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1
11th ACCC Regulatory Conference
Next Generation Networks in Australia and NZ
- Alternate paths to the same outcomes?
2
Objectives
• Contrast approaches to NGN policy in Australia and NZ
• Highlight some key issues
• Reflect on Karl-Heinz Neuman’s paper
3
Why are Australia and NZ leading the world?
• Are we visionaries? Better understanding than ROW of the emerging digital economy?
• Do we enjoy different economics from other OECD countries to justify NBN investment?
• Proved-in business cases to demonstrate NBN & UFB as best use of nation’s capital?
• Other drivers?
•GFC, economic stimulus and Australia’s relative prosperity
•Perceived under-investment in network and failure to upgrade
•High cost, slow, and uncertain regulatory solutions to market failures; incumbent behaviour over time
4
NBN Snapshot – at least 90% fibre coverage
Source: NBN Co Limited
Cf Karl-Heinz data points:
•€1000-2000 per household•FTTH x5 the cost of FTTN•25% FTTH viable in France•72% VDSL viable in Germany
•Cf EU NGN Agenda:
•BSO by 2013 for 100%•30 Mbps by 2020 for 100%•100 Mbps by 2020 for 50%
5
Source: NBN Co Limited
NBN Snapshot – fibre + wireless + satellite
6
NZ- LFC Candidate Areas
•Layer 1 and Layer 2 services•Around NZD3000 to pass and connect•Layer 1 equivalence after 10 year concession
7
Key project differences
Australia - NBN
• 100% Government funded
• $43 Billion Govt contribution
• 90% coverage
• Speeds to 100 Mbps
• Layer 2 services only
• GPON architecture
NZ - UFB
• Form of PPP
• $1.5 Billion Government contribution
• 75% coverage
• Speeds to 100 Mbps
• Layer 1 and 2 services
• GPON architecture except for Layer 1
8
Key project differences -/2
Australia - NBN
• Telstra deal
• Infrastructure access by NBN
•Copper decommissioning
•Ultimately one last mile network
NZ - UFB
• No deal with TCNZ at this point
•Chorus as an LFC?
•Copper remains
•Open to TCNZ to compete head-on with LFCs
9
Key regulatory and other differences -/1
NZ - UFB
• Unbundled copper local loop (UCLL) & unbundled bitstream access (UBA) since June 2008
• Full operational separation since March 2008
• Chorus run as stand-alone business
• Equivalence
• FTTN rollout (10-20Mbps): to 80% of NZers by end 2011; $1.4B cost
• ~$1000 per household
Australia - NBN
• Unbundled local loop (ULL) since 1999
• Unbundled bitstream access (LSS) declared Aug 2002
• Notional operational separation since June 2006
10
Key regulatory and other differences -/2
Australia - NBN
• Regulatory design is work in progress
• NBNCo Special Access Undertaking
•ACCC approval
NZ - UFB
• Regulatory design is work in progress
• Private party contracts between CFH and Partner to form LFCs
•LFC Deed of Undertaking
11
NBN/UFB Wholesale Services
Australia - NBN
• Layer 2 bitstream ethernet
• Implementation Study recommended that NBN be built for fibre network unbundling
NZ - UFB
• Layer 2 bitstream ethernet
• P2P
• Layer 1 (dark fibre)
• FTTH unbundling (full equivalence) after Year 10
12
A comment on GPON versus P2P
• Karl-Heinz has suggested that P2P architecture < 10% more than PON
• As I understand it, this is not what Australia and NZ economics have indicated
• P2P adds cost:
• additional fibre count
• Increased civil engineering costs
• reduced ability to undertake aerial rollout (large fibre runs) – going underground doubles cost
• reduced ability to use drill runs – needs open trenching
•Power and CO costs (see over)
13
Comparing P2P, Active Ethernet, GPON
0
5
10
15
20
25
30
35
40
45
50
p2p AE GPON
CO
rack
s
Small CO (1k)
Large C0 (20k)
0
5000
10000
15000
20000
25000
p2p AE GPON
Feed
er fi
bers
Small CO (1k)
Large C0 (20k)
0
1
2
3
4
p2p AE GPON
Pow
er (W
/use
r)
SmallCO (1k)LargeC0 (20k)
Central Office SpaceCentral Office Space Fiber Raw MaterialsFiber Raw Materials Power ConsumptionPower Consumption
14
Just some of the complex regulatory issues
• What is wholesale?
•Who can buy from NBN Co and LFCs
• Price discrimination
•E.g. volume discounts
• In NZ, preventing predatory conduct by TCNZ against the LFCs
• Preventing monopoly profits
•Role of FCM
15
Just some of the complex regulatory issues -/2
• Does network structural reform solve competition problems permanently?
•Cf Karl-Heinz comments on the multi-fibre model
• How to regulate the ‘new fibre monopolies’
• Will content rights become a new bottleneck?
• How to regulate for the transition period?
16
17
Point-to-
Point
ActiveEthernet
TDMPON
Central Office Access loop Home
IP
Ethernet switchEthernetswitch
Efficient Outside Plant Small street/pole cabinet No remote powering
Cost-effective Feeder Smaller duct sizes, Less RoW,… CO consolidation
Best ScalabilityPassive OSP, lowest CAPEXCO scalability & Consol. (20+ km)
Wavelength per user Few fibers in feeder section CO consolidation
PON OLT Optical splitter
IP
Ethernetswitch
More distributedMore concentrated
IP Splicing
WDMPON PON OLT
WavelengthSplitter
IP
A Basic Comparison of Four FTTH Architectures