1. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Working Group for Chapter 10 – Information society and media Bilateral screening: Chapter 10 PRESENTATION OF MONTENEGRO Brussels, 21-22 January 2013

2. Chapter 10: Information society and media RELEVANT MARKETS AND MARKET ANALYSIS Darko Grgurović Deputy Executive Director Agency for Electronic Communications and Postal Service darko.grgurovic@ekip.me M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 10: INFORMATION SOCIETY AND MEDIA

3. Chapter 10: Information society and media M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 10: INFORMATION SOCIETY AND MEDIA Contents  Relevant Acquis  National Legislation  Status of liberalisation of the electronic communications sector  Transposition of the Regulatory framework EU into the current Law on Electronic Communications  Transposition of the Regulatory framework EU into the  Proposal of the Law on Electronic Communications  Analysis of relevant markets  Accounting separation and cost accounting  Future Activities

4. Chapter 10: Information society and media M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 10: INFORMATION SOCIETY AND MEDIA Relevant Acquis (I)  Commission directive 2002/77/EC of September 16, 2002 on competition in the markets for electronic communications networks and services. Commission directive 2002/77/EC  Commission Recommendation 2007/879/EC of 17 December 2007 on relevant product and service markets within the electronic communications sector susceptible to ex ante regulation in accordance with Directive 2002/21/EC of the European Parliament and of the Council on a common regulatory framework for electronic communications networks and services. Commission Recommendation 2007/879/EC  Commission guidelines (2002/C 165/03) on market analysis and the assessment of significant market power under the Community regulatory framework for electronic communications networks and services. Commission guidelines (2002/C 165/03)

5. Chapter 10: Information society and media M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 10: INFORMATION SOCIETY AND MEDIA  Commission Recommendation 2009/396/EC of 7 May 2009 on the Regulatory Treatment of Fixed and Mobile Termination Rates in the EU. Commission Recommendation 2009/396/EC  Commission Recommendation 2005/698/EC of 19 September 2005 on accounting separation and cost accounting systems under the regulatory framework for electronic communications. Commission Recommendation 2005/698/EC  Commission Recommendation 2008/850/EC of 15 October 2008 on notifications, time limits and consultations provided for in Article 7 of Directive 2002/21/EC of the European Parliament and of the Council on a common regulatory framework for electronic communications networks and services. Commission Recommendation 2008/850/EC  Commission Recommendation of 2010/572/EU of 20.9.2010 on regulated access to Next Generation Access Network (NGA). Commission Recommendation of 2010/572/EU Relevant Acquis (II)

6. Chapter 10: Information society and media M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 10: INFORMATION SOCIETY AND MEDIA  Law on Electronic Communications (“Off. Gazette of Montenegro” No 50/2008, 70/2009, 49/2010, 32/2011)  Decision on relevant market services i relevant geographic market („Off. Gazette of the the Republic of Montenegro “ no. 29/09);  Decision on relevant market services which are the object of the implementation the”Three-criteria Test” (“ Off. Gazette of the Republic of Montenegro» No 19/2011).  Proposal of Law on Electronic Communications National Legislation

7. Chapter 10: Information society and media M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 10: INFORMATION SOCIETY AND MEDIA  There are not exclusive or special rights: for the establishment and/or the provision of electronic communications networks, for the provision of publicly available electronic communications services.  Provision of electronic communications networks or provision of publicly available electronic communications services is based on general authorization Status of liberalisation of the electronic communications sector

8. Chapter 10: Information society and media M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 10: INFORMATION SOCIETY AND MEDIA  Article 40 - Operators with significant market power paragraph 2 Article 14, para. 2 of Framework Directive 2002/21 EC paragraph 3 Article 14, para. 2 of Framework Directive 2002/21 EC paragraph 4 Article 16, para. 3 of Framework Directive 2002/21 EC paragraph 5 Article 14, para. 3 of Framework Directive 2002/21 EC paragraph 6 and 7 Criteria for significant market power – Part 3 of Commission Guidelines (2002/EC 165/03 ) Transposition of the Regulatory framework EU into the current Law on Electronic Communications (I)

9. Chapter 10: Information society and media M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 10: INFORMATION SOCIETY AND MEDIA  Article 41- Definition of relevant markets, Article 42 – Analysis of relevant markets, Article 43 - Designation of SMP operators and imposition of obligations Article 15 and 16 Framework Directive 2002/21 EC, Part 2 (Commission Guidelines 2002/C 165/03 and Commision Recommendation 2007/879/EC )  Article 44 - Obligation of transparency Article 9 Access Directive 2002/19 EC  Article 45 - Obligation of non-discrimination Article 10 Access Directive 2002/19 EC  Article 46 - Obligation of accounting separation Article 11 Access Directive 2002/19 EC and Article 3 Commission Directive 2002/77 EC Transposition of the Regulatory framework EU into the current Law on Electronic Communications (II)

10. Chapter 10: Information society and media M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 10: INFORMATION SOCIETY AND MEDIA  Article 47 - Obligation of the network access Article 12 Access Directive 2002/19 EC  Article 48 - Price control and cost accounting obligations Article 13 Access Directive 2002/19 EC  Article 49 - Facility of carrier selection/carrier pre-selection Article 19 Universal Service Directive 2002/22 EC  Article 50 - Control of retail prices of services Article 17 Universal Service Directive 2002/22 EC  Article 51 – Obligation of minimum set of leased lines Article 18 Universal Service Directive 2002/22 EC Transposition of the Regulatory framework EU into the current Law on Electronic Communications (III)

11. Chapter 10: Information society and media M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 10: INFORMATION SOCIETY AND MEDIA  Article 64 - Market analysis procedure paragraphs 1 and 2, point 1 Article 15 para. 1 of Framework Directive 2002/21 EC and 2009/140 EC paragraph 2, point 2 Article 14, para 2 of Framework Directive 2002/21 EC paragraph 2, points 3 and 4 Article 16 of Framework Directive 2002/21 EC and 2009/140 EC paragraph 3 Article 15 of Framework Directive 2002/21 EC and 2009/140 EC paragraphs 4 and 5 Articles 15 and 16 of Framework Directive 2002/21 EC and 2009/140 EC Transposition of the Regulatory framework EU into the Proposal of Law on Electronic Communications (I)

12. Chapter 10: Information society and media M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 10: INFORMATION SOCIETY AND MEDIA  Article 65-Indetification of relevants market paragraphs 1 and 2 Article 15 para 1 of Framework Directive 2002/21 EC and 2009/140 EC paragraph3 Commision Recommendation 2007/879/EC  Article 66 – Determinaning relevants market paragraphs 1 and 2 Article 15 of Framework Directive 2002/21 EC and 2009/140 EC  Article 67- Operators with significant market power paragraph 7 para.1 and 2 Article 14, para 2 of Framework Directive 2002/21 EC paragraph 3 Article 16, para.3 of Framework Directive 2002/21 EC paragraph 4 Article 14, para 3 of Framework Directive 2009/140 EC, Articles 9,10,11 and 13 of Access Directive and Article 17 of Universal Service Directive 2002/22 EC and 2009/136 Transposition of the Regulatory framework EU into the Proposal of the Law on Electronic Communications (II)

13. Chapter 10: Information society and media M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 10: INFORMATION SOCIETY AND MEDIA  Article 68 - Criteria for the assessment of significant market power of an operator paragraph 1 Commission Guidelines(2002/C 165/03) paragraph 2 Aneks II Framework Directive 2009/140 EC  Article 69 - Identification of operators with significant market power and Article 70 – Repeated market analysis Article 16 Framework Directive 2002/21 EC and 2009/140 EC  Article 71- Obligation to disclose information and Article 72 – Change in reference offer Article 9 Access Directive 2002/19 EC and 2009/140 EC Transposition of the Regulatory framework EU into the Proposal of Law on Electronic Communications (III)

14. Chapter 10: Information society and media M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 10: INFORMATION SOCIETY AND MEDIA  Article 73 - Obligation of non-discrimination Article 10 Access Directive 2002/19 EC and 2009/140 EC  Article 74 - Accounting separation Article 11 Access Directive 2002/19 EC and Article 3 of Commission Directive 2002/77 EC  Article 75 - Access to network elements and their use Article 12 Access Directive 2002/19 EC and 2009/140 EC  Article 76 - Price control and cost accounting and Article 77 - Implementation control Article 13 Access Directive 2009/140 and 2002/19 EC Transposition of the Regulatory framework EU into the Proposal of Law on Electronic Communications (IV)

15. Chapter 10: Information society and media M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 10: INFORMATION SOCIETY AND MEDIA  Article 78 - Regulation of retail service prices Article 17 Universal Services Directive 2002/22 EC and 2009/136  Article 79 – Functional separation of vertically integrated operators Article 13 a Framework Directive 2009/140 EC  Article 80 – Voluntarily separation of vertically integrated operators Article 13 b Framework Directive 2009/140 EC Transposition of the Regulatory framework EU into the draft of Law on Electronic Communications (V)

16. Chapter 10: Information society and media M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 10: INFORMATION SOCIETY AND MEDIA  Decision on relevant service markets and relevant geographic market (Official Gazette of Montenegro, No 29/09).  The Decision defines the territory of Montenegro as relevant geographic market.  The Decision defines relevant markets according to Revised Recommendation of the European Commission (2007/879/EC) on relevant markets in the sector of electronic communications, which includes a list of 7 markets susceptible to ex ante regulation. Analysis of Relevant Markets I

17. Chapter 10: Information society and media M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 10: INFORMATION SOCIETY AND MEDIA  Market 2 The price of call origination within the network code of the access point: 0.93 €c/min, The price of the national call origination: 1.07 €c/min.  Market 3 Crnogorski Telekom, the price of the service of call termination on the fixed network local termination: 0.93 €c/min, single transit: 1.07 €c/min. Also, M:Tel, the price of the service of call termination on the fixed network 1.42 €c/min.  Market 6 price caps for leased lines, according the Recommendation of the European Commission 2005/268/EC on price aspects of wholesale leased lines.  Market 7 The price of the service of mobile termination:7.06 €c/min at the end of 2011. Analysis of relevant markets I

18. Chapter 10: Information society and media M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 10: INFORMATION SOCIETY AND MEDIA  Decision on relevant service markets, which is subject to verification by the Three-Criteria Test («Official Gazette of Montenegro,» No 19/2011)  This Decision defines the following relevant service markets: 1.Retail market of publicly available services of local and long-distance calls for residential and non-residential customers, which are provided at a fixed location, 2.Retail market of publicly available services of international calls for residential and non-residential customers, which are provided at a fixed location, 3.Wholesale market of trunk segments of leased lines, 4.Wholesale market of access and call origination on public mobile telephone networks, 5.Wholesale market of transmission and emission of broadcasting signals.  The Agency prescribed SMP operators - Decision of 30.12.2011 Analysis of relevant markets II

19. Chapter 10: Information society and media M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 10: INFORMATION SOCIETY AND MEDIA  The Agency has adopted the decision on additional markets susceptible to ex ante regulation on September, 18 2012.  According to the decision, the Agency is in the process of analyzing two markets: Retail relevant market for publicly available services of mobile telephony Retail relevant market for broadband access. Analysis of Relevant Markets III

20. Chapter 10: Information society and media M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 10: INFORMATION SOCIETY AND MEDIA  On May 2011 – the Agency ordered Crnogorski Telekom to perform the accounting separation and cost accounting in the way and under the terms defined in the document “Accounting separation and cost accounting methodology”.  Crnogorski Telekom has obligation to prepare revised financial statements and reports on unit costs for 6 wholesale and 3 retail markets.  Crnogorski Telekom submitted revised financial statements and reports on unit costs for the financial year 2011 based on HCA/FAC methodology. Documentations are reviewed and accepted only with part.  Methodology for accounting separation and cost accounting for mobile networks has recently been adopted and decision was issued to three mobile operators imposing them the obligation to implement accounting separation and cost accounting. Accounting Separation and Cost Accounting

21. Chapter 10: Information society and media M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 10: INFORMATION SOCIETY AND MEDIA Future Activities  According to the Methodology, Regulatory Financial Statements for the financial year ending on 31 December 2011, financial year ending on 31 December 2012 and financial year ending on 31 December 2013 will be drawn up on the basis of HCA/FAC model.  Also, Regulatory Financial Statements for the financial year ending on 31December 2014 and for subsequent financial years will be drawn up on the basis of the CCA/LRIC model.  In 2013, the Agency will continue its work on market analyses with second round of 7 relevant markets.

22. Thank you for your attention. QUESTIONS