Telecommunications Liberalisation: comparative overview within the EU and lessons to be learned ECTA’s view Innocenzo M. Genna, ECTA Chairman 2° International Conference on Broadband Internet Athens, June 1-3, 2007

About ECTA  European Competitive Telecommunications Association represents some 150 member companies across Europe  Pursuing the regulatory agenda ECTA aims to advance liberalisation and competition within the telecoms sector  Our operator members are diverse – most with substantial investments in infrastructure

Liberalisation goals  Innovation, choice, value for money, increased and more efficient investment  Internet, broadband, VoIP, NGN networks, triple-play all associated with competitive, liberalised markets  Since 1998 prices in key services incl international calls, business services have fallen more than one third across EU  Investment also higher than pre-liberalisation (1998). Recovery in 2004 evident following telecoms bubble  Europe’s investment in telecoms services compares well against USA, Japan, and South Korea – ICT success story, but notable that within Europe investment is much higher in some countries than others  Better performing regulatory regimes, as measured by the OECD Regulatory Index, or the ECTA Scorecard, contribute to higher investment levels

ECTA Regulatory Scorecard

Investors respond to effective regulation…  Investment strongly correlated to effective regulation – UK invests $184 per capita whilst in Germany only $68  Achieving best practice throughout the EU would boost investment by a third

…especially incumbents!  Incumbent NGN and NGA announcements often stimulated by competitive pressure UK: relatively well regulated and competitive market. €10b core network upgrade announced by BT Netherlands: competitive pressure from cable and unbundling. KPN announced access network upgrade Germany: Unbundling pressure in certain areas. DT announced €3 vDSL urban investment Japan: highest fibre penetration – initially stimulated through effective regulation of broadband  Triple play and IPTV advances competitively driven France: €30 per month buys 20Mbit/s broadband, IPTV and telephone services. HDTV launched

What is effective regulation?  Effective regulation measured as function of:  Regulatory certainty Clear legislation Timely implementation of secondary legislation Comprehensive guidance on interpreting legislation Harmonisation between EU member states Clear communication from NRAs Clear rules allowing fair return for incumbents AND competitors (price squeeze control) Adequate appeals processes Adequate NRA enforcement powers and sanctions  Access to facilitates which are difficult to replicate Unbundled loops, wholesale broadband access Wholesale line rental, carrier pre-selection Interconnect leased lines

Specific ‘Good and Bad’ Regulatory Examples  Comprehensive set of remedies to overcome identified market problems  Rapid completion of market review  Clear communication of regulatory strategy with full understanding of regulatory economics  Close working relationship between NRAs and ERG / Commission, with NRAs having right number/quality of staff, political independence and aiming for best practice  Access products not mandated: bitstream service, leased lines incl. Ethernet based services  No mechanisms to deal with price squeezes, unfair bundling and pricing incentives (discounting)  Lack of equivalence between new market players and traditional incumbents  Lack of consultation on major changes (e.g. NGN), lack of properly audited accounting separation, ineffective appeals systems, regulator lacking appropriate enforcement powers and remedies

 Access to bottlenecks together with the ability for competitors to recover their significant investments remains vital to achieving effective competition  Countries with the most effective regulation also have higher levels of local loop competition  However, incumbent market share in the local loop remains above 80% in all Member States. Nearly 100% in most Effective regulation: the starting point

Driving investment: broadband Local loop unbundling ATM bitstream IP Bitstream Resale  Broadband ladder of investment facilitates competition  Resale allows customer acquisition  With increased investment, connect at more points and gain increasing control over service  Local loop unbundling provides full flexibility on service offering  Rungs priced so as to encourage investment – no margin squeeze at any level of value chain  Narrowband ladder can link in

Driving investment: broadband  Ladder of investment in practice: France  Market outcome shows migration by altnets towards LLU/SA from resale  Total fixed industry investment grew by 17% in 2005 (IDATE survey)  Broadband penetration was 16.4% in Jan 2006 following swift growth  Triple play available for €30 with IPTV, 20MBit/s broadband, VoIP

How long for liberalisation?

What does this mean for Greece?  Framework has proven to be sound basis for competition and investment in telecoms. Make sure it is properly applied!  Responsibility of the Government Ensure the regulator is independent – from Government/political involvement as well as operators Provide effective enforcement powers – effective penalties, deterrent effect. Power to suspend provision pending compliance Consider giving NRA powers for ‘functional separation’ Ensure appeals system doesn’t delay or undermine measures  Responsibility of the NRA Focus on implementation and enforcement not just paper Complete market reviews thoroughly but efficiently Establish clear rules against discrimination for level playing field Ensure efficient spectrum allocation and trading Make provisions to protect against foreclosing behaviour. We don’t want to go backwards! Measure effectiveness of regulation. Is it really working?

Thank you and arrivederci  ECTA, Rue Royale 71, 1000 Bruxelles, Belgium  Innocenzo Genna, Chairman  Ilsa Godlovitch, Director of Regulatory Affairs