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The FTTC Project of Deutsche Telekom Regulatory Holidays would boost - - PowerPoint PPT Presentation
The FTTC Project of Deutsche Telekom Regulatory Holidays would boost - - PowerPoint PPT Presentation
The FTTC Project of Deutsche Telekom Regulatory Holidays would boost VDSL Investments and 3play Market Development Ralph-Georg Woehrl Deutsche Telekom, Group Regulatory Strategy Berlin, 6 October 2006 Relevant Questions regarding the
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The regulatory discussion of new and emerging markets Regulators are not taking a neutral stance on the new market concept, more rational and well-founded reasoning is needed
Investment problem vs. allocation problem Technical progress abolishes bottlenecks Regulatory failure and market failure Regulatory holidays foster infrastructure competition
Liberalisation Liberalisation of teleco f telecommunica mmunication tion m markets in rkets in 1998 was 1998 was assisted by ex ante acce assisted by ex ante access regulation. The o ss regulation. The over all er all
- bjective was allocative
- bjective was allocative effici
efficien ency of exist cy of existing n networks. tworks. Today existin Today existing acce access n ss networks reach th tworks reach their capaci eir capacity limits. ty limits. Access n Access network operators face a h twork operators face a huge fi ge fibr bre in e investm stment problem problem to en to enable an able and en d enter n ter new m markets. rkets. Technical prog Technical progre ress has has broug brought many p t many pathwa thways ys to to re reach ach the cust the customers (T ers (TV-cable, po V-cable, power werlin line, fibre, satellite, UMTS, e, fibre, satellite, UMTS, Wi WiMAX etc.). Network assets MAX etc.). Network assets are no more economically are no more economically unreplicabl eplicable, so th , so the r e reason ason for for ex ante regulation is gone. ex ante regulation is gone. Th The co e commitmen mmitment for regulatory forbearance will give the for regulatory forbearance will give the righ right incen t incentives for alternativ ives for alternative n e netw twork in
- rk investm
- stment. Th
. The f e fear ar
- f ne
- f new mo
w monop nopolie lies is is not we not well-founde ll-founded. .
The “hands off”-approach in the US sets the climate for more than 25 billion $ FTTX-Invest.
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T-Home Speed VDSL/FTTC deployment is the most complex and innovative project of the fixed line unit of Deutsche Telekom since digitalisation
Network expansion New products New markets
€ 3 bn bn ca cape pex in FTT n FTTC networ network Bandwidth of up to 50 Mbps Bandwidth of up to 50 Mbps 18,0 18,000 km of fibre cable 00 km of fibre cable 74,000 new optical street cabin 74,000 new optical street cabinets ts Television of th Television of the fu e future (IPTV) ture (IPTV) Quality e Quality enhance nhancement (H t (HDT DTV) V) Attractive content (Bundesli Attractive content (Bundesliga) ga) Access to n Access to new costumers, Telcos w costumers, Telcos will develop interactive 3play will develop interactive 3play e-Le Learning, -He arning, -Health, -G lth, -Government, -Pr nment, -Procure reme ment (I nt (Inf nformatio
- rmation S
Socie ciety) y) 3- 3-Dime Dimens nsional T ional TV (ne (new de device vices, ne new art of c w art of communications mmunications) Enablin Enabling of mass customization g of mass customization
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T-Home Speed Extension of the Access Network Infrastructure
Second Mile Last Mile Main Distribution Frame (MDF) Street Cabinet (Curb)
- ld
new Copper distribution cable Fibre cable / FTTC Copper cable MDF OLT Copper distribution cable
Fibre deployment parallel to existing copper cable Replacement of street cabinets Sub loops are still copper based and able to support very high bandwidths
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T-Home Speed VDSL/FTTC Rollout Planning
Phase 1 - Phase 1 - Midyear 2006: idyear 2006: 50% of h 50% of househ eholds in
- lds in th
the Top 10 cit e Top 10 cities es Phase 2 - Phase 2 - 31.12.2006: 31.12.2006: 90% of h 90% of househ eholds in
- lds in th
the Top 10 cit e Top 10 cities es Phase 3 - Phase 3 - 31.12.2007: 31.12.2007: 90% of households in 50 cities 90% of households in 50 cities Furth Further coverage de r coverage depe pends nds on marke
- n market
de deve velop lopment ent
Rollout planning is conditional on the regulatory parameters
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Bandwidth demand Full HD Interactive TV, Videophony and 3D applications will be the drivers for access link speeds – multimedia services require VDSL
Example scenario
Family with two kids: 2 TV channel HDTV* viewed 16 Mbps 1 TV channel recorded (DVD) 2,5 Mbps WWW 2,0 Mbps Video telephony 2,5 Mbps Intelligent Home 1,0 Mbps
Laptop / Desktop Music
TV
Gateway Gameconsole Voiceon PSTN Mobile/PDA Voiceover IP
LAN LAN LAN
Video Phone
LAN LAN
Seamless channel switching needs 1,3 x normal bandwidth!
Bandwidth driver
Full HD-IPTV requ Full HD-IPTV requires 8 - ires 8 - 17 Mbps 7 Mbps Videophony Videophony requires 2 - requires 2 - 5 Mbps Mbps (s (symme mmetric) tric) 3D-Videos 3D-Videostreaming reaming requires 20 - equires 20 - 25 Mbps 25 Mbps
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What is a new and/or an emerging service? New services must satisfy additional needs, emerging services are potentially new services
The introduction of the mobile phone created a new market.
What makes it new? Telephony - no Mobility - yes What makes it new? Telephony - no Internet - no TV - no Interactivity - yes Bidirectional TV - yes integrated terminal for 3play - yes enhanced TV quality
FTTC/VDSL services will also create new markets.
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Backup
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New Market Concept of the EU-Framework Exemption from the regulation of new networks and new markets is already part of the current European Regulatory Framework
EU-Framework
Framework directive (Art. 8 Ab Framework directive (Art. 8 Abs. 2 lit. c):
- s. 2 lit. c):
encouraging efficient investment in infrastructure, and promoting innovation
Objective Market definition
Market recommendation (Reci Market recommendation (Recital 15) : al 15) : new and emerging markets, in which market power may be found to exist because of “firstmover”advantages, should not in principle be subject to ex-ante regulation
Intention
Fram amework dir ework directiv ctive ( e (Recital 27 ecital 27): ): guidelines will also address the issue of newly emerging markets, where de facto the market leader is likely to have a substantial market share but should not be subjected to inappropriate obligations Guidelines on market analysis Guidelines on market analysis (no. 32) (no. 32): premature imposition of ex-ante regulation may unduly influence the competitive conditions taking shape within a new and emerging market. Guidelines on market Guidelines on market analysis analysis (footnote 92): (footnote 92): Article 14(3) of the framework Directive is not intended to apply in relation to market power leveraged from a ‘regulated’ market into an emerging, ‘non-regulated’ market. In such cases, any abusive conduct in the ‘emerging’ market would normally be dealt with under Article 82 of the EC Treaty.
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New Market Concept of the EU-Framework DIW-Operationalization: To ensure optimal incentives to innovate and invest in new networks NRAs must credibly be committed not to regulate new infrastructure and services for a fixed period of time!
t1 No regu No regulation of n lation of newly wly emerging markets emerging markets (new in (new infr frastr astruc uctu tures) s) No regu No regulation of n lation of new markets w markets (new services) (new services) SMP-Regulation if SMP-Regulation if necessary necessary
This concept reduces the barriers to innovate and therefore it creates economic incentives to invest in competing new infrastructures – not only for the incumbent but for the competitors as well!
t2 t3 Competition in Competition inten tensity th ity throu rough altern h alternative in ative infr frastructu astructures res
Sources: Baake, Kamecke, Wey (2005) „New Markets under the new Framework“, published as DIW Policy Consultancy compact No. 6 P.Baake, U.Kamecke (2006), New Networks, Competition and Regulation, DIW Discussion Paper 568, http://www.diw.de/deutsch/produkte/publikationen/diskussionspapiere/aktuell/index.jsp
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New Market Concept of the EU-Framework The government proposal of a new article regarding the regulation of new technologies and new markets
Statutory provisions concerning the regulation of new markets Section 9a of TKG (German Telecommunications Act) “New Markets”
As a rule, new markets shall be regulated in accordance with the provisions set out in this part only if the facts of the situation justify the assumption that the development of a permanently competition-oriented market in the field of telecommunications services and networks would otherwise be obstructed in the long term. When assessing the need for regulation in accordance with Section 10 and imposing conditions in accordance with this part, the Federal Network Agency must ensure that its stipulations are of an appropriate nature and pay particular attention to the aims of promoting efficient infrastructure investments and supporting innovation.
Evaluation of th Evaluation of the proposed rulin e proposed ruling Effort in the right direction but falls too s Effort in the right direction but falls too short
- rt
Qu Qualitativ alitatively almost n ely almost no diff differ eren ence to th ce to the cu e curr rren ent ru t rulin lings gs Gives no plannin Gives no planning reliability reliability for an for any m y market rket player, hen player, hence n e no en encouragem couragemen ent of eff t of efficien cient in investm vestments s in in in infrastructure frastructure NRA must have a definition of n NRA must have a definition of newl wly emergin y emerging ma markets and n rkets and new markets w markets Minimum time perio Minimum time periods must be set s must be set otherwise th
- therwise there will be no co
ere will be no commit mmitment for regulatory forbearance ment for regulatory forbearance