Conference Report

National strategies for ultrabroadband infrastructure deployment: Experiences and challenges
Berlin, April 26/27, 2010

WIK’s International Conference this year has focused on national strategies for ultrabroadband infrastructure deployment. The event was truly international with delegates from 30 countries and a little less than one third of the 115 participants coming from Germany. The following charts give an overview of the speakers’ and participants’ professional backgrounds and regions:

The volcanic eruption in Iceland and the subsequent flight restrictions in Europe were a particular challenge. Three of our speakers (from Australia, Asia and the U.S.) unfortunately were not able to fly to Berlin. Similarly, about 10% of the already registered participants had to cancel due to flight problems.

Nonetheless, the highly distinguished speakers gave informative presentations and engaged the conference participants in lively discussions. We would very much like to thank all of our speakers and participants for their contributions and for making the Berlin broadband conference a very successful event.

Keynote Speech: "The Broadband Strategy of the German Federal Government: Objectives and status of implementation"

In his keynote speech Mr. Andreas Schuseil (Director General for IT-, Communications and Postal Policy, Federal Ministry of Economics and Technology, Germany) highlighted in particular the objectives and implementation mechanisms of the national broadband strategy of the German Federal Government. The strategy has 4 points, focusing on: (1) the digital dividend; (2) carrier cooperation synergies; (3) financial support; and (4) regulation. The following lively discussion has focused on the status of implementation and concrete instruments the German Government uses to successfully pursue its ambitious goals.

National Broadband Strategies in New Zealand and Australia

Session I had its focus on the national broadband strategies in New Zealand and Australia and was moderated by Dr Karl-Heinz Neumann (CEO, WIK, Germany). Dr Kris Funston (Deputy Chief Economist Commerce Commission, New Zealand) highlighted the main developments for facilitating broadband deployment in New Zealand between 2001 and today. The special emphasis of his talk was on the current initiative for "ultra fast broadband" (UFB). He stated that New Zealand was the last OECD country to unbundle, but it will be the first country to establish a National Fibre Company. In his presentation he addressed important issues the current government broadband strategy brings about, i.e. ownership structure, funding, investment control, supply of services, the regulatory and governmental regime as well as the "rural broadband initiative" (RBI). The second presentation in this session was supposed to be held by Dr Rob Albon (Australian Competition and Consumer Commission, Australia). Since he was not able to attend, the presentation was delivered by Mr. Dieter Elixmann (WIK, Germany). The presentation focused on both broadband policy approaches launched by previous governments in Australia and the "National Broadband Network" (NBN) plan presented in 2009. Regarding NBN, the presentation in particular concentrated on the actual status of implementation. Prominent issues that were addressed are (1) a potential structural separation of the incumbent Telstra; (2) the regulatory changes currently discussed; and (3) the incentives for market participants to take a share in the NBN.

National Broadband Strategies in Europe

Session II contained three presentations of national broadband strategies in Europe and was moderated by Mr. Cristoforo Morandini (Associated Partner at Between Spa, Italy). Mr. Patrik Sandgren (Swedish Post and Telecom Agency, Sweden) presented the key objectives and elements of the "Bredbandsstrategi för Sverige", i.e. the strategy launched by the Swedish government in November 2009 aiming at realising "world class broadband" through a market based approach. The presentation addressed several measures for achieving the aims of the Swedish broadband strategy like broadband throughout the country, public sector players in the market, functioning competition, spectrum use, and reliable electronic communication networks. The presentation by Mr. Kip Meek (Chairman of the Broadband Stakeholder Group (BSG), UK) focused on "optimal" broadband investment in the UK and elsewhere and addressed a trade-off between coverage and network capabilities. "Optimality" was referred to by the concept of the "value" of broadband, by consumer surplus, producer surplus and externalities. Mr. Meek presented a flexible model allowing for the assessment of the incremental benefits of broadband investment by quantitatively estimating producer value, consumer surplus and costs. The model enables the assessment of broadband value by technology, country and region. Mr. Meek then presented the results of model calculations showing that (1) the market is unlikely to deliver widespread superfast broadband without intervention; (2) for many regions, policy makers will need to believe in the incremental externalities created by high speed internet in order to justify subsidies; and (3) some governments’ plans regarding broadband roll-out require a belief in very high incremental externalities (Mr. Meek mentioned that more than 80 Euro incremental externalities per month per connected household are required in Australia to "break even"). Ms Joëlle Toledano (Member of the Board of ARCEP, France) surveyed the FttH rollout in France and presented the different regulatory approaches and instruments that ARCEP has developed so far regarding ultrabroadband. Prominent issues are in particular the regulation of access to civil engineering which is essential to stimulate investment in fibre networks by all operators and the sharing of infrastructure within the last mile of fibre networks being crucial to eliminate the need for each operator to install its own fibre in the same building. Ms Toledano pointed out that local authorities can also help to stimulate operators’ fibre rollouts by carrying out field studies to identify best practices, making civil engineering (ducts and poles) available for fibre deployments, and by installing additional ducts during road work. ARCEP expects to see the rate of fibre equipment in France increase substantially in 2010/2011.

Technological Aspects

Session III titled "Optical transmission and access: Technological developments and implications for regulation", chaired by Mr. Thomas Plückebaum (WIK, Germany), had two speakers.

Mr. Sigurd Schuster (CTO, Head of Technology Roadmapping, Nokia Siemens Networks, Germany) underlined the continuously increasing bandwidth demand today and in the future (caused by e.g., 3D HDTV, Ultra HDTV). He concluded that today’s access technologies will not be able to satisfy this demand. He presented an approach by Nokia Siemens Networks, called "Open Lambda Initiative" (OLI), aiming at adequately meeting this increased bandwidth demand by creating a virtualised PON network environment. Mr. Schuster then highlighted the different elements of the OLI and underlined the implications of this approach regarding access in a PON environment.

Mr. Sanjay S. Patel (CTO Wireline Networks Division Alcatel-Lucent, USA) presented an approach developed by Alcatel Lucent aiming at paving a way towards competitive universal high speed broadband access. Mr. Patel also stressed the importance of future multimedia applications driving the demand for high speed broadband. He then pointed out that Europe is still far behind the U.S. and Asia regarding numbers of Fttx-connections. After having presented a basic comparison of four FttH-architectures (P2P, Active Ethernet, WDM PON, TDM PON) as well as their specific features, Mr. Patel emphasised that consumers benefit from competition where they can independently choose ISPs, ACPs, and can easily switch between providers. Sanjay stressed that a technology-agnostic, graduated regulatory environment can promote competitive universal broadband access.

Keynote Speech: Broadband deployment and adoption in the US: The National Broadband Plan

This keynote speech was supposed to be delivered by Dr Donald Stockdale (Deputy Chief and Bureau Chief Economist Wireline Competition, Federal Communications Commission (FCC), USA). Due to flight difficulties, Dr Stockdale unfortunately had to cancel his trip to Berlin.

Replacing Dr Stockdale was Mr. Scott Marcus (WIK, Germany, who formerly was Senior Advisor for Internet Technology at the FCC) who focused on the FCC document "Connecting America: The National Broadband Plan" which has been published in March 2010. Highlights of his presentation were the status of broadband deployment/adoption in the U.S., the national strategy’s objective that all people of the United States have access to broadband capability and the benchmarks for meeting that goal. The key recommendations for the government in order to influence the broadband ecosystem are: robust competition; efficient allocation; and management of assets government controls or influences (such as spectrum, poles, and rights-of-way), universal service mechanisms, and maximizing the benefits of broadband in sectors government influences (such as public education, health care and government operations). Apart from the National Broadband Plan, Mr. Marcus brought up the "Comcast case" in which the U.S. Court of Appeals found that the FCC lacked the authority to impose network neutrality rules on Comcast, and thus vacated the FCC’s order regarding Comcast’s network practices.

Cost-benefit aspects of high bit rate broadband deployment

Session IV addressed "Cost-benefit aspects of high bit rate broadband deployment" and was chaired by Mr. Marcus. The two speakers approached the subject from two different perspectives.

Dr Thomas Plückebaum (WIK, Germany) first gave a short overview of the elements and logic of WIK’s broadband cost model. He then presented the results of several projects that have been conducted for clients in Germany and other countries as well as the key results of these projects. For example, there is no FTTx architecture making a 100% fiber roll out profitable. Regulatory measures (duct and fiber access) might improve the viability of a business model and the replicability of a given infrastructure, but they are not sufficient to entail nationwide coverage. Multi-fiber approaches require an increased total investment, yet, they reduce investment per operator. This might increase coverage but tends to discriminate market entrants. Dr Plückebaum finally came to the conclusion that subsidies in a variety of approaches may help to enlarge coverage up to nationwide access to broadband networks.

Mr. Brian Williamson (Plum Consulting, UK) focused on mobile and fixed-link broadband access and addressed the issue whether mobility or speed might be more valuable. In particular he referred to a study prepared for the UK Broadband Stakeholder Group in 2008, which was focusing on the development of a framework for assessing the costs and benefits of next generation broadband. The study identified the Internet to be the "killer app" and highlighted three categories of direct private benefits: (1) saving time doing what one does now; (2) doing more of what we do now; and (3) doing new things. Moreover, Mr. Williamson pointed out social/external benefits. The presentation was closed with naming four priorities consistent with maximising private and social value: (1) widen options for mobile application; (2) facilitate retirement/substitution of outdated technologies and policies (e.g. copper and broadcast networks, USO policy); (3) reallocate spectrum to mobile; and (4) develop new metrics (for mobile broadband and internet based services).

(Minimum) bandwidth for everyone

Session V titled "Broadband access and (minimum) bandwidth for everyone" closed the first conference day and was chaired by Mr. Elixmann, Germany).

Dr Bernd Langeheine (European Commission, Belgium) presented a detailed overview of the recent activities of the European Commission relating to broadband issues. Dr Langeheine highlighted the key measures of the EU 2020 Strategy aiming at "smart, sustainable and inclusive growth". This initiative in particular envisages to realise broadband for all by 2013 and 30Mbps for all by 2020 (of which 50% should have more than 100 Mbps) as well as increased R&D spending, e.g. by using EU structural funds (€ 2.3 bn. for telecoms in present programme). Moreover, an efficient spectrum policy should be pursued and stable legal frameworks should be created to promote investment while maintaining competition. Dr Langeheine then presented an overview of the recently adopted revision of the framework telecoms rules (directs NRAs to apply sound regulatory principles and gives them the power to impose sharing of in-building wiring), the draft Commission Recommendation on Next Generation Access Networks, and the Citizens’ Rights Directive Recital 5 (which refers to the possibility of Member States to define the scope of universal service).

Mr. Cristoforo Morandini (Associated Partner at Between Spa, Italy) focused his presentation on developments in Italy. After having given an overview of Italy’s status quo of broadband penetration, he addressed the "Telecom Italia Anti Digital Divide Plan" as well as "The Romani Plan". "The Romani Plan" aims at realising broadband for everyone in Italy by 2012, with 96% of the population receiving speeds of 20 Mbps, and the remainder receiving at least 2 Mbps. Mr. Morandini then highlighted the importance of the numerous initiatives originated by provincial governments (e.g. Lombardia, Provincia Trento, Valle d’Aosta, Piemonte) to foster broadband deployment within the particular region. Moreover, he presented the results of a new approach in Italy to measure the actual bandwidth availability of broadband connections, the "Bandometro® Isposure".

Panel discussion on open access and separation

Day 2 of the conference started with a panel discussion, moderated by Dr Ulrich Stumpf (WIK, Germany), on "access" to a fibre optic infrastructure and instruments to achieve a non-discriminating and incentive compatible regime of "openness". The panel comprised three panellists.

Dr Annegret Groebel (BNetzA, Germany) emphasized that NRAs need to ensure transparency by announcing early on the regulatory strategy as predictability is the key to give investors the necessary confidence. Yet, investment decisions should be left to operators rewarding the investment with a risk-adequate rate of return. Above all the competitive gains and perspectives should not get out of sight and NRAs should continue to ensure non-discrimination and prevent margin squeeze to enable a competitive NGA roll-out with joint projects where appropriate.

Dr Martin Cave (University of Warwick, UK) differentiated between "one way access" and "two way access". These two forms of access differ regarding regulatory and competition policy aspects. One was access requires a mandatory solution. Two way access can be observed in the mobile sector. Examples of two way access are joint ventures and cooperative solutions. Depending on the behaviour of the partners involved there can be a need for intervention e.g. if collusion is prevalent.

Dr. Funston focused on the separation approaches of Telstra in Australia and of Telecom New Zealand. He outlined that the Australian Government is seeking to move the industry to a structurally separated basis and that it has placed pressure on the vertically integrated Telstra to separate (‘voluntarily’) its network and service elements. The government’s threat is to preclude Telstra from future spectrum allocation and to exercise other Ministerial powers if Telstra does not separate voluntarily. In March 2008, Telecom New Zealand formally separated its access network (Chorus), wholesale and retail business units. In June 2009 the Minister of Communications and Telecom agreed to vary Telecom's operational separation undertakings.

Keynote Speech: The role of the cable infrastructure for broadband deployment and competition

In his keynote speech Mr. Manuel Kohnstamm (President Cable Europe, Managing Director Public Policy and Communications, Liberty Global Europe BV) focused on the cable sector’s potential for the roll-out of broadband infrastructure and competition in this era. He underlined that broadband penetration is significantly higher in active "cable markets" (Western Europe: + 30% penetration in cable driven markets; Central and Eastern Europe: + 50% penetration in cable driven markets) and that "cable markets" reached higher penetration significantly quicker. Mr. Kohnstamm pointed out, that cable operators in Europe (focussing on Austria, Germany, the Netherlands, Portugal, and Switzerland) have invested over €22bn. into network infrastructure over the past six years. On average, this is equal to a capex of 25% of revenues, compared to 15% for telcos. Mr. Kohnstamm closed his speech with emphasising cable operators’ main future challenges: matching the telco challenge, accelerating DOCSIS 3.0 rollout, forcing the next wave of infrastructure competition, being based on superior networks and good customer care, constantly evolving the Digital Home, and focussing on personalisation and web integration in the future.

Final panel discussion on broadband deployment strategies in Europe: The perspective of carriers

The Conference was closed by a final panel discussion aiming at bringing about the perspective of carriers in regard to broadband deployment strategies in Europe. The Panel was chaired by Dr Neumann.

Mr. Richard Feasey (Public Policy Director, Vodafone Group Services Limited, UK) cautioned that an incremental approach to investment in next generation broadband networks will not be sufficient. Further, he added that the possibility of co-investment presents certain challenges, but allows network operators to draw on collective resources and eliminates the need to build duplicate infrastructure such as backhaul for LTE networks.

Mr. Frédéric Gastaldo (Head of Strategy and Innovation, Swisscom, Switzerland) initially gave an overview of the status quo of fiber deployment in Switzerland. Furthermore, he stated that access to third party ducts will accelerate NGN deployment and thatpublic money should only be used to build NGNs in remote rural areas, if at all.

Ms Erzsébet Fitori (Acting Director, Regulatory Affairs, ECTA, Belgium) outlined the importance of competition for broadband deployment. Competition delivers better services, most obviously higher speeds for broadband services. The need of open NGN as well as the choice of architecture matters to unbundling of fibre networks and competition. Open access lowers the investment risk and wholesaling provides the opportunity to grow the market, fill the pipes and reduce investment risks.

Dr Jos Huigen (Director Regulatory and European Affairs, KPN, NL) referred to the prediction by KPN, that in 2016 the Netherlands’ market will be developed into a full single access market and that this might lead to various and new competition problems. More precisely, platforms will have different performance ((HD) TV, multi-room, broadband speeds, reach). Regulation will have to: (1) go regional; (2) focus on dynamics of Triple Play competition; (3) focus on single access competition; and (4) balance copper, wireless, FFTH and HFC regulation.

Altogether and taking all the feedback we received into account this event has been a truly success. We would very much like to thank all our speakers and participants who made this event happen and whose presentations as well as the following lively discussions has contributed substantially to the success of this event. We would be delighted to have the opportunity to welcome all of you at one of our future events and will keep you informed.

Anna Maria Doose
Tel.: +49 2224 9225-47
Fax: +49 2224 9225-69

Karin Wagner
Tel.: +49 2224 9225-42
Fax: +49 2224 9225-69