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Unbundling in Europe

Product Type: Market Research Report
Published by: IDATE
Published: June 2006
Product Code: R221-153
Description
In recent years, there has been a sea change in the role played by the local copper wire loop that links the subscriber to the operator’s exchange. Through the local loop, the subscriber can now make phone calls, access the Internet, watch TV, use video-on-demand services over a single telephone line. The local loop has thus become a fundamental element in the market for telecom services.

Most of Western European countries started to unbundle the local loop in 2000-2001. By making it compulsory for incumbent operators to offer third parties access to their local loop at a cost-oriented price, unbundling was expected to foster competition in telephone services and in Internet access via DSL. This measure was based on the recognition of the local loop as an “essential facility” that is difficult to duplicate. It appeared all the more important in that there was little infrastructure competition in the broadband market (DSL, cable, FTTx) in the majority of European countries.

After a slow start, the pace of unbundling began to speed up considerably in mid-2004. Recourse to unbundling has now become one of the chief points of focus in the growth strategy adopted by operators and Internet service providers (ISPs) in the broadband market in Europe. It enables them to differentiate their offerings and roll out new options (especially in regard to triple play services).

The report details the main developments in unbundling in Western Europe in recent years and highlights the features of the individual domestic markets. It assesses the impact of unbundling on the growth of competition in the various European markets and looks at the current debate on the benefits of unbundling, particularly its potential impact on investments in access networks, and at the future prospects for unbundling.

Key questions
  • How much progress has unbundling really made in Western Europe ?
  • What are the strategies adopted by operators and major players in unbundling ?
  • What is the impact of unbundling on competition among operators ?
  • What are the costs involved for incumbent operators ? Alternative operators ?
  • What solutions exist for rural areas ?
  • Will the current unbundling model remain feasible for new infrastructures ?
  • In addition to unbundling, what can be done to foster infrastructure-based competition ?
Who should read this report ?

  • Telecom operators
    • - Assess incumbent operators’ exposure
    - Understand alternative operators’ positioning
  • Internet players
    • - Assess the opportunities in terms of positioning and offerings
    - Analyse unbundling business models
  • Equipment manufacturers
    • - Assess unbundling-related investment opportunities
  • Telecom regulators & Administrations
    • - Compare the positioning of domestic markets in Europe
    - Identify the issues related with the digital divide
  • Investors and analysts
    - Assess unbundling prospects
    - Understand the specifics of domestic markets

Players
  • Arcor
  • Belgacom
  • BT
  • Deutsche
  • e.Biscom
  • Eircom
  • France Télécom
  • Iliad
  • KPN
  • neuf cegetel
  • NexGenTel
  • OTE
  • Tele2
  • Telecom
  • Telefónica
  • Telenor
  • Telia Sonera
  • Tiscali
Table of Contents

1. Context

1.1. Introduction

1.2. What is unbundling?

1.2.1. Definitions

The local loop

Local loop unbundling

Colocation

1.2.2. Full and partial unbundling

Full unbundling

Partial unbundling

1.2.3. Sub-loop unbundling

1.2.4. Unbundling vs. Wholesale DSL (bitstream access and resale DSL)

Resale DSL

1.3. Players

Operators

Equipment manufacturers

Regulators

1.4. Regulation

1.4.1. Regulation basics

Service-based competition vs. infrastructure-based competition

The local loop, an essential facility

Regulation of unbundling - part of the regulator’s work towards the development of the broadband market

1.4.2. Regulation in the European Union

Regulation of December 2000

Unbundling in the regulatory framework of 2002

Reference offers

Implementation of the new regulatory framework

1.5. Economics of unbundling

1.5.1. Costs

Nomenclature of unbundling costs

Cost evaluation

Total technical costs for the alternative operator

1.5.2. Business models

Options available to alternative operators

From a bitstream model to an unbundled model

2. Development of unbundling in Europe

2.1. General trends

2.1.1. Background

Fixed services market in Europe

Weak infrastructure-based competition

2.1.2. Growth of unbundling since 2002

2.1.3. Tariff regulation

2.2. Situation in national markets

2.2.1. France: largest base of unbundled DSL lines

2.2.2. Germany: recent resurgence of unbundling

2.2.3. Italy: third largest unbundled base in Europe

2.2.4. Northern Europe, leader in unbundling

Netherlands

Sweden

Denmark

Norway

2.2.5. Spain: recent boom in unbundling

2.2.6. Limited unbundling in the United Kingdom, Belgium and Portugal

United Kingdom

Belgium

Portugal

2.2.7. Unbundling virtually non-existent in Ireland and Greece

Ireland

Greece

2.3. Major players in unbundling in Europe

2.3.1. Who is investing?

2.3.2. Why invest?

2.3.3. Main operators involved in unbundling

Arcor

Deutsche Telekom / T-Online

e.biscom / FastWeb

France Télécom / Wanadoo

Iliad/Free

neuf cegetel

NextGenTel

Tele2

Telecom Italia

Telenor

Tiscali

3. Challenges and prospects

3.1. Impact of unbundling on competition

Broadband market

Telephony

New services

Rural areas

3.2. Current issues

3.2.1. Very high-speed networks Debate on benefits of unbundling Adapting regulation

3.2.2. Naked DSL

3.3. Prospects

4. Annexes

4.1. Data by country

4.1.1. Austria

4.1.2. Belgium

4.1.3. Denmark

4.1.4. Finland

4.1.5. France

4.1.6. Germany

4.1.7. Greece

4.1.8. Ireland

4.1.9. Italy

4.1.10. Norway

4.1.11. Netherlands

4.1.12. Portugal

4.1.13. Spain

4.1.14. Sweden

4.1.15. Switzerland

4.1.16. United Kingdom

4.2. Unbundling outside Europe

4.2.1. USA New unbundling framework changes players’ strategies

4.2.2. Unbundling in Japan




List of Tables




Table 1: Characteristics of DSL technologies

Table 2: Main DSL access equipment manufacturers in 2004

Table 3: Broadband subscribers in Europe

Table 4: Structural trends in the European broadband market by access technology, 2002-2005

Table 5: Unbundled lines in Europe, 2002-2005

Table 6: Unbundling penetration in Europe

Table 7: Unbundling charges in Europe

Table 8: Operational and regulatory implementation of unbundling in selected European countries

Table 9: Availability of hosting options by country

Table 10: Unbundling in France, 2002-2005

Table 11: Unbundling in Germany, 2002-2005

Table 12: Unbundling in Italy, 2002-2005

Table 13: Unbundling in the Netherlands, 2002-2005

Table 14: Unbundling in Sweden, 2002-2005

Table 15: Unbundling in Denmark, 2002-2005

Table 16: Unbundling in Norway, 2002-2005

Table 17: Unbundling in Spain, 2002-2005

Table 18: Unbundling in the United Kingdom, 2002-2005

Table 19: Unbundling in Belgium, 2002-2005

Table 20: Unbundling in Portugal, 2002-2005

Table 21: Deutsche Telekom - main subscriber data

Table 22: FastWeb - Main subscriber data (Internet)

Table 23: France Télécom - main subscriber data

Table 24: Free - Main subscriber data (France)

Table 25: Telecom Italia - Main subscriber data

Table 26: Telenor - Main subscribers data

Table 27: Tiscali - Main subscriber data

Table 28: Unbundling in Europe: forecasts up to 2010

Table 29: Broadband connections in Japan by access technology, 2001-2005

Table 30: Copper loop unbundling charges in Japan

Table of contents Unbundling in Europe




List of Figures




Figure 1: Network diagram - Fully unbundled access to the local loop

Figure 2: Network diagram - Shared access to the local loop

Figure 3: Bitstream access

Figure 4: Players

Figure 5: Technical cost per line on shared access in France

Figure 6: Main broadband options for alternative operators

Figure 7: Compared costs of unbundled and bitstream access according to distribution frame capacity, France

Figure 8: Broadband subscriber bases in Europe, 2000-2005

Figure 9: Broadband subscriber bases in Europe, 2002-2005

Figure 10: Broadband penetration rates in Western Europe

Figure 11: Structure of the European broadband market by access technology in December 2005

Figure 12: Unbundled lines in Europe, 2002-2005

Figure 13: Unbundled DSL lines in Europe by country, 2003-2005

Figure 14: Shared access as percentage of total unbundling by country, June 2005

Figure 15: Incumbent operator’s estimated share of the retail broadband market (End 2005)

Figure 16: Incumbent operator’s share of the DSL market (including wholesale) (End 2005)

Figure 17: Broadband market in Western Europe, 2005-2010

Figure 18: Unbundled lines bases in Western Europe - forecasts to 2010

Figure 19: Ratio of unbundling in DSL bases in 2005 and forecasts up to 2010

Figure 20: Broadband market structure by country - forecasts up to 2010

Figure 21: Breakdown of main lines operated by CLECs in the USA at end 2004

Figure 22: Fibre unbundling in Japan
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