New approach to regulation of fixed and mobile networks

Transcription

1 New approach to regulation of fixed and mobile networks Relevant Markets International Forum of CRC: Challenges of the Relevant Market Regulation for Telecommunications Networks and Services, Bogota, 15 June 2012 Dr. Ulrich Stumpf 0

2 Overview 1. Why review ex ante regulation of fixed and mobile networks? 2. How adapt ex ante regulation of dominant operators? 3. Give symmetrical ex ante regulation greater emphasis? A European perspective 1

3 1. Why review ex ante regulation of fixed and mobile networks? 2

4 Ex ante regulation must be adapted to multiple technological & commercial developments NETWORKS NGN core netwoks VDSL & fibre networks DOCSIS 3 upgraded cable networks LTE networks Migration to NGN/NGA networks RETAIL SERVICES Ultrafast Internet connections New applications and services (e.g. IPTV, OTT) Partial convergence of fixed & mobile services Differentiation of residential & businessgraded services Widespread bundling of services WHOLESALE SERVICES Unbundled to VDSL & fibre networks Wholesale broadband to VDSL & fibre networks Ethernet based dedicated capacity IP interconnection Migration to NGN/NGA wholesale services Investment incentives Competition Access remedies 3

5 2. How adapt ex ante regulation of dominant operators? Regulated markets/operators 4

6 Focus on, and principles of, ex ante regulation of dominant operators remain untouched 1. Targeted at competition problems related to dominance 2. Limited to electronic communications markets characterised by Persistent barriers to entry No tendency towards effective competition Ex post application of competition law alone not sufficient 3. No regulation at retail level if wholesale regulation is enough 5

7 WHOLESALE RETAIL Current ex ante regulation of dominant operators concentrates on voice & broadband VOICE BROADBAND ACCESS fixed No related wholesale markets defined fixed calls Transit Fixed call origination Fixed call termination on individual networks mobile & calls Mobile & call origination Mobile call termination on individual networks fixed broadband Internet Wholesale Internet connectivity Wholesale broadband Unbundled local loop; duct mobile broadband Internet No related wholesale markets defined dedicated capacity Trunk segments of wholesale dedicated capacity Terminating segments of wholesale dedicated capacity RETAIL WHOLESALE Regulated market = Market susceptible to ex ante regulation and characterised by SMP Unregulated market 6

8 Ex ante regulation for voice can be reduced 1. New retail market boundaries for voice Fixed & calls a bundle (voice) VoIP a substitute for voice over PSTN Mobile voice a partial substitute for fixed voice (residential customers) Differentiation of business from residential services 2. voice markets competitive subject to regulation of call termination on fixed & mobile networks 7

9 Ex ante regulation for broadband must be maintained 1. New retail market boundaries for broadband Internet Ultrafast broadband (fibre/vdsl/docsis3) a chain substitute for standard broadband (ADSL) LTE a substitute for fixed broadband, where enough capacity (residential customers) Differentiation of business-graded services (faster/more reliable, multi-site) from residential services Convergence of business-graded broadband and dedicated capacity 8

10 Ex ante regulation for broadband must be maintained 2. Platform competition alone is not effective, except in few countries (Romania with lots of overground wiring) 9

11 Ex ante regulation for broadband must be maintained 3. Usually, retail broadband markets will only tend towards competition subject to continued wholesale regulation Unbundling of fibre and VDSL networks and, where not technically or economically feasible, virtual local Wholesale broadband (except possibly for residential customers) Terminating segments of wholesale dedicated capacity 10

12 STANDARD, SINGLE-SITE Bundling may require new ex ante regulation 1. Longer term trend towards separate retail markets for bundles (are we already there?) RESIDENTIAL BUNDLES BUSINESS BUNDLES Voice Fixed broadband Internet TV/OTT Mobile Voice Fixed broadband Internet Dedicated capacity Mobile GRADED, MULTI-SITE 2. Need to regulate wholesale for all components? 11

13 2. How adapt ex ante regulation of dominant operators? Regulatory measures 12

14 WHOLESALE RETAIL În the past, most ex ante regulation included cost oriented prices based on LRIC+ or FDC VOICE BROADBAND ACCESS fixed fixed calls mobile & calls fixed broadband Internet mobile broadband Internet dedicated capacity RETAIL FDC or price cap LRIC+ LRIC+ or FDC or retail-minus Fixed call origination Fixed call termination on individual networks Mobile call termination on individual networks Wholesale broadband Unbundled local loop; duct Terminating segments of wholesale leased lines WHOLESALE LRIC+ and asymmetric LRIC+ and asymmetric LRIC+ or FDC LRIC+ or FDC 13

15 To avoid overcompensation, wholesale charges need to be reviewed Cost orientation to be based on efficient networks (the Modern Equivalent Asset) Fixed and mobile call termination: NGN Unbundling: Fibre Wholesale broadband : Fibre /NGN 14

16 To avoid overcompensation, wholesale charges need to be reviewed Cost orientation to be based on LRIC Fixed and mobile call termination: Pure LRIC in EU, but non-eu countries may go for LRIC+ Fibre unbundling: LRIC+ Copper unbundling: LRIC+ of fibre less performance delta between fibre and copper Wholesale broadband : LRIC+ or retail-minus Glidepath to target levels 15

17 To avoid foreclosure, bundles need to be tested for margin squeezes 1. Margin squeeze tests for individual products alone do not allow to capture margin squeezes on bundles 2. Need to test bundles for margin squeezes ex ante 3. A competitor should be able to cover the costs of wholesale inputs plus its own downstream costs 4. Downstream costs of a reasonably efficient competitor versus equally efficient competitor? 16

18 WHOLESALE RETAIL Current ex ante regulation of dominant operators includes non-discriminatory terms of VOICE BROADBAND ACCESS fixed Non-discrimination Non-discrimination fixed calls Fixed call origination Fixed call termination on individual networks mobile & calls Mobile call termination on individual networks fixed broadband Internet Non-discrimination Wholesale broadband Unbundled local loop; duct mobile broadband Internet dedicated capacity Terminating segments of wholesale leased lines RETAIL WHOLESALE Non-discrimination Non-discrimination Non-discrimination Non-discrimination 17

19 To avoid foreclosure, non-discrimination needs to be implemented much more effectivley 1. Unbundling, wholesale broadband, terminating segments Need to ensure equivalence of, including in delivery & fault repair Functional separation as a measure of last resort 2. Transmission of third-party VoIP and other retail applications Need for minimum quality standards against blocking/throttling 3. Call termination and IP interconnection Discrimination less of a concern where there is reciprocal traffic exchange 18

20 2. Give symmetrical ex ante regulation greater emphasis? 19

21 WHOLESALE RETAIL Past symmetrical ex ante regulation focused on transparency & end-to-end connectivity VOICE BROADBAND ACCESS fixed Transparency, number portability fixed calls Transparency Fixed call termination on individual networks mobile & calls Transparency, number portability Mobile call termination on individual networks fixed broadband Internet Transparency mobile broadband Internet Transparency dedicated capacity RETAIL WHOLESALE End-to-end connectivity End-to-end connectivity Symmetrical regulation No symmetrical regulation 20

22 Symmetrical ex ante regulation provides a complementary instrument to promote a variety of objectives 1. Ensure interoperability of services and end-to-end connectivity 2. Address market power independent of dominance 3. Avoid economically inefficient or physically impracticable duplication of infrastructure to end-users 4. Promote net neutrality 5. Raise transparency and reduce switching costs 6. Protect the environment, public health, public security or to meet town and country planning objectives 21

23 All of these targets gain increasing importance Price caps for retail & wholesale intern l roaming Address market power independent of dominance MVNO for wholesale internat l roaming Sharing of in-building wiring, (France, Spain, Portugal) Infrastructure sharing & co-investment Minimum quality levels for network transmission services Address market power independent of dominance Avoid economically inefficient or physically impracticable duplication of infrastructure to end-users Protect the environment, public health, public security; meet town/country planning objectives Promote net neutrality Transparency obligations for transmission of applications Reduce switching costs, promote net neutrality 22

24 New approach to regulation of fixed and mobile networks At the cross-road 23

25 Muchas Gracias por su atención! 24

26 D. Ulrich Stumpf wik-consult GmbH Postfach Bad Honnef www. wik-consult.com 25