SEPARATING THE TRANSPORT LAYER, LEVELING THE PLAYING FIELD? Chris Witteman, Staff Counsel* California Public Utilities Commission *These comments do not necessarily represent the views of the Division or Ratepayer Advocates or the CPUC.

Special Access - U.S. – Sometimes referred to as Middle Mile

Last Mile – US

Middle and Last Mile: U.K. (pretty much the same)

Keep it Simple? Base and Superstructure At its most basic level, the Internet runs on wires (PSTN): Application Physical Transport

Internet Protocol, the new Lingua Franca Electronic communications networks are becoming packet switched, mostly or completely based in the IP [Internet Protocol]. They will be multi-service networks, rather than service specific networks for audio (including voice), video (including TV-services) and data networks -- allowing a decoupling of service and transport provision… European Regulators Group Consultation Document On Regulatory Principles of IP-IC/NGN Core (2008)

Apropos Layers A crucial point is the adoption of open and standardized interfaces between each functional level in order to allow third parties to develop and create services independent of the network. –European Regulators Group Consultation Document, supra

The BT/Ofcom solution

Openreach’s self-description The local access network – the wires and fibres that connect tens of millions of homes and businesses to local telephone exchanges is one of the UK’s most important assets, and Openreach was created to give communications providers equal access to it. Our customers are Communications Providers - the companies end users choose to provide telephone, internet, and more recently television services to their home or business. openreach.co.uk

Scope of Openreach limited to areas of SMP Regulated asset value c.£ 9.6 billion Demarcation Points Backplate of NTE Customer premises ~26m homes Main Distribution Frame Primary Connection Point ~90,000 cabinets Secondary Connection Point Distribution Point (DP) ~8m poles Copper Cables Openreach is also responsible for all duct, access fibre and copper & fibre backhaul openreach LLUO Space Line Card BTW Core Node CP Core Node Backhaul products Core Node. Local Telephone Exchange 5,600 E-side Cables Overhead and underground distribution D-side Cables

In U.S.: Incumbent’s view

And why is it imprudent?

Ofcom Result – Greater Competition

Result - lower price

X Degrees of Separation – US History Kingsbury Commitments (1913) – separation of telephone & telegraph, mandatory interconnection Carterfone (1968) – separation of network from end-user equipment) Whitehead Report (Nixon White House 1974) – separation of cable network and content Computer II (1980) – structural separation

The Great Unravelling of the concept of competition and open access Computer III (1986) –non-structural “safeguards” 1996 Telco Act – –Unbundling and wholesale access as substitute for separation (didn’t work) 2003 Triennial review –Eliminated fiber unbundling DC Circuit USTA II 3/2/04 –Effectively eliminated UNE-P, precipitated mergers Cable Modem/Brand X – –No telco, common carrier, unbundling requirements for broadband

Google’s “Range of Tools” 6 Proposed NN Rules (or 5 Rules only, or Disclosure only) More Detailed Openness Rules – re, e.g., QoS More Detailed Access Rules – UNEs, Dom Carrier Pricing… Non-Structural Sep’n – Access as Telco Serv (vs Info Serv) Computer III – “Comparably Efficient” [Functional Separation] Structural Separation – Computer II Ban: No Cross Ownership

is Openreach going to do fiber? Next Generation Access (NGA) is the Openreach programme dedicated to shaping tomorrow's communications environment. We're working with our customers, the regulator, industry and other stakeholders to ensure that we build a clear picture of an access network that's fit for the future. Fibre to the Premises Fibre to the Cabinet Generic Ethernet Access

OK, What’s the Catch? ILECs - “Not going to use my pipes” Argument: Cable Cos - Different History Argument: Doesn’t apply where cable- telco competition Argument: Difficult to apply to fiber Argument: Requires rate-setting on basic network services