virtual unbundling - remedy for nga
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23.02.2011 ECO PT TRIS Page 1
Virtual Unbundling A new wholesale product in NGA networks
Kurt ReichingerAustrian 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.
23.02.2011 ECO PT TRIS Page 2
Agenda The Austrian Unbundling Market Virtual Unbundling Final Considerations
23.02.2011 ECO PT TRIS Page 3
The Austrian Unbundling Market
23.02.2011 ECO PT TRIS Page 4
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
Overview
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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 supplierNo self-supply for OLOs due to high barriers to entry
vertical integrationLeveraging from LLU market to neighbour markets (Retail PSTN access, BB market)
natural monopoly Duplication of access network not economically feasible
Overview
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Market Analysis – Obligations imposed
Obligation Content
Access (with cost oriented pricing) LLU, SLU, v-ULL (virtual unbundling)
Annex-Services Access to Duct & Dark Fibre, Collocation
VDSL2@CO 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
Overview
… …
23.02.2011 ECO PT TRIS Page 7
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
23.02.2011 ECO PT TRIS Page 8
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
ADSL2+ / neu: VDSL2
VDSL2Glasfaser
VDSL2Glasfaser
Glasfaser
23.02.2011 ECO PT TRIS Page 9
EC‘s recommendation on NGA regulation (2010)
Addressing the challenge of managing competing (and sometimes conflicting) drivers in the implementation of broadband
1. Securing investment in infrastructure and roll out, Past and future investment in active and passive infrastructure Both from incumbent and alternative operators
2. Promoting competition both at the infrastructure and service layers, Promotion of competition on both infrastructure and service edge possibly conflicting
3. 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
4. Designing a framework for the transition from copper to fibre.
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Traditional (copper-related) remedies
ADSL2+ / neu: VDSL2
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
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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
FTTCFTTB
23.02.2011 ECO PT TRIS Page 12
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
23.02.2011 ECO PT TRIS Page 13
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
23.02.2011 ECO PT TRIS Page 14
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
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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
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Virtual Unbundling
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Virtual unbundling – 8 cornerstones
1. Possibility for a grade of innovation comparable with passive access
2. Highest possible transparency for higher layers
3. Possibility for multicast services
4. Technological neutrality
5. Flexibility for choosing CPE (white list)
6. Service hand-over at MDF (or similar PoP in the NGA)
7. Third-party service hand-over
8. Configuration access for all relevant connection parameters or non-overbooked bandwidth between customer and PoI
9. To be offered in NGA areas only
23.02.2011 ECO PT TRIS Page 18
Technical Concept of VULL Reference Offer
Bandwidth (HP/LP) Netz ANB
CPE
CPE
CPE
CPE Bandbreite
Bandbreite
Bandwidth
Bandbreite
DSLAMBandbreite
Bandbreite
Bandwidth
Bandwidth
Bandwidth
NetworkOLO
POI
Overview
23.02.2011 ECO PT TRIS Page 19
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
23.02.2011 ECO PT TRIS Page 20
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
23.02.2011 ECO PT TRIS Page 21
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)
23.02.2011 ECO PT TRIS Page 22
VLAN Concept (2/2)
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Prioritisation with p-Bit Marking (1/2)
VULL partner defines associated quality of data frames within bandwidth ordered for a single DSLAM using priority bit marking
p-Bit = 5 … high priority p-Bit < 5 … low priority
23.02.2011 ECO PT TRIS Page 24
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
23.02.2011 ECO PT TRIS Page 25
Defined Service Parameters for VULL
23.02.2011 ECO PT TRIS Page 26
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
23.02.2011 ECO PT TRIS Page 27
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 / 4.096NGA
NGA
Non-NGA 8.192 / 768
20.480 / 4.096
30.720 / 4.096
23.02.2011 ECO PT TRIS Page 28
CPE – DSLAM: bandwidth and monthly fees
23.02.2011 ECO PT TRIS Page 29
DSLAM – PoI: Bandwidth profiles and monthly fees
Price comparison:
Full LLU: € 5,87 per month
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Next steps
Public consultation until mid march 2011 Evaluation of consultation responses Possible adaption request from TKK … Introduction of VULL on the market
23.02.2011 ECO PT TRIS Page 31
Final Considerations
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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 …
23.02.2011 ECO PT TRIS Page 33
Virtual Unbundling A new remedy in NGA networks
Kurt ReichingerAustrian 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.
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