Discussion Papers

Dieter Elixmann, Ulrike Schimmel unter Mitarbeit von Anette Metzler

Next Generation Networks" and Challenges for Future Competition and Regulatory Policy
Nr. 248 / November 2003


There are fundamental differences between traditional PSTN/ISDN and Next Generation Networks (NGNs). NGNs, based on a packet switched network, are capable of handling voice, data and video traffic simultaneously. In this network transport and control functions are separated, the network functions are located decentrally, the intelligence is more and more located in terminal devices and standards are open. NGNs presumably will rest on a layered structure consisting of four layers. The disaggregated nature of NGNs enables increasing specialisation of market participants on distinct functional parts of the provision of services and applications. In particular, a competitor is able to specify own services and applications independent of the transportation network. Moreover, services can be created by the end user. Thus, NGNs will bring about a multi-layer, multi-operator, and multi-service provider environment.

NGNs will lead to a blurring of traditional PSTN/ISDN concepts of ownership and operation of a network. Functional control of a network will no longer be directly linked to physical terminal points of the network. Rather, NGNs will have reference points which not necessarily are physically determined. A-priori there will be a broad spectrum of feasible service-related and network-related points of interconnection. In a fullyfledged NGN environment service providers may at least conceptually need access to control plane functions, user plane functions and management functions.

The more decentralized nature of NGNs in all likelihood requires to define new telecommunications markets. Moreover, new possibilities and incentives for vertical integration might arise calling for a much more differentiated way to define, assess and find remedies against abuse of market power than today. Notwithstanding the actual existence of essential facilities, unbundling in an NGN environment will bring about several challenges. Due to the disaggregated nature of NGNs the issue of ensuring integrity of the network will become more complex. Moreover, (at least migration towards) NGNs foreseeably will be characterised by vendor specific service features and architectural features of the network. Together with the dynamic technological progress generating much shorter product life cycles than in the PSTN world the scope for regulatory intervention regarding unbundling of NGNs is therefore limited provided regulation aims at being technologically neutral. In addition, the number of entities potentially involved in regulatory unbundling cases will increase.

In the absence of a real market dominant position we basically see no need for mandated interconnection regarding international or national (end-to-end) IP-based backbone networks of ISPs. However, market dominance and, thus, competition policy or regulatory concerns might arise regarding IP interconnection between large national ISPs and small regional or local ISPs. Regarding interoperability, development of norms and standards first and foremost should be left to the market. Regulation, however, will have an important task to organise and monitor the process of standard setting and to develop appropriate conflict resolution mechanisms.

Diskussion Paper is available for download.

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