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Peering, Transit, Interconnection: Access Regulation and Legislation

Peering, Transit, Interconnection: Access Regulation and Legislation. Lisbon February 15, 2003. Telecom Market Structure. Interdependencies. Economy Single Player. Wireline Market. Wireless Market. Market Share. Wireless v Wireline. Growth. Internet. Verizon 1. Verizon 2. Verizon 3.

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Peering, Transit, Interconnection: Access Regulation and Legislation

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  1. Peering, Transit, Interconnection: Access Regulation and Legislation Lisbon February 15, 2003

  2. Telecom Market Structure

  3. Interdependencies

  4. EconomySinglePlayer

  5. Wireline Market

  6. Wireless Market

  7. Market Share

  8. Wireless v Wireline

  9. Growth

  10. Internet

  11. Verizon 1

  12. Verizon 2

  13. Verizon 3

  14. Fiber Capacity McGarty, in a 1990 Harvard paper, stated: “Fiber has revolutionized the data networks in the United States. A single strand of fiber can transmit 1012 bits per second of data. If we allocate each home, 100 million residences, with 100 Kbps of full time data, that is 1013 bits per second if everyone in the US is talking simultaneously in this high speed data fashion. That is the capacity of just a single strand of fiber. A typical bundle of fiber has 25 to 50 strands and these are connected to other such bundles. The current fiber network is structured like past voice networks, and generally does not take advantage of the bandwidth of the fiber. Albeit the technology is not yet totally operationally capable, the world view of the system designers is one that is to use fiber as copper. Use it for one voice circuit after another.”

  15. Reasons for Telecom Collapse 1.     Overcapacity on backbone 2.     Excess Debt 3.     Excess Vendor Financing 4.     Regulatory Confusion 5.     Inexperienced Management 6.     Pricing Suicide: 7.     Monopolistic Practices: • 7.1           Access and Interconnection Fees • 7.2           Unbundled Network Elements (UNEs) 8.     Litigation Excess: • 8.1           Iowa Utilities Board v FCC et al, US 8th Circuit Court, July 17, 1997 • 8.2           AT&T et al v Iowa Utilities Board, US Supreme Court, January 1999 • 8.3           Verizon et al v FCC, US Supreme Court May 13, 2002 • 8.4           US Telecom Association (USTA) v FCC, Bell Atlantic as Intervenor, US Court Appeals, District of Columbia, May 24, 2002 • 8.5           Trinko v Bell Atlantic, US Court of Appeals, 2nd Circuit, June 2002

  16. Access and Interconnection

  17. Network and Service Interconnections Local Exchange Carrier CATV Network Meet Point IP Carrier Wireless Carrier

  18. Interconnection

  19. Element 1 Element 2 Element N-1 Element N Service Provision Elements Third Party Peer Networks Meet Point

  20. Interconnection Costs

  21. Interconnection Costs Effects

  22. Baulmol & Willig

  23. Economic Models

  24. Cost Functions

  25. Cost Models

  26. Cost Models

  27. Expense Models

  28. Scale Economies

  29. Value and Monopoly Issues

  30. Monopoly Rents >>

  31. Cost Models Revenue Driver, R: The revenue drive may be as simple as the number of customers or the number of new customers. Clearly the customer service and billing functions are driven by the number of customers. The sales effort is driven by the number of new customers. The cell maintenance function is driven by the number of cell sites which in turn is driven by the number of customers. Productivity Factor, P: The productivity factor reflects how the operations reflects revenue drivers into human resources. For example in customer service it is in terms of the calls per customer per day, the holding time per call, the hours per day per customer service representative. This results in the number of customer service representatives per unit revenue driver. Unit Costs; U: The unit costs are the costs associated with the labor and other units of production used in the operations model. This then yields a cost for unit k as:

  32. Microeconomic Factors

  33. Cost Curves

  34. Valuation

  35. Scale & Scope SCALE: THERE ARE ESSENTIALLY NO SCALE ECONOMIES IN Telecom IF NEW TECHNOLOGY IS DEPLOYED.. SCOPE: SCOPE EXISTS IF AND ONLY IF THERE ARE NON-DISAGRATEABLE ELEMENTS. OUTSOURCING AND USE OF DISTRIBUTED DATA BASES REDUCES SCOPE. SCOPE EXISTS FOR LEC AS A BOTTLENECK ONLY IN TERMS OF LOCAL SWITCH ACCESS.

  36. Access and Interconnect

  37. Access Implications

  38. Microeconomics: Monopoly v Competition

  39. Competitive Technologies

  40. Technology & Access Fees

  41. Cross Payment

  42. Subsidy versus Tax

  43. European Internet

  44. Central Europe

  45. Tandem Switch Gateway Switch Gateway Switch Tandem Switch Local Carrier LD Carrier International Carrier International Carrier LD Carrier Local Carrier Settlement Agreement Now Defunct Transit NAP or Other Transit NAP or Other Local Carrier Local ISP Backbone ISP Backbone ISP Local ISP Local Carrier Tier 1 Peering

  46. TPSA Genuity Warsaw UUNet New York Frankfurt CZ Tel Prague ATM Switch DNS Server OTE MAE East Router

  47. AT&T AT&T UUNet UUNet Genuity Genuity C&W C&W Global Interconnection ZNAP

  48. Minimum Cost

  49. Central Europe Growth

  50. Central Europe Fees

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