Posted by: Costas Troulos | April 15, 2008

AIT Workshop on April 11, 2008 (comments and conclusions) – PART3

To conclude my report on AIT Workshop on “FTTx architectures, technologies, business and economic aspects” I have compiled a list of short & longer remarks I found intriguing from either speakers or attendants, and some personal conclusions:

  • “GPON is chosen by most incumbents worldwide because it makes the unbundling process harder”, or as another speaker put it: “Home run fiber is not used by incumbents because it is easier to regulate”
  • As described by the Cisco representative, fiber have some great advantages over copper since in fiber networks:
    • No major modifications are needed
    • Upgrades are made easy
    • Open Access principles can be more easily be applied
    • There are no bottle-necks in passive infrastructure
    • Trouble-shooting is much simpler
    • There is no need for encryption (this is particularly true for P2P Ethernet where the user’s fiber is shared by none other)
  • I did some research in the news about the Verizon FiOS project. It’s quite interesting the fact that although Tellabs presented this case as a success story, a week ago it was announced that the GPON efforts at Verizon are discontinued (!) News provided by Light Reading.
  • All major telecom providers in the country are deploying fiber in Athens and other prime markets. Presentations referred to 100+, 200+ and 400+ Km of entrenched ducts, by individual operators. It seems that the fiber race in the country is starting to take up, although, the unconditional deployment of fiber may have severe (negative) long-term implications in the market conditions (reduced market shares, price wars, decreased profitability, longer payback periods etc).
  • A speaker from OTE stated that the organization needs a stable regulatory environment to evaluate and assess his investments options. In fact, they have a point here: When a firm is regulated (usually via an average incremental cost method), competitors that request the use of unbundled elements bare no risk of investment. Instead, regulated prices decrease investors’ Return-on-Investment (ROI) until a certain degree of network utilization is reached.
  • Mr. Doukoglou, OTE indicated that although the incumbent is required to invest in infrastructure to provide user access to lucrative content services, they receive no monetary compensation from the content providers. His remark opens up an important business issue for broadband. Do the roles in the telecom industry need realignment? And if yes how this realignment will succeed? Network convergence, service integration and ubiquitous user experience may indeed be a starting point. However, maybe the path to salvation may be much longer! Think about revenue sharing schemes that extend through the entire telecommunications value chain, across network boundaries, based on Multi-domain SLAs, QoS monitoring & measurements, usage & quality data reconciliation etc.
  • Mr. Tzerefos from Vodafone made also a good remark. Telecom operators must be a service facilitator not a bit-pipe provider. Caution is required when addressing the business models. A provider can’t play very easily in all three layers of the network value chain (Infrastructure, Access, Services). They are totally different markets, and the expectations for returns vary very!
  • Finally Mr. Votsis from Forthnet indicated that “although local authorities have revenues (they require certain types of compensation for the civil disturbance) they do however have obligations such as to maintain the as-built maps and release them to future constructors when requested.

Responses

  1. It is no surprise that telecom operators.. would like to charge the content.. can you recall the time tha incumbent was charging the fax lines more than phone lines ? although they were carrying less capacity ? !!!

    Ragarding the coment of the Vodafone company.. it is a surprise for a company which has a licence for telecom operation .. would like to position themselves as service operators…

  2. There are some quite strong arguments for the opposite.

    Broadband changes business models simply because it changes end-users’ requirements and service expectations. There is a wealth of new services that require more than traditional best effort transport. A revenue sharing policy will increase network access providers (NAP) incentives to invest in advanced network access.

    For example, I can’t figure out a good reason why a Video-on-Demand (VoD) subscribers network (e.g. Euroleague.net) shouldn’t compensate NAPs (with some portion of his profits) that provide their users with the ability to buy the service.

    The lack of revenue sharing results often to vertical integration strategies and gated-walls offerings that harms consumer welfare in the long-term.

  3. […] up on from a previous post and comment and after reading Michael Geist’s European Parliament Votes Against ISP […]


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