Effective regulatory regimes and impact on investments in the telecom sector: A perspective from ECT

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Effective regulatory regimes and impact on
investments in the telecom sectorA perspective
from ECTA
Tom Kiedrowski Regulatory Affairs Manager, ECTA
14 April 2005

• ECTA
• European Competitive Telecommunications
  Association

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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.

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Policy context

• Recently Commissioner Viviane Reding outlined her
  
• i2010 agenda.
• One of those is is for innovation and
  investment in ICT.
• Europeshould 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

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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

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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

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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

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Regulatory Effectiveness

• Regulatory effectiveness still varies
  significantly across Member States

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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

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Investment in Belgian telecom market Platform
members Belgacom
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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!

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Competition stimulates Investment

• Incumbent and altnet investment follows a
  similar pattern highest in best regulated
  (most competitive) markets

Source JonesDay SPC Network (Regulatory
Scorecard)
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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

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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)

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Keys to fostering competition (cont)

• Securing implementation of the framework
• Many countries have yet to complete the market
  reviews. Directives dont 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.

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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.

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Thank you

• Tom Kiedrowski
• Regulatory Affairs Manager, ECTA
• tkiedrowski_at_ectaportal.com