DUBLIN November 15, 2007. The aim A single telecoms market for 500 million consumers.

DUBLIN November 15, 2007


The aim

A single telecoms market for

500 million consumers


Why is the telecoms sector so important?

• 2% of the EU economy (GDP)

• Key to EU goals of growth & productivity

• Overall revenue growth of sector outpaces growth of the EU economy as a whole

• In 2006 the ICT sector was valued at €649 billion

• In 2006 investment in telecoms sector was €47 billion

• Value of radio spectrum-dependent services in the EU is €250 billion


Why is there an EU responsibility for the telecoms sector?

• Jose Manuel Barroso: "airwaves know no borders. And the internet protocol belongs to no nation.“

• UNICE, for industry: “The current system has not delivered a true internal market”.

• BEUC, for consumers: “Because of the sluggish, sometimes incoherent implementation of the framework by national regulatory authorities, we would welcome any procedural reform that would speed up and improve implementation.”

• A Voice over IP-provider: “It is very difficult to implement pan-European strategies and commit to cross-border investment when national regulatory authorities rules vary so widely.”


Remaining competition bottlenecks in the telecoms sector

Subscribers using an alternative provider for direct access, July 2006

10.50%

21.00%

8.00% 7.60%

0.09%

13.92%

3.30%

0.17%

1.90% 2.00%

3.61%

7.80%

15.20%

1.10%

5.00%

25.56%

9.00%

0% 0%0%

9.20%

0%

5%

10%

15%

20%

25%

30%

BE DK DE EE EL ES FR IT CY LT LU HU MT AT PL PT SI SK FI SE UK

Direct access EU average July 2006


Remaining competition bottlenecks in the telecoms sector (II)

Incumbent's broadband market share excluding/including resale lines of alternative operators (July 2007)

46.8

%

28.0

%

36.9

%

63.7

%

46.4

%

56.6

%

59.0

%

55.8

%

46.8

%

48.6

%

64.8

%

89.8

%

49.5

%

48.8

%

73.2

%

49.5

%

42.6

%

44.4

%

39.2

%

60.2

%

70.1

%

12.2

%

52.0

%

54.3

%

69.1

%

38.9

%

25.7

%

48.1

%

28.0

%

36.9

%

65.1

%

66.7

%

56.6

%

59.0

%

57.9

%

48.4

%

48.6

%

64.8

%

89.8

%

49.7

%

48.8

%

84.8

%

49.5

%

61.3

%

44.4

%

39.2

%

60.2

%

70.1

%

12.2

%

52.4

% 56.8

%

69.1

%

44.0

%

54.0

%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

BE BG CZ DK DE EE EL ES FR IE IT CY LV LT LU HU MT NL AT PL PT RO SI SK FI SE UK

Incumbents no resale Incumbents + DSL resale


Too many white spots on Europe’s broadband map

0%

20%

40%

60%

80%

100%

BE DK LU UK NL MT FR SE PT DE FI AT EE ES EU25 HU IT SI IE LT CZ LV CY PL SK EL

National Rural

Coverage of DSL networks as % of population


Good regulation drives competition and investment

EU Broadband penetration rate (July 2007)

5.7% 6.

6%

6.8%

6.8%

6.9%

11.1

%

11.6

%

11.6

%

12.2

%

12.7

%

13.9

%

14.8

%

15.3

%

15.5

%

15.9

%

16.8

%

18.4

%

20.0

%

21.1

%

22.3

%

23.8

%

23.9

%

24.6

%

28.3

%

28.8

%

33.1

%

37.2

%

18.2

%

0%

5%

10%

15%

20%

25%

30%

35%

40%

BG RO EL PL SK CY LV HU CZ LT MT PT SI IE IT ES EU27 AT EE DE FR UK BE LU SE FI NL DK


Promote competition

Safeguardthe interests

of citizens

Complete the Single Market

Reforming the Telecom Rules:Objectives


Main Proposals for Change

• Strengthening consumer rights

• Reinforcing national regulators– e.g. Improved independence and Functional Separation

• Promoting the wireless economy– better radio spectrum management and making use of the

digital dividend

• Less but better regulation - 50% reduction in regulated markets

• A new European Authority


Strengthening consumers’ rights

• Pricing & supply conditions

• Number portability

• Network and information security

• Emergency access via «112»

• eAccessibility


Pricing & supply conditions

• Operators to publish comparable, adequate and up-to-date information on applicable prices and tariffs

• Tariff information to be available to third parties to publish interactive guides

• National Regulatory Authorities (NRAs) may require tariff information to be made available ‘at the time and point of purchase’


Number portability

• Porting of numbers and their subsequent activation to be within one working day


Network and information security

• Stronger obligations for operators to ensure the integrity and security of their networks - eg mandatory breach notification

security audits

• New Authority to be a European Centre of resource and expertise

• Further legal measures to combat spam and malicious software (malware)


Emergency calls

• Automatic provision of caller location information to emergency authorities

• More publicity for the European emergency number 112

• Better access to emergency services for disabled users


eAccessibility

• Users with disabilities to have equivalent access to telephone services, directory services etc

• Establishment of a permanent working group on eAccessibility issues

• Annual report on measures to improve eAccessibility


Reinforcing national regulators

• A new remedy - functional separation

• Stronger safeguards for NRA independence

• More powers & resources


Functional Separation

• Aim is to ensure fair and equal access to bottleneck network assets

• Entails separate management of an operator’s infrastructure and retail operations; does not imply ‘ownership unbundling’

• To be used where justified; not appropriate in all Member States


Functional Separation

Prior to imposing functional separation, an NRA must:

• Identify persisting competition problems/market failures in several relevant markets

• Analyse the impact of the proposed separation

• Receive Commission approval


Independence of NRAs

• NRA not to take instructions from any other body (except courts or appeal bodies)

• No arbitrary dismissal of the Head of the NRA


Powers and Resources of NRAs

• Member States may empower NRAs to impose financial penalties

• Member States to ensure that NRAs have adequate financial and human resources


Promoting the wireless economy

• New approach to spectrum management

Making it easier to get spectrumand to use it

• Making the best use of the digital dividend


Spectrum management

• Apply principles of technology and service neutrality

• Designate bands where EU wide spectrum trading would apply

• Encourage licence-free spectrum use

• Harmonisation where appropriate to create a level playing field for industry and benefits for citizens


Digital Dividend

• The transition from analogue to digital TV will make fresh spectrum available

• Unique opportunity to boost broadcasting and wireless sectors, e.g. HDTV, wireless broadband to help bridge the digital divide

• Dividend to offer substantially more benefits if coordinated at EU level – “Common bands” for a wide variety of networks and to stimulate innovation


Less but better regulation

• 7 regulated markets (instead of 18)

• Focus on key bottlenecks

• Better and faster procedures


A new European Authority

European Parliament


A new European Authority

• Working with national regulators and the Commission to achieve consistent EU best practice

• Facilitating the roll-out of pan-European services

• Incorporating tasks currently undertaken by the European Regulators Group (ERG) and the European Network & Information Security Agency (ENISA)


Proposed new Proposed new procedureprocedure

Opinion of Authority

Result:Consistency

Commission Recommendation - List of markets

NRA defines market

NRA designates SMP operators

NRA imposes obligations

Commission approval

Commission approval

Result:Consistency

Consistency

Commission approval


Review Communication

Elements of the reform package Elements of the reform package

Directive

Regulation on Authority

Digital Dividend Communication

Recommendation relevant markets

+ Explan Note

Impact Assessment+ Summary

Framework

Access

AuthorisationePrivacy

Universal service

Directive


In conclusion:the Reform will …

• Reinforce Europe’s position as a world leader in telecoms

• Increase competition, leading to more innovation and investment

• Help the European citizen to get the most out of modern communications systems


For more information….

• http://ec.europa.eu/ecomm

http://ec.europa.eu/ecomm

http://ec.europa.eu/ecomm


Markets removed from list

3 National/local residential fixed telephone services

4 International residential fixed telephone services5 National/ local business fixed telephone services6 International business fixed telephone services7 The minimum set of leased lines10 Transit services in the fixed telephone network14 Wholesale trunk segments of leased lines 15 Access and call origination on mobile networks17 International roaming on mobile networks 18 Broadcasting transmission


Markets remaining in the list

Retail level1. Access to the public telephone network at a fixed

location for residential and non-residential customers

Wholesale level2. Call origination on the public telephone network

provided at a fixed location 3. Call termination on individual public telephone

networks provided at a fixed location 4. Wholesale (physical) network infrastructure access

(including shared or fully unbundled access) at a fixed location

5. Wholesale broadband access 6. Wholesale terminating segments of leased lines 7. Voice call termination on individual mobile networks

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DUBLIN November 15, 2007. The aim A single telecoms market for 500 million consumers.

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