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11 th ACCC Regulatory Conference. Next Generation Networks in Australia and NZ - Alternate paths to the same outcomes?. Objectives. Contrast approaches to NGN policy in Australia and NZ Highlight some key issues Reflect on Karl-Heinz Neuman’s paper.

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11 th accc regulatory conference

11th ACCC Regulatory Conference

Next Generation Networks in Australia and NZ

- Alternate paths to the same outcomes?

objectives
Objectives
  • Contrast approaches to NGN policy in Australia and NZ
  • Highlight some key issues
  • Reflect on Karl-Heinz Neuman’s paper
why are australia and nz leading the world
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
nbn snapshot at least 90 fibre coverage
NBN Snapshot – at least 90% fibre coverage
  • 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%

Source: NBN Co Limited

nz lfc candidate areas
NZ- LFC Candidate Areas
  • Layer 1 and Layer 2 services
  • Around NZD3000 to pass and connect
  • Layer 1 equivalence after 10 year concession
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

Key project differences
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

Key project differences -/2
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

Key regulatory and other differences -/1
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

Key regulatory and other differences -/2
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

NBN/UFB Wholesale Services
a comment on gpon versus p2p
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)
comparing p2p active ethernet gpon
Comparing P2P, Active Ethernet, GPON

Central Office Space

Fiber Raw Materials

Power Consumption

just some of the complex regulatory issues
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
just some of the complex regulatory issues 2
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?
slide17

A Basic Comparison of Four FTTH Architectures

Central Office

Access loop

Home

More concentrated

More distributed

Point

-to-

Point

Splicing

IP

Ethernet

switch

Active

Ethernet

IP

Ethernet switch

Ethernet

switch

TDMPON

IP

PON OLT

WavelengthSplitter

WDMPON

IP

Optical splitter

PON OLT

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