L IBERALISATION & R EGULATION IN THE E LECTRONIC C OMMUNICATIONS S ECTOR

1. LIBERALISATION& REGULATIONIN THE ELECTRONIC COMMUNICATIONS SECTOR LOCAL LOOP UNBUNDLINGLLU http://www.netmode.ntua.gr/ Courses/Graduate/Liberalization & Regulation in the Telecommunication Sector Vasilis Maglaris <maglaris@mail.ntua.gr> Vassilis Merekoulias <merek@netmode.ntua.gr>

2. AIMS • To brake the last “Monopoly Bottleneck” i.e. the Subscriber Access • To encourage Fast Internet Service to the Home (xDSL – Digital Subsriber Loop) • To enable Provision of High Volume – High Speed Content (Video on Demand, Peer-to-Peer Applications : Sharing of Music / Video Files, Video / Audio Conferencing) • Alternative technologies : Wireless (fixed LMDS, 3G Mobile UMTS), Fiber to the Customer, (Power Lines ? )

3. REGULATORY FRAMEWORK • Regulation 2887/2000 (18/12/2000) – European Parliament / Counsil : Obligatory • Incumbents to provide full or shared Copper Local Loop or Sub-Loop Access to Competitors for Telephony & DSL (Fast Internet) • Local Loop: From Main Distribution Frame (MDF) to Subscriber • Sub-Loop: From Local Concentration Point to Subscriber (fiber to the curb installed by incumbents ?)

4. REGULATORY FRAMEWORK • Incumbents to publish Reference Unbundling Offer (RUO) by 1/1/2001 !! • Charge of LL and Collocation: Cost Based • LRIC or FDC model ? • E.U. LL Monthly Charge : • 10 - 20 Euros / month / loop (passive copper loop) • Three Models : Full, Shared, Bit-stream

5. FULL UNBUNDLED LOCAL LOOP

6. SHARED LOCAL LOOP ACCESS Shared Access use of 'Splitter'

7. BIT-STREAM SERVICE

8. ADSL TECHNOLOGIES • Upstream Speed: 256, 384, 768, 1024 Kbps • Downstream Speed: 760 Kbps, 1.5 – 24 Mbps • Voice Telephony (Analog – ISDN) shares the 2-wire Local Loop (Splitters) • DSLAM (DSL Access Module): • Upstream (to subsribers): Broadband IP • Downstream (to backbone services) • ATM VPs / SDH Add-Drop Multiplexers (ADM) • RAS - SSG: Remote Access Server - Service Selection Gateway • ISP – Internet Service Providers (ISPs), AAA: Authentication, Authorization & Accounting • Content providers (Video Servers, Streaming, MCUs, …)

9. Suscribers Web Server Video Server Video Streaming V/C MCU VoIP Gateway ΙΝΤΕRΝΕΤ Radius Ethernet Switch ATM Switch IP router RAS (SSG) ADM DSLAM ADM 155 Mbps (VP16 Mbps) 155 Mbps (VPs 16, 20, 34 Mbps) AAA Subscribers ISP ATM/SDH 20 Mbps ADM 2-wire Local Loop ADSL Modem Splitter 155 Mbps (VP 34 Mbps) ADM ATM Switch DSLAM Subscribers DSLAM Subscriber ADSL CONCEPTS

10. ADSL BUSINESS MODEL • Depends on LLU, Collocation • Residential Customer Monthly Charge : 20 Euros/month (including ISP) • Driving force (presently) : Fast Internet (always ON, peer-to-peer applications) • Future : Video broadcasts, tele-teaching, entertainment, video games etc. • Problems : Lack of content, limited throughput of ISPs (bakcbone networks become the bottleneck)

12. LIBERALISATION& REGULATIONIN THE ELECTRONIC COMMUNICATIONS SECTOR Universal Service Obligation http://www.netmode.ntua.gr/ Courses/Graduate/Liberalization & Regulation in the Telecommunication Sector Vasilis Maglaris <maglaris@mail.ntua.gr> Vassilis Merekoulias <merek@netmode.ntua.gr>

13. Overview of presentation • History of USO. • Which Services. • How is Supported. • What is the Cost of providing USO? • Non profitable areas, users, booths. • The next genaration services and USO.

14. History • USO and Competition • The first use of the term Universal Service:‘One system, one policy, universal service’ (Theodore Vail, President, AT&T) • Universal Access

15. Which services? • Basic POTS • Basic Telephony with standard quality • Free access to emergencies • Catalog services • Card and coin phones • Operator assistance • Reasonable prices • One price list for the entire country • Soft disconnection • Special prices for low usage users • Services for special groups • Special devices for such groups • Special Telephone booths

16. How is USO supported? • Pay or Play • Balance between extended and basic services • Information Society throughout the country vs. high cost/price • Financial support • Special fund supported from the e-communication sector • Mark – up on interconnection services • National Funds • Auctions

17. Basic USO Properties • Dynamic concept changing as services extend • Indexes needed for the level of services

18. USO Cost • USO Cost = Cost of services – Non financial benefits (advertisement, brand name etc.) • Cost of services = Financial benefits – Long run avoidable cost • Non financial benefits • Brand name recognition, reputation • Access to usage data and customers habits • Customer cycle (a non profitable turns to profitable) • Economies of scale

19. Methodology for recognition of non profitable areas • Classes/Zones of areas based on density • Modeling of a typical customer access line for each area based on: • Mean length of the local loop (“Last mile”) • Type of cables, technologies used • Demographical data • Equipment used for different types of landscape and density

20. Methodology for recognition of non profitable areas • Network usage cost for each class • Financial benefits for each area for: • Monthly rental • Network usage • Net cost calculation for each class • Adjustment for non financial benefits • Non profitable areas recognition

21. Methodology for recognition of non profitable users • No data available to model non profitable users in a profitable area. • Calculation based on a rule of thumb

22. Methodology for recognition of non profitable telephone booths • Similar methodology with the non profitable areas • Data needed: • Investment cost • Usage statistics for the telephone booths • Operating cost

23. USO & Information Society • Internet Access • DSL Services • Fiber to the Home – Fiber to the Curb

24. LIBERALISATION& REGULATIONIN THE ELECTRONIC COMMUNICATIONS SECTOR IP Market Structure based on Traffic Characteristics http://www.netmode.ntua.gr/ Courses/Graduate/Liberalization & Regulation in the Telecommunication Sector Vasilis Maglaris <maglaris@mail.ntua.gr> Vassilis Merekoulias <merek@netmode.ntua.gr>

25. IP traffic – market structure – network provisioning • IP traffic and multiplexing. Gain as the number of users/customers increase. • Multiplexing and the structure of the market • Vertical Market. • Small number of big ISPs. • Provisioning of services in small cities is unprofitable

26. Market size, need for aggregation • On – off 1% duty time (max = 100 x average) • No Buffering or 100ms buffering Sources 100 – peak 8,4Mbps – utilization 12% Sources 100 – peak 4,4Mbps – utilization 23% Sources 1000 – peak 30Mbs – utilization 33% Sources 1000 – peak 17Mbs – utilization 59% Sources 10000 – peak 170Mbps – utilization 59% Sources 10000 – peak 120Mbps – utilization 83% • Effective provisioning > 5000 customers (20% on-line)

27. ISPs Market based on dial up • Big number of ISPs • Provisioning to isolated areas, small cities. • Dial-up users => max 56kbps • On – off 30% duty time (max = 3,3 x average) Sources 700 – peal 8,7Mbps – utilization 80% • !!Provisioning is profitable for a small number of customers!! • Income for the ISPs from the regulatory framework.

28. Introducing xDSL • Access bottleneck removed. The customer – user can have an average of 50kbps with 1Mbps peak (1/20) • New customes. Allways-on, p2p. • How does p2p traffic look like? • Q1 2002 51% of the abilene traffic + 18% unidentified of a total of 157,6Tbytes/week • 60% for the NRNs • Today (2003) 13,82% p2p + 44% unidentified of a total of 271Tbytes/week (new apps, hide p2p apps) • P2P Signaling traffic is NOT Self Similar (good news)

29. xDSL – Market Structure • 2000 concurrent xDSL users (~10000 customers) for effective provisioning!!!! • Is it possible to provide services in small communities? • Vertical market. • Regulation is needed!!! Where is the Interconnection of xDSL Access with the ISPs taking place? • Cost of national core networks is critical for competition.

30. What’s next? • Need to understand the traffic characteristics of p2p networks (not only signalling but file transfers too). • A model to calculate the number of customers for effective provisioning. • Scenarios for the interconnection points, cost of core network, regulation initiatives. • Municipality nets.