1. LIBERALISATION AND (DE)REGULATION OF SLOVENIAN TELECOMMUNICATIONS MARKETS Presented by Matej Švigelj Montpellier, November 2004

2. 2 INTRODUCTION Slovenian electronic communications market General indicators for Slovenia (2003): –2 mio inhabitants –685,000 households –12,273 EUR GDP per capita (17,090 EUR according to the PPP) Slovenian electronic communications market: –782 million EUR (2003) –3,2 % of GDP –Electronic communications market segments by revenues (2003) Mobile services (44%) Fixed telephony (28%) Network interconnection (11%) Internet (7%) CATV (3%) Leased lines (1%), Switched data services (1%) Others (5%)

3. 3 INTRODUCTION Review of regulation Changes in Slovenian legalisation –Regulation of SMP operators –Telecommunication Act Complied with old EU legislation –Electronic Communication Act (April 2004) Adopted new EU regulatory framework Regulatory authority –APEK was established in second half of 2001 –Performs all regulatory duties stipulated by the EU law –Sector approach to financing –Problems in regulator operations: (education structure, at enforcing its discretional right) Methodology of regulation –Price cap is statutorily used (in practice: benchmarking)

4. 4 MOBILE TELEPHONY Market structure Technology development of mobile telephony in Slovenia (1991-NMT, 1996-GSM, 2003-UMTS), 90% penetration rate Four companies: –Mobitel (operator) 1991 NMT, 1996 GSM, 2003 UMTS, Market share (2003): 73% –Debitel (service provider) Since November 1998, Market share (2003): 4,7% –Si.mobil (operator) Since March 1999, Market share (2003): 20% –Western Wireless International: Vega (operator, national roaming) Since December 2001, Market share (2003): 2,2%

5. 5 MOBILE TELEPHONY Number of GSM users

6. 6 MOBILE TELEPHONY Prices Average real price of a minute of call by companies (in SIT per minute)

7. 7 MOBILE TELEPHONY Problems and regulators activities MAIN CHARACTHERISTICS OF THE MARKET Concentrated market structure due to: –Late granting of licences to competing firms –High call termination prices between operators (high difference between off-net and on-net calls caused tariff mediated network externality) Competition leads to low prices Anomalies at granting UMTS licence –Brings back monopoly position at the market for 3G services MAIN ACTIVITIES OF THE REGULATOR In July 2002 appealed to operators to set prices based on the cost of efficient service provision Assigned status of SMP operator to Mobitel and Si.mobil (Nov 2002 and Dec 2003) Introduction of asymmetric model of call termination prices at the end of 2003 –Accepted by Mobitel and Si.mobil –Vega rejected the model and persists at its standpoint that ATRP should regulated end-user prices

8. 8 FIXED TELEPHONY Incumbent Number of fixed lines of Telekom Slovenije (in 000)

9. 9 FIXED TELEPHONY Incumbent’s tariffs Source: 4th Report, 2003 and 9th Report-Annex I, 2003. Monthly subscription is increasing The call prices are decreasing in real terms since 2002

10. 10 FIXED TELEPHONY Fixed-to-fixed interconnections Phase One: Benchmarking (August 2003) –charges were set on EU average level Source: APEK, 2004 – Local call 2.2 c€/min – Positive difference was introduced Phase Two: Cost based (when?)

11. 11 FIXED TELEPHONY Competition New legislation Removal of all administrative barriers to entry -fixed licences for free since 2003 Reference Interconnection Offer (RIO) since 2004 Number of operators offering fixed voice telephony: 2

12. 12 BROADBAND Number of connections (000) Market share of SiOL-incumbent (2003): –99% (DSL), 7% (other broadband technologies) –66% (all broadband technologies) At the end of the 2003 additional price model for ADSL was introduced

13. 13 CONCLUSION PROSPECTS Fixed Voice Telephony –From monopoly to competition (international calls) Broadband –From competition (dial up) to monopoly (DSL) Mobile services (Voice) –From monopoly to competition Mobile services (Data) and 3rd generation –Monopoly? Service competition –Fixed telephony Infrastructure competition –Mobile services –Data/Broadband