Issue: 01/09

ECTA 2008 Regulatory Conference

January 21, 2009

ATUG attended the European Competitive Telecommunications Association annual regulatory conference in November 2008.

A number of the topics discussed were of relevance to ATUG and our members and related to:

Development of Australia’s National Broadband network
Domestic mobile termination rates,
International Mobile Roaming rates,
Exemption from regulation
Assessing competition

The agenda and speakers for the conference are at http://www.ectaportal.com/en/basic880.html

Workshop topics included:

Infrastructure sharing
MVNOs and Competition in the mobile market
The Termination Conundrum
IPTV, Access to Content and Net Neutrality

Conference Topics included:

Day 1

Market analysis and geographic segmentation
Next Generation Access Regulation – Fibre Access, Competition and Investment
Universal Broadband and State Aid

Day 2

Review of the EU Regulatory Framework
Call termination and IP Interconnection
Mobile Competitiveness and Data Roaming

ATUG has a full set of papers and presentations for use by members. The full set of papers can be purchased from ECTA for EUROs195 by contacting Sara Russell, srussell@ectaportal.com

Workshops Key Issues

Infrastructure Sharing Workshop

Europe now seems to support regulated access to fibre networks at the deepest layer possible and at the wholesale service layer with prices reflecting a premium for the risks.

Equivalent (not just open) access is a must - at every layer of the NGN.

Approaches to risk sharing between operators - How much risk and who has the risk in fibre network roll-out?

Regulators must take a very active role – early. Network topology decisions cannot be allowed to foreclose competition.

Duct sharing regulation takes time – developing SLAs and pricing options. The Portugese Regulator took this decision in 2004 and it was fully operational in 2006.

Cable is not seen as an effective competing network to fibre. Wireless helps mobility – it is not a substitute for fixed broadband services

Termination Workshop

The fixed/mobile asymmetry provides a clear incentive for mobile operators to maintain MTRs

A range of termination rate options are being considered for the future – include Bill and Keep; Peering

The WIK (March 2008)study recommends reducing MTRs at wholesale dramatically over 3-5 years – possibly zero.

Ofcom started a Mobile Sector Assessment in August 2008

Pass through to consumer – Regulated Obligation on the incumbent; clause in wholesale contracts requiring reduction to be passed through to consumer retail prices

International roaming market – can only be fixed by regulation.

The GSMA says only mobile operators can access the Roaming Contracts (GSMA IP which they protect) which means MVNOs have not access to roaming services.

Is there a Predatory pricing Problem - How can an operators own retail prices be lower than its wholesale roaming prices?

Conference Day 1 - Key Issues

Task is to support European businesses achieve their goals to for productivity and efficiency – 35% of EU GDP is produced by the private sector

Competition is not about multiple offers - it is about real choice.

New generation networks do not need a new regulatory framework – they need risk sharing and a risk premium – co-funding with other players – could infrastructure sharing turn into market sharing and the exclusion of 3rd party access?

What is efficient investment?

New networks – must remain open, both fixed and mobile networks. EU Will not accept any walled garden arrangements by dominant players

Ownership of ducts and fibre should not be allowed to support dominance/re-monopoly in broadband market. Regulatory decisions are easy – the hard work is making them work in practice eg ARCEP weekly meeting to ensure Duct Access decision will work

EU will not allow existing level of competition to be damaged by transition to NGA.

Financial crisis will not be used as an excuse to role back regulation in this sector

Negotiation could be a tool eg internet and internet IP traffic eg peering agreements are an example of good practice – regulators could review for “fairness”

It is doubtful that the infrastructure cost of NGN/NGA can be refinanced only by access fees only – paid for by content, a business model redefinition eg sharing between telco and content owners with State subsidy for rural areas

ERG - working on IP Inter-Connect NGN Regulatory Principles

Market Analyses - Geographic Segmentation; product segmentation (Spain); customer segmentation (INTUG); EU level markets

Ofcom is using a new method of analysis in geographic segmentation decisions – HCC, homogenous competitive conditions (cf SSNIP)

Ex-post approaches to telco sector competition – Competition Law has difficulty being effective in the telco/media market because of delay.

Private enforcement action can be suitable eg Spanish Consumer Association has sued Telefonica

Conference Day 2 – Key Issues

Regulation is needed as operators do not have the incentives to reach agreement on termination rates

Bill and Keep will be a big discussion in 2009

National Authorities cannot fix roaming rates

Regulation of fibre networks will be explored in 2009 – cost, duplication, access,

Functional separation has been included as an exceptional remedy in EU Package

Consumer protection is an increasingly important issue: portability, transparency, complaint handling, contract provisions

Next Generation Access policy discussions – investment conditions, risk sharing, risk premium, competition, technology neutrality of LLU

Geographic segmentation of markets is being reviewed

Symmetric obligations are being explored

Problem of pass through of termination reductions

A new world of scarcity in mobile internet capacity in an IP world – peering, bill and keep, pricing as a rationing tool

Symmetry in termination – fixed operators invest more but earn less revenues from termination

Termination rate benchmarking – regulated prices, balance sheet rule, cost analysis

IP Interconnection position from ERG

It is now clear that operators intend to keep the vertically integrated approach of the PSTN world – therefore will need regulation

Operators seek regulatory holidays – but cling to regulated termination rates

Data roaming charges – wholesale regulation – traffic steering is a big issue – drives consumer prices up even when wholesale prices are coming down

Need retail safeguard cap of EURO 1 per MB (cf retail price regulation)

KPN offers 25 cents per MB and this is still profitable

Why do we have roaming and not peering? Mobile Internet interconnection eg Africa and Middle East

SMS regulation will create a problem – as the international roaming rate may be lower now than domestic pricing

Find a way to competition through innovation rather than through regulation – too low, too slow

Transparency – a single data tariff exemplar from each operator so customers can easily compare offers.

Members interested in materials on particular topics should contact rosemary.sinclair@atug.org.au