1. International Mobile Roaming Market in Turkey
ALİ DEMİRÖZ
SENIOR COORDINATOR, TCA
Internatıonal COMPETITION DAY
INTERNATIONAL WORKING GROUP FOR RESEARCH OF COMPETITION ISSUES IN THE MARKET OF INTERNATIONAL TELECOMMUNICATIONS
3RD MEETING SEPTEMBER, ST. PETERSBURG

2. Works of International Working Group- What we have done so far?
First Meeting in Kazan in September 2012
Initial presentations and debates
Second Meeting in İstanbul in April 2014
With participation of delegates from Russia, Kazakhstan and Turkey
Presentations by TCA and FAS
Decided to provide detailed information about
Market position of the mobile operators
General price level in inter-operator settlements
Level of subscriber roaming rates
Volume of roaming communication

3. Presentation Plan
Summary of the issues presented in the previous meetings
General information and data about Turkish mobile market
Regulations: Responsibilities of different authorities
Summary of a case handled by TCA on roaming agreements
IMR market in Turkey:
Regulations
Data on IMR practices, prices and volumes
The way forward?

4. Turkish Telecommunications Markets

5. Turkish Telecommunications Markets-1
Telecoms
Mobile
Turkcell
Vodafone
Fixed
Türk Telekom
Avea
Turkcell Superonline
TTNET

6. Turkish Telecommunications Markets-2
Controlled by three telecom conglomerates
Türk Telekom Group: Türk Telekom, Avea, TTNET etc.
Turkcell Group: Turkcell, Turkcell Superonline etc.
Vodafone Group: Vodafone, VodafoneNet etc.
Groups operate in a various telecom related businesses included fixed and mobile telephony, broadband services, backhaul services and etc.
The mobile market is more competitive than the fixed market.

7. Turkish Telecommunications Markets-3
Mobile telecommunications are growing fast while fixed telecommunications are becoming «obsolete»;
Fixed vs. Mobile Volume (million minutes)

8. 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

9. Turkish Telecommunications Markets-5
Regulation
Policy Setting: Ministry of Transport, Maritime Affairs and Communication
Sector Specific Regulation: ICTA
Competition Law: TCA

10. Turkish Telecommunications Markets-6
Main Regulations in mobile markets
Wholesale Market
Domestic call termination: All operators have Significant Market Power (SMP) on their own networks
Call origination and access to mobile network: Turkcell is the SMP operator but Vodafone and Avea are not
Retail market
All operators are subject to price cap
Turkcell is also subject to retail price control
(not to reduce prices under 0,0428 TL-0,0158€/min)

11. Turkish Telecommunications Markets-7
TCA
Enforcer of Competition Law: No regulatory power!
Competition Act covers antitrust and merger control provisions
Ex post case handling in the sector
Handled many cases in mobile markets-mostly related to abuse of dominance cases
So far, a preliminary investigation concluded in 2013 about international roaming
No sector inquiry conducted in this market

12. TURKCELL-VODAFONE INTERNATIONAL ROAMING CASE (December 2013)

14. Allegations - 1
Turkcell and Vodafone TR violate Turkish Competition Act by signing international roaming agreements with foreign GSM operators.
Wholesale level international roaming agreements:
GSMA’s STIRA (standard terms for international roaming agreements) and a discount agreement as an Annex to STIRA
Discount agreements
include reciprocal terms; i.e. both for inbound and outbound traffic.
require parties to choose each other’s network as the first choice and they include commitments regarding the total amount of traffic sent.

15. Allegations - 2
Under a reciprocal discount scheme, operator having more outbound traffic (parallel to power in national GSM market) use this advantage to be the first choice operator and take most of the inbound traffic.
Turkcell is dominant in Turkish GSM market. Vodafone has global market power in GSM services.
They violate the Turkish Competition Act:
Provisions on being first choice operator creates de facto exclusivity.
Provisions on reciprocity creates foreclosure of inbound traffic market.
Alternative operator(s) cannot receive inbound traffic despite having cheaper tariffs.

16. Analysis of the Allegations- 1
Reciprocal agreements are common in the market.
Discount agreements have become common especially after the introduction of steering technology.
In these reciprocal discount agreements, the parties make commitments about their own traffic directed to other operator’s network.
Based on the amount of commitments given, these agreements allow for decreases from standard/reference tariff of per minute international call/SMS/data traffic.
Turkey is a net traffic (and hence income) receiver country: Turkish citizens going abroad create less traffic than the traffic created by tourists coming to Turkey.

17. Analysis of the Allegations- 2
Analysis of the effect of these agreements to understand whether they restrict competition or not.
International roaming revenues constitute very low portion of total revenues.
In last 3 years, Turkcell’s market share in terms of net total sales has decreased slightly; while Vodafone’s and applicant’s shares increased slightly.
Turkcell’s roaming revenues have been falling since 2012 while applicant’s revenues have been increasing. Turkcell could receive lower rate of traffic than the traffic it sent. For the applicant, there is a progress towards higher rate of inbound traffic.
Inbound calls to Turkcell’s and Vodafone’s networks have fallen while inbound calls to network of the applicant increased substantially.
Contrary to allegations, it is seen that the applicant performs better in international roaming market in terms of receiving inbound traffic from foreign operators.

18. Analysis of the Allegations- 3
No exclusivity clause in agreements except for 2 of them.
One of them is with a 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 inbound international roaming traffic 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 amounts and in turn, discounts are made from standard tariffs. If an operator cannot reach to traffic amount committed, it still pays the price of the committed traffic to other party.
The traffic committed is in terms of «minutes», not in terms of «share in total incoming traffic». It is stated that the latter cannot be known by home operator.

19. Analysis of the Allegations- 4
Effect of discount agreements including reciprocal traffic commitments:
T-Mobile signed agreements with all 3 Turkish GSM operators.
Traffic received by Turkcell and Vodafone from T-Mobile compared to their commited traffic is much less than the traffic received by the applicant compared to its commitment.
Telefonica 02 has discount agreements with Turkcell and applicant.
Turkcell commits much higher traffic to Telefonica than the applicant but receives lesser 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
All allegations rejected.

20. International Roaming Market in Turkey

21. Regulations No regulation on wholesale or retail price levels
Only consumer protection regulations
Transparency
Bill shock alert
Wholesale rates are freely negotiated between operators.
Retail prices are freely set by MNOs.

22. IMR Practices in Turkey
Wholesale Level
STIRA
Base prices are determined
Discount Agreements
Varies among countries and/or operators
In Turkey, Vodofone’s rates are negotiated globally by VRS; Turkcell and Avea individually.
Retail
Base prices vs. package offers
Prices differ according to countries and/or country groups
Not advertised except for Vodafone
Consumers refrain from mobile phone usage because of high prices

23. IMR Data on Volumes and Prices

24. Methodologies and Difficulties
According to the Competition Act, a formal investigation is needed to collect data
TCA cooperated with ICTA for data collection and they collected the data
Prices vary among operators, thus average prices are employed
Also data and information include business secrets that we have to protect,
Not possible to share all data and information
Not possible to collect data for all the IWG countries, data about Russia were collected as a good indicator
The data provided by ICTA is only on voice,
The data on SMSs and data services are collected informally from operators

25. Retail Prices (Turkcell)
As the largest operator prices for Turkcell are presented
Base Prices (2013)
To Europe, Russia, US and Canada 3,90 TL/min (1,39 €/min)
10 TL(3,57 €)/MB for first 10 MB, next 10 MB 4 TL(1,43 €)/MB, then 2 TL (0,72 €)/MB
«Smart Packages» (2014)
25 TL (8,93 €) for 30 minutes or SMSs
(0,83 TL (0,30€)/min-SMS)
25 TL (8,93 €) for 30 MBs
(0,83 TL (0,30€)/MB)
Price Caps (As of July 1, 2014)
Home 0,4625 TL (0,1652 € )/min, 0,3325 TL (0,1188 € )/SMS

26. Quarterly International Roaming Traffic (EU+US+RF)

27. International Roaming Traffic
Turkey is a «Net Receiver» country
On average, inbound roaming volume is more than four times higher than outbound roaming volume,
Inbound traffic volume shows high seasonality,
In summer, inbound roaming volume peaks,
On the contrary, outbound volume is stable
In 2014’s Q2, Russian Federation accounts for the third highest inbound and outbound mobile traffic in Turkey.

28. International Roaming Traffic with Russian Federation

29. Yearly International Roaming Traffic (RF)

30. Quarterly Traffic Comparison (RF)
2012
2013
2014 Q1
Total Outbound Traffic
Total Inbound Traffic Q2 Q3
n/a Q4

31. International Roaming Traffic with Russian Federation
Not different from the general traffic volume
Turkey is again the «Net Receiver» country
On average, Roaming traffic created by Russian Federation citizens in Turkey is more than eleven times higher than roaming traffic created by Turkish citizens in Russian Federation
Inbound traffic volume shows high seasonality
In summer, inbound roaming volume peaks
On the contrary, outbound volume is stable

32. Average International Roaming Prices (EU+US+RF)

33. Average International Roaming Prices
The money paid by Turkish operators abroad are always higher than the money paid by the operators of other countries in Turkey.
On average, a Turkish operator pays almost two and half times more than a foreign operator.
Although, the chart doesn’t show a clear trend in pricing, recent average roaming price in Turkey is clearly lower than the previous years.

34. Average International Roaming Prices with Russian Federation

35. Average International Roaming Prices with Russian Federation
Except for 2012 Q1, the average money paid by Turkish operators in Russia are always higher than the money paid by the operators of Russian Federation in Turkey.
On average, a Turkish operator pays more than three times more money per minute of roaming in Russia than a Russian operator pays in Turkey.
Average money paid by a Russian Federation operator for roaming in Turkey is almost same with general average (EU+USA+RF)

36. International Roaming Prices in the EU
July 1,2011- June 30,2013
July 1,2012- June 30,2013
July 1, 2013-June 30,2014
EU Outgoing calls (wholesale)
0,18 €
0,14 €
0,10 €
EU Outgoing calls (retail)
0,35 €
0,29 €
0,24 €

37. International Roaming Prices in the EU
EU prices are regulated and continuously declining
As a result, international roaming rates in Russia and Turkey are more expensive than EU tariffs
But still international roaming rates for Turkish operators in Russia are almost three times higher than Turkish rates and six times higher than EU tariffs
Informal data also support our conclusions

38. International Roaming Prices for data and SMS (wholesale)
Incomplete and confidential (cannot share the data and rates but results)
Varies among operators
From 1st of July, price per MB of data was reduced to 5 Euro cents from 15 Euro cents in the EU,
It seems that after that reduction the EU prices for data match the wholesale prices applied by Turkish and Russian operators
Still wholesale prices of Turkish operators are cheaper than Russian operators’ prices
Price per SMS is 2 Euro cents in the EU, prices applied by Turkish and Russian operators are almost identical and partially higher than the EU rates.

39. The Way Forward The problem: High IMR prices
Impossible to find a domestic solution: At least there is a need for bilateral intervention
Handled mostly by regulators and/or ministries
Is competition law an appropriate tool?
Difficulties in establishing the dominance and abuse
Difficulties in imposing and supervising effective remedies

40. The Way Forward
What Should Be Done? A binding agreement must be targeted.
An initiative should be started between/among regulators
ICTA’s initiatives : Regional Roaming Initiative Among Balkan Countries
Inclusion of Turkey into the scope of EU roaming regulation
Political support is needed
Support of relevant ministries is essential as they are the policy-makers
Regulators and TCA has no power to make a binding agreement

41. Thank you for your attention…