INTUG Publishes Report on NGN and NGA
INTUG has identified NGNs as a strategic priority for its members, contacts and for business users globally. As a result, it commissioned a detailed paper by Stratix Consulting to analyze the issues from a business user perspective, recognizing that the focus in regulatory debate until now had been directed towards the telecom operators’ perspectives.
The paper highlights key issues to stimulate debate at national and international level within INTUG member communities and elsewhere. It also gives valuable input to INTUG’s response to the European Commission’s consultation on NGA Networks, which will be submitted separately. Both documents will be in the public domain.
The timing is critical. Major investment decisions are being made by both the supply and demand side of the industry. Improvements in growth, productivity and jobs for the whole economy, not just the telecoms sector, are now of paramount importance, especially with many parts of the world’s economy now in recession.
NGNs represent an opportunity to improve the quality and cost effectiveness of services for business users and for domestic residential consumers, bringing greater harmonization and consistency to network solutions internationally, more stimulation for innovation and investment, and a more vibrant environment for competition.
There are risks, however, with the way NGNs, and their associated Next Generation Access (NGA) services are implemented and regulated. In the worst case scenario, they could foreclose competition, rather than encourage it, re-monopolizing sections of the industry, and further fragmenting the patchwork of national networks in the EU and elsewhere, which exist today. This must not be allowed to happen. Initiatives such as the Framework Review in Europe, policy decisions made at ITU’s WTSA-08, and other regulatory developments throughout the world, must ensure it does not.
The paper explains why financial investors in the telecommunications industry are influencing operator strategy by judging investment risk on a short term equipment replacement cycle, whereas previously the investment cycle of an operator was measured in decades, rather like real estate.
This short term risk reward calculation uses time periods similar to market analysis cycles of National Regulatory Authorities (NRAs), and leads to a short-term attitude to policy. The long-term damage to the industry and to business users of its products and services may be severe, if the long-term implications are overlooked.
NGNs are actually an implementation of technologies well established in private networks and the Internet, in which intelligence moves both to the center and to end user devices. Some incumbent operators, however, initially viewed NGNs primarily as a low cost PSTN replacement platform.
There were therefore signs of trying to re-impose the philosophy of central/state control, in order to preserve traditional operator business models, most notably in terms of vertical integration. Whilst this can be useful as a service offering in some cases, businesses need both horizontal and vertical integration, and the option to change from one to the other. Some incumbents are now revising their NGN technology plans as they take a broader view.
The position paper explores the impact of topology, rather than technology, on future investment, innovation and competition, and concludes that regulation is needed to ensure that topology does not foreclose competition. This might occur for example, where Local Loop Unbundling became non-viable for competitors, when collocation options moved from exchange level to street cabinet level. In such circumstances, the non-discriminatory availability of equivalent wholesale inputs, notably Ethernet and Bitstream are essential. Where even this does not lead to effective competition, an exceptional remedy of functional separation may become necessary.
Fixed and wireless networks now complement each other and are used in some applications interchangeably. Regulatory and technical solutions must accommodate this reality. The artificial disparities in cost between equivalent services depending on the underlying technology, when costs are not dissimilar, must be eliminated, as must disproportionate charges for transiting more than one network of either type. The decisions on termination rates in the EU and elsewhere must resolve this.
The business user community could generate a step change improvement in growth and productivity through efficient ICT-led investment, at a time when it is desperately needed. This is most likely to occur where NGNs are implemented in a way which:
- facilitates open international competition
- eliminates bottleneck facilities and resources
- encourages innovation and long term investment
- generates harmonized solutions between public and private networks
- enables both vertical and horizontal integration of business processes
- acknowledges the specific needs of business users
- optimizes the international process of migration from legacy networks
Comments on the paper are welcome and should be addressed to:
Nick White
Executive Vice President
INTUG
Email: nick.white@intug.org
Source: INTUG
