'Boring' standards work could revolutionise the broadband market, says Rob Gallagher
We've always tried to set our own agenda at Informa Telecoms & Media, but sometimes I'm puzzled when even the trade press doesn't pick up on some of the developments we give centre stage to (writes Rob Gallagher, Principal Analyst at Informa Telecoms & Media). Such is the case with Ethernet Active Line Access, a concept for wholesale access to next-generation broadband networks that UK telecoms regulator Ofcom hopes industry will turn into a global standard.
Admittedly, the words "wholesale" and "regulator" individually are often enough to convince many trade hacks to return to their iPhone-rumor newsfeed. But ALA could have profound effects on the broadband market, which would be felt by telecoms CEOs and consumers alike.
To be fair, not even Ofcom has highlighted some of the more far-reaching consequences the concept could have. It developed ALA with two more immediate concerns in mind.
Like most European regulators, Ofcom believes that service providers are best equipped to develop new products and compete on price if they have installed their own equipment on the incumbent's network via processes such as local-loop unbundling. But the regulator's research suggests that in a next-generation world, similar kinds of "passive" access will not be technically or economically feasible in many cases.
Ofcom is also concerned that the radically different structure of tomorrow's telecoms markets will lower competition in other ways. Instead of a single national network owned by the incumbent, many countries will have "patchworks" of NGA networks based on different technologies and owned by different players, including startups and municipalities. Although Ofcom is keen to encourage such investments, it is concerned that the resulting networks could become "islands" of low competition and higher prices if they are too difficult for service providers to connect to.
The ALA push is designed to solve both these problems. The technology promises service providers similar scope to create new services as today's passive products allow, even though access to the network is at only the "active" level of the operator's equipment. And if NGA operators offer it as standard, it should be easier for service providers to connect to their networks.
Ofcom is convinced that active access will have a "more important and sustained place in superfast broadband competition" than it does today. Given the problems with passive access to NGA networks, many service providers that have based their businesses on local-loop unbundling will have to rely on active access in a next-generation world. But some observers suggest that ALA could also open the door for a new breed of media service provider.
To date, only established service providers that have spent many millions of dollars on unbundling could hope to bring a commercially viable IPTV service to market. The flexibility of ALA could enable a new entrant to do the same without making even as near the same size of investment in infrastructure. This new entrant could be a well-known store or supermarket chain looking for more ways to make money from its trusted brands, or a media or consumer-electronics company focused on providing connected-home services, say observers.
This might be wishful thinking, particularly because the high speeds offered by NGA will allow such firms to deliver increasingly sophisticated services "over the top" of other service providers' networks with even less investment. In fact, ALA may play a much more interesting role in helping today's service providers to become pan-European or even global players.
Since the creation of the European Union, regulators and policymakers have hoped that their attempts to harmonise the region's regulation would lead to cross-border competition in telecoms services, to no avail. Both passive and active products have simply been too different in each country for many service providers to enter or maintain successful businesses across borders.
ALA could change that. Ofcom notes that the European Commission's draft recommendation refers to the standardisation of wholesale access and suggests that its final position will emphasise the importance of active access. "I've had some very positive signals from members of [telecoms commissioner] Viviane Reding's cabinet on this point," said a senior Ofcom executive at IIR's Telecoms Regulation 2009 conference earlier this week.
In addition, the UK regulator has been meeting with several of its European counterparts over the past year to encourage them to adopt ALA. The active access product of Dutch incumbent KPN is said to meet many of Ofcom's technical requirements.
The Swedish Urban Network Association (SSNf), which represents Sweden's many municipal NGA networks, is already working to bring its forthcoming active access specification in line with ALA, before the specification's launch in August. The SSNf also plans to collaborate more closely with like-minded bodies in Denmark and Norway on similar matters, in order to encourage more service providers to use their networks.
The UK's NICC communications-interoperability-standards body, meanwhile, has created a working group to look at international standards that meet ALA requirements. Telecom New Zealand is already working on an active access product that is thought to bear many of the characteristics of ALA.
Unfortunately, not all regulators and operators in some of Europe's largest markets are convinced by ALA. Spain's regulator has approved a decidedly un-ALA-like wholesale product from the country's incumbent, Telefonica, which limits service providers to 30Mbps speeds. In addition, the regulation, which is likely to remain in place until CMT's next wholesale-broadband-market analysis in two years, does not specify whether wholesale products need to allow service providers to offer IPTV.
One senior executive at a major European regulator also comments that ALA is "nothing special," noting that there are already advanced active NGA products in Belgium. She expects that regulators will need to mandate a range of different active access products, rather than just one.
One German service provider, meanwhile, complains that Deutsche Telekom's recently announced voluntary wholesale NGA offer is "technically resale" and not as flexible as ALA. The country's regulator, BNetZa, is considering whether active access to Deutsche Telekom's NGA network will be required. In France, regulator ARCEP has placed little emphasis on active access, preferring to promote passive access instead.
It also seems likely that the factors that caused regulation to diverge in Europe's telecoms markets – differences in infrastructure competition, and the relative strengths or weaknesses of national regulators – will be magnified in a next-generation world.
On the other hand, Ofcom has provided ready-made guidelines for operators and regulators wondering what to do about wholesale access to NGA networks. But there is still much work to do. The Broadband Forum (formerly the DSL Forum) has pledged to convert Ofcom's technical requirements for ALA into technical standards, while the Metro Ethernet Forum is looking at Ethernet access standards as well. But Ofcom also hopes that the European Commission will endorse ALA and push European telecoms-standards body ETSI to adopt it as well. The regulator is also encouraging bodies such as the Telemanagement Forum to drive standardisation of the "operational" aspects – ordering, migration and other management processes.
No doubt this work will focus on details of little interest to the layman, but a more dynamic, broadband market that crosses at least a few borders would be anything but boring.
Rob Gallagher is a principal analyst for Informa Telecoms & Media's Broadband & Internet Intelligence Centre research portal and editor of Telecom Markets. Contact: rob.gallagher@informa.com
* Article courtesy of Informa Telecoms & Media's Intelligence Centre (www.intelligencecentre.net), an online subscription service providing industry executives with reliable, real-time intelligence from over 60 in-house analysts on topics, markets, technologies and companies within the telecoms and media landscape, from TV and broadband to mobile operator strategy.
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