Equivalence of output in Italy
Brussels
29 April 2014
Davide Gallino
Head of Unit, Equivalence of access
Electronic communications Networks and Services Directorate - AGCOM
d.gallino@agcom.it
Disclaimer: Any views or opinions presented hereby are solely those of the author and do
not necessarily represent those of the institution
1
EOI and EOO
In the European regulatory framework, there are two recognizable types of
equivalence:
Equivalence of Inputs (EoI): the downstream access product retailed by the
incumbent uses exactly the same physical upstream inputs as the
downstream product supplied to its competitors, e.g. same tie-cables, same
electronic equipment, same exchange space, etc. The (wholesale) product
development process is therefore exactly equivalent in its provision in terms
of functionality and price.
Equivalence of Outputs (EoO): the access products offered by the incumbent
operator to alternative operators are comparable to the products it provides
to its retail division in terms of functionality and price, but they may be
provided by different systems and processes.
(BEREC guidance on functional separation - BoR (10) 44, pg. 7-8.)
2
Recent Non discrimination milestones
In 2011, EC promoted a consultation on:
Non Discrimination Obligation Under Article 10 Of The
Access Directive, including Functional Separation
Under Article 13a);
In 2013, non discrimination was “encoded” in a
Recommendation which also cover cost accounting
obligations (C(2013) 5761 final )
The two (ND and Equivalence) go together since nondiscrimination can be economic, technical, or both.
But it is helpful to have ND provisions and more
3
specific rules for EOI/EOO.
Equivalence of access and non
discrimination in Italy. The path to EOO
2000
In July 2000, 26 alternative network operators wrote a joint letter to AGCOM to protest against the discriminatory
practices, which, according to them, were used by TI, the incumbent operator. TI was accused of delaying
(business/technical) operations, squeezing the margins of alternative operators, discriminating these
operators to the advantage of the downstream divisions of TI operating in the same markets, using technical
and economical discrimination as an anti-competitive weapon.
May 2002
Following a year-long investigation, including a detailed procedure and the opinion of the national Competition
Authority, a landmark decision (152/02/Cons) was adopted by AGCOM in May 2002. That decision focused
on ensuring equivalence of access and non-discrimination (“parità di trattamento interna-esterna”). The
decision imposed on TI (as SMP operator) included the adoption of margin squeeze tests, accounting
separation and a cost accounting methodology. Functional separation between the IT-systems of the
wholesale and retail divisions of TI was also imposed, together with publishing service level agreements
(SLAs) to ensure technical non-discrimination. In pursuing non-discrimination,
2008
In addition, starting from 2008, as a result of accepting TI’s Undertakings (effective from 1 January 2009),
monitoring and implementing Equivalence of Output (EoO) became an iterative process. Such processes
imply close monitoring, facilitating technical solutions and implementation of detailed business support and
operational support systems. The current model has thus a relatively long history.
4
2014 Non discrimination rules, including margin squeeze tests, are updated periodically
Equivalence of outputs (EOO)
Whereby wholesale products
offered by TI to altnets
would be comparable to
those offered to its retail
activities, but the underlying
processes did not have to
be exactly the same.
Address
inefficient
processes
Mitigate bad
performance
Implement
changes
and iterate
Identify
priorities
Also, the business/operations
support systems may differ.
Set
deadlines
EOO in Italy - Situation in 2011
Current Equivalence of Output model according to TI’s (2014)
Technical
Equivalence
KPITI RETAIL
End
User
End
User
TI
Retail
Altnet
Retail
Ordering/TT
(provisioning
and assurance)
Ordering/TT
(provisioning
and assurance)
Open Access:
Production of
SMP Access
services
Production of TI’s retail
access services
TI
Retail
End
User
Production of Altnet’s retail
access services
Altnet
Retail
End
User
KPIAltnet
• The EoO model adopted by TI ensures a complete process symmetry between TI Retail and Altnets. In
fact, TI’s Retail and Altnets have an equivalent interface with OA
• All employees in charge of the provisioning and TT assurance, for both TI and Altnets, are in OA
• National Wholesale Services is only in charge of the commercial and administrative/contractual
relationships between TI and Altnets
7
Compliance regime design
AGCOM
Delibera n. 718/08/CONS dell’11 dicembre
2008, accepted Undertakings. This decision
called for
a) Establishing a monitoring group (GMI, chaired
by an AGCOM officer – Head of Unit) with
regulatory/compliance/sanctions functions;
b) Setting up OTA –Italy to address technical
and new emerging issues in access
provisions;
OdV § 7 of the Undertakings
called for the establishment
of a Compliance verification
body (Organismo di
Vigilanza or OdV), financed
by Telecom Italia, with a
President appointed by
c) Setting up an NGN Committee (Next
Generation Network) Italia, to discuss
technical economical and organizational
issues in the transition towards NGA
8
Compliance regime 2014
AGCOM
Delibera n. 718/08/CONS dell’11 dicembre
2008, accepted Undertakings. This decision
called for
a) Establishing a monitoring group (GMI, chaired
by an AGCOM officer – Head of Unit) with
regulatory/compliance/sanctions functions;
OdV § 7 of the Undertakings
called for the establishment
of a Compliance verification
body (Organismo di
Vigilanza or OdV), financed
by Telecom Italia
b) Setting up OTA –Italy to address technical
and new emerging issues in access
provisions;
c) Setting up an NGN Committee (Next
Generation Network) Italia, to discuss
technical economical and organizational
issues in the transition towards NGA
9
Equivalence of output according to AGCOM = high
resolution regulation
Crisis management and prevention
Exact rules + Moral suasion supported by threat of
sanctions
Some (voluntary) Undertakings turned into
(mandatory) Remedies (already in 2009)
SLA and penalties (service level guarantees) regularly
enforced (fine should not be a price)
KPI less relevant until the system is really fine-tuned
10
Prevention #1 – «Line overhaul» and «Cabinet
upgrade» planned/executed, 2013
11
Prevention #2 «Yellow lights»
In the transition from bitstream ATM to Ethernet, many
central offices become saturated or nearly so. An
early warning system («yellow light») was devised in
order to reduce sales rejections; the system also
pointed out areas for prioritization of investments.
2013,
DSLAM ATM
7 mbit/s
12
EOO also a moving target
Levels of performance need to evolve over time
New wholesale products might require adjustments to
established processes or outright innovation (es.
«dumb» cabinet becomes smart)
Delivery, provisioning time and fault management
might become an important part of altnet’s
commercial strategy: these are assets that need to
be protected by NRAs, especially when the
incumbent’s network is an essential facility
13
Current performance of EOO / 2014
• Unsatisfactory performance in terms of provisioning and
delivery (migration over active lines, number portability,
missing or wrong entries in records that cause unjustified
order rejections), and assurance (fault management,
including recurring faults)
• Complex system generates complex interactions and new
problems
• Some processes need to be designed from scratch (i.e.
access to cabinets in co-operative Fttcab deployments);
others evolve over time (transition to ethernet from ATM)