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when the utility gets into owning telecom infrastructure – dependability quo vadis?

November 12th, 2008 · No Comments ·

Deregulation means better choice (e.g., infrastructure, broadband Internet access and telephony). Besides, deregulation also means that achieving of greater dependability and resilience of public e-communication networks has become ever more challenging for regulators, operators and users alike.

This post explains how infrastructure owned by a utility – ewz.zürinet, being operated by a vendor improves broadband access while increasing various  risks that could result in system failures.

We all know that in today’s world, public e-communication networks that are dependable, reliable, robust and resilient against certain threats and risks (e.g., power cable being cut) are needed to keep our economy run smoothly. Deregulation has helped in increasing our choices when it comes to type of communication and data services offered. Hopefully, this has also given users better value for money.

At the same time, more companies have entered the field providing services and/or owning infrastructure. What all these developments mean for regulators we began outlining in a series of posts:

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On March 11, 2007 the people of Zurich voted yes for a credit of 200 mio Swiss Francs (about 130 mio Euro) to build a fibre optics network. 39.9% of eligible voters did cast their vote, of these about 65% voted yes resulting in public funds being used to build a third network. Swisscom and Cablecom both have networks as well and the last mile has been deregulated in Switzerland as well.

The fibre optics network called ewz.zürinet will be owned by the town’s electric utility called EWZ. While EWZ owns the network, the utility will not provide services but instead let private companies do this. What makes this case interesting is:

1) After the electorate approved a credit, tax money is being used to build a fibre optics network.

2) The network is being ‘owned’ on the city’s behalf by its electric utility called EWZ.

3) The fibre optics network is using hardware supplied by Alcatel-Lucent

4) EWZ will not operate the network but outsource this task to Alcatel-Lucent

5) EWZ will sell the capacity of its network to several service providers (e.g., Orange, Sunrise, Netstream,, Init Seven AG, GGA Maur and Translumina AG) that offer a whole range of services to private users and companies.

6) The cells and islands of the network will cover most of the town – but not everybody will get access by 2013

The network has been operational since June 1, 2008.

The challenge for the regulator

The regulator will have to make sure that the infrastructure provided by the EWZ meets various requirements including those affecting security, dependability and reliability of the network infrastructure. OFCOM – Federal Office of Communicatuions has its work cut out because in Switzerland like elsewhere, ever more firms and utilities own certain parts of the infrastructure.

Usually the regulator works closely with the infastructure owners. In nearly all instances, these are the main telecom companies (e.g., Orange, Sunrise and Swisscom) and the cable company Cablecom. For the EWZ.Zürinet things are a bit different. For starters, EWZ may own the infrastructure but leave it other players to sell various kinds of communication and data services to private and business users.
While the ewz-zürinet is a special case looking at type of ownership, technology used and so forth, a recent study revealed that Switzerland has several hundred telecom providers including municipalities providing various types of telecom and data services:

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This situation applies to other countries as well. Ever more parties own infrastructure and may, for different and valid reasons, outsource network operations and service delivery to other companies. In turn, the number of players that need to be included if we want to succeed in our efforts to maintain satisfactory network resilience is on the rise. This makes regulatory oversight an ever greater resource challenge. Moreover, just the smallest glitch in the chain may result in service disruptions somewhere in the network:

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This all indicates that resilience and depedability of public e-communication networks has just become an ever greater challenge for countries that want to assure that they stay competitive in the digital world.

What is your experience on this, share your thoughts below.


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