Issue: 22/08

Broadband Stakeholders Group Reports

June 11, 2008

ATUG has attended a number of discussions about broadband and regulatory framework developments in Europe as part of the June INTUG meeting. These discussions provide background input to the development of ATUG’s submission to the government on regulatory issues associated with the National Broadband Network. ATUG is interested in your input, email rosemary.sinclair@atug.org.au

The Broadband Stakeholders Group (BSG) meeting discussed two reports commissioned by the BSG on broadband in the UK.

The first report, A Framework for Evaluating the Value of Next Generation Broadband, examines economic and social value of next generation broadband and concludes “there’s more value in doing it right than doing it now”.

The report says the UK could reap significant social and economic value from the wide-spread deployment of next generation broadband. Looking at the potential private value (value accruing to commercial investors and consumers) and the wider economic and social value, the BSG found that the long-term benefits to the UK associated with the wide-scale deployment could outweigh the cost of deployment, which could be as much as £16bn (to reach 80 per cent of UK homes).

The BSG believes that in the short-term, there are unlikely to be significant costs associated with delaying deployment and there may actually be considerable value in waiting for a limited period in order for more information to emerge, before investing. But the value in waiting will diminish over time and the report recommends that commercial providers, government and regulators continue to work to create an environment that is conducive to timely and efficient investment. If widespread network deployment didn’t happen in the medium term (perhaps three to five years), then this report suggests that the UK could be losing out.
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The second report is Models for efficient and effective Public Sector interventions in Next-Generation Broadband access networks.

This BSG report identifies critical success factors, which if met, should help to ensure that interventions prove efficient and effective. The report also makes several recommendations including a call for greater co-ordination at national level between public and private sector organisations involved in broadband projects.

The factors include:
• Not pre-empting markets unless there are good reasons to do so
• Using the open access network model
• Designing to minimise barriers to adoption eg low connection charges, common technical specifications and wholesale products
• Stimulating and aggregating demand – details of services and prices before networks are built, concurrent with supply, a strong community based dimension, end user incentives to help take-up
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The UK approach is contrasted by Sweden where local councils have determined that their communities need access to next generation broadband and have built open access fibre networks.
Municipal governments or municipal own companies in Sweden have invested approximately $ 3billion (US) in regional and local fibre networks with funding coming from Central government, EU and the municipalities themselves. Sweden has a large rural and farming population. Swedes living in rural areas are getting fibre laid to their farms and homes. Much of this roll-out in sparsely populated areas of Sweden is being undertaken by local energy utilities owned by the municipality.
There are 290 communities in Sweden and about 200 of them have an open access network, meaning that anyone can lease dark fibre or capacity on equal terms. These networks serve schools, healthcare centres, and local councils.
Access has to be wholesaled to commercial service providers on an open, non-discriminatory basis. The goal is simply to deploy an open network and seed the market based a public-private sector partnership model, which is the result in large part of strict EU rules governing the use of public funds for broadband infrastructure.
Stokab has built the network in Stockholm. Stokab was founded in 1994 and is owned by the company group Stockholms Stadshus AB, which is in turn owned by the City of Stockholm.

Stokab’s core tasks are to build, operate and maintain the fiber optic communication network in the Stockholm region and to lease fiber optic connections. The company is competition-neutral and provides a network that is open to all players on equal terms. Stokab cooperates to facilitate the rollout of infrastructure for wireless communication and drives development of the broadband market in the Stockholm region.
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Vasteras is another city in Sweden to take their own approach to fibre deployment:

In 2000, Västerås was the first municipality in Sweden to form its own commercial company to build and operate an open urban network, and since then the company, Mälarenergi Stadsnät AB, has deregulated the broadband market by allowing the users themselves to decide which services they want. Mälarenergi Stadsnät has, in turn, connected commercial properties, local and county councils and households. The Västerås network today covers the entire town and functions as "a town within the town".
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Quotable Quotes and Questions from BSG “Beyond Pipe Dreams” conference:

• How many alternative infrastructures can be funded?
• How deep can competition go with new networks?
• The mobiles market has moved from a “land grab” where coverage was the main differentiator to a market where network sharing is common and competition focuses on services and applications. Is this a lesson for fibre network deployment?
• Content providers drive the business models for infrastructure investment
• Net neutrality is the biggest problem is driving an effective business model for infrastructure investment – telco view
• Not having net neutrality would be a disincentive to the development of innovative content services – content view
• Quality of service options is a characteristic of next generation broadband networks
• Broadband quality of service is important – if poor quality stops users getting content, the business case for broadband suffers and users will see less value
• How early should government intervene with funding? Rural areas will always need government funding so earlier is better.
• Better backhaul is the key to better application performance for today’s services
• Open access to services is key to asking customers to pay more for faster broadband access
• Consumers will not pay more for voice or for internet access. Will they be willing topay for video? New services?
• Broadband was not successful UNTIL it was competitive
• The transition to fibre must be carefully managed – to protect consumers and to promote competition
• End users should not be forced to pay for something they don’t want BUT at some point efficiency concerns will force the migration
• The success of fibre will depend on how the broadcasting market is organised. Will customers change their preference for Free to Air TV
• Mobile broadband is now taking off – flat rate pricing, all you eat, good speeds
• BT supports competitive infrastructure, not access holidays. Any investor in fibre should have an obligation for open access. There will be a mix of technologies. Public funding may be needed in small pockets. Functional separation has not slowed investment.

OFCOM Next Generation Broadband initiatives

Ofcom announced that it would undertake a sample survey of underground ducting infrastructure to understand its potential use for the rollout of next generation broadband in the UK.

“Given the remarkable results from recent French surveys, we need to establish what the position is here and whether or not duct access has a role to play in the development of competitive next-generation access. So, in cooperation with operators we intend to undertake a sample survey of the existing duct network.”
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Clarity for consumers on broadband speeds - UK’s first authoritative survey

Ofcom is concerned that consumers could be misled or misinformed when choosing their broadband services by ISPs advertising headline speeds that are higher than users can receive in practice. Ofcom’s own research has shown that consumer satisfaction of ISPs has fallen over the last year.

To gain a clearer picture of the issue, Ofcom is undertaking the UK’s most authoritative and comprehensive broadband speed survey to identify actual broadband performance across the country and its relationship to advertised headline speeds.
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The Communications Managers Association in the UK (also a member of INTUG) released their 2008 Communications in Business Report
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KEY RESULTS:
• Enterprise strategies are stable and mainly focused on maximising revenue but the challenges are evolving and the impact on communications & networks is high
• Convergence & workforce mobility are well established in the enterprise space and spending on IP and mobile keeps increasing
• Enterprise mobility is a key future strategy in which unified communications and fixed mobile convergence are central
• Reducing power consumption and making the best use of technology are the key sustainability and environmental focuses
• In the face of strong adoption of converged services significant challenges remain for suppliers in delivering customer satisfaction
• Customers want help to turn ‘potential’ into ‘reality’ especially in connection with unified communications, fixed mobile convergence and next generation networks

ATUG will be discussing Unified Communications at the ATUG/EVUA Enterprise Conference: Unified Communications and Asia-Pacific Network Developments in conjunction with EVUA, an INTUG member.

ATUG Opinion next week will be an update from the INTUG meeting on developments in the European Framework review.