virtual unbundling in austria

24.01.2012 Interconnection World Forum 2012

Virtual Unbundling

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.


Agenda How do access networks look like today? Why are traditional remedies not appropriate any longer? What is VULL and why did we choose it? Is VULL a successful wholesale product?


Access networks look different today …


Traditional telco access network

MDF

MDF … Main Distribution Frame


It‘s all NGA now …

ARU MDF ARUFibre Fibre

MDF … Main Distribution FrameARU … Access Remote UnitFTTC … Fibre to the CabinetFTTB … Fibre to the BuildingFTTC … Fibre to the Home


Traditional regulation in legacy access networks

MDF

OLO Full Unbundling

OLOCustomer


Traditional regulation in NGA networks

ARU MDF ARUFibre Fibre

OLOCustomer

OLOFull Unbundling

OLOSub-Loop Unbundling

Access to Ductsand Dark Fibre


Basic conclusions Economies of scale hard to achieve in NGA scenario

Both for incumbent operator and even harder for alternative operators Austria ~ 1.500 MDFs several ARUs per MDF needed Austria ~ 300 MDFs unbundled practically no sub-loop unbundling

Alternative operator roll-out of FTTC/B/H not expected on a larger scale Huge investment necessary Positive business case hard to achieve with single-digit market share

Classical unbundling at the MDF will become less attractive or even impossible Less attractive: maximum bandwidth from MDF lower than from ARU Impossible: in the case of copper no longer available from MDF (e.g. new-build)

Sub-loop unbundling Has not been a success in the past Not expected to be a success in the future


Regulatory approach Continue to apply yesterday‘s remedies or introduce something new? Basic considerations

Providing a substitute wholesale product for areas where classical unbundling is no longer feasible for technical or commercial reasons

In addition to traditional remedies on unbundling market Keeping alternative operators competitive Introducing an active product on a passive market Virtual unbundling

European Commission Accepted the new remedy as an intermediary wholesale product


It’s not only about regulation … Safeguarding competition

Mandating appropriate wholesale products (remedies) from SMP operator Incentivising OLOs climbing the ladder of investment Allowing sufficient margin for alternative and SMP operator Market analysis procedure: Definition of relevant markets Analysis of competitive

situation Significant market power? Imposition of appropriate remedies Promoting innovation

Promoting innovation from incumbent and alternative operators Incentivising investment

Making investment scenarios attractive while safeguarding competition But: Investors usually want return not regulation


Virtual unbundling (VULL)


VULL cornerstones (from market analysis decision)1. Possibility for a grade of innovation comparable with passive access 2. Highest possible transparency for higher layers3. Possibility for multicast services4. Technological neutrality5. Flexibility for choosing CPE (white list)6. Service hand-over at MDF (or similar PoP in the NGA)7. Third-party service hand-over8. Configuration access for all relevant connection parameters or non-

overbooked bandwidth between customer and PoI

9. Obligatory for NGA areas only


VULL implementation rules VULL to be offered in NGA roll-out areas only Approach allows „emptying“ of NGA roll-out areas, i.e. (re)creating areas

without unbundled lines and being solely controlled by the SMP operator Absence of disturbing lines allows higher bandwidth for customers Absence of alien systems allows better introduction of vectoring

Possibility for forced migration from ULL to VULL under the following conditions Invitation to planning meeting 4 months prior to planned roll-out start Information on roll-out area, technology and planned roll-out date Invitation to submit request for compensation payments for frustrated investments Cost-free migration from ULL to VULL Invitation for co-operation talks Further information on roll-out plan for interested OLOs 2 months before roll-out start Detailed information on roll-out for co-operating OLOs

Alternatively: Spectrum shaping for protection of xDSL services from MDF


VULL technical concept from incumbent operator

Bandwidth (HP/LP) Netz ANB

CPE

CPE

CPE

CPE Bandbreite

Bandbreite

Bandwidth

Bandbreite

DSLAMBandbreite

Bandbreite

Bandwidth

Bandwidth

Bandwidth

NetworkOLO

POI

Layer 2 Service


VULL Reference Offer Modular layer 2 bitstream product based on Ethernet technology

Access part: VDSL2 on copper loop with several bandwidths to choose from (8/20/30 MBit/s)

depending on access scenario (FTTC, FTTB); 50/100 MBit/s with FTTH Individually 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

Virtual Connections Up to 4 VLANs per customer

Quality of Service: Service prioritisation of Ethernet frames using p-Bit


VULL Reference Offer 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 traffic priority (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)


VULL Reference Offer 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


Is VULL a success story?


VULL on the timeline

SEP2010

DEC2010

JAN2011

MAY2011

SEP2011

JAN2012

Regulatory decision

1st reference offer

2nd reference offer

Detail specification of VULL


Critical issues still in discussion Technical limitations of incumbent‘s equipment to be taken into account MTU size

Current limitations of DSLAMs regarding maximum frame size (1522/1526) QoS

Current limitations regarding frame loss, frame delay and frame delay variation Layer 2 Control Protocols

Current limitations regarding L2CP protocols supported by DSLAM Symmetrical bandwidth

Limitations due to 998 VDSL2 band plan Operation and Maintenance

Access to measurement data and configuration parameters Technologies used (e.g. DHCP snooping, DHCP option 82, trusted ports, etc)


Critical issues in discussion (cont‘d) Pricing

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

Price comparison:

Full LLU: € 5,87 per month


VULL … still some hills to climb „Quite nice“ wholesale product for residential user products

Asymmetrical data rates up to 30/4 MBit/s (FTTC), 50/5 (FTTB) and 100/10 (FTTH) Feasible for voice, video and Internet Feasible for IP-TV

Room for improvement regarding business user products Limitations in symmetric data rates Limitations in MTU size Limitations in QoS achievable Limitations in L2CP transparency


Summing it up … Today’s access networks look different – it’s all NGA now Regulatory interventions have to be tailored to address the changes Virtual unbundling is a new remedy that has the potential to replace

several of yesterday’s remedies in a medium to long term perspective Moving from layer 1 (unbundling) to layer 2 (virtual unbundling) is a bigger

step for alternative operators than expected Specifying details for VULL proves to be time-consuming as is agreeing on

general conditions for migration

VULL is available – but alternative operators still seem not convinced


Virtual Unbundling

Kurt ReichingerAustrian Regulatory Authority for Telecommunications and Broadcasting

virtual unbundling in austria

Technology