|Topic:||Next generation access networks (NGA) in Germany|
|Organisation:||German Federal Network Agency for Electricity, Gas, Telecommunications, Post and Railway|
Matthias Kurth is the President of Germany’s Federal Network Agency for Electricity, Gas, Telecommunications, Post and Railway, having previously been its Vice President. During his career he has been Director of Business Development, Law and Regulation for COLT Telekom GmbH, Chairman of the Conference of Heads of Administration of the Ministers of Economics, at federal and state level, and Member of the Supervisory Board of the Deutsche Ausgleichsbank. Mr Kurth has also been Representative of the State of Hesse in the Committee of the Regions of the European Union, Representative of the State of Hesse in the Regulatory Council for Posts and Telecommunications, State Secretary in the Hesse Ministry of Economics, Transport and Urban and Regional Development, Head of Administration and Permanent Deputy of the Minister, Parliamentary Secretary and Deputy Chairman of the SPD Group in the Land Parliament, member of the Presidium of the Hesse Land Parliament and judge at the Darmstadt Regional Court. Mathias Kurth studied Law and Economics at Frankfurt am Main University, and was a postgraduate Legal trainee in the Administration of Justice of the State of Hesse.
Broadband networks are a prerequisite for economic growth. Although Germany’s broadband coverage is quite good compared to most countries, there is a need to upgrade broadband speeds and serve rural areas. Germany’s long-term goal is to provide broadband connections with minimum transmission rates of 50 Mbit/s. The Federal Network Agency is using regulation to drive competition and investments in network deployment. Frequencies freed by the move to digital TV, the digital dividend, will be dedicated to providing broadband in rural areas.
Powerful broadband networks for the rapid exchange of information and knowledge are a prerequisite for economic growth. A powerful broadband infrastructure forms the basis for innovative broadband services with a high economic potential, for example, for eWork, eGovernment, eHealth and eLearning. Broadband interconnections substantially accelerate the transfer of knowledge and enable access to an ever-wider range of – and more sophisticated – audiovisual media contents and infotainment services. Recent technological developments help take advantage of this potential by helping create powerful wired and wireless broadband networks. Cable and telecommunications companies in Germany are investing heavily deploying broadband networks and installing powerful networks that replace copper lines with fibre-optic cables and use new DOCSIS 3.0 transmission technology with vastly higher bandwidths than hitherto possible. With transmission rates of up to 100 Mbit/s end-users can get significantly higher-speed Internet access. When appropriate, these investments may be supported by the state. From an international viewpoint, Germany’s broadband coverage is very good. More than 98 per cent of all households have access to broadband Internet at a rate of at least 384 kbit/s. If broadband is considered to be at least 1 Mbit/s, the coverage is about 92 per cent. Well over 70 per cent of households have access to transmission rates of at least 2 Mbit/s and powerful broadband connections with up to 50 Mbit/s are already available to more than 20 per cent of households. Compared with other European countries this is excellent. These figures conceal a tangible decline in ‘white spots’ – regions with no commercially available broadband connections. This decline is mainly due to ongoing investments by network operators. It should also be pointed out that various programmes by the States, municipal broadband initiatives, nationwide actions by relevant associations, and measures by the federal government have also contributed to bringing high-speed broadband to rural areas. On 18 February 2009, the German government published its broadband strategy to place extra emphasis on activities at federal level. The strategy aims to create powerful nationwide broadband coverage in the medium term. The long-term goal is to provide broadband connections with transmission rates of at least 50 Mbit/s. The federal government has based the path to this goal on four pillars: exploitation of the synergies from infrastructural deployment; supportive frequency policies; growth and innovation-oriented regulation; and provision of funding as needed. The first three pillars affect the Federal Network Agency’s mandate. The government’s broadband strategy hence provides an opportunity to merge the current piecemeal treatment of broadband markets into a cohesive whole covering all aspects of broadband development, and to draw up a detailed and holistic concept for the regulatory support of the broadband sector. To meet these requirements, the Federal Network Agency presented its regulatory strategy on broadband deployment on 13 May 2009. The document – ‘Key elements for advancing modern telecommunications networks and creating powerful broadband infrastructures’ – set forth an innovative, investment-focused, concept now undergoing public consultation. The Agency will orient its future decisions on the consultation paper’s pillars – risk reduction; maintaining investments and innovation; planning security and transparency – to support and promote broadband expansion in Germany. The Agency will focus on regulatory decisions promoting competition, especially unbundled access to the local loop and bitstream access that increased alternative network operators’ broadband access market share to about 50 per cent during 2008 and raised investments in fixed networks to €4.8bn in 20071. It must be worthwhile for providers to invest in modern fibre-optic networks and to provide broadband connections to hitherto unserved regions. The Agency has also announced its intention to create a high-level NGA Forum to promote dialogue and provide a venue where key players can pragmatically resolve issues that arise, thereby rendering regulatory proceedings superfluous. The Federal Network Agency has long sought to establish competitive structures that foster investments in network deployment by means of market regulation that uses competition as a driver for efficient investment. The risks inherent in fibre-optic deployment – uncertainty about demand for innovative services and customer willingness to pay premium prices can be mitigated by various means. Preconditions could be created that avoid unnecessary civil engineering, the most expensive part of creating new wired networks, thereby lowering the costs of network deployment. This could be done through joint use of available ducts, by using available public infrastructures or by taking advantage of road construction to place lines or ducts at a lower cost. The federal government has asked the Federal Network Agency to compile an ‘infrastructure atlas’ listing the existing infrastructure available for co-use. The success of this project will depend on the willingness of government bodies and private enterprise to share infrastructure and furnish the relevant information. If this proves possible, the atlas can accelerate network deployment and reduce costs. These national activities must also be examined in an international context. Investments in NGAs are worldwide, so many regulatory authorities face similar issues. The European Regulators Group (ERG) has examined the challenges posed by NGA development for several years. In June 2009, the Group published its Report on Next Generation Access – Economic Analysis and Regulatory Principles. Based on the ERG Opinion/Common Position on NGA published in October 2007, it is an economic-regulatory analysis (22 country case studies) of European NGA rollout that takes current economic studies into account. The report implicitly tackles the Draft NGA Recommendation, since published by the EU Commission. Apart from various NGA implementation scenarios (FTTCab, FttH/B), different regulatory approaches – to the extent that they are known – are also discussed. The principle of promoting competition as profoundly as possible remains valid – as does the ladder of investment, which becomes increasingly sophisticated with changes in the relative importance of rungs. Since NGA rollouts are likely to reinforce economies of scale and scope, replicability is reduced, thereby reinforcing enduring economic bottlenecks. It is important to maintain the level of competition reached so far through regulation and other means, particularly infrastructure competition, as it promotes investment. This can be seen in countries with high cable penetration. The Report also deals with cooperative investment arrangements where several operators jointly rollout NGA infrastructure (build-and-share models). Since these arrangements potentially reduce competition, they must be subject to scrutiny by the national competition and/or regulatory authorities who aim at preventing discrimination of third-party access seekers. Similarly, new pricing models (early commitment, upfront payment, volume discounts) have to be checked to ensure non-discrimination and prevent margin squeeze. Regulators can facilitate investment planning by providing regulatory predictability and stability (for example announcing regulatory strategy including the length of the regulatory period) as this reduces risk. Overall, the Report concludes that the European Regulatory Framework for electronic communications networks and services remains fit for the purpose as it allows incentives to competition and investment. Another important step towards accelerated expansion of broadband availability is the designation of suitable frequencies in the mobile communications range for broadband networks. It is not possible to simply take these frequencies from current users and reassign them overcome white spots, but the switch from analogue antenna-based TV to DVB-T has yielded a ‘digital dividend’. The vastly reduced spectrum requirement of digital television, frees frequencies for other uses. In view of the low frequency and suitability for indoor reception, the frequencies previously used for TV are eminently suitable for mobile data. The federal government therefore modified its Frequency Band Allocation Ordinance on 4 March 2009 and dedicated the 790 to 862 MHz range to broadband data services. On 12 June 2009 the Bundesrat (2nd Chamber representing the States) gave its approval, thereby paving the way for an auction of frequencies by the Federal Network Agency. This will probably take place at the end of 2009/beginning of 2010. The Agency intends to define frequency usage terms for digital dividend frequencies and impose certain requirements on its future users. For example, they will be required to use the790 – 862 MHz frequency range primarily to close coverage gaps in rural areas. This means that the federal states need to list such gaps as soon as possible. Specifically, the Federal Network Agency will prohibit providers from offering services to other regions before the rural areas have been adequately covered. Since the frequencies are dedicated to improving broadband coverage in rural areas, coverage gaps in rural areas must be closed prior to those in other regions, and initial planning for non-rural areas will not be permitted. The forthcoming allocation guidelines will clearly define the rollout obligations attached to the spectrum. The rollout will be scheduled in stages. Rural communities with less than five thousand inhabitants and totally lacking broadband infrastructure will have top priority. Once 80 per cent of these households are served, providers will be permitted to turn to more densely inhabited regions. We shall not rely on mere promises, but shall set clear targets. The federal government’s broadband strategy offers an excellent platform for the rapid enhancement of the broadband availability in Germany. It is now up to public bodies, federal agencies and industry to grasp this opportunity to ensure that new networks indeed emerge without bureaucracy. The Federal Network Agency will certainly make every effort to support this process.