Next Generation Networks: Challenges for the Future Regulatory Policy

Case Study: Slovak Telecom

• 56 Exchanges

• PSTN/ISDN

• Analogue

• 372 Exchanges

• 

• 

• 

• 

• FR

• LL

• ATM

• MPLS

• 1.0 mil. Customers

• 200,000 Customers

• Voice

• Data

• Core

• Core

• Core

• Core

• 6.500 Accesses

• IP/

• eNGine - Fully integrated IP Company by 2008

• Source : Slovak Telecom 2005

Case Study: Slovak Telecom

• eNGine - Fully integrated IP Company by 2008

• Source : Slovak Telecom 2005

• NGN

• 1+1 Softswitch

• + 24 Trunking GW

• + 310 Access GW

• 56 Exchanges

• PSTN/ISDN

• 1st Phase

• IP/MPLS Core

• 6.500 Accesses

• FR

• LL

• ATM

• MPLS

• IP/

• 2nd Phase

• Migration

• 1 Softswitch

• NGN

• Enterprise

• Solution

• New business models for ICT sector stakeholders

• We all build the global knowledge-based information society!

NGN: Business models

• Access

• IP-based Networks

• Applications

• Source : Telefonica 2005

NGN Implications for Sector

• NGN accelerates process of convergence
• Market structure
• Institutional changes
• Consolidation
• Changed role of network operators
• Many newcomers: electricity companies, cable companies and mobile operators
• Changed business models
• New sources of revenue
• Bundling offerings more popular
• Revision of regulatory policy reqiured
• NGN should increase economic meaning of ICT sector

NGN Implications for consumers

• New quality of service
• Enhanced Efficiency  automatic network monitoring and fault management
• Self configuration of voice applications via web interface  reduction of activation time
• Flexible addition of new voice applications and customer locations via central network management
• No own investment in PBX necessary
• Full cost transparency through flexible and simple pricing
• New price strategies bundling offerings

N-play economics…

• NGNs facilitate product differentiation and bundling strategies
• To be considered by service providers
• first, find out which products are proper to be bundled and therefore answer the question if the bundled goods should be complementary, substitutive or neutral;
• second, set the price for the new package taking into consideration the reservation prices for each product separately and package
• third, decide if the introduction of bundle excludes the possibility of obtaining the bundled products separately i.e. pure versus mixed bundling strategy.

N-play economics… Demand side related conditions

• Products Complementarity
• Bundling complementary goods - Reservation prices for such package become much more higher then for the separated products. In this way the willingness to pay increases and the company is able to benefit from this behavior (e.g. mobile telephone together with provision of mobile telecommunications services).
• Reservation prices for the bundle products are negatively correlated - Putting together fixed access with mobile telephone contracts for young people - demonstrating the highest inclination to substitute this two communication technologies - is good example
• The more products are combined into the package, the smaller is the probability, that the individual estimations of the value of the bundle will differ from the from the mean value. Through such reduction of the heterogeneity of customers the enterprise is able to sell more as in case of separated offerings.