Broadband strategy driven by Triple Play(IP TV in HDTV quality) and Web 2.0/3.0 (need for more upstream bandwidth) Demand of bandwidth is increasing pursuant to Moore’s Law Benefits of VDSL: Bandwidth for IPTV in HDTV quality, (current bandwidth offered by Telekom: Downstream: 10.000-16.000 kbit/s, Upstream: 800-1.000 kbit/s ; VDSL 25: (Entertain Comfort VDSL oder Entertain Comfort Plus VDSL) Downstream: 16.704-25.064 kbit/s, Upstream: 1,6-5 Mbit/s ; VDSL 50 24: (Entertain Comfort VDSL oder Entertain Comfort Plus VDSL) Competition facilitated by fibre deployment: 1.) Economies of fibre such that market entrance of alternative operators much easier than with copper access (fibre much smaller and easier to lay in existing ducts e.g. of the sewerage system, underground etc.) => it is easier to have competing fibre networks than to have competing copper networks, additionally: intermodal competition: access by different fixed (copper/fibre) and wireless (bidirectional satellite, Wimax, UMTS etc.) technologies 2.) Market situation different from 90s: alternative operators have strong market presence and customer base (ladder of infrastructure investment approach got this right)
Wilhelm.tel ist ein Unternehmen der Stadtwerke Norderstedt Sources: http://www.heise.de/newsticker/meldung/97447; http://www.heise.de/newsticker/meldung/84155
ZISP seit 2002 angeboten Seit 2003 preisreguliert Resale DSL seit 2004
06 Frank SCHMIDT.ppt
Regulatory Challenges of Fttx Regulation & Public Policy – 3rd Transatlantic Telecom Forum Dr. Frank Schmidt, Deutsche Telekom
T-Home Entertain: We make the Triple Play future happen in Germany <ul><li>IP TV for the mass market in 2007 </li></ul><ul><li>Launch of IP TV via ADSL2+ in up to 750 cities </li></ul><ul><li>Increase T-Home IP TV coverage to 44 % / 17 Mio. Homes (end of 2007) </li></ul><ul><li>Premium VDSL quality: 8 Mio. homes </li></ul><ul><li>Mid term: VDSL in up to 50 cities </li></ul>
Increasing demand for bandwidth leads to the need for fibre roll-out continuous development Increasing deployment of bandwidth Increasing demand of bandwidth by new applications <ul><li>Traditional copper business model of (all) telcos under pressure </li></ul><ul><li>More fibre deployment without alternative </li></ul><ul><li>Fibre rollout does not lead to new or more enduring bottlenecks </li></ul><ul><li>Fttx opens new and enhanced opportunities for infrastructure based competition </li></ul>Hunger for bandwidth Challenges for telcos and NRAs
New competition in the local loop NetCologne FTTB in cologne area , target: 100% of city covered by 2011 Mnet FTTB in Munich area, target: 60% of homes covered by 2011 HanseNet FttH in Hamburg area, target: 100k households CableCo’s Plans to massively invest in broadband Wilhelm.tel FTTH and Cable TV in Schleswig-Holstein Internet market share of 71 % in Norderstedt area Source : Wilhelm.tel presentation, November 2006 , bubbles by DT The new level playing field does not rely on the incumbents’ infrastructure <ul><li>Sharing of passive infrastructure (ducts) might be reasonable if applied by all players </li></ul><ul><li>Facilities of utilities or municipalities should also be taken into account! </li></ul><ul><li>Careful market analysis is necessary – and still missing in the German case </li></ul><ul><li>Street cabinets do not meet the definition of a bottleneck </li></ul>Investments into fibre networks Have you found the bottleneck? Not yet..
Comprehensive Services in DT’s Access Network today Copper cable Local Exchange Building (MDF) Main copper cable Street Cabinet Old New MDF Copper cable Full Unbundling since 1998 Current price: €10,50/month Line Sharing since 2001 Current price: € 1,91/month Sub-loop Unbundling since 2002 Current price: € 7,55/month Access to inhouse cabling since 1999 € 0/month Local Loop Unbundling since almost 10 years Bitstream Access Offered since 2002 in different product combinations Bitstream Access <ul><li>Downstream access regulation (e.g. bitstream) might not be necessary at all </li></ul><ul><li>If bitstream is regulated it should not deter incentives for more infrastructure competition </li></ul>
Old thinking traps investments. It is time to rethink! <ul><li>Old thinking traps investments </li></ul><ul><ul><li>Fttx does not aggravate an “access problem” but rather helps solving it </li></ul></ul><ul><ul><li>Traditional access regulation aggravates a bottleneck situation as it artificially sets incentives to use the infrastructure of the incumbent </li></ul></ul><ul><ul><li>Europe risks falling behind other markets such as Japan and the US in the move to fibre </li></ul></ul><ul><li>How to create the right framework for investments? </li></ul><ul><ul><li>No further or even enhanced regulation in the downstream markets (bitstream access) </li></ul></ul><ul><ul><li>Facility sharing to be applied by all infrastructure providers, not only imposed on the incumbent </li></ul></ul><ul><ul><li>Price floor for remaining regulated access prices has been reached </li></ul></ul><ul><ul><li>Bottom Line: Deregulation! </li></ul></ul>
Thank you for your attention. Dr. Frank Schmidt Deutsche Telekom AG, D-53105 Bonn [email_address]
Demand for bandwidth in Germany More than 70% of broadband access lines in Germany have already a downstream speed of 2Mbit/s or more. > 6000 Mbit/s 2000-6000 Mbit/s 1000-2000 Mbit/s < 1000 Mbit/s Estimate
Fttx by DT: Fibre to the street cabinet Copper cable (old) Local Exchange Building Main fiber-optic cable (new)/FTTC Main copper cable (old) Street Cabinet Old New MDF ODF Copper cable (old) Optical fiber runs parallel to the existing retained copper network. Street cabinets to host additional technology (DSLAM, Energy Supply, AC). Last mile is retained, but supplied via outdoor technology with considerably higher transmission rates.
Germany is the leader in ULL based competition Number of fully unbundled local loops 03/2007 Source: ECTA 03/2007 0 1.000.000 2.000.000 3.000.000 4.000.000 5.000.000 Germany France Italy UK Spain Netherlands Finland Austria Portugal Sweden Denmark Belgium * Already 5.9 million ULLs in Germany by end of September 2007. *
US Telecommunications Industry – Lessons learnt ”With increasing regulation, investment of both incumbents and new competitors decreased sharply”. The US’ regulation policy based on the ladder theory clearly failed and made deregulation possible. RBOCs: R egional B ell O perating C ompanies Source: FCC data, Hazlett/Bazelon 2005.
Europe‘s Telecommunications Industry – Indicators “USA and Asia increase their investment leadership“ *EU-15 **Japan, Korea Source: OECD (2007) Telecommunications Investment per capita (OECD 2007 ) US Dollar 100 150 200 2003 2004 2005 Asia** USA Europe*