NGA Forum Report

8 November 2011

NGA Forum Report

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Contents List of figures

IV 

List of abbreviations

V 

0  Management Summary

1 

I 

8 

Introduction

II  Key topics and their progress since the interim report II.1  Open Access and interoperability

10  10 

II.1.1  Joint paper by Bundeskartellamt and Bundesnetzagentur on principles of non-discrimination 12  II.1.2  Non-discrimination standard contract

12 

II.1.3  Policy document clarifying technical and operational aspects of access to fibre networks and other NGA networks 13  II.1.4  Ethernet bitstream specifications II.2  Shared use of infrastructure (eg in-house cable installation) II.2.1  Deutsche Telekom field report on property owner declaration

23  29  29 

II.2.2  Access to fibre in-house cabling – initial experiences in France and lessons for Germany 29  II.3  Cooperations/Co-Investment

30 

II.4  Broadband rollout in rural areas

30 

II.4.1  LTE rollout situation

30 

II.4.2  Cooperation with the public sector in rural regions

31 

II.4.3  Assessment

31 

II.5  NGA rollout business case: demand, costs and competitive effects. II.5.1  Demand patterns and willingness to pay for fibre network services

32  32 

II.5.2  Implications of nationwide fibre rollout and its subsidy requirements 32  II.5.3  WIK study "Architectures and competitive models in fibre networks" on NGA architectures 40  III  Conclusion/Outlook

40 

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List of figures Figure 1:  NGA delineation - Network Segments, Service Layers, Interfaces, and Focus of the examination .............................................................................................. 14  Figure 2: 

Examples of NGA access points on higher layers in the overall network 15 

Figure 3: 

Examples of access/aggregation network scenarios .......................... 16 

Figure 4 

HFC architecture ................................................................................. 20 

Figure 5 

Principle of standardised BSA wholesale............................................ 24 

Figure 6 

Wholesale provision diagram .............................................................. 25 

Figure 7 

Connection area clustering according to customer density................. 33 

Figure 8 

Concentration of customers and space (cumulated share of total)..... 34 

Figure 9  Total investments for 80% and for nationwide rollout and operation at 70% penetration (in billions of euros) ............................................................................ 35  Figure 10  Monthly total cost per customer for FTTH/P2P without in-house cabling depending on penetration rate....................................................................................... 37 

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List of abbreviations 1P

Single-Play

2P

Double-Play

3P

Triple-Play

A10-NSP

A10-Network Service Provider

ARPU

Average Revenue Per User

BEREC

Body of European Regulators for Electronic Communications

BEP

Building entry point

BSA

Bitstream access

CO

Central Office

Coax

Coaxial Cable

CPE

Customer Premises Equipment

CuDa

Copper twin wire

DIAGSS

Diagnosis interface

DOCSIS

Data Over Cable Service Interface Specification

DSL

Digital Subscriber Line

DSL

Digital Subscriber Line

DSLAM

Digital Subscriber Line Access Multiplexer

ETSI

European Telecommunications Standards Institute

EP

Entry Point

FFP

Fiber Flexibility Points

FTTB

Fiber to the Building

FTTC

Fiber to the Curb

FTTH

Fiber to the Home

FTTR

Fiber to the Remote

GPON

Gigabit Passive Optical Network

HFC

Hybrid Fiber Coax

IAD

Integrated Access Device

IP

Internet Protocol

IP-TV

IP-Television

ITU

International Telecommunication Union

L2

Layer 2 V

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L2-BSA

Layer 2 Bitstream Access

Line-ID

Line Identifier

LTE

Long Term Evolution

MDF

Main Distribution Frame

MDU

Main Distribution Unit

MPoP

Metropolitan Point of Presence

NGA

Next Generation Access

NID

Network Interface Device

OAM

Operation, Administration and Maintainance

ODF

Optical Distribution Frame

OSS

Operation Support Systems

OTH

Optical Transport Hierarchie

P2MP

Point to Multi Point (Punkt-zu-Multipunkt)

P2P

Point to Point (Punkt-zu-Punkt)

PDH

Plesiochrone Digital Hierachie

PON

Passive Optical Network

PPP

Public Private Partnerships

RF-Overlay

Radio Frequency Overlay

RTTC

Radio to the Curb

S/PRI

Supplier / Partner Requisition Interface

SC

Service Creation

SDH

Synchronous Digital Hierarchy

TKG

Telecommunications Act (Telekommunikationsgesetz)

TR

Technical Report

TV

Television

VDE

Verband der Elekrotechnik Elektronik Informationstechnik e.V. (Association for Electrical, Electronic & Information Technologies)

VDSL

Very High Speed Digital Subscriber Line

WDM

Wavelength Division Multiplexing

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1

Management Summary

In February 2009, the German federal government published its broadband strategy in order to provide a major boost to broadband rollout, formulating two key objectives in the process, •

Nationwide capable broadband access available by the end of 2010.

•

Regarding rollout of high-speed Next Generation networks (NGA), 75% of households should have broadband access with transmission rates of at least 50 MB/sec by 2014.

These objectives relate to the two central issues of the political discussion on broadband rollout, namely deployment in rural areas and rollout of high-speed networks. These two topics were also the focus of the work of the NGA Forum, an advisory board founded in May 2010 by the Bundesnetzagentur for promoting dialogue between the Bundesnetzagentur, network operators, manufacturers, states and local authorities on NGA rollout. Broadband rollout in rural areas One focus of the NGA Forum was the deployment of broadband in rural areas and the elimination of so-called white spots. In addition to generally relevant factors such as willingness to pay on the demand side, other aspects are of particular importance for rollout in sparsely populated areas, including expansion of fixed wireless broadband connections (eg LTE), synergy effects in infrastructure expansion by telecommunication, energy supply and cable companies, and the sustained involvement of the public sector, particularly local authorities. By mid-2011 almost 99% of households had access to a broadband connection with bandwidth of at least 1 MBit/s. The goal for fixed wireless broadband rollout in the shortterm is to cover up the "white spots". The assignment of 800 MHz frequencies has therefore been attached to a progressive coverage and rollout obligation.1 The coverage requirements have already been met by the mobile operators in Bavaria, Baden-Württemberg, Hessen, North-Rhine Westphalia, Rhineland Palatinate and the Saarland.2 This means that the frequencies can now be used to continue improving broadband coverage. Delays may however occur as a result of planning permission. In the medium term, the aim is to provide nationwide mobile broadband (with data speeds similar to DSL today) together with LTE1800 and LTE2600. LTE has also been integrated in the federal government's Broadband Atlas since July 2011.

1 Cf. Decision by BNetzA of 21 October 2009 (BK1a-09/002) 2 Cf. BNetzA press release of 28 September 2011

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The discussion regarding the financial support options of the government, and thus of it sharing in the risk of rollout, should involve all decision makers. Varying forms of cooperation with the public sector in rural areas could result in various advantages and disadvantages. In addition to the use of synergies in public infrastructure expansion plans, forms of cooperation also include surety programmes and (low-interest) loan programmes, along with support schemes and public private partnerships (PPP). Lastly, there is also infrastructure construction by the public sector itself. In terms of synergies in infrastructure expansion through, for example, energy suppliers, it has become clear that these can make a significant contribution to the construction of a broadband network in rural areas. In many cases broadband coverage is sustainably supported, particularly by SMEs. Rural areas can only be reached by combining a range of initiatives to a greater extent than in towns and cities. The keys to success in terms of economic viability have emerged as the shared use of infrastructure, coordinated installation activities or funding, along with large market shares through regional sales. This adds to the significance of the Infrastructure Atlas and its continued development. Through the use of all available options, nationwide capable broadband access can be achieved within a short space of time. Expansion of high-speed networks Significant investments are required in order to ensure high bitrate coverage across Germany. This degree of investment cannot be made by one single company, but instead through efforts by a range of companies – including SMEs – along with a mix of strategies and technologies (VDSL, FTTB, FTTH, TV cable and wireless technologies). The NGA looked at the necessary investments for the construction of fibre networks. In addition, using scenarios based on a model, a study ("Implications of nationwide fibre rollout and its subsidy requirements") by WIK calculated the investments required, end consumer prices and, where necessary, the financing requirements for (profitable) nationwide NGA rollout to the home. According to the model calculations carried out, depending on the architecture and technology implemented, a nationwide fibre network with potentially approx. 40m acces lines in Germany would need investment ranging between € 70 and 80 bn. Over 80% of this amount would go towards the so-called passive network, ie the installation of glass fibre, and less than 20% towards the active electronic network components. At the same time, the difference in investment volumes between the architecture and technologies are fairly low, at up to 10% (max). The investments required depend very heavily on the population or connection density. While investments of just over € 1000 per connection are necessary in the low cost

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areas, investments in sparsely populated areas of the country reach over € 4000 per connection. If expansion is carried out for only 80% of subscribers, the investment volume decreases in relation to a full-scale rollout by around 30%. If existing infrastructure is also used, corresponding savings can also be made. Due to the large share of installation costs for fibre cables, coordinated installation activities have particular significance. The profitability of network expansion depends on ARPU (Average Revenue Per User) and the penetration rate, as the fewer subscribers reached in an expansion area, the greater the increase in overall investment per customer. Unfavourable cost parameters (eg in terms of the home connection, a particular end device and the amount of aerial cabling) increase investment volume and lower profitability to a comparatively modest degree. With favourable assumptions regarding profits (current end customer prices and limited additional willingness to pay for fibre access lines; an ARPU of € 38 is assumed here in concrete terms) and costs, profitable FTTB/H expansion is conceivable for 25-45% of German access lines, depending on architecture. As a guide to the consumers' willingness to pay, a market survey by 1&1 indicated that customers are willing to pay around € 5 for higher bandwidth. Generally speaking, the expansion limits quoted would be higher if network operators were able to achieve greater network usage/penetration or the end customers were willing to pay higher prices for fibre network services. The limits can be further stretched to a certain degree if the necessary investments are able to be reduced; the use of existing infrastructure and coordinated installation activities has particular relevance here. In order to achieve profitable coverage, there are various conceivable options, such as a higher monthly price for customers in deficit expansion areas, a uniform price which makes all rollout areas profitable, or an investment injection in deficit areas. Moreover, if the costs for in-house cabling and building access are borne by the user, this can contribute to achieving greater nationwide rollout that is also profitable for the network operators. It must be considered, however, that the investments required for inhouse cabling are approx. € 5bn, and approx. € 11bn for cabling on properties. Operational and procedural aspects of expansion (eg lengthy processes for obtaining owner data and approval; planning scarce excavation resources; very limited window of time for negotiating what are as a rule very long term supply contracts with the housing industry; very complex and time-consuming negotiations etc) are insufficiently included in the models, however, if at all.

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In summary, the following success factors are critical for fibre rollout: significant progress requires the development of demand (penetration) and willingness to pay on the part of customers (ARPU); profitable network expansion options depend to a considerable degree on the expected ARPU (significance of attractive services) and the achievable penetration rate. Furthermore, any existing willingness on the part of the user to make a contribution (eg by assuming certain costs), could be the starting point for more extensive nationwide fibre rollout. In terms of the significance of the penetration rate, if fibre is successfully deployed, this will also depend on enabling a quick switchover to this new infrastructure for all market participants, thus reducing the migration phase. Migration costs and risks are not incorporated into the model. The model calculations show that efforts are required by all involved in order to realise the necessary investments and offer end customers attractive services. The construction of fibre networks requires a very high penetration rate, even in areas where it is essentially already profitable. This highlights the necessity, while the new networks are being established, of developing and providing suitable access products, which enable competitive involvement of all market partners in the necessary fibre network usage. It is also evident, however, that the current rate of expansion achieved with fibre access lines has not yet reached the potential it has even under unfavourable circumstances. Open Access and interoperability NGA rollout in Germany is not driven by one individual company alone, rolling out one technology nationwide. Local fibre networks from communities and other local authorities, together with energy suppliers whose business case is subject to other conditions, will make a key contribution. This variety of business models and the large number of participants lead to a greater number of potential providers and users on a wholesale level. This offers the guarantee of both rapid construction of new network generations and fast penetration development leading to a boost in efficiency. Bidirectional demand will increase, in order to reach more customers outside the individual infrastructure. Deutsche Telekom may also appear in this context as a user of wholesale services. An incentive for ensuring voluntary access could emerge if access is required on a reciprocal basis (more likely to be the case with national as opposed to local providers). It could equally arise if wholesale service providers are not active themselves on higher levels of the value chain, but instead operate with vertical separation of various value added stages. Ultimately, high usage is required within a relatively short period of time for the profitability of fibre rollout projects, which also increases the incentive to provide voluntary access.

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The participants' views continue to differ in terms of details (such as on minimum amounts of access products or price setting), with this being the result of the basic opposing interests of various market players. In the interim report, however, all companies declared that they wanted to ensure access to their FTTB/FTTH networks. Non-discrimination and transparency are also fundamentally recognised as necessary components in an Open Access concept. Above all, there was agreement that standardisation of interfaces and processes is necessary. In order to take a more in-depth look at non-discrimination, the Bundeskartellamt and Bundesnetzagentur have established non-discrimination principles relating to the aspects of competition and regulatory law in the prohibition of discrimination. Both the vertical and horizontal relationships in cooperations involving third-party access are relevant in a competition law context. Agreement on prices and conditions is considered a prohibited arrangement. In contrast, agreements concerning purely technical conditions, such as interoperability of networks and services, or processes in the event of a supplier switch by the end customer, are not affected by the prohibition of restrictive practices. From a vertical perspective, cooperating companies are subject to the prohibition of discrimination and unfair hindrance of section 20 of the Act Against Restraints of Competition (GWB) as are dominant firms and firms with significant market power. Under the Telecommunications Act (TKG), obligations are imposed on a company with significant market power (such as Deutsche Telekom) by order of the Regulatory Authority. Discrimination is always prohibited, with obligations also imposed regarding separate billing and presentation of a reference offer to avoid discriminatory behaviour. Assessment of fair or unfair treatment can only be carried out on a case by case basis. Under no circumstances can the assessments under competition and regulatory law diverge. Prohibition of discrimination can only be imposed on companies without significant market power within the strict limits of section 18 of the TKG. Voluntary selfobligation of non-discriminatory guaranteed access, eg within voluntary open access models, is welcomed. As the construction of high-speed broadband networks (Next Generation Access – NGA) demands the coordination of numerous actors in the telecommunications sector, interoperability is a core element in the success of Open Access activities. In order to allow the new NGA networks to realise cross-network services, multilateral agreement on technical interfaces and operative processes is necessary. The complexity of the NGA landscape, determined by a large number of expansion strategies and implemented technologies, requires a consensus reached through objectivity and willingness to compromise. Interoperability between networks is a core element in the success of future broadband network infrastructure expansion. In order to limit transaction costs in particular, it is necessary to develop uniform national specifications for wholesale products.

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A policy document published in May 2011 ("Technical and operational aspects of access to optical fibre networks and other NGA networks") describes, compendiumstyle, the technical possibilities of expanding NGA structures, in addition to the fundamental links between network segments, possible network access points and wholesale products. Architectures and technologies are presented and compared neutrally; foreseeable medium-term developments are also taken into consideration. There is a wide range of potential wholesale products, upon which various demands can be placed. The presentation of possibilities however does not come with the expectation that all wholesale products need to be offered by every network operator. In terms of interoperation which can be implemented quickly, there are first detailed descriptions of passive infrastructure (ducts and dark fibre) and a Layer 2 bitstream product (Ethernet BSA) as wholesale products. The discussion of business processes focuses on the development of standardised processes using the example of an active Layer 2 product. The policy document covers the entire range of process topics recommended for standardisation and demonstrates the form and depth of a potential agreement using the example of the central processes. The results obtained here relate directly to the second results section, namely the specifications of a Layer 2 access product. In specifications of a Layer 2 bitstream access product published in October 2011, the framework specifications and process definitions in the policy document were picked up and used as a template for an actual description of an L2-BSA wholesale product. This defines in detail the technical and operational interfaces, the key business processes necessary for integration and the requirements of the technical interfaces needed for this. The description can be viewed as a recommendation for Layer 2 interoperation. The specification of the technical interfaces is neutral in terms of access network architectures and technologies. It sets out the basic structures, models, protocols, parameters etc for interoperation. The performance parameters are to be set by the contractual partners when implementation actually occurs. These are dependent on the one hand on the capability of the selected technology and architecture of the access network, and on the other on the service provider's requirements. The description of the business processes aims to provide NGA operators and suppliers of end customer NGA products with descriptions of the processes necessary during wholesale product cooperation that are uniform and as simple as possible. In addition to the principles for the order of network interfaces between NGA operators and end customer contractual partners, the description also contains a detailed presentation in graphics and text of the key business events in the relationship with the end customer (provision, termination, fault repair).

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Particular attention is paid to a uniform model for switching provider, in order to allow the end customer to switch with as little interruption as possible, via reliable coordination of all parties involved. The presentation is rounded off by agreements on invoicing and an overview of the necessary Service Level Agreements. Furthermore, the web-based interfaces for processing order and fault repair procedures, as well as operational and diagnostic tasks, are defined, with their technical implementation described. Ideally, the above service specifications could be used as a simple basis (in the form of a sample agreement) for bilateral cooperation agreements and adapted to specific situations. In interoperability, a significant breakthrough has been reached for planning security and additional investment in new broadband networks. With the adoption of the "Technical and operational aspects of access to optical fibre networks and other NGA networks" and "Specifications of a Layer 2 Bitstream Access Product" documents, the NGA Forum has made a key contribution to achieving the objectives of the federal government's broadband strategy. There was a strong consensus from numerous telecommunication industry actors, in which objectivity and willingness to compromise stood out. The new hope is therefore that this future market for broadband communication, of great significance for Germany, can be shaped by the voluntary principles of cooperation. The Bundesnetzagentur welcomed the consensus by numerous market players on these documents. These lay the foundations on which a number of actors, particularly those in local and regional broadband networks, are able to offer their services competitively on a cross-network basis. It remains to be seen whether the market players will follow the agreed principles in their decision making and contracts and thus bring Open Access success. A continuation of the work of the NGA Forum is planned, particularly in order to follow up the efficient work carried out by the interoperability working group. This will also involve monitoring whether and to what extent the concepts developed by the NGA Forum have found their way into practice. The following points were identified amongst others as topics for the interoperability working group: •

Specification of a Layer 0 wholesale product

•

Specification of an L2 business customer product

•

Checking implementation of a BSA design for cable networks

•

Completion of diagnosis interface

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L2 sample agreements using several technology examples

For process interoperability, the focus is to be on the implementation of the processes defined in the work so far in an order interface which can be put to general use on the market. In addition, further agreement aspects, especially of the multilateral variety, are also to be developed where necessary. The NGA Forum also wants to reserve the right to consider other topics, depending on the current situation (for example, the issue of in-house cabling since the TKG came into force, in order to assist swift practical implementation).

I

Introduction

The NGA Forum was founded by the Bundesnetzagentur in May 2010 to promote dislogue between the Bundesnetzagentur, network operators, manufacturers, states and local authorities on NGA rollout. It aims to discuss concrete issues which play a part in the rollout of NGA networks. The NGA Forum has a consultative mandate and looks to encourage consensus in the industry with its decisions and resolutions. Following the federal government's broadband strategy (February 2009), the Bundesnetzagentur planned in its "key elements for the regulatory framework for progressing modern telecommunications networks and creating powerful broadband infrastructures" (March 2010) to found such a forum in order to support increased transparency as a core element in the successful expansion of broadband networks. Key topics for the NGA Forum were Open Access, communication and co-investment, NGA architectures, technical and operational aspects of access to fibre networks and other NGA networks (interoperability) and shared use of infrastructure (eg in-house cabling). Broadband rollout in rural areas and demand, costs and competitive effects for the NGA rollout business case were also discussed. An interim report was published In December 2010, with a policy document on implementation of NGA networks following in May 2011. Since submission of the interim report in December 2010, the NGA Forum has met eight times, making a total of 16 sessions. As announced at its inception, the NGA Forum has worked transparently and, as far as possible, published all results and presentations on the Bundesnetzagentur's website. The following interim results were recorded in the 2010 report:

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Open Access •

All companies declared that they wanted to ensure access to their FTTB/FTTH networks. Non-discrimination and transparency are also fundamentally recognised as necessary components in an Open Access concept.

•

There is agreement that standardisation of interfaces and processes is necessary.

•

Separation, enforced by the regulator, into three different levels was declined by the companies and associations represented in the forum.

Interoperability •

The discussions in the NGA Forum and the "interoperability" working group came to the conclusions that the range of potential wholesale products is large, and various demands are placed. At the same time, the participants agreed that the first step should be the concrete specification of a Layer 2 bitstream access product, as this has emerged as the wholesale product with the highest initial potential on the market. Interface definitions and specifications are also to be proposed for Layer 0 wholesale products.

Regarding the conclusion of work by the NGA Forum, the following was set out in the interim report: •

As far as Open Access is concerned, the extent to which the different positions that have existed thus far are moving closer together needs to be explored in particular. Approaches should also be considered should this fail to happen.

•

For interoperability, it appears realistic to complete the outstanding descriptions from the technology field within the planned timeframe, as well as proposing the interface definitions and specifications for the selected Layer 0 and 2 wholesale products. In terms of business processes, the aim is to be able to provide descriptions of standard processes for the key operations for a Layer 2 wholesale product, and proposals for standard agreements and standardised interfaces for these.

•

The question regarding cooperations is whether, and if so how, the difficulties establishing coopertions can be overcome, and what contribution the NGA Forum can make to this.

•

There is a consensus within the NGA Forum that in terms of shared use of infrastructure, waiting to see how the legislative process continues to develop should be the first step, whilst simultaneously examining the extent to which other approaches to the problem can be implemented.

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Key topics and their progress since the interim report

According to its mandate, the NGA Forum is to deal with four topic areas in particular: •

Open Access

•

Interoperability

•

Shared use of infrastructure (eg in-house cable installation)

•

Cooperations/Co-investment

In addition, the following two aspects were discussed within the NGA Forum: •

Broadband coverage in rural areas

•

NGA rollout business case: demand, costs and competitive effects.

As the topics of Open Access and interoperability are closely linked, they will be dealt with together from this point on.

II.1

Open Access and interoperability

The future NGA market and competitive landscape will be characterised by increasingly heterogenous multi-carrier environment with several technologies. NGA rollout in Germany is not driven by one individual company alone, rolling out one technology nationwide. Local fibre networks from communities and other local authorities, together with energy suppliers whose business case is subject to other conditions, will make a key contribution. As the construction of high-speed broadband networks (Next Generation Access – NGA) thus demands the coordination of numerous actors in the telecommunications sector, interoperability is a core element in the success of Open Access activities. This variety of business models and the large number of participants lead to a greater number of potential providers and users on a wholesale level. Bidirectional demand will increase, in order to reach more customers outside the individual infrastructure. Like other companies, Deutsche Telekom may also appear in this context as a provider and user of wholesale services. While the large number of potential users and providers does lead to high transaction costs on both sides, these can be reduced by the use of integrators, already in place today, which take on the role of a technical (procedural) and contractual intermediary between the various potential NGA providers and users. An incentive for ensuring voluntary access could emerge if access is required on a reciprocal basis (more likely to be the case with national as opposed to local providers). It could equally arise if wholesale service providers are not active themselves on higher levels of the value chain, but instead operate with vertical separation of various valueadded stages. Ultimately, high usage is required within a relatively short period of time

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for the profitability of fibre rollout projects, which also increases the incentive to provide voluntary access. The participants' views continue to differ in terms of details (such as on minimum amounts of access products or price setting), with this being the result of the basic opposing interests of various market players. In the interim report, however, all companies declared that they wanted to ensure access to their FTTB/FTTH networks. Non-discrimination and transparency are also fundamentally recognised as necessary components in an Open Access concept. Above all, there was agreement that standardisation of interfaces and processes is necessary. In order to allow the new NGA networks to realise cross-network services, multilateral agreement on technical interfaces and operative processes is necessary. The complexity of the NGA landscape, determined by a large number of expansion strategies and implemented technologies, requires a consensus reached through objectivity and willingness to compromise. Interoperability between networks is a core element in the success of future broadband network infrastructure expansion. In order to limit transaction costs in particular, it is necessary to develop uniform national specifications for wholesale products. In interoperability, a significant breakthrough has been reached for planning security and additional investment in new broadband networks. With adoption of the "Technical and operational aspects of access to optical fibre networks and other NGA networks" and "Specifications of a Layer 2 Bitstream Access Product" documents, the NGA Forum has made a key contribution to achieving the objectives of the federal government's broadband strategy. There was a strong consensus from numerous telecommunication industry actors, in which objectivity and willingness to compromise stood out. The new hope is therefore that this future market for broadband communication, of great significance for Germany, can be shaped by the voluntary principles of cooperation. The Bundesnetzagentur welcomed the consensus by numerous market players on these documents. These lay the foundations on which a number of actors, particularly those in local and regional broadband networks, are able to offer their services competitively on a cross-network basis. It remains to be seen whether the market players will follow the agreed principles in their decision making and contracts and thus bring Open Access success. Continuation of the work of the NGA Forum is planned, particularly in order to follow up the efficient work carried out by the interoperability working group.

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II.1.1 Joint paper by Bundeskartellamt and Bundesnetzagentur on principles of non-discrimination In order to take a more in-depth look at non-discrimination, the Bundeskartellamt and Bundesnetzagentur have established non-discrimination principles relating to the aspects of competition and regulatory law in the prohibition of discrimination. Both the vertical and horizontal relationships in cooperations involving third-party access are relevant in a competition law context. Agreement on prices and conditions is considered a prohibited arrangement. In contrast, agreements concerning purely technical conditions, such as interoperability of networks and services or processes in the event of a supplier switch by the end customer, are not affected by the prohibition of restrictive practices. From a vertical perspective, cooperating companies – in addition to dominant companies and companies with superior market power - are subject to the prohibition of discrimination and unfair hindrance of section 20 of the Act Against Restraints of Competition (GWB). 3 Under the Telecommunications Act (TKG), obligations are imposed on a company with significant market power (such as Deutsche Telekom) by order of the Regulatory Authority. Discrimination is always prohibited, with obligations also imposed regarding separate billing and presentation of a reference offer to avoid discriminatory behaviour. Assessment of fair or unfair treatment can only be carried out on a case by case basis. Under no circumstances can the assessments under competition and regulatory law diverge. Prohibition of discrimination can only be imposed on companies without significant market power within the strict limits of section 18 of the TKG. Voluntary selfobligation of non-discriminatory guaranteed access, eg within voluntary open access models, is welcomed.

II.1.2 Non-discrimination standard contract A proposal for a standard contract has been drafted, taking into account the following aspects: •

service level;

•

commercial conditions;

•

provision and fault repair processes;

•

interfaces

This standard contract can be used as a starting point for negotiations.

3 Cf the individual explanatory notes published in consultation with the Bundesnetzagentur on 19 January 2010 on assessment of fibre rollout cooperation projects under competition law in Germany. (http://www.bundeskartellamt.de/wDeutsch/download/pdf/Stellungnahmen/100110Hinweise_Breitband kooperation.pdf).

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II.1.3 Policy document clarifying technical and operational aspects of access to fibre networks and other NGA networks As the deployment of high-speed broadband networks (Next Generation Access – NGA) requires coordination between numerous actors in the telecommunications sector, interoperability is a key element for the success of the Open Access approach. Enabling the NGA networks to provide network-transcending services requires multilateral agreements concerning technical interfaces and operational processing. The complexity of the NGA environment resulting from the multitude of deployment strategies and technologies in operation demands a consensus driven by objectivity and the willingness to compromise. Interoperability, ie the interaction of the networks, is a core element of successful deployment of future broadband network infrastructure. In particular, the limitation of transaction costs necessitates the elaboration of specifications for wholesale products applicable nationally and uniformly. A policy document published in May 2011 (“Technical and operational aspects of access to optical fibre networks and other NGA networks") describes compendium-style the fundamental links between network segments, possible network access points and wholesale products, as well as the technical options for deployment of NGA structures. The policy document is subdivided into three main parts: general NGA topics, techniques, and business processes.

II.1.3.1 General NGA topics Layer Model One of the initial general topics is to boil down the numerous possible Access Network options to an abstract network model in order to clearly define the scope of work and the terminology. Furthermore, five network layers are proposed to which all relevant wholesale products can be assigned according to their technical requirements. The selection and labeling of the NGA layers is an abstraction of the regular layer models in order to describe all areas of NGA interoperation sufficiently precisely without unessential complexity.4 The trisection on the right hand side of the diagram (see Figure 1: NGA delineation - Network Segments, Service Layers, Interfaces, and Focus of the examination) largely uses the terminology of the NGA- and Open Access discussions thus far. The NGA interface requirements and descriptions can be identified on the basis of this layering.

4 The layer structure is similar to that of the ISO layer model, but does not strictly correspond to this.

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A product description usually refers to the highest service layer. However, the realization of said product involves some or all of the layers below, meaning that actual access networks technologies comprise functions of several layers. Depending on specific technologies the integration of such functions may inherently be required. However, in many cases access networks can be structured vertically and some of the lower layers may be considered separately.

Focus NGA Home

In-house

Access

Interoperability: Technics and Business Processes Backbone

NGA Layer

(Aggregation / Core)

Layer 4

Applications

Layer 3

Layer 3 Transport

Layer 2

Layer 2 Transport

Layer 1

Channels of Dedicated Bandwidth

Layer 0

Ducts / Transport Media

Heim

Gebäude

Zugang

Applications

Active Infrastructure

Passive Infrastructure Konzentration / Kern

Network Segments

Figure 1:

NGA delineation - Network Segments, Service Layers, Interfaces, and Focus of the examination

Network segments The locations of NGA interfaces are considered in the context of the overall network. In terms of network segments the NGA focus is on access and in-house networks; aggregation and core networks are not considered. However, some access network technologies also extend to the aggregation segment, P2MP networks may be structured within the access segment, and the first aggregation point may be part of the access network. The possible access points for wholesale products depend on the access layer. The aggregation network plays a role in NGA access in at least some technology and architecture versions. The overall architecture needs to be considered at the latest with the deployment of L2/L3 multicast products and the roles of the network segments involved must be clearly defined. Figure 2 depicts examples of NGA access points in the overall network context, taking into account the situation of regional and supra-regional operators. In an open network environment the transport through the aggregation network may in principle be provided by a third party operator, therefore the NGA access interfaces are marked at the edge

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of the access networks as well as at the edge of the aggregation network.5 In both cases the NGA interface definition includes only the access network-related characteristics. Access Networks

Service Provider A

DOCSISModem

B

Video

Data

CMTS

Aggregation

Fibrenode

Data

Voice

Voice

Modem

DSLAM

E Fixed Networks OLT ONT

C EthSwitch

Video

EthNT

Data

D

HLR/HSS/ AAA

Mobile Networks

BTS

Video

MSC

Data

BSC

Voice

Transparent Transport

Figure 2:

PDSN/ GGSN

Potential NGA Interface Location

Examples of NGA access points on higher layers in the overall network

It needs to be considered whether access and aggregation networks are owned by one single operator, or by different operators, and whether multicast functions (Layer 3) are required in the aggregation network operators’ domain. The possible architecture options can be structured according to those two basic criteria. The influences of access and aggregation networks on each other are illustrated by means of the example network scenarios outlined in Figure 3: Examples of access/aggregation network scenarios. All the example scenarios assume that the service provider is not the network operator and further that multicast capability is required, which calls for end-to-end network design considerations.

5 The expansion of bandwidth or coverage may require varying levels of economic investment depending on the various technologies used.

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Access Network

Aggregation Network

Service Provider Video

A) Single Operator for Access and L2/L3Aggregation

Data

L2 (/L3) Multicast

Voice

Multicast

Video

B) Operator 1 for Access Operator 2 for L2/L3 Aggregation

Data

Aggregation Switch *)

Multicast

L2 (/L3)

Voice

(Multicast)

Video

C) Operator 1 for Access Operator 2 for L1 Aggregation

Data

Aggregation Switch *)

L1

Voice

Multicast *) Function may be integrated in Access network nodes

Figure 3:

NGA Interf ace

Access Point with transparen transport

Examples of access/aggregation network scenarios

Interoperation interfaces Ensuring interoperability between NGA network operators and service providers requires, in addition to the actual access network interfaces (access point), further interfaces for automated interoperation processes, ie interfaces for coordination of operations and business support. The transport interface is therefore joined here by order and diagnosis interfaces: •

•

•

The transport interface describes the point of interconnection between two networks carrying the user data, ie where the service is actually provided. In the context of this document it is the A10-NSP interface supporting Ethernet Bitstream. The order interface describes the Business Support System (BSS) requirements in the process and service environment. Here, the business processes for a standardized and automated interface are modelled and demonstrated, bearing in mind automated business support processing to a greater degree. The diagnosis interface supports operations-related processes for fault localization and, where applicable, repair, and are generally known as Operations Support Systems (OSS) interfaces. Another – virtual – interface allows the service provider direct access to the end customer’s CPE. In addition to management functions – eg configuration of the CPE – in principle it enables independent performance monitoring of the customer-specific network access by the service provider.

II.1.3.2 Techniques In the Techniques subject area, descriptions and recommendations for interoperation interfaces are derived from wholesale product requirements and the options provided by

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the available network technologies. To this end, all relevant wholesale products and access network architecture options (FTTH, FTTB, FTTC etc.) and technologies are first determined. The latter are compared in terms of their characteristics. Fixed networkbased technologies (copper pair, coaxial, fibre) are examined in detail, along with radiobased technologies (broadband and mobile radio, satellite, radio links). Architectures and technologies are presented and compared in a neutral way at this stage; foreseeable midterm developments are also included. The different fixed access network architectures are presented as an example below. Please refer to the policy document for the characteristics of the access network technologies. Overview of NGA fixed access network architectures NGA deployment focuses on fibre networks. Therefore fixed access networks are usually categorized according to the type of fibre network architecture, eg FTTH, FTTB, FTTC. However, fibre and copper-based technologies are often combined in NGA architectures. Pure copper-based architectures also remain relevant.

a) FTTH architectures:

Home (H)

Building (B)

Cabinet (C)

MDF (CO)

P2P - WDM(C,D), - SDH,

A

- OTH, EthoXX, - Eth - RF-overlay

A

Active

A

Ethernet - L2-Bitstream - RF-overlay

A

A

P

A

xPON - L2-Bitstream

P

A

- RF-overlay

P

P

P

passive

A

A

active

Fibre

In an FTTH architecture, connection to the end customer in the access network is realised completely by fibre and is terminated in the home by a corresponding device.

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Pure fibre-based architectures enable the highest transfer rates and are limited practically only by the active technology implemented. • • •

The point-to-point architectures (P2P) connects each end customer via a dedicated fibre link to the MDF or MPoP and can therefore be used universally in terms of the active technology. Active Ethernet architectures provide high date rates over long distances with good fibre economy by actively splitting either at the curb or in the building. xPON architectures enable one or two-stage splitting by passive splitters. The passive technology provides a cost-efficient fibre infrastructure comparable to Active Ethernet, however, they do not require active equipment in the field. xPON access networks are based on shared use of the media, which limits the transfer rate in principle.

b) FTTB Architectures: Home (H)

Building (B)

VDSL / Ethernet - L2-Bitstream - RF-overlay*)

Cabinet (C)

MDU (CO)

A

A

TW Cat 6/7

VDSL / xPON - L2-Bitstream - RF-overlay*)

P

A

P

passive

A

active

Fibre

A

TW /CAT 6/7

*) to the building

In FTTB networks, copper cables are still used in the last section leading to the customer, in their building. The active technology is generally located in the cellar of a building or near the existing distribution point. Transmission rates of up to 100/100 Mbit/s (downstream/upstream) are possible with this. The copper section is terminated with a VDSL2 router (eg for business customers) or with VDSL2-IADs. Ethernet can also be used if there is copper-based ethernet cabling in the building. Various network structures can be used between the MDU and the CO.

c) FTTC Architecture: Home (H)

Building (B)

Cabinet (C)

VDSL / Ethernet

A

MDF (CO)

A

TW A

active

Fibre

Twin Wire

FTTC can be used in areas with an existing telephone infrastructure as an efficient interim step towards FTTH in broadband network expansion. In FTTC, the fibre leads to

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a suitable splitting point in the telephone network near the customer, generally a street cabinet. There, the optical transport network is terminated and the broadband signal transmitted along the last section from cabinet to customer via an xDSL system. d) RTTC Architecture: Home (H)

Building (B)

VDSL / Radio ADSL2 / Radio - L2-Bitstream

Cabinet (C)

A

MDF (CO)

A

TW active A

Twin Wire

Radio

RTTC (radio to the curb) architecture is gaining significance in the deployment of broadband in areas which have a classic telephone infrastructure with copper twin wires, yet where connection between the MDF and cabinet or beyond using coaxial cable or fibre is not feasible in the required timeframe for economic or geographic reasons. Here, the cabinet is equipped with VDSL or ADSL DSLAMs which are then connected to the MDF via radio link. While RTTC architecture is a suitable option for covering relatively sparsely populated areas, it only represents a temporary medium-term solution for the very high data rate requirements expected in future in more densely populated areas. e) Coaxial cable architecture In the past, coaxial cable was used for one-way transmission of analogue and digital television and radio signals originating from a central point. Coaxial cable networks are a shared medium, and consist primarily of a superior primary distribution network (network level 36) and exist within a downstream secondary distribution network on private property (network level 47). Network level 3 has a tree structure (P2MP), as does network level 4, in addition to a star structure to some extent. The network level 3 tree structure can typically cascade up to 20 high-frequency amplifiers with full use of the whole coverage area. It was increasingly requested that broadband cable networks be upgraded to return path compatible status for high-speed internet, telephony and interactive services. For this reason, amongst others, hybrid fibre coax architecture was developed and introduced.

6 Network level 3: Coaxial cable network on public property; the network levels bear no relation to the layer model presented here 7 Network level 4: Coaxial cable network on private property (home distribution system)

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Home (H)

Building (B) (EP)

COAX / DOCSIS / Ethernet - L2-Bitstream - RF-overlay

A

P

A

P

A

P

Cabinet (C)

NE3 P

Figure 4

A

A

COAX

NE4

Cable PoP

passive

A

active

Fibre

COAX

HFC architecture

Hybrid fibre coax architecture is similar to a certain degree to the FTTC architecture. FTTC architecture with copper twin wires only resembles the hybrid fibre coax architecture to a limited extent, however. Unlike a copper twin wire, which is brought into individual households from the street cabinet passively in line with the P2P principle, the signal in the HFC architecture can be amplified several times up to a certain degree after leaving the cabinet. If the signal is still provided passively via COAX from the cabinet to the building, amplification of the signal is thus unavoidable under most circumstances in a property with several recipients. Based on the HFC architecture, internet and voice services can be realised with the DOCSIS technology in addition to the distribution of the TV signal. Wholesale products A second step sees the wholesale products evaluated according to their relevance for swift interoperation. There is a wide range of potential wholesale products upon which various requirements can be placed. The presentation of possibilities, however, does not come with the expectation that all wholesale products need to be offered by every network operator. Wholesale products are described briefly for all layers. In terms of interoperation that can be implemented quickly, there are first detailed descriptions of passive infrastructure (ducts and dark fibre) and a Layer 2 bitstream product (Ethernet BSA) as wholesale products, followed by framework interface specifications proposals for these. A distinction is made between empty ducts and dark fibre in the Layer 0 wholesale products: •

The "empty duct" product assumes existing conventional cabling between the MDF and the distribution point and empty duct systems, which will be established under the framework of broadband programmes by the federal government, the states, network operators ' FTTx projects and future FTTB/FTTH projects.

•

Dark fibre wholesale products distinguish between FTTC and FTTB/FTTH applications.

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o

Point-to-point connections between the MDF and the street cabinet can be assumed for feeding fibre cables to the copper twin wire or coaxial cable network in FTTC applications.

o

Point-to-point (P2P) and point-to-multipoint (P2MP) connections are assumed in FTTB/FTTH. These include fibre systems in the MDF, the cabinet and the distribution point or fibre flexibility points (FFP), along with the building entry point and, in FTTH, the fibre system in the inhouse cabling.

o

Moreover, there is the possibility of being able to offer individual wavelength pairs from a passive WDM PON as a Layer 0 wholesale product in future. This technology is still in the R&D phase; at present no interoperable specifications for the passive multiplex/selection elements can be recommended yet in relation to the active technology.

Set-ups for providing Layer 2 Bitstream Access Service (BSA) can be divided into three segments: •

the access segment (from the end customer NID - Network Interface Device - to the uplink towards the aggregation network),

•

the transport segment (transport and aggregation in the aggregation network)

•

and the interface with the service provider (A10-NSP).

BSA services are offered on a logical N:1 infrastructure. This enables both unicast and multicast services (as part of IPTV) via the network. Transport takes place consistently on Layer 2. The service includes several services classes with various performance parameters in which the service provider can arrange their ethernet frames with suitable labelling in the Ethernet header. Further Layer 1 wholesale products include the following: •

Fixed connections for business customers (dedicated lines, direct connections, leased line) are dedicated, permanent point-to-point data connections between two customer locations or a customer location and a service provider's connection location (PDH, SDH, OTH connections, ethernet point-to-point and fibre channel).

•

Radio frequency and optical channels o

The provision of radio frequency channels is linked to wireless systems. These include mobile radio systems, along with radio relay links for connecting mobile stations or also for customer fixed line connections.

o

Unbundling on Layer 1 is not currently common in access networks; use of several channels on one fibre is in the hands of the respective operator. The

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principle of unbundling on Layer 1, however, requires wavelengths to be centrally managed and allocated, and that all operators and devices involved comply with the standards in order to ensure interference-free operations. Layer 3 wholesale product •

IP bitstream The IP bitstream product requires an existing end customer local loop to be made available to a user. The complete local loop or the high bitrate section thereof is provided to the bitstream user "virtually" with high bitrate transmission capacity, as opposed to physically.

II.1.3.3 Business processes The creation of coordinated and standardised business processes is viewed as one of the key success factors for interoperability in an NGA world. NGA can only be a success on the market if it becomes a broadly accepted and used product. In order to achieve this, it must be marketed by multiple service providers who are able to provide customers with crucial added value by offering innovative and competitively convincing services. At the same time, however, the business processes developed for the interaction of the various supply chain levels leading to the end customer must also be able to be mass-marketed. Process coordination must include all necessary levels of the supply chain, in order to be able to offer end customers the requisite services in line with their needs in a functioning competitive environment. As with the technical interfaces, the aim should be for standardised, market-ready and mass-marketable process models in order to achieve efficient and open structures in this area, too, in the interests of a high level of customer satisfaction. To this end, agreements on conditions (technical interfaces and processes) are to be made, both vertically between the various supply chain parties involved, as well as horizontally between competitors. Binding Service Level Agreements can be a suitable means here of achieving and maintaining appropriate quality of service standards. The list, compiled from a customer perspective, of processes to be approached is not initially dependent on the issue of the precise design of the wholesale product required to realise the service, eg upon which layer and technical basis access is provided. However, it can be assumed that the actual products will have an impact on the process content. There has been no certainty thus far regarding the prevailing future access options on the market. The processes were initially considered under the premise of Layer 2 access (ethernet). In this way, a helpful understanding of significant elements of processes can be

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developed, which should then be able to be transferred as required to other product designs and any special aspects they may have. The discussion of business processes thus focuses on the development of standardised processes using the example of an active Level 2 product. The market participants involved in the cooperation will be identified and their roles detailed, from which the interfaces requiring coordination will be derived. The processes to be considered from an end customer perspective will be determined in a further stage. The following three significant basic processes have initially been defined in detail: •

provision (assuming a complete new connection),

•

termination (assuming cancellation by the customer without any request to continue or switch),

•

fault repair.

Textbook examples of fundamental processes are developed assuming access at level 2 (Ethernet). The processes are depicted in flow-charts in which the overall process is broken down into sub-processes. These are accompanied by text describing in detail each step required at the interface between end customer provider and NGA operator, along with the information to be exchanged there. In addition, the diagnosis interface requirements for fault repair are formulated. Significant basic principles have been agreed for the more complex process of switching provider. The policy document covers the entire range of process topics recommended for standardisation and demonstrates the form and depth of a potential agreement using the example of the central processes. The results obtained here relate directly to the second results section, namely the specifications of a Layer 2 access product.

II.1.4 Ethernet bitstream specifications In specifications of a Level 2 bitstream access product published in October 2011, the framework specifications and process definitions in the policy document were picked up and used as a template for an actual description of a L2-BSA wholesale product. This defines in detail the technical and operational interfaces, the key business processes necessary for integration and the requirements of the technical interfaces needed for this. The description can be viewed as a recommendation for Level 2 interoperation. The specifications consist of a framework document and several individual documents (technical specifications, business processes, diagnosis interface). This is partly the fault of the extent of documentation involved, but also the fact that the specifications are consist of some very different topic areas, some of which are independent of each

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other, and which tended to be processed by different groups when cooperation was implemented. II.1.4.1 Technical interface specifications The specification of the technical interfaces is neutral in terms of access network architectures and technologies. It sets out the basic structures, models, protocols, parameters etc for interoperation. The performance parameters are to be set by the contractual partners when implementation actually occurs. These are dependent on the one hand on the capability of the selected technology and architecture of the access network, and on the other on the service provider's requirements. The interface described permits •

an access network provider (wholesale provider) to offer a service provider a wholesale product (wholesale BSA) on a standardised Layer 2 interface basis, or

•

a service provider (wholesale customer) without their own access network to offer their end customers a service via BSA wholebuy.

A standardised interface description enables corresponding harmonised development of the network of different operators who are expanding network infratructures. Service providers can design their end device interfaces and service platforms accordingly. Figure 5 shows the how such an interface may be realised in principle. This simplified presentation does not include potential aggregation networks between the access network and the service provider's system. Network models such as these are described in the policy document (cf II.1.3.1 network segments).

Customer location

Access network operator Netzbetreiber

Service provider Service Creation (SC) SC by service provider

Layer 2 based network connection (A10-NSP)

Figure 5

Principle of standardised BSA wholesale

The service provider takes on Service Creation (SC) for its customers, in other words responsibility for end customer devices connected via Layer 2 wholesale from a partner. Traffic from end customer connections is passed on via an ethernet interface. Following

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the broadband forum's TR101, this network interface between access network operator and service provider is referred to as A10-NSP in this document. In the event that both partners are access network operators as well as service providers, A10-NSP network connection wholesale and wholebuy will take place via physically separate L2 transfer interfaces. Interoperability tests between the service provider and access network operator are required before A10-NSP interface operation starts. The same applies to U interfaces, which require tests to ensure interoperability between the access network operator's network termination and the service provider's CPE, particularly with xDSL-based technologies. Futhermore, a process must be established between the network operator and the service provider which guarantees interoperability at the U interface in the event of changes to the network connection or the CPE. The wholesale product should make 1P/2P/3P Single-Play, Double-Play and Triple-Play products mass-marketable. The broadcast share of 3P occurs via IPTV. The interface on the network side described here relates to provision of bitstream access (BSA).

U-SSt

A10-NSP-SSt N:1 Entity

CPE

Wholesale customer

Figure 6

Access

Aggregation

Wholesale provider

Wholesale customer

Wholesale provision diagram

The interface specifications described in this document concentrate on the minimal technical requirements for providing wholesale L2-BSA and represent a recommendation which aims to enable efficiently-designed cooperation agreements and smooth operation in the context of open L2 access networks. Additional requirements can be agreed in bilateral discussions between service providers and network operators. Implementation of the recommendation requires system suppliers to incorporate these specifications in their products at short notice, which cannot be assumed without

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reservation. Further development is thus to be awaited, until the majority of access networks fully support this recommendation. The respective access network operators' different network structures require the technology to be employed in their own network and in the associated IT infrastructure in a specific manner. This means that various methods of production emerge when BSA wholesale is used. The aim here is to define a uniform abstract interface, independent of the respective access network technology or architecture. The interface definition sets out the basic structures, models, protocols, parameters etc for interoperation. The actual performance parameters are to be set by the cooperation partners when implementation occurs. These are dependent on the one hand on the capability of the selected access network, and on the other on the service provider's requirements. The focus of the descriptions here is on establishing the access network via FTTH, FTTB or FTTC. The technical description and parameters of the L2 BSA wholesale product include specification of the U interface on the end customer side, the A10-NSP interface on the network side and the aggregation/transport service properties of the access network provider. In order to be able to cover all significant services offered by the provider, four downstream quality classes and two upstream quality classes are determined. The quality parameters set must be met by the defined traffic classes here. Multicast implementation has a considerable effect on the quality of IPTV service. Multicast features are thus defined, for which concrete values need to be set by access network operators and service providers. In addition, requirements for OAM mechanisms (Operation, Administration and Maintainance), determination of clear end customer identification (line ID) and security functions are described. II.1.4.2 Business processes and cases description The creation of coordinated and standardised business processes is key to interoperability in an NGA world and therefore an important factor in the success of moving to NGA. Process creation is therefore less dependent on an actual product design than it is on technical interoperability arrangements. The principle of cooperation between a service provider serving end customers and a network operator providing a wholesale product is not particular to NGA networks, but instead is already a common situation in the competitively structured telecommunications market. Many experiences from the current environment are thus also transferrable to NGA.

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Considering today's experiences, the following points in particular emerge as important for a high quality of service and avoiding inefficiency: -

agreeing on mass-marketable processes and order interfaces;

-

clear, explicit interface descriptions;

-

effective coordination of processes involving more than two parties, particularly switching supplier;

-

successful coordination of technician assignments.

If these elements are not established at an early stage, existing problems risk becoming exacerbated in a more complex NGA environment, as they will be shaped by necessary cooperation involving a larger number of participants. Established, uniform processes, on the other hand, ensure the necessary competition between services which are as varied and attractive as possible for the end customers, who will guarantee that NGA becomes a market success. To this end, an independent document ("L2-BSA III – Description of business processes and cases") describes the significant processes based on a Layer 2 wholesale product. Process creation is therefore less dependent on an actual product design than it is on technical interoperability arrangements. The principle of cooperation between a service provider serving end customers and a network operator providing a wholesale product is not particular to NGA networks, but instead is already a common situation in the competitively structured telecommunications market. Many experiences from the current environment are thus also transferrable to NGA. At the same time, the determinations already made for a Layer 2 wholesale product can also be transferred to other NGA wholesale products – possibly with certain modifications. The actors involved and their roles are defined in an introduction. The functions of the necessary communication interfaces are then described. Additional documents are referenced in the detailed specification of the interfaces. Some of these were compiled by external groups (AGK S/PRI) based on requirements developed in the NGA forum. The core of the specifications is the detailed presentation of the key business processes in the end customer relationship, namely: -

provision of a "new connection" (connection / activation)

-

termination (cancellation without switching supplier)

-

fault repair and

-

switching supplier in the key technical switching scenarios.

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To achieve this, textbook processes and key exception processes are defined. These are depicted in flow-charts in which the overall process is broken down into subprocesses. These are accompanied by text describing in detail each step required at the interface between end customer provider and NGA operator, along with the information to be exchanged there. Particular attention was paid to a uniform model for switching provider, in order to allow the end customer to switch with as little interruption as possible, via reliable coordination of all parties involved. Interfaces and processes have therefore been described for this area, both vertically between the various supply chain parties involved, as well as horizontally between competitors. Finally, the presentation includes an overview of the process-relevant Service Level, which the cooperation partners are to agree on. Furthermore, the business cases in the context of network connection via the A10-NSP interface are described, and fundamental aspects of invoicing between the NGA operator and end customer provider defined. The description of the business processes aims to provide NGA operators and suppliers of end customer NGA products with descriptions of the processes necessary during wholesale product cooperation that are uniform and as simple as possible. In addition to the L2-BSA interface itself, other interfaces are required for order management and operations. These also need to be defined, as does their technical implementation. Specifically, these are the web-based interfaces for dealing with order and fault repair processes, as well as other web-based interfaces for operational and diagnostic processes. II.1.4.3 Diagnosis interface A diagnosis interface (DIAGSS) is specified in a separate document. It indicates the necessary IT-oriented interface for requesting information in an access network operator's network that is required for interoperable and uniform diagnosis of end customer connections. The diagnosis interface (DIAGSS) makes it possible to process operations for diagnostic purposes within NGA networks. Here, dedicated standardised diagnosis enquiries from a service provider are sent to an upstream system belonging to the access network operator via the defined interface operations. The upstream system verifies the enquiries and, on receiving a positive response, generates an encapsulated enquiry to the corresponding operational monitoring system for further processing. The diagnosis operations available and the extent to which these can be operated are predetermined according to the networks and the technology these are based on.

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This specification describes abstract and general diagnosis enquiries (methods standardised in this document, including parameters and outgoings), which could be implemented across all technologies indentified relating to NGA. Which of these specified methods and the extent to which they could be accessed in agreed use of enquiries depends on bilateral agreements between two partners. Communication between two DIAGSS systems from the partners involved occurs via an automated electronic interface. This document describes the DIAGSS interface specification, the principles, the construction and the technical requirements for implementing this. II.1.4.4 Summary Ideally, the above service specifications could be used as a simple basis (in the form of a sample agreement) for bilateral cooperation agreements and adapted to specific situations. During development of the service specifications and the description of business process, NGA-relevant descriptions, recommendations and standards from numerous organisations and working groups were taken into consideration and in some instances implemented or expanded. Particularly noteworthy were the results of the IT summit, the Broadband Forum, the VDE, BEREC, the ITU and ETSI. As regards the description of the order and diagnosis interfaces, the close cooperation with the S/PRI (Supplier / Partner Requisition Interface) working group also deserves to be highlighted.

II.2

Shared use of infrastructure (eg in-house cable installation)

II.2.1 Deutsche Telekom field report on property owner declaration A field report by Deutsche Telekom on property owner declaration contains a description of the starting situation and initial empirical data from pilot cities, owner data collection, technical challenges and balancing aspects of FTTH rollout. As regards inhouse cabling set-up, it was shown that excess construction is often impossible as a result of exclusive contracts. The rate of consent to property owner declaration emerged as the core focus. There are however no contractual restrictions whatsoever in this respect from third parties which would prevent home owners from consenting to a property owner declaration for setting up a home entry point.

II.2.2 Access to fibre in-house cabling – initial experiences in France and lessons for Germany In terms of initial experiences in France with fibre in-house cabling, the symmetrical regulation was first considered within the context of the French regulatory regime. This

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was followed by a description of the regional division of the symmetrical access regime in France, namely into areas with higher and lower population density. First experiences with the French symmetrical access regime were analysed. In terms of any lessons for Germany, attention must be drawn in particular to the following points: France has thus far focused solely on symmetrical regulation for FTTH. In Germany, discussions on symmetrical regulation have centred on access to fibre home networks in heavily populated areas. The French regulation regime for heavily populated areas does contain constructive elements (eg access obligation, transparency obligation, obligations for non-discriminatory and cost-oriented prices with appropriate risk compensation). It became clear overall, however, that the findings of the study are only transferable to a very limited extent, due to the markedly different framework conditions in France. A core element in setting the course for the future significance of these aspects will be the relevant final arrangements under section 77a of the TKG.

II.3

Cooperations/Co-Investment

Following publication of the interim report it was decided to continue work on cooperations/co-investment, whilst however waiting for a concrete study of the availability of commercial solutions. To date, however, there are no concrete commercial projects. According to the analysis carried out by the NGA Forum, the main reason for this may be that the transaction costs associated with cooperations are prohibitively expensive. This theory has been confirmed by similar experiences in Italy. Nevertheless, if concrete cooperations in broadband rollout occur between companies in the near future, the principles of competitive law published by the Bundeskartellamt in consultation with the Bundesnetzagentur in January 2010 will still apply.

II.4

Broadband rollout in rural areas

One focus of the NGA Forum was the deployment of broadband in rural areas and the elimination of so-called white spots.

II.4.1 LTE rollout situation In addition to generally relevant factors such as willingness to pay on the demand side, other aspects are of particular importance for rollout in sparsely populated areas, including expansion of fixed wireless broadband connections (eg LTE), synergy effects in infrastructure expansion by telecommunication, energy supply and cable companies, and the sustained involvement of the public sector, particularly local authorities. By mid-2011 almost 99% of households had access to a broadband connection with bandwidth of at least 1 MBit/s. The goal for fixed wireless broadband rollout in the short-

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term is to cover up the "white spots". The assignment of 800 MHz frequencies has therefore been attached to a progressive coverage and roll-out obligation.8 The coverage requirements have already been met by the mobile operators in Bavaria, Baden-Württemberg, Hessen, North-Rhine Westphalia, Rhineland Palatinate and the Saarland. This means that the frequencies can now be used to continue improving broadband provision. Delays may however occur as a result of planning permission. In the medium term, the aim is to provide nationwide mobile broadband (with data speeds similar to DSL today) together with LTE1800 and LTE2600. LTE has also been integrated in the federal government's Broadband Atlas since July 2011.

II.4.2 Cooperation with the public sector in rural regions The discussion regarding the financial support options of the government, and thus of it sharing in the risk of rollout, should involve all decision makers. Varying forms of cooperations with the public sector in rural areas could result various advantages and disadvantages. In addition to the use of synergies in public infrastructure expansion plans, forms of cooperation also include surety programmes and (low-interest) loan programmes, along with support schemes and public private partnerships (PPP). Lastly, there is also infrastructure construction by the public sector itself. In terms of synergies in infrastructure expansion, for example through energy suppliers, it has become clear that these can make a significant contribution to the construction of a broadband network in rural areas. In many cases broadband coverage is sustainably supported, particularly by SMEs. Rural areas can only be reached by combining a range of initiatives to a greater extent than in towns and cities. The keys to success in terms of economic viability have emerged as the shared use of infrastructure, coordinated installation activities or funding along with large market shares through regional sales. This adds to the significance of the Infrastructure Atlas and its continued development.

II.4.3 Assessment A number of cases have already seen notably positive results which could also be applied as examples of best practice; these include local authorities in Hohentengen am Hochrhein (Baden-Württemberg), Rudelzhausen (Bavaria) and Wollmershausen (Baden-Württemberg). Through the use of all available options, nationwide capable broadband access can be achieved within a short space of time.

8 Cf. Decision by BNetzA of 21 October 2009 (BK1a-09/002)

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II.5

NGA rollout business case: demand, costs and competitive effects.

II.5.1 Demand patterns and willingness to pay for fibre network services Demand patterns and willingness to pay for fibre network services were investigated in a market research study discussed in the NGA Forum. The demand for greater bandwidth was examined, as was current Internet usage and the dependency on available bandwidths, driving factors in demand, along with willingness to pay. One significant finding was that customers are prepared to spend around € 5 for greater bandwidth. Availability, demand, price and quality emerged as the core strategic success factors.

II.5.2 Implications of nationwide fibre rollout and its subsidy requirements The NGA also looked at the investments necessary for the construction of fibre networks. To this end, the Scientific Institute for Infrastructure and Communication Services (WIK) carried out a detailed model calculation for the deployment of a nationwide fibre network throughout Germany. This is based on geo-coded German building locations, the geo-coded German road networks and statistical data on households and businesses, taking the main distribution frames – also geo-referenced – as new scorched nodes (Metropolitan Point of Presence, MPoP) for the fibre connection network. One FTTB and three FTTH concepts (see table 1) were also modelled, on the assumption that only the building access and the in-house cabling are dependent on the penetration rate. Network expansion to the street outside each customer's building was, on the other hand, presented as full-scale rollout. Table 1:

Systemisation of the three FTTH concepts analysed in terms of topology and technology

Technology

Ethernet GPON

Topology Point-to-point Point-to-Multipoint "P2P" "GPON over P2P" "PON"

Source: WIK.

The FTTH option, "GPON over P2P", combines the advantages of a passive network, which allows central unbundling to remain possible and is able to react flexibly to future broadband challenges, with the saving potential of GPON technology. In the analysis, the areas were aggregated into 20 clusters of similar customer density in such a way that each cluster contained around 5% (approx. 2 million customers) of the overall number. Allocation of the areas to these 20 clusters is shown in Figure 7. For installation costs, it was assumed that these would increase with the density of access lines and would thus be significantly lower in rural areas than in urban centres.

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MDF Clustering Germany German border Federal state border

Cluster type (Customers per km²)

Figure 7

Connection area clustering according to customer density

The investments required depend very heavily on the population or connection density. Germany features a relatively heavy concentration of customers as a country, with the top 80% of customers in terms of population density inhabiting one third of the land,

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while the last 5% of customers in the most sparsely inhabited regions also take one third of land area. Cumulated weighting of clusters 100% 90% 80% 70%

Percentage of customers

80%

15%

5%

Percentage of land

33%

33%

33%

60% 50% 40% 30% 20% 10% 0% 1

2

3

4

5

6

7

8

9

10 11 Cluster

Customers in cumulated % 

12

13

14

15

16

17

18

19

20

Land in cumulated %

Source: WIK. Figure 8

Concentration of customers and space (cumulated share of total)

The costs for nationwide fibre rollout including more rural clusters were also calculated based on the hypothesis that the fibre network would replace copper in these areas. The profitability of fibre access networks is limited, however: all indications suggest market driven substitution will only succeed in a limited area. For the purposes of this study the investment volume of nationwide rollout in particular was nevertheless relevant. While investments of just over € 1000 per connection are necessary in the low cost areas, investments in sparsely populated areas of the country reach over € 4000 per connection. Reflected in the costs, these range from € 30 to € 70 per customer per month in order to present cost-covering prices. According to the model calculations carried out by WIK, depending on the architecture and technology implemented, a nationwide fibre network with potentially over 40m access lines in Germany would need investments ranging between € 70 to 80 bn. Of this amount, around 80% goes towards the so-called passive network, in other words the installation of fibre from the MPoP to the customer, and less than 20% towards the active electronic network components. Figure 9 shows the necessary investments for

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nationwide coverage on the one hand and for population coverage of 80% on the other. Reducing the scope of the rollout by 20% of the population decreases investments on average by 30%.

Investments in billions of euros For the top 80% of customer in terms of pop. density on 1/3 of the land

Figure 9

National

Total investments for 80% and for nationwide rollout and operation at 70% penetration (in billions of euros)

FTTH/PON architecture requires the relatively lowest level of investment; however the differences in investment volumes for the architectures are relatively low. The difference for national rollout between FTTH/P2P and FTTH/PON in only around 5% (up to 10% in the analysis of individual clusters). Table 2 breaks down total investments into the 6 most important components which make up between 97% and 99% of all investments.

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Table 2:

Breakdown of investment components for a national fibre network

FTTB***

PON

PON + inhouse

P2P

P2P + inhouse

GPON over P2P

GPON over P2P + inhouse

Total investment [€bn]

79.34 €

69.31 €

74.35 €

72.78 €

77.82 €

70.86 €

75.90 €

FTTR*

65 % 51.84 €

76 % 52.95 €

71 % 52.95 €

73 % 52.78 €

68 % 52.78 €

74 % 52.78 €

70 % 52.78 €

Building access line

14 % 11.18 €

16 % 11.18 €

15 % 11.18 €

15 % 11.18 €

14 % 11.18 €

16 % 11.18 €

15 % 11.18 €

7% 5.04 €

In-house cabling

6% 5.04 €

7% 5.04 €

FTTB - Mini DSLAM

14 % 10.96 €

CPE

3% 1.99 €

5% 3.81 €

5% 3.81 €

5% 3.31 €

4% 3.31 €

5% 3.81 €

5% 3.81 €

Active equipment at MPoP

4% 2.98 €

2% 1.12 €

2% 1.12 €

5% 3.99 €

5% 3.99 €

1% 0.68 €

1% 0.68 €

Rest**

0% 0.39 €

0% 0.26 €

0% 0.26 €

2% 1.52 €

2% 1.52 €

3% 2.41 €

3% 2.41 €

Passive network *

Active network

Passive network of customer-side ODF port to branch joint on the street in front of the building.

** Rest: MPoP investments in area, network-side ODF ports, IPTV platform, central splitter for GPON over P2P. *** The results for FTTB only have limited significance: FTTB benefits in particular from high customer numbers per building, where investments in Mini-DSLAM are less expensive than in-house cabling for each customer. The average created per MDF and cluster in the analysis results only in relatively low customer figures per building, even in urban areas. The model architecture always prescribes one miniDSLAM per building (also in rural areas with just 1-2 customers per building). An investor would not set up FTTB on this basis and the results column for FTTB can only be interpreted to a limited extent. Source: WIK.

In the greenfield case presented, the differences between architectures are very small in absolute investment values in the passive network of ODF port in MPoP to the branch joint on the street in front of the building (FTTR). As this section makes up the dominant share of network investments (FTTR alone is over 70%), it follows that only small differences exist in total investment volumes. Measured in terms of the amount of investment required9, the advantages of PON over P2P have their roots above all in the overall cheaper active equipment at the CO and (in the greenfield case) not in cheaper fibre installation.

9 Here we are considering and evaluating differences in performance which do not exist between a PON and P2P architecture.

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Starting with the approximated degree of ducted cabling in the German copper network, a brownfield sensitivity estimated the extent to which the various concepts could profit from free access to empty ducts, assuming favourable circumstances. The difference in fibre count in the feeder segment between the MPoP and the distribution point (now the cable splitter) was taken into account here. As the assumption, particularly in rural regions, was that no pipe pullers were used in the construction of the copper network, the investment-reducing effects are only small on the whole, based on the copper network infrastructure alone. Due to the high amount of fibre cable installation costs, all measures which could reduce these costs, such as coordinated installation activities and use of (other) existing infrastructure, will be of great significance in future. Construction and operation of an FTTB/H network involves high fixed costs which do not vary greatly with the number of customers. This means that costs per customer are heavily dependent on penetration achieved. Figure 10 shows the costs per customer according to the penetration rate in each of the 20 clusters using the example of FTTH/P2P without in-house cabling (the cost curve for cluster 1 is at the bottom left, the curve for cluster 20 is at the upper right in the diagram). It clearly shows that low penetration rates require high end customer prices in order for the network to operate profitably. In contrast, if the end customer price is fixed between € 30 and € 40, as can be observed on the market today, high penetration rates are needed to ensure profitability. Even in the more densely populated regions, penetration rates of at least 40%, preferably over 60% are thus required in order to operate fibre networks profitably. In less densely populated clusters in particular the rates are significantly higher. 100 €

Cost per subscriber and month

90 € 80 € 70 € 60 € 50 € 40 € 30 € 20 € 10 € 0 € 0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Penetration

Source: WIK.

Figure 10

Monthly total cost per customer for FTTH/P2P without in-house cabling depending on penetration rate

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When analysing the profitable range, it was claimed that maximum penetration of the FTTx network was 70%, as a share of potential customers exclusively select other connection technologies (mobile services, broadband cable) or no demand develops at all.10 Based on current end customer prices and a limited additional willingness to pay for fibre connection, and taking into account the secondary factor that clusters may reach a maximum of 70% penetration to break even, it could be possible at best to provide between 25% and 45% of the German population profitably with fibre access lines, depending on the scenario. In sensitivity calculations for FTTH/P2P without in-house cabling, investments per end device were increased by 25%, investments in excavation work for building access lines by 33% and the small amount of aerial cabling in rural areas assumed in the basic case was set to zero. Monthly costs thus increase by around € 2 per customer and the profitable range decreases by one cluster from 35% to 30% of customers. If it is alternatively assumed that at best a penetration rate of 60% can be achieved for the new NGA instead of 70%, the profitable range of FTTH/P2P without in-house cabling is reduced from 7 clusters (35% of customers) to 5 clusters (25% of clusters), which highlights the key role of the penetration rate. Under current circumstances, profitable fibre connection would thus not be possible for the majority of the population. The expansion limits quoted can be (locally or regionally) further stretched, if the investments required for the network operators decrease, higher network usage/penetration rate (over 70%) was able to be achieved or end customers were willing to pay higher prices for fibre-based services (between € 40 and € 70 per month and connection). Instead of different regional cost-covering prices, a higher national price could compensate for deficits in non-profitable regions. Taking the losses that occur with a price of € 38 per month and a penetration rate of 70%, the national uniform price for all customers would have to be around € 44. The users themselves can also ensure that a greater degree of coverage becomes marketable through their own contributions. Depending on customer density and level of deficit, a one-off investment injection of several hundred to approximately € 2,500 with network usage of 70% would be required. If, for example, customers took responsibility themselves for in-house cabling, with there being good arguments in favour of this, network operators could save investments of approx. € 5bn. Furthermore, if home owners bore the cost of cable installation on their premises, which has been proven to increase the value of the house and grounds, network operators would be able to save investments of approx. € 11bn. Both measures taken together and on an individual basis would significantly increase the marketable range possible for fibre expansion. Greater coverage could also be achieved by government subsidies. With an optimistic

10 The range of the current copper fixed network is approx. 80%

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view of costs and profits, a government investment injection of around € 14bn would be necessary for a nationwide fibre network. Realistic or more pessimistic expectations see subsidy requirements climb to up to € 30bn. Moreover, all model calculations are based on the non-explicit assumption that a potentially accelerated rollout would cause no significant cost increases or capacity congestion in the necessary wholesale products such as empty ducts or excavation work. Operational and procedural aspects of expansion (eg lengthy processes for obtaining owner data and approval; planning scarce underground construction resources; very limited window of time for negotiating what are as a rule very long term supply contracts with the housing industry; very complex and time-consuming negotiations etc.) are also however insufficiently included in the models, if at all. Despite these problems, it can be ascertained that the current rate of expansion achieved in concrete terms with fibre access lines has not yet reached the profitable potential it has even under unfavourable model assumptions. Summarising classification of results Through its depth of detail and the broad number of parameters considered, the study permits a varied analysis of the issues relating to fibre expansion. In particular, on the basis of certain assumptions, conclusions can be drawn on the extent to which corresponding profitable expansion is possible and what effect certain variables have on this. The members of the NGA Forum have agreed on the following critical success factors for fibre expansion: o

Significant progress requires the development of demand (penetration) and willingness to pay by customers (ARPU); profitable network expansion options depend to a crucial degree on the expected ARPU (significance of attractive services) and the achievable penetration rate. The achievable penetration rate is influenced in particular by infrastructure competition from cable network operators and mobile only users; it is thus not determined in the model. The latter also applies to the level of ARPU, which is not derived in the model, but instead merely represents a starting point for scenario calculations.

o

Furthermore, any existing willingness on the part of the user to make a contribution (eg by assuming certain costs), could be the starting point for more extensive nationwide fibre rollout.

o

Regarding the significance of the penetration rate, if fibre is successfully deployed, this will also depend on making a quick changeover to this new infrastructure

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possible, thus reducing the migration phase. Migration costs and risks are not incorporated into the model. The model calculations show that effort is required by all involved in order to realise the necessary investments and offer end customers attractive services. Co-existence of several fibre networks is not a sensible economic alternative. The construction of fibre networks requires a very high penetration rate, even in areas where it is essentially already profitable. This highlights the necessity, while the new networks are being established, of developing and providing suitable access products, which enable competitive involvement of all market partners in the necessary fibre network usage. It is also evident, however, that the current rate of expansion achieved with fibre access lines has not yet reached the potential it has even under unfavourable circumstances.

II.5.3 WIK study "Architectures and competitive models in fibre networks" on NGA architectures The WIK study "Architectures and competitive models in fibre networks" looks at four different NGA architectures (Ethernet P2P, GPON over P2P, WDM PON, GPON) with five wholesale scenarios. The study reaches the following conclusions and makes the following recommendations, amongst others: -

The passive topology of the future fibre networks determines the intesivity of competition and thus potential market successes in an NGA environment.

-

A P2P topology permits market participants the largest selection of applied technologies and is thus the only guarantee for technology neutrality.

-

The higher investment costs associated with P2P topology are more than counterbalanced by the welfare effects of the business models possible as a result and their dynamic advantages.

III Conclusion/Outlook Nationwide capable broadband access could already be achieved within a short period of time. LTE expansion and financial support options from the government have particular significance here. The necessary expansion of high-speed networks could also be made reality within a reasonable length of time. Through a mix of strategies and technologies (VDSL, FTTB, FTTH, cable TV and wireless technologies) this goal can be achieved competitively. Interoperability (in the sense of agreement on technical interfaces and operational processes) is a central element here for the success of the rollout of future broadband infrastructure. The adoption of the two documents marks a significant breakthrough for planning security and additional investments. The NGA Forum has thus made a considerable contribution to the implementation of the federal government's broadband strategy.

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In light of this, the NGA Forum considers it constructive to continue with its work, particularly in order to follow up the efficient work carried out by the interoperability working group This will also involve monitoring whether and to what extent the concepts developed by the NGA Forum have found their way into practice. The following points were identified amongst others as topics for the interoperability working group: •

Specification of a Layer 0 wholesale product

•

Specification of a L2 business customer product

•

Checking implementation of a BSA design for cable networks

•

Completion of diagnosis interface

•

L2 sample agreements using several technology examples

For process interoperability, the focus is to be on the implementation of the processes defined in the work so far in an order interface which can be used generally on the market. In addition, further agreement aspects, especially of the multilateral variety, are to be developed where necessary. The NGA Forum also wants to reserve the right to consider other topics, depending on the current situation (for example the issue of in-house cabling since the TKG came into force, in order to assist swift practical implementation).