A Proposal for the Oligopoly ( eircom/voda/o2)

Sponge Bob

Following many discussions , private and otherwise , I have a proposal. We cannot have a one size fits all Next Generation Plan . We will not all get fibre .

Let us divide the country into lesser served and better served . A 50/50 POPULATION split .

Fibre the entire lot in the better served with open access FTTH all the way to every door .

This proposal concerns the lesser served 50% of the state where population dispersal is an issue .

1. Voda and O2 lose their 2G 900mhz spectrum by 2011 . They seem to think they are entitled to it for free . They are not .

2. 900mhz is more valuable in the lesser served 50% because it penetrates and carries better than rubbishy 3g spectrum does.

3. In the lesser served 50% of the country we need 100% indoor coverage at 900mhz . This will require more base stations .

Furthermore the industry consensus is that high speed 3G LTE from around 2011 will require fibre to the mast even in very rural areas because of the data volumes envisaged by 3G LTE .

4. The state therefore undertakes to build a 10GE-PON network to serve every mast in the lesser served 50% of the state in return for a surrender of the 900mhz spectrum .

5. The state further undertakes to make this 10GE-PON network open access and to serve every premises passed. This would mean that if your house is on a boreen to a mast you are entitled to fast fibre drop . If not then you may build a fibre in your area as FAR as that boreen and pick it up there .

6. eircom further agrees to facilitate full sub loop unbundling within 1km of every 10GE-PON fibre laid under this agreement . There will be no sub loop unbundling anywhere else in the lesser served 50% of the state , we all know that . Make it happen close to the state open access fibres all the same .

7. every fibred mast in the lesser served 50% is converted to a shared facility, all 3 operators shall share one base station thereby saving rental costs and rollout costs, no competition issues are involved because the operators do not compete in rural areas anyway . The regulator shall understand this in advance .

8. As the masts are shared the 900mhz spectrum is pooled among all three operators off the one shared mast . Exclusive re-assignments of spectrum are only to be tolerated in the better served 50% where market based principles still apply as there is some semblance of a market .

9. Any money paid by operators for reassignment of 900mhz spectrum post 2010 is completely ring fenced for 10GE-PON mast provisioning by the state network . Some societal good comes of the money and all stakeholders benefit .

10. Finally , 100% indoor coverage ( unless you live in a feckin Faraday cage) at 900mhz , shall be a universal obligation . The oligopoly members shall present proposals to every local authority on how they shall achive this by end 2012 and the planning acts shall oblige every local authority to make it so .

bk

SB, great idea, I couldn't agree more, a very reasonable and doable plan.

It has always been likely that there would be a urban/rural split. The advantage of your plan is that going forward, it could be extend to reach more homes in rural areas as needed and it also encourages people to do it for themselves (lay fibre along roads in farms, etc. to connect to fibre passing down the road).

Unfortunately I'm not sure if this will ever happen.

Sponge Bob

It is implicit that issues of 'competition' are not dwelled unduly upon in the 'underserved' 50% and that the USO is widened to the big 3 instead of just eircom and when this project is complete with 100% 900mhz coverage . If BT and 3 wish to claim they have significant market power then by all means make it a big 5

The urban market , the 'served' 50% can be analysed and dealt with as a competitive market by and large!

It may not even turn out to be 50% but may turn out to be less.

Steviemak

Not a bad idea. However, I'm interested in how you see the sub loop unbundling element working.

I would have thought that as your 'rural' plan bypasses the current access network and the state builds the fibre out to the mast then Sub Loop Unbundling becomes irrelevant. Surely it is some sort of back haul you want eircom to provide?

Sub Loop as currently defined allows operators access from an eircom cabinet out to the customer's premises not from the cabinet back to the exchange.

Sponge Bob

Steviemak wrote: »

Not a bad idea. However, I'm interested in how you see the sub loop unbundling element working.
Sub Loop as currently defined allows operators access from an eircom cabinet out to the customer's premises not from the cabinet back to the exchange.

That much is correct.

The objective behind sub loop unbundling is that WHERE copper is used the run of copper should be as short as possible and no more than 1km (ideally) but that is not mandatory . There may be 5 houses on a 1km long boreen passed by a Fibre , they could run 1km of fibre or reuse the copper there already . If that boreen were 3km long with 5 houses the copper would deliver less but that boreen may start 4 km from the nearest exchange meaning 7km from the nearest exchange to the last house.

The average line in the areas served by this plan is 4km ( ish) long including villages and incapable of sustaining high speed copper based technology . So shorten it as you go to the mobile masts if possible .

In the larger towns or cities there should be full FTTH and therefore SLU should not be as important as it would be in the more rural parts .

10GE-PON local loops are 20km long which is what you need in rural areas There shall of course be a facility to unbundle a PON at these fibre nodes or to pay for aggregation back to nearby larger towns where telcos have their own networks .

HTH

Sponge Bob

In terms of Network sharing we should look at Sweden where the equivalent of a Voda/O2 joint venture was not a competitive issue

http://www.telecomseurope.net/content/swedish-operators-take-ran-sharing-lte

The latest move comes from Sweden's Tele2 and Telenor, which has announced plans to create a joint venture to build and run an LTE network, with an ambitious build-out schedule that should see the first commercial services from late 2010.

The 50:50 deal will include the sharing of spectrum in 900MHz and 2.6GHz. The two operators can move more quickly than most of their European counterparts because Sweden has been so early in running its auctions of 2.6GHz mobile broadband licenses - the first to allocate the bands, along with Norway - and has also made quick decisions to allow the refarming of 900MHz GSM spectrum for 3G and 4G.
With most cellcos looking to use these frequencies to extend HSPA coverage to rural areas, the Swedish partners are the first to announce firm plans for an LTE deployment - mirroring Verizon Wireless' US plans to build out LTE in a mixture of 700MHz and higher frequencies, to achieve the optimum rural/urban coverage.

The Sewdish regulator has publised an excellent paper that I commend to everybody, especially those muppets in Comreg who have NEVER LICENCED A NETWORK FOR MORE THAN 90% Population Coverage

Sweden has developed a policy mix for 100% Population coverage and will tolerate no less. This includes North of the Artic Circle !!!!!! Remember Sweden is HUGE, Ireland TINY!

This from the Swedish Regulators website . It is a very well written document and I highly commend it .

http://www.pts.se/upload/Ovrigt/Tele/Bransch/Langsiktig%20analys/Martin-Cave-Regl-Strategies-in-Sweden-to-2015.pdf

absent significant market power in the wholesale network infrastructure access and wholesale broadband access markets, there is no legal basis for regulation. This assessment is highly dependent on geographical market definition (see below).
[2]. in the unlikely event that two or more firm are jointly dominant in the market, some form of cost‐oriented price control could be introduced, in the knowledge that both had already undertaken the necessary investment.
[3] and [4]. In these outcomes, wholesale prices are regulated on a scale of rigour, from a traditional LRIC basis [3] to allowing a higher degree of discretion to the access provider at least for certain products. The purpose of such departures from the normal approach should be seen in case [4A] as relating to the encouragement of competition and in case [4B] as relating to the bringing forward of NGA investment.
Finally, on the issue of geographical markets, there seems to be a good logical case grounded in competition economics for a different market analysis and (probably) for different remedies in markets characterised by significantly different conditions of competition. However the decision must take account also of practical matters and will inevitably be to some extent reverse engineered from the preferred regulatory strategy.

Now he proves why Irish is a second/third world country , we allow spectrum hoarding and have no secondary markets or indeed effective regulation to stop spectrum squatting .

There are, however, reasons to believe that, at least in developed economies, market power in spectrum should not be a significant issue in future.

• Existing hoarding is most likely to be related to lack of effective secondary markets;
• Regulatory bodies exist that can investigate and address concerns relating to market power.

Not in Ireland my son Now to Universal service , a fukin disgraceful mess in Ireland . But we must accept that Universal Copper networks are ahangover from when 85% of households in Ireland had a phone line in the 1990s . That is now under 70% and falling rapidly .

4. Universal Service39
A. Universal voice service

The goal of universal voice telephone service has been accomplished in Sweden to an extremely rigorous standard, with only a handful of fixed locations incapable of receiving service by one means or another (wireline, wireless, mobile, satellite). This is despite legal issues relating to the identification of a universal service operator.

Sweden therefore exemplifies the technological neutrality noted in the Commission’s last (2005/6) review of universal service. In that review, the Commission noted that;

"Fixed telephone lines remain the main delivery mode of universal service, although operators are free to use any technology that can fulfill the requirements. Nevertheless, the most notable trend in telephony in the recent years has been the fixed‐to‐mobile substitution. Since 1999, the level of fixed telephony in the EU 15 has fallen by 10 percentage points with 82% penetration in early 2004, on a par with mobile telephony at 81%."
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His next point , I totally agree with him , is that the next Universal Service Obligation should be Mobile not Fixed . Page 36

This creates a basis for arguing that the yardstick for universally available tariffs should switch from those for fixed to those for particular clients of mobile services.

In summary, in developed countries ‐ in the EU in particular‐ the spread of mobile technologies is displacing the traditional fixed network as the natural or only means of discharging the voice USO, and this justifies full technological neutrality in allocating and discharging the USO; it makes it inappropriate to adopt a separate or additional mobile USO; and it makes it necessary to identify ‘affordable prices’ through the lens of mobile rather than fixed pricing practices.

And further , on a Broadband USO ( I am not proposing a Mobile Broadband USO by the way , I only want 100% Voice and SMS and GPRS ...maybe 200k EDGE .

Moreover, it is also crucial to take account of wireless delivery of broadband. The capability of mobile broadband is considered below, but its comparative cost advantage in more sparsely populated areas must also be taken into account. Wireless networks are far more replicable than fixed ones as a result of the fact that they are both less capital‐intensive and more readily scalable. As a result, they tend to have a comparative cost advantage in remoter areas and much greater competitive potential.
Moreover, in some countries‐ Austria is an example‐ wireless broadband accounts for 40+% of broadband connections, so that it is more of a substitute than a complement for wireline broadband. This conclusion is supported by data which show that over the EU, the annual growth rate of fixed broadband connections is inversely related with the penetration of 3G wireless. The first growth of mobile broadband in Sweden is another example.
Within a USO context, a range of technologies could be used to make broadband service available at a standard price. This might best be achieved by identifying potentially non‐commercial areas for the supply of broadband and imposing a coverage requirement on an operator or operators. How the financing of such an arrangement is linked to spectrum policy is considered below.
On the basis of the above discussion, there seems to be a way forward, parallel with the way forward with voice, to utilise wireless technologies in the provision of a broadband USO. The USO would take the form of the imposition of a coverage requirement on one or more operators. The obligation might be to provide either a wholesale or a retail product (or both). Ideally the operator would be chosen through a competitive process, and we shall see in section C below how the auctioning of spectrum licences can be a means of achieving this objective over a group of wireless competitors: because they are bidding for a valuable asset‐ access to spectrum‐ an explicitly defined obligation can be superimposed on one licence, and then priced by the competitive process.47 Creating a
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level, technologically neutral playing field between wireless and wireline technologies is more problematic.48
C. Implications for spectrum policy
The discussion above has identified possible roles for wireless technologies in the provision of (voice or data) universal services. Where wireline networks exist, wireless technologies can supplement or compete with them in the supply of universal service. Where a wireline network does not exist, several competitive providers can dispute the role of meeting the USO.
The policy advocated above of placing as many frequencies as possible in the hands of potential network operators (or even speculators) will also benefit end users by reducing barriers to entry and speeding up the process of competition.
Is it possible or appropriate in either of these cases to use spectrum policy as a direct method of implementing a USO solution? This would mean, for example, gifting spectrum to an operator which assumed a USO.
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finally

An elegant extension of this approach would be to design a USO tendering process which involved a transition from voice to data service (for example, from 2G to 3G; in other words, the object being auctioned would be an obligation first to offer a voice service, with capacity specified in erlangs, and then a

data service, with capacity measured in bps. The tender could take the form of a menu auction, in which participants could offer alternatives at different prices. It might also be possible, via a carefully constructed procedure to harness bidders’ knowledge of the best moment to make the ‘upgrade’. Ideally there would be no restriction on the technology or platform chosen.

A summary of such ‘reverse auctions’ can be found in S Wallsten, Reverse Auctions and Universal Telecommunications Service: Lessons from Global Experience, April 2008 ( that book may be downloaded from here )