1 High Speed Broadband Access F ig u r e 2 : H i g h S p e e d - PDF document

ACCC Regulatory Conference 2006 Surfers Paradise, Queensland 27-28 July 2006 “Local Loop Network Access” Martin Cave Martin Cave Warwick Business School, UK Martin.Cave@wbs.ac.uk mec1409 Regulatory criteria: the European model Which are the relevant markets? Which end-to-end value chains exhibit dominance? Where is the source of the dominance? Devise a pro-competitive remedy mec1409 2 Application to current generation broadband Local loop DSLAMs Backhaul IP Network Retail mec1409 3 1

High Speed Broadband Access F ig u r e 2 : H i g h S p e e d B r o a d b a n d A c c e s s A D S L E v o lu t io n C u r r e n t A D S L B r o a d b a n d D S L D S L E x c h a n g e F a s t e r D S L F i b r e E v o l u t i o n F i b r e F i b r e F i b r e F a s t e r D S L N e x t G e n e r a t i o n B r o a d b a n d mec1409 4 High Speed Broadband Access F ig u r e 3 : H ig h S p e e d B r o a d b a n d A c c e s s C a b le E v o lu tio n C u rr e n t C a b le B ro a d b a n d C o a x F ib r e E v o lu tio n F ib r e F ib r e F ib r e F ib re N e x t G e n e ra tio n B ro a d b a n d mec1409 5 High Speed Broadband Access F ig u r e 4 : H ig h S p e e d B r o a d b a n d A c c e s s C u r r e n t W ir e le W ire le s s E v o lu tio n B r o a d b a n d F ib r e E v o lu t io n N e x t G e n e r a t io n B r o a d b a n d mec1409 6 2

Broadband access differentiators Speed - Derived demand from services - Continuous chain of substitution? - Mobility - fixed, nomadic, mobile (Mobile (3G) data still very expensive) mec1409 7 Fixed NGNs Existing model LLU PSTN PSTN Local Core Cab Conc Exch. exch. 88k 5k copper copper fibre fibre 1k 200 Core NGN – e.g. BT LLU IP IP Tier 1 Metro Cab MSAN MSAN Node 88k copper copper n k < 5k fibre fibre 1k 100 Access NGN SLU LLU? IP IP Metro Tier 1 Cab MSAN copper fibre Node fibre MSAN fibre mec1409 8 Policy implications 1 2.X regimes (fixed, cable, wireless) Forbearance on new access networks, unless wireless is unsuccessful and collective dominance on fixed/cable mec1409 9 3

Policy implications 2 1.X regimes Fibre to the cabinet - Mandate access up to certain speed (identify separate ‘high speed’ wholesale market) - Mandate access with elevated cost of capital - Focus access regulation on ducts mec1409 10 Structural separation options Wholesale/Retail Access/rest Ownership separation Joint venture Legal separation BS + separate incentives Business separation (BS) Virtual separation Wholesale division for 3 rd parties Accounting separation mec1409 11 4