Leased lines Ewan Sutherland http://www.3wan.net/ www.3wan.net 11.x.06, LINK Centre 1
Contents Introduction Issues OECD European Union South Africa Conclusions www.3wan.net 11.x.06, LINK Centre 2
Basic building blocks Users for private networks Operators to compete with incumbent Mobile operators to link base stations ISPs, IXPs and IIC E-commerce Many of the problems are now addressed through unbundling of the local loop. www.3wan.net 11.x.06, LINK Centre 3
Monopoly & dominance Charging excessive prices, far in excess of cost Failing to replace older, more expensive and obsolete technologies Discrimination against new entrants to the advantage of the incumbent operator s own commercial operations in terms of: provisioning times repairs quality of service wholesale prices www.3wan.net 11.x.06, LINK Centre 4
ITU-T T D.1 intn l leased lines Article 1.3 requires member states to ensure that administrations do not enjoy unfair advantage over other service providers using IPLCs to provide services Article 6.1 charges should generally be cost-oriented Little evidence that member states have undertaken studies to determine whether or not prices are cost-oriented www.3wan.net 11.x.06, LINK Centre 5
International routes 2Mbit/s Bahrain - Muscat Dubai - Muscat Bahrain - Riyadh Bahrain - Jeddah Dubai - Riyadh Dubai - Jeddah Bahrain - Dubai London - Frankfurt London - Paris London - Geneva London - Milan London - Brussels London - Dusseldorf London - Vienna 0 3,000 6,000 9,000 12,000 15,000 18,000 Source: INTUG, 2002. per month www.3wan.net 11.x.06, LINK Centre 6
OECD 30 developed countries Communications Outlook 2005 (next in 07) Specific studies of leased lines Comparisons amongst 30 member states Communications Outlook 2003, page 17:... liberalisation has curtailed tremendously the monopoly rents extracted from long distance services, international services and leased lines. http://www.oecd.org/sti/telecom www.3wan.net 11.x.06, LINK Centre 7
Broadband access for business Broadband access to networks is important for economic growth and development In many OECD countries the level of competition is insufficient and is having a negative effect on business users Local leased line prices remain of concern where there is insufficient competition OECD governments should work together to produce comparable benchmarking data for pricing and provisioning The most efficient way would be for regulators to require major operators to report data on prices and performance Source: OECD/DSTI/ICCP/TISP(2002)3/FINAL www.3wan.net 11.x.06, LINK Centre 8
OECD price trends Source: OECD. http://dx.doi.org/10.1787/646172562005 www.3wan.net 11.x.06, LINK Centre 9
National 2Mbps leased lines 2004 Source: OECD http://dx.doi.org/10.1787/488541086553 www.3wan.net 11.x.06, LINK Centre 10
European Union Concern about leased lines from the early 1980s Cross-border prices varied strangely: Brussels to Milan and Marseilles similar distances, but one was twice the price PTTs supplying leased lines restricted: use of multiplexers interconnection with PSTN Concern about the viability of PTTs in the face of competition www.3wan.net 11.x.06, LINK Centre 11
1990 legislation Directive required member states to ensure provision to all operators and users Application of non-discriminatory supply: pricing provisioning quality of service fair distribution of capacity (if scarce) www.3wan.net 11.x.06, LINK Centre 12
1992 legislation Non-discriminatory supply Provision of information to users and operators Provision of a minimum set of leased lines throughout each member state: voice bandwidth 64 kbits/s 2 Mbits/s NRAs were required to collect and to report data to EC for comparisons www.3wan.net 11.x.06, LINK Centre 13
Continuing complaints Lack of high capacity leased lines Disparity: USA 700,000 private networks EU 14,000 private networks Bangemann report called for urgent adjustments in prices www.3wan.net 11.x.06, LINK Centre 14
User data INTUG survey in late 1990s Compared national and international leased lines: international half-circuit both of the same length 200% to 500% more expensive! helped the EC to act on prices www.3wan.net 11.x.06, LINK Centre 15
2Mbit/s international/national in 1999 500 450 percentage of domestic price 400 350 300 250 200 150 100 50 0 NL FR UK ES DK SE BE IT DE NO PT CH AT www.3wan.net 11.x.06, LINK Centre 16
Yet more legislation 1997 Directive obliged SMP operators to provide interconnection at cost-oriented prices 1998 Recommendation set price ceilings 1999 Review 2002 Directives www.3wan.net 11.x.06, LINK Centre 17
1999 Recommendation Price ceilings for leased lines part circuits Benchmarking EU-15 Taking third cheapest prices 64 kbit/s up to 5 km, is 80 per month 2 Mbit/s up to 5 km, is 350 per month 34 Mbit/s up to 2 km, is 1,800 per month up to 5 km, is 2,600 per month www.3wan.net 11.x.06, LINK Centre 18
2005 delivery ceilings 64 kbit/s 18 calendar days 2 Mbit/s unstructured 30 calendar days structured 33 calendar days 34 Mbit/s leased lines 52 calendar days www.3wan.net 11.x.06, LINK Centre 19
2005 price ceilings 2 km 5 km 15 km 50 km One-off 64k 61 78 82 99 542 2 M 186 248 333 539 1112 34 M 892 963 1597 2539 2831 155 M 1206 1332 1991 4144 3144 www.3wan.net 11.x.06, LINK Centre 20
Annual cost for 2Mbits/s 200 km ES IT GR PT UK FI IE NL BE DE AT DK 2005 2004 2003 2002 SE 0 10,000 20,000 30,000 40,000 50,000 60,000 www.3wan.net 11.x.06, LINK Centre 21
34 Mbps per year, excl VAT 450,000 400,000 350,000 300,000 2 km 200 km 250,000 200,000 150,000 100,000 50,000 0 IE ES UK IT FR PT HU AT EL SL EE DE BE DK CY LT LU www.3wan.net 11.x.06, LINK Centre 22
155 Mbps per year, excl VAT 900,000 800,000 700,000 2 km 200 km 600,000 500,000 400,000 300,000 200,000 100,000 0 UK IT IE FR EL PT AT HU BE SL DK DE LT www.3wan.net 11.x.06, LINK Centre 23
64 kbps half-circuit 40,000 35,000 30,000 near EU country far EU country 25,000 20,000 15,000 10,000 5,000 0 UK BE AT IT ES IE EL DK NL PT FI FR LU LT CZ HU CY LV PL SK MT EE SL www.3wan.net 11.x.06, LINK Centre 24
2 Mbps half-circuit 450,000 400,000 350,000 near EU country far EU country 300,000 250,000 200,000 150,000 100,000 50,000 0 LV PL LT HU MT CY EE SL SK CZ DK LU IE FI NL PT EL BE IT FR AT ES UK www.3wan.net 11.x.06, LINK Centre 25
Half circuits to the USA 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 64 kbps 2 Mbps UK ES AT FR IT EL BE PT NL LU IE FI DK MT CZ SK SL CY EE PL LV H LT www.3wan.net 11.x.06, LINK Centre 26
European Commission annual leased lines report: delivery period service availability repairs data gathered by national regulatory authorities compiled by EC www.3wan.net 11.x.06, LINK Centre 27
Delivery period 64kbps (days) all national EU 90 80 70 60 50 40 30 20 10 0 average AT IE EL LT EE HU SE MT DK NL UK- BT IT LU CZ PT FI UK- KC ES DE SK FR LV BE CY www.3wan.net 11.x.06, LINK Centre 28
Service availability 0.50 64 kbps 34 Mbps 155 Mbps 0.45 0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 Mean long-term recorded unavailability ratio (%) 0.00 HU MT DK GR FI DE LT IE CY SK PT EE ES BE FR CZ UK NL AT LU www.3wan.net 11.x.06, LINK Centre 29
Asia-Pacific Some policy work in APECTEL No secretariat Quite limited data gathering Some very wide price discrepancies Especially when compared with price reductions in undersea cables www.3wan.net 11.x.06, LINK Centre 30
2,500 2,000 1,500 1,000 1984 kb/s 2048 kb/s 500 - Australia Hong Kong, China Republic Of Korea Malaysia Singapore Chinese Taipei www.3wan.net 11.x.06, LINK Centre 31
Monthly rental 155Mb/s access circuit 14,000 12,000 10,000 8,000 6,000 4,000 2,000 Australia Hong Kong, China Republic Of Korea Malaysia Singapore Discounted Chinese Taipei - Un-discounted www.3wan.net 11.x.06, LINK Centre 32
Asia vs. Europe and the U.S.A Prices for 2 km Leased Lines Australia Hong Kong China Republic Of Korea Malaysia Singapore Chinese Taipei France 64 kb/s 2 Mb/s Germany Iceland Spain UK USA - 200 400 600 800 1,000 1,200 1,400 1,600 US$ per month www.3wan.net 11.x.06, LINK Centre 33
India Pressure from ISPs Pressure from outsourcing and call centre operators Analysis of the prices Comparisons with other countries Drastic cuts imposed on international and long distance leased lines www.3wan.net 11.x.06, LINK Centre 34
South Africa Very slow to liberalise the provision of infrastructure Users and competitors reliant on access to national and international leased lines from Telkom SA Neotel will, in time, bring a duopoly, if not competition High ADSL prices help to protect leased line revenues www.3wan.net 11.x.06, LINK Centre 35
South Africa 2Mbits/s R 18,000 R 16,000 R 14,000 annual installation fee R 12,000 R 10,000 R 8,000 R 6,000 R 4,000 R 2,000 R 0 2000 2001 2002 2003 2004 2005 2006 Source: Telkom. www.3wan.net 11.x.06, LINK Centre 36
Conclusions An essential input for competition A long hard struggle Difficult to determine the real costs, requires sophisticated cost accounting Operators had to rebalance their tariffs Requires international benchmarking In competitive markets it is being overtaken by other policy tools www.3wan.net 11.x.06, LINK Centre 37
Thank you Ewan Sutherland http://3wan.net/ 3wan [@] 3wan.net +44 141 416 0666 skype://sutherla www.3wan.net 11.x.06, LINK Centre 38