NGA roll-out
Infrastructure competition in convergent markets
(Case of Spain)
Fabio del Alisal
Director for International Affairs
TAIEX - Kiev
14-10-2011
Index
 Market: Offer and Demand
 Regulation of the broadband markets
 A focus on NGA roll-out and uptake
2
Market: Offer and Demand
3
Broadband mainly commercialized in bundles
Internet
TV + Internet
Triple play
2008
12%
71%
2%
15%
2009
10%
73%
1%
16%
2010
3,3%
75,6%
1,3%
19,9%
32,3%
64,2%
0,04%
3,5%
(Residential)
4
Internet + telephone
2010
(Business)
Broadband mainly commercialized in bundles
5
NGA penetration (speeds)
 High speeds available...
Price (euros)
Many operators
offer BB
products > 20
Mbps
June, 2010
>20 Mbps not
yet very
significant
%
 ... but not purchased by users
6
CMT Annual report 2010
Broadband penetration
BB Penetration
23,2%
Evolution of BB lines (thousands)
> 70% of cable
accesses upgraded to
DOCSIS 3.0
Low FTTH
penetration
DSL Telefónica
7
Alternative xDSL
operators
Cable modem
BB
CMT monthly note - August 2011
Market shares by number of access lines
8
CMT monthly note - August 11
Broadband prices
Euros / month
Telefónica is the most expensive in every speed range
Bitstream
9
CMT Report of competitive situation – June 2010
LLU
Competition level
Competition specially active..
Increasing competition specially
from alternative operators based
on unbundling.
Telefónica
10
Cable operators
Rest
CMT monthly note - August 11
Market shares by number of access lines
11
CMT monthly note - August 11
Broadband prices (geographical variation)
There are less expensive access offers, however they are geographically
restricted to densely populated areas
60
50
46,92
46,92
47,87
49,97
/ month
Euros
€/mes
43,87
40
33,4
30
33,92
33,97
36
29,9
29
20
10
0
Euskaltel
tele2
jazztel
ya.com
(+)
orange (+) R Cable Telefónica
con limitación
geográfica
OffersOfertas
restricted
to specific
geographical areas
12
ya.com
jazztel
tele2
Ofertas
disponibles
toda
España
Offers
in all en
the
national
orange
territory
Market shares (geographical variations)
Although…again geographic differences
37% (competitive areas)
Telefónica predominates, but
market share slightly decreasing
in favour of altnets
68,8% (uncompetitive areas)
Telefónica market share high
and steady
Telefónica
Cable
13
CMT Report of competitive situation - June 2010
LLU
Bitstream access
CONTEXT FOR NGAs REGULATION
14/27
THE CONTEXT FOR NGAs REGULATION
1. Migration to Next Generation Networks
 Substitution of copper by fiber
 Evolution to IP and separation of networks and services
 High bit-rate application (IPTV, HDTV, video streaming, etc.)
2. Interplatform competition
 Docsys 3.0 vs FTTX
3. Cost savings/investments
 A single platform for all services.
 Reduction of access points (less access switches)
 High barriers for passive infrastructure deployment
4. Different technological architectures with different implications
 POINT TO POINT VS. POINT TO MULTIPOINT
 FTTH, FTTC, FTTB, FTTN
15/27
THE EC RECOMMENDATION ON NGAs
REGULATION
16/27
EC RECOMMENDATION ON ACCESS TO NGAs
September 2010: European Commission Recommendation on
regulated access to Next Generation Access Networks (NGA)
 One of the key tools devised by the EC to fulfill the objectives
established in the EU Digital agenda.
 It sets a common framework for NGAs regulation along the EU.
 A lot of discussion in the previous versions. Criticism from NRAs: Too
prescriptive.
 NRAs obliged to take “outmost account”. Departures to adapt to
national context need to be justified.
Encourage
investment
in NGAs
Balance
Safeguard
efficient
competition
Ensure a level
playing field in
the EU single
market
17/27
EC RECOMMENDATION ON ACCESS TO NGAs: PRINCIPLES (1)
1. Reference wholesale access offer for:
 Unbundled local loop
 Passive infrastructure (ducts, etc.)
2. Passive infrastructure: implementation of a database accessible to
all operators
 Geographical location for each element
 Capacity
 Other relevant technical characteristics
3. SMP: new WBA products available 6 months before marketing retail
products.
4. Application of the principle of equivalence
 Access provided under the same conditions to internal and to thirdparty access seekers
18/27
EC RECOMMENDATION ON ACCESS TO NGAs: PRINCIPLES (2)
5. Migration path to NGAs:
 Inform operators five years in advance
 Inform about future network deployment plans.
6. Price regulation for wholesale access
 Cost-orientation methodology
 Risk-premium incorporated in cost of capital.
7. Definition of sub-national markets/remedies
 Diversity in conditions of competition for NGAs
 NRAs allowed to define differentiated markets
8. Incentives for joint deployments
 When no SMP condition is met
 Conditioned to implement duct capacity enough for third parties (to be
used at cost-oriented prices).
19/27
NEW WHOLESALE ACCESS PRODUCTS
FOR NGAs
20/27
NGAs LADDER OF INVESTMENT. NEW WHOLESALE ACCESS PRODUCTS
Wholesale products to reach
access point
Access products
Access to the end
user using own
infrastructure only
Only own
infrastructure
Access to inhouse wiring
Duct access
or equivalent
Concentration
point
Dark fibre
unbundling
Cabinet
Leased Lines
unbundling
(incl. Ethernet)
MDF/ODF
unbundling
Increasing proportion of
own infrastructure
+
Bitstream
(Ethernet incl. ALA,
IP, ATM)
- DSLAM
- parent node
- distant node
Resale
ERG (09) 17 Report on NGA - Economic Analysis and
Regulatory Principles
“the principle of the ladder of investment remains valid
in an NGA environment, but is expected to be a more
sophisticated ladder, with changes in the relative
importance of their rungs and, in general, different
dynamics, as a consequence of a shift in the economic
bottlenecks”
21/27
CASE STUDY: SPAIN
22/27
NGA regulation - markets 4 and 5
23
CMT NGA regulation: Regulatory objectives
Fostering competition
Facilitating investments
For the maximisation of benefits for consumers
 Ensuring regulation technologically neutral

homogeneous regulation for fibre and copper…

although challenges posed by the migration to NGA must be addressed
 Facilitating innovation and investment by all agents
 Fostering sustainable competition
24

Promoting investment to achieve infrastructure competition
2008
CMT NGA regulation: milestones
January
CMT issues guidelines on NGA regulation
May
Interim measures in M4
October
Notification of draft measures M4 & 5
Public consultation on sharing of the in-house wiring
November EC opens Phase II in M5
2009
December CMT re-notifies amended measures M5 and EC closes Phase II
25
January
Adoption of final measures M4&5
February
Adoption of symmetric measures for in-house wiring sharing
Market 4 – overview of regulatory measures
Aims
Improve the competitive
situation in the retail
markets
• of copper-based offers
• of NGA-based offers
Remedies
LLU & SLU
(facilitating FTTN
unbundling)
RO only for LLU
LLU/SLU of copper
(as in the 1st round)
Access to passive
infrastructures
(viable substitute for LLU
operators in network
upgrading process)
General access to associated facilities
(as in the 1st round)
LLU/SLU of FTTH not included
(not currently viable in a GPON scenario)
Duct Access
(at cost oriented prices)
Dark Fibre
(when ducts not available)
Facilitate the transition from
the traditional to the NGA
network
Control of the migration
process towards NGA
Information with 6 months in advance about the
NGA deployment
Guarantees in the case of exchanges dismantling
– 5-year transitional period before dismantling
– Begin when >25% of Telefónica’s clients
connected to alternatives to copper
Additional measures with impact on market 4
Decision on symmetric measures imposing the sharing of in-house wiring (at reasonable prices)
26
The importance of duct access
 Duct access is a facility hardly replicable
 Constituting between 60%-80% of the costs related to FTTH deployment
 Telefónica’s network is based on ducts
Chambers
Ducts
Main regulatory obligations imposed on Telefónica
 Access (chambers, ducts, posts)
 Collocation
 Cost-oriented prices
27
 Reference offer
Posts
Duct access reference offer – experience so far
Two years of duct access in Spain
 First experiences in 2008
 Final version in place from April 2010
Main features
 Access to urban Telefónica’s passive infrastructure
 Can be used to deploy fibre/coaxial but not copper
 Online application with cartographic information
 SLAs and KPIs
Usage so far
 1782 km of ducts used in the last 2 years…
 … and more than 18.000 chambers
28
 mainly requested for fibre deployments (Vodafone, Orange, Colt)
CMT APPROACH TO MARKET 4: DUCT ACCESS
Remedies
Access
• Meet reasonable requests for access to infrastructure resources
• When technical barriers arise, Telefonica shall offer alternatives (including dark fiber
rental).
Cost oriented prices
Transparency
• Regulated Reference offer
• Provision of information on the technical and physical characteristics of the
infrastructures associated to exchanges, including space availability (6 months after
measures are in force)
Non discrimination
• Quality parameters quarterly provided to CMT (for both wholesale and equivalent selfprovided activities).
• Agreements reached between interested parties shall be communicated to CMT.
 Incumbent’s reference offer:

On-line information system with cartographic maps of
ducts, manholes, handholes and poles

Procedures and information systems to request
information about space availability as well as request
effective occupation

Technical specifications (rules on space usage and
maintenance, space availability criteria, …)

Economic specifications (prices, …), SLAs, KPIs
29/27
Sharing of in-house wiring (symmetric measures)
 Adopted in February 2009
 Legal basis out side the EU Regulatory Framework
 Scope: buildings with no ITC + new deployments
Obligations
Access to the
fibre network
elements located
inside or close to
the building
• The first operator to install the optical equipment/wiring inside the
building shall meet all reasonable access requests
• Regardless the solution implemented, the first mover must ensure that
the sharing is feasible (at proportionate cost & reasonable period)
• Obligation to negotiate reciprocal agreements
• Centralised management of network elements by first mover
Reasonable
prices
Transparency
30
• Provide information about the buildings with deployed optical wiring
 Currently, signed agreement amongst main operators (topologies,
description of in-house elements , collocation database, first mover’s
responsibilities, etc)
SYMMETRIC MEASURES IMPOSING THE SHARING OF IN-HOUSE WIRING
 12th Feb 2009: decision adopted
 Legal basis: Article 13.2 LGTel (obligations on non SMP operators)
 Scope

buildings with no ITC (only of residential and mixed use)

New and already initiated deployments
Obligations
Access to the fibre network
elements located inside of
close to the building
• The first operator to install the optical equipment/wiring inside the
building shall meet all reasonable access requests
• Regardless the solution implemented, the first mover must ensure
that the sharing is feasible and possible at a proportionate cost and
within a reasonable period
• Obligation to negotiate reciprocal agreements
• Centralised management of the network elements by the first mover
Reasonable prices
Transparency
• Provide information about the buildings where the optical wiring has
been deployed
31/27
SCOPE FOR THE SYMMETRIC OBLIGATION (I)
Symmetrical obligations complement the remedies imposed to
Telefonica in the framework of market 4.
Buildings
Exchange
Sala de
Collocation
equipos
Reference offer for duct access
Equipment
collocation
Tie cable
Ducts, manholes, handhole
Symmetrical
obligations inside
buildings
32/27
SYMMETRICAL OBLIGATIONS: WHY?
 Starting point is equivalent to all operators that intend to
deploy FO inside buildings.
 Operators face problems related to usage of (scarce) space
in buildings and obtaining authorizations from the building
owners.
 Mechanisms must be established to simplify the operative of
several operators interested in deploying fiber in buildings.
33/27
SCOPE FOR THE SYMMETRIC OBLIGATION
 Obligations are addressed to operators that deploy fiber optics
inside buildings.
 Not included operators whose deployment is based in other
technologies (e.g. HFC).
 Remedies apply to buildings where no ICT is enabled.
ICT: rules for the deployment of telecom infrastructures inside
buildings (areas for equipment, ducts for copper, coax
and fiber).
 Business buildings are out of scope.
34/27
Market 5 – overview of regulatory measures
Aims
Make regulation technologically
neutral
Remedies
Wholesale broadband access available irrespective of:
• Copper-based offers
• NGA-based offers
Adapt regulation to the new
needs (e.g. new wholesale
product adapted to business
needs)
“Enhanced bitstream” product:
Strike the right balance between
fostering competition and
facilitating investments and
innovation
Wholesale broadband access available up to 30 Mbps
(emphasis on investments by
alternatives on own infrastructure)
35
• covering VDSL and fibre
• valid for VoIP services
(it is considered that for premium offers above 30 Mbps
alternatives can make use of the instruments available in market
4)
New Ethernet bistream service (NEBA) !!
Adopted in November 2010
 Stemming from analysis of market 5
 Pure Ethernet model both for residential and business costumers
 Ensures VoIP reliability
 Allows replication of NGA services in bitstream…
 … but also differentiation from Telefónica
 It emulates the behaviour of an own network Tariffs according to the
speed delivered at the Interconnection Access Point (instead of speed of
every user)
36
Available in pre-commercial terms in January 2012
Highly flexible product
 NEBA conceived with a high list of commercial profiles...
 ...and more can be defined!
Perfiles
Commercial
comerciales
profiles
predefined
profiles
37
v1
v2
v3
v4
v5
v6
v7
v8
v9
v10
v11
v12
v13
v14
v15
v16
v16-2
v17
v17-2
v18
v19-2
v19
v19-2
categories
BE
down
ORO
10M
10M
10M
25M
25M
25M
30M
30M
30M
30M
-
up
1M
1M
1M
1M
1M
1M
1M
1M
3M
3M
-
-
-
RT
down
1M
2M
10M
10M
10M
10M
4M
4M
25M
25M
25M
25M
-
up
1M
2M
1M
1M
1M
1M
1M
1M
1M
1M
1M
1M
-
-
-
30M
30M
30M
30M
1M
1M
3M
3M
down
256k
512k
256k
512k
256k
512k
1M
256k
512k
1M
2M
128k
128k
128k
128k
up
256k
512k
256k
512k
256k
512k
1M
256k
512k
1M
2M
128k
128k
128k
128k
Validation
profile
Perfil
validación
25M/3M
25M/3M
25M/3M
25M/3M
25M/3M
25M/3M
25M/3M
25M/3M
30M/3M
30M/3M
30M/3M
30M/3M
30M/3M
30M/3M
30M/3M
25M/3M
25M/3M
25M/3M
25M/3M
25M/3M
25M/3M
25M/3M
25M/3M
Overview of bitstream products available
GigADSL
ADSL-IP
NEBA
Service Level
Points of
Interconnection
(PoI)
Protocol
Regional
109 PoI
ATM
National
1
IP
Regional
50
IP
Regional
50
Ethernet
 Once NEBA available, Telefónica will not be mandated to provide
access to GigaADSL and ADSL-IP (only when overlapping of PoIs)
38
Overview of bitstream products available
Other operator
ADSL-IP national
Internet
IP
ADSL-IP regional
NEBA
GigADSL
Internet
IP
Ethernet
ATM
ATM aggregation
DSLAM ATM
39
Ethernet aggregation
xDSL: DSLAM IP
GPON: OLT
Overview of Spanish NGA products
 Ensuring all necessary investment options are
available (where viable)
Other ducts
Bitstream
access
Optic access
Sub-loop
Local loop unbundling
unbundling

Access to
Telefónica’s
ducts


FTTH
Up to 30
Mb/s
FTTB
In-house
wiring











Up to 30
Mb/s
Local exchange
FTTN

Up to 30
Mb/s

COPPER

Up to 30
Mb/s
Copper access
CABLE
Cable
operator
40
Market 5
Market 4
Not regulated
Overview NGA regulation EU
41
^: only mandated in some cases
Results on NGA roll-out and uptake
42
NGA roll-out
December 2010
Higher
coverage
Higher
penetration
Higher
offered speeds
43
DOCSIS 3.0 (ONO)
FTTH (Telefónica)
6,8 million
passed households (72%)
Near 600,000
passed households
1,517 million active lines
59,981 active lines
Max speed 100 Mbps
Max speed 50 Mbps
NGA roll out (geographical variation)
FTTH
 203 exchanges
equally distributed in
competitive & less
competitive areas
 360.000 passed
homes
DOCSIS 3.0
 Distributed along all
the territory
 ONO (main cable
operator) 5.100.000
DOCSIS 3.0
households passed
(~ 70% total ONO
44
network)
FTTH optical exchanges
FTTH exchanges
CMT Report of competitive situation - June 2010
Estimated NGAs viability in Spain
Estimated (theoretical) maximum number of operators by
zones
Theoretical max:
3 alternative
operators
Theoretical max:
2 alternative
operators
Theoretical max:
1 alternative
operators
No alternative
operators
More operators expected in urban zones (higher population density and income)
Note: number of operators estimated assuming a basic deployment in place by Telefónica + a cable network with a
coverage similar to the current one.
45/14
Spain in the European context
NGA coverage and take-up
FTTH / FTTN
46
FTTN / DOCSIS 3.0
Cullen International, December 2010
NGA penetration (geographical variation)
 Concentrated in highly populated areas (Madrid and some medium cities)
 Cable more spread across territory than FTTH
FTTH only in 55 cities
DOCSIS 3.0 in 120 cities
FTTH lines
Docsis 3.0 lines
47
CMT Report of competitive situation - June 2010
NGA commercial offers
Operator
Movistar
ONO
Technology
FTTH
DOCSIS 3.0
Download
speed
50 Mbps
50 Mbps
Adamo
(on Asturcón
network)
FTTH
100 Mbps
R
DOCSIS 3.0
100 Mbps
Type
Price
(excluding VAT,
excluding promotions,
01/2011)
Double play
55 € / month
Triple play
76 € / month
Double play
40 € / month
Triple play
44 € / month
Single play
29 € / month
Double play
35 € / month
Single play
36 € / month
High
price
national
offers
Some
more
affordable
offers in
specific
regions
48
48
WHAT ABOUT MOBILE?
49
Mobile broadband (datacards)
Boost of take up in the last 3 years (yearly increase of around 60%)
Thousands (datacards)
3.354.437 lines (January 2011)
50
CMT Report of competitive situation – June 2010
Mobile broadband (geographical variations)
Unlike fixed broadband…homogeneous competitive situation across
territory
51
CMT Report of competitive situation – June 2010