1. Slide 1 Access to Bandwidth The Way Forward Peter Walker Director, Technology OFTEL pwalker@oftel.gov.uk

2. Slide 2 Responses to previous DSL TG Recommendations Approval regime for DSL-lite Not useful as RTTE-D overtakes us RA testing of DSL equipment We understand cooperative testing is now planned

3. Slide 3 Responses to previous DSL TG Recommendations Promoting standards and Interoperability Oftel promotes and supports international standards Compatibility testing is a matter for industry Application of RTTE Essential Requirements Sympathetic to this But may not be complete solution Need to consider ERs under ONP Directives

4. Slide 4 Results of consultation And recap of 5 options

5. Slide 5 Option 1: Local Loop Unbundling Layer 0 (physical medium) Access OLO collocated equipment OLO provided equipment Customer SiteBT Local Concentrator Building Loop acquired from BT MDF

6. Slide 6 Option 2: Partial Baseband Leased Circuit Layer 1 Analogue Access OLO collocated equipment OLO provided equipment Customer SiteBT Local Concentrator Building BT Partial Baseband Leased Circuit NTP NTP/POI MDF

7. Slide 7 Option 3: Bitstream Access Layer 1 Digital Access OLO collocated equipment BT Local Concentrator Building BT Bitstream Circuit NTP/POI DSL modem DSL modem NTP

8. Slide 8 Option 4: Permanent Virtual Circuit Access Layer 3 Access OLO or SP BT Local Concentrator DSL modem DSLAM NTP NTP/POI ATM switch or IP router providing Permanent Virtual Circuit connection to OLO or SP ATM or IP DSL Access Multiplexer

9. Slide 9 Option 5: Indirect Access Layer 4 Access OLO or SP BT Local Concentrator DSL modem NTP NTP/POI To rest of public network OLO route accessed via short code ATM DSLAM

10. Slide 10 Results of consultation Over 60 responses from a wide variety of bodies Preliminary conclusion is that there is unmet effective demand in the SME sector Residential sector has promise of future effective demand, but faces ‘chicken & egg’ situation at present Operators and Service Providers’ also had current unmet demand

11. Slide 11 Options for Action Customers need access to services, not access options Service Providers prefer wide accessibility as delivered by Option 4 Operators preferred more control over service delivery and timing, as in Option 2 Options 1, 3 and 5 received less support, though Option 5 is long term goal

12. Slide 12 Balancing risks If no action is taken, effective demand in the SME sector may remain unmet or seriously delayed Similarly, effective demand in the residential sector may not emerge But risk that regulatory intervention can distort investment decisions Or might deter competing solutions

13. Slide 13 Preferred Options Main pointers from consultation is that Option 2 and Option 4 had greatest support Need to analyse carefully these two Options

14. Slide 14 Pros and Cons of Option 2 Option 2 is a form of unbundling Would give customers competing choices of higher bandwidth access Each operator can take its own risk and investment decisions independently of BT Likely to stimulate innovation in the range of services

15. Slide 15 Pros and Cons of Option 2 (2) But: Option 2 unlikely to deliver early availability of ‘mass-market’ higher bandwidth access Technical difficulties in spectral management Co-location and process issues need detailed planning Not all Operators want to supply telephony as well - could a split be practical?

16. Slide 16 Pros and Cons of Option 4 Substantial proportion of UK could be covered quite quickly Thus attractive to many Service Providers Minimises technical and operational problems Customers can retain BT as telephone supplier

17. Slide 17 Pros and Cons of Option 4 (2) Some effective demand my remain unmet for some time No competition in the network upgrade Choice of technology in the hands of BT If pace and extent of roll-out left to BT:-

18. Slide 18 Pros and Cons of Option 4 (3) OFTEL would have to substitute its assessment of economic viability for BT’s Highly unattractive If OFTEL were to determine extent of roll-out:-

19. Slide 19 OFTEL’s conclusions on consultative responses The pros and cons of Options 2 and 4 tend to balance each other A combination of Options 2 and 4 likely to best meet overall objectives Stimulates competition in both Service Providers and Operator markets Differing needs of residential and SME could be met

20. Slide 20 Market Developments BT is expected to announce soon its plans to roll-out ADSL based services, similar to Option 4 BT would provide wholesale access to Service Providers And wholesale interconnect to other Operators BT must treat its own SPs as it treats others

21. Slide 21 BT’s concerns over Option 2 Believes ADSL service only viable with high volumes of customers Believes that Option 2 would take away that high volume of SME customers Believes that Option 2 would divert resources from roll-out of Option 4

22. Slide 22 Next Steps: OFTEL’s initial conclusions Still believe that combination of Option 2 and Option 4 best meets needs Not convinced of BT’s arguments But will commission an independent assessment of ADSL viability And progress work on Option 2

23. Slide 23 Option 2 studies The NICC will be asked to produce a Spectral Management Plan to support Option 2 Focus Groups will be established to develop guidelines for the provision of: Co-location facilities Operational processes for loops Target for this work is June 2000 Could allow Option 2 by July 2001 if agreed

24. Slide 24 Further consultation OFTEL seeks rapid reactions to our preliminary conclusions Consultation runs to 30th September 1999 Expect to announce firm conclusions by end of October

25. Slide 25 Option 2 Proposed Time Plan Technical Co-location Process Pricing Build Scoping work on all tasks Spectral Management Plan Compatibility Tests Specify Co-location Design process Build support system & price Design circuit process Build support system & price circuits Publish exchange area data Develop commercial offer Collect Circuit Forecasts Trial Collect orders Build initial sites OLO installation Service starts 1st July 2001