1. Colombo, Sri Lanka, 7-10 April 2009 Next Generation Access (NGA) Technology and Regulatory Issues Satya N. Gupta, Chief Regulatory Advisor BT Global Services-SAARC Region FORUM ON NEXT GENERATION STANDARDIZATION (Colombo, Sri Lanka, 7-10 April 2009)

2. Colombo, Sri Lanka, 7-10 April 2009 2 Agenda Next Generation Network Architecture – Layered approach Next Generation Access (NGA) NGA – Superfast Broadband NGN Regulation – UK Approach Enabling Regulation for NGA

3. Colombo, Sri Lanka, 7-10 April 2009 3 NGN – a layered architecture distributing intelligence at every layer

4. Colombo, Sri Lanka, 7-10 April 2009 4 Source: ASTAP05/WS-IP&NGN/13 Practical NGN architecture

5. Colombo, Sri Lanka, 7-10 April 2009 5 Technologies for Next Generation Access (NGA) Regulatory issues to be resolved Regulatory Impact 0.4 Mbit/s 0.8 Mbit/s 10 Mbit/s 24 Mbit/s ADSL2+ ~£600/line£200 £400/line Cost of Deployment 15 Mbit/s5 Mbit/s0.4 Mbit/sUpstream Typical 50 Mbit/s10 Mbit/s0.8 Mbit/sUpstream Headline 30 Mbit/s20 Mbit/s5 Mbit/sDownstream Typical 100 Mbit/s40 Mbit/s8 Mbit/sDownstream Headline FTTP (All homes) FTTC (+VDSL) Now

6. Colombo, Sri Lanka, 7-10 April 2009 6 PSTN Leased lines ATM Copper Fibre DSL PSTN SDH access PDH access K Stream End User ~ 5.5k sites ~ 2k sites ~ 1k sites ~ 400k sites ~ 100k sites ~ 15k sites SDH VC-4 PDH SDH VC-12 IP PDH access BT UKs Current Network

7. Colombo, Sri Lanka, 7-10 April 2009 7 UK Access Today E-side Cables Local Exchange (5.6k) Telephone Pole ~8m Customer Home ~26m Overhead Distribution Underground Distribution Backhaul D-side Cables Street Cabinet ~90k Core network Current LLU demarcation point ~ 4m Distribution Points (Lines split almost 50:50 between overhead & underground) ADSL1 0.4 Mbit/sUpstream Typical 0.8 Mbit/sUpstream Headline 5 Mbit/sDownstream Typical 8 Mbit/sDownstream Headline Todays Broadband

8. Colombo, Sri Lanka, 7-10 April 2009 8 End User -5.5k sites -100 sites Multi-service access Converged Core Copper Fibre & Copper Content ISP WWW Class 5 Call Server Wireless IP-MPLS-WDM Next Generation Simplified Network BTS 21CN

9. Colombo, Sri Lanka, 7-10 April 2009 9 Access Tomorrow Underground Distribution Overhead Distribution Fibre-to-the-Premises (FTTP) Fibre Backhaul Core network Cu/ Wirele ss 8 Mbps FTTC20 Mbps FTTP>50 Mbps FTTP Cut-Over Being planned for Greenfield Single, high-quality network Big investment, big savings Paves the way for super fast future… Fibre

10. Colombo, Sri Lanka, 7-10 April 2009 10 2004 2005 2006 2007 2008 2009 2010 2011 BTs 21CN vision announced. Consult21 launched. Converged network architecture developed. Voice transformation trial underway Industry engagement via Consult21 gains pace. Strategic vendors announced. First service launches based on reusable capabilities Strategic vendor contracts signed. UK migration plan announced. Part of the IP/MPLS core network in place. Migration control centre established. Comprehensive testing and trials. End user communications strategy enacted. End user migration begins ~50% of UK broadband services delivered over 21CN UK wide migration to 21CN begins. Next generation broadband product available to ~50% of UK. > 15% of PSTN lines migrated Next generation broadband available to >16m end users. ~ 65% of broadband and ~50% of PSTN lines migrated Next generation broadband available to >20m end users. 21CN migration substantially complete 21CN completes 21CN – Key Milestones

11. Colombo, Sri Lanka, 7-10 April 2009 11 New Era of NGN Regulation Promoting Investment and Innovation BTs Undertakings offered in lieu of reference to Competition Commission in September 2005 Regulation to be focused on bottlenecks Incentive to invest in NGNs and Innovate Expectation of reduced regulation downstream Promote infrastructure-based competition Benefits the consumers, operators and UK economy Incumbent to compete fairly on a level playing field Creating a climate of confidence for infrastructure Competition, Investment and Innovation

12. Colombo, Sri Lanka, 7-10 April 2009 12 Ex-ante regulation Applies to defined markets where a communication provider has Significant Market Power (SMP) Provision of network access/interconnect, non- discrimination, cost-oriented prices, etc. BTs Undertakings – NGN specific section No foreclosure of network access without consultation Charges to be based on efficient network design Network access to be provided on Equivalence basis Industry group to agree transition to NGN interconnect Compensation arrangements Regulatory Context in the UK

13. Colombo, Sri Lanka, 7-10 April 2009 13 Regulation and NGN – Key Issues Investment – Regulatory certainty NGNs are driven (in part) by cost savings Investment requires demonstrable shareholder value Regulators face a difficult challenge No one can build it and they will come on revenue bet NGNs/NGAs are disruptive to traditional boundaries They challenge past regulatory assumptions (e.g. thin & dispersed vs. fat & fewer interconnect, minutes & miles vs. capacity & QOE) Regulation needs to become simpler Requires collaboration amongst incumbents, regulators and Competitive communications providers. Over regulation could restrict converged service innovation

14. Colombo, Sri Lanka, 7-10 April 2009 14 BTs Consulation Approach Consult 21 Consult 21 launched Summer 2004 Largest voluntary consultation of its kind ever undertaken in our industry 650 people from industry involved Remit is open and transparent consultation with wholesale customers (CPs) Director recruited from a CP 10 Working Groups, including: Product Migration from 20CN to 21CN (E.g. PSTN Interconnect, Broadband, Ethernet) 21CN Migration Management Communications Commercial Each WG has BT and Industry Co-Chairs Industry Steering Board (Ofcom monitors) All proceedings published on the Internet

15. Colombo, Sri Lanka, 7-10 April 2009 15 Functional Separation - Wholesale Concept

16. Colombo, Sri Lanka, 7-10 April 2009 16 Next Generation Broadband: A bold vision for the UK UKs biggest super fast broadband investment: £1.5 bn Accessible by up to 10 million homes by 2012 Range of speeds up to 100mbps: with >1,000mbps potential Basis for nationwide demand led roll out Worlds most open super-fast network Need for the barriers to investment being removed 2

17. Colombo, Sri Lanka, 7-10 April 2009 17 Building on Success UK has world leading availabilit y & take up… BTs multi-billion pound investment has ensured everyone can be part of the broadband revolution 10 million kilometers of fibre already in the network 120,000 businesses have fibre to the premises 10 million people work from home using broadband Higher take up in rural areas than in cities …and provides massive choice to consumer s Massive customer choice from 200 ISPs Among the lowest prices in the world Opportunity to learn from the experience of others All fibre based services from BT will be wholesaled to other ISPs 5

18. Colombo, Sri Lanka, 7-10 April 2009 18 The Next Chapter: a mixed economy model ADSL2+ roll out makes speeds of up to 24 Mbps available to 40% population Widespread access to ADSL2+ and speeds of up to 24 Mbps 2008 FY* Fibre roll-out brings range of speeds up to 100Mbps Fibre available to up to 10 million families Olympic village, a fibre showpiece case Enhanced copperFibre Fibre to the home in Ebbsfleet Operational trials of fibre to the cabinet Fibre available to millions of homes and businesses BT backhaul investment reduces network bottlenecks 2010 FY 2012 FY 7 *2008FY = 08/09 financial year Continuing to develop technologies to enable faster speeds and more services

19. Colombo, Sri Lanka, 7-10 April 2009 19 What it means for consumers TODAY…TOMORROW… Fast internet... Instant messaging… VoIP… BT Vision… iPlayer… Multi viewing High Definition TV... Advanced High Definition gaming experience… High Definition video conferencing… A world of new possibilities from super-fast broadband Virtualisation, Cloud Computing, Collaboration …But growth of simultaneous usage raises potential peak bandwidth issues for the future …Assured high quality experience even with simultaneous usage of all new high speed applications and services 8

20. Colombo, Sri Lanka, 7-10 April 2009 20 What it means for businesses Bringing big business fibre services to smaller businesses: speeds > 1 Gigabit Improved choice in access speeds providing UK businesses with a competitive edge Improved flexibility in remote and home working Two way speed allowing collaboration across locations between customers and suppliers 9

21. Colombo, Sri Lanka, 7-10 April 2009 21 Removing the barriers to investment the chance to earn a fair return if investment is successful principle based regulation that avoids red tape removal of outdated rules, such as having to deploy copper cables in parallel to fibre assurance that other UK companies will wholesale their fibre services just like we will freedom from responsibility for other operators past investment We need to have… 11

22. Colombo, Sri Lanka, 7-10 April 2009 22 Next Generation Broadband for the UK The UK already has world leading availability The UK already has world leading take up BT wants to give the UK world-leading speeds and capacity through Next Generation Broadband The UK already has world leading competition and prices 13

23. Colombo, Sri Lanka, 7-10 April 2009 23 Enabling Regulatory Initiative for NGA Ofcom (UK) Allowing wholesale pricing flexibility- Enabling ROI appropriate to risks Minimizing efficiencies in Network Design- Forbearing Technical Regulation Supporting use of new and more flexible wholesale services Safeguarding the opportunity for further infrastructure based competition Symmetric Regulation for all new infrastructure(Mandated Sharing)

24. Colombo, Sri Lanka, 7-10 April 2009 24 THANK YOU Satya N. Gupta Satyen.gupta@bt.com