Tuesday, January 22, 2008

Telefonica: no open access obligation to FTTH

Among this year's main themes, I believe, is sharing. So far we had a few announcements, spanning a wide range of network assets:

As to the latter, I have noticed quite some resistance (revulsion is perhaps a better word) against governments getting involved, either through regulation or through direct investment. My personal view is that there is nothing a priori wrong with government bodies taking part, especially when you do not see them as intrinsically bad. They can afford a longer horizon, when public companies cannot. Add to that the view that open access is the way forward, allowing network operators to maximize utility rates of their networks.

By way of reality check: what if you really want to insist on the market taking care - in this case: of building FTTH?

All you have to do is drop one of the two basic assumptions (FTTH = end game; 1 network should suffice). Obviously, it would be the second. This would mean that we would potentially end up with perhaps 3 fibers entering our homes: one telco, one cableco, one (or more) altnet. This is pretty much what CMT (the Spanish NRA) seems to be aiming at, if I interpret the Cinco Dias story on the current market consultation correctly:

  • "(...) want competition in infrastructure, not only in services".
  • "(...) the abandonment of the idea of a single Spain (...) two types of areas, the competitive and the non-competitive." Alas Ms. Reding: fragmentation seems unavoidable.
  • "Telefonica will not be obliged to open its network to rivals whenever a new pure fiber infrastructure that reaches households."
  • "But Telefonica rivals have achieved a victory and that the network of copper will maintain its existing regulation. But it is a pyrrhic victory, because this infrastructure is doomed to disappear, and they know it."
  • "More real is the obligation imposed on (...) Telefonica to open their rivals pipes - the conduits through which the (fiber runs)." This is the duct sharing part of the CMT plan. In other words, CMT seems to consider the duct network the only real dumb part of the physical layer.
  • "(...) encourages investment from Telefonica, which will not have to share its new network with the rest, and force rivals to develop their own infrastructure. (...) But it is a gamble that can go well or not. In the worst scenario, operators alternatives not considered profitable investment and reduce its presence in Spain, or go entirely, which would strengthen Telefonica."
  • "Have you ruled out functional separation of the network of Telefonica? (...) remedy of last resort."
  • "The rules will not be ready before mid-2009."

UPDATE: see also Quinta's assessment.


1 comment:

Stefano Quintarelli said...

My feeling is that CMT is protecting the national champion; I think this is a sort of regulatory holiday a la espanola.
In my post I comment the spanish newspaper "cinco dias"'s article.
The article says

..."competitors must replicate telefonica's netork or disappear" to "stimulate investment and innovation" (bear in mind this, for another part of the article)

...the fibre network implies breaking the schema of infrstructure development that has developed in the last 40 years and the competition as we hav known it so far.

... CMT goes even far beyond of what is proposed by the EU.

... CMT wants infrastructure competition (and not service based competition) because they feel it is the only sustainable over time. And this is not viable with present regulation

...the first thing CMT wants is what Telefonica is asking, that markets are smaller than spain, i.e. geographic segmentation. (I wonder how they will do markets analysis..)

... where Telefonica will make FTTx, they will not have any obligation of cost on wholesale offers on the FTTx network

.. the only way to stay in the market for an operator is to build its own FTTx

...the bet is that Telefonica will be incentived to build a FTTx network

... the risk is: disappearance; in the worst case scenario altnets will reduce their operations in spain or withdraw from the spanish market

.. Telefonica is the big winner; cable operators are not tat bad positioned, though the geographic segmentation oses them at risk to be notified as SMP in small areas, smething that at this stage seems unlikely

... regulation will not allow the possibility of continuing competition in the ADSL markey as it has been done so far.

.. a possibility for smaller operators or for those that do not have UNLIMITED FINANCIAL RESOURCES is to focus on small market niches

...CMT has de facto ruled out functional separation.

... these are regulatory guidelines that must be approved by EU and could necome activ mid 2009.

these are "Cinco dias" words, not mine

my comment is a poem by a spanish author, which says that all past times were better.