1. Effective regulatory regimes and impact on investments in the telecom sector: A perspective from ECTA European Competitive Telecommunications Association 14 April 2005 Tom Kiedrowski Regulatory Affairs Manager, ECTA

2. What is ECTA?  The European Competitive Telecommunications Association is the leading pan-European trade association serving the alternative electronic communications industry.  ECTA has some 150 member companies, operators and service providers as well as national associations of such.  ECTA objectives are to:  Work for a fair regulatory environment which allows all electronic communications providers to compete on level terms in order to multiply investment and innovation throughout an effective European internal market.  Represent the electronic communications industry to key government and regulatory bodies  Maintain a forum for networking and business development throughout Europe.

3. Policy context  Recently Commissioner Viviane Reding outlined her i2010 agenda.  One of those ‘i’s is for innovation and investment in ICT.  [Europe]”should be world-class in the take-up of new informational products and services.”  Investment is critical to development in most industries and to the growth of economies in general: ICT is no exception

4. Communications Competition and Investment  In “ICT”, the “C” of communications plays a significant role in delivering EU growth objectives and driving innovation and productivity.  ECTA believes that effective competition is key to unlocking the potential of the electronic communications sector because: it drives innovation it drives down prices it boosts broadband penetration and adoption and above all else: it stimulates investment

5. The (not so) New Regulatory Framework  The single most important way of achieving the benefits of competition is through effective implementation of the new regulatory framework (NRF)  Mid-term review: the Kok Report “the regulatory framework for electronic communications adopted in 2002 should be fully implemented and strictly enforced, so that competition is more effective in driving down prices for consumers and businesses.”  It provides the right tools to foster competition and many of the existing bottlenecks could be resolved by using these tools in an effective manner

6. The liberalisation process is NOT complete  transposition by Member States has been difficult – some better than others  Moreover, effective implementation still varies significantly across Member States and is not compliant with the directives in some cases  This leads to significant discrepancies that do not benefit end- users and can impact growth  Ofcom Strategic Review Regulation is still needed and Ofcom plans to reinforce its efforts to prevent discrimination by the incumbent. Non-discrimination is a key element of the NRF and probably the best tool to ensure effective competition

7. Regulatory Effectiveness Regulatory effectiveness still varies significantly across Member States

8. Uncompetitive Investment  European Commission and NRAs are being pressurised to shift their regulatory policies from one that encourages altnets to one which focuses on rewarding operators investing in new networks  The numbers game  It useful to look at all this incumbent investment …

9. Investment in Belgian telecom market – Platform members & Belgacom

10. Financial Results  A similar story is to be found looking at the results of other major telecos such as KPN in the Netherlands and Telecom Italia in Italy  It I can read financial statements, regulators and policymakers should, too!

11. Competition stimulates Investment Incumbent and altnet investment follows a similar pattern: highest in “best” regulated (most competitive) markets Source: JonesDay & SPC Network (Regulatory Scorecard)

12. Need for a Reinforced Approach The work done by Ofcom with the input of the entire industry draws some interesting conclusions:  Bottlenecks remain and access is certainly a key one  Having considered all options from full deregulation to increased regulation, Ofcom concludes regulation is still needed (Real Equality of Access) to encourage investment and innovation both from the incumbent and altnets  Non-discrimination is a key element of the NRF and probably the best tool to ensure effective competition

13. Keys to fostering investment through effective regulation  Ensuring equivalence of access Non-discrimination is not always understood or effectively enforced. Commission must clarify this concept and enforce it consistently Key to relaxing burden of regulation is creating a compliance culture. Need to assess and embrace incentives, penalties and organisational structures which entrench compliance  Enabling convergence ‘New Services’, (e.g VoIP), offer the potential to transform regulatory landscape.Clear Commission Guidance and urgent amendments to the Universal Services Directive needed to remove barriers Vital also to ensure that competition is maintained and enhanced with the transition to converged ‘next generation’ networks (legacy assets will still be fundamental to network roll-out)

14. Keys to fostering competition (cont)  Securing implementation of the framework Many countries have yet to complete the market reviews. Directives don’t adequately specify deadline. In some cases the Directives have not been accurately transposed, leading to uncertainty and less harmonisation. Both issues need to be addressed through infringement or possibly formal mandate  Addressing lengthy appeals procedures In some countries appeals are lodged as a matter of course and take up to 5 years. Action is needed by Member States to establish deadlines and ensure effective appeals process. The Commission must play a role in facilitating this.

15. Conclusions  i2010 is achievable given political will and regulatory guidance  Communications has and will continue to play a vital role in delivering an effective and productive European information society  Altnets must be allowed to climb the ladder of investment  Evidence demonstrates that competition and regulatory effectiveness is key in driving innovation, investment and growth.  Underlying implementation issues concern ‘equivalence of access’, implementation of the NRF and appeals procedures.

16. Thank you Tom Kiedrowski Regulatory Affairs Manager, ECTA tkiedrowski@ectaportal.com