Goodbye LLU say hello to a virtual future world
Earlier in the week the European Union announced the reduction of the amount of regulation involved with two telecoms markets. Voice call origination and fixed access markets are now largely off the EU telecoms regulation radar, the reasons given are:
- Increased use of VoIP
- Competing providers able to provide fixed telephone access through the nationally regulated wholesale products
- Growth of mobile versus fixed line communications
- The reality that in bundles of telecoms products, the telephony access is becoming the least important element and stand-alone fixed telephone access is declining.
Given the level of complaints and moans every time a fixed line retailer increases its voice line rental this seems at odds with the basic member of the public, who invariably feels that while broadband is the more important element of fixed line telecoms in 2014, a lot of the costs have been moved to the small print.
The continued rise of voice line rental is balanced by the fact that broadband costs have plummeted since its launch and going further back into the late 1990's people will remember the costs of dial-up access.
Neelie Kroes in presenting the decreased red tape has also endorsed the concept of virtual unbundling, which should be no surprise to UK broadband followers since the EU gave the green light to Openreach VULA products back in 2010. Virtual unbundling means that for fibre heavy deployments like FTTC and FTTP the EU is accepting that due to the costs of rolling out active and optical networks we are unlikely to see competing networks deployed to the same extent as has been done with copper LLU.
Certain criteria need to be met for VULA to be accepted, such as local access for handover of the data stream, guaranteed bandwidth and sufficient control to allow for product differentiation. The local access means that LLU hardware is not totally defunct, it can still be used to handle the bitstream and voice traffic which is handed off to the cheapest network available in each area.
Ofcom still has a key role to play and the fibre world is waiting to hear what the result of the TalkTalk fibre broadband pricing complaint is, if TalkTalk does get the wholesale cost of FTTC halved we might see fibre demand jump, as TalkTalk would be able to offer a bundle of fibre and voice line rental for under £20 a month, even when you ignore all the normal incentives to join. Oddly cheaper FTTC might make TalkTalk less keen to spend £5 million on a trial FTTP roll-out in York.