virtual unbundling - remedy for nga

23.02.2011 ECO PT TRIS

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.


Agenda The Austrian Unbundling Market Virtual Unbundling Final Considerations


The Austrian Unbundling Market


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


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


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

… …


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


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


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.


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


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


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


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


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


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


Virtual Unbundling


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


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


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


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


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)


VLAN Concept (2/2)


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


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


Defined Service Parameters for VULL


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


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


CPE – DSLAM: bandwidth and monthly fees


DSLAM – PoI: Bandwidth profiles and monthly fees

Price comparison:

Full LLU: € 5,87 per month


Next steps

Public consultation until mid march 2011 Evaluation of consultation responses Possible adaption request from TKK … Introduction of VULL on the market


Final Considerations


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 …


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.

virtual unbundling - remedy for nga

Technology

llu market

access services

market analysis obligations

market analysis procedure

market analysis indicators

largest access network

nga regulationcompensation

future nga roll