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Strategic Study on the Impacts of a Multi-Network Infrastructure
For further information please contact:

Harald Johansen
Project Supervisor
Wieblinger Weg 19/4
69123 Heidelberg, Germany

Project Information
What is this Project about

As more networks are developed, the underlying cost structure will change. Traditionally, calls were priced according to distance. As transmission costs have fallen, so the industry has moved towards a simple price structure where calls to most parts of a country are a single price. However, if the number of networks increases, there will be increased transaction costs between network operators. If transport becomes a commodity service where prices fall to reflect underlying costs, then a situation may arise where prices depend not on distance, but on the number of operators involved in delivering the call. Will this be understood by and acceptable to customers?

As well as the underlying cost structure, a multi-network world raises the issue of responsibilities and liabilities. Who is responsible for ensuring QoS. The obvious answer is the service provider - but this has implications for the structure of the industry. Thus, a future service provider, rather than acting as an agent for a particular network operator, or as a broker for competing network operators, may take control of routing - essentially leaving the network operator as a provider of transport pipes. In effect, network operation is separated from ownership of the transport infrastructure. Is this a viable model? What implications does it have for the management of networks and services? What are the regulatory implications?

Another issue might be the management of uncertainty in network and resource planning and engineering related to the condition, that advance investment puts intolerable risks on any competitor, and pricing-stimulated changes in traffic flows (e.g. due to customer flexibility based on carrier selection), which will create extreme cost-related difficulties in traffic handling and routing. Will the customers accept breakdowns in service delivery performance?

Another possible development is the usage of Service Level Agreements (SLA) between the involved network operators. However, the exact parameters to agree on are currently not clear and the possible involvement of many operators in a single cennection (see below) would lead to requirements on dynamic agreements (similar to concepts now discussed in the GSM sphere). Relevant questions in this scenario are: Which aspects should be part of the SLAs? How are SLAs handled when a large number of operators (>5) are involved?

This is an area which will be breaking new ground in our understanding of how competition may develop over the longer term.

The main objective of this study is to examine the potential strategic implications to European TelCos of the development of multiple competing networks.

Project Results
Deliverable Title  No Planned issue date
Impact of a Multi-Network Infrastructure D1 published


Project Information
Project Leader and Contractor Code: Michael Lyons, BT
Project Supervisor: Harald Johansen
Project Participants: BT, DT, HT, ST, TI
Project Start Date: 1 February 1998
Project Completion Date: 19 November 1998