Vodafone s position on the Public Consultation on an EU Initiative to Reduce the Cost of Rolling Out High Speed Communication Infrastructure in Europe

Transcription

1 Vodafone s position on the Public Consultation on an EU Initiative to Reduce the Cost of Rolling Out High Speed Communication Infrastructure in Europe Vodafone welcomes the opportunity to submit its views to the European Commission on its public consultation on how to reduce the cost of rolling out high speed internet. The largest part of the total broadband investment cost is related to civil infrastructure works and Vodafone agrees that a lack of coordination of civil engineering projects, insufficient re-use of existing infrastructure and lack of cooperation between the various actors contribute to inefficient duplication and delay, as well as to costs to the broader society. Vodafone supports the EC s view that infrastructure sharing, a transparent central information system and better coordination can help to lower NGA costs and stimulate NGA investment. While the EC can play an important role by providing guidelines at European level, the decisive steps will have to be taken where the works themselves are undertaken. Fibre roll out in this context is not about the European Digital Agenda but about town planning, street works, health & safety and construction. These activities are overseen by many local administrative bodies, land owners and other interested parties. Greater coordination amongst them to ensure best practice as well as comparative performance measurement will be needed if standards are to improve. At the heart of any significant improvements will be a centralised information system with clear obligations for infrastructure owners to contribute relevant information in sufficient technical detail under conditions that enable easy access to all interested parties but respect the competitive sensitivity of the information and the costs to collect, validate and integrate it. These measures will help in reducing construction costs, but the Commission is also taking steps to address other barriers which hinder large scale investment in NGA, namely economic and regulatory uncertainty. Sharing trenches and ducts is important, but Vodafone remains convinced that far more coordination between industry players will be required in future. Our proposals to extend co-operation through co-investment ownership models are now well known. We still consider this the best way to secure the combination of pricing flexibility and equivalence of inputs which the Commission also appears to be seeking. Attached are our responses to the specific questions. ANSWERS TO SPECIFIC QUESTIONS: Q1. What are the benefits (including approximate savings) that could be achieved for NGA roll-out by a more intensive infrastructure sharing within the EU, including the infrastructure of utility companies? A1. Passive infrastructure (ducts, poles, etc.) forms the major component of both the capital investments and the operational costs of any next generation fixed broadband access ( NGA ) deployment project. Sharing therefore implies a strong reduction in the cost per home passed (e.g. renting fibres generate 50-70% savings vs. new build outs). Such rationalization of capital investments result in significant reduction of the pay-back time of investments of up to several years, (depending of the elements shared and the conditions under which this takes place) and therefore significant improvement of the business case for operators like Vodafone. 1

2 Better utilization of existing infrastructures leads to higher roll out speeds and faster and larger population coverage as operators can use limited capital more efficiently. The inclusion of existing and new-build infrastructures from utility companies is a clear win-win in which utility companies could gain by receiving income from the utilization of their ducts/poles by the telecom operators. Whereas sharing of new build networks improves competition in NGA markets, sharing with utilities may allow for NGA deployment where none is otherwise feasible. Any health and safety concerns in this regard should not stand in the way but should be addressed by training and a clear definition of the procedures of usage and installation. Clearly utilisation of any existing infrastructure and sharing of new build outs have environmental and social benefits. Q2. What are the benefits that could be achieved by a more coherent regime of infrastructure sharing within the EU, including the infrastructure of utility companies? A2. A clear and concise regime across the EU for the utilisation of existing utilities infrastructure will allow operators to reach their customers more quickly and at lower (economic and environmental) cost. This is not limited to the deployment of fixed networks: many operators will rely on mobile broadband particularly in rural areas. Next generation mobile broadband is dependent on availability of fiber networks to connect their PoP s, base stations (backhaul connectivity). The advantages exist not only for the operators but also for the administrative bodies that will have less civil works to manage and co-ordinate (in terms of permits), which should reduce delays. However, many of the details of sharing regimes will be inherently local in nature. Utilities act in different ways and local organisations will have to coordinate works between various local actors. The EC can provide general guidelines, but the practical implementation of coordination between infrastructure providers needs to be undertaken at local level. The biggest challenge is to ensure that coordination does not impose unacceptable delays upon firms which will result in the regime ultimately be bypassed. Q3. Which are the main bottlenecks (practical, administrative, technical or legal) that operators wishing to deploy high-speed communication networks are confronted with when accessing existing infrastructures? A3. There are several areas that require special attention for the NGA deployment: Practical bottlenecks exist where in dense urban areas manholes are not accessible due to external matters (car parking, construction, manholes in busy streets, etc.) or old wooden poles in advanced state of deterioration Administrative bottlenecks exist where o procedures allow for the period between an application for (e.g.) duct access and installation to exceed a month or o o o incumbents can delay due to alleged bad inventory or confidentiality or municipalities do not allow the installation of new poles, fiber or ODF s for environmental, health, safety, town planning, public order or other reason or can ask for excessive easement fees or land owners, tenants, local building administration or other private stakeholders do not allow access or otherwise frustrate the authorisation process. 2

3 o utilities do not inform public bodies when new works are to be undertaken, so that coordination with other parties is impossible, or parties fail to attend the site at the time or date the works are planned to be undertaken Technical obstacles exist where ducts are obstructed due to installation of copper and coaxial cables, also in building (blocking new fiber installation), or where they are collapsed or are generally absent in rural areas. Financial obstacles exist where consultation on duct availability is too costly Legal uncertainty exists in many areas of applicable regulation which hinders operators willing to deploy. While telecommunications or more precisely broadband are considered Services of General Economic Interest (SGEI) by the European Commission, in reality it doesn t get the same level of attention by many local authorities as other utility services. Other obstacles exist like the non-availability of existing ducts due to the absence of a reliable, up to date and complete database of existing infrastructures Q4. What are the good practices in the EU and in third countries that could be identified and be promoted with respect to achieving a more intensive infrastructure sharing with a view to deploying high-speed communication networks? A4. Regulatory measures imposed on incumbents to require them to open up their civil infrastructure and to publish the corresponding Reference Offer (like MARCo in Spain) are positive. In other cases where infrastructures sharing is being promoted or even mandated, this is not always intended to achieve better utilisation, but it has different objectives, derived from divergent local interests (see above under 3) that in fact make the deployment of infrastructures more difficult instead of easy. Q5. What would be the main benefits and disadvantages for broadband investment if access to ducts were mandated across infrastructures? A5. The access to ducts and poles being mandated across all infrastructures would bring several benefits to the deployment. Main benefits: i. Optimal utilization of available infrastructure by several parties ii. Sharing of infrastructure investments made by various users reduces fixed costs, which may facilitate new investment in rural areas iii. Synergies between operators that enables a reduction in operating costs and optimizes maintenance work iv. Favourable urban and landscape planning with a common infrastructure v. Optical infrastructure with difficult access to unauthorized persons will be easier to access with less risk to service cuts. However there are some key requirements: i. an adequate inventory system that allows for management of available resources in the infrastructures by the various operators and does not become an administrative or financial bottleneck ii. an effective regulatory entity that coordinates and supervises the process (including penalties for non-performance) iii. mandatory access of third parties should not discourage investments in new-build outs This last issue (discouragement of investments) could be addressed by allowing interested parties to coinvest in any new duct build to be followed by a period of e.g. 3 years after which a cost based wholesale offer must exist. 3

4 Q6. What measures could be envisaged to increase the business interest on the side of the utility companies to provide access to their infrastructure for broadband investment? A6. We envisage the following: the development of a wholesale model with clear definitions of cost items and cost models that will be the basis for the calculation of regulated access prices. Some maximum values should be established in order to promote a clear, fair and transparent price list for each infrastructure establishment of a common database for recording and accessing the infra-structure information. Mandatory inclusion in a database of infrastructures and published regulated access prices so the interested parties may support the creation of new revenue streams. establishment of the conditions and technological IT support of the interfaces and data models proper health & safety regulation that will allow operators to use the utilities infrastructures in a simple and quick way the possibility of reciprocal access to other telecom or utility infrastructures in the database. penalties for non-compliance with commitments to attend street works or other co-ordination activities Q7. How do you assess the importance of systematic infrastructure mapping / of drawing up consistent inventories of infrastructure? Besides the potential economic advantages for electronic communications operators, do you see other advantages that such mapping could entail for citizens, public authorities or other (economic) operators? A7. This is critical. The necessary information about existing infrastructures is missing in many markets today. The current decentralized model is very time consuming for everyone who is planning to build. Systematic infrastructure mapping is vital for many aspects of network deployment, especially when using a geo-referenced tool. It would help with civil works planning and cooperation. Potential investors are able to estimate with precision the amount of work to be done and trace a realistic deployment plan accordingly. Once the work is mapped it is possible to accurately calculate the necessary budget and the list of materials used, to accurately manage the infrastructure; this is: space used, who is using it, capacity for future use or rent to a third party, set usage alarms and to give detailed information for teams working in the field. All these features greatly improve deployment and running costs. When shared, infrastructure inventory can greatly reduce the cost and time to market for projects of other entities, thus reducing the amount of construction sites leaving the public roads and sideways untouched. Finally, inventories of infrastructure can also be useful for national security plans and identification of critical infrastructures. To address confidentiality concerns of the infrastructure owners access to and use of the information should be limited by strict sharing conditions/regulations. However, creation of these inventories will also be costly, particularly for those utilities with very old plant and poor records. A cost benefit analysis will need to demonstrate that the benefits outweigh these costs and some form of subsidy may be required. Q9.1 What information should be included in such maps with a view to facilitating cooperation, infrastructure sharing and broadband rollout? A9.1. To be effective for an access seeker a central infrastructure database should hold complete technical documentation of the asset, i.e.: type of infrastructure (fiber, cable duct, utility pipes, electric distribution poles, collectors, etc.) geographical information of the infrastructure owner, construction company access points to the infrastructure information about infrastructure capacity and status (how many fibres, how many fibers are used, available space in fiber duct, expansion plans etc.) 4

5 Information should be available only to potential users and entities with similar mapping. Ideally, each infrastructure operator should have its own mapping and commercial offer. This information would then be shared with a publicly procured entity responsible for gathering all the information from all operators in a centralized mapping tool. This way it would be possible to present all possible solutions to interested parties in a transparent way. As it may be much easier for some utilities than other to gather the relevant information about their often very old legacy networks, this may have to be reflected in the compensation to these data for interested parties. Q9.2 Who should be in charge of such mapping exercises and at what level should it be organised? A9.2. It should best be mandated nationally, at the highest level of hierarchy across the relevant Ministries, but executed locally with clear involvement of local authorities. NRA s can play an important coordinative role in consistent mapping addressing incumbents objections ( sensitive information ), creating commercial models to incentivize telecom and utility companies to provide the information and to provide access and defining access terms to the information (e.g. making it only available to parties with similar mapping). Q10. What would be the approximate cost of introducing systematic mapping? A10. That will depend on the size of the information to re-use and the status of the data models. However a very high level analysis would lead to a value in the order of: Capex a few per HP (Home Passed) Opex a few cents per HP Again, the levels may differ between telco s and utilities and will very much depend on the underlying costs of collecting the relevant data. Ongoing initiatives in Europe like those in France and Portugal will provide increasingly better information to validate and improve cost estimates. Q11. In your view, which substantial benefits would exist in offering possibilities to systematically lay new ducts when undertaking (public) works? In your experience, to what extent would additional potential revenue outweigh the extra costs? A11. To lay down new ducts during (public) works is possible today, but there are obstacles which make it very difficult in practice. Typically, the consent of ordering party is missing or easements fees are too high. A common and coordinated process for laying new ducts between operators and utilities can be expected to have significant economic and social benefits with negligible additional costs. An obvious benefit is the avoidance of disruption of the mobility of citizens. Furthermore, in addition to cost and time benefits for operators, municipalities gain from efficiencies of coordinated efforts, avoidance of manpower and utilities deployment. Q12.1 What good practices are you aware of concerning transparency and coordination of civil engineering works? Should this be mandatory in the case of publicly financed works? A12.1. Better coordination of civil engineering works is particularly relevant for the deployment of next generation fixed broadband networks. In several markets there is significant deficiency in coordination. Civil engineering works should be planned regularly (e.g. twice a year) and notified to all interested parties 5

6 (operators and utility providers). A strict coordination between operators, utility companies and local municipality can significantly reduce damage to existing ducts. Also for this purpose the city council should have the inventories of all the infrastructures in a single data base. The Spanish Telecom Act (Ley General de Telecomunicaciones) has introduced the following measures which may serve as an example in this regard: publication of a resume of every local regulation regarding the deployment of infrastructures (not implemented). when drafting town planning, Public entities /administrations require a prior report from the Ministry regarding possible telecom infrastructures needed in the corresponding urban area. rules adopted by the Public administration must comply with publicity and transparency and adopt simple and non-discriminatory procedures. whenever a public administrative body forces operators to share infrastructures, this must be publicly announced in advance of the works being carried out so that interested parties are given a chance to apply for sharing. In addition, there is regulation that contemplates the deployment of ducts for telecom infrastructures in new buildings and a procedure to coordinate operators access, both of which are useful for NGAs deployment (Common telecom Infrastructures regulation for buildings). Q12.2 Should this be mandatory in the case of publicly financed works? A12.2 Yes. Q13. Are you aware of any sources of information concerning planned civil engineering works? To what extent are they comprehensive (for instance covering different types of infrastructure) and easy-to-access? Please specify their scope. A13. In the Czech Republic every municipality has to display information about civil engineering works on an official notice board (on the internet), but these boards are not centralized and its use is very impractical. Q14.1 To what extent would inventories of infrastructure be suitable for high speed communication infrastructure rollout? A14.1 The infrastructure inventories are crucial since they allow the optimization of the network rollout costs and it helps to do the correct design and usage of the available resources. See above. Q14.2 What kinds of infrastructures would you consider most suitable for being included in such an inventory? A14.2 Any infrastructure suitable for fixed NGA deployment and for sharing (e.g. Power grid, gas, heat, water pipes, railways and roads) with their corresponding points of access (Ducts, Manholes, Poles, Cables, Junctions and ODF s) Q14.3 Who should be in charge of such an initiative? A14.3 The entity in charge of such an initiative should the owner of the infrastructure who should do the inventory of the all the mandatory elements. Through a public tender a third party with the relevant expertise should validate and integrate the information from the different owners, under the supervision of the NRA. 6

7 Q14.4 Should the obligation to announce planned investments apply only to the public sector, or also to private investors? A14.4 To all parties Q14.5 What time horizon would you consider relevant for the availability of information about individual planned projects, so that this could lead to setting up concrete co-deployment projects? A14.5 It should be available early enough that a request to share can be included in the project in time. So, at the start of the permit allocation process, with a minimum of four months between the announcement and the start of the network deployment. Q14.6 What are in your view the main organisational requirements, including costs, necessary for the establishment and maintenance of such an inventory? A14.6 The infrastructure inventory must be managed centrally, whereby one standard for the information should be adopted for all participating entities. The inventory should be supported by the owners of the relevant infrastructure and contributions to support its cost should be proportionate to the share of each operator in the infrastructure. Q15. What other best practice examples to improve coordination of civil engineering works are you aware of? Q16. How do you estimate the costs and period of time needed for a company to receive all the necessary permits needed to rollout a high speed electronic communication access network? A16. The costs are closely related with the period of time needed to receive all the necessary permits. These vary from market to market. In the Czech Republic the costs are different depending on the extent of construction. The time to roll out an NGA fixed network depends on the discussions with landowners and interested parties, which typically can take up to 12 or 14 months. In Portugal the incumbent operator has a regulated offer under which it has three weeks to respond to a request for available infrastructure. If the response is affirmative, two requests for installation permits have to be issued: one to the incumbent and another to the city council which takes about one week to be issued. With the installation permit the public police services are requested to help with traffic in the construction site. The estimated time is two months, although the process is not always straight forward. In Spain the average time is 4 months. In various markets costs and the period of time are adversely affected by negotiations about appeasement fees or by burdensome conditions local administrative bodies put to permits. Q17. a. What measures could help increase transparency and streamline the process of granting such permits? b. What kind of permits should be covered by such measures? A17a. A first measure that would benefit transparency and streamline the process of granting of permits would be to reduce permits and authorizations required by local or regional administrative bodies and replace those by a homogeneous permits regime at national level. 7

8 Another focus area is the process of easement payments. Currently municipalities, institutions and companies can ask for an unreasonably high price or for other conditions that can be higher than the costs of the materials to build the new infrastructure. Telecoms Authorities need to obtain the buy-in of other central and local Governments and private stakeholders in the public interest of the Digital Agenda but also the other way around: NRA s, telecom providers and construction companies need to understand and address legitimate local concerns. Code of Conducts and other public/private covenants can be useful instruments in lowering fees and accelerating procedures. Simplification of the authorization/permits regime and reduced easement fees will lead to lower tax incomes for those local administrations, so alternative incomes should be envisaged. Possibly national or European funds that aim to support the DAE could flow to local administrations that adopt and enable new NGA deployment technologies. In the Czech Republic Electronic communication infrastructure has a public interest nature according to the Electronic Communication Act, but not according to other Acts like the Building Act. It would be beneficial to be defined as public interest in all relevant national legislation, as with water pipes, gas pipes etc. A17.b. The measures should cover all permits necessary to carry out civil works and to make use and exploit the infrastructure. Q18. What kind of coordination would, in your view, facilitate the most the permits granting process? How could such coordination be best organised? How far should such coordination go and what would be the benefits achieved of the suggested level of coordination? A18 We believe the creation a national entity that manages permits as a one stop shop and controls time periods for local administrations to respond would facilitate the process most. The design of the new Greek Antenna permits procedure can serve as an example. Q19. How do you estimate the costs incurred by any measure suggested? A19. This is difficult to estimate, but we expect that benefits will outweigh costs. Q20. What existing requirements under construction laws are you aware of regarding in-building equipment for electronic communication infrastructure? Please specify the Member State, region or municipality. A20. In Spain Telecommunication Engineering College published construction standards to be followed in order to construct in-building infrastructure in buildings constructed after 1995 to provide the conduit for copper and cable, so any operator which reaches the building has the opportunity to provide services to any of its households. For buildings constructed after April 2011 this regulation has been updated to include fiber cables, i.e. to adapt it to NGA deployment. The main Operators (Telefonica, Vodafone, Orange and Jazztel) reached agreement to define technical aspects of sharing in-building FTTH infrastructure for buildings that do not have existing ICT infrastructure (buildings constructed before year 1995). Q21. What is, in your view, the most suitable and cost effective way to ensure the existence of adequate and state-of-the-art in-building equipment, while also securing open access for electronic communications providers? 8

9 A21. There must be one, unique last drop and one interconnection point in the building. To help and reduce costs and installation issues with the inside plant, the NRA should require every indoor infrastructure to be multi-operator meaning that an operator later can connect and share the vertical network already installed in a building. All communication providers that want to make use of the vertical network must agree to share the costs and maintenance thereof. This must be supported certification, coordinated by the NRA, to be allowed to manage the infrastructure. Every new operator that wants/needs to use the vertical network or ducts should accede to this agreement and certification process. Q22. What would be the advantages and disadvantages of an obligation to equip buildings with open next generation access? How do you assess the additional costs incurred? A22. The great advantage is the reduction of time to market and cost of deployment of NGA networks as access to residential buildings is usually difficult and the indoor infrastructures are often occupied by other services and operators. Q23. Are you aware of any good practices or measures other than those discussed above undertaken in order to facilitate the deployment of high speed broadband access networks? What has been their impact so far? How would you estimate the cost-saving potential of such measures? A23. In Spain Telefonica has a regulated reference offer to open its civil infrastructure (MARCo) which has been a good starting point and is currently under review There are a number of new technologies that are promising for cost efficient deployment of access network: Micro-trenching, Direct Burial Micro Duct, Micro Duct Over Head. Source: Comments/questions should be directed to Anthony Hellegers, Head of Public Policy, Fixed Services. Anthony.hellegers@vodafone.com 9