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Opinion "Communicate, Collaborate, Innovate" |
| Issue: 46/07 | ECTA,
INTUG, OECD
|
December
12, 2007
|
ULL based broadband competition is working – very slow to implement but now speeds are increasing, prices falling, and offers are delivering more value to end users. ULL lines have gone from 105K in EU to 3.3 million in 2007.
Two approaches to the Fibre Future issue are being explored – Fibre to the Home and Fibre to the Node.
The latter is seen as having great dangers for re-monopolisation by incumbents. The EU is currently debating the details of the new EU Framework for Communications which contains some wins and some losses for everyone. The wins include a strong commitment to continued support for competition – even in the face of “jam tomorrow” ie high speed broadband to re-invigorate the EU economy. Depending on your viewpoint and market analysis skills the wins also include a reduced number of markets for ex-ante regulation. On the other hand the introduction of Functional Separation as a potential remedy for regulators facing intractable discrimination (ATUG’s words) is seen as a loss by incumbent operators. Perhaps the most telling figure in support of this additional remedy is that incumbent operators in the EU still control over 90% of all fixed lines – seen by many as a portent of a world where incumbent operators control fixed fibre access platforms without strong regulation. At its core the EU position is that fibre induced regulatory holidays would be a backward step for competition and consumers.
In France and the US, fibre to the home is seen as the way forward. In the US, without ULL type access, because of the strong competition coming from the cable networks – in the eyes of the incumbent telcos and now the regulator. There are other views about the effectiveness of broadband competition in the US market and perhaps this is the reason for the focus on including mobile broadband platforms in OECD statistics.
In France the regulator is intensely focused on trying to deliver competitive fibre to the home services – through mandated access to rights of way, poles, ducts, and sharing the last part of the local fibre loop eg building wiring systems. The French have even resolved the “no room in the ducts” problem – by requiring access to dark fibre in such circumstances. France sees a high risk of competition going backwards just at a time where there is need for substantial investment by industry. The framework will apply symmetric regulation to all operators – whoever is first to construct within a building will be required to provide shared access to competitors. “First-in” will not be allowed to mean “customer pre-emption”. Inter-connection will be required to ensure “any-to-any connectivity” and pricing will be developed through a Reference Interconnect Offer from the provider – which may be amended by the regulator if required to deliver a reasonable price. France sees a strong role for municipalities in providing a plans and infrastructure base for competitive fibre providers. In summary France is now as concerned with supporting competition as it has been focused on extending coverage.
In The Netherlands update it was interesting to learn the incumbent KPN has plans for FTTN which it is now re-considering in light of recent announcements by cable operators of faster speeds than KPN’s VDSL would have been able to deliver. Cable operators in NTL have 90% penetration and offer triple/quad plays which are taking 100,000 customers from KPN every quarter – competition is driving the need to respond with innovation. KPN is talking about maintaining some MDF access points and providing compensation for DSL providers affected by its plans to cut MDF numbers and sell buildings to fund the FTTN rollout. Germany also has a view that incumbents can’t dismantle MDFs without making some substitute arrangements – in EU jargon it’s a problem of dominance in one of the prescribed markets.
Fixed to mobile convergence is becoming more and more interesting – it’s now not a question of technology although there is work for industry to do to ensure seamless interoperability across communications networks, content stores and end users’ devices. It’s really a matter of price for end users. The price of mobile broadband at present means the service will not take off as operators are expecting. When price bundles start delivering value to end users, then the convenience of broadband in the hand WILL appeal to end users – as did mobile voice. But it took Hutchison’s 3 to innovate with the pricing buckets before this happened. Industry concentrates on technology innovations – from end users it’s often a matter of price innovation. The INTUG meeting had a presentation on the reason Mobile Termination Rates (MTRs) were ever a problem and the lengths to which regulators and policy makers have had to go to get to a sensible outcome for end users. The start point was a letter of understanding sought from the EU by the GSM Association which allowed mobile operators to change the basis on which they charged each other for terminating mobile minutes. This was a moment of great clarification – prices for termination after this change increased by almost 300% (!!!) and lead to INTUG to start the long campaign to reduce the termination rates because of the flow on of high prices to end users for fixed to mobile calls and also for roaming calls. The ARCEP presentation from the INTUG meeting on this topic is of particular interest. Hutchison 3G made the point during the ECTA conference that the mobiles markets is now at a point where Mobile Termination Rates will cause market distortions – operators who want to offer flat rate buckets for 3G services will not be able to! Another example of Hutchison “price innovating” and a reminder of why competitors are so important to markets and end users. Innovation comes from many sources in competitive markets – even from incumbents! The presentation for the US Verizon speaker on MTRs in the US was an eye opener – in that market MTRs are set at .0007 US cents per minute. At this price point operators charge and bill each other BUT no-one bills the customer! This market based price for termination compares very favourably with regulator set prices of around 9 cents per minute.
In all the circumstances, the ACCC’s long, slow glide path to 9c (from 22c) looks VERY cautious and generous to industry players. ATUG recommends to members to negotiate the rate for fixed to mobile calls with their supplier – there is plenty of room to move as larger organisations have already discovered.
There were many other issues discussed at these meetings. A number of them are “old” issues requiring a contemporary framework for applications and implementation, this is the work that lies ahead of Australia during 2008-2009. There is no doubt that we are all about to embark on an important conversation about the future – of our economy and society and of the communications platforms, services, policies and structures which will be needed to support our directions.
The issues, which will be discussed in ATUG Opinions during 2008, include:
• Any to any connectivity – across platforms, two content services, multi devices, fixed and mobile networks
• Business markets needs – universal access and guaranteed quality are needed to support re-engineering of business and government services. A two-speed economy will be an inefficient economy.
• Continuity of service – effective broadband portability rules which enable end user choice
• Quality – if telco operators don’t define end to end interconnected QoS based Voice over IP services, they will
become dumb bit pipe providers.
• Spectrum for wireless broadband – the wireless economy taking over from the networked economy
• Consumer power – information, fair contracts, reasonable prices, effective choice
• Regulating dominance – an issue which has had new life breathed into it through technology architectures
ATUG has held the third on our series of Future Forums – covering demand trends, technology trends and now business model/revenue trends. In February we will hold the last Future Forum looking at policy and regulatory trends. We would welcome input from all our members and will be announcing in 2008 a series of interactive discussion forums to ensure we capture all your views as we develop end users views on the policy discussions in 2008. ATUG will announce the major trends from the Future Forums at ATUG 2008.
ATUG 2008 |
ATUG
Industry Awards and Gala Dinner
 |
ATUG
Broadband Awards 2008
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| ** Details
for coming events will be forwarded via normal notice/event channels. ***This email has been sent from: Lauren McGinley, Australian Telecommunications Users Group, Suite 506, Level 5, 815 Pacific HWY Chatswood NSW 2067 |
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