Transcript CPE - Userpage

ACCC 2004 Regulation Conference
29-30 July, 2004
Competition in a IP World
Martin Cave
Warwick Business School
[email protected]
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The question:
What is the scope for competition in a post-PSTN/first generation
broadband world?
The (UK) starting point:
Dominant PSTN operator extending dominance into burgeoning
broadband markets (subject to cable modem competition); little or no
access competition; limited unbundling; rival networks principally
serving business data needs.
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Issues in voice
What is the degree of fixed (mobile subscription)?
Fixed and mobile found to be in different markets in Europe
Transition to VoIP technologies in both will affect this.
How does VoIP operate?
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PSTN – traditional circuit-switched voice
Customer
Premises
Equipment
(CPE)
Transit
Access
Core
Transit
Access
Narrowband
Digital
Local
Exchange
Customer
Premises
Equipment
(CPE)
Narrowband
DMSU
Digital Main
Switching
Unit
DLE
Circuit
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PC-to-PC VoIP
CPE
Core
Transit
Access
Transit
Access
CPE
DSLAM
ISP
DSL or
cable
modem
ISP
Broadband
Internet
Narrowband
Modem
DLE
Narrowband
Router
Packets
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Phone-to-phone VoIP
CPE
Access
Transit
Core
Transit
Access
CPE
VSP
DSL or
Cable
Modem
Broadband
Internet
Broadband
VSP
ATA
Router
PSTN
Gateway
Circuit
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Packets
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VoIP
user
Narrowband
PSTN user
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VoIP in the PSTN
CPE
Transit
Access
Core
Transit
Access
Narrowband
Narrowband
DLE
Digital
Local
Exchange
Incumbent-owned
private IP network
Circuit
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CPE
Packets
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VoIP in the corporate network
Voice
Office
LAN
Data
Voice over LAN
Desks
Circuit
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Packets
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Implications for competitive process
Existing operators can migrate their customers to VoIP at will; they may
not notice.
Winning new customers to be achieved by selling broadband access
and offering VoIP as an additional service
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Importance of promoting ADSL competition
Sought via ‘ladder theory of investment’
First make intermediate wholesale broadband access – bitstream - available
Then increase price of / withdraw WBA and lower price of (high frequency)
unbundled loops
Apply severe margin squeeze tests ex ante to prevent deterrent to further
investment
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The cost structure of PSTN and of IP
There is evidence that
Minimum efficient scale of IP network much smaller percentage of market
than mes of PSTN as percentage of (declining) fixed voice market
This creates scope for competition – in core networks
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However,
the scope for competition is backhaul is limited, especially is less densely
populated geographies
this creates an argument for geographically differentiated markets – again
directed at encouraging investment
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Access Competition
No apparent silver bullet providing country-wide competition to
incumbent’s copper wire
Instead likely to be a patchwork quilt of (primarily) wireless technologies,
UMTS, WiMax etc.
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