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International Roaming Markets in Turkey Umit Nevruz OZDEMIR Nur Seda KOKTURK 1
International Roaming Markets in Turkey
Umit Nevruz OZDEMIR
Nur Seda KOKTURK
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Turkish Telecommunications Markets-1
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Turkish Telecommunications Markets-2
• Market size is considerably high and keeps growing;
– Total sales: 25,9 B.TL in 2013 from 20.7 B.TL in 2009,
– Mobile sales: 18,7 B.TL in 2013 from13 B.TL in 2009.
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Turkish Telecommunications Markets-3
• Mobile telecommunications are growing fastly while fixed telecommunications are becoming «obsolete»;
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Turkish Telecommunications Markets-4
• Mobile market is led by Turkcell with strong presence of Vodafone and Avea:– Turkcell leading operator
regional power,
– Vodafone, part of an
int’l conglomerate,
– Avea, subsidiary of fixed
incumbent Türk Telekom
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International Traffic-1• Incoming traffic; Germany leads, followed by a cluster of Russia,
Bulgaria and England
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Incoming Voice Traffic
(Million Minutes)
0
5
10
15
20
25
30
35
40
2011 Q1 2011 Q2 2011 Q3 2011 Q4 2012 Q1 2012 Q2
Germany
Russia
Bulgaria
England
International Traffic-2
• Outgoing traffic; Germany leads, followed by Saudi Arabia and England
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Outgoing Voice Trafic
(Millions of Minutes)
0
20
40
60
80
100
120
140
160
180
2011 Q1 2011 Q2 2011 Q3 2011 Q4 2012 Q1 2012 Q2
Germany
Saudi Arabia
England
International Traffic-3
8
0
1
2
3
4
5
Outgoing Calls
2012-3 2012-4 2013-1 2013-2 2013-3 2013-40
1
2
3
4
5
Incoming Calls
2012-3 2012-4 2013-1 2013-2 2013-3 2013-4
Sept. 2012 9
International Traffic-4
• For International Traffic;
– Turkish citizens residing outside Turkey (Germany)
– Factors related to religion (S. Arabia)
– Tourism (England, Russia)
– Neighborly relations (Bulgaria, Syria)
– Business purposes (Russia)
Sept. 2012 10
International Traffic-5
• In Turkey;
– Domestically;
• Call termination: All operators have Significant Market Power (SMP) in their own networks
• Turkcell: SMP in access to mobile networks
Sept. 2012 11
International Traffic-6• Until September 2011;
– Calls originating abroad was also regulated
– No distinction between ‘calls originating abroad’ ‘call originating at home’
– Same call termination rates applied which were;
Call Termination Rates (in Turkish Cents)
Avea Turkcell Vodafone
2G Network 2,96 2.50 2.58
3G NetworkVoice 2,96 2,50 2,58
Video 7,75 7,75 7,75
Sept. 2012 12
International Traffic-7
• After September 2011
– Calls originating abroad are taken out of regulation context
– Rates are freely negotiated between domestic and foreign operators
Sept. 2012 13
International Traffic-8
• TCA
– Case handling role in the sector
• So far, a preliminary investigation concluded in 2013 about international roaming
– No sector inquiry initiated in this issue
– Limited access to trading conditions
– Formal request from BTK
• No regulation – limited data
TURKCELL-VODAFONE INTERNATIONAL ROAMING
CASE (19.12.2013)
01.04.2014İstanbul
International Roaming Services
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Allegations - 1
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• International roaming allows a subscriber to use the services of itsown GSM operator abroad.
• This requires the presence of an agreement between GSM operatorsoperating in different countries (Home operator – Foreign/Visitedoperator)
• Wholesale level international roaming agreements:
– GSMA’s STIRA (standard terms for international roamingagreements)
– Discount agreement as an Annex to STIRA
Allegations - 2
• Discount agreements include reciprocal terms; i.e. both for incomingand outgoing traffic.
• Discount agreements require parties to choose each other’s networkas the first choice and they include commitments regarding the totaltraffic sent.
• Instead of choosing the Turkish operator with the cheapest tariff,foreign operators choose the one that commits to buy the largestquantity of minutes.
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Allegations - 3
• Under a reciprocal discount scheme, operator having moreoutbound traffic (parallel to power in national GSM market)use this advantage to be the first choice operator and takemost of the incoming traffic of foreign operators.
• This creates an artificial link between national GSM servicesmarket and wholesale international roaming servicesmarket.
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Allegations - 4
• Turkcell and Vodafone TR violate Article 4 and Article 6 ofTurkish Competition Act by signing international roamingagreements with foreign GSM operators.
– Provisions on being first choice operator creates de facto exclusivity.
– Provisions on reciprocity creates foreclosure of inbound (incoming) trafficmarket.
– Alternative operator(s) cannot receive inbound traffic despite havingcheaper tariffs.
– Turkcell is dominant in Turkish GSM market.
– Vodafone has global market power in GSM services.
Issues on International Roaming - 1
• Bilateral International Roaming Agreements (reference: STIRA and annexedAA.12-14) are needed:
– Home operator’s subscriber goes abroad and uses its own network to make calls (also to sendSMS and to use data).
– Foreign operator’s subscriber comes to home country and uses its own network to make calls.
– Both operators use the network/services of the operator that is based on the country that thesubscriber goes.
• Inter-Operator Tariff (ITO) at wholesale level:
– Outgoing calls: origination and transit tariffs
– Incoming calls: termination and transit tariffs
• This is cost of outbound traffic for the operator whose subscriber goes abroad.
• This is income from inbound traffic for the operator whose network is used by aforeign operator.
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Issues on International Roaming - 2
• Reciprocal agreements that include clauses on inbound and outbound traffic of bothparties are common in the market.
• Discount agreements (including discounts from the unit/minute price tariffs in referencedocument) have become common especially after the introduction of steering technology,which allow parties to direct their traffic to a chosen operator.
• In these reciprocal discount agreements, the parties make commitments about their owntraffic directed to other operator’s network. Based on the amount of commitments given,these reciprocal discount agreements allow for decreases from standard/reference tariff ofper minute international call/SMS/data traffic.
• Turkey is a net traffic (and hence income) receiver country: Turkish people going abroad create less traffic than the traffic created by tourists coming to Turkey.
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Issues on International Roaming - 3
• Turkcell states that:
– The amount of traffic commitment to a foreign operator is determined by the past traffic databetween a specific foreign operator and Turkcell.
– It is not possible to know the total traffic of a specific foreign operator incoming to Turkey.
– Steering has positive consequences for the subscriber: It allows for steering traffic to a foreignoperator with better service quality and lower prices.
• Vodafone TR states that:
– Since February 2011 Luxemburg based Vodafone Roaming Services (VRS) deal with theinternational roaming agreements of Vodafone Group.
– Commitments, discounts and steering issues are all handled by VRS.
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Article 4 Analysis - 1
• Agreements between mobile operators in different countries are vertical agreements since homecountry operator gives a service at wholesale level to a foreign operator.
• Since the agreements do not have hard-core limitations on resale price maintenance, geographicalor customer allocation etc., it is concluded that they do not have the object of restricting oreliminating competition in the market.
• Hence it should be analyzed whether the effect of these agreements restrict competition or not.
• Exclusivity:
– Except for two of them, none of the discount agreements have clauses on exclusivity. On the contrary it is stated in most of them that the «agreement does not prevent the parties to make agreements on the same subject with third parties».
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Article 4 Analysis - 2• Effect analysis:
– Whether the applicant can/could acquire market share in international roaming market that is parallel to itsshare in national GSM market is the focus of the analysis.
– In last 3 years, Turkcell’s market share in terms of net total sales has decreased from 55% to 49%;Vodafone’s share increased from 26% to 30% and applicant’s share increased from 19% to 20%.
– International roaming revenues are below 3% of total revenues.
– Turkcell’s roaming revenues have been falling since 2012 while applicant’s revenues have been increasing.
– Incoming calls to Turkcell’s and Vodafone’s networks have fallen while incoming calls to network of theapplicant increased substantially. As a result for incoming calls, market shares of Turkcell and Vodafonehave decreased, applicant’s share has risen.
– Turkcell could receive lower rate of traffic than the traffic it sent. Vodafone’s case is the opposite, probablydue to Vodafone Group’s subsidiaries’ traffic from other countries. For the applicant, there is a progresstowards higher rate of incoming traffic.
– Contrary to allegations, it is seen that the applicant performs better in international roaming market interms of receiving inbound traffic from foreign operators.
• Allegations under Article 4 should be rejected.
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Article 6 Analysis - 1
• Allegations:
– Turkcell abuses its dominant position in Turkish GSM market in international market. Most ofthe traffic from foreign operators is steered to Turkcell’s network by using the first choiceoperator clauses in reciprocal bilateral agreements and this creates de facto exclusivity.
– Vodafone is dominant in global GSM market and abuses its dominance by discriminating infavor of its own subsidiaries.
• Steps of Article 6 Analysis
– Relevant market: assumed
– Dominance: assumed
– Abuse: focus of the analysis
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Article 6 Analysis - 2• No exclusivity clause in agreements except for 2 of them.
– Russian GSM operator. It should steer all its traffic coming to Turkey to Turkcell
– The share of this operator’s traffic in Turkcell’s total incoming international roamingtraffic is below 4%. In terms of revenues the share is below 2%.
• No clause in Turkcell’s agreements on being «first choice operator».
– In discount agreements, commitments are given based on reciprocal traffic amountsand in turn, discounts are made from standard tariffs. If an operator cannot reach totraffic amount committed, it still pays the price of the committed traffic to other party.
– In few of the agreements there are different prices (discount rates) for balanced andunbalanced traffic amounts.
• The traffic committed is in terms of «minutes», not in terms of «share in totalincoming traffic». It is stated that the latter cannot be known by home operator.
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Article 6 Analysis - 3• Effect of discount agreements includind reciprocal traffic commitments:
– T-Mobile signed agreements with all 3 Turkish GSM operators.
• Traffic received by Turkcell and Vodafone from T-Mobile compared to theircommited traffic is much less than the traffic received by the applicant comparedto its commitment. Telefonica 02 has discount agreements with Turkcell andapplicant.
• Turkcell commits much more higher traffic to Telefonica than the applicant butcan receive only modestly higher traffic.
– Vodafone Group also has discount agreements with Turkcell and applicant.
• Applicant receives much more traffic than it commits to send Vodafone’s network.
• Contrary to discrimination allegations
• Allegations under Article 6 should be rejected.28
Additional Findings
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Thanks
