1. 1 Open Networks TDC: Views from an Incumbent TRIS meeting Copenhagen 24-25 September Allan Bartroff TDC Legal and regulatory

2. 2 Agenda Background: TDC in the Danish BB market Open Networks: Models Incumbent operator’s business model: Any difference compared to ‘open networks’? Disclaimer: It is about conditions/options for service providers how to access the networks ≠ any network neutrality discussion

3. 3 The Danish BB market: Platform and service competition Fixed broadband 1 st H 2009 DK has 2.084.360 broadband subscriptions (36% penetration per inhabitants) DSL is dominant, but also cable and increasingly fibre + various local networks 38% BB connections are based on alternative (to DSL) infrastructure: cable, fibre, networks owned by housing associations, internal networks etc. Cable networks cover about 2/3 of the Danish households (homes passed) and have a 26% share of the broadband market, FTTH accounts for 5-6% share Mobile : 4 mobile network operators oTDC oTelenor oTelia o3 (only 3G) Each rolling out mobile broadband: 3G, HSDPA + MVNOs/Service Providers Additionally wireless WiFi/Wimax operators

4. 4 Danish NRA policy: ‘Several pipes to the home’ + service competition Service-based competition Infrastructure- based competition Competition between alternative platforms: Wholesale broadband access: PSTN (DSL) CATV (cable modem) FWA/WiMax/WLAN 3G/EDGE/HSDPA Optical fibre - Fibre/LAN - FTTH Satellite Digital Terrestrial Television LLU - ”Raw copper” Shared access Bitstream (incl. cable?) Simple resale

5. 5 The Danish BB market: Market shares BB subscriptions – market shares 2nd half 2008. Today TDC has 62% due to recent consolidations

6. 6 Open Networks – models Open Networks: Where to locate in the value-chain ? 1.Network owner provides both wholesale and retail services. Other service providers can get access at both service and network layers (at non-discriminatory conditions?) to provide their services to end-customers 2.Network owner provide only wholesale. Other operators may offer services (at non-discriminatory conditions?) without competing at the retail level with the network owner, i.e. a wholesale-only model 3.Regardless 1 or 2: The end-user only needs relations with the service provider(s), i.e. no separate relationship with network owner (one-stop-shopping) 4.Regardless 1 or 2: Choice between more service providers at the same time – one for Internet access, one for TV services etc. ‘Open Networks’= A business model >< vertically integrated model of incumbents? Not necessarily – or rather the contrary..

7. 7 ‘ Open networks ’ : One Danish example When a retail customer select fibre BB from the FTTH provider Syd Energi (South Energy) he then chooses his provider of BB services (Internet, telephony, TV etc.) from one of 4 providers: Open but! The end-user only has a choice between the providers selected by the network owner (Syd Energi) and for an SP access is thus conditional on the interest of the network owner in concluding a deal, i.e. no equal access or access rights at all for providers which may open for various exclusionary practices In this example the network owner offers one-stop-shopping. However most of the network owners in the utility sector require separate access agreement with end-users for the network  Neither is a problem as such but it differs from the model of most regulated incumbents

8. 8 TDC: Open networks? TDC offers a variety of access products at wholesale level at non- discriminatory conditions It is then left: 1.To the alternative providers to make their services available to retail customers 2.To the retail customers to choose among these alternative operators

9. 9 7. juni 2016 9 TeleConnect DK DK + Scandinavia Broadband Basic BSA Raw copper Telephony via 3rd party Resale Fixed networks Broadband via 3rd party SIP Gateway Mobil via 3rd party Mobile Tele- phony and Data SIP MVNO Multicast IPConnect/ IP VPN Ethernet VPN Ethernet over SDH SDH Wavelength Dedicated fibre ProProdcuts aiming at retail end customers and business BroadbandTelephony MobilTV Infrastructur e and netorks Exchange of traffic IP Peering Exchange of traffic SIPConnect Intercon- nection Mobile Broad- band Control, responsibility, ressources TDC Wholesale offers… A strong product portfolio

10. 10 7. juni 2016 10 7. juni 2016 10 Characteri- stics Control, Responsibilities and Resources Wholesale services Wholesale Wholesale offers... Flexible business models Brand Partner who holds a strong position in other business areas and offers telecom services complementary Access, infrastructure, networks and interconnection Operator with fully or partly own networks, primary focus on IT and network services Service Provider who has telecom competences and primary focus on telecom services or offer telecom services complementary to other business areas Complete or partly complete products in telephony, broadband or mobile Complete products in broadband, telephony and mobile via 3rd party Operator/Service provider Wholesale

11. 11 7. juni 2016 11 Wholesale offers… Flexible co-operation Bitstream Access BB Basic Raw copper (LLU – full/shared) TDC Service provider/operator Mobile BB Access line Switch/ platforms Billing CPE Internet -access Product and price Customer service and handling Marketing and sale Access line Switch/ platforms Billing CPE Internet -access Product and price Customer service and handling Marketing and sale Access lineSwitch/ platforms Billing CPE Internet -access Product and price Customer service and handling Marketing and sale Access line Switch/ platforms Billing CPE Internet -access Product and price Customer service and handling Marketing and sale

12. 12 7. juni 2016 12 7. juni 2016 12 Wholesale offers… Flexible business models Access Switching /platform s Billing CPE Product and price Customer service and handling Marketing and sale Access Switching /platform s Service Provider CPE Product and price Rå kobber/Delt rå kobber Access Centraler/ platforme Brand Partner Operator TDC Your business Marketing and sale Billing Customer service and handling CPE Product and price Marketing and sale Billing Customer service and handling 3. part TDC or your business

13. 13 Bit Stream Access, Shared Access and ULL (wholesale, external sale) Source: TDC * Prior to 2005, Resold access is included in bit stream access

14. 14 So what ’ s the difference … Two major differences TDC >< ‘Open Networks’ (non-regulated, for example Syd Energi model, i.e. wholesale only):  Every alternative operator/SP has an access right as the basic products are regulated, i.e. access conditions are non-discriminatory among all providers including TDC Retail  There is a variety of access levels, i.e. an SP can chose how to establish his business model(s) and geographical presence. E.g. to invest in more control of network management, development of own services (quality, security, redundancy) or to buy more simplified products with easy access requiring less investment and focus on short lead time to market Two potential drawbacks:  TDC does not as a network provider recommend one particular set of Service Providers  For an SP there is a competitive pressure from TDC Retail – and vice versa!

15. 15 Conclusions Impact of alternative ‘open networks’ on an incumbent regulated operator with a proactive wholesale business is just:  Increased competition ay wholesale level which at a point in time may reduce the need for regulated access  Regulatory non-discrimination obligation may make it difficult to compete with non-regulated ‘open networks’ at equal footing  However, flexibility and product variety of a full fledged wholesale business is incomparable to most ‘open networks’  Increasingly focus on access to internal networks controlled by house owners?