Saturday, September 23, 2006

The Hague Telecom Day 2006 (3)

In the first section of the meeting, KPN was planned to make a presentation, entitles: Why KPN invests 1,5 billion euro in an open ALL-IP network. As the question mark is lacking in the title, it is already a certainty that KPN will start this project. In fact it was announced in March of 2006. Mr Paul J. Hendriks told in 10 minutes the argumentation: KPN need a new and faster conduit in order to distribute content. He did not mention the controversy the plan has stirred as KPN might leapfrog over its competitors.

KPN wants to upgrade its network. Presently the network is a hybrid network of coax cable and fibre glass. Fibre glass already links the exchanges. But now, KPN wants to go further and go to street level connecting 28.000 distribution boxes in the streets bypassing the exchanges. Great plan, isn’t it?

But this exactly were the problems will begin. In the present exchanges third parties such as Bbned and Colt Telecom have located their xDSL equipment. By bypassing the exchanges and by dismantling most of them, KPN creates a problem for those third parties as to the location, where to put there equipment and of course under what conditions.

Recently KPN has been rather aggressively gathering ADSL clients from competitors. It started when Tiscali sold 60.000 clients to KPN, as they were serviced over the KPN network. After that a small competitor had an argument and subsequently a payment problem with KPN; KPN closed off the clients and made them an offer to subscribe to KPN services (Planet Internet, Het Net and XS4ALL). KPN got away with that action. Last week KPN bought the remainder of Tiscali 276.000 subscribers.

The question arises whether KPN is on a course to duopoly, two network powers: telecom and cable. This would mean a choice out of two operators and hardly any competition. That would be contrary to the development of the last years, whereby the unbundling of the local loop has generated competition. This has brought the Netherlands to the top ranking of the broadband league. So companies are now anxious to see what is going to happen. Will KPN allow the competitors on the fibre glass network and against what conditions. And will these conditions be checked by the telecom watch dog OPTA before or after. Of course, in the meantime third parties will have to make extra costs for the new constellation.

Not everyone is convinced that this KPN network upgrade is a frog’s leap into duopoly. The Dutch and European telco watch dog will not allow that.

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Blog Posting Number: 517

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