Report on workshop on operators views on infrastructure and likely evolution

Transcription

1 Report on workshop on operators views on infrastructure and likely evolution IST Study into European Research and Education Networking As Targeted by eeurope SERENATE Deliverable no. D4 Delivery type: Report Security: Public document Final editor: Karel Vietsch, TERENA Date: 25 January 2003

2 CONTENTS Summary Introduction Workshop Objectives Workshop Preparations Date and Venue Workshop Programme Invitees Financial Support for Participants Workshop Report Introductory Session Views on Research Networking from Operators Perspectives Discussion on Technology Discussion on Pricing and Geography Discussion on Stability of the Industry Discussion on Relations between Operators and Research Networks...21 Annex I Annex II Annex III Annex IV Annex V Annex VI Annex VII Annex VIII Annex IX SERENATE Operators Workshop Programme Participants List David Williams: SERENATE What s the idea? Dai Davies: Objectives of the SERENATE Operators Workshop Don McAuley: Research Networking from Interoute s Perspective Bruno Tideman: BT s view on research networking Carlos Oliveira: Research Networking from PT Prime s Perspective Béla Gellai: Review from the Eastern outskirts: A CEE operator s perspective on SERENATE Roberto Sabatino: Future R&E networks: Technology challenges 2

3 Summary The Operators Workshop organised by the SERENATE project was held on 7 and 8 November 2002 in Amsterdam, the Netherlands. In total 48 persons attended the event; key participants were 26 representatives of fifteen different telecommunications operators. The workshop was judged a success by both organisers and participants. It has produced information and insights that will be taken up in subsequent SERENATE work items. The main goal of the workshop was to provide an opportunity for traditional and alternative providers of telecommunications and network services to present their own views of the status of the pan-european telecommunications and network infrastructures and their likely evolution. A very active participation by all workshop attendees was therefore strongly encouraged. This was very successful and the workshop developed into an open and frank debate on a number of essential issues. The representatives of telecommunications operators welcomed the opportunity to meet with each other in an open setting to exchange views on the current status and the future of markets and technologies. They would be interested to participate in future events of the same nature, if possible even on a regular basis. After introductions about the SERENATE studies in general and the objectives of the Operators Workshop in particular, the workshop programme covered eight sessions. Four speakers from telecommunications operators presented their view on research networking from the perspective of their own company. These speakers could be seen as representing the spectrum of companies currently present in the market: new pan-european operators, traditional operators that have developed pan-european capabilities, traditional monopolists and regional operators. The other four sessions were devoted to key areas in the context of the SERENATE studies: technology development, geographical issues, stability of the industry, and relationships between operators and the research networking community. The presentations and discussions contained a lot of interesting information and opinions, which are reported in detail in section 4 of this report. Some of the highlights can be summarised as follows. Both political support and user needs point to a development path for research networks in Europe in the next few years that is more than simple upgrades of the current infrastructures. For example, there are certain research groups, at a relatively small number of sites, that require much higher capacity than the average user of research networks. The European research networking community is therefore thinking seriously about implementing a hybrid network, keeping a router-based approach for any-to-any connectivity but using a switched approach for high-speed connectivity with a more limited footprint. Against this background the research and education networking community has a number of questions for the operators. How will the portfolio of operators develop? How stable is the industry? What will happen with the Digital Price Divide in Europe? The operators represented at the workshop appeared to be divided on the issue of making dark fibre available. Some refuse to sell dark fibre and consider it like selling their crown jewels. Others however have dark fibre as a product in their portfolio. Most offer wavelengths services and recommend those to customers as a solution that brings the benefits of dark fibre without the associated capital investment. Whilst research networks may be interested in 80 Gb/s as the building blocks for the future infrastructure, operators see no serious demand for 40 Gb/s connectivity as a single channel today, and do not have it (yet) as part of their portfolio. Prices for national and international connectivity have gone down enormously in the past years. It is definitely not expected that this will continue at the same rate. There is a very large divergence of pricing across Europe. In GÉANT, the cheapest bandwidth costs 5% of the equivalent cost of the most expensive bandwidth. Workshop participants expected that in five years time competition in Eastern Europe will be much fiercer than today and the price gap with the rest of Europe narrower. But governments should be advised not to rely on that and not to wait for that. Liberalisation of the telecommunications market and support to their national research and education network are important 3

4 instruments for governments, in those countries where bandwidth is expensive, to close the gap with countries in the economic heart of Europe. There was consensus among workshop participants that we have not seen the end of the financial problems of telecommunications operators yet. Very few, if any of the operators are fully confident about their own situation. A substantial market consolidation can be expected through mergers and take-overs. This should result in more economies-of-scale and a stabilisation of price and customer demand. The representatives of operators felt that their companies have a lot to gain by getting into close collaborations with the research networking community, because that community represents the most demanding users of networks and is very advanced in taking up new technologies. However, their management has not always identified research networks yet as an interesting target group. The structure and organisation of the companies produce barriers to the establishment of collaborative partnerships. 4

5 1. Introduction SERENATE is the name of a series of strategic studies into the future of research and education networking in Europe. The SERENATE (Study into European Research and Education Networking As Targeted by eeurope) project aims to contribute to European policies, social objectives and economic development by providing inputs on initiatives that could help to keep European research networking at the forefront of world-wide development. The objective is to provide important inputs to the development of policies by the European Commission, but also to national governments and funding bodies, the management of universities and research institutions, and the national research and education networks. The current situation is that national research and education networks and the wider European research networking community are at the forefront of technological developments. Whilst much of the history of European research networking over the past two decades was characterised by the need to keep up with developments in North America, Europe currently has a leading position in many aspects of networking. Gigabit networks are being implemented by a number of national research and education networking organisations, and in other countries plans for such networks are being developed. At the European level, the GÉANT interconnect network has been a significant step forward, introducing 10 Gb/s in the core of the network and offering a wide coverage of 2.5 Gb/s capacity. It is possible that GÉANT will deploy some links at or above 100 Gb/s during its lifetime, and even more ambitious longer-term numerical targets may now be appropriate. Similar developments are to be expected at the national and local levels of research networking. SERENATE contributes to achieving these networking goals by investigating the strategic aspects of the development of such superfast networks, looking into the technical, organisational and financial aspects, the market conditions and the regulatory environment. As a result, by the end of the project, the relevant policy makers, funders and managers of research networks in Europe will have at their disposal a set of recommendations and background materials that will enable them to set their policies for the further development of European research networking. The European Commission funds the SERENATE project as an Accompanying Measure in the Information Society Technologies programme of the Fifth Framework Programme for Research and Technological Development. The project consortium consists of TERENA (co-ordinating partner), the Academia Europaea, the Center for Tele-Information (Technical University of Denmark), DANTE and the European Science Foundation. However, the work needs the active participation from all stakeholders research and education networking organisations, governments and funding bodies, network operators and equipment vendors, and the users of research and education networks. SERENATE consists of fourteen interrelated studies and workshops, covering a period of seventeen months from May Understanding the market conditions and the regulatory environment is essential in order to be able to develop scenarios for the future evolution of the European research networking infrastructure. This set of issues is initially addressed by two large work items in the SERENATE project. One is a fact-finding study on the transport and infrastructure market deployment and trends, including pricing and availability and market development as well as global connectivity issues. That study reviews the status current or planned for the near future of the transport infrastructure available for European research networking. It covers both traditional transmission systems and various alternative approaches, such as fibre infrastructure and bandwidth exchanges. The other is a study into the development of the national and pan-european regulatory situation, especially in relation to alternative models of acquisition. These two studies interact with a third SERENATE work item, which is described in this report: the Operators Workshop. Preliminary results from the two studies have been used in the preparations of the workshop, and the workshop results are taken on board in the formulation of the conclusions of the studies. The major goal of the workshop was to provide an opportunity for traditional and alternative providers of telecommunications and network services to present their own views of the status of the pan- European telecommunications and network infrastructures and their likely evolution. 5

6 2. Workshop Objectives The research networks in Europe have always been advanced users of telecommunications services. In the last ten years, there have been major advances in the pan-european interconnection between the national research and education networks, culminating in the current GÉANT network, which is a worldleading infrastructure. These actions have been co-funded by the European Commission under the Fifth Framework Programme for Research and Technological Development. The theme of research networking is also a major element of the Sixth Framework Programme, and the SERENATE studies are a strategic review of all aspects of the strategy and organisation of European research networking. A key element in the creation of these networks is the telecommunications building blocks available. SERENATE has therefore organised a workshop with telecommunications operators from across Europe to discuss the way the market will develop in the next five years, from a technical, commercial and regulatory point of view. The current perception of the members of the SERENATE consortium is that the liberalisation of the market place has generally been beneficial. Prices have dropped and network capacities increased. This is, however, not the case all over Europe. There remain countries that are only served by monopoly suppliers and there are areas where the available infrastructure is limited. In addition, although competition has had positive effects on prices, it has led to fragmented delivery channels and, in some cases, huge local-loop charges. Participants in the workshop were asked to discuss the following themes: Technology Protocol Wars: The Return of the Circuit Switch Is faster better? How will the current service portfolio evolve in terms of performance, cost, technical innovation, new products etc.? Hardware is becoming relatively more expensive than connectivity when one considers the cost of routers. It is expected that this will continue to be the case as we move to higher speeds. In parallel, we see the emergence of the demand of a new class of users who have projects where point-to-point connectivity requirements are significant compared with current network traffic generated on any-to-any basis among the connected networks. This leads us to look at the possibility of implementing a hybrid switched/router model, keeping a router-based approach for any-to-any connectivity but using a switched approach for high-speed connectivity with a more limited footprint. One of the technical areas to discuss is how this model will develop and whether the operator service portfolio will change to offer, for example, Gigabit Ethernet or multi-wavelength reconfigurable connectivity. Geography How to close the Digital Price Divide in Europe? Will the market liberalisation lead to a more homogeneous European market for international services? What are the timescales involved? Are there still regulatory roadblocks? What will be the long-term trend in prices? How will local-loop costs develop? There is a very significant difference in price between the cheapest and the most expensive locations in Europe. This does not really relate to geography but is more a question of market imperfections. In GÉANT today, the cheapest bandwidth costs 5% of the equivalent cost of the most expensive bandwidth. If ubiquitous service is to be a feature of the European, national and local research networking infrastructure in future, then this enormous gap has to be closed. Why does this gap exist today? How do telecommunications operators foresee this changing? 6

7 Commercial Relationships Business relationship or partnership? The research community in general leases capacity from operators. Are alternative models based on ownership or donation appropriate? We have always looked at leased connectivity based on, in practice, a three-year commitment. The question arises whether we should consider alternative models such as direct investment in fibre for certain elements of the network on a multi-year basis. Another question is how the relationship between telecommunications operators and research networks will develop. With notable exceptions, that relationship in Europe has traditionally been on a business-like customer-provider basis, whilst for example in the United States infrastructure donations and partnerships for development have been more common. How will this relationship develop in the next years, taking also into account for example the changes (or even disappearance) of research laboratories of telecommunications operators and possible changes in the standardisation process? Stability of the Industry Will we see more operators getting into serious problems? How will the structure of the industry develop? Will there be other KPN/Qwests? In the last twelve months major suppliers to European research networks have simply disappeared. Carrier One, KPN/Qwest and Teleglobe were important suppliers and their actual time to disappear was no more than two or three months. In addition there have been a number of Chapter-11 applications and major accounting scandals. How can operators assure us that they will still be in business in the next years? 7

8 3. Workshop Preparations 3.1. Date and Venue In addition to the ongoing work on the two studies mentioned in section 1 above, the results of the Initial Workshop of the SERENATE project also formed an important input to the Operators Workshop. Because of a delay in the signing of the SERENATE project contract, the Initial Workshop did not take place at the very beginning of the project s lifetime but only in September It was therefore decided to organise the Operators Workshop not in October, as had been originally planned, but a few weeks later, in order to have some time available to assess the results of the Initial Workshop. The Operators Workshop was planned as an event covering an evening and a full day, thereby providing maximal time for discussions whilst allowing the workshop participants, who all have very busy diaries, to be away from their regular work for no more than one day. It was therefore necessary to find a location in a city served by a major European airport. In addition the venue had to provide the right atmosphere and facilities. The Victoria Hotel in Amsterdam met these requirements and the SERENATE Operators Workshop was held there on Thursday 7 and Friday 8 November Workshop Programme The workshop programme was developed in close collaboration between SERENATE project partners DANTE and TERENA. The workshop started with an informal get-together and dinner on the evening of the first day. As the workshop participants had either not met each other before or only as competitors in a commercial setting, it was important to create to right collaborative atmosphere for open discussions. This also made it possible to get down to business immediately on the morning of the second day. After introductions about the SERENATE studies in general and the objectives of the Operators Workshop in particular, the workshop programme covered eight sessions. Four speakers from telecommunications operators presented their view on research networking from the perspective of their own company. The four speakers had been chosen in such a way that they could be seen as representing the four kinds of companies that are currently present in the market: new pan- European operators, traditional operators that have developed pan-european capabilities, traditional monopolists, and regional operators. Each presentation was followed by a discussion; a small panel consisting of Marko Bonac (ARNES), Claire Milne (Antelope Consulting) and Kees Neggers (SURFnet) stimulated these discussions by putting forward controversial questions. These sessions were chaired by the chairman of the SERENATE Steering Committee, David Williams. The other four sessions were devoted to discussions on the topic areas mentioned in the previous section: technology, geography, stability of the industry, and relationships between operators and the research networking community. Each of these sessions had its own chairperson and rapporteur. As the objective of the workshop was to collect the views of providers of telecommunications and network services on the status of the pan-european telecommunications network infrastructures and their likely evolution, a very active participation by all workshop participants was strongly encouraged. This was very successful, and the workshop developed into an open and frank debate on a number of essential issues. The detailed programme of the workshop is attached to this report as Annex I. 8

9 3.3. Invitees In order to promote an active discussion between workshop participants, it was decided to limit the number of attendees to at most 45, the majority of them being representatives of various types of telecommunications operators. Other invitations were extended to representatives of major equipment manufacturers, national research and education networks that have significant experience with alternative forms of infrastructure acquisition or partnerships with telecommunications operators, and the European Commission. Members of the SERENATE Steering Committee and staff members of the SERENATE project partners who are actively involved in the project also attended the workshop. Between mid September and early October 2002, personal invitations to participate in the workshop were extended to almost 50 selected representatives of traditional and alternative telecommunications and network operators. The selection was done with great care, so as to assemble company representatives with knowledge of the research networking environment and sufficient experience and authority to express their company s views on the current and future relationship between operators and research networks. Such representatives were nominated by DANTE and by a large number of national research and education networks in Europe. After a few weeks the initiative became well known and popular, with research networks nominating an increasing number of potential invitees and various companies asking for invitations. Consequently by early October the organisers had to stop sending out more invitations, so as not to exceed the maximum capacity of the workshop facilities. Eventually the workshop was attended by 26 representatives of fifteen different operators. The full list of participants is attached to this report as Annex II Financial Support for Participants In the SERENATE budget, funds were available for the organisation of the workshop, but participants were asked to pay their own travel and accommodation costs. Within the SERENATE funds there is a separate budget to enable stakeholders from non-commercial organisations in countries with less developed economies to participate in SERENATE workshops. In this case this concerned representatives from research networks in these countries who could bring information about their current situation, needs and future plans to the event and review the problem setting from their perspective. In principle SERENATE offers such partial reimbursement of costs only to invitees from countries that are qualified by the World Bank as low-income economies, lower-middleincome economies or upper-middle-income economies. Two participants requested and were allocated partial reimbursement of their travel and accommodation costs through this scheme. 9

10 4. Workshop Report 4.1. Introductory Session David Williams, President of TERENA and Chairman of the SERENATE Steering Committee, welcomed participants to the event. He continued with a presentation under the title SERENATE What s the idea? to explain the background and contents of the SERENATE work. The slides of David Williams presentation are attached to this report as Annex III. SERENATE is a study supported by the European Commission to look five years ahead into the strategic needs for research networking. SERENATE is only about the strategic aspects and will not make any concrete detailed plans for infrastructures or services. The project is carried out by a consortium of five partners, but it needs the active involvement of all stakeholders, including national research and education networks, end-users and industry. The project is led by a Steering Committee of nine persons, which includes representatives of the project partners and some other key persons from the European research networking community. The SERENATE project has started on May 1 st, 2002 and will run for seventeen months, until the end of September The project comprises fourteen work items, including studies, workshops and the drafting of reports detailing the project conclusions. There will be five workshops: the Initial Workshop, which took place at La Hulpe, Belgium on September 2002, this Operators Workshop (November 2002), a Users Workshop (January 2003), an NREN Workshop (February 2003) and the Final Workshop (June 2003). After each workshop a report will be generated. In addition there will be various study reports and a number of reports sketching scenarios for the future. Other studies will cover schools and other possible user communities, and some geographic aspects of the future strategy for European research networking. Three of the studies will be of particular interest to the participants in this workshop. The first is a fact-finding study on the transport and infrastructure market, looking at deployment and trends, including pricing and availability, and market development as well as global connectivity issues. This work is carried out by DANTE and CTI. They have taken the results of recent GÉANT calls for tender as one of the inputs for this work. They are also having a number of confidential interviews with European-level operators. The results of the Operators Workshop will be taken into account in the report on the study, which is expected to be published in the next few months. The second is a study, carried out by CTI and Antelope Consulting, into the status of regulatory development in a number of European countries and at the pan-european level. The study looks at each of the EU Accession States individually, at Portugal and Greece, and at the other EU Member States as a whole. The work on this study is currently nearing its completion. The third study looks at the availability and characteristics of equipment for next-generation networks. This work is carried out by DANTE and TERENA staff with contributions from technical experts in TERENA s task force TF-NGN. The study is expected to be completed early in David Williams continued by giving his own personal first impressions of the results of the Initial Workshop. Research networking is evolving fast. Nowadays, the challenge is not connecting hardware to the desk of the researcher, but delivering a set of services. The user wants access to information, collaborative tools and Grids. AAA and Web/Grid services will be part of the delivery mechanism. National governments increasingly understand that research and education networks are an important resource for the country, and that if one capitalises on their expertise research networks can play a pivotal role in the use of information and communication technologies as a driver for national economic prosperity. As to the technology, it is clear that the opportunity to go to fully optical networks will bring important changes and new opportunities. On the economic side we need a clear understanding of any regulatory barriers that could hinder deploying pan-european fibre. Does it matter whether you actually own fibre, or lease fibres or wavelengths on a long-term basis? As to the policy and political aspects, there appears to be a potential conflict between two fundamental European Union policies: on the one hand in the context of the European Research Area equal opportunities are supposed to be available for researchers wherever they are in Europe, while on the other hand the principle of subsidiarity leaves the provision of the necessary infrastructures and services to national and local policy makers, who may have different priorities. Researchers appear to want to receive from research networks as much capacity and service as they can get and afford. For other users, such as schools, libraries and hospitals, it would be interesting 10

11 to develop certain benchmarks. And in general, a continuing dialogue with funding bodies and governments and politicians at the national and the European level remains necessary. Participants in this Operators Workshop are people with operator backgrounds who have been recommended to the organisers as being interested in these topics and being able to voice educated opinions. David Williams concluded his presentation with a personal general comment: research and education networks and their users understand the need for operators to have healthy finances, whilst operators also understand the value for them and for the overall economy of early adopters of advanced services. Consequently operators and research networks need to find a way of working together that is mutually beneficial. Dai Davies, General Manager of DANTE, rounded off the first workshop session by explaining the workshop s objectives. The slides of his presentation are attached to this report as Annex IV. All participants in this workshop are specialists in the provision of service. It will be clear to all of them that the current market place offers great opportunities for research and education networks. Some initiatives in the United States involving Internet2 illustrate how the market situation can be used to get new infrastructure initiatives off the ground. More generally, the opportunities for research networking are recognised in the Sixth Framework Programme of the European Union: there is a much higher priority for research networking there than in earlier Framework Programmes. But this also means that the research networking community must be more ambitious, looking for new arrangements instead of simple upgrades of the current infrastructures. GÉANT is already the sixth generation of the European backbone interconnect in the last ten years. This generation is the first one that can be considered to be leading instead of just catching up with technology. The goals of GÉANT are to provide Gigabit connectivity, to expand the European coverage by connecting more countries, to offer guaranteed Quality of Service (a goal that has not been fully achieved yet but on which much progress is being made), and to offer access for intercontinental connectivity. GÉANT currently interconnects 31 countries. It has a core at 10 Gb/s with many links at 2.5 Gb/s and additional connections between 34 and 622 Mb/s. In the past years, the results of the calls for tender for GÉANT and its predecessors have shown a spectacular decrease in the prices for international bandwidth. The average offer price per Mb/s per year has fallen from 200,000 euro in 1996 to 5,000 euro in At the same time the lowest offer price has fallen from 200,000 euro per Mb/s per year in 1996 to 36 euro in This is certainly an enormous decrease, but at the same time it shows a growing gap between the most expensive and the cheapest offers. At the best locations there has been a price reduction by a factor of 6,000 in the past five years, but the situation is changing far more slowly at the less-favoured locations. With the new GÉANT infrastructure in place, there are a number of new challenges. One is related to the diversity of the end-users. There are certain research groups located at a relatively small number of sites that require much higher capacity than the average user of research networks. For example: at igrid 2002, a showcase of research networking applications that was held in Amsterdam in September 2002, one single application used three times more bandwidth between the Netherlands and the United Kingdom than the total normal GÉANT traffic between these two countries. Just providing faster IP networks will therefore not suffice for the future, and the community must be thinking seriously about implementing a hybrid network, keeping a router-based approach for any-to-any connectivity but using a switched approach for high-speed connectivity with a more limited footprint. A second challenge is in providing Quality of Service. Supported by the work of the technical experts in TF-NGN, a Less-than-Best-Effort service has now been introduced on GÉANT. Other challenges are in access controls, the need for which is clearly demonstrated by the experience that one individual can create more traffic than an entire country (and one should not underestimate the potential anti-social behaviour on the Internet), and generally in the support for Grids. It is interesting for operators to know that GÉANT will be implementing a dual stack IPv4/IPv6 platform within the next twelve months. GÉANT will certainly look closely into the role of optical networking. Other future plans concern traffic management, which is clearly needed because of the large flows but which poses a number of interesting technical questions. The cost balance remains a very intriguing one, with the large divide between cheap and expensive locations. Within GÉANT there is currently 130 Gb/s connectivity: 127 Gb/s DWDM and only 3 Gb/s SDH. But the SDH constitutes 45% of the total connectivity costs and the DWDM only 55%. 11

12 Against these backgrounds the research and education networking community has a number of questions for the operators. How will the service portfolio of the operators develop? Three major suppliers with close relations to the research networking community have disappeared from the scene over the past few months, so how stable are the remaining ones? The digital price divide between different places in Europe is certainly politically important, but is it also important to operators? The portfolio of Europe s research networks can be summarised as follows. Today it is based on point-to-point connections, offers a router-based IP service and uses 10 Gb/s wavelengths as building blocks. Tomorrow s portfolio will depend on what will be available. Will operators offer switched lambdas? Or dark fibre? Is Gigabit Ethernet part of the operators portfolio? Will we have 80 Gb/s as building blocks? Politicians say that speeds should move to 100 Gb/s. Is that cost effective? How do the operators think that the technology will develop? 4.2. Views on Research Networking from Operators Perspectives Four speakers from telecommunications operators presented the view on research networking from the perspective of their own company. They could be seen as representing four kinds of companies: new pan- European operators, traditional operators that have developed pan-european capabilities, traditional monopolists and regional operators. Each presentation was followed by a discussion involving the whole audience. Don McAuley, Senior Optical Pre-Sales Engineer of Interoute, gave the first presentation. The slides of Don McAuley s presentation are attached to this report as Annex V. Interoute was founded in Initially it provided voice networks, but it is now concentrating on the provision of European fibre-optics. Interoute has built the i-21 network, which is the largest, most homogenous fibreoptic network in Europe, based on the latest technology. Interoute owns all the equipment, fibre and rights-ofway. The company is an established European telecommunications operator. It is Europe-based with European shareholders. Sandoz is the majority shareholder and Alcatel has provided vendor financing; there are no other debts. The i-21 network consists of 13,500 km of ducts, 18,000 km of fibre with 48 fibre pairs connecting 45 major cities in Europe. The network covers nine countries: the United Kingdom, the Netherlands, Belgium, Germany, France, Spain, Switzerland, Austria and Italy. It also includes nine Metropolitan Area Networks. Current technology consists of fixed point-to-point networks, with capacities between E1 and STM-64, and 2.5 and 10 Gb/s wavelengths. The future will be Ethernet over SDH, 2.5 and 10 Gb/s wavelengths, bandwidth on demand, and more customer control over the network. Interoute is currently rolling out Ethernet over SDH. This offers a common platform to carry TDM and Ethernet services, and provides for billing because of the flow control. It requires only small simple equipment at the sites. There is a future for wavelength services, because they meet the needs of users who want the benefits of dark fibre without the associated capital investment. Customers can obtain the same facilities as they would by owning the fibre, but they do not have to buy the fibre, make large expenses to equip it and then maintain it. The problem for users has been the lack of transparency. But now it is possible to provide a transparent wavelength service so that the operator does not interfere and the customer can manage the network end-to-end: what you put in is what you get out at the other end. VPN is the provisioning and management of circuits and resources through a partitioned sub-network of a larger transmission network. Here you pay for what you use. There are different levels possible: read-only (customers view their existing circuits), restricted (access to physical ports and bandwidth), standard (same as restricted except bandwidth up to port size) and enhanced (minimum bandwidth usage, access to physical ports, additional access to Freepool, unrestricted bandwidth). BonD (bandwidth on demand) is similar to VPN except that it is controlled by equipment. Fibre, wavelengths and SDH can all be obtained via lease or via long-term lease. Starting the discussion, David Williams asked if Interoute is an infrastructure provider or a full-service provider. Don McAuley replied that the market is changing. Interoute has purchased the metropolitan area component of 12

13 Ebone and is also repositioning itself. Initially all providers wanted to connect the same locations in Europe. Now the market is diversifying and Interoute is now for example also concentrating on Metropolitan Area Networks. Interoute does not see itself as being at the same time a provider to the other operators attending this workshop and their competitor. Rather Interoute is often complementary to the others. The meeting then turned to a general discussion about the way that operators see the market developing. One of the participants thought that there is an end to the fixed-services portfolio, and that more tailor-made solutions will be needed. Selling dark fibre is not necessary; for operators it would mean selling their crown jewels. Instead different blends of services are possible, as shown in the presentation. Operators are there to do business with their customers, including the research networks, but in practice they quite often dictate the conditions. Operators do not have all the answers, and certainly not now. They need questions and demands from research and education networks to develop their policies and portfolio. Another operator representative felt that there was too much talk about buying fibres; the real users simply want Ethernet over long distance. The Telia representative however stated that fibre is a product in their portfolio. But everything is of course a matter of the price of the service. David Williams reminded the meeting about Dai Davies explanation about different user groups in the research community. A relatively small group needs very high capacities but with only a limited footprint. Are these users served well by a general IP network? One of the participants replied that up to now it has always been cheaper to buy your own network instead of buying services. But if the pricing structure changes then no doubt those networks that need to be built, will be built. However, this raises the question whether the commercial market is able to react timely to the very rapid change in demand. Addressing the question of disparities in pricing, Marko Bonac asked if Interoute charges different prices in the nine different countries in which it is present. Don McAuley replied that this was the case, but also the operator s costs are higher in some countries than in others (access, co-location space etc.) that would explain a price difference by a factor of 2 or 3. The price gap by a factor of 40 as mentioned by Dai Davies, is likely to disappear. The situation can be compared to what happened in the airline industry once the opportunities of market liberalisation were taken. However, if an operator drops its prices too much then it will disappear, as has happened to some operators recently. Having studied the market conditions, Interoute does not plan to invest in Eastern Europe itself just now; for the moment the company just wants to partner with others in that region. Some of the operators had emphasised that they were moving in the direction of more added value to the services in their portfolio. But how will that be arranged between operators for a pan-european service if none of the operators has a footprint that includes all the customers? That is indeed a difficult problem, which operators are trying to address on the basis of Service Level Agreements between each other. Answering a question from Artur Binczewksi, Don McAuley confirmed that Interoute s network had been built and optimised for 10 Gb/s. There is not much demand for 40 Gb/s yet, so developments in that direction are not receiving much attention from operators. Bruno Tideman, Contract Manager at BT Ignite Solutions Europe, presented BT s view on research networking. The slides of Bruno Tideman s presentation are attached to this report as Annex VI. BT is a full-service provider. It has five business units and its own research department with 4,000 people. BT Wholesale is responsible for international operations. BT has global capabilities through BT-owned infrastructure and partnerships with local and regional telecommunications operators, and delivers service to more than 400 cities in more than 100 countries. BT is however concentrating on Europe, where it has a pan- European fibre network with a core backbone running at speeds up to 10 Gb/s. Bruno Tideman is BT s business manager responsible for the GigaPort project in the Netherlands. In 1999 the contract was signed for GigaPort s research network, SURFnet5, which currently is the fastest network in the world. SURFnet5 has a semi-collapsed backbone in Amsterdam with a capacity of 80 Gb/s. BT provides the dark fibres, which SURFnet manages at Gb/s. There are also 29 DWDM lambdas at 10 Gb/s (the dark fibre local loops), and 14 managed dark fibres. 13

14 In the United Kingdom, BT operates the LEANet wide-area research network as a testbed facility connecting universities, managed from BT s research facility at Adastral Park. This is a coloured triangle at 2.5 Gb/s. BT s market policy is of course based on the requirement that the company must make a profit. Until now research networks have not been in the focus of BT s attention; instead the company has been concentrating more on multi-site corporate networks (e.g., Unilever). The research community has only recently been recognised as a potentially interesting market. BT wants to be and to remain a full-service provider. It wants to sell services rather than transmission. Consequently, BT is not going to sell dark fibre to anyone (anymore); as one of the other workshop participants put it earlier, that would be like selling the crown jewels. Managed wavelengths will therefore be the service that BT offers to the most advanced user communities. BT recognises that it has to develop a separate business model for the research community, since that community is an early adopter of network technology and a developer of new products. Developments will go in the direction of building high-capacity, scalable data-centric networks that are low-cost. This requires simplifying the network architecture, lowering equipment costs and lowering operational costs. Operators also need to be flexible to offer new service opportunities. As to the technical development, the only solution for the future is optical IP networking: IP over light. SDH is out, IP is and remains in. But we have a legacy, and a majority of customers ask for frame relay and slow access lines. In summary, the global Grid is an emerging market of commercial significance, but it is still in its early definition and research stage. Operators need to be able to make a profit to create a stable industry. If companies keep offering services below cost price, as they are doing now, then the industry will not yet be stable. The research community can benefit from optical IP networking by partnering with operators and vice versa. The telegraph charged for words, voice charges by the minute, data charges for bits, and the global Grid will charge for cycles. Very intelligent billing systems will be needed to charge for cycles. Replying to the last point of the presentation, David Williams gave as his personal opinion that Grids will perhaps not be charging for cycles but for storage space. He noted that the last point of the presentation said that one will only be charged for cycles, in other words: networking will be free-of-charge! Kees Neggers recognised that it was BT s policy to stop selling dark fibres, but he thought that this was a dangerous development. It would be going back to the 1960 s when only operator-defined services were for sale. The customers of national research and education networks need dark fibre. The research networking community does not aim to own metropolitan networks - they see that as the business of the operators. However, if operators would refuse to sell dark fibres to research networks then they would force research networks to set themselves up as competitors. In the end operators would be killing their own business. The Global Crossing representative stated that it was part of his company s portfolio to sell dark fibre. Basically the company s policy was to sell whatever the customer wants to buy. The sale of dark fibre is however of course only a limited market. Competition has driven prices down to a normal level, but very recently the price reductions have gone a bit too far. It can be expected that in 2-3 years time prices will be realistic and hence the industry will be stable. The immediate question for research networks now is whether they want to buy fibre from companies that are in trouble or from companies that maybe ask a bit more money but have the capabilities in place to support the infrastructure. The bottom of the prices has now been reached. It was remarked that in capacity terms the bottom price might not be reached yet, because the technology is still developing fast, increasing the quantity of data that can be carried over a single fibre. Is dark fibre a glut or a crown jewel? Is there a way of managing the market? Studies say that only 2% to 5% of the total bandwidth is being used on lit fibres, and only 10% of fibres is being used. For the current market, it may however be interesting to know how much spare equipped capacity is there. In practice, fibre is lit as one needs it; the first customer only takes a small part of the available capacity and then it gradually fills up. No matter what the background may be, from the perspective of the research networks there is a lot of unused fibre that they simply cannot reach. It is circumstances like this that are holding the community back from making progress. 14

15 It was remarked that most operators may indeed only fill up two or three slots of the 80 in an available connection, but one should remember that it does not cost so much then to use the additional wavelengths. As one of the participants remarked: It is not what is there, but what is left.. One should however not only look at the geographic scope but also at the service element: local-loop costs and co-location costs etc. Those elements have a limited capacity and may drive up prices. Carlos Oliveira of PT Prime presented the views of the Portugal Telecom Group on research networking. His slides are attached to this report as Annex VII. The Portugal Telecom Group is active in three major markets. It is the market leader in Portugal in domestic wired communications, with a good track record of cost reduction. It is also the market leader in mobile communications in Portugal and Brazil, with 16 million controlled subscribers. Finally, it is the market leader in multimedia, such as Pay-TV, newspapers and cinemas, with a successful deployment of broadband. In all areas the group will be cash-flow positive either this year or next. In Portugal, a liberalised regulatory environment has been introduced step by step in the period since PT s revenues have increased by 13.9% between 1994 and The company has made significant investments in the infrastructure. PT Prime is the company that deals with the corporate market, being the PT Group s commercial front-end for the top 6,500 corporate customers. As such it is also the company responsible for the relations with the Portuguese national research and education network, which is organised by FCCN. Part of those relations is the key account relationship: PT Prime provides a dedicated account management team with technical experts and led by a senior account manager and offers a 24 hours per day and 365 days per year customer service. PT Prime and FCCN also are partners in projects. Examples are an ATM trial ( ) and a partnership established in 2002 between FCCN, RNP, PT and Embratel to provide an interconnection between Lisbon and Rio de Janeiro at 2 Mb/s. The national research and education network is a customer with very demanding requirements and focused on Information Society developments. At the technical level it asks for short delivery lead-time and complex configuration, and high availability of Quality of Service. At the commercial level it focuses on obtaining the highest bandwidth at the lowest price. Having consisted of digital circuits up to 2 Mb/s until 1996, the Portuguese national research and education network offers since 1999 ATM services up to 155 Mb/s. This is mainly in the MANs in Lisbon and Oporto, two cities interconnected by multiple 34 Mb/s. Other locations in the country are connected to these two cities at speeds up to 2 Mb/s or between 2 and 34 Mb/s. In 2002, one lambda will be introduced at 1.25 Gb/s. The network also connects schools and libraries; this currently involves 11,500 ISDN lines, 15 PoPs and 110 ISDN primary accesses. Portugal is connected to GÉANT with a 622 Mb/s link between Lisbon and Madrid. Answering a question from David Williams, Carlos Oliveira said that there is no lack of fibre going to Portugal. One can ask however if there is enough demand for that fibre. Dai Davies pointed out that at the igrid 2002 event one single project had transmitted more than 600 Mb/s, which is more than the entire GÉANT connectivity to Portugal. In his view any lack of demand for high-capacity connectivity to Portugal is caused by a lack of supply at affordable prices. The consequence of the situation is that Portuguese researchers are significantly disadvantaged. Carlos Oliveira expected, with some of the other operator representatives, that the digital price divide will be closed quickly. Asked why GÉANT had not turned to an alternative provider if PT s prices were too expensive, Dai Davies explained that GÉANT is bound to work on the basis of public tenders and that no other offers for Portuguese connectivity had been received. The LambdaNET representative told that his company was also present in Portugal now and had sold more than 2.5 Gb/s in a few months. Prices for SDH are going down by a factor of 5 per year. In Dai Davies experience it takes three or more competitive providers in a country to achieve cost-based pricing. And once that situation is achieved, the demand increases significantly. 15

16 Kees Neggers felt that the Portuguese national research network suffers from a chicken-and-egg problem between national and international connectivity. Even with a limited capacity of 622 Mb/s GÉANT is not a bottleneck anymore when the national backbone is typically at a mere 34 Mb/s. Problems like this have very negative consequences for researchers in Portugal and similar countries. Carlos Oliveira pointed out however that the national research networking infrastructure is now also improving. He repeated that in his view there is a lot of competition in the Portuguese telecommunications market, both nationally and internationally. Claire Milne asked how Portugal Telecom sees the competitive picture for the company, and which companies might respond to tenders for national or international connectivity. Carlos Oliveira re-iterated that in his view the telecommunications market in Portugal was a healthy one, with enough competition. Kees Neggers mentioned the general remarkable problem that often the prices for a local loop are higher than the prices of an international connection. How is that in a country like Portugal? Is it possible to get fibre for a local loop there? The answer was that regulations vary from city to city. Local infrastructure used to be easier in Oporto than in Lisbon, but that has changed as a lot of fibre is being put in the ground in Lisbon. Béla Gellai, Deputy Director in the International Services Division of MATAV Hungarian Telecommunications Company Limited, gave the final presentation in this part of the workshop programme, under the title Review from the Eastern outskirts. His slides are attached to this report as Annex VIII. Béla Gellai started his presentation by announcing that he would demonstrate that flexible and reliable incumbent operators meet the demands of advanced customers like research networks, thereby refuting impressions that might have arisen on the basis of the discussions following the earlier presentations. Telecommunications operators in Central and Eastern Europe are in a post-revolution age. There has been a transition from national PTTs in planned economies to national service provider stock-companies in market economies. At the same time there has been a technical metamorphosis, from copper to fibre, from analogue to digital, from PDH to SDH to ATM to WDM. There has also been a change in management style, from a strong technology-based hierarchy to a functional management model ruled by economists, to an overwhelming market orientation. From the West there has been support through technical-scientific consulting, management consulting and restructuring funds, loans and programmes from among others the International Monetary Fund and the World Bank. Privatisation has also resulted in strategic partnerships. In the region there is now a chain of well-equipped strong incumbents-monopolists with a Western-style management integrated in a meshed international network. In a country like Hungary deregulation has been very important. The legislative environment is tailor-made, supportive of emerging carriers and forward-looking. The timetable for the market liberalisation is almost according to the milestones of the European Union. Alternative operators from Central and Eastern Europe and public utility companies are entering into partnerships. Global network operators are beginning to appear in the region. But all this comes still a bit late in view of current general developments in the telecommunications market world-wide: the rate of market growth is smaller than expected, the operational margins are shrinking, the price war in the data communications market is destabilising the players, and all the time there is bad news from the stock exchange. Matáv is an example that shows that incumbent operators can meet the demands of the research networking community. Matáv provided the first 34 Mb/s link from Hungary to Vienna in TEN-34, expanded the connectivity in TEN-155 and is now providing the GÉANT connectivity from Budapest to Vienna and to Bratislava, and in the second phase of GÉANT also the connectivity to Zagreb from Budapest and Vienna. More generally, Matáv has good prospects as a regional operator. It has a strong presence in South-East Europe, offers connectivity to each of the former republics of Yugoslavia, has a stake in Macedonian Telecom etc. Matáv has a good knowledge of the regional market, traditional partnerships with the incumbents and business contacts with emerging carriers. Matáv is flexible in pricing and is reliable in operations. Answering questions from Dai Davies, Béla Gellai felt that the situation in Hungary had benefited strongly from the introduction of competition as early as The cultural heritage is also important: because of their history Hungarians have been able to adapt quickly to the new environment, combining an American business attitude with German punctuality. Because of all of this, Matáv has developed from a monopolist to a service provider with significant market power. 16

17 Karel Vietsch asked about the national research network in Hungary. HUNGARNET also uses other carriers besides Matáv. In a recent tender for the national network Matáv lost the provision of the metropolitan network in Budapest to the competition, but it is providing connectivity for the research network across Hungary. Claire Milne asked what would be realistic timescales for other countries in the region to reach the situation that Hungary has achieved now. For example, deregulation will come into effect in Romania and Croatia in It should be remembered that the countries in the region are all different, and that has its consequences for the national telecommunications markets. Slovenia, for example, is an advanced country but it is small and therefore misses the economies-of-scale effects that play a positive role in market development in larger countries. In Romania a large drop in prices can be expected as soon as the market is liberalised; a number of companies are ready to enter the market there as soon as that is possible. But in Serbia-Montenegro and in Albania, for example, liberalisation of the telecommunications market is not foreseen before 2005, and even after liberalisation developments in these countries may be slow. At the end of the discussion, Béla Gellai remarked that he certainly was able and willing to give some explicit messages to research networks for their future policies. However, he would prefer to go into more detail only in private confidential conversations. Other representatives of operators might feel the same Discussion on Technology Chair: Rapporteur: Roberto Sabatino, DANTE Valentino Cavalli, TERENA Protocol Wars: Return of the Circuit Switch Is faster better? Roberto Sabatino introduced the discussion session with a short presentation on the technology challenges for future research and education networks. His slides are attached to this report as Annex IX. Roberto Sabatino first mentioned some key points on GÉANT and its future successor, and then identified the underlying technical and economic issues. GÉANT currently provides 10 Gb/s in nine locations and 2.5 Gb/s in twelve locations. Its successor is expected to support 40+ Gb/s, single channel, IP/optical integration and Europe-wide end-to-end wavelengths to user sites. The developments are expected to be driven by increased user demand for bandwidth and Grid applications, and made feasible by advances in opto-electronics and all-optical solutions as well as by reductions of transmission and equipment costs. The expectation is that carriers and vendors are willing to work with research and education networks, but will that be made possible by market developments? More specifically, there are a number of issues that need to be addressed, including the real demands of users, the adoption of 40 Gb/s by carriers, the economics of the optoelectronics that is needed to support IP/optical integration, and the geographic scope and multi-domain operations and management in providing wavelengths to users on an end-to-end basis. There is clear evidence that ordinary users are, more and more, using end-to-end applications. In combination with the increasing demands of Grids users this shows that bandwidth of at least 40 Gb/s aggregate in the backbone will be needed very soon. There are different options for the provision of 40 Gb/s: 4 times 10 Gb/s or single channel, shared IP infrastructure or mixed IP/layer-2 environment, full routed model or hybrid solution with smaller routers and switches. We think that carriers are interested in 40 Gb/s but that nobody intends to offer it because of little user demand and the high investment that is required. Offers for 4 x 10 Gb/s look more feasible in the short term. As regards IP/optical integration and deployment of opto-electronics it should be taken into account that the shared IP model is simple but the relative costs of IP routing are increasing. It is questionable if this is the right model for users requiring point-to-point connections. GMPLS seems the right solution for a mixed environment, but there are issues about the costs of optical equipment and management as well as operational and multidomain issues. End-to-end service delivery is not easy. Access to wavelengths is not uniform yet across Europe. Accessing fibre is easy in the United Kingdom, France, the Netherlands, Germany and Belgium, and it is feasible in Austria, 17

18 Switzerland, Spain, Italy, the Czech Republic, Hungary, Slovakia, Poland and Sweden. However it is still too difficult in Greece, Portugal and Slovenia, and virtually impossible elsewhere. The current model of research and education networks is based on point-to-point circuits, based on lambdas with SONET framing/presentation for long-distance connectivity. In some cases dark fibre is used in short-distance scenarios. Is it feasible to reach a model where research and education networks procure managed dark fibre (dim fibre) for long distance? Roberto Sabatino concluded his introduction by suggesting the following points for discussion: the economic viability of 40+ Gb/s, shared IP versus a hybrid model, Gigabit Ethernet versus SONET/SDH framing (this involves the choice of protection versus redundancy the latter being more interesting for national research and education networks today), dim-fibre services, and multi-domain service management. Economic viability of 40+ Gb/s Several national research and education networks already have a need to plan for 40 Gb/s networks for research users with high bandwidth demands, like Grid users, astronomers etc. Operators feel that there is no serious demand for 40 Gb/s connectivity as a single channel today, but if it is requested then they will evaluate the business case for it. The problem in economic terms is that new DWDM components require high investment and this must be carefully evaluated. There are differences at various levels (backbone, NREN, MAN), but in general it is very important to drive down the cost per unit and still stay competitive. Switches/routers, economic aspects Fully meshed networks are not cost effective to provide point-to-point Gigabit connections. For large streams it is already more economical today to use electrical switches rather than Gigabit routers. Gigabit routers are very expensive as a consequence of complexity in producing line-rate cards; complexity is also the main reason for the high cost of optical components. Routers are still electrical. It is felt that there is a need to use optical networking technology to address user needs that demand more bandwidth, especially when they require point-to-point connections. This argument assumes however that all-optical components will be cheaper, but there is no evidence on the market and in the technological developments right now that this will actually be the case. One has to consider all aspects of any alternative service model, and these involve lots of components, including optical transport, isolation, Quality of Service in point-to-point connectivity and provisioning. Solutions may be provided both at layer-2 and at the lower-layer equipment. It should be clear that any-to-any connectivity does not fit all requirements. How can operators ensure multi-domain inter-working in providing an end-to-end service either in a shared or a separate IP model? Operators and (national) research and education networks are used to focus on providing multi-domain interworking at shared IP level, some of the operators especially to support local ISP customers. The experience has proved that this is feasible. In terms of providing end-to-end bandwidth, spanning different domains and carrier services, this is still a challenge. Operators do this almost on a regular basis, but in a static (almost manual) fashion with long provision times. Clearly there must be an effort in providing it dynamically or on much shorter timescales. Managing very high capacity in a real-time fashion is a matter of Bandwidth on Demand (BoD); one needs to provide solutions for dynamic BoD provision in an optical network. The issue of Quality of Service is also important when considering new service models for data transport. DiffServ techniques (i.e., Premium IP) are useful in providing guaranteed Quality of Service in a shared IP model to protect relatively low-capacity flows. The provision of high-capacity flows requires different techniques; most likely separate connections are needed. Such a need to establish end-to-end point-to-point services looks like the ideal driving force for carriers to establish inter-working agreements. 18

19 Demarcation of carrier domains is the key point to be addressed. Customers also need to pay on a per-session basis. It was remarked that one can do that when providing value-added services and this should drive collaboration. Two-thirds of operator representatives in the workshop were from wholesale departments and one-third from the retail department. Wholesale people are those that national research and education networks need to talk to. It is good that carriers want to differentiate their business model and offer services to their customers, but the national research and education networks should continue to have access to raw material because they have this Qualityof-Service need already and cannot wait until carriers are ready with the establishment of inter-working agreements. Ideally one has to go beyond the level of wholesale/retail and let the technology people work together and negotiate directly with DANTE and national research and education networks. Is it feasible to provide dark- or dim-fibre service? The expression dim fibres means that amplification and regeneration are performed by a service provider and national research and education networks put their own equipment at both ends of the fibre. It is clear that this can only be achieved on stretches where no regeneration is required, as regeneration is required for each wavelength provisioned and is one of the most expensive operations to perform. With this model one has to take into account that carriers would control, to some extent, the quality and reliability of the service and national research and education networks would only have access to the edge equipment. The view from carriers was that the only reason to procure managed fibres would be the wish to transport something that is not standard; if one wants to use it for standard traffic then there is no difference in practice with managed wavelengths. Representatives from national research and education networks remarked that the investment in buying fibres is convenient in terms of the flexibility it can offer in comparison to long-term procurement of managed wavelengths. For really long distance, the cost of DWDM is so high that it is more cost effective to share it. For metropolitan areas, it is more convenient to have one s own DWDM equipment in place Discussion on Pricing and Geography Chair: Rapporteur: Claire Milne, Antelope Consulting Marko Bonac, ARNES How to close the Digital Price Divide in Europe? Claire Milne and Marko Bonac introduced the topic of the discussion session. As shown in the presentation by Dai Davies, the current pricing structure for high-capacity SDH or DWDM connectivity has a very large divergence of pricing across Europe. In GÉANT, the cheapest bandwidth costs 5% of the equivalent cost of the most expensive bandwidth. This enormous gap in prices has to be closed if we want to provide similar opportunities to research and education communities across Europe. But what are the reasons behind the digital price divide? Are these small market imperfections that will solve themselves in a few months or at most years? Are they caused by regulatory barriers or by obstruction by official or de-facto monopolists using their political influence? Do operators make large profits in Eastern Europe, or is there not enough demand in those regions and hence no economies of scale? It was mentioned that the telecommunications laws in the EU Accession States are in accordance with the acquis communautaire 1, but nevertheless the secondary legislation is missing in many areas. Also national regulatory authorities are understaffed and not very efficient. There is not enough infrastructure in most of the Accession States, and what there is may not be the latest technology. Some areas in EU Member States are not covered either. In less developed countries the local access network is in an even poorer state than the international lines. 1 The policies and rules of the EU that candidate countries must adopt. 19

20 Some carriers, operating internationally, see Eastern Europe as a key market. Countries there are five years behind in Internet penetration. Looking at the price graph in the presentation by Dai Davies, these countries are also five years behind Western Europe in their pricing. But price changes tend to go faster in these newly developing economies, so some workshop participants expected that prices in Eastern Europe would reach the level of Western European prices in five years time. The demand for capacity is low in EU Accession States, and hence telecommunications operators do not have high-capacity backbones. In itself there are no regulatory barriers in the Accession States, but sometimes there are hindrances because of the influence of former monopolists. Such former monopolists are rigid in their attitude, but there are new small competitors arising, and that offers opportunities. The level of Internet penetration provides a partial explanation for the large differences between countries. There are also important differences in Internet penetration within Western Europe, for example Sweden is generating more Internet traffic than France, which has a much larger population. The reason is that the Swedish government has actively promoted the proliferation of home computers and Internet use. Some workshop participants thought that cultural factors such as knowledge of the English language were also an important factor for Internet penetration, but others doubted that. It is clear however that general economic prosperity of a country is a crucial factor; for example, in Russia most people who can afford a home computer have one and are connected to the Internet, but still there are more Russians in the United States connected to the Internet than in Russia. South-East Europe is late in adopting modern telecommunications regulations; for example, liberalisation of the market in Bulgaria is expected only for It can be expected that after liberalisation prices will become more affordable we have already witnessed that for the mobile market. But even then investments in the Balkan countries can be expected to remain low. In the Commonwealth of Independent States one cannot expect the situation to change at all in the foreseeable future, because of the poor economy in those countries. Poland, Hungary and the Czech Republic are more developed, have a higher Internet penetration and a betterdeveloped telecommunications market than other EU Accession States. One reason for this is that governments in these countries have supported their national research and education networks as far back as That has educated students about the opportunities that networking offers, and has therefore subsequently generated Internet demand. But in other countries, especially in Eastern Europe, national research and education networks have never received much government support and are therefore still in a poor state. As mentioned before, it may be that in countries that are now up to five years behind in development, the demand will be stronger in five years time, competition fiercer and the price gap with the rest of Europe narrower. But governments should be advised not to rely on that and not to wait for that. Governments have a responsibility to act, introduce competition now and provide opportunities that are equal to those elsewhere in Europe. Liberalisation of the telecommunications market, through regulation, is one important instrument for governments. Another is to stimulate Internet penetration and use by providing support to their national research and education network. Subsidising Internet connectivity in schools can be instrumental, and in any case a strong national research and education network will have a strong influence on broader use of telecommunication technologies in other sectors. Eventually large price gaps between countries covered by the SERENATE studies may be expected to disappear. Unfortunately, to some extent the price gap may be reduced by a rise of the current very low prices and not only by high prices going down. Recent business failures show that the lowest prices may be unsustainable Discussion on Stability of the Industry Chair: Rapporteur: David Williams, CERN Karel Vietsch, TERENA Will we see more operators getting into serious problems? This discussion session was about the current and future health of the telecommunications industry. Recently we have seen a number of important operators getting into serious problems or even disappearing. Have we seen the 20