1. 0 NGN and core-IP networks regulation (sorry if most has already been said) ITU Geneva M. François Varloot

2. 1 Agenda I. Core and access NGN: definitions II. Migration towards core NGN: strategies and actors III. NGN and symmetrical regulation IV. NGN and asymmetrical regulation V. Example of NGN potential impact on regulation: fixed- mobile convergence

3. 2 I. Core and access NGN: definitions Core NGN planes Source : OVUM

4. 3 I. Core and access NGN: definitions NGN access layer –DSLAM/MSAN –Access itself NGN core network –Transport layer –Control layer –Services layer NGN applications layer Key components –Media gateway (transport layer) To ensure control of the physical layer of the network Converts an incoming TDM signals into an outgoing IP signal Not an “intelligent” component –Softswitch (control layer) Switching function But contrary to TDM networks, not associated to any physical point in the network and no longer controls the physical links of the network

5. 4 I. Core and access NGN: definitions NGN main justifications –Incumbents revenues loss with traditional voice services –Need development of new services: bundles, convergent and nomadic services –Obsolescence and increase of maintenance costs of the actual networks Benefits of NGN core networks –Independent layers -> NGN-core is independent of access –Better flexibility: multi accesses and adaptable to new services –New services : convergent services, nomadic services, profile and presence management… –Costs reductions (?) NGN Access networks –NGN access and core NGN develop independently –Access networks: upgrading of the local loop with FTTH, FTTC + VDSL, Wimax/wifi –Other issue: multi-service terminal equipment

6. 5 Agenda I. Core and access NGN: definitions II. Migration towards core NGN: strategies and actors III. NGN and symmetrical regulation IV. NGN and asymmetrical regulation V. Example of NGN potential impact on regulation: fixed- mobile convergence

7. 6 II. Migration towards core NGN: strategies and actors Strategies to migrate towards core NGN Overlay strategy –“Breakdown” strategy: deploying a NGN network in parallel with the existing switched network – Can be costly during the migration – Example: BT Replacement strategy – Gradually replacing traditional equipment (switches and others) as they come to the end of their life with NGN equipment (softswitches, MSAN, application servers, IP/IP gateways…) – Offers operators a more immediate return – Different scenarios depending which part you start replacing from – Not that clear on interconnection and interoperability (solo-strategies) – Services not really part of the strategy yet (with the sole exception of convergence)

8. 7 II. Migration towards core NGN: strategies and actors Strategies to migrate towards core NGN Time schedule among European Member States – Incumbents decision to migrate depends on Characteristics of the fixed national market Involvement in the mobile market Competition pressure Obsolescence of the actual network – Between 2010 and 2020 NGN emergence will differ among Europe – Impact in terms of developing common rules for interconnection, interoperability and quality of services – Regulators will need flexibility to adapt to national circumstances

9. 8 II. Migration towards core NGN: strategies and actors Several types of actors concerned by migration towards core NGN Fixed incumbents – To address new services data, voice, convergence mobile/fixed – To replace traditional network soon becoming obsolete Challengers – Already develop pre NGN networks – Will have to adapt to incumbents NGN migration Mobile operators – NGN needed for data transmission – Networks progressively upgraded in the past -> Less need for replacement Cable operators – To develop telecommunication services Software actors – User of IP connectivity without financing networks – Contract with telecom operators for new convergent services – Full nomadic usage – NGN-core operator independency

10. 9 II. Migration towards core NGN: strategies and actors French market situation: Broadband access More than 9 million of broadband access at the end of 2005, with 8,9 million for ADSL In a one-year period, broadband access growth reaches 44,1%

11. 10 II. Migration towards core NGN: strategies and actors French market situation: Triple play success More than 2 millions VoB users, not counting VoInternet 30% of the DSL users More than 2 millions of home gateways in the French market 300 000 subscribers to Pay TV on DSL offers (end 2005) Subscribers distribution within the ADSL market

12. 11 II. Migration towards core NGN: strategies and actors TV is becoming mobile – Mobile TV is provided with EDGE - 3G networks – DVB-H and DMB T tests are under process Infrastructures continue to develop – ADSL 2+ (up to 20 Mbps) rolling-out – Large scale tests underway for VDSL and FTTx – Licensing under process for Wireless Local Loops / Wimax over the territory – PLC not that successful yet – Cable operators strengthen their position – Investments from local public authorities (new role as operators) French market situation NGN de facto driven by market and competition pressure in France

13. 12 Agenda I. Core and access NGN: definitions II. Migration towards core NGN: strategies and actors III. NGN and symmetrical regulation IV. NGN and asymmetrical regulation V. Example of NGN potential impact on regulation: fixed- mobile convergence

14. 13 III. Symmetrical regulation issues End users issues –Quality of services (availability, security…) for Voice services TV services Internet services –New terminal equipment required (proprietary today) –Emergency calls, localization, profile, rights and presence management, DQ services, portability, operators’ liability… Operators issues –Costs of NGN migration –Transitional issues between PSTN and IP networks –Interconnection, interoperability and dependency from others’ migration New interconnection points for the challengers Technical standards (codecs, SIP, taxation info, DB sharing…) Routing issues: lost packages and interrupted communications for subscribers –Integrity and security of the network –Number portability and resources

15. 14 III. Symmetrical regulation issues Symmetrical regulation and auto regulation –IP/PSTN and IP/IP interoperability is the current driver of the industry in the standardisation process: market players will act to promote it –Regulation could nevertheless be pro active In order to speed up the process or to correct it if it detects failures of the market By identifying relevant services where interoperability needs to be achieved In the field of quality of service to end users To allocate scare resources: for example, ARCEP has defined new number resources beginning by « 09 » and dedicated to VoIP, VoB, convergent services (multi access services, fixed mobile services) To ensure that third party service providers and virtual networks can fully benefit –Such issues required European discussions: ERG is currently working on common rules regarding NGN networks\ –“Leaving it to the industry” did not work for the Internet (freedom vs. security) Regulatory challenges: –To promote investments –To act together with market players to guaranty open rules and standardisation for the benefits of consumers

16. 15 Agenda I. Core and access NGN: definitions II. Migration towards core NGN: strategies and actors III. NGN and symmetrical regulation IV. NGN and asymmetrical regulation V. Example of NGN potential impact on regulation: fixed- mobile convergence

17. 16 IV. Asymmetrical regulation issues Cornerstone principle: technology neutrality –NGN networks do not modify as such operators positioning Market analysis and today practice regarding VoB –ARCEP decision relating to fixed telephony (decision n°05-0571 27/09/05) Wholesale markets: Include IP interconnection Obligation imposed to France Telecom to meet reasonable requests for access to new interconnection infrastructures Retail markets Include VoB and exclude VoIP from the market definition Contrary to traditional voice services, no remedies imposed on VoB –Commission Communication on VoB (13/09/05): case by case analysis Distinction between managed VoB and unmanaged VoB VoB can be a substitute for retail calls depending on several criteria among which Evidence of switching between the products Broadband penetration rate and proportion of broadband houses that currently use VoB Responsiveness of PSTN prices to VoB prices and vice-versa Extent of the PSTN incumbent in VoB markets…

18. 17 IV. Asymmetrical regulation issues NGN and the review of the regulatory framework (see IRG/ERG answer to the call for inputs of the European Commission) –Actual framework is flexible and sound –Regulatory holidays or loopholes cannot be agreed with but regulation must take into account high investments at remedies stage –Some concepts should be adjusted Remedies: to deal with issues that transcend a number of services markets, especially accounting separation Non discrimination: to allow replicability and equality of access Joint dominance: to allow regulation of oligopolistic markets where competition is not effective Actual framework has already been applied to new services thanks to its flexibility But as far as NGN are regarded, it needs adjustments to address specific issues relating to integrated operators and oligopolistic markets

19. 18 Agenda I. Core and access NGN: definitions II. Migration towards core NGN: strategies and actors III. NGN and symmetrical regulation IV. NGN and asymmetrical regulation V. Example of NGN potential impact on regulation: fixed- mobile convergence

20. 19 V. Example of NGN potential impact on regulation: fixed-mobile convergence Development of convergence offers A single retail market Three markets (fixed retail market, mobile retail market and F/M market Two distinct markets (fixed and mobile markets) Large development Autonomous uses for F and M telephony Few offers Market definition should be flexible in order to take into account differences over time and in the pace of convergence offers development in each European country. Depending on national time schedule Triple play (fixed voice, data, broadcasting) becoming quadruple play with fixed/mobile convergence IMPACT - + Potential impact on retail markets definition

21. 20 V. Example of NGN potential impact on regulation : fixed-mobile convergence New entrants Fixed operators Mobile operators Most relevant structure to provide F/M Convergence Integrated operators Need access to : fixed local loop mobile network (through MVNO offers) Need access to fixed network The success of convergence offers could reduce the number of market players if appropriate access to fixed and mobile networks are not satisfactorily provided. Risks : possible extended dominance of the integrated operator and extension of the mobile oligopoly to F/M convergence market and then to the whole electronic communications sector Have both networks No need of access to another network IMPACT Fixed market Competition through access regulation of the essential fixed local loop Oligopoly IF Potential competition IF Market 15 (MVNO) is competitive IF Potential competition IF Market 15 (MVNO) is competitive Mobile market Convergence market Oligopoly through access regulation of the essential fixed local loop Potential impact on wholesale markets

22. 21 V. Example of NGN potential impact on regulation: fixed-mobile convergence Potential impact in terms of remedies Does the actual framework allow to deal efficiently with integrated operators and cross markets issues ? –Actual market by market approach could be too segmented to address such issues Does the actual framework allow to deal efficiently with oligopolistic markets ? –The joint dominance SMP test can be not efficient enough to address oligopolistic markets Convergence market will develop differently in different countries, this required: - Flexibility in market definition and analysis - Flexibility of remedies depending on the seriousness of the bottlenecks identified

23. 22 Thank you for your attention