24.01.2012 Interconnection World Forum 2012 Page 1
Virtual Unbundling
Kurt ReichingerAustrian Regulatory Authority for Telecommunications and Broadcasting
The opinions expressed in this presentation are the personal view of the author and do not prejudge decisions of the Austrian regulatory authorities.
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Agenda How do access networks look like today? Why are traditional remedies not appropriate any longer? What is VULL and why did we choose it? Is VULL a successful wholesale product?
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Access networks look different today …
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Traditional telco access network
MDF
MDF … Main Distribution Frame
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It‘s all NGA now …
ARU MDF ARUFibre Fibre
MDF … Main Distribution FrameARU … Access Remote UnitFTTC … Fibre to the CabinetFTTB … Fibre to the BuildingFTTC … Fibre to the Home
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Traditional regulation in legacy access networks
MDF
OLO Full Unbundling
OLOCustomer
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Traditional regulation in NGA networks
ARU MDF ARUFibre Fibre
OLOCustomer
OLOFull Unbundling
OLOSub-Loop Unbundling
Access to Ductsand Dark Fibre
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Basic conclusions Economies of scale hard to achieve in NGA scenario
Both for incumbent operator and even harder for alternative operators Austria ~ 1.500 MDFs several ARUs per MDF needed Austria ~ 300 MDFs unbundled practically no sub-loop unbundling
Alternative operator roll-out of FTTC/B/H not expected on a larger scale Huge investment necessary Positive business case hard to achieve with single-digit market share
Classical unbundling at the MDF will become less attractive or even impossible Less attractive: maximum bandwidth from MDF lower than from ARU Impossible: in the case of copper no longer available from MDF (e.g. new-build)
Sub-loop unbundling Has not been a success in the past Not expected to be a success in the future
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Regulatory approach Continue to apply yesterday‘s remedies or introduce something new? Basic considerations
Providing a substitute wholesale product for areas where classical unbundling is no longer feasible for technical or commercial reasons
In addition to traditional remedies on unbundling market Keeping alternative operators competitive Introducing an active product on a passive market Virtual unbundling
European Commission Accepted the new remedy as an intermediary wholesale product
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It’s not only about regulation … Safeguarding competition
Mandating appropriate wholesale products (remedies) from SMP operator Incentivising OLOs climbing the ladder of investment Allowing sufficient margin for alternative and SMP operator Market analysis procedure: Definition of relevant markets Analysis of competitive
situation Significant market power? Imposition of appropriate remedies Promoting innovation
Promoting innovation from incumbent and alternative operators Incentivising investment
Making investment scenarios attractive while safeguarding competition But: Investors usually want return not regulation
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Virtual unbundling (VULL)
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VULL cornerstones (from market analysis decision)1. Possibility for a grade of innovation comparable with passive access 2. Highest possible transparency for higher layers3. Possibility for multicast services4. Technological neutrality5. Flexibility for choosing CPE (white list)6. Service hand-over at MDF (or similar PoP in the NGA)7. Third-party service hand-over8. Configuration access for all relevant connection parameters or non-
overbooked bandwidth between customer and PoI
9. Obligatory for NGA areas only
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VULL implementation rules VULL to be offered in NGA roll-out areas only Approach allows „emptying“ of NGA roll-out areas, i.e. (re)creating areas
without unbundled lines and being solely controlled by the SMP operator Absence of disturbing lines allows higher bandwidth for customers Absence of alien systems allows better introduction of vectoring
Possibility for forced migration from ULL to VULL under the following conditions Invitation to planning meeting 4 months prior to planned roll-out start Information on roll-out area, technology and planned roll-out date Invitation to submit request for compensation payments for frustrated investments Cost-free migration from ULL to VULL Invitation for co-operation talks Further information on roll-out plan for interested OLOs 2 months before roll-out start Detailed information on roll-out for co-operating OLOs
Alternatively: Spectrum shaping for protection of xDSL services from MDF
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VULL technical concept from incumbent operator
Bandwidth (HP/LP) Netz ANB
CPE
CPE
CPE
CPE Bandbreite
Bandbreite
Bandwidth
Bandbreite
DSLAMBandbreite
Bandbreite
Bandwidth
Bandwidth
Bandwidth
NetworkOLO
POI
Layer 2 Service
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VULL Reference Offer Modular layer 2 bitstream product based on Ethernet technology
Access part: VDSL2 on copper loop with several bandwidths to choose from (8/20/30 MBit/s)
depending on access scenario (FTTC, FTTB); 50/100 MBit/s with FTTH Individually ordered per customer
Backhaul part: Ethernet with 16 bandwidths to choose from (2 … 800 MBit/s) allowing OLOs to
choose degree of overbooking – even allowing non-overbooked services Ordered per DSLAM
Virtual Connections Up to 4 VLANs per customer
Quality of Service: Service prioritisation of Ethernet frames using p-Bit
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VULL Reference Offer VULL services are aggregated for every MDF area connected
MDF area (MPoP) comprising several VDSL2 DSLAMs VULL services are mapped into double-tagged VLAN (S-Tag and C-Tag)
allowing to adress customers via Layer 2 Ethernet S-Tag defines specific DSLAM
VLAN-ID 10 … 2009 (i.e. 2000 DSLAMs per handover point) C-Tag defines specific customer
VLAN-ID 100 … 300 (i.e. 200 customers per DSLAM) p-Bit marking defines traffic priority (QoS)
VULL services are handed over to VULL partner on defined PoIs Hand-over is at today‘s MDF locations (i.e. locations with existing collocation and
backhaul facilities)
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VULL Reference Offer Customer Premises Equipment (VDSL2 Modem/Router)
No modem included – to be chosen by OLO Minimum modem requirements defined Modem whitelist with modems tested, being qualified as properly working and
guaranteeing defined service performance parameters Service hand-over for several DSLAMS at MDF location in NGA roll-out
areas 1 GbE and 10 GbE Service hand-over to third party provider possible Transparency for multicast services Pricing issues
Margin squeeze free
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Is VULL a success story?
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VULL on the timeline
SEP2010
DEC2010
JAN2011
MAY2011
SEP2011
JAN2012
Regulatory decision
1st reference offer
2nd reference offer
Detail specification of VULL
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Critical issues still in discussion Technical limitations of incumbent‘s equipment to be taken into account MTU size
Current limitations of DSLAMs regarding maximum frame size (1522/1526) QoS
Current limitations regarding frame loss, frame delay and frame delay variation Layer 2 Control Protocols
Current limitations regarding L2CP protocols supported by DSLAM Symmetrical bandwidth
Limitations due to 998 VDSL2 band plan Operation and Maintenance
Access to measurement data and configuration parameters Technologies used (e.g. DHCP snooping, DHCP option 82, trusted ports, etc)
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Critical issues in discussion (cont‘d) Pricing
Pricing according to FL-LRAIC methodology taking into account the full range of products offered, i.e. NGA and non-NGA products
Risk premium applicable for NGA products No margin squeeze in relation to A1TA retail offerings
Price comparison:
Full LLU: € 5,87 per month
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VULL … still some hills to climb „Quite nice“ wholesale product for residential user products
Asymmetrical data rates up to 30/4 MBit/s (FTTC), 50/5 (FTTB) and 100/10 (FTTH) Feasible for voice, video and Internet Feasible for IP-TV
Room for improvement regarding business user products Limitations in symmetric data rates Limitations in MTU size Limitations in QoS achievable Limitations in L2CP transparency
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Summing it up … Today’s access networks look different – it’s all NGA now Regulatory interventions have to be tailored to address the changes Virtual unbundling is a new remedy that has the potential to replace
several of yesterday’s remedies in a medium to long term perspective Moving from layer 1 (unbundling) to layer 2 (virtual unbundling) is a bigger
step for alternative operators than expected Specifying details for VULL proves to be time-consuming as is agreeing on
general conditions for migration
VULL is available – but alternative operators still seem not convinced
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Virtual Unbundling
Kurt ReichingerAustrian Regulatory Authority for Telecommunications and Broadcasting