April 23, 2007

Meeting With a People's Republic of China Delegation

Today I had the pleasure to receive, together with Mr. Garcia Pereira (Director of Market Regulation), Mr. Mário de Freitas (Director of Special Projects) and Mr. Mário Florentino (Head of Mobile regulation) a Delegation from the People’s Republic of China, integrated by Mr. Shu Jianjun (Director of the Department of Planning – China Mobile), Mr. Wang Xicheng (Deputy General Manager of China Mobile),Mr. Du Guangda (Department of Planning of the Ministry of Information Industry), Ms Liu Shuping (Deputy Director General of the Ministry of Information Industry), Mr. Liu Yi (Department of Fixed Assets Investment of the National Development and Reform Commission), Ms Liu Li (Department of Development Planning of the National Development and Reform Commission), Ms. Chen Suang (Director of the Hi-tech Industries Development Division of the Beijing Municipal Commission of Development & Reform), Mr. Li Bo (Deputy General Manager of Ericsson China) and Mr. Xing Laijun (Senior Sales Manager of Ericsson China) and Mr. Miguel Filipe (Ericsson Marketing & Business Development).

The Chinese Delegation was particularly interested in the regulatory framework of Universal Service (US) provision in Portugal (including US scope, net cost assessment and financing of net costs), in the development of the mobile wholesale and retail markets in Portugal and in Europe, in the competitive panorama in Portugal, in the authorisation and licensing regimes and in the conditions governing access to submarine cable landing stations. The deployment of NGN in China, which is occurring at a fast pace, was also briefly discussed.
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IRG/ERG Team Photo



My application to the IRG/ERG Chair’s Secretariat was also a time for us, at ICP-ANACOM, to rethink the whole participation in the IRG/ERG in terms of confirming priorities, reinforcing commitment, widening availability and reanalyzing inputs and results.

I am really grateful for all the suggestions and contributions received from my ICP-ANACOM’s colleagues concerning the rationalization and efficacy of the Secretariat and also in relation to the words of incentive from fellow regulators in Europe and beyond.

From left to right our “IRG/ERG” Team: Carlos Costa (Co-chair of the End Users WG), José Barros (Director of European Affairs – CN), Prof. José Amado da Silva (Chairman of ICP-ANACOM), Ana Tojal (attaché of the candidate and former TF 99 Review participant), Luis Garcia Pereira (Director of Market Regulation), Manuel Costa Cabral (EU WG), Carla Amoroso (Mobile Market WG), Paulo Goulart (NGN TF), Teresa Lima (EU WG), Hugo Brito (Convergence PT), Paulo Fontes (Mobile Access WG; Legal Issues WG), Luis Manica (FN WG), Teresa Melo (Regulatory Accounting WG), Patricia Teodoro (SMP WG) and José Godinho (Fixed Termination Rate PT).

Reported as “Missing in Action”: Augusto Fragoso (Chair of the IRGIS WG, Co-chair of IRG Visibility PT, Head of IRGnet Support Team, IT Security WG), Mário Florentino (Mobile Termination Project Team, Competition in Oligopolies PT), Eduarda Gonçalves (VoIP High-Level TF) and Fátima Tobias (CN).

Behind this team there is, off course, an immense “invisible” work developed by many other people that contribute to IRG/ERG output production but usually do not attend meetings.

To all, many thanks !!!
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April 20, 2007

AGCOM’s NGN WORKSHOP

Torino, where Italy’s past (embodied in the magnificence of its superb palaces) meets its promising future (anticipated in the aerospatiale and automobile industries), was undoubtedly an appropriate place to discuss the transition from traditional networks to NGN.

The speakers certainly contributed to form a better understanding of the technological, economic, competition and regulatory context associated with the rollout of NGN, in particular concerning the country case studies of the Netherlands, the UK and Italy.

As tentative conclusions of the workshop, one could highlight the following:

(a) migration towards NGN is an evolution, not a revolution - change will happen gradually and require large investments;

(b) NGN will result in high operational cost savings, which distribution has to be carefully considered;

(c) there is no actual evidence that supports the case for “regulatory holidays”, but there is a real need to ensure transparency and predictability of regulatory decisions;

(d) establishing adequate standardisation and interconnection principles and models is paramount;

(e) “horizontal” barriers (mainly related with access to ducts and related infrastructure), “vertical” barriers (essentially associated with in-building wire costs) and the cost of equipment, may result in considerable obstacles to the investment of alternative operators;

(f) information about the precise rollout plans and business cases of the operators is scarce, which tends to aggravate the classical information asymmetry problem between regulator and regulated entities;

(g) bundles of services may probably become a standard offer in a NGN scenario;

(h) new NGN supported services require ICT skills from customers, which, in conjunction with the elevated costs of broadband deployment in rural areas, recommends special attention should be given to the “Digital Divide”;

(i) there is not a “one size fits all solution” for Europe – significant differences in terms of obsolescence of the “traditional” networks, length of the local loop and of the sub local loop, distribution of the population, economies of scale and scope, access to ducts conditions, etc – advise that particular attention should be given to specific national conditions, naturally in the framework of a globally European coherent regulatory approach.
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April 19, 2007

Getting To Yes

This book (written by Roger Fisher, William Ury and Bruce Patton; published by Random House Business Books) begins with a question: what is the best way for people to deal with their differences? According to the authors, the negotiation game integrates two levels: (a) substance and (b) the procedure for dealing with substance.

To address both these levels, the method of principled negotiation (or negotiation on the merits) is proposed, which focuses in four points:

(a) People – separate the people from the problem;
(b) Interests – focus on interests, not positions;
(c) Options – Generate a variety of possibilities before deciding what to do;
(d) Criteria – Insist that the result be based on some objective standard.

Expectably, the principled negotiation method of focusing on basic interests, mutually satisfying options and fair standards, typically results in a wise agreement and in an efficient decision.

The authors also make clear that the good negotiator should consider people as individuals with emotions, deep systemic values, widely different backgrounds and personal values and that “failing to deal with others sensitively as human beings prone to human reactions can be disastrous for a negotiation” and may endanger the interests of an ongoing relationship.

An interesting conclusion is drawn regarding perception: ultimately “conflict lies not in objective reality, but in peoples’ heads. Truth is simply one more argument – perhaps a good one, perhaps not – for dealing with the difference. The difference itself exists because it exists in their thinking”. Hence, it is important to put yourself in the other side shoes.

To sum up, this very interesting reading proposes a win-win approach to negotiation that avoids a choice “between the satisfactions of getting what you deserve and of being decent”, when you can have both.
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Critical Infrastructure Protection

Yesterday’s meeting with the Vice-President of the Committee for Emergency Communications (former IRG participant, Henrique Gomes) resulted in a very straight forward discussion about the status of communications in case of emergency situations in Portugal and in Europe. The evolution of “traditional” networks to NGN was also discussed and, in particular, the eventual necessity to rethink the concrete reality of critical network infrastructure.

In this context the implications arising from the Communication from the Commission on a European Programme for Critical Infrastructure Protection [COM (2006) 786 final][1] – which followed the Green Paper[2], from the related Proposal for a Directive of the Council on the identification and designation of European Critical Infrastructure and the assessment of the need to improve their protection[3] and from the European Programme for Critical Infrastructure Protection[4][5] were thoroughly discussed, emerging a long path that Europe still has to follow in order to achieve the main objectives set out in those documents.
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April 18, 2007

NGN UK Progresses

The public consultation OFCOM launched in 24/11/2004[1], after BT has announced its BT 21C NGN project[2][3], was a cornerstone in the discussion of the development of NGN in the UK and its regulatory developments.

This document was followed, in June 2005, by the “Next Generation Networks: Further Consultation”[4] which supported policy principles and processes for the development of NGN, with a view to ensuring that the deployment of BT’s NGN did not foreclose competition, either through disrupting competitive businesses or preventing equality of access in the future.

Already evident, at that stage, was the matter of the need for continuity of existing SMP products, which was considered questionable in cases where they would be replaced by future products. There was a strong debate as to how the existing WLR, CPS and IA remedies would be supported by BT’s NGN. An ‘MSAN voice access’ product was proposed which would allow an alternative provider to take over a BT line, as with the current WLR product, and control the origination of calls on that line via their own call server. If such a product were introduced, OFCOM admitted a separate CPS remedy, and possibly a separate IA remedy, may no longer be necessary. A potential benefit of this approach would be, also according to the regulator, that it could greatly increase the potential for service providers to differentiate their retail services.

As for the crucial matter of future models of local interconnection, these would very much rely on the distance dependence of NGN-based backhaul interconnection charges (their ‘distance gradient’). The refined technical report commissioned by OFCOM to .econ, “Distance Gradients – assessing the impact of NGNs on interconnection tariffs’ distance gradients”[5], dated March 2006, provides a reasoned insight into possible solutions:

(a)There is no “death of distance”. NGN allows traffic to flow more cheaply across distance, but it does not mean that costs become independent of distance. Thus, “a flat-rate charging model is inappropriate for regulated interconnection, as it would not reflect costs and would eliminate incentives for efficient bypass of the incumbent”;

(b)”Potentially, if the trend to more similar unit costs across the network were sufficiently pronounced, charging by distance rather than by level of network hierarchy might become a better proxy for the network costs of conveying traffic”;

(c)”There are no strong reasons to expect the potential for competition at the core to be affected by the move to NGN, as entrants in this segment can aggregate traffic significantly and achieve the minimum efficient scale”;

(d) “Other factors equal, the move to NGN may reduce incentives for infrastructure competition at the periphery, as incumbent’s costs in this segment are likely to fall significantly due to increased aggregation of traffic. However, where alternative networks can aggregate traffic in a similar way to the incumbent and have access to similar technologies, the differences in unit costs between entrants and incumbent should narrow. Therefore, infrastructure-based competition, where feasible, is likely to involve competition for the entire bundle of services offered to customers, rather than for individual services”.

In September 2005, BT committed (in addition to concluding, by September 2006, the delivery of “equivalence of inputs” in relation to Ethernet-based backhaul products - expected to be used by BT and other operators for their NGN) to:
(a) provide unbundled network access;
(b) to do so on an ‘equivalence of Inputs’ basis and
(c) not to make, without consultation, design decisions which would foreclose specific product options.

In that context, OFCOM addressed (policy statement of 07/03/06)[6], namely, the:

(a) promotion of NGN based competition [whilst maintaining a proper balance between regulatory certainty (including, namely, in cost of capital evaluation[7]), effectiveness of regulatory action and incentives for investment] while, in that precise framework, dealing with difficult questions associated with interconnection and the structure of markets;

(b) identification of a whole new set of related consumer issues (e.g. maintaining quality of service, ensuring continued efficacy of the number portability processes[8], providing accurate information about the migration process and safeguarding consumers from disruption trough the migration process, promoting transparency – insofar as the bundling of diverse services corresponds to the standard offer, comparing products may tend to become harder and that may, in turn, lead to higher transaction costs, info-inclusion – in particular when considering the investment needed to make available broadband in less attractive areas).

In relation to consumer issues, OFCOM’s approach seems to translate primarily in adopting a co-regulatory approach, in the expectation that the industry has a common interest in addressing them. Even when intervening, OFCOM would specify the overall objective and provide industry with the flexibility to determine how best to fulfill it.

One of the proposals of the referred policy statement of 07/03/06 was the development of Next Generation Networks UK (‘NGNuk’)[9] as an independent NGN industry body, with a view to improving industry engagement.

NGNuk's mission, which was launched in April 2006, is “to act as a co-ordination forum in which key investors in NGN infrastructure and services will discuss, research, consider and, where possible, agree the direction for NGNs in the UK and communicate such direction to other players in the telecommunications industry and the general public”.

NGNuk aims to create a set of guiding principles, a vision (this vision being that, “by January 2008, the UK industry will have an agreed NGN interconnect model that allows the predictable & seamless transport of a technically unrestricted range of services across multiple NGNs using a commercial framework that drives service & application innovation and efficient investment”) and an implementation framework for an interconnected NGN future for the UK, including “interconnection between PSTN replacement NGNs, IP-based mobile networks, VOIP operators, and other relevant future developments in communications networks and services”. One of NGNuk goals is also to work with international groups to ensure the UK is not isolated in any solutions that NGNuk adopts.

According to NGNuk’s Chairman’s latest report (dated 11/04/2007), the commercial work streams have continued to make steady progress and an NGNuk discussion paper was submitted to BT Wholesale giving the thoughts of members towards the number and location of future IP interconnects and making some alternative suggestions. The same report also notes that the charging work is continuing to progress and, hence, NGNuk views of how the various charge models (such as CPP, RPP and B&K) might be applied to End to End services could be published soon. Finally, a significant number of interconnect requirements are already undergoing consultation.

The ultimate success of OFCOM’s challenge may rest, however, on the success of:

(a) the co-regulatory approach conducted via NGNuk, whose results seems to be very productive up to the stage of requirements definition (running just a few months behind schedule). Notwithstanding, the more difficult to solve issues, related with framework development and implementation and transition lie ahead;

(b) Openreach - a new part of BT created to install and maintain phone and internet connections to Britain’s homes and businesses on behalf of most telephone and internet service providers, ensuring to all providers fair and equal access to local access and backhaul networks – where “non trivial” breaches of the roadmap and conditions agreed with BT have been noticed.

In conclusion, the UK has already come a long way in what regards the implementation of NGN and the necessary evolution of the applicable regulatory framework, thus offering valuable lessons, notwithstanding relevant national differences, related namely with the technological options incurred by the historic operators to deploy NGN, the types of network already in place and their relative obsolescence, the density and distribution of population and the structure of housing (which impacts upon in-house wiring costs).

Some questions may also incite additional thinking at the light of particular national circumstances in each Member-State:

(a) Is the implementation of vertical separation in parallel with the deployment of NGN more likely to facilitate or to hinder the latter?

(b) What is the appropriate pricing regime for NGAN?

(c) What levels of quality of service should be associated to the provision of access to NGN?

(d) To what extent should bundles of (a) NGN supported services and (b) between NGN supported services and “traditional services” be subject to regulation and under which precise circumstances?

(e) What safeguards/information should be guaranteed to wholesale customers and end users in order to minimize disruptions during the migration period?
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April 16, 2007

European Regulation at a Crossroad: Next Generation Networks in the Netherlands

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
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April 15, 2007

Objectives of the Application

The IRG/ERG have set up a permanent Chair’s Secretariat, based in Brussels, as agreed at the IRG Plenary meeting in Bratislava on December 2006. The Chair's Secretariat will be initially hosted in the premises of DG INFSO (European Commission) and will be composed of one senior member and two junior members.

The senior member will manage the daily activities of the Secretariat, including:

  • running the day-to-day operations of the Secretariat and coordinating activities of the Junior members and operational staff, acting as a liaison with the IRG/ERG Chair and with his/her delegate/s,
  • acting as contact point to the European Union Institutions, Associations, stakeholders and any third interested third parties,
  • assisting the Chair in relation to the IRG/ERG’s institutional relations with the European Union Institutions and representing the IRG/ERG position, upon specific request of the Chair,
  • organising, preparing, attending, taking minutes at and providing Secretariat support to the IRG/ERG Plenary meetings, including preparing meeting agendas with the Chair,
  • monitoring the budget and resources of the Secretariat.

The motivation behind my application to the position of senior member of the IRG/ERG Chair’s Permanent Secretariat is to ensure the professional and proficient management of the IRG/ERG Secretariat, following the principles of efficacy, efficiency, impartiality, objectivity, loyalty, transparency, commitment, sense and sensibility .

I firmly believe that I have the required experience, commitment, motivation, ability to work efficiently within a team (please see my application letter and C.V.), under the scrutiny of the IRG/ERG Chair and in close cooperation with the CN, the WG chairpersons, the EC services and the stakeholders.

In this context, the main goal of this blog is to provide information about the initiatives taken to listen to everyone who has been active in the IRG/ERG, to collect contributions which might be useful to improve the functioning of the Secretariat and to showcase the personal and professional achievements of those working for the IRG/ERG.

I am looking forward to working with and for You
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