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Next generation access

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International Institute of Communications

Ofcom, the UK communications regulator, discusses policies and plans for providing super fast broadband nationally including an overview of deployment options

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Next generation access Tom Kiedrowski, Principal, International 26 March 2009 IIC Telecoms & Media Forum
What I will cover Background Current regulatory framework Recent developments NGA Statement and Variation Ethernet Active Line Access Outstanding policy issues
Background: the arrival of superfast broadband … … and around the world Source: operators, Ofcom estimates Both in the UK… Virgin Media -20% of UK homes, Dec 2008, whole footprint (50% of homes) by mid 2009 BT announcement – 40% UK coverage by 2012 Virgin footprint Cornwall Act Now – tendering for regional NGA using EU funds H2O: Aim for 88k homes in Bournemouth - 30+ homes connected now BT building FTTH in Ebbsfleet and Olympic Village Community projects H2O: Aims for 55k Dundee homes. Deployment underway Commercial deployments Public sector schemes Digital Region: 500k FTTC homes by 2010/11 West Whitlawburn (Glasgow): 100 FTTH housing association flats, 2009 Wembley: aim for 3.7k apartments with FTTH Walsall: Council proposed FTTH in Birchills ward Titanic Quarter, Belfast: FTTH to ~15k new homes Manchester: Trial FTTH to 450 premises, 2009 Corby: FTTH being deployed to 6k new homes Angus Glens: potential community backed-NGA for villages Salford: FTTH to Media City - 1st phase completing 2010 Derby: proposing 100% NGA availability by 2016 ? Cable FTTC FTTH
Current regulatory framework Wholesale Broadband Access market review (April 2008) 3 separate geographic markets - two thirds of country deregulated BT commitments on price floors expired at end of 2008 Commitments on price ceilings expire at end 2010 Wholesale Local Access market review (Dec 2004) Market defined to include copper and cable, but not fibre BT obliged to provide LLU (Shared and Full MPF) and Unbundled Sub-Loops (SLU) SLU product based on separate cabinets – has proved uneconomic BT Undertakings (Sep 2005) Equivalence of Inputs applied to LLU – Shared MPF for Broadband, plus full MPF SMPF is an input to IPStream, which is used by BT Retail But BT uses very little MPF
Recent developments Market initiatives: Virgin Media now offering 50Mb broadband based on DOCSIS 3 BT plans to invest £1.5bn in NGA Largely in rolling out Fibre to the Cabinet to 40% of UK homes by 2012/13 Will be used to provide “Generic Ethernet Access” Various FTTH initiatives, largely related to new build Policy initiatives Ofcom NGA Statement and Variation Caio Report Digital Britain
NGA statement - key policy messages Ensure fit-for-purpose GEA Allow this to be supplied out of Openreach on an EOI basis Vary Undertakings accordingly 1. Active remedies (ALA/GEA) Significant interest in GEA product Active products likely to be required on an on-going basis in significant parts of the UK Support passive remedies where there is demand, including collocation Prevent foreclosure for future competition Duct access as a future possible remedy 2. Passive remedies (sub-loop, fibre, duct Significant uncertainty about viability; limited interest Sky interested in cabinet collocation Pricing freedom on new high-speed (active) products Passive remedies priced on cost plus basis, including risk, with fair allocation of all fixed and common costs 3. Pricing Commercial case uncertain Existing broadband products likely to provide a pricing constraint Limited concerns on pricing freedom apart from margin squeeze concerns Not progress this issue any further at this time 4. Transition Currently little interest or appetite to remove existing copper network Policy position Consultation outcome Issues
Why is Ofcom promoting Ethernet ALA? Like most regulators, we prefer infrastructure access We are also promoting sub-loop unbundling and looking at duct access But these are unlikely to be viable everywhere – like LLU So some form of bitstream access is essential And the better it is, the more innovation will follow And the more consumers will benefit Other regulators are also looking at active line access type products What should this mean for communications providers? The availability of a standardised wholesale access product sooner rather than later Giving easy access to fibre communities wherever they may be Supporting wholesale and retail products And allowing for differentiation in pricing, quality of service, security, applications etc The opportunity to compete in the superfast broadband market without major infrastructure investment
Key competitive requirements of Ethernet Active Line Access There is no universally economical interconnection point To allow CPs to innovate in CPE functionality Bandwidth savings in backhaul of one to many services (e.g. IPTV) Satisfactory delivery of voice and video Secure delivery of services Authentication of users Justification Local, regional, national interconnect Common interface Freedom to move Flexible interconnection Common Ethernet interface (initial) Wires- / Fibre-only interface (future) Flexible customer premises equipment Multicast enablement QoS enablement Security enablement Functionality Choice between ALA-provider and ALA-user implemented solution Common interface Static and dynamic support ALA-provider offers QoS information ALA-user labels traffic Separate traffic streams ALA-users implement own security Technical requirements
The NGA Variation Undertakings restrict Openreach to the control and operation of assets within the Physical Layer of the access and backhaul network Openreach cannot control or operate assets in the Transmission Layer (i.e. electronics) Undertakings obligations BT requested a variation to allow Openreach to control and operate electronics in street cabinets to deliver NGA products using FTTC BT’s variation request In return we have sought commitments on To allow co-investment To use the same processes wherever possible To implement in a way that will not foreclose future use of passives
Outstanding policy issues (1) How to promote competition based on passive inputs? EC draft recommendatin strongly favoured passives Interest so far from CPs has been very limited joint investment in FTTC uncertain Results of duct survey suggest that duct access may have some potential Ofcom’s aim has been to keep the options open Potential architecture for Coordinated Investment
Outstanding policy issues (2): duct survey shows significant availability, but difficulties remain The survey shows significant availability, although availability appears higher closer to the metro-node then to the cabinet Level of end-to-end routes availability will be lower than headline results - a third of all sections showed some ‘congestion’**. 51% of ducts appear to have space for 3 or more new sub-ducts* that could be used for fibre Survey results are encouraging, but further work necessary to understand how duct can promote competition . NGA consultation showed some interest in duct access for the first time, but only from 2 CPs Policy position: Wait for clear industry demand before pushing duct Consider expanding survey to looks at cabinet to home, non BT duct Look further at practical ways of overcoming operational challenges *25mm tubes were used as proxy for average sub duct **Congestion defined as not having at least three half empty ducts
How far will market drive investment in FTTC? Will BT’s plans be focused on responding to Virgin in cable areas? But economics of cabinet deployment are less variable than economics of LLU deployment, so widespread deployment may be viable Digital Britain now looking at options for promoting NGA rollout Broader implications for BT Undertakings Consider implications of OR focus on active products new WLA market review, commencing Q3 2009 And beyond ?  Outstanding policy issues (3)

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Next generation access

  • 1. Next generation access Tom Kiedrowski, Principal, International 26 March 2009 IIC Telecoms & Media Forum
  • 2. What I will cover Background Current regulatory framework Recent developments NGA Statement and Variation Ethernet Active Line Access Outstanding policy issues
  • 3. Background: the arrival of superfast broadband … … and around the world Source: operators, Ofcom estimates Both in the UK… Virgin Media -20% of UK homes, Dec 2008, whole footprint (50% of homes) by mid 2009 BT announcement – 40% UK coverage by 2012 Virgin footprint Cornwall Act Now – tendering for regional NGA using EU funds H2O: Aim for 88k homes in Bournemouth - 30+ homes connected now BT building FTTH in Ebbsfleet and Olympic Village Community projects H2O: Aims for 55k Dundee homes. Deployment underway Commercial deployments Public sector schemes Digital Region: 500k FTTC homes by 2010/11 West Whitlawburn (Glasgow): 100 FTTH housing association flats, 2009 Wembley: aim for 3.7k apartments with FTTH Walsall: Council proposed FTTH in Birchills ward Titanic Quarter, Belfast: FTTH to ~15k new homes Manchester: Trial FTTH to 450 premises, 2009 Corby: FTTH being deployed to 6k new homes Angus Glens: potential community backed-NGA for villages Salford: FTTH to Media City - 1st phase completing 2010 Derby: proposing 100% NGA availability by 2016 ? Cable FTTC FTTH
  • 4. Current regulatory framework Wholesale Broadband Access market review (April 2008) 3 separate geographic markets - two thirds of country deregulated BT commitments on price floors expired at end of 2008 Commitments on price ceilings expire at end 2010 Wholesale Local Access market review (Dec 2004) Market defined to include copper and cable, but not fibre BT obliged to provide LLU (Shared and Full MPF) and Unbundled Sub-Loops (SLU) SLU product based on separate cabinets – has proved uneconomic BT Undertakings (Sep 2005) Equivalence of Inputs applied to LLU – Shared MPF for Broadband, plus full MPF SMPF is an input to IPStream, which is used by BT Retail But BT uses very little MPF
  • 5. Recent developments Market initiatives: Virgin Media now offering 50Mb broadband based on DOCSIS 3 BT plans to invest £1.5bn in NGA Largely in rolling out Fibre to the Cabinet to 40% of UK homes by 2012/13 Will be used to provide “Generic Ethernet Access” Various FTTH initiatives, largely related to new build Policy initiatives Ofcom NGA Statement and Variation Caio Report Digital Britain
  • 6. NGA statement - key policy messages Ensure fit-for-purpose GEA Allow this to be supplied out of Openreach on an EOI basis Vary Undertakings accordingly 1. Active remedies (ALA/GEA) Significant interest in GEA product Active products likely to be required on an on-going basis in significant parts of the UK Support passive remedies where there is demand, including collocation Prevent foreclosure for future competition Duct access as a future possible remedy 2. Passive remedies (sub-loop, fibre, duct Significant uncertainty about viability; limited interest Sky interested in cabinet collocation Pricing freedom on new high-speed (active) products Passive remedies priced on cost plus basis, including risk, with fair allocation of all fixed and common costs 3. Pricing Commercial case uncertain Existing broadband products likely to provide a pricing constraint Limited concerns on pricing freedom apart from margin squeeze concerns Not progress this issue any further at this time 4. Transition Currently little interest or appetite to remove existing copper network Policy position Consultation outcome Issues
  • 7. Why is Ofcom promoting Ethernet ALA? Like most regulators, we prefer infrastructure access We are also promoting sub-loop unbundling and looking at duct access But these are unlikely to be viable everywhere – like LLU So some form of bitstream access is essential And the better it is, the more innovation will follow And the more consumers will benefit Other regulators are also looking at active line access type products What should this mean for communications providers? The availability of a standardised wholesale access product sooner rather than later Giving easy access to fibre communities wherever they may be Supporting wholesale and retail products And allowing for differentiation in pricing, quality of service, security, applications etc The opportunity to compete in the superfast broadband market without major infrastructure investment
  • 8. Key competitive requirements of Ethernet Active Line Access There is no universally economical interconnection point To allow CPs to innovate in CPE functionality Bandwidth savings in backhaul of one to many services (e.g. IPTV) Satisfactory delivery of voice and video Secure delivery of services Authentication of users Justification Local, regional, national interconnect Common interface Freedom to move Flexible interconnection Common Ethernet interface (initial) Wires- / Fibre-only interface (future) Flexible customer premises equipment Multicast enablement QoS enablement Security enablement Functionality Choice between ALA-provider and ALA-user implemented solution Common interface Static and dynamic support ALA-provider offers QoS information ALA-user labels traffic Separate traffic streams ALA-users implement own security Technical requirements
  • 9. The NGA Variation Undertakings restrict Openreach to the control and operation of assets within the Physical Layer of the access and backhaul network Openreach cannot control or operate assets in the Transmission Layer (i.e. electronics) Undertakings obligations BT requested a variation to allow Openreach to control and operate electronics in street cabinets to deliver NGA products using FTTC BT’s variation request In return we have sought commitments on To allow co-investment To use the same processes wherever possible To implement in a way that will not foreclose future use of passives
  • 10. Outstanding policy issues (1) How to promote competition based on passive inputs? EC draft recommendatin strongly favoured passives Interest so far from CPs has been very limited joint investment in FTTC uncertain Results of duct survey suggest that duct access may have some potential Ofcom’s aim has been to keep the options open Potential architecture for Coordinated Investment
  • 11. Outstanding policy issues (2): duct survey shows significant availability, but difficulties remain The survey shows significant availability, although availability appears higher closer to the metro-node then to the cabinet Level of end-to-end routes availability will be lower than headline results - a third of all sections showed some ‘congestion’**. 51% of ducts appear to have space for 3 or more new sub-ducts* that could be used for fibre Survey results are encouraging, but further work necessary to understand how duct can promote competition . NGA consultation showed some interest in duct access for the first time, but only from 2 CPs Policy position: Wait for clear industry demand before pushing duct Consider expanding survey to looks at cabinet to home, non BT duct Look further at practical ways of overcoming operational challenges *25mm tubes were used as proxy for average sub duct **Congestion defined as not having at least three half empty ducts
  • 12. How far will market drive investment in FTTC? Will BT’s plans be focused on responding to Virgin in cable areas? But economics of cabinet deployment are less variable than economics of LLU deployment, so widespread deployment may be viable Digital Britain now looking at options for promoting NGA rollout Broader implications for BT Undertakings Consider implications of OR focus on active products new WLA market review, commencing Q3 2009 And beyond ?  Outstanding policy issues (3)