RELEVANT MARKET DEFINITION AND IDENTIFICATION OF OPERATORS WITH SIGNIFICANT MARKET POWER (SMP) IN A CONVERGED BROADBAND WORLD

Transcription

1 RELEVANT MARKET DEFINITION AND IDENTIFICATION OF OPERATORS WITH SIGNIFICANT MARKET POWER (SMP) IN A CONVERGED BROADBAND WORLD Amine Mcharek, PhD KAIST Kuala Lumpur, Malaysia, 28 September 2015

2 The State of Broadband Disparities in Growth in Telecom Revenues & Capex for Different Players, 2013 Mobile Broadband is the Fastest-Growing ICT Service in History 2

3 Broadband : Complexity of regulation Changing market boundaries, service bundle Platform nature (or multi-sidedness) of markets: Service Provider and end user Promoting investment in new infrastructure and services vs promoting access to existing infrastructure The speed of change of markets vs the time required for regulatory remedies 3

4 Relevant Market Definition Which products and/or services are relevant for the investigation? What are the characteristics, functionalities and end-use of the products/services in question? Are there any substitutes to the products and/or services in question? How would customers react to a small but significant and non-transitory price increase (SSNIP) of the product/service in question? Do consumers have to incur any costs when switching from product A to a substitute product B? Is there evidence of switching? Would another firm start providing the product or service in question in case of a SSNIP? How far would customers go to buy a substitute product in case of a SSNIP? Are conditions of competition homogenous across the country? EU :Definition of the Relevant Market for the Purposes of Community Competition Law. US, market definition methodology is laid down in the Horizontal Merger Guidelines. Mexico it is described in the report Market Definition: Assessment of the Relevant Market in Competition Matters. 4

5 Criteria used in determining SMP Asia-Pacific India, Indonesia, Pakistan and Viet Nam acknowledge market and Barriers to entry shares only, each setting the threshold for dominance between 25 and 30 per cent. Japan considers market shares and the control of an essential facility Fiji considers geographical and potential competition. Malaysia consider shares, economies of scale and scope and potential competition Korea includes non-price competition such as the level of innovation, investment and consumer satisfaction Source: ITU World Telecommunication/ICT Regulatory database 2014, 5

6 Criteria used in determining SMP Africa Congo, Mali use only market shares Niger, Burundi, Equatorial Guinea and Zimbabwe consider market share and the control of essential facilities Ghana considers barriers to entry and potential competition in addition to the market share and control of an essential facility (and the market share at which dominance is considered ranges from between 25 per cent and 65 per cent). The majority of NRAs from Africa responded that they undertake a review of dominant status on an annual basis while others undertake periodic reviews every two to three years. Source: ITU World Telecommunication/ICT Regulatory database 2014, 6

7 Criteria used in determining SMP Arab States Algeria considers only market share - above 50 per cent. Egypt considers market share, control of essential facilities and barriers to entry Bahrain and the United Arab Emirates consider : share, geography, control of essential facilities, easy access to financial resources, economies of scale and scope, barriers to entry, potential competition, technological advantages or superiority. Periodic review of dominant status ranges from every year in Kuwait and Sudan, to as long as every five years in Saudi Arabia.. Source: ITU World Telecommunication/ICT Regulatory database 2014, 7

8 Criteria used in determining SMP Europe Countries are governed by the Telecommunications Framework laid out by the European Union, a wide range of factors in addition to market share; as potential for competition, barriers to entry, control of an essential facility allow NRAs to establish the ability of an operator to exert its market power. Reviews typically take place every two to three years. Americas Canada considers geography, market share, control of essential facilities, economies of scale and scope, and barriers to entry Bolivia, Costa Rica, Dominica and Paraguay consider only market share with defined thresholds standing at between 25 and 40 per cent. Brazil considers geographical location, Market share in terms of number of subscribers (or revenues) : 20, Control of essential facilities, Economies of scale and scope, Barriers to entry The majority of NRAs undertake regular reviews every two years. Source: ITU World Telecommunication/ICT Regulatory database 2014, 8

9 Criteria used in determining SMP Percentages of responses in 2014 Based on 25/44 Based on 13/21 Criteria used in determining dominance or SMP, 2014 Based on 19/40 Based on 7/12 Based on 36/43 Based on 25/35 Based on 125/195 Common criteria crosscountries and crossregions National, global players Input is sought from ITU members on the draft recommendation on SMP ource: ITU World Telecommunication Regulatory Database ITU ICTEye: w w.itu.int/icteye 9

10 Competition and regulation Who has jurisdiction over competition issues related to telecommunications/ict sectors? Jurisdiction over telecom/ict competition issues, 2014 Percentages of responses in 2014 Based on 17/44 Based on 7/21 Based on 18/40 Based on 7/12 Based on 36/43 Based on 17/35 Based on 102/195 In what legal instruments is the provision of competition defined? Legal instruments defining competition, 2014 Percentages of responses in 2014 Based on 23/44 Based on 11/21 Based on 21/40 Based on 7/12 Based on 37/43 Based on 26/35 Based on 125/ Source: ITU World Telecommunication Regulatory Database

11 More dynamic approach in regulation in order to address increasing complexity of broadband convergence. Stronger co-operation : At the regional/ global level Exchange of experiences and best practices Active participation on SMP related recommendations At National level High level of coordination between NRAs and NCAs