Telecoms Regulation in Europe Competition in Broadband Services. James Thomson

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1 Telecoms Regulation in Europe Competition in Broadband Services ASEAN-EC Workshop Singapore, June 2008 James Thomson Cullen International

2 Outline Broadband take-up in Europe EU regulatory framework Next Generation Access State aid

3 International Broadband Penetration Rates July 2007 (Source: OECD) 35% 30% 25% 20% 15% 10% 15.1% 15.3% 15.9% 16.5% 16.8% 18.2% 18.4% 20.0% 21.1% 21.3% 22.1% 22.3% 22.7% 23.7% 23.7% 23.8% 25.0% 28.3% 28.8% 29.8% 29.8% 29.9% 30.7% 33.1% 34.1% 5% 0% Denmark Netherlands Switzerland South Korea Norway Iceland Finland Sweden Canada United Kingdom Belgium Luxembourg Australia France United States Japan Germany Estonia Austria EU27 Spain New Zealand Italy Slovenia Ireland Some European countries are world leaders But 25%+ separates European countries with highest and lowest broadband penetration rates

4 Total Broadband Lines in Europe 1 October January m (1%) 0.27m (<1 %) 1.2m (2%) DSL 1.3m (1%) 1.1m (1%) 2.4m (3%) DSL 8.8m (17%) Cable FTTH 15.1m (15%) Cable FTTH 42.3m (80%) WLL Others 79.1m (80%) WLL Others Total broadband lines: 53.13m Total broadband lines: 99.05m ADSL/ADSL2+ over copper local loops accounts for 80% broadband lines in Europe Cable broadband is strong in a few European countries (e.g. Belgium, Netherlands) (Source: European Commission)

5 DSL Broadband Lines in Europe 1 October January m (11%) 4.95m (12%) Incumbent own lines LLU 7.5m (10%) 0.5m (1%) 5.9m (7%) Incumbent own lines LLU 7.07m (17%) 25.59m (60%) Bitstream Resale 20.6m (26%) 44.6m (57%) Bitstream Resale Total DSL lines: 42.29m New entrants own DSL network Total DSL lines: 79.1m Local Loop Unbundling (LLU) has taken-off showing that alternative operators are climbing the investment ladder (at least in some countries ) (Source: European Commission)

6 Investment Ladder

7 Market Analysis Local Loop Unbundling Wholesale Broadband Access Market definition 2003: Wholesale unbundled access (including shared access) to metallic loops and subloops for the purpose of providing broadband and voice services 2007: Wholesale (physical) network infrastructure access (including shared or full unbundled access) at a fixed location 2003: Wholesale broadband access 2007: Wholesale broadband access Non-physical or virtual network access including bitstream access at a fixed location SMP All fixed incumbent operators All fixed incumbent operators All fixed incumbent operators (Except KPN Netherlands) UK: BT no SMP in area covering 70% UK households where competition from LLU Regulatory obligations - LLU copper loops - Cost-based pricing - NRAs taken different approaches to costs Same + Some NRAs propose to add access to ducts (France, Spain) Biststream access NRAs taken different approaches to: -Handover points - Pricing rule (retail minus, cost orientation, nondiscrimination) Same + some NRAs propose BSA should apply to VDSL or FTTH networks Austria: Obligations withdrawn from Telekom Austria in urban areas

8 3G Data Cards in Austria Typical offer: 3 GB / 24 euro per month (24 month contract) 700, ,000 Telekom Austria DSL Cable 500,000 3G Data Cards 400, ,000 LLU 200, , Q 1Q Q 3Q 4Q 1Q Q 3Q 4Q 1Q Q 3Q Bitstream FWA Others (Source: RTR)

9 European Telcos with aggressive NGA deployment plans before 2010 Operator Country NGA Coverage Total households Belgacom Belgium FTTC + VDSL/VDSL2 Spring 2008: 60% households 4.5m TDC Denmark Hybrid mix of FTTC + VDSL2 and cable End 2010: 90% households with 20Mbps and 75% households with 100Mpbs France Telecom France FTTH (GPON) End 2008: 1m homes passed 27.4m Free France FTTH (Point-to-Point) End 2012: 4m homes passed NeufCegetel France FTTH (Point-to-Point) End 2009: 1m homes passed 250K customers 2.5m Deutsche Telekom Germany FTTC + VDSL End 2008: 50 cities (approx. 25% of German households passed) 39.2m Telecom Italia Italy FTTC + VDSL2 FTTB Fastweb Italy FTTH in Northern Italy LLUfrom TI KPN Netherlands FTTC + VDSL2 FTTB/H (new build housing) 2010: 52,600 FTTx cabinets passing 2m customers FTTH customers peaked at 300K. New connections mainly based on LLU from TI. 23.9m Complete PSTN switch-off m Telefonica Spain FTTH (GPON) End 2010: 3m FTTH lines 15.4m TeliaSonera Sweden FTTC + VDSL2 2013: Up to 2m households 4.4m

10 Public Funding of Broadband Amsterdam Open Access Model Investment in FTTH network by city of Amsterdam serving 37K households (10% of the city) Three layer model where passive and active infrastructures are operated and managed separately Open and non-discriminatory access offered to all retail providers European Commission decided no State aid

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