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Experiences with Liberalisation and EU Accession Views by Gabor Frischmann former president of the Communications Authority of Hungary, now independent.

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Presentation on theme: "Experiences with Liberalisation and EU Accession Views by Gabor Frischmann former president of the Communications Authority of Hungary, now independent."— Presentation transcript:

1 Experiences with Liberalisation and EU Accession Views by Gabor Frischmann former president of the Communications Authority of Hungary, now independent consultant

2 Sofia, 10th of May 2005G. Frischmann: Experiences...2 Contents History Why to liberalise? Liberalisation –In theory –In practice Results of EU accession? A balance…

3 Sofia, 10th of May 2005G. Frischmann: Experiences...3 History 2004Law on Electronic Comm 2003Numb.Port, MOB Term. 2002SMP, RIOs, RUOs, CS 2001Law on Communications Voice o. IP 19983rd GSM operator 1997Matáv IPO Telecom Act, 2 GSM lic. 1993Privatisation of MATÁV Westel Starts 1990Matáv Starts

4 Sofia, 10th of May 2005G. Frischmann: Experiences...4 If the History is so nice, why arent we satisfied? Nobody is happy! –Good sign, but must not be a target! Still both Analogue and Digital divide! –Does the market solve everything? It has been very slow! –Do we have effective tools? Innovation has slow down! –Is there any incentive?

5 Sofia, 10th of May 2005G. Frischmann: Experiences...5 Why to Liberalise? Everyone do liberalise its telecom market… It is an EU requirement… Alternatives want it… To let the market operate… Market is the most effective regulator… To cut the prices… To create a continuously evolving market? To create the basis of an I-Soc? Did we ask this Question before starting?

6 Sofia, 10th of May 2005G. Frischmann: Experiences...6 If not: –Lets look at the result! If yes: –Did we find the good strategy of getting to the target? –Did we implement the strategy in proper way?

7 Sofia, 10th of May 2005G. Frischmann: Experiences...7 Liberalisation In theory: Minimise state ownership Just remove restrictions Assure equal rights Load incumbent by additional remedies If market cant solve supply, create USO Create powerful NRA, improve enforcement Depolitise NRA In practice: OK, lobby power remains Nothing happens Hopefully works after 2-3 years Is there a working model in CEE and EU? OK, but final power at amateur court Is it possible?

8 Sofia, 10th of May 2005G. Frischmann: Experiences...8 Minimise state ownership It is not enough just to sell majority or all shares Difficult to manage: –All key knowledge remains with Incumbent –All personal and professional relations maintained –Increased lobby power: owners come too, and Leaving the country No more investment Even government level pressure Increasing unemployment etc. But: –Why to place all government orders to incumbent? –Build independent (regulation, market and economics) knowledge! –Do not believe threats. –Real public hearings!

9 Sofia, 10th of May 2005G. Frischmann: Experiences...9 Just remove restrictions & assure equal rights No legal entry barriers – far not enough Equal rights – far not enough –Huge financial entry barriers –Huge differences in size (1:100-1:10000) –Asymmetric historical distribution of natural and network resources But: create equal chance instead! –Why to place all government orders to incumbent? –Introduce asymmetric regulation –Real public hearings!

10 Sofia, 10th of May 2005G. Frischmann: Experiences...10 Load incumbent by remedies This is a good idea, But: it is very complex and time consuming doesnt solve the problem of final interpretation It can be successful, in case of well prepared NRA well prepared and co-operative operators open and transparent process using best-practices…

11 Sofia, 10th of May 2005G. Frischmann: Experiences...11 control and supervision market identification market analysis Data coll. SMP identification defining remedies EU notification transparency publication non-discr. publication account sep. transparent pricing facility sharing access, co-location non-discr. RxO approve cost orientation fair wholesale prices no chance of competition obligations price regul. Market Regulation

12 Sofia, 10th of May 2005G. Frischmann: Experiences...12 Time table of first Market Analysis prepare data collection market survey – demand side other qualitative studies education data coll. evaluate data market analysis, def. SMP EU notification define remedies public consult Before new lawAfter new law in force 4 th Q 20031st Q 20043rd Q 20042nd Q nd Q 043rd Q 044th Q1stQ

13 Sofia, 10th of May 2005G. Frischmann: Experiences...13 If market cant solve supply, create USO It is a very good idea, but very difficult to create a working solution –Affordability? According living standard or social problems? –What kind of services? Home and public telephone? In 21th century? –What kind of technology (e.g. telephone, but fix or mobile or both?) –Who shall be selected as US provider? And how? (huge lobbies!!!) –Who shall contribute? (huge lobbies!!!) –How to minimise market distortion? –How can USO contribute market development and growth?

14 Sofia, 10th of May 2005G. Frischmann: Experiences...14 previous regimenew regime content telephony, access, public phones, info. telephony, access, public phones, info technology fixed (and prov. fixed GSM) no theoretical limitation USprovider former monopolies, based on contract by appointment (!), based on contract selection criteria automaticmost effective provision financing loss in revenue (32 M EUR) max. net avoidable cost (0) contribution to the fund all market playersrelatively big players only handling of social problems no (only by price package) by special social coupons Example: Changes in USO regime in H.

15 Sofia, 10th of May 2005G. Frischmann: Experiences...15 Create powerful NRA, improve enforcement It is important, but can NRA be really powerful? EU guarantees of limited authority power: –No legislative power, just application of legislation –Must of reasoning –Decisions may be appealed But there are elements of power: –Knowledge and information –Transparency –Independence (both political and from market) –Enforcement and penalising –immediate applicability –Communications –Success in front of court ( %) – but after 1-3 years

16 Sofia, 10th of May 2005G. Frischmann: Experiences...16 NRA can and shall learn and be prepared From advanced markets: –well working/non working models –benchmarks: business, productivity, price etc. –patience From advanced regulators: –best practices, methods, models –way of transparency, conciliation, moderation –real independence How? –active participation in IRG/ERG work –utilising relative delay –from general to specific education, some together with operators experts –preparatory projects on all new issues –preparing new procedures –completing IT investment

17 Sofia, 10th of May 2005G. Frischmann: Experiences...17 Example of Transition membership based items 01.Jan May Sep.04. number portability (geographical) number portability (mobile & nongeogr.) new HRA (Hungarian Regulatory Authority) first market analysisnew SMPs and remedies new USO regime new act in force RIO/ROU account sep. transitory USO regime access deficit comp. old USO HIF former SMPs – new remedies old SMP

18 Sofia, 10th of May 2005G. Frischmann: Experiences...18 Interpretation forbidden uncertain free uncertain obligatory Newcomers interpretation on inc. obligations Newcomers interpret. on incumbents restrictions Newcomers wish on incumbents room NRA Interpretation NRA can be wrong too Incumbs interpret on what is obl. Incumbs interpret. on what is forb. Incumbents wished room

19 Sofia, 10th of May 2005G. Frischmann: Experiences...19 How EU accession influences all these? If your answer on Why liberalise? was, that because of EU, you will get a lot of problems with EU and yourself If it was one of the last two (evolving market, i- soc), in that case EU adds a lot of new tools and power: –Best practices, tools –Relations –Safe legislative background

20 Sofia, 10th of May 2005G. Frischmann: Experiences...20 Summary - Challenges For the operators higher flexibility, less pre-defined rules wide scale of remedies new customer protection rules incl. comparativeness playing in EU playing field audited account separation & data provisioning For the regulator creation of a brand new decision process market analysis, new SMP def, remedies etc. implementing effective Customers Rights represent. function higher flexibility, less pre-defined rules development of competencies notification (Art.7.)

21 Sofia, 10th of May 2005G. Frischmann: Experiences...21 Lets make a balance Cost of non-conformity Cost of conformity Total cost for the Society Total benefits For the Society Thank You!


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