DSL Technology and Trends -A Regulator’s Perspective

M H AuDeputy Director-General

OFTA, Hong Kong28 June 2001

2001 Digital 21 Strategy

• Building on Hong Kong’s early success inestablishing a solid foundation for e-commerce,Digital 21 will now strive to position Hong Kongas a leading e-business community and digital cityin the global information economy

Elements of Digital 21 Strategy

• Enhance e-business environment• Develop e-government• Develop IT workforce• Strengthen community for digital exploitation• Exploit enabling technologies

A broadband infrastructure is indispensable forthe above initiatives

Telecommunications PenetrationHong Kong Singapore South Korea

Fixed LinePenetration

56% (Apr2001)

48.5% (Apr2001)

46.4%(Dec 2000)

MobilePhonePenetration

78.6% (Apr2001)

70.6% (Apr2001)

56.7% (Dec2000)

Home Computer and InternetPenetration

Hong Kong Singapore South Korea

HomeComputerOwnership

49.7% (Mar2000) - C&SD,HKSARG64.2% (Dec2000) - TRP, HKU

59% (2000) N/A

HomeInternetPenetration

36.4% (Mar2000) - C&SD,HKSARG50.4% (Dec2000) - TRP, HKU

42% (2000) 40% (2000)

C&SD - Census and Statistics Department TRP - Telecommunications Research Project

Dial-Up Internet AccessHong Kong Singapore South Korea

Number ofDial-UpInternetAccounts

2,175,186(Mar 2001)

1,957,786(Apr 2001)

16,807,067(Dec 2000)

Population 6.9 million 4.0 million 47.3 million

Penetration 31% 49% 36%

Broadband Internet AccessHong Kong Singapore South Korea

Number ofBroadbandInternetAccounts

444,450(Mar 2001)

300,000(Apr 2001)

3,870,293(Dec 2000)

Population 6.9 million 4.0 million 47.3 million

Penetration 6% 7.5% 8%

Broadband Internet AccessHong Kong Singapore South Korea

Number ofBroadbandInternetAccounts

444,450(Mar 2001)

300,000(Apr 2001)

3,870,293(Dec 2000)

Number ofFixed Lines

3,925,843(Mar 2001)

1,950,400(Apr 2001)

21,931,651(Dec 2000)

BroadbandConnections/Fixed Lines

11.3% 15.4% 17.6%

The Broadband Infrastructure

• Creating and maintaining a conduciveenvironment for private investment

• No foreign ownership restriction• Promotion of competition and market-driven

approach• Market liberalization

– External connections– Trunk networks– Access networks

External Connections

• Competition since January 2000• 8 cable-based licences and 12 satellite-based

licences so far– APCN2 (80 Gbps), East Asia Crossing (80

Gbps), C2C (160 Gbps), Flag/Level 3 (320Gbps)

– Second fibre ring, Third fibre ring,ChinaUnicom fibre ring, China Netcom cable, CLPTelecom cable, others

Trunk Networks

• Local wireline-based fixed networks– competition since July 1995– four licensed– extensive trunk networks rolled out covering

Hong Kong Island, Kowloon peninsula andNew Territories

– moratorium to terminate at end-2002

Access Networks

• Only one choice before 2000• Access Networks as “bottleneck” facilities

– rollout requires road opening and takes time– building access problem– congestion in in-building cabling facilities– “moratorium” for use of Type II

interconnection for broadband services untilend-February 2001

– high wholesale price for conveyance

Overcoming “Bottleneck” inCustomer Access

• Type II interconnection (DSL Technology)• Fibre-to-the-Building• Cable Modem Technology• Wireless Local Fixed Networks• Broadband Access from Satellites

Type II Interconnection

• Previously available only up to 144 kbps (ISDNbasic rate)

• Extended to cover broadband services as from 1March 2001 (TA Statement on “BroadbandInterconnection” of November 2000)

• Two options– full capacity available to interconnecting carrier– “line sharing” between narrowband telephony

service and broadband service

Fibre-to-the-Building

• Initially emphasis on commercial buildings• New entrants committed to make connections to

specified number of buildings by end-2002• Buildings law amended in 2000 to make provision

of telecommunications cabling facilities (ducts,risers, equipment rooms) mandatory in newbuildings

Cable Modem Service

• Hong Kong Cable Television licensed in Jan 2000• Initially cable modem service for broadband

Internet access; cable telephony service under test• Commitments on coverage under licence

Date Premises passed by service31 Dec 2000 500,00031 Dec 2001 900,79531 Dec 2002 1,200,681

Wireless Local Fixed Networks• Five networks licensed in February and March

2000• Based on Local Multipoint Distribution System

(LMDS) technology (operating in 25 - 31 GHzbands)

• Initially for broadband Internet access; telephonyservice may be introduced in later years

Broadband Access via Satellites

• Satellite Master Antenna Television (SMATV)Licence modified from January 2000 to allowreception of telecommunications signals fromsatellites

• To be used for broadband downloading fromsatellites

• Return path via terrestrial public switchedtelephone network

DSL Technology Coverage

• Covers 95% of homes (distance from localexchange < 4 km) (source: PCCW-HKTC)

• Compared: Cable modem service– 1.2 million homes (57% homes) passed by end-2002

• Compared: Wireless fixed networks– Coverage 1 - 3 km radius around each hub– Number of hubs ranges from 23 to 35 in 3 years after

licensing– Number of buildings covered ranges from 240 to 3,552

in 3 years after licensing

DSL Technology Performance

• Dedicated capacity for xDSL family of technology• Compared: cable modem, LMDS and satellite

downloading - all shared capacity• Overall speed perceived by users limited by

speeds of other links over the Internet• Stable performance• Compared: rain attenuation for LMDS, line-of-

sight restriction for LMDS

DSL Opportunity and Threat

• Potential of rapid service to 95% of customers• Commercial negotiations required for access to

dominant operators’ local loops• Rollout limited by space availability in local

exchanges, productivity rate to effectinterconnection, etc.

• Window of opportunity may pass as othertechnologies catch up

What OFTA is Doing

• Promoting effective competition in broadbandaccess

• Type II interconnection to enable early andwidespread availability of broadband access tohouseholds

• Direct connections to buildings for new entrantsprogressively implemented

• New technologies (laser, pico-cell microwave,powerline carriers, fibre to home) in the long term

What OFTA is Doing (Cont’d)

• Additional competition in local fixed networkmarket from 1 January 2003

• Encouraging provision of high-capacity in-building wiring systems and regulating to preventdevelopment of “bottlenecks”

• Facilitating building access• Implementation of 3G mobile infrastructure• Open access to networks• Digital terrestrial television

What OFTA is Doing (Cont’d)

• Industry code of practice to be extended to covercoordination procedure for broadband Type IIinterconnection

• Developing technical specification for interferenceprevention in Type II interconnections

• Facilitating commercial negotiations• Determining terms and conditions if commercial

negotiation fails

Office of theTelecommunications Authority

PCCW DSL Forum28 June 2001