Integrated operators should be prohibited to provide VAS

Some traditional network operators claim that open access (unbundling or WBA) is not necessary to establish competition, since subscribers are free to choose any over-the-top service they like. Sounds crazy, buy maybe it can be made to work.

The familiar 3 layer model (passive, active, services) can be extended by splitting the lowest and the highest levels:

• Layer 0: trenches, ducts, PoPs
• Layer 1: fiber
• Layer 2: equipment
• Layer 3: access services
• Layer 4: value-added over-the-top (OTT) services

Both at the lower end and at the higher end, this raises problems: natural monopoly and net neutrality, respectively.

Few people will maintain that multiple fiber networks can be laid in a financially viable way. You don't want to build a complete network for a 50% (or even 33%) maximum penetration. Hence, the natural monopoly.

Also, few people see OTT as a viable model for competition. They want open access at layer 1, 2 or 3. The trouble is: the network owner competes with the OTT players, but has all the goodies (billing relation, presence and location information). OTT players have one big asset only: brand name. Hence the net neutrality issue.

Suppose the natural monopoly would lead to a single vertically integrated network, with competition played out only at the OTT layer, then net neutrality issues can be resolved by prohibiting the network operator of providing any value-added services (VAS) - just basic Internet access, which is not a VAS but a basic access service (although business providers usually describe it as a VAS). In other words, a monopoly operator should be prohibited to provide any broadcast, video or voice services. Or spin-off the services devision; not Internet access, but just the VAS and content services.