CONVERGENCE AND NEXT GENERATION NETWORKS
MAIN POINTS
This paper has been prepared as a background document for the ICCP-organised Ministerial meeting
on The Future of the Internet Economy.
The communications sector is undergoing significant changes, with the emergence of a number of
platforms available to provide a different range of services. Some of these platforms are complementary,
others are competitive, or can provide a valid substitute for some of the services provided. Up to now, the
most important communications platform in OECD countries has been the public switched
telecommunication network (PSTN) which provides access to all households and buildings across most
countries. This universality in providing access has also meant that the network has generally been
designated as the one for universal service.
This paper focuses on the area where the most significant changes are taking place in the
communications sector, rather than providing an overview of all communication platforms, nor is it aimed
to assess the relative extent to which different platforms complement or compete with each other. As such,
this paper is limited to examining developments in what is commonly referred to as next generation access
networks and next generation core networks and their role in convergence. The focus on next generation
access and core networks is because they are changing the public switched telecommunication networks
(PSTN).
The changes taking place in the PSTN are considerable. For over 100 years copper has been used as
the transmission technology in the local loop to connect each home and building to the telecommunication
network. Copper is increasingly being replaced by fibre in the local loop while packet-based technology
using the Internet Protocol is replacing existing circuit-based switching technologies. These changes
require policy makers to review and reassess existing regulations and policy frameworks and ensure that
legacy frameworks do not hamper convergence, investment and choice in the market place. New
technologies and services can bring significant benefits to end users but care must be exercised to maintain
effective competition in telecommunication markets and to prevent the exertion of market power, which
would reduce the benefits.
The paper examines developments in a number of areas where policy and regulatory change may be
necessary:
It is expected that significant investment will take place in bringing fibre closer to users as
telecommunication operators upgrade the local loop. This will have important benefits in
increasing speeds and allowing for the development and transmission of new services. There are
concerns, however, that the new fibre networks deployed by incumbent telephone companies
may create a challenge to maintain effective competition in markets. Regulators need to examine
the options that they can use to ensure competition. This could take place inter alia either through
access to facilities, access to passive facilities, or through policies promoting inter-modal
competition.
DSTI/ICCP/CISP(2007)2/FINAL
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The rollout of fibre networks has increased the importance of rights of way and access to ducts
and poles for new entrants. As a large part of the cost of deploying fibre networks is in civil
works, appropriate policies should be in place to ensure fair and non-discriminatory access to
ducts, poles and rights of way for market players. Policy makers also need to examine how to
ensure better access by new entrants to existing resources to promote facilities-based
competition.
The convergence of video, voice and data on next generation networks can lead to more
competition in individual markets for each of these services.
In addition, increasing competitive
pressure on mobile carriers is coming from the IP world. On the other hand, the trend towards
horizontal integration of infrastructures, market and services could lead to strengthening of
market power as there may be relatively few companies that can package voice, video and data
services in a single bundled offer to end users.
The migration towards Next Generation Networks (NGN) changes the network topology which
potentially involves several structural changes, such as a reorganisation of core network nodes
and changes in the number of network hierarchy levels. The shift to IP networks also raises
questions of whether interconnection frameworks need to be revised, such as a shift to use
interconnect frameworks which have been successful in developing Internet markets.
The roll-out of higher capacity networks, such as through fibre in the local loop, could create
asymmetries in access between urban and rural and remote areas. Questions arise as to whether
alternative technologies may be used to provide high speed access to rural and remote areas. In
addition, the question of whether new network developments should be reflected in universal
service obligations also needs reviewing.
The range of technologies making demands on spectrum, such as HDTV, mobile TV or 3G
services, is growing rapidly. This raises the question of the need to change current spectrum
allocation and management and to flexibly reassign unused and underused spectrum to users who
will use it most efficiently.
DSTI/ICCP/CISP(2007)2/FINAL
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