BT's Proposals (lots of ref. to ATM )
search.bt.com
In this section, we outline some of our plans for development in network technology and what they mean in
terms of services as well as some implications for pricing new services.
The Broadband Any-to-Any World
BT's long term vision is the broadband any-to-any world. This means that any customer on a broadband
network could communicate with any other customer via any Service Provider on such a network.
We believe that the ability to make broadband any-to-any sessions or calls will create a quantum leap in the
way people use services and applications. For example, widespread good quality video-telephony will become
a reality; file transfer and other applications will become easier. Customers will be able to send broadband
messages directly to each other, and they will also find it easier to select different Service Providers from a
wide variety of sources. Customers will be able to decide for themselves how they want to use the services.
We believe that this vision of the evolution of a broadband any-to-any environment and its associated markets
for services and applications is shared by most operators. Co-operation is in the interest of operators as it
increases the utility of network assets by giving access to a wider range of customers.
As markets for broadband services are just starting to emerge, and companies are still exploring demand with
ranges of new products, we believe that regulatory intervention in support of any of the Options proposed by
Oftel would be premature and not beneficial. We believe that the market will be highly competitive and that
therefore the Competition Act is the appropriate instrument for ensuring customer choice. Further, we also
believe that if the Service Provider market (especially for content and value added services) is to flourish, then
co-operation and reciprocity of access must be fostered between different sectors of the market.
Given the long-term aims of the industry, together with current market uncertainty, regulatory intervention is
unlikely to bring benefits for end-users. It is more likely to provide disadvantages by either focussing on
particular technologies or mandating solutions which do not address the target market and do not provide the
migration path towards the broadband vision. We believe that regulatory intervention could stifle some of the
initiatives and thereby delay broadband adoption in the UK by inhibiting investment in this uncertain area.
As we outline in Annex B, there are many technology options for delivering broadband services. We believe
that competition in various sectors already exists and will stimulate demand. This will bring about the greatest
benefits for consumers. ADSL is not the only solution, as cable modem and different radio technologies
demonstrate. However, the general vision of a broadband world with full connectivity will enable different
customers to connect to each other, whatever access technology they are using.
Reciprocal access is important for end-to-end connectivity of services across broadband networks. In such a
world, all customers would have access to the widest possible range of broadband services and broadband
Service Providers would be able to offer their services to the maximum number of customers.
BT's Plans for Meeting the Data Wave
BT aims to be a leading supplier of broadband data services in the UK. We are already making major
investments in this market, and intend, assuming effective demand does grow, to increase our commitment in
the future.
Over the coming 5 years BT intends to:
extend and upgrade BT's access network to provide capacity and promote the market for new data
services. This will involve the provision of higher capacity access links to a wide range of business
and residential customers, leading to an increase in the number of customers who are using the new
data services. Over time, their volume of usage will increase;
supply broadband data services to both business and residential customers as retail products, and as
intermediate products to other operators and Service Providers;
be a leading supplier of data transport services to both the Service Provider and end-user markets
within the UK;
be a major Service Provider for new data services, including Internet access and e-Commerce.
Broadband Transport Products
BT already offers a range of high bandwidth products that provide capacity between business sites. These are
used by business customers in their company networks (for example for Intranets and data transfers as well
as voice networks) and for infrastructure by operators and Service Providers. As Oftel notes, this sector of the
high bandwidth market is extremely competitive in the UK.
We are working to extend this range of products to provide ATM (Asynchronous Transfer Mode) and IP
(Internet Protocol) transport capacity to a wider range of customers and sites. This includes new types of
products that offer high-speed capacity to small and medium companies and residential areas.
Broadband Core Network
BT's network development to support the Data Wave is well advanced. By the end of this year, we will have
over 600 SDH (Synchronous Digital Hierarchy, a transmission system for high bandwidth) nodes and100
ATM switches across the UK.
Over the next 5 years, we expect to increase the capacity of this network by about 10 to 12 fold. We also
expect to extend the coverage of our SDH network to around1500 to 2500 nodes. This network is planned to
have ATM switches at around 200 to 400 nodes (depending upon demand), and ATM access points at around
1200 to 2000 nodes. Obviously, the size and extent of network rollout will depend on the volume and
distribution of demand.
In the core of this broadband network, we are planning to install a set of large trunk switches that perform
both narrowband and broadband switching, including interconnection between the PSTN and ATM networks.
A similar rate of growth is expected for our national IP network, which is largely transported over this ATM
network.
Broadband Access
BT's current plans for broadband access across the UK distinguish between three different types of sites:
Large/Medium Businesses, with high bandwidth requirements, using SDH and/or ATM over fibre
for access.
Medium/Small Businesses, with slightly lower requirements for bandwidth, where typically access is
via SDH or ATM using DSL over multiple copper pairs. This includes the use of HDSL and ADSL
over copper pairs.
Small and Medium Enterprises, (SMEs) Small Office/Home Office (SOHOs), and higher usage
residential customers with more modest bandwidth needs. Access would be provided with ADSL
over a single copper pair to the ATM network.
The market and delivery methods for large business sites are well known and, being highly competitive, well
served. The case for fibre access versus multi-line copper across the medium size business sites is less clear.
Most customers express a preference for fibre delivery. However, it will be possible to offer sufficient access
bandwidth at lower cost using DSL on multiple copper pairs.
The size of the market for ADSL delivery to SMEs, SOHOs, and higher usage residential customers is even
more difficult to predict. It depends upon:
customer demand for broadband data access, when offered at prices which generate a commercial rate
of return. This in turn depends upon the value of the content and services (business or entertainment)
available to the customer via this access. Given the economics of DSL rollout, demand density is
more critical than overall volumes;
the level of competition from other sources to supply such content and services. This includes cable
TV, as well as DigitalTV with Web-casting;
the cost of other equipment such as PCs and wiring which home users may need to access broadband
services.
BT plans to be able to meet the different ranges of demand as broadband services begin to develop and has
designed a flexible network solution that can cope with high and low levels of demand. We are also working
on planning techniques that enable us to adjust the rate and location of ADSL rollout according to market
demand.
Under the high demand scenario, BT estimates roll-out at around 3.8m ADSL lines by the end of 2002/3.
Under the low demand scenario, a slower roll-out would provide about 1.5m ADSL lines by the same date.
Under both scenarios, substantial growth is expected in the years beyond 2003. Both scenarios are of course
highly dependent on take-up, cost trends in the supply industry and the development of applications by BT
and others to exploit the increased bandwidth delivered by ADSL. Although these figures are forecasts and
not firm plans, they represent the range of our current best judgements about how BT will respond to an
inherently unpredictable new market sector. If there is sufficient effective demand we will build capacity to
support the product set which meets that demand. Supporting the evolving needs of our customers is essential
to our business mission in the UK.
BT's current trial in North & West London
BT is running a trial in London of a technology which is similar to Oftel's option 4. Service Providers are
participating in the trial. We are developing products for the intermediate and end-user markets. There are a
number of operational issues which need to be resolved for the intermediate market. We propose to invite
operators and Service Providers to work jointly with us in developing services for their needs.
International Standards
The development of the broadband any-to-any world will require significant effort to drive international
standards to a successful outcome. The UK should start to drive the work in this area. We would be very
willing to play a leading role in a UK Task Force with this aim.
Pricing
There are a number of complexities particularly in a multi-operator, multi-service provider environment which
need to be addressed, especially when incentives to continue to invest in new services throughout the UK are
of paramount importance. Investment in infrastructure needs to be appropriately rewarded. Reward should
reflect the high degree of risk associated with new markets and technologies. Reward should also reflect
innovation in new services. The correct level and structure of prices will be one that has the right incentives to
encourage efficient operators to make infrastructure investment. BT expects to work with partners and other
suppliers along the value chain to ensure that commercial risks are shared.
Furthermore, any pricing considerations will need to address the specific aspects of the services (for example,
usage and defined quality of service based on contention, variable versus constant bit rate), which will all affect
costs.
The Consultation Document asked specific questions on geographic de-averaging. Oftel is right to be
concerned and it is important to understand the issues. The Ovum (1998) study for the European
Commission, in our view, rightly concluded that de-averaged wholesale prices, combined with averaged retail
prices, would cause difficulties.
There is a very real tension between economic efficiency, which would suggest cost reflective prices and
geographic deaveraging, and consumer interest which calls for affordable access and may warrant
cross-subsidy between high and low cost areas. These tensions are compounded by competition which is free
to focus its energies and will tend to exploit variances between an incumbent's prices and costs. Indeed,
competition is likely to render geographical averaging untenable in the long term. The complex web of social
and economic problems associated with geographically averaged prices for current services need not be
incurred for new services such as data and broadband access.
Conclusions
The best interests of customers, Service Providers, network operators and the UK economy will be met by:
co-operation between the players to develop standards and the longer-term vision;
a non-interventionist approach which permits the market and technologies to develop competitively
towards the long term vision;
the establishment of a UK Task Force to agree the standards which would help to bring about Option
5 as quickly as possible;
charges for broadband services being set on a commercial basis and providing appropriate rewards
for innovation, risk and investment. |
