16 Rev2b NGA Opinion Supplementary doc - IRG

ERG (07) 16rev2b NGA Opinion Supplementary Doc 9 / 69
Question Chapter 3: Do you agree/disagree with regard to the
conclusions on economics and business case
studies?
ad 3.2 Implications of NGA on the economics of electronic communications networks
Consultation Comments
There was a wide range of comments relating to the implications of economics of NGA.
Several respondents commented that the economics of NGA varied substantially between
geographic areas. One comment identified 3 types of areas identified (market led = urban,
risk driven = suburbs and policy driven = rural areas) and that economics and regulation varies
between them (Alcatel). Two others commented that that business cases for NGA may
vary substantially between areas (BSG, BT).
The economics of infrastructure competition were also raised by some players, and demonstrated
another wide range of responses:
• SLU is not economically viable (BT);
• Competition at the cabinet is difficult and so WBA service requirements should be imposed
on incumbent (KPN);
• Ability to co-locate at incumbent cabinet, rather than having to locate nearby improves
viability of sub-loop unbundling remedies. (ARCOR).
An incumbent believes there is scope for altnets to deploy alternative infrastructure in urban
areas (TI, similar AFORST).
Several respondents commented about the relative cost structures faced by incumbents and
entrants in relation to NGA:
• Several altnets stressed that NGA costs and cost savings should be considered together.
NGA may enable incumbents to make savings but could lead to higher costs
for altnets.
o A stakeholder association stressed that the cost data and ARPU assumptions
being made related to an incumbent rather than an altnet (ECTA) ;
o A competitor also commented that it is important to distinguish between costs
and ARPU of incumbents and of altnets (Tele2);
o Another competitor noted that economies of scale enjoyed by incumbents
make it harder for altnets to recover infrastructure costs (Fastweb) ;
o A manufacturer acknowledged that fibre deployments may be justified on basis
of OPEX savings (Ericsson).
In relation to the access network being a bottleneck, there was a feeling from altnets that
NGA increased the scope for the access to be a bottleneck:
• A competitor suggested that NGA may increase the scope of this (C&W). Interestingly,
a comment suggested that, in the short term, one should not assume that NGA
will be a bottleneck asset if copper is maintained (BSG).
• A stakeholder association agrees that existing legacy advantages and scale economies
are likely exacerbated thereby reinforcing bottlenecks (ECTA).