Discussion Papers

Stephan Jay

Bedeutung von Bitstrom in europäischen Breitbandvorleistungsmärkten

Nr. 299 / September 2007

Summary

In light of the ongoing introduction of bitstream in Germany and the discussion about the suitable characteristics of bitstream services this study analyzes the relevance of bitstream for broadband wholesale markets. This includes the analysis of the position of bitstream compared to other wholesale products and the features of bitstream in the context of the Ladder of Investment. The study realizes this through quantitative and qualitative research. A review of the general availability and variants of bitstream is undertaken basing on the bitstream definition of the European Regulators Group. In a first step this is realized on a European level on the basis of data from the European Competitive Telecommunications Association and the 12th implementation Report of the European Commission. These first results are extended through a regulatory-economic analysis of the historic development in selected countries (France, United Kingdom, and Belgium). The study identifies regulatory decisions and framework conditions as well as strategic repositioning of competitors in time as driver for the usage and relative importance of different wholesale products. Due to the heterogeneity of broadband itself and bitstream specifically the study analyzes the bitstream reference offers in the five European countries with greatest degree of bitstream utilization (France, United Kingdom, Italy, Spain, Belgium) in a third step. The study identifies and compares the major parameters and characterizes their potential for differentiation.

In the course of the analysis it becomes apparent that fundamental difficulties in the separation of resale and bitstream remain. Furthermore the study shows that most countries usually only apply one or two wholesale products to a significant degree. In four of the major five European countries bitstream plays an important role within the national wholesale usage. The historic evaluation shows fundamental shifting of national wholesale usage which may be interpreted as evolution along the Ladder of Investment. At least, this can be perceived very clearly in the French market. The comparison of reference offers shows that in addition to the Quality of Service options other parameters also strongly define the relative strength of bitstream compared to other wholesale services. Regarding Quality of Service as key characteristics the study shows that the ability to influence Quality of Service is considerably lower with IP bitstream as opposed to ATM bitstream. Especially in the context of an increase of Local Loop Unbundling this however does not generally question the complementary character of bitstream. The lack of quality features of current bitstream reference offers may not belie that the role of bitstream with distinguished potential for differentiation will rather rise than fall, especially considering the growing service integration in the NGN.

In particular the realisation of (incumbents’) FTTx strategies could indicate that, with a view towards sustainable, infrastructure orientated competition, bitstream is expected to gain importance. [only a german version available]

Discussion Paper is available for download.

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