Am I an Open Access Freak ?

Photo by B. Felten / Photoshop by

During a conversation last week, someone in the industry reported to me that a mutual acquaintance (also in the industry) saw me as an 'open access freak'. For some reason, that disturbed me a little. I don't have any qualms about being associated with Open Access, but the term freak suggests that my views on this issue aren't entirely rational. Actually it suggests that they are entirely not rational, and I think I take exception to that.

So I thought as this is likely to be my last post in a while (I'm leaving for the South of France on holiday soon) that I would try and summarize my views on open access and (hopefully) stress the rational thought process that leads me to general support open access policies and initiatives.

The first thing that is (probably) necessary is to distinguish between two forms of open access that are often lumped together but operate under different dynamics:

  • there are projects out there that operate as wholesale only: the network deployer invests and manages the network (or outsources the management) and then wholesales the access lines (or capacity) to service providers. In this model, the network deployer does not provide services himself (usually, although see below). Examples of this include many of the Swedish municipal networks, Utopia, and to a certain extent Openreach in the UK (although the intermediate role of BT Wholesale and the existence of BT Retail as a service provider make this a watered down wholesale only model.)
  • then there are projects (and most legacy incumbent copper operations fall under that category) that are designed to be retail operations but will allow (or be forced to offer) access to their network by third party players. For clarity's sake, I will call these opened up.

'Wholesale Only' and 'Opened Up' are both flavours of open access, and I have different views on each model. In a nutshell, in the context of FTTH, Wholesale Only is probably the model that makes the most sense in the long term (because the economics of the network and service layers are so radically different) but it's also devilishly hard to make it work right now, especially when national ISPs and incumbents will not offer services over the network. Opened Up is common sense and can only benefit an FTTH deployment.

I suspect that my perceived 'freakishness' comes from the latter point since this is the most contentious policy point. So why do I support Opened Up networks ? Three reasons:

a. In the context of a new network deployment, economic analysis shows that it's beneficial to maximise take up early on, and both retail and wholesale can help achieve that. Unless the company deploying has a utility strategy of low retail prices to maximise take-up (à la HKBN) in which case it might make sense not to open the access economically, it can only be beneficial since it allows addressing market segments that wouldn't be able to afford or wouldn't be interested in the retail offering. Get every line generating some revenue if you can.

b. In most regions of most countries, FTTH will be a natural monopoly. In the modern age, service without competition shouldn't be an option and opening up the access should therefore be a policy goal.

c. Cursory analysis of copper unbundling and other open access measures in the DSL world strongly suggest that not only did it not harm incumbent operators, it actually boosted their revenue. This is an area I intend to focus more energy and research on to try and have more definitive quantitative backing of this. As it stands, only one incumbent I know (KPN) has acknowledge the financial benefits of copper unbundling.

That's it, in a nutshell. Does that make me a freak? You tell me!