The swift implementation of NGN in several Member-States is associated with lower operational costs, innovative services and large investments by the operators which are adopting them, but on the other hand may also impact adversely on providers that traditionally have been dependent on the access to the local loop of those operators, in particular in cases where MDF locations are being phased out and where SDF access enabling greater speed is paramount.
The NGN economics, where access to ducts and the cost of equipment play an important part, is thus challenging the assumptions of the present regulatory network. In parallel, it is also confronting wholesale customers with a strategic choice that will affect their own survival: choosing to rollout towards the sub local loop vs adhering predominantly to a wholesale service provisioning that is pointing to services competition.
Regarding access to ducts, albeit it can not be considered a universal panacea, it is certainly helpful to promote competition, especially in a context where alternative operators need to get closer to their clients premises. Hence, I would like to refer to the seminal work developed by ICP-ANACOM establishing the first Reference Offer of Access to Ducts, where important aspects related with prices, physical access to ducts, quality of service, mapping and inventory, network integrity and security were defined1.
In this context, the final report (26/01/07) “The business case for sub loop unbundling in the Netherlands”2, conducted by Analysis for OPTA, pointed out, inter alia, that:
(a) Operators’ view that it is not possible to deploy SLU for the mass market are strongly supported by the significant costs associated with this (even considering a possible reduction of co-location costs) and the ongoing negative cashflows in comparison with continuing with LLU;
(b) The fact that WBA has also been demonstrated to be significantly more expensive than continuing with LLU supports operators’ views that continued availability of LLU at the MDF site would be the best outcome for their business cases;
(c) There are very strong local economies of scale effects that may disadvantage even quite large competitors to KPN if the option is to deploy SLU.
OPTA’s Position Paper on KPN’s Next Generation Network All-IP3 revealed already a solid analysis of the regulatory implications of KPN’s All-IP Strategy (a consultation document supports dated 03/10/06), in particular with respect to section 3 (OPTA’s position on the proposed phasing out of MDF access and the relationship between All-IP and the market analyses), section 4 (related with “equivalent access” to MDF access) and section 5 (conditions to be respected by KPN in order to discontinue MDF access).
It should be noticed that following the results of the consultation and taken into consideration, namely, negotiations between KPN and other operators regarding conditions associated with the phasing out of MDF access, SDF backhaul and provision of WBA, OPTA concluded recently that those conditions should be established in parallel to the new market analysis process.
At the same time, in March 2007, OPTA published a study on OFCOM’s approach to the functional separation of BT4, having concluded that the application of a similar approach to the Netherlands, besides not being admissible by current Law, would be disproportionate and could have undesirable effects. Notwithstanding, positive effects (such as increased transparency, reduced need of regulatory intervention and less opportunities to discriminate) arising from functional separation, which could be achieved by an eventual voluntary agreement with KPN, were also identified.
To sum up: the deployment of NGN networks demands in the short-run a relevant number of regulatory solutions; OPTA’s papers, even considering the peculiarities of the Dutch situation, do provide an important analytical reference to understand this situation in its entirety and to reflect upon the solutions.
I will try to come back to this issue after the NGN Seminar in Turin, reflecting also upon other very relevant country case studies.
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1 http://www.anacom.pt/template15.jsp?categoryId=126599
