A discussion document provided by an outside consulting group for UK’s Ofcom communications regulator, points to a cornerstone of communications competition, just how can a pure market can be made in local telecommunications.
It discusses what report author CSMG calls a business-to-business (BtB) interface, which means the automation and standardization of how you order and provision lines and services ‘ mostly broadband. The UK was slow to copy the US lead into what the US called CLECs (competitive exchange carriers) and which in Europe are referred to as LLUs (Local Loop Unbundling organizations), but is finally getting its teeth into the idea.
In order to have competitive (and therefore cheap) broadband services (along with all the services such as IPTV, which go over such broadband lines) you need a drag free wholesale operation. It’s a long drawn out process. Instead of an incumbent operator’s core management team behaving as BT has done for years, and as AT&T still behaves in the US, dragging its wholesale heels when working with competitive Communications Operators, access and core network supply need to be separated.
Once that’s done, the terms offered by the core network need to be the same (in principle) to internal groups as they are to outside communication providers. Once that principle is established there is still a huge work load to carry out taking that principle and making it a practicality. And that’s what the Ofcom report is about, at this stage a discussion paper, but expected to lead the discussion in creating an entirely transparent way of conducting business between access networks (local loops) and the nation’s core infrastructure. Other similar moves conducted recently by Ofcom is to work out a way of extending this to fiber to the home in the future.
When you get right down to it, this is really a set of system to system transactional interfaces that lay out a structure for communications wholesalers to go about supplying smaller ‘brand name’ communications suppliers.
At the heart of what appears to be a flimsy academic analysis of transactions, is the European dream that there can be European wide communications groups, just as easily supplying BT lines as Deutsche Telekom lines, all under their own brand, and under their own control.
It’s a very long evolution for unbundling telecommunications services within Europe, and a path (so far) abandoned by the US, where it was invented.
First you need to establish what a network costs to run, and then decide on pricing for wholesale lines, pricing which is regulated. Without that regulation, existing monopolies (like BT and the freshly formed AT&T) would be able to overcharge for wholesale provision of broadband lines and kill competition in the market. It then gets fat and flabby, and convinces itself nothing can be done to make things cheaper, and before you know it you have the worst performing, most expensive broadband in the Western world (as the US almost has).
I can hear AT&T lovers wringing their hands and cursing and asking how on earth can you make an honest buck in that kind of environment. But it’s been proven over time that competition leads to profitable rivals and cheaper services.
Once you have separated the cost of the provision of wholesale services, then you have the problems of costs and queuing of service provision. It used to take 6 months to order a phone line, now it can take days to order a receive a broadband line. Everyone knows the cost of attachment, the continued cost of backhaul and connectivity, the way this changes if you use your own DSLAMs, and how long it will take to get everything done.
But once you get through that decade long process, the next step is to automate routes in an out of each other’s IT systems so that the processes in diagram below, aren’t just feasible, but are standardized.
Once this is up and running in the UK, the European super regulator may push the system for BtB processes to be standardized in other countries, potentially using the same technology. Next thing you know there will be a European wide common broadband and connection infrastructure.
There are five key things to this, say the Ofcom report, first that it has multi-provider support so that the underlying network might be BT in some parts of the country, and Virgin cable in other parts, but the business processes above it can remain the same. Secondly such a system has to allow full access to all of a service’s features, permitting deep network access and transparency. Thirdly the costs of adhering to such a set of processes should not be too expensive and neither should system upgrades. Another consideration is that best practice IT should be followed, so that a test suite exists, along with adequate documentation and reliable message handling. Finally there should be performance guarantees controlled by SLAs (service level agreements) which implies automatic penalties for failing to complete jobs on time etc’
The idea is that someone like BT gets away from an email, phone or fax message paper trail and replaces this with a highly automated operational support systems with varying levels of automation, which suit different size communications providers. Some might spend the £500,000 required to build a machine to machine interface to the BT system, others might only be able to work with a manual paper trail.
The report goes on to sing the praises of an ebXML system written by OpenReach called the Equivalence Management Platform (EMP), which could now be extended to all sorts of next generation communications services.
What we are guessing Ofcom hopes for is eventually a kind of super-European trading hub whereby any provider can request bids for long haul carriage for a communications service, and then manage bids automatically, order service and deploy the service online, and bill for it and pay through the same system.
The report concedes that the OpenReach EMP may not be the right answer technically and takes a peek at other potential system approaches from around Europe such as using XML and SOAP (Simple Object Access Protocol) or copying other systems such as the Swedish Urban Network Association which does the same job for fiber connections there, or the system for sending SMS between carriers in Europe using third party SMS hubs, and even dips into examples from aviation, the European Gas trading and Swift money transfer services.
The technology choice though is not the issue for us, but the fact that wholesale and access components continue to be rigorously segregated within Ofcom, which has itself begun to have a strong voice in Europe, and all that this could lead to, such as genuinely Europe wide suppliers.