Sharing </li></ul><ul><li>Flexibility for Trials </li></ul>
  3. 3. Broadband UK: affordable, available and attractive? <ul><li>Top of G8, better than mains water </li></ul><ul><li>Vast majority commercially funded </li></ul><ul><li>Infrastructure competition: LLU, cable, wireless in over 70% of the country </li></ul><ul><li>Even wider set of technologies for broadcast applications (esp. TV) </li></ul><ul><li>Hundreds of nationwide service providers with a number of wholesale providers </li></ul><ul><li>E.g., IP TV, mobile over broadband, broadband on the move, IP telephony, hybrid platforms... </li></ul><ul><li>Bundles and packages with wireless, landlines, software as a service </li></ul><ul><li>99.6% broadband availability, over 12 million subscribers </li></ul><ul><li>One of the lowest prices in the world </li></ul><ul><li>Service and commercial innovation </li></ul>
  4. 4. Ample bandwidth for the vast majority today? <ul><li>Bandwidth and price tend to dominate marketing messages – “simple” to understand and compare, or is it? </li></ul><ul><li>Typical customer uses much less than ‘last mile’ capacity </li></ul><ul><ul><li>Average bandwidth usage <30 kbit/s </li></ul></ul><ul><ul><li>Peak individual throughput much more constrained by ‘internet’ and servers, peak time of day, also backhaul and core networks </li></ul></ul><ul><ul><li>But some intensive users e.g. streaming SDTV, peer-to-peer file transfer >200 MB/hour - who pay no extra </li></ul></ul><ul><li>However BT aware of growing public debate and keen to engage with end customers, Ofcom, CPs and other stakeholders e.g. BSG, content industry </li></ul><ul><li>With long investment lead-times for NGAs, important to get right balance between supply-led and demand-led approach and take account of ongoing technology evolution e.g compression </li></ul>
  5. 5. Business Where is the last mile bandwidth an issue? What else drives customer experience? Example applications requiring different transmission rates & Quality of Service <ul><li>Internet Access </li></ul><ul><ul><li>Best Effort (e-mail, online gambling etc) </li></ul></ul><ul><li>On-line Gaming </li></ul><ul><ul><li>PC, Console P2P </li></ul></ul><ul><li>VoIP Communications </li></ul><ul><ul><li>(BE PC-PC, off-net PSTN quality) </li></ul></ul><ul><li>Video-Communications </li></ul><ul><ul><li>(web-cab to TV, Video calls, Conference) </li></ul></ul><ul><li>TV & Video </li></ul><ul><ul><li>VoD download/streamed, SDTV, HDTV </li></ul></ul><ul><li>Business applications </li></ul><ul><ul><li>Software as a service, IP-Centrex, VPN </li></ul></ul>Need for high upstream rate as well as download rate Gaming QoS Service level Best Effort Access (d/s) Bandwidth 100 kbps 1 Mbps 10 Mbps 10 kbps HDTV Video-on- demand VoIP Internet Access applications Video telephony Video Conferencing ???
  6. 6. BT’s Access Network Today Local Exchange Telephone Pole (DP) Customer Overhead Distribution Underground Distribution Backhaul E-side Cables D-side Cables Street Cabinet (PCP) In Confidence manual cross-connection of e-side and d-side pairs
  7. 7. BT’s Access Network Today Street Cabinet (PCP) Local Exchange Telephone Pole (DP) Customer Overhead Distribution Underground Distribution Backhaul E-side Cables D-side Cables … some older cabinets are more challenging! Whilst some cabinets are modern and easy to work with… In Confidence
  8. 8. Technology provides a number of options to ‘accelerate’ last mile bandwidth Bandwidth (Mbit/s)[1] DownStream (Headline) Indicative DownStream (Median) Indicative UpStream (Headline) Indicative Upstream (Median) ADSL – Exchange based 8 4-6 0.8 0.75 ADSL2+ (MSAN) – Exchange based 24 6-10 0.9 0.75 FTTC - VDSL2 c50 22-25 c24 9 FTTP/GPON c75+burst c75+burst 40+burst 40+burst Broadcast satellite 100s 100s n/a n/a Broadcast terrestrial digital TV 10s 10s n/a n/a Wireless (HSPA, LTE, WiFi, WiMax) 10s 1-5++? <1 <1
  9. 9. BT’s strategy for UK broadband infrastructure <ul><li>Maximise the performance of existing copper infrastructure </li></ul><ul><ul><li>Fix the customer experience issues starting from marketing messages, to selling, provisioning and operating </li></ul></ul><ul><ul><li>Tackle residual areas of non availability, making it near ubiquitous, with public funding support </li></ul></ul><ul><ul><li>Upgrade the current copper based broadband to ADSL2+ </li></ul></ul><ul><ul><li>Develop “hybrid” solutions: broadband, satellite/digital terrestrial, storage/processing, software </li></ul></ul><ul><li>Exploit 21CN investment to provide much more throughput capacity at </li></ul><ul><li>lower cost; make this a competitive advantage for ‘rich content’ services (TV) </li></ul><ul><li>Provide targeted solutions to “NGA” with the best technology and commercial </li></ul><ul><li>model in each case </li></ul><ul><ul><li>Fibre to the Premises in Greenfield development </li></ul></ul><ul><ul><li>Selective participation in government funded opportunities where ‘state aid’ case is clear. </li></ul></ul><ul><ul><li>Develop a ‘targeted deployment’ Equivalent proposition </li></ul></ul><ul><li>Re-endorse the regulatory principles that have served us well to date </li></ul><ul><li>(Equivalence in particular, as it drives the risk sharing and volume, both critical </li></ul><ul><li>for the commercial case to work) but reflect the “NGA” requirements in the detail </li></ul><ul><li>Communicate our plans and rationale openly to manage public policy </li></ul><ul><li>pressure ensuring that BT does not get ‘held responsible’ for UK NGA </li></ul><ul><li>investment (or lack/delay thereof) </li></ul>Satisfy the vast majority of needs with our existing copper network Continue investment in core network Develop targeted NGA solutions Re-endorse Equivalence Actively engage customers and stakeholders
  10. 10. NGA becomes targeted <ul><li>Fibre deployment requires a lot of civil engineering </li></ul><ul><ul><li>Requires time and money so inevitably some opportunities will be captured before others </li></ul></ul><ul><li>NGA investment becoming ‘targeted’ </li></ul><ul><ul><li>Where new greenfield sites are built </li></ul></ul><ul><ul><li>Where customers pay </li></ul></ul><ul><ul><li>Where developers or other commercial investors pay </li></ul></ul><ul><ul><li>Where taxpayers pay (with consequences to commercial investment?) </li></ul></ul><ul><ul><li>... </li></ul></ul>How to make targeting fair and effective?
  11. 11. Vision: Targeting NGA to where customers demand is, Equivalently <ul><li>Fibre To The Cabinet (FTTC) solution evolution </li></ul><ul><ul><li>Typical BT cabinet 300 lines/customers; BT has over 90’000 cabinets </li></ul></ul><ul><ul><li>May need a new powered cabinet required for FTTC; minimum commercial level of about 80 subscribers may be difficult to reach (25% of all lines in a cabinet) (assume £10/month premium); May be simpler/lower cost options as technology develops. </li></ul></ul><ul><li>Establish a ‘trigger level’ and prepayment by Communication Providers to determine where to deploy </li></ul><ul><li>Make it possible to deploy ‘anywhere’ but get paid up front to reduce ‘stranded cash’ exposure </li></ul><ul><li>Nationwide deployment but BT (and any CP) would have a choice where to deploy roll-out depending on customer demand </li></ul><ul><li>Next Generation Access provided by Openreach at ‘Layer 2’ level at exchange </li></ul><ul><ul><li>Broadband electronics in Openreach </li></ul></ul><ul><ul><li>Minimal difference in the end customer and Communication Provider interface whether FTTP or FTTC </li></ul></ul><ul><ul><li>Review of the operationally and commercially difficult sub-loop product currently in the Undertakings </li></ul></ul>New technology solution New commercial model New point of equivalence (Openreach – BTW)
  12. 12. Sub Loop Unbundling vs Wholesale layer 2 service Sub Loop Multiple cabinets Multiple backhaul Multiple tie cables <10% of lines accessible* Wholesale Layer 2 Shared cabinet Shared backhaul Shared tie cable >80% of lines accessible* * Assumes aggressive commercial model:- high penetration rates, additional revenue, multiple CPs
  13. 13. Analysys report for OPTA, Jan 07 conclusions on Sub loop <ul><li>“ the use of SLU by an alternative provider is not economically viable as an alternative to continuing to use LLU…..we estimate that a business case for SLU would require both: </li></ul><ul><ul><li>a market share greater than 55% of all broadband lines (including cable) in all areas served </li></ul></ul><ul><ul><li>Our highest estimate for incremental revenue (which assumes an increase in ARPU across all broadband users of EUR10 per month” </li></ul></ul>
  14. 14. Complexity <ul><li>Likely multiplicity of operators owning NGA infrastructure </li></ul><ul><li>Patchwork deployment </li></ul><ul><li>Range of possible models – including developer-led and ‘campus’ models </li></ul><ul><li>BT’s SMP and USO not applicable? </li></ul><ul><li>Need for new approach to ensure connectivity and interoperability – and choice of downstream supplier </li></ul><ul><li>Long Rollout timeline (Civil works) </li></ul>
  15. 15. ‘ Hiding’ the infrastructure complexity to enable efficient innovation and competition nationwide End User CP – Wireless Access EU – Fixed and Wireless S Voice & Data Ethernet 32 Split CP1 CP’N’ R Enhanced Backhaul Offers D-side Copper Legacy E-side Openreach Handover point MSAN Fibre backhaul External Network Voice & Data T SLU NTE5 CP1 CP’N’ Openreach EoI Layer 2 ONU CP1 CP’N’ Wifi WiMax 2G 3G Pt-Pt Access Fibre FTTP PON Access Fibre FTTP CP1 Core CP2 Core CPN Core Ethernet FTTCab – Copper DSide Infrastructure investor x, layer 2 ONT 1 ONT N OLT OLT <ul><li>Common Ethernet presentation “Layer 2” and standardised ‘OSS’ to Unify Market above a limited range of physical media options </li></ul><ul><ul><li>Fibre to Cabinet – Brownfield </li></ul></ul><ul><ul><li>Point–Point Fibre – Major business sites </li></ul></ul><ul><ul><li>Fibre to Premises (GPON) Greenfield </li></ul></ul><ul><ul><li>Other technologies as built </li></ul></ul><ul><li>Fibre and Wireless are complementary </li></ul><ul><li>Next Generation Access Infrastructure </li></ul><ul><li>A mix of Fibre Access Network designs with a unified service offering </li></ul><ul><li>A basis for sustainable long-term access network investment </li></ul>
  16. 16. Reaffirming the regulatory principles and updating the “detail” <ul><li>Openreach formed to deliver underpinning infrastructure and Equivalence of Input for all </li></ul><ul><ul><li>Communication providers and BT’s downstream businesses are equal </li></ul></ul><ul><ul><li>Equivalence should continue in NGA </li></ul></ul><ul><ul><li>Openreach is only successful if the industry as a whole is successful </li></ul></ul><ul><li>Recognising the narrowing reality of ‘bottleneck’ assets in light of technology and infrastructure competition </li></ul><ul><li>Encouraging innovative ways to trial without making commitments to particular products or roll-out to be available </li></ul><ul><li>Symmetric treatment of all investors in new assets </li></ul><ul><li>Reviewing the universal service obligations and funding in light of multiple private and public investors and value chain fragmentation </li></ul><ul><li>Stimulation of competition in higher layer network services and applications on all infrastructure </li></ul>
  17. 17. Investment Risk <ul><li>Agreement on need to reflect risk/return </li></ul><ul><li>There are possible options </li></ul><ul><ul><li>Trigger approach with up front payments </li></ul></ul><ul><ul><li>Anchor pricing </li></ul></ul><ul><ul><li>Utility regulation </li></ul></ul><ul><li>BT open to suggestions and keen to explore alternatives </li></ul>
  18. 18. Flexibility for trials <ul><li>Technical trials are essential first step </li></ul><ul><li>May be ‘exceptional’ ‘semi-commercial’ cases where more dynamic cross-BT working required to develop feasible ‘real world’ solutions </li></ul><ul><ul><li>geographically – restricted </li></ul></ul><ul><ul><li>involving other CPs </li></ul></ul><ul><ul><li>testing demand-led models </li></ul></ul><ul><ul><li>will require ‘experimental’ approach </li></ul></ul><ul><li>Need for exemptions? </li></ul>
  19. 19. UK NGA Vision? <ul><li>Not whether the UK has a monolithic NGA or not, but: </li></ul><ul><li>An evolutionary delivery of innovative services at affordable prices to those who want to buy them, which means:- </li></ul><ul><li>Responding to real demand </li></ul><ul><li>In a commercially and technically innovative way </li></ul><ul><li>That enables effective downstream competition everywhere </li></ul><ul><li>And rewards the risk investors take </li></ul>