11th ACCC Regulatory Conference

1
11th ACCC Regulatory Conference

• Next Generation Networks in Australia and NZ
• - Alternate paths to the same outcomes?

2
Objectives

• Contrast approaches to NGN policy in Australia
  and NZ
• Highlight some key issues
• Reflect on Karl-Heinz Neumans paper

3
Why are Australia and NZ leading the world?

• Are we visionaries? Better understanding than ROW
  of the emerging digital economy?
• Do we enjoy different economics from other OECD
  countries to justify NBN investment?
• Proved-in business cases to demonstrate NBN UFB
  as best use of nations capital?
• Other drivers?
• GFC, economic stimulus and Australias relative
  prosperity
• Perceived under-investment in network and failure
  to upgrade
• High cost, slow, and uncertain regulatory
  solutions to market failures incumbent behaviour
  over time

4
NBN Snapshot at least 90 fibre coverage

• Cf Karl-Heinz data points
• 1000-2000 per household
• FTTH x5 the cost of FTTN
• 25 FTTH viable in France
• 72 VDSL viable in Germany
• Cf EU NGN Agenda
• BSO by 2013 for 100
• 30 Mbps by 2020 for 100
• 100 Mbps by 2020 for 50

Source NBN Co Limited
5
NBN Snapshot fibre wireless satellite
Source NBN Co Limited
6
NZ- LFC Candidate Areas

• Layer 1 and Layer 2 services
• Around NZD3000 to pass and connect
• Layer 1 equivalence after 10 year concession

7
Key project differences

• Australia - NBN
• 100 Government funded
• 43 Billion Govt contribution
• 90 coverage
• Speeds to 100 Mbps
• Layer 2 services only
• GPON architecture

• NZ - UFB
• Form of PPP
• 1.5 Billion Government contribution
• 75 coverage
• Speeds to 100 Mbps
• Layer 1 and 2 services
• GPON architecture except for Layer 1

8
Key project differences -/2

• Australia - NBN
• Telstra deal
• Infrastructure access by NBN
• Copper decommissioning
• Ultimately one last mile network

• NZ - UFB
• No deal with TCNZ at this point
• Chorus as an LFC?
• Copper remains
• Open to TCNZ to compete head-on with LFCs

9
Key regulatory and other differences -/1

• NZ - UFB
• Unbundled copper local loop (UCLL) unbundled
  bitstream access (UBA) since June 2008
• Full operational separation since March 2008
• Chorus run as stand-alone business
• Equivalence
• FTTN rollout (10-20Mbps) to 80 of NZers by end
  2011 1.4B cost
• 1000 per household

• Australia - NBN
• Unbundled local loop (ULL) since 1999
• Unbundled bitstream access (LSS) declared Aug
  2002
• Notional operational separation since June 2006

10
Key regulatory and other differences -/2

• Australia - NBN
• Regulatory design is work in progress
• NBNCo Special Access Undertaking
• ACCC approval

• NZ - UFB
• Regulatory design is work in progress
• Private party contracts between CFH and Partner
  to form LFCs
• LFC Deed of Undertaking

11
NBN/UFB Wholesale Services

• Australia - NBN
• Layer 2 bitstream ethernet
• Implementation Study recommended that NBN be
  built for fibre network unbundling

• NZ - UFB
• Layer 2 bitstream ethernet
• P2P
• Layer 1 (dark fibre)
• FTTH unbundling (full equivalence) after Year 10

12
A comment on GPON versus P2P

• Karl-Heinz has suggested that P2P architecture lt
  10 more than PON
• As I understand it, this is not what Australia
  and NZ economics have indicated
• P2P adds cost
• additional fibre count
• Increased civil engineering costs
• reduced ability to undertake aerial rollout
  (large fibre runs) going underground doubles
  cost
• reduced ability to use drill runs needs open
  trenching
• Power and CO costs (see over)

13
Comparing P2P, Active Ethernet, GPON
Central Office Space
Fiber Raw Materials
Power Consumption
14
Just some of the complex regulatory issues

• What is wholesale?
• Who can buy from NBN Co and LFCs
• Price discrimination
• E.g. volume discounts
• In NZ, preventing predatory conduct by TCNZ
  against the LFCs
• Preventing monopoly profits
• Role of FCM

15
Just some of the complex regulatory issues -/2

• Does network structural reform solve competition
  problems permanently?
• Cf Karl-Heinz comments on the multi-fibre model
• How to regulate the new fibre monopolies
• Will content rights become a new bottleneck?
• How to regulate for the transition period?

16
(No Transcript)
17
A Basic Comparison of Four FTTH Architectures
Central Office
Access loop
Home
More distributed
More concentrated
Efficient Outside Plant Small street/pole cabinet No remote powering
Cost-effective Feeder Smaller duct sizes, Less RoW, CO consolidation Best Scalability Passive OSP, lowest CAPEX CO scalability Consol. (20 km)
Wavelength per user Few fibers in feeder section CO consolidation
Point -to- Point
Splicing
IP
Ethernet switch
Active Ethernet
IP
Ethernet switch
Ethernet switch
TDMPON
WDMPON