My dime here, regulation theory suggests that the right price would be
one based on, or even set at, the LRAIC + a markup. EU regulatory framework and
practice agree on this. But LRAIC of what? Ohh this one is also easy , of a “modern equivalent asset”
capable to provide similar services to end customers and retail or
wholesale providers. Ahaaa!, this point is where the discussion should begin. In fact the question that should be set from the beginning is what is the “modern equivalent asset” of the copper LL?

In my humble opinion a
“modern equivalent asset” of copper local loop is a point to point (and
we can argue further on this) FTTH network. Nothing more and nothing
less.  If a brand new modern operator was asked to cover with telecom
infrastructure a new built city in TodaysLand, I think he would peak FTTH as
the most appropriate technology together with wireless technologies for
mobility. FTTH can provide higher future proof speeds while at the same
time is cheaper than copper to deploy in a greenfield approach.

But LRAIC of a p2p FTTH will most probably (we will look into this “most
probably” later on) result into higher LLU prices! Yes, but at the same
time, it will provide the right incentives to the market – providers –
to start investing into FTTH networks. 

The “most probably” of the previous paragraph is there to identify the
following. As stated before a new build FTTH access network would cost
less than an equivalent copper one. Fiber is cheaper than copper,
micro-trenching is also cheaper than the traditional trenching that
copper needs, and the demarcation point close to the customer for both
networks, from the operator point of view, are in most of the cases not
covering inhouse cabling. Thus someone would expect that the LRAIC of a LL
copper pair to be higher than that of fiber. Even if I do not have any
practical evidence for this, seems to me that the prices of LLU in most
European countries is set significant lower than the equivalent prices
calculated based on a modeled FTTH network. What is your opinion on
that?

Apart from the above, during the last FTTH conference, S. Stanislawski
& J. Krauze, in
http://www.slideshare.net/ceobroadband/stefan-stanislawski-andjacekkrauze
suggested that taxation on the margins of LLU could provide the right
incentives towards the incumbent too.  In my opinion, an invest (into
FTTH) or tax dilemma could provide a solution on this, while the tax collected could provide the necessary funds for the government to support FTTH development in under-served areas.  Taxation in any case should not reduce the net LLU price under the real cost  (based on historical prices) of the incumbent.  At the same time if the retail prices for xDSL  services of the incumbent are regulated, the special tax should be taken into account too, allowing lower prices for broadband to the end customer.

br

merek

I guess we agree on this (and that’s the reason of the
slower than expected drop of prices – still better than other sector’s, so not
many people shouting .

But, I write this note to tell you that you forgot to
mention something: regulators are there also to protect consumers! So, they
HAVE to press lower a monopolistic commodity product that is the (depreciated)
copper net unit (close to the point of just covering OPEX+small margin for the
incumbents… – which as we know couldn’t be more than a couple of euros…)
Tough for DT,OTE,alts, everybody… so many of them will disappear…

And this leads us to the conclusion, that the next
monopolistic commodity (fiber) will only be built by collaboration and if
supported by public funds for the benefit of the consumers-economies in
general. And this will happen inevitably when we will convince everybody of the
ftth unique benefits and once the global economy enters the next
development/spending cycle – not before – unfortunately for us ;-(

(stelios)