Issue: 45/08

INTUG Consultation for NGNs

November 19 , 2008

This week’s Opinion is an extract from INTUG’s response to the European Commission’s current Consultation on Commission Recommendations regulated access to Next Generation Access Networks (NGA).

Background on the Commission’s Consultation at http://ec.europa.eu/information_society/policy/ecomm/library/public_consult/nga/index_en.htm

INTUG’s full response is at http://www.atug.com.au/Opinion/Op191108/INTUGNov08.pdf
ATUG has worked with INTUG on the issues covered in this response.

As Australia approaches the deadline for lodgement of NBN RFP responses, many of the issues addressed by INTUG will become issues for the Expert Panel, the ACCC in its role of advising the Expert Panel and the Minister when he considers the advice from the Panel in early 2009.

INTUG Executive Summary

INTUG believes that ubiquitously available and competitively supplied fibre-based services are vital for economic growth, productivity and jobs, and for universal social inclusion. This is essential for new ways of working, for new business models, and for improved collaboration. The direction should be towards FTTH and FTTB (fibre to the business) but FTTN will play an important and potentially extensive role en route. The topologies and technologies chosen should facilitate competition and migration to FTTH.
INTUG believes, however, that the option of wireless providing an effective mechanism as a substitute technology for access should not be excluded.
Regulatory principles for NGA networks should apply to fixed and wireless.

INTUG believes that a balanced strategy of technology-neutral service and content-based competition should exist alongside infrastructure-based competition. Therefore, it is essential that effective ex-ante regulation is in place for NGA networks, to ensure equivalent access to wholesale broadband inputs. INTUG supports maximising equal access and sharing at all levels of the ladder of investment from civil engineering works, through duct and mast sharing, to in-building and entry cabling, dark fibre local loop and sub-loop unbundling. Bitstream and Ethernet access are essential facilities. The recent Wik study has proved the huge advantages for first movers in terms of bigger economies of scale, lower cost of capital, higher ARPUs, and windfalls from the use and sale of legacy assets.

INTUG believes that market analysis for sustainable, effective and efficient competition must be undertaken at an international, as well as national level, and must recognise the distinct sub markets serving residential consumers and business customers. These have major differences in traffic profiles, with more demanding service quality and resilience requirements for businesses. Businesses, including SMEs, require access at multiple locations, and need transnational volume packages from single suppliers. Exclusive fibre access rights during regulatory holidays for incumbents makes this completely impossible. The existing arrangements for risk-related return are adequate for this purpose.

INTUG considers that regulation should dissuade operators from further investment in copper networks, except where this is necessary to protect the quality and manageability of existing services and the provision of essential capacity increases in the core and backhaul network. It is also important to minimise duplicate costs during migration for operators and customers.

INTUG believes that NRAs and SMP Operators must collaborate actively on regulation, technology choices, topologies and implementation in order to share learning, evolve best practice and minimise the disruption and migration impact on public and private business customers and other operators. This must include the needs for network management. A requirement to use EU approved equipment designed to facilitate migration from FTTN to FTTH would assist in facilitating interoperability between Member States, without unduly deterring innovation.

INTUG is concerned that deregulation of sub national geographic markets where there is effective local competition for residential customers will further fragment the market for business customers, who will be faced with network requirements within Member States which are partly regulated and partly deregulated. Such deregulation is irrelevant to analysis of business markets and generates a similar obstacle to exclusive access rights in terms of the non-achievability of transnational contracts with guaranteed service quality.

INTUG welcomes the decision of NRAs who recognise the risk that topology changes can foreclose competition and encourages vigilance in ensuring that the competitive assets of alternative operators, for example in copper LLU service provision, are not stranded by incumbent NGN implementation.
NGA Networks must make adequate provision for collocation of equipment.

INTUG acknowledges that there are links between NGA network policy and regional and social policy. There should therefore be “joined up thinking” to ensure consistency, recognising that in each Member State there will be variances. State aid should only be implemented in ways which are overtly recognised as social policy via subsidies to the service, rather than being introduced via a tax on telecommunications services. Any public subsidies should be linked to open access to passive infrastructure. Interconnect charges between operators should not develop into a tax on trade between Member States. A single telecommunications market must be the aim.

Comments on Introductory Paragraphs

1	INTUG supports the view that efficient and timely transition to fibre-based broadband is key to development of the European economy. INTUG agrees guidance regarding access is important to prevent undesirable divergence of regulatory approach, which could harm competition and undermine development of the communications single market, most notably where fibre investment is exempted from equal access to wholesale inputs
4	INTUG supports the view that the application of consistent regulatory remedies to SMP operators in Market 4 and 5 (see also paragraph 2), regarding access to NGA networks, is required to foster investment and innovation, and that international considerations must be included in assessing competition in market analyses
6	INTUG believes there are serious risks that SMP obligations could be undone by network topology changes, and that SMP operators must ensure their new network design maintains existing access options, in particular with regard to the provision of wholesale bitstream access and Ethernet services where LLU solutions are unavailable (see also paragraph 9 regarding reasonable transition from collocation)
7	INTUG believes that in a FTTH context, duplication of infrastructure should be avoided where impractical or undesirable, or where this requires inefficient investment without benefit to competition
8	INTUG accepts the desirability of negotiated agreements between SMP and alternative operators, but believes that NRAs must have the power to ensure there are adequate dispute resolution processes in the event of failure to agree
11	INTUG does not believe fibre based NGA represents a newly emerging market which is thus exempt from “inappropriate” obligations. It is an essential facility which must be accessible in a competitive market.

Comments should be addressed to:

Nick White, Executive Vice President
International Telecommunications Users Group (INTUG)
nick.white46@blueyonder.co.uk
Tel: +44 20 8647 4858 Mobile: +44 77 1009 7638