Next Generation New Build Promoting higher speed broadband in

Next Generation New Build Promoting higher speed broadband in new build housing developments Chinyelu Onwurah, Head of Telecoms Technology, Ofcom May 15th 2008 Agenda • Background – where are we now? • Fibre deployments in new build – principles of our approach • Consultation proposals – Protecting consumers – Securing investment – Promoting competition • The feasibility of infrastructure sharing • Wholesale Ethernet Active Line Access • Next steps and questions 1 The UK has displayed a good performance in terms of current generation broadband… More than 73% of homes can choose from two or more network providers… UK LLU coverage, February 2008 C o s t (£ p e r m o n th ) ... and we see increasing take-up, decreasing prices and increasing bandwidth 30 20 29 25 10 20 17 15 14 0 2002 15 Broadband lines (millions) 2003 2004 2005 2006 2007E 10 +8Mbps Up to 8 Mbps Up to 2Mpbs Up to 1Mbps Up to 512Kbps Data not available 5 0 2002 2003 2004 2005 2006 2007 H1 2 …driven by significant investment in infrastructure from competitive providers • 4,000,000 local loops unbundled • UK DSL allows 2Mbps to up to 97% of homes • UK LLU operators are launching services up to 24 Mbps • Cable rolling out 10 Mbps and trialling 50M services • BT launched nationwide 8Mbps ADSL Max service - 6Mbps to ~60% of homes • Current DSL and cable deployments appear to be meeting consumer bandwidth demands 3 Where are we with fibre? Planned deployments (Sep. 07) 100% 80% 80% 61% 60% 40% 40% 20% 4% 0% Verizon Neuf KPN NTT Telia Sonera Telefonica Belgacom Telia Sonera AT&T TDC FT DT Illiad Swisscom Virgin Media Cable 47.5% 2009 n/a Note: AT&T is present in 35 out of 50 states. Verizon has presence in 28 out of 50 states. Virgin coverage is 50% of the UK. Illiad target coverage extends to 70% of Paris 100% 90% 90% Recently announced plans Target coverage Achieved coverage 48% 38% 17% 0.4% 2% 4% 26% 16% 9% Country Technology FTTH/B Target coverage 4% Target year 2008 Coverage so far 0.6% FTTC 9% 2010 n/a FTTC 16% 2010 8% FFTH 26% 2010 7% FTTC 40% 2009 21% FTTC 61% 2008 59% FFTC 80% 2010 75% FTTC 90% 2010 n/a FTTH 90% 2011 84% FFTC 100% 2010 7% FTTC/H FTTH/B FTTH/B FTTH 0.4% 2% 4% 17% n/a 2009 2009 2009 n/a 0.9% 0.5% 2% FTTH 38% 2013 n/a TI 4 In the UK we are seeing trials and some announcements Communications providers New business models Sewers and alternative wayleaves BT’s only announcements on NGA is its intention to deploy fibre to new build developments New build fibre We are seeing an increasing number of fibre deployments to new build developments by new entrants Examples include: Titanic Quarter development, Belfast Virgin Media announced its plans to offer new 50Mbps cable broadband service to 70% of its customer base by end 2008, rising to 95% in 2009 H2O announced plans to deploy fibre through sewers in Bournemouth, Northampton and Dundee by 2010. Potential build cost savings may be 70- 80% versus traditional methods of network build Geo using sewers to deliver bespoke fibre networks to carriers and businesses. Sky and Carphone Warehouse are showing interest in using a sub-loop unbundling product 5 Our approach to new build is based on the principles outlined in the Future Broadband consultation… Aim 1: Securing efficient and timely investment Contestability Maximising innovation Equivalence Reflecting risk in access terms Regulatory clarity Ensure everyone can compete by making their own investments in their own time Maximise consumer and business benefits from these new services Allow fair and effective competition between all Ensure regulation does not distort investment incentives Allow investors to make fully informed decisions Aim 2: Promoting effective and sustainable competition 6 In new build this means… Protecting consumers • Promoting effective and sustainable competition • Ensuring access to lifeline services. The promotion of effective competition in new build areas • Promoting standardization of wholesale access • Clarifying the nature of the wholesale access products available • Considering future options for promoting competition such as duct access and dark fibre. Securing efficient and timely investment • Regulatory clarity as to the equitable treatment of next generation NGA network providers. • Regulatory clarity as to the application of existing regulatory requirements in new build 7 Securing efficient and timely investment Equitable treatment for next generation NGA network providers • Potential investors need clarity on the regulation they will face • BT and KCOM will continue to be subject to existing regulation • Other potential investors should recognise that where competition does not develop Ofcom may impose similar remedies to those in place today • New build providers are encouraged to design competition in from the start. The application of existing regulatory requirements in new build • Passive access: We propose LLU obligation does not require parallel copper network • Broadband access: if there is no upstream competition then likely to need fit for purpose product • Voice access: obligations continue to apply (WLR, CPS, IA) • USO: obligations continue to apply 8 Protecting consumers Promoting effective and sustainable competition Ensuring access to lifeline services • Publicly Available Telephone Services must “take all reasonably practicable steps” to maintain emergency access • In the past we have said this does not mean VoIP services must include line powering • But in new build, customers do not have a choice of technology • Therefore we propose that battery back up must be provided See later slides 9 Promoting competition in new build Promoting standardization of wholesale access • Investing in new services is expensive for CPs • Standardisation helps reduce these costs and also reduces network infrastructure costs • Reduces likelihood of technology isolation and increases likelihood of competition Clarifying the wholesale access products available • We seek views on whether existing obligations must be met by the replication of the existing product? • Or could an ALA type product meet the existing obligations and increase potential for innovation Considering future options for promoting competition. • International study suggests duct access can be effective • We propose a framework for assessing infrastructure access. • We seek views on feasibility of infrastructure access in new build 10 In practice likely to be two types of wholesale access products Proposed regulatory products - FTTC Copper Fibre Customer Street Cabinet Metro Node Local Exchange Core Network Passive line access - sub-loop unbundling plus backhaul Active line access (e.g. Ethernet based product) plus backhaul Proposed regulatory products - FTTH Fibre Fibre Customer Splitter Local Exchange Metro Node Core Network Passive line access Duct access, fibre unbundling - for further exploration Active line access (e.g. Ethernet based product) plus backhaul 11 Infrastructure sharing in new build • The incremental cost of building in sharing is much less at time of deployment • There are nevertheless many outstanding issues: – Commercial model: • Shared investment at time of dig • Expression of interest/option at time of dig followed by duct purchase/lease • Duct lease/purchase after dig • Sharing or outsourcing of operational costs (see below) – Operational model: • Joint/shared network planning • Unrestricted access to one or many other CPs • Managed access to one or many other CPs • No access – infrastructure ‘owner’ undertakes all access on behalf of others drop distribution feeder backhaul Customer premises Dark Fibre Dark Fibre Local Exchange Dark Fibre Regional Hub - PoP Trench and Ducting Tertiary Secondar y Flexibility Flexibility Point Point Primary Flexibility Point Access Node Metro/Core Node 12 ‘Active line access’ is a form of bitstream which • Approaches the level of innovation supported by passive access • Is neutral to higher layers: – IP-VPN, VLAN, PBB, PBT… • Is implementation neutral to the underlying media – Ptp fibre, GPON, copper, bonded copper… • Supports all services: – Video, HDTV, voice, data… • Helps overcome technology isolation – One wholesale access for all technologies • Benefits from the economics of scale of Ethernet • And the economics of distribution and management of bitstream – Customer acquisition does not necessitate truck roll – Interconnect at different points 13 But it is for industry not regulators to define ALA – and there are significant challenges • Wide range of potential standards • Needs to be highly scaleable – thousands of CPs with millions of customers and hundreds of services • Maximum control of underlying network requires product flexibility • Ability to support quality of service is key, however that is achieved • Flexibility within consumer premises equipment required • Product definition requires significant effort by all industry players • Pan industry product specification • Industry players need to understand requirements and trade off product features to achieve an optimal definition… • Regulatory role to encourage engagement 14 To help the debate Ofcom commissioned a study of Ethernet access products currently available Copper Ethernet First Mile Customers n ONU Fibre Fibre Rings Access Node Customers Point-to-Point Access Node Passive Optical Network Access Node Network Architecture Business Residential MDF Customers Customers Splitter Fibre Copper Specialised DSLAM bonds multiple LLU copper lines • Re-uses existing copper • Requires multiple lines • Suitable for 10 - 20Mbps Ring-based packet switching network • High-availability solution • Relatively high cost • Aimed at business segment Fibre Ethernet switch in node aggregates discrete fibres • Highly flexible solution • Fibre per customer must be terminated at access node Optical signal distributed using passive splitters • Single fibre at access node can serve 32-128 customers • Less flexible than pt-to-pt Europe USA Canada France Holland Japan 15 The analysis compared the products against our view of key competitive characteristics Key Characteristics Flexible options for aggregation and interconnect Case Study Findings • Wide support for traffic aggregation, using a range of underlying transport technologies • Gigabit Ethernet interconnect most common; some examples of 100Mbps • No wires-only options at present; likely to emerge on EFM and point-to-point fibre • Operators and SPs currently prefer separate CPE for clear demarcation • Wide support for retail services (esp. residential) but limited in wholesale offers • IP multicast more common than Layer 2 approaches • Two main approaches to QoS: Guaranteed Bandwidth and Class of Service • Generally simple product definitions with a wide range of data rates to chose from • Non-PON networks to logically and physically separate customer traffic • PON recognised as having additional risks due to use of shared medium Degree of support: Flexible support of CPE Support for Multicast Support for QoS Low High Ability to guarantee Security and Integrity 16 Questions in consultation • Question 1: What can Ofcom do to encourage timely standards development for new build NGA wholesale access products and interfaces? Which industry body is best placed to undertake the standardisation of these products and interfaces? What action should Ofcom take if these standards fail to materialise? Question 2: Do you agree with Ofcom’s approach to promoting competition and consumer choice in new build fibre access deployments? Question 3: Do you (a) believe that the existing obligations must be met by replicating the existing copper products, or that an alternative approach could be satisfactory? What are the implications of replicating existing products on fibre? (b): Do you agree that SMP holders rolling out fibre do not need to roll out a copper network in parallel solely to meet their LLU obligation? (c): Do you agree with Ofcom’s approach in relation to WBA and new build areas? Question 3d: Do you believe that the WLR obligation must be met by replicating the existing copper product, or that an alternative approach based on an ALA-type product would be satisfactory? (e): Do you believe that the CPS obligation must be met by replicating the existing copper product or that an alternative approach based on an ALA type product would be satisfactory? (f): Do you believe that the IA obligation must be met by replicating the existing copper product or that an alternative approach based on an ALA type product would be satisfactory? (g): Do you agree with our proposal to interpret GC 3.1 (c) as being met through the provision and use of a battery backup facility to maintain uninterrupted access to emergency services in new build developments? Question 4: Do you think access to the duct network, including non telecoms duct, is a potentially feasible means of promoting competition in new build? If so what types of commercial and operational models could successfully support such access arrangements in the UK? 17 • • • • • • • • • • Next steps: • Consultation closes June 25th http://www.ofcom.org.uk/consult/condocs/newbuild/ • Workshops on ALA aggregation and CPE in May and June 2008 • Stakeholder engagement with traditional and new stakeholders • Statement Summer 2008 • Future Broadband further publication Autumn 2008 • Other related ongoing activity – BERR/Caio review on NGA – BSG review of NGA – EU consultation on NGA 18