tno dsl seminar_reichinger_final

23.05.2011 TNO DSL Seminar 2011

Regulation of NGA in Austria

Kurt ReichingerAustrian Regulatory Authority for

Telecommunications and Broadcasting

The opinions expressed in this presentation are the personal view of the author and do not prejudge decisions of the Austrian regulatory authorities.


Agenda The regulator’s dilemma

Life between hard-core SMP and soft law regulation

The Austrian Unbundling market as an example From the ladder of investment concept to accepted products on the market

Virtual unbundling New universal wholesale product … or just one remedy more on the list?


The regulator‘s dilemma


It‘s not about incumbent bashing …

Hard-core SMP regulation Market analysis procedure

Definition of relevant markets Analysis of competitive situation Occurrence of significant market power (?) Imposition of appropriate remedies

Regulation often means definition of general conditions or a framework Regulation is more difficult in unknown waters Regulation as an ex ante or ex post procedure

Soft law regulation EC recommendations, e.g. regarding NGA regulation EC general strategies like the Digital Agenda BEREC common positions National topics


Three tasks … not always easy to fulfil

Safeguarding competition Mandating appropriate wholesale products (remedies) from SMP operator Incentivising OLOs climbing the ladder of investment Allowing sufficient margin for alternative and SMP operator

Promoting innovation Promoting innovation from incumbent operator Promoting innovation from alternative operators

Incentivising investment Making investment scenarios attractive while safeguarding competition But: Investors usually want return not regulation


The Austrian unbundling market … as an example


Market definition and analysis

Austrian definition of market 4 (“access to physical network infrastructure”) Included: Metallic loops only (!!) Not included: Fibre, cable, mobile technologies Included as ancillary service: Access to ducts and dark fibre, co-location, …

Results of Austrian market analysis Copper access network of A1 Telekom Austria is „bottleneck resource“ 100% market share of A1 Telekom Austria (Possible) disadvantages for alternative operators – also for broadband roll-out A1 Telekom Austria has significant market power

Now, what remedies to choose?


Deployment scenarios

Yesterday: Copper only ADSL2+: ~ 16 – 20 MBit/s VDSL@CO: ~ 25 – 30 MBit/s

Today: Copper and fibre FTTC: ~ 30 – 40 MBit/s FTTB: ~ 50 – 80 MBit/s

Tomorrow: Fibre only FTTH: > 100 MBit/s

ADSL2+ / neu: VDSL2

VDSL2Glasfaser

VDSL2Glasfaser

Glasfaser


Basic considerations of Austrian decision M 3/09

EC recommendation on NGA regulation (Sep. 2010) Securing investment in infrastructure and roll out

Past and future investment in active and passive infrastructure Both from incumbent and alternative operators

Promoting competition both at the infrastructure and service layers Promotion of competition on both infrastructure and service edge possibly

conflicting

Relaxing regulation where sufficient levels of competition Relaxing regulation on market fully based on regulation may be dangerous Signals of relaxing regulation important for investment decisions

Designing a framework for the transition from copper to fibre


Basic considerations of Austrian decision M3/09

Economies of scale will be hard to achieve in NGA scenario Both for incumbent operator and even harder for alternative operators Alternative operator roll-out of FTTC/B/H (rather) not expected on a larger scale Classical unbundling at the MDF will become less attractive Sub-loop unbundling never has been a success

Introduction of a new remedy In addition to traditional remedies on unbundling market Keeping alternative operators competitive Providing a substitute wholesale product for classical unbundling Introducing an active product on a passive market Virtual unbundling

European Commission Accepted the new remedy as an intermediary wholesale product


Basic considerations of Austrian decision M 3/09

Promote alternative operator investment in VDSL@CO VDSL2 from the „Central Office“ (VDSL@CO) allowed as a first step Compensation for frustrated investment by A1 Telekom in case of future FTTx roll-out

Promote alternative operator investment in FTTC/B Increased transparency Better data delivery for FTTC/B-planning Access to ancillary services Duct / dark-fibre backhaul Negotiation possibilities for deploying new infrastructure Request for cabinets

Allow for A1 Telekom Austria investment in FTTC/B No obligatory „spectrum shaping“ under specific conditions Prioritising more advanced technologies VDSL@CO < FTTC < FTTB (< FTTH)


Traditional (copper-related) remedies

ADSL2+ / neu: VDSL2

Full unbundling of copper line - LLU Sub-loop unbundling of parts of copper line - SLU Co-location (incl. compensation payment when MDF is closed down) Cost orientation Non-discrimination Separated accounts

Unbundling


Additional „NGA-related“ remedies

Virtual unbundling incl. accompanying measures … see next slides!

Access to backhaul ducts Access to backhaul dark fibre

FTTCFTTB


Virtual unbundling … active remedy on a passive market


Virtual unbundling cornerstones (from M3/09)

1. Possibility for a grade of innovation comparable with passive access

2. Highest possible transparency for higher layers

3. Possibility for multicast services

4. Technological neutrality

5. Flexibility for choosing CPE (white list)

6. Service hand-over at MDF (or similar PoP in the NGA)

7. Third-party service hand-over

8. Configuration access for all relevant connection parameters or non-overbooked bandwidth between customer and PoI

9. Obligatory for NGA areas only


Virtual unbundling implementation rules (from M3/09)

VULL to be offered obligatory in NGA roll-out areas only Approach allows „emptying“ of NGA roll-out areas, i.e. (re)creating areas

without unbundled lines and being solely controlled by the SMP operator Possibility for forced migration from ULL to VULL under the following

conditions Invitation to planning meeting 4 months prior to planned roll-out start Information on roll-out area, technology and planned roll-out date Invitation to submit request for compensation payments for frustrated investments Cost-free migration from ULL to VULL Invitation for co-operation talks Further information on roll-out plan for interested OLOs 2 months before roll-out start Detailed information on roll-out for co-operating OLOs

Alternatively: Spectrum shaping for protection of xDSL services from MDF Same procedure applies for OLO NGA roll-out


VULL technical concept from A1 Telekom Austria

Bandwidth (HP/LP) Netz ANB

CPE

CPE

CPE

CPE Bandbreite

Bandbreite

Bandwidth

Bandbreite

DSLAMBandbreite

Bandbreite

Bandwidth

Bandwidth

Bandwidth

NetworkOLO

POI


VULL Reference Offer

Modular layer 2 bitstream product based on Ethernet technology Access part:

VDSL2 on copper loop with 3 bandwidths to choose from (8/20/30 MBit/s) Individually ordered per customer

Backhaul part: Ethernet with 16 bandwidths to choose from (2 … 800 MBit/s) allowing OLOs to

choose degree of overbooking – even allowing non-overbooked services Ordered per DSLAM

Quality of Service: Service priorisation of Ethernet Frames using p-Bit p=5: Voice / p=4: Video / p=1: Business Internet / p=0: Residential Internet 50% of Link: high priority quality guaranteed / Remainder: low priority quality

Virtual Connections Up to 4 VLANs per customer



VULL services are aggregated for every MDF area connected MDF area (MPoP) comprising several VDSL2 DSLAMs

VULL services are mapped into double-tagged VLAN (S-Tag and C-Tag) allowing to adress customers via Layer 2 Ethernet S-Tag defines specific DSLAM

VLAN-ID 10 … 2009 (i.e. 2000 DSLAMs per handover point) C-Tag defines specific customer

VLAN-ID 100 … 300 (i.e. 200 customers per DSLAM) p-Bit marking defines traffic priority (QoS)

VULL services are handed over to VULL partner on defined PoIs Hand-over is at today‘s MDF locations (i.e. locations with existing collocation and

backhaul facilities)



Customer Premises Equipment (VDSL2 Modem/Router) No modem included – to be chosen by OLO Minimum modem requirements defined Modem whitelist with modems tested, being qualified as properly working and

guaranteeing defined service performance parameters

Service hand-over for several DSLAMS at MDF location in NGA roll-out areas 1 GbE and 10 GbE

Service hand-over to third party provider possible Transparency for multicast services Pricing issues

Margin squeeze free


Critical issues for business grade services

MTU size Current limitations of A1TA DSLAMs regarding maximum frame size (1522 Byte -

customer edge / 1526 Byte - VULL hand-over)

QoS Current limitations regarding frame loss, frame delay and frame delay variation

Layer 2 Control Protocols Current limitations regarding L2CP protocols supported by A1TA DSLAM

Symmetrical bandwidth Limitations due to 998 VDSL2 band plan


Pricing issues

Pricing according to FL-LRAIC methodology taking into account the full range of products offered, i.e. NGA and non-NGA products

Risk premium applicable for NGA products No margin squeeze in relation to A1TA retail offerings

Non-NGA

NGA

NGA

8.192 / 768

20.480 / 4.096

30.720 / 4.096

Non-NGA 8.192 / 768

20.480 / 4.096

30.720 / 4.096

NGA

Non-NGA 8.192 / 768

20.480 / 4.096

30.720 / 4.096NGA

NGA

Non-NGA 8.192 / 768

20.480 / 4.096

30.720 / 4.096


CPE – DSLAM: bandwidth and monthly fees


DSLAM – PoI: Bandwidth profiles and monthly fees

Price comparison:

Full LLU: € 5,87 per month


Summing it up … on a single slide


Summing it up …

The telecoms landscape is changing – so are regulatory interventions Some of yesterday‘s remedies are not appropriate any longer These remedies have to be phased out with new ones to be carefully

introduced in order to support today’s regulatory intentions Virtual unbundling may be such a new remedy that could even have the

potential to replace several of today’s remedies in a medium to long term perspective, e.g. classical unbundling, classical bit-streaming or leased line terminating segments, …

In summer 2011 VULL is finally expected to be launched in Austria …


Regulation of NGA in Austria

Kurt ReichingerAustrian Regulatory Authority for

Telecommunications and Broadcasting

The opinions expressed in this presentation are the personal view of the author and do not prejudge decisions of the Austrian regulatory authorities.


VLAN Concept (2/2)


Prioritisation with p-Bit Marking (1/2)

VULL partner defines associated quality of data frames within bandwidth ordered for a single DSLAM using priority bit marking

p-Bit = 5, 4 … high priority p-Bit = 1, 0 … low priority p-Bit priority: 5 > 4 > 1 > 0


Prioritisation with p-Bit Marking (2/2)

50% of bandwidth ordered for DSLAM area available for high priority (HP) traffic according to defined service and service-class parameters

Up to 100% of bandwidth ordered for DSLAM area available for low priority (LP) quality as long as bandwidth is not used for HP traffic

Traffic exceeding 50% limit available for HP is discarded (p = 4 discarded before p = 5)

In LP class p = 0 discarded before p = 1 Re-marking of p = 2, 3, 6, 7 to p = 0


Defined Service Parameters for VULL

tno dsl seminar_reichinger_final

Technology

austrian unbundling

regulation of nga

market definition

framework regulation

a1 telekom austria investment

future investment

investment decisions

frustrated investment