Meeting with BEREC The italian model of EoO

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1 TELECOM ITALIA GROUP Meeting with BEREC The italian model of EoO Mr. P. Aureli Public & Regulatory Affairs Head of Equivalence Bruxelles, 29th April 2014

2 Index Milestones of TI s Non Discrimination Measures 2008 Undertakings (brief recall) Current TI s Equivalence of Output model Italian EoO model vs EoI model Technical equivalence Economic equivalence Transparency or Information Equivalence Compliance and Monitoring TI BoD decisions of November 2013 about EoI Page

3 Milestones of TI s Non Discrimination Measures TI communication about EoI Model Creation of Open Access division by TI Feb. AGCom decision 718/08/CONS Approval of voluntary Undertakings by AGCom Dec. AGCom decision 600/11/CONS: EU Recommendation on non Discrimination AGCom decision 731/09/CONS Transposition of most of the Undertakings into remedies Dec. Withdrawal of sanction proceedings against TI (non discrimination and anti-competitive behaviour) Nov. Start of NGAN equivalence implementation Jul. Sept. Nov Progressive implementation of undertakings and remedies in strict cooperation with Altnets Improvements and fine-tunings AGCOM Decision 152/02/CONS On internal and external equal treatment by SMP operators Separation of Retail and Wholesale Systems KPI on provisioning and assurance From 2003 to 2013 obtained 11 annual certifications concerning the separation of Retail and Wholesale/Network Systems by primary certification bodies: Accenture, Cap Gemini, Ernst & Young Introduction of specific biannual KPIs to monitor the full application of the principle of internal and external equal treatment 3

4 Technical Equivalence Economic Equivalence 2008 TI s Undertakings G.1: New Processes pro Altnets New Delivery Process and single queue, Co-location, Wholesale CRM G.3: SMP services monitoring system - KPI's and auditing by independent body G.5: Network Quality technical plans TI provides Supervisory Board, AGCOM and Altnets its plans for the annual quality improvement and for the development of the access network Legend: Undertakings listed in red were transposed into remedies with AGCOM decision n. 731/09/CONS G.4: Monitoring system transparency : publication of KPI reports G.6: Network Development Plans for copper and NGA both to TI s Retail Arms and Altnets Transparency Governance G.2: Code of Conduct and separate incentive system for Open Access and Wholesale Division G.7: Independent Supervisory Board G.10: Office of Telecom Adjudicator G.8: Regulatory accounting and internal transfer charges Consumer Protection G.11: Ban on commercial activities for Open Access network technicians G.12: Unsolicited services activation reporting G.13: CPS termination notification procedure G.14: More efficient dealing with complaint and reduction of disputes with consumers 4

5 Current TI s Equivalence of Output model KPI TI RETAIL End User End User TI Retail Altnet Retail Ordering/TT (provisioning and assurance) Ordering/TT (provisioning and assurance) Open Access: Production of SMP Access services Production of TI s retail access services Production of Altnet s retail access services TI Retail Altnet Retail End User End User KPIAltnet The EoO model adopted by TI ensures a complete process symmetry between TI Retail and Altnets. In fact, TI s Retail and Altnets have an equivalent interface with Open Access (OA) All employees in charge of the provisioning and TT assurance, for both TI and Altnets, are in OA National Wholesale Services is only in charge of the commercial and administrative/contractual relationships between TI and Altnets As regards Assurance model, it is based on the pertinent and applicable Reference Offers and is already managed in EoI as TI Retail and Altnets use the same system and the same Trouble Ticket managing and dispatching procedure. 5

6 EoI TI EoO Italian EoO model vs EoI model Same systems Same processes Same quality of service Same performance Same reliability Same time of provision Same prices Same terms and condition Same information Same timing KPI reports NRA KPI,SLA and SLGs Supervisory Board MBO and incentives Technical Replicability Economic Replicability Chinese walls Technical equivalence Economic equivalence Transparency or Information equivalence Compliance and Monitoring Same systems Same processes Same quality of service * Same performance * Same reliability * Same time of provision * Same prices * Same terms and condition * Same information Same timing KPI reports NRA & Undertakings' Monitoring Group KPI, SLA and SLGs Supervisory Board MBO and incentives Technical Replicability Economic Replicability Chinese walls * TI retail signs Internal Service Agreement with OA containing the same technical and economic conditions for SMP wholesale access services In Blu the obligations related to sectorial regulation 6

7 Technical Equivalence in EoO Italian Model Technical Equivalence Scope To prevent technical and quality discrimination in the provision of external and internal services To ensure full technical replicability of TI s retail offers Main Instruments Certified KPIs to monitor the equivalence of the ordering, delivery, assurance and system availability between TI s retail divisions and Altnets SLAs and penalties Introduction of a single queue process for cases of new installation requests where network resources are not sufficient, where the orders coming from TI s Retail systems and Altnets systems are handled on a first in first out base Specific commitments in terms of plans to improve network quality 7

8 Economic Equivalence Economic Equivalence Scope: To prevent price discrimination and cross subsidisation To ensure full transparency for the application of the same economic conditions applied to TI Retail (by OA) and Altnets (by NWS) for SMP wholesale access services Instruments: Internal Service Agreements containing both technical and economic conditions for internal transfer charges of SMP wholesale access services provided by Open Access to TI Retail (submitted and approved by AGCOM) Transfer price model (i.e. applying to TI Retail the same prices applied to Altnets) Separate Accounting for SMP services provided by Open Access Fully achieved in 2012 (Agcom Decision 678/11/CONS) 8

9 High levels of Transparency and Information availability Transparency "Technical Plans" By its wholesale website TI provides to Supervisory Board, AGCOM and Market annually and quarterly plans for: quality improvement of the access network development of the access network quarterly detailed reports on the implementation status of its plans "NGAN Development Plans" By its wholesale website TI provides to Supervisory Board, AGCOM and Market annually and quarterly plans of New Generation Access Network Plan which outlines the local exchange areas where FTTH and FTTC network is going to be available quarterly detailed reports on the implementation status of its plans weekly details on the building addresses served by FTTC and FTTH access networks with the specification of their availability date Other Information By its wholesale website TI provides to Supervisory Board, AGCOM and Altnets monthly, quarterly and annually KPI Reports highlighting the trend of each of them bimonthly a Network Access Data Base detailing local exchanges, cabinets, streets and street numbers 9

10 Compliance and monitoring: KPI Results Compliance and Monitoring With reference to 28 KPIs that directly compare Open Access Delivery and Assurance performance towards Telecom Italia Retail and Altnets, the results of Supervisory Board auditing for 2013 show that: 8 KPI appear to favour Altnets; 4 KPI show substantially equivalent performances; 7 KPI appear to favour Telecom Italia Retail; 9 KPI are not significant as there are insufficient volumes to complete a statistical analysis In the next slide an example ok KPI measuring Provisioning and Assurance for Voice and Broadband connections 10

11 KPIs Scoreboard: Annual report 2013 Main figures Compliance and Monitoring KPIs trends, as calculated and verified by the Supervisory Board, show a convergence between the quality offered to TI s Retail and Altnets KPI Group 1: Delivery Voice Average working time (calendar days) KPI Group 2: Assurance Voice Average time to repair Voice connections (working hours) KPI Group 1: Delivery Broadband Average working time (calendar days) Asymmetric ADSL KPI Group 2: Assurance Broadband Average time to repair broadband ADSL (working hours) Source: Supervisory Board, Annual report

12 Compliance and monitoring Compliance and Monitoring Scope: To monitor compliance with Undertakings and non discrimination obligations Instruments: Undertakings Monitoring Group (GMI) composed by NRA, AltNets, TI in charge of verifying the undertakings implementation about Data Bases Quality and KPI effectiveness Supervisory Board as an independent body in charge of monitoring the proper implementation of the Undertakings The Supervisory Board verifies the proper performance of the provisions set forth in the Undertakings and, in the course of its activities, adopts Decisions and Recommendations designed to stimulate greater compliance with said Undertakings by Telecom Italia. It also receives complaints from operators regarding alleged violations committed by Telecom Italia. If Telecom Italia fails to remedy any confirmed violations in accordance with the deadlines and procedures set forth, the Supervisory Board reports this to the Authority and to the Board of Directors of Telecom Italia. Inside the Supervisory Board, an Equivalence Office is in charge of the KPI monitoring system and related reports An independent Auditor is in charge of certifying: the KPIs data; the correctness of the algorithms for the calculation of KPIs; the data extraction procedure from TI s data warehouse. 12

13 Telecom Italia BoD decisions of November 2013 The Board of Directors of 7 November 2013 has decided to give priority to the creation of the "Equivalence of Input " (EoI) model through functional separation, with particular reference to the offer of unbundling of the local loop (ULL) and virtual unbundling local access (VULA) for the new generation networks based on FTTCab and FTTH architectures. This decision is the straightforward evolution of the approach towards separation started by Telecom Italia with the creation of Open Access and the following Undertakings adopted in The introduction of EoI is to be considered as a completion of the FS model started to be deployed at the beginning of However this project is still to be shared with the Italian Regulator as regards both the features of the implementation of the EoI model and the related changes in the Italian regulatory framework. 13

14 The italian model of EoO, Something more than EoO, «EoO Advanced» or «EoI Light»? Thank you for your attention 14

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