Draft Decision of ANACOM on the evolution of the ''PT ADSL Network'' wholesale offer
I – Broadband development
The promotion of a universal access to broadband Internet and, at a wholesale level, conditions to ensure a sustained and competitive development of ADSL services provided to end users constitutes a priority of ANACOM.
ANACOM’s “2004-2006 Activity Plan” identifies from the outset the promotion of an effective competition as a strategic objective, paying particular attention to the broadband market, in which services based on ADSL are of a relevant nature.
This objective is also stated in the “Broad Plan Options for 2004” where the “mass access and use of the broadband internet” is referred, and in the Program of the XV Government, where the “broadband for everyone” at accessible prices is deemed a fundamental technological issue for the acceleration of the Information Society.
Furthermore, these objectives are also shared by the European Commission and the Regulatory Authorities of several Member States.
II – ADSL
In Portugal, PT Comunicações, S.A. (PTC) rendered available in the year 2000 a wholesale service named “PT ADSL Network”, that consists of the offer of connectivity for the transport of broadband IP traffic between terminal points of the access network and traffic aggregation points.
This offer represents one of the three means of access to the local loop, the remaining consisting of the two modalities of local loop unbundling - full unbundling or shared access –, subject to a specific regulatory framework (Regulation EC no. 2887/2000 of 18 December) which establishes for operators with SMP in the market of fixed telephone networks and /or fixed telephone services the obligation to provide unbundled access to the local loop.
The European Commission, in several documents that refer to this matter, has repeatedly considered that these three means of access complement one another. The same point may be inferred from the position expressed by European regulators in the scope of the European Regulators Group (ERG) in its most recent document named “Bitstream Access”.
III – Situation in Portugal
At national level, the “PT ADSL Network” offer has turned out to be an effective instrument to establish mass ADSL services. Notwithstanding, there is also an increasing use and commitment on the part of the remaining operators as regards the provision of the local loop unbundling (LLU), which clearly indicates operators intention of investing in their own infrastructure. This will enable a privileged relationship with the final user and an increased control of services provided, making it possible to offer different and innovative products. However, the number of disaggregated accesses is still small, amounting to around two thousand loops.
In Portugal, in the end of the year 2003, the estimated broadband penetration, in ADSL and cable access per home, was above 10%. It must be emphasised that the quota, concerning the number of ADSL accesses, of the PT Group, in the end of the year 2002, was already of 83%, having also increased in the course of the year 2003 to around 85%. Summing up the number of accesses to the broadband Internet supported in the cable network of TV Cabo, a subsidiary company of Portugal Telecom, the global quota of the PT Group was around 75%, in the end of the year 2003.
Against this background, where in the present framework the offer of broadband Internet access supported in cable network has not been regulated so far, the intervention of ANACOM in the “PT ADSL Network” wholesale offer is particularly important.
IV – The offer of PTC
Regarding this type of offers, it has been specially argued that it is essential for the development of competition in the local access that operators are granted the possibility to accede, in a non-discriminatory way, to elements of the network associated to broadband access and transport.
In this respect, the European Commission, in the scope of the 8th Report on the implementation of the telecommunications regulatory package, refers that whenever the historic operator does not offer access at the DSLAM or ATM levels, the National Regulatory Authority may request the historic operator to supply the access at those network levels. In the same document, the Commission also refers that one issue that needs to be examined in detail by the NRAs is the effect of technical restrictions associated to the access offers of historic operators on the remaining operators.
According to the Commission, some historic operators believe that they are in conformity with the rule of non-discrimination by offering access only at that point where access is given to their own retail services or subsidiary companies (at one extreme at the local DSLAM and the other at a national PoP). The Commission considers that, in practise, this may impose heavy transmission costs on a new operator, whose network does not have the same geographic coverage or topography, or alternatively, condemn it to the simple role of reseller, if it cannot control the quality and data rate supplied to the distant consumer, connected through the historic operator’s network to its PoP.
This is why, in the Commission’s opinion, access at the ATM level is of great importance for new entrants, along with access as DSLAM and IP where appropriate, in order to allow them to make full use of their own network (or alternative network offerings) and to control the technical characteristics of the connection to the end user.
The same issue has been raised in other contexts.
Thus:
By joint initiative of the European Regulators Group (ERG) and the Independent Regulators Group (IRG), a consultation on “Bitstream access” was launched on 14 July 2003, to which national operators also replied (PTC, Novis and ONI).
The replies received show that the new operators, and also Novis and ONI, agree on the importance of the provision of the access at the level of the ATM network (and possibly at the DSLAM level). On the same occasion, PT declared that these access modalities should be rendered available in a non-discriminatory way, if requested by operators.
According to the most recent data, there is an interconnection at the ATM level in the scope of wholesale offers of broadband Internet access, in several Member States of the European Union, namely Austria, Belgium, Denmark, France, Ireland, Italy, the Netherlands, Spain, Sweden and the United Kingdom. The access at the DSLAM level is rendered available only in Belgium. Moreover, an increased development of the core networks, namely the ATM network, can be expected, as a result of the implementation and development of the UMTS.
At present, in Portugal, the parameters of the “PT ADSL Network” offer are under the control of PTC, although the evolution occurred in this wholesale offer have allowed an increasing consistency with the market interests. However, these evolutions have generally been achieved in articulation with the subsidiaries of the PT Group (vide, for example, the decision of ANACOM of 14 July 2002).
ANACOM takes the view that the possibility of providers launching services, at the moment considered appropriate, with an increased independence regarding the conditions defined by PTC, would promote the development of the business models, increased innovation and thus increased competition, at the level of services provided to the end user. Therefore, there would be an evolution from a situation of mere competition for margins where providers in general render similar services.
The current offer entails a strong limitation on other operators due to their material inability to control largely the technical features of the service provided to their customers.
V – Intervention requests
ANACOM has been formally requested to intervene in this matter, namely to promote the inclusion in the wholesale offer of PTC of more access points and the disaggregation of different components (network and service elements), in order to enable a more efficient use of available resources and the definition of retail offer features, namely with respect to data rates, contention fees and other components, such as the quality of service.
Sonae.com, on 21 May 2003, requested the enforcement of a determination establishing, namely, that PTC rendered available as many interconnection points as technically possible, as well as the disaggregation of the different components “so that the contracting of network elements and services that are not strictly necessary to the access and interconnection operation requested by each operator individually considered would not be required”, having regard to the fact that “at present, there are market operators with national-wide networks, technically capable of interconnecting in points closer to the end user, thus maximising the use of their own infrastructure”.
ONI, on 16 October 2003, also requested an intervention to the same extent, considering that the present situation, “that within the scope of the European Union, is parallel only to the situation in Greece, prevents ISPs from controlling service parameters, namely the quality thereof, and hindering innovation and the differentiation of services involved.”
VI – View of ANACOM
ANACOM considers important that the “PT ADSL Network” offer evolves towards offering operators the possibility of interconnecting in an increasing number of points, namely at the ATM network level (and possibly at DSLAM level), that is, towards offering transmission capacity between the end user, connected through an access line, and the interconnection point available to the operator.
In fact, the supply of transmission capacity at these levels shall enable other operators to offer new products with different features, namely regarding data rates, contention fees and other components associated to the quality of service, and added value with reference to the products currently provided by the wholesale supplier.
The possibility of access in different points (specially at ATM and PoP IP levels) is thus important, enabling operators to explore to best advantage the potential of their own network, as well as the features of the service provided to end users. The differentiation of services that operators may achieve shall depend on the architecture of PTC’s ATM network (interconnection at the level of the parent or distant ATM switch) and on the options it provides regarding service categories, contention rates, among other factors relating to the quality of service (QoS).
Pilot tests have been recently started, associated to video services supported on the ADSL network, resulting from a significant progress of ADSL standards as well as the maturation thereof. In this light, innovative services, aggregating voice, Internet and video services may be expected to be provided in the short term.
ANACOM considers that the service categories in the ATM network should enable new operators to provide innovative services, which are at present widely accepted by consumers, namely the clients of cable network. To this end, the access of clients must be connected through ATM switches via virtual paths (VPs), configured through the broadband network of PTC. As a priority, these VPs must be provided in the CBR class (and possibly in the UBR+ class), notwithstanding the possibility of the offer evolving to the VBR class or others, according to market needs. Operators will thus be able to control contention fees, the quality of service and the number of users per channel (VP).
In order to speed up the process of promotion of a competitive market of broadband service access, ANACOM takes the view that the “PT ADSL Network” offer should be altered, so that the access to PTC’s transport network is promoted, enabling the evolution towards a more appropriate wholesale product, the launching of new services and an increasing competition in the retail market of broadband services based on xDSL, which shall constitute an access offer that may complement the LLU.
VII – Regulatory framework
ANACOM has repeatedly stated that the PTC’s wholesale offer configures, in regulatory terms, a means of access to its won network.
Operators with SMP in the market of fixed telephone networks and/or fixed telephone services have special obligations regarding access, which entail providing access to the network, including in points other than the terminal points provided to most end users – article 6, paragraph 1 of Decree-Law no. 415/98 of 31 December.
The regime of access to the networks of fixed operators with SMP is developed in article 33 of the Regulations for the Operation of the Fixed Telephone Service (ROFTS) approved by Decree-law no. 474/99 of 8 November, which comprise a set of rules that define not only the obligations of operators with SMP but also the intervention powers of ANACOM.
Pursuant to the same article, namely paragraph 4 thereof, ANACOM may, on its own initiative and at any moment, and should, at the request of any of the parties, intervene in the making of the agreements for special access to the networks where justified to guarantee effective competition and/or interoperation of services, determining non-discriminatory, fair and reasonable conditions which are most advantageous for all users.
The regime of the referred article 33 shall apply to PTC, having regard to its significant market power, where a wholesale offer of access of its network is under consideration, as is the case of its “PT ADSL Network” offer.
This offer of PTC exists since December 2000, and ANACOM has intervened several times on the issue, in order to ensure compliance with the applicable regulatory principles and the pursuing of the public interest it aims to safeguard. The interventions of ANACOM and the initiatives of PTC itself show that this is not a static offer, having undergone evolutions over time.
As mentioned above, two operators requested ANACOM to intervene in the matter of this offer, modifying it as regards the so-called “aggregation points”, since its current version only includes two such points for the whole territory. This means that all traffic relating to end users, clients of new operators, regardless of the point of the territory they are in, has to converge necessarily to one of those 2 points – one in Lisbon and the other in Oporto – and from those points on traffic may carried in the ISP’s own infrastructures. But this circuit is also carried out based on PTC’s network, who is naturally remunerated for it – and the conditions under which this operation is made are comprised and are an integral part of the “PT ADSL Network” offer.
ANACOM is therefore requested to intervene with regard to the existent offer conditions, where only two national points access points are rendered available, to the extent that it determines the increase of the number of aggregation points provided by PTC. The consequences of this alteration are clear: if an operator alternative to PTC is provided with its own infrastructure in different points of the territory, is may opt to carry out the mentioned circuit on its own network, with economic advantages resulting from a more efficient use of its resources.
The new Community regulatory framework for electronic communications identifies the wholesale supply of broadband access, including ADSL, as a relevant market, that is, susceptible of being applied regulation measures thereto.
This means that the “PT ADSL Network” offer, which is already regulated under the law in force, shall surely continue to be regulated when the Law of Electronic Communications enters in force, and thus an intervention of ANACOM in the present moment is included in a line of action that shall have continuity in a near future.
VIII – Decision
In the light of the above, the Board of Directors of ANACOM hereby determines, pursuant to paragraph 4 of article 33 of the ROFTS, the following:
I. PTC shall submit for discussion to providers that are using the “PT ADSL Network” offer, within one month from the date of the final determination, an initial technical proposal based on the following aspects:
1. Increasing the available points of access to the ATM level;
2. Providing a detailed list of new access points, namely distinguishing the sublevels of the parent ATM switch and of the distant ATM switch (of the highest level);
3. Establishing, for each new access level, the technical conditions that relate to that new offer, namely available interfaces, means of configuration, classes of service supported and other network parameters;
4. Foreseeing the offer of service categories that enable the offer of services with guaranteed data rate (CBR and possibly UBR+, or others);
5. Updating the respective forms and interface for the exchange of information regarding operator requests;
6. Including new prices for the new access points and service categories (VPs);
7. Defining the aspects concerning average timings for the provision activities (namely, for aggregated access and configuration of VPs) and for the repair of damages;
8. Including the conditions for the co-installation of equipment, including the co-installation in open space regime, at access points.
II. PTC shall alter the “PT ADSL Network” offer, within two months from the date of the final determination, including all aspects identified above, having maximum regard to contributions submitted by interested parties within 10 days from the reception of the initial technical proposal mentioned in point I above.
III. ANACOM shall monitor the evolution of market conditions and needs, aiming at ensuring sound competition and the respect of established regulatory principles, with the power to intervene in the scope of the wholesale offer.
IV. Pursuant to articles 100 and 101 of the Code of Administrative Procedure, points I and II of the present determination shall be submitted to the prior hearing of interested parties, who are entitled to assess the issue within 10 working days at the most.
