EoO or EoI
and
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
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 repair
Incentives and capability to discriminate not eliminated!
2
Discrimination is in-built in the EoO approach: line activation
Open Access
BT Retail
Final
customer
Altnets
Final
customer
TI Retail
Final
customer
TI Wholesale
Altnets
Openreach provides wholesale services
to internal and external customers
through the same processes and
systems, on the same timescale
Final
customer
Provisioning leadtime for Altnets
Provisioning leadtime for TI retail
Open Access
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
Lead-time for Altnets activation further increased by the
“two-step“ process
Activation for
TI prospect
customers
Activation for
Altnets’ prospect
customers
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
Activation leadtime - TI
Two step
activation process:
longer time and
higher complexity
Activation leadtime Altnets
The inability to control the activation process end-to-end is a huge issue
for Altnets, especially in the transition to ultrabroadband services
PG. 4
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 competition
PG. 5
Discrimination in fault repair
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
Fault repair for
Altnets customers
Fault repair
for TI
customers
First intervention
TI
First field
intervention
FW
FW
Check
fault in TI’s part
of the network
Second field
intervention
TI
Fault in
Altnet’s part
of the newtork
TI
FW
If the fault diagnose was wrong in the first intervention
Not even EoI can resolve this kind of discrimination
Strategic use of internal/external workforce
Sicily – average time for fault repair
Telecom
internal
workforce
100
80
60
40
20
0
External
workforce
Telecom
internal
workforce
100
80
hh
hh
Milan – average time for fault repair
60
2012
40
External
workforce
20
0
Aprile
Maggio
Giugno
Aprile
Maggio
Giugno
Telecom Italia extensively uses external contractors for activation and fault repair
When 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
2013
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
Fastweb customer churn (customer that have experienced a fault)
4,80%
3,20%
1,80%
Guasto
risolto
72 ore
Fault
solved< <72h
Guasto
risolto
72 ore
Fault
solved>>72h
Fonte: Dati Fastweb
Guasto
ripetuto
Multiple
faults
9
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
segment under the responsibility
of Altnets
segment of access network under the responsibility of incumbent
Incumbent
MDF
UNBUNDLING OF
ACTIVATION/REPAIR
EXISTING APPROACH
CUSTOMER PREMISE
CABINET
NTP
CPE
ONE CONTRACTOR CARRIES OUT THE FAULT REPAIR ACTIVITIES END-TO-END
ACTIVITIES PERFORMED BY INCUMBENT WORKFORCE
ACTIVITIES CARRIED
OUT BY ALTNET
Providing the Altnets the capability to manage end-to-end the activation and fault
repair processes is the real answer to technical discrimination issues
Unbundling of services for SLU is even more critical
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
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!!
Lessons to be drawn
In 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
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
13