Pedestrian Crossings and Superhighw ay Robbery: Sources of Market - - PowerPoint PPT Presentation

Pedestrian Crossings and Superhighw ay Robbery: Sources of Market Pow er in Broadband

ACCC conference 2008

Rob Nicholls Consultant 24 July 2008

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Agenda

• Introduction
• The need for speed
• The real competition – services and applications
• The importance of capital
• Contended issues – wireline and wireless
• Unlearning regulatory lessons – the absence of a magic

bullet

• Competition in the NGN access network
• Conclusions

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Introduction

• Technology oriented view of next generation network world
• Interaction with NBN
• Three key messages:

– Speed is key – Wireline is the delivery technology – Excessive regulatory intervention will render the question of broadband market power moot

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The need for speed

• Australia does not have the policy concept of the

“information society”

• An information society perspective requires access to low-

cost ubiquitous broadband

• A world without SMS and email is unfathomable
• This will expand to encompass rich media delivery on a

personalised basis – independent of location and time

• Key characteristics (EU) – interoperability and speed
• The interoperability issue has been addressed by

engineers

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Need for speed – An Australian user perspective

Source: ABS Dial-up and IS DN 256 kbps to less than 512 kbps 512 kbps to less than 1.5 Mbps 1.5 Mbps to less than 8 Mbps 8 Mbps to less than 24 Mbps 24 Mbps or greater

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The real competition – services and applications

• In the old PSTN world a voice service is just a voice

service

• In the NGN world, voice is an application which can be

acquired independently of carriage

• The application need not be in the same country as the

network

• Cloud compute space already developing
• Quality of Service (QoS) determined on an application by

application basis – by either the end user, the supplier or both

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The importance of capital

• The deployment of part state funded, fibre based

broadband networks is a regional trend: – Australia – $4.7 billion as part funding of NBN – Malaysia – more than $US4 billion to TM in PPP – Singapore – separate core network and access networks – Pakistan – least cost subsidy auction using USF money to add broadband to USO

• Pure private investments by Verizon (FiOS – FTTP) and

AT&T (U-verse – FTTN) as well as France Telecom and Deutsche Telekom

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The importance of capital

• Viviane Reding recognises the need for regulatory

certainty:

we want to encourage investment into next generation access networks by a stable and predictable regulatory

• environment. We are still discussing the final details of this in

the Commission, but I believe that the best way for encouraging long-term investment is to establish a priori a number of principles that national regulators should take into account when regulating access prices with regard to next generation access networks. In my personal view, these should include a risk premium of around 15 %

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Contended issues – w ireline and w ireless

• Mobile voice is a substitute or complement to PSTN voice
• Little difference in the user experience (price and

portability)

• Wireless and wireline IP data are significantly different
• Number of cells would require to rise significantly in order

to offer reasonable contention (both HSPA and LTE)

• Contention in wireline networks (or passive optical

networks) is well characterised

• Concurrent downloads (P2P or IPTV) demonstrate the

contention issue

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Unlearning regulatory lessons – the absence of a magic bullet

• Globally, regulators are struggling with the new paradigm

that NGN provides: – ERG with ladder of investment – Separation as a magic bullet

• NBN regulatory submissions call for structural separation –

with little definition (BT uses the European “functional separation”)

• Academic literature does not support the concept and its

implementation in telecommunications has been limited (UK, NZ, Sweden (in a fashion) and Denmark by

• utsourcing)

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Unlearning regulatory lessons – the absence of a magic bullet

• Larouche argues that separation has two consequences:

– loss of control over operation decisions (mission paradox) – cost of regulation not being taken into account (regulatory externality) structural solutions – essentially separation of vertically- integrated companies – are put forward, but they are perhaps too drastic and they evidence a deep involvement of regulatory authorities with the operation

• f firms

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Unlearning regulatory lessons – the absence of a magic bullet

• Nor is there an uncontended view on separation in Europe

as EU Parliament shows: Functional separation, due to its far-reaching character, is subject to a special treatment whereby the Commission and BERT have to agree that it is the only effective remedy in order for the concerned NRA to be able to impose it

• It is also not quite clear what the problem is (rather than

what it might be) as vertical integration is both efficient and encourages both investment and innovation

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Competition in the NGN access netw ork – core

Secure Tunnel Au

Customer

I D QoS Tunnel Filtering

Set up

Location

I MS Core

Mobile Packet core Fixed Packet core Mobile CS PSTN

Wireless circuit switched Wireline circuit switched Wireline packet switched Wireless packet switched

Service Plane Control Plane Access Plane

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Competition in the NGN access netw ork

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Competition in the NGN access netw ork

• Key issue is QoS!
• NGA interconnection permits managed QoS between both

networks (any-to-any). Innovative applications and services can be provided at the applications plane of either NGN1

• r NGN2.
• Access seeker chooses both QoS and bandwidth and can

self provision QoS parameters on an application by application basis

• Even the retail broadband service has the potential for

significant innovation simply because the QoS parameters are selected by the access seeker

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Conclusions

• Speed is key
• Wireline is the delivery technology
• Excessive regulatory intervention will render the

question of broadband market power moot: – Functional separation is not a magic bullet – Acceptable undertakings are likely to be the only practical answer in Australia – Unbundling needs to be unlearned – Facilitating interconnection at the access network may be all the intervention that is required

Pedestrian Crossings and Superhighw ay Robbery: Sources of Market Pow er in Broadband

ACCC conference 2008

Rob Nicholls Consultant 24 July 2008