columbi some remarks on bandwidth in europe ton de liefde columbi on behalf of intug
TRANSCRIPT
Columbi
Some Remarks onBandwidth in Europe
Ton de Liefde
Columbi on behalf of INTUG
Columbi
INTUGgeneral
• International Telecommunications User Group– based in Brussels– full members: users associations– associated members: companies
• interfaces with EC, ITU, OECD
Columbi
INTUGorganisation
• Global coverage with regional organisations – i.a. INTUG Europe
Columbi
INTUGactivities
• Lobbygroup in Brussels• one of the topics: Leased line
availabilities and pricing• instrument ONP
– tariffs must be cost oriented
• Focus on business community
Columbi
INTUG Cost comparison studies
• comparison of list prices• comparison of prices paid
Columbi
Important because:
• Leased circuits are the asphalt of all telecommunications services including the Internet
Columbi
Just to remind
• In 1998 corporate data traffic will exceed voice(Arthur Anderson)
• By 2002, voice will be less than 1% of telecom traffic (Ebbers - Worldcom)
• Internet bandwidth is growing at 10% per month (Mergen - GTE)
• Required bandwidth will be 35 Tbit/s by 2002 (Newport Conference on Fiberoptics - Oct ‘97)
• 6 US ISPs will deploy ATM networks in 1998 (van der Berg - Project Oxygen)
Columbi
But is it possible in Europe?
• A 300km 2Mbit/s national circuit in Europe costs 4 times more than equivalent capacity in the US
• European 2Mbit/s cross-border tariffs are 17 times higher than within the US
• A 2 Mbit/s local circuit in Europe (not UK) costs 5 times the price in London”!
Columbi
It is just not reasonable
Columbi
Comparison of the cost of a 300km 2Mbit/s circuit in USA and Europe
USPrice=1
ECU 4100/month
ECU 6500/month
Some illustrations
0
0,5
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1,5
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USA Domestic EU Domestic (Average)
Columbi
Comparison of the cost of a 300km 2Mbit/s circuit in USA and Europe...after discounts
USPrice=1
ECU 1600/month
ECU 5900/month
Illustrations: USA vs Europe
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USA Domestic EU Domestic (Average)
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USA Domestic (AT&T) EU Domestic (Average) EU Cross-Border (Average)
ECU 6500/month
ECU 34900/month
Comparison of the cost of a 300km 2Mbit/s circuit in USA and Europe
USPrice=1
ECU 4100/month
Illustrations: But it is even worse
Columbi
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5
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USA Domestic (AT&T) EU Domestic (Average) EU Cross-Border (Average)
ECU 6500/month
ECU 34900/month
Comparison of the cost of a 300km 2Mbit/s circuit in USA and Europe...after discounts
USPrice=1
ECU 1600/month
Illustrations: worse still
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4000
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7000
8000U
SA
(45M
bit
/s)
Neth
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itz'
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UK
(B
T)
Belg
ium
Luxem
b'g
Germ
an
y
Fra
nce
Local Circuit Cost of 5km 34 Mbit/s - ECU/month...after discounts
Source: National PTOs
1460
2730
7150
6520
5110
39203900
3160
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02468
1012141618
Ratio of the cost of 34Mbit/s: 2Mbit/s for a 5km local circuit (...after discounts)
Source: National PTOs
16.6
10.4
7.4
4.2
3.72.9
Columbi
A common market?
2 Mbit int. half circuit costs
05.000
10.00015.00020.00025.00030.00035.00040.000
010203040506070
cost
diff '96 '97
Source OPT committee
Columbi
What would one expect?
price level vs price reduction
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10.000
20.000
30.000
40.000
0 20 40 60 80
price reduction '96- '97
ec
u/ h
alf
cir
cu
it
Columbi
Not this
price level vs price reduction
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10.000
20.000
30.000
40.000
0 20 40 60 80
price reduction '96- '97
ec
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alf
cir
cu
it
Source OPT committee
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conclusion
• Not only a common pricing policy lacks
• There is not even a common direction
Columbi
Three tests
• Tests: – cost based pricing– uniform pricing approaches across Europe– bench-marking with the USA
• Europe fails all three tests!
Columbi
Some hope
• New brand of international operators– WorldCom, COLT, Hermes railtel,
Esprit
• and the old ones in disguise– Concert, Unisource, Global One
Columbi
Limitations
• Limited to main financial (and research) centres
• No need to price agressively as long as incumbants may charge high tariffs
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Conclusions
• Approach to harmonise by European directives and leaving the primary watchdog function to national authorities has failed or at best works to slow
• Competition alone will not bring prices down neither far enough nor fast enough
• This justifies action on a European level
Columbi
Summary
Without an European regulator, Europe will not be able to catch up with the US
ColumbiTon de LiefdeEngelandlaan 1722711 DW ZoetermeerThe [email protected]