Developing Next Generation Access Networks Challenges in the SEE Region Jaroslaw K. Ponder Strategy and Policy Unit International Telecommunication Union The 1st Southeastern Europe Broadband 2006 Conference & Expo (http://seebb2006.tninternational.com/ ) 10-11 April 2006, Belgrade, Serbia and Montenegro Note: The views expressed in this presentation are those of the author and do not necessarily reflect the opinions of the ITU. Jaroslaw K. Ponder can be contacted at Jaroslaw.Ponder@itu.int

Agenda Concept of IP-enabled NGNs and next generation access networks Techno-economic analysis and implications for access networks Worldwide and regional trends Challenges for the SEE region 10 April 2006 Jaroslaw.Ponder@itu.int

Concept of IP-enabled NGNs and next generation access networks We all build the Information Society together! 10 April 2006 Jaroslaw.Ponder@itu.int

NGN versus NGAN ITU-T SG 13: Rec. Y.2001 What is different? A NGN is a packet-based network able to provide telecommunication services and able to make use of multiple broadband, QoS-enabled transport technologies and in which service-related functions are independent from underlying transport-related technologies. It enables unfettered access for users to networks and to competing service providers and/or services of their choice. It supports generalized mobility which will allow consistent and ubiquitous provision of services to users. What is different? Multimedia Generalized mobility Convergence Integrity Multi-layer orientation Open character 10 April 2006 Jaroslaw.Ponder@itu.int

NGN: New environment IP-based Networks Access Applications 10 April 2006 Jaroslaw.Ponder@itu.int Source : Telefonica 2005

What drives NGN development? Better financial performance Revenue growth Margin protection Reduced OPEX and CAPEX Operational issues Obsolescence & modernization Reliability, resilience & quality Capacity & scalability Simpler and faster provision of service Competitive issues New service roll-out/substitution & service differentiation Market share growth & protection Convergence of voice, data and IT enables provision of new offerings in packages 10 April 2006 Jaroslaw.Ponder@itu.int

NGN impact Convergence Market structure Market potential Now Convergence Market structure Market potential Business models Price strategies Sell strategies Customer preferences Customer protection Regulatory model What next… Service A Service B Service C Net. A Net. B Net. C Future Services A, B, C IP Platform (QoS) Access Networks 10 April 2006 Jaroslaw.Ponder@itu.int

New requirements Up-grade of the core networks Expansion of next generation access networks Fix Mobile Convergence High investment programmes Very high investment risk Unknown business models Unknown regulatory proceedings Regulatory holydays under discussion 10 April 2006 Jaroslaw.Ponder@itu.int

Next Generation Access Networks Fixed xDSL Cable TV PLC FTTx Wireless Mobile infrastructures; 2G to 3G and beyond 3G WiFi and WiMAX Satellite Digital broadcast infrastructures Wireless Mesh networks 10 April 2006 Jaroslaw.Ponder@itu.int

Service Driven Next Generation Access Networks 100 Peer to Peer Upstream / (Mb/s) 2 Local web server teleworking 0.6 Video preview Advanced videophony 0.2 Broadband Video Telephony Video Games 0.06 Fixed voice/ Fax / Dial-up TV VoD Interactive TV Broadband + Multi VoD HDTV Broadband + Multi HDTV 0.06 0.6 2 10 35 10 April 2006 Jaroslaw.Ponder@itu.int Downstream / (Mb/s) Note: Adopted from TPSA

Service Driven Next Generation Access Networks 100 FTTx Peer to Peer Fixed BWA 2 VDSL Upstream / (Mb/s) Local web server teleworking 0.6 ADSL 2+ 0.2 ADSL 0.06 Broadband + Multi VoD HDTV TV / VoD Interactive TV Broadband + Multi HDTV Mobile Broadband 0.06 0.6 2 10 35 10 April 2006 Jaroslaw.Ponder@itu.int Downstream / (Mb/s) Note: Adopted from TPSA

Life of Next Generation Access Technologies ADSL GPRS GSM EDGE WiFi UMTS ADSL2 WiMAX Life cycle of next generation access technologies is relative and depend on the regional or country particularities ADSL2+ VDSL VDSL2 FTTh WiMax Emerging Growing Matured Declining time 10 April 2006 Jaroslaw.Ponder@itu.int

Worldwide and regional trends We all build the Information Society together! 10 April 2006 Jaroslaw.Ponder@itu.int

Broadband access worldwide (2005) 5 10 15 20 25 30 United States Sweden Norway Japan Finland Belgium Israel Taiwan, China Canada Switzerland Iceland Denmark Netherlands Hong Kong, China Korea (Rep.) DSL Cable modem Other 21.3 24.9 19.8 18.9 18.3 17.9 17.7 16.5 16.3 15.6 15.3 15.0 14.9 14.7 12.8 Broadband penetration by technology, top 15 economies, DSL and Cable prevail over other technologies worldwide 10 April 2006 Jaroslaw.Ponder@itu.int

Few countries started development of FTTx infrastructure. FTTx in Europe (2005) Few countries started development of FTTx infrastructure. Home / Building passed European FTTx subscribers Source: IDATE (2005) The customer base is still very small but grows very fast in most of leading economies 10 April 2006 Jaroslaw.Ponder@itu.int Source: IDATE (2005)

Broadband access in SEE (2005) Broadband penetration by technology in SEE, 2005 0.68% Turkey Croatia 0.60% Romania 0.41% Broadband penetration rates of SEE leading countries do not exceed 1% Bosnia & Herzegovina 0.12% The former Yugoslav Republic of Macedonia 0.12% Serbia & Montenegro - Kosovo 0.11% Bulgaria 0.08% DSL Serbia & Montenegro - Serbia 0.02% Cable modem Serbia & Montenegro - Montenegro 0.0% Other 0.0% 0.1% 0.2% 0.3% 0.4% 0.5% 0.6% 0.7% 0.8% 10 April 2006 Jaroslaw.Ponder@itu.int

Broadband subscription price, (cheapest plan sampled, monthly, US$, top 75, 2005) 10 April 2006 Jaroslaw.Ponder@itu.int

Broadband prices per 100 kbit/s (top 75, 2005) The broadband prices for in selected SEE countries are very high and very high and not affordable for average user 10 April 2006 Jaroslaw.Ponder@itu.int

Wireless technologies Number of cellular users per 100 inhabitants In 2004 in Romania 279’408 users of 3G, 2.7% of all mobile subscribers (16 position) 3G In 2004 Moldova 3’000 users of 3G, 0.4% of all mobile subscribers (32 position) 10 April 2006 Jaroslaw.Ponder@itu.int

Measuring Opportunities Digital Opportunity Index DOI Opportunity Utilization Infrastructure 1/3 1/3 1/3 10 April 2006 Jaroslaw.Ponder@itu.int

Digital Opportunity Index percentage of population covered by mobile cellular telephony internet users per 100 inhabitants Utilization Opportunity mobile cellular tariffs as a percentage of per capita income ratio of broadband internet subscribers to internet subscribers DOI internet access tariffs as a percentage of per capita income ratio of broadband mobile subscribers to mobile internet subscribers Proportion of households with fixed line telephone proportion of households with a computer mobile cellular subscribers per 100 inhabitants mobile internet subscribers per 100 inhabitants proportion of households with Internet access at home Infrastructure Infrastructure 10 April 2006 Jaroslaw.Ponder@itu.int

Digital Opportunity Index in developed economies and CEE DOI Leaders: Korea, Hong Kong and Japan CEE: High opportunities but low utilization Mobile component and broadband 10 April 2006 Jaroslaw.Ponder@itu.int

Digital Opportunity Index in South Eastern Europe Infrastructure Utilization DOI Estonia 0.94 0.59 0.19 0.58 Slovenia 0.97 0.48 0.17 0.54 Czech Rep. 0.93 0.42 0.23 0.53 Malta 0.33 0.27 0.51 Cyprus 0.43 0.12 Croatia 0.92 0.52 0.1 Slovak Rep. 0.14 0.5 Greece 0.06 0.47 Hungary 0.4 Latvia 0.88 0.37 0.46 Poland 0.36 0.08 Lithuania 0.34 0.09 Turkey 0.89 0.38 0.05 0.44 Bulgaria 0.72 0.31 Bosnia 0.86 0.2 0.02 Serbia and Montenegro 0.74 0.24 0.04 Rumania 0.56 0.07 0.29 Macedonia 0.64 0.03 Albania 0.01 DOI in SEE Leaders: Croatia, Turkey, Bulgaria Special Cases: Romania, Macedonia, Albania CEE: High opportunities but low utilization SEE: Low opportunities High opportunities but low utilization 10 April 2006 Jaroslaw.Ponder@itu.int Note 1: DOI results calculated on different dataset as results presented on the previous slide Note 2: Calculated on base of 2004 data

DOI in selected SEE Countries Note: Calculated on base of 2004 data 10 April 2006 Jaroslaw.Ponder@itu.int

DOI in selected SEE Countries Note: Calculated on base of 2004 data 10 April 2006 Jaroslaw.Ponder@itu.int

Challenges for SEE countries We all build the Information Society together! 10 April 2006 Jaroslaw.Ponder@itu.int

Challenges for SEE Countries Definition of long term goals of the regulatory policy; privatization process Regulatory reform and harmonization Promotion of pro-competitive policy and focus on dynamic aspects Balance between service based and infrastructure based competition Efficient and workable unbundling policy Optimal spectrum management New approaches relevant for IP-enabled NGNs 10 April 2006 Jaroslaw.Ponder@itu.int

Thank you very much for your attention! Jaroslaw K. Ponder International Telecommunication Union Strategy and Policy Unit E-mail: Jaroslaw.Ponder@itu.int http://www.itu.int/spu Tel: 00 41 22 730 60 65 Fax: 00 41 22 730 64 53 We are building global information society together! 10 April 2006 Jaroslaw.Ponder@itu.int

Resources Full version of this presentation and others focusing on NGN: www.itu.int/osg/spu/presentations/ NGN regulatory and policy resources: http://www.itu.int/osg/spu/ngn/ ngn-policy-regulatory-resources.html ITU activities on NGN: www.itu.int/spu/ngn 10 April 2006 Jaroslaw.Ponder@itu.int

International Telecommunication Union We all build the Information Society together! 10 April 2006 Jaroslaw.Ponder@itu.int

ITU - International Telecommunication Union The oldest specialized UN agency with more than 140 years of experience in communication sector Headquarters in Geneva plus regional offices ITU staff: more than 750 from more than 80 countries 189 member states, more than 640 sector members ITU Agenda for Change Structure of the ITU ITU-T – Telecom Standardization ITU-R – Radio-communications ITU-D – Development Bureau 10 April 2006 Jaroslaw.Ponder@itu.int

ITU – International Telecommunication Union 10 April 2006 Jaroslaw.Ponder@itu.int

ITU’s Strategy and Policy Unit (SPU) New Initiatives Programme Digital Bridges (2005) Ubiquitous Network Societies (2005) Today’s Networks Tomorrow (2005) What Rules for IP-enabled NGNs? (2006) Digital Transformations in the Information Society (2006) Regulatory Environment for Future Mobile Multimedia Services (2006) Many other activities… http://www.itu.int/spu 10 April 2006 Jaroslaw.Ponder@itu.int