Telecommunications Competition Code

1. Telecommunications Competition Code Overview of Draft Interconnection Policies May 15, 2000

2. Introduction Objectives Approach to Developing Interconnection Principles Challenges Framework for Interconnection and Access Regulation Proposed Interconnection Policies Scope of Services Obligation to Provide Access Responsibility for Charges Structure of Charges Charging Standards Summary Agenda

3. Infrastructure moves from service specific to multi-services Existing infrastructure can be re-used in ways it was not originally designed Standards bodies have not been able to keep up with technological change Content has a significant impact on service demand Demand is difficult to forecast Traffic patterns change Introduction Change Driver

4. Government Objectives Interconnection Policy Objectives Consumer Needs Technological Development Policies Industry Development Consultative Process Introduction Approach

5. Introduction Challenges Singapore as Info-comm Hub • Creation of an attractive environment for infrastructure investment • Greater service innovation, choice and any-to-any connectivity • Protection of Investments Except in Instances of Genuine Market Failure • Network Ownership, Planning, and Design At the Discretion of Operators • Fair and Just Compensation for Network Usage • Preference for Commercial Arrangements within Broad Guidelines • Regulatory Intervention Only As Necessary • Bias Towards Open Access for All

6. Introduction Elements What are the likely interconnection related services that can be requested in a fully liberalized market? Scope of services Who are the eligible requesting and providing operators for the interconnection related services? What are their obligations, and are these time bound? Obligation to Provide Services Where do the responsiblities lie for costs incurred in establishing or maintaining these interconnection related services? Responsibility for Charges What guidelines should govern the structure of charges? Structure of Charges What rules will be applied to the make-up and level of interconnection charges? Cost Standards

7. Introduction Future Considerations The following topics are not part of the focus of today’s discussion: Operator to Operator • Universal Service Obligations • Retail Price Regulation • Consumer Protection • Mobile Access Operator to Service Innovator • Network and Service Bundling • Intellectual Property Rights • Allocation of Network Capacity

8. Introduction Today’s Focus Scenario Application Interconnection Related Service Customer to customer access • Physical Interconnection (PI) • Origination and Termination (O/T) Network traffic and payment exchanged (e.g. PSTN) Operator to Operator Interconnection Operator to customer access • Physical Interconnection (PI) • Unbundled Network Elements (UNEs) • Essential Support Facilities (ESFs) Network operator pays network operator (e.g. unbundled loop) Customer to service innovator access Out of scope Customer pays network provider who compensates service provider (e.g. CATV) Operator to Service Innovator Interconnection Customer pays service provider, who purchases network (e.g. ISP) Service innovator to customer access Out of scope Today’s Focus

9. Agenda Introduction Objectives Approach to Developing Interconnection Principles Challenges Framework for Interconnection and Access Regulation Proposed Interconnection Policies Scope of Services Obligation to Provide Access Responsibility for Charges Structure of Charges Charging Standards Summary

10. Type Description Current Example Physical Interconnection • The physical act of connecting two networks to allow O/T and/or to permit the use of UNE / ESF • Items that enable competition • Collocation (for O/T) • Virtual Collocation • SS7 interconnection • Local Number Portability • Collocation for (UNE) • Emergency Services • Operator Services Originating and Terminating Charges • Network to Network interconnection charges for traffic origination or termination • Call termination • Class 5 Aggregation • Equal access Unbundled Network Element • Elements that will be made available to allow new operators to offer service and promote competition • Local loop • Switch port Essential Support Facility • Competitive bottleneck that do not provide a telecommunications service • Conduit • Utility poles • Radio Tower Scope of Services Interconnection Related Services One-Time On-going

11. Type Examples of PI O/T Enabling • Collocation for FBOs • Signaling Interconnection • Interconnection Trunks UNE/ESF Enabling • Collocation (space, heat, light, power) • OSS Interconnection, where appropriate Competition Enabling • Local Number Portability • White Pages/Directory listings • Equal Access Scope of Services Identification and Examples of PI

12. Example Logic Issues Telephone Loop (Feeder, Distribution, and Drop) • Made available in conjunction with the sale of service (including the service already using the loop) • Asset ownership • Availability • Repair and Maintenance • Cream skimming Switch Port • Made available to connect to another carrier’s access network • Asset ownership • Repair and Maintenance Access to the Feeder/Drop at the Jumper Wire Interface • Allows VDSL type services to be provided • As above plus • Space and Power • Network Intelligence Access to CATV plant at the Final Distribution Node • Allows others to provide two way high speed service over CATV plant • As above plus • Network Intelligence Scope of Services Identificationand Examples of UNEs Current Potential Broad- band

13. Example Logic Issues Termination of call (PSTN) • Allows network interconnection for voice services • Type of origination (National/International) • Pricing • Asymmetric traffic (e.g. Dialup ISP, 800) Current X.25, Frame Relay, and ATM Packet Termination • Allows data network interconnection for packet services • Pricing • Standards • Performance Voice over IP Termination on PSTN • Allows IP based and PCM based networks to be interconnected • Call Quality (delay, voice, quality) and Pricing • Signaling • Type of Origination Potential Broadband Native IP Interconnection • Allows peering (interconnection) between IP based networks • Network performance • Pricing • Signaling • Type of traffic Scope of Services Identification and Examples for O/T

14. Scope of Services Identification and Examples of ESEs Example Logic Issues Conduit • Difficult/expensive to replicate • May not be being used effectively • Lots of conduit will become available as fiber replaces copper pair • Ownership • Availability • Repair and Maintenance In building risers and signal distribution networks • Difficult/expensive to replicate • Control over these resources have created significant problems for service providers in North America • Ownership • Availability • Repair and Maintenance Towers • Radio towers create environmental impact • Ownership • Wind loading • Power, spectrum etc. Rooftop Space • Similar to in building distribution and risers rooftop space is required for radio/satellite based service providers • Ownership • Availability

15. Introduction Objectives Approach to Developing Interconnection Principles Challenges Framework for Interconnection and Access Regulation Proposed Interconnection Policies Scope of Services Obligation to Provide Access Responsibility for Charges Structure of Charges Charging Standards Summary Agenda

16. Element Current and Future PI • All operators and requesting parties O / T • All dominant operators for all customers / services mix • All other operators direct or indirect UNE • All dominant facilities based operators where: • No commercial agreement can be reached • Not economically possible to replicate or bypass • Necessary to provide “telecom” service ESF • All facilities based operators and building landlords / owners for current Obligations Policy

17. Obligations Clarification on Availability IRS Status Not Available - in use or reserved Available - not in use and not reserved Providing Operator’s Obligation ü Lease on a Permanent Basis (100% capacity, e.g. loop) ü if customer or customer group agrees Lease on a Permanent Basis (<100% capacity, e.g. cable channel) ü û Lease on a Transactional Basis (100% capacity, e.g. call completion) ü ü obligation to build

18. Obligations Classes of Requesting Operators Service Classes Description Examples • Provides communications, computing or broadcasting services • Owns or operates systems that operate over telecommunications facilities IBM CNN Credit Card Processor Service Innovator • Owns or operates switching/ broadcasting equipment but leases transmission capacity from a FBO • Operates a private network Services Based Operators (SBOs) Equant Phoenix Network Inc. SingTel SCV StarHub Facilities Based Operators (FBOs) Directly or indirectly owns and operates transmission plant together with switching/broadcasting equipment Affected Operators

19. Obligations Summary Rights Obligations Class All Operators Class Dominant Non-Dominant Service Innovator Service Innovator Not in Code Not in Code Not in code • Must Provide • PI • O/T • Must Provide • PI • O/T • May use • PI only for O/T SBO SBO • Must Provide • PI • O/T • UNE • ESF • May use • PI • O/T • UNE • ESF • Must Provide • PI • Direct/Indirect O/T • Existing ESF FBO FBO

20. Introduction Objectives Approach to Developing Interconnection Principles Challenges Framework for Interconnection and Access Regulation Proposed Interconnection Policies Scope of Services Obligation to Provide Access Responsibility for Charges Structure of Charges Charging Standards Summary Agenda

21. Responsibility Summary Requesting Operator Providing Operator PI, competition enabling Pays own Pays own Shared Shared PI, O/T All (including costs of modifications) None PI, UNE/ESF Pays Own Pays Own O/T All (including costs of modifications) None UNE All (including costs of modifications) None ESF

22. Responsibility Facilitating Competition • In order to ensure that the creation of PI does not become a barrier to competition, the iDA proposes that the dominant operator is initially responsible for the investment • The iDA will ensure that the dominant operator will provide PI in a timely manner • The requesting operators will reimburse the dominant operators as they use the PI

23. Introduction Objectives Approach to Developing Interconnection Principles Challenges Framework for Interconnection and Access Regulation Proposed Interconnection Policies Scope of Services Obligation to Provide Access Responsibility for Charges Structure of Charges Charging Standards Summary Agenda

24. Structure Policy High FBOs Only End Users Resale of Retail Service Unit Cost of Goods Sold to Deliver Service for Requesting Party Leased Bandwidth Unbundled Network (UNE) Essential Support Facilities (ESF) Origination / Termination Low Low High Investment Required by Requesting Party

25. Structure Time Limits on UNEs Retail Rate Cost UNEs may not be available after a certain time UNE Time

26. Structure Symmetrical Charges Asymmetrical Symmetrical Bill and Keep • Can help to remove new technology entry barriers • Covers operators actual costs • Can be used to deal with Universal Service Obligations • Easier to administer • Can be used to ease new operator market entry (e.g. reciprocal compensation) • Technology neutral • Simple to administer • Does not promote arbitrage • Technology neutral Advantages • Open to significant arbitrage • Does not reflect the reality in the choice of technology in each network • Does not assist market entry • Rewards inefficiency • Difficult to administer • Leads to arbitrage Disadvantages

27. Introduction Objectives Approach to Developing Interconnection Principles Challenges Framework for Interconnection and Access Regulation Proposed Interconnection Policies Scope of Services Obligation to Provide Access Responsibility for Charges Structure of Charges Charging Standards Summary Agenda

28. Not desirable for achieving policy objectives Desirable for contributing to policy objectives Desirable for achieving policy objectives Standards Justification of Cost Standards Policy objectives Cost standards Maximise customer benefits Promote investment Promote effective competition Optimise resource utilisation Simple and practical Long Run Incremental Cost low charge partially compensatory level “playing” field avoid duplication implementable Long Run Average Incremental Cost fair and equitable charge fully compensatory; right cost of IRSs no discrimination optimal use of resources implementable Fully Distributed Costs high charge arbitrary apportionment distorts investment prone to incumbent’s manipulation new entrants over-invest facilities implementable Efficient Component Pricing Rule high charge price may include monopoly profit barrier to entry by raising price inefficient duplication if tariffs do not reflect costs difficult to implement Stand Alone Cost high charge SAC exceeds cost of providing IRSs efficient entry discouraged duplication of facilities practicable

29. Policy objectives Cost bases Maximise customer benefits Promote investment Promote effective competition Optimise resource utilisation Simple and practical Historical or Embedded Cost tend to be higher no correct signals for investment decisions prone to incumbent’s manipulation new entrants over-build systems transparent and auditable Current or Replacement Cost tend to be lower correct “build or buy” signals not subject to incumbent’s manipulation no over-building of systems sometimes difficult to quantify Forward Looking Economic Cost likely to be the lowest invest in efficient and advanced technology encourage efficient entry; discourage inefficient entry no wasteful duplication very difficult and time-consuming to estimate/determine Not desirable for achieving policy objectives Desirable for contributing to policy objectives Desirable for achieving policy objectives Standards Justification of Cost Bases

30. Introduction Objectives Approach to Developing Interconnection Principles Challenges Framework for Interconnection and Access Regulation Proposed Interconnection Policies Scope of Services Obligation to Provide Access Responsibility for Charges Structure of Charges Charging Standards Summary Agenda

31. Summary Defining Elements of Interconnection All technically feasible IRS across different types of networks Scope of services • Issue implementation details • Issue enforcement procedures • Outline the methodology for the calculation of charges to facilitate negotiations between operators • Based on licensee’s status • Time Bound ? Obligation to Provide Services • Requesting operator for PI, UNE and ESF • Pay own for O/T or shared to establish Responsibility for Charges Structure of Charges • Asymmetrical ? • Usage Based • LRAIC • FLEC or Current or Replacement Costs Cost Standards

32. Summary iDA Process Review • Commercial agreements published or iDA arbitrates in the case where dominant carriers are involved • If dominant carrier is not involved, no arbitration iDA set framework Ida puts out costing methodology and guideline iDA review Yes No Operator requests inter-connection (O /T) Can commercial agreement be reached? Is one operator dominant? iDA dispute resolution No Yes iDA review Yes No iDA set framework Can commercial agreement be reached? Is one operator dominant? Is the facility necessary? Can the facility be replicated / obtained? Is the facility available? iDA dispute resolution No Yes Yes Yes No Yes No No action unless appealed to the iDA due to lack of agreement