![• Commission’s Possible Policy
Responses:
OPTION 1: Regulatory forbearance and a
priori exclusion of remedies
OPTION 2: Imposition of full range of
access and pricing remedies
OPTION 3: Imposition of access
obligations adjusted for investment risk
NGA Guidelines
• OPTION 1: Regulatory forbearance and
a priori exclusion of remedies
– Only policy objective: investment in
networks
– Regulatory holidays (to you and me), but
definition of markets difficult
– Abandons cost-orientation?
– [Unstated, but Case C-424/07 European
Commission v. Federal Republic of
Germany]
• OPTION 2: Imposition of full range of
access and pricing remedies
– Essentially, current regime
– Argues “all rungs of the ladder of investment
would have to be present in every
conceivable regulatory situation, from duct
access over unbundling to bitstream”
– Access remedies would be requested to be
priced at very low levels (strict cost-
orientation, no/little consideration of
uncertainty or investment risk)
– Hostile to risk-sharing mechanisms](https://image.slidesharecdn.com/bah11417v1nextgenerationaccessnetworks-12881176864333-phpapp02/85/NGA-Networks-Download-for-slideshow-19-320.jpg)
NGA Networks (Download for slideshow)
- 1. COMPETITION & REGULATORY GROUP Charles Russell LLP 5 Fleet Place London EC4M 7RD www.charlesrussell.co.uk Charles Russell LLP Floor 31, World Trade Centre West Tower Is Al Kabeer Avenue PO Box 31249 Manama Kingdom of Bahrain www.charlesrussell.bh Next Generation Access Networks Andrew Sharpe Competition Law & Regulation in the Telecoms, Internet & Broadcasting Sectors 2010
- 2. Next Generation Access Networks • Key elements from the NGA guidelines • Multiple or mono-fibre? • Is the Commission’s policy technology neutral? • Implementation of equivalence • Practical legal challenges in moving towards the next generation of fixed and mobile networks • State aid
- 3. © Draka Holding N.V. (permission being sought) Next Generation Access Networks
- 4. NGA Guidelines • Commission Recommendation 2010/572/EU – Commission Recommendation of 20 September 2010 on regulated access to Next Generation Access Networks (NGA) – OJ L 251/35 dated 25.9.2010 – only 14 pages = “simples” • Commission Staff Working Document C(2010) 6223 – accompanies Recommendation 2010/572/EU – 60 pages = “that’s more like it”
- 5. • Definitions: “Next generation access (NGA) networks” (NGAs) means wired access networks which consist wholly or in part of optical elements and which are capable of delivering broadband access services with enhanced characteristics (such as higher throughput) as compared to those provided over already existing copper networks. In most cases NGAs are the result of an upgrade of an already existing copper or co-axial access network” NGA Guidelines • Definitions: “Next generation access (NGA) networks” (NGAs) means wired access networks which consist wholly or in part of optical elements and which are capable of delivering broadband access services with enhanced characteristics (such as higher throughput) as compared to those provided over already existing copper networks. In most cases NGAs are the result of an upgrade of an already existing copper or co-axial access network” • Definitions: “Next generation access (NGA) networks” (NGAs) means wired access networks which consist wholly or in part of optical elements and which are capable of delivering broadband access services with enhanced characteristics (such as higher throughput) as compared to those provided over already existing copper networks. In most cases NGAs are the result of an upgrade of an already existing copper or co-axial access network”
- 6. NGA Guidelines • Definitions “Metropolitan Point of Presence” (MPoP) means the point of interconnection between the access and core networks of the NGA operator. It is the equivalent to the Main Distribution Frame (MDF) in the case of the copper access network.
- 7. • Wired network access: – twisted pairs (100 pair external illustrated) – co-axial cable (32 core external illustrated) – fibre optic (48 fibre, 8 ribbon slotted external illustrated) NGA Guidelines
- 8. NGA Guidelines • FTTx Fibre to the: Node (Cabinet) Curb (Cabinet) Building (Basement) Home Premises = FTTH or FTTB Illustration © Riick under GFDL (http://en.wikipedia.org/wiki/)
- 9. NGA Guidelines Illustration © Riick under GFDL (http://en.wikipedia.org/wiki/)
- 10. NGA Guidelines Illustration © Riick under GFDL (http://en.wikipedia.org/wiki/)
- 11. NGA Guidelines • Access to wholesale physical network infrastructure (Market 4) – Access to civil engineering infrastructure – Access to FTTH terminating segment – Unbundled access to FTTH fibre loop – Access where FTTN
- 12. NGA Guidelines • Access to civil engineering infrastructure – If duct capacity, NRAs to mandate access – Access at cost-orientated prices – Reference offer in place 6 mths from request – Encourage or, where national law permits, oblige SMP operator to install “sufficient capacity for other operators” – Establish database of available civil engineering facilities
- 13. NGA Guidelines • Access to FTTH terminating segment – In addition to civil engineering access where SMP operator deploys FTTH – Includes wiring inside buildings – NRAs to determine distribution point, taking into account that DP “will need to host sufficient number of end-user connections to be commercially viable for the access seeker” – Cost-orientated pricing – Encourage (or oblige) deployment of multiple fibres in terminating segment
- 14. NGA Guidelines • Unbundled access to FTTH fibre loop – Unless in particular geographical areas where effective competition at downstream level, mandate unbundled access (with appropriate co-location and backhaul measures) – Access point normally MPoP – Amend existing LLU reference offers within 6 mths after NRA mandate – Cost-orientated pricing, including risk premium in cost of capital for “additional and quantifiable investment risk” – NRAs to carry out margin-squeeze testing
- 15. NGA Guidelines • Access where FTTN – Obligation of unbundled access to copper sub-loop, with supplemental backhaul measures, including fibre and Ethernet backhaul – Reference offer in place in 6 mths – Cost-orientated pricing
- 16. NGA Guidelines • Wholesale broadband access (Market 5) – Access remedies maintained or amended – Wholesale broadband access over vDSL a chain substitute to access over copper-only loops – Access products available 6 mths before SMP operator or retail subsidiary markets NGA retail services
- 17. NGA Guidelines • Don’t ignore the Commission Staff Working Document: – “the report… contains an analysis of the content of the Recommendation, setting out in more detail the range of remedies available to national regulatory authorities and the way they could be applied in an NGA setting”
- 18. NGA Guidelines • Rungs of the ladder of investment
- 19. • Commission’s Possible Policy Responses: OPTION 1: Regulatory forbearance and a priori exclusion of remedies OPTION 2: Imposition of full range of access and pricing remedies OPTION 3: Imposition of access obligations adjusted for investment risk NGA Guidelines • OPTION 1: Regulatory forbearance and a priori exclusion of remedies – Only policy objective: investment in networks – Regulatory holidays (to you and me), but definition of markets difficult – Abandons cost-orientation? – [Unstated, but Case C-424/07 European Commission v. Federal Republic of Germany] • OPTION 2: Imposition of full range of access and pricing remedies – Essentially, current regime – Argues “all rungs of the ladder of investment would have to be present in every conceivable regulatory situation, from duct access over unbundling to bitstream” – Access remedies would be requested to be priced at very low levels (strict cost- orientation, no/little consideration of uncertainty or investment risk) – Hostile to risk-sharing mechanisms
- 20. NGA Guidelines • OPTION 3: Imposition of access obligations adjusted for investment risk – Access obligations appropriately adjusted for investment risk, aimed at driving both competition and investment – Any change? • See Article 8 Framework Directive 2002/21/EC • Any help/change after amendment by Better Regulation Directive 2009/140/EC
- 21. Multiple or mono-fibre? • Encourage (or where national law permits, oblige) deployment of multiple fibres • Not clear upon what basis additional capacity to be valued/priced? • Rationale? – Technological neutrality? – DWDM/optical switching?
- 22. Is the Commission’s policy technology neutral? • Policy, as set out in Staff Working Document, is for technological neutrality • In practice? – Why define any broadband market by reference to transport medium (twisted pair, co-axial cable, optical fibre, radio)? – Remedies based upon most practicable and efficient network access points • Location and nature of access points always technology specific? • Ethernet?
- 23. Implementation of equivalence • Set out in Annex II of the Recommendation: – Principle of Equivalence – Information on Infrastructure and DPs – Ordering and provisioning – SLAs/Reference Offer – Functional separation “lite”?
- 24. Practical Legal Challenges • Nothing new? • Major challenges: – NGA/NGN pricing? – SLAs across whole network – NGA impact on net neutrality? – Cost-orientation for civil engineering assets
- 25. State aid • Article 107(1) TFEU, cannot have state funded NGA networks • Application of Article 107(3) where aid may be compatible with internal market • Commission Guidelines for application of State aid rules to broadband networks (OJ C 235/7 30.9.2009) • DG Comp list – http://ec.europa.eu/competition/sectors/telecommunication s/broadband_decisions.pdf – Mostly Article 4(3) under Council Regulation 659/1999 for rural development (Art. 107(3)(a))
- 26. Next Generation Access Networks “The point is ladies and gentlemen that greed, for lack of a better word, is good.” Gordon Gekko, “Wall Street” “The point is ladies and gentlemen that competition, for lack of a better word, is good.” “The point is ladies and gentlemen that regulation, for lack of a better word, is good.”
- 27. Next Generation Access Networks • NGAs in the UK?
- 28. Next Generation Access Networks • NGAs in Lyydington, Rutland, UK
- 29. Andrew Sharpe Charles Russell LLP Tel: + 44 (0) 20 7203 5194 +973 17 133219 Mobile:+ 44 (0) 77 1307 9516 +973 39 035451 Email: andrew.sharpe@charlesrussell.co.uk andrewjsharpe TMT_Lawyer http://www.linkedin.com/in/andrewsharpe CRITique at http://charlesrussell.wordpress.com
- 30. Offices in: London, Oxford, Cambridge, Cheltenham, Guildford, Geneva (Switzerland), Manama (Bahrain) This information has been prepared as a general guide only and does not constitute advice on any specific matter. We recommend that you seek professional advice before taking action. No liability can be accepted by us for any action taken or not taken as a result of this information. Charles Russell LLP is a limited liability partnership registered in England and Wales, registered number OC311850, and is regulated by the Solicitors Regulation Authority. Any reference to a partner in relation to Charles Russell LLP is to a member of Charles Russell LLP or an employee with equivalent standing and qualifications. A list of members and of non-members who are described as partners, is available for inspection at the registered office, 5 Fleet Place, London EC4M 7RD. www.charlesrussell.co.uk www.charlesrussell.bh
Editor's Notes
- #19: Resale (simple wholesale purchasing and branded reselling to retail customers, involving no separate own production effort) Bitstream access (wholesale broadband access combined with interconnection in the core network – IP bitstream) Shared access (alternative provider is present at the local exchange with its own network and shares a line with the incumbent) Local loop unbundling LLU (alternative provider rents the entire access line running from the local exchange to the end customer) Sub-loop unbundling (alternative provider does not rent the entire local loop but just the sub-loop, i.e. the access line running from the sub-loop to the end customer) Access to the terminating segment (alternative provider deploys its own network right up to a building and then pays for using the incumbent's vertical in-house wiring Access to ducts (alternative provider relies entirely on its own fibre or copper lines in the access network yet uses already existing civil engineering facilities such as manholes and ducts)
- #26: Article 107 (ex Article 87 TEC) 1. Save as otherwise provided in the Treaties, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market. 2. The following shall be compatible with the internal market: (a) aid having a social character, granted to individual consumers, provided that such aid is granted without discrimination related to the origin of the products concerned; (b) aid to make good the damage caused by natural disasters or exceptional occurrences; (c) aid granted to the economy of certain areas of the Federal Republic of Germany affected by the division of Germany, in so far as such aid is required in order to compensate for the economic disadvantages caused by that division. Five years after the entry into force of the Treaty of Lisbon, the Council, acting on a proposal from the Commission, may adopt a decision repealing this point. 3. The following may be considered to be compatible with the internal market: (a) aid to promote the economic development of areas where the standard of living is abnormally low or where there is serious underemployment, and of the regions referred to in Article 349, in view of their structural, economic and social situation; (b) aid to promote the execution of an important project of common European interest or to remedy a serious disturbance in the economy of a Member State; (c) aid to facilitate the development of certain economic activities or of certain economic areas, where such aid does not adversely affect trading conditions to an extent contrary to the common interest; (d) aid to promote culture and heritage conservation where such aid does not affect trading conditions and competition in the Union to an extent that is contrary to the common interest; (e) such other categories of aid as may be specified by decision of the Council on a proposal from the Commission.