REGULATION IN EUROPE QUO VADIS?
EUROPE.
SPANISH REGULATION ON NGA NETWORKS
FTTH COUNCIL EUROPE CONFERENCE 2009
Bella Center, Copenhagen (Denmark), 11th & 12th February 2009
ALBERT MARTI, Director of the Board
COMISIÓN DEL MERCADO DE LAS TELECOMUNICACIONES 1

SPANISH REGULATION ON NGA NETWORKS
The incumbent plans
p
Announcement in 2008: deployment of FTTN and FTTH networks to
reach 3 million HH’s until 2010
Commercial offers already launched by Telefonica in November 2008
2 & 3 Play packages up to 30 Mbps.
Copenhagen, 11th & 12th
ALBERT MARTI, Director of the Board February 2009
COMISIÓN DEL MERCADO DE LAS TELECOMUNICACIONES 2

CMT REGULATION ON NGA NETWORKS
The broadband market situation in Spain : retail market
Spain*:
ULL coverage: 60 % of HH’s
Cable coverage: 50,3 % of HH’s 60 % of Telefonica’s
number of access points
Markets shares by technology of access and regions
(*) YE 2007
Copenhagen, 11th & 12th
ALBERT MARTI, Director of the Board February 2009
COMISIÓN DEL MERCADO DE LAS TELECOMUNICACIONES 3

SPANISH REGULATION ON NGA NETWORKS
The broadband market situation in Spain : retail market
Spain*:
ULL
18%
BITSTREAM 4%
TELEFONICA
58%
CABLE
20%
*SOURCE: CMT; Q3 (2008)
Copenhagen, 11th & 12th
ALBERT MARTI, Director of the Board February 2009
COMISIÓN DEL MERCADO DE LAS TELECOMUNICACIONES 4

SPANISH REGULATION ON NGA NETWORKS
The broadband market situation in Spain : retail market
Spain*:
Internet Television
2.407.013
2 407 013
151.218
1.041.497 1.359.709
385.166
3 Play: 15,5%
15 5%
6.221.372
2 Pl
Play: 71%
Fixed telephony
12.388.747
*SOURCE: CMT; Q3 (2008)
Copenhagen, 11th & 12th
ALBERT MARTI, Director of the Board February 2009
COMISIÓN DEL MERCADO DE LAS TELECOMUNICACIONES 5

SPANISH REGULATION ON NGA NETWORKS
Broadband retail market share by regions* (I)
regions
Telefónica: 32% - 78%
Cable: 0% - 52%
% %
Asturias Cantabria Asturias Cantabria
Pais Vasco
52% 32%
Pais Vasco
49% 38%
Galicia
Galicia 49% Navarra 34% Navarra
35% 44%
27% 51%
La Rioja La Rioja
29% 50%
Cataluña Cataluña
Castilla y León
Castilla y León Aragón Aragón
8% 57%
38% 42%
19% 54%
Madrid Madrid
14% 52%
Comunidad Comunidad
Castilla / La Mancha Valenciana Castilla / La Mancha Valenciana
Extremadura Extremadura
Baleares Baleares
23% 45% 56% 38%
28% 58%
0% 63%
Murcia Murcia
43% 42%
Andalucía + Ceuta y Melilla Andalucía + Ceuta y Melilla
Canarias Canarias
23% 12% 53% 78%
(*) YE 2007
Copenhagen, 11th & 12th
ALBERT MARTI, Director of the Board February 2009
COMISIÓN DEL MERCADO DE LAS TELECOMUNICACIONES 6

SPANISH REGULATION ON NGA NETWORKS
Broadband retail market share by regions* (II)
regions
Bitstream: 4% - 15%
% % ULL: 0% - 29%
% %
A sturias Cantabria
C t bi
Asturias Pais Vasco
12%
Cantabria 6%
Galicia
Pais Vasco
4% 12% Navarra
7%
Galicia 5% Navarra 12% 14%
9% La Rioja
8%
La Rioja 11% Cataluña
10% Cataluña Castilla y León Aragón
Castilla y León 27%
Aragón 9%
12% 19%
8% 9%
Madrid
Madrid
29%
5%
Comunidad
Comunidad
Castilla / La Mancha
Castilla / La Mancha Valenciana Valenciana
Extremadura Extremadura
Baleares Baleares
14% 8% 8% 9%
10%
15% 4%%
22%
Murcia
Murcia
7%
8%
Andalucía + Ceuta y Melilla
A ndalucía + Ceuta y Melilla
Canarias
Canarias
10% 10%
15% 0%
(*) YE 2007
Copenhagen, 11th & 12th
ALBERT MARTI, Director of the Board February 2009
COMISIÓN DEL MERCADO DE LAS TELECOMUNICACIONES 7

SPANISH REGULATION ON NGA NETWORKS
CHALLENGES
FIRST CHALLENGE
How to maintain incentives to invest in innovative
infrastructures?
How to f
foster competition on infrastructures and not just on
f
services?
How t allow the development of alternative operators’
H to ll th d l t f lt ti t ’
competition in the new fibre scenario?
Copenhagen, 11th & 12th
ALBERT MARTI, Director of the Board February 2009
COMISIÓN DEL MERCADO DE LAS TELECOMUNICACIONES 8

SPANISH REGULATION ON NGA NETWORKS
Regulatory obligations on the wholesale physical network infrastructure
access at a fixed location*
RESPONDING TO THE
FIRST CHALLENGE
Telefonica h
T l f i has SMP
No physical access obligation to FTTH networks (GPON)
Access to wayleaves
• for all technologies, not only for fibre
• for access networks, but also for trunk lines, including MNO s
MNO’s
(*) Market 4 (E.C. Recom. 2007): CMT document approved last 22 January
Copenhagen, 11th & 12th
ALBERT MARTI, Director of the Board February 2009
COMISIÓN DEL MERCADO DE LAS TELECOMUNICACIONES 9

SPANISH REGULATION ON NGA NETWORKS
Regulatory obligations on the wholesale physical network infrastructure
access at a fixed location*
RESPONDING TO THE
FIRST CHALLENGE
• non discrimination
• transparency: a need for a Reference Offer
• prices orientated to costs
• in case no capacity in ducts dark fibre
TELEFONICA LAUNCHED WHOLESALE WAYLEAVES OFFER LAST 16TH SEPTEMBER
(*) Market 4 (E.C. Recom. 2007): CMT document approved last 22 January
Copenhagen, 11th & 12th
ALBERT MARTI, Director of the Board February 2009
COMISIÓN DEL MERCADO DE LAS TELECOMUNICACIONES 10

SPANISH REGULATION ON NGA NETWORKS
Regulatory obligations on the wholesale physical network infrastructure
access at a fixed location*
Conditions to Telefonica’s cooper MDF switch-off
when at least 25 % of clients migrated to fibre
•
5 years term + 6 months for full migration
•
(*) Market 4 (E.C. Recom. 2007): CMT document approved last 22 January
Copenhagen, 11th & 12th
ALBERT MARTI, Director of the Board February 2009
COMISIÓN DEL MERCADO DE LAS TELECOMUNICACIONES 11

SPANISH REGULATION ON NGA NETWORKS
Regulatory obligations on the wholesale broadband access*
g y g
Telefonica has SMP, also in Market 5
Market definition does not establish any service speed limit
But the regulatory obligations define a bitstream access up to
30Mbps
new Ethernet based bitstream service
•
flexible configuration according to operator’s requests
•
prices orientated to costs + risk premium
•
(*) Market 5 (E.C. Recom. 2007): CMT document approved last 22 January
Copenhagen, 11th & 12th
ALBERT MARTI, Director of the Board February 2009
COMISIÓN DEL MERCADO DE LAS TELECOMUNICACIONES 12

SPANISH REGULATION ON NGA NETWORKS
NGA based business models with the approved regulation
pp g
RSP RSP RSP
+ + +
RSP RSP
I. O.
I. O.
C.O. C.O. C.O.
+ +
C.O. C.O.
I. O
I O. I. O
I O.
C. O.
+
P. N. O.
ONO
TELEFONICA
P. N. O.
TELEFONICA
2 & 3 Play 2 & 3 Play 2 & 3 Play 2 & 3 Play 2 Play 2 & 3 Play
I.O.: Integrated Operator Alternative operators in high density Based on the Model based on
urban areas Ethernet bitstream P2P fibre
C.O.: Communication Operator
deployed by new
(obligation Market 5)
P.N.O.: Passive Network Operator agents
R.S.P.: Retail Service Provider
Copenhagen, 11th & 12th
ALBERT MARTI, Director of the Board February 2009
COMISIÓN DEL MERCADO DE LAS TELECOMUNICACIONES 13

CMT REGULATION ON NGA NETWORKS
CHALLENGES
SECOND CHALLENGE
How to prevent market closure in the access to the buildings*?
buildings ?
(*) In Spain, around 70% of households are in buildings
Copenhagen, 11th & 12th
ALBERT MARTI, Director of the Board February 2009
COMISIÓN DEL MERCADO DE LAS TELECOMUNICACIONES 14

SPANISH REGULATION ON NGA NETWORKS
Obligations with regard to in-house wiring
g g g
RESPONDING TO THE
SECOND CHALLENGE
Imposition of symmetrical obligations to operators*
obligation on the first operator deploying fibre in the building,
•
to give access
g
obligation to set reasonable prices
•
transparency obligation to facilitate planning of third parties
•
access points after the last fibre splitting
•
(*) In buildings without Communal Telecommunications Network (Law 1/98) representing 80% of total
Copenhagen, 11th & 12th
ALBERT MARTI, Director of the Board February 2009
COMISIÓN DEL MERCADO DE LAS TELECOMUNICACIONES 15

CMT REGULATION ON NGA NETWORKS
SUMMARIZING
TWO MAIN CHALLENGES
• incentive to invest in NGA networks in balance with
development of competition
• prevention of vertical barriers (in-building fib access)
ti f ti l b i (i b ildi fibre )
The proposed regulation, allows several business models,
pp g , ,
incentivising infrastructures’ based competition
Copenhagen, 11th & 12th
ALBERT MARTI, Director of the Board February 2009
COMISIÓN DEL MERCADO DE LAS TELECOMUNICACIONES 16