The views of the speaker do not represent those of th

1
Regulation between Evolution and Revolution
approaching NGNs(davide.gallino_at_cec.eu.int)

• What rules for IP-enabled NGNs?
• ITU Geneva 23-24 March 2006

2
Disclaimer

• The views of the speaker do not represent those
  of the European Commission
• or of the ERG as such.

3
Outline of presentation

• ERG and NGN
• Regulatory challenges
• Other elements in the NGN scenario
• Conclusions

4

• The European Regulators Group (ERG) was
  established in July 2002. Its members are the
  Heads of the National Regulatory Authorities
  (NRAs) for electronic communications and networks
  from thirty three European countries. These
  comprise the twenty five EU Member States, the
  four EFTA states (Switzerland, Norway, Iceland
  and Liechtenstein) and the four EU Accession/
  Candidate States (Bulgaria,Romania, Turkey and
  Croatia). The European Commission attends and
  participates in meetings of the ERG.
• The ERG was set up as a forum for advising and
  assisting the Commission in the electronic
  communications field. It allows cooperation
  between the NRAs and the Commission in a
  transparent manner and serves as a body for
  reflection, debate and advice on the
  implementation of the electronic communications
  framework as required by Article 7(2) of the
  Framework Directive (2002/21/EC).

5
NGN definition

• As a working definition of Next Generation
  Networks, ERG takes the definition from ITU-T,
  i.e.
• NGN is a packet based architecture fostering the
  provisioning of existing and new/emerging
  services through a loosely coupled, open and
  converged communications infrastructure

6
ERG's activity on NGN

• Work already undertaken in 2004-5
• Work Programme 2006
• Deliverable ERG Common Position on principles
  for IP interconnection
• Deadline Q4 2006
• Public consultation
• Deliverable ERG Common Position on regulatory
  principles for NGN
• Deadline Q4 2006
• Public consultation
• ERG Submission in response to the European
  Commission Call for input

7
NGN evolution or revolution?

• Mithology 1 everything changes
• Mithology 2 everything changes, very fast
• Mithology 3 generalized cost reduction
• Mithology 4 single IP platform more
  interoperability
• Mithology 5 NGN changes more significant than
  NGS(ervices)
• Can we say that evolution wins over revolution?

8
Timeline for NGN in Europe

• Telecom Italia currently most advanced operator
  in Europe in terms of core (transport)
  modernization
• Significant developments in
• Belgium, France, Slovak Republic, Spain, Poland
  and others (GER)
• UK more ambitious changes will probably take
  place in the longer run

2009
2006
2004
2002
2000
Backbone completed in several countries
Substantial development in access networks
TI begins replacement core network
Most EU incumbents will have core network replaced
Development of backbones including MNOs
9
The three main regulatory challenges from NGN

• I Fitness of EC relevant markets list to deal
  with technological change and network / service
  convergence
• II - Access remains crucial element in
  competition
• III Interoperability and internal market issues

10
Other factors adding to complexity

• Regulatory culture internet model ? telco model
• Regulatory culture limited content/media
  regulation culture in several telecom NRAs
• Stickyness of regulation
• Technical complexity (layers, protocols, blurring
  of access/core borders, different (non typical)
  actors in value chain, billing)
• Market evolution cable operators and fixed
  incumbents buying MNOs MNOs voice minded on
  data / roaming traffic
• Growing importance of P2P (peer-to-peer) networks

11
Old word vs New world

• Interconnection (transit/termination)
• Cost orientation
• Price caps
• NRA discretionality on numbers, frequency use
• Emergency services

• Peer to peer (centralized/distributed) and
  transit
• Bundled offers (services bandwidth content
  mobility)
• Price squeezes
• Nomadicity, unlicensed bands, spectrum trading

12
Regulatory challenges /1

• Existing EC markets list still fit to cope with
  changes?
• Ensure consistent market analysis_definition
  (VOB, VDSL, etc.) across MS
• Need to understand how technological change
  affect CAPEX, OPEX in cost oriented or price
  control regulation
• Need to evaluate if SMPs' operators cost
  reductions are
• to be passed on to altnets and end-users

13
Relevant market list possible changes??

• WHOLESALE
• The current list was based on the (PSTN) fixed
  network, not on the new technologies now being
  deployed.
• RETAIL
• Markets 1-6 are based on PTN
• EMERGING MARKETS CONCEPT
• Probably needs reworking

• The development of ADSL2, satellite, VoB, Wimax
  might entail definitional problems in the
  Broadband market which could affect markets 11,
  12, 16 and 18.
• All markets are potentially subject to change

14
Regulatory challenges / 2

• Access ( copper, metallic line) remains key to
  competition in near future
• ULL, Bitstream access, WIFI, WIBRO
• ULL deployment largely depends on price (squeeze)
  AND SLAs, co-location (NGN further reduces need
  for physical space and number of co-location
  stations)
• No access regulation holidays, but discussion on
  sunset clauses, risk adjustment (real option
  theory)

15
Regulatory challenges / 3

• Interoperability
• Existing definition (Framework Directive) too
  flexible
• Single market attribute should be reinforced
• Recital 30 FD Standardisation should remain
  primarily a market-driven process. However there
  may still be situations where it is appropriate
  to require compliance with specified standards at
  Community level to ensure interoperability in the
  single market.
• Concrete risk of proliferation of walled gardens
  (some OEMs may favour open platforms, other will
  defend legacy and installed base NOs will in
  general favour walled gardens)

16
Technology neutrality

• Also spells network neutrality
• Risks of walled garden at IMS (IP Multimedia
  Subsystem) level
• USO directive to be adjusted in this regard
  (fixed location)

17
Conclusions (from the ERG submission to the EC)

• Communications markets are undergoing significant
  technological transition towards NGNs, converged
  and IP based services. In the near future IP
  services will be seamlessly provided through
  various networks. In addition, the bundling of
  services as well as the provision of cross-border
  services will increase. Technological
  developments will also dilute divisions between
  traditional platforms such as broadcasting and
  telecommunications where triple and quadruple
  play products are becoming increasingly
  prevalent. While these developments may
  undoubtedly give rise to new regulatory
  challenges, they may also fuel the expectation
  that lighter touch regulation will be possible in
  traditional areas of regulatory oversight.
• In recognition of these developments the
  Framework review needs to guarantee appropriate
  flexibility to enable regulators to address the
  issue of convergence particularly as such changes
  will not take place in all European markets at
  the same time. As convergence becomes a reality,
  the Recommendation on Relevant Markets and the
  Framework in general need to be technology
  neutral.