Subnational market approach

Transcription

1 Subnational market approach Review of the European Framework for Electronic Communications, WIK-Conference, Bonn, April 2008 Dr. Ulrich Stumpf 0

2 Overview Subnational market approach Where consider it? Why consider it? When consider it? How apply it? What (unresolved?) issues? Conclusions 1

3 Where consider it? Strongest focus is on WBA, in large Member States Markets listed in Recommendation Relevance of subnational market approach Market 1 Retail fixed telephone access Low (with exceptions?) Market 2 Wholesale fixed call origination Low (with exceptions?) Market 3 Wholesale call termination on individual --- fixed networks Market 4 Wholesale local access Low, but prospectively higher (with exceptions?), Market 5 Wholesale broadband access High (with exceptions?) Market 6 Market 7 Wholesale terminating segments of leased lines Wholesale voice call termination on individual mobile networks High (with exceptions?) --- 2

4 Why consider it? Substantial geographical differences in broadband access infrastructure (incumbent, unbundlers, cable, wireless) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% BE LU DK UK NL MT FR SE PT DE FI AT ES HU IT SI IE LT LV CY PL SK EL DSL coverage Cable coverage Coverage if DSL and cable in % of population, end 2006 (source: IDATE) 3

5 Why consider it? Where there are geographical differences in broadband access infrastructure, a subnational market approach may better promote competition and investment than a national market approach Areas with several Areas with a single White areas (C) competing BB dominant BB infrastructures (A) infrastructure (B) National approach - WBA regulation Reduces incentices for investment in infrastructure Addresses competition problems Reduces incentices for investment in infrastructure National approach Raises incentives Neglects Raises incentices -No WBA for investment in competition for investment in regulation infrastructure problems infrastructure Subnational approach Deregulate Regulate Forebearance (?) 4

6 When consider it? 2 conditions First: Competitive conditions differ significantly across geographical areas - What are the geographical areas subject to investment decisions? (unbundlers, cable operators, wireless operators)? - How measure differences in competitive conditions? (Number & shares of main suppliers, barriers to entry, QoS & prices) - Is there a common pricing constraint? - How ensure forward look? Forecast of infrastructures over lifetime of market review (cable upgrade, wireless, etc.)? What will happen to unbundlers, when incumbents migrate to NGA? 5

7 When consider it? Second: When in one part of the territory a WBA remedy is required, while this is not/no longer the case in the other part 6

8 How apply it? Define a subnational market, which is more competitive, and one (or several) subnational market(s), which are less competitive For more competitive subnational WBA market, apply either a market analysis (SMP test) to identify effective competition, or a 3-criteria test to identify that competition law alone is sufficient For less competitive subnational WBA market(s), apply a market analysis to identify SMP On subnational market(s) with SMP, impose remedies - Needed: Access + Transparency/Reference Offer + Non-discrimination - Possible: Price control - Debatable: Accounting separation and cost accounting 7

9 What unresolved (?) issues? Market definition - Include self supply in WBA market definition or take account of self supply in SMP assessment (resp. 3-criteria test)? Market analysis/3-criteria test for more competitive subnational market - How many operators are enough, so that there is no/no longer SMP (resp. 3-criteria are not/no longer fullfilled): 2+, 3+, or 4+? - What role for the other factors relevant for SMP assessment (resp. 2nd criterion in 3-criteria test)? - How assure forward look? 8

10 What unresolved (?) issues? Price control obligation for subnational market with SMP - Cost orientation for WBA? Could squeeze an alternative ti operator s margin between retail and WBA if incumbent retail tariffs are uniform But this may not be a problem if alternative operators purchase WBA at a national level - Retail-minus for WBA? Could lead incumbent to abandon uniform retail price But this may stimulate competition and investment in rural areas 9

11 What unresolved (?) issues? Safeguards for deregulated subnational market - Will incumbent maintain WBA offering? Rely on commercial incentives, or maintain obligation during a transitory period? - Will incumbent squeeze alternative operator s margin between WBA and ULL? Impose a safeguard during a transitory period? Rely on ex post intervention by NCA or NRA (where empowered to do so) 10

12 Conclusion on subnational market approach Focus is on WBA, and perhaps p wholesale terminating segments of leased lines Focus is on larger Member States, where there are significant geographical differences in available infrastructure and competitive conditions Requires complex analysis, but the benefits may justify the burden Can promote competition and investment t May mean less EU harmonisation, but is this bad? 11

13 Dr. Ulrich Stumpf wik-consult GmbH Postfach Bad Honnef / Germany u.stumpf@wik-consult.com 12