1. Developments and the regulatory environment in the electronic communications market 2000- 2007 Rivo Mets

2. Table of Contents Electronic Communications – situation, market players Development of market regulation

3. Market turnover 2003 2004 2005 2006 2007 (in million EUR) 492,0 537,2 609,9 706,0 740,5 In 2007 the market was divided by the following services:

4. Recent figures end of Q2, 2008 Mobile penetration: 164,0% (realistic 130%) Fixed line penetration 37,3% Digitalization of fixed network: 84% Internet services are used by 67% of population 48% of the households are connected to the internet Broadband penetration: 22,7% of the population and 47% of the households mobile broadband is used by 6% of population.

5. Service providers registered and actually providing services

6. Customer penetration in the mobile telephone market

7. mobile telephone market shares

8. Customer and access line penetration in the telephone market

9. Telephone market shares

10. Internet service market dynamics

11. Internet service market players and used technologies Q2, 2007 and 2008

12. Cable and IPTV service market players and technologies

13. Development of the electronic communications sector in Europe Until the late 80-ies of the last century the electronic communications sector was considered as a natural monopoly, where the state owned 100% of shares and which originated from two main principles:  The infrastructure is not easily replaceable  Communication services were considered as public services0. The situation changed in the end of 80-ies and in early 90-ies partly because of political and partly because of economical reasons.

14. The development of European electronic communications sector regulation (1) 1987 – Green Paper; Liberalisation directives:  Directive of terminal equipment 88/301/EEC  Directive of telecommunication services 90/388/EEC Directives related to opening the fixed communications networks for (the 1998 regulatory framework):  Directive of full competition 96/19/EC  Directive of open network provision 97/33/EC ja 98/10/EC

15. The development of European electronic communications sector regulation (2) 2002 regulatory framework (07.03):  Framework Directive 2002/21/EC  Authorisation Directive 2002/20/EC  Access Directive 2002/19/EC  Universal Service Directive 2002/22/EC  Directive on privacy and electronic communications 2002/58/EC (12.07) In relation to the framework recommendations and guidelines have also been implemented:  Recommendation on relevant markets 17.12.2007 nr 2007/879/EC  Commission guidelines on market analysis and assessment of SMP 11.07.2002

16. The development of European electronic communications sector regulation (3) In the second half of 2006 the commission started a review process of the regulatory framework The amendment proposals to the directive were introduced in November 2007, the new directives should be enacted in 2010 Recommendations, regulations and guidelines will be/have been also changed:  Roaming Regulation 27.06.2007 nr 2007/717  Recommendation on relevant markets 17.12.2007 nr 2007/879/EÜ (previously 11.02.2003 nr 2003/311/EC)  Currently under preparation is the recommendation on voice termination rates, NGA recommendation, new roaming regulation.

17. The development of Estonian electronic communications sector regulation 1991 - 2000 Communications Act, also Broadcasting Act (01.06.94) and Cable Distribution Act (01.06.99) Telecommunications Act (01.03.2000), new Cable Distribution Act (2001) Electronic Communications Act 01.01.2005

18. The development of Estonian electronic communications sector Until 1992 a service exclusively provided by the state; In 1992 the fixed network and the provision of fixed communication services was handed over to AS Eesti Telefon (currently Elion); According to the concession agreement Elion was given exclusive rights to provide certain communication and network services; In 2001 the market was opened for competition.

19. Regulation according to the Telecommunications Act (2000-2005) 2000-2005 Elion was designated as having significant market power (SMP) on the markets of fixed telephony, interconnection and leased lines (this was prolonged until new market analyses were carried out according to the new Electronic Communications Act) 2001-2005 EMT was designated as having SMP on the market of mobile telephone services; The main regulatory focus was on the former monopoly Elion, the remedies were enacted in the legislation and the undertaking with SMP had to act in accordance with the Telecommunications Act; The regulation on EMT was minimal

20. Implementation of the Electronic Communications Act (1) The act came into force in 01.01.2005 a. The analysis process (which was preceded with the data gathering exercise from April to August) was started in August 2005. The market analysis process on 18 markets ended in September 2007 with the final decision on the broadcasting transmission market.

21. Implementation of the Electronic Communications Act (2) The process was carried out in two years (August 2005- September 2007) 20 market analysis were made (additional analysis on two markets) 13 decisions with annexes were made on those markets (two drafts were drafted before the final decision – for the national and international consultation rounds) Three decisions were appealed to the regulatory authority Two decisions have been appealed to court

22. Results of market analysis SMP-s were found on 10 markets (2 on retail markets and 8 on wholesale markets); 14 communications undertakings were designated as having SMP; Elion has SMP on 8 markets; The Estonian electronic communications markets are one of the least regulated markets in Europe.

23. Problems The launch of a new process – market analysis; No previous experiences; Difficulties with data gathering; Pressure from the commission to complete the market analysis process (often emphasis on speed rather then on quality); Fluctuation of manpower (during the process 9 people left and 5 more after completion).

24. Thank You!