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...regulatory background respective requirements cost allocation. In this paper the model is exposed and applied to a network example. Additionally some problems arising for quality of service differentiation in providing bitstream access services are shown and a first approach is indicated.
Key words: bitstream access service, broadband access network, cost modelling, regulation
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Although most European telecommunication markets have been liberalised in 1998, incumbent operators still have significant market power in most wholesale markets. According to the European regulatory framework the existence of significant market power requires regulations. With regard to the broadband market, which is under consideration in this contribution, European Regulators decided incumbents to have significant market power in imposed remedies. Among others some national regulatory authorities obliged the incumbent to provide bitstream access services at cost based rates (1). This generally implies the application of the forward looking long run incremental cost standard.
In order to determine the forward looking long run incremental cost of wholesale services bottom-up cost models are applied by national regulatory authorities (HACKBARTH, RODRIGUEZ DE LOPE, GONZALEZ & KULENKAMPF, 2002). Bottom-up modelling means that a network configuration is studied considering the corresponding services, and demand respectively (HACKBARTH, RODRIGUEZ DE LOPE & KULENCAMPFF, 2005).
Forward looking long run incremental cost means selecting the best network technology and an optimal network design without considering historical costs or an already existing network (2). As modern telecom networks integrate various services all of them must be considered for studying the cost increment of a certain service.
This contribution treats cost modelling for bitstream access services in broadband access networks because many national regulatory authorities are required to impose regulatory measures on this market and thus a detailed understanding of cost of efficient service provision is of utmost importance. The paper proposes a model for the bottom-up broadband access network configuration, a service classification for considering the service integration inside the network and a cost model for the forward looking long run incremental cost approach. This contribution resumes and actualizes a recent study from the same authors provided for the German regulator BNA-Bonn (Bundesnetzagentur, 2005).
* Regulatory background
The implementation of bitstream access services is considered to be important for enhancing competition in the broadband market. In this context ERG (3) defines the main elements of bitstream access as follows (ERG, 2004) (4):
--"high speed access link to the customers' premises (end user part) provided by the incumbent;
--transmission capacity for broadband data in both direction enabling new entrants to offer their own, value--added services to end users;
--new entrants have the possibility to differentiate their services by altering (directly or indirectly) technical characteristics and/or the use of their own network;
--bitstream access is a wholesale product consisting of the DSL part (access link) and "backhaul" services of (data) backbone network (ATM, IP backbone)" (MMR, 2003).
According to this definition it is important to note, that the bitstream access is not equitable with a combined wholesale product consisting of an unbundled or shared access and a conveyance service in the access network, respectively the backbone. This is because the ERG definition requires that alternative operators must be able to differentiate their services; and a simple resale of the access line does not allow the alternative operator to differentiate access speed (5). The ERG does not define the point of traffic handover, but outlines possible points of access which include access at the DSLAM, the ATM level (parent or distant point of presence) or at the IP level (parent or distant point of presence).
Although the ERG's common position is not binding on member states, many countries have already implemented bitstream access services or are about to introduce it. A survey reveals quite a few differences between the implemented services, not at least with regard to the possibility of competitors to differentiate their services. Since the ability for product differentiation is a particular characteristic of bitstream access services, special attention should be paid to the provision of different quality of service classes. It shall be noted, that currently bitstream access services are mainly defined as bandwidth tubes (tunnels) and do not consider the source traffic resulting from the different applications using this tunnel.
* Traffic and network architecture
The implementation of the forward looking long run incremental cost standard in a bottom-up model requires a detailed knowledge of an efficient network configuration and the traffic load on it. In the following we first outline details on the network architecture, and second on traffic patterns.
Network architecture
The network architecture for bitstream access services can (at most) be segmented into the following network segments:
--subscriber access network,
--broadband access network, and
--IP core network.
[FIGURE 1 OMITTED]
The broadband access network is required because an IP core network does not connect all the DSLAM locations directly. Hence, the broadband access network covers the section between the DSLAMs and the IP core access provided by a corresponding broadband remote access server.
In most European countries this network section is implemented in the form of OSI layer 2 networks, currently with ATM technology. The implementation of broadband access networks under Ethernet technology already started in some countries, but, at the moment, its penetration is still low, (CRAWFORD & VRHEYE, 2003). The model outlined and applied in this paper is still based on ATM technology. Although ATM constitutes an outdated...
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