Genna (ECTA Zagreb)


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Innocenzo M. Genna

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  • Genna (ECTA Zagreb)

    1. 1. Telecommunications Liberalisation: Issues and Players ECTA’s view Innocenzo M. Genna, ECTA Chairman Zagreb, Croatian Chamber of Commerce, February 21, 2007
    2. 2. Agenda <ul><li>Introduction </li></ul><ul><li>Liberalisation goals </li></ul><ul><li>The role of regulation </li></ul><ul><li>What is effective regulation? </li></ul><ul><li>Case study: investment in broadband </li></ul><ul><li>What does this mean for the Framework Review? </li></ul><ul><li>What does this mean for next generation networks? </li></ul>
    3. 3. About ECTA <ul><li>European Competitive Telecommunications Association represents some 150 member companies across Europe </li></ul><ul><li>Pursuing the regulatory agenda ECTA aims to advance liberalisation and competition within the telecoms sector </li></ul><ul><li>Our operator members are diverse – most with substantial investments in infrastructure </li></ul>
    4. 4. Liberalisation goals <ul><li>Innovation, choice, value for money, increased and more efficient investment </li></ul><ul><li>Internet, broadband, VoIP, NGN networks, triple-play all associated with competitive, liberalised markets </li></ul><ul><li>Since 1998 prices in key services incl international calls, business services have fallen more than one third across EU </li></ul><ul><li>Investment also higher than pre-liberalisation (1998). Recovery in 2004 evident following telecoms bubble </li></ul><ul><li>Europe’s investment in telecoms services compares well against USA, Japan, and South Korea – ICT success story, but notable that within Europe investment is much higher in some countries than others </li></ul><ul><li>Better performing regulatory regimes, as measured by the OECD Regulatory Index, or the ECTA Scorecard, contribute to higher investment levels </li></ul>
    5. 5. ECTA Regulatory Scorecard
    6. 6. Investors respond to effective regulation… <ul><li>Investment strongly correlated to effective regulation – UK invests $184 per capita whilst in Germany only $68 </li></ul><ul><li>Achieving best practice throughout the EU would boost investment by a third </li></ul>
    7. 7. Investors respond to effective regulation… <ul><li>Incumbent NGN and NGA announcements often stimulated by competitive pressure </li></ul><ul><ul><li>UK: relatively well regulated and competitive market. €10b core network upgrade announced by BT </li></ul></ul><ul><ul><li>Netherlands: competitive pressure from cable and unbundling. KPN announced access network upgrade </li></ul></ul><ul><ul><li>Germany: Unbundling pressure in certain areas. DT announced €3 vDSL urban investment </li></ul></ul><ul><ul><li>Japan: highest fibre penetration – initially stimulated through effective regulation of broadband </li></ul></ul><ul><li>Triple play and IPTV advances competitively driven </li></ul><ul><ul><li>France: €30 per month buys 20Mbit/s broadband, IPTV and telephone services. HDTV launched </li></ul></ul>
    8. 8. What is effective regulation? <ul><li>Effective regulation measured as function of: </li></ul><ul><li>Regulatory certainty </li></ul><ul><ul><li>Clear legislation </li></ul></ul><ul><ul><li>Timely implementation of legislation </li></ul></ul><ul><ul><li>Comprehensive guidance on interpreting legislation </li></ul></ul><ul><ul><li>Harmonisation between EU member states </li></ul></ul><ul><ul><li>Clear communication from NRAs </li></ul></ul><ul><ul><li>Clear rules allowing fair return for incumbents AND competitors </li></ul></ul><ul><ul><li>Adequate appeals processes </li></ul></ul><ul><ul><li>Adequate NRA enforcement powers </li></ul></ul><ul><li>Access to facilitates which are difficult to replicate </li></ul><ul><ul><li>Unbundled loops, wholesale broadband access </li></ul></ul><ul><ul><li>Wholesale line rental, carrier pre-selection </li></ul></ul><ul><ul><li>Interconnect leased lines </li></ul></ul>
    9. 9. Specific ‘Good and Bad ’ Regulatory Examples <ul><li>Comprehensive set of remedies to overcome identified market problems </li></ul><ul><li>Access products not mandated: bitstream service, leased lines incl. Ethernet based services </li></ul><ul><li>Rapid completion of market review </li></ul><ul><li>No mechanisms to deal with price squeezes, unfair bundling and pricing incentives (discounting) </li></ul><ul><li>Clear communication of regulatory strategy with full understanding of regulatory economics </li></ul><ul><li>Lack of equivalence between new market players and traditional incumbents </li></ul>
    10. 10. Specific ‘Good and Bad ’ Regulatory Examples cont’d <ul><li>Close working relationship between NRAs and ERG / Commission, with NRAs having right number/quality of staff, political independence and aiming for best practice </li></ul><ul><li>Lack of consultation on major changes (e.g. NGN), lack of properly audited accounting separation, ineffective appeals systems, regulator lacking appropriate enforcement powers and remedies </li></ul>
    11. 11. <ul><li>Access to bottlenecks together with the ability for competitors to recover their significant investments remains vital to achieving effective competition </li></ul><ul><li>Countries with the most effective regulation also have higher levels of local loop competition </li></ul><ul><li>However, incumbent market share in the local loop remains above 80% in all Member States. Nearly 100% in most </li></ul>Effective regulation: the starting point
    12. 12. Driving investment: broadband <ul><li>Broadband ladder of investment facilitates competition </li></ul><ul><li>Resale allows customer acquisition </li></ul><ul><li>With increased investment, connect at more points and gain increasing control over service </li></ul><ul><li>Local loop unbundling provides full flexibility on service offering </li></ul><ul><li>Rungs priced so as to encourage investment – no margin squeeze at any level of value chain </li></ul><ul><li>Narrowband ladder can link in </li></ul>Local loop unbundling ATM bitstream IP Bitstream Resale
    13. 13. Driving investment: broadband <ul><li>Ladder of investment in practice: France </li></ul><ul><ul><li>Market outcome shows migration by altnets towards LLU/SA from resale </li></ul></ul><ul><ul><li>Total fixed industry investment grew by 17% in 2005 (IDATE survey) </li></ul></ul><ul><ul><li>Broadband penetration was 16.4% in Jan 2006 following swift growth </li></ul></ul><ul><ul><li>Triple play available for €30 with IPTV, 20MBit/s broadband, VoIP </li></ul></ul>
    14. 14. What does this mean for Croatia? <ul><li>Framework has proven to be sound basis for competition and investment in telecoms. Make sure it is properly applied! </li></ul><ul><li>Responsibility of the Government </li></ul><ul><ul><li>Ensure the regulator is independent – from Government/political involvement as well as operators </li></ul></ul><ul><ul><li>Provide effective enforcement powers – retroactive penalties, deterrent effect. Power to suspend provision pending compliance </li></ul></ul><ul><ul><li>Consider giving NRA powers for ‘functional separation’ </li></ul></ul><ul><ul><li>Ensure appeals system doesn’t delay or undermine measures </li></ul></ul><ul><li>Responsibility of the NRA </li></ul><ul><ul><li>Focus on implementation and enforcement not just paper </li></ul></ul><ul><ul><li>Complete market reviews thoroughly but efficiently </li></ul></ul><ul><ul><li>Establish clear rules against discrimination for level playing field </li></ul></ul><ul><ul><li>Ensure efficient spectrum allocation and trading </li></ul></ul><ul><ul><li>Make provisions to protect against foreclosing behaviour. We don’t want to go backwards! </li></ul></ul><ul><ul><li>Measure effectiveness of regulation. Is it working? </li></ul></ul>