Next Generation Access:A Global / Policy Perspective

Maury D. Shenk

27 June 2007

The Big Question

Is telecommunications network access a natural monopoly or a field ripe for competition?

Where Have We Been?

In the beginning, telecoms access was a monopoly Facilities-based access competition:

• UK – Mercury / C&W• Cable networks in various countries• Wireless networks around the world

Access competition through regulation:• Local loop unbundling

• Wholesale resale obligations

• UK – BT equivalence undertakings

• US – Telecommunications Act of 1996

These have been partial solutions for access monopolies

Where Are We Going?

Growth of the Internet has generated broadband requirements that are exceeding the capacity of copper networks.

But will the building of new networks generate any different result from a competition perspective than for existing copper networks?

Some Concerns

BT-sponsored competition study (June 2007): “The future development of telecoms, with Next Generation Access (NGA) and Next Generation Network (NGN) network architectures, will tend to entrench and extent the uncompetitive element of the network further from the customer. However, it will potentially increase the scope for a services layer, which is geography and network independent, provided this is anticipated and supported by appropriate regulation.”

European Regulators Group NGA consultation (May 2007): “With the deployment of NGA networks, regulators need to consider whether these new networks result in a fundamental change in the underlying economics of wireline local access networks as a result of the roll-out of new infrastructure that may impact on the competitive dynamics of the relevant market(s). Traditionally, current fixed local access networks have constituted a non-replicable asset.”

Fibre to the Home / Building

“State of the art” for next generation access Highest-cost option Examples:

• France – France Telecom

• US – Verizon

• Japan – NTT

Fibre to the Node / Cabinet

Less-expensive than fibre to the home / building Typically involves VDSL over copper to the

home Examples:

• Germany – Deutsche Telekom

• Netherlands – OPTA

• US – AT&T Can co-exist with current ADSL, but technical

issues can exist

IP at the Network Layer

Next generation access at a different layer of the network

• TCP / IP instead of TDM

• Can co-exist with various physical layer technologies Example:

• BT – 21CN

Cable

Existing option, but co-axial cable has higher bandwidth than twisted copper pairs

Can’t deliver the bandwidth of fibre Examples:

• UK – NTL

• Various other countries have higher penetration

WiMAX

WiMax = Worldwide Interoperability for Microwave Access

Greater range than Wi-Fi offers prospect of broad coverage

A wildcard for facilities-based competition for next-generation access

Conclusions

Commercial evolution will drive regulatory evolution Key issue is the viability of multi-network, facilities-based

competition for next-generation access It’s too soon to say whether the situation will be different

than for copper networks How many competitors is enough? Wireless is the wildcard