4 Network access services Key Points
4.4 Sub-loop unbundling
The current ULLS (and LSS) service descriptions involve access to unconditioned
communications wire in the CAN between the boundary of a telecommunications network (on the customer side) and a point where the communications wire terminates. Currently, the communications wire generally terminates at the local exchange. In contrast, access to the sub-loop involves access at a new point between the customer and the local exchange along the communications wire. That is, unbundling at the sub-loop level would enable an access seeker to gain access to a smaller part of the local copper loop (rather than the full local loop).
4.4.1 Previous ACCC consideration of sub-loop unbundling
In 2007, the ACCC commenced an inquiry into the possible variation of the service
declaration for the ULLS.87 This followed a request in March 2007 from the G9 consortium of companies to vary the ULLS service declaration to ensure that sub-loop access falls within the definition of the declared ULLS. The G9 consortium submitted that a variation would provide certainty for a fibre to the node (FTTN) provider as the provision of services over the network would be contingent on access to the sub-loop.88
The ACCC concluded that there was no need at that time to vary the ULLS declaration for the purpose of access or unbundling at the sub-loop level as the need for a variation was dependent on the scenario under which an FTTN network was implemented. At the time, there was uncertainty about whether and how an FTTN network might be implemented.
4.4.2 Issues
In an FTTN network, sub-loop unbundling may be a necessary input for quasi-facilities- based competitors to compete in downstream broadband and voice markets. Access seekers could potentially install their own DSLAMs and switching equipment at a node and use the sub-loop infrastructure to provide voice and data services to end-users (as access seekers currently do at Telstra’s local exchange in conjunction with using the ULLS or LSS). Access to a sub-loop may become necessary in future. For example, access to the sub-loop could allow a FTTN network to be built more efficiently depending on the design of that network. In that scenario, NBN Co (and potentially other access seekers) could install their network equipment in a cabinet or other node (along with fibre transmission), and use the existing sub-loop to connect to the end-user premises.
Location of the customer access module
The current ULLS service description states that the point where the communications wire terminates is ‘a point on a telecommunications network that is a potential point of
interconnection located at or associated with a customer access module and located on the end-user side of the customer access module’. The customer access module (CAM) is defined as ‘a device that provides ring tone, ring current and battery feed to customers’ equipment’. The CAM is the electronic equipment necessary to provide the traditional voice service to end-users.
The current service description requires Telstra to provide access to an exchange or cabinet if a CAM is present. Depending on how an FTTN network is implemented, a CAM may not necessarily be located at a node. For example, where voice services are provided via VoIP, the CAM could be located in the customer premises equipment.
Economics of unbundled access at the sub-loop level
In its 2007 position paper on varying the ULLS service description, the ACCC considered that any theoretical benefits of competition at the node would need to be weighed against the
87 ACCC, Unconditioned Local Loop Service: ACCC inquiry into possible variation of the service declaration
for the unconditioned local loop service, Position Paper, December 2007.
88 ACCC, Unconditioned Local Loop Service: ACCC inquiry into possible variation of the service declaration
economics of the FTTN model. In particular, the low number of addressable premises available at the node may mean that investment at the node lacks the requisite economies of scale and scope. In addition, there may be difficulties in obtaining physical access to the node or space in the node to install DSLAMs.
In its 2007 position paper, the ACCC noted international evidence that where an incumbent telecommunications provider had built an FTTN network, access seekers have shown little interest in deploying their own DSLAM and switching equipment at nodes.89 The ACCC considered that lack of take-up may be due to the limited economic viability of
interconnecting at the node. Due to the smaller addressable market provided at nodes and higher per unit costs of equipment (relative to deployment of DSLAM and switching equipment at the local exchange), a significantly large proportion of the total number of customers in each distribution area would need to be secured by any one access seeker to meet the minimum efficient scale necessary to deploy infrastructure within a particular distribution area.
More recent international evidence suggests that this conclusion remains relevant. For example, sub-loop unbundling has been mandated in the UK since 2001. This service allows competitors to place their own DSLAM infrastructure in British Telecoms’ Openreach cabinets to access Openreach’s sub-loop. However, take-up of this service has been very limited.90
In 2013, the New Zealand Commerce Commission (NZCC) declared an unbundled sub-loop service. To date, no access seeker has taken up an unbundled sub-loop service at any
cabinets. The NZCC consider that some factors that may have an effect on access seeker’s choice to unbundle cabinets in New Zealand include that cabinetised lines are difficult to unbundle and the scale necessary to make investment in installing equipment at the cabinet viable.91
Implications of vectoring for unbundled access
As identified during the 2007 ULLS variation inquiry, an issue that may arise with sub-loop unbundling is ‘cross-talk’ (or ‘mid point injection interference’). Cross-talk occurs when one xDSL service interferes with other xDSL services transmitted over copper pairs, which are in close proximity to each other (i.e. within a cable).92 Currently street cabinet providers must comply with a maximum power and spectrum limit to ensure that a certain level of
performance can be achieved for xDSL services provided over the ULLS to avoid cross-talk. In effect, this means that the capacity to provide higher xDSL through-put data-rates for equipment located at a cabinet would be significantly compromised, which would mean that some of the benefits of deploying a FTTN network may not be fully realised.
89 ACCC, Unconditioned Local Loop Service: ACCC inquiry into possible variation of the service declaration
for the unconditioned local loop service, Position Paper, December 2007, p. 10.
90 Ofcom, ‘Review of wholesale local access market’, 7 October 2010, p. 90, viewed 4 April 2013 at
http://stakeholders.ofcom.org.uk/binaries/consultations/wla/statement/WLA_statement.pdf.
91 New Zealand Commerce Commission, Unbundled Bitstream Access Service Price Review: Update on
matters relevant to the UBA price review, 13 August 2013, p. 21, viewed 15 November 2013 at http://comcom.govt.nz/dmsdocument/10926.
92 ACCC, Unconditioned Local Loop Service: ACCC inquiry into possible variation of the service declaration
Another solution to cross-talk is to implement vectoring. Vectoring reduces cross-talk by cancelling out some of the interfering signals. Vectoring allows higher transmission rates to be reached in the existing copper tail (or sub-loop) local network than has thus far been the case with the already advanced very high bit-rate (VDSL) vectoring technology. However, with current technologies, the effective use of vectoring is facilitated by having a single company control the use of all the copper pairs in the street cabinet, making unbundled access impractical where VDSL technology is being used.93
In Germany, Deutsche Telecom’s requirements to provide sub-loop unbundling have recently been relaxed in preference for provision of a bitstream service utilising VDSL vectoring technology.94
4.4.3 ACCC’s draft view
The ACCC is of the view that, given uncertainty around the details of how the FTTN network will be rolled out, it is not clear whether the current ULLS declaration may need to be varied to allow for sub-loop unbundling. The ACCC will consider the declaration of sub loop services further, if necessary, when details of the FTTN implementation have been determined.
In any future inquiry into sub-loop unbundling, the ACCC would consider the likely market demand for sub-loop unbundling, noting the low take-up of such services in other
jurisdictions, and whether declaring sub-loop access would promote the LTIE.
93 Bundesnetzagentur, Press release ‘Companies should drive forward rapid broad-band roll-out’, 29 August
2013
http://www.bundesnetzagentur.de/SharedDocs/Pressemitteilungen/EN/2013/130829_DecisionVectoring.ht ml
94 Reuters, Deutsche Telekom gets conditional regulatory nod for vectoring, 9 April 2013.
http://www.reuters.com/article/2013/04/09/us-deutschetelekom-regulator-idUSBRE93808520130409; See also Ovum, “Deutsche Telekom's VDSL2 vectoring decision will be a catalyst for others”, 17 December 2012.