EoO or EoI and is there another way to prevent discrimination? BEREC roundtable on Equivalence of...
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Transcript of EoO or EoI and is there another way to prevent discrimination? BEREC roundtable on Equivalence of...
EoO or EoIand
is there another way to prevent
discrimination? BEREC roundtable on Equivalence of Inputs
Bruxelles, April 29th 2014
EoO proved ineffective in ensuring technical non discrimination in Italy
• EoO implementation started in 2008 following Telecom Italia’s undertakings, to avoid sanctions for discriminatory behaviour in activation of services
• In 2009, TI undertakings were transposed into remedies within the second round of analysis of markets 1, 4 and 5
2
• EoO does not involve the use of the same processes and interfaces the vertically integrated incumbent operator uses internally for activation and fault repair
• After 5 years, experience demonstrates that the retail arm of the vertically integrated incumbent operator enjoys a de-facto preferential treatment, in terms of lead-time and effectiveness for activation/fault repairIncentives and capability to
discriminate not eliminated!
Discrimination is in-built in the EoO approach: line activation
TI Retail
Open Access
TI Wholesale Final customerAltnets
Final customer
BT Retail
Final customer
Final customer
Altnets
Openreach provides wholesale services to internal and external customers through the same processes and systems, on the same timescale
4 In Italy, different processes and systems are used for the activation of wholesale products: Altnets orders have to be processed by TI Wholesale first, resulting into increased lead-time compared to activation for TI’s retail arm
Open Access
Provisioning leadtime for Altnets
Provisioning leadtime for TI retail
Lead-time for Altnets activation further increased by the “two-step“ process
PG. 4
Two step activation process: longer time and higher complexity
TI sends its technician to configure the line and activate it
TI sends its technician to configure the line
After line configuration by TI, Altnets’ technician steps in and activates the line
The inability to control the activation process end-to-end is a
huge issue for Altnets, especially in the transition to ultrabroadband
services
Activation for TI prospect customersActivation for Altnets’ prospect customers
Activation leadtime - TIActivation leadtime - Altnets
The use of different databases and interfaces leads to further rejections of requested activations
• Altnets recently found out that the database through which they get information on whether a prospect customer is reached by a TI line -and therefore whether the service can be provided through LLU or WBA- was incomplete for about 10% of available lines.
• Fastweb filed a complaint on rejections by Telecom Italia for «impossibility to provide ADSL services for presence of MUX equipment» on which TI had activated ADSL clients. The outcome was that in over 20% of cases, there was a «disalignment of databases» which led to the unjustified rejection.
• In many cases, Altnets have not been able to activate a service for a prospect customer because the system did not detect the presence of a copper line in their premises, whereas TI was able to connect the same customer having a more complete database available
The use of different databases between TI retail and Altnets has led to a significant part of the market not to be
addressed by competitionPG. 5
Telecom Italia fault repair is always “first time right“, whereas for Altnets it may take several field interventions, as part of the access network is under the responsability of Telecom Italia and other under the responsability of Altnets
FW
TI
Fault in Altnet’s
part of the newtork
fault in TI’s part of the network
Second field intervention
Fau
lt r
ep
air
fo
r TI
cu
sto
mers
Fau
lt r
ep
air
for
Alt
nets
cu
sto
mers
TI FW
First field intervention
TI
If the fault diagnose was wrong in the first intervention
Discrimination in fault repair
First intervention
Not even EoI can resolve this kind of discrimination
FWCheck
Strategic use of internal/external workforce
Aprile Maggio Giugno0
20
40
60
80
100
Milan – average time for fault repair
hh
Aprile Maggio Giugno0
20
40
60
80
100
Sicily – average time for fault repair
20122013hh
Telecom internal
workforce
External workforc
e
Telecom internal
workforce
External workforce
Telecom Italia extensively uses external contractors for activation and fault repairWhen TI uses external contractors to activate and repair Altnets line, Altnets can hire the same contractors and simplify/speed-up their activation/repair. Telecom Italia is increasingly and strategically witdrawing the use of external contractors for activation and fault repair of the Altnet lines in specific areas, thus affecting the quality of services that Altnets can offer to their customers
After March 2013 in Milan and Sicily, upon the elimination of external workforce for the fault repair of LLU lines, average time to repair a
fault for Altnets has doubled
Persistent discriminatory behaviour recognized by competition authority The Italian Competition Authority launched an investigation to TI discriminatory behaviours in June 2010.
The complaint concerned the high number of rejections of Altnets’ requests for activations of wholesale access lines to provide services to end users (technical boycotting)
AGCM found that from 2009 to 2011:• TI had unfairly rejected a number of requests for
activation of wholesale services• TI treated requests coming from other operators in a
discriminatory manner compared to those originating from its internal divisions by obstructing competitors' access to its infrastructure and making service access activations significantly more difficult
AGCM imposed a €88.2m fine on TI
The ineffective or delayed fault resolution is the major reason for customer churn
9
Fastweb customer churn (customer that have experienced a fault)
Fonte: Dati Fastweb
1,80%
3,20%
4,80%
Guasto risolto < 72 ore Guasto risolto > 72 ore Guasto ripetutoFault solved <72h
Fault solved >72h
Multiple faults
Unbundling of fault repair and activation services is feasible, easy and cost effective• Incumbents in many countries already outsource
these services to external contractors• Unbundling would simply involve the capability
for the Altnet to negotiate contracts directly with the certified technicians and manage activation and fault repairs end-to-end
Providing the Altnets the capability to manage end-to-end the activation and fault
repair processes is the real answer to technical discrimination issues
Incumbent MDF NTP CPE
segment of access network under the responsibility of incumbent
segment under the responsibility of Altnets
CABINET
ONE CONTRACTOR CARRIES OUT THE FAULT REPAIR ACTIVITIES END-TO-ENDUNBUNDLING OF
ACTIVATION/REPAIR
ACTIVITIES PERFORMED BY INCUMBENT WORKFORCEEXISTING APPROACHACTIVITIES CARRIED
OUT BY ALTNET
CUSTOMER PREMISE
Unbundling of services for SLU is even more critical
No need for intervention at MDF (less security issues)
No impact on incumbent workforce (the percentage
of SLU activation/repair will be 5% of total activities)
Effectiveness and quality in the activation of
ultrabroadband services will be key
in stimulating the market!!
Fastweb is currently engaged in a massive migration of its customer base to SLU-based services, to enable ultra-broadband services to existing and new customers
Lessons to be drawnIn Italy EoO has proved to be:
• Ineffective: as discrimination by the SMP operator has been persistent under EoO regime;
• Expensive: as it has required the supervision of two public authorities (AGCM and AGCOM) plus the establishment of an ad hoc Body of Surveillance (Organo di Vigilanza);
• Highly damaging: It has damaged competition and investments, consequently consumer welfare and innovation
Unbundling of activation and fault repair services can be highly cost/time effective
and create huge advantages for the competition and for end users
Introduce competition on quality of service offered to end users The impossibility of Altnets to fully control quality of services provided on provisioning and maintenance of wholesale access lines translates into:
Absence of differentiation of services to the end users
An inefficient and cumbersome process to provide wholesale
services (ie. longer provisioning times, greater costs for altnets and
poor service for end users)
Possible discriminatory behaviour by incumbents
No incentive/possibility of competition on the quality of service
offered
No competitive pressure on the incumbent to improve quality of
services
13
Impossibility of Altnets to manage directly activation and fault repair services has a direct impact on the
competitiveness of the market and on end users