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FTTH Conference 2009 Regulator UK OFCOM
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  • 1. Regulation in Europe: Quo Vadis? Ofcom and the future of Superfast Broadband Chinyelu Onwurah, FTTH Council, 12th February 2009
  • 2. Interest in superfast broadband continues to grow… Both in the UK… … and abroad Take-up Actual Coverage Planned Coverage Virgin Media -20% of UK homes, Community projects Dec 2008, whole footprint (50% of homes) by mid 2009 Commercial deployments 100% Public sector schemes Virgin footprint BT announcement – 40% t Angus Glens: potential community A Gl t ti l it backed-NGA for villages UK coverage by 2012 80% H2O: Aims for 55k Dundee homes. Deployment underway West Whitlawburn (Glasgow): 100 FTTH housing association 60% flats, 2009 Digital Region: 500k FTTC homes by 2010/11 Titanic Quarter, Belfast: Derby: proposing 100% NGA 40% FTTH to ~15k new homes availability by 2016 Corby: FTTH being deployed Manchester: Trial FTTH to 6k new homes to 450 premises 2009 premises, 20% Wembley: aim for 3.7k Salford: FTTH to Media City - apartments with FTTH 1st phase completing 2010 0% BT building FTTH in Walsall: Council proposed FTTH Ebbsfleet and Olympic FTTH in Birchills ward Village Vill FTTC ? H2O: Aim for 88k homes in Cornwall Act Now – tendering for Cable Bournemouth - 30+ homes regional NGA using EU funds connected now Source: operators, Ofcom estimates 1
  • 3. We will soon publish a policy statement following last Autumn’s consultation: A ’ li Allowing pricing freedom for next generation wholesale products Securing timely S i ti l and efficient Creating room for passive access investment products in response to demand Supporting industry led development Promoting of active access products p competition Developing a framework for transition ii http://www.ofcom.org.uk/consult/condocs/nga_future_broadband/ 2
  • 4. Passive and active wholesale access Proposed regulatory products - FTTC Copper Fibre Street Metro Node Customer Core Network Local Cabinet Exchange Passive line access - sub-loop Active access - bitstream unbundling Proposed regulatory products - FTTH Fibre Fibre Splitter Metro Node Customer Core Network Local Exchange Passive line access - duct access, fibre or DWDM access Active access - bitrstream unbundling 3
  • 5. Standardised wholesale access has many benefits • Retains as much as capability to differentiate as possible – I neutral to higher l Is t l t hi h layers: – Is implementation neutral to the underlying media – Is service neutral to the applications: • Helps overcome technology fragmentation – One wholesale access for all technologies • Facilitates the delivery of the USO – One wholesale access for all technologies • Benefits from the economies of scale of Ethernet • And the economies of distribution and management of bitstream But would have a price… • Undermines regulatory technical neutrality • May impose ‘wrong’ technology • May stifle innovation • Unforeseen consequences 4
  • 6. Why is Ofcom promoting Ethernet ALA? • Like most regulators, we prefer infrastructure access • We are also promoting sub-loop unbundling and looking at duct access • But these unlikely to be viable everywhere – like LLU • So some form of bitstream access is essential • And the better it is, the more innovation will follow • And the more consumers will benefit • Other regulators are also looking at active line access type products What should this mean for communications providers? • The availability of a standardised wholesale access product sooner rather than later • Giving easy access to fibre communities wherever they may be • Supporting wholesale and retail products • And allowing for differentiation in pricing, quality of service, security, applications etc li ti t 5
  • 7. Ofcom and the European Framework • At EU level it’s important to avoid premature attempts – to harmonise the detail of regulation – to hard-wire regulatory holidays or other forms of anti-competitive discrimination on the other into the Framework • Not ‘investment vs competition’ but ‘investment and competition’. Ensuring a competitive environment stimulates investment, it does not deter it. •S So – the Commission should avoid too much of a focus on passives and set out the key principles instead; – We remain wary of some of the previously proposed amendments on risk-sharing; – But we believe that regulated prices should be adjusted to reflect uncertain future demand for retail products and hence increased project investment risk; – Consequently, we seek text to clarify what would be legitimate spreading of investment risk as opposed to disguised erection of new barriers to entry 6
  • 8. Functional separation and the impact on investment: • The Undertakings have provided BT with regulatory certainty and BT continues with a £10bn (€11.3bn) investment in NGN core network 7
  • 9. Questions? chinyelu.onwurah@ofcom.org.uk 8
  • 10. Active Acti e line access Public Promote effective Regulatory competition Objectives j Competitive 2 4 1 3 5 Characteristics Technical 2 4 1 3 5 Requirements Standardisation Broadband ITU ETSI MEF IEEE NICC forum Specification CP 1 CP 2 CP 3 Product Specification Product 2 Product 1 Product 3 Private 9
  • 11. Implications • Functional separation has been an important remedy in the UK telecoms market… – More flexible remedy than structural separation in dealing with pace of market and technology innovation – Has not reduced investment incentives – current nor next generation • …but it is not a necessary remedy in all telecoms markets but – e.g. may not be required in markets which already have strong infrastructure competition (e.g. Belgium, NL) • And within the context of the current EU Framework Review negotiations – Whilst not perfect, we are supportive of the current Council compromise text on function separation ( p (Art 13a) ) – We not believe there is any need to include additional tests for NRAs to meet such as impact on the incumbent’s workforce nor ‘ensuring the territorial or social cohesion’ of p g a Member State which are frankly not relevant to the purpose and outcomes of functional separation 10
  • 12. Europe Update • EU Framework Review – critical issues & next steps • Safeguarding investment in NGANs • Functional Separation and the impact on investment 11