2.7. Ethernet lines

Further to the publication of RELLO by PTC, on 6 December 2010, comments on that offer were received by OniTelecom, Optimus, Verizon and Vodafone. A joint position on RELLO taken by Colt, OniTelecom, Optimus and Verizon was also received on 24 October 2011.

Although OSP generally agreed with RELLO, some OSP considered that the offer is somewhat limited and fails to fully meet ICP-ANACOM's determinations, thus requesting its review as far as some specific points were concerned.

The following comments must be stressed from those received on the issue:

(a) Levels of service and compensation for non-compliance

Indicators of levels of service defined in RELLO - namely, setup times, times to restore service and availability - are deemed to be unadjusted to the reality of the sector, this being the aspect which, for example, in Optimus' view is the most serious shortcoming of the offer.

Optimus suggests as follows:

• To establish a setup deadline of 50 days for 95% of cases and of 100 days for 100% of cases, and to define more demanding compensation amounts, with a deterrent effect on failures to comply, for the set of 95% (which shall not be lower that 50% the monthly fee per day of delay).
• To establish a service restore deadline of 4 consecutive hours for 95% of cases and of 12 consecutive hours for 100% of cases, and to define variable compensation amounts according to the extent of the delay, which shall not be lower than 12.5% of the line monthly fee per each hour of delay in the repair of the fault.

These proposals correspond to those included in the joint position taken on RELLO by Colt, OniTelecom, Optimus and Verizon.

As regards the degree of availability, Optimus, based on public tender data on RELLO and other European reference offers, supports that the service availability should be of at least 99.5%. The joint position taken on RELLO by Colt, OniTelecom, Optimus and Verizon proposes a level of at least 99.79%, with compensation amounts depending on the value of the deviation from the objective, and not lower than 0.5% of the total of monthly instalments per each one hundredth below the vale defined.

Vodafone focuses more on fault repair times and availability than on supply times. According to this operator, as Ethernet lines tend to be used in high-speed connections, there is a greater need for ensuring more demanding parameters of quality of service, bearing in mind the risk of loss of greater volumes of traffic. As such, Vodafone suggests fault repair times that vary between 4 hours, for 90% of situations, and 24 hours, for 100% of situations. The definition of a repair deadline for 100% of faults is in fact a critical point, in the view of Vodafone, because, otherwise, a selective performance by PTC is allowed, for fault repairs and other problems of service, and makes room for an absence of objective for some situations. As regards the degree of availability, Vodafone proposes values between 99.95% for 10M and 99.99% for 1G.

OniTelecom refers that setup deadlines are higher than those defined for LLRO and for the "PT Ethernet Network" commercial offer (the latter establishes in average 15 working days for budget and 30 working days for setup), and the same occurs as regards restore times, that exceed those laid down in LLRO.

OniTelecom highlights, as well as Optimus, that deadlines for 100% have not been defined, both for setup and service restore.

According to OniTelecom, the availability level (98%) is low - when compared, for example, with levels established in LLRO - and is calculated per set of lines, being insufficient for the business market standards. It seems also to OniTelecom that there is no technical reason for RELLO levels to be different from those in LLRO.

Lastly, OniTelecom supports the inclusion of a repetition limit for incidents of degradation of service, per line.

Both Optimus and OniTelecom showed comparisons with Ethernet offers provided by other European operators.

Verizon also focused on deadlines for setup, repair and service availability, establishing a comparison with times defined in Spain (for example, in Spain the setup deadline is 60 days for all cases, whereas in Portugal it is 60 or 120 days for 90% of cases; the repair deadline is 6 hours, whereas in Portugal it is 12 hours for 80% of cases; and the level of availability is 99.93%, whereas in Portugal it is 98%). According to Verizon, not only times are excessive, but it is problematic that they apply to a limited set (that is, to a percentage of situations).

(b) Compensation for non-compliance with levels defined and forecast plan

Optimus, OniTelecom and Vodafone, as well as remaining operators that subscribed the joint position on RELLO, advocate that payment of compensation in the scope of RELLO should no longer be dependent on the sending of forecast plans (e.g. LLRO and RUO) and that such compensation should be paid proactively by PTC.

Vodafone refers specifically to the absence of a relation between the supply of a forecast plan for engaging new services and PTC's performance in repairing faults of services already engaged and delivered and in complying with their degree of availability.

Vodafone refers further that, given the dynamics of a telecommunications network, it is hardly able to predict requirements for new services one year ahead, with details at the level of type, speed and termination points of each line, as specified in RELLO.

Vodafone thus believes that the forecast plan should cease being indexed to compensation for non-compliance with objectives defined, and deems it unacceptable for PTC to demand compensation for any costs incurred due to the lack of inaccuracy of the beneficiary.

As regards the amount of compensation, according to Vodafone, compensation for non-compliance with objectives related to fault repair times and degree of availability is clearly insufficient and inappropriate given the impact of damage arising for beneficiaries of RELLO from non-compliance with the referred parameters, which, as such, do not encourage compliance with levels of quality by PTC.

Vodafone deems it fundamental that a scheme of steps is established where the amount of compensation is proportional to the level of non-compliance, that is, the greater the failure to comply, the greater should be the compensation.

(c) OSI layer 2 services and technical characteristics

Optimus stresses that the RELLO is typically a layer 1 offer (of the OSI model), and does not include a set of relevant information associated to the service performance, namely latency, packet loss and jitter, which implies additional and significant costs of the interface with PTC and of equipment at the client. In this case, Optimus proposes that, like offers provided in other countries of the European Union, OSI layer 2 services are supplied, including the associated and above-mentioned relevant information (Optimus believes that the information on latency should be supplied regardless of the nature of the service to be provided and additionally, it should be lower than 1.5 ms, in order to meet the market's most common requirements; furthermore, the online provision of the quality of service monitoring should be guaranteed).

On the other hand, maximum MTU (Maximum Transmission Unit) values are, according to Optimus, below the requirements of specific markets, namely as regards requirements associated to Data Centers, so Optimus proposes that maximum MTU values of 1916 bytes or higher are introduced, where PTC makes them available in the scope of its retail offers.

OniTelecom also mentions that RELLO does not present a distinction according to classes of service, which would not be a problem in case available lines via RELLO guaranteed an appropriate quality of service to support the class of service with the desired best quality (which is the approach followed in Spain). According to OniTelecom, RELLO fails to present a comprehensive technical line specification, namely at the level of transmission parameters, thus it is not clear what their level of quality is. As such, the company suggests the introduction of the same parameters suggested by Optimus (that is, latency, jitter and packet loss).

The absence of references to higher level parameters (that is, latency, jitter and packet loss) was also highlighted by Verizon.

OniTelecom further comments the absence of sub-speeds (that exist only for CAM and inter-island lines - 1 Gbps sub-speeds - due to limitations of the available capacity in those routes, not at the option of the beneficiary operator).

Lastly, OniTelecom supports the inclusion of line testing mechanisms before lines are placed into service (acceptance testing).

The proposals above were also included in the joint position taken on RELLO by Colt, OniTelecom, Optimus and Verizon, having also been proposed the "guarantee of transparency of the PT Ethernet network to IP precedence information (IP PREC)". This joint position further suggests that ICP-ANACOM launches an analysis of the introduction of a modality of access to RELLO based on a layer 2 model.

OniTelecom identifies a set of specific technical issues, which must be clarified at technical level between the two companies.

(d) Support infrastructure

Optimus, as well as other operators that subscribed a joint position on RELLO, refer that PTC does not guarantee the provision of lines in specific technologies (e.g. fibre optic), however some public tenders make specific demands on the infrastructure to be set up. For this reason, Optimus suggests that the introduction in RELLO of a service that identifies the infrastructure (i.e. fibre, copper...) underlying a given line, including the definition of response times and respective compensation to information requests made by OSP.

OniTelecom makes a similar claim, stating that in other countries this distinction is used, where appropriate, to differentiate prices and levels of service, which is more objective and transparent.

(e) Loyalty periods on account of upgrades or changes of network termination points (NTP)

Optimus takes the view that the introduction of loyalty periods of 12 months for any change of NTP or for service upgrades is abusive and disproportional, thus it proposes the removal of the 12-month loyalty obligation, in case NTP changes or upgrades are required.

Vodafone goes further than this, disagreeing with the loyalty period obligation as the tariff already includes service setup fees (and network dynamics are not consistent with such loyalty periods). Vodafone refers that the situation is even more serious given that RELLO provides that the change of any NTP or speed (even for upgrade purposes) implies a new minimum loyalty period.

Vodafone thus supports that all obligations in the offer concerning loyalty periods should be removed.

(f) Charging for cancelled lines

Optimus refers that there is no transparency as regards the charging of costs associated to cancelled lines (in particular, the absence of limits associated to such costs and the fact that cost elements incurred by the provider prior to and during the cancellation process fail to be identified).

Vodafone commented also this aspect of RELLO, referring that the amount charged for the cancellation of requests, even if PTC has not yet started the line setup, is completely inadequate.

(g) Advance notice on the dismantling of a line

Vodafone declares not to understand the reasons for the requirement to inform 30 days ahead of the dismantling of a line. According to Vodafone, in all leased transmission services, the cancellation of a line is only requested when it is no longer being used (to avoid any type of interruption and service failure). Provisions in the offer require beneficiaries, according to Vodafone, to bear another service monthly fee even when the line is not used.

As such, Vodafone is of the opinion that the period for communicating the dismantling of a line should be shortened and, at the same time, the obligation to pay the last monthly fee should be removed.

(h) Deadlines for claiming against invoices and compensation

According to Vodafone, there is a disparity between rights and obligations of PTC and those of RELLO beneficiaries, as regards deadlines for claiming against invoices and compensation for non-compliance.

Vodafone declares that the beneficiary has 90 days to present to PTC a claim against amounts invoiced or compensation and, on its turn, PTC is entitled to charge values due for set up and line monthly fees in the invoice of the month concerned or in the following months, without any type of limits to a possible retroactivity.

Vodafone deems it fundamental that differences at the level of deadlines binding each of the parties are corrected in the offer, so that the contractual relation is endowed with a healthy balance that is appropriate to its proper implementation.

(i) Securing lines

Vodafone refers that RELLO only includes unsecured lines, and given the absence of guarantee of quality of service and lack of redundancy, the confidence in the solution and its reliability is removed, making it impossible to use such lines in transport solutions for more sophisticated clients or in the network of operators themselves.

According to Vodafone, if the offer of secured solutions is possible (currently subject to specific viability and budgeting analysis), its exclusion from the offer gives PTC room to technically prevent the solution or to define such a high commercial price that it becomes devoid of interest for the beneficiary (forcing it to opt for another type of solution, less flexible and economically less interesting and competitive).

(j) Reasonable requests for access

Optimus stresses the need for intervention as regards the total absence of information in RELLO as regards the meaning of "reasonable requests for access, under transparent, fair and non-discriminatory conditions" ¹, specifically concerning criteria for characterizing "reasonable requests for access", as well as the description of conditions associated to the determination of costs of "unreasonable" requests.

Optimus states that this situation has taken an increasing relevance given that PTC is allegedly already using this regime of exception in the scope of requests submitted by Optimus, presenting values which are clearly excessive and without any detailed justification for costs incurred.

Each of the referred aspects is addressed below.

(a) Levels of service and compensation for non-compliance

- Setup time

Although PTC makes a distinction as far as the setup time is concerned according to the location of local exchanges serving the NTP and to the line capacity, there seems to be no reason for such extensive time limits, when compared to traditional leased line deadlines (LLRO). As Ethernet lines are typically supported on fibre optic, it is justified to define a longer period of time for areas where this infrastructure has not been yet implemented, when compared to setup times for traditional lines not exceeding 2 Mbps, typically supported in copper pairs and which practically have universal coverage.

The definition of a 60-day deadline for any type of Ethernet lines would be close to the setup deadline for 155 Mbps lines provided for in LLRO, which was lowered under point D 1 to 20 or to 40 calendar days, for 95% of cases, respectively for lines involving only Type A exchanges, defined as such in RELLO, and for the remaining cases, and under point D 2 to 40 or to 80 calendar days for 100% of cases, respectively for the referred connections.

Table 3. Levels of service: RELLO vs. LLRO setup times

	Deadline	Universe
LLRO	33 days to 59 days	95%
RELLO	120 days (60 days for Type 1 < 1GB)	90%

Time-limits of 60 days (that is, two months), for the setup of 10M or 100M lines between PTC's main network exchanges (in which optic infrastructure already has been implemented for the most part) or 120 days (that is, four months), in other cases, are clearly excessive and must be lowered, and there are no reasons why they should not be in line with deadlines defined for LLRO.

Note that the fact that the SLA covers only 95% of the set of lines, thus leaving out the most problematic cases.

On the other hand, RELLO provides that the order request may "require a technical feasibility analysis", and time limits for PTC responses have failed to be indicated. This situation is not reasonable, so deadlines for the technical feasibility analysis must be included in supply times.

As such:

D 17. The deadline for supply of leased lines in the scope of RELLO, regardless of the type concerned, shall be:
 
- 20 calendar days, for 95% of cases, and 40 calendar days, for 100% cases, for lines involving only exchanges of Type A, defined as such in RELLO;
 
- 40 calendar days, for 95% of cases, and 80 calendar days, for 100% cases, in remaining cases,

 being assessed on a monthly basis for the set of lines supplied to a specific OSP, and including in that time-limit any periods related to a technical feasibility analysis.

In line with provision in D 3 as far as LLRO is concerned, it is considered also in the scope of RELLO that compensation currently defined for failures to comply with supply times for 95% of cases should also apply to failures to comply for 100% of cases.

D 18. PTC shall apply in the scope of RELLO determination D 3 hereof.

- Fault repair time and availability

Given that the set of Ethernet lines is smaller than the traditional set of lines, there may be grounds, in certain situations, for a greater precaution in the definition of the degree of availability.

This is not clear as regards fault repair times, and it is not understandable why the fault repair time is in the scope of RELLO twice as high as that established for LLRO (or three times higher, in the case of 155 Mbps lines), which is aggravated by the fact that the set of covered situations is in RELLO lower than in LLRO where the term of comparison is 155 Mbps lines.

Table 4. Levels of service: RELLO vs. LLRO fault repair times

	Deadline	Universe
LLRO	6 hours (4 hours for 155 Mbps)	80% (90% for 155 Mbps)
RELLO	12 hours	80%

In this case, and compared to the "line network contract" (that is, operators with a set of more than 10 lines and less than 50 lines), the fault repair time-limit in RELLO should be at least equivalent to 155 Mbps end-to-end lines, which is 4 hours for 90% of cases.

However, and, as an indication, the specifications of the bid limited by pre-qualification for the conclusion of a framework agreement for the provision of voice and data communication services at a fixed location, for which PTC applied, provides for the restore of data services maximum values between 2 consecutive hours (for over 100 Mbps) and 4 consecutive hours (for 10 Mbps), even if on average and annual terms.

D 19. The deadline for leased line fault repair in the scope of RELLO shall be 4 consecutive hours for 90% of cases.

Also as regards compensation for non-compliance with repair times, there is no reason why different approaches should be adopted, according to whether repairs concern LLRO or RELLO. In fact, PTC's approach for RELLO was to adopt rules for compensation allocation similar to those provided for in LLRO.

As such:

D 20. PTC shall apply in the scope of RELLO determination D 4 hereof.

Also in the scope of RELLO, and in line with provisions made in D 5 for LLRO, objectives that cover all occurrences are required, thus PTC must include in RELLO fault repair deadlines for 100% of cases, submitting the respective grounds to ICP-ANACOM.

D 21. PTC shall apply in the scope of RELLO determination D 5 hereof.

As regards availability, the level set by PTC is lower to any of the levels established in LLRO, even for the basic contract lines (which apply to operators with a set of less than 10 lines, with a guaranteed availability of 99%).

An availability degree of 98% means that, in a quarter, for a 10-line operator, it is guaranteed that the accumulated fault repair time for the set of lines does not exceed 432 hours. This means that, in a monthly average, a line could be out of order for more than 14 hours, that is, each line would have in average more than one fault per month, even considering the fault repair time defined by PTC (12 hours for 80% of cases).

This situation is not admissible, nor compatible with market needs. Again, as an indication, it should be referred that the above-mentioned specifications defined annual degrees of availability of 99.90% (for connections at 10 Mbps) and 99.99% (for connections exceeding 100 Mbps) for the data service.

The degree of availability of 99.99% ensured in LLRO for "Line Network Contracts" and for 155 Mbps end-to-end lines seems excessive given the reduced set of lines which are under consideration here. In the situation referred to earlier, this would mean that in a quarter, a 10-line operator would only have two hours of non-availability for the whole set of lines.

Table 5. Levels of service: RELLO vs. LLRO degree of availability

LLRO	99.00% to 99.99%
RELLO	98.00%

In this case, taking by reference contracts of the wide line network and of the line network for 155 lines, it is deemed that an objective of 99.95% for the degree of availability for 1 Gbps lines is an appropriate value. Following a similar logic, the degree of availability for 10 Mbps and 100 Mbps lines is defined at 99.50% - value provided for in LLRO for lines of a capacity lower than 15 Mbps in the line network contract, and value proposed by Optimus.

D 22. The degree of availability applicable in the scope of RELLO is 99.50% for 10 Mbps and 100 Mbps lines and 99.95% for 1 Gbps lines.

(b) Compensation for non-compliance with levels defined and forecast plans

In this regard, the reasons laid down earlier, relatively to the dependency between the payment of compensation and the sending of demand forecast plans, apply as well, thus the amendments determined for LLRO should also be adopted for RELLO. Note as regards information to be included in the forecast plan that RELLO provides for the inclusion of the forecast of the number, type (Ethernet type 1, Ethernet type 2), speed (10M, 100M and 1G) and characterization of termination points of Ethernet lines, which is deemed to be reasonable and proportional, and therefore not subject to alteration.

D 23. PTC shall apply in the scope of RELLO determinations D 6, D 8 and D 9 hereof.

(c) OSI layer 2 services and technical characteristics

RELLO was imposed by ICP-ANACOM in the scope of the assessment of the leased line market.

In this scope it should be referred that an offer of OSI layer 1, such as RELLO, is more appropriate that an offer of layer 2, as the PT Ethernet Network offer was. This is an offer similar to the traditional leased lines offer, but supported on a different technology - Ethernet - and the parameters of higher level must, at the beginning, be guaranteed by beneficiaries of the offer, even if additional costs of interface with PTC and of equipment at the client arise.

Consequently, PTC is not required to provide Layer 2 services, without prejudice to the inclusion, in RELLO, of information on all relevant parameters associated to the quality of service of an offer of the OSI model layer 1.

D 24. PTC must include in RELLO information on all relevant parameters associated to the quality of service of an offer of the OSI model layer 1, and it is recommended that the company takes into account proposals already put forward or to be submitted by OSP.

As regards maximum MTU (Maximum Transmission Unit) values provided for in the offer, it is deemed that PTC should additionally guarantee an MTU value of 1916 bytes, where required by OSP, and assess on a case-by-case basis other requirements for higher MTU values.

D 25. PTC must guarantee in RELLO an MTU value of 1916 bytes, where required by OSP, and assess on a case-by-case basis other requirements for higher MTU values.

(d) Support infrastructure

According to PTC's letter giving reasons for RELLO prices, Ethernet lines are always supported on fibre optic, thus the issue of whether the line may be supported on other infrastructures (e.g. copper pairs) will not be raised. 

(e) Loyalty periods on account of upgrades or NTP changes

According to PTC, given the technology and investments required for the supply of Ethernet lines, which are always fibre optic lines, and that these costs are not reflected in the setup price, but in monthly fees, Ethernet lines should be subject to a minimum loyalty period of 12 months.

Although in the case of additional investments not covered by the setup price, the requirement of a minimum loyalty period is understandable, so that investments already made may be recovered, this requirement is not admissible where there are no additional investments not covered by the setup price. As such, in the case of NTP changes, a new 12-month loyalty period may only be imposed in case there is a new external local extension to PTC's exchange. Otherwise, minimum loyalty periods shall not be applied. In the specific case of line speed upgrades, it is deemed that the minimum loyalty period should be shortened to 6 months, and if the upgrade is requested before one year has elapsed from the provision of the initial speed, PTC shall maintain the current practise, that is, the company must not invoice remaining monthly fees until 12 months from the initial connection have elapsed.

D 26. Minimum loyalty periods in the case of the change of location of an internal NTP to PTC's exchange shall be removed from RELLO. In the case of speed upgrades, the minimum loyalty period should be shortened to 6 months (if the upgrade is requested before one year has elapsed from the provision of the initial speed, PTC must not invoice remaining monthly fees until 12 months from the initial connection have elapsed).

(f) Charging for cancelled lines

This issue bears some resemblance to the previous one. For example, in case PTC begins to install optic fibre to meet a request for the setup of Ethernet lines and, later, the operator cancels the request, given that the setup price does not cover all investment costs, such costs should be passed on to the operator.

It is not possible, at the outset, to estimate limits associated to these costs (although they should not exceed 12 monthly fees, which correspond to the minimum loyalty period), as such costs depend on materials and labour used up to the cancellation. Without prejudice, PTC must inform the operator that the technical process for setting up the line has already begun and clearly identify to the beneficiary the elements of costs incurred and, in case ICP-ANACOM's action has been sought, this Authority shall be given justification on the basis of orders for materials or specific works developed to meet the specific request which in the mean time was cancelled.

Just as for LLRO, RELLO must also provide that in case the cancellation is due to a delay in the line setup attributable to PTC, exceeding 15 calendar days, the OSP shall not be liable to pay for any amounts.

D 27. PTC must inform the RELLO beneficiary that the technical process for setting up the line has already begun, so that the company may be compensated for costs incurred in case the setup is cancelled or changed, and clearly identify to the beneficiary the elements of costs incurred.

 Where the cancellation is due to a delay in the line setup attributable to PTC, exceeding 15 calendar days, the OSP shall not be liable to pay for any amounts.

(g) Advance notice on the dismantling of a line

As regards VODAFONE's claim that the period for communicating the dismantling of a line should be shortened and, at the same time, that the obligation to pay the last monthly fee should be removed, ICP-ANACOM considers that there is no reason why time-limits defined in LLRO and RELLO should be any different, thus the 30-day deadline provided for in RELLO must be decreased to 15 days, as provided for in LLRO.

D 28. The time-limit for dismantling an Ethernet line shall not be less than 15 days, from the date of the request made by the OSP, except where PTC agrees otherwise.

(h) Deadlines for claiming against invoices and compensation

LLRO provides that "The line monthly fee is invoiced in the civil month concerned. In the month the line is set up, the OSP must pay an amount that corresponds to the setup price plus 1/30 of the monthly fee, per day that elapses from the Starting Invoice Date until the end of that month. These amounts are invoiced after the date of conclusion of the setup and included in the invoice of the following civil month ² (emphasis added).

RELLO, as referred by Vodafone, establishes no limit whatsoever as regards the moment on which the service is invoiced, stating that "In the month the Ethernet line is set up, the OSP must pay an amount that corresponds to the setup price plus 1/30 of the monthly fee, per day that elapses from the Starting Invoice Date until the end of that month. These amounts are included in the invoice of the month concerned or in the following months ³ (emphasis added).

Although this issue is purely contractual, governed by private law which exceeds the competences of the Regulatory Authority as it does not concern the sector regulation scope, this Authority considers that it must recommend PTC to include in RELLO a provision on invoicing similar to the one in LLRO, that is:

ICP-ANACOM recommends that PTC includes the following provision in RELLO: The line monthly fee is invoiced in the civil month concerned. In the month the line is set up, the OSP must pay an amount that corresponds to the setup price plus 1/30 of the monthly fee, per day that elapses from the Starting Invoice Date until the end of that month. These amounts are invoiced after the date of conclusion of the setup and included in the invoice of the following civil month.

(i) Securing lines

As in LLRO, RELLO does not give details of securitisation prices nor of the corresponding technical conditions. This is an already very specific solution which may be implemented in several ways, thus it is not deemed appropriate to define it completely in RELLO, technical and commercial conditions for securitisation been agreed on a case-by-case basis.

Without prejudice, there must be a minimum of predictability as far as this matter is concerned, so PTC must include in RELLO, as in LLRO, the general principles followed to define the technical and commercial conditions for securitisation, including main solutions and reference to the principle of non-discrimination.

D 29. PTC must include in RELLO the general principles followed in the definition of the technical and commercial conditions for securitisation, including main solutions and reference to the principle of non-discrimination.

(j) Reasonable requests for access

As regards the issue raised by Optimus on the need to include criteria for characterizing "reasonable requests for access", ICP-ANACOM considers that it is relevant and should be duly clarified by PTC, as this could make the offer more transparent.

D 30. PTC must include in RELLO the characterisation of "reasonable requests for access", specifically identifying what it means by "unreasonable requests", including the description of conditions associated to the determination of costs of "unreasonable" requests.