Bottleneck of last mile.
Any solution?
組員: 丁婉涵、賴暐昌、蔡秉辰
指導老師: 黃光渠老師
Outline
last mile introductions
Industry Characteristics
Bottleneck introductions
Background
Fixed–line existing situation
Government views
Competitors views
Chunghwa Telecom views
Foreign solutions
Conclusion
What is last mile?
• the local loops between the city's Telecommunication Local Switch
main distribution frame(MDF) to the Customer Premise
Equipment(CPE)
Categories of last mile
Wired systems
Wireless systems
1.cooper twisted line
1.Wifi
2.Cable
2.Wimax
3.Optical fiber( FTTx)
3.1G~4G LTE
4.Power Line
4.Satellite communications
The last mile-defined by NCC
• Directorate General of Telecommunication (DGT) era laid
“telephone line”=>“cooper twisted line ”(XDSL).
• "open the last mile" =>
• Not including the fiber-optic
Industry Characteristics
Natural
Monopoly
Bottleneck
Capital
Intensive
Vertical
integration
Public
Utility
What’s bottleneck?
Fixed Communications Business Management Rules
1.Themselves unable to build in a reasonable period
2. No other feasible alternative technologies
3. competitors can ask for share the facilities
The reasons of bottlenecks
• Subscriber loop :difficult to achieve effective competition
• Others can’t have the same economies of scale in short period
• No "alternative service" concept
• Not including the fiber-optic
Background
1996: pass the 電信三法 :three-stage opening of telecommunications services, mobile, satellite,
fixed-line business liberalization.
2000: apply the licenses
2001: issue licenses
2002:CHT、Eastern Broadband 、Asia Pacific Broadband、Taiwan Fixed Network、 New
Century InfoComm (FET)
The industry started to toward privatization.
Background
• Governing Fixed Network Telecommunications Businesses ( 22、 22-1):
1.must provide one million fixed-line number in six years
2. switching equipment and connected CPE of the subscriber loops .
• Funds: Eastern Broadband 65.7 billion / Taiwan Fixed Network 92.2
billion /New Century InfoComm 47.5 billion
• Last mile lines no future but to invest the FTTx , so government ask
CHT to take over
• Scandal: PEWC:孫道存embezzled17.1 billions/Asia Pacific王又曾
embezzled 27.2 billions
• pressure the government to claim last mile
Fixed–line existing situation
FIXED LINE MARKET SHARE(2013 Q2)
• 2013 FTTx
subscribers
annual growth rate of 10.49 %, ADSL
5.20%
100.00%
21.90%
decline to
12.69%
80.00%
• fixed broadband
business benefited from fiber grow.
60.00%
CHT
Others
94.80%
• cut tariffs
/ increases the78.10%
speed service automatically
40.00%
20.00%
0.00%
• draft amendments
to the "last mile" of Telecommunications Law has
not passed Local phone Broadband
• Equipment depreciation costs highest proportion (26.41%)
The Government views ─NCC(1/4)
• In Taiwan, when the building is being constructed, the pipeline almost
will be constructed in order to give operators pull the line, but the
pipeline is designed to Chunghwa Telecom specifically and other
carriers need to pay additional fee to the building or construction
company.
The Government views ─NCC(2/4)
• the laying of the pipeline to each household, which belongs to the "critical
facilities" of the network building
• to avoid monopolize, the owners of critical facilities should provide equal
opportunities for all entrants closing to the facility
This is the "Telecommunications Law "draft intent
The Government views ─NCC(3/4)
• "The draft amendments to the Telecommunications Law," added
25
requires the last mile of Chunghwa Telecom to be set up an
"independent sector" or "independent company."
45
regulates Chunghwa Telecom must release the subscriber loop (Local Loop)
infrastructure of pooling conduit, manholes, hand holes and other pipelines used
cost price by law.
The Government views ─NCC(4/4)
• After returning the Act to NCC to redraft by the Executive Yuan
“Accounting Separation”
The costs of last mile, revenues and other accounts should
be independently calculated, in other words, An independent
accounting statements cannot be combined with other
services in the CHT accounting items.
The Government views
─the Ministry of Transportation(1/1)
1.Releasing last mile only let them enjoy the public goods.
2. Other carriers coveted is probably financing several hundred billion
continued laying fiber-optic network.
3.Chunghwa Telecom is a listed company, the business separation could
harm shareholders' equity.
The Government views
─the Executive Yuan(1/1)
• the government invested NT $ 30 billion to promote the "M-Taiwan Plan"
for other carriers to rent but they actually rented only about 1800 km.
Low willingness
The performance of implementation is ineffective
Competitors views -Government
• Background of Government
• paid by the national tax and the fee was budgeted by the government
• Government hold stocks about 35.29%
Competitors views -laying pipes
• Road-smoothing project
• Social costs
• More complete network construction provide better services
• Unreasonable tariffs of CHT.
Competitors view -the buildings’ pipeline
occupied by CHT
• most of the pipeline were designed to China Telecom.
• need additional pay to the builders.
• Bottleneck=> resulting in the new entrants of fixed-line were acquired
by mobile service operators.
Chunghwa Telecom views(1/3)
• Income of fixed line in Taiwan accounted 32.2% of CHT’s revenue
in the first half of 2013, it’s about NTD 36.2 billion.
Chunghwa Telecom views(2/3)
• Other operator didn’t want to participate in construction and
maintenance.
Chunghwa Telecom views(3/3)
• CHT have devoted a significant amount of money, which ups to
300 NTD billions to build the networks connecting to its customers
for 15 years since 1999, and it is unfair to demand them to share
their networks with other competitors.
Foreign solutions─Japan:
• According to the ITU's report, the development rate of
broadband in Japan is the world's highest, the price is lowest in
the world. The key to success lies in a completely open of last
mile market.
urging the Type I & Type II telecommunications business to
become convergence.
allows the broadband speed different by each Japan’s ISP and
product differentiation occurs
Foreign solutions─Korea:
• The government pick winning carriers to build the basic network
construction used specific and the government also gives
financial assistance.
• The carrier owns a bottleneck facility is limited to use
symmetric for all public network access to all carriers and
cannot discriminate.
• The market of cable networks facilities also be regulated, the
provision is that the construction of network should adopt
competing way in the new apartments.
Foreign solutions─United Kingdom:
• They implement functional separation to establish Openreach, the
competitive carriers are reluctant to invest to build fiber-optic
networks due to existing low circuits available.
causes the costs increased
it hikes up the circuit price from 82 pounds three
years ago to 91.5 pounds last year
NCC
CHT
Operators
Conclusion(1/3)
• NCC needs to consider the pros and cons about enforcing CHT to
offer its local loop to its rivals at cost price or farm out the
company’s last mile service to an independent company.
Conclusion(2/3)
• According the NCC's plan, CHT should also break up and create a
separate and independent division or a subsidiary to handle the
services related to the “last mile” sector.
Conclusion(3/3)
• Recently there’s a news claims that Institute for Information
Industry(III) is to develop Superwifi, which communicate in the
white space of spectrum.
Thank you for listening