ALL FOR BROADBAND Conference Budapest 3 march 2011 Austrian Regulator

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ALL FOR BROADBAND Conference Budapest 3 march 2011 Austrian Regulator

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ALL FOR BROADBAND Conference Budapest 3 march 2011 Austrian Regulator

  1. 1. The role of NRAs in broadbanddevelopment – The Austrian caseDr. Georg SerentschyCEO Telecommunications and Postal Services Slide 1
  2. 2. The process of market definition and market analysis as the basis of/forregulation. Overview  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”)  Spring/Summer 2010: public consultation / coordination  September 2010: final decision by the regulator  “Landmark decision”: general framework for broadband expansion defined  Secure investment conditions for investors and operators  Regulator requires A1 Telekom to maintain transparency and allow access  New provisions governing protection against electromagnetic interference  Protection of alternative operators investments03.03.2011 The role of NRAs in broadband development – The Austrian case Slide 2
  3. 3. Conclusions of the Austrian market analysis: Copper access network of A1Telekom Austria still a „bottleneck“. The Outcome  100% market share of A1 Telekom Austria  No sufficient restricting power by demand side  A1 Telekom Austria has significant market power  But: there are also derived disadvantages for alternative operators for NGA roll-out  Lack of information  Lack of economies of scale  …  only „copper-related“ remedies are insufficient for NGA deployment (slide 7)  additional „NGA-remedies“ necessary (slide 8)03.03.2011 The role of NRAs in broadband development – The Austrian case Slide 3
  4. 4. Copper-related remedies are insufficient for NGA deployment. An Overview  Full unbundling of copper line – LLU  Sub-loop unbundling of parts of copper line – SLU  Co-location (incl. compensation when MDF is closed down)  Cost orientation  Nondiscrimination  Separated accounts Customer (a) Unbundling: MDF Cabinet DSLAM Copper Copper03.03.2011 The role of NRAs in broadband development – The Austrian case Slide 4
  5. 5. Additional „NGA-remedies“ necessary to foster competition. An Overview Customer (b) Fibre to the Cabinet: Cabinet OLT DSLAM Fibre Copper Customer (c) Fibre to the Building: OLT DSLAM Fibre Copper / Coax03.03.2011 The role of NRAs in broadband development – The Austrian case Slide 5
  6. 6. Deployment scenarios: (a) Unbundling: Customer  Yesterday: Copper only MDF Cabinet  ADSL2+: ~ 16 – 20 MBit/s DSLAM  VDSL@CO: ~ 25 – 30 MBit/s Copper Copper Customer (b) Fibre to the Cabinet:  Today: Copper and fibre OLT Cabinet DSLAM  FTTC: ~ 30 – 40 MBit/s Fibre Copper  FTTB: ~ 50 – 80 MBit/s (c) Fibre to the Building: Customer OLT DSLAM  Tomorrow: Fibre only Fibre Copper / Coax  FTTH: > 100 MBit/s (d) Fibre to the Home: Customer Legende: Coax ……. Coaxial Cable Copper … Copper Subscriber Line DSLAM …. Digital Subscriber OLT Line Access Multiplexer MDF …… Main Distribution Frame OLT …….. Optical Line Terminal Fibre03.03.2011 The role of NRAs in broadband development – The Austrian case Slide 6
  7. 7. The aims of additional NGA-remedies are: (I) Four key elements 1. Promote alternative operator‘s investments in VDSL@CO  VDSL2 from the „Central Office“ (VDSL@CO) allowed nationwide as a first step  Compensation for frustrated investment (Modem and DSLAM) in case of subsequent FTTC/B roll-out 2. Allow for investments of A1 Telekom Austria in FTTC/B  No obligatory PSD-shaping under specific conditions  transparency about 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 infrastructure03.03.2011 The role of NRAs in broadband development – The Austrian case Slide 7
  8. 8. The aims of additional NGA-remedies are: (II) Four key elements 3. 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 on requested 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 viable03.03.2011 The role of NRAs in broadband development – The Austrian case Slide 8
  9. 9. The aims of additional NGA-remedies are: (III) Four key elements 4. Keeping alternative operators competitive  Virtual unbundling  In addition to traditional remedies on unbundling market  Providing a substitute wholesale product for physical unbundling  Introducing an active product (layer 2 bitstream) on a passive market (infrastructure)  Introduction of a new remedy   Reference Offer for „Virtual unbundling“ - VULL03.03.2011 The role of NRAs in broadband development – The Austrian case Slide 9
  10. 10. A closer look at virtual unbundling. The 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 only03.03.2011 The role of NRAs in broadband development – The Austrian case Slide 10
  11. 11. The technical concept of vULL reference offer Overview CPE Bandwidth CPE Bandbreite Bandwidth POI DSLAM CPE Bandwidth Bandbreite Bandwidth (HP/LP) Network Netz ANB OLO CPE Bandbreite Bandwidth03.03.2011 The role of NRAs in broadband development – The Austrian case Slide 11
  12. 12. EC‘s recommendation on NGA regulation (2010): Work in progress  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.03.03.2011 The role of NRAs in broadband development – The Austrian case Slide 12
  13. 13. NGA regulation as of December 2010: An Overview* ( )03.03.2011 The role of NRAs in broadband development – The Austrian case * Cullen International / RTR-GmbH Slide 13
  14. 14. Legend03.03.2011 The role of NRAs in broadband development – The Austrian case Slide 14
  15. 15. The role of NRAs in broadbanddevelopment – The Austrian caseDr. Georg SerentschyCEO Telecommunications and Postal Services Slide 15
  16. 16. Backup03.03.2011 The role of NRAs in broadband development – The Austrian case Slide 16
  17. 17. All crucial Indicators were analysed in the market analysis process. The outcome of the analysis Indicator Interpretation Market share Incumbent: near 100% – Barriers to entry High: „sunk cost“ – Control over not easily A1 Telekom: largest access network, can offer access replicable infrastructure services nationwide – Does not exist because incumbent is sole supplier and Countervailing buyer power no self-supply for altnets due to high barriers to entry – Leveraging from LLU market to neighbour markets vertical integration (Retail PSTN access, BB market), incentive to – anticompetitive behaviour natural monopoly Duplication of access network not economically feasible –03.03.2011 The role of NRAs in broadband development – The Austrian case Slide 17
  18. 18. Based on the results of the market analysis remedies were imposed. Obligations imposed Obligation Content Access (with cost oriented LLU, SLU, v-ULL (virtual unbundling) pricing) Annex-Services Duct-, Dark-fibre –Access, Collocation VDSL2@CO VDSL@CO and VDSL@ARU - Deployment permitted Compensation for frustrated investments, coordination NGA Regulation meetings, … Reference Offers General rules, v-ULL, Duct-, Dark-fibre –Access OLO can request relevant information for planning of Transparency own FTTC/B-deployments … …03.03.2011 The role of NRAs in broadband development – The Austrian case Slide 18

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