KPN Capital Markets Day, 7 November 2023: preview

KPN is organizing a Capital Markets Day on November 7. We expect the board to unveil plans for the period up to and including 2026 and to provide a glimpse into the years to come, possibly up to 2030. The fiber optic renovation is nearing completion, which will have a major positive impact on the financials. However, the network is never finished and further evolution is on its way. Partnerships will be central to this. In the meantime, competition is and remains the greatest risk.

Competition in mobile consists of the other two mobile operators and possibly entrants in Private Wireless. In fixed, fiber optic brings new players to the market. Consolidation is obvious, but there are different scenarios. In services, OTT still drives cord cutting, mostly or communications, but or TV/video as well.

Partnerships are likely to be central in areas where KPN is too small or lacks knowledge to develop solutions itself: ultra-rural coverage, cybersecurity, venture capital and developing a network-as-a-service platform. Where KPN lacks scale, such as in ICT customization (tailored solutions and serving verticals such as healthcare and transport), acquisitions are an obvious solution.

KPN's previous Capital Market Days focused on growth and simplification:

• May 2011: Strengthen - simplify – grow
• February 2014: Building on strong fundamentals
• March 2016: Raising the bar
• November 2018: Organic sustainable growth
• November 2020: Accelerate to grow
• November 2023: Building for the future???
  

General strategy

• Netwerk evolution:
  
• Fixed: FTTP and a partnership (e.g. Starlink) to cover the remaining ~30k ultra rural addresses.
  
• Mobile: 5G/3.5 GHz plans, following the 2024 auction, will mostly be about upgrading the 5G network's capacity. Ultra-low latency may form the basis for new services, e.g. in IoT.
• A jump on the AI bandwagon could look quite differently, if SKT is followed, or rather Iliad.
• New tech such as digital twins and virtualisation will serve network control and maintenance, help enable zero-touch and cloud-native networks.
  
• Network are increasingly seen as platforms-of-platforms (or: network-as-a-platform), for traditional (telephony, television) and new (IoT, etc.) services. Network API's are coming to market to allow developers and enterprises to take advantage of network and subscriber data, see e.g. TIM, DT/Ericsson, Nokia/Dish and BT/Google Cloud.
• Services:
• In fixed, most telcos have embraced the Super Aggregator status for access to and billing of media services (streaming video, music, other). In mobile, it's still early days. Proximus is trying to translate the Super Aggregator to a Super App strategy, for all 'daily services' (Proximus+).
• Some telcos are modestly in the business of developing apps themselves (Proximus, Orange, Verizon). The entry-barrier is low, but it remains a challenge to compete with Big Tech and specialised developers. Maintenance is complicated for a roster of apps (for a range of operating systems) that need to be updated regularly.
  
• Cybersecurity and quantum computing are very important areas and could involve partnering with other telcos. After all, it makes no sense for each telco to develop these solutions on their own.
• Branding could use a little more clarity, now that a single-brand strategy has been abandoned, with current brands KPN, Youfone (takeover pending), Solcon, Simyo, XS4ALL (no longer for new subscribers), Cam IT Solutions, Inspark.
• What is so hard devising a proper loyalty program?
• Financial targets:
  
• KPN's fiber renovation is finally nearing completion. Taking around 30 years in all, it must be regarded a once-in-a-century operation. Benefits will need to be updated, in terms of opex (maintenance, energy, support), revenues (ARPU, customer wins) and capex. When the fiber program was relaunched (Capital Markets Day 2018), KPN said it aimed for 80 percent coverage, which excluded the coverage at the time by third parties (mainly Delta Fiber and other cablecos). With KPN increasingly overbuilding competing fiber operators (such as in Oss), the 20% figure will drop to a lower level.
• The fiber impact will be positive for revenues, margins and free cash flow, exacerbated by sunsetting more legacy systems (copper, 2G, 3G, PSTN, ISDN, etc.). Capex will likely drop below EUR 1b per annum (currently EUR 1.26b), net free cash flow (after interest and tax) may rise above EUR 1b per annum (currently EUR 860m). Still, the impact of higher interest rates on the interest bill is not to be overlooked.

Threats and opportunities:

• New entrants
• Mobile: the 2024 3.5 GHz auction will set aside 100 MHz for Private Wireless. Citymesh is a likely candidate to enter the market.
• Fixed:
• Wholesale-only operators (neutral hosts) of the active layer in fiber networks have already entered (Fiber Crew/Jonaz, Fiber Operator, Weserve).
• Delta and ODF could team up to build the Third Digital Infrastucture. This would put pressure on occupancy rates, but with fierce competition price increases would be unlikely. Ultimately, a shake-out would follow.
• Alternatively, Delta and ODF could acquire Ziggo's HFC-network to construct a Second National Fiber Operator. In this scenario, VodafoneZiggo's retail operations would be combined with its mobile network, mirroring Odido (formerly TMNL).
• FWA is increasingly likely to compete with FTTH, especially in ultra rural areas and in places where KPN deploys PON technology (no physical unbundling and instead high wholesale tariffs). Odido would be very well positioned.
• Disintermediation:
• Communications (Meta, Microsoft) and content (Netflix, Amazon, Disney, WBD, etc.) have already largely gone OTT.
• Hyperscalers have claimed large sections of the cloud market.
• Smart TV manufacturers offer an alternative TV-platform.
• There's always the risk of NOT doing something. New opportunities that must not be missed may include the Super App (Proximus+), speed-based pricing in mobile or FWA.
• Outsourcing carries the risk of losing indepth network knowledge and capabilities. Perhaps KPN needs to clarify where it stands.
• Selling real estate, even if this is not core business, is not wise. It exposes the company to hefty annual price increase and gives it a fake sense of independence. Migrating to a different real estate owner may be possible in theory, but the lock-in is such that this is near impossible. Selling real estate only makes sense in case of an immediate need for cash.
• Structural separation is meant to create two businesses that can each improve their growth profiles. It can be implemented in two different ways: NetCo/wholesale versus ServCo/retail, or Fixed/wholesale versus Mobile/retail. The latter is becoming harder for KPN, now that it is integrating fixed and mobile at the core network level.
• APG could, from a value point of view, swap its 50% Glaspoort stake for roughly a 10% stake in the entire fixed-line network. Who knows, what could happen from there.
• Areas where KPN lacks scale or capabilities:
• ICT (Tailored Solutions).
• Verticals: health (KPN Health), possibly transportation.
• KPN Ventures: its portfolio is of limited size. Theoretically it would be better to participate in a larger and similar investment portfolio, such as DTCP.
• Cybersecurity is of the utmost importance and it doesn't seem to make sense for every telco to develop a cybersecurity unit on its own. Perhaps a partnership would be preferable.
• Takeover
• An LBO can be ruled out, theoretically resulting in a share price discount. It was tried by EQT and KKR, but it only led to KPN creating the option to issue preference shares with high voting power, combined with government oversight.
  
• Only a friendly takeover will be realistic.

FTTH-related news round-up

• In the Netherlands, CIF is reaching the limits of growth, owning a range of small cable companies. Now they are looking to do rural FTTH, with partners, in a ‘line-rental’ model.
• FTTH is expanding in South Africa, of all places.
• Reggeborgh is selling a majority stake of Deutsche Glasfaser to KKR. Is that an early exit or a way to raise massive funds?
• Impressive cost savings from NG-PON2. It is being trialed by Vodafone.
• Structural separation in the UK? Vodafone appears to be the company with the strongest belief in both FTTH and Open Access. People cannot even agree on the UK’s performance in an international perspective. Of course, BT claims a top position, but others, speaking from experience, disagree strongly.
• A Hyperoptic survey points to real estate value increase from FTTP.
• Italy seems to be committed to nationwide FTTH, but remains a bit unclear on where they are.
• Google Fiber: a new unit in Alphabet and much more than a ‘hobby’. Challenged by Google, several operators are doing cross-state FTTH now: AT&T, TDS, CenturyLink and others. Comcast’s 2 Gb/s service: over FTTH and later over Docsis 3.1? It remains somewhat unclear. And the price is pretty outrageous.
• Speculation in Australia over NBN Co returning to FTTP, with Malcolm Turnbull as Prime Minister.
• Sandvine’s September 2015 edition of Global Internet Phenomena Report.
• The ITU State of Broadband 2015 report: 148 nations have an NBN plans.
• Akamai’s latest State of the Internet report.

Structural separation revisited

Premise #1: Telecoms market characteristsics

• High entry barriers (network duplication cost, mobile license cost).
• Scale business. The network effect is essential.
• There is ample legacy (incumbent operators inherited formerly state-owned assets).
• Telcos have a tendency to outsource network management to specialised firms such as Ericsson. Apparently, it is not considered core-business by many.

Premise #2: Private company characteristics

• The agency problem: management has its own personal agenda, targeted at personal wealth maximisation.
• Company targets are aligned with private management targets through stock & options rewards.
• Listed companies focus on short-term rather than long-term value creation in order to be able to pay out a predictable dividend.
• They have a tendency to repair instead of replace in order to minimise capex & maximise dividends. This comes at the risk of supporting outdated technology with 'regret investments'.
• Companies strive for low risk i.e. steady returns and hence predictable capex.

Premise #3: Government characteristics

• Civil servants are not entrepreneurs.
• Governments have extensive experience in running passive network grids (electricity, gas, water, roads, railroads).

Premise #4: Infrastructure vs. services

• Grids are vital for the economy & national security.
• They are typically long-lived assets, providing a steady but low return.
• Building a network requires high capex; technology shifts lead to periodical capex spikes.
• Networks thrive at a maximum utility level. More service providers means more business and a higher utility level.
• Services are high-risk business, requiring high opex, in a highly competitive market.

Premise #5: Regulation

• Regulation is a way to repair market failure.
• Market failure occures when cometition is insufficient.
• Insufficient competition leads to sub-optimal prices, quality, service levels, innovation, investment.

Issue #1: How to measure market failure?

• It should not be a matter of opinion, but of thorough & independent research.
• When are prices 'low'? How to benchmark?

Issue #2: How much is enough?

• In fixed, it famously sounds 'two is not enough'.
• In mobile, the OECD recently said 'three is not enough' (please do network sharing instead).
• Does network duplication make sense or destruct value since it undermines the utility level?

Issue #3: Are OTT services full substitutes for managed?

• Are managed services, with 99.999% availability & reliability, required for vital communication (emergency calls)?
• Which level of QoS or QoE is required or sufficient?

Issue #4: Is the active layer part of the network or part of the services layer?

• Active equipment coupled with a passive network raises the technology risk, leads to frequent technology shifts & capex spikes and thus undermines the low risk/return profile of grids.
• Active equipment coupled with the service provider layer introduces technology risk to the services business & raises the entry barrier. It also creates physical space-related & technology issues for service providers trying to compete.

Issue #5: Which role fits a government agency?

• Can a governement-controlled body act as an entrepreneur and run a business?
• Which role suits such a body (passive only, providing permits? or active, investing goverment funds & taking ownership?).

Solution: Structural separation. This model ...

• ... creates a state-owned natural monopoly grid (NetCo), which maximises the utility rate. Goverments are well-equipped for this. It doesn't compete with any company at the services level.
• ... could be a joint venture of market participants in a different model. For instance, all interested Italian telcos (Telecom Italia, Vodafone, Wind, ...) could jointly buy Metroweb and injects their network assets to create a national jointly owned grid. The NetCo in time may be spun off because of its low risk/low return profile that doesn't match the profile of its owners.
• ... frees up funds for services companies (ServCo) to improve services, to innovate & to keep prices low.
• ... creates an incentive to maximise competition at the services level in order to maximise the utility rate. In other words, the NetCo will treat all ServCos equally.
• ... incentivises the NetCo to support net neutrality because it raises the utility rate. As a result, competition is enhanced with pure OTT providers.
• ... connects to operator strategies of outsourcing network management.
• ... probably caters to the markets best if it allows for both access at the passive layer (unbundling) and at the active layer (resale). Service providers can chose what fits them best. This also allows for a specialised OpCo to arise (as in Singapore).

Structural separation: great in theory (but so is communism)

Structural separation, separation of network and services, open access: it remains beautiful in theory but hard in practice.

Network and services are financially and operationally entirely different animals, but operators are simply reluctant to let go of the vertically integrated model.

• EE (UK mobile JV of DT and Orange): set off as wholesale-only, but decided to enter the retail services market.
• LightSquared (4G in the US): never got off the ground as wholesale-only provider, albeit for entirely different reasons (interference).
• Reggefiber (FTTH in NL) set out as a wholesale-only network builder with an operator and a services branch to get things off the ground. Indeed, it succeeded in selling the ISPs to KPN, but itself will be rolled into KPN as well. Effectively, it will end up being the NetCo of a vertically integrated player.
• CIF (FTTH in NL) wanted to sell its services branch Caiway to KPN, but this was prevented by the competition council. No other buyer seems on the horizon, leaving CIF a vertically integrated player as well.
• Several open access FTTH operators in the US: the incumbent shuns using their networks and small ISPs appear to have just too little weight to pull of the job. And so, Provo ends up in the hands of Google.
• Google Fiber itself promised an open access model, but this isn't happening either. Google is providing services itself.

Singapore seems to be pulling of the separation model, even though SingTel is trying to grab hold of the passive layer (which it will be required to spin off). The Australia NBN appears to be a disaster. (Who ever advised the NBN Co? Who so shamefully failed in carrying out the business plan according to plan?)

The new dichotomy of connectivity and services

Technological innovation, competition and regulation shape the telecoms sector. The entry of OTT providers has one the one hand been more of the same, but on the other hand it is causing big changes. If we take a step back to see how the sector changed over the past two decades or so, this is what appears to be going
on.

First, let's look at what we have to work with:

• Telecoms is a privatised free market.
• Regulation consists of defining markets, ascribing significant market power and applying remedies (on the wholesale or retail level).
• There are two infrastructures (in most countries to at least some extent): copper (nationwide) and coaxial (regional).
• Telecoms is a scale business. The entry barrier (capex, licenses) is very high. It has a tendency towards a monopoly, duopoly or oligopoly.

In the old days, the wider telecoms market was about traditional managed services (voice, SMS, TV). There was a somewhat artificial distinction between line rental (basic charge, fixed) and a usage-based fees. Competition was inter infrastructure (copper vs. coaxial) of intra infrastructure (unbundling, reselling). A three-layer model (passive, active, managed services) could be applied. The incumbent telco was regulated, the local cable company (lacking nationwide coverage) was not. When services such as CS and CSP rose, a rebalancing in the voice market started to happen: as usage fees went down, line rental charges went up.

Today, a fourth layer is added: IP, enabling OTT services (VoIP, IM, unmanaged IPTV). Unbundling appears to be too expensive for most challengers, but OTT brings a new form of competition, at least in the services space. Infrastructure-based competition is reduced to copper (upgraded to fiber) vs. coaxial (HFC). A rebalancing is going on, as traditional managed services are being replaced by non-managed OTT services. The new distinction is between service revenues (dropping) and connectivity. Limited infrastructure competition may lead to rising connectivity prices. Especially when the infrastructure players not only see services revenues dropping, but at the same time investments must be made in NGA networks (FTTH, LTE, WiFi). Hence, they are asking for a regulatory holiday to first roll out the NGA and accept regulation at a later stage.

In the services domain, net neutrality rules are designed to protect the OTT players in order to create a higher level of competition. Looked at it this way, other regulation is no longer needed.

That leaves lots of questions regarding connectivity:

• Is two enough in fixed-line competition (copper, coaxial)? In mobile, is three enough?
• Is LTE a fixed-line replacement? Is WiFi a mobile replacement?
• Is infrastructure a natural monopoly? Is it really a utility, such as water, gas, sewer, electricity?
• Is structural separation the answer? Is regulatory symmetry needed, i.e. structural separation of cablecos as well?

Structural separation revisited

Apparently, the regulator nor many a competitor thinks structurally separating the incumbent is needed. In the Netherlands, the situation could be the same. Still, I believe there could be a point in moving the issue up the political agenda. Yes, it's a huge issue, but precisely that may require huge steps.

• Half of the employees of this regulator are former KPN employees. Most munifiber networks have recently become KPN partners. Are the representatives still objective?
• Structural separation is seen as a remedy, whereas I would see it as good for business. As long as this doesn't change, structural separation will likely not happen. Unless the incumbent totally screws up (Australia), or regulation suddenly changes (US). KPN is well respected (perhaps even too much so), also among competitors. It has a good wholesale portfolio. Further, competitors are not asking for separation. And any competitors still around seem to have doubtful commitment to the Dutch market (BBned was put up for sale by Telecom Italia; Tele2 is facing large investments in mobile and broadband but hasn't made any commitments yet; Online doesn't sit very well in T-Mobile's portfolio, but there are simply no buyers).
• Separation is unlikely as long as regulators think that competition is at a decent level. In the broadband market, KPN has a 45% share, cable has 40% and unbundlers have the other 15%. The EC is rightfully worried over ongoing incumbent dominance. It looks like the 15% share of altnets will be going down, especially when the market moves toward FTTN/VDSL.
• The advantages of structural separation are not about pricing only. Incumbents like to drag their feet; let's not forget that Openreach's P&L still is included in BT's. Also, separation opens the way to attract third-party funding, or even nationalisation.
  
• Why do incumbents object to structural separation? Not just because of the disruption and the one-off costs. Surely, it must be because they fear the loss of any synergy benefits of being vertically integrated. And that is precisely why they must be separated: this inequality of enjoying these benefits will only go away once the incumbent is separated. In other words, if incumbents object, they implicitly say they have advantages over competitors. This is not good for true, long-term competition.
  
• If you think that proper wholesale prices are the way to avoid structural separation, look again. BBned (active operator in Amsterdam's Phase 1) pays only about half of what is proposed now by her employer (14.50-17.50 EUR/mo/line for ODF access to passive FTTH lines). Going forward, active operators and service providers will have to recoup about 10 EUR/mo more from their customers than currently is the case in Amsterdam. Does FTTH have this kind of pricing power? It certainly paves the way for low margins at service provider businesses. KPN will be the only service provider that can afford this kind of pricing.
• KPN will not ony be a service proviser, but it also is co-owner of the passive layer (with a call option to a majority stake), and possibly the monopolist of the active layer (which is not regulated), which could lead to serious re-monopolisation. I would like to call upon the regulator to make sure that the active layer doesn't turn into a monopoly (as it will in Singapore). If it does, the wholesale tariffs mentioned above should fall. Further, an active operator monopoly is not good for competition, because true service differentiation arises on the active level. Otherwise, we are stuck with WBA only.
  

Telstra is looking to replace Trujillo

What was rumoured before is now a fact: Sol Trujillo will step down as Telstra's CEO by June 30. The board expects to have found a successor by that time.

This is potentially good news for all who believe in open access FTTH. The real reason for Trujillo's departure may remain undisclosed, but under his rule a way back into the NBN process would have been impossible. There's a good chance that the board realised that change has come to the telecoms sector and open access is the name of the new game. Trujillo typically believed in a closed network and vitriol-rich press releases to undermine his rivals.

Competitors should be valued as wholesale customers. And if this whole co-opetition thing doesn't work, then there is just one solution: structural separation. The threat of structural separation could have been another reason for the board to end Trujillo's reign: under a new CEO, the government may feel it isn't necessary after all.

Wither FTTH regulation?

Last week, KPN's FTTH plans were leaked - possibly to test investor appetite for large-scale FTTH investments. Officially, they are testing demand and will decide 09H2 to go either FTTH or FTTC. Whatever is the case, the coming week will be eventful. Not only does it have Australia's NBN deadline, OPTA (the Dutch NRA) will publish a proposal on rulemaking regarding FTTH Monday night (at 7 PM).

It will be very interesting to see how they plan to regulate this huge effort, that could entail re-monopolisation of the market if it is not regulated well enough.

We have been in favour of structural (ownership) separation to deal with the two basic issues at stake: competition and investment. However, KPN has been able to stave off any threat like that by offering open access to rivals. It was also helped by the fact that competitors' commitment to the Dutch market has always been a bit uncertain.

Now James picked up on one of the basic reasons to go to structural separation: attract outside funding.
KPN will have 41% of the Glashart joint venture, but Reggefiber's 59% should not suggest that it will shoulder the majority of the investments because it simply can't. Enter third parties ...
If KPN is allowed to spin-off network assets into the joint venture, it will start to look more and more like the Singapore way.

BBC 2008 and a new poll

Broadband Cities 2008 was a great opportunity to catch up with my fellow Fibre Ring bloggers: Costas (our host), Benoit (who did a great job on FTTH open access and services) and Stefano (via Skype). Costas provided this link to access the presentations.
Several towns, districts and countries presented either their broadband (Malta, Trikala) or their FTTH plans (Almere, UTOPIA, Seltjarnarnes).
We had some pretty good discussions with people such as Paul Larsen (UTOPIA), Thomas Martin (Cisco), Bart Nieuwenhuis (Exser, to be launched December 18) and Vassiliki Apostolopoulou (Telecompare). They covered quite a wide spectrum of FTTH related topics:

1. Network

• Technology, topology, protocols, standards
  
• Benefits
• Comparison to DOCSIS
• Cost (opex, capex)
• Digital divide
• In-building wiring, network sharing
  

2. Wholesale services

• Layers
• Open access
• Regulation, separation
• Dark fiber, bitstream access, unbundling, wholesale broadband access, IP access
  

3. Retail services

• Usage v. availability, Nielsen's Law
• Net neutrality
• VAS: internet access, IPTV, VoIP, e-learning, e-health, gaming, video conferencing, surveillance (Ericsson's Crister Mattsson quoted the case of Sweden, where he identified 242 services types (slide 22), and Stockholm, where 155 service providers are active (slide 17 of this presentation, earlier this year in Greece as well)).
  

Benoit's presentation centered on this prerequisite: the customer should be serviceable by many different service providers (BSPs) at the same time. His solution: opening up the IP layer for wholesale services.
But then you can ask the question: don't all these BSPs want a choice of wholesale operator? And so the question goes down all the way to the physical layer.
Which brings me to my new Poll: How many infrastructures do we need?
It's the perennial question, and nobody really seems to have the answer. Now, the answer probably doesn't exist, but I would very much like to see how people feel about this question in a very general sense. Let me provide some food for thought:

The case for 1:

• It's a dumb pipe anyway.
• It's expensive as it is (FTTH), so let's just build one and share it. Once operator X puts a network in place in any town, the chance for operator Y to replicate it is near zero.
  
• Even in mobile are operators starting to share more and more of their infrastructure.
  

The case for 2:

• For those of you who think that the US is a healthily competitive market: this is a telco/cableco duopoly. Put differently: intermodal competition (truly infrastructure-based) is what regulators should aim for. There is no long-term point in intramodal competition (such as LLU).

The case for 3:

• OPTA's slogan (the Dutch NRA) is: 'Two is not enough.' In other words, the telco/cableco duopoly doesn't work. Adding compulsory open access to the telco network (LLU etc.) leaves the market asymmetric, so now OPTA is aiming for cable open access as well. But is intramodal competition truly a form of infrastructure-based competion, or is it in fact more of an enhanced form of services-based competition?
  
• In Germany, investors have been speculating about the options for the #3 (E-Plus) and #4 (O2) operators to merge, in order to create a viable competitor against T-Mo and Voda. Many other mobile markets, including the Netherlands, have three players.
• SingTel is opposed to structural separation on the grounds that there would be enough intermodel competition: telco, cableco, 4G.

The case for 4:

• The British mobile market had four players for a long time, until 3 UK launched. However, many remain skeptical about Hutchison's chances in the long run.
• The US mobile market has four more or less nationwide operators: AT&T Mobility, Verizon Wireless, Sprint Nextel and T-Mobile USA. In addition, there is a choice of one or more regional operators, but it looks like these will be absorbed by the national players in the long run.
• ARCEP, the French NRA, is very keen on issuing a #4 mobile license in order to increase competition levels. The same goes for Portugal, Albania, Hungary, Bulgaria, Slovakia and South Africa.
  

The case for 5 or more:

• In rare cases are regulators trying to get as many as 5, 6 or even 7 mobile operators to build out networks (Burundi, Ghana, Sierra Leone).
  

Incufiber: presentation in Greece

Tomorrow I will be joining the Broadband Cities 2008 conference in Greece. Here you have the presentation, but it will only make sense if you come to Greece (Trikala, Thursday at 11:30 local time). Or invite me to come for a 20 minute talk.

Will Telstra bid if it is structurally separated? Betcha!

Our fourth poll has ended, but to no obvious conclusion. A ridiculously small sample was heavily skewed toward structural separation (65%), but functional separation wasn't completely off the table (35%). Operational separation (5%) and accounting seperation (which you couldn't even vote for!) are excluded going forward.

The topic gets a lot of press these days, mostly in New Zealand, Australia and Italy. Check out this Arcep document for an introduction to separation.

Here is why we believe in structural separation.

• In a world of intramodal competition on the telco network (and intermodal competition between copper and coax) there will never be full equivalence between all players (incumbent, unbundlers, resellers, etc.). As much as PTT's want symmetry between telco and cableco competition (i.e. open access to cable networks), they should also allow for symmetry on the copper network. There will never be true symmetry if one service provider also owns the network, and the others don't. No matter what they say, the incumbent will always be at an advantage.
• Look at it from a synergy point of view. The incumbent reaps all the synergy benefits stemming from owning both the network and a service provider. These advantages should be equal and shared. And hence, all incumbents cry foul when confronted with the threat of being structurally separated. But that's the whole point, brothers and sisters: the regulator should focus on simply making PTT's smaller and creating long-term competition from viable altnets.
  
• KPN has successfully staved off structural separation. On the one hand, this is due to its full portfolio of wholesale services and a certain co-opetitive stance toward resellers. On the other hand, the world is facing next-generation access investments (i.e. FTTH), which are not only expensive (to be carried by a company the size of the incumbent only) but also create huge regulatory uncertainty. In the Netherlands, hardly anybody is left to consider serious and long-term competition (apart from cable). Orange Broadband is now owned by T-Mobile and put up for sale; bbned and its sisters can hardly be taken seriously because parent company Telecom Italia has a lot on its mind; and Tele2 seems to be withdrawing from western Europe altogether.
• Only when structurally separated can the telco appeal to the right investment communities: the dividend aficionados can buy the network, retail minded investors can focus on service providers (higher risk/return profile), etc. Also, only in this way can the network attract subsidies or create public/private partnerships. In a way Telstra acknowledges this: if it is structurally separated, it will not bid for the National Broadband Network contract and subsidy (AUD 4.7bn). But once separated, the network company will surely bid for the contract; I will eat my hat if it doens't!
  

We have looked very hard and closely at all the arguments against structural separation, but none really seems to make sense. Yes, it will be quite disruptive. And it will costs a few pennies. But to say that it would take away any incentive to invest just isn't very 21st century thinking. Finally, to say that you want to own the network (to generate the cash and allow you to pay fat dividends) is not very clever in light of the above (we want equivalence and symmetry, right?).

To round off, we want to share some fun related to the topic - unless it brings you to tears, of course.
Telecom Italia is one of those companies that may face structural separation and it will come as no surprise that Tiscali is all in favor. FastWeb takes a different position: they think it's a bad idea! Functional separation would suffice. But wait a second: isn't FastWeb 82% owned by Swisscom, another PTT?
With hindsight, that calls for a round of applause for Optus (the Australian subsidiary of SingTel). It openly called for structural separation of Telstra, even if it's parent company was fighting the same fate in Singapore. Or is it the other way around: was SingTel being a hypocrit?

Singapore and Malaysia: worlds apart

Singapore and Malaysia are walking two very well distinguished roads toward NGA (next-generation access) - and Singapore proves vastly superior, we believe. Not only do they aim for nationwide FTTH (OK, that would be a little easier than in Malaysia), the network will also be structurally separated and hence providing full open access. Malaysia on the other hand opts for an extended regulatory holiday for Telekom Malaysia: until 2015! In the process, it will create a huge digital divide.

To freshen up your mind, here are the specs (comments welcome to add more).

Singapore:

• Name: Next Generation National Broadband Network.
• FTTP, but apparently no decision on active (P2P) or passive (PON) yet.
  
• Targets: 1 Gb/s, reaching 60% by 2010 and 95% by 2012; universal service obligation from 2013.
• Passive layer (NetCo): to be built by OpenNet, a consortium of SingTel (30%), Axia (30%), Singapore Press (25%) and Singapore Power Telemedia (15%); maximum state subsidy SGD 750m. Wholesale prices: 15 SGD/mo for residentials, 50 SGD/mo for businesses, no connection fee. Furthermore, SingTel will be allowed/forced to spin-off ducts and other infrastructure into an AssetCo. OpenNet will lease those assets from AssetCo.
  
• Active layer (OpCo): winner to be announced 09Q1 (bidders: BT, DT, SingTel, Axia, StarHub, MobileOne, City Telecom); maximum state subsidy SGD 250m.
  
• Service layer (RSPs): to be announced.
  

Malaysia:

• Name: High Speed Broadband (HSBB) Project.
• FTTH, EPON.
  
• For high-density areas only. Target: 1.3m homes passed by 2012.
  
• State to subsidise around 20% of the total cost ($3.3bn), Telekom Malaysia to be the rest.
  
• No open access (regulatory holiday) until September 15, 2015.
• More details 09Q1.
  

Structural separation: spread the incumbent benefits

Very disruptive new regulation are coming to the telecom sector. Incumbents will suffer, both former PTTs and mobile operators.

Dominant operators are finally attacked. The synergistic benefits of running an integrated operator will be spread among all service providers.
The stranglehold that mobile operators hold on the market may end too.

Here are two of the most significant regulatory developments today.


1. Structural separation
In Australia and New Zealand several people call for structural separation of Telstra and Telecom NZ respectively.
Australia is preparing an NBN at the cost of AUD 4.7bn. At that price, it will probabaly be a FTTC network, but FTTH is still a possibility. It prompted opposition spokesman Bruce Billson to propose structural separation: "the natural monopoly that will be produced requires that kind of clarity".
Telstra retorted that structural separation "increases costs, reduces efficiencies, limits future innovation, and most importantly, kills off investment". Telecom NZ also resists.

I am very much in favor of structural separation on these grounds:

• It will be good for competition. One-time costs are something we'll have to live with.
  
• You bet it will reduce efficiencies that are linked to operating a vertically integrated monopoly that controls all three network layers (passive infrastructure, active infrastructure, services). Reducing efficiencies is not the purpose of introducing competition, but it is inevitable. There needs to be symmetry between all service providers on the telco network. Only then will there be true equivalence. Also: why should the incumbent be the only operator reaping all the synergetic benefits of integration? And don't forget: one of the main tasks of any NRA is to make the telco incumbent less dominant and hence: smaller! After many years of competition, these incumbents still dominate the market. Put differently: if the incumbent says it's bad for them, it must be good for the market!
  
• Innovation and investment theoretically suffer because the operator of the passive layer most likely would be a monopolist. However, I don't buy this argument, in our brave new co-opetitive world. Still, I suppose value-based management, regulation, incentive schemes and ownership structure of the passive layer could help solve the problem.
  

2. Bill and keep
British NRA Ofcom launched a consultation on the future of mobile communication (until November 6). Among the new regulations could be a move from termation charges (currently around 15% of mobile revenues) to a bill and keep regime (by 2011).
At about the same time, Vodafone released a report claiming that 40m Europeans would cancel their subscription if the sector moved to US style interconnection (i.e. bill & keep).

It has been stated before: lowering interconnection rates, or indeed moving to bill & keep, is meant to increase usage and lower prices. So how does Vodafone arrive at their claim of 40m people (10%) pushed out of the market? Could it be the way they structured their inquiry? "Suppose we would be forced to double our rates, because we would have to bill you for both making and receiving calls, would you still subscribe to our service?"
Or does Vodafone fundamentally disagree with the expected price elasticity? That seems odd, since mobile substitution still has a long way to go.
It remains to be seen how much pricing power mobile operators really have in the retail market. But it sure looks like they have to do another round of slimming down.
A different way to look at it is the fixed line alternative operator perspective. These operators look upon mobile termination as a subsidy for mobile operators building out their networks. Again, after so many years it is time to do away with this subsidy.

How to create competition on incufiber

Wednesday, at an NGA workshop ('High speed Europe ...') in Brussels, ECTA presented a WIK Consult report on FTTH. Based on case studies for 6 countries (DE, FR, ES, IT, PT, SE), they conclude that incumbents only can do FTTH, on a large and profitable scale.

The main points:

• Incumbents have both the infrastructure (available for re-use or closure) and the customer bases to make it possible in a profitable way (RoC = 10%), through a 30% cost advantage over altnets.
• Large-scale replication is not economically viable for altnets, outside very densely populated areas or in places like Paris (with its famous open access sewer system).
• The network must be open access, because all this implies that rolling out FTTH by incumbents bears the risk of re-monopolizing the telecom market. Duct access is not enough. Unbundled fiber (from Metro Core Locations) could allow for more altnets than unbundled copper. Sharing with altnets right from the start reduces the cost to incumbents.
• Access regulation has to change from 'how to provide access' to 'how to structure new network elements'. A form of 'fiber subloop unbundling' is only possible for point-to-point fiber.

The WIK press release (we haven't seen the report yet) raises a whole range of interesting questions:

• Does the report imply the obvious: we need just a single FTTH network?
• If full replication is not viable, the question remains: at which level do we need competition? (Take the poll in the right hand column!)
• How about cable competition: does that count as network replication? The 6 countries mentioned all have cablecos, but with diverging coverage. What happens once they start rolling out FTTH?
• Does the case still stand in a country like France, where altnets are cherry-picking high-density geographies?

This fits nicely with our 'incufiber' stance, which we were able to present in Rome earlier this month. We proposed structural separation as a way to maintain a proper level of competition. The advantages include:

• True equivalence between SPs.
  
• The ablity to attract (state) funding.
• Avoid more than one FTTH networks being built.
  

And there were more FTTH goodies:

• Viviane Reding (EC) proposed a 15% 'risk premium' for NGA builders in a speech that wasn't all too different from a previous one. So far, it's not clear what this means exactly. However, the message is clear: true infrastructure-based competition is favoured. Now, if the incumbents aren't supposed to re-monopolize the market (since only they have the scale for nationwide FTTH roll-out), there must be open access and true equivalence: all service providers (including SPs belonging to the incumbent) should have identical terms for accessing the network.
  
• Telecom Italia calls for increased NGN investments through PPPs. Partnering is the way to go.
  
• Vodafone considers entering the fiber game. It starts to look more and more as if Vodafone wants to be a full-service provider (integrating Arcor, bidding for Ghana Telecom, launching BB, etc.). Are they, sort of, going the Tele2 way (consolidating some markets, exiting others)?
  
• SFR targets 5m homes passed by 2012. It remains to be seen how France can reach nationwide coverage.
  

Will mobile network sharing lead to separation?

This news from Thailand again brings up the matter of separation in wireless networks. Thai Mobile seems to volunteer the building of the nation's first 3G network, to which it will offer open access to all operators.

Other recent news around mobile network sharing:

• Vodafone UK and Orange UK plan RAN sharing (3G and 2G) to reduce capex and opex by 20-30%.
• Hutch Essar and Bharti plan infrastructure sharing, to be supported by the regulator.
• Nokia's solution is expanded to supporting up to 4 operators.
• Yoigo (TeliaSonera) and Telefonica Movistar plan antenna sharing.

(Now, it is important to realise that sharing may be done at different levels: sites (towers), antennas, RAN, backhaul.)

Some observations, beyond the obvious cost savings target:

• Similarly, operators are teaming for mobile TV (be it a shared DVB-H network, wholesale access to Qualcomm's MediaFLO or any other technology). So, why not for 3G as well - or for that matter: for 2G (not to mention 4G)? As in fixed, sharing and separation make a lot of sense in an IP-based world.
• Differentiating by touting network coverage (as Verizon Wireless still does) will become a thing of the past.
• So, operators will need to make sure they can differentiate on the services and applications level.
• If network operations are to be separated, a new (natural) monopoly will arise. As long as existing service providers are deemed to have SMP (significant market power), this may give rise to new open access obligations at the network operator. On the other hand, the rise (not the fall) of MVNOs could preclude this (what will the difference be between MNOs and MVNOs anyway)? However, spectrum will always be much more of a scarce resource than anything equivalent in the fixed world (duct access, access to sewers, etc).

Co-operation will drive separation and FTTH

This news out of Italy unites three of my favorite (and interrelated) trends: co-operation, separation and FTTH.

Apparently, alternative operators (Vodafone Italia, Fastweb, Wind, Tiscali, BT, Tele2, Welcome Italia and Eutelia) are calling for a break-up of Telecom Italia.

1. Co-op
Note that PTTs who resist full separation at home (BT, Swisscom), allow their foreign subsidiaries (BT Italy, Fastweb) a viewpoint different from their own. Deutsche Telekom to the contrary did not allow T-Mobile NL a divergent view when OPTA (the Dutch NRA) called for market response to KPN's All-IP network plans; T-Mobile, mirroring Deutsche Telekom's strategy in its home market, called for an end to regulation altogether in the Netherlands.
The new development in Italy is supportive of my call for a country-by-country approach, which will allow altnets to finally work together, no matter what their parents do or believe or say.

2. Separation
I am not sure what kind of separation the Italian market is headed for (anywhere between accounting and ownership regulation, but probably functional). Anyway, having truly equal access to TI's network must reduce the need for altnets to build their own infrastructure: embracing the wholesale market will drive the need for TI to build a broad portfolio of IP-based services, available to each altnet.
Another interesting development is that an incumbent like Telecom New Zealand openly lost interest in being a network operator and wants to be service provider.

3. FTTH
Fiber being a natural monopoly and the TI network to some degree spun-off from the TI services organisations will, I believe, drive the newly created NetCo to aim for nationwide FTTH. Demand keeps rising and there is no such thing as the Broadband Incentive Problem in the wholesale market, where tariffs are usage-based (the BIP in the consumer market is a consequence of flat-fee tariffing and unsufficient pricing power). As a result, building FTTH will drive revenues and lower the cost base (after an intial capex hump, naturally).

FTTH is the endgame (but it will take a while)

Yesterday I attended the 'Next Generation Network Conference', hosted by Euromoney's Global Telecoms Business, in Amsterdam. Thanks for inviting me!
It was an interesting day, even if there wasn't so much really new. I enjoyed talking to telco and vendor officials, most notably Dirk 'Amsterdam' van der Woude.
Below I will summarize my take of the views on a number of trends (which I regularly write about on this blog):

• FTTH, VDSL/LLU/regulation 2.0, Web 2.0, SaaS, WIMAX
• Separation, co-op
• Owning the customer, advertising as a business model

Companies and organisations represented included:

• KPN, BT, Vodafone, Orange NL, Thus, 2 smaller Dutch MSOs (CAIW and Kabel Noord)
• Xconnect, Alcatel-Lucent, BroadSoft, Sonus, AlwaysON
• OPTA (the Dutch NRA)
• Analysys, Fitch

1. Demand

The perennial question: will 10 Mbps be enough? or 100 Mbps? Some statements (not precise quotations) included:

• There is no ceiling (KPN),
• even if the new services are as yet unspecified (Analysys).
• Why should the exponential increase stop now(BT)?

My comment:

• KPN, through Nico Baken (senior strategist and professor at Delft University), proved to be among the most radical. By the way, when I asked Nico how he feels about KPN's current strategy, he responded somewhat in this manner: KPN is among the most respected telcos, and they allowed me to hire 12 PhD's to work on long-term strategies, in order to allow KPN to maintain its lead. Bravo Eelco Blok for gathering this team at the heart of KPN!

2. FTTH, NGA (access)

Statements included:

• We see no business case, except for greenfield operations (BT).
• FTTH is the endgame (OPTA, KPN).
• Build-outs in the Netherlands (7.0m households) are projected to go from 115k at present to 580k by 2009.
• Public/private partnerships (PPP) will emerge (KPN).
• Wireless will be the way to connect over the 'last few meters' (KPN).
• Within a few years, all munifiber in the Netherlands will be bought by either KPN or Cablecos (CAIW).
• 2 Infrastructures (copper/telco and coax/cableco) are not enough to ensure real competition (OPTA).

My comments here:

• KPN's Nico Baken was probably among the most impressive in his presentation. His visionary analysis underscores that KPN fundamentally believes in FTTH - as well as PPP!
• Dirk pointed me to a new development: KPN plans to connect 11k homes in the eastern town of Enschede and eventually the entire city (155k inhabitants) will be covered. "We will try to convince any doubters that copper access is not sufficient in tomorrow's world." I suspect that OPTA's 580k number (see above) does not include Enschede, which would take the number up to 735k. By the way, Dirk added a new overview (as of June) of fiber developments to the Citynet site.
• There was surprisingly little on VDSL. I feel that everybody present believes in FTTH, which makes VDSL a transitory if not outmoded technology before it is even launched.
• OPTA's acknowledgement of FTTH as the endgame is positive (in fact, it was aired before, most recently last week), but saying that 'two is not enough' is puzzling (to put it mildly). I would say: all we need is one (FTTH), which needs to be regulated. I feel that OPTA regards LLU and even bitstream access as a separate infrastructure.
• Now, if even KPN feels that PPP is the way to go, separation makes more and more sense to me. How about separating both the telco (KPN) and cableco ('Zesco') networks - which I feel could stimulate the two new network companies to build a nationwide FTTH network through some PPP/joint venture (with Reggefiber).

3. NGN (core)

Statements:

• The 21CN project started out as a cost savings measure, but grew into a complete business transformation (BT).
• We offer NGN as part of our 'Business Transformation Partner' offering (Alca-Lu).
• NGN implies cost savings, but at first a 'hump' will appear in capex and opex spend (Alca-Lu, BT). BT sees costs at a low in 2013, when the hump is coming to an end and normal growth is resumed (at a level less than half of what it is now).
• BT established BT 21C Global Venture as a way to leverage its know-how that it is acquiring, doing the 21CN project (BT).
• Apart from cost savings, NGN is all about new services (BT, Alca-Lu) for which SOA must be adopted (BT).
• Telecom New Zealand wants to be a service provider and is less interested in being a network operator (Alca-Lu).
• Altnets lack scale for NGN projects (Orange NL).

My comments:

• SOA and SaaS will be recurring themes for telcos,
• As well as separation. One could say that separation (and Saas) are ways of taking outsourcing to the extreme.
• I wonder how the BT 21C Global venture fits into the IT services market. Do they have customers yet?
• I will pound on one of my favorite subjects once more: why on earth do we see so few co-ops?

4. New services

Statements:

• Future services will include HDTV, social networking, software apps and Web 2.0. Many may not be really new but subsititutes. "New services are as yet unspecified", and business models are unclear (Analysys).
• Many new services, such as triple play, aren't really new. Blending however (like on-screen caller notification) is what we will be seeing a lot of (Alca-Lu).
• In offering IPTV, we focus on interactivity, not on exclusive content. We will offer "what is relevant for our customers" (KPN).
• We aim at personalisation (Vodafone).
• Data may actually make up for much of mobile growth decline, but IPTV will not do the same for fixed operators (Fitch).
• "The customer experience needs vast improvement." (Fitch)

My comments:

• Somebody mentioned that it is all about "owning the customer". I couldn't agree more. That is also why I question KPN's representation of WLR, which I believe distorts their net line loss numbers. Sure, WLR still adds to wholesale revenues, but the customer relationship is gone.
• I wasn't terribly impressed with KPN's IPTV ('Mine') presentation. The service will be (re)launched after the summer, but not as a premium service anymore. The UI didn't look very fancy. The feedback they had so far (the low key launch was done in May 2006) must be a long shot at what they overambitiously describe as "what is relevant for our customers".
• Blending sounds like mash-ups, in Web 2.0 terms.
• Selling to Google or KPN is one business model, and otherwise it seems to be advertising. Sure, budgets move online and can be targeted a lot better, but in the end online advertising will prove to be a cyclical market. The Broadband Incentive Problem kind of raises the same issue: in the long run, things need to be paid for, preferably in a usage based (not flat-fee) model.

5. Other

• I spoke to Orange NL and other people, who all seem to believe that T-Mobile will not dispose of the Wanadoo BB unit of Orange NL, once the acquisition is worked out. I always assumed that T-Mobile would be a mobile-only play (outside their home markets in Germany and Eastern Europe) in the US, the Netherlands, Austria, the Czech Republic. But who knows they will embrace the convergence story.
• On the side, if T-Mobile do embrace a convergence model, selling T-Mobile USA must come into play again (remember the cablecos work with Sprint and the satellite companies teamed with Clearwire, so teaming with a fixed or WiMAX operator seems hard).
• I am getting pretty fed up with people saying that the end user is not interested in technology - to the point that I start to feel that people are increasingly familiar with alphabet soup.
• On the side, WiMAX was touted by someone in the audience as a technology capable of bypassing cellular networks in large cities. I do not wish to be overskeptical about new technologies, but I think we have to be realistic. It is an emerging technology, especially 16e (there are many 16d deployments underway, including Vodafone's Malta plans). Handset range will be a major issue. At first, the technology was supposed to deliver 70-120 Mbps over a distance of 50 km. Now, 16d seems to deliver perhaps 10 Mbps over 5 km (in a NLOS situation). Imagine what the performance will be for 16e, assuming the kind of usage we see in cellular networks today. And then I haven't mentioned building the network, from construction, backhaul and interconnect up to marketing ...
• Not to end on a sour note: Xconnect is a very interesting story. Peering is a whole new way of saving costs (and enabling new services). In fact, it is like OTC trading. Actually, I included peering in my own overview of efficiency measures (including such seemingly unrelated things like DWDM, CDN, P2P, MPEG-4 and AJAX) at my Tiscali Wholesale presentation two weeks ago. Mail me for that presentation.

Network operators give limited clarity

Network separation as well as sharing are gaining momentum, but several operators provide limited clarity on their long-term strategies.

• Sprint Nextel: having several networks (iDEN for P2T, CDMA for voice and data) already, it is ready to add WiMAX (for 4G) to the mix. The iDEN networks needs investments for maintaining a certain quality level, while the CDMA network is being upgraded continuously (Rev A, B, C). The company appears to be looking for a partner in WiMAX. Will all networks converge one day?
• Deutsche Telekom: outside Germany and Eastern Europe (where it owns PTTs), the company has a mobile-only strategy (with WiFi). However, buying Orange NL would add an LLU operator. OK, that can be sold on, but to whom?
• France Telecom: selling Orange NL makes sense, given weak market positions in both wireless and LLU. However, the company owns many wireless operators and yesterday added Austria. So far, triple play offerings are limited to France, Poland, the UK and Spain (as well as fixed/BB in several smaller countries). What about the mobile-only operations, like Austria - will they add LLL or BB?

Silicon Valley business model in the Netherlands: be bought by KPN

The KPN takeover was looming large over the Tiscali Wholesale Annual Partner (ISP customer) Day I was invited to speak at, last Thursday. OPTA (the Dutch NRA) has spoken supportively of NMa’s (the Dutch competition watchdog) approval of KPN buying Tiscali NL. Closing is expected this month.

I suppose KPN’s plans could be anywhere between fully dismantling Tiscali NL and maintaining it as a standalone operation. One thing seems inevitable: a namechange, as Tiscali SpA’s Italian and UK operations are now completely unrelated. Possibly KPN will have the retail branch focus on a certain demographic, under a new label. The wholesale operations could actually be kept at an arm’s length to service ISP’s who suffer a certain degree of ‘green-phobia’ (green being the KPN corporate color – formerly that is). The latter part of Tiscali NL will be cherished, I suppose, because it only recently scored its largest customer win: Vodafone NL, which is working toward it's fixed/mobile strategy. I hear that Vodafone issued its RfP around the time that KPN and Tiscali came to an agreement (September 2006), so when Tiscali NL was chosen, Vodafone was very well aware of the KPN takeover.

Vodafone NL was also invited to speak. Daniel Nordström presented the new fixed/mobile strategy. I wonder if Vodafone’s mobile portfolio could be offered to Tiscali Wholesale’s other ISP customers. Of course, that would be a tough sell at the new parent company (KPN), but it could be a smart way of luring green-phobic customers and at the same time get some inside information on a competitor. However, I doubt KPN would allow Tiscali this level of independence.

What stood out during the day was Tiscali Wholesale’s focus on the end user, which coincided nicely with my own presentation, which related Timothy O’Reilly’s Web 2.0 to STL’s Telco 2.0. People at Tiscali are definitely aware of those developments in the marketplace.

Also, I touched on LLU in the Netherlands, which is coming to an end because of KPN’s ‘All-IP’ plans. What will OPTA come up with to replace it (a ruling is due this month)? If SLU is not feasible (as Analysys calculated), something rather big seems to be heading our way. I believe LLU and SLU are intermediary strategies, fiber is a natural monopoly (both in the backbone and on the in-home level) and thus open access FTTH is inevitable. How about some separation (to add some recent news: Sweden is looking at the Openreach model)?

I aired my growing surprise at the lack of willingness to cooperate among network operators. Recent developments are few and include Australia (G9), possibly Sweden (Telenor/Tele2/Telia) and Nigeria (25 ISPs teaming to build a WiFi network). Sure, these operators are backed by competitors, but if you want to compete with the powerful incumbent, you better get together.

Which brings me to my final observation. We all know the ‘business model’ of many a start-up in Silicon Valley: be bought by Google. Now, somebody confided to me that a similar model was explicitly chosen by many ISP’s in the Netherlands: be bought by KPN. And we all know how that ended!

Separation round-up

In March, the Dutch NRA (OPTA) declined to separate network and services at incumbent KPN. OPTA said it didn't have the power to do so. It added that cable competition, as well as open access to the KPN network (be it wholesale, LLU or bitstream) were sufficient to guarantee a competitive market.

However, Viviane Reding seems to be on collision course, aiming for a European effort at separating PTTs.

I suppose this issue will produce a lot of nois.

What has happened since?

• Italy seems most advanced, preparing a legal basis.
• New Zealand is pushing forward as well. In response, Telecom NZ has its own plans.
• Sweden has commissioned a report from its NRA, PTS, due June 15.