Tno dsl seminar_reichinger_final

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Presentation at TNO DSL Seminar 2011 in Leiden, Netherlands.

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  • The Regulator’s dilemma : Finding a balance between hard-core SMP and new soft law regulation The old Unbundling market as an example : Closing the gap between safeguarding competition and promoting innovation and taking due account of the European Commission's NGA recommendation From the ladder of investment concept to accepted products on the market: Classical Unbundling, Virtual Unbundling and Bitstream Access Final Considerations
  • Tno dsl seminar_reichinger_final

    1. 1. Regulation of NGA in Austria Kurt Reichinger Austrian Regulatory Authority for Telecommunications and Broadcasting The opinions expressed in this presentation are the personal view of the author and do not prejudge decisions of the Austrian regulatory authorities.
    2. 2. Agenda <ul><li>The regulator’s dilemma </li></ul><ul><ul><li>Life between hard-core SMP and soft law regulation </li></ul></ul><ul><li>The Austrian Unbundling market as an example </li></ul><ul><ul><li>From the ladder of investment concept to accepted products on the market </li></ul></ul><ul><li>Virtual unbundling </li></ul><ul><ul><li>New universal wholesale product … or just one remedy more on the list? </li></ul></ul>
    3. 3. The regulator‘s dilemma
    4. 4. It‘s not about incumbent bashing … <ul><li>Hard-core SMP regulation </li></ul><ul><ul><li>Market analysis procedure </li></ul></ul><ul><ul><ul><li>Definition of relevant markets  Analysis of competitive situation  Occurrence of significant market power (?)  Imposition of appropriate remedies </li></ul></ul></ul><ul><ul><li>Regulation often means definition of general conditions or a framework </li></ul></ul><ul><ul><ul><li>Regulation is more difficult in unknown waters </li></ul></ul></ul><ul><ul><ul><li>Regulation as an ex ante or ex post procedure </li></ul></ul></ul><ul><li>Soft law regulation </li></ul><ul><ul><li>EC recommendations, e.g. regarding NGA regulation </li></ul></ul><ul><ul><li>EC general strategies like the Digital Agenda </li></ul></ul><ul><ul><li>BEREC common positions </li></ul></ul><ul><ul><li>National topics </li></ul></ul>
    5. 5. Three tasks … not always easy to fulfil <ul><li>Safeguarding competition </li></ul><ul><ul><li>Mandating appropriate wholesale products (remedies) from SMP operator </li></ul></ul><ul><ul><li>Incentivising OLOs climbing the ladder of investment </li></ul></ul><ul><ul><li>Allowing sufficient margin for alternative and SMP operator </li></ul></ul><ul><li>Promoting innovation </li></ul><ul><ul><li>Promoting innovation from incumbent operator </li></ul></ul><ul><ul><li>Promoting innovation from alternative operators </li></ul></ul><ul><li>Incentivising investment </li></ul><ul><ul><li>Making investment scenarios attractive while safeguarding competition </li></ul></ul><ul><ul><li>But: Investors usually want return not regulation </li></ul></ul>
    6. 6. The Austrian unbundling market … as an example
    7. 7. Market definition and analysis <ul><li>Austrian definition of market 4 (“access to physical network infrastructure”) </li></ul><ul><ul><li>Included: Metallic loops only (!!) </li></ul></ul><ul><ul><li>Not included: Fibre, cable, mobile technologies </li></ul></ul><ul><ul><li>Included as ancillary service: Access to ducts and dark fibre, co-location, … </li></ul></ul><ul><li>Results of Austrian market analysis </li></ul><ul><ul><li>Copper access network of A1 Telekom Austria is „bottleneck resource“ </li></ul></ul><ul><ul><li>100% market share of A1 Telekom Austria </li></ul></ul><ul><ul><li>(Possible) disadvantages for alternative operators – also for broadband roll-out </li></ul></ul><ul><ul><li>A1 Telekom Austria has significant market power </li></ul></ul><ul><li>Now, what remedies to choose? </li></ul>
    8. 8. Deployment scenarios <ul><li>Yesterday: Copper only </li></ul><ul><ul><li>ADSL2+: ~ 16 – 20 MBit/s </li></ul></ul><ul><ul><li>VDSL@CO: ~ 25 – 30 MBit/s </li></ul></ul><ul><li>Today: Copper and fibre </li></ul><ul><ul><li>FTTC: ~ 30 – 40 MBit/s </li></ul></ul><ul><ul><li>FTTB: ~ 50 – 80 MBit/s </li></ul></ul><ul><li>Tomorrow: Fibre only </li></ul><ul><ul><li>FTTH: > 100 MBit/s </li></ul></ul>ADSL2+ / neu: VDSL2 VDSL2 Glasfaser VDSL2 Glasfaser Glasfaser
    9. 9. Basic considerations of Austrian decision M 3/09 <ul><li>EC recommendation on NGA regulation (Sep. 2010) </li></ul><ul><li>Securing investment in infrastructure and roll out </li></ul><ul><ul><ul><li>Past and future investment in active and passive infrastructure </li></ul></ul></ul><ul><ul><ul><li>Both from incumbent and alternative operators </li></ul></ul></ul><ul><li>Promoting competition both at the infrastructure and service layers </li></ul><ul><ul><ul><li>Promotion of competition on both infrastructure and service edge possibly conflicting </li></ul></ul></ul><ul><li>Relaxing regulation where sufficient levels of competition </li></ul><ul><ul><ul><li>Relaxing regulation on market fully based on regulation may be dangerous </li></ul></ul></ul><ul><ul><ul><li>Signals of relaxing regulation important for investment decisions </li></ul></ul></ul><ul><li>Designing a framework for the transition from copper to fibre </li></ul>
    10. 10. Basic considerations of Austrian decision M3/09 <ul><li>Economies of scale will be hard to achieve in NGA scenario </li></ul><ul><ul><li>Both for incumbent operator and even harder for alternative operators </li></ul></ul><ul><ul><li>Alternative operator roll-out of FTTC/B/H (rather) not expected on a larger scale </li></ul></ul><ul><ul><li>Classical unbundling at the MDF will become less attractive </li></ul></ul><ul><ul><li>Sub-loop unbundling never has been a success </li></ul></ul><ul><li>Introduction of a new remedy </li></ul><ul><ul><li>In addition to traditional remedies on unbundling market </li></ul></ul><ul><ul><li>Keeping alternative operators competitive </li></ul></ul><ul><ul><li>Providing a substitute wholesale product for classical unbundling </li></ul></ul><ul><ul><li>Introducing an active product on a passive market  Virtual unbundling </li></ul></ul><ul><li>European Commission </li></ul><ul><ul><li>Accepted the new remedy as an intermediary wholesale product </li></ul></ul>
    11. 11. Basic considerations of Austrian decision M 3/09 <ul><li>Promote alternative operator investment in VDSL@CO </li></ul><ul><ul><li>VDSL2 from the „Central Office“ (VDSL@CO) allowed as a first step </li></ul></ul><ul><ul><li>Compensation for frustrated investment by A1 Telekom in case of future FTTx roll-out </li></ul></ul><ul><li>Promote alternative operator investment in FTTC/B </li></ul><ul><ul><li>Increased transparency  Better data delivery for FTTC/B-planning </li></ul></ul><ul><ul><li>Access to ancillary services  Duct / dark-fibre backhaul </li></ul></ul><ul><ul><li>Negotiation possibilities for deploying new infrastructure  Request for cabinets </li></ul></ul><ul><li>Allow for A1 Telekom Austria investment in FTTC/B </li></ul><ul><ul><li>No obligatory „spectrum shaping“ under specific conditions </li></ul></ul><ul><ul><li>Prioritising more advanced technologies  VDSL@CO < FTTC < FTTB (< FTTH) </li></ul></ul>
    12. 12. Traditional (copper-related) remedies <ul><li>Full unbundling of copper line - LLU </li></ul><ul><li>Sub-loop unbundling of parts of copper line - SLU </li></ul><ul><li>Co-location (incl. compensation payment when MDF is closed down) </li></ul><ul><li>Cost orientation </li></ul><ul><li>Non-discrimination </li></ul><ul><li>Separated accounts </li></ul>Unbundling ADSL2+ / neu: VDSL2
    13. 13. Additional „NGA-related“ remedies <ul><li>Virtual unbundling incl. accompanying measures … see next slides! </li></ul><ul><li>Access to backhaul ducts </li></ul><ul><li>Access to backhaul dark fibre </li></ul>FTTC FTTB
    14. 14. Virtual unbundling … active remedy on a passive market
    15. 15. Virtual unbundling cornerstones (from M3/09) <ul><li>Possibility for a grade of innovation comparable with passive access </li></ul><ul><li>Highest possible transparency for higher layers </li></ul><ul><li>Possibility for multicast services </li></ul><ul><li>Technological neutrality </li></ul><ul><li>Flexibility for choosing CPE (white list) </li></ul><ul><li>Service hand-over at MDF (or similar PoP in the NGA) </li></ul><ul><li>Third-party service hand-over </li></ul><ul><li>Configuration access for all relevant connection parameters or non-overbooked bandwidth between customer and PoI </li></ul><ul><li>Obligatory for NGA areas only </li></ul>
    16. 16. Virtual unbundling implementation rules (from M3/09) <ul><li>VULL to be offered obligatory in NGA roll-out areas only </li></ul><ul><li>Approach allows „emptying“ of NGA roll-out areas, i.e. (re)creating areas without unbundled lines and being solely controlled by the SMP operator </li></ul><ul><li>Possibility for forced migration from ULL to VULL under the following conditions </li></ul><ul><ul><li>Invitation to planning meeting 4 months prior to planned roll-out start </li></ul></ul><ul><ul><li>Information on roll-out area, technology and planned roll-out date </li></ul></ul><ul><ul><li>Invitation to submit request for compensation payments for frustrated investments </li></ul></ul><ul><ul><li>Cost-free migration from ULL to VULL </li></ul></ul><ul><ul><li>Invitation for co-operation talks </li></ul></ul><ul><ul><li>Further information on roll-out plan for interested OLOs 2 months before roll-out start </li></ul></ul><ul><ul><li>Detailed information on roll-out for co-operating OLOs </li></ul></ul><ul><li>Alternatively: Spectrum shaping for protection of xDSL services from MDF </li></ul><ul><li>Same procedure applies for OLO NGA roll-out </li></ul>
    17. 17. VULL technical concept from A1 Telekom Austria Bandwidth (HP/LP) Netz ANB CPE CPE CPE CPE Bandbreite Bandbreite Bandwidth Bandbreite DSLAM Bandbreite Bandbreite Bandwidth Bandwidth Bandwidth Network OLO POI
    18. 18. VULL Reference Offer <ul><li>Modular layer 2 bitstream product based on Ethernet technology </li></ul><ul><ul><li>Access part: </li></ul></ul><ul><ul><ul><li>VDSL2 on copper loop with 3 bandwidths to choose from (8/20/30 MBit/s) </li></ul></ul></ul><ul><ul><ul><li>Individually ordered per customer </li></ul></ul></ul><ul><ul><li>Backhaul part: </li></ul></ul><ul><ul><ul><li>Ethernet with 16 bandwidths to choose from (2 … 800 MBit/s) allowing OLOs to choose degree of overbooking – even allowing non-overbooked services </li></ul></ul></ul><ul><ul><ul><li>Ordered per DSLAM </li></ul></ul></ul><ul><ul><li>Quality of Service: Service priorisation of Ethernet Frames using p-Bit </li></ul></ul><ul><ul><ul><li>p=5: Voice / p=4: Video / p=1: Business Internet / p=0: Residential Internet </li></ul></ul></ul><ul><ul><ul><li>50% of Link: high priority quality guaranteed / Remainder: low priority quality </li></ul></ul></ul><ul><ul><li>Virtual Connections </li></ul></ul><ul><ul><ul><li>Up to 4 VLANs per customer </li></ul></ul></ul>
    19. 19. VULL Reference Offer <ul><li>VULL services are aggregated for every MDF area connected </li></ul><ul><ul><li>MDF area (MPoP) comprising several VDSL2 DSLAMs </li></ul></ul><ul><li>VULL services are mapped into double-tagged VLAN (S-Tag and C-Tag) allowing to adress customers via Layer 2 Ethernet </li></ul><ul><ul><li>S-Tag defines specific DSLAM </li></ul></ul><ul><ul><ul><li>VLAN-ID 10 … 2009 (i.e. 2000 DSLAMs per handover point) </li></ul></ul></ul><ul><ul><li>C-Tag defines specific customer </li></ul></ul><ul><ul><ul><li>VLAN-ID 100 … 300 (i.e. 200 customers per DSLAM) </li></ul></ul></ul><ul><ul><li>p-Bit marking defines traffic priority (QoS) </li></ul></ul><ul><li>VULL services are handed over to VULL partner on defined PoIs </li></ul><ul><ul><li>Hand-over is at today‘s MDF locations (i.e. locations with existing collocation and backhaul facilities) </li></ul></ul>
    20. 20. VULL Reference Offer <ul><li>Customer Premises Equipment (VDSL2 Modem/Router) </li></ul><ul><ul><li>No modem included – to be chosen by OLO </li></ul></ul><ul><ul><li>Minimum modem requirements defined </li></ul></ul><ul><ul><li>Modem whitelist with modems tested, being qualified as properly working and guaranteeing defined service performance parameters </li></ul></ul><ul><li>Service hand-over for several DSLAMS at MDF location in NGA roll-out areas  1 GbE and 10 GbE </li></ul><ul><li>Service hand-over to third party provider possible </li></ul><ul><li>Transparency for multicast services </li></ul><ul><li>Pricing issues </li></ul><ul><ul><li>Margin squeeze free </li></ul></ul>
    21. 21. Critical issues for business grade services <ul><li>MTU size </li></ul><ul><ul><li>Current limitations of A1TA DSLAMs regarding maximum frame size (1522 Byte - customer edge / 1526 Byte - VULL hand-over) </li></ul></ul><ul><li>QoS </li></ul><ul><ul><li>Current limitations regarding frame loss, frame delay and frame delay variation </li></ul></ul><ul><li>Layer 2 Control Protocols </li></ul><ul><ul><li>Current limitations regarding L2CP protocols supported by A1TA DSLAM </li></ul></ul><ul><li>Symmetrical bandwidth </li></ul><ul><ul><li>Limitations due to 998 VDSL2 band plan </li></ul></ul>
    22. 22. Pricing issues <ul><li>Pricing according to FL-LRAIC methodology taking into account the full range of products offered, i.e. NGA and non-NGA products </li></ul><ul><li>Risk premium applicable for NGA products </li></ul><ul><li>No margin squeeze in relation to A1TA retail offerings </li></ul>Non-NGA NGA NGA 8.192 / 768 20.480 / 4.096 30.720 / 4.096 Non-NGA 8.192 / 768 20.480 / 4.096 30.720 / 4.096 NGA Non-NGA 8.192 / 768 20.480 / 4.096 30.720 / 4.096 NGA NGA Non-NGA 8.192 / 768 20.480 / 4.096 30.720 / 4.096
    23. 23. CPE – DSLAM: bandwidth and monthly fees
    24. 24. DSLAM – PoI: Bandwidth profiles and monthly fees Price comparison: Full LLU: € 5,87 per month
    25. 25. Summing it up … on a single slide
    26. 26. Summing it up … <ul><li>The telecoms landscape is changing – so are regulatory interventions </li></ul><ul><li>Some of yesterday‘s remedies are not appropriate any longer </li></ul><ul><li>These remedies have to be phased out with new ones to be carefully introduced in order to support today’s regulatory intentions </li></ul><ul><li>Virtual unbundling may be such a new remedy that could even have the potential to replace several of today’s remedies in a medium to long term perspective, e.g. classical unbundling, classical bit-streaming or leased line terminating segments, … </li></ul><ul><li>In summer 2011 VULL is finally expected to be launched in Austria … </li></ul>
    27. 27. Regulation of NGA in Austria Kurt Reichinger Austrian Regulatory Authority for Telecommunications and Broadcasting The opinions expressed in this presentation are the personal view of the author and do not prejudge decisions of the Austrian regulatory authorities.
    28. 28. VLAN Concept (2/2)
    29. 29. Prioritisation with p-Bit Marking (1/2) <ul><li>VULL partner defines associated quality of data frames within bandwidth ordered for a single DSLAM using p riority bit marking </li></ul><ul><li>p-Bit = 5, 4 … high priority </li></ul><ul><li>p-Bit = 1, 0 … low priority </li></ul><ul><li>p-Bit priority: 5 > 4 > 1 > 0 </li></ul>
    30. 30. Prioritisation with p-Bit Marking (2/2) <ul><li>50% of bandwidth ordered for DSLAM area available for high priority (HP) traffic according to defined service and service-class parameters </li></ul><ul><li>Up to 100% of bandwidth ordered for DSLAM area available for low priority (LP) quality as long as bandwidth is not used for HP traffic </li></ul><ul><li>Traffic exceeding 50% limit available for HP is discarded (p = 4 discarded before p = 5) </li></ul><ul><li>In LP class p = 0 discarded before p = 1 </li></ul><ul><li>Re-marking of p = 2, 3, 6, 7 to p = 0 </li></ul>
    31. 31. Defined Service Parameters for VULL

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