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Virtual Unbundling - remedy for NGA

Virtual Unbundling - remedy for NGA



Virtual Unbundling - a new remedy for NGA environments

Virtual Unbundling - a new remedy for NGA environments



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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

Virtual Unbundling - remedy for NGA Virtual Unbundling - remedy for NGA Presentation Transcript

  • Virtual Unbundling A new wholesale product in NGA networks 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.
  • Agenda
    • The Austrian Unbundling Market
    • Virtual Unbundling
    • Final Considerations
  • The Austrian Unbundling Market
  • Market Analysis Procedure
    • December 2008 – Market Definition Ordinance (“TKMV08”) issued
      • Market for “Access to physical network infrastructure” defined
      • copper access-lines (LLU, SLU)
      • not included: CATV, FTTH, Mobile (GSM, 3G, LTE, …)
      • not included - but regulated: duct, dark-fibre
    • January 2009 – Start of Market Analysis Procedure (“M 3/09”)
      • > 500 parties involved (due to Administrative Court Decision as of 2008)
      • TKK commissioned RTR with an expert opinion
    • Fall 2009 – RTR expert opinion issued
      • Market Analysis and Obligations for LLU/SLU (copper lines)
      • Further recommendation for “NGA-related” regulation
    • Spring/Summer 2010 – public consultation / coordination
    • September 2010 – final decision by TKK
  • Market Analysis - Indicators analysed Indicator Interpretation Market share Incumbent: near 100% Barriers to entry High „sunk cost“ Control over not easily replicable infrastructure A1 Telekom: largest access network, can offer access services nationwide Countervailing buyer power Not existing as incumbent is sole supplier No self-supply for OLOs due to high barriers to entry vertical integration Leveraging from LLU market to neighbour markets (Retail PSTN access, BB market) natural monopoly Duplication of access network not economically feasible Overview
  • Market Analysis – Obligations imposed Overview … … Obligation Content Access (with cost oriented pricing) LLU, SLU, v-ULL (virtual unbundling) Annex-Services Access to Duct & Dark Fibre, Collocation [email_address] VDSL@CO and VDSL@ARU - Deployment permitted NGA Regulation Compensation for frustrated investments, coordination meetings, … Reference Offers General rules, v-ULL, Access to Duct & Dark Fibre Transparency OLO can request relevant information for planning of own FTTC/B-deployments
  • Conclusions of the Austrian market analysis
    • Copper access network of A1 Telekom Austria still a „bottleneck“
    • But: there are also (derived) disadvantages for alternative operators in current and future NGA roll-out scenarios
      • Lack of information
      • Lack of economies of scale
    •  Sole imposition of „copper-related“ remedies deemed insufficient for NGA deployment scenarios
    •  Additional „NGA-related“ remedies seen as necessary
  • Deployment scenarios
    • Yesterday: Copper only
      • ADSL2+: ~ 16 – 20 MBit/s
      • VDSL@CO: ~ 25 – 30 MBit/s
    • Today: Copper and fibre
      • FTTC: ~ 30 – 40 MBit/s
      • FTTB: ~ 50 – 80 MBit/s
    • Tomorrow: Fibre only
      • FTTH: > 100 MBit/s
    VDSL2 Glasfaser VDSL2 Glasfaser Glasfaser ADSL2+ / neu: VDSL2
  • EC‘s recommendation on NGA regulation (2010)
    •  Addressing the challenge of managing competing (and sometimes conflicting) drivers in the implementation of broadband
    • Securing investment in infrastructure and roll out,
        • Past and future investment in active and passive infrastructure
        • Both from incumbent and alternative operators
    • Promoting competition both at the infrastructure and service layers,
        • Promotion of competition on both infrastructure and service edge possibly conflicting
    • Relaxing regulation where there are sufficient levels of competition
        • Relaxing regulation on markets fully based on regulation may be dangerous
        • Signals of relaxing regulation important for investment decisions
    • Designing a framework for the transition from copper to fibre.
  • Traditional (copper-related) remedies
    • Full unbundling of copper line - LLU
    • Sub-loop unbundling of parts of copper line - SLU
    • Co-location (incl. compensation payment when MDF is closed down)
    • Cost orientation
    • Non-discrimination
    • Separated accounts
    Unbundling ADSL2+ / neu: VDSL2
  • Additional „NGA-related“ remedies
    • Promote alternative operator‘s investments in VDSL@CO
    • Allow for investments of A1 Telekom Austria in FTTC/B
    • Promote alternative operator‘s investments in FTTC/B
    • Keeping alternative operators competitive  Virtual unbundling
  • Promote alternative operator‘s investments in VDSL@CO
    • VDSL2 from the „Central Office“ (VDSL@CO) allowed nationwide as a first step
    • Compensation payments for frustrated investment (Modem and DSLAM) in case of subsequent FTTC/B roll-out
  • Allow for investments of A1 Telekom Austria in FTTC/B
    • No obligatory PSD-shaping under specific conditions
      • Transparency regarding planned NGA-deployment
      • Coordination meetings
      • Compensation payment for frustrated investments (Modem, DSLAM)
      • Cost-free migration to virtual unbundling
    • Prioritising more advanced technologies
      • VDSL@CO < FTTC < FTTB < FTTH
    • Possible risk premium for new infrastructure
  • Promote alternative operator‘s investments in FTTC/B
    • No obligatory „spectrum shaping“ under same conditions as for A1 Telekom
    • More comprehensive data delivery for FTTC/B-Planning  transparency
    • A1 Telekom has to negotiate in the case of OLOs requesting the installation of new cabinets
    • Access to ducts – for backhauling
      • Cost savings – civil works
      • Attractive access conditions – better than general rule acc to Telecoms Act
      • Nationwide offer – not only in NGA areas
      • Fees – similar to general rule
    • Access to dark fibre – for backhauling
      • Same as for duct-access
      • BUT: only available in case of ducts not available or not economically viable
  • Keeping alternative operators competitive
    • Introducing a new substitute wholesale product for physical unbundling
    • In addition to traditional remedies on unbundling market
    • Introducing an active (layer 2 bitstream) product on the passive wholesale market for access to physical infrastructure
    •  Reference Offer for „Virtual unbundling“ - VULL
  • Virtual Unbundling
  • Virtual unbundling – 8 cornerstones
    • Possibility for a grade of innovation comparable with passive access
    • Highest possible transparency for higher layers
    • Possibility for multicast services
    • Technological neutrality
    • Flexibility for choosing CPE (white list)
    • Service hand-over at MDF (or similar PoP in the NGA)
    • Third-party service hand-over
    • Configuration access for all relevant connection parameters or non-overbooked bandwidth between customer and PoI
    • To be offered in NGA areas only
  • Technical Concept of VULL Reference Offer Bandwidth (HP/LP) Netz ANB CPE CPE CPE CPE Bandbreite Bandbreite Bandwidth Bandbreite DSLAM Bandbreite Bandbreite Bandwidth Bandwidth Bandwidth Network OLO POI Overview
  • Reference Offer by A1 Telekom Austria
    • Modular layer 2 bitstream product based on Ethernet technology
      • Access part:
        • VDSL2 on copper loop with 3 bandwidths to choose from (8/20/30 MBit/s)
        • Ordered per customer
      • Backhaul part:
        • Ethernet with 16 bandwidths to choose from (2 … 800 MBit/s) allowing OLOs to choose degree of overbooking – even allowing non-overbooked services
        • Ordered per DSLAM
      • Quality of Service: Service priorisation of Ethernet Frames using p-Bit
        • p=5: Voice / p=4: Video / p=1: Business Internet / p=0: Residential Internet
        • 50% of Link: high priority quality guaranteed / Remainder: low priority quality
    Under consultation
  • Reference Offer by A1 Telekom Austria
    • Customer Premises Equipment (VDSL2 Modem/Router)
      • No modem included – to be chosen by OLO
      • Minimum modem requirements defined
      • Modem whitelist with modems tested, being qualified as properly working and guaranteeing defined service performance parameters
    • Service hand-over for several DSLAMS at MDF location in NGA roll-out areas  1 GbE and 10 GbE
    • Service hand-over to third party provider possible
    • Transparency for multicast services
    • Pricing issues
      • Margin squeeze free
    Under consultation
  • VLAN Concept (1/2)
    • VULL services are aggregated for every MDF area connected
      • MDF area (MPoP) comprising several VDSL2 DSLAMs
    • VULL services are mapped into double-tagged VLAN (S-Tag and C-Tag) allowing to adress customers via Layer 2 Ethernet
      • S-Tag defines specific DSLAM
        • VLAN-ID 10 … 2009 (i.e. 2000 DSLAMs per handover point)
      • C-Tag defines specific customer
        • VLAN-ID 100 … 300 (i.e. 200 customers per DSLAM)
      • p-Bit marking defines QoS
    • VULL services are handed over to VULL partner on defined PoIs
      • Hand-over is at today‘s MDF locations (i.e. locations with existing collocation and backhaul facilities)
  • VLAN Concept (2/2)
  • Prioritisation with p-Bit Marking (1/2)
    • VULL partner defines associated quality of data frames within bandwidth ordered for a single DSLAM using p riority bit marking
    • p-Bit = 5 … high priority
    • p-Bit < 5 … low priority
  • Prioritisation with p-Bit Marking (2/2)
    • 50% of bandwidth ordered for DSLAM area available for high priority (HP) traffic according to defined service and service-class parameters
    • 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
    • Traffic exceeding 50% limit available for HP is discarded (p = 4 discarded before p = 5)
    • In LP class p = 0 discarded before p = 1
    • Re-marking of p = 2, 3, 6, 7 to p = 0
  • Defined Service Parameters for VULL
    • Limited by equipment currently used by A1TA
      • Maximum frame size
        • 1522 Byte (customer edge)
        • 1526 Byte (VULL hand-over)
    • Frame size limit to be adapted as soon as new equipment is available
    Maximum Transfer Unit (MTU) Size
  • Pricing issues
    • Pricing according to FL-LRAIC methodology taking into account the full range of products offered, i.e. NGA and non-NGA products
    • Risk premium applicable for NGA products
    • No margin squeeze in relation to A1TA retail offerings
    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
  • CPE – DSLAM: bandwidth and monthly fees
  • DSLAM – PoI: Bandwidth profiles and monthly fees Price comparison: Full LLU: € 5,87 per month
  • Next steps
    • Public consultation until mid march 2011
    • Evaluation of consultation responses
    • Possible adaption request from TKK
    • Introduction of VULL on the market
  • Final Considerations
  • Final considerations
    • The telecoms landscape is changing – so are regulatory interventions
    • Some of yesterday‘s remedies may not be appropriate any longer
    • Such remedies may have to be phased out with new remedies being carefully introduced in order to support today’s regulatory intentions
    • Virtual Unbundling is such a new remedy that could even replace several of today’s remedies in a medium to long term perspective, e.g.
      • Classical Unbundling
      • Classical Bitstreaming
      • Terminating Segments
  • Virtual Unbundling A new remedy in NGA networks 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.