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Some Remarks on Bandwidth in Europe

Some Remarks on Bandwidth in Europe. Ton de Liefde Columbi on behalf of INTUG. INTUG general. International Telecommunications User Group based in Brussels full members: users associations associated members: companies interfaces with EC, ITU, OECD. INTUG organisation.

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Some Remarks on Bandwidth in Europe

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  1. Some Remarks onBandwidth in Europe Ton de Liefde Columbi on behalf of INTUG

  2. INTUGgeneral • International Telecommunications User Group • based in Brussels • full members: users associations • associated members: companies • interfaces with EC, ITU, OECD

  3. INTUGorganisation • Global coverage with regional organisations • i.a. INTUG Europe

  4. INTUGactivities • Lobbygroup in Brussels • one of the topics: Leased line availabilities and pricing • instrument ONP • tariffs must be cost oriented • Focus on business community

  5. INTUG Cost comparison studies • comparison of list prices • comparison of prices paid

  6. Important because: • Leased circuits are the asphalt of all telecommunications services including the Internet

  7. Just to remind • In 1998 corporate data traffic will exceed voice (Arthur Anderson) • By 2002, voice will be less than 1% of telecom traffic (Ebbers - Worldcom) • Internet bandwidth is growing at 10% per month (Mergen - GTE) • Required bandwidth will be 35 Tbit/s by 2002 (Newport Conference on Fiberoptics - Oct ‘97) • 6 US ISPs will deploy ATM networks in 1998 (van der Berg - Project Oxygen)

  8. But is it possible in Europe? • A 300km 2Mbit/s national circuit in Europe costs 4 times more than equivalent capacity in the US • European 2Mbit/s cross-border tariffs are 17 times higher than within the US • A 2 Mbit/s local circuit in Europe (not UK) costs 5 times the price in London”!

  9. It is just not reasonable

  10. Some illustrations Comparison of the cost of a 300km 2Mbit/s circuit in USA and Europe ECU 6500/month ECU 4100/month US Price =1

  11. Illustrations: USA vs Europe Comparison of the cost of a 300km 2Mbit/s circuit in USA and Europe ...after discounts ECU 5900/month US Price =1 ECU 1600/month

  12. Illustrations: But it is even worse Comparison of the cost of a 300km 2Mbit/s circuit in USA and Europe US Price =1 ECU 4100/month

  13. Illustrations: worse still Comparison of the cost of a 300km 2Mbit/s circuit in USA and Europe ...after discounts US Price =1 ECU 1600/month

  14. Local Circuit Cost of 5km 34 Mbit/s - ECU/month ...after discounts 7150 6520 5110 3920 3900 3160 2730 1460 Source: National PTOs

  15. Ratio of the cost of 34Mbit/s: 2Mbit/s for a 5km local circuit (...after discounts) 16.6 10.4 7.4 4.2 2.9 3.7 Source: National PTOs

  16. A common market? Source OPT committee

  17. What would one expect?

  18. Not this Source OPT committee

  19. conclusion • Not only a common pricing policy lacks • There is not even a common direction

  20. Three tests • Tests: • cost based pricing • uniform pricing approaches across Europe • bench-marking with the USA • Europe fails all three tests!

  21. Some hope • New brand of international operators • WorldCom, COLT, Hermes railtel, Esprit • and the old ones in disguise • Concert, Unisource, Global One

  22. Limitations • Limited to main financial (and research) centres • No need to price agressively as long as incumbants may charge high tariffs

  23. Conclusions • Approach to harmonise by European directives and leaving the primary watchdog function to national authorities has failed or at best works to slow • Competition alone will not bring prices down neither far enough nor fast enough • This justifies action on a European level

  24. Summary Without an European regulator, Europe will not be able to catch up with the US Columbi Ton de Liefde Engelandlaan 172 2711 DW Zoetermeer The Nehterlands www.columbi.nl a.de.liefde@columbi.nl

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