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
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INTUGorganisation
• Global coverage with regional organisations – i.a. INTUG Europe
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INTUGactivities
• Lobbygroup in Brussels• one of the topics: Leased line
availabilities and pricing• instrument ONP
– tariffs must be cost oriented
• Focus on business community
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INTUG Cost comparison studies
• comparison of list prices• comparison of prices paid
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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”!
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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
1
1,5
2
2,5
3
3,5
4
USA Domestic EU Domestic (Average)
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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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0,5
1
1,5
2
2,5
3
3,5
4
USA Domestic EU Domestic (Average)
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0
5
10
15
20
25
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
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0
5
10
15
20
25
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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0
1000
2000
3000
4000
5000
6000
7000
8000U
SA
(45M
bit
/s)
Neth
'lan
ds
Sw
itz'
lnd
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
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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
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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
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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
u/ h
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
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Three tests
• Tests: – cost based pricing– uniform pricing approaches across Europe– bench-marking with the USA
• Europe fails all three tests!
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Some hope
• New brand of international operators– WorldCom, COLT, Hermes railtel,
Esprit
• and the old ones in disguise– Concert, Unisource, Global One
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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
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Summary
Without an European regulator, Europe will not be able to catch up with the US
ColumbiTon de LiefdeEngelandlaan 1722711 DW ZoetermeerThe [email protected]
