Advanced Broadband Services Developments
Developments in Other Countries
60. Verizon20 has announced that it will progressively invest in a fibre-to-the-Home (FTTH) network that will pass 3 million homes by the end of 2005 at an investment of $3 billion, and pass ~14 million homes by 2010, around 40% of its total residential users. This will be used to provide faster data speeds, voice and offer a full suite of video services.21 Verizon is actively promoting take-up of FTTH based services.22
61. SBC23 plans to deliver advanced services, via Project Lightspeed, to half of the 36 million households in its customer base by the end of 2007, via fibre-to-the-node (FTTN) network topography. This group of users represent 75% of the total revenues SBC receives from its residential customers. SBC says that it expects to spend about $250 per household to deploy FTTN.24
62. Project LightSpeed will deliver 20 Mbps to 25 Mbps to each home, which will include four streams of IP television (featuring high-definition television and video-on-demand), IP voice and Internet access speeds of 6 Mbps downstream and 1 Mbps upstream.
63. BellSouth25 is progressively transforming its network to offer a full suite of IP-based services including faster broadband speeds and VoIP. It currently has ~1.1 million customers served by fibre-to-the-curb (FTTC) systems and anticipates adding 150,000 - 200,000 new homes on those systems in both 2005 and 2006.
64. Almost 50% of BellSouth households are served by a combination of fibre (FTTC) and short loops. BellSouth consider that with ADSL2-plus it will be able to deliver 24 Mbps on copper loops of under 5,000 feet.26 This will support delivery of broadband services, such as VoIP and high-speed Internet access, over a single platform.
65. Advanced residential user broadband telephone services are now becoming more widely available in the US. Some examples are: Verizon offers a DSL broadband VoIP-based telephone service, VoiceWing, that provides an extensive range of advanced features. AT&T offer an advanced feature broadband VoIP-based telephone service, CallVantage®, that also offers a range of unlimited local and long distance calling options in the US and to Canada.
66. Vonage27 offers a range of quality VoIP based telephone services over a broadband access line with a focus on US based users.28 There are two residential user options, basic and premium. The basic US service offers 500 anytime minutes a month to anywhere in the US & Canada for $15 per month and additional minutes at 3.9 cents. The premium plan offers unlimited calls in the US and Canada for $25 per month. Free additional features for both plans are Voicemail Plus, Caller ID with Name, Call Waiting, Call Forwarding, 3-Way Calling, In-Network Calls (free worldwide), Take Vonage With You (premium), Area Code Selection, Call Transfer, Click-2-Call, Call Return, Caller ID Block, Repeat Dialing, International Call Block, Ring Lists, Call Hunt, 911 Dialling.
67. In June 2004 British Telecom (BT) announced a network transformation timetable for the mass migration of customers from PSTN to IP based network (termed the 21st Century Network programme or 21CN) to begin in 2006 with the majority due to be completed in 2008. BT said that 21CN will drive a radical simplification of BT's operations including significantly lower costs and the capability to launch new services to market faster.
68. In July 2005 BT chose Cardiff as first city to be migrated to 21CN and said that migration of customer lines to the new infrastructure is expected to begin during the second half of 2006. This will involve around 350,000 customer lines in the area. The experience and feedback from the project will help BT finalise plans to roll out 21CN to customers across the UK by the end of the decade.
69. The delivery by BT of 21CN to everyone in the UK will involve migration of about 30 million lines in four years and require an investment of up to £10 billion by the end of the decade, or about an average of £340 per line.
70. TV over DSL has been available in the UK for over four years from Homechoice (in London) and Kingston Communications (in Hull). Homechoice provides a combined pay television, internet and Video-on-Demand (VoD) service over its own network using unbundled local loop. It is available to over 1.2 million homes in London and it had 3,870 subscribers at the end of June 2004. Homechoice's service options offer up to 55 digital TV channels; 512 kbps/8 Mbps broadband; optional phone calls and video on-demand.
71. Iliad is a leading player in the French telecommunications and ISP markets. Its ISP, Free, has ~1,316,000 ADSL-based broadband service users, 67% of which are provided over unbundled lines. Free has a 17.4% share of the total residential ADSL market.
72. For €29.99 per month Free currently offers the following services over unbundled lines:
- Internet access at up to 20 Mbps (downlink) and 1 Mbps (uplink);
- telephone services including free local and national calls to landline phones in mainland France;
- up to 200 television channels, 80 of which are free-to-air channels;
- a free Freebox modem/router, which supports WiFi;
- the option to do away with telephone line rental charges (€13.99/month) by subscribing to the Total Freebox or Total Freebox for a deactivated number service.
73. Free provides it services via an integrated access device Freebox. This device also supports home media centre functions, via downloaded software, such as use a television to view films or photos stored on a PC, and use a HiFi system to listen to music on a PC.
74. Deutsche Telekom has announced a commitment to invest up to €3 billion on FTTC networks to deliver up to 50 Mbps to homes in 50 cities by the end of 2007, providing access to the majority of the country's 82 million citizens. The investment will upgrade fibre access, VDSL equipment, and fibre deployment.
75. The first cities will be connected by mid-2006, bringing fast fibre to almost three million households. Deutsche Telekom will provide a triple play package of video telephone, TV, PC and other multimedia services.
76. Ovum's September 2005 report entitled Bandwidth Key to Telcos' Success with IPTV over DSL said that in North America, nearly every major ILEC29 and a handful of independent operating companies are either planning or are already deploying some form of IPTV services. In Europe and Asia, more than twenty-six telecommunication operators currently offer IPTV services and more announcements are expected. The goal is the same - offering triple-play services to increase ARPU (average revenue per user), reduce churn, and capture market share.
77. In July 2004 Telstra announced its future network evolution and product strategy for broadband access based multi-services. This would involve an accelerated migration to an IP packet switched network and an MPLS core30 to carry voice and data traffic and support high performance business services.
78. In March 2005 Telstra announced that it had commissioned and was testing its Softswitch next generation Voice over IP platform. This involved around 200 people in Melbourne using the platform to provide VoIP-based multiple telephone line capability and call control features on their existing broadband service. Telstra has said that VoIP is not a replacement for Telstra's PSTN network. Instead, voice over broadband using IP is expected to be provided as a second or additional fixed line.
79. Optus has been silent on its advanced broadband services strategy. However, on 22 September 2005 Optus announced an AU$150 million rollout of broadband DSLAMs to about 340 Telstra exchanges around Australia, that will use unbundled Telstra local loops to connect to customers. The investment encompasses both DSLAMs and fibre connections from the exchanges back into the main Optus network. The new competitive network will reach an additional 2.9 million households and businesses, adding to the existing cable footprint of 1.4 million homes in Sydney, Melbourne and Brisbane.
80. iiNet and Primus31 are investing in ADSL2/2+ DSLAMs to roll out residential VoIP services and video/TV32 nationwide. iiNet's VoIP telephone service, launched on 29 August 2005, is positioned as a second line telephone access service and offers calling rates of 10 cent untimed local calls, 10 cent untimed calls Australia-wide to national capital cities, and 5 cents per minute national calls outside capital cities to fixed phone lines. It features free calls between iiNet customers, a free phone number for incoming calls, and free extras like voicemail and caller identification services. iiNet's connection speed for combined Internet and VoIP service is rated up to 1 Mbps/12 Mbps (up/down). A pricing example is Internet access (2 GB peak + 2 GB off-peak) with iiphone at $69.90 per month.
81. iiNet, Primus and others are reported to have aggressive plans to roll out residential VoIP services and video/TV over ADSL2/2+ access links.33
New Zealand Developments
82. In 2003 the Commerce Commission undertook a detailed investigation into the local loop unbundling issue, the outcome of which was a requirement on Telecom to provide a limited unbundled bitstream service with an upstream speed of 128 kbps (maximum) and a downstream speed of 256 kbps (minimum), with a non-real time quality of service. Fuller bitstream unbundling utilising the working capability of the network elements was not recommended by the Commission.
83. The Commission considered that its unbundling recommendation would limit:
- Telecom's exposure to the loss of high value corporate markets but would enhance competition in markets for SME (small and medium enterprises) and residential services;
- dynamic efficiency-diminishing incentives on Telecom to undertake investment in Next Generation Network infrastructure while encouraging innovation through competition.
Telecom New Zealand
84. In August 2004 Telecom announced the next phase of its $1 billion, 10-year investment programme, in the Next Generation Network to provide new services to business and residential users. Telecom said that this involves:
- $120 million investment in fibre network over five years;
- $10 million fibre pilot for residential and business customers;
- $110 million to continue to extend broadband services based on its copper cable network over the next three years (DSLAMs etc);
- $125 million investment in the core network over five years;
- detailed planning to replace 600 exchanges and remote line concentrators with new IP technology over the next eight years.
High-Level View of Telecom's NGN Work Programme
85. The Ministry commissioned an expert advisor to audit Telecom's progress in implementing its programme. The audit, as at 1Q 2005, concluded that:
- a baseline timeline had been established to deliver a multi service next generation network;
- an IP core network has been substantially completed;
- IP based services for businesses are beginning to be deployed;
- additional funding had been allocated to increase the penetration of fibre in the feeder network;
- fibre to the premises based multi-service trials were being planned;
- funding had been provided for planning and development of residential market NGN services;
- laboratory trials of customer equipment required to deliver multi-media services had commenced;
- multi service single access technology had not yet standardised;
- at this stage it was too early to determine whether Telecom will roll out broadband services to the residential user mass market.
86. In May 2005 Telecom announced a trial of the future home phone service involving more than 100 users from around New Zealand.
87. On 30 August Telecom and Alcatel announced that they had agreed on a project to build the IP Voice platform for Telecom's Next Generation Network. Specifically, Telecom said that:
- it will invest $220 million in new network and system capability to support next generation services;
- the first residential customers will migrate onto the new network by early 2007 and eventually all of New Zealand's 1.7 million customer lines will be transitioned to the new platform in 2012;
- this is a milestone in the multi-year transition to a new network platform that will deliver triple play (voice, data and video bundle) services;
- this has the potential to reduce costs for customers and put a lot more control and flexibility in customers' hands.
88. The IP Voice platform project involves:
- an IP Voice Call Control platform and Gateways to switch and process IP Voice traffic to and from the current PSTN;
- network "border security" to prevent unauthorised access, detect and prevent security threats and provide voice security;
- the capability to deliver an IP Voice product to connect enterprise VoIP systems to Telecom's network;
- adaptation of Alcatel's NGN solutions to the New Zealand environment, enabling the equipment to interoperate with other networks and billing and service management systems.
89. On 30 August Telecom announced further trials of next generation voice services with 120 residential customers, small businesses and Telecom staff from New Zealand's five main centres taking part. As part of the trial, each participant receives:
- access to Telecom's Next Generation Voice portal;
- a dedicated telephone line for the purpose of the trial;
- an IP telephone or an analogue telephone adaptor that allows a normal home phone to be used as an IP phone; and
- free IP calling for the duration of the trial within reasonable usage limits.
Other New Zealand Service Provider Initiatives
90. In early 2005 Callplus launched iTalk, a VoIP based telephone service provided over a broadband Internet connection, to make and receive phone calls. iTalk is effectively a second Auckland (09) based local telephone line34 providing personalised voice mail, call forwarding, do not disturb, call waiting, and is priced at $9.95 a month. Calls to other iTalk users are free of charge and local calls are free. Calls to other national destinations are 5 cpm, calls to other destinations vary from 5 to 30 cpm.
91. The iTalk service was initially PC based but is now supported by an iTalk phone, available from supporting retail stores, that plugs directly into the ADSL modem and works independently of the PC.
92. As mentioned earlier in this report, Woosh recently launched its VoIP based wireless local telephone access service in Auckland. See para 13.
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