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ITU – Oman, Muscat, Mon 4 th April 2005 Interconnection and Price Regulation Workshop Issues related to Interconnect. Mark Norris. Scope of Presentation. The Big Issue – Growth in the Region Three ways of expanding choice for the operator and the consumer Local Loop Unbundling

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mark norris

ITU – Oman, Muscat, Mon 4th April 2005Interconnection and Price Regulation WorkshopIssues related to Interconnect

Mark Norris

Doc Ref 00712/PN/774.1

scope of presentation
Scope of Presentation
  • The Big Issue – Growth in the Region
  • Three ways of expanding choice for the operator and the consumer
    • Local Loop Unbundling
      • Broadband provision
      • Co-location
      • Facilities sharing
    • Number portability
    • Carrier Pre-Selection
  • Discussion

Doc Ref 00712/PN/774.1

slide3
The Middle East is Growing Fast

Doc Ref 00712/PN/774.1

fixed pstn lines forecasts
Fixed PSTN lines forecasts

Number of Fixed Lines in Region

Kuwait

Oman

Qatar

Saudi Arabia

UAE

Cyprus

Egypt

Iran

Jordan

Lebanon

Pakistan

Syria

Yemen

30,000,000

Iran

25,000,000

Pakistan

20,000,000

No. Fixed PSTN Lines

Egypt

15,000,000

10,000,000

Saudi Arabia

5,000,000

Syria

UAE

0

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Doc Ref 00712/PN/774.1

mobile subscriber forecasts
Mobile subscriber forecasts

No. Mobile Subscribers in the Region

Kuwait

Oman

Qatar

Saudi Arabia

UAE

Cyprus

Egypt

Iran

Jordan

Lebanon

Pakistan

Syria

Yemen

30,000,000

Iran

25,000,000

Pakistan

20,000,000

Egypt

Saudi Arabia

No. Mobile Subs

15,000,000

10,000,000

5,000,000

Syria

UAE

Kuwait

Qatar

0

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Doc Ref 00712/PN/774.1

internet subscriber forecasts
Internet subscriber forecasts

Number of Internet Subscriptions in the Region

Kuwait

Oman

Qatar

Saudi Arabia

UAE

Cyprus

Egypt

Iran

Jordan

Lebanon

Pakistan

Syria

Yemen

8,000,000

Pakistan

7,000,000

Iran

6,000,000

Saudi Arabia

5,000,000

Egypt

No. Internet Subs

4,000,000

3,000,000

Syria

2,000,000

UAE

1,000,000

Kuwait

Oman

Qatar

0

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Doc Ref 00712/PN/774.1

unbundling the herald of competition
Unbundling – the herald of competition
  • Unbundling is ….
    • Politically popular;
    • An admission that previous policies have not really worked;
    • New route to market for broadband services;
    • Probably potentially profitable for some
  • Unbundling is not….
    • A way of providing USO wide band services;
    • An easy option

Doc Ref 00712/PN/774.1

ull the standard picture
ULL – the standard picture
  • The Characteristics of Local Loop Unbundling are:
    • It is an access service between the Network Terminating Point (NTP) and the Main Distribution Frame (MDF);
    • It is open to providers other than the Incumbent, so removes a bottleneck to competition
  • And it can take various forms
    • Copper pair rented by new operator for its exclusive use to provide full services including DSL (Full Unbundling)
    • Incumbent continues to provide POTS & the new operator provides high speed services. The local loop remains part of the public switched network (Shared Access)
    • Incumbent installs DSL to the customer and sells wholesale to the new entrant. There is no unbundling involved! (Bitstream)

Doc Ref 00712/PN/774.1

ull the full story
ULL – the full story
  • Simple DSL resale – a new entrant resells an undifferentiated DSL access service in conjunction with its own portfolio of value added services
  • Wholesale DSL or bitstream access - a new entrant delivers its own access services that incorporate DSL elements provided by the incumbent
  • Unbundled local loop – a new entrant uses the ‘metallic path’ between the incumbent’s local exchange and an end user’s premises as a constituent part of its own services
  • Line sharing – a new entrant uses the portion radio spectrum on the ‘metallic path’ that is not used for PSTN or ISDN services as an element in its services; the PSTN or ISDN portion remain in the control of the incumbent and may be used by the incumbent to provide other services
  • Sub loop unbunding – a new entrant uses the ‘metallic path’ over a segment of the local loop from the end user’s premises, to an intermediate point in the local loop as a constituent part of its own services.
  • Duct sharing – a new entrant places its own infrastructure in the ducts or on the poles of the incumbent
  • Trench sharing – a number of operators collaborate to dig a combined trench and each then lays its own ducts and cables.

Doc Ref 00712/PN/774.1

terminology
Terminology
  • DSLAM: Digital Subscriber Line Access Modems
  • DMSU: Digital Main Switching Unit
  • DLE: Digital Local Exchange
  • MDF: Main Distribution Frame
  • NTP: Network Termination Point
  • PCP: Primary Cross Connection Point
  • POTS: Plain Ordinary Telephone Service
  • HDF: Handover Distribution Frame
  • Tie Cable: Cable connecting MDF to DSLAM
  • BRAS: Broadband Remote Access Server
  • IX: Internet Exchange

Doc Ref 00712/PN/774.1

the component parts
The component parts

Local Switch

DMSU

Distribution frame

Radio antenna

D Side

RCU

Distribution

Pole

D Side

E Side

Street pillar

Street cabinet

NTP

Doc Ref 00712/PN/774.1

full unbundling

POTS/ISDN

POTS/ISDN

M

D

Splitter

Splitter

F

xDSL

xDSL

DSL Modem

OLO

Full Unbundling

Incumbent

telephony

service

Incumbent

Incumbent

s

Incumbent

managed IP

managed IP

BRAS

IX

DSLAM

backbone

backbone

1

OLO

OLO

s

OLO

BRAS

managed IP

managed IP

DSLAM

backbone

backbone

2

4

Splitter

3

PSTN

PSTN

OLO

s

Switch

5

Doc Ref 00712/PN/774.1

shared access

Incumbent

s

telephony

service

POTS/ISDN

POTS/ISDN

POTS/ISDN

M

M

Incumbent

s

D

D

Splitter

Splitter

Splitter

Splitter

DSLAM

F

F

Incumbent

s

managed IP

BRAS

BIX

IX

backbone

xDSL

xDSL

xDSL

DSL Modem

DSL Modem

1

OLO

OLO

OLO

s

OLO

OLO

s

BRAS

managed IP

DSLAM

DSLAM

backbone

2

4

3

Shared Access

Incumbent

telephony

service

Incumbent

s

DSLAM

Incumbent

Incumbent

s

managed IP

managed IP

BRAS

backbone

backbone

1

OLO

OLO

s

BRAS

managed IP

managed IP

backbone

backbone

2

4

3

Doc Ref 00712/PN/774.1

bitstream i e wholesale
Bitstream (i.e. Wholesale)

Incumbent

telephony

service

BRAS

POTS/ISDN

POTS/ISDN

M

D

Splitter

Splitter

F

4

SDH / ATM

SDH / ATM

Incumbent

Incumbent

s

Incumbent

parent /

parent /

managed IP

managed IP

IX

DSLAM

distant

distant

backbone

backbone

xDSL

xDSL

DSL Modem

OLO

3

1

2

OLO

OLO

s IP

s IP

BRAS

backbone

backbone

Doc Ref 00712/PN/774.1

unbundling pros and cons
Unbundling Pros and Cons
  • Nominal benefits of unbundling the Local Loop
    • Full competition in all services
    • Medium capital intensive for new entrant
    • Encourages rapid take up of competitive opportunities
    • Reduces environmental impact
    • Increased efficiency in use of resources overall.
  • Issues in unbundling the Local Loop
    • High cost of implementation
    • Technical complexity and possibility of radio interference
    • Not all access lines can be upgraded
    • Reduces incentives for alternative access build;
    • Requires significant regulatory involvement and may require tariff re-balancing

Doc Ref 00712/PN/774.1

relationship between alternative forms of access and ancillary services
Relationship between alternative forms of access and ancillary services

Doc Ref 00712/PN/774.1

collocation
Collocation

Site

Boundary

Other Licenced Operator’s

POP

(Switch Location)

Incumbent Operator’s

POP

(Telephone Exchange)

OLO

Cable Chamber

OLO infrastructure

  • Advantages
    • Own local POP not required
    • Ability to address Local Loop access at a later stage
  • Disadvantages
    • Cost, access, security
    • Installation and Maintenance
    • Requires OLO Infrastructure

Doc Ref 00712/PN/774.1

sharing physical infrastructure
Sharing physical infrastructure
  • Advantages
    • Reduced environmental impact
    • Reduced traffic disruption when an OLO builds out a new network
    • Reduced overall investment requirement by a new entrant to a market
    • Improved return to the incumbent on an investment in infrastructure.
  • Disadvantages
    • Network integrity
    • Availability of spare capacity

Doc Ref 00712/PN/774.1

collocation1
Collocation
  • Collocation space may be provided:
    • In a distinct caged space accessible to an OLO with or without separate entrance facilities. The OLO can request space to locate its equipment within the incumbent operator’s local Main Distribution Frame (MDF) site or equivalent distribution point closer to the user premises, either in the building containing the MDF or in other space that could be made available in the site (such as adjacent buildings, car parks or warehouses).
    • In a separate uncaged space. This space can be fitted and operated in an area within a incumbent operator’s exchange where the incumbent operator houses its own equipment,
    • Within a single overall space shared with the incumbent; this form of collocation is often referred to as co-mingling
    • As virtual collocation space, where the equipment is managed in its entirety by the incumbent on behalf of the OLO.
    • At a distant or adjacent collocation – an OLO can choose to use its own premises and connect to the incumbent operator’s local MDF site or equivalent distribution point closer to the user premises.

Doc Ref 00712/PN/774.1

collocation and facility sharing
Collocation and Facility Sharing
  • The regulator should encourage sharing of facilities and/or property
  • Agreements are normally commercial and technical between the parties
  • The regulator would usually intervene in case of dispute
  • After public consultation a regulator may impose facility or property sharing

Doc Ref 00712/PN/774.1

collocation services
Collocation Services
  • Hand-over Distribution Frame (HDF) , including the street cabinet where this is relevant to sub loops
  • Tie Cables
    • Internal Tie Cable
    • External Tie Cable
  • OLO’s External Tie Cable Pull-Through Service
  • Transmission and backhaul Services
  • Power
  • Air conditioning/chilling/heating (as relevant)
  • Access to collocation space
  • Equipment moving assistance (where lifting/hosting apparatus is needed)

Doc Ref 00712/PN/774.1

the wider scope of sharing
The wider scope of sharing
  • Masts
    • Allows second operator to rollout network faster
    • Requires rules for access, safety, loading etc
    • Widely mandated (e.g. Bahrain)
  • Ducts
    • Often not feasible or prohibitively expensive to install new ducts
    • Widely mandated (e.g. Singapore)
    • Affects rollout speed of both national and local network
  • Exchange space
    • Essential for access to unbundled local loop
    • Usually implies significant overhead (e.g. access controls to preserve security)

Doc Ref 00712/PN/774.1

slide25
ULL = Broadband?

Doc Ref 00712/PN/774.1

leaders in unbundling
Leaders in Unbundling

Doc Ref 00712/PN/774.1

share of broadband subscriptions that comprise wholesale or simple resale dsl
Share of broadband subscriptions that comprise wholesale or simple resale DSL

Doc Ref 00712/PN/774.1

share of broadband subscriptions that comprise ull dsl
Share of broadband subscriptions that comprise ULL DSL

Note the comparable examples of Italy and Ireland. Both have around half the number of ULL–broadband subscriptions compared to wholesale DSL subscriptions.

Doc Ref 00712/PN/774.1

broadband penetration in relation to gdp per capita
Broadband penetration in relation to GDP per capita

Broadband penetration in relation to GDP per capita

25

20

2

R

= 0.4495

15

Penetration, lines per 100 inhabitants

10

5

0

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

GDP per capita

The evidence indicates that GDP in general and time since introduction in particular are the main drivers of broadband uptake. ULL has little impact.

Doc Ref 00712/PN/774.1

slide30
ULL Implementation

Doc Ref 00712/PN/774.1

the customer view
The Customer View
  • Advantages
        • choice
        • possibly quality of service
        • possibly value for money
  • Disadvantages
        • may be difficult to change service supplier
        • network may fall over

Doc Ref 00712/PN/774.1

implementation issues
Implementation Issues
  • Collocation
  • Ordering processes – Multiple parties involved
  • Line lengths and line quality
  • Quality of Service – Ownership
  • Network management – Complex faults possible and, potentially a number of OSS interfaces

Doc Ref 00712/PN/774.1

slide33
ULL and Interconnect

Doc Ref 00712/PN/774.1

a review of interconnect
A Review of Interconnect
  • In the early days of telecommunication liberalisation, interconnect meant just ‘interconnection”
  • Definitions:
    • The commercial and technical arrangements under which service providers can connect their equipment, network and services to enable customers to have access to the customers, services and networks of other service providers. ITU
    • linking with suppliers providing public telecommunications transport networks or services in order to allow the users of one supplier to communicate with users of another supplier and  to access services provided by another supplier, wherespecific commitments are undertaken WTO
    • “interconnection” means the physical and logical linking of public communications networks used by the same or a different undertaking in order to allow the users of one undertaking to communicate with users of the same or another undertaking, or to access services provided by another undertaking. Services may be provided by the parties involved or other parties who have access to the network. Interconnection is a specific type of access implemented between public network operators; EU Directive 2002/19/EC
  • Key points - Interconnection
    • is essential for telephony services
    • is specific to public network operators
    • is a specific type of access

Doc Ref 00712/PN/774.1

access
Access
  • As competition has evolved so it has become desirable to broaden the scope of interaction between dominant and other operators and the concept of ‘Access’ has arisen
    • “access” means the making available of facilities and/or services, to another undertaking, under defined conditions, on either an exclusive or non-exclusive basis, for the purpose of providing electronic communications services.
    • It covers inter alia:
      • access to network elements and associated facilities, which may involve the connection of equipment, by fixed or non-fixed means (in particular this includes access to the local loop and to facilities and services necessary to provide services over the local loop),
      • access to physical infrastructure including buildings, ducts and masts;
      • access to relevant software systems including operational support systems,
      • access to number translation or systems offering equivalent functionality,
      • access to fixed and mobile networks, in particular for roaming,
      • access to virtual network services;

EU Directive 2002/19/EC

Doc Ref 00712/PN/774.1

wholesale
Wholesale
  • Another specific form of access now frequently included under the umbrella of ‘Interconnect’ is access to standard, retail services at a ’wholesale’ price.
  • Customisation of these services may sometimes be offered – eg multiple leased line services could be offered in an aggregate format
  • The offering of ‘wholesale’ prices to operators is often viewed as a purely commercial transaction, in principle no different to that between an operator and any other non-operator major user of his services.
  • However, in certain areas the regulator may deem such services to be necessary to support the development of competition and may influence or determine the terms on which they are offered.

Doc Ref 00712/PN/774.1

rio or rao
RIO or RAO?
  • The RIO should contain at least all interconnect services (i.e. those required to deliver traffic that originates on one network to another)
  • The RIO may be limited to the services required for the termination of traffic
  • In this instance, a separate agreement would be needed to cover Wholesale and Access services – the Reference Access Offer (RAO)
  • Is there a preferred approach?
    • A combined or consolidated RIO gives a single point of reference
    • RIO plus RAO distinguishes different types of service
    • One RIO ensure a uniform approach to provisioning etc
    • RIO plus RAO admits flexibility (e.g. in the timing of the offers)

Doc Ref 00712/PN/774.1

the variety of rios
The variety of RIOs

Bahrain

C&W Guernsey

C&W Jamaica

Eircom

TC NZ

Belgacom

Legal Framework and

Reference Offer

Legal Framework and Agreement

Standard Interconnect Agreement

Sch 2 Standard Terms

RIO

Agreement

Annex A Service

Sch 3 Services Covered

Sch 1 Service Descriptions

Sch 3 Service Descriptions

Annex C Service Schedules

RIO

Descriptions

by Agreement

Sch 2 Notify/Accept

Annex D Service

Sch 6 Schedule of Services Taken

Standard Interconnect Agreement

Sch 2 Standard Terms

of Service Request

Schedule

Sch 5 C&W Interconnect and Access

Sch 3 Charges

Annex E Tariff Schedule

Annex C Service Schedules

Sch 4 Charges

RIO

Price List

Sch 4 Billing and Collection

Sch 2 Billing and Payment

Annex B Billing and Payments

Legal Framework and Agreement

Sch 5 Ordering and Provisioning

Standard Interconnect Agreement

O&M Manual

Annex C Joint Working

Legal Framework and Agreement

Manual

Sch 6 Fault Management

Standard Interconnect Agreement

O&M Manual

Sch 7 Facilities Access Service

O&M Manual

Standard Interconnect Agreement

Sch 2 Standard Terms

Sch 8 Dictionary and Rules of

Sch 1 Definitions

Annex B Definitions

Annex A Definitions

General RIO

Interpretation and Construction

with negotiated

Standard Interconnect Agreement

agreements

Legal Framework and

Sch 9 Supply Terms

Legal Framework & Agreement

Annex F Non Disclosure

Agreement

Agreement

Technical Manual

Annex C Joint Working

Joint Working Manual

Annex E Network Plan

O&M Manual

Manual

Annex F Parameter

Annex D Service Level

Sch 4 Service Level Agreements

Schedule

Agreements

Sch 7 Telco Interconnect and Access

Sch 5 Local Interconnect

Price List

Calling Areas

Doc Ref 00712/PN/774.1

content of the rao
Content of the RAO
  • Format is similar to that for a RIO – physical interconnect and PoIs, interconnect services, costs and terms.
  • Content depends on the precise definition of “Access”
  • This may be limited to the local loop, may extend to wholesale service and could include:
    • Resale of specified services to licensed network operators or service providers;
    • Collocation or other forms of facility sharing (e.g. ducts, buildings, masts);
    • Access to specified network elements or facilities, including, but not limited to Unbundled Local Metallic Path and Line sharing;
    • Access to technical interfaces, protocols or other key technologies that facilitate the interoperability of services that relate to the relevant market;
    • Access to specified services needed to ensure interoperability between users, of end-to-end services (end to end services are those network services provided to customers other than network operators as part of a retail service) relating to that market;
    • Access to operational support systems or similar software systems that are needed to enable fair competition in the provision of services relating to that market.
  • Finally, the RAO may be available to a wider range of operators than the RIO

Doc Ref 00712/PN/774.1

slide40
Carrier Pre-Selection

Doc Ref 00712/PN/774.1

carrier pre selection
Carrier Pre-Selection

Without CPS:

LX

TX

LX

With CPS:

LX

TX

LX

IX

  • Pre-selected Operator bills the customer

PSOSwitch

Doc Ref 00712/PN/774.1

scope of pre selection
Scope of Pre-selection
  • Single basket or Multi Basket
    • Different carriers for different call types (e.g. consumer can select one carrier for National calls, another for International) or one pre-selected carrier for all?
  • Call by call over-ride
    • Short code allowing reversion to incumbent?
  • Operators who have to provide pre-selection
    • Dominant, Significant Market Power?
  • Operators eligible for pre-selection
    • Criteria, such as conformance to safety, security standards, technical soundness etc?
  • Fixed, Mobile, National, International
    • Exclusions usually include calls from public payphone lines, special and premium rate services etc

Doc Ref 00712/PN/774.1

cps issues
CPS Issues
  • Slamming
    • Unauthorised changes to a consumers carrier selection preferences
    • Formal change control process
  • Costs
    • CPS involves the installation of extra equipment and resources (e.g. billing, switch data changes, customer records). These need to be taken into account in the costing of call transfer
  • Market competition
    • Customer information (e.g. for price comparison)
    • Impact on other services (for example, CPS can diminish the advantage of VoIP services when origination charges are closely aligned with costs (i.e. very low). In this instance the IP based operator has little cost advantage over a conventional competitor, but has added inconvenience (e.g. distributing a VoB converter)
    • Numbers available for Interconnect

Doc Ref 00712/PN/774.1

interconnect numbering
Interconnect Numbering

Carrier Selection Code Telecommunications Provider 16200 VOICENET

16211 RG COMMUNICATIONS A.E.

16222 NEWSPHONE HELLAS A.E.

16234 INTRACONNECT A.E.

16262 NET ONE A.E.

16333 TELEPASSPORT HELLAS AE

16363 ALGONET A.E.

1733 A.C.N A.E.

1738 EVERGY

1750 VIVODI TELECOMMUNICATIONS A.E.

1751 ALGONET A.E.

1755 TELEDOME A.E.B.E.

1757 COSMOLINE

1760 VOICENET

1765 INFO QUEST Α.Ε.

1770 WEB COMMUNICATIONS LTD

1771 TIM

1777 OTE Α.Ε.

1780 LΑΝ-ΝΕΤ Α.Ε.

1781 NET ONE A.E.

1787 TELEPASSPORT HELLAS AE

1789 FORTHnet Α.Ε.

  • Numbering Plan needs to have spare ranges that can be allocated as Carrier Pre-Selection codes:
    • for consumers
    • for operators

Doc Ref 00712/PN/774.1

regulators role
Regulators role
  • Most regulators ensure:
    • availability of carrier pre-selection
    • each operator has a number plan for their allocated ranges
    • that number changes are properly managed, advertised and supported
    • that a clear process for choosing a pre-selected carrier is in place
    • that a clear change control process between operators is in place
    • that costs are appropriately apportioned between operators
    • that consumer issues are demonstrably attended to (e.g. anti-slamming measure, consumer forum for CPS etc)

Doc Ref 00712/PN/774.1

slide46
Number Portability

Doc Ref 00712/PN/774.1

number portability
Number Portability
  • Number Portability is a facility that enables a customer to change network operator and/or service provider while retaining their E.164 number
  • In the process of changing network operator and/or service provider the customer may lose supplementary services related to the basic service
  • Requires additional capabilities in the network to properly route the call to the final destination. The two options for implementing number portability are;
    • Intelligent Network (IN) based solutions, which is the more flexible but expensive option (both cost and load on switches)
    • Signalling Relay Function (SRF) based solutions, which are simpler and cheaper to implement but not flexible

Doc Ref 00712/PN/774.1

issues in number portability
Issues in Number Portability
  • Using Number Portability between fixed and mobile networks would dissolve the geographic numbering plan as geographic numbers will be used for phone calls to mobile phones and mobile numbers for phone calls to fixed lines.
    • Geographic information in a phone number will be lost, as well as the ability of a differentiated tariff between fixed and mobile, due to the need for harmonised tariffs for these calls.
    • Different tariffs to fixed and mobile lines may confuse users. Considering those problems, users’ interest for fixed-mobile portability has to be proved before considering its possible introduction.
  • If a call is originated in the fixed network and the called party is in the mobile network but ported to the fixed network, would a release lead to a database query in the fixed network or in the mobile network?
    • If the called party is in the mobile network and ported to another mobile network, does the release lead to database query in the mobile network?
    • Or would it be better to get a routing information from the fixed network?
  • The situation is further complicated by the emergence of converged networks which open the possibility of using personal identifiers that may be dynamically associated with a network address
  • All possible scenarios must be investigated concerning their regulatory implications.

Doc Ref 00712/PN/774.1

regulators role1
Regulators Role
  • to evaluate the pros and cons of number portability, with special attention to the emergence of converged networks
  • to ensure that customer interests are taken into account concerning:
    • whether customer procedures are simple to follow and how well customers are informed
    • for what reasons and for how long the porting process can be blocked
    • which and how many numbers a customer can port per changeover
    • how limited time scales are for the preparation of the porting
    • how limited disruption is during the actual changeover.
  • to administer the porting of E.164 numbers (centralised or decentralised databases)

Doc Ref 00712/PN/774.1

summary
Summary
  • We have addressed a number of issues related to consumer access
    • ULL, which enables competition among operators in the access network
    • Carrier pre-selection, which gives consumers choice in which operator they use
    • Number Portability, which removes a barrier to consumers moving between operators
  • Each of these promotes interaction between carriers
  • Each has some bearing on Interconnect

Doc Ref 00712/PN/774.1

questions and discussion
Questions and Discussion
  • To what extent should the regulator seek to control competition;
    • in the interests of market development?
    • in the interests of the consumer?
  • What impact will emerging technologies have, and when?
  • What else will be needed to maintain balance in the telecoms market?

Doc Ref 00712/PN/774.1