403 VOLUME 1 COMMISSION STAFF WORKING

Transcription

COMMISSION OF THE EUROPEAN COMMUNITIES
Brussels, 29.3.2007
SEC(2007) 403
VOLUME 1
COMMISSION STAFF WORKING DOCUMENT
ANNEX TO THE
COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL
COMMITTEE AND THE COMMITTEE OF THE REGIONS
EUROPEAN ELECTRONIC COMMUNICATIONS REGULATION AND MARKETS
2006 (12th REPORT)
{COM(2007) 155 final}
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TABLE OF CONTENTS
INTRODUCTION...................................................................................................................... 5
MARKET AND ECONOMIC DEVELOPMENTS .................................................................. 6
Main market developments ........................................................................................................ 6
Key horizontal themes................................................................................................................ 7
FINANCIAL AND ECONOMIC OVERVIEW OF THE SECTOR......................................... 9
THE MOBILE MARKET........................................................................................................ 13
Mobile take-up ......................................................................................................................... 14
Market players.......................................................................................................................... 15
3G and data services................................................................................................................. 17
Interconnection and access....................................................................................................... 18
Mobile Number Portability ...................................................................................................... 19
FIXED VOICE TELEPHONY ................................................................................................ 21
Competition.............................................................................................................................. 21
Pricing .................................................................................................................................... 25
Interconnection......................................................................................................................... 26
BROADBAND......................................................................................................................... 28
Take-up .................................................................................................................................... 28
International Comparison ......................................................................................................... 29
Broadband technology trends................................................................................................... 31
Competition and regulation ...................................................................................................... 32
LLU Pricing.............................................................................................................................. 35
Wholesale access to the incumbents’ networks ....................................................................... 36
TECHNOLOGY TRENDS ...................................................................................................... 39
Wired technologies................................................................................................................... 39
VoIP
.................................................................................................................................... 39
Wireless Local Loop (WLL) .................................................................................................... 40
Mobile TV ................................................................................................................................ 41
REGULATORY DEVELOPMENTS ...................................................................................... 42
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Main Regulatory developments ............................................................................................... 42
Regulatory environment ........................................................................................................... 45
Implementation of Regulatory measures by sector .................................................................. 53
THE CONSUMER INTEREST ............................................................................................... 59
Tariff Transparency.................................................................................................................. 59
Universal Service ..................................................................................................................... 60
Directory services and directory enquiry services ................................................................... 63
Disability and social needs ....................................................................................................... 63
Number portability ................................................................................................................... 64
Out-of-court dispute resolution ................................................................................................ 65
Emergency services.................................................................................................................. 65
Must-carry ................................................................................................................................ 68
E-Privacy.................................................................................................................................. 68
HORIZONTAL REGULATION ............................................................................................. 73
Administrative charges............................................................................................................. 73
Rights of way ........................................................................................................................... 73
SPECTRUM MANAGEMENT............................................................................................... 76
Spectrum liberalisation and secondary trading ........................................................................ 76
Implementation of spectrum decisions..................................................................................... 76
Assignments of spectrum ......................................................................................................... 77
MONITORING AND ENFORCEMENT ................................................................................ 78
ANNEX 1 - IMPLEMENTATION IN THE MEMBER STATES
BELGIUM................................................................................................................................ 82
CZECH REPUBLIC ................................................................................................................ 90
DENMARK.............................................................................................................................. 99
GERMANY............................................................................................................................ 107
ESTONIA............................................................................................................................... 114
IRELAND .............................................................................................................................. 122
GREECE ................................................................................................................................ 130
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SPAIN .................................................................................................................................... 139
FRANCE ................................................................................................................................ 149
ITALY .................................................................................................................................... 159
CYPRUS ................................................................................................................................ 169
LATVIA ................................................................................................................................. 178
LITHUANIA .......................................................................................................................... 185
LUXEMBOURG.................................................................................................................... 192
HUNGARY ............................................................................................................................ 198
MALTA.................................................................................................................................. 206
NETHERLANDS................................................................................................................... 213
AUSTRIA............................................................................................................................... 220
POLAND................................................................................................................................ 227
PORTUGAL........................................................................................................................... 236
SLOVENIA ............................................................................................................................ 246
SLOVAKIA ........................................................................................................................... 254
FINLAND .............................................................................................................................. 263
SWEDEN ............................................................................................................................... 270
UNITED KINGDOM............................................................................................................. 279
ANNEX 2 – MARKET OVERVIEW (see volume 2)
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INTRODUCTION
This Commission Staff Working Document accompanies the Commission’s Communication
to the European Parliament, the Council, the European Economic and Social Committee and
the Committee of the Regions on European Electronic Communications Regulation and
Markets 2006 (12th Report).
It provides a detailed analysis of electronic communications services markets, the regulatory
environment and the consumer interest, together with the customary overview of the situation
of the sector in the individual Member States (‘country chapters’) and the detailed market data
on which the Communication is based.
The regulatory situation described here is that at 31 December 2006. Market data, unless
otherwise indicated, cover the period up to 1 October 2006.
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MARKET AND ECONOMIC DEVELOPMENTS
MAIN MARKET DEVELOPMENTS
The e-communications services sector continues to represent the largest segment of the
overall ICT sector, accounting for around 44.5% around the same as the previous year.1 In
2006, the sector was worth approximately €649 billion1 of which €289 billion was fixed
telephony, mobile telephony and fixed/data services. Overall revenue growth was
approximately 2.3%2, i.e. lower than the revenue growth rate for 2005 (between 3.8% and
4.7%); traffic volumes increased in all segments.
Mobile
Revenue from mobile services grew at 4.6%1, though at a slower pace than last year. While
take-up and usage of mobile phones continued to increase, the mobile voice market is
showing clear signs of maturing. Prices have continued to fall as a result of intensifying
competition although there is scope for more progress in some areas. Mobile penetration has
now exceeded 100 per cent and stands at 103% when compared to 95% penetration last year.
There are now 478.4 million mobile subscribers in the EU. There are signs that 3G take-up is
increasing. There continues to be downward pressure on mobile termination rates through
regulatory intervention in most Member States.
Average retail prices for calls made while roaming continue to be significantly higher than the
equivalent prices for domestic mobile calls despite initiatives to increase transparency of
tariffs, including the launch of a consumer website by the Commission.
Fixed voice
Fixed voice telephony has continued to decline but still remains the most important source of
revenue to players in the fixed market. Intensifying competition leading to falling prices and
substitution by mobile services (and to a lesser degree by VoIP) are the primary factors. The
decrease in revenues from fixed is estimated at between 4.5%1 and 5.1%2.
Broadband
Broadband is the fastest growing segment, with growth in revenue estimated at between
7.8%1 and 8.5%2. EU countries are world leaders and there are now six Member States with
penetration rates exceeding the 20% mark. More than 20 million fixed broadband lines were
taken up in 2006, representing an increase of 39% on the previous year. Increasing revenues
from broadband services are helping to offset the decline in revenues from traditional fixed
services. Consumers continue to benefit from lower prices, higher speeds and a variety of
broadband offers due to increasing competition in the broadband market. New bundled
offerings are fuelling consumer demand for broadband services.
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2
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EITO 2006
IDATE 2006, EITO 2006
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Effective regulation has contributed substantially to broadband rollout in many Member
States. Whilst it is true that growth in broadband resale arrangements was particularly
pronounced in 2006 (up by 124%), alternative providers continued to climb the ladder of
investment with more than 4.1 million new fully unbundled local loops (up by 79%),
investing several billion euros into new infrastructure in the process.
KEY HORIZONTAL THEMES
Overall the electronic communications sector is continuously adapting to changing
technologies and market developments. Most operators are gradually upgrading existing
infrastructures and deploying new networks in order to enable higher data speeds and delivery
of converged products. The divisions between the previously well-defined markets within the
electronic communications sector are continuing to blur.
Convergence has a wide range of implications that affect how the different networks are
rolled out and packages of services are offered to end-users. Converged devices are enabling
new communication behaviours, while content is assuming a growing importance.
Convergence of platforms and services, together with the development of new technologies,
constitutes an important challenge for stakeholders and regulators.
Operators are investing in Next Generation Networks (NGN), which should allow more
efficient provision of multiple services over the same infrastructure. This movement is
especially important for incumbent operators, who have inherited a variety of networks
dedicated to the provision of different services, and it represents an important challenge for
stakeholders and regulators. Interconnection between NGNs and between NGNs and
traditional networks is likely to be extremely important in order to maintain connectivity.
Mergers and acquisitions in 2006 continued to achieve scale and created the conditions for
further pan-European consolidation. In addition, strategic partnerships were signed with
content providers, as content is becoming a more important factor with the development of
new services such as IPTV, mobile TV or DTT in allowing market players to differentiate
offers.
There is a trend towards bundled products, where operators offer a variety of services for a
single overall price, provided through different platforms for the benefit of consumers. An EU
survey3 on the evolution of communication services in European households showed that 19%
of EU households subscribed to at least one bundled service with higher percentages in some
Member States (Denmark: 38%, Estonia: 35%, the Netherlands: 32%, Spain: 29% and
Luxembourg: 27%). The most frequently purchased service package is a double play offer of
fixed voice telephony and Internet access (8% of EU households). Triple play and quadruple
play offers have been taken up by only 3% and 1% of EU households respectively.
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E-Communications Household Survey (March 2007). Special Eurobarometer, European Commission.
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Penetration
EU Household Penetration of Bundled Offers
16%
14%
12%
10%
8%
6%
4%
2%
0%
Internet+Fixed voice+TV+Mobile
Internet+Fixed voice+Mobile
Internet+Fixed voice+TV
Other
Internet+TV
TV+Fixed voice
Internet+Fixed voice
2Play
3Play
4Play
This survey also found that the majority of residential internet access is now based on
broadband, with an EU average proportion of 32% of households, against 12% of households
with narrowband access (compared to 23% and 16% respectively almost one year earlier4). In
recent years, the growing number of services requiring high data rates has prompted
subscribers to shift from narrowband to higher speed offers and increasingly to demand
symmetric connections.
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E-Communications Household Survey (July 2006). Special Eurobarometer, European Commission
(EU25).
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FINANCIAL AND ECONOMIC OVERVIEW OF THE SECTOR
This section provides an overview of the current economic and financial state of the electronic
communications sector. It will look at price developments for the consumer, at investment as
the source of dynamic gains in the future and at the financial health of the industry as
reflected by the financial markets.5
One of the principal advantages that liberalisation and ensuing competition have created for
consumers is lower prices for existing communications services. The benefits flowing from
this constitute one of the most important parameters against which the functioning of EU
regulatory policy should be judged; and they are highlighted throughout this implementation
report. On this score, it is no surprise that the data show that in 2006 consumers continued to
benefit from deflationary price developments for most standard communications services.
As illustrated in annex 2 of this report, the OECD baskets measuring prices in mobile services
for typical consumption patterns show price decreases of up to 13.9% between 2005 and 2006
across EU-25. Similarly, in the UK, quarterly consumption of mobile voice minutes went up
from 16.4 billion in mid-2005 to 18.3 billion minutes in mid-2006, whereas over the same
period industry revenues for the provision of these services increased only from €3.76 to
€3.95 billion – indicating that prices for the consumer actually fell by 5.7%.6 Finally, in
Germany, the price index for all electronic communications services fell by 3% in 2006, with
specific decreases in prices for standard internet usage amounting to 5.1% and for fixed voice
calls amounting to 0.2%.7
Clearly, the evidence assembled in this report and these examples show that the average
European consumer of electronic communications services in 2006 was better off than the
year before, and that the static gains in consumer welfare resulting from falling prices are a
strong indication that the regulatory framework is functioning well overall.
Positive price developments were underpinned in the past year by increased investment in the
electronic communications sector. Investment is a necessary condition for both consumer
gains from innovation over time and the ability of operators to provide consistent levels of
quality of service. In 2006, aggregate investment in the electronic communications sector –
measured in terms of capital expenditure – is estimated to have risen to more than €47 billion,
representing an increase of 5% over 2005. It was the fourth consecutive year of increased
year-on-year investment levels since 2003. The steady nature of this overall increase points to
a continuation of the current investment cycle and a broadly favourable structural
environment.
Disaggregating this figure, it can be seen that the typical incumbent firm in the fixed sector
invested approximately 13.3% of its revenues, whereas the typical incumbent firm in the
mobile sector invested approximately 12.7%. Both of these percentages are slightly below the
levels seen in the late 1990s, although they are in line with long-run historical averages for the
sector. Incumbents continue to outspend their competitors in absolute (though not always in
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6
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Data for this section are taken from ECTA, ETNO, ECCA, OECD, Cable Europe, European Commission sources
as well as financial research by investment banks Morgan Stanley and Goldman Sachs.
Ofcom, Telecommunications Market Data Tables Q2 2006 (January 2007), p.17-18.
German Office for Statistics, Consumer Price Index for Telecommunications Services, 8 January 2007.
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relative) terms; and approximately 70% of total EU 25 investment is accounted for by the five
largest markets.
The increase in investment has to be attributed to both cyclical and structural factors. On the
cyclical side, all major operators – while under significant pressure from strong price-based
competition in most of their business lines – continue to extract sizable cash flows from their
legacy businesses. Moreover, servicing debt and repaying principal was facilitated by
continued low interest rates in the period under review. Both of these factors provided the
basis, in the fixed sector, for strong investment in next generation networks – widely seen as
the principal source of future profits and rendered even more urgent by sometimes powerful
competition from alternative cable operators.
In the mobile sector the cycle is slightly more advanced, and, on this level of analysis,
investment can be expected to remain flat or even to decrease slightly over the coming years.
Most operators are reticent to commit to new infrastructure investments in the light of the
comparatively slow take-up of 3G services, and there is evidence that future services will
probably be based on existing networks.
On the structural side, arguably, where regulatory action has been appropriate, it has created
an environment of regulatory certainty and flexibility, in which remedies can be applied that
are commensurate with national economic circumstances and thus conducive to investment.
For example, while most national regulatory authorities have opted for the imposition of
LLU-obligations on the dominant integrated provider of fixed services with a view to
encouraging network investment by alternative players, the UK regulator has chosen to go
one step further and to separate functionally the wholesale from the retail arm of the
incumbent operator.
Broadly speaking, as in the past, it can be argued that genuine platform-based competition is
more conducive to investment and more desirable than simple service-based competition.
Therefore, it is important to realise that in economic circumstances where for historical or
accidental reasons platform-based competition has yet to emerge, the framework’s concept of
the investment ladder is useful. A regulatory focus on removing barriers to entry generally is
more appropriate than one that actively privileges investments by specific players.
Mergers and acquisitions activity remained an important feature of the sector. In 2006,
however total transactions in the EU are estimated to have fallen slightly short of the previous
year’s €70 billion8. Typical driving factors behind deals were the aim of achieving scale
through pan-European consolidation, a shift of emphasis from voice to data and a continued
inflow of speculative capital from private equity groups profiting from historically still low
interest rates. In 2006 – continuing a trend already established in 2005 - private equity groups
are estimated to have accounted for one in five transactions. A good example of this was the
acquisition of a 4.5% minority stake in the German incumbent by a US buy-out investor.
Finally, many mergers and acquisitions had an important cross-border dimension, perhaps
best typified by the €26.8 billion take-over of the second-largest UK mobile network operator
by the Spanish incumbent.
Mergers and acquisitions activity in 2006 was also linked to the changing financial
performance of the sector. After a difficult year in 2005, the financial outlook for the major
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Commission estimate; Morgan Stanley; ING.
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players in the European electronic communications brightened slightly in 2006. As measured
by the Dow Jones Euro Stoxx Telecommunications Index (SXKE), the value of the sector in
2006 increased by 11.53%. Over three years, the increase was 23.84% (see chart 1). While all
major sector indices are disproportionately weighted towards the incumbent operators, they
can still be seen as a good proxy for the overall financial health of the industry and its future
growth perspectives.
Performance Dow Jones Euro Stoxx Telecommunications (SXKE)
490
470
468.6
450
451.5
430
420.15
410
390
378.4
370
350
2003
2004
2005
2006
Year
DJ Euro Stoxx Telecoms
The picture above is slightly more nuanced when assessed in a wider context, as shown in
chart 2.
Relative Sector Performance since 2003
Percentage Change
60%
50%
40%
30%
20%
10%
0%
2003
2004
2005
Dow Jones Euro Stoxx Telecoms (SXKE)
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2006
DJ Euro Stoxx 50
EN
One reason for the volatile performance of the sector since 2003 may be the uncertainty over
the industry’s future business model in the context of ongoing changes in the electronic
communications value chain. New players, such as internet companies, are entering the
market for IP-based telephony and are leveraging their large and rapidly growing customer
base to gain competitive advantages. In this way they exert pressure on traditional fixed and
mobile providers to develop new strategies for retaining their customers in the face of
innovative pricing models such as flat rates or even advertising-based tariffs. European
incumbent operators are still dependent on their traditional voice and access businesses for
approximately 60% of their EBITDA9. Clearly, the strong competitive pressures in these
businesses are currently still outweighed by the high growth-rates in broadband. However,
there is considerable uncertainty over what answers the industry will develop once these
growth rates start to decrease in coming years.
Similarly, the mobile sector in past years has invested significantly in advanced network rollout. However, meaningful revenue streams from next-generation services have yet to
materialise. In mid-2006, non-voice revenues (the overwhelming proportion of which is
standard text messaging) of European operators were estimated at 17.1%; and although these
are significantly higher than the comparable figure for the US, this is not nearly enough to
compensate for the increasing commoditisation of mobile voice services.
Contrasting with this picture, a benign macro-economic environment with low interest rates
combined with solid operative performance has enabled the sector to reduce its debt levels
and increase dividend pay-outs. The resulting dividend yields have probably created a floor
below which financial valuations are unlikely to fall in the short term – even in the current
period of transition that is creating so much uncertainty for investors.
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Earnings before interest, taxes, depreciation and amortisation – as a measure for profits.
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THE MOBILE MARKET
Operators continued to register revenue growth even though the sector is now growing at a
slower pace than last year. The mobile sector grew by 4.6% in 2006 compared to 5.9% in
2005, reaching now €133 billion in total. Growth was driven by further increases in
penetration and to some extent by data services. The slowdown in growth can be attributed to
intensifying competition, falling prices and the fact that, although penetration continues to
rise, this does not have as much significance for revenue growth as in previous years, given
that much of the increase is accounted for by customers owning more than one SIM.
Over the past two years consumers have begun to see significantly lower prices. This decline
can be attributed to domestic prices and does not reflect the continued high prices that are
charged for international roaming, which are the subject of a proposal for a regulation on
international roaming adopted by the Commission in June 2006. Despite political pressure on
operators last year to act and bring prices down, an intervention was deemed necessary since
in most cases, standard prices for consumers remained particularly high.
The tables below give an indication of the fall in prices for mobile telephony between 2002
and 2006. A sharp drop in prices was registered at EU level over the period 2004 and 2006.
Simple average across all mobile operators covered
Medium usage basket
Low usage basket
40
20
38
16
17.49
16.07
14
13.84
12
10
8
6
4
euro per month including VAT
18
36
36.64
34
32
32.84
30
28
29.01
26
24
22
2
20
0
2004
2005
2004
2006
2005
2006
EU25
EU25
For the purposes of the above tables, OECD baskets have been used. Further details on the
composition of these baskets can be found in the Annexes.
Despite still accounting for only a small share of the total revenue of mobile operators, nonSMS data services are now showing signs of growth. This growth may become even more
pronounced when 3G operators have fully deployed HSDPA which will allow higher speed
data transfers.
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MOBILE TAKE-UP
The average EU penetration rate continues to grow and is now above 103%. In fact, 17
Member States have now exceeded 100 per cent penetration. The reasons for such high
penetration could range from consumers being in possession of more than one subscription to
the use of data cards in computers and PDAs. Data cards, however, are still a niche product.
Mobile subscribers penetration in EU (2G and 3G)
600
120%
103.2%
500
100%
95.0%
60%
200
100
EU penetration rate
300
478.387994
80%
436.676645
400
386.607495
Million of subscribers
84.6%
40%
20%
0
0%
Oct. 2004
Oct. 2005
EU subscribers
Oct. 2006
EU penetration rate
Source: Commission services based on NRA data and EMC estimates
In terms of Member State penetration, Luxembourg10 tops the list with 171%, followed by
Italy with 134% and Lithuania with 133%. Luxembourg’s high penetration is mainly
attributed to trans-national commuters who have a Luxembourg SIM card. The growth in
penetration has been less than the previous year, however, suggesting that mobile voice
telephony is a maturing market and that growth in terms of penetration will be lower in the
coming years. The graph below gives an indication of the penetration levels and number of
subscribers in the different Member States.
The highest growth in percentage terms was registered in Poland where subscriptions were up
from 72% in 2005 to 91% in 2006. This means that, in just two years, penetration in Poland
has gone up by 36%. Italy and Lithuania also registered strong growth of 15%. Cyprus also
registered further growth of 14% following strong growth in the previous year.
On the other hand, some Member States have shown only slight growth, indicating that their
markets have matured. It is interesting to note that low growth was also registered in Member
States that have not reached 100% penetration, which may indicate potential for further
growth in subscriptions in these Member States in the coming years.
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It should be noted that penetration in Luxembourg is significantly lower if trans-national commuters are
added to the national population.
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Mobile penetration rate (and growth) 2005-2006
180%
160%
140%
120%
104.0%
109.0%
99.6%
102.2%
97.0%
104.1%
80.6%
86.1%
88.1%
90.2%
105.8%
113.3%
71.0%
91.1%
102.3%
107.9%
103.2%
105.3%
80.4%
83.0%
89.9%
95.1%
117.5%
132.9%
115.3%
123.3%
100.0%
113.6%
118.7%
133.8%
98.5%
110.0%
74.9%
82.3%
93.8%
103.6%
89.3%
99.8%
101.2%
112.5%
115.2%
118.6%
92.2%
100.7%
40%
90.1%
91.9%
60%
100.7%
104.0%
80%
159.4%
170.6%
100%
20%
0%
BE CZ DK DE EE EL ES FR
IE
IT CY LV LT LU HU MT NL AT PL PT
Penetration rate Oct. 2005
SI SK
FI
SE UK
Pre-paid customers continue to be very important for mobile operators, with an EU average of
nearly 60% as against 40% for post-paid customers. In Italy and Malta, in particular, pre-paid
customers account for more than 90% of the market. On the other hand, in Finland pre-paid
customers account for just 7%, while in Denmark only 18% are pre-paid customers.
MARKET PLAYERS
While competition is intensifying in the mobile sector, as the situation with roaming charges
shows, there is scope for even more competition. The number of mobile network operators
has remained static and, while the number of service providers has continued to increase year
on year, there are still many Member States where mobile service providers are not yet
present.
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2.G Mobile Network Operators, July 2006
5
4
2
3
3
3
4
2
3
3
3
4
3
3
3
3
3
3
3
3
3
3
2
1
2
3
3
4
3
2
2
1
1
0
BE CZ DK DE EE
EL
ES
FR
IE
IT
CY
LV
LT
Operators with DCS or GSM licence only
LU HU MT NL
AT
PL
PT
SI
SK
FI
SE UK
Operators with GSM and DCS licences
In total, compared to the previous year, the number of mobile service providers which are
defined as mobile virtual network operators, enhanced service providers or simple resellers
has risen to 290, an increase of 76 on the previous year.
While not all service providers are already active in the market, the number of authorisations
for these types of operators has continued to increase in many Member States with the highest
number of service providers being found in the UK (70) and the Netherlands (60). However,
as the table below indicates, 10 Member States still have no mobile service providers.
Mobile service providers
(July 2006)
80
70
60
50
40
70
60
30
20
30
10
20
22
8
11
DE
EE
12
14
2
LT
LU
7
4
2
10
AT
SI
FI
15
0
BE
DK
ES
FR
LV
NL
SE
UK
Despite the fact that competition may be deemed to be increasing in many EU countries, the
following table shows that the actual decrease in the market share of the leading operators was
relatively small between 2004 and 2006. In percentage terms, the decrease in the leading
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operator’s market share in terms of subscribers between 2005 and 2006 was only 0.2% while
the main competitors increased their market share by 0.1% between 2005 and 2006.
Although there are Member States such as Cyprus and Slovenia where the leading operator
has a market share of over 90% and 70% respectively, in general the leading operators in most
Member States have between 40% and 50% of subscribers. The leading operator with the
lowest market share can be found in the UK (23%), which also reflects the impact service
providers have on competition.
EU average mobile operators' market share
45%
40.0%
39.8%
40%
39.4%
35%
32.1%
32.0%
31.2%
30%
28.6%
28.2%
27.5%
25%
2004
Leading op.
2005
Main competitor
2006
Others competitors
3G AND DATA SERVICES
There 70 operators now offering 3G on a commercial basis and 3G services are now available
in all Member States. While Japan retains the highest penetration of 3G services, Europe now
has the highest number of subscribers. It is estimated that there are around 45 million UMTS
subscribers in the EU, indicating that Europe has in fact overtaken Japan as leader with regard
to 3G subscriptions.
3G penetration in Europe is highest in Italy, with nearly 20% of total mobile subscribers now
using 3G networks for their services. Penetration for 3G services is also high in Portugal,
Luxembourg, Ireland, UK and Sweden.
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UMTS operators offering commercial services, July 2006
7
6
5
4
3
3
2
2
4
4
3
3
3
2
1
1
3
4
1
3
2
3
3
3
2
1
3
2
2
1
1
5
4
1
1
0
BE CZ DK DE EE
EL
ES
FR
IE
IT
CY
LV
LT
Trial
LU HU MT NL
AT
PL
PT
SI
SK
FI
SE UK
Commercial
SMS still remains a very important source of revenue for mobile operators but other data
services are growing in importance. Although they still account for only a small percentage of
total revenue, non-SMS services - such as access to internet via mobile devices and music
downloads - may in future become the primary driver for additional growth. Operators are
now starting to report that other data services are beginning to show an important contribution
to the overall mix. In fact, one operator reports that 34% of ARPU in Italy came from data.
Some operators are also encouraging their customers to use data services through flat-rate
data tariffs. These could be a very important factor for operators since they will need to
compensate for the lower projected growth rate in voice services.
INTERCONNECTION AND ACCESS
Prices for mobile termination rates (MTRs) have continued to decline, as can be seen in the
table below. This year, no distinction is being made between SMP and non-SMP operators
since practically all operators have been designated as having SMP in the mobile termination
markets.
EN
18
EN
EU average interconnection charges for call termination on mobile networks
17
15
€-cents per minute
14.58
13
12.53
11
11.40
`
9
7
5
July 2004
October 2005
October 2006
On aggregate, the figure of 12.53 cents in 2005 went down to 11.40 cents in 2006 - a drop of
9%. The most significant reductions in MTRs occurred in France (around 24%) and in
Denmark, Austria, Portugal and Sweden (down 20% in all countries). Significant reductions
(of between 11% and 17%) can also be observed in Germany, Greece, Spain, Luxembourg,
the Netherlands, Hungary and Slovenia. Nevertheless, MTRs remain, on average, more than 9
times higher than the average fixed interconnection charges (double transit).
MOBILE NUMBER PORTABILITY
The number of mobile ported numbers has increased significantly over the past year (up by
almost 6.3 million). As of October 2006 31.4 million subscribers in 24 Member States have
ported their number since this facility was introduced (data not available for the United
Kingdom).
Apart from the countries that did not introduce number portability until 2006, there has been
significant growth in the amount of mobile numbers ported in France, the Netherlands,
Finland and Sweden.
Mobile numbers ported as a percentage of total mobile subscribers are higher in Finland (over
64%) and Denmark (32%). Spain and Sweden have over 20%, while Belgium, Ireland, Italy
and Netherlands have ported between 10% and 16% of the existing mobile numbers. Most of
the new Member States show a very low level of numbers ported compared to the total of
number of mobile subscribers owing to the late introduction of number portability. The
percentage of mobile number ported is also quite low in Luxembourg (3.4%) and in Germany,
Greece, France, Portugal and Austria (not higher than 1.9%).
EN
19
EN
EN
IT
1.6%
1.9%
10.5%
20
LT
1.4%
LV
3.4%
CY
LU HU MT
NL
AT
0.0%
IE
0.8%
FR
0.9%
ES
0.1%
EL
2.4%
1.8%
1.3%
EE
0.7%
CZ DK DE
0.6%
BE
1.2%
0.8%
6.2%
10.3%
14.8%
15.5%
21.1%
21.9%
64.0%
32.3%
% of mobile number ported over total mobile subscribers (Oct. 2006)
PL
PT
SI
SK
FI
SE
EN
FIXED VOICE TELEPHONY
COMPETITION
Competition in the fixed voice market continues to be largely based on indirect access
wholesale products such as carrier pre-selection (CPS) and carrier selection (CS). CS and CPS
services are now available in all Member States. However, the number of alternative operators
using CS or CPS as a percentage of active operators has remained stable, even decreasing in
some Member States as a result of either the increased number of unbundled lines or
increased investment in networks. The biggest decrease in CS/CPS has been in the UK mainly
due to the growth of full LLU services. Wholesale Line Rental (WLR) has been introduced in
more countries this year, indicating the potential for even greater competition in time. In
countries where WLR products have already been available for some time, demand trends
have been positive.
As regards direct access competition, compared to one year ago there has been an increase of
about two percentage points, on average, in the proportion of subscribers using an alternative
provider and it now stands at 10.4%. Alternative providers are providing these services over
their own network via cable lines, unbundled lines, or other means of wireless access, such as
fibre or PLC.
Subscribers using an alternative provider for direct access, July 2006
30%
25.56%
25%
21.00%
20%
15.20%
15%
13.92%
9.20%
10.50%
10%
8.00% 7.60%
7.80%
9.00%
5.00%
5%
3.61%
3.30%
1.90% 2.00%
0.17%
0.09%
0%
BE DK DE EE EL ES FR
IT
1.10%
0%
CY LT LU HU MT AT PL PT
Direct access
SI
0%
0%
SK
FI
SE UK
EU average July 2006
The high percentage of subscribers using an alternative operator for direct access, such as in
Portugal, Italy and the UK11 (countries where the percentage increase was the highest since
September 2005) can be attributed to significant investments by operators in their own
network and to a significant increase in local loop unbundling. In the case of Portugal,
11
EN
The figure for the UK excludes wholesale line rental.
21
EN
15.20% of subscribers were using an alternative provider for direct access in 2006 compared
to 11.0% in 2005. This increase can also be attributed to cable, LLU, and to the provision of
access services using mobile frequencies.
Market share
The EU average incumbents’ market share in the overall fixed voice telephony markets12 on
the basis of retail revenues (but also by volume of traffic) continues to show a declining trend
from 67.7% at Dec. 2004 to 65.8% at Dec. 2005 (figures by volume of traffic are,
respectively, 66% in 2004 and 63.9% in 2005). Looking at the incumbent’s market share in
each Member State separately13, the biggest rate of decline (around 7%) has been experienced
in Cyprus, Hungary, Ireland and Poland. It is also worth mentioning that the incumbent in
Denmark increased its market share by minutes of traffic to 64.1% (Dec. 2005) compared to
60.94% (Dec.2004).
EU incumbents' average market share on the voice telephony market
(based on revenues)
80%
75%
75.8%
73.2%
71.8%
70%
70.6%
69.2%
68.8%
67.0%
65%
65.1%
62.9%
62.2%
60%
58.7%
56.7%
55%
Dec. 2003
Local calls
Dec. 2004
Long-distance calls
Dec. 2005
Calls to mobile
International calls
Source: Commission services based on NRA data.
As the above graph shows, the difference between the EU average market shares of the
incumbents in local calls as compared to international calls is still significant (as last year)
even though the rate of decline is comparable. Measured by declining incumbents’ market
share at EU level, the calls to mobile market (more than -4% since 2005) is more competitive
than the international and long distance calls markets (around -3%). The local calls market
shows the lowest declining incumbents’ market share (around -2%).
Looking at the market share of the incumbents in individual Member States, the different calls
markets reveal a varied pattern:
12
13
EN
All type of calls.
See also the respective country chapters.
22
EN
40%
77.4%
78.2%
75.9%
79.8%
96.0%
51.9%
52.7%
54.6%
58.0%
75.0%
65.0%
85.0%
99.0%
99.0%
89.3%
90.6%
79.0%
67.4%
66.1%
71.0%
74.0%
70.5%
65.3%
70.0%
69.6%
64.1%
44.0%
50%
55.0%
60%
66.3%
64.1%
70%
74.0%
74.2%
82.3%
80%
95.3%
90%
91.1%
95.1%
91.2%
96.4%
100%
97.3%
99.2%
Incumbents' market share in the fixed telephony market (all types of calls)
(Dec. 2005)
30%
20%
10%
0%
BE CZ DK DE EL ES FR
IE
IT
CY LV LT LU HU MT NL AT PL PT
By retail revenue
SI SK
FI UK
By volume of traffic
Incumbents’ market share on overall fixed market remains particularly high (more than 90%)
in Cyprus, Latvia, Lithuania, Hungary, Malta, Slovenia, Slovakia and Finland.
New entrants have managed to gain considerable market share by offering cheaper prices for
certain types of calls. This has been observed in the international calls market in Italy, Poland
and Slovenia (with a decrease of between 9% and 11%14), in the long distance call market in
the Czech Republic (-35%14) and Ireland (-15%14), and in the local calls market in Belgium,
Ireland and Hungary (between -7.5% and 8.7%14).
Against the background of incumbents with declining market shares and despite the declining
growth in the fixed voice sector, the EU fixed market has experienced an increase in the
number of requests for new authorisations to provide fixed services during 2006, even if to a
lesser extent than last year. As at July 2006 there were 2127 operators authorised to offer
public voice telephony services and 2846 public network operators. Around 50% of the
authorised operators were actually providing services as of July 2006. Many new entrants
concentrate their business on specific segments of the market, thus having a limited impact on
the overall level of competition. The chart below shows that only seven countries (Belgium,
Germany, Spain, Ireland, Austria, Sweden and United Kingdom) had five or more major
competing players (including the incumbent).
14
EN
By retail revenue.
23
EN
Number of players in the
fixed telephony market in terms of retail revenues (including the incumbent, Dec. 2005 )
12
11
10
10
9
8
6
6
6
5
4
4
4
5
4
4
4
4
4
3
3
2
2
2
2
1
1
1
1
CY
LV
LT
1
1
SI
SK
0
BE CZ DK DE EE
EL
ES
FR
IE
IT
LU HU MT NL
AT
PL
PT
FI
SE UK
Operators that along with the incumbent operator have a combined market share of 90% of the voice telephony market
The number of EU subscribers using alternative operators stabilised during the reporting year,
with more subscribers opting for an alternative operator when making international calls.
While the data in the chart should be considered as indicative, the percentage of subscribers
using alternative operators for international calls has shown a substantial increase since
September 2005. The fact that the percentage of subscribers using direct access reached
10.4% this year is noteworthy, although incumbents continue to dominate the local access
market.
EU subscribers using an alternative provider
35%
32.2%
30%
27.5%
27.3%
27.7%
25%
27.4%
26.0%
23.6%
22.4%
20%
18.0%
15%
10%
10.4%
7.9%
5%
6.1%
0%
July 2004
Local calls
EN
Sept. 2005
International calls
Direct access
24
July 2006
Long-distance calls
EN
As the graph shows, the percentage of subscribers using alternative operators has increased
only slightly for long-distance calls whereas the increase for international calls was more
substantial. The fact that the percentage of subscribers using direct access reached 10.4% this
year is noteworthy, although the incumbent’s dominance in the local access market still
prevails.
Fixed number portability has continued to contribute positively to the competitiveness of the
market. It is currently introduced in all Member States except Slovakia; in Malta, however,
the service is not yet effective. Strong growth in the number of ported numbers has been
recorded in Spain, France, the Netherlands and Sweden. Since the introduction of fixed
portability, a total of more than 15 million subscribers have ported their numbers as of
October 2006 (compared to 7 million as at October 2005).
Revenues from fixed telephony are on a long-term downward trend, driven by falling prices
due to increased competition between operators and by fixed-mobile substitution. Partly in
response to this trend, operators in many EU Member States have increasingly begun to make
available triple play services (where television, voice and internet are delivered on the same
‘pipe’ from a single service provider), which are expected to shift the consumer market
further towards broadband connections. Quadruple play offers (which also include mobile
voice) are also being made available in some Member States (e.g. France, Finland, Germany,
Sweden and the Netherlands).
During the reporting year VoIP has become widely available in the EU, showing strong
growth in some countries. Both incumbents and alternative operators are responding to this
new IP environment by offering VoIP products or bundled packages which include voice
services. Companies in a number of Member States have introduced Voice over Broadband
(VoB) services. If VoIP continues to grow over the coming years, competition and prices in
the fixed voice telephony market may be further affected.
PRICING
The declining trend depicted in the prices for 3-minute and 10-minute calls is evident in the
following graphs:
L o c a l a n d n a tio n a l c a ll c h a rg e , 3 m in u te s
E U 2 5 w e ig h te d a v e ra g e
45
41,8
37,1
€ -C e n t, V A T i n c l u d e d
40
34,3
33,7
35
2 9 ,9
30
25,3
25,0
12,3
13,1
2005
2006
25
20
15
10
12,5
13,0
2000
2001
12,9
12,9
1 2 ,7
2002
2003
2004
5
0
L o c a l c a l l c h a r g e , 3 m in
EN
25
N a tio n a l c a l l c h a r g e , 3 m i n
EN
Local and national call charge, 10 minutes
140
EU 25 weighted average
133,3
116,9
€-Cent, VAT included
120
107,6
105,6
91,8
100
76,3
73,9
80
60
40
39,0
39,1
38,5
38,8
37,7
35,4
36,5
2000
2001
2002
2003
2004
2005
2006
20
0
Local call charge, 10 min
National call charge, 10 min
Prices of both 3-minute and 10 minute national calls have continued to decrease, albeit more
slowly and less steeply than the previous decrease since 2000. Prices for 3-minute calls have
decreased by 1.1% and for 10-minute calls by 3%.
INTERCONNECTION
In the case of two Member States - Portugal and Poland – NRAs have imposed an obligation
on the respective incumbents to modify their RIO so as to introduce capacity-based
interconnection as an alternative method of interconnection. This interconnection model
allows an operator to contract certain capacity for interconnection services from the dominant
operator at a specific point of interconnection, paying a fixed cost, regardless of the traffic
minutes actually routed. It also gives an incentive to alternative operators to increase traffic
volumes, allowing the routing of a higher number of minutes at lower unit costs. This model
of interconnection was first successfully implemented in Spain where more than half of the
fixed access and termination interconnection is now capacity-based. The increased flexibility
offered by capacity-based interconnections makes it easier for alternative operators to provide
a varied range of retail offers, such as flat rates for voice or data, bundled offers, free or
discounted calls.
EU average fixed interconnection charges for call termination on the incumbent’s network
have further decreased this year for all level of interconnection. The decrease in prices, which
ranges from 6.5% for local level to 8.5% for single transit, and 10% for double transit, was
due to regulatory measures taken by the national regulatory authorities following the analysis
of the relevant market or to modifications made in cost-accounting systems used for defining
cost-oriented prices for interconnection in some Member States. Operators thus profited from
lowered interconnection costs.
EN
26
EN
A significant development in the EU fixed telephony market in 2006 has been the
implementation of operational separation of the UK fixed incumbent’s access network
business. This has been achieved by the creation of a new business unit, Openreach, which
operates the access and bottleneck network of the UK incumbent. The aim is to deliver key
access products to communication providers in a way that guarantees equality of access to the
incumbent’s infrastructure on fair and equal terms. The UK NRA, Ofcom, is expecting that
investments in infrastructure will be encouraged, that innovations through multiple services
will be enabled, and that deployment of next-generation networks will be increased. The
overall benefit to the consumer would thus be lower prices and greater choice of products and
services.
EN
27
EN
BROADBAND
TAKE-UP
There has been a further substantial increase in broadband take-up in the EU. The number of
fixed broadband access lines is now almost 73 million as of 1 October 2006, compared to 52.6
million in October 2005 - an increase of more than 20 million lines. On average, 55 146
broadband lines were added per day during 2006 compared to 52 482 new broadband lines per
day during the previous year.
EU Broadband penetration rate, 1 October 2006
October 06
MT
SI
IT
ES EU25 AT
NL
26.0%
DK
21.8%
19.7%
19.0%
17.2%
16.4%
15.8%
PT
29.8%
IE
13.9%
CZ
13.6%
LV
13.5%
10.3%
LT
12.6%
9.6%
PL
9.3%
4.5%
SK
9.3%
4.3%
3.3%
5%
8.6%
7.4%
10%
12.3%
15%
15.7%
20%
20.4%
24.5%
25%
29.4%
30%
0%
EL
CY
HU
DE
EE
FR
LU
UK
BE
SE
FI
Data for Austria as of July 2006. The estimate for the Austrian NRA for October 2006 is 16.42%
As a result the EU average broadband penetration rate has risen from 11.4% in October 2005
to 15.7% in October 2006. Overall sector size reached €58.5 billion.
EN
28
EN
Penetration rate in October 2006 and speed of progress
EU25 average
Penetration Rate October 2006
35%
30%
FI
SE
25%
UK
BE
20%
LU
FR
AT
EU25 average
15%
DE
ES
PT
MT
10%
EE
SI
IT
LT
CZ
HU
IE
LV
CY
SK
5%
DK
NL
PL
EL
0%
0
1
2
3
4
5
6
7
8
Increase in penetration rate October 05-October 06 (percentage points)
Data for Austria as of July 2006.
Growth has been highest in Denmark and Luxembourg, followed by the Netherlands, Finland,
the UK and Sweden. Member States with growth higher than the EU25 average also include
Estonia, Ireland, Germany and Latvia. The gap between the Member States with the highest
and the lowest penetration increased from 23.6 percentage points in October 2005 to 26.5
percentage points in October 2006. The UK is now among the most successful Member States
(the Netherlands, Denmark, Finland, Sweden and Belgium) in terms of penetration rates.
Among the new Member States, Estonia and Slovenia in particular continue to perform well,
whereas Malta has seen a decline in growth.
INTERNATIONAL COMPARISON
The Netherlands and Denmark now have the highest broadband penetration in the world and
other EU countries are also among the world leaders. However, the EU still lags behind some
other comparable world economies on average.
EN
29
EN
International Broadband Penetration Rates
(EU - 1 October 2006, 3rd countries - 30 June 2006)
35%
FI
CH
27.3%
NO
26.4%
SE
29.8%
CND
29.4%
BE
26.2%
LU
24.6%
US
24.5%
JAP
22.4%
19.7%
FR
21.8%
19.2%
AUS
19.0%
15.7%
EE
19.0%
DE
DK
NL
11.7%
10%
17.4%
16.4%
NZ EU25 AT
15%
17.2%
15.8%
20%
20.4%
25%
26.0%
30%
5%
0%
UK
KOR ICE
Data for Austria as of July 2006. The estimate of the Austrian NRA for October 2006 is 16.42%.
The US seems to have performed better than in 2005, while Japan and South Korea
underperformed compared to the situation one year ago. South Korea, in particular, has been
showing very strong signs that growth potential is flattening out as the country is potentially
nearing its natural saturation point.
Comparable 3rd Countries
Iceland
South Korea
Switzerland
Norway
Canada
US
Japan
Australia
New Zealand
Broadband Population
Penetration Rate (30 June
2006)
27.3%
26.4%
26.2%
24.6%
22.4%
19.2%
19.0%
17.4%
11.7%
Annual Increase in
Penetration Rate (%
points)
5.8
1.1
5.8
6.5
3.2
4.7
2.6
6.6
4.7
Source
OECD, June 2006
OECD, June 2006
OECD, June 2006
OECD, June 2006
OECD, June 2006
OECD, June 2006
OECD, June 2006
OECD, June 2006
OECD, June 2006
DSL continues to be the leading platform in the EU (at 81.7% of all broadband lines)15, while
broadband over cable is well developed in the USA, South Korea, and Canada. Japan leads in
terms of fibre-to-the-home (FTTH) with 6.3 million fibre broadband subscribers in June 2006.
In Japan, there are more subscribers using fibre than other access modes. Despite the
incumbent having an obligation to offer unbundled access to its fibre, the main driver for this
investment in Japan seems to be the intense local competition (in particular with electricity
utilities) and strong evidence of demand for more bandwidth among consumers. In South
Korea, the total number of DSL connections continues to decline as more users upgrade to
fibre. In the USA, investment in fibre is continuing, while China is reputed to have at least 5
million FTTH connections.
15
EN
The predominant speed in the US is 2.5 Mbps, but 512 kbps – 2 Mbps in the EU (sources: IDATE,
FCC).
30
EN
Bridging the broadband gap
Auctions for designations for WiMAX, CDMA, UMTS, HSDPA, LMDS licences were held
in a number of Member States in 2006. Once these wireless networks are rolled out (some as
early as 2007), options for end-users, particularly those in remote or sparsely populated areas,
will increase. This will reinforce broadband take-up and accelerate the catching up process
between urban and rural areas as well as between Member States, even more so when suitable
frequencies become available.
BROADBAND TECHNOLOGY TRENDS
In the EU, DSL continues to consolidate its position as the main broadband technology
(81.8%). In contrast, broadband over cable, which stands at 15.5%, has decreased by 1.3
percentage points since October 2005. Other technologies (FTTH, wireless local loop (WLL),
satellite, leased lines, LAN using Ethernet protocol, etc) account for 2.7%. Broadband over
mobile networks (UMTS, HSDPA, CDMA, Flarion, EDGE) is gradually increasing, in
particular in the new Member States.
The EU broadband market is becoming ever more sophisticated, with ADSL2+ and VDSL
services and increasing transmission speeds facilitating the introduction of new services.
Cable is responding with the Euro-DOCSIS technology, which is expected to increase data
transmission speeds significantly.
DSL technology
From October 2004 to the present DSL lines grew by 127% compared to a 77.2% increase in
cable modem subscriptions. Several incumbents have announced plans to invest further in
DSL, in particular in sub-loops, in order to increase the efficiency of their networks. These
developments could push up the investment costs of alternative operators and increase the
number of interconnection points, as well as limiting the possibilities for co-location.
Other technologies
Cable is losing ground to DSL in all Member States with the strongest cable presence in
Malta, Austria, Belgium, the Netherlands and Portugal (from 40.78% to 38.06%, on average).
Nevertheless, some cable network operators (e.g. in Germany and Ireland) recently
announced investments to upgrade their networks, which will place them in a position to offer
competitive broadband (and triple play) products to a large number of end-users in the future.
Operators generally increased their investment in FTTH and WLL technologies. Take-up in
FTTH-based lines is evident in Estonia, Sweden, Slovakia and Lithuania. WLL has seen
significant growth in the Czech Republic and Ireland. Ethernet has developed into an
important alternative platform in all three Baltic States. Municipal broadband projects are
expanding in Northern European countries such as France and the Netherlands. These
deployments are acting as an incentive for incumbent operators, some of which have
announced large fibre roll-outs (France, Germany, Italy, Spain, the Netherlands, Belgium and
Slovenia), although mainly not to the home, but only to the street cabinet.
EN
31
EN
COMPETITION AND REGULATION
Of the many factors that contribute to broadband rollout, competition is key. Competition in
broadband can be measured both at the infrastructure level (LLU + other technologies, mainly
cable modem) and at the service level (bitstream and resale of DSL lines). The best
performing countries in terms of broadband take-up have traditionally been characterised by
competition between alternative platforms, which allows consumers to choose between
different modes of access.
Take-up has been particularly strong in those countries where competition between DSL and
cable has been effective. Thus, all five leading Member States in terms of penetration (the
Netherlands, Denmark, Finland, Sweden and Belgium) also have a high roll-out of cable and
have arrangements in place which allow alternative operators to gain access to the existing
telecoms networks.
However, as the broadband market relies heavily on the DSL networks of incumbent
operators (over 80% of broadband lines), access to these networks has been crucial to the
development of competition. Sector regulation has brought about significant shifts in
countries where DSL is the predominant access technology, in particular in countries where
the unbundling of the local loop has made significant advances, e.g. the UK, Ireland and
Portugal.
Other factors contribute to the development of consumer demand for broadband. Market
growth has recently become more and more content-driven, as customers move away from
traditional stand-alone products towards bundles of services, most often individually tailored,
e.g. pay-per-view (PPV) and video on demand (VoD). At present however, the availability of
greater download speeds appears to be stimulating more demand for online gaming and music
download services. Broadband internet tools for real-time communication (e.g. VoIP tools)
also drive overall competition and choice for end-users.
Additionally, foreign investments and attractive financial and tax environments can play a key
role in the growth of broadband. In Estonia, for example, in the absence of effective DSL
regulation, market take-up remains strong due to the presence of alternative networks cofinanced by foreign investors.
In some new Member States, broadband penetration is hindered by social and economic
conditions.
EN
32
EN
There is a general consensus that competition is one of the main drivers of broadband take-up.
The best performers appear to be those Member States, such as the Netherlands and Denmark,
where the presence of competing infrastructures is key to broadband take-up. Effective market
regulation, permitting access to the incumbent’s infrastructure, also stimulates the growth of
broadband and intra-platform competition. For example, decisive regulatory action in France
and functional separation in the United Kingdom have clearly been important factors.
Effective regulation improves market conditions and enables alternative operators to move
gradually from service-based to infrastructure-based competition. In contrast to the above, in
Member States where poor regulatory policy is combined with the absence of effective
infrastructure-based competition, gaps in performance can be observed.
Regulation and implementation of remedies
In the absence of competition between different platforms, national regulatory policies are
critical in setting the right conditions for competition to develop by means of access to the
incumbent’s infrastructure, in particular through unbundling and bitstream access products.
However, the toolbox of pro-competition remedies provided by the regulatory framework can
only be used when the framework is in place and the market reviews have been completed.
Late transposition has undoubtedly had a detrimental impact in this regard, in particular in
Member States without effective infrastructure competition. This is exacerbated where market
reviews themselves have been late in starting. Belgium has not yet analysed either of the two
recommended markets, i.e. LLU market (market 11) and wholesale broadband access (market
12), Malta was late with market 12, and Estonia with market 11, whereas Germany has not
notified all the remedies on market 12. Latvia did not notify both markets until late November
2006.
NRAs have generally determined that the relevant markets are not effectively competitive and
have generally imposed access obligations. Furthermore, almost all NRAs that have notified
market 11 have imposed some sort of price control and cost accounting obligation; on the
other hand the majority of regulators that have notified market 12 have imposed price control
and cost accounting obligations, albeit mainly using retail-minus formulas.
There is evidence of some regulators focusing more closely on the potential for different
conditions of competition to apply in different geographic areas within their territory, thereby
offering the prospect of differentiated remedies.
Partly as a result of generally effective market regulation in the EU25, competition has grown,
with the incumbents’ broadband market share falling to 48.1% from last year’s 50.2% on
average. The situation regarding market shares differs from one Member State to another,
ranging from 24.8% (incumbent’s market share) in the UK to 98.3% in Cyprus. Growth of
alternative operators’ market share between October 2005 and October 2006 has been
significant in some countries, such as Germany (17 percentage points), Slovakia (16
percentage points), Latvia (14 percentage points), Ireland (10 percentage points) and Greece
(10 percentage points).
EN
33
EN
Incumbents' vs. new entrants's retail market share by technology,
October 2006
Total lines: 72 722 459
100%
80%
Other
Satellite
60%
WLL
Fiber to the home
40%
Cable modem
DSL
20%
0%
INCUM BENTS 48.1%
NEW ENTRA NTS 51,9%
The results of regulation appear to be very positive in Denmark, where the NRA has imposed
very strict remedies. Bitstream has become available in Germany, while the number of LLU
lines is growing in Slovenia as a consequence of broadband regulation. Owing to the
existence of several alternative operators (both cable operators and LLU operators), the
Netherlands is the only Member State where the wholesale broadband bitstream is not
regulated.
Some Member States have achieved competition based on full or shared LLU access. In these
countries (e.g. France, Germany, Sweden, Finland, and the Netherlands) alternative operators
hold significant shares of the DSL market. France has one of the highest broadband
penetration rates measured by access-based competition.
On the other hand, weak regulation, difficulties with enforcement of remedies and appeals
against the imposition of remedies are capable of seriously hindering the effectiveness of
wholesale broadband regulation, with a resultant negative impact on the development of
competition. In certain Member States (e.g. Hungary, Latvia, Slovakia, Lithuania and
Cyprus), alternative operators have a very low share of the DSL market. Resale appears to be
the only service-based type of DSL wholesale offer in Slovakia and Malta. In Lithuania,
bitstream appears to be viable only for non-residential users. The situation is particularly
serious in Cyprus, where - apart from a small number of unbundled lines – there are no
alternative infrastructures.
Furthermore, the degree of precision of remedies imposed by the regulators has been an issue
with regard to the wholesale broadband market (market 12) in Poland and the LLU market
(market 11) in Slovakia. Finnish legislation leaves it up to the operators themselves to decide
which kind of cost accounting model is applied in LLU and bitstream markets.
The UK has, as an example of good practice, stepped up the oversight of the LLU process by
creating new enforcement structures, aimed at assisting the NRA in tackling practical
problems in the implementation of regulated processes.
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In Belgium, Hungary, the Netherlands and Sweden, systematic or frequent legal challenges
also tend to delay implementation of remedies.
LLU PRICING
General
LLU pricing remains an important component in the strategy mix that influences the
behaviour of alternative operators in infrastructure based competition. In principle, lower
LLU fees create greater demand for access to the local loop (although provisioning and
technical conditions remain important). For instance, partly thanks to a reduced monthly
rental fee for full unbundling, France has added some 1.22m new fully unbundled lines since
October 2005. Portugal, the Netherlands, Luxembourg, Denmark, Belgium and Austria have
seen significant growth in the number of fully unbundled lines (on average between two and
four times the number in October 2005), partly due to reductions in monthly rental costs.
Decreasing monthly rental fees for LLU have, for example, contributed to the emergence of
fully unbundled lines in Slovenia, which, together with shared access lines represent nearly
10% of all DSL lines and make Slovenia, despite its small size, the top performer in absolute
terms (with 16 814 lines) amongst the new Member States.
Significant decreases in monthly average total costs (connection fees over three years plus
monthly rental fee combined) have fuelled the growth of shared access lines in the Czech
Republic and Slovenia, whereas Italy and, in particular, the UK have drastically increased the
number of subscribers using alternative DSL lines via shared access.
Full unbundling
The EU monthly average total cost for full unbundling has decreased by € 1.2 since October
2005, which is more than in the period 2004-2005. Ireland and the Netherlands respectively
remain the Member States with the highest and the lowest monthly average total cost for full
unbundling. EU average connection fees for full unbundling decreased from € 77.9 in October
2005 to € 65.9 in October 2006. During the same period, monthly rental charges dropped on
average from € 10.6 in October 2005 to € 9.7 in October 2006. The highest connection fees
can be seen in Slovakia while the Netherlands remains the cheapest. Spain, Italy, Sweden,
Malta and, in particular, Poland (due to the charging of an additional fee for technical
information on the connection) have raised their connection fees since 2005. Monthly rental
charges are highest in Ireland (€ 15.1), which has raised the price of rental compared to 2005,
while Lithuania (€ 7.8) and Italy (€8.1) are the cheapest countries.
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L.L.U. monthly average total cost in EU
16
14
13.3
12.7
11.5
Euro per month
12
10
8
6
5.7
5.1
4.5
4
2
0
2004
2005
Fully unbundled lines
2006
Shared access lines
Shared access
The EU monthly average total cost for shared access has fallen by € 0.6 since October 2005,
in particular because of the 15% decrease in monthly rental charges. Average monthly rental
charges have thus dropped from € 3.4 in October 2005 to € 2.9 in October 2006. Slovakia and
the Netherlands remain the most and the least expensive countries respectively. On the other
hand, connection fees for shared access (€ 59.7) have not changed on average compared to
last year. Denmark, Spain, Malta and Poland have increased connection fees for shared
access.
WHOLESALE ACCESS TO THE INCUMBENTS’ NETWORKS
New entrants, spurred on by adequate access price regulation, are climbing the ladder of
investment by moving away from bitstream access (5.13 million lines) towards local loop
unbundling (13.89 million lines) in the provision of broadband services.
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TOTAL: 30 192 315
Availability of wholesale access in the EU
Incumbent's PSTN activated main lines (million): 184 450 569
9 348 125
11 170 380
12 000 000
10 000 000
5 212 691
8 000 000
4 994 893
3 558 205
6 000 000
5 132 765
4 541 045
5 153 440
3 094 945
4 000 000
1 534 956
2 814 201
2 000 000
1 843 121
272 803
Fully
Shared
Bitstream
unbundled
access lines
access
lines
2 635 742
916 987
2006
2005
1 776 931
2004
Resale
Shared access lines
2003
Bitstream access
Resale
LLU, which now represents 7.53% of the PSTN lines in the EU, provides 46% of DSL new
entrants with access to broadband network. Fully unbundled lines increased by 79.3% over
the year. Germany and France have been the principal contributors to the growth of full
unbundling, while Italy, the Netherlands and Portugal have also played an important role.
Many operators seem to have chosen full unbundling over shared access, since this allows
them to provide a full set of services (voice, data and video) independently of the incumbents.
In addition, it allows alternative operators to provide single billing to their customers and
permits market operators to modify the characteristics of the service in a competitive way. In
shared access, France remains the country with the highest number of lines, while the United
Kingdom in particular, Italy, Spain and Sweden all considerably increased the number of
shared access lines in the space of one year.
Bitstream has been stable and accounts for only 17% of alternative operators access lines in
DSL. The United Kingdom, Belgium, Hungary, Ireland and the Czech Republic are the
countries with the highest number of new bitstream lines in the course of one year, while
France and Italy - despite a decrease in the number of bitstream lines – are still the countries
with the highest absolute bitstream penetration.
Strikingly, new entrants have been particularly active in reselling the incumbents’ DSL
products (6.17 million new lines added compared to October 2005, which is equivalent to an
increase of 123.6%) and account for some 37% of all new entrants’ DSL lines. Resale
continues to grow mainly as a result of the increase in Germany, where the incumbent
reduced the prices of unregulated resale products; 1.8 million lines have been added to give a
current total of 2.9 million DSL lines. In the United Kingdom, 4.3 million new lines - a
development due mainly to falling prices16 - pushed up the resale figures to 7.4 million lines.
However, resale - which in the main is still unregulated - is unlikely to provide a basis for
sustainable competition. Moreover, it is perceived as a means by which incumbents exercise
16
EN
It also appears that the figure reported by the NRA includes all new entrants’ wholesale DSL
connections, although it is impossible to estimate the exact share of bitstream and pure resale.
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continued control over the end-users. This is becoming critically important in some Member
States. There are considerable differences in the incumbents’ market share depending on
whether DSL resale lines are included or not. For example, in the UK the incumbent’s market
share excluding resale lines is 24.8%, as compared with 68.4% including resale lines (a
difference of 43.6 percentage points). In Malta the difference is 22.6 percentage points, in
Germany 21.5 percentage points and in Luxembourg 10.2 percentage points.
Incumbent's Broadband market share excluding/including resale lines by alternative operators
October 2006
98.3%
100%
30%
67.6%
68.5%
36.9%
57.6%
49.0%
43.2%
44.8%
39.7%
44.9%
40%
50.7%
54.5%
59.2%
68.4%
67.5%
49.0%
51.4%
49.4%
50%
59.5%
60%
63.7%
63.5%
70.1%
70%
69.1%
80%
69.1%
85.7%
90%
20%
Incumbents no resale
49.0%
36.6%
68.5%
65.9%
SE
UK
CY
CZ
EE
HU
LV
LT
MT
PL
SK
54.6%
42.9%
FI
50.7%
PT
54.5%
AT
36.9%
NL
98.3%
LU
24.8%
IT
38.9%
IE
69.1%
FR
69.1%
ES
39.7%
48.2%
EL
44.9%
55.8%
DE
75.5%
63.7%
DK
67.5%
48.6%
BE
49.0%
62.3%
0%
47.2%
10%
SI
Incumbents + DSL resale
The introduction of functional separation, as in the UK, could create more transparency, open
up the infrastructure bottlenecks and ultimately generate a new wave of competition in the
highly converged markets with strong incumbent control.
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TECHNOLOGY TRENDS
The electronic communications sector is characterised by rapid technological advances, which
often present new challenges for the market and regulatory approaches. Many new
technologies have significant potential and may well have strong economic and social impacts
in the near future.
WIRED TECHNOLOGIES
In most Member States, operators have started upgrading the existing infrastructure in order
to be able to carry higher data rates and to supply converged products. Incumbent operators
with legacy copper access infrastructure, and some alternative operators using wholesale
access products, have started to adopt new DSL technologies.
Although over the past years DSL has grown in importance as the predominant broadband
technology, there has been some investment - mainly led by alternative operators - in the
other two main wired access platforms currently used, namely cable and, to a lesser extent,
FTTH. Some analysts predict that the basis for competition will shift from the data rates and
prices offered through the different platforms towards converged services and content.
Cable operators were the pioneers in providing entertainment services in conjunction with
pure telecommunication services. Last year, cable market share fell very slightly, and the
cable operators' main focus appears to be boosting revenues from new content-related services
taking advantage of a platform fitted for media provision. In relation to fibre, following the
initial investments made mainly by a number of alternative operators, public authorities and
utility companies, some incumbent operators are also planning to deploy FTTH in the future,
which would allow the provision of very high data rates with symmetric bandwidth.
VOIP
Alongside the increased availability of broadband, VoIP services, whether provided through
managed networks by operators or through unmanaged networks by using computer
application programmes, are experiencing significant growth, mostly in enterprise but also in
the residential segment. Alternative operators began offering this service to compete with
traditional voice services, and incumbent operators have responded with their own offers. In
an effort to overcome some of the disadvantages of VoIP versus traditional voice services,
some companies are implementing a technology called "power over Ethernet", which would
enable the provision of electrical power as well as data over existing Ethernet cables for
powering IP telephone devices.
In February 2005, the Commission urged national regulatory authorities to take a “light
touch” approach in order to allow innovative services and market structures to emerge.
National regulatory authorities have adopted different approaches towards VoIP services in
relation to a number of issues, such as consideration as traditional voice services, numbering,
number portability, interconnection, quality of service, or provision of caller location
information to emergency authorities.
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There are different types of VoIP services: VoIP managed by the broadband access provider
(called Voice over broadband or managed VoIP), VoIP managed by an independent voice
service provider and VoIP as a usually free “personal voice application”. Currently, usage of
VoIP is still limited but growing in several Member States. For instance, in a 2006 household
survey, 10% of all German broadband customers stated they were using their broadband
connection for telephony services. The figure was 14% for Finland and 10% for
Luxembourg17.
WIRELESS LOCAL LOOP (WLL)
Although DSL and cable technologies account for most of the broadband market share,
wireless technologies may provide competition to the existing wired platforms, with the
advantage in certain cases of offering mobility. For alternative operators this provides another
way of access in addition to wholesale access to the incumbents’ networks. However, in a
number of cases it is the incumbent or cable operators who have shown interest in WLL
technologies in order to complement their existing offers from fixed networks. The
deployment of wireless services will partly depend on the regulatory environment established
by regulators, mainly the national spectrum policies.
Although the existing wireless technologies have not been extensively used to date, WiMAX
technologies might have a larger impact in the market. WiMAX technologies might be used to
provide voice and data services as fixed wireless access solutions, being especially attractive
as a way of extending services to remote and sparsely populated areas, and to provide
backhaul services as well as mobile wireless services, given that a new mobile standard has
been developed.
As is the case with all wireless technologies, spectrum availability is essential for the
development of WiMAX technologies. In July 2006, the French regulator auctioned spectrum
on the 3.5GHz band, awarding 35 licences to different operators including some public
authorities. Spectrum was auctioned in the same band in Germany in December 2006. Other
Member States such as the UK are planning to assign additional spectrum during the coming
year. In previous years, operators have conducted trial phases across the EU using “preWiMAX” equipment, and there are also currently some commercial services available, e.g. in
Belgium, Denmark, Finland, Ireland, the Netherlands, Slovakia or the UK. In some Member
States, such as the UK or Spain, operators have shown a renewed interest in existing licences
previously awarded in those bands for other wireless services, which has prompted some
merger and acquisition activity with companies holding such licences.
The role of radio spectrum in the electronic communications market has significantly
increased and the Commission has been stressing the need to develop the European dimension
and to coordinate the approaches for spectrum policy18. In November 2005, the Radio
Spectrum Policy Group issued the Opinion on Wireless Access Policy for Electronic
Communications Services (WAPECS) calling for action across Europe to allow more flexible
use of radio spectrum for different electronic communications services.
17
18
EN
Quoted in the i2010 Annual Report (March 2007)
“Communication on a forward-looking radio spectrum policy for the European Union”, September
2005.
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In the context of spectrum liberalisation, the Commission services are working closely with
the Member States in the Radio Spectrum Committee to develop a Commission decision that
would effectively replace Directive 87/372/EC (GSM Directive) and achieve a consistent
approach across the EU for a more flexible use of the relevant frequency bands. In this
connection, several Member States have announced plans to expand the usage of the radio
frequency bands originally reserved for GSM technology by allowing 3G mobile technologies
or even other technologies capable of providing electronic communications services in those
bands.
MOBILE TV
Operators are looking for new sources of revenue in mature mobile markets, and a number of
trials carried out in the EU seem to confirm that there is demand for mobile TV services. Most
subscribers are currently offered unicast audiovisual services over the 2.5G and 3G network.
Moreover, mobile broadcasting services have recently been commercialised using DVB-H
standard in Italy and Finland. In the future, mobile TV would benefit from more efficient
transmission as a result of the evolution of 3G networks and the development of separate
broadcasting networks, for which business models still need to be defined.
In some Member States, frequencies have already been assigned temporarily for trials or
permanently. However, the availability of spectrum for further development of commercial
services remains a key issue which could be delayed, depending on the standard and
frequency band, until the switch-off of analogue TV release the ‘digital dividend.’ Another
major issue, which will affect the development of these services and the launching of panEuropean services, is interoperability amongst different networks and standards. The
Commission plans to publish a Communication on Mobile TV by mid-2007.
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REGULATORY DEVELOPMENTS
MAIN REGULATORY DEVELOPMENTS
At the heart of the 2002 regulatory framework for electronic communications lies the
principle that undertakings should not be subject to ex ante regulatory obligations unless they
have been found to be dominant in a relevant market, on the basis of a thorough market
review by their national regulatory authority (NRA).
This market review process has made significant advances since the last implementation
report. Most NRAs have now substantially completed the first round of market analysis and
review of obligations and notified their results to the Commission and other NRAs in
accordance with Article 7 of the Framework Directive. This has created a genuine body of
know-how and experience which can be shared by NRAs across the Community.
In general, it is still too early to make a definitive assessment of the effects on the market of
the regulatory obligations imposed as a result of the market review process, given that the
practical implementation of the resulting obligations is still work in progress.
Indeed, in a number of Member States there have been significant delays in the practical
implementation of remedies, as well as divergence in the nature of the remedies chosen
following completion of the market analyses and findings of significant market power (SMP).
These are key factors that in practice have restrained the framework from exercising its full
effect.
Delays can be caused by a variety of factors: legal challenges (including appeals);
procedural delays on the part of NRAs in imposing definitive remedies (for example, by
adopting a completely different timetable for decision making on this issue); or insufficient
detail in the formal obligations imposed. In the latter case, legal certainty and the ensuing
demand from market entrants for regulated offers may not materialise until the details of
implementation have been determined by other means, such as dispute resolution or a further
phase of regulatory action by the NRAs. In either case, this can take months or even years.
The Commission services regret the legal uncertainty and lack of consistency in the
application of remedies across the Community that may result.
At the same time regulators need to strike a balance between the level of detail to be
included in legally binding regulatory obligations (with all the complexity and administrative
burden that this may entail) and the simplicity and ease of access to regulated products that is
needed in order to ensure market take-up. Some elements of the implementation process are
arguably more effectively dealt with by other, more flexible and consensual, methods.
In a further development of this more flexible approach, some authorities consider that the
economic objectives of ex ante regulation can be best achieved by organisational changes to
the regulated undertaking’s business, in order to achieve genuine non-discriminatory access to
its key infrastructure and to create clearer incentives for all parties. This approach has been
seen in particular in the functional separation of the United Kingdom fixed incumbent’s
local access network from its retail and other businesses, which resulted from a process of
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negotiation between the undertaking concerned and the United Kingdom’s NRA. Similar
organisational remedies are under consideration in Italy and Portugal (in the latter case as a
condition to a takeover bid for the fixed incumbent).
Nevertheless such organisational approaches should go hand in hand with the effective
implementation of other clearly defined regulatory obligations (such as non-discrimination,
access and cost-orientation).
In general the majority of relevant markets reviewed by the NRAs to date have resulted in a
finding of significant market power and the need to impose on the dominant operator(s) a
range of obligations sufficient to remedy the lack of effective competition.
However, a core of markets can be identified in which the removal of regulatory obligations
has been possible or where the relevant market has remained unregulated following a finding
that the market was effectively competitive. In particular, findings of effective competition
have been made in a number of retail calls markets in different Member States. The market
for mobile access and call origination is also an example of a market where most NRAs have
found that competition is effective. De-regulation can also take place where an NRA
considers that, although the market is still not effectively competitive, market conditions
and/or the availability of regulated offers elsewhere in the value chain have allowed scope to
lighten the regulatory burden on the SMP operator.
A tendency can also be seen in some Member States, where the formal implementation
process is perhaps more established, whereby a process of negotiation between the SMP
operator and the regulator results in the latter offering voluntary commitments (e.g. with
regard to the availability or pricing of specified products) as an alternative to the full
application of the regulatory procedure. For example, this has happened on a number of
occasions in the United Kingdom. It is also worth noting that Italy has adopted legislation
enabling the NRAs to enforce voluntary commitments.
Although this approach has significant advantages in terms of flexibility, certainty and speed
of application, care needs to be taken to ensure that the safeguards in the framework relating
to transparency and public consultation are not undermined and that third parties do not
feel excluded from the decision making process.
In general, the NRAs have consolidated their position and authority as the implementation
process has unfolded and they have gained experience in the process of regulating the sector.
The independence of the NRA from the ownership interests in the sector is now established
in most Member States. However, this can still be an issue in some Member States, for
example where the head of a regulatory authority can be (or even has been) replaced by the
Government without explanation or reference to any pre-defined criteria. The dissolution of
an NRA and/or the transfer of its functions to another legal entity without due explanation or
justification would, in the Commission services’ view, raise similar concerns in such
circumstances. Finally, the view that a regulator must be free to carry out its tasks without
undue political interference is gaining traction across the Community. This is an area where
greater clarity in the regulatory framework could be beneficial.
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An issue which arises from an overview of regulatory activity across the Community in the
last year relates to the powers of the regulatory authorities to enforce the obligations
imposed on operators under the framework, and their effective use. The Commission is
considering whether in some countries the level of the penalties which regulators can impose
is sufficient to act as a genuine deterrent for large operators. In others, the effective use by the
regulator of its enforcement powers may be open to question, whether due to the
administrative burden that enforcement entails or a lack of confidence in the legal outcome
following likely legal challenges. This would in particular be a problem where the original
obligations imposed are not clear and precise enough to make them easy to enforce.
Although action has been taken in some Member States to address the procedural issues that
have contributed to the length of appeal processes, this still can constitute a significant factor
in delaying the practical effect of the framework in a number of Member States.
While at one end of the scale some NRAs still have work to do in defining and enforcing
obligations arising out of the first round of market analysis, a number of regulators are
beginning to address the issue of how regulatory obligations will need to evolve in order to
resolve competition problems arising from the development of new technologies and new
services. An example of this is the planned roll-out of next generation networks, based on IP
protocols. Timely action is needed in this regard in order to ensure that all market players (not
just the fixed incumbent) have the confidence to invest in new infrastructure and services, and
can develop their business cases accordingly. The regulatory environment should adapt in
such a way that access to the infrastructure needed to service markets which are not
effectively competitive remains available at the appropriate level and that competing
operators are not prevented from evolving to take advantage of the new opportunities offered
(for example by allowing for migration paths to the new products). Initiatives to address these
issues have been launched, for example, in France, Ireland, Italy, the Netherlands and the
United Kingdom.
Over the reference period an increased focus by some NRAs on consumer issues has been
apparent, particularly where the initial market review process has been substantially
completed. Many of these consumer issues are perennial issues that nevertheless require
renewed regulatory oversight and enforcement to ensure that competition is allowed to
develop in an orderly environment. NRAs have taken initiatives, for example, to address the
mis-selling of retail products, unlawful action to save or win-back consumers from rival
service providers, issues of pricing and transparency in relation to calls to value-added or
premium rate services, the publication of quality-of-service parameters and compensation
mechanisms for failure to meet specified quality levels.
As competition intensifies in the retail broadband markets, operators have been seeking to
gain competitive advantage and respond to demand by offering a full range of
communications services to their customers, combining internet access and audio-visual
(IPTV) services as well as fixed telephony and even mobile services in a single package. This
bundling of services can raise concerns both for consumers and competitors where
dominance persists in a given market, and is likely to be an increasing focus of attention for
regulators and competition authorities in the future. The leveraging of dominance from one
market into another associated market may extend to the exclusive acquisition of premium
content for inclusion in audio-visual broadband or mobile services.
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In general, regulators have not sought to impose obligations on operators without using the
processes and safeguards provided by the regulatory framework, in particular the market
reviews conducted in accordance with Article 16 of the Framework Directive. However, the
Commission is keen to ensure that this remains the case. For example, the Commission
services are looking into a proposal from the Polish regulator to impose MVNO access on one
mobile network operator as part of a dispute resolution procedure, without any corresponding
finding of significant market power in the relevant market, as well as an obligation to meet
reasonable network access requests attached to the right of use for radio frequencies of a 3G
operator in Ireland.
REGULATORY ENVIRONMENT
Transposition issues
Transposition of the requirements of the EU regulatory framework into the national laws of
the Member States was substantially completed with the adoption by Greece of the relevant
primary legislation in February and June 2006.
However, it would appear to be the case that in a number of Member States the adoption of
further secondary legislation or amendment of existing laws to refine and perfect the legal
framework is still awaited. For example in Belgium part of the applicable secondary
legislation is still based on the previous Telecommunications Act and needs to be updated
(e.g. regarding the regulator’s internal rules). In the Czech Republic the authorities are
preparing secondary legislation for the further implementation of rules relating to 112 caller
location information, numbering and the national frequency plan. In Greece, most of the
necessary secondary legislation is still lacking (such as revised procedures for the grant of
mast permits). In Hungary, repeal is still awaited of the secondary legislation which permits
the fixing, without any prior market analysis, of maximum retail prices for access to internet
services via the telephone network and for broadcasting services still has to be repealed.
On the other hand some Member States have already updated their legislation. For instance in
Denmark the legislation governing appeal procedures has been amended, in line with Article
4 of the Framework Directive, to ensure that no automatic suspension of the regulator’s
decisions takes place on appeal. In the Netherlands, legislation concerning rights of way has
recently been updated and improved, by providing for a structural separation between
ownership and decision-making powers within municipalities providing electronic
communications networks, coupled with restrictions on local authorities providing electronic
communications networks without specific safeguards. In France, new legislation on
consumer issues and broadcasting (digital switchover) is proposed.
In Germany the recently adopted amendment to the German Telecommunications Act would
exempt new markets from regulation unless criteria more restrictive than those allowed by the
Community framework are met. The Commission has expressed serious concern at this
development.
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New Member States
In accordance with the Treaty of Accession of Bulgaria and Romania signed in Luxembourg
on 25 April 2005, those two countries became Member States of the European Union on 1
January 2007.
Bulgaria
In December 2006, Bulgaria notified its law on telecommunications of 10 October 2003, as
last amended in June 2006. The Bulgarian authorities themselves consider this to be a partial
transposition of the EU regulatory framework. The Commission is in the process of
examining this measure.
During the accession negotiations, the chapter on electronic communications and information
technology had been earmarked as an area where further progress was needed. Issues include,
for instance, whether the national regulatory authority, a corner stone of the regulatory
framework, had been given full capacity and independence to carry out its regulatory tasks;
whether secondary legislation enabling market reviews is in place; and whether effective costaccounting mechanisms, an important prerequisite for accurate and fair obligations, are in
place. Bulgaria has not yet adopted a national broadband strategy.
To bring Bulgarian law into compliance with the EU regulatory framework, draft legislation
is being debated in Parliament. In that context, regular exchanges have taken place between
the Bulgarian authorities and the Commission. The Commission services will continue to
monitor closely the progress made by Bulgaria.
Romania
Romania had already adopted its primary and secondary legislation in the field of electronic
communications on the basis of the 2002 regulatory framework. Law no. 304/2003 on the
universal service and users` rights relating to electronic communications networks and
services, Law no. 239/2005 on the amendment and completion of several normative acts in
the field of communications, the Government Emergency Ordinance no. 79/2002 on the
general regulatory framework for communications and the Government Ordinance no.
34/2002 on access to the public electronic communications networks and to the associated
infrastructure as well as their interconnection, together constitute the core body of Romanian
legislation for the electronic communications sector. So far the Romanian authorities have
notified to the Commission national laws which they consider as constituting full
transposition of the Framework, Access, Authorisation and e-Privacy Directives, whilst in
respect of the Universal Service Directive only partial transposition has been notified.
Romania has not yet adopted its national broadband strategy.
As a result of the early transposition of the 2002 regulatory framework by Romania, market
analysis of several markets was carried out before accession. As Romania was not a Member
State at the time, the Romanian authorities could not notify the draft measures resulting from
the market analysis to the Commission for comments as provided for by the 2002 regulatory
framework. Consequently, in accordance with the 2002 regulatory framework Romania is
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required to ensure that, as soon as possible after its accession and periodically thereafter, the
NRA notifies draft measures to the Commission under Article 7 of the Framework Directive.
The Commission will closely follow Romania’s implementation of the entire 2002 regulatory
framework. Nevertheless special attention will be given to such issues as the independence of
the national regulatory authority, implementation of the provisions on universal service and
the completion of the market analysis process.
Organisation of the NRA
In broad terms the NRAs across the Community are increasingly establishing a status and an
authority consistent with the tasks assigned to them by the regulatory framework. However,
there are a number of individual cases in which issues relating to their powers and objectives
still have to be clarified. For example in Greece no NRA has yet been designated with
competence to conduct the review of the broadcasting transmission market. In Spain, the
CMT has appealed against certain legislative acts on the basis that these acts unduly limit its
powers.
Powers and resources
One of the key powers which NRAs need to have available in order to ensure that the national
framework for which they are responsible is implemented effectively, and produces the
intended results for competition and consumers, is the power to enforce their own decisions
and the wider sectoral obligations. Yet this is an area in which issues are still apparent in
many Member States. Unless consumers and market players are confident that obligations
will be actively followed up and enforced by regulators, the safeguards for competition and
consumer protection put in place by the framework will be deprived of much of their
effectiveness.
In Belgium and Portugal questions have been raised concerning the NRA’s exercise of its
enforcement and fining powers in the event of breach, while in Ireland it would appear that
the regulator’s enforcement powers are limited and the absence of a credible threat of
enforcement action, combined with the length of appeal proceedings, has delayed the practical
effects of the regulatory decisions taken so far. In Malta the scope of the enforcement powers
of the regulator with regard to access and interconnection disputes, and the low financial
limits for fines are also open to question. In Italy the lack of deterrence in the level of
financial penalties which the regulator can impose has been addressed by new legislation.
Likewise in Estonia and Greece, where there are limitations on the powers of NRAs to impose
financial penalties. The Commission services are looking into the question of whether the
NRA in Slovakia has sufficient means to investigate whether reference offers are fully in line
with the remedies imposed. In the United Kingdom the NRA’s lack of power to impose
interim measures in dispute resolution procedures limits their effectiveness in the eyes of
alternative operators. In Finland and France, however, legislative amendments should
strengthen the powers of the NRA, including in the area of consumer contracts. In Hungary
the increasing imposition of significant fines by the NRA on operators who breach their
regulatory obligations has been noted.
The issue of ensuring sufficient resources for the NRAs to ensure that they can carry out the
full range of tasks conferred on them by the Community framework is still a factor in some
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Member States. A lack of human resources is reported in several countries, such as Estonia,
Greece and Italy. In Slovakia the NRA is seen to be suffering from a lack of resources in
terms of both personnel and finances. In particular, it does not have its own dedicated
financial resources, but is dependent on the Ministry’s budget. In Sweden the agency with
responsibility for consumer issues reported severe staffing problems as a result of its
relocation.
Independence
The effectiveness of a national regulator depends on both the perception and the reality of its
independence from external influences that may affect the objectivity of its decision making
and enforcement action. The notion of independence in this regard applies not only to the
need for an arm’s length relationship with commercial interests in the sector, but also to the
need for transparency and impartiality in the exercise of its functions. One of the key means to
achieve these objectives is the separation of regulatory and ownership functions within the
administrative structures of the Member States. The Commission services are still looking
into this issue in Luxembourg, Slovakia and Lithuania, and also in Austria in relation to the
functions of government in the broadcasting sector.
Undue influence from political forces on the exercise of the regulator’s responsibilities could
also result in a breach of the impartiality and transparency requirements in circumstances
where there is the potential of overlapping regulatory and ownership functions. In this regard,
in Poland concerns have been raised with regard to independence and impartiality of the new
NRA, particularly in the light of the abolition of its predecessor and the scope of the
Government’s ongoing powers of dismissal. The Commission services will consider this issue
carefully, also in relation to other Member States.
Co-operation with National Competition Authorities
Member States must ensure consultation and cooperation between the NRA and the national
competition authority on matters of common interest. In several Member States, this
cooperation follows a specific protocol signed between the different authorities. However, the
division of tasks and responsibilities (e.g. ex ante versus ex post regulation, settlement of
price squeeze issues and complaints) appears not to be clear in certain cases (Luxembourg,
Malta, Slovenia). Close cooperation is also needed between the two authorities in the context
of merger cases, where the NRA may be requested by the NCA to provide an opinion on the
impact of a merger in the regulated electronic communications sector (e.g. France, Portugal).
Dispute Resolution
With respect to the resolution of disputes arising between operators, NRAs have to issue
binding decisions within a maximum timeframe of four months in accordance with Article
20(1) of the Framework Directive. While in some countries (e.g. Sweden, United Kingdom)
disputes are generally resolved within the four-month deadline set by the Directive, a number
of Member States exhibit different trends. Where proceedings are lengthy and decisions do
not really meet market and business needs, operators tend to abandon dispute resolution in
favour of other mechanisms. Concerns in this regard have been expressed in Belgium, Italy,
and Slovakia. In some cases, the NRA might not be inclined to intervene, given the resources
it would need in order to do so. Dispute resolution also becomes effective when the NRA is
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able to enforce its decisions whenever necessary. The Commission is examining whether this
is the case in Ireland. Examples of robust and effective decisions have been reported in Spain
(NRA decision of November 2006 fining the incumbent for voluntary obstruction of new
entrants’ services) and the Netherlands (NRA decision of November 2006 imposing
administrative penalties on the incumbent and granting compensation to individual operators).
However, NRAs may decline to resolve disputes (for a certain time) when there are
alternative dispute resolution mechanisms, e.g. mediation that would be more effective in
helping to resolve the dispute (Article 20(2) of the Framework Directive). At this stage, much
can depend on the NRA’s ability, de jure or de facto, to intervene as a mediator in order to
prevent disputes arising between operators. Sometimes a swift decision on interim measures
may also suffice. The clear determination of the NRA to encourage market parties to consult
each other or to apply informal mediation procedures before moving to formal dispute
resolution may also reduce the number of disputes to be dealt with (Netherlands, Hungary and
Slovenia). It is also worth mentioning that operators can use more informal mechanisms to
report their positions to the NRA (Portugal) and that associations of operators may provide
internal mechanisms for dispute resolution before referring the case to the NRA (Czech
Republic).
Appeals
The right to effective judicial protection - one of the fundamental principles of the
Community legal order - is embodied as regards the field of electronic communications in
Article 4 of the Framework Directive. Under this provision, effective mechanisms must exist
at national level in order to ensure that any user or undertaking providing electronic
communications networks and/or services, affected by a decision of a NRA, has the right to
appeal against that decision.
The large number of appeals and the length of the proceedings are still seen as a major issue
in many Member States. This is the case, for instance, in Italy and Portugal, where appeals
may often take four to six years or more to complete. In Greece the highest administrative
court has not issued a single decision, and some decisions are still pending since 2001. Such
delays mean that operators can avoid complying with their regulatory obligations. A review of
the appeals procedures (Ireland) or a reform of the judicial system (Portugal) or possibly
granting judicial competence to another appeal court (Greece) could improve the situation, but
the effects have still to be examined. Lengthy procedures may also produce a system, as in
Italy, in which urgent provisional measures may be requested and are often granted as a
remedy to alternative operators who are dissatisfied with the way the NRA is dealing with the
incumbent’s practices. Limitation of the appeal proceedings to one instance (or two instances
down from three, like in Sweden) would help by reducing the length of time involved.
In some Member States, market review decisions are systematically appealed, which reduces
legal certainty and commercial predictability in the market (e.g. Belgium, Italy, Cyprus,
Hungary, Netherlands, Poland, Slovakia and Sweden). Repeated and systematic recourse to
appeal procedures, often used by operators against all types of decisions, may also lead to a
regulatory environment that maintains the status quo and de facto favours the position of the
incumbent or other designated SMP operators.
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In principle, NRA decisions must stand pending the outcome of the appeal, unless the appeal
body decides otherwise. However, in some Member States the NRA decision is suspended
when the appeal is against the imposition of a fine or sanction (Belgium, Poland). In Portugal,
the decision stands when the NRA submits a statement that non-implementation of the
decision would affect the public interest. In two Member States (Czech Republic and
Slovakia), decisions normally stand when they are challenged at the level of the court but
suspension is automatic when the appeals are lodged internally (at the level of the board of the
NRA) against a first instance decision adopted by an internal department or by the NRA
chairman. The Commission will examine whether this provision is in line with the
requirement of the regulatory framework. In several Member States, legal rules or court
practices have been amended and automatic suspension of the NRA decision in the event of
appeal is no longer applied (Denmark, Lithuania, Austria and Poland). In Poland however, it
appears that decisions (other than those imposing fines) can no longer be suspended by the
appeal body, since they are given immediate effect by law.
As part of the ongoing review of the regulatory framework the Commission is examining how
to make appeal procedures run more smoothly, including how the option for suspension of
decisions on appeal can be clarified, so that it occurs only when the proper administration of
justice would otherwise be undermined.
When issuing a judgement, the appeal body must take into consideration not only formal
elements but also the merits of the case. In several Member States, NRAs and operators point
to the necessary expertise required from appeal judges to deal with complicated electronic
communications matters. Solutions put in place by Member States might take one of several
forms: designation of a specialised appeal body (United Kingdom), designation of more and
specialised judges (Poland) and the training of judges (Poland). The Commission services also
organise seminars for national judges on a regular basis, in order to promote best practice
across the Member States.
Another issue in some Member States is the effective right of third parties affected by a
decision of an NRA to appeal against that decision. The Commission considers that the
concept of undertakings “affected” by a decision within the meaning of Article 4 of the
Framework Directive goes beyond the addressee of the decision. Specific cases include
Sweden, where a decision may only be appealed by the person whom it “concerns” (which in
Swedish law appears to be a narrower concept than “affected”), unless there are specific
regulations or statements setting out that interested parties should be given an opportunity to
respond or that certain interests should be taken into account. A similar issue has been
reported in Belgium, where in several cases parties other than the addressee in several cases
have not been allowed to appeal against an NRA decision, or to intervene in an action brought
by the incumbent (related to the incumbent’s reference offer). The appeal court considered
that competing operators are not directly and individually concerned by the NRA decision as
is required by general procedural law.
In three cases, the issue of the right of appeal for third parties has been referred to the
European Court of Justice for a preliminary ruling.19 The Commission considers that it is not
19
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In case C-426/05 (Tele2 UTA Telecommunication), an Austrian administrative court has asked the ECJ
for an interpretation of the term “parties affected”, by submitting the question whether it includes
competitors operating on the relevant market in respect of which specific obligations are not withdrawn
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possible to give a general answer to the question of who, other than the addressee, is affected
by a decision of the NRA. Instead, each individual situation has to be closely examined with
respect to the rights of the undertaking concerned, its specific relationship with the
undertaking which is directly concerned by the NRA decision (e.g. by an SMP designation)
and the content of the decision. Article 4 of the Framework Directive seems to cover a wide
range of NRA decisions and should therefore apply at least to a competitor which has
established, vis-à-vis the addressee of the decision, contractual rights which are directly based
on SMP obligations previously imposed on the addressee.
Decision making
The first round of market analysis and review of obligations following the date of application
of the regulatory framework for electronic communications has now been substantially
completed across the Community, with most NRAs having notified the Commission and other
NRAs of their proposals with regard to all but a few of the 18 relevant markets identified in
the Commission Recommendation20 on relevant markets. The second round of market reviews
has already begun in some Member States (e.g. Slovenia, Hungary, Finland and the United
Kingdom.
While the progress made in 2006 towards completing the first round of market reviews
represents a major step towards the goal of ensuring a fully functioning regulatory framework
which guarantees a common set of principles consistently applied across the Community, it is
not sufficient in itself to achieve that goal. It is also essential that NRAs follow up with the
rigorous implementation and enforcement of the remedies adopted as a result of the market
review process. For example, in Portugal the publication of the leased lines reference offer
took place a full year after the relevant markets were reviewed and the wholesale line rental
offer did not become available until one and a half year after it was mandated. In a number of
Member States the practical implementation of the remedies selected still remains to be
addressed. For example in Cyprus all but one of the market reviews had been completed by
1 November 2006, but remedies had been imposed in only four markets.
In some cases the level of detail provided in the notified measures is not sufficient to ensure
the legal certainty and transparency needed to implement remedies effectively and so create
positive effects in the market. As an illustration, cost orientation obligations are of limited use
unless they are backed up by a rigorous and transparent cost accounting system/methodology
and certified by an independent entity. Similarly, where reliable and validated cost accounting
information is lacking, allegations of the existence of a price squeeze are more likely to arise
and to be more difficult to disprove. The absence of such cost orientation systems or delays in
their certification continue to be an issue in the Czech Republic, Italy and Luxembourg.
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or modified as a result of a market analysis procedure. A German administrative court requested an
interpretation of the term in the context of a third party appealing against a decision concerning cost
oriented tariffs (case C-55/06, Arcor). In a third case, the ECJ has received a preliminary question about
the extent of the right of appeal of a third party with respect to a Finnish NRA decision adopted as a
result of a market analysis (C-366/06, Verkot).
Commission Recommendation of 11 February 2003 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 communication networks and services (OJ L 114, 8.5.2003. p. 45).
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There are nevertheless encouraging signs that where remedies are mandatory on a finding of
significant market power, a consistent pattern of implementation is beginning to emerge
across the Member States. Carrier selection and carrier pre-selection21 are now available by
law across the whole EU25, even if issues over the conditions for their provision persist in
some Member States.
In some cases, delays in the NRAs’ decision-making can be attributed in part to the lack of a
clear division of responsibilities. For example, in Belgium, the implementation of broadband
and broadcasting related remedies (including with regard to LLU) has been delayed by the
complex division of responsibilities between the federal and regional regulatory authorities.
Co-operation between these authorities on matters of shared competence has been established
by the signing of a co-operation agreement. Similarly, in Greece, the task of analysing the
broadcasting transmission market has not yet been assigned to an NRA. In Germany, the
separation of the decision making on remedies from the process of market analysis has
created legal and commercial uncertainty, as well as contributing to delays in some cases.
A necessary pre-condition for effective decision making is the process of public consultation
and, in appropriate cases, consultation of the Commission and other NRAs which is provided
for in Articles 6 and 7 of the Framework Directive. This ensures that the interests of all
interested parties are duly taken into account. Real consultation involves more than merely
following the procedural formalities provided by a consultation process, it also involves a
genuine openness on the part of the NRA to adapt its proposal where new facts or
considerations are brought to its attention. Concerns have been raised to varying degrees by
market players in a number of Member States that the views of interested parties have not
been genuinely taken into account. The Commission services consider that this is a matter that
requires ongoing attention by all NRAs, even if it has to be acknowledged that perceptions
can often be subjective in this area. The Commission services do, however, note with
approval the practice of some NRAs to explain systematically in the documentation following
up on a public consultation what the primary comments have been and how they have taken
them into account in reaching their final decision. The Commission continues to believe that
national consultation procedures should be carried out before the Commission and other
NRAs are consulted under Article 7 of the Framework Directive.
The Commission services closely monitor the final stages of the decision making process that
follows consultation by NRAs under the procedures in Article 6 and Article 7 of the
Framework Directive. In particular, the Commission reserves its right to take infringement
proceedings under Article 226 of the Treaty where the Commission has expressed concerns
that core principles of the framework may be violated by a notified draft measure and where
those concerns are not taken into account by the NRA in adopting its final decision. The
Commission is also concerned that there should be no unjustified delay in an NRA
completing a market review where a notified draft measure is withdrawn as the result of the
exercise of the Commission’s veto under Article 7(4) of the Framework Directive.
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To be imposed if SMP is found on the market for the provision of connection to and use of the public
telephone network at a fixed location.
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IMPLEMENTATION OF REGULATORY MEASURES BY SECTOR
Effective implementation of remedies imposed following the market reviews and finding of
significant market power is a key factor in fostering competition. In the following sections the
main implementation issues are dealt with by market segments.
Broadband Implementation
Many regulators have required the publication of reference offers by SMP operators in the
local loop unbundling (LLU) and wholesale broadband access markets. A range of issues with
the implementation of reference offers have arisen in many Member States (pricing, service
level agreements, collocation, migration between products or number portability).
The availability of effective dispute settlement procedures is a key factor in giving new
entrants the confidence to invest. For example in Spain the regulator has created a monitoring
unit to follow-up disputes in relation to the Reference Unbundling Offer (RUO). In the United
Kingdom, the Telecommunications Adjudicator - who is independent of regulator and
industry - has continued to play a key role in streamlining non-discriminatory LLU processes
and overcoming practical obstacles to high volume take-up.
The availability of wholesale access products differs from country to country. In those
Member States where there is choice between various levels of wholesale access, alternative
operators are able to combine them and gradually invest in their own infrastructure. The
Italian NRA has imposed the obligation on the incumbent to provide bitstream access at local
exchange level (DSLAM) on sites not open to LLU. In Germany, an IP bitstream offer was
not mandated until 2006 and a draft measure governing ATM bitstream was expected in
January 2007; neither measure has yet been implemented. In Estonia, delays in the market
review process have led alternative operators to turn to alternative platforms (fibre networks,
local area networks and cable). It is to be regretted that a functional bitstream access offer
from fixed network operators with SMP is not available on a more consistent basis across the
Community.
There is evidence of an increased focus by some regulators on the potential for different
competitive conditions to apply in different geographic areas within their territory, thereby
offering the prospect of differentiated remedies. For example in November 2006 the United
Kingdom regulator submitted to public consultation a document reviewing the wholesale
broadband access markets, in which the areas covered by local exchanges are regarded as
geographical units.
It is also important that NRAs address the relationship between different regulated wholesale
products when deciding on remedies, particularly with a view to facilitating migration
between different regulated products. In this regard the relationship between the pricing of
different products is clearly a key factor. In Greece, implementation of cost orientation for the
incumbent’s bitstream offer has been delayed because of delays in the provision of accounting
information to the regulator. Some countries, such as Czech Republic, Austria or Slovakia
have reported problems in the take-up of regulated access products due to the lack of a clear
framework for the pricing of those products.
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In most Member States, the major operators are facing a situation where networks need to be
upgraded. This results in new regulatory challenges, particularly for the fixed access networks
where many alternative operators have based their operations on regulated wholesale access
to the networks of SMP operators. Many incumbent operators are planning or have already
started deploying fibre in the access networks, either fibre to the node (FTTN) to provide
VDSL services or fibre to the home (FTTH) directly reaching buildings or customers.
Regulators need to define their approach to regulation of these new infrastructures where
dominance already exists in the relevant markets.
In this context, concerns have been expressed by the Commission about a legislative
amendment adopted by Germany in December 2006, under which new markets (possibly
including those based on the incumbent’s new VDSL network) may be exempted from
regulation unless certain conditions, which go beyond those in the EU framework, are met.
The Commission announced that it would launch an infringement proceeding as soon as the
German law was adopted. On the other hand in the Netherlands, the NRA has consulted
stakeholders on the regulatory issues surrounding the planned roll-out of the incumbent’s IPbased network by 2010, and in October 2006 issued a document stating its proposed positions
and the follow-up steps considered necessary. Moreover, the Dutch incumbent has voluntarily
published an offer. Also, in the United Kingdom the regulator has submitted for discussion
with industry a document on the regulatory challenges posed by next generation networks.
As the importance of broadband for economic development and social cohesion has become
clearer, there has been a corresponding increase in the number of initiatives by national and
local authorities to ensure the availability of broadband infrastructure in their regions. This
has taken place either through the establishment of publicly owned enterprises engaged in the
provision of electronic communications infrastructure or through the financing of such
provision from public funds. While there is clearly a role for government action where market
forces are insufficient to ensure that the necessary investment takes place (for example in
remote or sparsely populated areas), it is important that the scope for the market to achieve the
same result is not unduly restricted or competition distorted. A key requirement in this regard
is that, where public funds are used, a convincing economic justification for intervention is
provided and the principle of open access to the state-funded infrastructure for competitive
operators is guaranteed. In this respect, the Commission declared for the first time that a
subsidy for a broadband network was incompatible with the state aid rules22, as the area was
already served by other broadband networks. In February 2007, the Commission invited
applications from public authorities to exhibit broadband projects that constitute good practice
at regional and local level in the context of the Conference on “Bridging the Broadband gap:
Benefits of broadband for rural areas and less developed regions” which will take place in
May 200723.
Mobile Implementation
No mobile retail markets are included in the Commission Recommendation on relevant
markets; therefore regulation for mobile markets is applied only at the wholesale level. The
market for access and call origination on public mobile telephone networks has been generally
found to be competitive and any existing regulation was consequently withdrawn.
22
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FTTH network in Appingedam (Netherlands), Press release of 19 July 2006 (IP/06/1013).
http://europa.eu.int/information_society/events/broadband_gap_2007/index_en.htm
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As regards the market for termination on public mobile telephone networks, regulatory
intervention is the rule since all mobile operators have been found dominant in terminating
calls onto their own network. As a consequence there have been further decreases in mobile
termination rates in many Member States. Several NRAs have determined asymmetric rates,
to take into account the different dates of market entry.
Although the Commission Recommendation on relevant markets identifies the wholesale
national market for international roaming on public mobile networks as a market susceptible
to ex ante regulation, the cross-border nature of international roaming services has made it
difficult for Member States to regulate these services at national level.
This gave rise to calls, from NRAs and more widely, for action at EU level to address the
problem of the persistently high retail prices paid by mobile users for calls made and received
within the Community. Despite initiatives to increase the transparency of roaming tariffs,
including the launch of a consumer website by the Commission, roaming prices remain
significantly higher than the equivalent prices for domestic mobile calls, without justification
by reference to underlying costs.
Consequently, in July 2006 the Commission adopted a proposal for a regulation on roaming
on public mobile networks within the Community and amending Directive 2002/21/EC on a
common regulatory framework for electronic communications networks and services.
In the wholesale market, the proposed regulation establishes a maximum price that one
operator may charge another for handling roaming calls, fixed by reference to different
multiples of the EU average mobile termination rate, depending on the nature of the call. The
regulation also states that the retail prices that mobile operators may charge their customers
for making and receiving a call while roaming may not exceed 130% of the applicable
wholesale rate for that type of call. The proposed regulation is also designed to enhance price
transparency, which has been a major problem with roaming.
The proposal is currently being discussed in the Council and in the European Parliament.
Fixed Implementation
Although incumbent operators generally retain a large share of the fixed markets (65.8% on
average in terms of retail revenues), there is a slight trend towards de-regulation in this
segment of the electronic communications market in some Member States.
Carrier selection (CS) and carrier pre-selection (CPS) - key building blocks for competition in
the fixed market - are now available by law in all Member States and represent a major
contribution to competition generally. However, in some Member States (Latvia, Malta, and
Slovakia) the terms on which it is offered means that take-up remains minimal. In some
countries, such as Greece and Portugal, regulators have tackled “win-back” practices by
mandating standstill periods to prevent the incumbent from contacting customers who have
transferred to alternative operators.
Most regulators have obliged operators found to be dominant in the relevant fixed markets the
obligation to publish a reference interconnection offer (RIO) based on a fixed price per
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minute. However, a capacity-based interconnection model24, in addition to the meter-based
interconnection model, has been available in Spain since 2001. This has proved to be very
successful as it allows better demand planning by the incumbent and allows alternative
operators to route more minutes at lower unit cost. During 2006, the Polish regulator UKE
introduced capacity-based interconnection as an obligation on the incumbent operator, and the
Portuguese NRA ANACOM approved the modifications of the RIO in order to introduce
capacity-based interconnection.
With the growing number of bundled offers in which fixed voice is increasingly offered as a
service in addition to broadband and/or TV services, regulators are facing a challenge as in
many instances offers combine regulated and unregulated services, with the risk that SMP
operators may leverage their dominance in other markets. For example, in Luxembourg,
difficulties have been reported in replicating an incumbent’s bundled product due to the lack
of a wholesale line rental offer from the incumbent, Estonia has also reported problems with
bundled offers.
The regulatory approach to VoIP services differs across the EU with a number of issues being
tackled or still to be resolved by the NRAs, such as whether those services qualify as
“publicly available telephone services” (PATS) for the purposes of their regulatory treatment,
numbering, number portability, interconnection, quality of service or provision of caller
location information to emergency authorities. A positive example is Italy, where the
regulator has imposed a new obligation on all operators to negotiate direct IP
interconnection in order to guarantee full interoperability of VoIP services.
Broadcasting Implementation
The division of competences between different authorities can restrict the effective analysis of
the market for broadcasting transmission services. In at least two Member States (France and
Poland) the regulators decided that they are not competent to regulate access to transmission
networks for broadcasters, limiting their analyses to the relations between broadcasting
transmission undertakings. It is to be noted that the broadcasting transmission market, as
explained in the Recommendation on relevant markets, comprises commercial relations where
providers of broadcasting transmission services offer broadcasters the delivery of content.
Member States should therefore ensure that there is a body competent to analyse and regulate
that (part of the) relevant market if necessary.
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In the capacity-based interconnection model an operator may contract certain capacity from the
dominant operator at a specific point of interconnection paying a fixed cost, regardless of the traffic
minutes actually routed.
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Digital terrestrial TV
As far as the deployment of digital television is concerned, whereas the digitisation of satellite
and cable TV is believed to be mainly market-led (with more distant prospects for the switchover in the case of cable), the transition from analogue to digital transmission in the case of
terrestrial TV requires a more coordinated approach. This is due to such factors as lack of
spectrum in certain areas, the cost of achieving wide coverage, relatively limited network
capacity and competing TV offers already in place. At the same time, additional spectrum
capacity released by terminating analogue terrestrial television may bring a significant
economic benefit for the market. In a Communication related to this subject25 the Commission
invited Member States to establish switch-over strategies and later26 proposed 2012 as a
recommended date for analogue switch-off in the EU. Most Member States expect to meet
this deadline; for the time being only Poland has indicated 2015 as the switch-off date (an
earlier date may be possible depending on market developments). A few Member States
(Estonia, Ireland and Portugal) have not yet finally decided on the analogue switch-off date.
On the other hand, switch-off in the Netherlands already took place in December 2006.
The deployment of digital terrestrial TV (DTTV) varies considerably across the EU. In some
Member States a commercial offer for DTTV has been available for many years and countries
like Finland or the United Kingdom have relatively high DTTV penetration rates (33.1% and
23.3% respectively in September 2005 according to Dataxis27). In contrast, in six Member
States (Cyprus, Hungary, Ireland, Poland, Romania and Slovakia) the commercial provision
of DTTV services either has not yet been launched or is not fully operational.
Member States have taken a number of initiatives to assist and to encourage the transition to
digital terrestrial TV. While recognising that in some cases digital switch-over may be
delayed if left entirely to market forces and that public intervention can be beneficial, in some
cases there may be concerns with regard to potential state aid. Under Community law, any
state aid must be based on objective criteria, address specific issues where the market does not
provide solutions, be limited to the minimum necessary and avoid distorting competition
unduly, particularly as between different delivery platforms.
In addition, some Member States seem to accord specific treatment to public service
broadcasters (PSBs). PSBs would normally have a guaranteed listing on a multiplex operated
by another party or they are granted the frequency for a whole multiplex (as in the Czech
Republic, Finland, Germany, Spain, Sweden and the United Kingdom) for up to 6-8
channels28. In at least four Member States (Germany, Italy, Spain and the United Kingdom) it
was decided to reserve radio frequencies for assignment to current commercial broadcasters.
The Commission services are examining the policy objectives at stake and whether the
preferential treatment of some broadcasters is proportionate to the objectives pursued.
25
26
27
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Switchover communications of 2003; COM (2003) 541
Communication of 2005 on accelerating the transition from analogue to digital broadcasting; COM
(2005) 204
Dataxis, Digital television data; EU market for digital television”, 2006
Using the compression standard – MPEG2. MPEG4 standard makes it possible to double the efficiency
of compression.
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According to the Authorisation Directive, when assigning frequencies for any purpose,
including for the transmission of broadcasting content, Member States have to follow open,
transparent and non-discriminatory procedures. Selection criteria have to be objective,
transparent, non-discriminatory and proportionate. However, the Directive is without
prejudice to specific criteria and procedural requirements applied by Member States when
assigning radio frequencies to broadcast content providers with a view to pursuing general
interest objectives and in conformity with Community law. The process of granting
frequencies to broadcasters should be as open, transparent and non-discriminatory as possible
while meeting the general interest objective pursued. Any divergence from those principles
has to be weighed against the identified general interest objective(s) and needs to be
proportionate.
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THE CONSUMER INTEREST
TARIFF TRANSPARENCY
The Universal Service Directive requires Members States to ensure that transparent and up-todate information on applicable tariffs and on standard terms and conditions relating to
publicly available telephone services is available to customers and end-users. Furthermore,
the national regulatory authorities are encouraged to provide and promote the use of consumer
tools enabling independent evaluation of costs and services, for instance by means of
interactive tools.
The Commission notes the proactive approach taken in many Member States towards
ensuring a higher level of consumer protection and information awareness. Most notably, a
variety of web-based comparative information tools are offered to customers and end-users in
order to facilitate the information flow and broaden their consumer choice.
In Estonia, for example, the NRA has developed a web-based price comparison service,
which enables consumers to calculate and choose the best suitable offer on the market on the
basis of the tariffs of all public telephony operators. The Portuguese NRA set up an online
observatory of mobile prices which serves as a practical customer consultation tool by
simulating their traffic profiles. The Belgian regulator has been active in establishing a tariff
simulator, allowing customers to make quantitative and qualitative comparisons of tariffs. The
simulator is expected to be available on their website in 2007.
Several Member States have gone a step further and also included other services in their
interactive tools in order to provide more comprehensive information. The Irish NRA
expanded its mobile tariff comparison internet site to include fixed and broadband services.
Similarly in Slovenia, the tariff transparency interactive project includes mobile, fixed and
broadband offers. A price comparison database in Sweden includes fixed, mobile and internet
services. The Hungarian consumer choice and price comparison information system entails
fixed, mobile, broadband and also cable services. The Belgian project envisages including
broadband and triple-play, while the Portuguese NRA indicated a future upgrading of its
service to broadband.
The projects described above stem from public initiatives. However, the Commission also
notes similar initiatives by commercial players. On the basis of an initiative from the United
Kingdom’s NRA, a number of fixed service providers launched an independent website to
provide users with comparative information on quality of service. Moreover, the United
Kingdom’s four GSM operators have launched a website providing independently
commissioned comparative information on their voice quality and network performance.
The developments in the approaches of both the regulatory authorities and market players
described in the best practice examples above indicate that transparency of consumer-related
information is increasingly regarded as an additional tool to facilitate further effective
competition on the electronic communications market.
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Consumer Perception
The Commission conducted several surveys of consumer satisfaction with services of general
interest in 2006, including broadband connection, fixed and mobile telephony29. While all
these services are perceived as “very” or “fairly” important in consumers’ daily lives, fixed
telephony is considered still more important (75%) than mobile telephony (69%) and the
Internet (45%).
Regarding transparency, the pricing used by service providers makes the comparison of offers
by different providers very difficult for consumers. For example, evidence shows that a rather
high percentage of consumers (38%) admit that they have difficulties in comparing the offers
of different mobile providers.
In addition, there is evidence that consumers are not taking advantage of beneficial offers and
in some cases even switching to higher-cost providers. In mobile telephony, only 20% of
consumers have switched and found the experience to be easy whereas in fixed telephony
16% switched and had an easy experience. For both services, 8% of consumers had problems
when they tried to switch. Terms and conditions for mobile and fixed telephony are generally
seen by consumers as “fair” with the EU25 average at 63%. However there is a considerable
percentage of consumers, almost one in three, who think that these are “unfair”.
UNIVERSAL SERVICE
Scope
The Universal Service Directive defines universal service as a minimum set of services to be
ensured by Member States, of specified quality and available to all end-users within the
territory of a Member State, irrespective of their geographical location and at an affordable
price, without distorting competition.
Within this definition, there are currently four basic elements to the universal service. First,
there is the provision of access at a fixed location, enabling the users to make and receive
local, national and international telephone calls and fax communications, and have functional
Internet access. Second, there is the requirement to make available at least one comprehensive
directory and one comprehensive directory enquiry service comprising all subscribers who
wish to be included, regardless of whether these are fixed or mobile numbers. Third, there are
requirements governing the availability of public payphones. Fourth, there is provision for
Member States to take appropriate specific measures to ensure access to and affordability of
the same services for users with disabilities and special social needs.
Designations
Where the minimum set of services is not provided at an affordable price by the commercial
environment, Members States may designate one or more undertakings to provide these
elements in part or all of the territory. Moreover, different undertakings may be designated for
the provision of different elements. Details of the designation mechanism are left to the
29
EN
Special Eurobarometer 65 on Service of General Economic Interest, March 2007
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discretion of the Member States. However, the procedure applied must be efficient, objective,
transparent and non-discriminatory, so that no undertaking is excluded a priori. Primary or
secondary legislation on the designation mechanism must therefore follow these rules.
During the reporting period several Member States have designated universal service
providers under the new framework. The Czech Republic, Estonia and Poland have all used
an open tender procedure for the designation mechanism, which raises the total number of
Member States using this type of mechanism to six (previously also Cyprus, Hungary and
Slovenia). Ireland, the United Kingdom and Slovakia carried out the designation following a
public consultation procedure. Such designations stand in contrast to the situation in Latvia,
where the incumbent appears to be simply re-designated on an annual basis in the absence of
the designation process envisaged by the EU regulatory framework.
There are still a number of countries where the incumbent is providing the universal service
on a transitional basis. Spain and Denmark, for example, indicated that new designation will
take place during the next reporting period.
As to the outcome of the new designations, the incumbents are by far the most commonly
designated undertakings. The exception is Estonia, where an open tender brought in a new
entrant as the designated undertaking. In other countries, such as the Czech Republic and
Belgium, other operators have been designated alongside the incumbent to provide tariffs for
people with special social needs.
There is therefore ample scope for further involvement of other market players in the
provision of universal service. Since the Directive allows more than one undertaking to be
designated to provide universal service in its different elements or in different parts of the
territory, there is a possibility for the Member States to include interested new entrants in the
provision of these services.
Member States may decide not to designate a universal service provider if the market is able
to provide the elements of the universal service commercially at an affordable price and
specified quality. Two Member States, namely Germany and Luxembourg, are currently
exercising this option fully. It is necessary to emphasize that close monitoring of the provision
of these services should be maintained in cases where there is no designation for a part or all
of the universal service.
Several other Member States opted to withdraw certain elements from the scope of the
universal service on the basis that these are provided commercially by the market at a level
satisfying the requirements of the Directive. The Czech Republic has withdrawn the provision
of access at a fixed location from the scope of the current designation. In Estonia, a
comprehensive directory and directory enquiry service, and the availability of public
payphones, are no longer part of the universal service. This is also the case for comprehensive
directory enquiry services in Ireland and Austria. Moreover, in Austria, the designated
provider is relieved of the obligation to transfer certain freephone number calls from public
payphones. The Commission services are examining the matter.
One of the critical conditions of the designation mechanism under the EU regulatory
framework is to ensure that no undertaking is excluded a priori from the possibility of being
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designated to provide at least a part of the universal service. For non-compliance with this
requirement France was referred by the Commission to the European Court of Justice (ECJ)
in December 2006. Another infringement proceeding in this regard is open with Portugal. An
infringement proceeding with Hungary was closed after assurances from the authorities that
individual elements of the universal service could be provided by different operators.
However, the Commission will continue to monitor implementation of this interpretation very
closely.
Financing
The financing mechanism for the universal service set out in the Directive reflects the need
for compensation for the costs incurred by the designated undertakings in instances where the
provision of the service to end-users departs from normal market conditions. However, any
compensation must involve only related specific net cost and be recovered in a competitionneutral way.
Where the NRA considers that the provision of the universal service represents an unfair
burden for the designated undertaking, the net cost must be calculated. The costs and revenues
from provision of all universal service elements of one undertaking, including all intangible
benefits, must be taken into consideration when determining the net cost for that particular
designated provider. The net cost is then set as the difference between provision of the service
under the universal service obligation and market conditions. The NRA verifies the accounts
submitted by the universal service provider.
On the basis of net cost calculations, the NRA may find that the universal service provider is
subject to an unfair burden. Thereafter, and only at the request of the designated provider,
compensation can be provided via public or sector-specific funds. The sector-specific fund
created from contributions from other market players should only be used for compensation of
obligations deriving from the Directive.
Most of the Member States provide for the financing mechanism in their legislation, but its
use is rather limited as, in many of them, the provision of universal service is not deemed to
be an unfair burden. In certain countries where the unfair burden has been established, for
example in the Czech Republic and Italy, transfer of compensation is delayed because of
pending disputes or administrative delays. France is currently the only country, as far as the
Commission is aware, where the designated undertaking receives compensation. Since the
compensation is paid from sector-specific funds, there is a de facto transfer of funds from new
entrants to the incumbent taking place.
Belgium’s legislation fails to include a mechanism to determine whether providing a universal
service is an unfair burden. Likewise, there is no condition that the universal service provider
must apply for financing. Additionally, the automatic inclusion of all operators in the
provision of the special tariff element is addressed. The Commission is addressing the
financing mechanism in Belgium via infringement proceedings.
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DIRECTORY SERVICES AND DIRECTORY ENQUIRY SERVICES
The EU framework, within its universal service obligations, includes a requirement for the
Member States to ensure that there is at least one comprehensive directory and directory
enquiry service available to end-users. This requirement means that not only fixed, but also
mobile subscribers need to be given the opportunity to opt-in to a directory so that their
contact information is available if they so wish. The Commission has opened an infringement
proceeding regarding the implementation of this requirement in the United Kingdom.
Following the infringement proceedings launched in 2005, comprehensive directories and
directory enquiry services are now available to customers in the Czech Republic, Greece,
France, Cyprus, Malta, and Slovakia. This positive development now leaves only three
countries where these are not available: Portugal and the United Kingdom, where the nonavailability of a comprehensive directory is addressed by infringement proceedings, and
Poland, which has been referred to the ECJ for the non-availability of either a comprehensive
directory or a directory enquiry service.
DISABILITY AND SOCIAL NEEDS
Promotion of an inclusive society is one of the cornerstones of the Commission’s policies
built into the i2010 initiative. The existence of barriers to achieving eAccessibility
encompassing all citizens, including those with disabilities and special social needs, was
highlighted in a Communication on this issue in 2005.30 Additionally, this matter has been
examined in detail in the INCOM (Inclusive Communications) sub-group of the
Communications Committee.31 The Commission is assessing the changes to be proposed in
relation to facilitating use of and access to electronic communications networks in the light of
the current review of the electronic communications framework.
The current framework leaves wide discretion to Member States to adopt special measures
tailored to meet the needs of users with disabilities and special social needs. Member States
may also choose to take steps on the basis of their national conditions to ensure that people
with disabilities and those on low incomes or with special social needs are able to enjoy the
choice of services and operators that is available to the majority of consumers.
Many Member States include special tariff schemes for low-income and disabled users as part
of the universal service that the designated provider is obliged to offer.
The Irish regulator has taken action to accommodate the needs of users with disabilities by
establishing a Forum to promote greater attention to their needs by electronic communications
service providers. The United Kingdom sets another example of a tailored approach. The
NRA is taking measures to establish a stakeholder advisory panel for the text relay service for
deaf, hearing impaired and speech impaired customers. It also proposes to make changes to
extend the range of disabled users who can receive their bills and contracts in special formats.
30
31
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COM(2005) 425
INCOM report (COCOM06-16 Final) published on 12 September 2006.
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In Sweden, the NRA’s strategy for services to people with disabilities involves consultations
with market players on the possibilities for offering tailored services to people with special
needs. The NRA, at the same time, goes a step further and actually procures eight services to
disabled consumers, while running trials of several more. A sign language translation service
based on 3G video calls (where an interpretation centre translates bi-directionally between the
sign language and voice communication), as well as distribution of digital voice books from
an electronic archive accessible by nearly all public libraries, are thus examples of regularly
procured services in Sweden.
As illustrated by the best practice examples above, there are various approaches in the
Member States to meet the needs of people with special needs. However, there are still many
other possible ways, as yet unexplored, in which both the regulatory authorities and market
players can make the information society more inclusive for all citizens.
NUMBER PORTABILITY
Number portability is an important tool of customer choice whereby subscribers are given the
possibility to keep their existing phone numbers when changing operator.
As number portability has become available in the vast majority of the Member States, the
Commission notes the positive impact this facility has created by exerting competitive
pressures on both mobile and fixed markets.
Now that mobile number portability has become available in the Czech Republic and Malta
(where the arrangements have been put in place also for fixed number portability), Slovakia
remains the only EU country where number portability is not fully applicable. The
Commission is therefore addressing the non-availability of fixed number portability in
Slovakia via an infringement proceeding.
Of all the Member States, Spain has the highest number of mobile telephone numbers v (9.21
million) and the second highest number of fixed ported numbers (2.24 million). In Spain this
facility has been extensively used as a competition tool to attract customers. With such levels
of uptake, the Spanish regulator has recently launched a public consultation to streamline and
centralise the procedure for mobile number porting.
Many other Member States report increasing use of the facility by subscribers. Greece,
Germany, Ireland, Italy, Lithuania, Luxembourg, Finland and Sweden are all reporting an
increase in ported numbers, especially with regard to mobile services. Fixed number
portability has been popular particularly in France, Italy and the Netherlands.
A few countries have included VoIP in their porting system. In Sweden it is possible to port
fixed numbers into VoIP services. The Belgian authorities are currently preparing legislation
extending the scope of number portability rights and obligations to MVNOs. Belgium,
however, reports problems concerning the porting of VoIP numbers due to a legal distinction
between publicly available telephone services and electronic communications services.
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A number of countries are experiencing difficulties in the practical application. Estonia is
facing long delays due to an outstanding dispute over the database. Delays have also been
reported in Italy and in France, where a new technical system is being put in place. In Ireland
the current mobile porting procedure appears to entail disadvantages for the new entrants. In
the United Kingdom, the NRA has proposed changes to the technical arrangements for
number portability to simplify the process and reduce the costs involved. The Commission
will continue monitoring the situation in countries where number portability remains
relatively low in order to observe cases where porting prices could act as a disincentive.
OUT-OF-COURT DISPUTE RESOLUTION
An increasing need for consumer protection goes hand in hand with the growth and
diversification of electronic communication services and a growing number of service
providers. A mechanism to settle disputes between consumers and service providers that
offers a more flexible, cheaper and less formal alternative to court proceedings is required.
Practical applications of the dispute resolution mechanism, as well as the status of the
decisions adopted, vary from one Member State to another. In Belgium, consumer complaints
are brought before the Ombudsman, whose rulings are enforceable and extend to internet
services. Similarly, the Czech NRA is empowered to issue binding decisions on consumer
complaints.
In Spain, the Ministry is responsible for resolving disputes out of court. To increase consumer
protection, Spain has adopted legislation extending the right to automatic compensation for
service interruption to internet subscribers. The Latvian and United Kingdom NRAs offer the
possibility of submitting complaints online. In Sweden, the Consumer Agency includes the
office of the Consumer Ombudsman, who can lodge cases with the Market Court. Potentially,
the new Consumer Bureau established to provide information and advice to customers could
also play a role in settling disputes.
There are several bodies responsible for consumer protection and dispute resolution in France.
The French consumer associations are calling for a more streamlined approach and an
increased role for the NRA in the process. Similarly, in Hungary, several bodies are
responsible for consumer protection. For the sake of transparency, it is important to
emphasize the need for cooperation and a clear division of competencies, so as to prevent
consumer confusion in cases where more than one institution has the responsibility for
consumer disputes.
EMERGENCY SERVICES
In 2006, the single European emergency number 112 was operational in all 25 Member
States, and users of both fixed and mobile networks could benefit from this service, wherever
they were within the European Union. The Member States increased their efforts to ensure
that the standards observed for national emergency numbers are equally met for calls to 112,
and in several European countries an average call response time of around 8-10 seconds for
calls to 112 is now reported, allowing dispatchers to respond promptly to an emergency.
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Sweden, Denmark and the Netherlands have already chosen the single European emergency
number 112 as their sole emergency number.
While availability and quality of provision of the basic service now appears to be widely
ensured within the Union, implementation of caller location information remains an area
where further strengthening of European efforts is required. The caller location information
identifies where an emergency call was made from and hence where the person in danger is
physically located. For some Member States, provision of this functionality is still a problem,
while other Member States have achieved significant success, benefiting from further
advancements in technology and good cooperation between emergency authorities and
operators (Czech Republic, Finland).
In 2006, infringement proceedings were opened against 13 Member States and letters were
sent expressing the Commission’s concerns regarding the provision of caller location
information for 112 emergency calls. Following satisfactory responses from Ireland, Cyprus
and Luxembourg, the cases against these countries were closed. After scrutiny of the situation
in Greece, Portugal, Slovakia, Italy, Lithuania and the Netherlands, the Commission urged
those countries to remedy the situation. Further investigations were still pending at the end of
the reporting period for the remaining four Member States - Poland, Belgium, Latvia and
Hungary.
Caller location for emergency calls made from mobile phones remains the most difficult
element to implement, and location accuracy for calls from mobile phones remains low in
many Member States. In most cases, emergency authorities only receive information about
the “cell” from which the call originated; the possibility of obtaining more detailed
information is usually subject to severe technical limitations. In Sweden, for example, the
accuracy of caller location is reported to be between 5 metres and 3 kilometres.
Moreover, in most of the Member States location data is provided only at the request of the
emergency service (the “pull” method), instead of being automatically forwarded by the
network to public safety answering points each time an emergency call is initiated (the “push”
method). Even though the latter is more costly, the Commission recommends it32, as it saves
valuable time and is easier for dispatchers to use. It also facilitates the development of
innovative solutions such as the e-Call, a pan-European service of emergency calls from cars
using 112.
It must be noted, however, that some Member States have achieved a very high level of
efficiency also by use of the “pull” method, with a very good service reliability and an
average time of location provision on request of around 6 seconds (Finland). Those Member
States argue that the “pull” method is more cost-effective (not all emergency calls require
automatic caller location) and easier to implement. However, for a majority of the Member
States using the “pull” technique, it is far more cumbersome for emergency services
dispatchers, as location in some countries may take as long as 20 minutes.
32
EN
Commission Recommendation on the processing of caller location information in electronic
communication networks for the purpose of location-enhanced emergency call services, C(2003)2657,
25 July 2003
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The use of the 112 number is free all over Europe, and efforts have been made by Member
States to make citizens aware of the existence and use of this number. Their efforts range
from displaying 112 alongside other emergency numbers in payphones, directories, telephone
bills, police notices, newspapers and other media, to organising dedicated campaigns with
posters, comic-strips, folders, radio commercials and TV clips. Many 112 campaigns are
focused on children and young users. In Sweden, 112 information is provided on the
packaging of a popular brand of milk. In Latvia and the Czech Republic, TV programmes
bring the daily work of the people behind 112 closer to a wide audience.
A Eurobarometer survey33 shows improving results as far as knowledge of 112 by European
citizens is concerned. 40% of EU citizens at that time identify 112 as the number to call in
case of an emergency outside their Member State, whereas only 35% almost one year earlier
and only 19% in 2000 were able to do so. The survey reported higher percentages in some
Member States (Luxembourg: 79%, Slovakia: 66% and Czech Republic: 63%). Citizens’
awareness of 112 as the European single emergency number has increased in 20 out of 27
Member States over the last year.
Some of the Member States have developed dedicated websites explaining how, and under
what circumstances, the 112 number should be used. It seems, however, that more needs to be
done, as many emergency authorities have expressed concern about the growing number of
hoax calls. The percentage of calls from users misusing 112 is as high as 28% in Finland, 50%
in Sweden, 60% in Latvia and over 60% in Germany. It would appear that the majority of
hoax calls are originated on mobile networks, from end-users using pre-paid cards and SIMless devices, often just to check if the device is operational. In Sweden and Lithuania, systems
have been installed to filter hoax calls, allowing operators to focus on genuine emergency
calls.
Bearing in mind the pan-European character of the 112 emergency number, it is critical that
satisfactory arrangements in terms of language coverage are put in place (such as in Finland,
Greece, Latvia, Luxembourg and the Netherlands). In addition to that, in 2006 some Member
States reported that steps are being taken to ensure coverage of languages spoken in
neighbouring countries (Czech Republic, Germany, Lithuania).
The Commission recognises and acknowledges that people with disabilities and in particular
those who are deaf, hard of hearing or speech-impaired may experience difficulties in trying
to contact the emergency services34. The issue is addressed in the review of the ecommunications regulatory framework, which is currently under way. In addition to
proposing amendments to the existing legislation, the Commission will identify the best
available techniques for users with disabilities to access emergency services, and seek
appropriate standards which could be applied and used in all Member States.
To ensure appropriate implementation and application of 112 provisions, the Commission
regularly discusses the issue of emergency telecommunications with the Member States, in
particular in the Communications Committee, and in the expert group established to improve
dialogue on 112 issues, made up of experts on both telephony and civil protection. A
33
34
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E-Communications Household Survey (March 2007). Special Eurobarometer, European Commission.
INCOM report (COCOM06-16 Final) published on 12 September 2006
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document “Common European Requirements for Access to Emergency Services” is being
prepared. It will be a preliminary outline of what functional requirements at European level
could look like, as it will bring together and update requirements that are currently spread out
over various documents.
MUST-CARRY
According to Article 31 of the Universal Service Directive (USD), Member States may lay
down reasonable “must-carry” obligations for the transmission of specified broadcast
channels and services on the network operators under their jurisdiction, for legitimate public
policy reasons. This has been the case in many Member States (although not in Cyprus,
Latvia, Greece, Luxembourg and the United Kingdom). However, such obligations should
only be imposed when a significant number of end-users of such networks use them as their
principal means to receive radio and television broadcasts and where they are: (i) strictly
necessary to meet clearly defined general interest objectives, (ii) proportionate and
transparent, and (iii) subject to periodic review.
In cases where Member States decide to impose must-carry obligations, the general interest
objectives pursued have to be clearly defined. In accordance with the requirement of
transparency, the general interest objectives pursued should be made known in advance. It
appears from the analyses of the respective provisions in the Member States that the public
interest objectives invoked tend to be of a general and broad nature, such as freedom of
expression and/or information, media pluralism or cultural diversity. In cases where a
decision by an administrative body is required in order for a broadcaster (or a broadcast
programme) to obtain must-carry status or to impose a must-carry obligation, sufficiently
circumscribed criteria should be used in order to avoid arbitrary decision-making.
In addition, in order to make it possible to assess the proportionality of the measure there
should be a limit on the number of broadcast channels that can obtain must-carry status.
As a result of a number of complaints and after examination, it was decided to initiate
infringement proceedings against Belgium, Finland, the Netherlands and Germany for failing
to ensure that their must-carry regimes are in line with the requirements of the Framework.
The letters of formal notice were sent during 2006 and the Commission services are now
examining the replies of the Member States concerned.
E-PRIVACY
The e-Privacy Directive (2002/58/EC)35 (the Directive) complements and supplements the
general Data Protection Directive (95/46/EC)36 in the area of electronic communications. It
provides for basic obligations to ensure the security and confidentiality of communications
35
36
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Directive 2002/58/EC of the European Parliament and of the Council of 12 July 2002 concerning the
processing of personal data and the protection of privacy in the electronic communications sector (OJ L
201, 31.07.2002, p. 37).
Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the
protection of individuals with regard to the processing of personal data and on the free movement of
such data (OJ L. 281, 23.11.1995, p. 31).
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over EU electronic communications networks, and gives consumers and citizens a set of tools
to protect their privacy and personal data. According to the Directive, the tasks of the
Working Party on the Protection of Individuals with regard to the Processing of Personal Data
instituted by Article 29 of the Data Protection Directive (the Article 29 Working Party)37 shall
also cover the protection of fundamental rights and freedoms and of legitimate interests in the
electronic communications sector.
In July 2006, Greece finally notified transposition measures for the Directive. It was the last
Member State to do so. The infringement procedure in this matter has therefore been closed.
The two main issues in 2006 in the area of privacy and electronic communications have been
unsolicited communications and traffic data retention. The latter is now covered by a specific
Directive, adopted in 2006 and discussed further below. Unsolicited communications –
mainly relating to “spam” – have been the focus of the Commission’s infringement
procedures against Member States in the electronic communications area, which are detailed
below. Furthermore, network and information security, including protection against spyware
and other malicious software (herein collectively referred to as malware), is gaining in
importance for reasons which will be explained in this chapter. The spam issue is becoming
intertwined with the fight against different kinds of malware, as spam and malware are
increasingly used in combination for criminal profit.
Unsolicited communications (‘spam’)
As a main rule under the Directive, Member States must prohibit the sending of unsolicited
commercial communications by fax or e-mail or other electronic messaging systems such as
SMS and MMS except where prior consent has been obtained from the subscriber. This is
usually referred to as an “opt-in” system. The Directive allows Member States to choose
between an opt-in and an opt-out system as regards unsolicited direct marketing by phone
marketers (i.e. non-automated). Around half of the Member States have chosen each solution.
Following an infringement procedure opened in 2005, legislation has been amended in the
Czech Republic to comply with the opt-out principle concerning direct marketing to own
customers, and the procedure was closed in June 2006. An infringement procedure on the
same grounds was launched in 2005 against Slovakia. As a consequence, legislation there is
now being amended. The Commission no longer has concerns with Latvia’s transposition of
the rules on unsolicited communications, and as a result the infringement procedure in
question has been closed.
In some Member States, while “national” spam may be under control, spam from abroad –
which constitutes by far the biggest portion in any Member State – is harder to tackle. In
2006, the European Network and Information Security Agency (ENISA) conducted a two-part
survey on steps taken by the industry to comply with national measures implementing
provisions of the regulatory framework for electronic communications relating to the security
37
EN
The Working Party on the Protection of Individuals with regard to the Processing of Personal Data is
composed of representatives of supervisory authorities, a representative of the authority or authorities
established for the Community institutions and bodies, and the Commission. It has advisory status and
acts independently.
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of services.38 As the study concludes, various anti-spam laws are in place in the EU, but the
challenge is to enforce them in Europe and beyond. Many agencies have undertaken
enforcement efforts, but there are significant differences in the number of cases prosecuted.
The usefulness of cooperation between public and private stakeholders is clear. However, in
some countries there appears to be a lack of public awareness of the possibility of
complaining to the competent authorities. In this context, efforts to raise public awareness and
– as in some Member States – online complaint mechanisms could be useful.
Although complaints about mobile spam have been received in a few Member States, it is not
considered an immediate threat, primarily because of the transmission costs incurred, but also
because, at the moment, mobile networks are relatively closed environments. The
technological and commercial developments in this area nevertheless call for vigilance.
In April 2006, the OECD launched an Anti-Spam Toolkit of Recommended Policies and
Measures, with the active support of the Commission and several Member States39. In
December 2006, the informal Contact Network of Spam Authorities (CNSA) set up by the
Commission liaised with enforcement agencies grouped in the London Action Plan40 in order
to exchange best practices, facilitate cooperation across borders and to examine strategies to
counter the increasing threat of spam as a vehicle for spyware, malware and “phishing”.
Network security, spyware and malware
Recent events in the Member States demonstrate the importance of ensuring the
confidentiality of electronic communications and the related traffic data. Under the terms of
the Directive, any unauthorised tapping or other kinds of interception or surveillance must be
prohibited. Users must also be informed of the purposes of third-party devices installed on
their terminal equipment, and have the opportunity to refuse such installation. The
transposition issues with Slovakia reported in the 11th Report were resolved after new
legislation was introduced there in 2006.
Whereas the nature and extent of spam as such is relatively clear and has been the subject of
numerous complaints by users as well as some enforcement efforts, less attention has been
given to other evolving threats. These include the dissemination of illicit third-party devices,
phishing messages and malicious software. Spam can often facilitate such practices by
providing a means of distribution. Once infected, computers may turn into parts of a remotely
controlled “botnet” used for sending even more spam, orchestrating denial-of-service attacks
against servers or other illicit activities. The Commission’s Communication of November
2006 on fighting spam, spyware and malicious software41 describes the evolving nature of
these threats and the work done so far to counter them. It also recommends measures to be
taken going forward.
38
39
40
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http://www.enisa.eu.int/doc/pdf/deliverables/enisa_security_spam.pdf;
http://www.enisa.eu.int/doc/pdf/deliverables/enisa_security_spam_part2.pdf
http://www.oecd-antispam.org/
The London Action Plan includes enforcement authorities from third countries such as the United States
and Japan as well as industry.
Communication from the Commission to the European Parliament, the Council, the European
Economic and Social Committee and the Committee of the Regions On Fighting Spam, spyware and
malicious software. Brussels, 15.11.2006 COM(2006) 688 final.
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The persistency and evolving nature of the problem calls for greater involvement and
prioritisation by Member States. Actions should in particular target ‘professional’ spammers,
“phishers” and the spreading of malware. Critical success factors include strongly committed
central governments, clear organisational responsibility for enforcement activities and
adequate resources. Currently, these factors are not present in all Member States.
In some Member States, action against the installation of illicit third-party devices either is
not seen as a priority or has not been given special attention. The explanations for this
phenomenon that have been given to the Commission services are as follows: while the use of
cookies is not seen as the biggest threat and is relatively easy to monitor, the more serious
breaches are designed not to be discovered. As unaware users tend not to complain,
enforcement agencies are not receiving the right signals about the nature and extent of the
problem. In general, the responsible agencies in Member States report that it is difficult to
estimate the level of compliance. Another disincentive to devoting resources to this area is
that serious breaches are often organised from outside the Member State or the EU and by
persons who may be difficult to identify. Nevertheless, given the significant social and
financial impact of these practices, more efforts need to be made by the competent authorities.
Breaches of the Directive’s rules on cookies, spyware and other kinds of malware have been
investigated in several Member States in 2006, and some Member States’ agencies have plans
to increase their activities in this area. In the Netherlands, fines for non-compliance can be as
high as €450 000, and a special project to combat malware was launched in September 2006.
For legal reasons the project is limited to activities in the Netherlands.
In several Member States, user awareness of the rules and the threat involved is considered
key to combating illicit third-party devices. In Member States such as Sweden and the United
Kingdom the responsible agencies have issued guidance on how to comply with the rules.
Good examples of industry self-regulation initiatives include Spain’s Confianza Online42 – an
organisation providing a kind of quality seal to its members and a complaint mechanism for
users in the area of e-commerce and data protection – and the website AllAboutCookies.org
by Interactive Advertising Bureau Europe, aimed at raising awareness among end users, web
page owners and advertisers. In a wider perspective of industry activity in this field, ENISA
provides some conclusions in its study on the action taken by industry to comply with national
measures implementing the provisions of the regulatory framework for electronic
communications relating to the security of services43. Overall, technical and organisational
measures which must be taken by service providers under the regulatory framework for
electronic communications in order to safeguard the security of their services are gaining in
importance, but they have to be improved.
As described in the 11th Report, some of the activities involving malware and breaches of
network security also fall under criminal law. The Commission’s Communication notes that
where this is the case, the responsibilities of different authorities and cooperation procedures
need to be clearly spelled out. Close cooperation between enforcement authorities, network
operators and ISPs at national level is also needed. Apart from the planned introduction in
2007 of new legislative proposals that aim to strengthen the rules in the area of privacy and
security in the communications sector as part of the Framework Review, the Commission is
currently working on the further development of a coherent policy on combating cyber crime.
This policy will be presented in a Communication that is due to be adopted in early 2007.
42
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www.confianzaonline.org
See above.
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Data retention for law enforcement purposes
The e-Privacy Directive limits the processing and storage of traffic data relating to subscribers
by public communications networks or publicly available electronic communications services.
However, Member States can derogate from the Directive in this regard – subject to certain
conditions – by adopting legislative measures extending the limits on traffic data retention in
order to safeguard national security, defence, public security and by the prevention,
investigation, detection and prosecution of criminal offences or of unauthorised use. The
Commission services are currently examining the provisions for data retention in Spain as
regards the amount of time during which data can be kept. The time allowed by Member
States for data retention for billing purposes varies significantly, but normally corresponds to
the period of limitation on claims. Such periods can be at least five years.
The Data Retention Directive, adopted on 15 March 2006,44 seeks to harmonise the national
data retention measures derogating from the e-Privacy Directive. The new Directive, which
must be transposed by 15 September 2007, obliges Member States to ensure retention of data
necessary to identify a communication’s source, destination, date, time, duration, type,
equipment - and, when mobile, location – for a period of between 6 months and 2 years. The
types of communication include Internet access, e-mail, Internet telephony and fixed and
mobile telephony. Member States have the option of postponing the application of the Data
Retention Directive until 2009 as regards Internet access, e-mail and Internet telephony.
Sixteen Member States have declared their intention or reserved their right to do so.
The Article 29 Data Protection Working Party has issued an Opinion (3/2006) on the
implementation of the Data Retention Directive. Overall, market players are concerned about
the expected data retention requirements and in particular the cost involved. As envisaged in
that Directive, in order to obtain advice and encourage the sharing of experience of best
practice in legitimate requirements of the competent authorities, the Commission intends to
establish a group made up of Member States’ law enforcement authorities, industry
associations, representatives of the European Parliament and data protection authorities.
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Directive 2006/24/EC of the European Parliament and of the Council of 15 March 2006 on the retention
of data generated or processed in connection with the provision of publicly available electronic
communication services or of public communications networks and amending Directive 2002/58/EC
(OJ L 105/54, 13.4.2006, p. 1).
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HORIZONTAL REGULATION
ADMINISTRATIVE CHARGES
The EU regulatory framework expressly restricts the amount of the administrative charges
that may be imposed by national regulatory authorities to the administrative costs resulting
from their regulatory work, such as management, control and enforcement of the general
authorisation scheme and of rights of use; appropriate adjustments also need to be made in the
light of the difference between the total sum of the charges and the administrative costs
(Article 12 of the Authorisation Directive). It also explains that systems for administrative
charges should not distort competition or create barriers to entry into the market (Recital 31 of
the Authorisation Directive).
Problems have been reported firstly as regards the limitations of administrative charges to
administrative costs. In particular, the Belgian NRA systematically reports surpluses on its
revenue and expenditure account which must be transferred to the State treasury (in 2006 the
NRAs of Greece and Spain also reported surpluses). Moreover, some of the expenses included
in the Belgian NRA’s budget appear to have only a very remote connection to the
administrative costs as described by the EU regulatory framework. Spain has put in place
legislation providing for transfer of the surplus to the future spectrum regulatory authority
instead of continuing to make adjustments to the amounts of the administrative charges. In
Malta, market players complain that the calculation of administrative charges on the basis of
total gross revenue results in double charging of the revenues related to interconnection (in
contrast, Spain has changed its legislation to allow amounts paid to other network operators or
service providers to be deducted from gross revenue before administrative charges are
calculated). The Commission services are looking into these issues.
In 2006 the Netherlands introduced an interesting system of administrative charges, imposing
a fee proportionate to turnover on the largest operators, a flat fee on middle-sized companies,
while granting a complete exemption to the smallest operators. A similar graduated approach
has also been introduced in France.
On 19 September 2006, the Court of Justice (Grand Chamber) adopted a judgement in the
joined cases i-21 Germany GmbH (C-392/04) and Arcor AG & Co. KG (C-422/04) v
Bundesrepublik Deutschland concerning, inter alia, the interpretation of Article 11(1) of
Directive 97/13/EC of the European Parliament and of the Council of 10 April 1997 on a
common framework for general authorisations and individual licences in the field of
telecommunications services. In particular, the Court reiterated the principle that
administrative costs must relate to the types of regulatory work expressly indicated in the
Directive and ruled against a possibility of taking into account the regulatory body’s
administrative costs over an extensive future period (30 years in the joined cases).
RIGHTS OF WAY
Permits issued to market players granting rights to access public or private property are key
facilitators in the development of competition. Granting of rights of way continues to
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represent a serious obstacle to infrastructure roll-out and hence to growth in a least 10
Member States, even seven years after the liberalisation of the telecommunications market.
As a general rule, a range of different laws and regulations concerning civil works, spatial
planning, environment, public health and general administration affect the procedures for
granting of rights of way and the roll-out of networks. Complex administrative procedures
involve numerous competent authorities depending on whether requests for access rights
relate to public or private property, roads, highways, railways or ports. The procedures also
depend on the type of infrastructure for which requests have been submitted. Roll-out and
maintenance of underground networks seems to be less problematic than the installation and
sharing of masts and antennae, to which stricter environmental and public health protection
rules are applied. Lastly, procedures also depend on whether requests for permits concern
deployment of new networks or whether they merely relate to access to existing networks.
The Commission services are looking into allegations of discrimination in Greece (in spite of
recent changes in the legislation, alternative operators are unable to deploy their networks),
Malta (the new entrant, without the necessary permit for more than a year, is denied the
possibility to offer its services in many areas, whereas the incumbent seems to be moving
ahead and is strengthening its market position) and Italy (where several operators are
encountering serious difficulties in obtaining permission for access to highways, railways and
non-metropolitan roads). Similarly, in Luxembourg some operators say they are unable to
obtain permits for access to railways, motorways and in some cases to the land owned by
municipalities. Taking into account the difficulties for new entrants to roll out fixed networks,
such as the refusal by the relevant authorities to grant rights of way to install facilities on,
over or under public property and on roads/highways, the Commission launched an
infringement proceeding against Cyprus in July 2006.
The diversity of rules across Member States can have the overall effect of rendering
procedures cumbersome and less transparent, causing significant delays in the roll-out of new
networks, thereby impeding the development of competition. This remains an issue in Spain,
Greece, Italy, Cyprus and Poland. Some Member States have therefore recently stepped up
transparency requirements by issuing guidelines and codes and have increased the
involvement of the NRAs by attributing more coordination or authorising powers to the
market regulators. The measures intended to streamline procedures and set effective deadlines
for decisions include recent laws in Greece and Cyprus (the two countries where problems in
obtaining rights of way are the most severe) and an advisory service for administrations and a
code of good practice in Spain. However the practical effects of these initiatives remain to be
seen. The Hungarian NRA is empowered to license all electronic communications structures,
but not the masts and antennae, for which it has a strong coordinating role.
Most of the Member States have set instructive deadlines in their legislation to ensure that
decisions concerning permits are properly respected. In the event of a failure by the competent
authorities to meet the deadlines the administrative law generally provides safeguards
whereby lengthy procedures can be challenged through the Courts. However, a few Member
States, e.g. Lithuania, Belgium, Greece (only recently), favour quicker procedures under
which the non-observance of deadlines to issue permits (including building, planning permits)
is considered as an implicit approval. Finally, in the United Kingdom, operators that have
prior “code” permission from the NRA simply have to notify the competent authority about
their planned roadworks; however, a Bill aimed at reducing traffic congestion may introduce
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an additional permit procedure for roadworks, which may increase the administrative burden
on operators.
With regard to the structural separation between functions relating to granting rights of way
and activities associated with ownership of local networks, the risk of conflicts of interest may
arise where the local authorities promote the use of their newly built networks and facilities.
In Ireland, the incumbent operator was not granted rights of way in one region where the
municipality intends to promote the use of local area networks (a project funded partially
through Structural funds), while in Luxembourg some operators are reportedly being denied
access rights in municipalities which have rolled out their own cable networks. The
Commission services are looking into these issues. In the Netherlands, a recent amendment to
the law introduces a separation between ownership and decision making competence within
municipalities that provide electronic communications networks and prohibits the provision of
new electronic communications networks or services by municipalities or their participation
in undertakings which provide such networks, unless a specific type of network cannot be put
in place without municipal participation.
With regard to facility sharing and collocation, difficulties with gaining access to ducts have
been reported in Ireland, Lithuania and Estonia, while in Luxembourg the new mobile
operators find that it is no longer possible to share or collocate space on mobile masts and
antennae owing to strict security and health rules. In Portugal, implementation of the
incumbent operator’s reference offer for access to ducts and associated infrastructure,
mandated by the regulator in 2004, was delayed mainly due to the incumbent’s appeals to the
Courts. However, in August 2006 the first requests were submitted to the incumbent and, at
the time this report was being drafted, the NRA was confident that the reference offer would
become increasingly operational.
With regard to facility sharing and collocation, difficulties with gaining access to ducts have
been reported in Ireland, Lithuania and Estonia, while in Luxembourg the new mobile
operators find that it is no longer possible to share or collocate space on mobile masts and
antennae owing to strict security and health rules. In Portugal, implementation of the
incumbent operator’s reference offer for access to ducts and associated infrastructure,
mandated by the regulator in 2004, was delayed mainly due to the incumbent’s appeals to the
Courts. However, in August 2006 the first requests were submitted to the incumbent and, at
the time this report was being drafted, the NRA was confident that the reference offer would
become increasingly operational.
Finally, in Greece and Cyprus there remain a number of mobile masts and antennae that have
been erected illegally and, according to the national authorities, will have to be removed.
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SPECTRUM MANAGEMENT
The efficient management of spectrum resources across the EU is critical for economic
success. The total value of electronic communications services dependent on use of spectrum
is estimated to exceed €200 billion, which is equivalent to between 2% and 2.5% of annual
European GDP45. According to recent research, effective spectrum management across all
Member States could generate up to 0.1% of GDP growth, i.e. about €1.5 billion46.
SPECTRUM LIBERALISATION AND SECONDARY TRADING
In 2006 a number of steps towards more flexible and liberal management of radio spectrum
were taken by Member States. In at least six Member States, liberalisation measures such as
technology and service-neutral use of radio frequencies, auctioning of spectrum, shared use of
spectrum on the basis of individual rights and use of radio frequencies under the general
authorisation regime, were either at the implementation stage (Sweden, United Kingdom) or
being considered (Denmark, France, Malta, Poland). In 2006, France introduced secondary
spectrum trading, raising to 13 the number of Member States where secondary trading is
permitted by law.
At EU level, the November 2005 Opinion on Wireless Access Policy for Electronic
Communications Services (WAPECS) produced by the Radio Spectrum Policy Group had
called for action across Europe to allow more flexible use of spectrum for mobile,
broadcasting, fixed wireless and other electronic communications services. In April 2006 the
Communications Committee decided to set up a working group on authorisations and rights of
use that would, in the first instance, establish an inventory and examine the authorisation
conditions applied by the Member States to the frequency bands envisaged for the
implementation of WAPECS. In the context of spectrum liberalisation the working group’s
aim is to identify possible future common and minimal (i.e. least restrictive) authorisation
conditions across relevant frequency bands.
IMPLEMENTATION OF SPECTRUM DECISIONS
By now, the four Commission radio spectrum harmonisation decisions adopted in 2004 and
2005 should now have been implemented. These are Commission Decision 2005/928/EC of
20 December 2005 on the harmonisation of the 169,4-169,8125 MHz frequency band in the
Community (frequency band originally designated for the ERMES paging system);
Commission Decision 2005/513/EC of 11 July 2005 on the harmonised use of radio spectrum
in the 5 GHz frequency band for implementation of Wireless Access Systems including Radio
Local Area Networks (WAS/RLANs); Commission Decision 2005/50/EC of 17 January 2005
on the harmonisation of the 24 GHz range radio spectrum band for the time-limited use by
automotive short-range radar equipment in the Community; and Commission Decision
45
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See the study by Analysis et al. ‘Conditions and options in introducing secondary trading of radio
spectrum in the European Community’ (2004), p. 12
Benchmarking Impacts of EU Policy - Options for Economically Efficient Management of Radio
Spectrum, Report to the Commission, SCF Associates, December 2006, not yet public.
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2004/545/EC of 26 July 2004 on the harmonisation of radio spectrum in the 79 GHz range for
the use of automotive short-range radar equipment in the Community.
Implementation of these decisions is patchy. So far the implementation of all four decisions is
reported only in 12 Member States (Austria, Cyprus, the Czech Republic, Finland, Germany,
Greece, Hungary, Latvia, Lithuania, Slovakia, Slovenia and Sweden). Three Member States
were in the process of implementation, while ten Member States reported that three of the
four decisions had been implemented.
ASSIGNMENTS OF SPECTRUM
The EU regulatory framework requires that spectrum assignment procedures conform to the
principles of objectivity, transparency, non-discrimination and proportionality (Article 9 of
the Framework Directive and Article 5 of the Authorisation Directive).
In 2006 four Member States (France, Italy, the Netherlands and Portugal) renewed the GSM
authorisations of existing operators or announced plans for their renewal in the immediate
future. Notably, the Netherlands has also considered the option of re-auctioning the rights of
use for the relevant radio frequencies if potential new entrants were to express an interest in
such rights.
As regards major new spectrum assignments in 2006, new 3G rights of use were granted in
Estonia and Slovenia. Moreover, the year saw a growing tendency for spectrum assignments
to operators providing WiMAX or comparable wireless broadband services. Finally, several
Member States (Belgium, Estonia, Finland, France and the Netherlands) announced plans to
expand the use of the radio frequency bands originally reserved for GSM technology by
allowing in those bands the 3G mobile technologies or even other technologies capable of
providing electronic communications services. Finland has already adopted the necessary
enabling legislation. The Commission services are working closely with the Member States in
the Radio Spectrum Committee to develop a Commission decision that would effectively
replace Directive 87/372/EC and achieve a consistent approach across the EU for a more
flexible use of the relevant frequency bands.
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MONITORING AND ENFORCEMENT
Enforcing full and effective implementation of the regulatory framework in electronic
communications is essential for the sector’s contribution to the overall Lisbon goals, and the
Commission welcomes the continuing support from the European Parliament for its
enforcement role47. By the end of the reporting year the Commission had opened more than
140 infringement proceedings under Article 226 of the Treaty since the date of application of
the new regulatory framework; in some 90 cases this action is prompted by failure to
implement the regulatory framework correctly. These proceedings now concern all EU 25
Member States.
During the reporting year, the Commission opened 31 new proceedings, while 17 pending
cases were taken to the second phase with a reasoned opinion being sent to the Member States
concerned. The Commission also decided to refer six cases to the Court of Justice in 2006. At
the same time, the Commission decided to close 37 proceedings following action by the
Member States. Finally, although all 25 Member States, including Greece, had completed
formal transposition of the regulatory framework, there were still some 50 proceedings for
incorrect implementation pending at the end of 2006.
Status of pending cases
as of December 2006
7
6
6
5 5
5
4 4 4
4
3
3
2 2 2 2 2
2
1 1 1 1 1 1 1 1
1
0 0 0 0 0
0
ES AT CZ IE SI DK SE EL LT HU MT UK FR EE IT LU NL CY LV PT SK FI BE DE PL
The focus of enforcement has now shifted from transposition issues to ensuring full
compliance and effective application in all 25 Member States. In particular, the Commission
services undertook an examination of the major concerns expressed in the annex to the 2005
Report. New proceedings accordingly focused on the non-availability of caller location
information to emergency authorities for calls to 112 made from fixed and/or mobile phones,
the failure to ensure timely completion of the market reviews and national must-carry
provisions. Other issues addressed are referred to in the table below.
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See the European Parliament’s Resolution on European electronic communications regulation and
markets 2004 (2005/2052(INI) of 1 December 2005, based on the Toia Report of 14 October 2005 (A60305/2005).
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New infringement proceedings in 2006 by subject
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14
112 - caller location information
Market reviews
Must carry
Rights of way
Lack of Reference unbundling offer
Cost accounting
Number portability
Universal service financing
Remedies
Independence of NRA
Right of appeal
The six cases which the Commission decided to refer to the Court of Justice in 2006
concerned the lack of powers of the NRA (Finland, Poland), the process for designating the
universal service provider (France), the lack of comprehensive directories and/or directory
inquiry services (Latvia, Poland) and the non-availability of mobile number portability
(Malta). In the case of Malta and Latvia the problem was resolved before the application was
sent to the Court, and the proceedings were subsequently closed.
Other proceedings that were closed in 2006 concerned the independence and powers of the
NRA, the implementation of the market review procedures, the transitional regime, the
suspensory effect of appeals against decisions of the NRA, the extension of the scope of SMP
obligations to non-SMP operators and the mechanism for designating the universal service
provider, and also important consumer issues such as directory services, number portability,
caller location information for 112 and protection against spam. The following table gives an
overview, by subject, of the number of cases closed due to incorrect implementation.
Infringement proceedings closed in 2006 by subject
0
1
2
3
4
5
6
7
8
Directory services
Number portability
112- caller location information
Independence of NRA
Transitional regime
Market reviews
Powers of the NRA
Spam protection
Scope of SMP regulation
Suspensive effect of appeal
Universal service designation
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Finally, six proceedings were also closed in 2006 following the communication of relevant
transposition measures for the regulatory framework from two Member States (five
concerning Greece, and one concerning the United Kingdom with regard to Gibraltar).
The Commission services will now start scrutinising the implementation measures notified to
it by Bulgaria and Romania following their accession on 1 January 2007.
To increase transparency for all stakeholders, the Commission has continued to issue press
releases at each stage of the proceedings that have been opened. These press releases are
available on the implementation and enforcement website of the Directorate-General for
Information Society and Media48 together with overview tables for all cases, which are
updated regularly. It is worth noting that this transparency has led to some 40 requests for
access to the relevant infringement documents in 2006. It is the Commission’s consistent
policy not to disclose any documents related to ongoing infringement investigations49, but to
disclose letters of formal notice and reasoned opinions where a proceeding has been finally
closed, unless they contain otherwise sensitive information.
In line with the Commission Communication on better monitoring of the application of
Community law50, the Commission services have also focused on preventing infringement
proceedings by providing general guidance on transposition requirements via the
Communications Committee and by making use of intensive bilateral contacts with the
relevant national authorities.
48
49
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http://europa.eu.int/information_society/policy/ecomm/implementation_enforcement/index_en.htm
See in particular Article 4(2) of Regulation(EC) No 1049/2001 of the European Parliament and of the
Council of 30 May 2001 regarding public access to European Parliament, Council and Commission
documents, OJ L 145, 31.5.2001, p. 43.
COM(2002) 725, of 11 December 2002.
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ANNEX 1
IMPLEMENTATION IN THE MEMBER STATES
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BELGIUM
INTRODUCTION
Over the last year competition in the mobile sector in Belgium increased, as various virtual
network operators entered the mobile market. By contrast, development of broadband access
is slowing down.
After transposing the regulatory framework late, in 2006 Belgium carried out a large
proportion of the market reviews and started to implement the first remedies. However, the
NRA’s regulatory efforts have not always appeared very effective and appeals are
systematically lodged against them. The cooperation mechanisms agreed between the federal
and regional authorities should allow Belgium to send notification of the few remaining
markets.
Main regulatory developments
More than one year after the belated transposition of the regulatory framework by the Act of
13 June 2005, the Belgian legal framework for electronic communications is firmly in place.
It appears that a large part of the secondary legislation is still based on the previous
Telecommunications Act and needs to be updated. Moreover, certain mechanisms are still not
in operation, even though they were announced long ago.
The NRA (the Institut belge des services postaux et des télécommunications/Belgisch
Instituut voor postdiensten en telecommunicatie (IBPT/BIPT)) has carried out most of the
market analyses required and has imposed obligations on the undertakings that have been
identified as having significant market power.
Market reviews on unbundled access and broadband have not yet been finalised, however. As
the federal state and the language communities are constitutionally required to cooperate on
shared competences, the respective government finally settled their dispute in November 2006
by means of a cooperation agreement. Once this has been adopted by their parliaments, the
federal and community regulators will start cooperating in the domain of infrastructure
common to both telecommunications and broadcasting. Under the cooperation procedure
agreed, the relevant draft decisions of the federal and community regulators may have to be
submitted to the conference of regulators. In case of disagreement, the decision will be
referred to a committee of ministerial representatives in a complex mechanism of substitution
for the regulator.
As a result of several appeals to the constitutional court, not only were the federal NRA Act
and the Flemish Broadcasting Act challenged but also the Broadcasting Decree of the French
community was partly annulled on 8 November 2006. This has delayed the market reviews
for broadcasting transmission services, which are allocated exclusively to the community
regulators.
The uncertainty about regulation is also reflected in the secondary legislation, where the
authorities are hesitant to adopt certain royal decrees (e.g. on spectrum trading, WLL, site-
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sharing and 3G services) since these implementing measures might be subject to further
annulment proceedings before the administrative court.
Market players add that the legislator and the regulator are often focusing on consumerrelated issues to the detriment of promoting competition on the market. Several consumer
protection measures are indeed in the pipeline and, allegedly, will impose a heavy burden on
all operators, often without any cost-effect assessment.
The powers of IBPT/BIPT were laid down by the Act of 17 January 2003 regarding the
statute of the NRA. Its rules of procedure, covering timing, internal competences, formal
requirements, publicity, communication, notification and other organisational aspects, have
yet to be adopted by royal decree.
IBPT/BIPT is empowered to impose several types of sanction in case of infringement of the
legislation or rules on electronic communications. After serving notice on the addressee to
comply with a decision within a set period,51 IBPT/BIPT may impose a maximum fine of
€12.5 million (or 5% of the addressee’s last annual turnover), but operators complain that the
NRA has imposed hardly any fine since 2003 and is highly reluctant to exercise these powers.
Although IBPT/BIPT is responsible for conciliation in disputes between operators,52 these
seem not to submit their cases to the NRA. The competition authority is legally empowered to
settle access and interconnection disputes, but has dealt with very few cases so far. Operators
consider that these mechanisms are not effective because the proceedings are uncertain and
slow. Furthermore, the competition authority has no explicit penal powers when acting in that
capacity. In competition cases it has seemed unable to come up with timely responses.53 As
decisions are not given within a reasonable time-frame and do not meet real market and
business needs, operators prefer to bring their disputes before the ordinary courts.
Operators are concerned by the lack of transparency about the NRA’s finances. They have
questions about the real financial needs of the IBPT/BIPT, whose annual report indicates a
surplus of approximately €3 million. This surplus seems to be recurrent and is systematically
transferred to the state treasury in accordance with Article 32 of the NRA Statute Act. At the
same time the budget provides for a structural reserve and officials of former state tax
administrations still appear on the payroll of the Institute.
Since the start of the market reviews in 2006, IBPT/BIPT has been cooperating closely with
the Competition Council, which issues an opinion on the draft decisions regarding the
relevant markets delimited by the NRA. However, the latter draws a clear distinction between
binding and non-binding opinions, considering that the Competition Council’s opinions are
obligatory only when they deal with price controls and regulatory controls on retail services
and that its powers do not go beyond checking conformity with competition law objectives.
51
52
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The decision to serve notice appears to be open to appeal. Appeals against fines are always suspensory.
A royal decree has been adopted recently to lay down rules for this procedure.
In the case of retail offers by the incumbent, challenged because of their price squeeze elements, it took
two years to reject a claim for provisional measures.
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Appeal procedures before the Court of Appeal under the 2003 Act are very lengthy and often
used by the incumbent. Not only all the decisions of the NRA with respect to reference offers,
but also all new market review decisions are under appeal. The case law has mainly been
decided on formal grounds, and has often resulted in decisions imposed on the incumbent
being removed.
Possibilities for appealing decisions have been defined by recent case law. Operators may not
intervene in any action brought against a reference offer of the incumbent (under the old
regulatory framework), as allegedly they are not individually and directly affected by the
decision challenged. In the view of the court, a reference offer does not confer subjective
rights on operators other than the addressee of the decision, i.e. the incumbent, which is
allowed to deviate from the reference offer and to negotiate individual contracts with
operators.54 This minimalist interpretation by the court could lead to a situation in which the
incumbent may discriminate between alternative operators and deviate from its reference offer
in individual agreements. The Commission is looking into this.
There is growing concern about the impact on future decisions about reference offers. These
would no longer need to be submitted for market consultation but would be presented to the
NRA with the sole purpose of allowing it to exercise its power of legal control. As there is no
longer any annual validity limit, the incumbent would be free to amend its reference offer at
any time, while the NRA would impose amendments on its own initiative.
Decision-making
After a belated start, due to the very late transposition of the regulatory framework in Belgian
law, the process of market reviews now seems to be on track. IBPT/BIPT carried out most of
the market analyses and notified the Commission of the relevant service and product markets.
The main concerns regarding the NRA’s efficiency relate to the LLU and bitstream markets,
where consultations have been held and draft decisions have been published, but, as
mentioned earlier, the legal requirement of cooperation with the community NRAs has
precluded notification and adoption of the resulting draft measures.
Operators are generally satisfied with the ample consultations launched by the NRA, but often
complain that their comments are not taken into account in the final decision. They mention,
for example, the price-squeeze test, on which several consultations have been held in recent
years, none of which has led to a final decision.
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Judgments of the Court of Appeal of 9 December 2005 and of 16 and 22 June 2006.
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MARKET AND REGULATORY DEVELOPMENTS
Broadband
Market situation
Belgium is not keeping up with the
pace of broadband penetration in the
leading Member States and has fallen
back to fifth place (21.84%).
Belgium BB penetration
30.00%
21.84%
24.00%
17.98%
18.00%
14.62%
Nearly half the retail broadband lines
are provided by the incumbent.
Alternative operators’ large market
share is mainly due to cable networks
(72% of alternative operators’ lines).
12.00%
6.00%
0.00%
2004
2005
2006
Regulatory issues (including market
analyses and remedies)
Belgium - BB lines by technology/means
TotalBB retail lines October 2006: 2 295 675
Incumbents' DSL lines;
1 083 397
The incumbent’s reference offer for
broadband access is still based on the
old telecommunications legislation.
Most broadband lines of new entrants
are still supplied using the bitstream
reference offer. Since last year the
three main alternative operators have
been migrating to unbundling but they
complain
about
anti-competitive
conditions, mainly high prices and
non-compliance with service level agreements (SLAs).
NE Full ULL + Shared
Access; 23 656
NE Bitstream access;
274188
NE Resale; 49657
NE Other (WLL, L.L.);
7 561
NE Cable modem;
857 216
Wholesale prices for full unbundling remain very high: with the raw copper rental at €11.26
per month, the Belgian fee exceeds the tariffs prevailing in most EU-15 countries. Other costs
for co-location and activation/deactivation are also considered excessive. Alternative
operators presented a cost model to the NRA in order to establish transparent price models for
unbundling, bitstream and co-location. However, the NRA has been developing its own
bottom-up model and the incumbent seems reluctant to provide information. Operators
complain, furthermore, that the incumbent fails to keep to the times for provisioning and fault
repair, and that decisions about SLAs and ISLAs (improved SLAs) are not really enforced by
the NRA.
The NRA claims that the trilateral meetings with the incumbent and the main operators are
constructive and have led to some operational changes. In the 2007 bitstream reference offer
decision of December 2006 (BROBA 2007), digital subscriber line access (DSLAM) tariffs
included a large reduction (over 20%) in the rental fee, while the asynchronous transfer mode
(ATM) tariffs also decreased (based on a newly developed bottom-up cost model). This
would lower the cost per user line by around 20% for mass-market operators and 5% for
business operators. BROBA 2007 provides for binding rolling forecasts for installations and
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migrations and higher penalties under the installation SLA. As for LLU pricing, a draft
decision will be adopted in early 2007. The latest (November 2006) decision on prices for
blocks and tie-cables provides for a decrease of around 20% for the most-used types.
In its 2006 BROBA and unbundling reference offer (BRUO) decisions, IBPT/BIPT placed an
obligation on the incumbent to include ADSL2+ in its reference offers. Alternative operators
are urging the NRA to enforce this decision not only under BRUO but also under BROBA, as
they depend heavily on a combination of both. In this case, as with regard to pricing, the lack
of effective regulation by the NRA is indicated as the main obstacle to competition. The
number of unbundled fixed lines in Belgium remains one of the lowest in Europe.
Mobile markets
Market situation
The penetration rate in Belgium stands at 92%. The market share of the largest mobile
operator (now completely owned by the fixed incumbent) is still decreasing (from 47% to
45%), while the second and third operators’ market shares are growing (by customer base, to
34% and 21% respectively). Competition is increasing as MVNOs are entering the market,
mainly on the network of the third operator.
The operators offer 3G services (with the minimum coverage required by law of 40% or more
at the end of 2006) or enhanced 2G services (EDGE).
Regulatory issues (including market analyses and remedies)
Mobile termination rates in Belgium are still amongst the highest in Europe and are
characterised by a strong asymmetry (rising from €0.125 for the incumbent to €0.165 for the
second operator and €0.202 for the third). After analysis of the relevant market in 2006,
IBPT/BIPT identified all three operators as having significant market power and, in particular,
imposed a cost-orientation obligation on them, following a three-year glide path (up to the end
of 2008). Retail prices are expected to fall as a consequence of this decision, but it is too early
to see the impact. IBPT/BIPT has given a commitment to review the current decision in 2007
in order to achieve symmetry between the first and second operators and symmetry or less
asymmetry with the third operator. All three operators have appealed against this decision.
Fixed
Market situation
The number of access channels for telephony remains more or less stable, with a strong
increase in access via cable networks and a slight decrease via ISDN-2. The number of active
CPS lines is steadily declining. The decrease in fixed calls was less sharp in 2005, with
several players offering “free-call” packages for off-peak hours.
The market shares of new entrants are still increasing although at a slower pace (from 31.2%
to 33.7%). Retail markets remain largely dominated by the incumbent, majority-owned by the
Belgian State, still holds large market shares ranging, in value terms, from 67% to 83% on all
markets, except the international calls markets for residential customers (45%).
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On 19 June 2006 IBPT/BIPT adopted the first market decisions under the new regulatory
framework. On the fixed retail access markets, the incumbent was designated as an
undertaking with significant market power. A new remedy imposed is wholesale line rental
(WLR), based on a retail-minus cost model, for which the incumbent is obliged to provide a
reference offer. After consultation of the market, WLR is expected to be launched in 2007. As
regards retail obligations, IBPT/BIPT decided to withdraw the existing general costorientation obligation but maintained the obligations of communication and notification of
retail tariffs, while imposing cost-accounting and accounting separation as wholesale
obligations. In the decision on the market in fixed wholesale call origination (July 2006), the
NRA maintained the existing remedies imposed upon the incumbent. For the call termination
market, the NRA decided to reduce the termination rates of the two main fixed competitors by
applying a glide path and allowed a little asymmetry for the other competitors (incumbent’s
interconnect rates +15%).
A draft royal decree on accounting separation in the electronic communications sector is
currently in preparation. At the same time, IBPT/BIPT is preparing a decision regarding the
obligation to set up a cost-accounting system. In its decision on the fixed telephony market
IBPT/BIPT announced that it will continue to use a top-down cost methodology for
interconnection services, subject, if necessary, to reconciliation with a bottom-up model.
Alternative operators insist on use of a BU-LRIC model and propose their own methodology.
On the retail market, problems are often related to price-squeeze issues: alternative operators
have challenged certain retail offers by the incumbent but have not achieved any protective
measure. In order to control compliance with the incumbent’s obligations in general,
IBPT/BIPT is developing a price-squeeze test which will be applied in case of suspicion or
complaint. Draft guidelines intended to enhance transparency and to contribute to selfregulation have been submitted for consultation.
Broadcasting
Market situation
Belgium has the highest penetration of cable networks55 in EU-25 (more than 90% of
households). Satellite and terrestrial TV have small market shares of 7.6% and 1.4%.56
Since 2005, digital cable platforms have been emerging and are now cooperating on
interactive DTV offers. In 2005 the fixed incumbent launched TV over IP, bundling
television, voice and broadband. As for DVB-T, since the end of 2006 the public channels can
be received free-to-air in most parts of the country.
The Flemish government recently proposed progressive analogue switch-off in 2007-2008.
55
56
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Half these companies are in private hands, the other half are semi-public or in public hands (intermunicipal groups). While larger cable companies are already operating in the north, in the south
consolidation is under way, in the form of concentration of ten cable companies.
Source: Dataxis 2006: “Digital television data; EU market for digital television”. (Figures for the third
quarter of 2005.)
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In the Belgian federal structure, broadcasting transmission services are under the
responsibility of the three language communities. As indicated earlier, the community
regulators have not been able to carry out the required market reviews. The French
community regulator has started to set up consultation structures and has already notified the
first draft decisions. The new Flemish Regulator for the Media started to operate in February
2006 but has not yet carried out any market review.
Horizontal regulation
Spectrum management
IBPT/BIPT prepared an opinion on a draft royal decree which will possibly review the
coverage requirements for UMTS networks. These are to be maintained but additional
flexibility is to be offered in that the future coverage obligation can also be met by using the
2G bands. Uncertainty is arising with respect to regulation and enforcement of spectrum
obligations, for example allocation of frequencies for mobile TV applications, as a
consequence of overlapping powers (see above).
Administrative charges
Operators complain that they are required to finance nearly all costs (90% of the investment
and 100% of the operating costs) associated with operation of the database for social tariffs,
provision of which is part of their universal service obligations (see below).
Tariff transparency and monitoring of quality of service
The Belgian Act provides for a large array of consumer protection measures, such as an
obligation for operators to present best tariff schemes, to issue detailed invoices and to publish
quality-of-service indicators. While operators question the planned IBPT/BIPT system for
monitoring quality indicators, a tariff simulator, allowing customers to make quantitative and
qualitative comparisons of tariffs, is expected to be made available on the IBPT/BIPT website
in 2007, first for mobile telephony tariffs and later also for broadband and triple play.
Universal service
The Electronic Communications Act of 2005 introduced a detailed set of rules on provision of
the different components of universal service, designation of the providers and the costing and
financing mechanisms. Apart from the general system (access at a fixed location, directory
enquiry services, directories and public pay telephones), for which the incumbent has been
designated as the transitional provider (until the providers are designated under the new
mechanism), there are specific rules on provision of special tariff conditions (“social tariffs”)
to certain categories of beneficiary.
Several issues with social tariffs have been raised by operators since the scheme was
introduced in June 2005. Pursuant to Article 74 of the Telecommunications Act, all public
telephony operators, including mobile operators, have been designated to guarantee provision
of different categories of tariff discounts. The Act established a specific fund to finance this
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part of the universal service: operators will either have to contribute to or be compensated
from the fund if the number of tariff discounts granted is lower or higher than the - theoretical
- number of social subscriptions they should be granting based on their market share. In
May 2006 the database for social customers, set up by the Act to ensure correct allocation to
the persons entitled, started to function within the NRA.
Most operators complain that the financing mechanism is based on lost revenue instead of net
costs and that no unfair burden has to be established by the NRA. Concerns have also been
expressed about the lack of proportionality and the potential effects of market distortion
inherent in the system, which is based on the social customers’ database working correctly.
Operators point to the additional payments demanded of them for the database, while the
NRA makes structural surpluses on its budget.
The Commission is looking into these matters in infringement proceedings.
Number portability
A royal decree extending number portability rights and obligations to MVNOs is being
prepared.
In a preliminary ruling of 13 July 2006 (case Mobistar, C-438/04), the European Court of
Justice gave its interpretation of Article 30(2) of the Universal Service Directive. With respect
to the scope of pricing for interconnection related to the provision of number portability, the
Court stated that this concept concerns the traffic cost of the numbers ported and the set-up
costs incurred to implement requests for number porting. The NRA has furthermore a certain
discretion to define the most suitable method to make portability fully effective. It may fix in
advance maximum prices on the basis of an abstract model of the costs, provided that these
are cost-oriented and fixed in such a way that consumers are not dissuaded from making use
of the facility.
Must-carry
The Commission started infringement proceedings against the Belgian authorities with respect
to the must-carry rules of the French Community and the Brussels Region. The federal Act on
Electronic Communications Networks and Services in Brussels, which includes the amended
must-carry obligations for cable networks in this bilingual region, has been adopted by
Parliament. The Commission is continuing to monitor these issues.
Out-of-court dispute settlement/Activation of non-requested services
Additional provisions give stronger legal protection to consumers in complaints brought
before the ombudsman. In out-of-court disputes, the intervention of the ombudsman suspends
the payment obligations of the consumer and may lead to recommendations which are
executable by the undertaking concerned. Furthermore, the ombudsman’s field of action has
been extended to slamming in connection with access to internet services (Article 135 of the
Belgian Act).
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CZECH REPUBLIC
INTRODUCTION
The broadband market in the Czech Republic is characterised by significant platform
competition, with the third highest market share for alternative operators in the EU. However,
concerning broadband over xDSL technology, which is currently gaining market share at the
expense of other platforms, the incumbent has a strong position. High mobile penetration is
felt to exert significant competitive pressure on fixed retail prices, and there are signs of
fixed-to-mobile substitution. Competition appears to be established on the fixed market,
which seems to be undergoing considerable consolidation.
Throughout 2006 regulatory developments in the Czech Republic were dominated by
intensive efforts to complete the market analyses and impose remedies based on the results
produced by the market review process. Within a relatively tight time-frame, the Czech
regulator has made significant progress, completing analyses of all 18 markets defined in the
Recommendation. The subsequent choice of remedies reflects an attempt to take a
differentiated approach tailored to a particular market situation. Given that to a large extent
implementation of the measures adopted started very recently, the impact on the market, in
the form of improved conditions for competition and a broader range of services offered to
end-users, remains to be seen.
The Ministry of Informatics continued preparing and issuing secondary legislation
implementing the Electronic Communications Act of 2005. A new decree on universal service
financing was issued to provide details of the financing mechanism for designations made
under the Act. The Ministry is currently preparing secondary legislation, some covering
further implementation of caller location information for emergency call numbers, numbering,
frequency plans and data retention, some amending and replacing previous regulations.
The Czech regulator (ČTÚ) has taken significant steps in the market review process. It has
completed the analyses of all 18 markets defined in the Commission Recommendation. To
facilitate this process, regulatory teams were activated and mobilised within the NRA.
Certain markets, both at the wholesale and retail level, were found effectively competitive,
and existing regulation is being lifted. On retail markets the regulator tends not to impose
price regulation, as the high level of mobile penetration and competition in general is
considered by the regulator as sufficient to prevent undesirable price increases.
ČTÚ appears to meet the criteria of an independent regulatory authority. Its regulatory powers
granted by law seem sufficient to enforce data collection and settle disputes between
operators, even if these fall outside the scope of significant market power obligations. It has
performed satisfactorily in monitoring remedies imposed on particular market players.
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The mechanism for appealing against decisions made by ČTÚ is designed to reflect the
significance of the decision taken. The actual appeal procedure depends on the source of the
original decision. The most important decisions, such as on results of market analyses,
remedy measures, price regulation and universal service designation, are made by ČTÚ’s
Board. These decisions are final within the internal decision-making process and appeals
against them can only be lodged before the courts.
Other ČTÚ decisions, i.e. those not adopted by its Board, have the status of first-instance
administrative decisions that can be appealed within the administrative procedure. As a rule,
with the exception of a few instances, an administrative appeal would appear to result in
automatic suspension of the decision’s effect. This does not appear to be in line with the EU
regulatory framework. Decisions challenged at court level stand unless the court decides
otherwise. To date, there has been one court decision to suspend a decision’s effect.
Besides the NRA, operators’ associations are also active in the out-of-court dispute settlement
mechanism in the Czech Republic.
The government has approved a proposal to dissolve the Ministry of Informatics in 2007. The
plan is to transfer responsibility for electronic communications to the Ministry of Industry.
The proposal will have to be submitted for parliamentary approval first; hence, no final
decision has yet been taken.
Decision-making
Out of the total of 18 markets analysed, one retail market (the fixed non-residential
international call market) and three wholesale markets (fixed transit services, trunk segments
of leased lines and mobile access) were found to be effectively competitive. Eleven of the
market analyses were closed without comments from the Commission. To date, ČTÚ has
imposed a full set of remedies, including price regulation, on the fixed and mobile
termination, fixed origination and local loop unbundling markets only.
On retail markets ČTÚ imposed mainly access, CS/CPS and accounting separation. As
regards retail, the regulator appears to impose price control through cost orientation only in
response to a particular tariff plan of the incumbent. For wholesale markets, the regulator
imposed no price regulation on the broadband access market and broadcasting transmission
services. The Commission invited ČTÚ to impose price regulation in these markets.
All the market analyses were finalised and notified to the Commission by August 2006. Apart
from exerting extra pressure for input from the market players, this situation appeared to have
no negative impact on the regulator’s approach to public consultations. On the contrary, ČTÚ
added an extra step to the regular consultation process. Workshops were held for market
players before the official public consultations on draft market analyses were launched. This
approach was well received by the operators, and the regulator found it a valuable means of
fine-tuning its regulatory approach. Moreover, since August 2006 ČTÚ has been issuing a
monthly monitoring report on developments in electronic communications related closely to
the market situation and regulation. Again, it appears a useful public communication tool and,
as such, is welcomed by the market players.
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The fixed market is undergoing consolidation in the form of acquisitions of larger alternative
operators, which has reduced the total number of effective competitors to close to six. The
number of fixed lines continues to decline, but the trend is expected to subside as DSL grows
in importance. The fixed incumbent merged its fixed and mobile branches into a single
company and started applying a single trademark for both services. The incumbent is
following the trend of converging voice, data and video into an integrated service. Besides
video-on-demand, it now offers a selection of programmes on an IPTV basis. IPTV is also
offered by two alternative providers. Cable operators have started to offer voice-over-cable
TV with IP protocol.
DSL services are dominated by the incumbent; nevertheless, its overall broadband market
share is less than 40%. In October 2006 the incumbent introduced an integrated broadband
service combining its ADSL and CDMA 450 offer. Other main platforms of broadband
competition remain WLL and cable. One of the mobile operators has merged the services it
provides via UMTS TDD with EGDE and GPRS into an exchangeable service in order to
achieve greater coverage. The incumbent offers a 3G broadband service based on HSDPA
technology in the two largest cities. The third mobile operator is preparing to start
negotiations on cost-sharing for 3G infrastructure with the other market players. All three
mobile operators offer GPRS and EDGE services.
A public broadband initiative financed by the Prague municipality and EU funds to provide
free internet access via WIFI technology faces strong opposition from commercial market
players. Currently, at the first stage of the project, the plan is to operate a wireless network
restricted to providing public e-government services. The Commission has emphasised to the
Czech authorities the importance of preventing distortion of competition when using state
financial resources. The initiative is being further examined by the Commission services.
Broadband
Market situation
The broadband market in the Czech
Republic displays extensive platform
15.00%
competition. More than 60% of all
broadband
customers
rely
on
12.00%
9.60%
infrastructure
other
than
the
9.00%
incumbent-based DSL for their
5.55%
6.00%
broadband access. WLL (31.1%) and
3.00%
1.70%
cable modem (21.3%), followed by
0.00%
bitstream access (6.38%), are the main
2004
2005
2006
means of providing services employed
by alternative operators. The DSL
service (36.9%) is in the hands of the incumbent. WLL, the main platform competing against
the incumbent’s DSL supply, is not expected to gain further momentum. Instead, DSL is
expected to grow after bitstream access was imposed as a remedy at the end of 2006.
Czech Republic BB penetration
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Overall, the most rapid increase was in
Czech Republic - BB lines by technology/means
TotalBB retail lines October 2006: 984 279
the number of DSL lines, partly due to
alternative operators providing access
via “managed” wholesale bitstream
access offered by the incumbent and
under bilateral agreements concluded
before ČTÚ’s remedy was imposed.
Wholesale DSL provision is bundled
with line access provision. Although
the number of LLU and shared access
lines has been increasing constantly, at
1.52% its real impact on competition
appears relatively insignificant. While
the number of broadband retail lines
has almost doubled since last year, the broadband penetration rate at 9.6% remains below the
EU average.
363382
NE Other (Satellite,
PLC); 4045
access; 15833
62769
NE Fiber to the home;
22000
NE Cable modem;
210 000
NE WLL; 306250
Regulatory issues
ČTÚ has imposed a full range of remedies on the market for full local loop unbundling and
shared access. Access, transparency, non-discrimination, accounting-separation and priceregulation obligations were imposed on the incumbent in May 2006. Price regulation is
achieved by setting price caps based on the LRAIC model both for LLU and co-location.
Price regulation on LLU was imposed in 2005 under the previous regulatory framework. Even
though the original prices offered in the RUO dropped significantly after the NRA carried out
cost investigations (by more than 50% for connection and 11% for monthly rental in the case
of fully unbundled lines and by almost 50% for connection and 41% for monthly rental in the
case of shared access), current LLU prices are still above the EU average and take-up is low.
ČTÚ expects price regulation for co-location to bring positive results with intensified
competition. Co-location price regulation is designed as a price cap for each set type of colocation service.
The wholesale broadband access regulation imposed in December 2006 does not include price
regulation, since it is felt by ČTÚ that wholesale prices are falling sufficiently due to the
indirect influence of competitive pressures. However, it must be pointed out that even while
prices are decreasing, wholesale competition can be negatively affected by margin squeezes.
Therefore, more detailed analysis is necessary to establish whether lack of price regulation is
not likely to produce margin squeeze margins in the future. The NRA has indicated that it
intends to continue monitoring this market and to re-analyse the market within one year.
An obligation to provide wholesale broadband access was set for IP level only. The remedy
includes use of BRAS (broadband remote access server) parameters to differentiate the
services of alternative operators from the services of the incumbent. Despite the
Commission’s comments, access at ATM and DSLAM level was not imposed as ATM is no
longer considered relevant to the Czech market and ČTÚ prefers access granted at LLU level
to DSLAM level. However, LLU cannot be considered a substitute for DSLAM, especially
considering the additional cost involved in the process of unbundling the local loop.
Moreover, access at ATM level enables the alternative operators to differentiate their services
from the incumbent’s far more deeply than at IP level.
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Mobile markets
Market situation
Three mobile network operators, with market shares distributed approximately in the ratio
40/40/20, compete in the mobile markets. The mobile penetration rate is high at 119% and
there are signs of fixed-to-mobile substitution. 3G services have been launched by the two big
operators. These are planned gradually to cover further cities throughout 2007. The third
market player is expected to launch its 3G service in 2008.
Regulatory issues
ČTÚ found no individual or collective dominance of access and call origination on the mobile
market. Regulation will therefore not be imposed on this market. There are currently no
MVNOs present. However, it remains to be seen whether competitive pressures alone will
suffice to secure market entry of an MVNO should demand materialise. Premium-rate
services, previously regulated, are now negotiated via commercial contracts. It is therefore
important to monitor these developments in relation to customer interest.
The mobile termination markets, on the other hand, were not found competitive and all three
operators were designated as having significant market power on their own individual
networks. To improve the market situation, ČTÚ imposed a full set of remedies, including
access, transparency by means of a reference offer, accounting separation and price
regulation. Although cost orientation is not explicitly imposed as such, ČTÚ set price caps for
termination rates.
Fixed market
Market situation
The fixed market is undergoing consolidation in the form of acquisitions by larger alternative
operators. To date, 20 alternative operators are providing services via CS/CPS. However, the
number of effective competitors on the side of new entrants has fallen to close to five. The
market share of the alternative operators is 28%. They appear to be most successful in
competing with the incumbent for long-distance calls and international calls. No data are
available on provision of services via direct access. Cable operators have started offering
VoIP services.
Prices for fixed interconnection show no signs of elasticity. They remain well above the EU
average (by 46% at local level, 36% at single transit and 21% at double transit level).
The state owns none of the incumbent’s shares as these were sold in 2005.
Regulatory issues
Access markets are regulated by CS/CPS, accounting separation and an obligation to allow
resale of access services. Cost orientation is applied only with regard to residential customers.
Prices for local and national residential fixed calls are not regulated. With retail prices still
clearly high compared with the EU average, the Commission notes that active monitoring of
these markets is necessary to determine whether the range of remedies imposed is sufficient to
address the market failure.
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Simple resale of monthly rental fee as part of the wholesale line rental became effective as a
remedy on retail access markets in November 2006. The incumbent has produced a relevant
offer to alternative operators.
Fixed international calls for business customers were found competitive, and current
regulations will therefore be withdrawn. For the same type of calls for residential customers,
and also for local and national business calls, ČTÚ proposes accounting separation and
withdrawal of current price regulation. These markets are regarded as under sufficient
competitive pressure, due to high mobile penetration and pressure from alternative operators.
Consequently, the incumbent is not expected to increase prices. The particular remedies were
issued in December 2006.
Prices of leased lines remain unregulated and high. However, ČTÚ indicated price regulation
at a later stage for wholesale terminating segments and the minimum set of leased lines. The
wholesale trunk segment was found effectively competitive and will therefore not be
regulated.
The NRA imposed a full set of remedies, including price regulation, on both the call
origination and termination markets. In each case price regulation is achieved by setting price
caps per minute based on the LRIAC model. Reference offers are therefore required to reflect
these rules. However, especially with regard to call origination and dial-up internet services,
there is also demand for price regulation of services charged on the basis of the FRIACO
model. Settling any price disputes in this context solely via the dispute settlement mechanism
could create a degree of uncertainty on the market. The incumbent was found no longer to
have significant market power on the fixed transit market; regulation will therefore be
withdrawn.
Broadcasting
Market situation
Broadcasting in the Czech Republic is mostly by analogue terrestrial transmission (65%),
followed by cable (21%) and satellite transmission (14%).57 Approximately 880 000
households use cable as their main means of receiving TV broadcasts. Satellite transmission
remains the platform used least. There are more than 100 local cable networks. The largest
cable operator has announced that it intends to buy its biggest rival, which could potentially
give it a cable market share of more than 60%. The NCA cleared the merger in December
2006, subject to a number of commitments. One of the large fixed alternative operators holds
100% of the analogue terrestrial broadcasting market.
One pilot and one regular digital TV broadcast service are still offered in the capital. DVB-T
licences were awarded to three companies, one of them being the fixed incumbent and another
the analogue broadcasting incumbent. The latter has expanded its coverage to two additional
cities. Digital switchover is expected to be launched in 2010-2012.
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EN
Source: Dataxis: “Digital television data, EU market for digital television”; report prepared for the
European Commission, 2006.
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Regulatory issues
In the analysis of the broadcasting transmission market, ČTÚ decided to restrict the definition
of the market to analogue terrestrial broadcasting transmission only. Concerning other
services, the NRA carried out no further evaluation of whether other transmission services are
subject to ex ante regulation based on the three-criteria test defined in the Recommendation.
The Commission invited ČTÚ to analyse the other broadcasting transmission services, in
particular digital terrestrial services, which have been already launched in the Czech Republic
and are likely to gain significant importance, and to establish whether the markets are
susceptible to ex ante regulation. The final remedies were imposed in December 2006.
The government approved the digital broadcasting development policy for the Czech
Republic in March 2006. ČTÚ is responsible for providing the technical plan for the
switchover from analogue to digital terrestrial TV broadcasting. A public consultation on the
national digital switchover plan was launched in October 2006.
Spectrum management
The Ministry is responsible for issuing the frequency band allocation plan via secondary
legislation. ČTÚ has been entrusted with drafting it, alongside other responsibilities such as
management of frequencies, issuing the frequency spectrum utilisation plan and granting
general authorisations. Any frequency allocation by tender is administered by ČTÚ. The
Czech authorities reported that the radio spectrum harmonisation decisions adopted by the
Commission had been fully implemented. Decisions were implemented in the frequency band
allocation plan.
Rights of way and facility sharing
The Electronic Communications Act contains provisions on granting rights of way. The law
uses the concept of easement for establishing rights of way. Administrative details and
disputes are dealt with by the local Construction Office on the basis of the Construction Law.
The current Construction Law expired at the end of 2006 when it was replaced by a new one.
The Commission services are examining whether the new rules comply with the EU
regulatory framework. As the Electronic Communications Act does not appear to specify
financial compensation issues in detail, network providers often rely on general civil law to
secure their rights of way.
Universal service
One major development in the reporting period was designation of the universal service
provider. At the end of 2005 and throughout 2006 ČTÚ designated universal service providers
for particular parts of the universal service via tendering procedures. The incumbent was
designated as single provider for all parts, but special tariffs for disabled users and users with
special social needs, for whom the incumbent is to provide this service together with two
other mobile operators.
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The scope of the universal service is defined in the primary law. However, ČTÚ may limit the
scope if the service is provided on the market through competition on a comparable basis.
ČTÚ then has the obligation to review the scope of the universal service on a bi-annual basis.
Following this line, the regulator excluded access at a fixed location from the scope of current
designations. It should, however, be noted that access is crucial for the provision of
narrowband internet access. Therefore this point should be closely monitored.
The universal service is financed from the universal service fund to which operators
contribute. The only exception is provision of services for disabled users and users with social
needs, which is financed by ČTÚ from the state budget. The Ministry issues secondary
legislation giving details of the financing mechanism. Major contributors to the fund have
appealed before the courts against contributions set for 2001-2003. Based on the decision of
the Supreme Administrative Court, ČTÚ is now revisiting the contributions. Due to legal
proceedings and the fact that new decisions by ČTÚ are still pending, none of the major
contributors has paid its contribution yet. It should be noted that even with provision of partial
services, the total net cost of each undertaking is to be calculated taking account of profits
from any of the partial services covered by the undertaking.
Directory services and directory enquiry services
After the comprehensive directory and directory enquiry services covering all subscribers,
fixed and mobile services became available in February 2006, the Commission closed an
infringement proceeding on this subject.
Emergency services (112)
The single European emergency number, 112, is accessible from both fixed and mobile
phones. Caller location information for all calls made to 112 is provided automatically for
emergency services (push method). Moreover, 112 emergency call handling procedures have
been set up to respond efficiently to callers’ various language needs. A pilot project on the ecall initiative was tendered out to the incumbent provider.
Number portability
Fixed number portability has been available since 2003. Use of this customer tool on the fixed
market is constantly growing. Mobile number portability was introduced in January 2006. The
Commission therefore closed its infringement proceeding on this subject. Mobile porting is
accessible for both post- and pre-paid customers. The number of mobile ported numbers is
increasing with more than 95 000 numbers ported in 2006. A dispute is pending with the NRA
regarding the financing mechanism for the mobile porting system. In line with the decision by
the Supreme Administrative Court, in the case of fixed-term contracts, however, only
customers eligible to terminate their contract are allowed to use the number portability
service.
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Must-carry
The Radio and Television Broadcasting Act is the principal law covering the must-carry
provisions in the Universal Service Directive. The amendment adopted in 2006 affected the
must-carry provisions, amongst others. All public channels have to be included in the lowest
retransmission offer, while the Radio and Television Broadcasting Council takes the decision
on inclusion of commercial channels. However, transitional arrangements expiring in 2011
currently apply. The Commission services are examining whether the provisions laid down in
the Act are in line with the Directive.
Out-of-court dispute resolution
ČTÚ is responsible for providing an out-of-court mechanism for settling disputes regarding
financial obligations and customer complaints. By far the majority of the disputes revolve
around billing issues raised by service providers and their customers. Decisions on disputes
are binding.
Data protection
The Data Retention Office is the primary administrative body responsible for supervising data
protection. Following an infringement proceeding launched in 2005, the legislation was
amended to allow an exception from the opt-in principle for electronic advertising.
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DENMARK
INTRODUCTION
2006 was a year of strong price competition for mobile and ADSL services, for the benefit of
consumers. Denmark is second in the EU in broadband penetration, building on extensive
broadband infrastructure and widespread use of broadband connections. The expansion of
broadband infrastructure has continued, including types of broadband access other than
ADSL. The incumbent has improved its position on the fixed market.
On the regulatory side, the NRA has maintained a very active role in both regulation and
preparing new legislation. While three markets have yet to be notified, specific remedies have
been revoked as a consequence of market developments. There are concerns about possible
amendments to Danish legislation and about a recent decision by the Telecommunications
Appeal Board.
Since its adoption, the Danish Act on Competitive Conditions and Consumer Interests in the
Telecommunications Markets has been successful in fostering competition on the national
market. It has been in force for three years, but a number of amendments have created a
feeling of regulatory uncertainty on the part of market players.
The Danish national regulatory authority IT-og Telestyrelsen (National IT and Telecom
Agency - NITA) is part of the Danish Ministry for Science, Technology and Innovation. As
such, it plays an active role in implementation of the government’s policies and initiatives. It
assists the Minister on matters and legislation concerned with information and communication
technology. It drafts policy proposals, bills and executive orders. NITA participates in
Council working meetings. Specific regulatory decisions are taken by NITA as an
independent body in accordance with the Act on Competitive Conditions and Consumer
Interests in the Telecommunications Markets.
The Danish NRA has around 300 employees. The Director, appointed in 1991, nominates the
two Deputy Directors. Following a major administrative reorganisation in May 2006, the
number of government staff in the Ministry was reduced to two advisers to the Minister on
matters regarding the electronic communications sector, while the remaining 33 government
officials were absorbed by NITA.
In addition to its overall objectives, the Danish regulatory authority has set three key
challenges for the year ahead: enhancing competition in local loop unbundling, clarifying the
situation with internal cabling58 , and focusing on building up the NGN.
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This relates to the situation where two alternative operators seek to run a cable between two racks colocated in the incumbent’s facilities
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In general, NITA is perceived as a powerful, knowledgeable agency, with close relations with
the Ministry.
All operators stressed the need for a stable regulatory framework and for timely and firm
decisions. They described the Act on Competitive Conditions and Consumer Interests in the
Telecommunications Markets as a “patchwork of amendments” since it was being amended at
least once a year.
Concerning the appeal mechanism, the Danish authorities have resolved the issue identified in
last year’s implementation report by bringing the Danish legislation into line with Article 4(1)
of the Framework Directive. As a result, appeals against decisions by the NRA no longer
automatically suspend their immediate enforceability.
Decision-making
NITA had failed to notify three relevant markets by July 2006. For this reason, the
Commission opened infringement proceedings in October 2006. Regulatory developments
with regard to roaming, deliberations on a possible definition of a transnational market for
wholesale broadcasting and the adoption of a draft national law on internal cabling seem to be
delaying analysis of the remaining markets. The Danish authorities stated that notification of
the three remaining relevant markets would be given in early 2007.
At the time of writing, NITA had taken final measures for 15 of the notified markets and
confirmed that all remedies imposed for those markets were in force. NITA imposed the full
set of obligations on wholesale markets and on the retail market of minimum set of leased
lines, but no remedies were imposed on the fixed retail access and fixed retail calls markets
(markets 1-6). Furthermore, NITA lifted regulation of wholesale access and call origination
on the mobile market.
Generally, NITA is considered efficient at conducting market analyses and taking final
regulatory measures. Yet all market players and NITA perceive the market analysis process as
time-consuming, partly due to legal challenges. Concerns were raised by the incumbent on the
wholesale broadband access market (market 12) that its analysis resulted in very detailed
regulation, and by the incumbent on the mobile call termination market (market 16) which
complained of asymmetry in the termination rates. Concerns by the alternative fixed operators
focused on a ruling by the Appeal Board on the market analysis and obligations imposed
under the current regulatory framework in relation to obligations imposed under the pre-2003
framework: if an obligation in a specific market was not imposed on the incumbent under the
old framework, the NRA could not impose it under the current framework. Alternative
operators feared that this decision could restrict the NITA’s regulatory powers. Legislation to
resolve this matter was passed in December 2006. The Commission services are looking into
this matter.
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Broadband
Market situation
Denmark has very extensive broadband
infrastructure and makes widespread
40.00%
use of broadband connections. It is
second in the world in terms of
29.39%
32.00%
broadband penetration rate with
22.47%
24.00%
29.39% in October 2006 (the EU-25
16.32%
16.00%
average was 15.69%). This success can
8.00%
be attributed to the increasing
competition on the broadband market,
0.00%
2004
2005
2006
due partly to new providers’ access to
the incumbent’s fixed network and
partly to emerging new technologies
based on alternative broadband infrastructure, creating intensive infrastructure-driven
competition. Broadband connections are primarily in the form of ADSL, cable modems and
LANs used by building associations. Other types of broadband connections, such as hotspots
based on WLAN technology and 3G
Denmark - BB lines by technology/means
mobile data services, also gained
ground in 2006. A number of energy
companies continued to invest heavily
in the roll-out of fibre-based
infrastructure.
Denmark BB penetration
NE Full ULL; 111415
NE Shared access;
65 107
86768
699794
NE Resale; 18993
NE WLL; 16955
The number of broadband lines
increased by 57.12% to 1 595 390. The
incumbent’s market share of retail
broadband
connections
remained
unchanged since 2005 at 60%. Its DSL
lines increased from 556 694 in
October 2005 to 699 794 in October
2006.
NE Cable modem;
201 965
NE Other (L.L., Satellite,
PLC, ow n PSTN
netw ork);
4 311
Inc. Other (WLL, other
traditional w ireline, LAN);
19636
Inc. Cable modem;
273 866
20697
NE LAN; 75883
The number of wholesale LLU lines has continued to increase by 23%, mostly in the form of
fully unbundled lines or shared access lines. The number of fully unbundled lines almost
doubled in 2006 to 111 415.
The wholesale connection price and the monthly rental price for fully unbundled local loops
are among the lowest in the EU. As regards shared access, the connection price continues to
be among the lowest in the EU while the monthly rental price is around the EU average.
Data on the use of alternative technology platforms suggest that broadband lines based on
cable, provided by the incumbent or by new entrants have experienced a significant increase.
The incumbent’s cable lines increased by 62% to 273 866 in 2006, while the new entrants’
increased by 18 468 to 201 965 cable lines by October 2006.
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Similarly, the incumbent’s broadband lines based on wireless local loop rose to 10 954 in
October 2006 (an increase of 290%), while new entrants’ cable lines increased from 4 392 a
year before to 16 955 in 2006. Operators have started using Wi-Fi hotspots to deliver
broadband services. The incumbent had 740 hotspots (4.5% of the total broadband lines) and
new entrants 208 (1.2% of the total broadband lines).
Regulatory issues
The problem identified in last year’s implementation report regarding internal cabling59 still
persists in competition on the Danish fixed network. Alternative fixed operators called for
clear legislation on the matter as the key to developing their infrastructure. The incumbent felt
that co-location between alternative operators should take place outside its local exchange
cabinets. All operators considered the underlying national legislation weak. The Danish
Telecommunications Complaint Board ruled against both NITA’s decisions that alternative
operators have the right of direct interconnection on the incumbent’s co-location premises.
NITA seeks to clarify this issue during 2007.
Market players have expressed different opinions regarding the pricing of the incumbent’s
access lines to the home (both PSTN and ADSL). The situation arose after the analysis of the
wholesale broadband access market (market 12) when NITA imposed an obligation on the
incumbent to give access to ADSL lines to its competitors without simultaneous delivery of
telephony to end-users (“naked DSL”). NITA’s decision entered into force when the
Complaint Board gave its final decision in July 2006.
With effect from October 2006, the incumbent introduced a new retail price system where
PSTN prices are higher if there is no ADSL service on the same line. The new retail price
system entails a discount on the PSTN price if ADSL is on the same subscriber line. The
incumbent introduced the discount after pressure from NITA to solve a problem related to
otherwise excessive recovery of costs by the incumbent. Alternative fixed operators fear that
the incumbent would have a competitive advantage since this will give end-users an incentive
to have both PSTN and ADSL lines from the incumbent. The discount is also given to WLR.
Another considerable concern among alternative fixed operators has been the incumbent’s
network roll-out strategy, which aims at meeting its end-users’ demand for high bandwidth.
Alternative operators are worried about whether they would be allowed access to the street
cabinets closer to end users, and on what conditions. They consider their investments in the
central local exchanges seriously at risk as they feel they will no longer be able to compete on
either speed or quality against the incumbent’s retail products. The roll-out raises problems
with quality and stability on the incumbent’s network. On the other hand, the incumbent felt
that the legislation in place was one-sided aiming at ensuring access to its broadband network
but not supporting the regulatory goal of “many pipes to the home”. NITA fears that this
restructuring of the network could force competitors to use bitstream products instead of
promoting investment in the operators’ own network.
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The situation where two alternative operators seek to run a cable between two racks co-located in the
incumbent’s facilities.
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Mobile markets
Market situation
The mobile telephony market in Denmark continues to record high penetration levels with
5.5 million mobile subscriptions by September 2006. The penetration rate rose to 104% from
101% a year earlier.
At the end of September 2006 there were four mobile network operators and one MVNO
operator on the Danish market. The leading mobile operator had a 31.57% market share in
terms of number of subscribers. Its market share remained stable compared with last’s year
figure. Its main competitor had 19.63% of the market while the third competitor had 19%.
The other competitors had a combined market share of 23.12%.
After the first half of 2006 nine operators provided 97.1% of all mobile services in Denmark.
Three operators currently offer 3G mobile services. Two of these are required to cover 80% of
the population by the end of 2008, while one is required to cover 80% of the population by
February 2013. One of the 3G operators has already met this coverage requirement. Another
operator has a 3G licence but is not yet in commercial operation.
Regulatory issues
The analysis of the mobile access market (market 15) suggested that there was effective
competition on this market. The relevant sector-specific regulation was therefore revoked.
MVNO access is no longer subject to regulation.
NITA’s analysis of the mobile call termination market (market 16) found that all five
operators had SMP on their particular market and that the termination prices were high. NITA
therefore imposed a number of obligations on all operators, while the three main operators
have also been subject to a price control remedy. A two-year glide path has been applied to
bring prices down to cost orientation by 1 May 2008. For 2006-2008 prices will be based on a
best practice benchmark. An LRAIC model is under development.
Fixed
Market situation
In September 2006 there were 37 public fixed voice telephone operators, 59 if cable TV
operators that provide voice telephony services are included. The national fixed voice calls
markets, however, are still deemed to lack effective competition due to the high market share
of the incumbent. In fact, the incumbent’s share of fixed calls in terms of minutes of traffic
increased from 60.9% a year earlier to 64.2% in 2006.
The number of subscribers using an alternative provider other than the incumbent for longdistance and international calls on the fixed voice telephony market decreased to 36% in 2006
from 44% the year before.
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Danish prices for fixed-network termination continue to be among the lowest in Europe. The
interconnection charges for call termination on the incumbent’s fixed network for single
transit decreased further in 2006 from €0.72 to €0.62. Similarly, for double transit they fell
from €0.91 to €0.88.
Regulatory issues
An amendment to the national law entered into force on 1 January 2006 giving NITA powers
to set terms and conditions for access and interconnection agreements, if required by one of
the parties or on NITA’s own initiative.
Following introduction of the LRAIC model in January 2003 for calculation of
interconnection prices, in 2005 NITA decided that some changes to the existing LRAIC
model were necessary. The corresponding decisions concerning the LRAIC maximum prices
for 2006 were taken in December 2005.
Broadcasting
Market situation
At the end of the third quarter of 2005 some 25.8% of all households in Denmark (2.5 million
households) had analogue TV as the main means of reception of TV content, while 21% had
satellite. 53.2% of households had cable TV.60
Analogue terrestrial switch-off is scheduled in Denmark at the end of October 2009. The rollout of digital terrestrial TV was initiated in April 2006 offering nationwide coverage. Three
public-service TV channels started broadcasting on the first nationwide digital terrestrial
transmission network.
NITA took steps in 2006 to collect suggestions on use of the frequencies from the transition to
digital TV (digital dividend) and the roll-out of mobile TV.
Regulatory issues
The analysis of the broadcasting transmission services market (market 18) in Denmark has not
yet been finalised.
Spectrum management
The introduction of new regulatory methods which would allow liberalisation of use of
frequency bands is currently being discussed in Denmark. In autumn 2005 NITA launched a
strategic review of the current licence regulation. This is focusing on establishing a fast track
to allocate frequencies, in particular in case of scarcity, on technology- and service-neutral
licensing of frequency allocation and on establishing a system to allow further spectrum
trading. A public consultation was to be launched in Denmark in summer 2006 on the basis of
60
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a report commissioned by NITA from a consultancy. The consultation will provide feedback
to the NRA to conduct political discussions and draft legislation.
A number of alternative operators considered that the decisions on frequency allocation were
not based on market considerations and that allocation of some frequencies was blocking
market development. The incumbent complained about delays in awarding spectrum in
frequency bands where there was scarcity.
While operators consider that administrative charges are generally high, numbering fees at
0.24 Euro per year for an 8-digit number have remained unchanged since 2004.
Network roll-out
The incumbent owns both types of infrastructure network (broadband and cable TV). It has
announced plans to invest in its network roll-out with the aim of meeting its end-users’
demand for high bandwidth on the broadband market. Cable TV networks, community
antenna systems and fibre-based LANs, widely used in urban areas, are currently being
extended or upgraded. At the same time, an increasing number of power companies have
continued investing heavily in the roll-out of fibre-based infrastructure in geographically
separated areas. Their target is to offer a fibre connection to 500 000 households and
enterprises within a couple of years. Fixed wireless broadband access networks and 3G
mobile networks are becoming widely available in the country. WiMAX is now being offered
in major cities. A considerable number of WLAN hotspots (around 1000) have been
established nationwide.
Universal service
The Danish incumbent is currently the designated undertaking providing all services that
correspond to the universal service obligations included in the Universal Service Directive
(Directive 2002/22/EC) nationwide until the end of 2007. In view of the need for a new
designation in the near future, the Danish NRA launched a public consultation in October
2006 to gather feedback on whether amendments to the primary legislation were necessary. If
so, secondary legislation on the matter will be proposed to the Danish Parliament.
A new regulation which came into force in January 2006 abolished all price regulation of
services included in the Universal Service Directive 2002/22/EC nationwide until the end of
2007, including call set-up charges on the fixed call markets.
Number portability
Number portability is available for all types of numbers, fixed or mobile. At the end of 2005
the Danish Parliament adopted a bill which abolished the legal requirement on full number
portability, that is the porting of numbers between fixed and mobile phones.
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Data protection
Following the government’s strategic anti-terrorism plan adopted in November 2005, the data
retention obligation, including incoming calls, mobile cell information and incoming e-mails,
has been defined. The law includes an extensive retention obligation for user traffic data on
the internet. All operators strongly disagreed with the Danish legislation, which they
considered went far beyond the EU requirements and was very costly.
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GERMANY
INTRODUCTION
During 2006 the competitive situation further improved on most of the fixed line markets in
Germany. On the mobile market, further significant changes were seen in retail prices, with
more new operators providing only basic services entering the market. The broadband retail
market became much more competitive, also due to increased resale-based offers. Consumers
continued to benefit from further falling prices, in some instances triggered by developments
on the markets rather than specific regulatory intervention.
As regards regulation, the German NRA (BNetzA) completed important market analyses,
such as those for the mobile call termination and wholesale broadband access markets.
However, there were also some delays in completion of significant market analyses.
The issue of how to regulate “new markets” was first discussed and finally addressed in
Germany by inserting a new provision in the Telecommunications Act which, in the view of
the Commission, would grant a “regulatory holiday” to the incumbent fixed network operator.
In addition, this provision would decrease the discretion of the German NRA and would
evade the consultation and consolidation mechanism provided for by the regulatory
framework. The Commission therefore decided to launch an infringement proceeding.
The main regulatory development in Germany was the addition of the abovementioned new
provision to the German Telecommunications Act (TKG) which aims at exempting new
markets from regulation. Under this new provision new markets should only be included in
the market regulation and the Community consolidation mechanism should apply only if
certain requirements are met. There have to be facts justifying the assumption that otherwise
development of a market on a basis of sustainable competition in telecommunication services
and networks would be hindered on a long-term basis. When examining the need to regulate
and when imposing remedies the NRA has to consider the proportionality of its action, taking
particular account of the objective of encouraging efficient investment and promoting
innovation.
Alternative market players have reacted extremely negatively. In December 2006, the
Commission decided to launch an infringement proceeding against Germany upon publication
since in its view the approach taken by Germany is in breach of the European regulatory
framework.
With regard to the regulatory situation as such, completion of some market analyses is still
being delayed. In October 2006 the Commission therefore initiated an infringement
proceeding against Germany. Nevertheless, BNetzA has delivered results on certain markets.
For example, it imposed access obligations on the incumbent fixed network operator on the
wholesale broadband access market for IP-based bitstream. For ATM-based bitstream
BNetzA recently also proposed an access obligation. However, the effectiveness of the
remedies imposed cannot be assessed sufficiently at this stage, as even on markets on which
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remedies have been imposed they are either not yet fully applied, e.g. due to lack of standard
offers, or have only recently been applied.
The majority of market players, represented by the two major alternative operators’
associations, confirmed that in the telecoms section BNetzA has remained fully operative
despite the broadening of its responsibilities. Since mid-2005 BNetzA has been responsible
for the railway, electricity and gas sectors in addition to telecoms and postal services.
Market players were not yet able to conclude that the removal of one instance in the court
hierarchy by the TKG had led to any real acceleration of the appeal mechanism. The NRA,
however, reported a shortening of the average duration of court cases.
In the 10th Implementation report concerns were expressed that the members of BNetzA’s
presidential chamber depend on political appointment. This situation has not changed yet.
Decision-making
BNetzA made progress during the last year, inter alia by giving notification of the analysis of
the broadcasting transmission services market and of the draft remedies for the mobile
termination market and the fixed wholesale broadband access market.
National consultations are run prior to consultation of the Commission. The fact, however,
that there are separate decisions for market definition/analysis and for remedies has prolonged
proceedings, including during the reporting period. The previous implementation report
addressed this issue in more detail.
Broadband
Market situation
The market situation improved
compared with the previous year. This
was mainly because alternative
operators were able to increase their
market shares concerning retail access
significantly. Moreover, retail prices
fell considerably.
Germany BB penetration
20.00%
16.36%
16.00%
11.49%
12.00%
8.00%
7.15%
4.00%
In October 2006 the broadband
penetration rate was 16.36% (up from
11%). Cable continues to be used
mainly for television, but the cable
network operators have slowly begun to offer broadband internet services and have reached a
market share of 3.17%. However, there is a clear trend towards more growth.
0.00%
2004
2005
2006
The alternative operators’ share of the DSL retail lines market has increased significantly,
from 33% in October 2005 to 47.24% in July 2006. However, a closer look at these figures
demonstrates that this positive development is largely based on resale products from the
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incumbent and would obviously not be
so good if resale were excluded. If new
entrants’ DSL resale lines were
included in the incumbent’s market
share, this would still add up to 71% in
July 2006.
Germany - BB lines by technology/means
NE Full ULL; 3500000
6500000
Alternative operators’ market share of
broadband in general was 51% in
October 2006 and was divided as
follows: the majority (25.38%) was
based on LLU, 19.83% on resale,
2.86% on cable modem and 0.23% on
shared access.
NE Shared access +
Bitstream access;
44 300
NE Resale; 2900000
Inc. Other (other
traditional w ireline
access, Satellite);
54 000
NE Cable modem;
428 000
NE Other (Satellite,
PLC); 59500
Whereas in the past the incumbent used to offer resellers only relatively small profit margins,
it changed its policy in 2006 by offering resellers with a large number of customers high
discount rates (the “net rental” offer). When the NRA decided that this differentiation
between resellers was discriminatory, the incumbent offered all resellers higher discount
prices enabling them to get a better profit margin.
Competition at resale level is constantly growing with retail end-user prices for DSL internet
access falling further. Lower retail prices consequently lead to an increase in DSL access in
Germany, with penetration rates rising continuously. The impact of this development on
investment in infrastructure will need to be verified.
Regulatory issues
Regarding the “ladder of investment” principle, the first and last rungs on the ladder - resale
and the unbundled local loop - are in place, but bitstream wholesale access is not yet
provided. However, in September 2006 BNetzA notified the Commission of the final remedy
imposing an obligation on the incumbent fixed network operator to offer IP-based wholesale
bitstream access. In January 2007 the NRA sent notification of a similar obligation
concerning ATM-based wholesale bitstream access.
Despite the growing penetration rate, it appears that two conditions could further enhance
Germany’s broadband performance. First, cable operators need to continue to upgrade their
networks for digital transmission in order to become a true alternative infrastructure option for
broadband access. Second, the incumbent fixed network operator needs, in principle, to open
or further open its network to alternative operators. Amongst other efforts, by challenging
Germany’s attempt to exempt certain markets a priori from regulation the Commission is
trying to support the achievement of that second condition.
Mobile markets
Market situation
Mobile penetration was 101% in October 2006 (up from 92%), and there were 83.1 million
subscribers. There were four mobile network operators and eight main mobile service
providers on the market. The overall market share of the subsidiary of the incumbent fixed
network operator was 36.9% in July 2006 (37.7% the year before). The main competitor held
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an almost identical market share with 35.6% (37.2% the year before). The third mobile
network operator had 14.7% and the fourth 12.8%.
Regulatory issues
The NRA started its analysis of two mobile markets and finalised the analysis of voice call
termination on individual mobile networks by October 2006. BNetzA found that all four
network operators have SMP on their networks. First, BNetzA invited the operators to agree
to lower mobile termination rates (MTRs) on a voluntary basis. As not all operators could
agree, BNetzA imposed a reduction of MTRs on all four operators with the consequence that
average MTRs were to go down by 16% as from November 2006 until November 2007. It is
worth noting that BNetzA did not refuse to apply ex ante wholesale tariff regulation by
invoking the controversial provision of Section 30 of the TKG which contains the “double
dominance” criterion. By this it would appear BNetzA applied the controversial decision in
conformity with Community law and in a forward-looking way.
Fixed
Market situation
A total of 132 operators were actually offering public fixed voice telephony in July 2006, nine
of which were major operators.
On the basis of retail revenue and minutes of outgoing communications, the incumbent fixed
network operator’s market shares of all types of calls decreased further. On the basis of retail
revenue, alternative operators’ market shares increased from 25% to 31% for local phone
calls, from 37% to 43% for national phone calls and from 60% to 61% for international calls,
while their share of calls to mobile rose from 39% to 43%. Alternative operators’ share of the
market for all local calls on the basis of outgoing minutes increased significantly once again,
from 34% in 2004 to 60% in 2005.
C(P)S is broadly applied and the fact that the incumbent fixed line operator also collects the
charges for call-by-call connections made through its competitors makes it attractive for
customers to use carrier selection.
Regulatory issues
The Commission asked BNetzA to revisit its opinion that, apart from the incumbent fixed
network operator, no operator had SMP on the fixed wholesale call termination market.
Subsequently, BNetzA identified all alternative fixed network operators as having significant
market power.
The definition and analysis of the markets for leased lines (markets 7, 13 and 14) were
notified in August 2006. BNetzA indicated no remedies at this stage. The Commission made
no comments on BNetzA’s findings concerning the retail market but at the end of September
2006 it asked for further investigations of the wholesale markets. In particular, the
Commission questioned the segmentation of the wholesale markets by cutting off at 2 Mbit/s
and the sufficiency of the data underpinning the market analysis. As in some cases the new
data collected by BNetzA from market players deviated from data previously submitted,
BNetzA decided to withdraw the notification of the wholesale leased lines markets.
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Broadcasting
Market situation
On the German TV and radio market end-users mainly use cable (55% of all connections) or
satellite (40% of all connections) to receive the radio and television signal. Analogue
terrestrial TV has virtually ceased to exist as an alternative access platform (around 2% and
still falling), while digital terrestrial television (DVB-T) has not yet reached critical mass
(around 3% of all connections). Both television via ADSL (“IPTV”) and UMTS account for
under 1% of all connections and are considered by BNetzA as still nascent alternative
platforms for delivery of the television signal.
Regulatory issues
As regards BNetzA’s notification of the broadcasting transmission services market, the
Commission did not challenge the NRA’s finding that the three major German cable operators
hold significant market power over parts of the cable network, despite the fact that an SMP
designation for cable operators is unprecedented. BNetzA demonstrated that – contrary to
other countries – the major cable operators were able to extract money from the TV stations
rather than vice versa.
Spectrum management
Frequencies are assigned by administrative act either ex officio (general allocations published
in the Federal Network Agency’s Official Gazette) or upon application (individual
allocations). The TKG enables BNetzA to put out to tender or auction frequencies in special
cases where demand outstrips the number of frequencies available for a particular application.
In general, no concerns have been reported about BNetzA’s spectrum policy. The auction for
broadband wireless access frequencies ended on 15 December. The incumbent fixed line
operator did not bid.
As regards the relevant Commission decisions on frequency harmonisation, Germany has
implemented the decisions on harmonised use of radio spectrum in the 5 GHz frequency band
for the implementation of wireless access systems (Decision 2005/513/EC), on the
harmonisation of the 24 GHz range radio spectrum band for time-limited use by automotive
short-range radar equipment (Decision 2005/50/EC), on the harmonisation of radio spectrum
in the 79 GHz range for the use of automotive short-range radar equipment (Decision
2004/545/EC) and on the harmonisation of the 169.4-169.8125 MHz frequency band
(Decision 2005/928/EC) by adapting the Federal frequency usage plan accordingly.
An important judgment was issued by the European Court of Justice (ECJ) in September 2006
following a request for a preliminary ruling concerning licence fees imposed by the German
NRA on the basis of the old ONP regime.61 The case concerned two telecommunications
61
EN
Cases C-392/04 – i-24 Germany GmbH v Bundesrepublik Deutschland and C-422/04 – Arcor AG & Co
KG v Bundesrepublik Deutschland, ECJ judgment of 19 September 2006.
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undertakings that had paid fees for their individual licences without contesting those fees
within the deadline laid down for appeal. The fees had been calculated on the basis of the
anticipated general administrative costs of the regulatory authority over a period of thirty
years, to be charged in advance which as such was found unlawful by the ECJ. The German
court had also asked the ECJ whether, despite the principle of legal certainty, Germany was
obliged to pay back such unlawful fees to undertakings that failed to lodge an appeal in time.
The ECJ replied in the affirmative albeit leaving it to the national court to make the final
determination whether Germany will have to repay the fees to the undertakings concerned.
Retail prices
On the fixed network, many operators provide various special offers such as a reduction of the
connection fee or set sums of credit. Furthermore, end-user equipment (modems, etc.) is often
offered free to new ISDN or DSL subscribers. Flat-rate tariffs for DSL subscriptions are still
falling.
Convergence has become more and more a matter of fact with mobile offers aimed at
persuading customers to give up their fixed subscription; the incumbent’s mobile subsidiary
came up with an offer combining mobile and fixed telephony.
Mobile operators offer inclusive tariffs covering a certain number of minutes of calls per
month. Some tariffs allow calls free of charge at certain times, e.g. at weekends. New lowcost mobile operators had entered the market a year before, offering a minimum service but
an easy tariff system with just one price for calls to all national mobile and fixed line
networks. As a consequence, tariffs have fallen continuously and markedly. Flat rates are also
available, allowing the customer unlimited calls to the network of the network operator and to
fixed lines.
With regard to pre-paid mobile credit, all network operators had provisions in place that after
a certain period of time customers were no longer able to use any unspent credit. Several
consumer protection associations brought these contractual provisions to court, and in two
cases so far it has been decided that such rules infringe German civil law.
Tariff transparency
The consumer protection association regards the lack of transparency of tariffs as a problem,
in particular in the case of mobile tariffs. The situation is reported to be even worse with
international roaming tariffs or tariffs for international calls.
Universal service
The previous implementation report pointed out that the new TKG appears to limit the NRA’s
regulatory discretion and powers. The Commission’s concerns have now been addressed in
the law amending provisions of the TKG which was adopted at the end of 2006.
Number portability
In 2006 there were more than one million ported mobile numbers, approximately 350 000
more than in the previous year. The average period before the ported number is operative with
the new operator was five working days, as in previous years.
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EN
112
112 is fully operational in Germany and, according to the German authorities, caller location
information is available for both fixed and mobile calls.
Since 112 has been in use in Germany for decades there was no need to run special
awareness-raising campaigns. With the introduction of the GSM telephone service and
international roaming German citizens were informed by GSM network operators that 112 is
used in many European countries. Before the holiday season telephone bills sometimes
include a hint about emergency numbers in foreign countries.
Must-carry
Must-carry is regulated in all sixteen Federal States (“Bundesländer”), some of which
designate all analogue channels for must-carry. In a few Bundesländer the stations that take
part in terrestrial digital TV provision (DVB-T) appear to receive must-carry status for
analogue provision via cable, and restrictions are regulated in law and in the cable allocation
statutes of the Bundesländer. Some must-carry rules have been called into question by market
players. In October 2006 the Commission initiated an infringement proceeding against the
legislation of four Bundesländer, without prejudice to the must-carry rules or application of
these rules in the remaining Federal States. One of the grievances addressed is the general
obligation which has the effect that all available cable channels are reserved for stations
identified by the Federal State.
Data protection
Due to inaccuracies and deficiencies in the German law transposing certain provisions of the
ePrivacy Directive, the Commission initiated an infringement proceeding against Germany.
The Commission’s concerns have now been addressed in the law amending the TKG adopted
at the end of 2006.
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ESTONIA
INTRODUCTION
Estonia has witnessed fierce competition on mobile markets, forcing market players to be
forward-looking and innovative. Broadband penetration is the highest amongst the new
Member States and above the EU average. These developments, coupled with the expansion
of triple play bundles, have ensured that broadband and mobile telephony continue to grow at
considerable rates. By contrast, there is no significant infrastructure competition on the
traditional fixed telephony market, where penetration levels are low.
On the regulatory side, Estonia has been late in conducting market analyses and this is
causing considerable regulatory uncertainty on the electronic communications markets.
Competition has not developed properly in the absence of effective remedies targeting,
principally, traditional incumbent networks.
Overall, there were no major changes in the regulatory environment in 2006. However,
missing secondary legislation was adopted and a few provisions of the Electronic
Communications Act (ECA) were amended. In particular, Estonia brought two areas of
legislation into line with the regulatory framework. Infringement proceedings, one concerning
the definition of relevant markets in the Act and the restriction of the powers of the NRA to
modify those markets, the other concerning the failure to maintain the SMP obligations under
the transitional regime, were closed by the Commission in the spring and summer
respectively.
However, Estonia is far from finalising the market analysis process and is having difficulties
with implementing the final measures. The number of appeals and the length of the appeal
procedures are still seen as a big obstacle to the practical application of the regulatory
framework.
The Estonian National Communications Board (ENCB) seems to have sufficient powers to
perform its regulatory functions efficiently. Market operators consider the NRA an impartial,
independent and transparent regulatory authority. However, the NRA’s reported limited
resources seem to have played an important role in delays in the completion of market
analyses. Furthermore, the question whether the NRA has sufficient powers and adequate
financial penalties remains to be examined.
The legal uncertainty about SMP obligations based on the old regime has been successfully
exploited in court by the operators concerned, with negative consequences in a number of
cases. For example, ENCB was not able to impose bitstream access because of a successful
lawsuit by the incumbent. In only one case have the courts of first and second instance ruled
in favour of the NRA’s attempt to regulate the incumbent’s home tariff package. In line with
its standard practice, the incumbent appealed against the verdict of the Court of Appeal.
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However, at the time of writing it was still uncertain whether the court of highest instance
would proceed with the matter.
The large number of appeals has again proved burdensome and time-consuming for the NRA.
Some of its decisions have been suspended.
On the other hand, cooperation with the National Competition Authority (NCA) is covered by
a specific protocol and has been proceeding satisfactorily. The current penalty threshold
which can be imposed by NCA for non-competitive behaviour is set at €30 000 and can rise to
€16 million in the case of repetitive breaches.
Decision-making
ENCB was very slow in notifying its market analyses in 2006. At the time of writing this
report only two analyses had been notified, covering the markets for mobile call termination
(market 16) and wholesale broadband access (market 12). This places the Estonian NRA
behind all other NRAs in this respect and led the Commission to launch an infringement
proceeding against Estonia.
On market 16 the NRA introduced a glide path approach based on international
benchmarking. During the glide path, the NRA is developing a cost model based on bottomup LRIC that it intends to apply for the next review period. However, two alternative
operators have appealed against the remedies imposed on mobile network operators (MNO)
and to which the incumbent consented, and ENCB’s decision has been suspended by the
court. On market 12 three market players agreed with the market definition, whereas the
incumbent objected to the conclusion of the market analysis and designation of SMP, stating,
inter alia, that there are separate local markets where there is either effective competition (in
urban areas) or new and emerging markets are being formed (in rural areas). The final
decision has not yet been enforced. ENCB decided that it would not be enforced until after the
Commission services had been consulted on the draft decision on market 11 (LLU market),
since price regulation on both markets is considered interrelated to a certain degree. The
incumbent plans to appeal against the final decision on market 12 if the suggested price
regulation is maintained.
Old SMP obligations, although very limited in their scope and of transitory nature, remain in
force until the completion of market analyses but at the latest until the end of 2007. Although
such transitional provisions are envisaged by the regulatory framework, this raises concerns
with the Commission services given the slow speed of the entire process.
Despite the shortcomings of regulation, the Estonian market is continuing to develop rapidly.
Alternative operators are key investors in new infrastructure. Fibre, Ethernet, WiMAX and 3G
are key technologies. 3G networks cover only limited parts of the three biggest cities. Two
alternative MNOs started providing 3G services on a trial basis in Tallinn in 2006 and are
now slowly expanding elsewhere. Fibre-optic cables cover a significant part of the territory of
Estonia, while direct undersea connections with Sweden and Finland and links to
neighbouring Russia and Latvia guarantee high-quality international communications.
Wireless local loop (WLL) services have been rolled out, mainly in 2006, and are now
available in 11 counties. Apart from WiMAX technology, which is currently present in
limited rural areas, services based on a technology using the 5.2 GHz frequency band are also
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available to consumers. Ethernet is developing, mainly in new residential apartment areas. In
addition, the government endorsed a programme which aims to improve access to permanent
internet connection in sparsely populated rural areas, thereby guaranteeing quality internet
coverage of 90% of Estonia’s territory. This would guarantee permanent internet access on
the same conditions as in densely populated areas. At the moment, over half of Estonia’s
territory is already connected with facilities stemming from that programme.
The Estonian market is showing the first signs of convergence between the alternative
operators, with at least two companies looking into the possibility of joining forces in
providing bundled services.
The NRA organised tenders for allocating frequencies during 2006. One authorisation to
provide network services based on broadband technology in the 450 MHz frequency band and
the fourth UMTS licence were granted recently.
BROADBAND
Market situation
Broadband penetration is the highest
among the new member states
25.00%
countries and has grown by more than
20.00%
17.20%
5 percentage points since October
15.00%
2005. Relative growth was also more
12.06%
8.62%
marked compared with the previous
10.00%
year, despite the regulatory deficit on
5.00%
xDSL markets. There is strong
0.00%
competition, mainly due to the
2004
2005
2006
presence of cable operators (24.32%
market share), while some operators,
including the incumbent, have also rolled out fibre-to-the-home (FTTH), which has a 16.79%
share among broadband technologies.
Estonia - BB lines by technology/means
Local access network (LAN), using the
Ethernet protocol, is developing mainly
in new residential apartment areas and
is in direct competition with the rollout of cable by alternative operators. In
the xDSL segment only 2.4% of all
connections are based on LLU, while
the market share of the incumbent
remains unchallenged at 97%. There
are few resellers of xDSL services,
while 0.5% of all broadband
subscribers choose to use the
alternative PSTN network provided by
the incumbent’s rival. The incumbent has strengthened its overall position on the broadband
market compared with October 2005 and has increased its market share from 53% to 54%.
Estonia BB penetration
109153
NE Other (ow n PSTN
netw ork, Resale);
1 143
Inc. Fiber to the home;
15326
Inc. Other (WLL, LAN);
1521
NE Full ULL; 2700
NE LAN; 15949
NE WLL; 5781
23502
NE Cable modem;
56 249
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Bitstream access is not likely to become available to alternative operators until 2007, since the
market analysis was not notified until November 2006. In the meantime, alternative operators
with less investment capabilities are forced to focus on reselling the incumbent’s xDSL
product.
Despite several interventions by ENCB, the existing reference unbundling offer (RUO)
provided by the incumbent does not seem to be in line with Regulation 2887/2000 on LLU. In
spring 2006 the Commission launched an infringement proceeding in this regard.
Furthermore, it seems that the alternative operators are affected by the incumbent’s slow
response to provide technical information about available local loops, while delivery times for
elements and services are also considered too long. Moreover, the time for upgrading LLU in
order to deliver xDSL services varies vastly between self-supply and supply to alternative
operators. Only remote co-location is available in Estonia. At the same time, prices for full
LLU and shared access seem to allow the incumbent to exert some price pressure, which
gives it an edge in the race for new customers. For example, mere rental of a copper pair plus
the relevant fraction of the connection fee cost €8.95 without VAT, while in September 2006
the incumbent’s bundled voice and internet retail rental for new customers stood at €12.46.
Similarly, in autumn 2006 the incumbent challenged its competitors with a highly attractive
triple play offer, which provided new customers with voice, data and video services for
€25.24. Towards the end of 2006 the incumbent raised the retail tariffs for its bundled
services. At the time of writing, double play was available from €16.93, while the cheapest
triple play customer package was available at €29.07.
As a result of the incumbent’s aggressive pricing policy, end-users are charged nothing for
upgrading their PSTN access link to a high-speed link.
The incumbent’s prices for access to ducts seem to impede development of the broadband
market. Together with installation costs, the prices of ducts more than quadrupled compared
with the previous year. This applies only to new ducts, since old ducts are still usually
unavailable. This longstanding issue is currently being examined by the NCA.
With regard to the leased lines wholesale offer, it appears that the incumbent is the only
network operator capable of providing services all over Estonia, while geographically the
offers of alternative operators seem to be restricted to connections between the cities. In
addition, alternative operators argue that the incumbent gives preferential treatment to its
retail unit.
Mobile markets
Market situation
Competition between operators providing networks and services in the mobile segment is far
more balanced than in other sectors, and penetration is approaching 113%. There are three
MNOs and seven active service providers. All three MNOs have UMTS licences and, together
with one mobile virtual network operator (MVNO), have also started providing 3.5G services
in Estonia’s biggest cities. When the mobile market leader launched its first 3.5G offer
(April 2006), based on HSDPA technology that supports mobile internet at a speed of up to
3.6 Mbit/s, this was only the second HSDPA network in the Nordic countries.
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The proposed regulation of the wholesale market for voice call termination on individual
mobile networks intends to bring the level of mobile termination rates (MTRs) down from
one of the highest (between €0.16 and €0.173) in EU-25 to one of the cheapest (€0.09 per
minute) by the end of 2008. Not only the proposed sharp reductions in MTRs but also the
symmetrical regulation appear highly controversial to two alternative MNOs, which have
appealed against the ENCB decision and succeeded in having it provisionally suspended.
Alternative MNOs fear that, in the absence of the relevant fixed wholesale and mobile retail
regulation, the proposed symmetrical regulation of MTRs would not reflect the actual costs of
the highly converged fixed incumbent and of the leading mobile operator. This would allow
price dumping of mobile on-net prices and cross-subsidisation of the revenue between the
incumbent’s two converged companies. Reduced profits on MTRs could eventually result in
retail price increases, since the alternative MNOs might consider passing on to end-users the
loss sustained in wholesale operations.
Fixed
Market situation
There is no significant infrastructure competition on the traditional fixed telephony market,
where penetration remains low at 33%. Some 7.6% of subscribers use alternative providers
for direct access, whereas five alternative operators using carrier selection (CS) or carrier preselection (CPS) services provide end-users with a choice.
The vast majority of network operators seem to include call set-up charges in their origination
fees. As a general rule, interconnection prices for local and single transit remain amongst the
highest in EU-25 and show an upward trend. The alternative, in particular cable, operators are
largely responsible for the incessant escalation of termination rates.
The level of CPS and CS pricing leaves alternative operators little room for a decent mark-up,
if the point of interconnection is at national level. Given the regulatory situation, one major
alternative operator ceased to provide fixed telephony services, while another key player plans
to pull out in the near future. CPS and CS seem to be viable in the long run only for
international calls.
The incumbent is continuing to promote a customer package where, after the tenth minute,
calls are free of charge. Since the ENCB’s attempt to regulate the incumbent’s offer had been
suspended by the court of first instance, the NRA appealed against the ruling to the court of
second instance. The date of the next court session had not yet been decided at the time of
writing.
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Broadcasting
Market situation
According to a report prepared for the Commission in 2006,62 some 51% of Estonian
households were using terrestrial, 8% satellite and 41% cable as the main means of receiving
TV content at the end of the third quarter of 2005. At that time, only 1.5% of all households
were using digital TV reception (mainly satellite). The commercial TV broadcasting sector
has consolidated since the late 1990s into two companies fully controlled by the Scandinavian
media. The government has announced that analogue television broadcasting should come to
an end in 2012, while Estonia is planning to develop nine nationwide plus a few regional
digital broadcasting networks.
Together with the entry into force of the ECA, the procedure for granting rights of use of
broadcasting frequencies was amended. In order to implement the new regulation, the
Ministry of Culture and the NRA developed a new procedure for granting frequencies.
Despite changes in the law, the Estonian broadcasting transmission services market is still
lightly regulated, as it has not yet been analysed by the regulator.
Spectrum management
In June 2006 a public tender for the provision of network services based on broadband
technology in the 450 MHz frequency band was organised by ENCB. The successful
alternative operator was granted an authorisation to use radio frequencies in November 2006.
Its network should provide end-users with broadband communications services with data
transfer rates of not less than 144 kbit/s. The basic selection criterion specified in the call for
tender was the speed with which the tenderer would be able to deploy a network covering the
whole of Estonia. This should ensure that wireless internet connections will be available to
end-users in the near future.
In September 2006 a public tender was announced for a fourth frequency authorisation for
UMTS. Since three frequency authorisations for UMTS systems had been granted by direct
offer to the existing MNOs in 2003, they were not allowed to participate in the tender. The
starting price for auctioning the frequency authorisation to be granted was set at
€4.47 million. In November 2006 the NRA announced the winner of the public tender, a
private equity company which was prepared to pay nearly €6.4 million for the frequency
authorisation. After the company failed to pay, ENCB decided to award the licence to the
second highest bidder.
ENCB announced that digital television frequencies are to be tendered shortly, while the
regulator is also investigating the possibility of granting UMTS authorisation in the 900 MHz
frequency band. In accordance with the Estonian frequency plan, the winner of the public
62
EN
Source: Dataxis 2006: “Digital television data, EU market for digital television”.
119
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competition for the fourth UMTS licence may also apply for the fourth GSM licence in the
1800 MHz band.
Estonia has implemented three of the four Commission Decisions on spectrum harmonisation.
Decision 2005/928/EC is expected to be implemented in the first half of 2007.
The Estonian local authorities are responsible for granting rights of way and, in some cases,
have been involved in the roll-out of networks. There are no specific procedures to ensure a
transparent and timely rights-of-way process. While local authorities impose no sectorspecific taxes on market players, the government plans to introduce non-sector-specific
taxation that would place an obligation on owners of networks and facilities to compensate for
their rights of way.
Tariff transparency
ENCB has developed a web-based price comparison service, enabling consumers to calculate
and choose the most suitable offer on the market from the tariffs of all operators.
Universal service
In July 2006 ENCB organised a public tender for designation of a universal service (US)
provider, since the existing designation was due to expire by the end of 2006. In November
2006 the alternative operator was designated for a period of five years, starting in January
2007. The designated undertaking has the obligation to provide connection to the public
telephone network as part of the US. It is under no obligation to provide comprehensive
directory or comprehensive phone directory enquiry services, nor to provide public payphone
services, since these three components are reasonably accessible to end-users at an affordable
price on a competitive basis. Additional requirements include provision of data at a speed of
up to 56 kbit/s and a fixed connection tariff for end-users set for a period of one year. No
compensation is envisaged for provision of the US.
Estonia has set up a modern and efficient network of four centralised public safety answering
points (PSAPs), all at regional level. It has also achieved a good level of coordination between
the different emergency services. Caller location information is available from both fixed and
mobile networks. Estonia has introduced a “pull” technique for caller location identification.
Number portability
Following the relatively straightforward introduction of number portability in 2005, porting of
numbers ran into considerable implementation problems during 2006. Due to an unresolved
dispute between the database manager and the NRA, based on an alleged failure by the
database manager to comply with its obligations, some 100 000 requests have not been
processed since October 2005. The Commission services are looking into the matter.
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Must-carry
The ECA imposes must-carry obligations on the SMP undertakings and cable operators only.
Cable operators are under an obligation to transmit free of charge the TV programmes of the
Estonian public service broadcaster and those of all terrestrial broadcasters received within a
cable distribution network area and compatible with the technical requirements.
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IRELAND
INTRODUCTION
The Irish electronic communications market saw competition intensify in the mobile sector in
2006. The mobile industry is already offering new 3G (3rd generation) based services (e.g.
mobile TV). Broadband penetration is still below the EU-25 average, but has improved
substantially, partly driven by the uptake of alternative platforms such as wireless local loop.
In the fixed market, alternative operators have succeeded in acquiring a visible market share
of fixed calls. The fixed incumbent has announced plans to roll out a next generation access
network and provide WiMAX broadband services in urban locations.
In an effort to speed up broadband adoption, the national regulatory authority, ComReg,
continued to tackle local loop unbundling-related problems. However, effective
implementation of remedies in practice remains an issue. While ComReg has taken a number
of regulatory initiatives in the fields of spectrum management and consumer protection, the
expected reforms of the Wireless Telegraphy Act would appear to be more than necessary.
ComReg has adopted a pro-active approach to addressing a broad range of issues, from
spectrum management to innovative services and consumer protection. However, strict
scrutiny of regulatory action by the Electronic Communications Appeals Panel (the Appeals
Panel, the Panel) and the courts, combined with the absence of a threat of tangible
enforcement measures, has meant several obligations imposed on the incumbent have not
always been applied in practice.
ComReg’s enforcement powers are very limited: it cannot impose fines itself, and the
maximum fine that can be imposed by a court upon ComReg’s request amounts to only
€3 000 (i.e. no turnover fines are possible). This legislative setting might explain in part
ComReg’s preference for softer regulatory tools, including facilitation of negotiations and
codes of practice combined with “naming and shaming”. However, as demonstrated by the
local loop unbundling (LLU) development process, consensus building, especially if not
backed by proper enforcement powers, does not always allow ComReg to achieve tangible
implementation results within reasonably short timeframes.
This situation has prompted the Department of Communications, Marine and Natural
Resources (the Ministry) to initiate legislative changes. The draft Communications Regulation
(Amendment) Bill, 2006, provides for enhanced ComReg enforcement powers by way of (a)
increased penalties; (b) new types of offences, some carrying heavy penalties; and (c)
increased powers of investigation (e.g. in order to obtain evidence). In addition, the Bill will
provide ComReg with certain powers concerning enforcement of general competition law.
Since December 2002, a cooperation agreement has been in place between ComReg and the
Competition Authority. In practice, the two institutions mostly work together in the market
review process.
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It appears that the use of Appeals Panel has set in motion a rigorous appeals process,
scrutinising all aspects of ComReg’s regulatory decisions. The time taken to hear these
appeals, combined with certain procedural aspects (such as an intermediate procedural step of
referring disputes to the Panel by the Minister), has meant that the process has proved to be
lengthy. In one appeal, which took over a year, the Appeals Panel pointed out in its decision
that, while it was alert to the guideline timescale of four months set in the Regulations
governing appeals, it was also mindful of the importance of fully adhering to the procedural
requirements and the imperatives of natural justice. Therefore, in the light of the experience
gained in this appeal, that Panel believed that the guideline timescale of four months would be
difficult to achieve, except, perhaps, in the simplest of cases. The Ministry admitted that the
appeals mechanism has not delivered on some of the initial aims, especially as regards speed
and cost of proceedings.
A general review of appeals procedures in a number of sectors (including electronic
communications) is ongoing at central government level. The creation of a special crosssector court and expanding the jurisdiction of the existing Commercial Court are among the
options under consideration.
Decision-making
ComReg has analysed and notified all the markets identified in the relevant Commission
Recommendation. As regards future developments, ComReg has planned for the second
round of market analysis notifications to start in the second quarter of 2007. However,
imposition of final remedies and their implementation is a matter of concern. In particular,
ComReg has only communicated six adopted measures of the total of 26 draft measures
notified. This is partly due to appeals. For instance, ComReg’s market analysis decision
concerning the market for wholesale voice call termination on individual mobile networks
was declared null and void in relation to one of the mobile operators. Moreover, as regards a
number of interconnection (call origination, transit, termination) markets, ComReg, drawing
on experience in the appeals procedures, has itself decided not to proceed to implementation,
and to do the analysis again on the basis of the most recent data.
In September 2006, ComReg announced a next generation access network (NGN) work
programme and is starting consultations with all the stakeholders involved. So far, the fixed
incumbent’s plans to develop an NGN are not entirely clear. However, the fixed incumbent
has already announced plans to roll out a NGN access network to 37 exchange areas covering
approximately 30% of the population.
Despite ComReg’s regulatory efforts (directions opening 076 number ranges to voice over the
internet protocol (VoIP) services and guidelines on treatment of consumers in 2005 plus a
review of the VoIP framework in 2006), the actual market uptake of VoIP appears to have
been quite slow, with the exception of large business users. It also appears that market players
are not planning a quick launch of hybrid fixed-mobile services, although one of the mobile
operators is trialling a home phone service using a hybrid fixed-mobile device.
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Broadband
Market situation
In
October
2006,
broadband
penetration reached approximately
15.00%
10.3% (compared to around 5.3% in
October 2005). However, Ireland
12.00%
10.30%
continues to lag considerably behind
9.00%
the EU-25 average (at 15.7%).
5.34%
6.00%
Broadband services are provided
2.45%
3.00%
through a number of competing
0.00%
infrastructures, with wireless local
2004
2005
2006
loops and cable playing increasingly
important roles, but digital subscriber
lines (DSL) remain the dominant technology. 34% of all DSL subscriptions are supplied by
alternative operators. Overall, the broadband market share of the fixed incumbent decreased
over the period 2004-2006.
Ireland BB penetration
As regards one of the most important
Ireland - BB lines by technology/means
Irish broadband projects - Metropolitan
Area Networks (MANs), its actual
impact on the retail broadband market
remained
marginal
in
2006.
User/consumer representatives call for
better information on their availability,
development status and use (e.g. lit or
unlit fibre). These networks also seem
to be a rather expensive connectivity
solution, partly due to the fact that
MANs are not connected nationally.
The Ministry noted that it is too early
to judge the effectiveness of MANs,
because the concession agreement with the managing company was signed only in 2004 and
the last MAN was handed over only in December 2005. However, it admitted that national
connectivity is an issue.
211897
Inc. Satellite; 343
5103
NE Full ULL; 18825
NE Shared access;
1 066
NE Cable modem;
46 861
NE WLL; 62462
86962
The Irish government is also looking into ways of extending access to broadband to the
remaining 10% of the population that is not covered by the existing broadband infrastructure
due to the lack of economic viability of providing services in the areas concerned. The
problem could (reportedly) be partly addressed by the fixed incumbent itself (in commercially
marginal areas) through its WiMAX service.
Wireless local loop operators also offer broadband (currently - 14, including the fixed
incumbent). However, availability of spectrum is a limitation to further expansion in the
Dublin area. Therefore, ComReg is currently looking at making additional spectrum available
in the 3.5 GHz band and is examining various other options, such as granting national or
regional licences rather than local area licences.
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A faster increase in broadband penetration in Ireland appears to be held back by a lack of real
progress in LLU penetration. The main LLU-related issues still persisting include (a) absence
of seamless migration from various wholesale products of the fixed incumbent to LLU (even
though seamless migration is already ensured between, for example, two bitstream operators);
and (b) manual LLU-synchronised number portability solution of comparatively low order
processing capacity. These issues result in significant user cut-off periods and hinder
investments by alternative operators. The fixed incumbent maintains that it has no legal
obligation to create migration possibilities and stresses that widespread migration would lead
to a “stranded assets” situation. Apart from the manual number portability solution
synchronised with LLU, the main achievements so far include allowing WLR (wholesale line
rental) and line share on the same line. Following an industry agreement, some improvements
to the number portability solution (e.g. an enhanced electronic ordering gateway) would be
available from January 2007. ComReg is continuing to publish status updates concerning the
development of LLU.
It also appears that the classic standalone LLU product of the fixed incumbent is still suffering
from quality issues (such as delays in delivery and fault management). The monthly rental of
both fully unbundled local loop and shared access slightly increased in 2006 and total prices
(including connection fees) remain amongst the highest in the EU. In contrast, prices of
bitstream access went down substantially compared to 2005. Bitstream (close to 90 000 lines
compared to approximately 20 000 LLU lines) remains the predominant access platform for
alternative operators.
Mobile markets
Market situation
In October 2006, the mobile penetration rate reached 110%, compared to 98% in October
2005. The market shares of the three largest operators are approximately 47%, 35% and 18%
(i.e. the third operator increased its market share from 12% in 2005). All three Irish 3G
operators are quite active in deploying new services: mobile TV (actual offering or testing)
and mobile broadband (planning for immediate future). High usage of mobile data services is
a particular feature of Irish mobile markets.
There are no MVNOs (mobile virtual network operators) on the Irish market yet. Alternative
operators put this down to difficulties in persuading mobile operators that opening their
networks to MVNOs could also be beneficial to operators themselves.
As regards the mobile call termination market, all operators but one have SMP (significant
market power) status. (SMP designation of that one operator was declared null and void by an
Appeals Panel). Furthermore, asymmetric remedies apply to a mobile network operator who
is a new entrant. ComReg has not imposed any specific MTR (mobile termination rates) caps
or glide paths, taking into account the operators’ voluntary reductions effective from January
2006 and their voluntary undertakings to further reduce MTRs in January 2007.
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As regards the mobile access market, the Appeals Panel decided by consensus between
ComReg and the other parties to annul ComReg’s decision to jointly designate the two
incumbents as SMP operators. ComReg is in the process of re-analysing the market.
Fixed
Market situation
The incumbent’s market share (measured by revenues) in the fixed telephony market
remained slightly above 70% in 2006. However, 24% of subscribers already used an
alternative provider for voice telephony services (the majority of which were carrier preselection (CPS) and WLR operators).
In 2006, one alternative operator dropped out of the CPS/WLR business. This followed a
commercial dispute and the eventual withdrawal of associated wholesale facilities by the
fixed incumbent. ComReg intervened to arrange a temporary connectivity solution for the
affected end-users. Some alternative operators partly attributed this business failure to the
tight CPS/WLR margin.
In general, ComReg has chosen a full set of obligations. In the fixed call termination market,
ComReg decided to impose an FL-LRIC (forward-looking long-run incremental cost) based
cost orientation obligation on the fixed incumbent and benchmarking for alternative operators
with SMP in this market. However, final measures were not adopted in 2006.
Alternative operators are concerned about the high retail price for rental of the fixed
incumbent’s lines, which directly reflects on the prices of the fixed incumbent’s wholesale
products. The fixed incumbent explains that the high price is due to such factors as the scarce
territory population pattern in Ireland, geographical averaging and the increase in copper
prices. In August-September 2006, ComReg consulted stakeholders on a retail price cap as a
remedy on fixed narrowband access markets. It remains to be seen how this price cap will be
structured and whether the rental price will come down as a result.
Broadcasting
Market situation
Ireland appears not to have finalised its digital terrestrial TV plans yet and has not made
known the digital switchover date. Nevertheless, trials with digital terrestrial broadcasting are
ongoing. Some market players questioned a business case for digital terrestrial broadcasting,
referring to the rapid uptake of cable and satellite digital programmes (generally, Irish users
are quite evenly spread between terrestrial (42% of households), cable (31% of households)
and satellite (27% of households) platforms63). Only one alternative operator provides (on
demand) IPTV. In 2006, the fixed incumbent started live simulcasting of sports content to its
broadband customers. An additional video-on-demand service allows seven-day access to
recent programming.
63
EN
According to the report by Dataxis “Digital television data: EU market for digital television”
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Spectrum management
Slow progress of reform of the Wireless Telegraphy Act is a continuing issue of concern. As
long as the current legislative framework is in place, ComReg will find it difficult to adopt
modern approaches to spectrum management (e.g. spectrum trading) on a large scale. Other
legislative initiatives seem to have higher priority in Ireland. In the meantime, the current
terminal-based approach seems readily enforceable (unauthorised equipment is easier to
detect and use as evidence than unauthorised use of radio spectrum).
The National Table of Frequency Allocations for Ireland (the 2004 version, which is the most
recent one) does not reflect the allocation of radio spectrum for the uses provided for by the
Commission’s radio spectrum harmonisation decisions. Moreover, no secondary legislation
(regulations on licensing or licence exemption) appears to be in place to ensure
implementation of these decisions. The Commission services are looking into this matter.
ComReg has still to deal with the award of the fourth 3G right of use for radio frequencies. In
February 2006, ComReg withdrew its offer of a 3G licence to an operator on grounds of
inadequate security for performance of licence obligations. In October 2006, the High Court
upheld ComReg’s withdrawal decision. ComReg has announced its intention to offer the
fourth 3G right of use to the second-placed operator in the original auction - the fixed
incumbent. One of the conditions attached to the right of use for radio frequencies of a 3G
operator is the obligation to meet reasonable access requests concerning its network at a
“retail minus” price, which apparently goes beyond the conditions which may be attached to
rights of use for radio frequencies under the Authorisation Directive. The Commission
services are looking into this matter.
Many market players praised ComReg for its flexible and attractive trial licences regime. An
interesting and useful initiative is the coordination between Ofcom (the UK national
regulatory authority) and ComReg of their respective procedures in issuing spectrum
authorisations covering the whole island. On the other hand, some market players criticised
ComReg for launching (in August 2006) an auction in the 26 GHz frequency band (fixed
links) at what they considered to be a very high entry level price. ComReg is currently
exploring a number of alternative approaches that would allow the market to determine the
appropriate value of the spectrum.
Many market players complain about the lack of consistency and predictability in the way
rights of way are granted by local authorities of different counties. On the other hand,
decisions of local authorities granting rights to place infrastructure on public roads seem to be
effectively scrutinised and, if necessary, corrected (albeit with a delay and at additional cost)
by the special appeals board. The Department of the Environment and Local Government is in
the process of drafting development management guidelines for planning authorities, which,
while not dealing specifically with rights of way, are intended to ensure consistency in the
planning process.
The fixed incumbent highlighted the practice of some property developers of entering into
exclusive contracts for the provision of electronic communications services to future residents
of their sites with alternative operators, which, as a result, prevent the fixed incumbent from
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fulfilling its universal service obligations. At present, ComReg cannot apparently mandate
facility sharing where the relevant infrastructure is not owned by an electronic
communications service provider, because the owner would not hold an authorisation from
ComReg. A provision in the forthcoming Communications Bill will enable ComReg to
enforce any decision it makes on physical infrastructure sharing against other undertakings,
such as property developers. In any case, in its July 2006 Response to Consultation on the
Future Provision of Telephony Services under Universal Service Obligations, ComReg
specified procedural steps that should be taken by the fixed incumbent in order to demonstrate
the reasonableness of its efforts to meet requests for connections to its network.
Tariff transparency
ComReg continued to be active in promoting consumer interests in 2006 (e.g. expanding its
mobile tariffs comparison internet site to include fixed and broadband services, organising
briefings to operators, awareness campaigns at public events, advertising campaigns, and
issuing consumer guides).
The work of the joint Ofcom and ComReg working group on mobile roaming has resulted in
the availability of a wide range of tariff options, effectively offering all-island rates, in
Ireland.
Universal service
In July 2006, ComReg redesignated the fixed incumbent as the universal service provider
until June 2010. This redesignation concerns the full set of universal service obligations with
the exception of the directory enquiry services, which, in ComReg’s judgment, are provided
by a number of operators on commercial basis. The fixed incumbent has made a formal
request to ComReg for compensation of the net costs involved in meeting these universal
service obligations.
Moreover, ComReg has established a Forum to promote greater attention to the needs of
disabled users among electronic communication service providers. This Forum is attended by
both operators and leaders of groups representing disabled users.
In 2006, an infringement case was opened against Ireland on the grounds that, contrary to the
requirements of Article 26 of the Universal Service Directive, caller location information was
not available to emergency authorities in Ireland for calls made from mobile phones.
However, the case was later closed after the Irish authorities had informed the Commission
that caller location information was available in a pull mode, i.e. on request. The Ministry is,
however, in the process of examining the deployment of a more sophisticated 112 caller
location (push) system. Market players are concerned with the financing of this system.
Furthermore, as a parallel initiative, an industry steering group is exploring ways of replacing
the current manual 112 caller location system with an automatic one.
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Number portability
The Commission services are examining whether the current mobile number portability
regime works against new entrants, because (a) agreements with all operators are necessary in
order to join the system, which takes quite a lot of time; and (b) the charge – €20 per port (one
of the highest in the EU) – disproportionately affects new entrants, which by definition have a
smaller customer base. Nevertheless, approximately 690 000 mobile numbers were ported in
2006, compared to 330 000 ported mobile numbers in 2005.
Data protection
The Irish unsolicited marketing calls opt-out register (launched in July 2005) did not initially
contain subscribers who had earlier elected not to have their details accessible through the
publicly available directory services. Upon direction by ComReg and the Office of the Data
Protection Commissioner, such ex-directory numbers were included in October 2006.
According to the data provided by ComReg, approximately 860 000 numbers are in the
database.
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GREECE
INTRODUCTION
The Greek electronic communications market presented a contrasting picture in 2006. While
there was intensive competition and consolidation in the mobile sector, the fixed incumbent
maintained its position as the only access network provider on the fixed market. Also,
regulatory and policy measures are being taken to address the poor broadband penetration
record.
Greece was the last Member State to notify measures transposing the European regulatory
framework into its national legislation, and the national regulatory authority devoted a lot of
energy to catching up on market reviews and has issued a number of regulations as part of its
obligations under the new law. In the meantime, as during previous years, legal uncertainty
remains an issue in several areas as a result of ongoing disputes and the length of time
involved in appealing decisions.
The long-awaited transposition of the regulatory framework was completed with the adoption
of Law 3431/2006 on Electronic Communications and Other Provisions which entered into
force in February 2006, while Law 3471/2006 adopted in June transposed Directive
2002/58/EC on the processing of personal data and the protection of privacy in the electronic
communications sector. Although the new regulatory environment brought considerable legal
certainty to the market, it still lacks some of the necessary secondary legislation which should
have been adopted 6 months after the entry into force of the new law. The Commission has
still one infringement proceeding against Greece for non-transposition of the regulatory
framework, with regard to broadcasting services that were explicitly excluded from the new
national law. The Commission services are following up this matter and is also now looking
into the missing secondary legislation cases.
Following transposition, the Greek NRA (EETT) issued regulations in five areas: public
consultation procedures, general authorisations, use and assignment of rights of use for radio
frequencies under general authorisations, antenna construction and terms of use for individual
radio frequencies or radio frequency bands.
In an effort to catch up with implementation, EETT launched a large number of parallel
public consultations and market analyses. In addition, it called for comments on the secondary
legislation to be submitted to the Ministry of Transport and Communications (e.g. on general
licences, spectrum trading, the national numbering plan, universal service and masts).
As indicated in previous implementation reports, there have been delays in submission of
regulatory accounting data from the incumbent to the NRA. EETT has been setting temporary
wholesale tariffs until the incumbent has proved, or the external auditors have calculated, cost
orientation. This can result in a situation where temporary prices apply for more than a year
until cost-oriented prices are approved. Alternative operators are then asked to modify their
payments retroactively for the period concerned, which may have obvious adverse cash-flow
consequences. A high fine was imposed on the incumbent for delaying submission of data for
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2005. Currently the NRA is examining whether the margin for the provision of broadband
services is being squeezed and whether prices for 2006 are cost-oriented.
EETT has analysed and approved a series of mergers and acquisitions, including the takeover
of the smallest mobile operator by one of the larger ones and the purchase of the biggest chain
of electronic communications retail products by one of the leading mobile operators.
The new law has assigned to EETT guarantees of personal and functional independence. The
adoption of the new law brought changes to the appointment of EETT’s board. The President
and two Vice-Presidents are now selected by the Council of Ministers following a
parliamentary hearing, no longer by the qualified majority-voting of the Conference of the
Presidents of the Parliament. Alternative fixed operators considered that the new law makes
EETT more vulnerable to political influence and less independent.
EETT is a self-funded regulator. It imposes administrative fees on all undertakings, which are
used to cover its total expenses, while 30% of the receipts is saved in a reserve fund. EETT is
able to impose fines ranging from €7 000 to €2 million in cases of breaches of the national
electronic communications law. EETT is also the competition authority for electronic
communications and these fines may be considerably increased when EETT is exercising its
competences under national or EC competition law. In this case additional fines may be
imposed up to 15% of the undertaking’s annual turnover.
The new law provides for 220 permanent employees (currently, there are 136 permanent
employees). Vacancies are currently being covered by experts’ working groups. EETT would
fulfil its missions in a more efficient way if all posts were effectively budgeted and allocated.
As far as operators’ expectations towards EETT are concerned, all have stressed the
importance of timely decisions resulting from hearings (EETT claims that, on average, four
months are needed for issuing a decision) and of the transparency in the publication of these
decisions. Fixed alternative operators referred to long delays in EETT’s decision-making
claiming that on a number of cases, decisions on hearings were pending for more than a year.
Given the requirements following the late transposition of the regulatory framework,
operators complained about both the number of parallel consultations and the tight deadlines
imposed. They considered this as a “missed opportunity” of proper debates which would have
resulted in better implementation. The incumbent called on EETT to apply clearer and longerterm policies that would encourage operators to invest in infrastructure instead of simply
reselling. Alternative operators have called on EETT to intervene with regard to restrictive
conditions imposed on them by the incumbent with regard to co-location and LLU.
Operators continue to express frustration about the lack of any decision by the highest
administrative court, the Council of State (to which appeals against the NRA decisions are
made), with some decisions pending since 2001. A negative side-effect of this delay has been
the avoidance to adhere to obligations, mainly imposed on the incumbent, on the grounds that
final decisions on appeals were pending. In an attempt to improve the appeal system, the
newly adopted law made provisions for appeals to the Administrative Court of 2nd Instance.
Alternative fixed operators expressed concern about a decision of the Council of State that
this provision of the law was unconstitutional. The Commission services are looking into this
matter.
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Regarding out-of-court disputes resolutions between undertakings, the NRA can adopt interim
measures at operators’ request prior to final settlement of the dispute only in specific cases
(irreparable damage or public interest reasons). Obtaining an interim measure can take three
days, but the subsequent decision can take several months. Disputes mostly concerned C(P)S
win-back practices and alternative operators’ debts to the incumbent and vice versa.
Disagreements regarding interconnection services on the incumbent’s network intensified
switch-off threats, sometimes leading to actual interruptions of interconnection services.
EETT has been calling on the parties respectively not to interrupt the service64 and to provide
letters of guarantee for a set amount.
Decision-making
Due to the late transposition of the legal framework, EETT was not able effectively (and
formally) to start the market analysis and notification process until early in 2006 and managed
to notify and propose remedies for sixteen relevant markets. The law gives EETT no specific
responsibilities for the analysis of the broadcasting transmission services market (market 18).
In general, EETT has imposed the full set of regulatory obligations. Some operators claimed
that the proposed remedies did not reflect the problems identified in the analysis of some
relevant markets. Some also complain that non-implementation of the obligations imposed by
OTE (for example, for cost-accounting separation and broadband retail offers) was creating
difficulties and uncertainty in the market.
Despite EETT’s efforts to improve enforcement of remedies, in view of the time taken for
appeal decisions and the scope of the EETT’s powers to impose financial sanctions, the
effectiveness of the remedies is still open to question.
Broadband
Market situation
The broadband market in Greece
comprises mainly xDSL lines with a
limited number of wireless and fibreoptic connections. There is currently no
cable-based broadband infrastructure.
Greece BB penetration
5.00%
4.00%
3.32%
3.00%
The total number of broadband lines
rose from 112 258 in October 2005 to
1.00%
0.30%
369 653 in October 2006, an increase
0.00%
of 229%. This growth can be attributed
2004
2005
2006
mainly to the decrease in ADSL retail
prices, to the doubling or even tripling
of ADSL speeds at the old prices and to operators’ aggressive advertising campaigns. As a
result, the penetration rate for retail broadband access increased considerably to 3.32%.
Broadband seems to be becoming a higher priority for Greek businesses and consumers.
2.00%
1.01%
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It must be noted that at one occasion the incumbent cut off interconnection despite EETT’s provisional
order.
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Compared with the EU-25 average of 15.7%, however, the penetration rate for retail
broadband access in Greece is still the lowest in the EU.
The incumbent’s market share of retail broadband connections at the end of September 2006
was 63.7% compared with 73.6% a year earlier. Its DSL lines increased from 82 002 in
October 2005 to 234 304 in October 2006.
There has been a considerable increase
in LLU lines, from 5 413 in 2005 to 13
463 in 2006. EETT expects this growth
to continue and actually to accelerate
sharply as a result of the rapid increase
in the number of physical co-locations.
Following the 2005 audit of the
incumbent’s costing system, the
monthly fee for shared access was cut
from €4.05 to €2.08 while the monthly
fee for fully unbundled loop was raised
slightly from €8.10 to €8.70.
Greece - BB lines by technology/means
234304
Inc. Other (other
access, Satellite);
1 226
NE Other (L.L., WLL,
Fiber to the home);
2 077
NE Full ULL; 7752
118583
NE Shared access;
5 711
Bitstream access lines recorded the
biggest increase (from 23 069 lines in 2005 to 118 583 this year). Other technology platforms
have also been used by operators to provide broadband. Wireless local loop increased by
4.8% and new entrants’ leased lines increased by 8.6% this year. Fibre-to-the-home
technologies have entered the market with 480 access lines (1% of all broadband lines).
EETT has made great efforts on construction of co-location facilities for the alternative
operators at the incumbent’s local exchange. At the same time, the incumbent has also
included increased broadband penetration as one of its main targets. The number of sites
where physical co-location was offered increased from one (October 2005) to 30 (October
2006) and was expected to reach 150 by early 2007. Distant co-location is now available at 48
sites. In line with the efforts to encourage broadband infrastructure, in July 2006 EETT also
organised an auction of a fourth 10-year WLL licence for development of WiMAX
infrastructure in the 3.5 GHz band. The undertaking awarded the licence has to provide its
services to 20% of the population in each of the seven geographical regions of Greece. The
project must be completed in four years.
New services are now becoming available to Greek consumers, including VoIP (at least from
four operators), triple play, HSDPA and IPTV services with ADSL and LLU broadband
connections.
The government launch of the DIODOS project to facilitate cheap ADSL internet access for
all higher education students was a great success, in terms not only of the number of ISPs and
network operators taking part but also of the immediate market interest, with ADSL prices
decreasing considerably.
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Regulatory issues
EETT found that the incumbent operator had nearly 100% of the low-speed narrowband
access market and imposed a remedy to force it to rent out wholesale lines.
In September the incumbent submitted to EETT its draft reference unbundling offer (RUO) to
update the existing RUO which has been in place since 2001. Both the RUO and the
broadband reference offer had been put to public consultation by EETT at the time of writing.
Many operators have complained about not having clear guidelines and about facing obstacles
to co-location in the local exchanges of the incumbent, limits on the number of loops made
available and the lack of a service level agreement.
Mobile markets
Market situation
The mobile telephony market is continuing to grow. The number of active subscribers reached
11.1 million in October 2006. The mobile penetration rate stands at 100%, a significant
increase from 89% a year earlier. There are four mobile providers serving the Greek market.
At the end of September 2006 the leading mobile operator had 40.52% of the market in terms
of number of subscribers. Its main competitor had a market share of 30.83% while the third
and fourth mobile providers had a combined market share of 28.65%.
Availability and take-up of 3G services and mobile broadband products and services have
continued to increase. Three of the four mobile operators have both 2G and 3G licences, while
the fourth has only a 2G licence.
Regulatory issues
The mounting competition on the mobile market was identified by EETT in its notification of
the access and call origination market for public mobile telephone networks (market 15)
which found this market effectively competitive.
Concerns were raised by the mobile operators about the analysis of the voice call termination
market on individual mobile networks (market 16). EETT notified this market three times
before it adopted final measures. The mobile operators expressed dissatisfaction with the tight
(10-month) glide path imposed for convergence of mobile termination tariffs towards cost
orientation.
Since November 2006 a special levy has been imposed by law on post-paid mobile
subscriptions which increases in proportion to different levels of monthly bills. Mobile
operators consider this to be indirect taxation that could distort competition since no similar
tax is imposed on fixed bills.
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Fixed
Market situation
The national fixed calls market is still deemed to lack effective competition. As can be seen
from the graph, the incumbent is still very strong on the fixed calls market with a market
share of 74.01%. Following a sharp decline in previous years, the incumbent’s market share
has stabilised. More specifically, the incumbent maintains a high market share in local calls
with 78.4% this year (down by 3 percentage points on the previous year), 73.1% in longdistance calls (down by 1.5 points) and 73.6% in international calls (up by 5 points). The
incumbent’s share of the market for international calls decreases significantly if calls via prepaid cards are taken into account.
There were 82 fixed voice telephony operators (data not comparable with previous years
given the change in the authorisation regime). Fourteen operators are offering fixed voice
telephone services over a leased line or their own network. These include the incumbent but
not operators acting as resellers or suppliers of pre-paid services.
Interconnection charges for call termination on the incumbent’s fixed network remained
stable for single transit (€0.89 in October 2005 and €0.86 in October 2006) and decreased for
double transit, from €1.30 to €1.10.
Regulatory issues
Delays in the approval of interconnection charges by EETT, due to late submission of data by
the incumbent, has caused frustration on the part of the alternative fixed operators and created
instability on the market. Interconnection rates for 2005 were published in June 2006 with
EETT setting temporary charges. Operators complained that they had to cover retroactively
the difference between the temporary charges and the higher prices set by EETT, otherwise
they faced threats of service interruption by the incumbent. It is hoped that a new costaccounting methodology adopted by EETT will solve this problem.
The current Reference Interconnection Offer (RIO) has been in place since 2003. The
incumbent intended to submit its new RIO once the final decision was taken on the relevant
market for call termination on individual public telephone networks at fixed locations
(market 9).
In 2006 there are 935 000 activated carrier pre-selection (CPS) lines. The issues identified in
last year’s implementation report were addressed in 2006 when EETT adopted changes to the
existing CPS system. The previous asymmetrical CPS procedures have now been replaced by
a system in which consumers migrating to an alternative operator are asked to submit the
deactivation application to the incumbent and not to the pre-selected provider. The incumbent
would reject any application to reactivate an old subscription submitted earlier than two
months before the deactivation date. This measure is seen by EETT as discouraging early
win-back. Alternative fixed operators were unhappy that the new system gave the incumbent
the possibility to follow win-back practices after two months and considered that there was
inappropriate exchange of information between the incumbent’s C(P)S and marketing
departments. An investigation carried out by EETT was not finalised at the time of drafting
this report.
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Broadcasting
Market situation
At the end of the third quarter of 2005, 94.3% of all households (around 4 million households)
had analogue TV as the main means of reception of TV services, while a small percentage
(5.7%) had digital satellite TV.65 No cable TV is offered in Greece. Digital switchover is
expected to take place after 2010.
Regulatory issues
As indicated above, the Greek authorities have not yet notified the broadcasting transmission
services market (market 18). The new law gives no relevant powers to the Greek NRA.
Discussions are being held in Greece about which authority will define and analyse this
market (the NRA or the Ministry of Press and Mass Media). The Greek authorities announced
that the regulatory framework would be transposed in a new media law as regards
broadcasting services. The Commission is looking into the matter.
Spectrum management
In March 2006 the Greek authorities adopted the new national regulation for the allocation of
frequency zones. A preliminary assessment suggests that Greece is now in compliance with
the Commission Decisions on radio spectrum harmonisation.
Administrative charges imposed by EETT produced a surplus in EETT’s accounts.
The newly adopted law includes provisions for improving the rights of way system in Greece,
where any authorisation to install base stations or masts for mobile or fixed wireless
communications has been completely blocked since March 2005. The law paves the way for
secondary legislation in the form of a Ministerial Decision to define a uniform procedure to be
applied by all local authorities involved and a Regulation to set the fees to be paid. Both
legislative acts were still pending when this report was being drafted although they should
have been adopted the latest six months after the entry into force of the new law.
All operators have stressed that there has been no improvement with regard to the various
issues with granting rights of way identified in last year’s implementation report. Moreover,
mobile operators have claimed that an increasing number of licensed antennae are being
deactivated by local authorities on the grounds of unspecified health and environmental
concerns.
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EETT has been collecting input from all parties involved in order to submit proposals for a
Ministerial Decision to the Ministry of Transport and Communications. The Commission
services are looking into the rights of way issue.
Authorisations
EETT adopted a regulation on general authorisations in June 2006.
Network roll-out
Major developments on network roll-out in the Greek electronic communications sector
seemed to be under way at the time of writing. In November 2006 an alternative fixed
operator signed a commercial agreement with a provider of wireless communication services
and networks that allows the operator to use the provider’s extensive WiMAX network.
Another alternative operator has announced plans to launch ADSL services reaching up to
4 Mbps based on LLU. One of the main ISPs has announced that rapid progress is being made
with construction and roll-out of its own fibre-optic network and that it is aiming at covering
160 km by 2007. Services on this network were scheduled to begin in December 2006. A
mobile operator has announced plans to invest in developing WiMAX networks, while
another operator has expressed interest in entering the fixed market.
The Greek government’s Broadband Access Development in Underserved Territories project
aiming at co-financing broadband investment for local access across Greece (excluding
Athens and Thessaloniki) is currently underway. Interested operators had submitted their
proposals at the time of writing. This broadband access development project will be cofinanced by EU Structural Funds and the new broadband infrastructure will be built on an
“open access” model. The project is expected to be completed by the end of 2008 with
geographical coverage reaching 60% (against 13% in 2006) and population coverage 90%
(against 60% in 2006).
Universal service
Following adoption of the new law, the incumbent remains the Universal Service (“US”)
provider for a transitional period until the new designation is made. EETT has carried out
national consultations on various aspects of universal service provision. EETT’s proposals are
to be submitted to the Ministry of Transport and Communication and to the Ministry of
National Economy for a Ministerial Decision.
In May 2006 the “US” provider completed printing and publication of the first issue of the
USO printed telephone directory which includes both fixed and mobile numbers and covers
all of Greece. All post-paid and pre-paid customers are included in the directory except those
who have opted out. The Commission has therefore closed the infringement proceedings
concerning the lack of a comprehensive US directory.
Regarding national directory enquiry services, agreement was reached between two of the
mobile operators and the incumbent on a dispute relating to access by operators to the
universal database, the relevant costs for providing their subscriber data for the
comprehensive directory and the technical specifications for subscriber data.
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Although the single European number (112) is operational in Greece, no caller location is yet
available to emergency services, neither from fixed nor from mobile phones. For this reason,
the Commission opened infringement proceedings against Greece in April. The Greek
authorities replied to the letter of formal notice in December 2006. The Commission is
looking into the matter.
Number portability
There has been a considerable increase in ported numbers since the introduction of number
portability in Greece for both fixed and mobile numbers. In October 2006 the number of fixed
ported numbers (including non-geographic numbers) stood at 60 948 compared with 24 307 a
year earlier. Mobile ported numbers increased by 68% during the year to 141 154.
Must-carry
Despite the new law introducing must-carry obligations for the transmission of specified radio
and television broadcast channels and services, there is still no secondary legislation in place
to impose these obligations.
Data protection
On 5 July 2006 the Greek authorities notified to the Commission Law 3471/2006 on the
protection of personal data and of privacy in the electronic communications sector, which
transposes Directive 2002/58/EC.
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SPAIN
INTRODUCTION
The Spanish electronic communications market is growing fast and the broadband market
remains dynamic. Regulatory mechanisms have already made a significant impact on
competition on the market, such as growing unbundling of the incumbent’s local network or
intensive use of number portability. There are also signs of increasing competition on the
mobile market, with new players entering the market and new tariff schemes increasing the
variety of offers for consumers. Overall, consumers have benefited from falling prices since
liberalisation of the electronic communications market, and some recent measures might
improve protection of users’ rights and quality of service information.
Moreover, in 2006 Spain completed the initial market review required by the EU framework.
As a result, regulatory obligations have been updated to current market conditions, although
the full impact of implementation thereof on the market has yet to be seen. Following
adoption of the remaining secondary legislation in 2005 and completion of the first market
review in 2006, the main challenge ahead is effective implementation of the regulatory
framework. The overall financial burden and the difficulties with roll-out of networks are
considered critical barriers by operators.
Although the first market analyses were not notified to the Commission until September 2005,
the Telecommunications Market Commission (CMT) completed the review of the level of
competition on the relevant markets in about one year. The level of regulation on the mobile
market increased, while regulation on the retail calls markets was lifted. Over the last year the
CMT has been especially active on the broadband market by resolving access disputes and
launching investigations for possible breaches of local loop unbundling (LLU) obligations.
Timely CMT resolutions are essential for effective implementation of those remedies.
The division of regulatory functions between different national regulatory authorities (NRAs)
persists, even if the main responsibilities are divided between only two of them (the CMT and
the Ministry of Industry, Tourism and Commerce). Establishment of the Radio
Communications State Agency, the NRA intended to manage radio frequencies, has been
postponed until the spectrum trading policy is defined.
As mentioned in the previous report, the CMT appealed to the Supreme Court to repeal a
number of articles in a Regulation adopted in December 2004, on the grounds that it transfers
some of the numbering powers which it previously held to the Ministry. The CMT also
appealed against the Regulation of 28 July 2006, which liberalises cable broadcasting
services, for reasons connected with audiovisual powers. Both appeals are still pending.
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Following the CMT’s move to Barcelona at the end of 2005, there was a substantial turnover
of personnel, together with changes of half of the members of the Board. The CMT started to
publish quarterly reports at the beginning of 2005 and is expected to publish a monthly
telecommunications price index starting in 2007. The regulator also improved the updates to
its latest decisions on its website.
Decision-making
The most significant development was completion of the initial market review required by the
EU framework. The CMT was slow to start its market analyses but the process was completed
efficiently in about one year. The regulator notified of all the recommended markets,
including the wholesale international roaming market and the final measures on each notified
market. The impact of the revised regulatory scenario on the market remains to be seen, as
some measures have been adopted only recently or are still about to be adopted.
The CMT launched the national consultation in parallel to the consultation of the Commission
on the first three markets and on the last market notified. In general, the national consultation
by the CMT has been welcomed by interested parties. However, more transparency about
price obligations is requested by the sector, while respecting confidentiality, as in some cases
price obligations are decided directly in the final decision. More detailed consultation on
prices is perceived in the decisions concerning the mobile sector.
To a large extent, the CMT maintained existing regulatory remedies, while extending their
scope to mobile access, to further products for wholesale broadband access (IP bitstream), to
additional interfaces for leased lines or to broadcasting transmission services. On the other
hand, the CMT withdrew price obligations for fixed retail calls markets, abolishing the
previous price cap system while maintaining transparency obligations. On other markets the
decisions by the regulator led to greater regulatory certainty, such as establishment of a glide
path for mobile termination rates (MTRs) replacing the previous yearly tariff update.
Following investigation, in November 2006 the CMT finally established that the incumbent
voluntarily obstructed the provision of LLU services by alternative operators in a continuous
and generalised manner and imposed an exemplary penalty on the incumbent. The regulator
has also performed intensive monitoring, focusing on the replicability of the incumbent’s
retail offers and resolving some of the numerous disputes submitted by alternative operators
regarding failure to fulfil unbundling obligations. However, there is room for improvement in
the form of more timely decisions by the CMT in order not to adversely affect operation of
this rapidly changing sector.
The total income of the electronic communications sector in Spain grew by 9.9%.66
Investment totalled €5 581 million in 2005, which is an increase of 19.6% over the previous
year and equals the 2002 investment level. The majority of the investment was driven by the
roll-out of fixed broadband and UMTS networks with 53.9% for fixed voice and broadband,
37.1% for mobile and 9% for audiovisual. The revenue of the telecommunications sector
accounts for 3.6% of GDP, a slight increase in its input to the Spanish economy, one of the
most dynamic in the Euro zone.
66
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CMT’s Annual Report 2005.
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Operators complained about the excessive overall financial burden imposed on the sector
which, according to a study,67 in the case of mobile telephony grew from €65 million in 2000
to €311 million in 2005 (€332 million estimated for 2006) and accounts for an average of
1.86% of the mobile operators’ gross revenue, excluding corporation tax (approximately
35%), which is higher than for other sectors.
A series of mergers and acquisitions created a scenario with stronger players, such as one
main consolidated cable operator and a new integrated operator following the acquisition of
the third mobile company. Meanwhile, the incumbent has entered new markets through
acquisitions of operators and new mobile licences in other European countries and
investments outside Europe.
Very significant price cuts have been reported for both fixed communications (62.6% since
2000) and mobile (77.1% since 2000)68 to the benefit of consumers. There is a clear trend on
the electronic communications market towards bundled products with cable and some ADSL
operators already offering triple play packages. By the end of 2005 a total of 3.6 million
customers were already benefiting from a bundled offer.68 Moreover, access to content is
assuming growing importance for the provision of electronic communications services.
Following the public consultation which took place in 2005, VoIP commercial offers were
launched during 2006, although without a major impact for the moment. On the one hand,
market interest in VoIP services is low in comparison with traditional voice services. On the
other, issues such as interconnection and number portability still need to be improved for
effective implementation of nomadic services.
Broadband
Market situation
The broadband market remained
dynamic over 2006. According to data
20.00%
from 1 October 2006, broadband
penetration increased from 10.52% one
16.00%
13.88%
year earlier to 13.88%, but is still
10.52%
12.00%
below the EU average (15.69%). The
7.01%
8.00%
number of broadband lines in Spain
4.00%
exceeded 6 million by October 2006,
0.00%
with ADSL the main technology used.
2004
2005
2006
Since mid-2005 the incumbent has
gained market share in terms of lines
(from 51.5% in July 2005 to 55.8% in October 2006). The incumbent launched in 2005 its
first double play (voice and internet) and triple play (voice, internet and TVoDSL) offers,
previously provided only by cable operators. Some alternative operators followed by
launching triple play offers and high data rate internet access based on LLU in 2006.
Spain BB penetration
67
68
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Study on the telephony sector’s financial burden in Spain in comparison with other economic sectors
and other EU countries. Deloitte, October 2006.
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While the incumbent increased its
Spain - BB lines by technology/means
market share to 55.8%, alternative
ADSL operators hold 23.0% and cable
operators 20.5%. However, cable
operators seem to be having difficulties
in maintaining their market share, and
the number of ADSL lines offered by
alternative operators overtook the
number of cable lines in the course of
2006. Alternative operators have made
significant investments in broadband
infrastructure (mainly LLU and cable)
to gain direct access to customers. As a
result, the number of unbundled lines
more than doubled in the past year, with new entrants still showing a preference for shared
access. According to October 2006 data, the number of unbundled lines has also overtaken
bitstream access to become the main means of access, after cable, for alternative operators.
Despite the recent development of LLU, in a resolution adopted in November 2006 the CMT
considered that the retail broadband prices in Spain are particularly higher than the EU
average, which might explain a lower level of broadband penetration.
NE Full ULL; 336321
NE Shared access;
438484
404241
NE Resale; 221025
3387955
NE Cable modem;
1 245 015
Inc. Satellite; 4222
Fiber to the home,
Satellite, PLC, ow n
PSTN netw ork);
37 728
The 1999-2000 tender procedure for frequencies in the 3.5GHz band for the provision of
wireless local loop (LMDS) assigned no frequencies to the incumbent as it was intended to
increase competition for access services. However, in July 2006 the incumbent took control of
one of the three remaining holders of those licences, after approval by the national
competition authority which had previously blocked the operation in January 2006.
Regulatory issues
Following the analysis of the bitstream market by the CMT, the incumbent presented a draft
reference offer (known as OIBA), including regulated IP bitstream wholesale access. As some
speeds are offered only within the IP bitstream, alternative operators which already invested
in ATM bitstream are forced to migrate to IP bitstream. In an effort to improve price control
obligations, the CMT has changed the cost model for the bitstream products from a retailminus to a cost-plus model based on cost accounting data. Meanwhile, the regulator
commissioned a study in order to establish a definitive cost-oriented model for bitstream
access.
The incumbent was authorised to launch a TVoDSL service in 2005 and a high-speed
ADSL2+ broadband offer in February 2006, without an equivalent bitstream product in the
reference unbundling offer (RUO), which would have guaranteed replicability in the whole
territory. Following the CMT’s decision in July 2006, the revised obligations imposed on the
incumbent in the context of the market review establish that bitstream products shall ensure
the technical replicability of all retail broadband offers (including VoIP and TVoDSL) and not
only retail broadband internet access services. The implementation of these obligations in
practice is still to be verified.
In this respect, the CMT blocked some of the incumbent’s offers which where not replicable
by alternative operators and in some cases requested the corresponding changes to the RUO.
On the other hand, the incumbent complained about the delays in introducing new retail
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broadband offers on the market as any change requested to the RUO can take up to seven
months due to the necessary administrative procedures.
The upward trend in the number of unbundled lines seems to suggest some improvement in
the unbundling process. However, alternative operators still complained strongly to the
regulator about the incumbent’s reluctance to comply with LLU obligations. A special
monitoring unit has been established within the CMT in an effort to streamline procedures.
The RUO was revised in September 2006, reducing the monthly fee for fully unbundled lines
from €11.35 to €9.72, which is now in line with the EU average. The new RUO also
introduced some changes, such as LLU demand estimates by alternative operators and
provision by the incumbent of information about certain quality parameters and about services
which it provides to its own subsidiary to check that new entrants are not discriminated
against compared with the incumbent’s own services.
The regulator opened several enforcement proceedings concerning non-fulfilment of the
obligations established in the RUO by the incumbent. Although the first decision came a year
and a half after the investigation was opened, in November 2006 the CMT finally imposed a
very hefty fine (€20 million) on the incumbent for hindering unbundling of local loops by
alternative operators. Beyond that, the CMT has resolved a number of access disputes and
imposed fines on the incumbent when it was found to be failing to comply with RUO
obligations.
Mobile markets
Market situation
The Spanish mobile market is continuing to grow in terms of both traffic and revenue, despite
high mobile penetration (104% in October 2006), which is still above the EU average (103%).
Mobile traffic already accounts for 43% of all voice traffic.69 As far as market shares are
concerned, the pattern of the previous year more or less continued. By October 2006 the
market share in terms of subscribers taken by the incumbent’s subsidiary had slipped back to
46%, the second operator’s share had increased to 29.8% and the third operator’s had
remained stable (23.9%).
There are signs of increasing competition on the mobile market with significant price
decreases. Operators continued to compete using mobile number portability, on-net call
discounts and mobile subsidies and launched a variety of innovative tariffs, such as flat rates,
in order to retain customers and win new ones. Since the introduction of commercial UMTS
services in 2004, business users have been the main target. However, the total number of
users of UMTS services is still low.
The situation on the Spanish mobile market is expected to change shortly following the recent
entry of the first mobile virtual network operators (MVNOs) and the fourth UMTS licenceholder. In particular, following the acquisition of a majority of shares by a Nordic operator,
the fourth UMTS licence-holder launched commercial services in early December 2006.
However, the effects on the market remain to be seen, especially as regards the type of
MVNO which will enter the market.
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Regulatory issues
One of the first markets reviewed by the CMT was market 15 in the Recommendation (mobile
access market), where the NRA imposed on the three mobile network operators (MNOs),
amongst others, the obligation to provide access, on reasonable requests by third parties, at
reasonable prices. This decision was not objected to by the Commission, which instead sent a
comments letter to the Spanish regulator. Up to now a number of agreements on the market
have not required the regulator’s intervention. However, the regulator’s measure was heavily
criticised by all mobile operators, which appealed against it to the national courts.
Nevertheless, appeals do not have automatic suspensory effect in Spain.70
During the last four years the CMT has been revising MTRs on a yearly basis. However, after
the review of market 16 in the Recommendation (mobile call termination) found significant
market power (SMP) on the part of the three MNOs, an asymmetrical glide path was
established in order gradually to lower prices to cost-oriented levels (a converged price of
7 cent per minute from April 2009 on).
Fixed
Market situation
Competition has increased on this rather mature market, where fixed voice is increasingly
offered as an additional service to broadband and/or TV services. Alternative operators
attracted customers from the incumbent and new customers, based on unbundling copper lines
and cable. By September 2006 the percentage of subscribers using a provider other than the
incumbent for direct access had risen further to 13.9% compared with 12.3% the previous
year. The incumbent’s share of the fixed voice telephony retail market remained stable in
terms of revenue (69.99% in December 2005).
Regulatory issues
The CMT was the first regulator to introduce capacity-based interconnection in 2001, which
allowed alternative operators to present attractive offers, including bundled products. By the
end of 2005 more than half of fixed interconnection was capacity-based71. Other countries are
currently examining introduction of this measure. Following the analysis of the call
termination market, amongst other things the CMT imposed an obligation to offer costoriented prices on the incumbent, but just an obligation to offer reasonable prices on
alternative network operators.
Following the Commission’s observations on the scope of the remedies, in November 2006
the CMT became one of the first NRAs to impose access and transparency obligations not
only for traditional interfaces but also for Ethernet and Fast Ethernet interfaces on the
wholesale terminating leased lines market. However, interconnection and leased line prices in
the reference interconnection offer (RIO) were not modified during 2006. The latest update of
the RIO in November 2005 decreased leased line prices, although they are still above the
recommended EU ceiling.
70
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One mobile operator also introduced an action before the European Court of First Instance seeking
annulment of the Commission’s decision contained in its comments letter of 30 January 2006. (Case T109/06).
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Over the last year the number of pre-selected lines decreased by 14.5% to 2 million by
October 2006. This reduction corresponds to the increase in the number of unbundled lines,
which are currently the option preferred by alternative operators. The regulator is studying the
impact of the introduction of wholesale line rental (WLR). The incumbent operator is
interested in providing offers combining fixed access and telephone services, though
replicability should be ensured first.
Broadcasting
Market situation
Different platforms are providing broadcasting transmission services72 in Spain: cable (8.2%),
satellite (17.2%) and analogue terrestrial television (74.0%), plus the DSL-based operations
launched in 2005 and 2006. Spain has one of the highest terrestrial television market shares in
the EU. Several broadcasters are already simultaneously using analogue and digital
technologies, which use different transmission service operators at local and regional level,
but a single operator at national level.
In 2005 the government moved the deadline for regional and national switch-off to 2010,
while the local switch-off deadline is 2008. Following the switch-off, a large part of the
digital dividend is still likely to be used for broadcasting terrestrial services, as Spain has a
complex broadcasting sector with national, regional and local levels.
Amongst the measures taken in July 2005, depending on spectrum availability the government
provided for allocation of a single multiplex for mobile broadcasting services for the
transitional period. However, no tender for the assignment of frequencies has been announced
yet. The first mobile TV trials (DVB-H) have proved successful and that there is potential
demand.
Most operators providing analogue broadcasting transmission services for local TV were not
allocated frequencies for this service, which created a legal vacuum. The Commission’s
services are currently examining effective management of radio frequencies for local
analogue TV.
Regulatory issues
The CMT was one of the first NRAs to impose an obligation to provide access to the
terrestrial broadcasting transmission network of the SMP operator at cost-oriented prices,
although no operator has made use of it to date. In 2006 the SMP operator signed long-term
contracts with all seven national digital terrestrial television (DTT) broadcasters, and it will
progressively upgrade its network to meet the digital coverage conditions.
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Household penetration in the third quarter of 2005. Dataxis 2006: “Digital television data: EU market
for digital television”.
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Spectrum management
Although the Spanish legislation generally allows transfers of rights to use spectrum, the
Ministry has not yet adopted a Regulation on radio spectrum management specifying the
conditions for spectrum trading, waiting for an EU approach to spectrum management. The
fee for use of spectrum will be increased this year by the consumer price index only, contrary
to previous years. Operators complained about the excessively slow procedures regarding
spectrum, although the Ministry argues that delays have been reduced over the last year.
Spain has taken measures to implement three of the four Commission Decisions73 adopted
under the Radio Spectrum Decision to harmonise spectrum use in specific bands and has
updated the national frequency allocation plan accordingly. Decision 2005/928/EC will be
included in the next review to be published early in 2007.
As in previous years, the CMT’s operating costs were lower than the amount collected
through the administrative tax which, as provided for by the Authorisation Directive, is
intended to cover only administrative costs, although the difference narrowed considerably in
2005. In December 2005 the administrative charge was adjusted from 0.15% to 0.125% of the
operator’s gross revenue.74 However, no further reduction is expected this year.
In late December 2005 a Regulation on Telecommunication Taxes75 was adopted, which sets
the deadline and conditions for the transfer of any surpluses from the CMT to the yet to be
established Radio Communication State Agency, which was already provided for under the
General Telecommunications Law. The Commission services are looking further into this
issue.
As reported last year, the roll-out of network infrastructure urgently needs to be facilitated, as
operators are still encountering serious difficulties in obtaining rights of way due to the
numerous regulations, coupled with delays or even continuous denials from some local and
regional administrations. Although some progress was made on certain procedural guidelines
between administrations and operators in previous years and the number of mobile base
stations increased by 30% during the last year, this has produced no significant overall
improvements in network roll-out.
73
74
75
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Commission Decisions 2005/513/EC of 11 July 2005, 2005/50/EC of 17 January 2005 and
2004/545/EC of 26 July 2004.
Law 30/2005 of 29 December 2005 on the general national budget for 2006.
Royal Decree 1620/2005 of 30 December 2005 laying down the taxes established in General Law
32/2003 of 3 November 2003 on telecommunications.
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The Ministry’s website provides an on-line service enabling citizens to check the certified
electromagnetic emission values for mobile installations, which are significantly lower than
the mandatory limits. Such action has been considered necessary in view of public concern
about antennae. Coordination of local and regional administrations would also be helpful, as
the deployment of networks is a very important issue especially for wireless installations in
relation to the development of UMTS services, the entry of the fourth mobile operator and
fulfilment of the quality criteria demanded of operators. Moreover, a number of municipalities
started imposing a public domain occupation tax equivalent to 1.5% of their gross income on
mobile operators, which were previously excluded in 2003. Mobile operators refused to pay
the tax and are currently discussing this issue with the Ministry.
Tariff transparency
Consumers have benefited from the growing diversity of offers. In a move away from the
existing time and volume tariffs, flat rates for voice and data services were introduced during
the last year. In October 2006 the incumbent launched the first mobile tariff including a
monthly fee, in return for which customers benefit from free incoming calls while roaming.
Universal service
Following the public consultation and call for expressions of interest launched by the
Ministry, the incumbent operator was to be directly designated as universal service provider
before the end of 2006 since it was the only operator to express interest in accordance with the
criteria laid down. The two bundles of universal service elements as laid down in the public
consultation might have limited the number of potential operators interested in providing this
service.
In March 2004 the CMT took its last decision on the net cost for provision of the universal
service, establishing that the unfair burden condition had not yet been fulfilled. Therefore the
universal service fund shared among operators has not yet been activated. After the universal
service provider appealed against this decision, in April 2006 the Court requested the
regulator to evaluate the impact that mobile and cable communications might have had on the
net cost. At the same time, the CMT will shortly approve the net costs estimates for 2003 and
2004 along with a new methodology for calculating net costs, including the concepts of unfair
burden and market benefits, the fruit of an external study.
According to the Spanish authorities, if an operator is designated as a universal service
provider by a tendering procedure the net cost of provision of the service will always be
considered an unfair burden and therefore eligible for compensation, ending the discretion of
the CMT. The Commission services will monitor this issue.
The Spanish authorities are examining the possibility of removing directory enquiry services
from the universal service. Up to now, in order to ensure the affordability of these services,
designated operators have had to communicate prices to the regulator.
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In Spain caller location information is provided using the push technique in the entire country.
However, operators claim that the costs should be borne by the emergency services and not by
the operators as has been the case so far.
Number portability
Number portability has been widely used to attract customers, who are able to change
provider to match their needs. The October 2006 data show that Spain has the second highest
number of fixed (2 290 400) and the highest number of mobile (9 400 000) ported numbers in
the EU, with an average of 44 000 fixed and 253 000 mobile numbers ported per month
during the last year. The CMT has shared its experience on number portability with regulators
from non-EU countries. Moreover, the CMT launched a public consultation in October 2006
on the progressive shift from a decentralised to a centralised procedure for mobile number
portability, in view of certain inefficiencies in the current system and of the entry of new
players on the mobile market, which will increase consumer choice.
Must-carry
A Regulation adopted in July 200676 maintains must-carry obligations only for certain
analogue channels and for a specified period of time, i.e. until the switch-over in 2010.
However, general interest objectives do not appear to be clearly defined. Up to now, mustcarry obligations have been imposed only on cable operators in their capacity as broadcasters
and at their own request. The latest draft Audiovisual Law contemplates the introduction of
new must-carry obligations on broadcasting service providers.
Consumer complaints and out-of-court dispute resolution
The right to automatic compensation for any interruption of service, which previously applied
only to telephone users, was extended to internet users in June 2006. In March 2006 a Quality
Order was adopted laying down a comprehensive list of quality indicators for fixed, mobile
and internet access services and for provision of the universal service.
The office established within the Ministry in April 2005 to deal with users’ complaints and to
provide information on users’ rights received an average of 200 queries and 47 complaints a
day. The majority of the complaints (18%) concerned subscriptions and cancellations for
internet services, while 5.9% were about installation of a telephone connection, which should
be ensured by the universal service provider.
Premium-rate service and activation of non-requested services
In February 2006 the Ministry announced that new regulatory measures will be established in
order to protect users’ rights, in particular concerning premium-rate services and in the light
of the growing number of complaints from users about, amongst other things, activation of
non-requested broadband services and customer care.
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Royal Decree 920/2006 of 28 July 2006 approving the general regulations on provision of radio and
television broadcasting services by cable.
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FRANCE
INTRODUCTION
France remains a dynamic and competitive broadband market, with high penetration rates and
attractive prices. At the same time, several municipalities are actively involved in deployment
of fibre at local or regional level, and several regions have been granted WLL authorisations.
Regarding mobile markets, the interest declared by some market players in a fourth 3G
authorisation could enhance competition. Importantly, the French market seems fully to
embrace convergence through triple or even quadruple play offers.
Against this background, the French NRA (ARCEP) has generally submitted detailed market
analyses and is actively trying to resolve market problems emerging (see, for example, the
review of the market for wholesale SMS termination). It has also lifted remedies in line with
competitive developments. Moreover, in the case of specific issues, such as consumer
protection, mobile television or the switchover to digital broadcasting, the French government
has taken legislative initiatives.
2005 had been spent mainly on the final stages of transposition and on the bulk of the market
analyses identified in the Recommendation on relevant markets. In 2006 secondary trading of
frequency bands was put in place. The French regulator was able to adjust or even remove
some remedies on various retail markets. On the legislative side, draft laws were tabled on
consumer protection (including universal service) and broadcasting, notably in view of the
switchover to digital broadcasting.
ARCEP is actively working to improve competition and benefits to users and is generally well
perceived by industry and consumers.
Cooperation with the competition authority (Conseil de la Concurrence) seems effective.
There appears to be good cooperation with the Frequency Agency (Agence Nationale des
Fréquences) which coordinates use of spectrum.
ARCEP deals with the transmission market, while the broadcasting authority (Conseil
Supérieur de l’Audiovisuel or CSA) deals with the (television and radio) broadcasting and
content market and manages spectrum allocated to broadcasting. Daily cooperation between
the two bodies seems to pose no problem and is facilitated by a liaison group made up of
representatives from both regulators (the Groupe de Liaison ARCEP-CSA or GLAC), which
meets on dossiers of common interest, such as mobile TV, IPTV, the yet to be completed
analysis of the market for broadcasting transmission services or the merger between the two
main satellite television operators. A recent report commissioned by the Minister for the
Economy, Finance and Industry cautiously recommends bringing ARCEP and CSA closer
together to reflect convergence.
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Cooperation with the various consumer protection bodies seems constructive. However, the
large number of public and private bodies involved more or less voluntarily does not seem
conducive to transparency or efficiency.
Decision-making
ARCEP has been relatively efficient at conducting market analyses and taking the appropriate
regulatory measures. For instance, the remedies imposed at wholesale level allowed ARCEP
to lift regulation of the retail calls markets sooner than expected.
Although it took some time before the new regulatory framework was fully transposed in
France, ARCEP has submitted detailed market analyses and is actively trying to resolve the
problems arising on the market. ARCEP has normally followed the comments made by the
Commission in the Article 7 procedure.
ARCEP has submitted notification of all markets, with the exception of wholesale
international roaming (market 17) and wholesale access and call origination on mobile
networks (market 15), for which the notification was withdrawn in 2005. An analysis of parts
of the market for transmission services provided to broadcasters is still awaited despite the
Commission’s comments.
In general, ARCEP extended and enhanced the existing regulation where justified, while
recently starting deregulation of the retail narrowband calls markets. However, certain ex-ante
provisions have been maintained on the basis of the Universal Service Directive. The
regulation of narrowband access markets has been maintained (CS/CPS) and strengthened
(wholesale line rental).
For several of ARCEP’s decisions (e.g. on fixed telephony, leased lines, LLU and bitstream)
one key issue seems to be to ensure effective implementation of the cost-accounting and
accounting-separation obligations imposed on the incumbent. Implementation of ARCEP’s
decision on cost accounting and accounting separation, adopted in December 2006, is
expected to provide a general overview of the incumbent’s costs in view of ex post controls,
not least in areas where ex ante remedies have been lifted. Accounting-separation provisions
are aimed at preventing discriminatory practices in favour of the incumbent’s own activities
or unfair cross-subsidies.
According to ARCEP, the resurgence of investment and growth was “clearly evident” from
the 2005 figures (15% up on 2004), based on increasing consumption. While this figure is
contested by operators, it is true that substantial investments have been announced by
operators this year, not least in fibre. In September 2006 the first alternative broadband
operator announced a €1 billion investment (over seven years) to deploy a fibre-to-the-home
(FTTH) network, starting with Paris during the first half of 2007. A key DTTV operator
announced a €1 billion investment over five years, inter alia for deployment of WiMAX
broadband. WLL authorisations were granted to a number of operators (using WiMAX
technology) in July 2006, partly to cover citizens who do not yet have access to DSL by the
end of 2007. Mobile television trials (DVB-H) run by various industrial players in the Paris
area in 2005-2006 confirmed the interest in such services. Authorisations have been granted
by the CSA for further trials in 2006-2007.
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France seems to be firmly engaged in converging services. Mainly thanks to unbundling,
triple play offers including telephony, internet access and television and quadruple play offers
(adding mobile) continued to develop in 2006, gradually leaving behind CS/CPS models. At
the same time, fixed-mobile substitution apparently did not develop as it had in 2005.
Broadband
Market situation
The broadband market has again been
very successful and is continuing its
strong progress, with a penetration rate
of 18.96% in October 2006. France
was the EU country with the third
highest number of broadband lines,
11.9 million (October 2006), of which
94.5% are DSL lines.
France BB penetration
25.00%
18.96%
20.00%
14.74%
15.00%
10.00%
9.48%
5.00%
0.00%
2004
2005
2006
This growth builds on the development
of fully unbundled lines, which had
risen to 1.58 million by October 2006 (compared with 0.6 million at the end of 2005). France
is now second in Europe in terms of
France - BB lines by technology/means
number of unbundled lines, with
3.51 million in October 2006.
NE Full ULL; 1584853
The incumbent’s share of the
broadband market increased slightly in
2006 to 48.2% of the total retail market
(compared with 45% in October 2005)
and 51% of the DSL market in October
2006, which shows the continued
importance of the incumbent’s resale
and wholesale broadband (bitstream)
products. As in 2005, a large number
of new sites opened to unbundling are
linked to public initiatives.
NE Shared access;
1 928 280
5746532
1617023
NE Resale; 383950
NE Cable modem;
660 000
The market analysis decisions on broadband have generally contributed to improving
competition on this market. For example, ARCEP identified a relevant market for wholesale
national broadband access in 2005 and imposed specific remedies to regulate this market for
one year in order to allow checks on internal provision of wholesale services to the retail
service arm of the incumbent operator. These soft measures on the broadband national market
seem to have smoothed the transition to more infrastructure-focused regulation of broadband
access. These light measures expired in September 2006 and will not be renewed according to
a draft decision notified to the Commission by ARCEP in December 2006.
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Mobile markets
Market situation
The 2G authorisations of the two bigger mobile operators were renewed in 2006. (The third
licence will expire in 2009 and a public consultation was launched in autumn 2006 to decide
the conditions for renewal.) The mobile market in France recorded an annual growth rate of
9.4%, with 48 million subscribers on 1 October 2006 (including MVNOs). This is an increase
of 4.1 million over the previous year. Nevertheless, the mobile penetration rate in France on
1 October 2006 stood at 82% (82.6% if the overseas territories are included), which is still
well below the EU-25 average (of 104% for 2G and 3G).
Prices have remained stable for the last few years and the three operators’ market shares have
decreased very slightly. Two of them hold 82.5% of the market: the incumbent’s mobile
subsidiary 45.9% and the second mobile operator 36.6% (according to Mobile
Communications Europe, 7 November 2006). The third player’s market share has remained
stable at 17.5%. Consumer associations consider that mobile prices have not decreased
sufficiently compared with other EU countries. Information collected on tariffs for mobile
baskets confirms the relatively high prices charged in France.
Against this background, access to this market by new entrants through mobile virtual
network operators (MVNO) agreements could be crucial and indeed increased in the course of
2006. Twelve MVNOs were on the market in September 2006. While a growing number of
subscribers are joining MVNOs (11.6% of new post-paid subscribers and 6.8% of pre-paid in
the third quarter of 2006), market shares remain low at around 1.99%. While the number of
MVNO subscribers grew to 954 000 in September 2006, from 108 000 in September 2005, it
remains to be seen whether MVNOs will become effective competitors on the market.
ARCEP has approved asymmetric mobile termination rates in that the third, smaller, operator
is authorised to charge higher mobile termination rates than the two bigger operators
(including for SMS termination). Under the ARCEP decision proposed in September 2006,
the average call termination price would fall further in 2007, by about 21% for the two major
operators and by about 18% for the third, following the trend established in 2005 and 2006.
The proposed decreases are in line with ARCEP’s announcement, in late 2004, of a 50%
decrease over three years.
ARCEP had decided to renotify, by the end of 2006, its draft decision on the analysis of the
market for wholesale access and call origination on mobile networks (market 15) which had
been postponed in 2005 in order to monitor the mobile market and establish the impact of the
MVNO agreements on competition. However, in November 2006 ARCEP decided once again
to postpone its analysis after various parties declared interest in the fourth 3G licence in the
course of a public consultation on the subject. If this interest is confirmed and a fourth
authorisation is awarded, competition could further intensify in France in the years ahead.
ARCEP was also the first NRA to identify a sub-market for SMS messaging within the
market for wholesale termination on individual mobile networks (market 16). ARCEP
concluded that each mobile operator in France holds a monopoly over accepting SMS
messages from other networks and decided to impose price caps per SMS.
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Fixed
Market situation
The fixed markets are developing in France, mainly due to the growth of broadband. In
October 2006 the penetration rate was 83% for fixed lines compared with 82% the previous
year. The consolidation of operators might have had an impact on the wholesale market.
France also reported a further slight decrease in the number of PSTN lines: there were
32.4 million PSTN lines in France in October 2006.
The incumbent is still dominant on the fixed voice market, with a 70.5% market share (by
revenue) on 1 January 2006, slightly down on 2005 (71.5% on 1 January 2005). The
incumbent is owned directly or indirectly by the French state with a holding of about 33.10%.
Other shares belong to employees (3.1%) and stock market investors (61%), in some of which
the state also has shareholdings.
Most alternative operators use carrier pre-selection for providing their voice services (64% of
active operators, whereas 35.71% use carrier selection). The extension of VoIP, accounting
for about 17% of voice traffic in the second half of 2006, is, however, bringing changes to this
market.
Triple play offers, including telephony, internet access and television, and quadruple play
offers (adding mobile) continued to develop in France in 2006. This seems to be due to
unbundling in general. Meanwhile the wholesale line rental (VGAST) product offered by the
incumbent has not yet been taken up (except in the overseas territories). While alternative
operators complained that the WLR offer imposed was not yet fully operational and did not
leave enough space to develop their retail offer, commercial offers were expected to be
launched in early 2007 according to the NRA.
In a 2005 decision on fixed telephony markets, ARCEP generally imposed on the incumbent
various non-discrimination and other obligations in relation to six retail (residential and
business) fixed markets until 2008. In line with comments made by the Commission, ARCEP
decided to remove some of these obligations in 2006, in order to reflect the changing
conditions on residential fixed markets and on the corresponding wholesale markets. In
particular, ARCEP considers that the wholesale line rental (WLR) product (VGAST) ordered
in 2005 and effectively offered by the incumbent since April 2006 allows more effective and
fairer competition to develop on these markets. The cost-accounting obligation remained
untouched until ARCEP adopted the specific accounting decision in December 2006.
Deregulation at this stage of development of the markets was, however, criticised by some
alternative operators which pointed to, for example, price squeezes, lack of experience with
the accounting-separation system or the potential for abusive fixed-mobile bundling offers.
ARCEP contests this position and refers to its cost model for the provision of alternative
communications services updated in 2006.
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Broadcasting
Market situation
The breakdown of (digital and analogue) TV delivery modes to households in France can be
summed up as follows (in December 2006): around 60.5% terrestrial, 23.6% satellite, 12.7%
cable and 3.1% IPTV. Penetration by digital terrestrial television (DTTV), which was
launched in March 2005, is growing steadily and covered an estimated 65% of the population
in December 2006 (according to the CSA). While 80 to 85% should be covered in 2007,
coverage of the remaining 15 to 20% is expected to be addressed through support measures
provided for in a draft law pending before the National Assembly. (In comparison, cable is
considered to cover 40% of the population.) This is also one of the subjects discussed in the
Comité stratégique pour le numérique (digital strategy committee) launched by the French
President in May 2006. Other issues to be addressed by this committee include switchover
and the digital dividend.
Remarkable consolidation efforts were made in France in 2006. The merger between the two
formerly competing satellite platforms was finally authorised in August 2006 subject to
certain conditions. Earlier in the year, the two main cable operators had merged into a single
company.
A draft law on modernisation of audiovisual broadcasting (“projet de loi relatif à la
modernisation de la diffusion audiovisuelle”) pending before the French National Assembly
sets the switchover date at 2011, to be preceded by a gradual switch-off to be decided by the
CSA. Under the draft law, analogue free-to-air terrestrial broadcasters would be required to
cover 95% of the population with their digital terrestrial broadcasts. Their programmes would
also have to be freely available on satellite. The principle of authorisation of mobile TV
services by the CSA would also be enshrined in the draft law.
Regarding market reviews, in particular of the market for broadcasting transmission services,
ARCEP decided that only the market for infrastructure-based terrestrial TV broadcasting
transmission services between transmission services undertakings was subject to ex-ante
regulation, but did not analyse the market for transmission services provided to broadcasters.
ARCEP would complete the market analysis on the basis of the impact of the current
remedies. The Commission considers that the latter market should be analysed by a competent
body and notified to the Commission.
Spectrum management
The spectrum decisions are implemented in France, except for the ex-ERMES Decision
(Decision 2005/928/EC). Moreover, a decree adopted in August 2006 (and an implementing
order) provides for secondary trading of rights of use for specific, designated spectrum bands.
Rights of use concerning broadcasting frequencies assigned by the CSA are excluded.
Secondary trading is subject to approval by ARCEP in several cases.
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In October 2006 ARCEP launched a public consultation on re-use of the 900-1800 MHz
frequency bands for UMTS services and on a possible fourth 3G licence. One interesting
lesson from the consultation is the interest in a fourth licence reported by ARCEP. ARCEP is
expected to prepare a call for applications in time for a fourth licence to be awarded in 2007.
There is also great interest in use of 2G bands for 3G services as soon as possible, not least to
extend the coverage of 3G services.
WLL (WiMAX) authorisations in the 3.5 MHz band were granted on a regional basis
(2 x 15 MHz per region) by ARCEP in July 2006. Four leading industrial players plus several
Regional Councils have been granted authorisations. They are aimed at providing broadband
(up to 2 Mb/s) in areas not satisfactorily served by (DSL) networks. This supplements the
national authorisation granted in 2003. Some operators are expected to provide wholesale
offers. These authorisations are also open to the above-mentioned secondary trading scheme,
in the form of the possibility of partial trades (frequency, time and geographical partitioning).
Notwithstanding these developments, in November 2006 a report commissioned by the
Minister for the Economy, Finance and Industry suggested that the current framework for
spectrum management may not provide enough incentives for efficient use of spectrum.
Conclusions - not endorsed by the French Government - include considering the possible use
of auctions in several cases. The digital dividend expected from digitisation of broadcasting
was also highlighted as an opportunity to promote innovative services (a specific committee
has been set up to this end).
A yearly overview of ARCEP’s administrative costs and of the charges collected from
operators is now provided in ARCEP’s annual report.
Secondary legislation concerning rights of way was finally adopted in December 2005. It
provides for maximum fees that can be imposed for use of the public domain. Its annulment is
being sought in court by the Paris city council.
Authorisations
Although no action has been taken so far to coordinate adjustment to the regulatory
framework of the hundreds of contracts between cable operators and local authorities, an
amendment to the above-mentioned draft law on modernisation of audiovisual broadcasting
pending before the French National Assembly would require the government to consult
stakeholders and report on the issue.
Generally speaking, consumer protection remained an important subject in France in 2006.
Despite implementation of a set of voluntary measures adopted in 2005, a draft law to protect
consumers was tabled by the Minister of Economy, Finance and Industry in November.
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Universal service
French law limits the possibility of being designated as “universal service provider” to
undertakings that are able to cover all the national territory. Community rules provide that no
undertaking should a priori be excluded from designation (provided it can deliver universal
service alone or with others) and that the designation mechanism should ensure that universal
service is provided in a cost-effective manner. The Commission decided to refer France to the
Court in December 2006.
A draft consumer protection law pending before the French Assembly would allow the
competent Minister not to designate a universal service provider, should the relevant parts of
the universal service be considered sufficiently competitive.
France had failed for a number of years to produce a comprehensive directory or directory
enquiry service. Steps taken mainly by ARCEP have brought this situation to an end and
enabled the Commission to close the infringement procedure against France in October 2006.
Many direct enquiry services have been launched since then. At the same time, consolidation
is taking place and prices are said to have increased. ARCEP is looking into this matter as part
of its efforts on premium-rate services (see below).
Regarding the universal service, the above-mentioned draft consumer protection law would
allow the Minister not to designate a universal service provider for some or all components of
the universal service (access and telephony, directory and enquiry services and public
payphones).
The obligation to carry free of charge and properly route all calls to emergency services and
for operators to transmit caller location information seems to be working effectively.
Difficulties with caller location, translation and specific services for disabled people are being
addressed in CICREST (the Interministerial Commission for coordination of
telecommunications networks and services for the defence of public security) which brings
together, amongst others, the relevant authorities, fixed and mobile operators and emergency
services.
Number portability
Implementation of mobile number portability (MNP) in France has not been satisfactory for
some time compared with other EU Member States. This is due, in particular, to long delays
not only for portability but also for contract termination. While new provisions were
introduced back in 2005 to shorten portability (and contract termination) delays to 10 days,
the decree making ARCEP responsible for implementation of the system was not adopted
until January 2006 following consultations with the sector. The one-stop-shop system
introduced by ARCEP together with direct routing is not expected to be effectively in place
before the second quarter of 2007.
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Consumer complaints - over 30 000 to the Directorate-General for Competition Policy,
Consumers Affairs and Fraud Control of the Ministry for the Economy, Finance and Industry
(DGCCRF) in 2005 - increasingly concern broadband subscriptions. (Previously, mobile
subscriptions were the main cause for concern.) This has led to various regulatory and selfregulatory initiatives.
The DGCCRF can investigate individual complaints from consumers about electronic
communications providers. It also acts as an informal mediator on a case-by-case basis,
alongside other out-of-court dispute resolution mechanisms (e.g. the telephony mediator and
the net mediator). According to ARCEP, consumer requests for assistance in contractual
disputes falling under its responsibility mainly concern pre-selection, unbundling and mobile
number portability. A handbook for consumers has been prepared by representatives of
industry, consumer associations and the DGCCRF.77 ARCEP has also set out procedures to
follow for mediation to succeed.78 Consumer associations would, however, like to see ARCEP
itself in charge of individual disputes.
While there are several routes to seek consumer protection, the large number of bodies
claiming some role in dispute resolution might not be the best way to serve this objective and
some streamlining could be beneficial.
This situation prompted the government to propose specific provisions regarding electronic
communications in the draft consumer protection law. In particular, they would prevent
internet access providers from charging customers for the time spent waiting for their calls to
hotlines to be answered. It would also include specific terms and conditions for terminating
subscription contracts, including a 10-day maximum period for terminating contracts. Other,
non-sector-specific, provisions of the draft law could also have an impact on electronic
communications, not least certain practices in the area of broadband, such as better protection
against abusive clauses, a class action open to consumer associations or improved
enforcement powers for the DGCCRF.
Premium-rate services
In November 2006 ARCEP launched a public consultation on premium-rate services,
including directory enquiry services, arguing that this important market (€650 million
according to ARCEP at the end of the second quarter) is not functioning satisfactorily and that
both premium-rate service providers and consumers are increasingly dissatisfied. ARCEP
suggests, in particular, symmetric regulation of several aspects of the relationship between
operators involved in premium-rate services, from accessibility through conveyance of traffic
to billing. ARCEP also suggests other improvements (not necessarily under its jurisdiction) to
reinforce consumer protection and consumer confidence, including on content deontology and
tariff transparency. The Commission services will examine the compatibility of such
measures with the regulatory framework.
77
78
EN
“Guide pratique des communications électroniques” [Practical guide to electronic communications],
available at: http://www.conseilconsommation.minefi.gouv.fr/guide_interactif_securise.pdf
ARCEP, Annual Activity Report for 2005, p. 359.
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Data protection
A data retention decree was adopted in March 2006, including a list of data to be stored by
operators. Further implementing measures are, however, required, which led associations to
lodge a request for annulment before the Administrative Court (Conseil d’Etat).
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ITALY
INTRODUCTION
The positive trends have continued in terms of growth in the broadband and mobile markets
(including in particular 3G) and improvements in the competitive situation in all markets.
Thanks to an effective regulatory and price environment, broadband penetration and local
loop unbundling have grown substantially since last year.
The national regulatory authority has been effectively reorganised and has managed to notify
all markets, but it has continued to be slow in taking some important regulatory measures like,
the approval of the incumbent’s accounting reports, bitstream offers, spectrum assignment. It
has dealt with a number of regulatory challenges resulting from convergence (e.g. voice over
IP, integrated fixed-mobile services, bundled retail offers) and there have been persistent
problems with ineffective emergency services. The Commission launched an infringement
proceeding with regard to a law addressing digital switchover and the Italian government was
in the process of amending this law at the time of writing this report.
As a result of its market analyses, the national regulatory authority (AGCOM) has imposed
obligations on all wholesale markets with the exception of mobile access origination and
wholesale international roaming. Some obligations have also been imposed on the retail
markets, where wholesale remedies were not deemed to be sufficiently effective by AGCOM.
An internal reorganisation of AGCOM started in February 2006. There are now separate
departments in five thematic areas (electronic communications, media and content, market
analysis, consumer protection, studies and research), which have significantly improved the
efficiency of monitoring and enforcing regulatory obligations (e.g. there were three times
more inspections than in the previous year). Lack of human resources nevertheless remains an
issue.
Appeals to the Court of First Instance usually take a very long time (up to 4 years), but it is
possible for complainants to ask for an urgent, provisional measure to be taken which is dealt
with by the Court within 2-3 months. There has been an increase in the number of such
requests concerning both AGCOM’s decisions and the incumbent’s commercial practices.
The Italian system for suspension of NRA decisions has been held up as an example of “best
practice” by the European Regulators Group.
Decision-making
Between September 2005 and June 2006, AGCOM notified all markets subject to ex ante
regulation, with the exception of remedies for the broadcasting transmission services market.
Specific new remedies and guidelines for fixed retail access markets, wholesale unbundled
access and wholesale broadband access were adopted in late 2006 (on wholesale line rental)
or were about to be adopted following consultation of all operators concerned (on migration
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procedures and bitstream offer). AGCOM has been quite late in completing market analyses.
There is also a significant delay for important decisions on, for example, approval of the
incumbent’s regulatory accounting, spectrum assignment, and the fund for universal service.
AGCOM’s decision-making and sanctioning powers have been significantly enhanced by two
laws adopted in 2006, which notably give the NRA the power to enforce obligations
voluntarily undertaken by operators. The possibility for operators to reduce fines by up to 1/3
through early payment has also been abolished.
The incumbent has considered some of AGCOM’s decisions to be disproportionate and not
comparable to the practice of other NRAs (e.g. the limit imposed on fixed/mobile offer and
the asymmetry in the wholesale fixed termination rates). On the other hand, AGCOM had
approved an incumbent’s retail broadband offer that had recently been found to be anticompetitive by the Regional Administrative Court. Some divergences between AGCOM and
the national competition authority, AGCM, also emerged in the analysis of the mobile access
market.
Important developments have been taking place in the Italian market with regard to
convergent services and voice over IP (VoIP). After the downstream merger with its mobile
branch in March 2006, the incumbent defined a convergent business model
(network/technology, wholesale and retail market, accountancy, single subscriber database).
The incumbent has implemented an extensive IP network, both at core and at access level, and
is currently offering triple and quadruple play services (VoIP, IPTV and integrated fixedmobile services).
In an effort to create a level paying field on the new IP networks, AGCOM has imposed a
new obligation on all operators to negotiate direct IP interconnection so as to guarantee full
interoperability of voice IP-based services. Furthermore, the incumbent must provide direct
voice interconnection through IP protocols. A public consultation is currently under way, with
the aim of further implementing the above obligations and defining the general regulatory
framework for new generation networks (NGNs).
The incumbent has launched a new convergent fixed-mobile service, which has been
temporarily authorised by AGCOM up to a maximum of 30 000 subscribers. AGCOM has
justified this restrictive decision on the basis of the lack of any commercial agreements
between alternative fixed operators and mobile network operators that could provide similar
competing services. For the time being, the only kind of wholesale offer that seems to be
available is fully controlled by the incumbent.
In autumn 2006, one mobile operator (which also had an authorisation for the provision of
fixed services) started offering an integrated fixed-mobile service (a “traditional” mobile
service with the possibility of using the fixed number for fixed voice telephony within a
limited number of cells). The mobile operator also included the possibility for customers to
maintain the fixed number. This was found to be anti-competitive by a Court judgment, which
considered the fixed number portability to an integrated fixed-mobile service not to be
provided for by the Italian Code. The Ministry has provisionally classified the proposed
service within the general category of fixed voice telephony services (PATS) and thus no
specific authorisation has been provided for. AGCOM has launched a public consultation in
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order to evaluate the technical features of the service and whether specific regulatory
measures are necessary (e.g. number portability within different types of services).
Alternative operators welcome AGCOM’s regulation for VoIP, as adopted in March 2006.
The regulation distinguishes between “fixed” services (restricted nomadic) and nomadic
services that use geographic and non-geographic numbers, respectively. The former have to
comply with all PATS obligations (such as number portability, calling line identification,
caller location for emergency services), while the latter enjoy lighter regulation. There seemed
to be a lack of technical regulation that would enable operators to fulfil the requirement of
caller location for emergency services imposed on nomadic VoIP.
In September 2006, the incumbent announced its intention to split into three separate
companies (fixed network, fixed/broadband services, mobile). Discussions with AGCOM on
the functional separation of the fixed network (and possible relaxation of obligations on retail
markets) have already started and will involve all operators concerned. Results were not
expected before 12-18 months.
Broadband
Market situation
The broadband market in Italy
comprises mainly xDSL lines with a
20.00%
limited number of optic fibre
connections.
Cable-modem
and
16.00%
13.63%
wireless-based
broadband
12.00%
9.99%
infrastructure
is
very
limited.
The total
6.74%
8.00%
broadband lines (BB) – over 8 million
4.00%
in October 2006 - had increased by
0.00%
more than 2 million lines since October
2004
2005
2006
2005, a growth of 37%. This increase
can mainly be attributed to extensive
use of ADSL technology, by both incumbent and alternative operators. While the penetration
rate for retail broadband access has increased considerably, reaching 13.6% in October 2006,
it nevertheless remains lower than the EU average of 15.7%.
Italy BB penetration
Italy is among the Member States with
Italy - BB lines by technology/means
the highest number of fully unbundled
lines (1.8 million wholesale lines in
October 2006) and among the lowest
wholesale tariffs (€8.05/month). As a
result of effective regulatory conditions
for shared access, there has been a
significant increase in this access
option, from around 100 000 lines in
October 2005 to 342 000 lines in
October 2006. Alternative operators
have improved their market share of
total BB lines from 30% last year to
32% in October 2006 (this percentage
would be significantly higher if 3G connections were included).
NE Full ULL; 945963
5382000
NE Shared access;
306933
1 037 190
Inc. Other (Satellite,
other traditional w ireline
access, Fiber to the
home); 26502
EN
161
222196
NE Other (WLL, L.L.,
Resale, ow n PSTN
netw ork, Cable modem);
6809
NE Satellite; 83000
EN
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EN
According to the reference offer approved by AGCOM at the end of 2006, the monthly fees
for local loop unbundling (LLU) (currently €8.05) will be further reduced to €7.8 in 2007.
While the incumbent has claimed that this will be a below-cost tariff, problems on pricing and
availability of co-location and co-mingling seem to persist, as well as on certain provisioning
services. With a view to increasing the level of competition on the broadband market,
AGCOM’s decision on wholesale broadband access (bitstream market) includes an obligation
for the incumbent to allow access to digital subscriber line access multiplex (DSLAM) for
sites not opened to LLU. Pricing obligations have been changed from retail minus to cost
orientation, while access at IP-managed level is left to commercial negotiations (retail minus
to apply until the full implementation of AGCOM’s decision). While the incumbent’s offer is
currently analysed by AGCOM, alternative operators are worried about the delay in the
availability of the new services.
The new regulation on fixed market includes an obligation for the incumbent to provide
wholesale line rental (WLR) at a retail-minus price on both non-active lines and active lines
not open to full or shared access. The service should be available at the latest by November
2007. AGCOM regards this measure as an intermediate step to the further development of
infrastructure-based competition. Alternative operators have criticised the length of the
implementation procedure, while the incumbent took the view that the measure should not
apply to sites opened to LLU but not taken up by alternative operators and that the WLR
service cannot be operational before 15-18 months from the reference offer.
Mobile markets
Market situation
Italy continues to be one of the EU countries with the highest mobile penetration rate (almost
134%), an increase of almost 15 percentage points since October 2005. The mobile branch of
the incumbent has slightly improved its position in the market (currently at 40.6%), with a
market share over 8 percentage points higher than the second largest operator. UMTS
subscribers continue to increase at a very fast rate, and AGCOM estimated that at the end of
2006 they would reach 12 million (compared to the 2.6 million at the end of 2004).
AGCOM’s decision on the mobile call termination market designated all four mobile
operators as having SMP on their own networks in the voice termination market and imposed
on all but one a maximum mobile termination rate with a 3-year glide path (2006-2008). For
the UMTS operator, AGCOM was of the opinion that price control would currently amount to
an excessive burden. AGCOM is currently reviewing the need to extend price control
obligations to the UMTS operator.
AGCOM’s decision on the mobile access market (market 15) found that there was no
individual or joint SMP on the wholesale mobile access market. Thus, there is no obligation
for mobile network operators to sign wholesale access agreements. The first commercially
negotiated wholesale access agreement was recently signed by one mobile operator with a
large distribution company and other agreements are currently under negotiation.
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Consumer associations have complained about the high cost of recharging a pre-paid card (up
to a maximum of €5). A joint investigation by AGCOM and AGCM found a lack of
transparency and a possible collusive behaviour in this practice; AGCOM has launched a
public consultation on this issue. The Italian Government has abolished by decree the cost of
re-charging a pre-paid card (January 2007).
Fixed markets
Market situation
The overall market share of alternative operators in the fixed voice telephony market in terms
of revenues (32.6% in December 2005) has increased by 1.9% since December 2004. The
main increase has occurred in the international calls market (+11.5%). The overall fixed
market share for alternative operators is almost 2% lower than the EU average. Due to
significant network investments, the percentage of subscribers using alternative operators for
direct access in July 2006 was 9.2%, 3.9 percentage points higher than in July 2005.
There are still long delays in AGCOM’s approval of the incumbent’s regulatory accounting
reports. At the time of drafting of this report, the last accounting report, approved in
December 2004, concerned the year 2001, while the incumbent had already submitted its
reports for 2002-2004. While a Network Cap system for the pricing of wholesale services of
the incumbent was introduced in 2003, this delay seems to create regulatory and pricing
uncertainty on the market. AGCOM’s justification for the delay is the complexity of the
required analysis and the very strict procedures for selecting an independent auditor. Thought
is being given to the option of giving immediate priority to the 2004 report. The incumbent
has strongly criticised the use of (and attendant administrative burden for) different cost
accounting models and the apparent lack of a single, coherent approach.
There has been fierce controversy as regards AGCOM’s decision on call termination on fixed
networks (call termination market), which has created asymmetric termination charges
(€0.154/min for termination to alternative operators’ networks, €0.073/min for termination to
the incumbent’s network at single level) and a 5-year glide path towards symmetric tariffs.
Alternative operators can ask AGCOM to approve higher termination rates if this is duly
justified by evidence of higher costs. Some of them have already submitted requests for a
termination price of over €0.3. AGCOM has not allowed the incumbent to differentiate its
retail prices according to the termination rates of the different alternative operators’ networks,
considering that transparency towards consumers, the low volume of traffic involved and the
glide path mechanism would not justify this price differentiation. AGCOM has undertaken to
review its current position and come up with a new proposal in March 2007 which takes
account of the need for alternative operators to become more efficient over time. Furthermore,
AGCOM has approved a favourable price cap and allows the incumbent to set a more flexible
retail price for bundled offers.
In 2005, the Commission had opened an infringement procedure for incorrect transposition of
the method for calculating the incumbent’s interconnection costs. An amendment to the
contested article of the Italian Code is currently pending approval. The incumbent’s
commercial offer for wholesale leased lines based on the new network architecture
(completely different from the direct circuits used so far) seems to lead to a significant
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increase in the prices for operators that are less infrastructure-based. The incumbent’s new
reference offer is being examined by AGCOM.
As regards the retail fixed market, AGCOM proposes to maintain the price cap for all retail
fixed calls (including calls to mobile phones), which will be made more favourable for the
incumbent once certain quality indicators are fulfilled. This will also contribute to a gradual
move towards infrastructure-based competition.
In May 2006, the Milan Court of Appeal found the incumbent guilty of win-back practices
using sensitive wholesale information. Subsequently, AGCOM has carried out control
inspections and the outcome of these activities is being analysed.
The Consiglio di Stato (the Administrative Appeal Court) confirmed the fines imposed on the
incumbent by the national anti-trust authority (AGCM) for the exclusionary strategy against
competitors during the period 2001-2004 (AGCM decision A/351 was partly upheld by the
Court of First Instance).
Broadcasting
Market situation
According to ISTAT,79 in February 2006 almost 94% of households received terrestrial TV
and 25% received satellite TV services. Italy has no cable TV service. The digital TV
switchover is progressing well in Italy, although to a lesser extent than in 2005. In September
2006, there were 4.3 million digital decoders sold, almost double the number sold in July
2005. Nevertheless, only 5.2% of Italian households have a digital TV set, while 87.8% still
have traditional analogue TV sets. Due to the difficulties to reach the critical mass, the
Ministry of Communications postponed the switch-off date at national level to the end of
2012 (switch-off in the two pilot regions will take place during 2008).
All national analogue TV operators and a significant number of local TV operators are
currently simulcasting using both technologies. A mobile operator has acquired a local TV
operator’s licence with the aim of setting up a national TV digital network. The incumbent
and an alternative fixed operator are currently offering IPTV. In May-July 2006, a mobile
operator and the UMTS operator launched a commercial DVB-H service. Two mobile
operators have already signed agreements with TV operators for the transmission band, while
the UMTS operator now has a licence as a TV network operator (through the acquisition of an
existing TV broadcaster).
In July 2006, the Commission opened an infringement proceeding for the non-conformity of
the Italian broadcasting law as regards the transitional period for the implementation of digital
TV in Italy. In particular, the Commission found that the law precludes operators which are
not active in analogue transmissions from creating their own digital networks and allows
existing broadcasters to acquire more frequencies than they need for simulcasting their
programmes in analogue and digital. While it could be legitimate to facilitate existing
analogue TV operators’ switchover to digital, such advantages are not mitigated by any
provisions concerning the digital dividend, as the frequencies that will become available
79
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Istituto Nazionale di Statistica.
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through the transition to digital technology seem to remain in the hands of the current
analogue operators. Italy has accepted the Commission’s position and has prepared a draft law
to address the problems, which is currently being examined by the Commission services and
the Italian Parliament.
According to AGCOM’s notification of the broadcasting transmission services market
(market 18), the two major TV broadcasters have a collective dominant position on the market
for analogue broadcasting transmission services. Remedies still have to be notified to the
Commission.
AGCOM has considered IPTV as an emerging service and excluded it from the market of
broadcasting transmission services (market 18). Alternative fixed operators are worried about
the possible leverage by the incumbent from the broadband to the IPTV market through the
bundling of access and content and the refusal to interconnect/interoperate its service with
other operators.
AGCOM is setting up an electronic national database (catasto delle frequenze), which will
give updated and verified information on the TV frequencies allocated to and used by national
and local operators.
Spectrum management
Legislative measures to implement the latest Radio Spectrum Decisions are included in the
new National Frequency Plan, not yet approved at the time of writing this report. The
Broadband Wireless Access (WiMAX) technology is perceived by the market as an important
tool for increasing competition on the broadband market and reducing the digital divide.
However, the licences for the provision of WiMAX services in the 3.5 GHz band have not yet
been granted. While the technical trials were concluded in June 2006, an agreement with the
Ministry of Defence for the release of the relevant frequencies was concluded only in
December 2006. In November 2006, AGCOM launched a public consultation on the licensing
procedures for WiMAX services.
There is a substantial delay in taking a decision on the 900MHs spectrum not already assigned
(see the 2005 Implementation Report). Discussions at European level regarding the possible
opening of the band to technologies other than GSM will be taken into account in the process.
Authorisations
The Ministry of Communications has recently proposed to increase the UMTS licence term
from 20 to 35 years for current licence holders. The Budget Law for 2007 amends Article 25
of the Code of electronic communications, providing that all authorisations can be extended
by Ministerial decree, on specific request and on the basis of a detailed technical and financial
plan (to be evaluated jointly by the Ministry of Communications and AGCOM).
There continue to be questions raised with regard to rights of way on highways (managed by
private companies under state concessions), railways (managed by a state enterprise) and nonmetropolitan roads (managed by a state agency). A formal complaint introduced to the
Commission in November 2006 alleges the existence of arbitrary and excessive economic
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conditions, long delays in granting rights of way, discrimination in favour of the incumbent
and ineffective dispute resolution systems. The Commission services are looking into this
complaint.
Universal service
No universal service provider has been designated. The incumbent has continued to provide
the universal service. AGCOM is late in approving the annual net cost for the provision of the
universal service components (the last net cost approved by AGCOM relates to 2002. The
approval of the net cost of 2003 has been delayed by AGCOM in order to introduce
methodological improvements which are expected to speed up the whole process.
Since the entry into force of the Italian Code in 2003, directory and directory enquiry services
are no longer part of the universal service obligation. The price of these services offered by
the incumbent had risen considerably when, approximately two years later, competing
services entered the market (there are currently 5 main service providers offering such
services in addition to the incumbent and two mobile operators). Competition seems to have
had no significant decreasing effect on prices. Consumers have been expressing strong
concerns and AGCOM took two relevant regulatory decisions. Firstly, it significantly
decreased the maximum price for non-geographic services (namely, those providing directory
enquiry services) from fixed calls. Secondly, in September 2006 it took a provisional measure
under Article 7(6) of the Framework Directive, identifying the four mobile operators as
having SMP in the market of mobile call origination towards directory services numbers and
imposed a price not higher than the double the current termination rate on their networks.
AGCOM subsequently notified a separate market of mobile call origination towards nongeographic numbers. The Commission was examining this notification at the time of writing
this report.
Caller location information is not available from mobile networks. Furthermore, there is no
standard automatic procedure for caller location from fixed network and the current system
does not allow the location of fixed numbers that are not included in the unique numbering
database. There is still no centralised Public Safety Answering Point (PSAP) and the level of
coordination of the emergency services concerned is very limited. The Commission services
are looking into the matter, in particular after the recent amendment to the original draft to
create a centralised PSAP coordinating all national emergency services.
In view of the delay in implementing the relevant provisions of the Universal Service
Directive properly, in particular as regards caller location from mobile networks, the
Commission is continuing with the infringement proceeding.
Number portability
The successful operation of mobile number portability (MNP) was further confirmed in 2006.
From its launch in 2002 to 31 August 2006, more than 9.6 million customers have changed
operator using MNP, of which about 4 million in the last year. In order to solve the persistent
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problem of delays (50 000 numbers waiting to be ported and delays of up to 45 days), in June
2006 AGCOM forced operators to increase their daily capacity of executing MNP requests
from 7500 to 9000, to be effective from November 2006. Several mobile operators have
complained that this was an unnecessary cost in view of the fact that during the summer the
delay for number porting dropped to 7 days maximum and the waiting list had almost
vanished.
As regards fixed number portability, consumers’ associations have complained of delays in
porting numbers from the incumbent to alternative operators and of the difficult and
expensive procedures for porting numbers between alternative operators.
Premium rate services and activation of non-requested services
Despite inspections and sanctions imposed by the Italian authorities, serious problems of
abusive behaviour of some premium rate service providers seem to have continued. In March
2006, the Ministry of Communications approved a decree regulating voice and data premium
rate services delivered via fixed or mobile networks, aimed at preventing abuses. Consumers’
associations expressed strong criticism of the final version of this decree, in particular with
regard to maximum prices allowed, delays and limitations in implementing an opt-out
mechanism after a certain price ceiling and possible bundled invoicing with other IP services.
A revision of the numbering plan was under way at the time of writing this report. This
revision would seek to further clarify the type of services that can be provided within each
category of numbers and make it easier to sanction inappropriate use.
There were also persistent problems of activation of non-requested services, although to a
lesser degree than in 2005. In 2006, AGCOM imposed high fines on four telecom operators,
and a new regulation on non-written contracts in this field is currently under review. In
February 2006, the privacy authority imposed more stringent internal security standards on
telecom operators for the processing of personal data, along with specific obligations for
dealers and call centres, such as the need to obtain the customers’ prior specific consent for
promotional calls/communications. Sanctioning proceedings by the same authority against
some telecom operators for activation of non-requested services are ongoing. Monitoring
activities are in progress in order to verify compliance with the guidance provided.
Data protection
In 2005, the Italian Privacy Authority had issued specific guidance on the data protection
measures to be taken by providers of interactive TV services, such as the ban on setting up
centralised databases of personal information, secure communication channels using state-ofart technology, the six-month limit for data retention, etc.
The Privacy Authority has been very active in carrying out inspections on several operators’
databases storing subscriber data. Furthermore, specific measures have been imposed on a
major operator, in order to improve the security of subscribers’ personal data, as the
procedure in place had been found to be insufficient. The above initiatives are partly a
consequence of alleged unauthorised use of such data kept by the incumbent.
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CYPRUS
INTRODUCTION
Despite a number of encouraging developments in 2006, competition on the Cypriot
electronic communications market is still limited, with the very strong market position of the
100% state-owned incumbent operator in the fixed, mobile and broadband markets. Apart
from the slow progress in the second mobile network operator’s (“MNO”) market position,
IPTV, mobile TV and triple-play services were prominent market developments in Cyprus in
2006. Nevertheless, there is still low broadband penetration, no national broadband strategy
and a very slow process of granting rights of way to alternative operators, which creates
serious barriers to rolling out alternative networks, both in the fixed and in the mobile sectors.
As a result of the significant amount of regulatory activity over the past year, all the markets
listed in the Recommendation, with the exception of the wholesale international roaming
market, have been analysed and products such as bitstream access and Wholesale Line Rental
(“WLR”), aimed at enhancing competition on the market, have been introduced as a result.
Their impact on the market, however, still needs to be seen.
2006 saw a number of encouraging developments in Cyprus’s regulatory approach. First of
all, the OCECPR analysed and sent draft measures to the Commission on all the markets
listed in the Recommendation, with the exception of wholesale international roaming. The
competent authorities took furthermore necessary steps in order to make available 112 caller
location information from all operators as well as comprehensive directory/directory enquiry
services.
In Cyprus, the main regulatory tasks are carried out by the Department of Electronic
Communications of the Ministry of Communications and Works (“DEC”) and the Office of
the Commissioner for Electronic Communications and Postal Regulation (OCECPR).
As the Minister of Communications and Works coordinates the ownership rights of the
incumbent operator within the Council of Ministers and also retained a number of regulatory
functions, the Commission addressed concerns as to the independence of this regulatory body
in an infringement proceeding launched in October 2005. Meanwhile the Cypriot primary
legislation was amended to ensure structural separation of regulatory and ownership functions
in respect of the incumbent operator. The regulatory powers on radio-communications issues
of the Council of Ministers and the Minister for Communications and Works were transferred
to the Director of the DEC, who thus became the sole source of regulatory power over radiocommunications issues, and the management function of the Minister for Communications
and Works concerning the incumbent operator was transferred to the Minister of Finance. As
a result, the Commission closed this case in June 2006.
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While concerns were raised by market players about the length of dispute resolution, the 4
dispute decisions in 2006 were all delivered by the OCECPR within 4 months as required by
the relevant Cypriot relevant legislation and the Framework Directive.
Appeals against the DEC’s and the OCECPR’s decisions are addressed to the Supreme Court.
During the appeal procedure the decisions stand. According to the alternative operators a
large number of the decisions of the OCECPR are systematically challenged by the incumbent
operator, which obviously has the effect of reducing legal certainty and predictability in the
market.
Decision making
In October 2005 the Commission initiated an infringement proceeding against Cyprus as the
latter had not notified any draft measure at that time. Since then, the OCECPR, has completed
its analysis of almost all the markets listed in the Recommendation. The first notifications
from Cyprus were registered in January 2006, and the OCECPR very quickly accomplished
the first round of its market review. As a result, the OCECPR has since analysed 17 markets
within a year more or less, which was considered to be a heavy burden on both the regulatory
body and operators alike. Some expressed the view that procedures for the collection of data
were particularly heavy for smaller operators.
All the markets analysed are considered to be non-competitive, with the exception of
broadcasting transmission services, where the OCECPR applied the three-criteria test and
concluded that the wholesale market for broadcasting transmission services is not subject to
ex ante regulation.
Up to November 2006, the OCECPR had taken final measures in four of the markets, namely
in the wholesale markets for LLU, for broadband access, for mobile access and for call
termination.
The Cypriot e-communications market is only at the stage of slow transition from a monopoly
to a competitive situation, as witnessed by the incumbent operator’s market share in the fixed,
mobile and broadband markets. The slow opening of the market is particularly regrettable as
the convergence of services and products is increasing demand by end-users.
Broadband
Market situation
Following
broadband
penetration
figures of 0.94% and 3.91% in 2004
and in 2005 respectively, broadband
penetration in Cyprus in 2006 was of
7.38%. Despite the fact that broadband
penetration has almost doubled in a
year, this figure is still relatively low
and only slightly above the new
Member States’ average (6.66%) but
well below the EU-25 and old Member
Cyprus BB penetration
10.00%
7.38%
8.00%
6.00%
3.91%
4.00%
2.00%
0.94%
0.00%
2004
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2005
2006
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States’ averages (15.69% and 17.41% respectively).
The national broadband strategy has still not been adopted by the competent authorities.
The incumbent operator’s broadband
market share is 99% which clearly
shows strong dominance on this
market. In addition, on the broadband
market, platform competition is not
flourishing as DSL is the main
technological means.
Cyprus - BB lines by technology/means
55294
NE Full ULL; 933
The incumbent’s broadband operations
are concentrated more in the capital
than in the countryside.
NE Other (L.L., Satellite,
ATM); 44
Inc. Other (other
traditional w ireline,
ATM); 295
As the price of dial-up internet access
is low, no real willingness seems to
exist to move towards broadband.
Regulatory issues
In its market analysis of the LLU market, the OCECPR, took account of its initial stage of
development and imposed full and shared access on the incumbent’s local loop or sub-loop in
a non-discriminatory and transparent manner, at cost-based prices. The incumbent is also
obliged to publish a RUO. As regards the wholesale broadband access market, the OCECPR
required the incumbent operator to provide bitstream access based on the “retail minus”
method.
The 2006 RUO was adopted and published on 29 December 2006. Consequently, no changes
in the RUO prices were registered in comparison with 2005. The monthly rental fee and the
connection fee for full unbundled local loop are below the EU average. In this respect,
alternative operators complain about the low retail prices practiced by the incumbent operator.
Within a few months, the number of the unbundled local loops has grown rapidly and, up to
November 2006, 933 local loops had been unbundled under the 2005 RUO, thus allowing
new entrants to start offering their broadband services. As a result, one of the main alternative
operators specialising in broadband services could launched its triple play services (already
provided by the incumbent). This new entrant, a strategic partner of the Electricity Authority
of Cyprus, owns its own fibre optic cables on the electricity network and reaches the endusers via the sub-loop of the incumbent.
Under the 2006 RUO, the timeframe for unbundling was dramatically reduced from 25 to
6 days.
Mobile markets
Market situation
In Cyprus there are two MNOs, the incumbent with a 90% market share (in terms of
subscribers) and the second MNO with a 10% market share (6.5% in 2005), which was
granted its mobile licence on 4 December 2003 for a period of 20 years. Under this licence,
the second MNO had the obligation to ensure that its network reaches 50% territorial
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coverage by December 2005 which was achieved. This coverage must increase to 75% by the
end of 2007. Both MNOs have 3G licences and provide related services. In 2006, mobile
penetration in Cyprus reached 113.6% (100% in 2005), with 900 000 subscribers.
Regulatory issues
Cyprus is one of the rare Member States where the mobile access market has been found not
to be competitive. Therefore, the dominant MNO (the incumbent operator) has been
designated as having SMP. In view of the strong market position of the incumbent operator
and the very early stage of transition from a monopoly to a competitive situation, the
Commission underlined that in the absence of mandatory MVNO access, the OCECPR should
ensure by way of stringent and effective wholesale regulation that the two MNOs currently on
the market in Cyprus are able to compete at arms length.
The second MNO stressed the need to regulate, not only the wholesale market, but also the
retail market for mobile access and call origination so as to ensure a fixed margin. The
incumbent operator’s regulatory obligations (pricing) on the retail mobile market were
revoked on 1 April 2005 by the OCECPR due to the fact that no mobile retail market is
defined in the Commission Recommendation. Since there was only a small margin between
the incumbent’s retail prices and national roaming prices, the second MNO submitted a
complaint to the Commission for the Protection of Competition (“CPC”). The CPC issued an
interim order in July 2005, requiring the incumbent operator to raise its prices to the pre-April
2005 rates, to which the incumbent has, however, failed to respond. In the same case the CPC
imposed a CYP 2.2 million (€3.8 million) fine on the incumbent in January 2006 for abuse of
a dominant position in the market for mobile telephony services. The CPC found the
incumbent guilty of its dominant position in that it had reduced its charges to its customers in
anticipation of the second MNO`s entrance onto the market; had implemented pricing similar
to the second MNO`s; and had significantly increased its advertising expenses.
In its comments following the notification of the mobile access market, the Commission
called upon the OCECPR to impose price regulation with regard to the national roaming
services the incumbent is obliged to offer to the second MNO. The Commission emphasised
that the price of national roaming services should be cost-based and permit a suitable margin
between the incumbent’s retail tariffs and its wholesale national roaming tariff. The price of
national roaming was fixed by the OCECPR at €0.0214, which the second MNO found to be
twice as high as it should be from its own cost calculation. As a result, the Weighted Average
Cost of Capital (“WACC”) in mobile prices changed to 14.19%. The price for wholesale
national roaming services is crucial in Cyprus, as the second MNO has not yet completely
rolled out its own network. It is currently having problems with the roll-out of its masts and
antennas because of the administrative slowness of the granting process (town planning and
building permits are both required). As a result, the coverage of the second MNO is still very
meagre (55% in July 2006), despite its obligation to reach 75% territorial coverage by
December 2007 and its desire to achieve total territorial coverage as soon as possible.
Moreover, it has to be noted that mobile call termination charges in Cyprus are very low (the
incumbent’s termination rate is €0.0216/min and the second mobile network operator’s
€0.0316/min following asymmetric price regulation). Furthermore, the second MNO WAS
required to publish a RIO only on 1 January 2007 and will not come under the accounting
separation obligation until its turnover exceeds the amount of €50 million.
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Fixed
Market situation
In Cyprus, the incumbent operator still has a dominant position in the fixed voice telephony
sector. The incumbent, a semi-governmental organisation and a vertically-integrated operator,
started operations in 1960. Its semi-governmental and state-owned status, coupled with its
financial strength, has made it extremely difficult for new entrants to compete. In the fixed
voice telephony sector, the incumbent’s total revenues in 2005 accounted for 91.2% of all
types of fixed calls and 86% of international calls. There has only been a very slow decrease
in the market shares of the incumbent, as these figures have remained more or less stationary
over the past year and are far from the corresponding EU averages (65.8% and 56.7%
respectively). For all local calls the incumbent’s market share is 97.5%. This situation is likely
to be due to the low retail prices offered by the incumbent where it faces competition from
new entrants and can be described as a considerable barrier to entry for alternative operators.
Despite the recent minor reorganisation of the activities of the Minister of Finance in respect
of the incumbent, ownership still remains with the Government. However, the Minister of
Finance is now able to collect a share of the profits. That said, as the incumbent is still not
obliged to make a profit and dividends are not automatically paid to the State, the incumbent
operator cannot be considered to be subject to normal business constraints.
Alternative operators provide voice telephony services mainly through carrier selection, preselection and for the purposes of accessing the internet through public switched
telecommunications networks. The incumbent and one of the new entrants already provide
triple play services in Cyprus.
Regulatory issues
In its analysis of fixed retail access markets, the OCECPR, took account of the monopoly
position of the incumbent, and imposed CS/CPS (already in place before the market analysis)
and WLR obligations on the incumbent as had long been requested by new entrants to allow
them to have a direct contractual relationship with their end-users and to charge them with a
single bill.
The carrier pre-selection process has improved but as a consequence there have been
allegations that the incumbent operator has launched allegedly anti-competitive win-back
campaigns targeting all customers changing to an alternative operator. As a result, the
OCECPR inserted a “Subscriber Win-back Code” in the incumbent’s 2006 RIO, adopted in
October 2006, in an effort to minimise this kind of market behaviour.
As a result of the transitional measures, the RIO 2005, published on 8 April 2005, showed a
decrease in charges for interconnection and backhaul services, especially in relation to
submarine landing stations, which can be considered as a bottleneck. Following the market
analysis of the wholesale market for call termination the incumbent operator and a number of
new entrants are obliged to publish their RIOs. To improve interconnection services, penalties
are included for delays in provision/establishment after fault of services. A slight drop in IC
charges was observed in 2006, which are already well below the EU average.
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After benchmarking the one-off and monthly rental charges for 2 and 34 Mbit/s leased part
circuits used for interconnection at the third lowest of all Member States in the absence of
sufficient information about the actual costs in the incumbent operator’s costing system, in
2006 the OCECPR designated the incumbent as an operator with SMP in the retail market for
the minimum set of leased lines in the wholesale markets for terminating segments of leased
lines and trunk segments of leased lines.
Broadcasting
Market situation
In Cyprus, end-user connections are predominantly via analogue terrestrial transmission
(88%) and satellite (8%) in order to receive radio and television signals. Eight television
channels (six free-to-air and two pay-tv channels) and 13 radio stations – all with nationwide
coverage – are offered via analogue terrestrial transmission. Cable and xDSL each have less
than 5% end-user penetration and are in the early stages of development.
Two analogue channels have been reserved to facilitate the introduction of digital terrestrial
television in Cyprus. 2012 was set as the date for analogue switch-off; but as part of its triple
play offer the incumbent already carries digital sound and image through a telephone line to
its subscribers via a set-top box.
Regulatory issues
The Cypriot authorities notified the market analysis and the draft measure relating to the
market for broadcasting transmission services to the Commission in September 2006. The
OCECPR proposed excluding cable, xDSL and satellite from ex ante regulation. It concluded
that the markets for analogue television transmission are not subject to ex ante regulation,
taking into account that there are no high and non-transient entry barriers in the market, the
obligation for broadcasters to be self-sufficient80 and that broadcasters mutually depend on
each other’s network infrastructure.81
Spectrum management
Cyprus has announced that it has transposed all radio spectrum harmonisation Decisions.
Fixed Wireless Access networks and services do not yet operate in Cyprus. In order to
increase competition, the DEC plans to introduce Fixed Wireless Access via an auction
process. The auction process will be used to distribute the available frequencies and allow
alternative operators to compete effectively with the incumbent operator. From the
information the Commission received, the Cypriot authorities will consider excluding
operators with SMP in the access markets from participating in the auction in an effort to
maximise the benefits of infrastructure competition, and in particular to increase the uptake of
broadband in Cyprus.
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81
EN
Each licensed station is responsible for installing its own broadcast network.
Even the public broadcaster, Cyprus Broadcasting Corporation is dependent on other station’s
transmission facilities to provide full coverage of the Cypriot market.
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With regard to the rollout of fixed infrastructure, market players voiced heavy criticism of the
time it takes for the required rights of way to be granted.
Operators currently need permits from local authorities (with the exception of the major road
belonging to the Ministry of Public Works/Public Works Department), as the roads belong to
the municipalities or the district authorities, and/or the utility companies. The procedures for
obtaining permits from local authorities are not harmonised. Furthermore, most sites in rural
areas are Government-owned, and thus approval for construction can be a lengthy process as
applications have to be approved both by the relevant Ministry/ies to which the land belongs
and by the Council of Ministers.
In view of the problems new entrants have in rolling out fixed networks, such as the refusal
by the relevant authorities to grant rights of way to install facilities on, over or under public
property and on roads/highways, the Commission initiated an infringement proceeding against
Cyprus in July 2006.
As a result, the Cypriot authorities undertook to harmonise the granting of the necessary
permits between the different competent authorities. On 31 August 2006, a Decision was
taken by the Council of Ministers approving the Code of practice entitled “Code of
procedures regarding the acquisition of rights of way on the road network by electronic
communications providers” (“Code”). These new policy guidelines were adopted in the form
of a Policy Decision of the Council of Ministers. The Code sets up time limits between the
various procedures. The time for the collection and recording of comments, opinions and
remarks of the various public services and the provision of the relevant authorisation from the
competent authority must not exceed 6 weeks, unless there are special reasons, which must be
duly justified. According to the Cypriot authorities, this means that an application for the
acquisition of rights of way will be assessed within the above period, provided that it is
accompanied by all the requisite documents and drawings. The Code can be fully
implemented once the technical planning of the actual installation under the new regime is
complete. The relevant legislation is currently being examined for any legal amendments that
may be needed. However, the legislation has not yet been adopted and consequently, despite
the efforts made, harmonisation of the procedure is not guaranteed.
Co-location is promoted in the case of existing roads. Underground roll-out of fixed line
infrastructure on existing roads is examined on a case-by-case basis if co-location is not
technically feasible.
Special space has been reserved on new roads for all operators and the cost will be shared
between the interested parties.
As regards mobile networks, planning and building licences are necessary for the installation
of masts/antennas. From 2002 to December 2003, no town planning licences were required
and the incumbent operator installed many masts/antennas without any such licence. As a
result, the incumbent operator was able to install and expand its mobile network, which now
comprises 470 base station sites. These were installed between 1994 and 2004.
With the granting of the mobile licence to the second MNO both the incumbent and the
second MNO, face major delays and difficulties in the roll-out of mobile network. In the
current legal environment, the erection of masts and antennas requires permission from
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planning authorities under the relevant town and country planning regulations, together with a
building permit from the designated planning authority. Moreover, building permit practices
differ between building authorities. Consequently, of the 84 applications that the incumbent
had filed for building permits between September 2004 and November 2006, only 3 were
granted. As for the second MNO, applications for building permits on government-owned
land have been pending for more than a year and no such licence has been issued to date.
To remedy this situation, the legal framework for the erection of antennas and masts is being
amended. A Decision of the Council of Ministers entitled “Policy and Procedures for the
Installation and Operation of Radio-communication Stations with Transmission Capability”
was adopted on 14 December 2005, thereby providing the framework for the harmonisation of
granting mast and antenna roll-out in Cyprus for which town planning and building permits
are required. As regards the town planning permits a Directive and an Order were published
respectively on 2 June and 25 August 2006. Under this secondary legislation, the majority of
masts and antennas are exempted from the obligation to submit applications for planning
permits. The permits are granted by planning authorities and a decision concerning the
planning permit should be issued within 6 weeks of the submission of an application. Where
no answer is forthcoming within the 6-week period, the planning permit is considered not to
be granted. As for building permits, the amendment of the Streets and Building Law is under
way but it has still not been adopted. Under this proposed amendment, building authorities
will have a fixed time limit to decide on an application and a decision should be made after
assessing the structural soundness of the mast. Failure to decide on an application within the
specified period is considered to mean that the building permit is granted. A Directive has
already been drafted by the Ministry of the Interior for adoption by the Minister after approval
of the amendment by the House of Representatives. According to the draft Directive, masts of
less than 600 kg will not need a building permit. This more flexible building permit regime
cannot enter into force until the amendment has been adopted.
In addition to the slow process of granting the requisite permits and licences for the
installation of fixed and mobile networks, operators also have the problem of maintaining
illegally built masts/antennas. Several market players underlined that, in view of the particular
administrative system and the relevant legal provisions, most of the antennas/masts are
considered to have been built illegally by both the incumbent and the second MNO.
Following the Decision of the Supreme Court of 30 June 2006, stating that the mobile base
stations of the incumbent are illegal because they were built without building permits, the
incumbent operator had to remove 3 base stations following District Court decisions taken on
the basis of the Supreme Court decision. The second MNO also faces repeated orders from
different public authorities to remove its existing base stations for lack of the requisite
permits.
The Commission is looking into the matter of rights of way in respect of both fixed and
mobile networks.
Universal service
In Cyprus, the universal service provider (“USP”) was last designated on 18 March 2005 for a
period of 3 years. The incumbent was designated for all components and for the whole
territory. Although provided for in the legislation, the OCECPR received no request for the
compensation mechanism set up for the provision of universal services.
EN
176
EN
Under currently Cypriot secondary legislation, the designated operator must have
geographical coverage of at least 85% of the whole territory and population coverage of at
least 70%. Following the concerns raised by the Commission in the last Implementation
Report that some operators might be excluded from the outset, the Cypriot authorities
submitted a draft amendment of the current legislation to the Commission. In this draft, all
reference made to the population and territorial coverage obligation have been replaced by the
general possibility for the OCECPR to set more stringent conditions in order to ensure that the
universal service provision is available to all users with good quality and at an affordable
price.
The Cypriot authorities introduced two schemes designed for end-users with low income and
end-users with special social needs (disabled, deaf or blind). Subject to providing evidence
that their situation allows them to benefit from the special service provision, users with low
income are entitled to special discounts on PSTN connection, subscription and calls. Users
with special social needs are entitled to free connection and subscription for one fixed
analogue line and to one hundred minutes of free national call per month or to free
subscription for one mobile connection and one PSTN connection to the internet, where they
benefit from special rates for broadband access to the internet.
The Commission initiated an infringement proceeding against Cyprus in December 2005
since comprehensive directory and directory enquiry services were not available. Following
the reply from the Cypriot authorities confirming that a comprehensive on-line directory and a
comprehensive directory enquiry services, including fixed and mobile numbers, had been put
in place, as the subscriber database of the second MNO had been made available, the
Commission closed the case in June 2006.
In Cyprus emergency calls are made both to 112 and to 199, the national emergency number.
Caller location information was only available for calls made from a fixed line but not for
calls made from a mobile phone. In this respect, an infringement procedure was launched by
the Commission in April 2006. In September 2006, the Commission closed the case after the
Cypriot authorities had provided assurances that both MNOs make caller location information
available to the Cypriot emergency authorities.
Number Portability
Number portability was introduced in Cyprus on 12 July 2004 with 10 000 fixed and 4 860
mobile ported numbers up to October 2006.82 In this context, it should be stressed that the
cost of fixed number portability is much higher than the EU average (€9.32).
82
EN
In respect of the fixed and mobile ported numbers it has to be underlined that these figures indicate the
number of transactions, consequently repeated portings are included and do not reflect the currently
ported number.
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EN
LATVIA
INTRODUCTION
Latvia’s strong GDP growth in 2006 has had tangible effects on developments in the
electronic communications sector. According to estimates by the regulator, the Public Utilities
Commission (PUC), the overall value of the sector has grown in the past year to
approximately €500 million.
From a regulatory viewpoint, competition in the mobile sector over the past year in particular
has intensified with the entry of a third GSM/UMTS mobile network operator; this operation
was well managed overall by the tender commission, which comprised members of the PUC,
the Ministry of Transport and several other institutions. Broadband take-up has more than
doubled to reach penetration levels of 9.2%. These positive developments were accompanied
by increasing regulatory activity, with the PUC stepping up its efforts to complete its first
round of market analyses by December 2006.
Finally, it was noted in December 2006 that the Latvian government had used external
consultants to establish an independent valuation of the state’s shareholdings in the incumbent
and in the leading mobile operator, with a view to privatising the remaining 51% stakes in
each of these firms. The Latvian government was set to decide in January 2007 whether to
divest its stakes, beginning with the mobile operator.
The PUC was off to a late start with its market analysis and imposition of the regulatory
obligations provided for by the Framework Directive. By the time of publication of the 11th
Implementation Report none of the markets had been analysed. One of the principal
regulatory developments in 2006 can thus be identified as the commencement of this process.
Up to January 2007 the PUC had notified 17 of the 18 markets listed in the Recommendation.
Market players followed with concern the sometimes complex administrative interaction in
the context of numbering and frequency issues between the Ministry of Transport, the PUC
and the Electronic Communications Office (outside the control of the regulator). The PUC in
turn is responsible for allocation on the basis of the plan, but the procedure is rendered more
complex through the involvement of a special inspection unit for equipment authorisation
placed outside the control of the regulator. In particular, discussions have taken place to
introduce fees for allocated numbering resources of €0.17 per year/number, as well as fees for
the use of spectrum resources; the proceeds (in combination perhaps with state revenues from
the budget) are then intended to finance the eventual establishment of a universal service
fund. The Commission will monitor these developments carefully during the coming year for
compliance with the Framework.
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178
EN
The PUC is a multi-sector regulator that has regulatory powers in energy, electronic
communications, postal services and railways.
It is generally regarded as being able to attract and retain well-qualified staff. The PUC is
presided over by a five-member board, appointed by the Latvian Parliament on the
recommendation from the Cabinet of Ministers. These board members are appointed for a
five-year term. 2006 witnessed a number of key personnel changes, including the appointment
of a new chairperson (in November 2005 – a former state secretary of the ministry of finance)
and a new commissioner (July 2006).
The executive arm of the PUC responsible for the electronic communications sector is the
Electronic Communications and Post Department, assisted by separate legal and economic
departments. They are all subordinated to the PUC board, enacting approved decisions and
overseeing implementation.
At the end of 2006, the relevant department of the PUC employed 24 permanent staff.
The appeals system was overall regarded as satisfactory by interested observers, and the
typical timeframe in the newly established administrative court system for reaching binding
decisions is put at 2-3 years. The PUC’s remedy decision in markets 8-10 went through
without appeal.
Observers have criticised the PUC for not making available on its website proper yearly or
quarterly data on the sector, leading to insufficient levels of transparency.
Decision-making
Since by November 2005 the PUC had not yet started the process of market analysis and
imposition of regulatory obligations provided for in the Framework Directive, its attention in
2006 inevitably focused on this crucial part of its regulatory responsibilities. Up to January
2007, the PUC had notified 17 of the 18 markets listed in the Recommendation. In general, in
executing these analyses (and particularly in conducting the attendant consultation phases) the
work of the PUC was found to be efficient by the market players concerned. However,
observers noted that the role of the Competition Council in the process was a purely formal
one.
Broadband
Latvia BB penetration
15.00%
Market situation
12.00%
9.28%
The Latvian market for retail
broadband access has seen another year
of formidable growth, reaching a
broadband penetration rate of 9.28%.
This is more than twice the 2005 level
(4.46% in October 2005) and more
than four times the 2004 level (2.37%).
9.00%
6.00%
3.00%
4.46%
2.37%
0.00%
2004
EN
2005
2006
179
EN
The fixed incumbent has an overall
Latvia - BB lines by technology/means
market share of 53.49%; its share of
xDSL lines remains close to 100%.
The picture of thriving infrastructurebased competition that emerges from
these figures needs some qualification.
First, while it is true that cable,
wireless local loops, Ethernet access
and even non-incumbent FTTH
solutions (for instance, by the stateowned monopoly power utility) all vie
for the end customer, this competition
is largely confined to the capital region
of Riga where the incumbent’s share has dropped significantly. However, in rural regions,
typically the only non-wireless broadband access solution remains the incumbent’s DSL
products. Unbundled local loops, bitstream and resale products account together for no more
than 0.32% of the entire alternative operator’s market share. It remains to be seen whether this
share will finally increase after the PUC’s notification of markets 11 and 12 in November
2006. Second, the incumbent’s market share, even in Riga, instead of coming under further
pressure, seems to have consolidated over the past year.
91129
NE DSL (Resale, Full
ULL, Bitstream, Shared
access); 943
Inc. WLL; 249
NE WLL; 9831
NE Other (Ethernet);
52139
NE PLC, Satellite;
1 789
NE Cable modem;
32 004
NE L.L.; 18122
6677
The sector’s dynamic growth and the still dominant position of the incumbent for DSL is
borne out by the incumbent’s figures – 100 000 subscribers by year end (of which 45 000
were in Riga, and 55 000 in the countryside), up from last year’s 69 000. Its typical retail offer
is approximately €24 for a 5 Mbit/s product. IPTV offerings with even higher bandwidth by
the incumbent are expected in early 2007, mainly in the Riga region, where cable and,
interestingly, Ethernet access (mainly for business customers) both have a strong presence.
Regulatory issues
In November 2006, the PUC notified markets 11 and 12 to the Commission’s Article 7 task
force, finding dominance by the incumbent player and imposing cost-based access
obligations.
As up to this notification the number of unbundled lines and bitstream products was
negligible, implementation of these remedies will clearly be a priority for the regulator in the
coming year.
Mobile markets
Market situation
In the Latvian mobile markets 2006 was another year of very strong growth and significant
structural change. Overall, penetration levels in this most important segment of the Latvian
electronic communications market have now increased to approximately 90-95% of the
population, compared to 63% in 2004 and 78% in 2005.
A key driver of this was the entry in 2006 of a third mobile network operator. It is estimated
to have attracted more than 175 000 customers in its first year of existence (of a total potential
market of approximately 2.3 million). This has brought three major changes.
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EN
First, according to market player’s own estimates, prices for mobile services have come down
by 15-20% in the reference period. If read in conjunction with higher penetration rates and the
increased total volume of minutes used, this figure points to a dramatic gain in consumer
welfare resulting from this new entrant.
Second, a thriving MVNO business has developed on two of the three networks in Latvia.
This is a significant development - particularly as MVNO entry has been as a result of
commercial arrangements rather than regulatory intervention. The new entrant alone now has
agreements with six MVNOs, catering for specific niches of the market. It is expected that the
overall figure will increase in 2007.
Third, as foreseen by the Latvian authorities, breaking up the former duopoly has resulted in
more investment in network infrastructure and new services. This is true in particular of the
new technology of HSDPA, which has now been rolled out by two networks in seven major
cities in Latvia. HSDPA retail products (currently mostly aimed at the business customer
segment) offer speeds of up to 3.6 Mbit/s and are currently priced at €35 to €65. The first
mobile TV offerings were also on the market at the end of 2006.
The current market structure - in terms of revenues – is made up of a 64.4% market share for
the largest player, a 35.5% market share for the leading competitor, and a 0.6% market share
for the new entrant (figures for the first half 2006).
All of the market developments outlined above are positive, even though there was some
criticism that, at least from the point of view of retail prices, the Latvian mobile market still
has some way to go before it reaches the even more competitive levels of some of its
neighbours in the Baltic region. In the coming years, as the market matures and consolidation
becomes an issue, the Latvian authorities – and perhaps the Competition Council in particular
– will face the important task of ensuring that the gains resulting from the present competitive
multitude of networks are permanent.
Regulatory issues
From a regulatory point of view, the welcome entry of the third mobile network provider was
largely well managed by the authorities and should be judged a success. It put an end to the
mobile duopoly that has characterised the Latvian mobile market for a long time.
In 2006, the transition to a new national 8-digit numbering plan for non-geographic numbers
was completed, preventing numbering ranges from becoming an artificial bottleneck for the
growing demand for mobile services in particular. The first numbers were allocated to mobile
operators in May 2006.
Termination rates for the two leading operators are set at €0.089. Non-supervised commercial
negotiations between the operators have resulted in a concessionary MTR of 20% above this
level for the new entrant. Latvia for the moment has thus an asymmetric MTR structure,
which - considering the relative scale of the different mobile players - should be able to
nurture competition.
As regards market 15, which was notified to the Commission in November 2006, the PUC has
elected to refrain from imposing national roaming obligations on the two leading operators on
the grounds that the new entrant was obliged by its licence conditions to effect certain levels
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EN
of network investment. The PUC should carefully monitor whether this arrangement is
conducive to sustainable long-term competition.
Fixed
Market situation
The fixed voice telephony sector remains the most uncompetitive – though not the largest segment of the Latvian electronic communications market. Approximately half the
incumbent’s revenues fall into this segment. This amounts to more than €100 million
revenues and comprises almost the entire market.
Since the PUC-mandated carrier pre-selection for local calls in September 2005, 111 players
providing local fixed voice services have entered the market. Similarly, at the end of 2006,
according to the PUC, there were 124 active players providing international fixed voice
services, approximately 30% share of this market segment. Compared to 2005, there has thus
been no movement.
Regulatory issues
As a transitional measure the PUC imposed CPS for local calls in September 2005.
Implementation of this measure shows new entry into this market. However, an accurate
assessment of most recent developments must await the analysis and notification of markets
1-6 of the Recommendation scheduled for late December 2006. It seems clear that the fixed
voice telephony market – though poised for technological change at least in big urban centres
– has to become one of the PUC’s regulatory focus points if it is to be serious about letting all
consumers benefit from liberalisation of the sector.
Broadcasting
The broadcasting sector is dominated by cable companies. However, the fixed incumbent is
introducing IPTV in early 2007.
The Latvian government has not yet decided upon a detailed timetable for the transition to
digital television.
Spectrum management
Responsibilities for the allocation of spectrum are shared in a complex manner between the
Ministry of Transport, the PUC, and a separate electronic communications office, which is
responsible for technical issues of implementation.
In the reference period, the PUC organised a successful beauty contest for the frequency
ranges 450 and 800 MHz in December 2005, for 40.5 – 43.5 GHz in June 2006 (for digital
television) and for 387/397 MHz in October 2006 (for security and defence purposes).
Furthermore, in November 2006 the Ministry of Transport drafted amendments to the Latvian
regulation on spectrum (national frequency plan), which incorporate Decisions 2005/928/EC,
2005/513/EC, 2005/50/EC and 2004/545/EC.
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EN
Some market players reported that the Latvian authorities planned to introduce frequency fees
to finance (perhaps in combination with state revenues from the budget) a future universal
service fund. The Commission will monitor carefully whether such a policy is in compliance
with the Framework.
The PUC conducted a beauty contest for the ccTLD.lv domain administration in June 2006,
which was won by the Institute for Mathematics and Informatics of the University of Latvia.
Security requirements and an obligation to submit annual accounts were imposed as part of
the award decision by the PUC.
Universal Service
On 22 November 2006, the PUC proposed a non-binding internal administrative measure
specifying guidelines on universal service obligations. The measure contains a list of activities
that fall under the scope of universal service, the obligations of universal service imposed by
the PUC, the geographical territory and the end-users covered by the universal service.
While the clarifications contained in this measure are clearly to be welcomed, since
transposition of the framework directive in November 2004 no proper designation process of
the universal service provider has been enacted or indeed followed up. In Latvia the basic set
of services within the scope of universal service is not provided under normal commercial
conditions at an affordable price (e.g. the 3800 public payphones operated by the incumbent
in 2006). Thus, the PUC has to designate an undertaking to provide these services and, in so
doing, it must ensure that the designation process is efficient, objective, transparent and nondiscriminatory, and furthermore that no undertaking is excluded as such from the process.
Rather than observing these rules, as contained in the applicable law, the PUC in the past
simply designated the incumbent operator as the universal service provider on an annual
basis.
Furthermore, the designated undertaking is to be compensated for the net costs incurred in
providing universal services, and to date there is no such agreed compensatory mechanism in
place in Latvia. While the Ministry of Transport has proposed a legislative act creating a
universal service fund financed by the industry to compensate the designated undertaking, this
act has not yet been adopted by the Latvian cabinet of ministers. Some observers have noted
that the reason for the legislator’s reluctance might be the intention to create a cross-sectoral
fund encompassing all industries regulated by the PUC – clearly a project that the
Commission will monitor as to compliance with the regulatory framework.
Contrary to Articles 5 and 25 of the Universal Service Directive, there was no comprehensive
directory or a comprehensive directory enquiry service comprising all subscribers, fixed and
mobile, available in Latvia until 2006.
In February 2006, the Latvian authorities had drafted amendments to the Electronic
Communications Law imposing further obligations on service providers with regard to data
transmission to enable this service.
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EN
In October 2006, the Latvian authorities stated, first, that a comprehensive directory enquiry
service was now available, and, second, that the amendments to the ECL had now been
implemented. This has been verified by the Commission with the fixed and mobile operators
concerned, and as a result the originally pending infringement proceeding has been closed.
The Latvian authorities have pointed out that it was planned to implement identification of
caller location in both the fixed and the mobile sector in 2007 at the latest. However, they also
made this contingent on it being ‘economically viable’. In the Commission’s view, this is not
acceptable because the applicable EC law does not provide for national exceptions based on
this criterion. The Commission has therefore opened infringement proceedings and has sent a
reasoned opinion to the Latvian authorities.
Number portability
Under the Universal Service Directive, number portability became available in Latvia in
December 2005. In the mobile and fixed sectors, a total of 35 000 numbers have since been
ported, approximately 26 000 numbers in the mobile sector and 9 000 numbers in the fixed
sector. Take-up has therefore been lacklustre. The Commission will continue to monitor
whether the level of charges for porting numbers is justified (at present a one-off fee of
approximately €8.5 for geographic numbers); whether there are any additional and possibly
unjustified variable fees (as was argued by one market player); whether the obligations are
non-discriminatory to all operators and to all kinds of subscribers (post-paid and pre-paid - the
Latvian Electronic Communications Law unduly seems to exclude pre-paid customers from
the definition of subscribers); and, finally, whether the time it takes to port a number is within
a adequate limits.
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184
EN
LITHUANIA
INTRODUCTION
In 2006, Lithuanian mobile operators and service providers continued to compete intensively
against each other. All mobile operators have started or are about to start commercial thirdgeneration mobile service offerings, including mobile TV. Broadband penetration increased at
a pace slightly slower than expected given the competing platforms. Fixed markets are still
dominated by the fixed incumbent to a very large extent.
On the regulatory side, the completion of virtually all market analyses, and the lower number
of decisions suspended while under appeal, have created the basis for rapid implementation of
the remedies imposed. Issues of concern include difficult relations between alternative
operators (including cable operators) and the fixed incumbent, and the absence of an effective
112 caller location service. Effective structural separation between regulatory functions and
functions associated with the control of operators would also appear to merit more regulatory
attention.
The national regulatory authority RRT could be categorised as a comparatively “light touch”
regulator that believes in the market forces of infrastructure competition. Arguably, this
approach has worked in the otherwise very competitive mobile markets and partly in the
broadband markets, but has been less effective in the fixed markets, where the fixed
incumbent has largely succeeded in escaping competition. It is yet to be seen what changes
will be brought by the implementation of remedies imposed in the course of market analyses.
The organisation of RRT’s decision-making is generally attributed to its director. However, a
predominantly advisory body called the Council apparently enjoys the power of veto over a
range of RRT decisions, including RRT’s budget, rules on administrative charges, market
analysis regulations, general authorisation regulations, rules on publication of information,
public consultation regulations, and dispute settlement regulations. The Council is composed
of seven representatives of various institutions, including RRT itself and the Ministry of
Communications (the Ministry). The Ministry also performs functions associated with the
control of operators, namely the analogue broadcasting transmission incumbent. It appears
that the same person represents the Ministry both in the RRT Council and on the board of that
operator. The Commission services are looking into this matter.
The positive trend noted by RRT is that, in 2006, the Lithuanian courts refrained from the
practice of automatically suspending RRT’s market analysis decisions. The courts now put the
burden of proof for the need for suspensions of this kind on operators.
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EN
Decision-making
RRT has notified all the markets identified in the Recommendation, with the exception of the
market for international roaming. Remedies resulting from the market analyses and SMP
(significant market power) findings are, as a rule, in their first stages of implementation.
RRT noted that alternative operators tend not to participate actively in public consultation
procedures. This might reflect the fact that the human resources of these operators are too
limited for them to pay adequate attention to regulatory issues.
An alternative operator has announced that starting from March 2007 it will provide
converged mobile/fixed IP services. The fixed incumbent has already introduced a VoIP
service. Two of the three mobile operators are providing mobile TV. Some cable operators
have introduced or are in the process of introducing triple play services.
The Lithuanian Government, subsidised by the European Structural Funds, is deploying a
3000km fibre backbone, designed to connect residential and non-residential users (i.e.
schools, hospitals, local administration) in rural areas. Operation of the backbone will be
entrusted to a private company selected by tender. The second phase of the project (RAIN II),
aimed at developing access to the backbone, is under study. Some criticism has been
expressed by local authorities that RAIN has not yet delivered tangible benefits.
Broadband
Market situation
In
October
2006,
broadband
penetration had reached approximately
15.00%
9.3% (compared to approximately
5.8% in October 2005). Broadband
12.00%
9.26%
services are provided through a number
9.00%
of competing types of infrastructure,
5.76%
6.00%
with local area networks and cable
3.06%
3.00%
playing important roles, but intra-DSL
0.00%
(digital subscriber lines) competition is
2004
2005
2006
virtually
non-existent.
Overall,
competition
between
technology
platforms has not yet resulted in a wider retail uptake of broadband (Lithuania is one of the
better performing new Member States countries, but lags considerably behind the EU-25
average of 15.7%). The broadband market share of the fixed incumbent was constantly on the
increase over the period 2004-2006. RRT believes that wireless technologies will
substantially enhance broadband penetration and is taking appropriate regulatory steps (a
tender is planned for WiMax rights of use).
Lithuania BB penetration
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186
EN
Lithuania - BB lines by technology/means
Regulatory issues (including market
analyses and remedies)
152630
As a result of the analyses of the
wholesale broadband access and LLU
(local loop unbundling) markets,
updated reference offers were issued
by the fixed incumbent in August and
October 2006 respectively. The
improved bitstream offer should allow
the alternative internet Service
Providers to provide differentiated
retail broadband services (the old one
was rather a retail business offer
comparable to resale). Twelve bitstream level contracts have been signed so far.
Inc. Other (LAN, Other
access, Fiber to the
home); 1958
2388
NE WLL;
23 555
NE LAN; 53027
19359
NE Cable modem;
61 010
NE L.L.; 1348
In 2006, the first fully unbundled local loops were brought into use in Lithuania. However,
there has still not been any wider uptake by alternative operators. Due to various connection
and service fees, use of LLU would make sense at national level, but for the time being
operators would be interested in LLU in selected areas only. LLU prices have not changed
compared to 2005. Limited attractiveness of LLU is also due to limited penetration of the
fixed incumbent’s network (approximately 23 lines per 100 inhabitants in June 2006
according to the data provided by RRT). RRT explained that massive investment would be
necessary for LLU, and that cable and LANs (local area networks) create competition in
urban areas.
In 2006, a fine close to €1 million was imposed on the fixed incumbent by the Lithuanian
Competition Authority for abuse of its dominant position in broadband markets, which took
the form of a price squeeze. The fixed incumbent was also obliged to change the conditions of
provision of the ADSL (asymmetric digital subscriber lines) access service by eliminating the
scope for unfair prices.
Mobile markets
Market situation
Mobile market is very well developed in Lithuania with notably a SIM card penetration well
above 100% (133% in October of 2006) and accounting for nearly half of the revenues
generated by electronic communications services.
The mobile access market was found to be effectively competitive by RRT. Following
unsuccessful appeals, RRT’s decisions concerning the mobile call termination market are
final and not contestable. Implementation of mobile termination remedies seems to be at an
initial stage, as a tender for methodology has recently been announced by RRT. In the
meantime, transitional measures are in place, under which each operator will be required not
to apply (price) conditions for the provision of voice call termination services which are
worse than those applied on 30 September 2004.
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EN
Fixed
Market situation
In Lithuania, competition on fixed markets is much less intense and dynamic than on mobile
markets. This is the result of several factors, including the proliferation of mobile-only users,
the fragmentation of the cable industry and the possible restraint of RRT against the fixed
incumbent so far. According to data provided by RRT, the market share of alternative
operators by revenues decreased from approximately 6.26% in the second quarter of 2005 to
approximately 4.15% in the second quarter of 2006. This is partly due to the decision of a
significant alternative market player to withdraw from fixed markets.
As a result of its analysis of the fixed retail access markets, RRT has imposed WLR
(wholesale line rental) obligations on the fixed incumbent.
According to alternative operators, the fixed incumbent acts in a discriminatory way by
charging much higher retail tariffs for calls to alternative networks than for the on-net calls
(12 Lithuanian cents for on-net calls and 45 Lithuanian cents for calls to alternative networks
at peak time). However, the fixed incumbent claims that the difference results from the
application of the principle of cost orientation and was looked at by RRT (which slightly
reduced the difference). Generally, new interconnection prices would come into force as of 1
January 2007. Most alternative operators interconnect at national points, indicating that local
interconnection is not cost-effective (e.g. 6 interconnection points for the Vilnius region).
Charges for call termination on the fixed incumbent’s network are remarkably high compared
to the EU average and have not decreased since 2005 (€0.026 local level, €0.035 national
level).
A formal complaint against the fixed incumbent was submitted to RRT by an alternative
operator due to the impossibility of calling its network from the fixed incumbent’s payphones.
In July 2006 (after more than a year), the dispute was resolved in favour of the alternative
operator, although the delay is not encouraging alternative operators to initiate new disputes.
According to the fixed incumbent, the problem resulted from the use of non-geographic
numbers by the alternative operator (payphones needed upgrading). The fixed incumbent
argued that payphones are not covered by the interconnection agreement with the alternative
operator, but RRT decided that the possibility of calling alternative networks from the fixed
incumbent’s payphones is part of the universal service.
According to the alternative operators, the fixed incumbent is pursuing a targeted win-back
campaign by offering their clients “almost wholesale” prices. However, this type of price
squeeze is difficult to prove. As a result, alternative operators are “pushed” into the IP
environment. Alternative operators are not helped by the indefinite public procurement
contracts for electronic communication services between state institutions and the fixed
incumbent.
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EN
Broadcasting
Market situation
Broadcasting content is delivered to end-users on a number of different types of
infrastructures: analogue and digital terrestrial networks, cable networks, satellites, the fixed
incumbent’s ADSL network. In terms of penetration, terrestrial networks still dominate the
market (73% of households83), with cable (23% of households) and satellite (4% of
households) networks coming next. Analogue broadcasting still prevails over digital
broadcasting. The analogue switch-off process will start as of 2012.
As a result of the analysis of the broadcasting transmission services market the analogue
transmission incumbent was designated as SMP operator. Remedies of access, transparency,
non-discrimination, price control, cost accounting and accounting separation were imposed by
RRT.
Broadcasters are “tied” by content licences to their transmission service providers (the
analogue broadcasting transmission incumbent in the case of analogue broadcasting; the
analogue broadcasting transmission incumbent or the fixed incumbent in the case of digital
broadcasting). This could be seen as an unnecessary restriction of the freedom of terrestrial
broadcasters to change provider, which symmetrically may restrict the freedom of the
transmission service providers to compete with each other for customers and may lead in
particular to dissuading potential new entrants from challenging the position of existing
providers. There are ongoing discussions between the Lithuanian authorities concerning
changes to these licensing rules.
Lithuanian authorities and operators apparently have certain problems with the standard
adopted for digital TV – mpeg 4. In particular, consumer equipment took some time to arrive
on the Lithuanian market. According to the consumer representatives, a viable alternative
could have been temporary use of mpeg 2 combined with relatively quick transition to HDTV
(high definition TV).
Spectrum management
The radio frequencies and their respective uses regulated by the Commission’s radio spectrum
harmonisation decisions are reflected in the List of Radio Frequencies (Channels) That May
Be Used Without an Individual Authorisation (version of April 2006), approved by RRT.
RRT has already issued two WLL “pre-WiMax” rights of use for radio frequencies. However,
according to alternative operators, these platforms are not yet a viable alternative to the fixed
incumbent’s PSTN (public switched telephone network), e.g. cable operators cannot use them.
A tender is planned for WiMax rights of use: two national and one regional, should
frequencies remain available after the granting of national rights. 3G mobile operators are
83
EN
According to the report by Dataxis “Digital television data: EU market for digital television”
189
EN
likely to be excluded from the tender (in order to promote infrastructure competition,
according to RRT). The fixed incumbent is interested in WiMax and other new technologies.
According to the alternative operators, the fixed incumbent artificially creates barriers for
access to its ducts, while the policy and regulations adopted by the state institutions are not
supportive enough. They also say that the fixed incumbent’s ducts laid in new construction
sites are simply too narrow. On the other hand, the prices of the fixed incumbent’s ducts seem
to be quite reasonable. The fixed incumbent claimed that it abided by the rules approved by
RRT (e.g. allowing projects scheduled over the coming two years to be taken into account).
RRT noted that the issue is partly regulated by the framework agreement between the fixed
incumbent and the association of cable operators. It also regretted that alternative operators
are not raising issues through formal dispute settlement channels. Finally, it is to be noted that
RRT is assuming a new regulatory role concerning construction planning in the area of
electronic communications.
Tariff transparency
Intense competition between mobile operators and service providers has resulted in a
proliferation of various tariff plans. Although clearly beneficial, this trend also has a negative
side-effect, as the consumer representatives complain about the lack of transparency in mobile
tariffs.
Universal service
In 2006, the Lithuanian Government adopted new Universal Service Regulations. In
particular, the mechanism for designation of the universal service provider has been improved
by providing that at least once per year RRT will announce an official call for expressions of
interest to provide the universal service or any of its constituent components.
In 2006, an infringement case was opened against Lithuania on the grounds that, contrary to
the requirements of Article 26 of the Universal Service Directive, caller location information
was not available to emergency authorities in Lithuania for calls made from mobile phones.
At the start of December 2006, a cooperation agreement concerning the future introduction of
the 112 caller location pull service was signed between the Joint Emergency Centre and
mobile operators.
Number portability
At the end of 2005, an infringement case was opened against Lithuania on the grounds that,
contrary to the requirements of Article 30 of the Universal Service Directive, the temporary
direct call forwarding solution that was used as a substitute for fully operational number
portability in Lithuania did not ensure that SMS (short message service) and MMS
(multimedia message service) messages reach the ported mobile number of a subscriber.
Following the introduction of the fully operational mobile number portability in February
2006, the case was closed.
EN
190
EN
Operators complain about the expensive number portability solution (1 Lithuanian litas per
allocated number) put in place in Lithuania. RRT partly responded by decreasing
administrative charges for numbers. However, number portability is free of charge to endusers and is delivering tangible results: being fully operational from February 2006, mobile
number portability allowed more than 100 000 numbers to be ported in 2006, compared to
55 573 in 2005. Fixed number portability represents only approximately 4 400 ports.
In 2006, RRT created the possibility for end-users to submit complaints and other documents
concerning the provision of electronic communication services on-line. Some operators are
concerned about RRT’s dual role as arbiter in disputes between operators and end-users
(under Lithuanian law operators must participate in RRT dispute resolution procedures
initiated by end-users) and at the same time as an institution responsible for consumer
protection.
EN
191
EN
LUXEMBOURG
INTRODUCTION
Luxembourg has improved its broadband penetration rate, which is now above the EU
average. The mobile market continues to grow and enjoys a very high penetration rate. A third
mobile operator recently entered the market, while a fourth mobile operator was granted an
authorisation. Due to obstacles such as the absence of wholesale line rental, the outlook for
the fixed market is less positive.
Partly due to late transposition, the national regulatory authority was lagging behind in
carrying out market reviews, thereby generating some legal uncertainty. The situation
substantially improved however in late 2006. In the meantime, a state-owned company has
been established to run a fibre network designed to improve Luxembourg’s internet
connectivity.
Overall, there were certain changes in the regulatory environment in 2006, in particular the
completion of the majority of the market analyses by the end of 2006. There is an ongoing
problem with regard to the accounting system of the incumbent. A letter of formal notice was
sent in the autumn of 2006 and the Commission services are assessing the reply of the
Luxembourg authorities.
The Institut Luxembourgeois de Régulation (ILR) (the NRA) is generally considered
independent, but questions have been raised on the level of its resources to carry out resources
inter alia the market reviews.
Many alternative operators also maintain that the cooperation between the Competition
Authorities and the NRA does not work well, and that the allocation of tasks is not always
clear. This view is not shared by the NRA.
Decision-making
Due to late transposition of the regulatory framework, the national regulatory authority has
been late in completing the market reviews. In November 2006, the vast majority of market
reviews had not been completed. A Reasoned Opinion was sent in the autumn of 2006, when
Luxembourg had only notified three markets out of eighteen. However, significant progress
has been made since then, and the national regulatory authority had notified most market
reviews by the end of 2006, except for the market for broadcasting transmission services and
the market for wholesale international roaming. The lack of completed market reviews has
created some uncertainty as to the regulatory framework under which operators will operate
(e.g. what remedies will be applied to what operators). In the markets notified so far, the NRA
tends to impose a full range of remedies.
EN
192
EN
The consultation process seems to work well. However, some alternative operators consider
that there is not enough transparency with regard to the consultation process for, inter alia,
market reviews, whereas the NRA points out that alternative operators are sometimes late in
replying to ongoing consultations. This has resulted in the NRA occasionally having to extend
the deadlines for replying.
An important development in Luxembourg is the creation of LUXConnect, a state-owned
operator which is expected to provide dark fibre to operators. According to the government,
the objective is to improve long-term, very high-speed internet connectivity, and to connect
Luxembourg to Brussels, Paris, Strasbourg, Frankfurt and London. LUXConnect would
provide dark fibre to other operators on non-discriminatory terms. The government considers
that the private sector either cannot provide sufficiently high-speed infrastructure, and/or does
not provide it to other operators on non-discriminatory terms.
Operators consider that the creation of another state-subsidised operator is unnecessary
duplication of existing broadband infrastructure or of infrastructure that easily could be
upgraded to sufficient high-speed. Competition may be skewed in that the state-subsidised
operator could offer more attractive terms, on the strength of having financial support, or
could have preferential treatment regarding rights of way.
An additional matter of concern is the fact that the President of LUXConnect, who is
responsible for controlling the state-ownership of the operator, also has duties in the Ministry
responsible for drafting electronic communications legislation (even if the President will not
be responsible for the day-to-day running of the company). Similar concerns about separation
of ownership and regulatory functions arise regarding the presence on the Board of the
incumbent of a person who at the same time is a senior member of the Ministry responsible
for drafting electronic communications legislation. The Commission services are looking into
these matters.
Broadband
Market situation
Luxembourg
has
significantly
improved in terms of broadband
penetration from a poor position four
years ago to a situation where it is now,
at 19.7 % as of October 2006, above
the old Member States average of 17.4
% for the first time (and above the EU25 average of 15.7 %). However, the
incumbent continues to hold a very
high market share in the broadband
market (72.25 %).
Luxembourg BB penetration
25.00%
19.71%
20.00%
13.40%
15.00%
10.00%
7.05%
5.00%
0.00%
2004
EN
2005
2006
193
EN
Luxembourg - BB lines by technology/means
Regulatory issues
The majority of broadband lines in
Luxembourg are currently provided by
means of the incumbent’s DSL lines
(67 406 lines, which is around 75 % of
broadband lines). There is no genuine
bitstream
access
available
in
Luxembourg (although a resale product
of the same name exists), and the
incumbent
does
not
have
a
comprehensive
ATM
network,
meaning that any future bitstream offer
seems unlikely.
67406
access; 5450
NE Resale; 9227
Inc. Other (Cable
modem, Other
access); 959
NE Cable modem;
7 452
NE Other (WLL, L.L.);
87
Furthermore, there is no wholesale offer for ADSL by the incumbent (although there is a
resale product of the same name). This situation has led some operators to offer products
based on full local loop unbundling (LLU), but no alternative operator has a substantial
market share so far. Alternative operators find it difficult to compete with the incumbent, due,
among other things, to the lack of a service level agreement for LLU. Operators also continue
to complain of a margin squeeze. Prices for LLU are higher in Luxembourg than the EU
average, both for fully unbundled lines and shared access. The total monthly average cost per
fully unbundled line in Luxembourg is 13.4 euros (compared to the EU average of 11.6
euros), and the total monthly average cost per shared access is 6.9 euros (compared to the EU
average of 4.4 euros). As a result, very few operators are requesting shared access from the
incumbent.
Finally, there are issues regarding the bundled package offered by the incumbent where
ADSL, fixed and mobile voice are bundled in one package, with reductions only available to
those who avail themselves of the bundled package. Alternative operators find it difficult to
offer the same or similar bundled packages due to the lack of wholesale offers for fixed and
ADSL by the incumbent. (As regards fixed voice, there is no wholesale line rental either.)
According to the alternative operators, the bundled package has already had a negative impact
on their market shares.
Mobile markets
Market situation
The mobile market continues to grow and the penetration rate is the highest in Europe
(171%). This is mainly attributed to transnational commuters who have a Luxembourg SIM
card. A third mobile operator recently entered the Luxembourg market and intends to finalise
its network by the end of 2006. A fourth mobile operator was recently granted a licence, but
has not yet started operations due to a pending court case.
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194
EN
Regulatory issues
Compared to the fixed market, there is greater competition in the mobile market, and mobile
number portability has been a success. However, the third generation network roll-out has
been slightly delayed, partly due to the procedures for obtaining planning permissions for
mobile masts and antennas.
Fixed
Market situation
The government owns 100% of the incumbent, which holds a strong market share in the fixed
market. Its market share for all fixed calls (including calls to the internet) is 78.97 %, by call
minutes. For local calls the situation is similar, where the incumbent’s market share for local
calls is 85.09% (by call minutes) and 77.86% for all local calls, including calls to the internet
(by call minutes). Its position on the market for international calls is slightly less strong:
72.06%, by call minutes. There are only a handful of operators in the fixed market, and the
incumbent together with one other operator holds 97.25 % of all fixed calls, including calls to
the internet.
Regulatory issues
There appear to be a number of factors in the Luxembourg fixed market that contribute to
lessening the competition. The first factor is the lack of a wholesale line rental offer by the
incumbent, which means among other things that alternative operators cannot offer single
billing. The imposition of wholesale line rental was proposed by ILR at the end of 2006.
Secondly, carrier pre-selection (CPS) procedures are long and involve several steps for a
customer to be able to change operator, meaning that many customers refrain from changing
operators. Thirdly, there has been little take-up of fixed number portability, as opposed to
mobile number portability. Finally, operators continue to have concerns about margin
squeezes for leased lines and non-transparent volume discounts offered by the incumbent,
which are difficult to match by the alternative operators.
Broadcasting
Market situation
There are two cable network operators in Luxembourg, one of which is owned by the
incumbent. According to a report prepared for the Commission,84 the household penetration
of the different television platforms (analogue and digital) in Luxembourg was as follows at
the end of Q3 2005: 14.3 % for terrestrial, 22.9 % for satellite, 62.9 % for cable (and 0.0% for
IPTV). Digital switch-over is currently ongoing; 1 analogue channel in the VHF band has
been switched off and 2 analogue channels in the UHF band were expected to be switched off
by the end of 2006. Switchover should be completed by 2010, even though take-up of digital
TV is currently limited.
84
EN
Dataxis Report on the EU Market for Digital Television 2006.
195
EN
Regulatory issues
There was originally a lack of clarity as to who would be responsible for the review of the
broadcasting market, although it has since become clear that it is the responsibility of the ILR,
which expects to carry out the market review in the course of 2007, as one of the last markets
to be analysed.
Spectrum management
The National Frequency Plan, which takes the form of a Règlement Grand-Ducal (i.e.
secondary legislation), is in the process of being changed in order, inter alia, to fully
implement the various Radio Spectrum Decisions, including the most recent ones.
Some operators have concerns about high administrative charges. These charges involve a
fixed fee and a fee based on percentage of turnover. Some operators claim that the latter
percentage becomes high due to the fact that, firstly, the fee is based on the total turnover,
and, secondly, that the turnover often involves resale activities, which increases the total
turnover. However, detailed information from the Luxembourg authorities show that the way
of calculating the fees are transparent (e.g. published on the internet), and are based only on
the turnover generated from end customers.
A Règlement Grand-Ducal entered into force in January 2006, which sets out the procedures
for applying for such permissions, and imposes legal time limits for each step of the three-step
procedure. However, the three-month time limits imposed under the law do not seem to be
observed in practice, and the procedure therefore would be long. Furthermore, the strict
security and health rules imposed would make it difficult to carry out facility-sharing and colocation. This seems to have delayed the development of third generation mobile networks in
Luxembourg.
Another concern is that it is difficult to be granted rights of way in specific cases, for example
from railway authorities, motorway authorities, or indeed certain municipal authorities. There
is a particular problem in one municipality, where the municipality runs its own cable
network. The Commission services are looking into the matter.
Tariff transparency
Concerns have been raised about the lack of transparency for tariffs within the incumbent’s
bundled package. Furthermore, the incumbent has initiated legal proceedings against one of
the alternative operators, claiming that the publicity for its bundled package is misleading.
EN
196
EN
Universal service
There is no formal designation of universal service provider in Luxembourg, even though the
incumbent provides universal service on an informal basis.
There was previously a problem with regard to the provision of caller location information for
mobile for calls to 112. However, this service has been available since the summer of 2006,
and the infringement proceeding was subsequently closed.
Number portability
Mobile number portability has been successful, and has contributed to increase customers’
choice. In contrast, there has been fairly limited take-up of fixed number portability (with
only the 3671 number ported in August 2006).
Must-carry
There are currently no must-carry obligations imposed in Luxembourg.
EN
197
EN
HUNGARY
INTRODUCTION
The growing number of fully unbundled local loops and the appearance of new services such
as IPTV, mobile TV/Video, 2in1 fixed-mobile or mobile payment and naked DSL-related
services were notable developments in the Hungarian market in 2006. Despite high mobile
and rapidly growing internet penetration rates, there is relatively low broadband penetration.
Despite positive progress in some areas of the market, the presence of a large number of
alternative operators and considerable activity by the National Communications Authority of
Hungary (the “NCAH”), the main incumbent has been able to retain its dominance in certain
segments of the market, and the division of the fixed-line market into five local
telecommunications operators (the “LTOs”) has resulted in regional asymmetry.
The principal regulatory progresses are linked to the results of the first round of the market
analysis. The reduction in fixed-line interconnection fees, wholesale broadband service prices,
mobile termination rates, the monthly rental fee for local loop unbundling and the related oneoff charges should be emphasised. The second phase of the market analysis started in 2006
bears witness to the slowly growing maturity of the market. The acquisition of the second
LTO by the owner of an LTO and the leading alternative operator is a further major step as it
aims to underpin its market position vis-à-vis the main incumbent.
In 2006 some improvements in the Hungarian regulatory approach were realized by
reinforcing the executive power of the NCAH. The NCAH is also proving to be more willing
to impose more significant fines on operators in an effort to enforce its decisions and seems to
be asserting its position more in matters of regulatory problems. By contrast, transfer of the
tasks of the Ministry of Informatics and Communications, which ceased to exist, to the
Ministry of Economy and Transport (the “Ministry”),85 resulted in a significant reduction of
staff, and its final structure was put in place only after more than seven months. Ministerial
resources now seem to be insufficient to carry out the Ministry’s legally defined objectives.
The regulatory tasks are divided between the NCAH and the Ministry. Despite the fact that all
Hungarian e-communications service providers are private companies, the Hungarian State
holds a ‘golden share’ in the main incumbent. The Ministry exercises ownership rights in
respect of that golden share, which raises doubts as to its conformity with the requirements of
independence stipulated by the Framework Directive. The Commission had initiated an
infringement proceeding against the Hungarian regime of golden shares and a new draft bill
was submitted to the Hungarian Parliament on 20 October 2006, in order to abolish the
special rights of the State.
85
EN
By Act LV of 2006 and Government Decision 163/2006 (VII.28)
198
EN
In general, electronic communications operators are concerned that the NCAH delivers its
decisions in the course of dispute resolutions very slowly. In 2006, in 3 dispute resolutions in
one case the NCAH did not deliver its decision within the time limit set by the law (45 days,
which can be extended once by 15 days).
At the same time, market players appreciate the fact that the NCAH is imposing increasingly
significant fines in order to enforce its decisions.
The decisions of the NCAH appear to be systematically challenged before the appeals court.
However, the number of appeals is on the decrease according to the NCAH. This market
behaviour has the obvious effect of considerably slowing down the final decision-making
process and reducing legal security and predictability in the market. Operators also underline
the fact that Hungarian courts are overburdened and a final decision delivered by a court of
second instance can take several years.
Decision-making
In 2006, the major regulatory task in Hungary was to finish the first round, to implement the
results of the first round and to begin the second round of the market analysis.
Despite the fact that the NCAH has almost completed its analysis, draft measures relating to
the wholesale market for broadcasting transmission services are still to be notified to the
Commission.
The NCAH found that there was effective competition in the wholesale markets for transit,
trunk segments of leased lines and mobile access. All other markets were found to be noncompetitive. The NCAH has taken final measures in all of the non-competitive markets
notified in the first round.
At the same time, the NCAH has already started the second round of market analyses,
notifying the wholesale mobile call termination market for the second time.
In general, market players found the work of the NCAH to be efficient. However, operators
raised concern in respect of the wholesale mobile termination rates based on a glide-path
producing symmetry in the MTRs by 2009.
Some e-communications operators still regret the fact that wholesale line rental and at least
the obligation to negotiate MVNO access were not imposed on MNOs by the NCAH and that
cable operators are not regulated at all whereas a third of the Hungarian broadband market is
based on cable technology.
Market players highlight the very short consultation deadline (20 days) they have under the
law to comment on NCAH decisions and deplore the lack of transparency of certain decisions.
Cooperation between the NCAH and the Office of Economic Competition (the “NAC”) has
been more intensive than in the first round of market analysis, as the NAC was part of the
project management committee.
The concerns regarding the price fixing mechanism without market analysis still remain, as
the Hungarian authorities have still not amended the law or repealed the secondary legislation
as announced in October 2005.
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199
EN
According to Hungarian market players, the convergence of services became a real challenge
as operators started to offer more and more bundled products.
Broadband
Market situation
Following
2.91%
and
5.08%
broadband penetration in 2004 and in
10.00%
2005
respectively, 2006 broadband
8.61%
8.00%
penetration amounted to 8.61%. While
the
objective of the National
6.00%
5.08%
Broadband Strategy adopted in 2005 is
4.00%
2.91%
to reach total territorial coverage before
2.00%
2010, this figure is still well below the
0.00%
EU-25 average (15.69%). From the
2004
2005
2006
data of the Hungarian Central Statistics
Office (“KSH”) published on 6
December 2006, the number of Hungarian internet subscriptions exceeded one million (1.159
million) in the second quarter of 2006, a 30% increase in comparison with the same period in
2005. The use of broadband internet access is roughly four times higher than internet access
based on dial-up or ISDN technologies.
Hungary BB penetration
Of the 230 ISPs, 19 operators cover roughly 90% of subscribers to internet services.86
In Hungary, two thirds (62%) of broadband lines are based on xDSL and one third (about
33%) on cable technology. At present, only cable operators offer triple play services (one
offer comprising access to fixed, internet and TV services).
In January 2006, the main incumbent
obtained a €190 million loan from the
European Investment Bank (the “EIB”)
for carrying out broadband roll-out
projects in Hungary. This is to finance
the extension of the geographical
coverage of the existing Hungarian
broadband services and to increase the
number of broadband connections,
their capacity and performance. The
loan should be reimbursed between
2009 and 2013.
Hungary - BB lines by technology/means
NE WLL; 29600
NE Cable modem;
248 160
142202
access; 2772
NE Other (L.L., Fiber to
the home); 4500
Inc. Cable modem;
40 574
Inc. Other (WLL, other
access); 6200
393274
86
EN
Second quarter of 2006
200
EN
Regulatory issues
Despite the flourishing platform competition between the network operators, the Hungarian
cable market is not regulated from what the market review can tell.
As regards the wholesale broadband access market, the NCAH decided in September 2006 to
set wholesale prices on a “retail minus” basis for each operator found to have significant
market power (“SMP”) on the given market so as to guarantee a minimum margin for retail
service providers.
As regards the LLU market, LTOs were designated as SMP operators and access and
interconnection-related obligations were imposed on them. The Reference Unbundling Offers
(the “RUO”) based on the transitional obligations87 approved by the NCAH by the end of
August 2004 were replaced by further obligations of 18 September 2006 based on the 2005
decision. As a result, the one-off fees of operators with SMP decreased by 66 to 82% while
the monthly local loop charge fell by 18 to 34% respectively. On the back of this significant
decrease, alternative operators soon published their new packages for fixed voice and
broadband services, offering the possibility of naked DSL services88 without telephone
subscription or fixed voice call and broadband services with only one invoice. The Hungarian
monthly average per fully unbundled local loop is below the EU average whereas for shared
access it is still above the EU average.
By October 2006, 260 local loops had been fully unbundled, and there were 2 554 shared
access lines reported.
Mobile markets
Market situation
In Hungary there are three MNOs, the mobile division of the main incumbent and two
Hungarian subsidiaries of foreign MNOs, with respective market shares of 44.8%, 33.8% and
21.4% in September 2006 (45%, 34.1% and 20.9% in 2005). While no major changes have
occurred in the different MNOs` market shares, the number of subscribers rose again last year
Mobile penetration reached 95%89 (90%90 in 2005), with 9.6 million subscribers in 2006. The
decreasing number of pre-paid subscriptions (21 000 less than in 2005) (65%) and the
increasing number of post-paid subscriptions (with 530 000 subscriptions - 6% more than in
2005) (35%) also shows evidence of increasing consumer trust. Between May 2004 and
October 2006, a total of 129 877 mobile numbers were ported in Hungary, accounting for
1.4% of all mobile subscribers in Hungary.
All MNOs have a UMTS licence (granted in 2004) and started 3G services in 2005. The issue
of harmonisation of the expiry dates of rights of use for 2G and 3G frequencies has not been
resolved so far. A fourth 3G licence is still available in Hungary. The main MNO has 28%
territorial HSDPA coverage.
87
88
89
90
EN
Linked to the starting conditions and not to the market analysis
The main incumbent plans to introduce naked DSL-based services in 2008
September 2006 figures
November 2005 figures
201
EN
Regulatory issues
In 2005, all MNOs had been designated as operators with SMP in the wholesale mobile call
termination market, and the NCAH had taken temporary decisions under Article 7(6) of the
Framework Directive to set mobile termination rates (“MTRs”) by using international
benchmarks in the absence of an acceptable LRIC model, resulting in asymmetric MTRs. On
4 October 2006, the NCAH decided to require MNOs to gradually cut their MTRs on the
basis of a specific glide-path model that would result in total symmetry of the cost-orientated
MTRs of MNOs by 1 January 2009 (HUF 16.84 - about €0.06). The glide-path is applied as a
new regulatory tool based on a bottom-up LRIC model. This decision enters into force on
1 February 2007. These wholesale reductions are also expected to bring down retail fixed-tomobile prices.
MNOs have no access-related obligations as the NCAH did not find operators with SMP in
the mobile access market in 2005. Consequently, there is no mobile virtual network operator
(“MVNO”) to date in Hungary. Some interest was reported by market players, but MNOs
found that the proposals made were not economically viable. The refusal by two of the MNOs
of simple resale of mobile services was also reported.
Fixed
Market situation
In Hungary, there have historically been several operators with exclusive rights to provide
public fixed local telephony: the main incumbent, with territorial coverage of about 80%, and
four other LTOs,91 which formerly enjoyed exclusive rights in geographical areas covering
about 20% of the country.
LTOs had lost their exclusive rights by the end of 2002, but have continued to hold strong
market positions in their respective territories. In terms of revenues, in 2006,92 LTOs had an
89.3% market share for all types of calls, with 92% (95.68% in 2005), 89.9% (88.27% in
2005) and 87.4% respectively on local, long-distance and international calls markets, all of
them well above the EU average. With the exception of international calls, the market shares
of LTOs decreased in 2006.
Fixed line penetration was 33.57% in 2006 compared to 34.30% in 2005 and 95% mobile
penetration in 2006 (112 000 fixed lines were withdrawn in 2006). Fixed voice traffic also
continues to decrease while mobile voice traffic and mobile penetration are still constantly on
the increase.
Traditionally, new entrants in the fixed communications markets have been more active in the
non-residential segment of the market, providing voice telephony services through carrier
selection and pre-selection. Nevertheless, in 2006 the main CS/CPS operator continued to
consolidate its market position in the residential segment. In 2006, roughly 13.5% of
international calls were via carrier selection in terms of minutes of conversation. Between
January 2004 and October 2006, some 158 900 fixed numbers were ported in Hungary.
91
92
EN
After completion of the acquisition of the second LTO by the owner of an LTO and the leading
alternative operator, there will be four LTOs in all on the Hungarian electronic communications market,
including the main incumbent.
Figures as at 1 January 2006
202
EN
In 2006, cable TV operators entered the access market for fixed voice services and totalled
more than 150 000 subscribers by mid-2006.
Regulatory issues
The NCAH found that there was effective competition in the wholesale markets for transit
and trunk segments of leased lines.
On 10 May 2006, the NCAH decided to reduce the fees of the 5 SMP operators for wholesale
call origination and call termination by 11 to 34% (11% in the case of the main incumbent).
Moreover, the one-off fee for carrier selection was reduced on average by 50% whereas the
fee for number portability dropped by 30 to 40%, thus resulting in lower prices than the EU25 average (€9.32).
Following recent reductions in interconnection fees, charges for call termination on the
incumbents` fixed network (single transit) are slightly lower than the EU-25 average, but
geographical asymmetry continues to be a concern for both LTOs and new entrants.
Recently, the NCAH stated its position in a case relating to convergence of services. While
the subscribers of a cable TV network operator and service provider, backed by an alternative
network operator for the provision of fixed voice services, are able to call any number
assigned in Hungary, the subscribers of the main incumbent and the second LTO cannot call
the subscribers of the service provider concerned, as the two LTOs in question do not accept
the third party as a transit provider. On 9 November 2006, the NCAH recommended that the
operators in question should not to refuse to transmit calls from their own customers through
the network of a third operator (transit operator) to the network of a cable TV service
provider. The NCAH also stated that if the situation remained unchanged it would take the
necessary legal steps to find a remedy to the situation.
Broadcasting
Market situation
In Hungary, broadcasting transmission services are provided via several platforms: analogue
terrestrial, cable, satellite, microwave, IPTV and DVB-T (in pilot phase).
National coverage in Hungary of analogue terrestrial transmission is approximately 90%. The
major television and radio transmission company was privatised in 2005. Digital transmission
is still only in the pilot phase. Approximately 55% of Hungarian households are subscribed to
cable TV services. It is a very fragmented market with 397 service providers and the two
biggest operators cover almost half of all cable subscriptions. Satellite broadcasting subscriber
services are provided by two operators to 313 000 Hungarian households.
Microwave-based broadcasting services are provided by the recently privatised major
television and radio transmission company. As of December 2005, this service became
digitalised and goes out to 48 000 subscribers. The service is guaranteed only within a radius
of 17km around Budapest. The number of subscribers is constantly on the decrease.
On 6 November 2006, the ISP unit of the main incumbent launched its internet Protocol
television services, which was available to begin with in six of Hungary’s main towns and
cities.
EN
203
EN
As the Media Act of 1996 prevents cable operators from providing broadcasting transmission
services to more than one third of the Hungarian population, the Commission initiated an
infringement proceeding against Hungary in October 2005 and decided to refer Hungary to
the Court of Justice in December 2006.
Regulatory issues
Hungary has not yet notified the Commission of its draft measures relating to the wholesale
market for broadcasting transmission services.
Spectrum management
All the radio spectrum harmonisation Decisions have been transposed.
The market surveillance fee cannot be higher than 0.35% of the previous year’s annual net
revenue from e-communications services. The exact rate is established by the Minister each
year. This amount has been set at 0.212% for the last two years.
Following the approval of the owners of the land and property, the installation of masts and
antennas is licensed by the municipalities; the NCAH participates as a special approval
authority.
On 3 October 2006, the Hungarian Constitutional Court annulled several legal provisions,
which allowed e-communications service providers to expropriate and to register rights of
way on private property in the cadastral system in order to install e-communications
equipment if agreement cannot be reached between the owners and the operators. The
decision was delivered on the grounds of incompatibility with constitutional right to property.
In practice, the decision of the Constitutional Court does not change the workings of
Hungarian network roll-out as no operators are reported to have used these provisions to date.
Universal service
A new designation system was introduced in Hungary in 2004 whereby undertakings
providing universal service are designated by the Minister. In April 2004, just prior to
Hungary’s accession to the European Union, each of the five LTOs was designated by the
Minister of Informatics and Communications for 4 years as Universal Service Provider
(“USP”) and have since provided the four components of the universal service in their
respective geographical area. In July 2005, the Commission initiated an infringement
proceeding against Hungary expressing its concern about the transposition of Article 8 of the
Universal Service Directive, on the grounds that operators which are not capable of providing
all four components of the universal service were excluded from the tender process. In its
reply to the letter of formal notice, Hungary assured the Commission that individual universal
service components could be provided by different operators. Consequently, the Commission
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decided in April 2006 to close the infringement procedure, although it will continue to
monitor the situation very closely.
As of 2004, Hungarian USPs need to prove that they suffer an unfair burden and that they
incur net avoidable costs related to the provision of universal services before they can receive
compensation. If the costs of universal service are substantiated, operators can benefit from
the Universal Electronic Communications Support Fund. For the years 2004 and 2005, USPs
had applied for compensation but their requests were refused, as net avoidable costs were not
substantiated.
Under the Act, electronic communications service providers must guarantee free access to
emergency call services, including the single European emergency call number 112.
Operators must also make caller location information available to the emergency authorities.
The Commission sent a letter of formal notice to the Hungarian authorities in April 2006, as
caller location information appeared not to be provided in practice to the Hungarian
emergency authorities, either from fixed or from mobile networks. The Hungarian authorities
informed the Commission in December 2006 that the collection and provision of caller
location information by both fixed and mobile operators were technically feasible and in the
one case in 2006 where caller location information had been requested by an emergency
service such information had been provided by the operator. In 2008, the system is planned to
be replaced by a push system in Hungary.
Must-carry
Hungary has a must-carry obligation. The Commission’s services’ attention has been drawn to
possible non-compatibility of the Media Act with Article 31 of the Universal Service
Directive, as the number of programmes to be broadcast by cable TV operators appears not to
be limited, and the general interest objectives are allegedly not clearly defined by the Media
Act. In addition, it is claimed that the Media Act does not provide for a periodic review of this
obligation, as required by the Universal Service Directive. The Commission’s services are
looking into this matter.
Consumer complaints
Under Hungarian law, electronic communications consumers can be protected by several
bodies, such as the NCAH, the NAC or the Consumer Protection Authority. A better and
clearer division of powers is still needed to allow consumers to have effective access to the
competent body.
To provide consumers with clearer information on electronic communications services, the
Representative of Communications Consumer Rights (within the NCAH) introduced a choice
and price comparison based on a consumer information system including fixed, mobile,
broadband and cable TV services.
In 2006, the NAC delivered several decisions on the grounds of misleading advertisements
and imposed heavy fines on the operators concerned.
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MALTA
INTRODUCTION
Malta posted relatively good broadband penetration rates in 2006, but the growth rate
decreased and the incumbent strengthened its retail market position. While fixed and mobile
communications users still have a limited choice of operators, one of the mobile operators
launched 3G services in August 2006. Fixed interconnection rates are considerably higher
than the EU average. Meanwhile, technological developments and convergence have brought
a number of innovative services to the market.
Market review delays and the practical application of remedies appear to hinder market
developments. In 2006, the incumbent operator signed the first interconnection agreement
with the cable operator, who owns a ubiquitous network with potential access to almost every
household in Malta. Also, a CPS provider managed to conclude an interconnection agreement
with the incumbent.
In October 2006, the fixed incumbent finally signed the first interconnection agreements with
the cable operator and with an alternative service provider, following the intervention of the
NRA. Malta has not finalised the first round of market analyses and has been rather slow to
adopt final measures on the markets analysed. Potential deficiencies with regard to the
sanctioning powers of the regulator in a specific case of interconnection-related disputes have
been identified, although it is noted that the sanctions imposed did bring about the intended
results. The length and quality of the appeal procedure are still seen as an important obstacle
to the application in practice of the regulatory framework.
The national regulatory authority for electronic communications in Malta is the Malta
Communications Authority (MCA), which in practice assumes all the responsibilities of the
NRA under the EU regulatory framework.
The MCA has most of the powers needed to conduct its regulatory functions in an efficient
manner and its performance is generally perceived as satisfactory. However, it seems to have
limited sanctioning powers in access and interconnection-related disputes. The law establishes
limits for financial penalties and these are at a relatively low level (€23 300 for a one-off fine
plus € 466 on a daily basis) in certain serious instances of non-compliance (such as the failure
to interconnect).
Despite the Memorandum of Understanding signed in 2005 between the MCA and the
national competition authority (Office of Fair Competition - OFC) on their respective powers
and responsibilities, there still appears to be some confusion on the part of some market
players in this regard. The Ministry responsible for electronic communication is considering
allotting more competition powers to the MCA, which is considered to have more expertise in
this area. This would, however, require important changes to primary law, including the
Competition Act.
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Appeals continue to be a worry. While the structure of the appeals process is no longer in
question (following the ruling of the Constitutional Court in January 2006), the duration of the
appeals against MCA decisions (a number of appeals are currently pending final decision by
the Appeals Board and these include cases that have been pending for a final decision for over
two years) are seen as a serious problem in practice by stakeholders. The Communications
Appeals Board was created by the law of 2004 replacing the former Telecommunications
Appeals Board. The effect of these amendments remains to be seen.
Decision-making
In the reporting period, the MCA issued a number of important decisions for the development
of competition in the Maltese electronic communications sector, including the revision of
fixed interconnection tariffs.
The MCA adopted a number of final measures following the market reviews, finding a lack of
effective competition on all the markets analysed so far. However, by November 2006 three
markets remained to be notified: (i) wholesale unbundled access, (ii) wholesale broadband
access and (iii) broadcasting transmission services. The MCA has also been rather slow to
take final regulatory measures in the market review process and most of the measures were
adopted only in September 2006 or later. It is therefore difficult to evaluate the effectiveness
of the remedies adopted and the impact they will have on the development of competition. In
general, the MCA has also imposed most of the available remedies on the retail markets.
Fixed to mobile substitution appears to be making progress in Malta, as evidenced by the
reported increase in mobile-to-mobile traffic and the accompanying decrease in the on-net
minutes of the fixed incumbent.
Thanks to converging technologies, some new services are being introduced. The cable
operator has been offering a triple play service for over a year now. Video calls and music
download services are offered by a mobile operator over its 3G network, and the other mobile
operator is already providing mobile TV services (including video on demand) based on
EDGE technology.
Broadband
Market situation
Broadband penetration in Malta was
12.34% in October 2006, below the
EU-25
average
(15.7%)
but
significantly above the new Member
States average (6.7%). In 2006,
broadband penetration grew at a much
lower rate than the year before.
Although limited, this growth reflects
the continued increase in internet
subscribers as a whole, as well as the
conversion from dial-up to broadband
connections, since speeds continue to
Malta BB penetration
15.00%
12.34%
11.13%
12.00%
9.00%
6.00%
3.82%
3.00%
0.00%
2004
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2005
2006
207
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increase while prices remain stable. The slower growth could be attributed to the availability
of 128 Kbps services, offered via both ADSL and cable, which has proven to be quite popular,
with around 12 500 subscriptions as at October 2006.
The main driver of the growth of
broadband penetration seems to remain
the existence of two ubiquitous
networks and a relatively large (but
declining) number of ISPs operating at
retail level that resell the incumbent’s
product. To date, however, no local
loop unbundling has been requested
and there is no wholesale broadband
access product available to third parties
on either DSL or cable.
Malta - BB lines by technology/means
NE Resale; 11284
18269
NE Cable modem;
20 336
As at October 2006, DSL was the
predominant technology (almost 59%
of all retail broadband lines). The subsidiary of the fixed incumbent strengthened its position
on the retail broadband market during the reporting period. This might be due to the merger
with the broadband wholesale arm of the incumbent, which, according to alternative ISPs,
would allow the incumbent to cross-subsidise its retail operations. Whereas in October 2005
these ISPs provided almost 31% of all broadband connections (on a resale basis), in October
2006 their market share had fallen to 22%.
According to ISPs, the delays in market reviews and application of remedies are hindering
broadband market developments.
In July 2006, the MCA published a draft market analysis for national consultation, including
proposed remedies on the wholesale market for broadband access. It suggested including
wholesale access to cable networks in the product definition of the relevant market and
designating the incumbent fixed operator together with the monopoly cable operator as jointly
having significant market power on the relevant market for wholesale broadband access. As
appropriate remedies, the MCA proposes non-discriminatory access obligations, among other
things, with price control based on cost accounting and accounting separation. The draft
measure in this regard was notified to the Commission in December 2006 and was being
examined at the time of writing of this report.
In October 2005, three licences for Broadband Wireless Access (BWA) were granted (two for
current mobile operators and one for a consortium of local ISPs). However, the roll-out of
BWA network was postponed until the first quarter of 2007 due to market uncertainty
regarding the adoption of standards for this technology and the regulatory approach to be
taken on the broadband wholesale market.
In addition, despite the existence of the reference unbundling offer of the fixed incumbent, no
local loop has been unbundled so far and no prospective alternative operator seems interested
in signing appropriate agreements with the incumbent. This may indicate that, although the
prices for LLU are relatively low in Malta in comparison to the EU average, other conditions
offered are not pro-competitive.
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Mobile markets
Market situation
End-users in Malta continue to have a limited choice of only two operators (one of which is
the subsidiary of the fixed incumbent) offering mobile services. Penetration is slowly growing
and at 83% remains below the EU-25 average.
One of the operators started providing 3G services in more densely populated areas in August
2006 and the other operator was prepared to follow suit by the end of 2006.
A steady increase in outgoing mobile minutes terminating on the mobile networks was
observed in the reporting period. This can be partly attributed to some providers’ offers
encouraging the use of mobile phones in off-peak periods (e.g. per call charging instead of per
minute or per second billing). This also indicates a more general trend of fixed to mobile
substitution.
Following the analysis of the wholesale market for voice call termination on individual
mobile networks, in December 2005 the MCA designated both mobile operators as having
SMP on their respective networks and imposed non-discrimination, transparency and cost
orientation obligations. In order to facilitate the process of setting cost-orientated rates, the
MCA fixed a glide-path in December 2005, based on the EU-25 benchmark, designed to
lower the mobile termination rates (MTRs) of the operators and to balance them out by
January 2008 at €0.096. This means a drop in MTRs of almost 30% in the case of the
subsidiary of the fixed incumbent operator and of 15% in the case of the other operator.
In July 2006, the MCA notified the Commission of its draft decision concerning the wholesale
market for access and call origination on public mobile telephone networks. The NRA found
that both operators jointly had SMP and proposed obligations with regard to cost-orientated
and non-discriminatory access, including full MVNO access and national roaming. This
decision could have a positive impact on the development of competition, given that in Malta
there are service providers that would be interested in signing MVNO agreements.
The competitive situation in the mobile sector could also be enhanced by assigning the
remaining frequencies in the 3G band. As reported last year, in August 2005 only two out of
three licences available were granted and, despite some expressions of interest, the third
frequency slot remains unassigned.
Fixed
Market situation
The fixed incumbent operator has maintained its dominant position in local access, local
(national) calls and fixed to mobile calls, with market shares in terms of revenues close to
100%. In October 2006, following lengthy negotiations, the cable operator signed an
interconnection agreement with the fixed incumbent. This marks the end of the de facto
monopoly situation for the provision of national fixed telephony services that the incumbent
had enjoyed up to that point. The cable operator (owning a ubiquitous network with potential
access to almost every household in Malta) had already started to provide on-net telephony
services in 2005 (for national and international calls based on VoIP technology). The impact
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of this on the competitive situation in fixed telephony was limited due to the lack of
interconnection with other operators. The cable operator will now be in a position to offer a
full range of telephony services, making it possible for infrastructure-based competition to
develop.
Also in October 2006, a first alternative service provider signed an interconnection agreement
with the fixed incumbent to provide services based on carrier pre-selection (CPS). This could
allow service-based competition to develop, which could be further encouraged by the
planned introduction of either a single billing solution or wholesale line rental (WLR) to be
imposed on the incumbent.
As regards international telephony services (including VoIP), the incumbent has strengthened
its position and as from the third quarter of 2005 it regained most of its market share
following the launch of its IP-based service, achieving a figure of 85% in the first quarter of
2006 in terms of revenues (in comparison to 65% in 2004). The aggregate market share of
ISPs fell to 12%, with the remaining 3% of the market being served by the IP-based service of
the cable operator.
Following a review of fixed interconnection pricing, based on a bottom-up model designed by
the MCA to depict an efficient next generation network, the MCA issued a decision in
December 2005 that reduced the average call termination rate of the incumbent by 33% as of
1 January 2006. Further changes to the interconnection tariffs are expected in the first quarter
of 2007.93 Nonetheless, as at October 2006, the rate for call termination of €0.019 was still
amongst the highest in EU (twice as high as the EU-25 average) and, combined with the
relatively low retail charges of the incumbent, this makes it difficult for any prospective
newcomer to compete with the latter.
In September 2006, the MCA issued a decision regarding the wholesale market for call
termination on fixed networks and designated both the fixed incumbent and the cable operator
as having SMP on their respective networks. The MCA maintained the obligation of the fixed
incumbent for cost orientation of its interconnection rates by using accounting separation and
a cost accounting model based on historical costs. A less stringent approach was adopted with
regard to the cable operator, whose termination rates cannot be higher than the termination
rates of the incumbent.
Broadcasting
Market situation
According to a report prepared for the Commission in 2006,94 some 77% of Maltese
households were connected to a cable TV network owned by a single operator by the end of
the third quarter of 2005. The remaining households rely on terrestrial TV reception and only
a limited number of households have a satellite dish allowing the reception of (foreign) freeto-air broadcasts.
93
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A decision reducing these rates by approximately 33%, bringing them closer to the European average,
was published on 15 December 2006 and came into effect on 1 January 2007.
Dataxis 2006: “Digital Television Data: EU market for digital television”.
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As regards the roll-out of digital terrestrial TV (DTTV), the assignment of frequencies by the
MCA to applicant operators was completed in 2005. Two operators, including the fixed
incumbent, have been assigned eight channels for a duration of eight years, with the
possibility of an extension by a further eight. An alternative operator started commercial
operations in July 2005, but the full development of network coverage and commercial
activities is dependent on permits to install a second mast and antennas in Dwejra and there
appear to be very significant delays in this regard. The Commission services are looking into
this matter.
The fixed incumbent operator has not yet started operating its DTTV network. According to
the MCA, frequencies will be assigned to a new or existing DTTV operator for the purpose of
broadcasting the content of local broadcasters, on the basis of general interest objectives, once
the requisite policy framework has been put in place by the government.
As indicated by the MCA in a consultation paper published in October 2006 entitled Policy
Review and Strategic Framework of Radio Spectrum Management, Malta plans to switch off
analogue terrestrial TV transmission by 2010.
Spectrum management
Malta appears to have implemented three of the four Commission Radio Spectrum
Harmonisation Decisions (2004/545/EC in the 79 GHz frequency band; 2005/513/EC in the
5 GHz band; and 2005/50/EC in the 24 GHz band) by adjusting the national frequency plan
(NFP) in January 2006. Decision 2005/928/EC in the 169 MHz range was expected to be
implemented in the first quarter of 2007, through the update of the NFP and the adoption of a
General Authorisation.
In October 2006, the MCA published a consultation paper on spectrum management, in which
possible strategies to ensure efficient and flexible spectrum management are discussed. It
mentions, inter alia, the possible introduction of frequency trading, spectrum liberalisation
and licence exemptions, wherever possible.
All public communications network operators and all publicly available telephony service
providers as well as broadcasting distribution service providers (cumulative in case an
undertaking is providing more than one of these elements) are subject to a fixed charge of €
11 650 plus a percentage (ranging from 0.5% to 1.5%) of their total gross revenue. In October
2006 some network operators lodged a formal complaint with the Ministry responsible for
communications arguing, inter alia, that the percentage charge based on the total gross
revenue as defined by the MCA results in double charging of the interconnection related
revenues.
In addition to administrative charges, all national operators with any kind of equipment in
place in, on or over roads in a minimum of fifty different localities (out of 71) in Malta
(including operators of fixed electronic communications networks and other distribution
networks) have to pay a fee of 0.4% of gross revenue, and not less than €279 600, for rights of
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way. This aspect of Maltese law was also raised in the above-mentioned complaint and is
being contested by one of the major operators before the ordinary courts.
An on-line, comprehensive directory service comprising (subject to data protection
provisions) all subscribers, fixed and mobile, has been available in Malta since March 2006.
This complements the comprehensive directory enquiry services that were already available in
Malta before that date and has allowed the Commission to close an infringement procedure in
this respect.
Number portability
Number portability became available for mobile subscribers as of 1 April 2006 (an
infringement procedure in this regard was consequently closed). By October 2006, there had
been 5 500 portings reported. All the necessary provisions are also in place for fixed number
portability and this should facilitate effective competition in the fixed telephony market.
Must-carry
The current must-carry regime (applicable to broadcasting network operators to carry all
national channels) is presently under review. The authorities are examining the options for a
way forward with regard to general interest objectives and must-carry obligations.
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NETHERLANDS
INTRODUCTION
The Netherlands was the leading country in broadband penetration in 2006. Competition
between networks and services has been increasing as cable operators cover almost the whole
territory and offer, alongside several DSL providers, attractive and inexpensive packages to
consumers. Mobile markets continued to be competitive throughout the year.
Regulatory steps taken by the national regulatory authority are deemed to be effective,
although some uncertainty has arisen as a result of systematic appeals against market review
decisions. While the broadband and the cable markets have been experiencing serious
consolidation moves in the last year, attention is shifting towards the next regulatory
challenge, i.e. the incumbent’s intention to convert its network to an IP-based next generation
network by 2010.
In 2006, the Dutch national regulatory authority, Onafhankelijke Post en Telecommunicatie
Autoriteit (OPTA), concentrated its efforts mainly on setting up the implementation measures
and remedies agreed upon in 2005. The achievements of this regulatory process now seem to
be contested by legal action brought by operators before the courts against all market
decisions. A first judgment in August 2006 annulled the market decision relating to SMP
designation and remedies in the mobile termination market.
As regards the incumbent’s plans to roll out an all-IP network towards 2010, the NRA
published an Issue Paper to consult stakeholders on the regulatory issues surrounding this
Next Generation Network. In its Position Paper of October 2006, OPTA informed market
players of its proposed positions and of the follow-up it considered necessary.
No problems were reported concerning the powers of the NRA, which continue to be divided
between OPTA and the Ministry.
Alternative operators draw attention to the regulator’s exemplary decision (November 2005)
on the illegal business discounts the incumbent had applied for a number of years. OPTA
imposed a balanced sanction, given the incumbent’s willingness to cooperate and to provide
compensation - an administrative fine of €17 million, the highest to date. The decision did not
trigger any appeal on the part of the incumbent and the alternative operators were
compensated for damages suffered and profits lost. Instead of claiming individual
compensations, they received and distributed the collective damage payment by means of a
trust.
All market decisions of the NRA have already been challenged before the courts. Although
appeals appear to be speedily handled by the competent court and have no suspending effect,
this causes uncertainty and the risk of a regulatory vacuum. In its decision on mobile
termination rates, the court emphasised the obligation placed upon OPTA, in accordance with
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Article 1.3(4) of the Telecommunications Act, to substantiate its decisions by way of a
qualitative and, as far as is reasonably possible, a quantitative statement on the proportionality
of the measure and on the foreseeable consequences. This places a very heavy burden on the
NRA, and thus may need addressing, as forward-looking analyses are nearly always uncertain
and their outcome is always prone to be overturned by new facts and figures. As the court
suggested furthermore that general competition law could address allegedly high tariffs,
OPTA feels squeezed between national case law and the duty to cooperate with the
Commission in the light of the Recommendation on relevant markets. The Commission is
looking into this matter.
As regards dispute resolution, the downward trend in the number of cases submitted to OPTA
for mediation in last years was confirmed: OPTA encourages market players to consult one
another in an effort to prevent potential problems.
Decision-making
Notifications of market decisions in 2006 mainly related to the implementation of the market
decisions, such as wholesale price cap measures (WPC), the WLR obligation (wholesale line
rental) and price control obligations in the mobile termination markets.
The NRA has taken deregulatory steps where possible, targeting a milder, less extensive
regulation. Noticeable examples of this trend have been the retail measures for fixed
telephony (price floor and price cap), the wholesale market for low-quality broadband access
(residential bitstream), the retail markets for national leased lines (2 Mbit/s and higher) and
the wholesale markets for trunk segments. At the same time, the NRA also intends to establish
long-term tariff regulation, giving the markets more certainty and lower transaction costs.
Alternative operators criticise the slow implementation of the remedies and refer, for
example, to the WPC decision, by which OPTA approved, only at the end of September, the
incumbent’s wholesale cost-accounting system. According to OPTA, this belated tariff
regulation has not caused any damage to operators as the measure (valid for three years)
applies from the beginning of 2006. While operators claim that the tariff reductions for fixed
telephony are not really based on the proposed reporting system, but are the result of a deal
with the incumbent, OPTA maintains that all the proposals have been discussed openly with
the Industry Group. The WPC decision will lead to a decrease in wholesale prices of between
18% (full unbundling) and 90% (shared access) by the end of 2008.
Alternative operators have also expressed their concern about insufficient regulation of leased
lines (shift to unregulated Ethernet products) and residential bitstream. In the light of existing
competition, OPTA deems this to be disproportionate. For the unbundled access and bitstream
markets, the NRA plans to carry out new market analyses, given the changing market
conditions and the roll-out of the incumbent’s all-IP network.
The incumbent’s attitude towards regulation in the different markets where it has SMP status
is likely to be influenced by the measures adopted with regard to cable networks. In June
2006, the incumbent sued the Dutch State, the NRA and the competition authority for
“discriminatory and asymmetric regulation”, claiming to be burdened by outdated regulatory
obligations, while the cable sector, though operating in the same markets, was alleged to be
exempt of regulation. The incumbent cites retail regulation, where it feels hampered in its
efforts to offer bundled services freely, and the wholesale market, where it claims access to
cable networks.
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The preliminary injunction sought against the Dutch state was rejected in July 2006. It is
worth mentioning that regulation has been imposed on the incumbent as a consequence of its
SMP position on the retail voice markets, while cable companies are regulated on the basis of
the finding of dominance in their respective coverage areas.
Dutch markets show increasing competition between DSL providers and cable operators.
Several types of broadband infrastructure, among them the network of the fixed incumbent,
cover the entire or a large part of the country while the networks of the cable providers reach
almost 90% of all households. High-speed broadband, content offering, digital telephony,
VoIP or VoB and multiple play services, generally combined with improved service levels,
are the benefits that consumers can reap from these developments.
Both the broadband and the cable market experienced serious consolidation moves last year.
The incumbent acquired several alternative broadband providers while the largest cable
operators are merging in several moves, potentially leaving only two big players on the
market. However, several alternative types of infrastructure (e.g. mobile networks, satellite,
DTT, FTTH) continue to compete locally or nationally.
Broadband
Market situation
At 29.80%, the Dutch are the
champions of broadband penetration.
35.00%
Growth has been steep and amounted
29.80%
to more than 6 percentage points
28.00%
23.79%
between July 2005 and October 2006.
21.00%
16.40%
The principal provider of broadband
14.00%
lines is still the fixed incumbent
7.00%
(44.9%) while the other DSL providers
0.00%
have a market share together of 16.3%.
2004
2005
2006
The prime competitors in the
Netherlands, however, are the cable
operators, which jointly have a market share of between 35 and 40%. Both the incumbent’s
and the cable operators’ networks cover more than 90% of the Dutch territory.
Netherlands BB penetration
New entrants have already climbed far
up the ladder of investment.
Alternative operators use mainly the
unbundled DSL lines of the incumbent
(16%), bitstream is virtually nonexistent and resale is not used. Several
DSL providers can reach 50% to more
than 70% of Dutch households via
unbundling. Positive figures with
respect to unbundling would, however,
need to be revised if the latest
acquisition of an important alternative
DSL provider by the incumbent
EN
Netherlands - BB lines by technology/means
2186000
NE Fiber to home;
83 000
NE Full ULL; 264160
NE Shared access;
532400
NE Cable modem;
1 801 962
215
EN
(September 2006) is to be taken into account (subject to regulatory approval by the
competition authority).
OPTA imposed light remedies on the new voice over broadband retail services (no price cap)
and did not regulate the wholesale market for low-quality broadband access. The latter
decision will however be reviewed in the light of the changing market conditions (following
the incumbent’s plans to roll out its All IP network).
Wholesale prices for fully unbundled and shared local loop are low and continue to decrease.
2006 connection prices more than halved compared with 2005. Prices per shared access are
among the lowest in Europe (€15.3 for connection and €0.74 for monthly rental). The WPC
implementation decision, valid from 2006 to 2008, provides for price reductions of between
18% (recurring costs for unshared access) and 90% (recurring costs for shared access) by the
end of 2008.
Mobile markets
Market situation
With four operators, one MVNO and a dozen service providers, the number of mobile
connections and mobile traffic increased still further in 2005-2006 (due among other things to
fixed to mobile substitution). The mobile subsidiary of the incumbent has a market share of
48% following last year’s acquisition of a competitor. Mobile penetration is now more than
100%. 3G services are offered by two of the four operators while two operators are expanding
their network of WiFi hotspots.
After average decreases of more than 40% compared with 2003, following the voluntary
agreement between mobile operators, mobile termination tariffs are around the European
average (slightly asymmetric rates: €0.110 for major operators with both GSM and DCS
licences and €0.124 for other operators with DCS licence only). In 2005, OPTA carried out
the analysis of the mobile call termination market, found SMP for each individual operator
and imposed a price control obligation, to be implemented in 2006 by means of a glide-path.
Since this market analysis was annulled by the court in August 2006 and OPTA was ordered
to issue new decisions, this market is still unregulated in practice. OPTA communicated in
November 2006 that it intended to perform a new market analysis.
Fixed
Market situation
Inland geographic calls fell steeply in 2005. Customers of the fixed incumbent and CP/CPS
providers are switching either to cable telephony or to VoIP services. Cable companies attract
most of these customers (+230 000 in 2005) because of their interesting multiple play
offerings, but the trend also seems to benefit broadband providers, and, proportionally, the
incumbent’s own internet providers even more so. Several companies, among them the
incumbent, have recently started to introduce VoB services.
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The incumbent remains dominant in most markets (retail revenue market share of 70-80% in
national calls).
While regulatory pressure has been maintained on most of the wholesale markets since the
incumbent was designated as an SMP operator in all telephony markets (except for the
international calls market), it appears that the regulation of the corresponding retail services
has been softened. OPTA has developed the traffic light model, which allows the incumbent
to assess its end-user tariffs itself. In addition to “green” services, which may be introduced
without previous notification, and “red” services, which are forbidden because they include
anti-competitive tariffs or do not abide by non-discrimination, transparency and price cap
requirements (the incumbent is nonetheless allowed to ask for a derogation in special
circumstances), “amber” services, mainly consisting of bundles of regulated and unregulated
products and services, have to be submitted for approval to OPTA. All tariffs are subject to a
combinatory price squeeze test and must meet the requirements of cost-orientation (price
floor) at market (reasonable retail return) and service level (incremental costs), but only
“amber” services are subject to ex ante control.
Alternative operators complain, however, about the lack of clarity of the price squeeze test
and refer to the supposedly even greater discretion of the incumbent to offer individual
discounts. In their view, the incumbent is able to exercise considerable leveraging powers
from voice to broadband. The incumbent, on the other hand, criticises the restrictions imposed
on its offering of bundles, given the context of competition with the cable networks. Viewed
by the NRA, the traffic light model seems nevertheless to offer sufficient room for
competition, as none of the incumbent’s tariff proposals has so far had to be rejected.
Broadcasting
Market situation
As indicated, cable platforms (taken jointly) are ubiquitous in the Netherlands (6.2 million
households, mostly analogue television).95 As mentioned, three of the four largest companies
are merging, leaving just a few big players on the market.
Digital television is expanding very rapidly in the Netherlands (1.1 million subscribers by the
end of 2005).96 Since mid-2005, digital cable television has been taken up so fast (more than
tripling to 1 million subscribers in December 200697) that cable now has the biggest market
share. DVB-T (including the fixed incumbent) is also growing. As regards DSL operators,
one was already offering a complete package of IPTV channels (after acquiring soccer rights),
and was followed in mid-2006 by the incumbent’s DSL television.
Digital terrestrial switchover took place in December 2006. Public and regional channels
remain available free-to-air.
95
96
97
EN
Dataxis 2006: “Digital television data: EU market for digital television” (Figures from Q3 2005).
Market Report for 2005 by the Dutch Ministry of Economic Affairs. By the end of 2005, more than
50% of customers were using satellite platforms but the market shares of digital satellite and digital
cable and terrestrial were already converging.
According to data from VECAI, association of cable operators.
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In 2005, the five biggest cable operators were found to be dominant in their respective
coverage areas on the wholesale markets. Following the retail market decision of March 2006,
all operators are obliged to operate transparent end-user tariffs and to unbundle their free-toair packages from other paid services of products (such as broadband internet or telephony
services). OPTA is monitoring the development of retail tariffs in the market, also given that
the one-year voluntary agreement of the operators not to increase their tariffs lapses in March
2007.
Spectrum management
The Dutch Ministry conducted a public consultation on the question of whether to extend
current GSM licences from 2010, at a reduced period of 5 years or using a different period in
order to synchronise with EGSM and GSM 1800 licences, or, alternatively, to auction them
where there is an expression of interest from new entrants. The Dutch authorities also raised
the question of whether it would be possible to introduce more flexibility into the use of GSM
bands. The Ministry is committed to taking a decision at least three years before the licences
expire, i.e. in March 2007.
The Dutch parliament recently amended the Telecommunications Act with respect to rights of
way, the aim being to establish structural separation between ownership and decision powers
within municipalities providing electronic communications networks. The existing regime is
being continued (obligation to tolerate the installation, maintenance and clearance of cables,
jurisdiction of the municipalities restricted to rules on place, time, implementation, shared use
and coordination with other public utilities, no permission to grant the rights of way
themselves). Parliament, however, approved an amendment imposing a ban on the provision
of new electronic communications networks or services by municipalities or on their
participation in undertakings which provide such networks. This ban can only be lifted where
a specific type of network cannot be established without municipal participation and it has to
be surrounded by specific guarantees, such as a periodic report on continuing this activity or
not and the obligation to request the opinion of the NRA. Municipalities may only play a
limited role in the provision of electronic communications networks (minority participation,
obligation to alienate, etc.).
Network roll-out
In November 2005, the fixed incumbent announced its plans to migrate to a next generation
network, migration to all-IP. It intends to phase out all of its local exchanges (MDF) and to
roll out fibre to street cabinets (fibre to curb). With the commitment to develop an “open
wholesale model”, the incumbent requests the NRA not to intervene as it is ready to offer
open wholesale broadband access to its network for alternative providers.
These plans have been received with growing concern by competitors, who claim that
investment in LLU came to a halt in the first half of 2006. In October 2006, OPTA issued a
Position Paper, inquiring whether MDF-access customers will be able to roll out their
networks to the sub-loop and proposing a regulatory approach. In the view of the NRA,
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certain obligations will need to be addressed by new market analyses geared first and
foremost to ULL and wholesale broadband access. The alternative to the current obligations
would consist of phasing-out conditions for the withdrawal of access already granted, a
regulated offer for unbundled access to the sub-loop (sub-loop unbundling or SLU), and
regulated offers for Wholesale Broadband Access (in areas where KPN does not yet offer
SLU and/or SDF backhaul and MDF locations are phased out), the provision of glass fibre
and/or glass fibre routes and SDF backhaul.
Alternative operators suggest that the incumbent’s plans are just part of its commercial
strategy to boost investments on its network, and they worry about the lack of information on
aspects such as the conditions and costs for access to and co-location in SDF, the possibilities
and costs of SDF backhaul and the wholesale/retail ratio. In their view, existing infrastructure
competition has to be maintained and MDF services may be seen as separate from the roll-out
to the sub-loop. As there are doubts as to whether this roll-out is economically feasible for
competitors, they urge OPTA to investigate the negative effects of the plans and to examine
alternative scenarios. Viable alternatives to MDF access should become available when the
incumbent decommissions the MDF buildings where alternative DSL providers are colocated.
By the end of 2006 the incumbent had started on a series of pilots, which are subject to
conditions imposed by OPTA in terms of information for and cooperation with competitors.
Roll-out is scheduled to start in May 2007. A reference offer for SLU and migration was
published in October 2006.
In April 2006, the Commission started infringement proceedings against the Netherlands
because the Dutch authorities had failed to take the necessary measures to ensure that
operators make caller location information available to the emergency services for mobile
calls to 112. The Ministry had already started a European call for tenders to deliver and install
a new national telephone exchange for emergency calls, which can also handle caller location
information. This will be fully operational in October 2007. In the meantime, the Ministry is
starting individual discussions with all the relevant operators on the technical specifications
for providing location information.
Number portability
The fairly high tariffs of the past have been reduced to between € 2 and 8 for fixed lines (on
the basis of reasonableness criteria). Mobile number portability is hardly charged due to the
reciprocity of the amount of ported numbers (bill and keep). Another issue addressed by
regulation is the internal portability of numbers (from one tariff scheme to another, within the
same operator).
Must-carry
The Commission has opened infringement proceedings concerning the compatibility of the
Dutch must-carry rules with the requirements of Article 31 of the Universal Service Directive.
EN
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AUSTRIA
INTRODUCTION
The current framework is firmly established in Austria and has by and large produced benefits
for end-users. Retail mobile voice prices, for instance, are quite low, having continued to fall
in 2006. At the same time, further consolidation has taken place, and win-back strategies by
the incumbent fixed network operator, for example in the retail broadband market, are
showing signs of partial success.
The NRA has already embarked on the second round of market analyses, having completed its
first round for all but one of the relevant markets in the Commission Recommendation and
also imposing the resulting remedies. In doing so, it took general recourse to the full range of
possibilities allowed by the regulatory framework. In addition, its final decisions generally
followed the comments made by the Commission. However, several remedies have not yet
been implemented in practice, since details have needed to be clarified in dispute-settlement
procedures before the NRA. In many instances market players meanwhile preferred to stick to
old agreements established prior to the market review process.
The NRA has the means to ensure the imposition of remedies, and uses them in full. In
particular, it imposed cost-accounting obligations and defined the cost model to be applied
where relevant. However, in practice the NRA does not set prices as part of market analysis or
tariff authorisation procedures but only on request by operators in dispute-settlement
procedures. In theory the NRA would have the power to set prices if it noted a deviation from
the price-setting standard it imposed as a remedy for a particular service. The NRA’s practice
can lead to delays in setting tariffs and it could therefore affect the efficiency of the regulatory
process.
It is difficult to assess the efficiency of remedies at this stage, as many remedies have not
been implemented yet. Market players appear to prefer applying old agreements rather than
waiting for new standard offers to be approved. In addition, although cost orientation was
imposed for access products, the incumbent fixed network operator can make special offers
(“Aktionsangebote”) for a limited period with extremely low retail prices. Such offers are not
regulated, and alternative market players may find it difficult to compete with them even
though they are usually accompanied by corresponding wholesale offers.
The Austrian Regulatory Authority for Broadcasting and Telecommunications (RTR) is the
operational arm of the Austrian Communications Authority (KommAustria) and the
Telecommunications Control Commission (TKK). The RTR is divided into two specialised
sections (broadcasting and telecommunications) and is inter alia responsible for market
definition in the telecoms sector. There exists the (hitherto only theoretical) possibility of
these two sections’ heads receiving direct instructions from the Federal Chancellor or the
Ministry of Transport, Innovation and Technology respectively on how to accomplish their
tasks.
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KommAustria regulates the broadcasting sector under the direct authority of the Federal
Chancellery, with just one official being responsible for its decisions. In its 10th
Implementation Report the Commission expressed concerns about KommAustria’s
independence, given that the public-broadcasting infrastructure is owned by a foundation. For
details of that concern reference is made to that report.
Following an infringement proceeding Austria changed its legal provisions to ensure that in
principle appeals against KommAustria´s decisions do not have suspensory effect. The
amended law came into force on 1 July 2006, and the infringement proceeding was then
closed.
Decision-making
In the first round, on the one hand, regulation was withdrawn in those markets where no SMP
was found, i.e. the residential international calls market (market 4) and the trunk leased lines
market (market 14). Mobile access and call origination was found to be competitive and
therefore no regulation was imposed.
On the other hand, TKK imposed the full set of remedies in all wholesale markets found to be
non-competitive, apart from the markets for fixed termination by alternative operators, where
lighter remedies were imposed. TKK also imposed strict remedies in retail markets. In
particular, cost orientation based on cost accounting was imposed in all retail markets where
TKK found SMP.
Several remedies were imposed, but they have not yet been applied de facto. Details of
remedies often have to be clarified in dispute-settlement procedures before the NRA if the
parties cannot reach agreement. This postpones their application. In several cases, for example
concerning standard offers, corresponding remedies have not yet been applied due to lengthy
negotiations. Market players appear to prefer to stick to old agreements from the time before
market analyses as they fear that, for example, standard offers approved by the NRA might be
less advantageous.
The Commission vetoed one of the analysed markets (the wholesale transit market) which the
relevant Austrian NRA (TKK) still needed to re-notify at the end of the reporting year.
The TKG requires the NRA to prove the appropriateness of market definition and the status of
the markets every two years, the reason being that it is difficult to predict market development
for a longer period in such dynamic markets.
Thus, TKK started the second round of notifications by notifying the leased lines markets
(terminating segments and minimum set), the markets for fixed network termination and
origination, for mobile termination and for wholesale unbundled access to metallic loops and
sub-loops for the purpose of providing broadband and voice services. So far the market
analyses and the proposed remedies correspond very much to what was decided in the first
round, above all as regards the market for mobile call termination, for example.
However, in the market for leased lines-terminating segments in certain major cities
regulation is now only imposed up to a transmission speed of 34 Mbit/s; capacities above this
threshold are no longer regulated in such cities. As regards fixed origination services, the
NRA is considering an adjustment concerning market entry barriers into the fixed transit
market relating to minimum capacity load required for joining links.
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Broadband
Market situation
The penetration rate was 15.85% in
July 2006 (up from 13%)98. Cable
continues to be the alternative
operators’ most popular technology, as
38.86% based their offer on cable
modem.
Austria BB penetration
20.00%
15.85%
16.00%
12.43%
12.00%
9.38%
8.00%
As far as market shares for retail
broadband in general are concerned,
2004
2005
2006
the alternative operators’ market share
was 60.2%, down from 63% in July
2006. Their market share was 19.32% based on DSL and 40.83% based on other means. The
DSL figure breaks down as follows: 10.23% based on LLU, 9.09% based on bitstream.
Finally, 1.31% of the alternative
Austria - BB lines by technology/means
TotalBB retail lines July 2006: 1 310 096
operator’s market share are based on
WLL and 0.68% on other technologies.
4.00%
0.00%
access; 143402
With regard to broadband, the
competition is mainly between cable
infrastructure and DSL. Consolidation
is also taking place in this regard, as a
large cable network operator recently
acquired a DSL access provider.
Broadband revenues rose from €361
million in 2004 to €440 million in
2005, an increase of about 21.9%99.
NE bitstream access;
117965
520041
NE WLL; 17742
NE Cable modem;
502 546
NE (L.L., Fibre to the
home, Satellite, PLC);
8400
Regulatory issues
In the wholesale broadband access market TKK imposed retail-minus pricing obligations and
required the dominant undertaking to establish a cost-accounting system suitable for
implementing the retail-minus obligation.
However, despite the imposition of remedies, the incumbent fixed network operator’s market
share is growing. This may be due to the fact that the imposed remedies, like bitstream access,
are not yet operative. Competitors are still waiting for the standard offer and negotiations are
continuing. In the meantime contractual relationships are based on agreements in place before
the new framework came into force.
Some alternative operators claimed that the applicable monthly rental fee for LLU was too
high at €10.70 and did not produce an acceptable profit margin. In addition, market players
reported that the incumbent fixed network operator tended to create new obstacles to LLU by
98
99
EN
The Austrian NRA’s estimate for October 2006 is 16.42%.
Data taken from RTR’s Communications Report 2005.
222
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evoking practical problems in opening the lines, by imposing additional conditions and by
delaying the actual unbundling work. On 11 December 2006, TKK imposed a supervision
measure for unlawful behaviour with respect to unbundling after deciding that the incumbent
operator violated its access- and non-discrimination obligations through delays100.
The Austrian Chamber of Labour’s Consumer Protection Department indirectly confirmed
such delaying tactics by stating that consumers often do not have any provider at all for a
certain period after applying to switch their operator.
Mobile markets
Market situation
Mobile penetration was 108% in October 2006 (up from 99%), and there were 8.9 million
subscribers. There are four mobile network operators in the Austrian market now. The second
largest operator acquired the previously fourth largest. The Commission approved the merger
after the second largest operator entered into certain commitments. When assessing the
merger, the Commission stressed the previously fourth largest operator’s role as a “maverick”
on the market that had promoted competition through remarkably low end-user prices. It
remains to be seen whether prices for mobile communications will remain at their current
very low level.
The market share of the mobile operator owned by the incumbent fixed network operator
remained steady at 39%. The market share of the second largest operator (after the merger
with the previously fourth largest operator) was 35.1%, that of the third operator about 19%.
Regulatory issues
Comments made during the national consultation and by the Commission in relation to the
market for voice call termination on individual mobile networks (market 16) (specifying the
LRIC costing model; shortening the glide path) were taken into account by TKK when
implementing the final measure, and substantially improved the effectiveness of the remedy
when it was finally imposed. Most importantly, TKK substantially reduced the glide path
toward cost orientation for mobile termination (from 31 December 2011 in the notified draft
measure to 31 December 2008 in the measure adopted).
Fixed
Market situation
The incumbent fixed network operator further strengthened its leading position in the market.
The alternative operators’ market share went down from 49.6% to 48.4% for fixed calls to
mobile, and from 45.5% to 45.2% for national phone calls including internet, in terms of retail
revenue. For local calls, where the incumbent had increased its market share significantly
according to last year’s Implementation Report, the NRA is no longer able to furnish updated
figures due to a change in its data methodology. The alternative operators’ market share for
local calls to the internet was 27.4%, based on outgoing minutes. Their market share by retail
revenue for all fixed phone calls increased from 45% to 45.4%.
100
EN
http://www.rtr.at/web.nsf/deutsch/Telekommunikation_Regulierung_Entscheidungen_Entscheidungen_
R-4-06?OpenDocument.
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The unbundling of the local loop continues to make progress and results should become more
visible in the near future. According to the alternative operators, however, only 5.7% of the
incumbent’s fixed lines have been unbundled so far.
Regulatory issues
TKK imposed the full set of remedies in all wholesale markets found to be non-competitive,
apart from the markets for fixed termination where lighter remedies were imposed for
alternative operators.
TKK also imposed on the incumbent fixed network operator the obligation to offer wholesale
line rental to its competitors. However, this has not been applied in practice yet.
As regards the terminating segments of leased lines, the NRA imposed various remedies, such
as a transparent accountancy obligation.
Broadcasting
Market situation
On the market for terrestrial television broadcasting one undertaking was identified as having
control of 98% of the sites and transmitters for analogue terrestrial TV broadcasts. The same
undertaking was identified on the market for terrestrial FM radio broadcasting as controlling
62% of the sites and 84% of the transmitters installed for terrestrial radio broadcasts. The said
undertaking manages the nationwide public broadcasting station.
Regulatory issues
Back on 14 October 2003, KommAustria notified a market definition deviating from the
Recommendation. KommAustria had split the market defined in the Recommendation into six
different product markets.
KommAustria designated two of these markets as being susceptible to ex ante regulation: the
market for terrestrial television broadcasting and the market for terrestrial FM radio
broadcasting.
The following remedies were imposed: the obligation to grant access to, and use of, specific
network facilities (including masts and sites); obligation of non-discrimination; obligation of
accounting separation; price control (obligation to charge cost-oriented prices), and the
obligation to provide a reference offer.
Spectrum management
As regards the relevant Commission decisions on this issue, Austria implemented the
decisions on the harmonised use of radio spectrum in the 5 GHz frequency band for the
implementation of Wireless Access Systems (2005/513/EC), on the harmonisation of the
24 GHz range radio spectrum band for the time-limited use by automotive short-range radar
equipment (2005/50/EC), and on the harmonisation of radio spectrum in the 79 GHz range for
the use of automotive short-range radar equipment (2004/545/EC), by duly adapting the
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federal frequency usage plan. The decision on the harmonisation of the 169.4-169.8125 MHz
frequency band (2005/928/EC) was implemented at the beginning of 2007.
Retail tariffs
The trend in retail rates for fixed line voice telephony has been stagnating. According to the
NRA, the trends in retail rates for mobile communications have been clearly going down.
Retail prices for broadband have been decreasing only slightly101.
Payphone access charge
Another issue affecting retail prices and consumer choice concerns the “payphone access
charge”. During dispute-settlement procedures before the NRA the incumbent fixed line
operator asked to be allowed to obtain such a charge from four of its competitors currently
providing 0800 freephone number calls to their clients from public payphones.
By setting the payphone access charge TKK intended to allow the incumbent fixed network
operator to charge the abovementioned operators not only for the call origination as such, but
also for the use of the public payphones by designating these as ancillary costs to
interconnection.
On 19 December 2005, the Austrian Administrative Court ruled that this charge did not
constitute an interconnection fee and that TKK was not the relevant authority in this case.
However, it did not assess the payphone access charge as such. To respond to comments that
the use of public phone booths with these calling cards formed part of the universal service
obligation of the incumbent fixed network operator designated to provide this service, the
Ministry changed the Universal Service Regulation by releasing the designated universal
service provider from the obligation to transfer each and every call to a 0800 number from a
public telephone booth. The Commission services are currently investigating whether this
complies with Article 6 of the Universal Service Directive.
Tariff transparency
Lack of transparency is still an issue, especially with regard to mobile tariffs, despite the fact
that all tariffs are published on the NRA’s website. The Austrian Chamber of Labour’s
Consumer Protection Department has complained about the further abolition of per-second
billing contracts.
Premium services
The Austrian Chamber of Labour’s Consumer Protection Department reported that consumers
are billed for incoming premium SMSs even though they had not asked for such an SMS and
no civil agreement had been concluded. For its part, the NRA confirmed that consumers do
not have to pay for such SMSs
101
EN
RTR’s Communications Report 2005.
225
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Universal service
As far as the inquiry services are concerned, their characterisation as a universal service was
slightly changed by an amendment to the TKG in 2006. If competition exists there will be no
invitation to bid. It is the objective that only if the market itself does not or cannot provide the
service, the Federal Minister would designate a universal service provider. As a result, the
incumbent fixed network operator is no longer obliged to offer the inquiry service as a
universal service obligation.
The funding of the universal service has so far not been based on the funding mechanism laid
down in the TKG, because the operators managed to agree by civil-law means on
compensation for the universal service provider. The incumbent has applied to the NRA for
such compensation for 2005, and the funding mechanism pursuant to the law might be
applied.
Must-carry
As mentioned in the previous Implementation Report, the nature of the specification of the
general interest for the must-carry obligation of the two nationwide public broadcasting
stations is being examined. No further administrative decision is required to impose this
obligation.
Data protection
The industry expressed concerns about the Austrian transposition of Article 13 of the
Electronic Data Protection Directive dealing with electronic advertising, and this after a recent
amendment to the TKG intended to assuage the Commission’s concerns expressed in a letter
of formal notice in March 2005. The Commission closed the infringement proceeding
following that new legislation.
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226
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POLAND
INTRODUCTION
With the highest mobile penetration growth in the EU in 2006, the Polish electronic
communications sector has witnessed significant growth in mobile markets, generating
interesting developments such as converged fixed-mobile offerings. By contrast, broadband
penetration remains one of the lowest in the EU, and the incumbent even strengthened its
position in the retail market. The incumbent also continues to be largely dominant in the fixed
calls markets.
Delays in conducting market analyses did not decrease regulatory uncertainty on the market.
While the new regulator established in January 2006 is actively trying to resolve market
problems, concerns have been voiced with regard to its independence and impartiality and,
indeed, some of its decisions. Moreover, various pieces of the regulatory toolkit are still
missing, e.g. a market analysis-based access and interconnection regime, a comprehensive
directory service or caller location for emergency services.
In January 2005, following political changes in Poland, a new NRA was established – the
President of UKE (Office for Electronic Communications) – to replace the former, the
President of URTiP (Office of Telecommunications and Post Regulation). UKE appears to
have a very proactive attitude towards the problems on the market. This is welcomed by
alternative operators and criticised by the incumbent operator and to a lesser extent by mobile
operators, which were affected by several far-reaching regulatory decisions. The new NRA
stated on several occasions that its strategic goal is to significantly lower the prices paid by
end-users for electronic communications services and appears to be using all possible means
to achieve this. Issues have been raised regarding the provisions related to wholesale line
rental (WLR), retail prices for broadband access and possible MVNO access.
Poland notified its first market analyses only in April 2006, yet by November 2006 fifteen out
of eighteen markets defined in the Recommendation were notified. Several market analyses
are still to be finalised. By November 2006 final measures had been adopted for just five out
of eighteen relevant markets.
An amendment to the 2004 Telecommunications Act, introducing quite significant changes to
inter alia the powers of the NRA, market analyses, consumer rights and corresponding
obligations on the part of all undertakings, is scheduled for the first half of 2007.
The replacement of the former NRA, the President of URTiP, by the President of UKE
following the 2006 elections cast doubts on the Polish NRA’s political independence. In
addition, as URTiP ceased to exist in January 2006, and the President of UKE was officially
appointed only in May 2006, the legality of the decisions issued in the meantime has been
questioned. The independence of the Polish regulator was further weakened when Poland
adopted the law on state personnel resources and key state administration officials that entered
into force on 26 October 2006. According to this law, a 5 year term of office for the President
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of the NRA was repealed, and the President of the Council of Ministers was granted an
unlimited right to dismiss the President of the NRA at any time and without the necessity to
indicate reasons. This raises the concern that the changes introduced may influence the
impartiality of the NRA given in general the holdings in various electronic communications
operators. The Commission has opened infringement proceedings.
UKE bears most of the NRA’s responsibilities under the regulatory framework (with the
notable exception of market definition for the purposes of market analysis for which the
Ministry of Transport, previously the Ministry of Infrastructure, is responsible) and appears to
have most of the necessary powers to fulfil its regulatory functions effectively. However, the
regulator does not seem to have the necessary specific powers to encourage and where
appropriate ensure, adequate access, interconnection and interoperability of services
irrespectively of the market power of the undertakings involved. An infringement proceeding
in this regard is ongoing.
As far as appeals are concerned, the 2004 Telecommunications Act was amended in
December 2005 in order to transpose the regulatory framework requirement stating that an
NRA decision should stand pending the outcome of the appeal.
The length of appeals appears to be an issue, as apparently the court takes on average from
two to three years to decide on an appeal, thus resulting in regulatory uncertainty. The
Ministry of Justice has decided to delegate more judges and assistants to the Competition and
Consumer Protection Court responsible inter alia for hearing electronic communications
cases. Some training is also foreseen for the judges on the specific aspects of the
telecommunications law.
Decision-making
Apart from some criticism voiced by the incumbent operators (both fixed and mobile), market
players generally consider the performance, quality and effectiveness of the new Polish
regulator to be quite satisfactory.
In 2006 the Polish NRA issued a number of decisions important for the development of the
competitive environment in the market, including imposition of bitstream access, imposition
of WLR, pro-competitive changes in the reference interconnection offer (RIO) and reference
unbundling offer (RUO). UKE also notified to the Commission a number of draft measures
following the market analyses process and adopted some final decisions, finding a lack of
effective competition in all the markets (except for international roaming) analysed so far and
imposing regulatory remedies on the undertakings designated as having significant market
power.
However, as UKE did not finalise the first round of market analyses in 2006, the Commission
launched an infringement proceeding in this regard. As of November 2006 the analyses of the
following relevant markets still remained to be notified: (i) minimum set of leased lines, (ii)
wholesale transit services in fixed networks, (iii) wholesale trunk segments of leased lines and
(iv) wholesale mobile access and call origination.
With regard to remedies, UKE tends to apply quite generally defined remedies possibly
requiring further specification through dispute-settlement proceedings. This affects
transparency and legal certainty for market players.
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As a result of the growing popularity of PC-based VoIP services, advancing fixed to mobile
substitution and steadily decreasing prices, revenues on the fixed telephony market have been
falling in recent years.
Some mobile-fixed convergence can be observed on the Polish market, with at least one
mobile operator offering telephony services also at a fixed location (at prices comparable with
the fixed incumbent’s offers) while using SIM cards, and another mobile operator announcing
plans to offer from 2007 a converged service allowing its customers to call at “fixed rates”
while at home and standard “mobile rates” while away. In addition, at least one mobile
operator was intending to enter the fixed market and sign appropriate access and
interconnection agreements, including WLR, in an attempt to compete better with the fixed
incumbent that also has its fully owned mobile subsidiary. Some alternative fixed operators
are negotiating MVNO agreements with the mobile operators.
The reporting period saw an increase in the number of cable operators offering triple play,
including voice and broadband access, in addition to standard TV services. At least two fixed
line operators (including the incumbent) started to offer IPTV services on a commercial basis.
Broadband
Market situation
Broadband penetration in Poland, at
4.53% in October 2006, despite growth
by almost three percentage points when
compared to October 2005, remains
among the lowest in EU25 and much
below the EU average (at 15.7%).
While continuing its intensified
marketing campaign for its DSL offer,
the fixed incumbent further increased
its market share in the retail broadband
market, which in October 2006 stood at
Poland BB penetration
6.00%
4.53%
4.50%
3.00%
1.72%
1.50%
0.58%
0.00%
2004
2005
2006
69% compared to 63% in October
2005 and 46% in January 2004. It
appears that several factors may
contribute to the low penetration rates
in Poland. Fixed line telephony
penetration is low (and does not cover
many rural areas). The price of retail
broadband services remains relatively
high, especially considering the
average disposable income of Polish
households. As a consequence, a
considerable number of internet users
resort to dial-up connections (25% in
2005, according to the regulator).
EN
Poland - BB lines by technology/means
Inc. Other (Frame
relay, ATM,
FE/GE/Sonet, Cable
modem); 6301
Ethernet, MPLS, Serial,
ATM, Frame relay,
Fiber to the home,
Satellite);
25 141
229
1177224
NE Cable modem;
395 641
NE Ow n PSTN
netw ork; 122904
EN
Local loop unbundling was not functioning in Poland and bitstream access has only recently
been imposed on the incumbent. In addition, while cable is present in particular in big cities, it
may not currently be upgraded to offer internet.
Competitors to the incumbent’s broadband offering include cable operators (almost 400 000
lines accounting for more than two thirds of alternative operators’ broadband subscribers), but
also the DSL offerings of some fixed operators that build their own infrastructure and a
limited number of lines using other technologies.
In May 2006 UKE imposed ex officio on the incumbent operator a reference offer for the
bitstream access (based on the open network provision (ONP) regime). The price on the
wholesale level was established based on an EU benchmark and using retail minus
methodology with an average rebate of 51%. By November 2006 five wholesale agreements
had been signed between alternative operators and the incumbent on the basis of this
reference offer and further agreements were being negotiated. The first broadband lines based
on bitstream access have been activated in November 2006.
Also in May 2006 UKE obliged the incumbent to publish the reference offer for leased lines,
lowering the average wholesale prices by over 20% (in a move to average them with the EU15 benchmark).
The reference offer for local loop unbundling was changed ex officio by UKE in October
2006 in order to significantly lower the prices for full and shared access (and base them on
EU benchmark) as well as provide for better and more detailed regulation of co-location and
other equally important elements of the successful co-operation between operators. Despite
that, no local loop had been unbundled until November 2006, when this report was being
written.
UKE notified the draft analysis of the relevant markets for wholesale broadband access
(August 2006), terminating segments of leased lines (October 2006) and local loop
unbundling (June 2006). On all these markets UKE designated the fixed incumbent as an
SMP operator and proposed to impose on it inter alia obligations to meet reasonable requests
for access at non-discriminatory and cost oriented conditions. The final decisions in this
regard had not been adopted until November 2006.
In an attempt to ensure better competitive conditions on the retail market for internet access,
UKE ordered the fixed incumbent to unbundle the retail provision of DSL connections from
the provision of line rental. UKE also seems eager to regulate the retail prices the incumbent
charges for broadband connections, and has already imposed fines on the incumbent for the
lack of transparency and cost orientation of its broadband offerings, as well as for not
submitting its retail broadband tariffs for prior approval. The Commission is looking into the
matter.
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Mobile markets
Market situation
The mobile penetration rate reached 91% in October 2006 following a significant growth of
20 percentage points in the reporting period, but it is still below the EU average. Three
operators are currently providing mobile services – voice and data (including 3G services in
highly populated areas). All three operators have similar market shares (34.2%, 33.8% and
32%: based on subscribers, October 2006).
With regard to retail price trends on the mobile telephony market, users of post-paid services
were able on average to enjoy further reductions offered in new tariff packages. By contrast,
the pre-paid segment, after a significant decrease in tariffs in 2004, saw no far-reaching
reductions in 2005.
The fourth network operator assigned 3G frequencies in May 2005 (to be used from July
2006) encountered some difficulties deploying masts, reportedly due to the stringent
requirements of the environmental and construction laws, and decided to postpone the start of
its commercial activities until the first quarter of 2007. This operator also signed a national
roaming agreement with one of the current mobile operators that will allow the operator to
offer services also in areas where it would not yet have its own network.
One frequency slot (with 3x33 duplex channels) in the 1800 MHz band remains to be
assigned, as two tenders were unsuccessful in 2005. The regulator is currently working on
another tender for these frequencies, possibly with lighter conditions, and is considering not
imposing any restrictions with regard to the technology to be used.
In July 2006 an undertaking active on the broadcasting content market signed an MVNO
agreement with one of the mobile network operators and aims to start its commercial MVNO
operations in 2007. By November 2006 all mobile network operators were negotiating several
other MVNO agreements with potential new entrants.
In April 2006, UKE had notified the draft measure on the market for mobile access and call
origination, where it found a lack of effective competition and designated all three mobile
operators as having a joint SMP position and proposed to impose inter alia non-discriminatory
MVNO access obligation at cost oriented charges. However, in June 2006 UKE withdrew this
notification and the market analysis remains to be re-notified.
In spite of the lack of the relevant market analysis, the regulator was considering imposing an
MVNO access obligation on one of the mobile network operators. The NRA is of the opinion
that its powers with regard to dispute resolution would provide a sufficient basis for imposing
the obligation in question. The Commission is looking into the matter.
In April 2005, UKE notified the draft measure in the market for mobile call termination where
it designated all three mobile operators as having SMP in their respective networks and
proposed to impose inter alia price control for call termination rates to be based on the cost
incurred, with the possibility for the regulator to verify the accuracy of the rates adopted by
using EU benchmarks or by other, not specified, methods. This fails to provide adequate
transparency and legal certainty for market players.
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In July 2006 the regulator published its position on mobile termination rates (MTRs),
indicating that they should be decreased by 34.5% on average. In October 2006 the regulator
announced that it would ex-officio set the level of MTRs through a decision. This was despite
an earlier proposal from the mobile operators to reduce the MTRs by 20-30% in a manner that
would, in their opinion, reflect the costs incurred.
Fixed
Market situation
The incumbent remains by far the largest player for fixed telephony and has 75.9% of the
fixed calls market (as at December 2005, in terms of revenues, for all type of calls). Since
December 2004 the incumbent’s share of the market for all calls has decreased by seven
percentage points.
As at October 2006, 43 undertakings were registered as fixed operators having their own local
access network and whose market share in terms of subscriber lines stood at 10%. However,
only a few of the alternative operators are in a position to compete with the incumbent
operator on a larger scale in more than one area and, by December 2005, only two alternative
fixed network operators had a market share above 3% (4.05% and 6.44%).
A number of service providers are active, mainly in the long-distance, international and fixedto-mobile calls market, offering a service based on carrier selection and/or carrier preselection (CS/CPS). At least one big international player offering its CPS services for all calls
(to fixed and mobile networks) was relatively successful in gaining some market share (6.07%
in 2005 in terms of revenue). Obligations recently imposed on the incumbent with regard to
WLR provision could benefit the further development of service-based competition.
A number of cable operators in Poland started offering telephony services and, according to
cable operators, there was a significant growth in 2006 in terms of the number of subscribers
to this service. However, their overall market share remains marginal.
So far there is no accounting model for the incumbent’s cost verified by the independent
auditor and subsequently accepted by the regulator as the basis for the cost orientation of the
measures imposed. The incumbent’s recent cost-calculation report was rejected by the
regulator in August 2006, after the auditor gave an unfavourable opinion. At the same time
UKE indicated that it would continue using benchmarks as the best available proxy for costoriented prices.
In July 2006, UKE introduced important changes to the reference interconnection offer of the
incumbent, lowering significantly the level of the interconnection charges. The decision also
introduced a capacity-based interconnection with a flat rate for a defined capacity of traffic
exchange.
Also in July 2006 UKE imposed, in the context of a dispute resolution between the incumbent
and one alternative operator, a WLR obligation on the incumbent, which will supplement the
CPS service provided by the alternative operator. The incumbent has to offer WLR with a
47% rebate from its normal retail price for line rental. The decision was based on the
transitional measures and a wide interpretation of the ONP regime, and not on the results of
the relevant market analysis. However, the final measure imposing regulatory remedies on the
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wholesale market for call origination (including an obligation to offer WLR) had been
adopted by the regulator shortly before. The Commission is looking into the matter.
In the second half of 2006, UKE notified to the Commission draft measures and the analysis
of all the fixed retail markets as identified by the Commission Recommendation. UKE
proposed to designate the incumbent as having SMP in all markets notified and to impose on
the operator a full catalogue of retail remedies, including cost orientation of prices and the
obligation to submit them for the regulator’s prior approval. With regard to markets for access
to the public telephone network at a fixed location for residential and for non-residential
customers, UKE suggested including xDSL lines in the product market definition. At the time
of writing this report, the Commission had initiated a second phase to further analyse these
notifications.
In September 2006 UKE notified the analyses of the fixed call termination markets for
alternative operators active on that market (29 operators), and the draft measures proposing to
designate all of them as having SMP in their respective networks and to impose remedies,
including non-discriminatory access and transparency. UKE is not proposing to impose costorientation obligations on the alternative operators.
According to the relevant provision of the Polish law, it appears that having SMP in any
market (including the call termination market) automatically obliges an SMP undertaking to
provide CS/CPS services. Thus, alternative operators would be obliged to offer CS/CPS
services. Nonetheless, the NRA does not in practice request the provision of CS/CPS services
from operators not having SMP in retail access markets. The Commission is looking into the
matter.
Broadcasting
Market situation
Cable penetration in Poland stands at about 22% and is concentrated in big cities. Out of more
than 400 cable operators registered in 2005, only a few had a subscriber base greater than
100 000 and only one operator has more than one million subscribers. Digitisation of the
network is progressing slowly, and in the third quarter of 2005 there were only 45 000 digital
cable subscribers in Poland102.
A new digital satellite platform started commercial activities on 12 October 2006. There are
currently three satellite digital platforms available in the Polish market which offer a variety
of content. In 2005, 17% of Polish households were receiving satellite signals (about 50% of
which were capable of receiving digital signals)103.
According to 2005 data104, over 60% of households in Poland rely on terrestrial broadcasting
as their main means to receive (analogue) TV broadcasts. Digital terrestrial TV is currently
available only in a few locations and on a trial basis. Following the adoption of a switchover
strategy by the Polish Government in May 2005, the frequencies for the first two multiplex
operators with national coverage still remained to be assigned by November 2006. In
102
103
104
EN
Dataxis 2006: “Digital television data; EU market for digital television”.
ibid
ibid
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accordance with the mentioned strategy, Poland is planning to switch off analogue
transmission by the end of 2014.
Two operators are offering IPTV services using DSL-enabled networks (one alternative
operator that was the first to offer IPTV, and the incumbent operator that started commercial
offerings in the second half of 2006).
Following national consultation and notification in July 2006, UKE adopted a final measure
concerning the market for broadcasting transmission services in November 2006. UKE found
lack of effective competition in that market and designated the subsidiary of the fixed
incumbent as having SMP. The regulator imposed remedies on the SMP operator including
non-discriminatory and cost-oriented access to its network for other operators. No access for
broadcasters has been granted, even though the regulator identified a number of competition
problems in relations between the SMP operator and broadcasting entities. However, it
appears that the definition of access in the Polish law covers only undertakings providing
electronic communications networks and/or services, and may not be applied to content
providers. The Commission is looking into this matter.
Spectrum management
Poland appears to have implemented three out of four Commission Radio Spectrum
Harmonisation Decisions (2004/545/EC in the 79 GHz frequency band; 2005/513/EC in the
5 GHz band and 2005/50/EC in the 24 GHz band) in the ministerial ordinance of 24 October
2005 concerning the use of radio equipment not requiring an individual authorisation.
Decision 2005/928/EC in the 169 MHz range is expected to be implemented in the first
quarter of 2007 through an amendment to the aforementioned ordinance.
The Polish authorities are debating whether to establish a harmonised strategy for spectrum
management, covering a number of issues ranging from facilitating access to frequencies by
making the spectrum bands licence-free whenever possible, to spectrum trading (the transfer
of spectrum usage rights between parties in a secondary market), and liberalisation (the
relaxation of restrictions on services and technologies associated with spectrum usage rights
and the possibility of reconfiguring usage rights).
Cable operators are subject to an additional annual fee of 1.5% of their revenues from
providing access to TV content and they voice concerns that this is allegedly in breach of the
regulatory framework. The Commission is looking into the matter.
Operators complain of cumbersome and not always transparent procedures as far as rights to
install facilities on public and private land are concerned. In addition, local authorities appear
to impose taxes on the telecommunications infrastructures and each authority appears to have
broad discretion in deciding on the levies. The Commission is looking into the matter.
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Universal service
The fixed incumbent operator was designated in May 2006 as the universal service provider
that has to guarantee the provision of all universal service elements throughout Polish
territory.
There is still no comprehensive directory service and directory enquiry service available in
Poland that would include fixed and mobile subscribers. In October 2006 the Commission
referred this case to the Court of Justice.
The single emergency number “112” has been available for all end-users since September
2005, but there appear to be some deficiencies regarding caller location when calls are made
from mobile phones.
Number portability
Number portability for both fixed and mobile numbers became available in 2006 (from
January for the fixed and mobile post-paid subscribers and from June for mobile pre-paid
subscribers, as in the latter case changes to the law were required). In August 2006, UKE
fined three mobile operators and the fixed incumbent for applying to subscribers overly high
direct charges for portability that were deemed to act as a disincentive to making use of
number portability.
Must-carry
According to the law on media, cable operators have to introduce as first national public
programmes. Depending on the region, the must-carry obligation accounts to 3 up to 6-8
programmes to be carried by cable operators – normally for no remuneration on either side.
Out-of-court disputes involving consumers may be dealt with by the consumer arbitration
court established by the 2004 Telecommunications Act or by UKE in a mediation procedure.
In 2005 and 2006 there were about 1 000 complaints on the arbitration court’s agenda, and
about 4 000 cases were referred to the NRA for mediation (in 2005, 21% of cases brought
were amicably resolved)
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PORTUGAL
INTRODUCTION
Some progress was made in the broadband market during the reporting year. The regulator
was active in reducing the prices paid by alternative operators for using the incumbent’s
network, and alternative operators increasingly invested in local loop unbundling (LLU). As
for the fixed market, the number of subscribers using an alternative operator for direct access
is significantly higher than the EU average, due to the combination of cable providers,
operators investing in LLU and the provision of fixed telephone services using mobile
frequencies.
Efforts in 2006 by the regulatory authority to increase the limited competition in the market,
in the face of the Portuguese incumbent operator owning the copper and main cable networks,
started to have some impact. However, the incumbent operator remained dominant in all
markets analysed, except the fixed transit one.
In February 2006 a smaller operator launched a takeover bid for the incumbent and its cable
subsidiary. The bid was conditionally approved by the Portuguese national competition
authority (NCA) in late December 2006. This transaction may have a major impact on the
market situation.105
The NRA was efficient in conducting its market analyses and in taking final regulatory
measures, adopting a full range of remedies to be imposed on incumbent operators. However,
existing regulatory measures had limited impact and did not result in fully effective
competition in the Portuguese markets. Some of the obligations imposed lacked sufficient
detail, which has delayed effective implementation of the measures. Some regulatory
measures introduced by the regulator are beginning to produce results, such as LLU or
wholesale line rental (WLR). The effectiveness of the appeal mechanisms has been raised as
an issue, although appeals do not have a suspensive effect, except for decisions imposing
fines or sanctions.
The national regulatory authority (NRA) provided continuous assistance to the NCA, AdC, in
its relevant areas of competence throughout the lengthy analysis of the above-referred bid.
When assessing a merger in a regulated sector such as electronic communications, the
Portuguese NCA must consult the relevant sector regulator, in this case ICP-ANACOM. It
should be noted that this bid procedure may be very relevant from a regulatory perspective
and as regards the number and nature of the remedies imposed.
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EN
Following the incumbent General Shareholders’ meeting on 2 March 2007 where one of the necessary
conditions for the takeover bid to succeed was not approved, the takeover bid failed. However, the
situation described here is that at 31 December 2006.
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The appeals procedure continues to be extremely long, although appeals do not have the effect
of suspending NRA decisions, except in cases where fines or sanctions are imposed. Some
appeals lodged with the administrative courts in 2001 have been pending for almost six years.
However, the new government included reform of the judicial system among its priorities.
Although a dispute resolution mechanism is provided for by law, operators do not tend to use
this formal mechanism offered by the NRA, preferring to use letters of complaint and more
informal inputs to report their positions to the regulator. Court conciliation mechanisms are
not an option for operators as they are quite complex.
Alternative operators also raised concerns about the NRA still being reluctant to impose
heavy fines on the incumbent, some of which have been reduced on several occasions
following appeals to the courts, even when it has been found guilty of not applying the
regulator’s decisions.
Decision making
Since the last notifications in March 2005, no further notification has been submitted by the
Portuguese authorities regarding the three remaining relevant markets (mobile access,
wholesale international roaming and broadcasting transmission services markets). The
Commission recently started an infringement proceeding against Portugal for failure to notify
all the market analyses in the Recommendation, such notification being considered essential if
the objectives of the framework are to be met. The NRA expects to finalise the first round of
market analyses by March 2007.
With regard to the relevant markets, the NRA found the incumbent to have significant market
power (SMP) in all but one of the analysed markets, and imposed a full range of obligations,
including some measures such as a standstill period to prevent win-back practices or capacitybased interconnection. It should be noted that the incumbent operator owns the two
nationwide networks (copper and cable).
Existing regulatory measures, such as LLU or WLR, are now beginning to have some impact
on the limited competition of certain Portuguese markets. A number of measures were not
implemented quickly enough, such as the publication of the leased lines reference offer which
took place one year after the relevant markets were reviewed; or the offer for WLR which
became available one and a half years after it was mandated and which needed a further four
months to be implemented to a certain degree, since some of the obligations imposed were not
sufficiently detailed, and the need for additional regulation has delayed effective
implementation of those measures. Other remedies had no real effect on the market, such as
shared access or regulated ATM bitstream. During the past year the NRA was active in
revising most of the various reference offers, improving the specific conditions for access,
price and other obligations, such as the offers for LLU, bitstream, leased lines and ducts.
Since February 2006, when a smaller Portuguese operator launched a takeover bid for the
incumbent and its cable subsidiary, the market situation has been influenced by the bid
procedure as it may be significantly affected by the outcome of that transaction. Both
companies are integrated operators with activities in fixed communications, mobile
communications, internet access and media sector. In fact, the bidder is the major competitor
in the fixed voice market, the third player in the mobile market, and the second player in the
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broadband market. The bid was conditionally approved by the Portuguese NCA, AdC, on 22
December 2006. It should be noted that the Portuguese Government still holds a small
participation in ownership and special voting rights (“golden share”) in PT for this kind of
decision. An infringement case is pending in this regard.
AdC imposed, as a condition, the sale of one of the incumbent’s two fixed networks, without
specifying which. The scenario may vary depending on which divestiture option the bidder
takes. In the event of divestiture of the cable network, AdC and ICP-ANACOM would
approve a model for functional vertical separation of the copper fixed network submitted by
the bidder. Should the takeover bid not succeed, the incumbent has already announced its
intention to divest its stake in its cable subsidiary. In both scenarios, separate ownership
should prove beneficial to competition in the Portuguese fixed and broadband market by
creating incentives to invest in fixed network upgrades and to compete in developing new
services.
Moreover, the situation in the mobile market may drastically change following the outcome of
the takeover bid. Should the takeover succeed under the envisaged conditions, Portugal will
become the first Member State reducing from three to two players in the market, with the
leading operator having an estimated 60% of the market share, well above the EU average.
There are further conditions laid down in the NCA’s final decision, such as retail mobile
regulation (price cap) or extension of the obligation of access to ducts to encompass all ducts
owned by the bidder, which will also need to divest certain content assets.
ICP-ANACOM granted a number of temporary authorisations for carrying out technical trials
of mobile digital television (DVB-H). However, frequencies are not expected to be assigned
for this particular service until analogue switch-off takes place.
ICP-ANACOM adopted a report in February 2006 following the consultation on VoIP
services in 2005. In addition to geographic numbers, the regulator allocated a numbering
range for nomadic VoIP services, further specifying that those numbers come under number
portability and that routing of calls to 112 should be ensured.
Broadband
Market situation
The Portuguese broadband market is
showing the first signs of growing
15.00%
13.47%
competition, with new entrants
10.84%
increasingly investing in LLU. As at 1
12.00%
October 2006 broadband penetration
9.00%
7.17%
(13.47%) was still below the EU
6.00%
average (15.69%). The number of
3.00%
broadband lines reached 1.42 million in
0.00%
Portugal, a year-on-year increase of
2004
2005
2006
24.7%. Although DSL constitutes a
higher percentage of broadband lines
(62.7%), cable (36.8%) is still a significant means of access.
Portugal BB penetration
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Since the beginning of 2005, the incumbent’s retail broadband market share has been
declining and it obtained just some
Portugal - BB lines by technology/means
40% of the new subscriptions in the
third quarter of 2006. However, the
incumbent still holds one of the highest
shares among incumbents in the EU
(69.1% of the overall broadband
market and 73.7% of the DSL market).
If the takeover entails disposal of the
cable subsidiary, the new entity would
control almost 87.7% of the DSL retail
market.
NE Full ULL; 164936
69 895
657913
NE Cable modem;
198 764
PLC, Shared access);
5985
Inc. Cable modem;
325482
Following the improvement of
regulatory conditions in Portugal,
major investment is being made by
alternative operators in fully unbundled lines (shared access is still not used) for the provision
of broadband services. The number of unbundled local loops exceeded 164 000 unbundled
lines in October 2006 compared to 16 000 at the beginning of 2005, which is an encouraging
trend.
Inc. Other (other
access);
1 049
Consumers have benefited from diversification of broadband offers. In relation to broadband
availability, all the incumbent’s local exchanges were equipped to provide ADSL services
nationwide as of June 2006. There are different triple play offers on the market, including
widespread service over cable, one service based on wireless local loop (WLL) with limited
coverage and one service over ADSL from an alternative operator. The incumbent’s triple
play offer is still in the trial phase.
Regulatory issues
Since the first version of the reference offer was published in 2000, the regulator has been
active in introducing a number of changes to the incumbent’s bitstream offer (known as Rede
ADSL PT), such as establishing conditions for the introduction of new speeds up to 20Mbps,
decreasing prices (last one voluntarily proposed by the incumbent), regulating the migration
of customers or increasing the number of interconnection points (ATM bitstream access).
Although market players had been requesting an ATM bitstream product, they seem not to be
attracted by the offer, available since 2004. While the number of bitstream accesses is still
growing and accounts for a very large part of the ADSL accesses, alternative operators
showed an increased preference for unbundling products. To avoid margin squeeze problems,
the regulator imposed a retail-minus obligation on the incumbent.
With regards to LLU, the NRA intervened through different modifications of the reference
unbundling offer (RUO), mainly by considerably reducing the fees for fully unbundled loops
in April 2005, followed by further reducing the monthly fees for fully unbundled (from €9.72
to €8.99) and for shared access (from €2.95 to €2.51) in April 2006. LLU prices continue to
be below the EU average, although certain issues remain to be solved in relation to
information on the technical eligibility of the incumbent’s lines, high fees for line testing and
service level agreements (SLAs).
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Mobile markets
Market situation
Mobile penetration in Portugal (113% as at October 2006) continues to be higher than the EU
average (103%), with the third highest proportion of prepaid customers in the EU (80%). The
incumbent’s mobile subsidiary still leads the market with a 46% market share, the second
operator increased its market share to 40% and the third operator’s decreased to 14%. Mobile
operators launched upgraded 3G broadband access services (HSDPA) and claimed that the
number of mobile broadband customers was approximately 174 000 in July 2006, which
represents 1.6% of the population. According to information from the NRA, traffic originated
in mobile networks already accounted for 60% of the overall voice traffic in 2005106.
In its final decision on the merger, the NCA gave its consent subject to the GSM and UMTS
frequencies of one of the mobile operators being returned to the NRA, infrastructure being
sold to a potential third mobile network operator (MNO), access being granted to mobile
virtual network operators (MVNOs) and the impact of network externalities being reduced,
which may alleviate the impact on the mobile market. Moreover, the NCA has also planned to
introduce a price cap mechanism and a certain control of offers at retail level if the takeover
bid succeeds.
Service providers signed the first agreements with the third MNO during 2006. Two service
providers started reselling commercial services, and the other may follow shortly. The arrival
of these new players into the market could drive competition on the mobile market, though
the effect in the market remains to be seen. Some MNOs appear to be currently negotiating
with undertakings interested in a more infrastructure-based business model.
Regulatory issues
At the beginning of 2005 the regulator introduced a glide path to reduce the high fixed-tomobile termination rates (€0.185 for the two biggest operators and €0.2779 for the smallest)
and mobile-to-mobile termination rates (€0.187) to a converged target of €0.11 for all mobile
networks in October 2006. ICP-ANACOM is currently analysing the markets to assess the
need for further reductions of mobile termination rates, which are now at the EU average. The
NRA has not yet analysed mobile access (market 15 of the Recommendation). However, the
obligation to provide access to MVNOs is one of the conditions considered for the incumbent
in the NCA’s draft decision on the takeover.
Fixed
Market situation
Despite the gradual loss of fixed voice market share, this market is still dominated by the
incumbent, which still had 77.4% of the market in terms of revenue in December 2005
compared to 79.40% the previous year. As at July 2006, 15.2% of subscribers were using a
provider other than the incumbent operator for direct access, compared to 8% one year earlier.
The use of alternative operators is significantly higher than the EU average (10.4%), due to
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EN
ICP-ANACOM’s Annual Report 2005.
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the combination of cable providers, operators investing in LLU and the provision of fixed
telephone services using mobile frequencies.
Regulatory issues
By decision of 21 April 2006, ICP-ANACOM reduced by around 5% the average
interconnection prices applicable under the 2006 reference interconnection offer (RIO).
Nevertheless, they still remain slightly above the EU average for all types of interconnection.
In June 2006 the NRA approved the RIO modifications in order to introduce capacity-based
interconnection, in addition to the metered interconnection model. This positive measure,
once implemented in the Portuguese market, would allow alternative operators to compete
better with the incumbent’s retail offers through increased diversification. The regulator
examined the incumbent’s proposal in compliance with the new requirements, and in
December 2006 the NRA issued a final decision, with further modifications to be introduced
by the incumbent.
The first offer for WLR (known as ORLA) was published in January 2006, and further
updated by a new offer published in November 2006, enabling alternative operators to
provide access together with telephone services. Although there were almost 120 000 accesses
under the WLR offer as at October 2006, implementation has proven to be problematic. A
number of issues were indicated as being barriers to effective implementation, such as the
exclusion of ISDN access, separate invoicing for some services by the incumbent operator,
and the conditions for denial of service suspension by the incumbent in the event of nonpayment. In December 2005 ICP-ANACOM intervened, by banning retail offers in which the
incumbent bundled subscription and calls until certain improvements in relation to WLR are
achieved.
In April 2006 the price for CPS activation was reduced to €5.10. Finally, in May 2006, the
NRA reduced the standstill period imposed on the incumbent, which now starts counting as
from the pre-selection activation request, from six to four months on the basis of the improved
competitive market situation and prohibited contacts with pre-selected customers for the
incumbent’s promotional campaigns during that period. The number of CS and CPS lines is
quite stable (499 000 CPS customers and 92 500 CS customers as at 31 March 2006).
In July 2005 the NRA obliged the incumbent to publish a leased lines reference offer, finally
adopted in June 2006 with further price reductions. The regulator stated that the price of
leased lines had decreased by 18% on average, and monthly rental fees are one of the lowest
in the EU. Alternative operators still complain about repair time and delivery times.
Following market analysis, the obligation concerning collocation of equipment in the
submarine landing stations was not imposed, and so operators need to rent backhaul services
to the incumbent up to a single secured point of interconnection, which is accessible for all
operators. Moreover, the NRA was analysing the tariff schedule for the retail fixed telephone
service proposed by the incumbent which falls under a price-cap obligation.
Some operators introduced a complaint to the NRA concerning phones installed for free by
the incumbent for exclusive use via the incumbent’s phone cards. In November 2006 the
regulator started action against the incumbent over this complaint.
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Broadcasting
Market situation
There are different platforms in Portugal competing for the provision of broadcasting
transmission services107: cable (27.1%), satellite (10.4%), analogue terrestrial television
(62.5%) as well as the recently launched operations based on DSL and WLL. The launch of
broadcasting television services over mobile platforms is planned for the future. The cable
network is a widely spread platform covering three out of four households, in addition to the
two analogue terrestrial networks.
The policy for Digital Terrestrial Television (DTT) is being revaluated in Portugal, following
revocation of the first DTT licence in 2003. ICP-ANACOM expects to launch a public tender
for assignment of frequencies for DTT in the first half of 2007, both for free-to-air and paid
channels, although there is no concrete date for the tender or for the launch of DTT services
yet. The incumbent operator announced the divestiture of its cable unit in order to be able to
participate in the tender. Analogue switch-off will tentatively occur between 2010 and 2012 in
Portugal, depending on the evolution of the DTT coverage achieved, with a regionally
staggered calendar.
Regulatory issues
The NRA has not yet notified the market for broadcasting transmission services (market 18 of
the Recommendation), though it expects to notify it to the Commission shortly. It should be
noted that the incumbent, through the concession granted to it until 2025, has obligations
concerning provision of the broadcasting and distribution service of the telecommunications
broadcast signal, as well as regarding access to masts. The regulator recognised that it cannot
withdraw the existing obligations in this market and that market evolution might not justify it
at this moment. The Commission services are looking at this issue.
Spectrum management
According to the national frequency allocation plan (known as QNAF), all rights of use for
frequencies are to be transferred, subject to the NRA’s approval in accordance with the terms
established under national law. The Portuguese authorities are, at national and European level,
currently studying options for a general policy on secondary spectrum trading.
Portugal took measures to implement three out of four Commission Decisions108 adopted
under the Radio Spectrum Decision harmonising spectrum in specified bands, and the QNAF
was accordingly updated. The national frequency allocation table was updated in July 2006
and is published on the NRA’s website. Decision 2005/928/EC should be included in the next
review of QNAF to be published early 2007.
107
108
EN
Household penetration as of 3Q2005. Dataxis 2006: “Digital television data: EU market for digital
television”.
Commission Decisions 2005/513/EC of 11 July 2005; 2005/50/EC of 17 January 2005; and
2004/545/EC of 26 July 2004.
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EN
During 2006 ICP-ANACOM renewed the licence of one mobile operator, and is currently in
the renewal process for the remaining operators. On 23 November 2006, the regulator
modified the existing rights of use for frequencies for operation of WLL systems previously
allocated to the incumbent and several alternative operators with national coverage, resulting
in a more geographically segmented coverage and the freeing of some spectrum. In addition,
following some requests for WiMAX trials and given the high potential of the frequency band
used by the incumbent, the NRA launched a public consultation in early December on the
introduction of broadband wireless access.
In Portugal the fee for rights of way for fixed networks consists of a percentage (up to 0.25%)
of each bill issued by operators to subscribers in the corresponding municipality. The
incumbent is concerned by the fact that it is the operator charging most of its clients that
municipal fee.
ICP-ANACOM imposed on the incumbent, as holder of a concession contract, the obligation
to provide a reference offer for access to ducts and associated infrastructure (known as
ORAC) in 2004, whilst previously the regulator had intervened to guarantee access to ducts
on an ad hoc basis. Since then the regulator has approved a number of decisions on the
amendments to be introduced in the reference offer. The most recent changes approved in
October 2006 concern the accreditation system for installation and maintenance work and a
database with information on ducts and other infrastructure. Although implementation of the
ORAC took a long time, ICP-ANACOM is confident that the reference offer will become
increasingly operational.
Authorisations
In 2005, the NRA authorised one mobile operator to use mobile frequencies for the provision
of fixed telephone services under certain conditions (e.g. using numbers for fixed services and
a limited number of network cells). The incumbent complained about this decision to the
regulator, and brought it in before the courts. In October 2006 the regulator authorised a
second mobile operator to provide similar services, where customers are able to use their
phones as a fixed line. The Commission services are looking further at this issue.
Tariff transparency and quality of service
The NRA set up an online observatory of mobile prices, which is a practical tool as it can be
consulted by consumers to simulate their traffic profiles. The NRA is also studying the
possibility of upgrading it for broadband services. After the regulator received consumer
complaints related to tariff transparency for international roaming tariffs, the NRA included
on its website information on the use and billing of roaming services abroad.
ICP-ANACOM is preparing to extend the Regulation on Quality of Service approved in June
2005 to cover undertakings providing internet access services; it currently applies only to
fixed operators. Moreover, in March 2006 the NRA approved the quality of service
parameters and the performance objectives for universal service provision. The universal
service provider must provide information on the quality of service to consumers before a
contract is signed, quarterly to the regulator and yearly to the general public.
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Universal service
Under the current concession contract the incumbent operator keeps the universal service
obligation until 2025, and an infringement proceeding is currently pending for this. The
Portuguese authorities have so far not provided concrete evidence that the Portuguese
Government is planning to launch a new universal service designation process before the
concession expires.
So far the regulator has always rejected the incumbent’s claims for compensation for the cost
of the universal service: the requests prior to 2001 on the basis that the market had not been
fully liberalised, and the subsequent ones on the basis that the data provided were incomplete.
In October 2006 the universal service provider submitted revised costs for 2001 and 2002,
together with estimated costs for 2003, which the regulator is currently analysing.
A comprehensive directory is still not available in Portugal as the data concerning one mobile
operator are missing, and therefore the Commission started an infringement proceeding. In
March 2006, a national court suspended a regulator decision of December 2003 concerning
the provision of subscriber data to the universal service provider, and ruled that that mobile
operator should agree with the universal service provider on the conditions for supplying
subscriber information, otherwise the NRA should lay down the conditions. Nevertheless, the
legal case is still pending following an appeal by the regulator against that ruling.
Caller location information is not available to emergency services for calls from mobile
phones, and therefore the Commission started an infringement proceeding. No decision has
been taken so far in relation to the technical solutions the mobile operators submitted to the
NRA. The situation might change following the adoption of an order by the Ministry of
Internal Administration on 13 October 2006 and the first meetings among the emergency
authorities, the mobile operators and the regulator.
Number portability
In May 2006 the regulator prohibited the charging of an additional monthly fee paid by
customers porting numbers to a certain fixed provider, something considered discriminatory.
Normally, the retail price for porting fixed numbers is between zero and €48, whilst porting
mobile numbers is either free or convertible into a number of call minutes. At wholesale level
the maximum price for a ported number has been reduced from €15 to €13.6 with certain
discounts per volume.
Moreover, fixed number portability is starting to impact on the market and fixed ported
numbers have almost doubled in one year. On the other hand, it seems that Portuguese mobile
subscribers are reluctant to change operator by porting their number, and operators do not
seem to actively promote that option. This, together with the fact that many subscribers have
locked terminals or have more than one provider, leads to low use of mobile number
portability.
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Must-carry
ICP-ANACOM is responsible for regulating transmission operators, in particular as regards
imposing must-carry obligations, but it has not imposed any yet as the Media Regulatory
Authority (ERC), established in November 2005, has not so far reviewed the channels which
would enjoy must-carry status. The current must-carry obligations imposed on cable operators
to provide two national public service channels and two regional (one in each of the outermost
regions of Azores and Madeira) derive from the previous regime. The awarding of DTT
frequencies, expected for early 2007, may include further must-carry obligations.
The NRA has created a specific unit dealing with complaints and requests for information,
which should be fully operational in the first half of 2007. However, the regulator is not
competent to settle conflicts between end-users and operators.
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SLOVENIA
INTRODUCTION
Most economic indicators point to market and competition growth in Slovenia during 2006.
The market experienced significant broadband growth. Competition between operators and
service providers in the mobile market was more balanced than in the fixed market.
Consolidation activities included the takeover of the fixed alternative operator by the owner of
the new mobile entrant, a possible step towards convergence.
Following the NRA’s completion and notification of all relevant market analyses and its
attempts at rigorous supervision of remedy implementation, the electronic communications
market in Slovenia now seems to be on the right track, except for the fixed telephony market
which remains largely non-competitive. It seems, however, too early for the NRA to reduce
the level of market regulation.
Overall there were some positive changes in the regulatory environment in 2006. Since all
relevant market reviews had been completed, the NRA focused on supervising
implementation of remedies, thereby manifestly facilitating the growth of alternative
operators. This made it possible for the Commission to close the infringement proceedings
opened due to the failure to maintain the SMP obligations under the transitional regime.
The amendment to the Electronic Communications Act (ECA) was adopted in late autumn
and took effect on 27 December 2006. The amendment streamlines certain ambiguous
provisions in the ECA and extends the interval for revision of market analysis from a
maximum of one to a maximum of two years.
The Agency for Post and Electronic Communications (APEK) appears to be independent and
effective. Several smaller alternative voice service providers, however, expressed
dissatisfaction at the lack of specificity and timeliness of remedies imposed on SMP
operators.
There have been 66 dispute cases addressed to the NRA, the great majority of them being
either settled or stopped by applicants. APEK has also begun to reform informal disputeresolution procedures between end-users and operators and between operators. It is assumed
that this measure will strengthen the NRA’s position as a mediator as prescribed by the Act
amending the ECA. The NRA intends to resort to the obligatory decision dispute-settlement
procedure only if either party opposes mediation or mediation appears to be ineffective. The
Act amending the ECA provides for end-users that are consumers to be exempted from
paying administrative taxes when applying to APEK for dispute resolution. The mediation
procedure should be formalised in the NRA Act in preparation at the time of writing this
report.
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Cooperation with the National Competition Authority (NCA) is proceeding satisfactorily and
according to a specific formal protocol. However, the division of responsibilities (ex ante vs.
ex post regulation of the sector) appears to be complicated at times, and alternative operators
reproach the NCA for failing to address core competition issues such as price squeezes.
An infringement procedure concerning the NRA’s independence was stopped in summer
2006, given the reorganisation of the incumbent’s supervisory board and the intended
amendment of the ECA.
Decision-making
APEK notified all 18 recommended markets. It took final measures in all markets, and all
remedies were implemented, except the mobile call termination market (market 16), where
the NRA is in discussion with the second biggest market player to find an agreement on cost
orientation. The NRA launched the second round of market analyses in the autumn.
The NRA tended to impose limited remedies in several cases, like the transit markets.
Delayed introduction of cost orientation raises concerns in the mobile and fixed termination
markets. APEK imposed asymmetric remedies on mobile termination. Two markets were
found to be competitive: market 17 (wholesale market for international roaming) and market
14 (wholesale trunk segments of leased lines).
In the retail markets APEK proposed remedies before having analysed the wholesale markets.
It appears that the final wholesale markets analyses – conducted after the analysis of the
corresponding retail markets - did not lead to any modifications in the remedies imposed by
APEK in the retail markets.
The Government announced its plans to privatise the state-owned incumbent within three
years, leaving the State with a 25% stake plus one share. The sale of the state-owned interest
in the incumbent is anticipated in three phases: first, listing of the shares on the stock
exchange, which took place in October 2006; second, the sale of 10% of the shares to
Slovenian citizens; and third, the sale of 39% of shares to a strategic investor.
The NRA organised several tenders for allocation of frequencies during 2006. Two UMTS
licences and two WLL licences were granted recently. However, no investments in the
physical infrastructures have been made so far in this regard. Currently more than 70% of
Slovenian territory has 3G services, provided solely by the incumbent’s mobile arm. This
places Slovenia amongst the top EU performers.
Triple-play solutions have become widespread. The incumbent continues to upgrade its
backbone and access network and is ready to offer a next generation of ADSL technology
(ADSL2+). Its main infrastructure competitor continues investing rapidly in the unbundling of
local loop (LLU) and provides broadband services on the basis of VDSL technology. Other
fixed alternative operators are also increasingly active in unbundling. One company is rolling
out core optical networks in several municipalities and has already leased facilities to
alternative operators. Bigger regional cable operators are consolidating their scattered local
networks. The incumbent intends to deploy WiMax technology in rural areas.
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Broadband
Market situation
Broadband penetration is the second
highest amongst the new Member
States. There were 252 928 broadband
lines in October 2006. The broadband
market,
which
is
becoming
increasingly
sophisticated,
with
ADSL2+ and VDSL services, has
grown by over four percentage points
since October 2005.
Slovenia BB penetration
15.00%
12.62%
12.00%
8.56%
9.00%
6.00%
5.31%
3.00%
0.00%
2004
2005
2006
The retail broadband market is
dominated by the incumbent’s ISP
subsidiary, which also uses LLU and controls 80% of the xDSL market. In fact nearly 10%
(nil in 2005) of all xDSL connections
Slovenia - BB lines by technology/means
are based on unbundling, which
demonstrates that operators are prepared
to invest more and are now moving up
the investment ladder. xDSL remains
the predominant technology, with such
connections constituting almost 68% of
all retail broadband lines. Cable
operators, with a total of 78 261 lines,
ensure that there is increasing
infrastructure competition. It is worth
mentioning that alternative operators’
overall broadband market share grew
from 38% in October 2005 to 45% in
October 2006.
137701
NE Full ULL; 10178
NE Shared access;
6 636
Inc. Other (Cable
modem, Fiber to the
home); 419
9287
NE Resale; 7665
NE Other (Fiber to the
home, Frame Relay,
L.L., WLL); 2781
NE Cable modem;
78 261
APEK’s reduction of LLU prices and improved reference unbundling offer (RUO) are seen as
key drivers of broadband competition, despite a significant number of issues still to be
addressed. A key issue is the risk of margin squeeze and predatory pricing by the incumbent’s
ISP subsidiary. APEK has proposed to switch from the current system of fully allocated costs
(FAC) to long run incremental costs (LRIC) and to impose on the incumbent an obligation to
set up prices on this basis by 31 March 2008 at the latest. Other issues include limited access
to information about freed LLU capacities, and first-mover advantages for the incumbent’s
daughter company, which resells local loop capacities to alternative operators. Furthermore,
the lack of service-level agreements for wholesale services, the size of co-location spaces and
excessive charges for ancillary LLU facilities represent an additional set of difficulties for
new entrants. Moreover, the incumbent is reluctant to install splitters delivered by alternative
operators, although they are cheaper and supplied in much shorter time than those of the
incumbent. Nevertheless, LLU delivery times by the incumbent have improved compared to
the end of 2005.
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Following an APEK decree, the incumbent significantly reduced connection charges and
rental prices of full LLU to €10.6 (compared to €14.5 in 2005) and shared access to €3.3
(compared to €6.3 in 2005) at the beginning of 2006. The incumbent claims that the new
prices undercut its costs, while PSTN retail prices cannot be raised to a normal level before
APEK concludes its cost-analysis exercise based on the outcome of the second round of
market analysis.
Despite the regulation of wholesale terminating segments in the leased lines market (retailminus), the incumbent’s prices for 2 km and 5 km rental and one-off charges continue to be
amongst the highest in the EU-25.
Mobile markets
Market situation
Competition between operators and service providers in the mobile market is more balanced
than in the fixed market, and penetration is very close to 90%. The leading operator’s market
share stands at 71%, while the main competitor controls 22.5% of the market. Two resellers
hold the remaining share.
The number of pre-paid users decreased slightly compared to last year and accounts for 41%.
The introduction of number portability appears to have favoured a new entrant reseller in
particular, which launched its services towards the end of 2005. The third mobile network
operator withdrew from the market in May 2006 and transferred its frequencies to a new
entrant, which was expected to start providing services early in 2007.
In summer 2006 two new UMTS licences were granted to market players, one to the second
largest mobile network operator (MNO) and one to the fixed voice alternative operator.
In the access and call origination mobile market the incumbent’s mobile arm brought a court
action against an APEK decision. The appeal is based on the statement that the market
analysis results did not show any lack of effective competition. The court decision was still
pending at the time of writing this report. In 2006 the incumbent’s mobile arm received about
20 enquiries and requests for operator network access. Even though access to its network is
mandated by the market analysis outcome, negotiations with alternative operators appear to be
lengthy and cumbersome. As regards the market for wholesale mobile call termination, both
MNOs hold SMP status, and asymmetric remedies are imposed. The incumbent’s mobile arm
has complied with all imposed obligations. The calculated cost-oriented target price for 2008
is one of the lowest termination charges across the EU. Until then the NRA is applying a
glide-path approach. The operator has reduced the tariff for fixed-to-mobile call termination
by 17% and slightly increased the termination tariff for the other mobile operator (at the
moment the price for mobile-to-mobile call termination is under the calculated cost-oriented
price).
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Although the second largest MNO is not complying with the imposed price-control remedy, it
has decreased its tariffs for fixed-to-mobile call termination by 11%. The NRA is
investigating the issue. The second mobile operator’s current termination charges are up to
five times higher than its on-net retail price, while the operator continues to offer an off-net
retail tariff which is lower than the on-net retail price of the incumbent’s mobile arm. In this
context it is important to mention that the leading operator creates 85% of on-net calls, while
its main rival terminates only 45% of calls within its network.
Current asymmetrical regulation severely affects smaller market players, i.e. MVNOs and
resellers, who have revenue-sharing agreements with the incumbent’s mobile arm and are
paying a high price for using the leading operator’s network and facilities. Since between 10%
and 30% of their calls are terminated on the second MNO’s network at rates that apply to the
incumbent’s mobile arm, this puts them at a competitive disadvantage vis-à-vis the second
MNO.
Fixed
Market situation
The fixed telephony market, where penetration is the highest amongst the new Member States
(50%), saw a slight downward trend in overall traffic volumes, despite rather positive
regulatory intervention and increased participation by alternative operators. The fixed
incumbent operator maintained its dominant position in local access, in national access as
well as in fixed-to-mobile calls, with market shares in terms of revenue and traffic close to
100%.International calls remain a niche for smaller market operators. There is visible
competition in the markets of publicly accessible international telephone services provided at
a fixed location for residential users. In addition, invisible traffic, possible through broadband
internet tools for real-time communication, increases competition and variety of choice for
end-users. There is a clear trend of increasing market share for new entrants (20.4% in terms
of minutes in 2006 compared to 12% in 2005).
The most common distribution technology for telephone services is still the analogue PSTN
system, followed by basic ISDN and analogue PSTN on the Centrex system, which is most
commonly used in the business sector, whereas IP and IP Centrex systems are emerging but
are not very numerous.
Interconnection prices for local, single and double transit remain amongst the highest in
EU25. According to the 2006 reference interconnection offer (RIO), the price of international
termination is equal to the price of national termination, whereas termination of international
calls is not possible at local (PX) level. Furthermore, the price of transit remained unchanged
compared to 2005. When coupled with the carrier pre-selection (CPS)/carrier selection (CS)
charge, the price of calls terminated in the incumbent’s network exceeds the price of PSTN
the incumbent charges to end-users. Retail prices remain low in the absence of historical tariff
rebalancing and thus there appears to be little room for competition. Alternative operators
avoid setting calls which are terminated at another PX switch within the same regional (SX)
node, since the cost appears to be prohibitively high.
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The NRA is currently examining the RIO and intends to reduce the cost of CPS and CS.
Besides, one-off interconnection charges appear to be high (initial investment between
€80 000 and €160 000, according to the alternative operators). Another issue involves national
calls using CS and CPS between two users on the same local exchange. In some instances
calls cannot be routed, while the incumbent continues to charge services to an end-user. This
usually leads to a situation where an unsatisfied end-user terminates their contract with the
alternative operator. An administrative lawsuit was lodged in spring 2006.
The competitive situation is generally poor, with only one alternative operator interconnecting
at local level (PX) (as this is not feasible for very small operators), three operators at regional
level (SX), while three operators interconnect at the national level (IX). The incumbent ISP’s
aggressive policy, whereby 120 free minutes of calls and free subscriptions are offered to new
subscribers, appears to affect, in particular, smaller alternative operators, since it leaves no
room for any mark-up in off-peak time, not even for those competitors that would wish to
interconnect at PX level. However, this offer by the incumbent’s ISP is under NRA
supervisory review and the procedure was pending at the time of writing this report.
Difficulties have continued to persist for the last six years in the segment of voice service
provision to principally non-residential but also residential users. The market share of the
incumbent’s bundled and non-cost-oriented Centrex services is growing steadily and seriously
challenging competition. The incumbent applies large discounts for Centrex users, whereby
PSTN connection appears to be five times that of Centrex. Several lawsuits were initiated at
national level.
Broadcasting
Market situation
According to a report prepared for the Commission in 2006109, some 41% of Slovenian
households had terrestrial, 13% satellite, 45% cable-TV and just below 1% IPTV reception at
the end of the third quarter 2005. At that time only 1% of all households was receiving digital
TV. Terrestrial analogue switch-off is scheduled for 2012, whereas the digital plan envisages
national territory coverage with three multiplexes, each with seven channels.
The national television and radio broadcaster and transmission provider is the only market
player with obligatory nationwide coverage; however, in practice three commercial
broadcasters also cover the majority of the population. Other terrestrial broadcasters have only
regional coverage and are limited in their expansion as most frequencies are occupied. There
are also 46 cable operators providing content transmission services. None of these companies
have nationwide operations, and in the regions where cable is offered there are nine
competing operators on average. Three main cable operators account for around 60% of all
cable connections. TV (video) is currently offered by three operators that also offer triple
play.
109
EN
Dataxis 2006, Digital Television Data – EU Market for Digital Television.
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EN
Terrestrial broadcast transmission was the only market defined by APEK as susceptible to ex
ante regulation.
Spectrum management
In February 2006 the Government adopted the Strategy for Fixed Wireline Systems (FWS) in
the 3.41 GHz to 3.6 GHz frequency band. Implementation of the strategy should provide for
rapid development of broadband in mountainous and rural areas. The Government plan is to
cover up to 60% of Slovenian territory within three years from adoption, and thus to fill the
current gap between LAN and WAN and to offer a plausible alternative to cable and xDSL
platforms. It is intended to grant four licences; the tender for the first two was organised in
March 2006 and two operators were selected for a period of 10 years, viz. the fixed incumbent
and one alternative operator.
APEK organised another tender for granting licences for a multi-channel microwave
multipoint distribution service (MMDS) in the frequency band between 11.7 GHz and
12.5 GHz, but failed to attract any bidders.
Two UMTS licences were awarded in the 2.1 GHz frequency band to one MNO and one fixed
alternative operator. A third GSM (DCS) frequency, which belonged to the MNO that ceased
operations in May 2006, was transferred to a new entrant. Slovenia has implemented all the
Commission’s spectrum harmonisation decisions.
Relevant laws allow the competent authorities to issue permits within a time limit of two
months. In addition, legislation governing electronic communications favours urgent
procedures when operators request a competent body to decide on a pressing issue.
Tariff transparency
APEK initiated a transparency project concerning services for end-users. The project aims to
develop an interactive platform that would include information on mobile, fixed and
broadband services. The platform, to be launched in the first half of 2007, will provide
overview and comparison facilities for end-users searching for the best service in terms of
price, capacity, security and quality, and will also facilitate effective competition among
operators.
APEK published on its web site the retail tariffs of all Slovenian operators for international
roaming.
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Universal service
The incumbent was appointed as universal service (US) provider for a period of five years
back in 2004; however, since January 2006 it has also been obliged to provide US to disabled
and disadvantaged users.
As in 2005 APEK received no request for compensation of net costs incurred by the provision
of US.
APEK issued a new general act which increased universal service data transmission speeds
from 14.4 Kbit/s to 28.8 Kbit/s.
The NRA reported identifying irregularities in implementation of framework provisions
relating to emergency services. Most cases involve the provision of services over VoIP, other
cases concern some mobile services. The problems mainly include the failure of service
providers to report on the quality of services furnished. In a few cases the services were not
provided at all. Following APEK’s intervention, the provision of 112 services appears to be
functioning normally again.
Slovenia has introduced a “pull” technique for caller location identification and signed a
Memorandum of Understanding in relation to the EU project ‘eCall’. The Act amending the
ECA further strengthens operators’ obligations to provide the competent authority
immediately and free of charge with caller number and location information, if technically
possible, with the burden of proof of technical impossibility falling on the operator.
Number portability
Number portability became available for mobile subscribers as of January 2006. By October
2006, 13 703 numbers had been ported. On the other hand, number portability for fixed
subscribers came into place only in May 2006. Consequently, only 5 679 numbers had been
ported by October 2006. The Commission was able to close the infringement proceeding in
this regard in autumn 2006.
However, prices for porting numbers are reported to be high, and alternative operators in
particular consider them to hinder further development of competition.
Must-carry
Only the television channels of the national television and radio broadcaster and some local
and student channels must be transmitted free of charge. The two leading commercial
television stations do not have must-carry status.
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SLOVAKIA
INTRODUCTION
Infrastructure competition is growing on the broadband market, though the majority of market
share is still in the fixed incumbent’s hands. Broadband retail lines more than doubled since
the previous year, but broadband penetration at 4.33% is the second lowest in the EU. It
appears that prices, content and various macroeconomic and even social factors play a role in
the slow broadband take-up. While fixed-market competition remains rather limited, the
mobile market experienced significant development in 2006 with the entry of a third player.
Mobile number portability has been implemented and is expected to be an important tool in
consumer choice once the third market player becomes operational.
Throughout 2006 regulatory developments in Slovakia were dominated by the ongoing
process of NRA market analyses and imposition of remedies. Although significant progress
was made in the market review process, remedy measures were lacking in many markets.
Partial implementation of some of those imposed is likely to delay their full potential impact
on the electronic communications market in terms of improved conditions for competition and
a broader range of service offers. Moreover, basic tools to foster competition, such as carrier
pre-selection, fixed number portability and local loop unbundling, are not yet applied in
practice. Additional obstacles to the practical effect of the regulatory framework arise from an
automatic suspension of the NRA’s decisions’ effectiveness pending administrative appeals,
as well as an infrequent utilisation of dispute-settlement mechanism by market players.
The Ministry of Transport, Post and Telecommunications notified an amendment to the
primary law following infringement proceedings concerning incorrect transposition of the
regulatory framework, and the Commission thus closed two such proceedings in July 2006.
The Ministry participated in preparing primary legislation focused on digital broadcasting,
taking the opportunity to seek further better transposition in the electronic communications
area.
The Slovak regulator TÚSR continued making progress towards finalising the first round of
market analysis notifications, and with 16 market notifications overall almost completed the
market analyses listed in the Recommendation. The NRA found effective competition on one
of the markets among those notified (mobile access market). All other markets were found not
to be competitive. During 2006 the regulator notified 11 markets and took final measures in
six of them. Only one market analysis was closed without comments from the Commission.
Besides the wholesale national market for international roaming on mobile networks, the
wholesale market for trunk segments of leased lines remains to be re-notified after the NRA
withdrew notification in June 2006 following doubts expressed by the Commission.
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TÚSR is the primary state administration body responsible for regulation of electronic
communications holding supervisory powers, including imposition of fines.
Besides having general responsibility in the primary legislation field, the Ministry holds
certain regulatory powers concerning universal service and the frequency allocation table. It
also owns and manages 34% of the incumbent’s shares. Since this is not in line with the EU
framework, the Commission has proceeded with an infringement proceeding.
TÚSR appears to be facing difficulties related to lack of resources, both personnel and
finances. It appears that lack of in-depth regulatory monitoring and the ability to push forward
the status of remedies imposed but not yet implemented are linked to the resources issue. The
NRA continues to be financed from the Ministry budget. The Government made no headway
on a proposal, approved in 2005, to change TÚSR’s financing mechanism so as to strengthen
its independence via self-financing.
As regards the dispute-settlement mechanism, the legislation in place grants the NRA the
power to issue decisions on disputes related to all obligations arising from the Electronic
Communications Act. However, during 2006 the NRA neither received an eligible dispute
case nor issued any decision within this mechanism. One dispute case regarding LLU has
been pending since 2005.
Appeals to the NRA Chairman against TÚSR’s first-instance decisions result in automatic
suspension thereof. Such automatic-suspension effect can be excluded only in cases of urgent
general interest or if an irretrievable loss is likely, but this provision has not been applied yet.
If appealed against, only decisions delivered at second instance are effective, unless the court
decides otherwise. The Commission is examining this matter as to compatibility with the EU
regulatory framework.
To date, the incumbent has always appealed against an NRA first-instance decision. On the
other hand, only one decision was appealed against at court level. It appears that due to the
automatic suspension arrangement, the appeal process caused delays in remedy
implementation. This situation may have a negative impact on the effective timing of the
regulatory measures taken. Moreover, market players are concerned about the length of time it
takes to reach decisions when the NRA Chairman is the appeal body.
Decision-making
The NRA continued its considerable efforts to proceed with the market analysis process and
appears to be tackling it efficiently. In contrast, it seems that the NRA needs to take a more
proactive regulatory approach to resolve cases in which remedies are imposed but not
successfully implemented in practice by market players. Implementation of such key elements
as CPS and LLU for fostering market competition made no progress in 2006. This situation
appears to be linked to insufficient details having been provided on the implementation of
price-control, cost-accounting and cost-orientation obligations at the time these remedies were
imposed. In order to prevent further delays in bringing effective competition to the relevant
market, the remedy measures need to provide details on the principles and models of
implementation underpinning the proposed obligation.
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EN
TÚSR does not appear to have a comprehensive mechanism for investigating whether
reference offers are fully in line with the remedy measures imposed. New entrants expressed
concerns as to certain provisions in RIO and RUO being directly contradictory to the
remedies’ overall aspirations, as well as containing provisions preventing effective use of
dispute resolution. With regard to the latter, concerns are raised in particular as to
Article 16(1) and Article 18(4) of the RIO, which both state that “if contracting parties are
unable to reach agreement (on changes to this contract; on dispute resolution), they are
allowed together and after mutual consent to turn to the state regulatory body for electronic
communications (TÚSR) in order to seek agreement”. TÚSR has not initiated any
investigations with regard to RIO or RUO, as in its view, regulatory action needs to be
prompted via the dispute-settlement mechanism. This deadlock appears to have a detrimental
effect on the market players’ confidence in the regulator in particular, as well as on the state
of market competition in general.
At the beginning of the market review process the Commission repeatedly urged the regulator
to carry out a national public consultation with all interested parties on each draft measure and
market definition, so as not to have the opportunity to comment limited just to the operator
with significant market power. TÚSR accepted this advice and acted accordingly. Despite the
change in the consultation provision, the consultation participation of other operators
concerned remained rather limited throughout 2006, and, in fact, formal comments come only
from the significant market power operator(s). The lack of feedback from other market
players may in turn have a negative impact on the regulator’s capacity to assess the market
and to design the appropriate remedy.
The incumbent continues to dominate the fixed market and the broadband market. It follows
the trend of converging voice, data and video into an integrated service with lower prices for
its customers. Since late 2005 it has also offered video and music on demand.
The larger of the two mobile operators currently offering mobile services opted for an
integrated operator approach and launched a trial project targeted at converging fixed, mobile
and broadband services via fibre to the home (FTTH). Investment in this area is expected to
intensify in 2007 with a view to providing triple-play and quadruple-play services.
The broadband market is dominated by the incumbent’s DSL service. At 4.33% the
broadband penetration rate is amongst the lowest in the EU. Wireless broadband services
offered by four operators through WIMAX technology launched last year constitute only a
minor part of the broadband market share. Both mobile operators launched their 3G services
at the beginning of 2006. The larger mobile operator uses high-speed mobile technology
HSDPA and UMTS TDD and offers music and video-on-demand services. This operator’s 3G
service covers over a third of national territory. The second mobile operator owned by the
fixed incumbent uses the same mobile technology, but its coverage is significantly smaller.
This operator concentrates more on developing the Flash-OFDM broadband technology
network, where it has 70% coverage. Cable remains the most important competition platform
for the incumbent’s DSL.
The fixed market continues to decline in numbers, but is expected to gain momentum as DSL
service gains importance.
EN
256
EN
Broadband
Market situation
The incumbent operator dominates the
broadband market, having over 66% of
5.00%
market share. The sources of
4.33%
infrastructure competition are DSL,
4.00%
cable modem, FTTH, wireless local
3.00%
loop and leased lines. With no
1.83%
2.00%
bitstream access obligation in place
0.62%
1.00%
yet, DSL service is mostly provided by
0.00%
the incumbent. Alternative operators
2004
2005
2006
are reselling a minor 1.6% of total DSL
volume. Cable with 13.2% of market
share and FTTH with 12.1% are the new entrants’ main means of providing broadband
services. While in 2005 only the biggest cable operator provided broadband services via
cable, the number of broadband providers over local cable networks increased significantly in
2006.
Slovakia BB penetration
DSL lines underwent the most rapid
growth by numbers. DSL growth
indicates the DSL market’s increasing
importance, thus highlighting the
importance of removing barriers to
market entry for new players.
Slovakia - BB lines by technology/means
153711
NE Resale; 3883
The
Government
launched
a
nationwide initiative to promote
broadband penetration and to address
the retail price issue by setting up a
mechanism to provide broadband
customers with financial support.
NE WLL; 2800
NE Cable modem;
30 761
Incumbents' Other
access; 256
28343
NE Other (L.L.,
Satellite); 1108
NE Ethernet; 12650
Regulatory issues
Analysis of the market of wholesale broadband access was notified to the Commission in July
2006. TÚSR is currently preparing the second-instance administrative decision on the
remedies to be imposed on the SMP player. As bitstream access is not yet imposed, and the
incumbent’s DSL wholesale prices continue to be unregulated, competition on the DSL
market remains very limited. Given the importance of DSL within broadband platform
competition, this situation appears to be an additional factor preventing retail price drops and
thus restraining higher broadband penetration.
The incumbent published a RUO in August 2005 following a remedy obligation from TÚSR.
However, to this date no unbundling agreement has been signed and LLU has thus not been
implemented in practice. There are currently no negotiations on LLU between the incumbent
and alternative operators. Prices remain unregulated for fully unbundled loop as well as
shared access within RUO. These prices are clearly high and act as a deterrent to practical
implementation (fully unbundled loop: connection €169.6 – the highest in the EU, monthly
rental price dropped from €14.1 to €10.8 but is still very high; shared access: connection
EN
257
EN
€ 178.8 – the highest in the EU, monthly rental price dropped from €10.3 to €8.27 but is still
well above the average). In addition, there is no regulation of prices regarding co-location. On
the other hand, though, TÚSR deems price regulation in terms of cost orientation to be
counter-productive as tariff rebalancing has not been finished.
The Slovak NCA fined the incumbent €22 million in May 2005 because the absence of a
RUO was found to constitute an abuse of dominant position. The fine has been appealed
against and remains pending in court, so imposition of the fine is not yet effective.
Mobile markets
Market situation
There are two market players currently offering services on the mobile market. The smaller
mobile operator is a 100% subsidiary of the fixed incumbent, 49% of which is in turn owned
by the State. Both current operators offer EDGE, GPRS and 3G services. There are no
MVNOs or SPs present on the Slovak mobile market, but this appears to be currently due to
lack of demand. Mobile penetration is 86%.
A major development in the mobile market was the entry of a third operator in September
2006. The new player has arranged for a national roaming, and is expected to launch GSM
services in February 2007 and UMTS services within 12 months from authorisation. The third
mobile operator is expected to bring positive competitive pressure to the Slovak mobile
market.
Regulatory issues
The market for access and call origination on public mobile networks was re-notified to the
Commission in July 2006 after the NRA withdrew notification in September 2005 following
doubts expressed by the Commission. The market analysis found no individual or collective
dominance on the given market. Thus no remedy obligations were set.
As regards the market for voice call termination on individual mobile networks, both current
mobile operators were found to have significant market power on that market. Final remedies
were notified in July 2006. The regulator opted for obligations of access, transparency, nondiscrimination, accounting separation, and cost accounting. Nonetheless, cost orientation as
such was not imposed, and the cost-accounting obligation does not appear to provide
sufficient details as to the applicable model and principles of implementation underpinning
the proposed obligation. While the decision stands effective, the smaller mobile operator has
appealed against it in court.
Fixed market
Market situation
Despite the fixed market having been opened up in 2005, it remains largely dominated by the
incumbent. In 2006, four new interconnection agreements were concluded between the fixed
incumbent and alternative operators, raising the total number of effective agreements to 10.
Six alternative operators offer voice services via carrier selection. Moreover, two operators
offer voice services via their cable network as part of triple play. On the other hand, there is
still no progress in provision of direct access to fixed telephony services.
EN
258
EN
Carrier selection was implemented at the end of 2005, but its impact on competition appears
to be rather small. The alternative operators’ market share by retail revenue is 7%. These
appear to be most successful in competing on calls to mobile networks and international calls.
The interconnection prices for call termination on the incumbent’s network, despite
decreasing in 2006, remain well above the EU average (by 51% at local level, by 44% at
single transit, and by 39% at double transit). It appears that effective establishment of
competition on the retail fixed market is only just starting, and new entrants are facing price
barriers to entering the fixed market.
The State continues to own 49% of the incumbent’s shares. The Ministry owns and manages
34%, while another 15% is owned by the National Property Fund.
Regulatory issues
The incumbent was found to have significant market power on all the relevant markets of
fixed telephony. As regards the retail access markets, TÚSR imposed measures providing
market access for new entrants and restricting predatory or excessive prices on the part of the
incumbent. Prohibition of unreasonable bundling of services as well as CS and CPS were
among the remedy obligations. In response to the remedies imposed, the incumbent
unbundled provision of voice and DSL services in May 2006.
Non-implementation of carrier pre-selection, fixed number portability and wholesale line
rental other than for leased lines continues to hinder more effective competition on the fixed
market. Though CPS was made a part of the RIO, none of the alternative operators opted to
use this service. No disputes were submitted to the NRA regarding the RIO provisions.
Price appears to remain the main obstacle to CPS implementation. The Law on Electronic
Communications stipulates that prices for access and interconnection related to the provision
of CS and CPS have to be cost-oriented. However, in its CS and CPS obligation, TÚSR did
not accompany the measure with any specification on how to implement and enforce price
control. As to retail price control, the regulator chose not to impose cost orientation of tariffs
because rebalancing has not been finished yet, and such an obligation was felt to be counterproductive. In the wholesale call origination market, the regulator chose not to impose cost
orientation at all, based on the conclusion that cost orientation would implicitly be imposed by
means of CS/CPS. However, imposition of CS/CPS plus non-discrimination in the call
origination market may not be sufficient to address the competition problems in this area. To
facilitate this, explicit imposition of cost orientation and application of appropriate costaccounting methods might have to be considered. The regulator indicated that a more detailed
approach would be taken in this regard in the next market review round.
In the fixed call termination market TÚSR imposed cost orientation based on the LRAIC
methodology. In the market for terminating segments of leased lines, wholesale line rental –
imposed as a remedy in November 2006 – is expected to add extra value for end-users.
EN
259
EN
Broadcasting
Market situation
Broadcasting in Slovakia is based mainly on analogue terrestrial transmission (51.6%),
followed by cable transmission (24.5%) and satellite transmission (23.9%)110. There are over
180 local cable networks, the incumbent holds close to 100% of market share in analogue
terrestrial broadcasting.
Pilot digital TV broadcasting continues to operate in three major cities and neighbouring
areas. Two new transmitters started operation in 2006. There are two pilot service providers
offering services on a DVB-T basis in three pilot projects. While TÚSR selected the service
providers for the pilot project via tender, the content of multiplexes was determined through a
tender issued by the Council of Broadcasting and Retransmission. The NRA plans to put out
nationwide licences to tender in 2007 once the appropriate digital TV legislation takes effect.
Regulatory issues
In the broadcasting transmission services market analysis TÚSR decided to restrict the
definition, and hence the analysis, to analogue terrestrial broadcasting transmission only.
Concerning other services, TÚSR did not carry out any further analysis as to whether other
transmission services are susceptible to ex-ante regulation on the basis of the three-criteria test
defined in the Recommendation. The Commission therefore invited TÚSR to analyse the
excluded markets of cable transmission services and nationwide digital terrestrial television
broadcasting transmission services to determine which ones are susceptible to ex ante
regulation.
The Digital Broadcasting Act is currently in the legislative process and is expected to enter
into force in March 2007. The draft law envisages the start of regular terrestrial digital
broadcasting from the end of 2007 or beginning of 2008. The Ministry prepared a national
Strategy of Digital Broadcasting in Slovakia, which was approved by the Government in July
2006. The document provides details of the switchover plan on a DVB-T basis and sets
analogue switch-off for the end of 2012. As part of the digital switchover process, TÚSR has
not issued any further analogue transmission licences since April 2006. It also started
preparing the technical plan and frequency table for digital transmission.
Spectrum management
The national table of frequency allocations is prepared and updated annually by the Ministry.
TÚSR cooperates with the Ministry on the table draft proposal. TÚSR facilitates spectrum
management and assignment of individual frequencies. As regards implementation of the
radio spectrum harmonisation decisions adopted by the Commission, the Slovak authorities
signalled complete implementation of all decisions. The decisions were incorporated into the
national frequency allocation table, and the NRA issued respective implementation decisions.
Based on an agreement with the Interior Ministry, registration for frequencies within the
110
EN
Source: Dataxis: Digital Television Data, EU Market for Digital Television; report prepared for the
260
EN
24GHz automotive short-range radars decision should start at the beginning of 2007. The
possibility of spectrum trading is envisaged by the primary law.
The Electronic Communications Act contains provisions governing the granting of rights of
way. It uses inscription of easement on property as the main tool for establishing rights of
way. As the law appears to provide neither for specific details on financial compensation nor
for a fast and effective dispute-settlement mechanism (i.e. any disputes are solved through
courts), undertakings often opt for general civil law to ensure their rights of way.
Universal service
A major development was the designation of a universal service provider. The incumbent was
designated in April 2006 as the sole provider of the full scope of universal service. The
designation was made via public consultation for an unspecified period. As the legislation on
universal service does not include provisions for a review of the designation, this situation
may raise concerns of transparency.
The scope of universal service is defined in the primary law. The Ministry issued secondary
legislation in 2004 concerning the financing mechanism for the universal service. Based on
the ministerial decree, universal service is to be financed, after determination of the unfair
burden, from a fund to which operators contribute on the basis of their annual turnover share
on the domestic market. TÚSR manages the fund. The operator providing the universal
service has so far not applied for financial compensation of the net cost.
After a comprehensive directory and directory inquiry service comprising all subscribers,
fixed and mobile, became available in April 2006, the Commission closed an infringement
proceeding in this regard.
The single European emergency number, 112, is accessible both from fixed and mobile
phones. However, caller location information for all calls made to 112 is not yet available to
the emergency services in Slovakia. The Commission addressed this issue via an infringement
proceeding in 2006.
Number portability
The incorrect transposition of number portability into national legislation was addressed by
the Slovak authorities in an amendment to the primary law that took effect in April 2006.
Following this amendment, mobile number portability became available in May 2006.
Although the total number of ported mobile numbers is low (1 980), it is expected to be an
important tool of consumer choice once the third mobile operator launches its service. Both
current mobile operators charge a fee (€28 by the larger operator and €14 by the smaller
operator) to provide this service.
EN
261
EN
Number portability is an important tool in fostering competition in the fixed market as well.
However, despite efforts made in the specialised association for number portability, fixed
number portability still remains to be implemented. The Commission initiated an
infringement proceeding in this regard in October 2006. The matter appears to have made
progress since then, as the first two number-portability agreements between the incumbent
and new entrants were signed at the end of 2006.
Must-carry
The Law on Broadcasting and Retransmission covers must-carry provisions. Under the
current regime all retransmission providers are obliged to carry all domestic public and
commercial channels and also to reserve one channel free of charge for local municipalities.
An amendment to the primary law aiming at better transposition of the Universal Service
Directive is currently in the legislative adoption process. The Commission services will
examine the amendment once it is notified.
The NRA dealt with a significant number of out-of-court disputes during the reporting period.
Most disputes of a financial nature related to text messages, international roaming and calls to
audio-text numbers. Disputes relating to quality of services mostly concerned failures at fixed
connection, data service speed and availability of certain services within mobile networks. No
agreement between the parties involved was reached in approximately one third of the
disputes. The regulator’s decisions are non-binding on the parties to the dispute.
Data protection
Following an infringement proceeding on cookies and exception from the opt-in principle for
electronic advertising launched in 2005, progress has been noted towards finalising all the
necessary legal amendments.
EN
262
EN
FINLAND
INTRODUCTION
2006 was a year of stabilisation for the Finnish electronic communications market. Finland
kept its third place in EU broadband penetration. The uptake of third generation mobile
services is strong; however, coverage is so far limited to the more densely populated areas.
While Finnish local call prices for fixed telephony are among the lowest in Europe, fixed-tomobile substitution has been progressing rapidly over the last year.
The national regulatory authority has started the second round of market reviews. In the
meantime, several amendments to the Communications Market Act are being prepared that
should give the NRA, FICORA, more powers. The Commission took Finland to court in 2006
for not endowing the NRA with sufficient powers to impose price regulation on all wholesale
mobile call termination.
Amendments to the Communications Market Act due to enter into force in March 2007 will
give FICORA more powers in the area of consumer contracts. Another amendment is in
Parliament. It addresses the Commission’s issue regarding a priori exclusion of operators
from becoming universal service operators. This amendment also includes provisions about
FICORA’s powers regarding cost-accounting methodologies. Another amendment to the Act
planned for the Parliament’s spring session should give FICORA the power to introduce glide
paths and symmetry in mobile termination price regulation (see also below). The Commission
continues to be concerned that FICORA does not have all the potentially necessary regulatory
tools as envisaged by the Regulatory Framework, and sent a supplementary letter of formal
notice to Finland in 2006 clarifying its position in this regard.
Operators perceive the often long decision-making times from SMP decision to
implementation – especially in cases where the decision is appealed against (see below) – as a
problem creating uncertainties about the sector’s rules. FICORA, on the other hand, promotes
transparency by chairing 10 permanent working groups with industry as well as some
temporary ones, such as for consumer contract terms. Cooperation with the NCA has been
good, and follows a formal protocol. However, the division of labour and the assignment of
complaints are at times complicated, and it can happen that parts of a complaint will go to
FICORA while another part goes to the competition authority.
Decision-making
Court appeal-handling times vary between one and two years. The Supreme Administrative
Court has seemed less inclined lately to suspend FICORA’s decisions. The agency’s new
decision on wholesale mobile call termination – following the Court’s order that further
account should be taken of countervailing market power – was appealed against but not
suspended. While the Court has sent two cases back to FICORA for re-assessment,
FICORA’s decisions have generally been upheld on the substance.
EN
263
EN
The second round of market analysis is ongoing. Following the completion of the analysis for
the wholesale mobile call termination market, the LLU and wholesale broadband access
markets are being re-examined.
Without any major new market or regulatory developments, 2006 was a year of stabilisation
in the sector. The structure of the Finnish market remains unchanged, with three groups
controlling the bulk of the communications infrastructure with their own mobile, trunk and
access networks. The smallest such group is the association of local telephony operators,
which make up another distinct feature of the Finnish electronic communications sector and
are further discussed below. The most important sector-specific trends in Finland relate to the
mobile market and are discussed in that subsection.
Broadband
Market situation
Finland is maintaining its third place
among broadband penetration in EU
Member States, but the growth rate is
slowing down as the market becomes
more saturated in relative terms.
Broadband infrastructure competition
in Finland is potentially restrained by
the fact that local telephony
incumbents often own the local cableTV networks as well.
Finland BB penetration
30.00%
26.02%
24.00%
20.33%
18.00%
12.44%
12.00%
6.00%
0.00%
2004
2005
2006
Nevertheless, local operators state that they are providing broadband via cable TV, or
upgrading their cable-TV networks to
Finland - BB lines by technology/means
bi-directional communication with the
intention of doing so. For the time
being, xDSL remains the predominant
form of consumer broadband access in
Finland. The main incumbent groups,
but also to some extent other operators,
have broadband networks of their own
in the more densely populated areas of
each other’s incumbent areas and only
lease local loops for access there.
According to FICORA, there was a
general retail price increase in 2006 on
subscriptions for up to approximately
2 Mbit/s. These account for over two thirds of all subscriptions.
788166
Inc. Other (WLL,
Ethernet, other);
65 068
Inc. Cable modem;
92 136
NE Full ULL; 159571
NE Shared access;
76428
NE Other (WLL, PLC
other); 19619
NE Cable modem;
81 375
EN
264
85224
EN
Regulatory issues
LLU delivery times improved but are still perceived as a problem. The LLU connection
charges remain at a high level similar to that of 2005. An independent study published in
October 2006 examined why connection prices are higher in Finland than elsewhere.
Alternative operators are comparatively more affected by the high connection prices than the
three main incumbent groups, which each control about one third of local loops but make use
of LLU to compete outside their respective incumbent areas. Whereas the incumbents have
both the expenditure and income of a higher price level, alternative operators see only the
expenditure. A number of margin squeeze cases are still with the competition authority. While
prices vary significantly between regions, there is a perception on the demand side that there
is generally also a margin squeeze effect in the provision of wholesale bitstream access, and
the competition authority has received several requests for action in this area. Part of the
problem appears to be that more and more households are discontinuing their fixed phone line
in favour of mobile telephony, increasingly leaving the alternative operator with having to pay
the LLU unbundling price in addition to the bitstream access-related price component.
Mobile markets
Market situation
In an EU-wide Eurobarometer study for the Commission in November 2006, 93% of those
asked in Finland replied that they have a mobile phone, making it the country with the second
most widespread mobile phone ownership in the EU. According to the same study, pre-paid
card usage in Finland is exceptionally low compared with the EU at large, with only 4% of
those saying they own a mobile phone indicating that they have a pre-paid arrangement for
that phone. The fixed-to-mobile substitution process in Finland seems to be going faster than
in comparable countries such as Sweden, although fixed-line penetration has historically been
lower in the former than the latter. UMA111-type solutions combining fixed and mobile access
have so far not appeared. Operators seem to want to follow a different path, where improved
indoor coverage – a key benefit of UMA – can be achieved through the use of the 900 MHz
radio spectrum frequencies for UMTS (“UMTS-900”; see below).
For some time after the third Finnish GSM network was launched in 2003, the resulting
overcapacity in mobile networks created competition at wholesale level to host MVNOs.
Developments since then have substantially increased mobile network traffic, with less
available capacity and proportionally fewer incentives to offer network capacity to MVNOs
as a consequence.
Around 50 regional licences for fixed wireless access had been awarded by the end of 2006.
Three WiMAX licences were awarded in 14 regions. Applications for new licences are still
being processed. According to the national frequency plan, a maximum of three such radio
licences can be awarded for each geographical area. Commercial operators have expressed
state-aid related concerns about local governments building wireless networks or providing
financial support to local companies building such networks. All three UMTS licence holders
have now started up 3G services. UMTS coverage is so far limited to the capital region,
bigger towns and the ski resorts.
111
EN
Universal Mobile Access.
265
EN
After a period of significant churn following the successful mobile number portability reform
(see also below), the retail market situation calmed down considerably as indicated by the
fewer numbers ported. The slowdown in ported mobile numbers appears to have happened
before the amendment to the Communications Market Act allowing subsidisation of 3G
phones in April 2006. The largest mobile operator’s market share decreased slightly between
2005 and 2006.
Regulatory issues
It is anticipated that the calculated mobile termination fees will be lower than at present with
the new “FIFAC” current cost-accounting model developed by FICORA. The two largest
mobile operators are concerned that the asymmetric element of the mobile termination price
regulation – which favours the newest, third operator – would increase with the introduction
of the new model. Those operators are also concerned that there is no glide path to symmetry,
as Finnish legislation does not empower FICORA with such a tool. FICORA, however,
considers that while cost calculations will be done on an individual network basis, there will
also be room for efficiency considerations. Moreover, an amendment to the Communications
Market Act planned for the Parliament’s spring session is to give FICORA the power to
introduce glide paths and symmetry in mobile termination price regulation. The Commission
referred Finland to the Court of Justice in 2006 for failing to ensure that FICORA has
sufficient powers to impose price regulation where appropriate on the wholesale termination
of fixed-to-mobile calls.
Fixed
Market situation
Small local incumbents have traditionally been a characteristic feature of the Finnish fixed
telephony market. What today remains of that structure is a well-coordinated group of 35 such
operators. These undertakings take varying ownership forms, but are normally regionally
controlled in the form of limited companies. A few are co-operatives. Many of the group’s
members cross-own each other to different degrees. Counting the group of 35 local operators
as one, there are three major fixed telephone operators in the Finnish market (no data on fixed
market shares).
Operators do not appear to see a great need for wholesale line rental. Finnish local call prices
are among the lowest in Europe. IP-telephony is not widely used by consumers. Generally,
traditional fixed telephony copper lines are no longer installed in new homes. Instead,
FTTH112 or other access forms are provided. The rapidly progressing fixed-to-mobile
substitution in Finland caused a 32% decrease in fixed telephony traffic minutes during 2005.
According to data from FICORA, the number of fixed telephony subscriptions decreased by
3.7% in the second quarter of 2006 alone, while the number of mobile subscriptions –
approaching saturation – increased by 1.4% in the same period. Fixed-line penetration
decreased from 55% to 40% between 2000 and 2005.
The average monthly rental for a 34 Mbit/s part circuit leased line was in October 2006
among the lowest in the EU countries where information was available.
112
EN
Fibre To The Home.
266
EN
Broadcasting
Market situation
FICORA data show that approximately 51% of Finnish TV households were using some kind
of digital TV reception in August 2006. According to a report113 prepared for the Commission
in the same year, 33% of all TV households were already using digital terrestrial reception at
the end of the third quarter 2005 – the highest figure in the EU. Consequently, a large
majority of terrestrial households were already receiving digital broadcasts back then.
Terrestrial analogue switch-off is scheduled for August 2007.
Regulatory issues
The operator running the terrestrial digital broadcasting network acquired a DVB-H114 licence
in March 2006, and announced its intentions to offer services and compatible handsets in the
capital region by the end of 2006. The licence concerns only the use of the spectrum and not
the provision of content. FICORA will grant the licences for the provision of DVB-H
programming. This lighter licensing regime was established by an amendment to the Act on
Television and Radio Operations which entered into force in January 2007. Concern was
expressed that too strong intellectual property rights in general will hinder the emergence of
new platforms and services, and in particular that additional royalty fees would have to be
paid for content transmitted by DVB-H and possibly for TV over the 3G access network, if
those services were to be considered separate services from DVB-T.
Spectrum management
FICORA issued a decision on the allocation of new spectrum which will contribute towards
the allocation of equal amounts of spectrum in the 900 MHz bands between the existing 900
MHz-frequency licence holders by early 2007. Previous allocation was based on traffic
volume per operator, and the largest mobile operator has appealed against the decision.
Finnish mobile operators are pressing for “refarming” of the 900 MHz radio spectrum
frequencies115 for UMTS usage (“UMTS-900”). One of the perceived benefits of such a
reform would be improved indoor coverage by comparison with the 2.1 GHz frequency range
normally used for UMTS. Operators foresee an increased need for UMTS-900 within a year
as 3G take-up is driven by the recently allowed special subsidies for 3G handsets. In autumn
2006 one of the mobile operators announced that it had undertaken 3G test calls in the GSM
frequency bands, and that – together with a Finnish mobile communications technology
provider – it had carried out a WCDMA/HSDPA data call on the 900 MHz band in a
commercial network.
On 2 June 2006 the Finnish Ministry of Transport and Communications announced its
decision to allow UMTS-900. According to the Finnish authorities, the network licence
holders are not using all available 900 MHz frequency bands for their GSM networks in
sparsely populated areas, and the aim of the Decree amendment is to allow each
113
114
115
EN
Digital video broadcasting for handheld terminals.
These frequencies are currently used for GSM in Europe.
267
EN
telecommunications company to decide for itself whether to use UMTS-900 in such areas.
The frequencies have not been put into use for UMTS so far. The Commission services are
following the matter closely.
The “Digital 450” licence – described further in the 11th Report – was given on the condition
that only wholesale transmission services are to be provided. The licence holder (which is
already running the terrestrial digital broadcasting network) has to build out the network in
rural and remote areas within a certain time frame, but is also allowed to build in densely
populated areas. Buildout has been delayed by an appeal against the decision to grant the
licence. According to a communication from the licence holder on 9 October 2006, the
network will be ready for use on 1 April 2007.
Finland implemented all the Commission’s spectrum harmonisation decisions.
112 has been the main number for emergency calls in Finland for a number of years, and has
high recognition in Finland as the European emergency phone number as well.
Number portability
Fixed number portability in Finland has mainly been a corporate user affair. The mobile
number portability reform was far more successful. In October 2006 there were approximately
3.5 million accumulated ported mobile numbers, as compared to 2.7 million a year earlier.
Must-carry
Questions concerning the definition of general interest objectives were raised with the Finnish
authorities in infringement proceedings. In June 2006, the Commission decided to send a
letter of formal notice to Finland for what it perceived to be a lack of defined interest
objectives and proportionality of Finnish must-carry obligations for cable-TV networks.
A March 2007 amendment to the Communications Market Act (see also above) will give
FICORA the power to regulate consumer contracts to the effect that operators will no longer
be able to change contract terms without explicit justification. Operators will also have new
responsibilities regarding errors or delays in communications services, with the Act defining
sanctions for errors. Additionally, the Act will contain provisions related to the unauthorised
use of communications services.
Data protection
Amendments to the law have widened the scope of e-privacy rules to include non-public
internal networks. There have been discussions between the responsible agencies and industry
regarding interpretation of the rules on what employers can or cannot do with their internal
traffic data. The level of detail in the regulation is relatively high, for example as regards what
operators are allowed to do in situations of compromised security.
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EN
FICORA devotes significant resources to the internet area, with a 30-staff department
including the national CERT (Computer Emergency Response Team). It has issued
regulations on e-mail spam protection measures and on internet functionality. The bill
implementing the Data Retention Directive will be in Parliament by the spring session, but the
Communications Market Act will not be changed for that purpose. The Data Protection
Ombudsman handles many complaints about spam. There are also industry working groups
dealing with these issues. While the division of tasks between FICORA and the Ombudsman
is not always clear, there is substantial cooperation between the two in order to ensure that no
matter falls in between them.
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SWEDEN
INTRODUCTION
The electronic communications market appears to be consolidating into mainly four Nordic
groups. Consumer broadband generally became cheaper last year and is still in a relatively
strong growth phase. Sweden has the highest mobile phone ownership in the EU, but
comparatively low fixed-to-mobile substitution; 98% of the population has UMTS coverage.
The regulatory environment remains relatively unchanged from a year ago. The NRA (PTS)
completed the first market analysis round – resulting in Sweden being the EU Member State
with the fewest regulated markets – and is starting its second round of analyses. The number
and length of appeal procedures and suspensions is still the most important issue. A
government-appointed commission proposed measures to improve the situation.
Overall there were no major changes in the regulatory environment in the last year. With its
decision in October 2006 not to regulate the wholesale international mobile roaming market,
Post- och telestyrelsen (PTS) completed the first round of market analyses. As a result,
Sweden became the EU Member State with the fewest number of relevant markets regulated
in the sector. Seven of the markets in the Commission’s Recommendation have been deemed
effectively competitive. PTS is starting its second round of market analyses with the fixed and
mobile interconnection markets, but is awaiting the revision of the Commission’s
Recommendation before notifying second-round decisions. It believes that decisions on the
interconnection markets in the second round can be notified in the second half of 2007.
Generally well organised, PTS and the competition authority now have in place – as foreseen
in the 11th Report – a memorandum of understanding on how the two agencies should work
together, including in the fields of market analysis and the exchange of data. There is a similar
agreement between PTS and the Consumer Agency. The Competition Authority has between
four and five full-time posts dealing with electronic communications issues, including work
with PTS on market analyses. It also expressed interest in having a formal mandate to
comment on draft regulatory obligations for SMP operators produced by PTS. In the field of
privacy protection, PTS cooperates with the Swedish Data Inspection Board through regular
meetings and informal contacts when necessary.
The Consumer Agency’s recent relocation from the capital has involved a large turnover of
staff, and the new recruitment process had still not been completed at the end of 2006. The
loss of personnel seems to have forced the authority to fall back on a more reactive strategy in
the electronic communications sector. The Consumer Agency intends to build a team of
lawyers to work on electronic communications issues, but while this area is prioritised, it has
been difficult to find staff.
Appeals remain a key issue. In July 2006 there were 55 appeals against PTS decisions at the
Stockholm County Administrative Court (first instance) and five such cases at the Stockholm
Administrative Court of Appeal. PTS decisions on obligations were appealed against on all
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markets but one, and final rulings on several decisions appealed against in 2004 were still
pending in September 2006. Many of the currently pending appeals against PTS regulatory
decisions relate to the wholesale mobile termination market, including appeals against the
cost-calculation model, enforcement decisions and dispute-resolution decisions. However, in
October 2005 a commission originally set up to investigate the need for modifying the mast
sharing rules (“the Karlström Commission”) was given the additional assignment of
reviewing the decision-making procedure under the Electronic Communications Act. The
assignment included appeals procedures and the division of responsibilities between the
government agencies involved. One year later the Karlström Commission presented its
findings together with proposals for improvements. It identifies the extensive right of parties
to submit further documentation in court procedures as a delaying factor.116
The Karlström Commission’s proposals aim at reducing regulatory uncertainty by more
detailed SMP decisions, creating incentives to comply, and shortening the average time
between initial decision and implementation. Among other things, it proposes a change in the
law so as to require obligations for SMP operators to be more detailed at the SMP decision
stage, a possibility of bringing civil action for damages as a result of non-compliance with
regulatory obligations, time restrictions on the right to submit additional documentation in
court proceedings, and a limit on the appeal instances from currently three to two. It also
proposes a six-month time limit for court judgments, and stricter criteria for granting
suspensions.
The Swedish Electronic Communications Act does not explicitly state who has the right to
appeal against national regulator decisions. Therefore, general administrative procedural law
applies. In the Commission’s view, the right to appeal laid down in the Framework Directive
goes beyond the addressee of the decision. However, Swedish administrative procedural law
appears to impose stricter conditions than the Directive on who has the right to appeal. The
Commission therefore decided in October 2006 to send a letter of formal notice to Sweden,
stating its concerns about Swedish implementation of the Framework Directive in that regard.
Decision-making
In dispute-resolution procedures PTS now generally keeps or nearly keeps to the four-month
deadline for decisions provided in Article 20(1) of the Framework Directive. Operators are
relatively unconcerned about this point. The Karlström Commission nevertheless proposes
more far-reaching powers for PTS to request information and background material from
parties in order to be able to further improve punctuality. The Competition Authority has been
receiving more complaints from the sector as a consequence of the de facto absence of sectorspecific regulation while PTS decisions make their way through the judicial system. It is
nevertheless difficult for the Competition Authority to take up complaints based on market
116
EN
The Karlström Commission takes the appeal of the SMP decision in the wholesale broadband access
market on 24 November 2004 as an illustrative example of a long and complicated procedure. The
decision was appealed against to the Stockholm County Administrative Court, which suspended the
decision for the duration of the appeal. On 20 April 2006 the Court ruled in favour of PTS and removed
the suspension. On 3 July 2006 the Administrative Court of Appeal decided not to grant the incumbent
an appeal against that ruling. This verdict was in turn appealed against to the Supreme Administrative
Court, which on 28 July decided to examine the question of whether the Administrative Court of
Appeal should have granted an appeal. The Supreme Administrative Court then again suspended PTS’s
decision. However, on 1 February 2007 the Supreme Administrative Court dismissed the appeal, finally
giving effect to the agency’s decision to regulate the Swedish wholesale broadband access market.
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problems which are already the subject of an appealed-against (and not unlikely suspended)
PTS decision intended to remedy the problem.
Consolidation of the Swedish electronic communications market continued in 2006. Four
larger Nordic groups seem to be emerging as the main players in the sector. The new
Government elected in September 2006 declared its intention to sell the State’s remaining
shares (approximately 45%) in the incumbent, but the timetable remains open. Now that much
of the 3G and digital terrestrial networks have been rolled out, investment attention appears to
be focused in particular on fixed broadband. However, the incumbent has so far not publicly
announced any major next-generation network buildout initiative. Major infrastructure
investments have been made by locally established companies running urban or local
networks, three quarters of which are publicly owned and often operated by the local power
grid companies. While these companies have different business models, 95% offer dark fibre.
Such networks include approximately 570 000 FTTH installations to approximately 13% of
Swedish households.117
Sweden historically has a very high level of fixed telephony subscriptions, and even though
mobile phone ownership appears to be the highest in the EU, fixed-to-mobile substitution in
the sense of cancelling fixed subscriptions has not taken off to the same extent as in countries
like Finland. Nevertheless, according to data from PTS, the share of the population that only
uses a mobile phone increased from 4% to 7% from October 2005 to October 2006, and called
mobile minutes grew 26% in the first half of 2006 compared to the same period a year earlier.
Broadband
Market situation
In October 2006 Swedish broadband
penetration in terms of subscriptions
30.00%
per inhabitant was 24.6%, making it
24.55%
fourth within the EU but last among the
24.00%
19.31%
Nordic countries. The number of
18.00%
13.61%
broadband subscribers in Sweden grew
12.00%
by around 40% between 2005 and
6.00%
2006, while total revenue from
0.00%
broadband services, according to PTS,
2004
2005
2006
grew by 25% during the same period,
indicating price pressure. Broadband
take-up is in a strong growth phase that operators generally estimate will continue over the
next 18 months, after which the market could begin to saturate. The share of technologies
other than xDSL was relatively stable in the last 15 months to October 2006, with around one
third of all subscriptions.
Sweden BB penetration
117
EN
Swedish Urban Networks Association (SSNf), Report October 2006.
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Sweden - BB lines by technology/means
The incumbent’s share of broadband
subscriptions in October 2006 was
39.6%, a slight retake of market share
from January’s 38.4%. In 2004 the
incumbent had 40% of the market. In
July 2006 the main competitor’s two
subsidiaries together had 26% of the
retail market. Negotiations between the
incumbent and the alternative operators
on a local exchange access framework
agreement began in the winter of 2006
within the context of a SITO118
workgroup. The agreement has been in
place since September 2006 in the
form of a “manual” which includes cost sharing for collocation, adaptation of exchanges,
rearrangements and space sharing. It remains to be seen how the agreement will work over
time and in practice.
NE Full ULL; 107000
NE Shared access;
376000
838000
NE Resale; 130000
Satellite;
13 850
Inc. Other (Fiber to the
home, Other traditional
w ireline access);
26 000
NE Cable modem;
420 000
310000
Regulatory issues
Despite industry efforts LLU compliance control remains an important challenge for PTS.
Connection prices for fully unbundled local loops are among the highest in the EU.
Alternative operators are increasingly using unbundling in more densely populated areas.
However, many subscribers are connected to small main distribution frames (MDFs). These
can be located both in sparsely and more densely populated areas. According to PTS, an MDF
would need more than 5 000 connected subscribers to be able to sustain more than one colocated operator commercially. More than 40% of the Swedish population are connected to
MDFs with fewer than 5 000 connected subscribers, and 83% of Swedish MDFs serve fewer
than 500 subscribers.
While the decision to regulate the wholesale broadband access market was taken in 2004,
there was still no regulated product in 2006 as the appeal case – described above – worked its
way through the administrative court system with the appealed-against decision suspended.
The incumbent did not offer wholesale bitstream access, but an alternative operator provided
it in some local exchanges where it has its own equipment. The incumbent is still offering a
resale service for its original ADSL product, but is no longer expanding that service and
instead focuses on building out ADSL2+, which increases the bandwidth substantially and/or
the possible distance between the exchange and the end-user, depending on the configuration.
However, a resale service is not offered for ADSL2+. In any case, resale has its limits as a
platform for providing VoIP and IP-TV.
The PTS decision (as part of the remedies in the markets for access to the public telephone
network at a fixed location) that the incumbent must provide “naked DSL” – broadband
access without the condition that there is a phone line subscription – was appealed against and
suspended in court until May 2006. Although the court at that time upheld the decision, in the
absence of any regulated wholesale broadband access product it did not have a major impact
and operators took advantage of it only to a limited extent.
118
EN
Swedish IT Companies Organisation.
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Mobile markets
Market situation
Mobile call prices continue to be pressured by competition. In an EU-wide Eurobarometer
study for the Commission in November 2006, 95% of those polled in Sweden said they
owned a mobile phone, thus making Sweden the country with the most widespread mobile
phone ownership in the EU. Forty percent of those responding that they own a mobile phone
in Sweden said they (only) used a pre-paid card with their mobile phone. There are four
mobile network operators providing GSM services, including one focused on in-door usage,
and four mobile network operators providing UMTS (3G) services. There are a number of
mobile service providers, but their total market share is low and they are generally niched
towards specific user groups such as students, or are part of a fixed operator’s effort to
provide a complete telecoms package to corporate clients. The incumbent’s market share has
been relatively stable at under 50% over the last couple of years.By the end of 2006 3G
operators covered around 98% of the population as compared to approximately 85% in March
2005.
Regulatory issues
The legal uncertainty regarding mobile termination regulation remains in part. The SMP
decisions by PTS on the wholesale mobile termination market in 2004 subjected all mobile
network operators to regulation. The decisions are currently being appealed against at the
Stockholm Administrative Court of Appeal (the second instance) but remain in force.
However, the decision by PTS – in line with its glide-path policy – to impose a 63-öre
(approximately €0.07) wholesale mobile termination fee on all SMP operators, except for a
new entrant, has been suspended for the duration of the SMP appeal cases.
Fixed
Market situation
More or less as envisaged, the foremost effect of the successfully implemented WLR reform
seems to be less churn among alternative telephony providers rather than large cuts in the
retail subscription price. IP-telephony over own infrastructure (for example cable-TV and new
local area networks) has, on the other hand, contributed to the continued substantial decrease
in the cost of fixed telephony. According to PTS data, in July 2006 23% of fixed telephony
subscriptions were provided by an operator other than the incumbent, compared with 14% a
year earlier. Moreover, broadband telephony subscriptions more than doubled during the same
period and now make up 5.5% of all fixed telephony subscriptions. In October 2006 there
were more than 400 000 ported fixed numbers, as compared to under 200 000 a year earlier
(confidential market share data).
Regulatory issues
The price-control decision on wholesale fixed termination was upheld by the first-instance
court but is currently under review and suspended by the second instance. On 3 October 2006
PTS decided that the wholesale market for trunk segments of leased lines was effectively
competitive and was, therefore, to be free from regulation. No appeal was made against the
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decision, but it must be noted that the relevant court dismissed an earlier attempt to appeal
against an SMP decision initiated by an operator other than the SMP operator119.
Broadcasting
Market situation
According to a report prepared for the Commission in 2006120, approximately 26% of
Swedish TV households were using terrestrial, 21% satellite- and 53% cable-TV reception at
the end of the third quarter 2005. At that time, approximately 12% of all TV households – or
slightly below half of all terrestrial households – were using digital terrestrial reception. In
spring 2006 four digital TV multiplexes covered approximately 98% of the Swedish
population and a fifth multiplex approximately 50%121. Digital switchover in Sweden is
progressing in stages. The 5th and final stage – when terrestrial analogue transmissions shut
down for the last 33% of the population and digital terrestrial coverage for public service
channels will be 99.8% – is to take place in October 2007. By October 2006 the Government
had granted a terrestrial digital broadcasting licence to approximately 40 TV channels.
Market players’ responses to a Radio and TV Authority questionnaire in 2006 indicated that
Application Program Interfaces (APIs)122and Electronic Programme Guides (EPGs) were
growing in importance by comparison with 2005, when interest was low. The Authority
previously supported the MHP standard, but has since revised its position as it is evident that
there is now more than one feasible standard to be considered. The end result could be two
proprietary standards.
Regulatory issues
Decisions were taken on 15 December 2005 concerning obligations for the SMP operator (the
state-owned provider of terrestrial transmission services) in the markets for analogue and
digital terrestrial television broadcasting respectively and analogue terrestrial radio
broadcasting. The decisions were appealed against but were upheld at first instance, and are in
force while being tried at second instance. The obligations include cost-based services for
broadcasting operators as well as wholesale transmission access.
In the related infringement procedure regarding exclusive broadcasting transmission rights –
further detailed in the 11th Report – the Commission decided in October 2006 to take Sweden
to Court for its failure to change rules giving a state-owned company a monopoly to provide
access control services in Sweden’s digital terrestrial broadcasting network. While the
Commission welcomed the Swedish Government’s agreement in principle to modify its
broadcasting legislation, Sweden has so far failed to abolish the monopoly. The Swedish
Government announced that it is working on a legislative proposal to address the matter, and
expects the new legislation to enter into force on 1 January 2008.
119
120
121
122
EN
See Organisation of the NRA, above.
See http://www.teracom.se; and Statens Offentliga Utredningar: Sveriges övergång till digital-TV,
Digital-TV-Kommissionen.
The software interfaces between applications, made available by broadcasters or service providers, and
the resources in the enhanced digital television equipment for digital television and radio services.
275
EN
Spectrum management
Sweden has declared that it has implemented the Commission’s Decisions on spectrum
harmonisation for short-range radars (SRR) for cars and Radio-LANs. It is in the process of
implementing the Commission’s Decision on the frequencies formerly used for the ERMES
pan-European paging system. The Commission services are currently assessing the
completeness of Sweden’s implementation of these decisions.
In October 2006 PTS published its new spectrum policy. The objective of the policy is to
ensure efficient use of spectrum and a competitive range of services for customers. The
agency should be as technology- and service-neutral as possible, make use of auctions in
selection procedures, make trading easy, and where possible apply licence exemptions or a
simplified licensing procedure. The policy also envisages rapid implementation of
international agreements. Spectrum trading is already allowed, but is used to a limited extent
mostly in the area of public land mobile radio (for example taxi services).
In September 2006 PTS published a report on potential use of the spectrum surplus from the
digital switchover (“the digital dividend”), which is to be completed at the end of 2007.
According to the report, the switchover will free up at least 189 MHz. The report concludes
that there are several realistic alternative uses, and that international coordination has great
value. According to the report, developments should not be impeded by hasty decisions, and
deliberations with interested parties must be held beforehand.
Tariff transparency
PTS continues to run its web-based price comparison service for most kinds of electronic
communications services to consumers.
Universal service
PTS received a number of complaints regarding requests for connection at a fixed location to
the public telephone network, but was unable to process them as its decision in 2005 to
designate a universal service provider is still being tried in court and has been suspended in
the meantime.
The PTS strategy for services to people with disabilities involves influencing stakeholders to
provide tailored services to people with special needs. At the same time, it procures eight
separate services to disabled consumers, and is running trial stages of several more. Two
former trial-based services have been taken up as regular procured services: a sign language
translation service based on 3G video calls (an interpretation centre translates bi-directionally
between sign language and voice communication) and the distribution of digital voice books
from an electronic archive accessible by nearly all public libraries.
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276
EN
Sweden is in the process of implementing a combination of “push” and “pull” techniques for
caller location identification depending on the network being used. 112-recognition is very
high. Awareness-raising efforts have been made in strategic media such as on the back of
milk cartons. During a two-year trial financed through PTS, 112 is also available as an SMS
service strictly for people with hearing or speech impairments.
Number portability
In October 2006 there were 2 million accumulated ported mobile numbers, as compared to 1.3
million a year earlier. In October 2006 there were more than 400 000 ported fixed numbers –
compared to under 200 000 a year earlier – as users took advantage of the WLR reform and IP
telephony on alternative access networks.
Must-carry
As noted in the 11th report, cable-TV operators may – as a consequence of rules revised in
2005 – be required to pay intellectual property organisations for re-transmission of content in
must-carry channels. However, cable-TV operators now have a barter-type agreement with
the public service broadcasting company (SVT) whereby SVT takes care of such payments.
The Consumer Agency includes the office of the Consumer Ombudsman, which can lodge
cases with the Market Court. So far that court has not had any cases related to broadband. As
described above, the Agency’s work has been constrained by its relocation. More positively,
the new Consumer Bureau for Telecom and internet was set up in 2006 and is funded by
SITO. Providing advice and information to consumers, it also has the potential to serve as a
form of de facto alternative consumer-dispute resolution mechanism. The bureau can be
expected to relieve PTS of some of its consumer counselling and complaints-related work, but
it will not run a price database.
Data protection
PTS is active in the electronic communications data protection area and for a long time now
has had a network security department in place including SITIC, the Swedish CERT123.
Several reports have been published in English – such as on spam, spyware and closely
related phenomena and on security threats to mobile telephony from a user perspective. PTS
has a well evolved site on network security and integrity aimed at consumers, and publishes
brochures on topics such as how to protect your home-PC or use a wireless network safely. It
also runs a free web-based diagnostics service for consumers (“Test Your Computer”) to
determine the safety level of their online computer, coupled with advice on improvements.
In the field of network integrity, PTS produced draft guidelines on good function operation
and technical security for providers of public communications networks and services. The
guidelines contain recommendations on security work in the form of risk analyses and risk
management as well as preparedness and follow-up regarding interruptions and disturbances.
123
EN
Computer Emergency Response Team.
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EN
In the data protection and retention area there is operator concern that divergent regimes in
Member States prevent technical integration of operations in countries of presence. Different
systems used in order to comply with different national requirements translate into higher
costs for operators’ cross-border operations.
EN
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EN
UNITED KINGDOM
INTRODUCTION
Over the last year the United Kingdom electronic communications sector saw intensifying
competition and significant restructuring and consolidation, as the larger operators seek to
position themselves to compete in a converging broadband environment in which it is
considered necessary to offer the customer a full range of services, combining products
(internet access, audio-visual services and voice telephony, both fixed and mobile) previously
provided over separate infrastructures or by separate providers. This intensifying competitive
activity has been accompanied by a significant increase in the number of broadband lines in
the United Kingdom and, in particular, in the take-up of local loop unbundling by a number of
key players in the broadband market. It has also been reflected in intensifying price
competition at retail level, including the launch of packages offering “free” broadband access
as part of a wider bundle of services.
These developments took place against the backdrop of (i) operational separation of the fixed
incumbent’s access network business, through the creation of Openreach, and (ii) progress
towards its delivery of key access products to communications providers in a manner intended
to guarantee equivalence of input, as provided for by its undertakings to Ofcom in autumn
2005, following the latter’s Telecommunications Strategic Review. While the broadband
sector’s dynamism could be said to reflect confidence in the regulatory settlement arising
from Ofcom’s Strategic Review, implementation of the fixed incumbent’s undertakings is still
in a transitional phase and it is too early to draw conclusions as to the final impact of the
regulatory settlement achieved.
Implementation of the fixed incumbent’s undertakings regarding the operational separation of
its access services division, and the achievement of equality of input to the wholesale products
requested by its competitors, has been a major organisational challenge, involving some tens
of thousands of employees, and has inevitably had an effect on the ongoing delivery of its
wholesale products.
Against the background of the operational separation of the fixed incumbent’s local access
network and its Enterprise Act undertakings to Ofcom, which go beyond the obligations
imposed as SMP remedies, there has also been a continued trend for the fixed incumbent to
offer voluntary commitments to the regulator as a means of satisfying regulatory concerns
without the need for regulation itself. While in many ways this can be seen as a positive
development, increasing speed, flexibility and limiting the need for formal intervention, this
approach can on occasion lead to a perception by third parties of a ‘special relationship’
between the fixed incumbent and the regulator which is not subject to the same level of
transparency and third-party participation as may be afforded by more formal regulatory
action. The issue of transparency and third-party consultation has arisen also in relation to
some exemptions granted by Ofcom from timing commitments covered by the fixed
incumbent’s Enterprise Act undertakings.
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EN
Ofcom’s independence in the exercise of its statutory tasks remains unchallenged. The
Chairman and non-executive directors can be removed from office only on grounds of
bankruptcy, prejudicial conflicts of interest, misbehaviour or incapacity.
In general Ofcom is seen to retain staff with a high degree of expertise. However, some
operators whose business is spectrum-reliant have stressed that there will be a growing need
for staff with the relevant technical and engineering expertise, as the process of spectrum
liberalisation and trading gathers pace and the need to make technical assessments of the risks
of interference becomes more critical.
Ofcom’s dual competence as a regulatory and competition authority is seen as one of its major
strengths. However, others indicate that a tension may arise between these two roles. For
example, the regulator’s willingness to take strong enforcement action under the competition
rules may be constrained by a reluctance to call into question the effectiveness of the
regulatory remedies that it has itself established, often through a process of negotiation with
the incumbent. The settlement reached with the fixed incumbent following Ofcom’s Telecoms
Strategic Review could be seen as an example of an area where this potential tension could
arise. Nevertheless, Ofcom did exercise its powers under the Competition Act in October
2006 by issuing a supplementary Statement of Objections in the long-running investigation
into the fixed incumbent’s retail broadband pricing.
Alternative operators have identified Ofcom’s lack of power to impose interim measures in
dispute-resolution procedures as a limit on such procedure’s full effectiveness.
Decision-making
As regards the process of market analysis and review of obligations required by the EU
framework, Ofcom had already completed the first round of notifications back in June 2004,
apart from the market on international roaming (market 17). Ofcom has taken final measures
in each notified market.
The second round of notifications started in 2006 and so far covers the markets for wholesale
international services as well as the markets for voice call termination on mobile networks.
In November 2006 it also launched an in-depth consultation on its second review of the
wholesale broadband access market, including proposals to define three categories of
geographical market, differentiated by the different number of competitors in the local
exchanges and the number of homes or businesses served, with the possibility of
differentiated remedies applicable in the different market categories.
The remedies put in place for operators with SMP have tended to be a relatively
comprehensive range of those provided for by the framework. However, Ofcom has also
taken some significant de-regulatory steps to reflect its assessment of the improved
competitive conditions in certain markets, notably the lifting from the fixed incumbent, with
effect from 1 August 2006 (after more than 20 years), of retail price controls derived from its
SMP in the fixed narrowband retail services markets. These deregulatory measures were
linked to the SMP operator’s provision of regulated products such as wholesale line rental to a
standard deemed fit for purpose by the regulator. In agreeing to lift these price controls
Ofcom also took account of a number of assurances from the fixed incumbent relating to the
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pricing of the line rental (i.e., the monthly fixed fee) that it charges for its basic exchange line
services, and to the pass-through of savings from lower mobile termination rates.
Following the conclusion of the Strategic Review there has been an increased focus by the
regulator on consumer issues. This has produced a number of initiatives, such as on the
regulation of calls to non-geographic numbers and measures to facilitate switching between
suppliers. Ofcom has also been active in investigating breaches of the rules relating to misselling and the abuse of automated calling equipment, and has taken enforcement action in a
number of cases.
As far as Ofcom’s role in dispute resolution is concerned, it has made determinations within
four months of accepting a dispute for resolution, except in the case of a set of grouped
disputes (two) relating to directory enquiries, where Ofcom concluded that there were
exceptional circumstances that precluded resolving these disputes within four months. Ofcom
published its draft determination in relation to those disputes in October 2006 and expects to
publish a further statement about the disputes early in 2007.
The number of decisions by Ofcom under the Communications Act which are subject to
appeal remains relatively small. The time frame for conclusion of such appeals has ranged
from just under seven months to 16 months. It is worth noting that in relation to Ofcom’s
decisions under national competition law, the Court of Appeal made an important ruling in
June 2006, to the effect that the Competition Appeal Tribunal (CAT) does not have the power
to set a deadline for Ofcom to retake a decision remitted to it where the CAT has set aside
Ofcom’s original decision.
To date the principles that would apply for the appeal body to determine which categories of
third parties have a “sufficient interest” to give them the right of appeal against an Ofcom
decision under the regulatory framework have not been tested in practice.
However, despite the general robustness of economic and consumer regulation as applied by
Ofcom, some problematic regulatory issues still await clarification, such as the regulatory
treatment of mobile gateways, changes to the arrangements for number portability and the
legal framework applicable to the provision of directory information.
Broadband
Market situation
The UK broadband market has seen a
period of intense growth and retail
price competition during the reference
period, which has put operators’ profit
margins under pressure, to the extent
that a number of operators are offering
bundles of converged products (such as
voice telephony or IP TV), including
“free” broadband connection. This
means that economies of scale and
scope and vertical integration are
United Kingdom BB penetration
25.00%
20.40%
20.00%
14.90%
15.00%
10.00%
8.80%
5.00%
0.00%
2004
EN
2005
2006
281
EN
increasingly seen as key prerequisites for success in the broadband market.
This is reflected in the spate of recent consolidation activity in the United Kingdom over the
past year, as the major operators seek to acquire the capabilities to provide a full, integrated
bundle of broadband products, involving broadband internet access, voice telephony, audiovisual services and mobile communications. The restructuring of the market has taken a
number of forms, such as the merged cable network operator’s acquisition of a major mobile
service provider, and the entry (by means of acquisitions) of a satellite broadcaster and a
further mobile network operator into the fixed broadband access market – using unbundled
local loops. On the other hand, another mobile network operator has chosen to enter the fixed
broadband market by means of a wholesale product from the fixed incumbent, rather than
through investing in local exchanges itself.
Likewise, operators are vying to exploit
the anticipated demand for converged
broadband services through the launch
of new, integrated packages including
IP telephony, video on demand and IP
TV broadcasting services. Access to
content is becoming increasingly critical
in this highly competitive area, with
market players scrambling to make the
necessary
tie-ups
to
guarantee
availability of premium content.
United Kingdom - BB lines by technology/means
NE Cable modem;
2 980 400
3060475
NE Ow n PSTN
netw ork; 65 423
NE Other (WLL,
Satellite);
8 500
NE Full ULL; 161219
NE Shared access;
677 160
NE Resale; 5371214
At the same time the mobile network
operators are developing mobile TV and
other content services for delivery over mobile devices. While a number of these operators are
also seeking to offer their customers a range of services including a fixed broadband element,
the new entrant 3G operator has focused on offering an open platform approach to mobile
internet access via the mobile device.
At the infrastructure level, the total number of broadband lines (excluding mobile) in the
United Kingdom grew to 12.3 million in October 2006, representing 20.4% of the population,
while Ofcom announced in November 2006 that the landmark of one million unbundled lines
had been reached. This compares with under 111 000 unbundled lines in October 2005. The
fixed incumbent’s share of the retail broadband market is among the lowest in the EU, at
25%, and it has seen a drop in its share of new broadband subscribers as local loop
unbundling gathers pace. It should be noted, however, that resale of the incumbent’s
broadband offering (whether by means of bitstream access or simple resale) retains the largest
single share of the market.
Although there is currently no “naked DSL” offering on the market, in November 2006 the
fixed incumbent initiated a consultation process with other operators on the anticipated
requirements and demand for such a “Broadband Line Access” product.
ADSL over the fixed access network represents the lion’s share of broadband lines in the
United Kingdom (around 75% of the total), while cable accounts for approximately one
quarter of broadband lines.
EN
282
EN
The United Kingdom has also seen significant growth in the use of WIFI technologies to
provide broadband access in key hotspots, with Ofcom reporting that the UK has the highest
number of WIFI hotspots per 100 000 people among the major national communications
markets surveyed124. WIMAX technologies have yet to see major deployment in the United
Kingdom, but this is expected to gather pace in the coming months.
The SMP remedies imposed in the wholesale local access market, combined with the fixed
incumbent’s undertakings on the delivery of equality of access following the Telecoms
Strategic Review and the work of the Office of the Telecommunications Adjudicator (who has
driven the processes needed to ensure industrialisation of the unbundling process), have
underpinned the market demand for LLU and translated into significant increases in
unbundled lines. Nevertheless, the process of achieving mass take-up of unbundling has been
difficult and the Telecommunications Adjudicator on occasion expressed concern about the
fixed incumbent’s delivery with regard to key performance indicators. One of the key areas
where Ofcom have identified the need for further improvement is in the capabilities and
quality of the equivalence management platform, the operational support system which
underpins the delivery of equivalence by Openreach.
In order to improve the consumer experience of switching broadband provider, Ofcom has
imposed measures to improve the facility with which customers can switch between
providers, through a requirement for suppliers to provide a Migrations Authorisation Code
(MAC) on request. The MAC is needed for customers to be able to switch providers without
loss of service during the transfer.
In November the fixed incumbent gave commitments to Ofcom regarding the pricing of its
key wholesale broadband products from May 2007, when it is expected that 1.5 million lines
will have been unbundled, as well as its NGN wholesale broadband products intended to
come on stream in 2008. These commitments are intended to allow for price reductions for
the incumbent’s wholesale customers while ensuring stability in the local loop unbundling
market. In addition, the main fixed incumbent made voluntary commitments for a price
ceiling to address the possibility of high prices in less competitive areas. This is an example of
voluntary commitments made by the fixed incumbent aimed at avoiding the need for more
detailed regulatory intervention.
In November 2006 Ofcom launched a document for discussion with industry on the regulatory
challenges posed by next-generation networks, with a view to preparing the way for its future
reviews of the relevant markets affected.
Mobile markets
Market situation
The high degree of competition in the retail mobile market can be seen both in the continued
decrease in mobile prices and the fact that the four established 2G network operators continue
to have market shares within a few percentage points of each other. The United Kingdom also
has a relatively high number of MVNOs and other service providers active on the mobile
124
EN
Ofcom’s International Communications Market Report, November 2006.
283
EN
market, which (according to figures provided by Ofcom) represented about 13% of total
mobile subscribers at the end of 2005.
A number of mobile providers have launched broadcast television services for mobile phones
during the year, while others favour the provision of televisual services by means of streaming
technology.
In its second-round market review of the mobile termination markets launched in September
2006, Ofcom is proposing that revised charge controls should apply for four years from
31 March 2007, with reductions by means of a glide path in four equal (percentage) steps
across the four years. The regulated average charge levels would be differentiated as between
the four more established mobile network operators and the new entrant operator. Ofcom also
announced that it will carry out an analysis of the market for SMS termination services in the
course of 2007.
One of the key regulatory challenges facing Ofcom with regard to the mobile market is how
to handle liberalisation of the existing 2G spectrum (GSM 900 and DCS 1800) currently in
the hands of the four more established network operators. The different players in the mobile
market have conflicting views, depending on their current spectrum holdings and market
position, on how to ensure the most equitable and efficient use of these frequencies when they
are redeployed for other uses and technologies.
Another regulatory issue affecting the mobile market and requiring clarification relates to the
legal status of mobile gateways in the United Kingdom. A judgment by the Competition
Appeal Tribunal in August 2006 held, in the context of an individual case, that contrary to
Ofcom’s previous determination, the licences held by the GSM mobile network operators did
authorise the operation of mobile gateways for commercial purposes, when read in the light of
the applicable Community law requirements. Ofcom has applied to the Competition Appeal
Tribunal for permission to appeal to the Court of Appeal against this judgment. The
Commission will follow developments in this area closely in the light of the relevant
provisions of the RTTE Directive and the Authorisation Directive.
Fixed markets
Market situation
The comparative intensity of competition in the fixed market from an EU perspective can be
seen in the fact that the United Kingdom has the highest number of operators (11) making up
90% of the fixed telephony market by retail revenue, and is mirrored in the fact that the fixed
incumbent has among the lowest incumbent market shares in the local and national fixed calls
markets. The consolidation of the two primary cable operators during the year has also
boosted the challenge from alternative infrastructure providers; the United Kingdom has the
highest percentage in the EU (among those Member States which supplied data) of
subscribers using an alternative provider for direct access.
At the same time, interconnection charges for call termination on the incumbent’s fixed
network are now the lowest in the EU countries which supplied data, in all three categories
(local, single transit and double transit).
EN
284
EN
While carrier pre-selection (CPS) has been the mainstay of competition in the fixed market
for some years, the number of lines subject to CPS in the United Kingdom has seen a decline
for the first time (dropping by 0.16% from August 2006 to October 2006). This is likely to be
the result of the growth of full LLU services (which provide voice and broadband services
without the need for CPS). Demand for wholesale line rental (WLR) continues to grow.
A new version of the WLR product (WLR3), designed to meet the criteria for equality of
access (as between the fixed incumbent’s retail business and alternative operators) established
by Ofcom’s Telecoms Strategic Review, is due to become available from January 2007.
Indeed, the incumbent has committed to offer a financial allowance to alternative operators if
this deadline is not met. However, there is some uncertainty to what extent alternative
operators will move to the new product immediately on that date, or whether they will wait to
ensure that any remaining wrinkles in the product have been ironed out. Some alternative
operators have alluded in this context to the tension that can exist between the need to ensure
that key target dates covered by the incumbent’s undertakings are met and the need to ensure
that a fully operational and stable product is available at launch. The issue has also arisen in
relation to the fixed incumbent’s undertaking to provide its wholesale broadband product,
IPStream, on an equivalent basis to industry by the end of December 2006.
Broadcasting
Market situation
Ofcom reports125 that take-up of digital television continues to increase, with around 70% of
households now having digital television.
As indicated above, one of the key market developments over recent months has been the
acceleration in the process of convergence of communications products across different
delivery platforms, including the launch of broadcast and pay-per-view products over fixed
broadband (ADSL) networks. As this process develops, access to key programming content
becomes increasingly important, and has driven new alliances and agreements in the
broadcasting sector.
According to a report prepared for the Commission126, United Kingdom household television
penetration by platform (analogue and digital) broke down as follows at the end of the third
quarter of 2005: 54.1% terrestrial, 32.4% satellite, 13.3% cable and 0.2% IPTV.
In view of the above, there is a perception in the market that access to premium audiovisual
content might increasingly become a barrier to entry. This would be as important for the
communications markets over time as the bottlenecks previously identified in access to
physical infrastructure (addressed through regulatory remedies and, in the United Kingdom,
the functional separation of the incumbent’s fixed access network). Vigilance in the exercise
125
126
EN
Ofcom Policy Evaluation: “The Consumer Experience - Telecoms, internet and Digital Broadcasting”,
Nov. 2006.
Dataxis Report on the EU Market for Digital Television 2006.
285
EN
of the regulator’s competition law powers is therefore seen as particularly important in this
regard.
Spectrum management
Ofcom has continued its programme of spectrum liberalisation and reform outlined in the
conclusions of its Spectrum Review in June 2005, completing two spectrum auctions in 2006,
both of which resulted in the issue of technology- and service-neutral licences (within certain
technical limits) which are also tradable. These involved the grant of 12 licences in May 2006
for shared use of spectrum in the GSM/ DECT guard bands127 (suitable for mobile services
using low-power picocell technology) and a single licence in the 412 MHz band in October
2006, which went to a company which provides communication services for emergency
services, government agencies and private companies. In the latter case, some operators
regretted that the design of the auction allowed for one operator to receive the entire
allocation of spectrum, although the Commission services note that this was not the only
possible outcome.
Although spectrum trading has not taken off in large volumes (no doubt partly in anticipation
of the availability of further spectrum from the regulator), a small number of spectrum trading
transactions in the fixed wireless access area have taken place.
The United Kingdom took measures to implement the four Commission Decisions128 adopted
under the Radio Spectrum Decision harmonising spectrum in specified bands, with the
exception of the high power part of the band covered by Decision 2005/928/EC, in relation to
which Ofcom is still considering the most appropriate licensing arrangements. However, the
UK Frequency Allocation Table (UK FAT) has not yet been updated to reflect these changes.
The main instrument for facilitating electronic communications providers’ acquisition of
rights of way is the Electronic Communications Code, administered by Ofcom. However,
planned secondary legislation designed to reduce traffic congestion will introduce an
additional permit procedure for roadworks.
In October 2006 the Commission closed its state-aid investigation into application of the
United Kingdom system of property tax (business rates) to telecommunications infrastructure,
having concluded that the methodology applied to the valuation of the fixed incumbents’
infrastructure did not undervalue their networks by comparison with those of their
competitors.
127
128
EN
1781.7-1785 MHz paired with 1876.7-1880 MHz.
Commission Decisions 2005/928/EC of 20 December 2005; 2005/513/EC of 11 July 2005; 2005/50/EC
of 17 January 2005; and 2004/545/EC of 26 July 2004.
286
EN
Transparency
At Ofcom’s initiative a number of fixed voice telephony providers, working on a coregulatory basis, launched an independent website (www.topcomm.org.uk) in July 2006 to
provide residential and business users with comparative information on quality of service
(ordering services, fault repair, complaints handling and billing accuracy). In a similar
initiative, the four 2G mobile network operators launched a website (www.topnetuk.org) in
September 2006 providing independently commissioned comparative information on each
operator’s voice quality and network performance on a geographic basis.
Universal service
In March 2006 Ofcom issued a statement confirming its conclusions on its review of the
universal service obligations first consulted on in 2005. This included details of the new
scheme offered by the fixed incumbent for users on low incomes. This scheme is available for
customers in receipt of Income Support, income-based Job Seeker’s Allowance and Pension
Credit. It also concluded that a Stakeholder Advisory Panel should be established for the text
relay service for deaf, hearing-impaired and speech-impaired customers, that changes should
be made to extend the range of disabled customers who can receive bills and contracts in
special formats, and that some accessibility requirements for public call boxes should be
increased. Some mobile operators, which have been required to ensure the availability of the
text relay service on their networks also, questioned whether this solution met disabled
customers’ requirements in the most cost-effective way. However, Ofcom believes it is
important that customers who use the text relay service should be able to communicate on the
move in the same way that users of conventional voice telephony services can.
The Commission continues to monitor progress towards ensuring that all mobile subscribers
who wish to have an entry in the comprehensive directory required by Article 5 of the
Universal Service Directive have such a right. A letter of formal notice was sent to the United
Kingdom in this regard in December 2005.
Further, the Commission notes Ofcom’s provisional conclusion, announced in August 2006 as
part of a dispute-resolution process, that the current universal service obligation imposed on
the fixed incumbent to make available its comprehensive and aggregated database (known as
OSIS) is unenforceable because it extends beyond the scope of its legal basis in both
Community and national law. As a result, Ofcom has indicated that it will urgently review the
position to ensure the United Kingdom is compliant with its obligations under Article 5 of the
Universal Service Directive. The Commission will follow developments in this area closely to
ensure that all the requirements of the EU directives relating to the universal service directory
are transposed and applied correctly.
EN
287
EN
Number portability
In response to concerns from new entrants that the current arrangements for number
portability in the United Kingdom act as a disincentive for switching, and incur unnecessary
conveyance costs (penalising operators which are net recipients of ported numbers), Ofcom
launched a consultation in November 2006 on proposed changes to these arrangements. The
proposals would involve changing the routing of calls to ported numbers by moving from the
current ‘onward routing’ solution (where the call has to pass through the operator which
originally assigned the number) to a more direct routing solution based on call-by-call query
of a common database. The new mechanism would ultimately apply to both fixed and mobile
number portability, but with earlier implementation for mobile numbers where it is considered
that existing technology allows for a shorter implementation timescale (September 2009, as
opposed to a deadline of end 2012 for fixed numbers).
The proposals would also include lowering mobile port lead times from the current five
working days to either less than one working day or three working days, depending on the
outcome of the consultation.
Non-geographic numbers
There has been significant public concern over the lack of price transparency and the high
charges paid by consumers for calling certain non-geographic number ranges, particularly
when such numbers are used as the only or primary public contact point for corporations and
government bodies and are a source of revenue generation for them (through revenue-sharing
arrangements with the operator providing access to the number). In response to these concerns
Ofcom made a number of decisions in 2006 following a review of the pricing structures
applicable to non-geographic numbers and the numbering regime more generally. These
include requiring telecommunications providers which originate calls to non-geographic
numbers to give greater prominence to the applicable charges in published price lists and in
promotional material, and to provide appropriate information to customers in relation to
complaints handling and enquiries about premium rate services.
Ofcom has also announced changes to the pricing structure for calls to one category of nongeographic numbers, the 0870 range, which has generated particular concerns about pricing
transparency and has been a cause of industry disputes. The changes will restore their link
with the prices that apply for national calls to geographic numbers. In addition Ofcom will
extend the role of the premium rate regulator ICSTIS to include calls made to the 0871 nongeographic range. These changes will take full effect at the beginning of 2008 in order to give
time for the operators to prepare. Ofcom also announced the opening from early 2007 of a
new range of UK-wide numbers, the 03 range, which will be charged at normal national rates
and will be suited to the needs of many public bodies currently using chargeable 08 numbers.
EN
288
EN
COMMISSION OF THE EUROPEAN COMMUNITIES
Brussels, 29.3.2007
SEC(2007) 403
VOLUME 2
COMMISSION STAFF WORKING DOCUMENT
ANNEX TO THE
COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL
COMMITTEE AND THE COMMITTEE OF THE REGIONS
EUROPEAN ELECTRONIC COMMUNICATIONS REGULATION AND MARKETS
2006 (12th REPORT)
{COM(2007) 155 final}
EN
EN
ANNEX 2
MARKET OVERVIEW
SOURCES OF DATA PRESENTED IN THIS ANNEX
Figures in sections 1 (fixed market), 2 (consumers’ choice of fixed operators), 3 (public
network interconnection), 4 (mobile subscribers and operators), 5 (number portability) and 6
(prices for LLU) were provided by the National Regulatory Authorities (NRAs) in response to
a questionnaire on regulatory market data sent by the Commission in July 2006.
Data on mobile subscribers (section 4) refer to October 2006 and come from the NRAs unless
otherwise specified.
Data in section 6 on broadband access are provided by the NRAs and the national ministries
through the Electronic Communications Committee (COCOM). Data have been collected
since July 2002 three times a year, in January, June and October. The figures in this report
refer to 1 October 2006 unless otherwise specified.
Information in sections 7and 8 (PSTN and retail leased lines prices) and partly in section 4
(mobile tariffs) is taken from a study carried out for the Commission by Teligen, Harris
Interactive UK. These data are collected from primary sources (i.e. directly from the
incumbent operators and new entrants) and checked by the NRAs. All NRAs, with the
exception of Ireland, Italy, Latvia, Slovenia and Poland provided comments and approved
these data.
A validation meeting with representatives from NRAs took place in November 2006.
Furthermore, a draft version of the charts in this annex (excluding section 7, 8 and 4.4) was
distributed to the NRAs before this report was finalised.
EN
2
EN
1.
1.1.
1.2.
2.
2.1.
2.2.
3.
3.1.
3.2.
3.3.
3.4.
4.
4.1.
4.2.
4.3.
4.4.
5.
5.1.
5.2.
6.
6.1.
6.2.
6.3.
6.4.
7.
7.1.
7.2.
7.3.
7.4.
7.5.
7.6.
7.7
7.8.
7.9.
8.
8.1.
8.2.
8.3.
8.4.
8.5.
8.6.
8.7.
EN
TABLE OF CONTENTS
FIXED MARKET ...................................................................................................... 5
Players in the fixed market........................................................................................... 5
Incumbents’ market share in the fixed voice telephony market ................................ 11
CONSUMERS’ CHOICE OF FIXED OPERATORS.......................................... 20
Percentage of subscribers actually using an alternative provider other than the
incumbent................................................................................................................... 20
Facilities used by new entrants for the provision of voice telephony ........................ 24
PUBLIC NETWORK INTERCONNECTION ..................................................... 26
Call termination on incumbent's fixed network ......................................................... 26
Call termination on alternative operators' fixed networks ......................................... 30
Call termination on mobile networks......................................................................... 32
Leased lines interconnection charges......................................................................... 39
MOBILE MARKET ................................................................................................ 44
Mobile penetration ..................................................................................................... 44
Players in the mobile market...................................................................................... 48
Mobile operators’ market shares................................................................................ 53
Mobile Tariffs ............................................................................................................ 55
NUMBER PORTABILITY..................................................................................... 65
Fixed number portability............................................................................................ 65
Mobile number portability ......................................................................................... 67
BROADBAND ACCESS AND PRICING ............................................................. 71
Broadband access definitions..................................................................................... 71
wholesale access......................................................................................................... 72
Retail broadband access ............................................................................................. 75
Prices for unbundled local loop.................................................................................. 91
PUBLIC VOICE TELEPHONY TARIFFS .......................................................... 98
Charging system......................................................................................................... 99
Monthly rental charged by the incumbent operators ............................................... 103
Average monthly expenditure (composite call basket)............................................ 105
Price of fixed national calls by the incumbent operator........................................... 112
Trend of the basket for fixed national calls (national basket).................................. 116
Price of fixed national calls by alternative operators ............................................... 117
Incumbent operator price for an average fixed international call (international call
basket) ...................................................................................................................... 119
Incumbent operator price of calls to eu, japan, usa.................................................. 122
Alternative operators’ price for fixed international calls ......................................... 126
LEASED LINES RETAIL TARIFFS .................................................................. 129
Incumbents' national leased lines ............................................................................. 129
National leased lines price trends (1 august 1998 - 1 september 2006)................... 142
International leased lines prices ............................................................................... 144
International leased lines price trends (1 August 1998 - 1 September 2006) .......... 149
Exchange rate used (except tariffs). ......................................................................... 152
Exchange rate used for tariff (on the mobile tariff - section 5, public voice telephony
tariffs - section 8 and leased line tariffs - section 9). ............................................... 152
Population ................................................................................................................ 153
3
EN
9.
9.1.
9.2.
9.3.
9.4.
9.5.
9.6.
EN
OECD TELECOMMUNICATIONS BASKET DEFINITIONS....................... 155
National PSTN basket .............................................................................................. 155
International PSTN basket ....................................................................................... 157
Composite national – international basket ............................................................... 157
New OECD baskets for PSTN 2006 ........................................................................ 159
OECD mobile baskets 2002 ..................................................................................... 161
New OECD mobile baskets 2006 ............................................................................ 163
4
EN
1.
FIXED MARKET
This section looks at the number of fixed telecommunications operators (fixed voice
telephony and network services) and at the level of competition in the fixed market. It
includes data on the number of fixed network operators and public fixed voice telephony
operators authorised to provide public voice telephony and to operate a public network at July
2006. The estimated number of players actually active in the fixed market and the
incumbents’ market shares in the fixed voice telephony market have also been shown.
Data on the number of operators refer to July 2006, while data on the incumbents’ market
shares in the fixed voice telephony market refer to the end of 2005.
Information have been provided by national regulatory authorities.
1.1.
Players in the fixed market
Under the new regulatory framework for electronic communications, operators are only
subject to a general authorization regime. Undertakings may be required to submit a
notification but may not be required to obtain an explicit decision or any other administrative
act. Granting of individual rights of use is required only for scarce resources such as radio
spectrum or numbers.
Given the above, the database set up by the national authorities may be very different across
the Member States and may include a variety of operators: fixed network operators, service
providers, voice over IP services, cable operators as well as wireless local loop, and mobile
and satellite operators for the fixed part of their networks and services.
Some Member States are now not able to provide detailed information on the number and
types of services provided by the operators that may include other services in addition to
public telephony and/or public network services. Therefore, the figures on the number of
operators should be considered only as estimates. Furthermore, in some Member States the
figure for 2006 is not comparable with the previous implementation reports given the change
in the authorization regime.
The figures do not take into account operators acting as resellers or offering services based
exclusively on pre-paid cards. The figures include cable TV operators that also provide voice
telephony or network services.
Concerning the operators providing voice over IP services, they are excluded in Belgium,
Czech Republic, Greece, Cyprus, Luxembourg, Hungary, Poland, and included in Estonia,
France, Latvia, Malta, Austria, Portugal and Sweden. In Belgium, Ireland, Lithuania VoIP
operators are included only if they provide a PATS1-like service. No information is available
for Denmark, Spain, Italy, The Netherlands, Slovakia and Finland. In Germany and United
Kingdom some VoIP operators might be included.
While it is difficult to measure the exact difference since 2005, data shows that there has been
an increase in the number of operators authorised to provided fixed services, even if to a
1
EN
PATS = Publicly Available Telephone Service as opposed to ECS (Electronic Communication Services) operators who have less
obligations (number portability, authorizations).
5
EN
lower extent than in previous years. Around 50% of the authorised operators were actually
providing services as of July 2006.
As of December 2005 the total number of major competing operators (i.e. operators that along
with the incumbent operator have a combined market share of around 90% of the global
telephony market) in the EU is around 94. Only in seven Member States there are five or
more major competing operators. In six new Member States, competition is still at an early
stage with the incumbents' retaining more than 90% of the market and a low level of
competiton mainly concentrated in the international calls market.
Data on the number of operators were provided by the national regulatory authorities and
refer to July 2006. Data on the number of major competing players refer to December 2005.
EN
6
EN
Figure 1
Estimated number of fixed operators in EU
3 000
2846
2495
2 500
2166
2141
1981
2 000
1608
1 500
1 000
2004
2005
Public voice telephony
2006
Public network
The figure for public network operators does not include Denmark (for both 2005 and 2006)
and the number of public network operators for Czech Republic in 2006 refers to 2005.
1.1.1.
Public fixed network operators
The chart below shows the estimated number of network operators. Public network operators
are defined as operators that install, manage and operate a telecommunications transmission
network to provide public telephony services or public network services in the whole national
territory, whatever the geographical scope of the service. In Austria, the following figure
includes also all operators either owing proprietary infrastructure and/or using local loop
unbundling (LLU) and operators offering leased line services over proprietary infrastructure.
As of July 2006 there were a total of around 2800 network operators in the EU. In some
countries data are not comparable with previous reports due to a change in the national data
collection or to different figures provided by NRAs.
EN
7
EN
Figure 2
Estimated number of authorised public fixed network operators
(July 2006) - Total EU: 2847
700
633
600
484
500
423
400
307
300
253
100
223 232
196
200
47
88
72
45
9
26
43
40
5
37
43
24
31
LT LU HU MT NL AT PL PT
SI
15
15
2
47
0
IE
IT
CY LV
SK
FI
SE UK
Czech Republic: Data are not comparable with other countries and with previous report (the
authorization regime has been fundamentally changed in May 2005).
Denmark: Data are not available due to the fact that there is neither a licensing requirement
nor a central register of operators.
Greece, Austria: Data are not comparable with previous reports because of a change in the
national authorization regime.
Spain: 340 out of 423 network cable operators are local cable operators.
Finland: 39 network operators are local incumbents out of which 32 belong to the Finnet
Group, 2 to the Elisa Group, 2 others to TeliaSonera and 3 operate outside of these groups.
France: Of the 307 operators declared, 199 wireless local loop operators are in a test phase.
Netherlands: Data refer to 31 December 2005.
Sweden: NRA's estimated values.
United Kingdom: The figure corresponds to the number of companies recorded in the
voluntary register for communications providers. Figure refers to October 2006.
1.1.2.
Public fixed voice telephony operators
Public fixed voice telephony is defined as a service available to the public for the direct
transport on a commercial basis of real-time speech via the public switched network, such that
any user can use equipment connected to a network termination point at a fixed location to
communicate with another user of equipment connected to another termination point. Voice
telephony could be provided by operators on an own self-operated network or on a leased
network (including LLU). In the first case, the operator provides voice telephony over a
network fully controlled, operated and (wholly or partially) owned by it; in the second case
the operator operates, controls, manages the transmission capacity leased from another
operator, and provides voice telephony through career selection or career pre-selection The
definition of service provider may differ from the one used in the national law of individual
countries (in some countries non-self operated network operators engage exclusively in
reselling activities). Operators offering simple call-back and calling card services as well as
operators dealing only with marketing, billing, etc., are excluded.
EN
8
EN
Figure 3
Estimated number of authorised public fixed voice telephony operators
(July 2006) - Total EU: 2166
400
336
350
300
250
232
200
168
153
139
150
107
110
97
87
100
106
81
50
33
39
38
22
15
82
82
64
57
12
21
36
47
2
0
IE
IT
CY LV
SI
SK
FI
SE UK
Czech Republic, Germany, Greece: Data are not comparable with previous reports because of
a change in the national authorization regime.
Denmark: Due to the fact that there is neither a licensing requirement nor a central register of
operators, the above figure refers to the number of operators actually offering public voice
telephony.
Spain: About 80% are local cable operators.
Finland: 39 network operators are local incumbents out of which 32 belong to the Finnet
Group, 2 to the Elisa Group, 2 others to TeliaSonera and 3 operate outside of these groups.
Netherlands: The figure refers to 2005.
Austria: Data are not comparable with previous reports because of a change in the national
authorization regime. Figure includes also operators actually offering carrier selection
(CbC)services. Data as of 31 December 2005.
Portugal: The figure includes 3 incumbent subsidiaries.
The number of operators authorised to offer telephone service only indicates the potential for
competition in the market rather than the actual level of competition. For this reason, where
possible, the following chart provides an estimate of the number of operators that are active in
the market. CATV operators providing public voice services and operators using direct access
are included.
Figures do not distinguish between local and national operators. Furthermore, some operators
only offer international calls, while others also offer national and local calls. Figures represent
the maximum number of active operators in each country irrespective of the type of services
they are actually providing.
Figures for some countries are not comparable with previous reports due to different data
provided by NRAs.
EN
9
EN
Figure 4
Estimated number of operators actually offering public voice telephony
(July 2006) - Total EU: 1110
140
120
100
78
LU HU MT NL AT
PL
66
CY LV
LT
42
1
8
IT
12
IE
12
EL ES FR
9
6
0
BE CZ DK DE EE
41
19
35
25
14
15
16
20
43
41
62
54
40
70
81
106
60
122
132
80
PT
SI
SK
FI
SE UK
Spain: Data are not comparable with 11th Implementation Report .
Netherlands: Data refer to 31 December 2005.
Austria: Data are not comparable with 11th Implementation Report and refer to 31December
2005.
Portugal: The figure includes 3 incumbent subsidiaries.
Many new entrants concentrate their business on specific segments of the market or limit their
activity to local areas, thus having a limited impact on the national market as a whole. To get
an idea of the number of main players that are effectively competing with the incumbent at
national level, the following chart shows, for each country, the number of operators that had a
combined market share, based on revenues, of 90% on the total voice telephony market (all
types of calls2). In December 2005 only seven countries had five or more major competing
operators (including the incumbent) with such a combined market share. These figures give
an idea of the number of major players operating in each national market, although in many
cases competition is largely asymmetric, with incumbents continuing to hold a strong
position. This situation can be observed in the new Member States, where the fixed incumbent
still dominates the fixed voice market.
2
EN
Local calls to internet, local phone calls, long-distance and international calls as well as calls to mobile
10
EN
Figure 5
Number of the major players in the fixed telephony market
(including the incumbent, Dec. 2005 )
12
11
10
10
9
8
6
6
6
5
4
4
4
5
4
4
4
4
4
3
3
2
2
2
2
1
1
1
CY
LV
LT
1
1
1
SI
SK
0
BE CZ DK DE EE
EL
ES
FR
IE
IT
LU HU MT NL
AT
PL
PT
FI
SE UK
Operators that along with the incumbent operator have a combined market share of 90% of the voice telephony market (in term of retail revenues)
Germany, Ireland: Figures are NRA's estimates.
Denmark, Netherlands, Slovenia: Data are based on minutes of traffic.
Finland: The figure includes the major operator groups only.
1.2.
Incumbents’ market share in the fixed voice telephony market
This section shows the incumbents’ market share in the fixed voice telephony markets on the
basis of both retail revenues and outgoing minutes of traffic. Where possible, figures for local,
long-distance, international calls, calls to mobile and calls to internet are shown. Not all
Member States collect separate figures for all types of data, and split between the various
markets is not always available.
Figures in this section have been provided by NRAs and refer to December 2005, except for
United Kingdom (March 2006). Where available, later values have been provided in the
notes.
Market share based on retail revenues exclusively refers to revenues from call markets and
does not include any access revenue.
Apart from Denmark, Spain, Cyprus and United Kingdom, traffic/revenues generated from
calling cards are excluded from the market definition. The market definition for Greece and
Austria includes calling cards for international calls based on volume of traffic (both
countries) and for the international calls based on revenues (only Austria).
Traffic/revenues from public payphones are not excluded in Czech Rep., Denmark, Estonia,
Spain, Greece (for international calls on volume of traffic) Latvia, Luxembourg, Austria,
Portugal, Sweden (for international calls). It is excluded in all the remaining countries. No
information is available for The Netherlands, Slovenia, Slovakia and Finland.
EN
11
EN
Traffic/revenues from calling shops are not excluded in Czech Rep., Greece, France, United
Kingdom. It is excluded in the remaining countries, except for Germany, Sweden, Italy, The
Netherlands, Slovenia, Slovakia and Finland where no information is available.
Peer-to-peer VoIP traffic/revenues is excluded in all countries. No information is available for
Germany, Sweden, Italy, The Netherlands, Slovenia, Slovakia and Finland. Managed VoIP
(VoIP calls over broadband) traffic/revenues is included in Belgium, Denmark, Estonia,
Latvia, Lithuania, Austria and Portugal. It is excluded in the remaining countries, except
Germany, Sweden, The Netherlands, Slovenia, Slovakia, Finland and United Kingdom where
no information is available.
1.2.1.
EU average incumbents' market share
The following charts show the trend for the EU weighted average of the incumbents’ market
share in the major segments of the voice telephony market since 2003.
Given that data were not available for all countries and for all types of calls, the EU average
should be considered as indicative. In particular, the overall fixed telephony market share in
term of revenues in 2004 and 2005 is an average of countries that represent 93% and 95% of
the EU population respectively, while data for 2003 represent only 89.6% of the EU
population. Market share data based on volume of traffic for 2004 and 2005 represent 97%
and 100% of EU population respectively, while the data for 2003 are based only on a number
of countries representing 78% of the EU population.
Figure 6
(all type of calls)
80%
75%
70.9%
70%
67.7%
70.3%
65.8%
65%
66.0%
63.9%
60%
55%
Dec. 2003
By retail revenues
EN
Dec. 2004
Dec. 2005
12
EN
Figure 7
(based on revenues)
80%
75.8%
75%
73.2%
71.8%
70.6%
70%
69.2%
68.8%
67.0%
65%
65.1%
62.9%
62.2%
60%
58.7%
56.7%
55%
Dec. 2003
Local calls
Dec. 2004
Long-distance calls
Dec. 2005
Calls to mobile
International calls
The figure for the local calls market is an average of countries that represent more than 91%
of the EU population for all the period considered; data for long distance calls represent
between 95% and 96% of the EU population for the period considered; data for calls to
mobile represent around 97% for the period 2004-2005 and 95% in 2003; data for
international calls represent between 97% and 98% of the EU population for the period
considered.
1.2.2.
Incumbent's overall market share in each Member State
The following chart shows the incumbents’ market share in the overall fixed market by retail
revenues and by minutes of outgoing traffic. All types of calls are included: local calls (local
phone calls and local calls to internet), long distance, international calls and calls to mobile
networks. Market share based on retail revenues does not include any access revenue.
Figure 8
EN
13
EN
77.4%
78.2%
PT
96.0%
85.0%
75.9%
79.8%
75.0%
44.0%
51.9%
52.7%
65.0%
PL
54.6%
58.0%
LT
99.0%
99.0%
LV
89.3%
90.6%
95.3%
CY
79.0%
91.1%
95.1%
FR
67.4%
66.1%
ES
71.0%
74.0%
70.5%
65.3%
64.1%
74.2%
50%
55.0%
60%
66.3%
64.1%
70%
74.0%
82.3%
80%
70.0%
69.6%
90%
91.2%
96.4%
100%
97.3%
99.2%
Incumbents' market share in the fixed telephony market (all types of calls)
(Dec. 2005)
40%
30%
20%
10%
0%
BE
CZ
DK
DE
EL
IE
IT
By retail revenue
LU
HU MT
NL
AT
SI
SK
FI
UK
Denmark, Spain, Greece (international calls based on volume of traffic), Cyprus, Austria
(international calls), United Kingdom: Market definitions include traffic/revenues generated
from calling cards.
Belgium, Ireland, Italy: Data are not comparable with previous reports due to a change in the
national data collection.
Estonia, Sweden: Data are confidential.
Denmark: Incumbent's market share by minutes of traffic in the first half-year 2006 is
64.13%.
Germany: Figures are NRA's estimates.
Hungary: Figures are NRA's estimates and refer to 5 fixed local incumbent operators.
The Netherlands: Figures are very rough NRA's estimates (extrapolation from 2004 data).
Portugal: Retail revenues do not include dial-up internet revenues.
United Kingdom: Data as of 31 March 2006.
1.2.3.
Incumbent's market share in the different segments of the national market
The following two charts show the incumbents’ market share in the local, long-distance and
international calls market by retail revenues and by minutes of outgoing traffic. The local calls
market includes both local phone calls and local calls to internet.
Figure 9
EN
14
EN
30%
50.3%
45.0%
46.8%
58.9%
59.9%
52.1%
52.7%
88.0%
82.6%
99.7%
99.7%
69.7%
70.8%
75.0%
75.0%
77.7%
79.8%
85.0%
99.0%
99.0%
98.0%
92.0%
89.9%
87.4%
87.8%
75.7%
71.3%
72.2%
83.0%
80.0%
78.5%
75.0%
68.2%
67.1%
63.0%
62.0%
56.0%
57.0%
39.0%
40%
62.1%
76.5%
63.0%
65.4%
58.0%
50%
68.3%
68.3%
70%
60%
78.4%
73.1%
73.6%
80%
86.0%
90%
97.0%
96.9%
97.9%
100%
99.0%
100.0%
Incumbents' market share in the local, long distance and international market
(by retail revenues-Dec. 2005)
20%
10%
0%
BE
CZ
DE
EL
ES
FR
IE
IT
Local calls (all)
CY
LV
LT
HU
Long-distance calls
MT
NL
AT
PL
PT
SI
SK
UK
International calls
Data for local call include local phone calls and calls to the internet.
Belgium, Malta, Luxembourg, The Netherlands, Slovenia: There is no distinction between
local and long-distance calls: figures refer to national calls to fixed numbers.
Denmark, Estonia, Cyprus (national calls), Luxembourg, Sweden, Finland: Data are
confidential or not available.
Spain, Cyprus, Austria (international calls), United Kingdom: Market definitions include
traffic/revenues generated from calling cards.
France: There is no distinction between local and long-distance calls (calls are only national).
The split between different calls is based on NRA's estimates.
Austria: Data for long distance calls are not strictly comparable with other countries because
it includes also local phone calls. Data from previous reports on local and long distance calls
are not comparable due to the change in the national data collection.
Portugal: Data for long distance calls are not strictly comparable with other countries because
it includes also all local calls.
United Kingdom: Data as of 31 March 2006. Data for local calls to internet include some
voice traffic.
EN
15
EN
Figure 10
31.9%
38.0%
33.0%
50.7%
37.4%
35.0%
56.3%
47.7%
95.0%
100.0%
88.0%
85.0%
99.7%
99.7%
79.6%
63.1%
74.4%
73.0%
82.6%
73.6%
99.0%
65,0%
98.0%
65.0%
65.0%
77.9%
77.9%
72.1%
98.5%
86.9%
53.9%
67.9%
68.2%
60.6%
61.3%
56.0%
45.0%
71.0%
54.2%
61.7%
69.6%
65.4%
68.5%
50.5%
52.0%
47.7%
20%
31.0%
30%
40.0%
40%
42.7%
50%
50.2%
66.8%
66.8%
60%
70.2%
70%
41.9%
76.2%
80%
82.0%
85.2%
90%
98.0%
96.6%
97.51%
97.5%
92.47%
100%
92.0%
88.8%
83.3%
Incumbents' market share in the local, long distance and international market
(by volume of traffic-Dec. 2005)
10%
0%
BE
CZ
DK
DE
EL
ES
FR
IE
IT
Local calls (all)
CY
LV
LT
LU
HU
Long distance calls
MT
NL
AT
PL
PT
SI
SK
FI
UK
International calls
Belgium, Cyprus, Malta, Luxembourg, The Netherlands, Slovenia: There is no distinction
between local and long-distance calls: figures refer to national calls to fixed numbers.
Estonia, Sweden: Data are confidential.
Denmark: Data for local and long-distance calls are not available.
France: There is no distinction between local and long-distance calls (calls are only national).
The split between different calls are based on NRA's estimates.
Austria: Data for long distance calls are not strictly comparable with other countries because
it includes also local phone calls. Data from previous reports on local and long distance calls
are not comparable due to a change in the national data collection.
Portugal: Data for long distance are not strictly comparable with other countries because it
includes also local phone calls. International calls market share as of September 2006 is
76.8%.
Finland: Figures are NRA's estimates.
voice traffic.
EN
16
EN
Figure 11
Incumbents' market share in the calls to mobile market
(Dec. 2005)
89.0%
52%
72%
40%
44.4%
51.6%
49%
65.0%
65%
76.2%
73%
HU
68.3%
69%
LU
99.1%
99%
100.0%
100%
LV
81%
FR
65.4%
66%
ES
70.0%
68%
62.0%
68%
50%
65.6%
64%
57.0%
51%
69.9%
70%
73.0%
69%
60%
68.0%
65%
70%
83.7%
83%
CY
80%
91.7%
85%
94%
90%
94.5%
90%
100%
30%
20%
10%
0%
BE
CZ
DE
EL
IE
IT
LT
By retail revenues
MT
NL
AT
PL
PT
SI
SK
UK
Denmark, Estonia, Sweden: Data are confidential or not available.
Hungary: Figures refer to 5 fixed local incumbent operators. Figures are NRA estimates.
Finland: The market for fixed-to-mobile is based on carrier pre-selection.
United Kingdom: Data as of 31 March 2006.
1.2.4.
Incumbents' market share in the local calls market
The following charts show the incumbents’ market share in the local calls market by retail
revenues and by minutes of outgoing traffic. Where possible, separate figures for local phone
calls and local calls to internet are provided.
Figure 12
EN
17
EN
Incumbents' market share in the local market
(by retail revenues- Dec. 2005)
100%
90%
80%
70%
91.0%
100.0%
99.0%
SI
SK
64.8%
66.0%
57.5%
59.9%
100.0%
99.6%
99.7%
100.0%
99.0%
99.0%
90.1%
84.3%
85.0%
99.0%
87.3%
92.0%
MT
92.5%
100.0%
96.8%
97.0%
98.2%
96.9%
HU
78.4%
71.3%
83.0%
81.1%
80.0%
62.6%
87.6%
76.5%
78.5%
69.0%
56.0%
LT
38.0%
30%
82.8%
73.7%
76.5%
40%
71.8%
67.3%
68.3%
50%
75.2%
78.4%
97.4%
60%
20%
10%
0%
BE
CZ
DE
EL
ES
FR
IE
IT
Local calls to Internet
LV
Local phone calls
NL
AT
PL
UK
Local calls (all)
Local calls to internet include calls to both geographic and non-geographic numbers.
Except to Ireland and Lithuania, local calls to internet exclude flat tariffs.
Belgium, Malta, Luxembourg, The Netherlands, Slovenia: There is no distinction between
local and long-distance calls: figures refer to national calls to fixed numbers.
Spain, United Kingdom: Market definitions include traffic/revenues generated from calling
cards.
Denmark, Estonia, Cyprus, Luxemburg, Portugal, Finland, Sweden: Data are confidential or
not available.
France: The split between different types of calls are based on NRA's estimates. Data on local
calls to the Internet refer to "pay as you go" calls billed to the subscriber by the operator. They
do not include "internet access package" fees.
Italy: No separate figures are available for local calls to internet and local phone calls.
Austria: No figure available for local phone calls.
voice traffic.
Figure 13
EN
18
EN
55.0%
51.4%
56.3%
71.3%
85.0%
76.0%
95.0%
99.7%
99.1%
100.0%
96.3%
80.8%
100.0%
99.0%
99.0%
MT
72.6%
99.0%
87.3%
92.0%
77.9%
98.5%
100.0%
98.2%
98.0%
98.3%
96.2%
99.0%
95.3%
97.5%
HU
26.0%
30%
70.6%
ES
40.0%
40%
49.8%
50%
73.3%
71.0%
73.7%
67.1%
69.6%
85.2%
74.1%
76.2%
EL
58.0%
60%
73.8%
70%
70.0%
66.2%
66.8%
80%
79.3%
90%
63.6%
71.3%
68.2%
99.3%
100%
90.0%
73.0%
82.0%
Incumbents' market share in the local market
(by volume of traffic- Dec. 2005)
20%
10%
0%
BE
CZ
DE
FR
IE
IT
CY
LV
Local calls to Internet
LT
LU
Local phone calls
NL
AT
PL
PT
SI
SK
FI
UK
Local calls (all)
Local calls to internet include call to both geographic and non-geographic numbers.
Except to Ireland and Lithuania, local calls to internet exclude flat tariffs.
Belgium, Cyprus, Malta, Luxembourg, The Netherlands, Slovenia: There is no distinction
between local and long-distance calls: figures refer to national calls to fixed numbers.
Denmark, Estonia, Sweden: Data are confidential or not available.
Belgium Ireland, Italy: Data are not comparable with previous reports due to a change in the
France: The split between different calls is based on NRA's estimates.
Austria: No separate figures available for local phone calls.
Portugal: Data for local phone calls are not available. Local calls to internet market share as of
September 2006 is 92.4%.
Finland: Data are NRA's estimates.
voice traffic.
EN
19
EN
2.
CONSUMERS’ CHOICE OF FIXED OPERATORS
This section analyses the fixed voice telephony market from the point of view of consumers.
It gives information on the percentage of subscribers using an alternative provider other than
the incumbent (for phone services and direct access) and the facilities used by alternative
operators for the provision of voice telephony.
The data presented below have been provided by the national regulatory authorities and,
unless otherwise indicated, report the position as of July 2006. Figures for countries not
included in the charts are not available and are not always comparable with those published in
previous reports due to changes in the methodologies and/or in the classifications used by the
Member States. Furthermore, separate data for type of calls are not available in a number of
Member States. Information on consumers’ use of alternative providers is unavailable in a
number of new Member States. For these reasons the figures presented in this section should
be considered as indicative .
2.1.
Percentage of subscribers actually using an alternative provider other than the
incumbent
Incumbents’ customers have the possibility of using an alternative provider, either by dialling
a call-by-call prefix (carrier selection, CS) or by choosing to route all calls by default to the
network of an alternative operator (carrier pre-selection, CPS). The use of an alternative
operator through carrier selection/carrier pre-selection does not exclude the possibility of also
using the incumbent’s services. Direct access is also available to users through alternative
operators’ proprietary wireline/wireless access or through unbundled local loops leased from
the incumbent.The following chart shows the percentage of EU subscribers (residential and
business) using an alternative provider for local, long distance and international calls and for
direct access.3
3
EN
The methodology for the calculation of the percentage of subscribers (residential + business) actually
using a provider other than the incumbent operator for local calls is the following:
[X = sum of all alternative operators' subscribers (residential + business) with CPS contract + sum of all
alternative operators' subscribers (residential + business) with direct access for voice telephony (ULL
and proprietary infrastructure)]/[total number of residential + business subscribers of the incumbent and
new entrants, with a standard/party/group telephone lines access. Direct telephone line access provided
by an alternative operator can either be through proprietary infrastructure or full ULL (active lines)].
The same calculation applied for long distance and international calls, with the addition to [50% of all
alternative operators' subscribers (residential and business) with CS contract] to the nominator (top
number). It should be noted that in many Member States calls are only national and the methodology
for long distance is the same as for local calls.
The percentage of subscribers actually using a provider other than the incumbent for direct access is
calculated as the total number of subscribers with direct access, fully ULL connection or with a cable
access owned by an alternative operator.
20
EN
As of July 2006, more than 32% of EU subscribers used an alternative provider to route
international calls, 28% for long distance calls and 24% for local calls. At the same time,
direct access from alternative providers was used by 10.4% of EU subscribers. Since last year,
the percentage of subscribers using an alternative provider has significantly grown for
international calls and direct access. The trend of the EU average should be considered as
indicative, since not all data are available for all Member States
Figure 14
EU subscribers using an alternative provider
35%
32.2%
30%
25%
27.5%
27.3%
27.7%
27.4%
26.0%
23.6%
22.4%
20%
15%
18.0%
10%
10.4%
5%
7.9%
6.1%
0%
July 2004
Local calls
Sept. 2005
International calls
Direct access
July 2006
Long-distance calls
Data are not comparable with previous implementation reports due to different figures
reported by NRAs.
The trend is indicative since not all data are available for all countries. Data for local calls
refer to 78% of EU population in 2004, 92% in 2005 and 94% in 2006. Similarly, data on
long-distance and international calls in 2004 refer, respectively, to 75% and 78% of EU
population while in 2005 and 2006 both type of calls refers to 74% and 76%. Data on direct
access refer to 79% of EU population in 2004, 89% in 2005 and 91% in 2006.
The following charts illustrate the percentage of subscribers using an alternative provider for
voice telephony services through carrier selection and/or carrier pre-selection and/or direct
access. Where available, separate figures for local and long-distance/international calls are
given.
Figures for some countries are not comparable with 11th Implementation Report due to a
change in the national data collection or to different data provided by NRAs.
EN
21
EN
Figure 15
Subscribers using an alternative provider
for voice telephony services, July 2006
58%
60%
50%
45%
39%
40%
36%
36%
35%
32.5%
31%
30%
25%
25%
24%
24%
21%
22%
23%
23%
20%
32%
14%
13%
BE
DK
DE
EE
EL
ES
Local calls
FR
IE
IT
CY
LT
LU
HU
Long distance
MT
AT
PL
PT
SI
1%
SK
5%
1.2%
4%
30.8%
1%
5%
7.7%
4%
7%
25.8%
19.4%
0%
21.4%
21%
16.2%
10%
FI
SE
UK
International calls
Belgium: Data are not comparable with previous report due to a change in the national data
collection.
Czech Republic, Latvia, Netherlands: No data available.
Denmark, Sweden, Belgium, Ireland, Cyprus, Austria, Poland, Slovakia, Sweden, United
Kingdom: Data provided by NRAs do not distinguish between different types of calls.
Estonia, Belgium, Cyprus, Luxemburg, Slovenia, Malta, Ireland: Calls are only national (there
is no distinction between local calls and long-distance calls).
Greece: Data refer to 31 December 2005.
Austria: Figure includes only share of carrier pre-selection; data refer to 31 December 2005.
Finland: Estimated value.
United Kingdom: The figures exclude indirect access.
Figure 16
EN
22
EN
Subscribers using an alternative provider for direct access, July 2006
30%
25.56%
25%
21.00%
20%
15.20%
15%
13.92%
9.20%
10.50%
10%
7.80% 9.00%
8.00% 7.60%
5.00%
5%
3.61%
3.30%
1.90% 2.00%
0.17%
0.09%
0%
BE DK DE EE
EL
ES FR
IT
CY
1.10%
0%
LT
Direct access
LU HU MT AT
PL
PT
SI
0%
0%
SK
FI
SE UK
EU average July 2006
Direct access is the total number of subscribers with direct access, fully LLU connection or
with a cable access owned by an alternative operator.
Czech Republic, Latvia, Netherlands, Ireland: No data available.
EN
23
EN
Greece: Data are not comparable with 11th Implementation Report.
Malta: No alternative operator.
Austria: Data refer to 31 December 2005.
United Kingdom: The figure excludes wholesale line rental.
2.2.
Facilities used by new entrants for the provision of voice telephony
This section provides information on the facilities used by new entrants to offer voice
telephony, particularly to residential users.
Data have been provided by the national regulatory authorities and refer to July 2006.
Alternative operators can route users to their network either through a carrier selection system
(CS), whereby a user dials a prefix on a call-by-call basis, or by carrier pre-selection (CPS),
where the user’s calls are routed to the new entrants’ network on an automatic basis. New
entrants can also provide voice services via direct access to users (through proprietary
wire/wireless access or through unbundled local loops leased from the incumbent).
These facilities are not mutually exclusive and very often the same operator uses all three at
the same time depending on the type of customers (business or residential), the type of
services (local or long-distance/international calls), the geographical area, the availability of
LLU, etc. The following figures should therefore be read separately and not aggregated as
country totals.
The following two charts show the number of operators using carrier selection and/or carrier
pre-selection by Member State for July 2006. Where possible, separate figures for types of
calls are given; in the other cases separate data were not available or operators do not
differentiate the data by type of calls. In a number of countries operators do not differentiate
between local and national calls. Figures for some countries are not comparable with 11th
Implementation Report due to a change in the national data collection or to different data
provided by NRAs.
The charts also present an estimate of the number of operators using carrier selection and/or
carrier pre-selection as a percentage of the number of active alternative operators (excluding
the incumbent). The figures do not show to what extent the operators are offering services to
residential and/or business users; nation-wide or only in local areas; in some cases it is not
possible to discern whether operators offer all types of calls or only long-distance and
international calls.
As of 1 July 2006, 46% of EU alternative operators offered the voice telephone service
through carrier pre-selection and 39% used carrier pre-selection.
EN
24
EN
Figure 17
Number of alternative operators using carrier selection (CS) as a % of active alternative
operators, July 2006
88%
83%
80%
67%
65%
63%
80
70%
71%
55%
60%
48%
60
38%
37%
27%
40
36%
50%
40%
33%
27%
30%
24%
20%
14%
8%
Alternative op. using CS
10%
38
6
6
5
1
10
101
PT
SI Int
SK
FI Loc
FI Int
UK
68
NL
AT
0
2%
5
7
LU
0%
HU
13
LT Int
2
5
CY Int
LT Loc
0
IE
4
15
FR
CY loc
25
ES
4
13
0%
EL
49
EE
DE Int
17
DK
18
20
CZ Int
DE Loc
13
5%
MT
20
0
90%
80%
100
BE
Number of alternative operators using CS
100%
100%
100%
87%
Alternative op. using CS as a % of active alt.
operators
120
0%
Alt. op. using CS as % of active alt. op.
Italy, Latvia, Poland, Sweden: Data not available.
Malta: No alternative operators.
Portugal: Data are not comparable with 11th Implementation Report. There are 9 alternative
operators in Portugal, of which 6 are providing CS and CPS to residential customers.
Slovenia: National carrier selection is available since October 2006.
Figure 18
Number of alternative operators using carrier pre-selection (CPS) as a % of active
alternative operators, July 2006
103%
100%
110%
100%
100%
88%
Number of alt. operators using CPS
87%
80
90%
80%
74%
64%
60
80%
67%
66%
70%
60%
60%
50%
42%
40
38%
36%
31%
40%
31%
21%
24%
24%
23%
22%
30%
17%
20
8%
7%
4
0
1
10
40
20
SI Int
SK
FI Loc
FI Int
SE
UK
1
6
SI Loc./L.D.
24
PL
PT
53
AT
0
MT
24
14
HU
NL
7
LU
1
3
LT Int
LT Loc
5
35
IT
CY Int
12
IE
4
27
FR
Alternative operators using CPS
CY Loc
24
55
DE Int
13
27
DE Loc
EL
19
DK
ES
20
EE
13
BE
CZ Int
1
10%
0% 2%
3%
0
20%
9%
0%
0%
Alt. op. using CPS as a % of alt. active operators
100
Alternative op. using CPS as % of alt. active operators
Greece, Austria: Data refer to 31 December 2005.
Latvia: Data not available.
Malta: No alternative operators.
Finland, Portugal: Data are not comparable with 11th Implementation Report.
United Kingdom: The decrease since a year ago has been the consequence of mergers
between operators.
EN
25
EN
3.
PUBLIC NETWORK INTERCONNECTION
3.1.
Call termination on incumbent's fixed network
This section analyses the interconnection charges for call termination on the incumbent’s
fixed network. The figures show the charges per minute based on the first three minutes of a
call at peak-time, VAT excluded.
The figures may have been approved by the NRA or simply agreed between operators, where
the legal framework does not require NRA approval.
The following chart shows the EU weighted average for the interconnection charges since
2004 for local level, single and double transit. The exchange rates for 2006 have been applied
to the years 2004-2005 for the non euro-zone countries. Since July 2004, the EU weighted
average charge for call termination on the incumbent fixed networks has decreased by 6.5 %
for local level, by 8,5% for single transit and by 10% for double transit. Among this
generalised downward trend, the major changes since last year have occurred in Malta (-32%)
for all levels, in Poland (-25%), Hungary (-26%) and Slovakia (-24%) for single transit, and in
Hungary (-26%), Slovakia (-24.3%), and Poland (-24%) for double transit call termination.
Interconnection charges, for most of the new Member States, are still higher than those for
EU15.
EN
26
EN
Figure 19
Fixed-to-fixed interconnection charges
EU25 weighted average (euro-cents)
2.0
1.61
1.5
1.39
1.01
1.0
1.25
0.86
0.94
0.66
0.61
0.5
0.57
0.0
July 2004
October 2005
Local level
October 2006
Single transit
Double transit
Figure 20
Interconnection charges for call termination on incumbents' fixed network (peak time)
Local level - EU average: 0,57 €-cents
3.0
2.5
2.0
1.5
1.0
October 2005
October 2006
LU
CZ
SK
FI
MT
2.60
AT
1.89
1.18
EE
1.49
1.06
SI
0.89
NL
0.82
ES
0.82
BE HU SE
0.75
0.65
0.65
0.64
PT
0.71
PL
0.67
IE
0.66
EL
0.63
FR
0.59
DE
0.58
0.53
IT
0.52
UK CY DK
0.46
0.40
0.31
0.0
0.24
0.5
LT
EU average Oct. 2006
Spain: Half of total interconnection traffic is carried out via capacity based interconnection for
which the price is significantly lower
France, Belgium, Spain: Price does not take account of IC linking fee
Latvia: Interconnection at local level not offered.
Hungary: Prices refer to the main incumbent operator Matav
Malta: Only one level of interconnection exists.
Luxemburg: Local level coincides with single transit.
Finland: Value refers to an average among 43 SMP operators. Charges vary between
1,261€cents/min - 1.999€cents/min.
EN
27
EN
Figure 21
Single transit - EU average: 0,86 €-cents
4.0
3.5
3.0
2.5
2.0
1.5
1.0
UK SE CY DK
IT
HU EL DE
IE
LU BE NL PL
October 2005
PT ES FR
October 2006
SI
EE LV AT CZ
FI
3.50
1.89
1.53
1.49
1.34
1.28
1.15
1.05
1.04
1.00
1.00
0.93
0.91
0.90
0.90
0.89
0.89
0.88
0.86
0.83
0.83
0.62
0.50
0.40
0.0
0.34
0.5
SK MT LT
France, Belgium, Spain: Price does not take account of an annual linking fee.
Lithuania: The national IC includes single and double transit.
Hungary: Prices refer to the main incumbent operator Matav.
Malta: Only one level of interconnection exists.
Finland: Value refers to an average among 43 SMP operators. Charges vary between
1,261€cents/min - 1.999€cents/min.
Luxemburg: Local level coincides with single transit.
Figure 22
Double transit - EU average: 1,25 €-cents
4.0
3.5
3.0
2.5
2.0
1.5
1.0
Oct. 05
BE
LU
IE
FR
Oct. 06
PL
DE
IT
ES
PT
CZ
SI
SK
AT
3.50
MT
2.25
1.67
1.59
1.44
1.39
1.36
1.36
1.33
1.25
1.18
1.17
1.15
LV
2.07
EL
1.12
HU
1.10
DK
1.89
SE
0.95
CY
0.88
UK
0.72
0.69
0.0
0.65
0.5
LT
EU average Oct 2006
Czech Republic: Price in place till 2 May 2006. Price are currently not regulated.
Estonia, Finland: Data are not available
EN
28
EN
France, Belgium, Spain: Price does not take account of annual linking fee.
Lithuania, Luxemburg: Double transit does not exist. There is a national IC including single
and double transit.
Hungary: Prices refer to the main incumbent operator Matav
The Netherlands: Data are not available, price not regulate
EN
29
EN
3.2.
Call termination on alternative operators' fixed networks
Figure 23
EN
30
EN
I.C. charges for call termination on main alternative operators fixed networks (peak) in €cents,October 2006
SE-all alt. op. (all levels)
0.67
1.12
SE-TDC Song (all levels)
8.60
SK all op. D
5.94
SK all op. S
3.60
SK all op. L
2.62
PT D (Novis)
PT D (Oni)
1.18
PT Max S (Novis)
1.5
PT Min S (Oni)
0.87
PT L (ONI)
0.94
1.33
PL-Telefonia D.- D
PL-Telefonia D.- S
PL-Telefonia D.- L
0.91
0.63
AT all op. S
1.28
NL all op. S
1.17
NL all op.L
0.92
3.5
LT average all op D,S
2.6
LT average all op. L
1.54
IT all op. S
1.04
IE-L max (Verison)
IE- L min (Magnet)
0.3
1.53
DE all op. D
DE all op. S
DE all op. L
FR all op. L
1.05
0.69
1.11
1.39
ES all op. D
ES all op. S
1
ES all op. L
0.67
EL-S max (Teldome)
EL- S min (Tellas )
CZ all op. D
CZ all op. L
BE- Verizon D
BE- Verizon S
2.05
1.16
1.34
1.06
1.65
1.24
6.45
BE- Telenet D
6.23
BE- Telenet, Versatel S
0
5
10
15
20
25
30
Legend:
L: Local level; S: Single transit; D: Double transit
Max./Min.= Maximum/Minimum
EN
31
EN
Alt. Op.= Alternative operators
Cyprus, Luxemburg, Hungary, Slovenia, Finland, United Kingdom: Data are not available.
Estonia, Denmark: Data are confidential.
France: Price does not take account of annual linking fee. Data refer to IC charges for
geographic number.
Malta: No alternative fixed operators.
Germany: For 32 alternative network operators a uniform tariff for termination services has
been imposed on the basis of a dispute settlement.
3.3.
Call termination on mobile networks
This section presents the per-minute interconnection charges for fixed call termination on the
networks of mobile operators based on the first three minutes of a call at peak rate. Where
available charges for call termination on the networks of 3G operators and service providers
(MVNO and resellers) have been included. Charges are for calls originated in the same
countries
In the following charts information is shown for 88 mobile operators in the EU (representing
almost 100% of the EU mobile market).
Following the analysis of the market for mobile call termination, mobile network operators
have been notified as having Significant Market power (SMP) on their mobile network. For
this reason the split between SMP and non SMP operators used in the previous report is no
longer applicable. It should also be noted that not all SMP mobile operators have been
imposed remedies on termination charges.
Apart from Ireland, Slovenia and Finland, termination charges applied for both fixed and
mobile calls (no information are available for Germany). Where available, information on
mobile-to-mobile termination rate have been indicated in the notes.
Data have been collected by the NRAs, and refer to 1 October 2006.
3.3.1.
EU and national average
The following chart shows the trend in the (weighted) average fixed-to-mobile termination
charges for all mobile operators in the EU since July 2004.
The national averages for all mobile operators in each Member States are weighted average
charges based on the number of subscribers and the termination rate of each operator at 1
October 2006.
Where available, data for 3G operators and service providers have been taken into account.
The 2006 exchange rates have been applied to the non euro-zone countries for previous years.
The trend shows that termination charges have continued to decrease and at October 2006 the
EU average termination charge was 9% lower than one year before (-21.8% respect July
2004). The most significant reductions have occurred in France (-24%). Reduction around
20% have taken place in Denmark, Austria, Portugal and Sweden. In Germany, Greece,
Spain, Luxembourg, Hungary, The Netherlands, Slovenia and Sweden there have been
reductions from 11% to 17%. The average mobile termination charge has increased in the
United Kingdom (+9.2%).
EN
32
EN
Despite the continuing decline, termination charges remain on average more than 9 times
higher than the fixed interconnection charges (double transit). Differences between 10 and 14
times the double fixed interconnection charges are found in Belgium, Denmark, Greece,
Ireland, Luxembourg, Hungary, Poland, Slovenia, Sweden, United Kingdom.
EN
33
EN
Figure 24
EU average interconnection charges for call termination on mobile networks
17
15
14.58
13
12.53
11
11.40
`
9
7
5
July 2004
October 2005
October 2006
Figures are not comparable with previous reports, because of different data reported by NRAs
for 2005 and 2004
Figure 25
Interconnection charges for call termination on mobile networks (national average)
EU average Oct. 2006: 11,4 €-cents
20
18
16
12
18.91
8.39
9.16
8.72
6.93
7.38
7.96
11.00
11.43
10.77
13.82
16.00
16.49
16.49
12.68
10.10
13.44
11.37
12.43
11.48
15.00
12.97
2.22
2.25
2
12.73
10.55
8.91
9.09
4
10.43
10.43
12.57
12.17
13.46
13.53
12.90
9.81
13.48
11.95
14.86
12.42
13.63
11.38
14.19
11.36
6
10.99
10.57
8
16.40
16.40
10
15.45
15.53
14
0
October 2005
IE
IT
CY LV
October 2006
LT
LU HU MT NL AT
PL
PT
SI
SK
FI
SE UK
EU average (Oct. 06)
Figures might not be comparable with previous reports, because of different data reported by
NRAs for 2005 and 2004.
Where possible, 3G operators and MVNO/resellers have been taken into account. In Ireland,
The Netherlands, Finland, the figures for 2005 and 2006 do not refer to the same operators.
Belgium: New interconnection charges are applied from November 2006. The new national
average will be 11.78 €-cents.
EN
34
EN
Germany: New interconnection charges are applied from November 2006. The new national
Estonia: Charges for two operators may change depending on the volume of calls (below or
above 3 million minutes per month). In the chart the second option is presented
France: Mainland operators only. Overseas operators not included.
Poland: New interconnection charges are applied from 15 October 2006. The new national
Finland: Fixed to mobile charges only apply when the call is made through a prefix code or
carrier pre-selection. In other cases, local operators determine the local network charges and
mobile operators determine the mobile call charges.
EN
35
EN
3.3.2.
Mobile operators' termination charges
The following charts show the individual fixed-to-mobile interconnection charges for 88
mobile operators in the EU. Apart from Cyprus which represents an exception (2.15 € cents)
the lowest charge is found in Finland (6.8 € cents) whereas the highest charge is found in
Belgium at 20.27 € cents (almost three times that of the cheapest).
EN
36
EN
Figure 26
I.C. charges for call termination on mobile networks (peak) in €-cents, October 2006
2.2
CY-CYTA
3.1
CY- Areeba
FI-Sonera
6.8
SE-TeliaSonera, Tele2, Telenor
6.9
UK-O2;Vodafone
8.3
SE-Hi3G Access
8.3
AT-Mobilkom
8.3
FI-Elisa Oy (Radiolinja)
8.4
8.9
LV-LMT, Tele 2
UK-Orange;T-Mobile
9.3
FR-Orange, SFR
9.5
9.8
HU-Westel
10.0
FI-Finnet Verkot Oy
LT-Bite, Omnitel, Tele 2
10.4
CZ-Cesky Mobil, Eurotel Praha, T-Mobile
10.6
AT-T-Mobile; Tele.ring
10.7
HU-Pannon
10.7
SK-Orange, T-Mobile
10.8
MT-Vodafone
10.8
DE-Eplus, O2
11.0
NL-KPN Mobile, Vodafone
11.0
PT-TMN, Vodafone, Optimus
11.0
IT-TIM, Vodafone
11.2
FR-Bouygues Tlc
11.2
DK-TDC Mobile, Sonofon, TeliaSonera
11.3
AT-One
11.3
ES-Telefonica Mov. Esp.
11.5
EN
0
5
10
15
37
20
25
30
EN
I.C. charges for call termination on mobile networks (peak) in €-cents,October 2006
ES- Vodafone Esp
11.7
HU-Vodafone
11.8
EL-Cosmote, Vodafone
12.0
MT-Mobisle Comm.
12.2
NL - Tele2, Telfort, Orange, T-Mobile
12.4
DE-T-Mobil, Vodafone
12.4
EL- TIM Hellas
12.5
BE-Proximus
12.5
LU- EPT, Tele2
12.8
IT-Wind
12.9
IE-Vodafone, O2
12.9
FI-Alands Mobitelefon AB
13.0
ES-Retevision Movil
13.1
DK-H3G
13.8
LU-Voxmobil
14.0
14.9
SI-Mobitel
16.0
AT-Hutchison
16.0
EE-EMT, Elisa
UK-3UK
16.2
IE-Meteor
16.4
PL-Centertel, Polkomtel, Polska Telef., Cyfrowa
16.5
BE-Mobistar
16.6
EL-Q Telecom
17.0
EE-Tele2
17.3
17.8
IE-H3G
18.8
IT-H3G
19.4
SI-Si.mobil
20.3
BE-Base
EN
0
5
10
15
38
20
25
30
EN
Belgium: From 23 November 2006 mobile termination rate are the following: 9.67 €-cents for
Proximus, 13.6 €-cents for Mobistar and 13.37 €-cents for Base.
Czech Republic: The prices are valid since 2 May 2006.
Germany: Data refer to fixed-to-mobile. No information available concerning mobile tomobile. From 23 November 2006 mobile termination rate are the following: 8.78 €-cents for
T-Mobile and Vodafone, 9.94 €-cents for E-plus and O2.
Estonia: Data refer to fixed-to-mobile. Termination charge from mobile network to EMTS is
12.9€cents/min for Elisa (no information available for EMT and Tele2). Charges in the chart
for Elisa and EMT refer to call volume over 3 million minutes per month. Charges for smaller
volumes are higher: 17.58 €-cents/min for EMT and 10.11 €-cents/min for Elisa.
Spain: Prices in the chart are valid from 16 October 2006 to March 2007.
Ireland: Data refer to fixed-to-mobile. Termination charges from mobile network are the
following: 13.4 €-cents for O2; 13.33 €-cents for Vodafone; 16.36 €-cents for Meteor; 17.78
€-cents for H3G.
Poland: Prices valid up to 15 October 2006. Mobile termination rate after 15 October 2006
will be 1.17 €-cents for all operators.
Slovenia: Data refer to fixed-to-mobile. Termination charges from mobile network are the
following: 0.1 €-cents for Si.mobil and 0.07 €-cents for Mobiltel.
Finland: Fixed to mobile charges only apply when the call is made through a prefix code or
carrier pre-selection.
3.4.
Leased lines interconnection charges
This section shows the monthly rental and the one-off charges for short-distance leased lines
(local ends, excluding VAT), up to 2 and 5 km, provided by the incumbent operator to other
interconnected operators.
The distance refers to the radial distance between the customer local end leased line and the
point of interconnection.
It should be noted that in some cases data include the handover costs, while in other cases
these costs are excluded.
National Regulatory Authorities have provided these figures through the questionnaire for the
12th Implementation Report. Unless otherwise indicated; figures indicate the position in
October 2006.
Compared to last year, the prices for monthly rentals (all capacities) have decreased in several
countries (France, Spain), whereas the highest price is in Slovenia (231€ for 64kbit/5km
distance: 3828 € for 34Mbit/5km) and the cheapest price can be found in Greece, Portugal and
UK (between 34 and 37 € for 64 Kbit capacity). One-off charges for leased lines have
remained stable in 6 countries (Belgium, Germany, France, Ireland, Austria and Portugal); in
Greece, the increase in price compared to last year was spectacular (close to 200% for 64Kbit
and more than 100% for 2Mbit lines) whereas in Denmark, the price drop was above 90% for
the 2Mbit/sec circuit compared to last year. The cheapest monthly fee is to be found in Cyprus
(between 32 and 77 € for 2 Mbit).
The highest one-off fee price is in Latvia for 2 Mbit (3261 €) while the lowest price in this
capacity can be found in Lithuania: 291 € compared to 1196 € last year.
EN
39
EN
Looking at higher speed leased lines (34Mbit/sec), one-off fee is significantly high in
Denmark.
3.4.1.
64 Kbit/sec part circuit
Figure 27
Monthly rental for leased line 64 Kbit/s part circuit, October 2006
EU weighted average 2 Km: 116 €
EU weighted average 5 Km: 124 €
250
231
225
200
164
171
143
132
122
125
100
88
BE
DE
EE
34
67
63
62
74
72
80
76
49
EL
ES
FR
IE
IT
LT
LU
2 km
36
40
34
25
69
93
73
45
42
50
36
67
75
65
100
NL
AT
PL
PT
SI
FI
SE
37
150
99
€-month
175
UK
5 km
Czech Republic, Latvia, Malta: Service not offered.
Germany: Price authorized as of 1 November 2006. Prices are lower with long-term contracts.
France: Data refer to local leased lines.
Cyprus, Hungary, Slovakia: Data are not available.
Lithuania: End circuit not offered, price refers to wholesale leased lines.
Luxemburg: Minimum price for 5km circuits (62 € to 80 €).
The Netherlands: For 64kbit there is no local service offer. Only a regional service offer is
available.
Austria: Hand-over for STM1 (Synchronous Transfer Mode–1) is not included (624.75 €).
Finland: Prices are the average of three local incumbent operators.
Figure 28
One-off charge for leased line 64 Kbit/s part circuit, October 2006
2 000
1 800
1 600
1 400
1 205
1 200
DE
EL
ES
FR
IE
IT
741
660
LV
LT
LU
NL
AT
PL
450
DK
350
BE
324
255
200
232
371
604
497
544
735
620
400
425
939
800
600
1 020
€ 1 000
PT
FI
UK
Czech Republic, Malta: Service not offered.
EN
40
EN
Denmark: Price shown is for a 2km trunk segment. The one-off price for 5km trunk segment
is 1274 €.
Germany: Price authorised as of 1 November 2006.
Estonia, Cyprus, Sweden, Slovenia, Slovakia: Data not available.
Lithuania: End circuit not offered, price refers to wholesale leased lines.
Austria: Price for a one-year contract. Otherwise price is 700 €.
3.4.2.
2 Mbit/s part circuit
Figure 29
Monthly rental for leased line 2 Mbit/s part circuit, October 2006
EU weighted average 2 Km: 334€, 5 Km: 367€
900
815
800
700
BE
CZ
DK
32
77
99
114
84
215
205
230
145
249
278
253
203
186
217
239
89
100
290
350
350
337
160
167
244
223
145
151
200
267
300
353
410
400
430
473
522
566
566
500
490
€-month
600
DE
EE
EL
ES
FR
IE
IT
CY
2 km
LT
LU
NL
AT
PL
PT
SI
FI
SE
UK
5 km
Germany: Price authorized as of 1 November 2006.
Latvia, Malta: Service not offered.
Lithuania: End circuit service not offered, price refers to wholesale trunk segment.
Hungary, Slovakia: Data are not available.
The Netherlands: For 2Mbit/s there is no km-dependent charge. The service is offered at a
standard charge from the end-user location to the local exchange office.
Figure 30
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41
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One-off charge for leased line 2 Mbit/s part circuit, October 2006
3 261
3 500
2 854
3 000
2 107
2 514
2 500
2 000
€
BE
CZ
DK
DE
EL
ES
FR
IE
IT
LV
750
688
750
398
290
373
500
738
809
825
636
928
1 000
1 105
1 107
1 487
1 500
LT
LU
NL
AT
PL
PT
FI
UK
Estonia, Cyprus, Hungary, Slovenia, Sweden: Data are not available.
Latvia, Malta: Service not offered.
Lithuania: End circuit service is not offered, price refers to wholesale trunk segment.
Austria: One-off price is 750 € for a one-year contract; otherwise 1500 €.
3.4.3.
34 Mbit/s part circuit
Figure 31
Monthly rental for leased line 34 Mbit/s part circuit, October 2006
EU weighted average 2 Km: 1481 €, 5 Km: 1671 €
3828
4 000
2 927
BE
DK
DE
1731
1 537
1444
1 256
EL
ES
FR
IE
IT
CY
LT
LU
AT
PL
PT
SI
FI
SE
691
519
659
620
596
721
329
292
EE
2 km
EN
2 021
793
481
500
688
677
959
743
924
827
1 000
1143
1 800
1 424
1 500
1915
1 957
1796
2 000
2047
2600
2 500
2204
€-month
3 000
3125
3 500
UK
5 km
42
EN
France: Price is for high populated area. Otherwise is 771,2 €.
Latvia, Czech Republic, Malta: Service not offered.
Hungary, Slovakia: Data not available.
The Netherlands: Price is unknown, not regulated.
Figure 32
One-off charge for leased line 34 Mbit/s part circuit, October 2006
23 871
30 000
25 000
20 000
€
15 000
LT
LU
AT
PL
PT
FI
2 441
IT
1 897
3 000
IE
1 000
FR
688
ES
750
EL
724
DE
1 281
DK
1 406
BE
1 582
2 479
5 000
2 500
5 000
6 032
10 000
UK
Estonia, Cyprus, Hungary, Sweden, The Netherlands, Slovenia, Slovakia: Data are not
available.
Latvia, Czech Republic, Malta: Service not offered.
Austria: One-off price is 750 € for a one-year contract; otherwise 1500 €.
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4.
MOBILE MARKET
This section provides information on the number of mobile subscribers and the penetration
rate for mobile telephony services. It also shows the number of both mobile network operators
and mobile service providers as well as the market share of the main players in each Member
State.
4.1.
Mobile penetration
This section provides information on the number of mobile subscribers and the penetration
rate for mobile telephony services in each Member State. The growth in the penetration rate
since 2004 is also shown.
Where available, data have been provided by the National Regulatory Authorities (NRAs).
Where data were either not available or confidential, figures are estimates from the “European
Mobile Communications” database.
The EU average is a weighted average.
It should be noted that operators and regulators use different methods to count the number of
subscribers. Some regulators distinguish between the overall number of mobile subscribers
and the number of active subscribers. The table indicates where this information is available.
Some operators consider the total number of users that have made or received a call or sent an
SMS in the last 9 or 6 months, whereas others only consider the active users of the last 3
months. This has an impact on the penetration rate, especially in small countries
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The chart below displays the number of mobile subscribers in the EU between 2004 and 2006.
In October 2006 there were around 479 million mobile subscribers, with an increased of more
than 42 million since October 2005 (+9.5%). Penetration rate is above 103% of EU
population (+8.2 percentage points since last year).
Figure 33
Mobile subscribers penetration in EU (2G and 3G)
600
120%
103.2%
500
100%
95.0%
200
40%
EU penetration rate
60%
478.39
300
436.68
80%
386.61
Million of subscribers
84.6%
400
20%
100
0
0%
Oct. 2004
Oct. 2005
EU subscribers
Oct. 2006
EU penetration rate
Source: Commission services based on NRA data and EMC
Where available, data include 2G and 3G mobile network operators' subscribers as well as
mobile service providers' subscribers. Data are not comparable with previous reports (updated
figures for previous years have been provided by some NRAs).
The following chart shows the absolute number of mobile subscribers in each Member States
(columns) and the penetration rate (dots), measured as the number of subscribers per 100
inhabitants. Where available figures include 2G and 3G subscribers for both mobile network
operators and mobile service providers.
Penetration rate is above 100% in 17 Member States; Italy (134%), United Kingdom (109%)
and Lithuania (133%) have the highest values (apart from Luxembourg where the value
(171%) is significantly lower if trans-national commuters are added to the national
population).
Figure 34
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45
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Mobile subscribers and penetration rate, October 2006
171%
90
180%
83.1
160%
80
113%
104%
101%
114%
110%
100%
104%
95%
82%
92%
104% 102%
91%
90%
80%
12.1
11.1
5.6
9.6
4.5
1.5
0.9
2.8
34.8
17.2
20
9.6
120%
100%
86%
65.4
30
109%
78.2
83%
40
10
113%
105% 108%
49.8
50
140%
123%
119%
60
44.6
million of subscribers
70
133%
40%
11.9
9.2
8.9
4.6
0.8
60%
penetration rate
134%
0.3
1.8
4.6
5.5
20%
0%
BE CZ DK DE EE EL ES FR IE
IT CY LV LT LU HU MT NL AT PL PT
Mobile subscribers
SI SK FI
SE UK
Penetration rate
Where available, data include 2G and 3G mobile network operators' subscribers as well as
mobile service providers' subscribers. Data are not comparable with previous reports (updated
figures for previous years have been provided by some NRAs).
Belgium: Data refer to January 2006.
Germany: Data as of 1 July 2006.
Ireland: Figures for one operator are taken by Mobile Communications Europe and refer to
June 2006.
France: Figures refer to national market (mainland France and overseas departments).
Penetration rate for mainland France is 79.3%.
Luxembourg: Data refer to 1 July 2006. Penetration rate is significantly lower if trans-national
commuters are added to the national population.
Netherland: Figures are NRA's estimates.
Slovakia: Data for some competitors refer to June 2006.
United Kingdom: Service providers are excluded, data refer to 1 January 2006.
The following chart displays for each Member State the growth of the mobile penetration rate
between October 2005 and October 2006, unless otherwise indicated. Penetration rate has
grown significantly in Poland (+20 percentage points (p.p.)), Italy and Lithuania (around +15
p.p.), Cyprus (+13.7 p.p.), Luxembourg, Estonia and Ireland (+11 p.p.).
Figure 35
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46
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Mobile penetration rate (and growth) 2005-2006
180%
160%
140%
120%
104.0%
109.0%
SK
99.6%
102.2%
80.6%
86.1%
SI
97.0%
104.1%
88.1%
90.2%
105.8%
113.3%
71.0%
91.1%
102.3%
107.9%
103.2%
105.3%
80.4%
83.0%
89.9%
95.1%
117.5%
132.9%
115.3%
123.3%
100.0%
113.6%
118.7%
133.8%
98.5%
110.0%
74.9%
82.3%
93.8%
103.6%
89.3%
99.8%
101.2%
112.5%
92.2%
100.7%
100.7%
104.0%
40%
90.1%
91.9%
60%
115.2%
118.6%
80%
159.4%
170.6%
100%
20%
0%
IE
IT
CY LV
FI
SE UK
Data are not always comparable with previous reports (data have been updated by NRAs).
Belgium: Data refer to July 2005 and January 2006.
France: Figures refer to national market (mainland France and overseas departments).
Ireland: Figures for one operator are taken by Mobile Communications Europe and refer to
June 2006.
Luxembourg: Data refer to 1 July 2006. Penetration rate is significantly lower if trans-national
commuters are added to the national population.
United Kingdom: Service providers are excluded; data for 2006 refer to 1 January.
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The following chart shows, for each Member State split between post-paid and pre-paid
subscribers. At EU level, almost 60% of subscribers use a pre-paid system. In four countries
pre-paid subscribers are more than 70% and in Italy and Malta they are more than 90%.
Figure 36
66%
0%
BE CZ DK DE EE
51%
41%
51%
66%
44%
57%
65%
52%
80%
93%
49%
49%
59%
34%
20%
34%
56%
43%
35%
34%
66%
45%
59%
76%
33%
47%
61%
7%
10%
18%
20%
39%
52%
40%
30%
55%
91%
50%
92%
60%
41%
24%
63%
53%
39%
82%
70%
61%
37%
63%
49%
37%
80%
63%
90%
48%
9%
100%
8%
Mobile subscribers: prepaid and monthly paid (October 2006)
EU average: prepaid: 59,8% - monthly paid: 39,8%
EL
ES
FR
IE
IT
CY LV
Prepaid
LT
LU HU MT NL AT
PL
PT
SI
SK
FI
SE UK
Monthly paid
Luxembourg, Malta, Austria: Data are confidential or not available from NRAs. For these
countries, the figures in the chart are estimates from Mobile Communications Europe and
refer to June 2006.
France: Figures refer to mainland France (overseas departments are excluded).
Ireland: Figures for one operator have been taken by Mobile Communications Europe and
refer to June 2006.
The Netherlands: Figures are NRA's estimates.
4.2.
Players in the mobile market
This section shows the number of mobile licences granted in each Member State for the
provision of mobile services (2G/3G mobile network operators and mobile service providers).
License for analogue mobile service are not phased out in Sweden (phasing out: 31-12-2007)
and in Poland (phasing out: 17-12-2016).
Data have been provided by the national regulatory authorities and refer to the situation in
July 2006.
The following chart shows the number of mobile network operators licensed to provide digital
mobile services (second-generation). The number of operators indicates the real magnitude of
the choice of operators for customers of digital mobile services, since very often operators
have licences for both GSM 900 and DCS 1800. Mobile network operators have been
identified as having only GSM 900 or only DCS 1800 frequencies, or both (in which case
they have usually been granted a GSM 900 licence which has subsequently been extended to
the DCS 1800 band).
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48
EN
EN
49
EN
Figure 37
2.G Mobile Network Operators, July 2006
5
4
2
3
3
3
4
4
2
3
3
3
3
3
3
3
3
3
3
3
3
2
1
3
2
3
3
4
3
2
2
1
1
0
BE CZ DK DE EE
EL
ES
FR
IE
IT
CY
LV
LT
Operators with DCS or GSM licence only
LU HU MT NL
AT
PL
PT
SI
SK
FI
SE UK
Operators with GSM and DCS licences
France: Mobile national operators for mainland France only. Overseas departments are
excluded.
Information on mobile service providers has been included where available (without
distinction between local and national coverage). Mobile service providers are defined as
mobile virtual network operators or enhanced service providers or simple resellers.
Whereas the number of 2.G operators (79) has remained virtually unchanged, mobile service
providers are increasingly entering the market and as of July 2006 they were 290, 76 more
than one year ago.
It can be noted, however, that many of those are currently inactive.
Figure 38
Mobile service providers
(July 2006)
80
70
60
50
40
70
60
30
20
30
10
20
22
8
11
DE
EE
12
0
BE
DK
ES
FR
7
LV
14
2
LT
LU
NL
4
2
10
AT
SI
FI
15
SE
UK
Belgium: Resellers of MVNO's are excluded.
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Germany: Data refer only to main service providers.
Estonia: 7 active resellers.
Spain: No active service providers at July 2006.
France: Service providers for mainland France only. Overseas departments are excluded.
Lithuania: 8 out of 14 service providers are active. Four of them provide services through
their own brand and four are simple resellers.
The Netherlands: About 50 service providers are providing commercial services.
Slovenia: One service provider is not active.
Portugal: The figure refers to simple resellers (one reseller is not active).
United Kingdom: Data on service providers is an estimate.
The following two figures indicate the number of UMTS licences granted in each Member
State and the status of the launch of 3G services: trial (tests with a closed group of selected
users) or commercial (fully commercial services open to any users at standard tariffs).
Figure 39
UMTS licences, July 2006
6
5
1
1
4
1
1
1
1
1
1
3
1
4
2
3
3
3
1
3
3
3
3
3
2
1
3
3
1
4
3
2
3
4
3
3
4
3
2
2
2
SI
SK
2
0
BE
CZ DK DE
EE
EL
ES
FR
IE
IT
CY
LV
LT
LU HU MT NL
Operators with UMTS and GSM/DCS licences
AT
PL
PT
FI
SE UK
Operators with UMTS licence only
Slovenia: Figure includes 2 UMTS licences granted in September 2006.
Finland: Figure includes 1 local UMTS licence.
Figure 40
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51
EN
UMTS operators offering commercial services, July 2006
7
6
5
4
3
3
2
2
4
4
3
3
3
2
1
1
3
4
1
3
2
3
3
3
2
1
1
5
4
3
2
2
1
1
1
0
BE
CZ DK DE
EE
EL
ES
FR
IE
IT
CY
LV
Trial
LT
LU HU MT NL
AT
PL
PT
SI
SK
FI
SE UK
Commercial
Denmark: Figure includes one operator that launched the service on 27th September 2006.
Finland: Figure includes 1 local UMTS licence.
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4.3.
Mobile operators’ market shares
The following charts present the market shares, based on subscribers, of the leading operator,
the main competitor and the other competitors in the mobile market. Operators’ market shares
have been calculated for the overall mobile market (including DCS 1800/GSM 900 and
UMTS subscribers).
Data concerning market shares are based on the data supplied by the NRAs except for Czech
Republic, Estonia, Greece, France, Luxembourg, Hungary and Sweden where they are
confidential. Data for these countries are estimates from European Mobile Communications
and refer to June 2006.
In Cyprus one operator largely dominates the market with a share of more than 90%. In
Slovenia the leading operator retains more than 70% of the market and in Slovakia it controls
56%. In 12 Member States the leading operators have between 40% and 50%. The lowest
market share of the leading operator is in the United Kingdom, with 26%. EU average has
been weighted using mobile subscribers for each country. At EU level, the market share of the
leading operator and the main competitors has slightly decreased to the benefit of the small
competitors, in particular mobile service providers.
Figure 41
EU average mobile operators' market share
45%
40.0%
39.8%
40%
39.4%
35%
32.1%
32.0%
31.2%
30%
28.6%
27.5%
28.2%
25%
2004
2005
Leading op.
EN
Main competitor
53
2006
Others competitors
EN
Figure 42
24.03%
16.97%
50.72%
32.74%
38.35%
23.41%
43.23%
FI
SE
25.87%
44.68%
56.12%
71.18%
46.06%
34.23%
39.21%
48.16%
LT
52.14%
LV
45.30%
36.08%
IE
35.23%
46.88%
FR
43.88%
22.53%
6.29%
14.35%
39.59%
33.76%
35.14%
22.61%
32.02%
25.65%
47.86%
29.23%
21.42%
34.56%
33.22%
33.28%
37.82%
26.95%
90.37%
45.88%
ES
40.61%
46.31%
40.61%
46.14%
36.94%
31.47%
41.11%
20%
45.22%
30%
51.22%
40%
29.35%
9.63%
27.23%
32.17%
35.56%
36.64%
29.78%
19.89%
50%
30.64%
34.53%
35.62%
39.84%
33.95%
70%
60%
17.56%
17.48%
23.91%
28.75%
19.34%
48.63%
80%
27.44%
19.05%
90%
20.83%
100%
15.56%
Mobile market share based on subscribers, October 2006
10%
0%
BE
CZ
DK
DE
EE
EL
IT
Leading operator
CY
LU
Main competitor
HU
MT
NL
AT
PL
PT
SI
SK
UK
Others competitors
Data for Czech Republic, Estonia, Greece, France, Luxembourg, Hungary, Sweden are
confidential. Data for these countries are estimates from European Mobile Communications
and refer to June 2006.
Germany: Data as of 1 July 2006.
Ireland: Figures for one operator (included in "other competitors") are taken by Mobile
Communications Europe and refer to June 2006.
Luxembourg: Data refer to 1 July 2006.
United Kingdom: Service providers are excluded, data refer to 1 January 2006.
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54
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4.4.
Mobile Tariffs
1. The analysis of national (as opposed to roaming) mobile services is based on the OECD
baskets for digital mobile services. Due to significant changes in usage patterns, the OECD
baskets have been redefined with effect from August 2002. These baskets contain an SMS
element, they include calls to several mobile networks, and they do not cover international
calls.
There are 3 different baskets, based on low, medium and high usage levels. All packages
analysed in this study are Post-Paid packages. Some of the main properties of the "2002
OECD" baskets are:
Low usage basket with:
25 outgoing calls per month + 30 SMS messages
42% of calls are to fixed line phones, 58% to mobile phones,
Medium usage basket with:
36% of calls are to fixed line phones, 64% to mobile phones,
High usage basket with:
40% of calls are to fixed line phones, 60% to mobile phones.
Each basket also has a unique definition of time of day distribution and call duration, and
includes the monthly rental, and any registration charges distributed over 3 years.
The two most prominent operators in each country are covered, based on available subscriber
numbers. All relevant packages from each operator are considered, but the final results
presented here only show the cheapest package for each basket.
The asterisk (*) behind the package name means that the package name and its structure have
changed between 2005 and 2006. The package chosen at any time is the cheapest package
from that provider for the usage profile in question. This may give rise to significant price
changes over time.
The balance of fixed and usage in the mobile baskets varies considerably between countries,
as the preferred packages in some countries contain a lot of calling time included in the fixed
charge.
A full description of the methodology can be found at the end of this report.
2. In order to show a price trend, the "2002 OECD" baskets have been used. Mobile services
from 2002 till 2006 are used. The graphs will show the average price development for the EU
countries, using a simple average across all member countries per year. The averages cover
the cheapest package from the same mobile operators.
From 2004 the EU10 countries are also included.
3. OECD baskets have undergone another revision that resulted in a new set of baskets at the
beginning of 2006. Similar to the PSTN baskets the mobile baskets were also updated with
EN
55
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current traffic weights and volumes. The changes are significant enough to prohibit the use of
the new baskets with old data.
The results for 2006 with using the new baskets are presented below. The principles of the
new baskets are the same as before, with 3 baskets for low, medium and high usage. The main
differences between the old "2002 OECD" and the new "2006 OECD" baskets are:
Low usage basket with:
22% of calls are to fixed line phones, 70% to mobile phones, 8% to voicemail,
Medium usage basket with:
High usage basket with:
and:
-Inclusion of MMS in the basket,
-Both MMS and SMS are separated for peak and off-peak times, and on-net and off-net
destinations,
-Voicemail is included in the baskets,
-Off-net calls can be directed to several networks,
-The methodology for calculating the effects of allowances has been improved.
-The names of the tariff packages used in the basket analysis is found in the table below.
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56
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4.4.1.
Old OECD basket
Figure 43
Low usage basket
29.66
29.66
UK, T-Mobile, Flext 20 *
UK, O2, Anytime £20 + 50% extra minutes for life *
Ireland, Vodafone, Perfect Fit 30
Malta, Vodafone Malta, Lite *
Greece, Vodafone, Vodafone 10 *
Italy, Vodafone, Vodafone Easy
Malta, Go, Go Together *
Ireland, O2, Active Life 40 *
Portugal, Vodafone, Plano Best
France, Orange, Forfait M6 19.90€ *
Greece, Cosmote, Basic SMS 30 *
Italy, TIM, TIM Unica 10 *
Netherlands, KPN, Mobiel WebBundel Small *
France, SFR, Le Compte 18€ *
Germany, Vodafone, SMS-Generation *
Austria, T-Mobile, Relax 50 *
Netherlands, Vodafone, Vodafone 12.50
Germany, T-Mobile, Relax 50 Relax SMS 40 *
Spain, Vodafone, Contrato Vitamina Mensajes Al 50% *
Hungary, T-Mobile, Relax 100 *
Spain, MoviStar, Contrato Empresas Tramos Horarios *
Poland, Era, Classic 70
Belgium, Mobistar, BestDeal *
Portugal, TMN, Plano Pos Pago
Belgium, Proximus, Smile Anytime All Netw orks €5 Messaging Pack €3 *
Austria, Mobilkom, A1 Xcite Easy *
Sw eden, Teliamobile, Telia Mobil kväll & helg *
Czech, T-Mobile, T 30
Latvia, LMT, Call me *
Czech, O2, Start *
Slovenia, Si.mobil Vodafone, Orto Smart *
Slovenia, Mobitel, Uniform *
Hungary, Pannon, Pannon 50 *
Slovakia, T-Mobile, 20+20Viac *
Slovakia, Orange, Pausal 199 Sk *
Luxembourg, LuxGSM, LIGHT *
Poland, Orange, Tw ój Plan 10 *
Estonia, Tele2 Estonia, Senior *
Cyprus, CYTA, Lite *
Estonia, Eesti Mobiltelefon, Profipluss *
Finland, Sonera, Netto
Sw eden, Tele 2 Comviq, Comviq.net *
Finland, Elisa, Oiva *
Luxembourg, Tango, Knock-out
Lithuania, Omnitel, Mano
Denmark, Sonofon, Debillos
Denmark, TDC Mobil, Mixit Regning
Lithuania, Tele2, Studentas *
Latvia, Tele2 Latvia, Brivais *
0.0
25.39
21.62
20.90
20.46
20.39
20.00
20.00
19.90
19.38
19.01
18.50
18.00
17.86
17.11
16.78
15.69
15.52
14.88
14.13
14.03
13.79
12.34
12.28
2006
2005
12.27
12.25
11.81
11.56
11.51
11.25
10.06
10.02
9.54
8.91
8.60
8.48
8.24
7.88
7.61
7.52
7.49
7.37
7.20
6.95
6.93
6.73
5.79
4.73
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
Entries with an asterisk (*) after the name have changed the package name and structure since
last year.
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57
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Figure 44
Medium usage basket
50.99
50.66
Germany, Vodafone, Wochenend 100 SMS 40 *
Italy, TIM, TIM Unica 10 *
Malta, Vodafone Malta, Active *
Ireland, Vodafone, Perfect Fit 100 Talk 300 Add On *
Italy, Vodafone, Valore *
France, Orange, Forfait M6 28.90€ *
Belgium, Proximus, Freestyle Classic €25 *
Spain, MoviStar, Contrato Empresas Tramos Horarios *
Belgium, Mobistar, BestDeal Mobistar Home *
Austria, T-Mobile, Relax 200 *
Czech, O2, Silver *
Spain, Vodafone, Contrato Autonomos 10
Ireland, O2, Active Life 150 *
France, SFR, Le Compte 35€ *
Portugal, Vodafone, Plano Best Aditivo SMS 30 *
Portugal, TMN, Plano Pos Pago Pakot 60 SMS *
Greece, Cosmote, Cosmote 120 SMS 30 *
Czech, T-Mobile, T 160 *
Netherlands, KPN, Mobiel WebBundel Medium *
Slovakia, T-Mobile, 100Viac
Poland, Orange, Firma 100 *
Netherlands, Vodafone, Vodafone 27.50 *
Slovenia, Si.mobil Vodafone, Orto Smart *
Luxembourg, LuxGSM, LIGHT *
Sw eden, Teliamobile, Telia Mobil till vänner *
Estonia, Eesti Mobiltelefon, Profipluss *
Slovakia, Orange, Pausal 50 + SMS *
Estonia, Tele2 Estonia, Extra 200 *
Poland, Era, Komfort Komfort 120
Lithuania, Omnitel, Kalbek *
Latvia, LMT, Formula 8 *
Sw eden, Tele 2 Comviq, Comviq Knock-Out
Denmark, Sonofon, Kvantum 99
0.0
45.43
44.25
43.55
43.01
40.44
38.22
37.38
37.08
36.26
36.11
36.03
36.00
35.80
35.00
35.00
34.69
32.25
32.00
31.66
31.14
29.94
29.66
28.50
28.25
27.78
27.50
26.39
25.92
23.45
22.65
22.63
22.47
22.08
21.46
20.84
20.80
20.08
19.08
17.87
17.44
17.31
16.67
16.52
16.16
12.57
12.41
11.98
10.0
20.0
30.0
40.0
50.0
2006
2005
60.0
70.0
last year.
EN
58
EN
Figure 45
High usage basket
97.03
Germany, Vodafone, Wochenend 200 SMS 40 *
Malta, Vodafone Malta, Extra *
Spain, MoviStar, Contrato Empresas 60 *
Italy, Vodafone, Vodafone Five Personal *
Ireland, Vodafone, Perfect Fit 200 Talk 300 Add On *
France, Orange, Forfait Classique 6h *
Czech, O2, Gold *
Ireland, O2, Active Life 250 Evening & Weekend *
Greece, Cosmote, Cosmote 240
Italy, TIM, Tutto Relax *
France, SFR, Essentiel 4H +50% en plus *
Poland, Orange, Firma 200 *
Netherlands, Vodafone, Vodafone 50.00 *
Portugal, TMN, Plano Extra Pos Pago *
Portugal, Vodafone, Plano Best500 *
Slovakia, Orange, Pausal 90 + SMS *
Belgium, Mobistar, BestDeal Mobistar Home *
Czech, T-Mobile, T 300 *
Denmark, TDC Mobil, Mixit Regning *
Belgium, Proximus, Smile Anytime All Netw orks €100 Mess. €3 *
Austria, T-Mobile, Relax 400
Estonia, Eesti Mobiltelefon, Company *
Luxembourg, LuxGSM, COOL *
Estonia, Tele2 Estonia, Extra 200 *
Netherlands, KPN, Mobiel WebBundel Large *
Slovenia, Si.mobil Vodafone, Smart III *
Lithuania, Omnitel, Kalbek *
Sw eden, Teliamobile, Telia Mobil till vänner *
Latvia, LMT, Formula 8 *
Sw eden, Tele 2 Comviq, Comviq Kompis *
0.0
79.56
79.42
72.67
71.07
69.51
69.27
68.99
61.41
59.19
57.50
55.60
55.16
55.07
53.00
52.52
52.46
50.49
50.00
49.50
49.50
49.08
48.36
48.10
46.90
46.59
44.80
44.51
44.50
44.50
42.59
42.44
40.55
40.51
40.24
39.77
39.68
38.61
36.58
36.22
33.70
33.61
30.53
30.40
30.25
26.67
24.99
24.32
24.19
20.0
40.0
60.0
2006
2005
80.0
100.0
120.0
last year
EN
59
EN
4.4.2.
Simple average across all mobile operators
Figure 46
Low usage basket
20
18
16
17.49
16.07
14
13.84
12
10
8
6
4
2
0
2004
2005
2006
EU25
Figure 47
Medium usage basket
40
35
36.64
32.84
30
29.01
25
20
15
10
5
0
2004
2005
2006
EU25
EN
60
EN
Figure 48
High usage basket
70
60
63.49
57.59
50
48.61
40
30
20
10
0
2004
2005
2006
EU25
EN
61
EN
4.4.3.
New 2006 OECD basket
Figure 49
Low usage basket
29.66
29.66
27.72
UK, T-Mobile, Flext 20
UK, O2, Anytime £20 + 50% extra minutes for life
Malta, Vodafone Malta, Lite
Italy, Vodafone, Vodafone Easy
Greece, Vodafone, Vodafone 10
Germany, Vodafone, SMS-Generation
Malta, Go, Go Together
Italy, TIM, TIM Menu Family + Tutti TIM Weekend Option
Ireland, O2, Active Life 40
Greece, Cosmote, Cosmote 60 SMS 30
Portugal, Vodafone, Plano Best
France, Orange, Forfait M6 19.90€
Netherlands, KPN, Mobiel WebBundel Small
France, SFR, Le Compte 18€
Spain, Vodafone, Contrato Vitamina Mensajes Al 50%
Spain, MoviStar, Contrato Empresas Tramos Horarios
Germany, T-Mobile, Relax 50 Relax SMS 40
Hungary, T-Mobile, Relax 100
Belgium, Mobistar, BestDeal
Sw eden, Teliamobile, Telia Mobil till vänner
Poland, Era, Classic 70
Belgium, Proximus, Smile Anytime All Netw orks €5 Messaging Pack €3
Austria, Mobilkom, A1 Xcite Easy
Portugal, TMN, Plano Pos Pago
Czech, O2, Start
Slovakia, T-Mobile, 20+20Viac
Latvia, LMT, Formula 8
Slovenia, Mobitel, Uniform
Hungary, Pannon, Pannon 50
Slovenia, Si.mobil Vodafone, Orto Smart
Slovakia, Orange, Pausal 299 Sk
Luxembourg, LuxGSM, LIGHT
Poland, Orange, Tw ój Plan 10
Estonia, Tele2 Estonia, Senior
Cyprus, CYTA, Lite
Estonia, Eesti Mobiltelefon, Profipluss
Finland, Elisa, Oiva
Lithuania, Omnitel, Mano
Lithuania, Tele2, Studentas
Latvia, Tele2 Latvia, Brivais
0.0
23.91
23.32
22.98
22.62
22.51
21.72
21.57
20.88
20.00
19.90
18.50
18.10
18.00
17.81
17.50
16.34
15.95
15.52
15.41
14.49
14.39
14.30
14.27
13.91
13.51
12.77
11.79
11.66
10.99
10.93
10.68
10.61
9.82
9.65
9.46
9.08
8.74
8.72
8.41
8.33
8.00
7.82
7.67
7.00
5.79
5.50
5.0
10.0
15.0
20.0
25.0
2006
30.0
35.0
EN
62
EN
Figure 50
Medium usage basket
46.21
42.75
42.72
41.82
40.29
38.78
37.08
35.17
33.45
33.26
31.88
31.72
31.44
31.03
30.90
30.78
2006
29.66
28.93
28.58
28.50
28.38
27.99
27.71
27.71
26.54
26.17
24.14
22.75
21.75
20.97
20.81
20.00
19.14
19.10
18.95
18.86
18.52
18.09
18.06
17.77
16.31
15.96
15.71
14.99
14.88
Germany, Vodafone, Vodafone 100 SMS 40
Malta, Vodafone Malta, Active
Italy, TIM, TIM Menu Family + Tutti TIM Weekend Option
Italy, Vodafone, Valore
Ireland, O2, Active Life 150
Spain, MoviStar, Contrato Empresas Tramos Horarios
Belgium, Proximus, Freestyle Classic €25
Belgium, Mobistar, BestDeal
France, Orange, Forfait M6 28.90€
France, SFR, Le Compte 25€
Greece, Vodafone, Vodafone 100 SMS 50
Czech, O2, Start
Netherlands, KPN, Mobiel WebBundel Medium
Portugal, Vodafone, Plano Best Aditivo SMS 30
Portugal, TMN, Plano Pos Pago Pakot 60 SMS
Slovakia, T-Mobile, 20+20Viac
Poland, Orange, Firma 100
Slovenia, Mobitel, Uniform
Slovakia, Orange, Pausal 50 + SMS
Slovenia, Si.mobil Vodafone, Orto Smart
Estonia, Tele2 Estonia, Extra 200
Cyprus, CYTA, Lite
Poland, Era, Classic 70 Bis
Finland, Sonera, Max
Finland, Elisa, Aito
Lithuania, Omnitel, Kalbek
0.0
11.87
11.47
9.36
8.50
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
50.0
EN
63
EN
Figure 51
High usage basket
79.40
75.29
70.81
66.93
65.94
63.87
63.33
Germany, Vodafone, Vodafone 200 SMS 40
Malta, Vodafone Malta, Extra
Italy, Vodafone, Valore
Spain, MoviStar, Contrato Empresas Tramos Horarios Modulo Numeros Movistar
Italy, TIM, Tutto Relax
France, Orange, Forfait Classique 4h
Belgium, Mobistar, Free
Czech, O2, Gold
Ireland, O2, Active Life 150 Evening & Weekend
Portugal, TMN, Plano Extra Pos Pago
Portugal, Vodafone, Plano Best500
Greece, Vodafone, Vodafone 200 SMS 50
Belgium, Proximus, Smile Anytime All Netw orks €100 Messaging Pack €3
France, SFR, Essentiel 3H +50% en plus
Poland, Orange, Firma 200
Slovenia, Mobitel, Pension Plus
Slovakia, Orange, Pausal 90 + SMS
Netherlands, KPN, Mobiel WebBundel Large
Slovenia, Si.mobil Vodafone, Smart III
Estonia, Tele2 Estonia, Extra 200
Cyprus, CYTA, Lite
Finland, Sonera, Max
Sw eden, Tele 2 Comviq, Comviq Kompis
Finland, Elisa, Aito
Lithuania, Omnitel, Kalbek
55.76
54.79
52.81
51.00
50.61
49.98
49.79
49.50
49.50
48.21
47.26
47.22
46.54
44.94
44.50
43.92
43.84
41.78
41.12
40.21
39.53
38.50
37.08
36.93
36.04
35.80
35.45
34.97
33.78
33.36
33.26
31.68
29.53
28.06
27.04
25.70
25.00
24.90
23.07
20.76
18.63
17.58
0.0
10.0
20.0
30.0
40.0
50.0
60.0
2006
70.0
80.0
90.0
EN
64
EN
5.
NUMBER PORTABILITY
5.1.
Fixed number portability
Fixed number portability enables fixed subscribers to retain their number when they move
from one operator to another.
Figures are not always strictly comparable between Member States, due to the fact that
repeated portings are included (i.e. the figures indicate the number of transactions) in
Belgium, Czech Republic, Denmark, Estonia, Ireland; Cyprus, Latvia, Lithuania, France,
Greece, Sweden, while they are excluded (i.e. the figures indicate the numbers currently
ported) in Spain, Italy, Luxembourg, Hungary, Austria, Portugal., Poland. (There is no
information available for Germany, The Netherlands, Malta, Slovenia, Slovakia and Finland).
Furthermore, portability of non-geographical numbers has been taken into account only in
some Member States.
Fixed number portability has continued to play an important role in encouraging competition.
As of October 2006, more than 15 million subscribers in 23 Member States have ported their
number since the introduction of this possibility (7 million from October 2005 and October
2006). Apart form the coutries that have introduced number portability only during 2006,
there has been significant growth in the amount of fixed numbers ported in France, The
Netherlands and Sweden.
Prices for fixed number portability refer to the amount charged by the incumbent to the
recipient operators for porting one telephone geographic number (excluding VAT). This price
may vary depending on a number of factors. In some countries the price for a non geographic number is different. Where available, information on price for non-geographic
numer portability is added in the footnote.
According to the data at our disposal for 23 Member States, the EU weighted average price
for a fixed number ported is 9.32 €. Prices in the Czech Republic, Ireland, Austria and Finland
are significantly higher than the EU average, while in 7 Member States (Belgium, Denmark,
Germany, Latvia, Hungary, Netherland and Slovenia) prices are below 10 €. The fixed
number portability is free of charge in Lithuania and less than 2 € in Estonia and the United
Kingdom. Since October 2005 a significant decrease in the price for number portability has
occurred in the Czech Republic (-63%), France (-33%), Hungary (-40%), Netherlands (-34%)
and Sweden (-29%). Over the same period the price has increased in Italy by 7%.
Figure 52
EN
65
EN
100
2 250
90
2 000
80
60
1 000
2500.0
2290.4
1 250
2702.5
1 500
1113.0
70
2422.2
1 750
50
40
30
CZ
August 2004
DK
EE
EL
FR
October 2005
IE
IT
CY
LV
LT
October 2006
66
LU
HU
NL
AT
5.7
103.8
3.7
4.4
6.0
10.0
63.1
ES
PT
SI
20
10
60.0
399.1
BE
60.9
43.7
250
158.9
500
EN
428.7
750
Price per number ported (€)
2 500
1828.5
110
926.9
Numbers ported (thousands)
Fixed ported numbers and price per number ported
2 750
0
FI
SE
Price per number ported (Oct. 06)
EN
The figures indicate the total fixed number ported up to each year.
Belgium: Figures refer to 1 January 2006. Price refers to simple installation.
Czech Republic: Fixed telephony ported numbers are represented. The price refers to one
single telephone number porting. Price for comprehensive order is 99.15 €.
Denmark: Figures refer to 30 June 2006.
Germany: Data for geographic numbers not available.
France: The price includes a fix cost of 8.72 € per request; price for more than one number is
then lower. Price for non-geographic numbers varies between 90 € and 320 €.
Ireland: Prices are for a single line. Price falls to 3,69 € per line for orders above 100 lines.
Cyprus: Non-geographic numbers are excluded.
Lithuania: Numbers are ported free of charge.
Malta, Slovakia: Fixed number portability not in place.
Netherland: Price varies between 2 € and 8 €.
Poland: Information not available.
Finland: The price is an average of 39 SMP operators, as prices vary from 10 € to 30 €.
Sweden: The price for ported non-geographic numbers is 14 €.
United Kingdom. Data are not available for numbers ported. Price for porting geographic
numbers varies between 0.74 € and 39.97 €.
5.2.
Mobile number portability
Mobile number portability enables mobile subscribers to retain their number when they move
from one operator to another.
The numbers ported are not always strictly comparable between Member States, because
repeated portings are included (i.e. the figures indicate the number of transactions) in
Belgium, Czech Republic, Denmark, Estonia, Ireland; Cyprus, Latvia, Lithuania, France,
Greece, Austria, Finland, Sweden, while they are excluded (i.e. the figures indicate the
numbers currently ported) in Spain, Italy, Luxembourg, Hungary, Portugal, Poland (there is
no information available for Malta, Germany, Netherlands, Slovenia, Slovakia and United
Kingdom).
The mobile ported numbers have increased significantly during the past period (almost +6.3
million) and as of October 2006 31.4 million subscribers in 24 Member States have ported
their number since the introduction of this possibility (data not available for United
Kingdom).
Apart from the countries that have introduced number portability only during 2006, there has
been significant growth in the amount of mobile numbers ported in France, Austria, Greece,
Ireland and Luxembourg. The highest percentage of mobile number ported over the total
mobile subscribers is found in Finland (over 64%) and Denmark (32%). Spain and Sweden
have over 20%, while Belgium, Ireland, Italy and Netherlands have ported between 10% and
16% of the existing mobile numbers. Most of the new Member States show a very low level
of numbers ported compared to the total of mobile subscribers due to the late introduction of
number portability. The percentage of mobile number ported is also quite low in Luxembourg
(3.4%) and in Germany, Greece, France, Portugal and Austria (not higher than 1.9%).
Prices for fixed number portability refer to the amount charged by the incumbent to the
recipient operators for porting one mobile number (excluding VAT).
EN
67
EN
According to the data at our disposal for 17 Member States, the EU weighted average price
for a mobile number ported is 12.3 €.
Prices in Germany, Ireland and Sweden are significantly higher than the EU average (more
than 20 €), while in Spain and Lithuania it is free of charge and costs less than 2 € in Sweden.
Since October 2005 a significant decrease in the price for a number ported has occurred in
Sweden and in the Netherlands.
EN
68
EN
Figure 53
9400000
Mobile ported numbers and price of mobile number portability, October 2006
20
7 000 000
6 000 000
15
3487000
5 000 000
August 2004
October 2005
2020044
10
1980
13703
106625
168702
18013
1800000
5500
129877
26083
107272
18983
4860
690000
837000
141154
93500
1 000 000
1014214
2 000 000
95071
3 000 000
1810000
4 000 000
1419757
Numbers ported
8 000 000
Price per number ported (€)
9 000 000
25
8021761
10 000 000
5
0
IT CY LV LT LU HU MT NL AT PL PT SI SK FI SE
October 2006
Price per number ported (Oct. 06)
Belgium, Czech Republic, Latvia, Hungary, Netherlands, Portugal, Slovakia: Missing data are
not available.
Belgium, Czech Republic: Price is currently subject of appeals or part of a dispute.
Spain, Lithuania: Numbers are ported free of charge.
Latvia: Number portability is available for post-paid contract only.
Malta: Price in the chart refers to post-paid contracts. Price for porting of a single mobile
prepaid number is 9,32 €.
Austria: Figure for price refers to the maximum value of 8,21 €.
Finland: Price vary from 5 € to 12 €.
United Kingdom: No information available.
Figure 54
EN
69
EN
% of mobile numbers ported over total mobile subscribers (Oct. 2006)
64.0%
70.0%
60.0%
50.0%
32.3%
40.0%
EN
DK
DE
EE
EL
ES
FR
IE
IT
70
LT
LU
NL
AT
0.04%
CZ
0.8%
BE
0.9%
MT
0.0%
0.1%
1.6%
HU
1.9%
10.5%
1.4%
LV
3.4%
CY
2.4%
0.7%
10.3%
0.6%
1.3%
0.8%
1.2%
10.0%
1.8%
6.2%
14.8%
20.0%
15.5%
21.1%
21.9%
30.0%
PL
PT
SI
SK
FI
SE
EN
6.
BROADBAND ACCESS AND PRICING
6.1.
Broadband access definitions
This section provides data on the number and type of broadband lines supplied by both
incumbent operators and new entrants in the EU. It also contains information on access lines
provided by means of alternative technologies such as wireless access (WLL), satellite and
cable modems.
Information has been provided by the national regulatory authorities through the ONP
COM02-18 questionnaire on data for local broadband access. Given the rapid developments
in this sector, it has been agreed with NRAs to update the ONP questionnaire on a regular
basis in January, July and October. Unless otherwise stated, the data below refer to the market
situation at 1 October 2006.
The definitions used in the charts and data below are as follows:
- Fully unbundled lines: Fully unbundled lines supplied to other operators, excluding
experimental lines. In the case of full unbundling, a copper pair is rented to a third party for
its exclusive use. As fully unbundled lines (ULL) supplied by the incumbent operator to the
new entrants could in principle be used for services other than broadband, the total number of
ULL for access to internet will be lower than the total number of ULL.
- Shared access lines supplied by the incumbent to new entrants: Shared access lines supplied
to other operators, excluding experimental lines. In the case of shared access, the incumbent
continues to provide telephony service, while the new entrant delivers high-speed data
services over that same local loop.
- Bitstream access: Supplied to new entrants. Bitstream access refers to the situation where the
incumbent installs a high-speed access link to the customer premises and then makes this
access link available to third parties, to enable them to provide high-speed services to
customers. Bitstream depends in part on the PSTN and may include other networks such as
the ATM network. Bitstream access is a wholesale product that consists of the provision of
transmission capacity in such a way as to allow new entrants to offer their own, value-added
services to their clients. The incumbent may also provide transmission services to its
competitor, to carry traffic to a 'higher' level in the network hierarchy where new entrants may
already have a broadband point of presence.
- Simple resale: In contrast to bitstream access, simple resale occurs where the new entrant
receives and sells on to end users - with no possibility of value added features to the DSL part
of the service - a product that is commercially similar to the DSL product provided by the
incumbent to its own retail customers, irrespective of the ISP service that may be packaged
with it. Resale offers are not a substitute for bitstream access because they do not allow new
entrants to differentiate their services from those of the incumbent (i.e. where the new entrant
simply resells the end-to-end service provided to him by the incumbent on a wholesale basis).
- Incumbent's DSL lines: Provided to end users by the incumbent, its subsidiaries or partners
(for example an associated company such as a joint venture providing ISP services),
EN
71
EN
- WLL: Internet broadband connections by means of wireless local loop (sometimes referred
to as fixed wireless access),
- Cable modem: Internet broadband connections by means of cable TV access,
- L.L.: Internet broadband connections by means of dedicated capacity (Leased Lines)
provided over metallic copper pairs, including tail ends or partial circuits. “Incumbent's leased
lines” includes only retail lines and excludes lines provided to other operators. “New entrants'
leased lines” includes all retail lines provided to end users, even if based on wholesale lines
supplied by the incumbent.
- Other categories: Internet broadband connections by means of 3G, satellite, fibre optic,
powerline communications, other.
- Retail access: Access provided to end users.
- Incumbents are defined as the organisations enjoying special and exclusive rights or de facto
monopoly for provision of voice telephony services before liberalisation, regardless of the
role played in the provision of access by means of technologies alternative to the PSTN.
- “New entrants” refers to alternative telecommunications operators, as well as internet
service providers (ISPs).
- Broadband capacity: Capacity equal to, or higher than, 144 Kbit/s.
6.2.
Wholesale access
This section shows the availability of wholesale access lines supplied by incumbent operators
to new entrants. Separate figures are provided for fully unbundled lines, shared access and
bitstream access.
Data from the New Member States are included when available. As can be seen from the table
at the end of this section, data are not always available, especially as regards wholesale lines.
The table below shows the number of agreements between operators for ULL, shared access,
bitstream and resale as at 1 October 2003, 2004, 2005 and 2006.
Table 1 Number of agreements for full ULL, shared access, bitstream access and resale, 20032006.
N. of agreements N. of agreements N. of agreements N. agreements on
on fully
on shared lines
on Bitstream
resale lines
unbundled lines
access
Oct. Oct. Oct. Oct. Oct. Oct. Oct. Oct. Oct. Oct. Oct. Oct. Oct. Oct. Oct. Oct.
03 04 05 06 03 04 05 06 03 04 05 06 03 04 05 06
B
8
8
8
9
8
8
8
9 10 11 11 13 22 25 27 18
E
C
n.
0
4
4
5
0
2
4
5
0
0
23
0 21 19
Z
a.
D
13 17 17 21
4 10
6
8
9 10 11 13
0
0 10 10
K
D
10
n.
81 86 99
7
9 16 17
0
0
3
5
0
8
24
E
1
a.
EN
72
EN
E
E
E
L
E
S
F
R
IE
IT
C
Y
L
V
L
T
L
U
H
U
M
T
N
L
A
T
P
L
P
T
SI
S
K
FI
S
E
U
K
EU
0
7
n.
a.
7
0
0
7
11
12
13
0
1
1
9
11
13
16
9
11
12
9
13
21
9
13
21
1
3
3
5
1
3
3
5
31
27
26
27
2
4
6
9
0
n.
a.
2
0
n.
a.
0
0
2
0
1
0
0
1
0
0
2
3
3
5
2
3
4
0
2
6
6
0
0
1
0
0
0
0
12
12
10
12
12
10
17
20
26
0
20
26
0
0
0
0
0
0
0
2
2
2
4
1
0
0
1
0
0
n.
a.
n.
a.
11
6
n.
a.
12
2
n.
a.
74
57
59
44
55
32
5
40
1
41
8
29
1
74
2
10
3
n.
a.
0
0
0
6
0
8
10
13
37
30
30
5
5
5
2
15
0
8
21
1
n.
a.
9
23
4
21
3
15
0
0
30
n.
a.
n.
a.
n.
a.
20
20
20
-
0
0
0
n.
a.
n.
a.
11
25
0
2
0
2
0
0
11
11
0
11
0
17
16
12
0
0
5
0
0
1
4
5
0
18
0
0
0
0
0
16
1
1
1
5
0
0
38
38
38
.
0
0
0
0
0
0
4
0
0
1
1
8
9
8
8
0
0
3
3
0
4
10
13
0
0
0
0
0
0
n.
a.
n.
a.
n.
a.
n.
a.
26
26
26
n.
a.
28
49
28
42
4
48
9
46
1
n.
a.
n.
a.
80
1
90
9
2
10
0
0
n.
a.
n.
a.
11
6
n.
a.
12
2
n.
a.
7
12
22
31
13
5
22
7
26
8
13
0
n.
a.
28
6
17
20
12
60
2
67
8
1
2
n.
a.
5
7
19
11
0
0
3
4
12
n.
a.
n.
a.
78
0
88
4
n.
a.
59
1
67
9
Figure 55 shows the distribution of wholesale access lines supplied by the incumbent
operators to new entrants. There has been a huge surge of 58.36% in wholesale unbundled
local loops (fully unbundled lines and shared access lines), from 8.77 million in October 2005
to more than 13.89 million, in October 2006, representing 7.53% of the PSTN lines in the
EU25. This increase comprises approximately 4.13 million fully unbundled lines and 0.98
million shared access lines. The number of shared access lines increased from 3 558 205 to 4
541 045 lines, while fully unbundled lines went up from 5 212 691 to a remarkable 9 348 125.
EN
73
EN
Resale grew by 6 175 487 lines, which represent 123.64% growth since October 2005, while
the number of wholesale bitstream access lines slightly declined.
Figure 55
TOTAL: 30 192 315
Availability of wholesale access in the EU
Incumbent's PSTN activated main lines (million): 184 450 569
9 348 125
11 170 380
12 000 000
10 000 000
5 212 691
8 000 000
5 132 765
4 541 045
4 994 893
3 558 205
6 000 000
5 153 440
3 094 945
4 000 000
1 534 956
2 814 201
2 000 000
1 843 121
2006
2005
1 776 931
Fully
Shared
Bitstream
unbundled
access lines
access
lines
2 635 742
916 987
272 803
2004
2003
Resale
Shared access lines
Bitstream access
Resale
Figure 56
EU wholesale fully unbundled lines by Member State
375 000
DE not to
scale
Value:
4 300 000
FR not to
scale
Value:
1 584 853
336 321
IT not to
scale
Value:
1 826 000
300 000
269 577
264 160
225 000
162 368
172 079
161 219
150 000
107 000
90 835
75 000
17 772
BE
CZ
18 825
4 214 7 752
7 192
DK
DE
EE
EL
933
ES
FR
IE
IT
October 2005
CY
279
LT
10 178
6 350 218
LU
HU
NL
AT
PT
SI
FI
SE
UK
October 2006
EN
74
EN
Figure 57
EU wholesale shared access broadband lines by Member State
600 000
FR not to
scale
Value:
1 928 280
500 000
UK not to
scale
Value:
677 160
532 400
438 484
400 000
376 000
342 000
300 000
200 000
84 901
100 000
76 428
43 000
17 715 8 641
BE
CZ
5 711
DK
DE
EL
1 066
ES
FR
IE
102
2
IT
CY
LU
2 554
HU
107
NL
October 2005
AT
6 491
3
PT
SI
FI
SE
UK
October 2006
Figure 58
EU wholesale bitstream access broadband lines by Member State
1 200 000
FR not to
scale
Value:
1 617 023
1 075 000
996 730
1 000 000
800 000
600 000
404 214
400 000
252 254
200 000
142 202
118 583
62 769
86 962
89 197
60 408
1 300
BE
CZ
DK
117 965
DE
EL
ES
FR
IE
October 2005
IT
885
2 388
LV
LT
HU
AT
PT
85 224
19 634
SI
FI
UK
October 2006
Spain: A sharp decline generally due to a change in the counting methodology.
6.3.
Retail broadband access
This section provides information on the deployment of broadband access lines by
incumbents (and their subsidiaries or partners) and by new entrants (alternative telecom
operators or Internet Service Providers) to end-users.
EN
75
EN
Internet broadband access can be provided by different means: DSL lines, wireless local loop
(WLL), cable TV access (cable modem), dedicated leased lines and other access (like
satellite, fibre optic, powerline communications, etc.).
New entrants’ DSL lines can be provided to end users by means of fully unbundled or shared
access lines, bitstream access or resale. In some Member States, new entrants have started
rolling out parallel DSL networks.
In all the charts below on fixed broadband retail lines the data refer to 1 October 2006. In
some cases only estimates are available.
The charts below only include fixed broadband lines.
Figure 59 shows the total number of broadband access lines for each Member State, provided
by both incumbents and new entrants, and including all types of fixed broadband connections.
Figure 59
October 04
14 000 000
12 324 391
11 920 638
16 000 000
13 485 800
EU broadband lines by Member State, October 20066 milion
4 867 522
8 000 000
BE (January), HU
DSL lines
2 295 675
2 220 850
1 727 211
1 367 587
FI
1 595 390
1 310 096
HU CZ AT
984 279
IE
867 282
LT EL
315 275
433 519
SI
369 653
MT CY LU LV EE SK
252 928
233 512
231 324
212 883
90 581
56 566
2 000 000
49 889
4 000 000
1 424 024
6 000 000
6 074 991
10 000 000
8 010 593
12 000 000
PT DK PL SE BE NL ES
IT
FR UK DE
Other technologies (cable, satellite, wireless local loop, PLC, FTTH)
Data for Austria as of July 2006. The estimate of the Austrian NRA for October 2006 is 1 357
405 lines.
According to Danish NRA 25.900 new entrants' cable and 37.747 new entrants' other (LAN)
lines, provided by non-profit user associations should be added, even though the associations
are themselves end-users.
EN
76
EN
The following chart presents the number of broadband lines per Member State in October
2005 and October 2006.
Figure 60
IE
IT
CY LV LT LU HU MT NL AT PL PT
October 2005
SI
SK
FI
2 220 850
1 367 587
233 512
252 928
1 424 024
49 889
867 282
90 581
315 275
212 883
56 566
433 519
369 653
231 324
1 595 390
2 000 000
984 279
4 000 000
2 295 675
6 000 000
1 727 211
8 000 000
4 867 522
6 074 991
10 000 000
1 310 096
12 000 000
8 010 593
14 000 000
11 920 638
13 485 800
16 000 000
12 324 391
Total fixed broadband retail lines
SE UK
October 2006
The following two charts show the breakdown of broadband lines according to the two main
types of technologies. Figure 61 shows the number of DSL lines. Amongst the technologies
other than DSL (Figure 62), cable modem is the most common technology. Other
technologies are still marginal, though some (fibre to the home and WLL) are quickly
developing.
Figure 61
EN
77
EN
EN
LV
LT
LU
HU MT NL
2 982 560
AT
781 408
PL
1 300 128
PT
892 747
SI
SK
FI
1 109 389
9 335 491
SE UK
1 451 000
Total DSL retail lines
CY
538 248
16 000 000
IT
7 673 068
14 000 000
318 750
IE
157 594
12 000 000
11 260 638
FR
29 553
October 2006
171 467
10 000 000
4 792 705
ES
82 083
8 000 000
EL
155 018
6 000 000
112 996
EE
366 350
October 2005
92 072
78
56 227
4 000 000
2 000 000
982 107
12 944 300
CZ DK DE
441 984
BE
1 430 898
EN
Figure 62
Total fixed broadband retail lines with technologies other than DSL
2 988 900
3 500 000
3 000 000
1 884 962
2 500 000
DK
DE
EL
ES
FR
IE
IT
CY
October 2005
LU
HU
MT
NL
AT
PL
PT
SK
258 198
769 850
SI
75 918
81 461
531 277
427 083
528 688
20 336
LT
329 034
LV
8 498
339
660 000
EE
160 257
CZ
120 811
BE
114 769
500 000
3 303
118 328
541 500
613 283
542 295
1 000 000
864 777
1 500 000
337 525
1 282 286
2 000 000
FI
SE
UK
October 2006
EN
79
EN
The following charts provide information on the national broadband markets according to the
technology used and the type of operator. Figure 63 shows that DSL is the predominant
technology in the EU. On average, 82% of the EU25 broadband lines use DSL technologies
and only in four countries DSL lines represent less than 50% of the overall market.
Figure 63
4%
1%
1%
96%
99%
99%
6%
94%
4%
9%
91%
33%
67%
18%
35%
65%
82%
37%
63%
19%
38%
62%
81%
38%
62%
21%
38%
62%
79%
39%
61%
24%
40%
60%
76%
41%
59%
25%
51%
49%
75%
51%
49%
26%
55%
45%
32%
57%
100%
43%
Total fixed broadband retail lines by technology, October 2006
90%
80%
70%
60%
50%
40%
30%
LV CZ EE LT MT AT NL DK HU BE PT SE SK
SI
IE
DSL
PL UK ES
FI EU25 LU FR
96%
0%
74%
10%
68%
20%
IT
DE EL CY
Other means
Red line represents the EU average.
With regard to the market share of fixed incumbent operators and new entrants, Figure 64
indicates that, on average, incumbent operators control 48% of broadband lines, which is 2
percentage points less than in October 2005.
Figure 64
31%
25%
2%
69%
75%
98%
34%
66%
31%
36%
64%
31%
38%
62%
32%
44%
51%
49%
LT HU EE
56%
52%
48%
IE
45%
52%
48%
46%
53%
47%
54%
55%
45%
49%
57%
43%
51%
60%
40%
51%
61%
39%
49%
63%
37%
51%
63%
37%
49%
75%
100%
25%
Fixed broadband retail lines market share by operator, October 2006
90%
80%
70%
60%
50%
40%
30%
20%
Incumbents
EN
ES DK EL SK
69%
SI
69%
UK MT CZ SE AT LV NL BE EU25 FR DE
68%
0%
55%
10%
IT
PL
FI
PT LU CY
New entrants
80
EN
However, differences in the incumbents' market share depending on whether DSL resale lines
are included or not are considerable.
Figure 65
Incumbent's Broadband market share excluding/including resale lines by alternative operators
October 2006
98.3%
100%
67.6%
68.5%
43.2%
36.9%
30%
57.6%
49.0%
50.7%
54.5%
44.8%
39.7%
40%
44.9%
49.0%
49.4%
51.4%
50%
59.2%
68.4%
67.5%
59.5%
60%
63.7%
63.5%
70.1%
70%
69.1%
80%
69.1%
85.7%
90%
20%
Incumbents no resale
49.0%
36.6%
68.5%
65.9%
SE
UK
CY
CZ
EE
HU
LV
LT
MT
PL
SK
54.6%
42.9%
FI
50.7%
PT
54.5%
AT
36.9%
NL
98.3%
LU
24.8%
IT
38.9%
IE
69.1%
FR
69.1%
ES
39.7%
48.2%
EL
44.9%
55.8%
DE
75.5%
63.7%
DK
67.5%
48.6%
BE
49.0%
62.3%
0%
47.2%
10%
SI
Incumbents + DSL resale
Data for Austria as of July 2006
EN
81
EN
Figure 66 presents the market share by operator in the DSL retail market. At EU25 level the
fixed incumbent operator provides 57% of DSL lines. In 9 Member States the incumbent
operator sells more than 80% of all DSL retail lines.
Figure 66
18%
9%
3%
2%
2%
2%
1%
91%
97%
98%
98%
98%
99%
24%
76%
82%
26%
74%
18%
27%
73%
82%
27%
73%
20%
29%
36%
64%
71%
38%
62%
29%
42%
58%
29%
43%
57%
30%
49%
51%
33%
50%
50%
34%
67%
33%
DSL retail lines market share, October 2006
100%
90%
80%
70%
60%
50%
40%
30%
20%
71%
71%
IE
AT
IT
ES
FI
Incumbents
DK HU NL PT BE
80%
70%
UK DE FR EU25 SE MT EL
67%
0%
66%
10%
SI
LU CZ PL EE SK CY LT LV
New entrants
The next series of charts provide further information on the trends observed in the three
segments analysed previously. As can be seen in figure 12, new entrants are steadily
increasing their presence in the overall broadband market, with an average 52% market share
against 50% a year ago. This trend is however not uniform, and in 12 countries, Denmark,
Estonia, Spain, France, Lithuania, Malta, the Netherlands, Austria, Poland, Finland, Sweden
and the United Kingdom the fixed incumbent operator has increased its market share.
Figure 67
EN
82
EN
Trends in the fixed broadband retail lines market share: New entrants
100%
90%
75%
80%
61%
60%
31%
25%
31%
31%
34%
45%
52%
55%
49%
51%
51%
52%
32%
30%
36%
38%
40%
44%
46%
50%
51%
53%
60%
57%
63%
63%
70%
20%
MT
NL
AT
PL
PT
October 2005
SI
SK
FI
50%
HU
75%
LU
64%
LT
33%
LV
18%
22%
CY
38%
37%
IT
61%
IE
57%
FR
73%
ES
47%
55%
EL
24%
48%
EE
58%
26%
DE
43%
47%
DK
0%
2%
35%
CZ
30%
40%
BE
41%
60%
0%
52%
10%
SE
UK EU25
October 2006
EN
83
EN
With regard to the trend in the number of DSL lines sold by incumbent operators in the same
period, there has been a reduction of 4 percentage points on average, from 61% in October
2005 to 57% in October 2006.
Figure 68
Trends in the DSL retail lines market share: Incumbents
98%
91%
71%
74%
57%
58%
62%
67%
73%
73%
70%
80%
82%
50%
50%
51%
60%
66%
71%
64%
70%
71%
76%
82%
80%
98%
98%
97%
90%
99%
100%
33%
40%
30%
IE
IT
CY LV
October 2005
SI
SK
FI
61%
34%
56%
68%
100%
96%
85%
92%
69%
72%
47%
74%
84%
98%
100%
73%
76%
48%
67%
74%
98%
67%
72%
88%
0%
78%
10%
97%
20%
SE UK EU25
October 2006
As it can be seen in Figure 69, the number of DSL lines has increased in the overall
broadband retail market, representing 82% of all broadband lines against 80% in October
2005. However, in a number of countries other technologies have increased at a higher rate.
Figure 69
76%
81%
65%
67%
63%
68%
75%
60%
61%
49%
40%
43%
45%
49%
50%
59%
62%
62%
60%
62%
70%
74%
79%
80%
82%
91%
96%
90%
94%
96%
99%
100%
99%
Trends in DSL retail lines as % of total broadband access lines
30%
20%
AT
PL
PT
SI
SK
FI
80%
NL
72%
MT
79%
HU
82%
LU
65%
LT
63%
LV
57%
CY
69%
IT
October 2005
56%
IE
60%
FR
58%
ES
65%
94%
EL
89%
77%
EE
43%
98%
DE
57%
48%
DK
96%
97%
CZ
94%
63%
BE
76%
44%
0%
62%
10%
SE
UK EU25
October 2006
EN
84
EN
The following chart shows the penetration rate for broadband lines measured as the total
number of broadband lines divided by the total population. The broadband penetration rate
varies significantly across Member States ranging from 3.3% in Greece to 29.8% in the
Netherlands.
Figure 70
EU Broadband penetration rate, 1 October 2006
October 06
MT
SI
IT
ES EU25 AT
DK
NL
26.0%
24.5%
21.8%
20.4%
19.0%
17.2%
16.4%
15.8%
PT
29.8%
IE
13.9%
CZ
13.6%
LV
13.5%
10.3%
LT
12.6%
9.6%
PL
9.3%
4.5%
SK
9.3%
4.3%
3.3%
5%
8.6%
7.4%
10%
12.3%
15%
15.7%
20%
19.7%
25%
29.4%
30%
0%
EL
CY
HU
DE
EE
FR
LU
UK
BE
SE
FI
Data for Austria as of July 2006. The estimate of the Austrian NRA for October 2006 is
16.4%.
are themselves end-users. This change would influence also the penetration rate.
EN
85
EN
Availability of wholesale access October 2006
Fully unbundled lines supplied by the
Shared access lines supplied by
incumbent to new entrants
the incumbent to new entrants
Wholesale DSL lines supplied
Bitstream access
Simple resale
Incumbent's
PSTN
No. of lines
No. of
Resale
No. of
activated
Unbundled Requested
N. of
Shared Requested
N. of
agreements No. of agreements
Country main lines
lines
lines
agreements lines
lines
agreements
lines
BE
17
49
4 147 659
17 772
464
9
87
9
252 254
13
18
715
657
CZ
2 902 064
7 192
5
8 641
5
62 769
23
DK
84
19
90 835
21
8
89 197
13
10
3 123 853
901
460
DE
43
2 900
38 300 000 4 300 000
101
17
1 300
5
24
000
000
EE
462 000
4 214
77
7
EL
5 401 989
7 752
639
13
5 711
251
6
118 583
15
ES
438
221
336 321
10 000
16
10 000
13
404 241
30
2
15 434 815
484
025
FR
1 928
383
32 359 000 1 584 853
280
1 617 023
950
IE
1 700 000
18 825
699
5
1 066
3
5
86 962
11
IT
342
21 278 077 1 826 000
44 800
27
000
8 300
9
1 075 000
250
CY
410 735
933
971
2
2
3
2
LV
600 000
2
2
885
11
LT
749 233
279
1
2 388
12
LU
224 620
6 350
230
5
102
5
9 227
7
HU
3 243 000
218
232
6
2 554
397
5
142 202
20
na
na
MT
11
202 331
284
11
EN
86
EN
NL
AT
PL
PT
SI
SK
FI
6 125 000
2 842 730
8 487 627
3 434 030
817 178
1 073 987
264 160
162 368
0
172 079
10 178
2 210 088
269 577
5 127 000
107 000
23 793 553
165 502
414
161 219
10
0
5 561
1 801
0
4
3
SE
n.a.
na
UK
EU15
EU10
9 325 111
55
62 393
265
532
400
107
0
3
6 491
76
428
376
000
677
160
4 523
357
17
688
4 541
045
0
1 124
10 confidential
117 965
0
0
1
60 408
3
19 634
5
4
8
13
0
0
6 935
3 883
4
12
85 224
n.a.
18 641
na
na
na
31
996 730
28
113
4 904 887
378
130
000
7 434
959
11 148
278
22
547
11 170
825
n.a
591
652
18 948 155
23 014
3 081
26
1 524
17
227 878
83
27
184 450
EU25
569 9 348 125
65 474
291
20 165
130
5 132 765
461
679
Spain: Please note that the counting methodology for bitstream and resale DSL has changed.
BROADBAND RETAIL LINES, OCTOBER 2006
October
New entrants' DSL lines on PSTN
Incumbents' access lines by other
New entrants' access lines by other means
2006
October 2006
means
Incum Ow Full
Shar Bitstr Res Total WL Cabl Lea 3 Fib Sate P Oth Tot WL Cabl Leas 3 Fib Satelli PL Other Tota
llite L er
te C
bent's n
ULL ed
eam
ale
L
e
sed Ger
al
L
e
ed
G er
DSL
net
acce acce
mod line
to
C
mod lines
to
lines wor
ss
ss
em
s
the
em
the
k
ho
ho
me
me
EN
87
EN
BE
CZ
DK
DE
EE
EL
ES
FR
IE
IT
CY
LV
EN
1083
397
3633
82
6997
94
6500
000
126
72
0
30
109
84
274
188
719
2
864
1
627
69
111
415
350
000
0
651
07
867
68
430
00
130
0
1091
53
2343
04
110 270
3
0
775
0
2
0
571
1
0
118
583
3387
955
467 336
9
321
158
485
3
188
25
438
484
192
828
0
106
6
945
325 963
5746
532
2118
97
5382
000
5529
4
9112
9
933
139
496
57
0
189
93
290
000
0
3475
01
0
7860
2
0
0
6444
300
221
025
1404
750
383
950
5514
106
1068
53
306
933
404
241
161
702
3
869
62
103
719
0
657
2291
068 0
0
0
0
933
119
675
0
943
0 0
0
306 210
250 000
563 293 169 201
6
502 55
965
30
00
510
00
0
10
0
2823 109 273 304
13
54 866 6
144
3843 7
0
1320
46
0
0
40
0
624 857
9
216
0
15
32
6
896
0
0
33
0
540
00
0 74
0 0
42
22
na
0
403
6
22
00
0
20
69
7
40
00
45
0
5422
95
98
758
83
3197
81
14
7
50
00
0
950
0
0
113
1
23
50
2
48
0
0
0
140
90
13
89
16
43
428
000
168 578 562
47
1
49
122
6
466 0
124
422 105 501
2
88
5
123
8647
77
118
9
660
000
624 468
343 62
61
4875
00
159
49
2077
369 164
5
4
0
407
273
249
88
22
1
265 119
0 194 02
8
20
22
295
0
983 320
249 1
04
1278
064
6600
00
1144
26
0
34
3
25
68
0
1014
81
460
9
51
03
22
21
96
83
00
0
40
181
22
66
77
2
44
0
3110
23
2
134 521
9
39
EN
44
1205
62
LT
LU
HU
MT
NL
AT
PL
PT
SI
SK
FI
SE
UK
EN
1526
30
6740
6
3932
74
1826
9
2186
000
5200
41
1177
224
6579
13
1377
01
1537
11
7881
66
0
0
534
8
218
264
160
143
301
122
904 0
164
936
101
0
78
0
0
159
571
0
238
8
102
255
4
0
142
202
532
400
101
0
3
663
6
0
764
28
8380
00
na
107
000
376
000
3060
475
654 161
23 219
677
160
0
922
7
na
112
84
confi
denti
al
117
965
0
698
95
928
7
0
852
24
0
0
na
766
5
388
3
130
000
537
121
4
2388
1467
7
1449
74
1128
4
0
114
0
743 216
470 405 150
0
74 0
7965
60
2613
67
1229
04
0
2348
34
na
3376
6
0
272 0
325 104
482 9
237 0
59
0
na
0
200
0
6275
016
89
0
0
0
na
18
2
na
0
n
a
0
0
280
256 0
635 157 261
55 204 6
3883 0
256
3212 151 921
23
3
36
6130
00
0
na
178 195 235 610
5
8
55
10
745
959 77
2
467 296 248
na 74
00
160
203
0
36
180
196
0
2
177 502
0
42
546
602 630 112 395
9
1
03
641
326 279 198
na 531 7
764
782
0
419 122 61
24
00
0
307
61
813
75
260 800 420
00
0
000
298
250 040
0
0
0
134
8
19
35
9
10
350
0
0
10
00
537
3
168
5
83
00
0
10
00
11
44
108
2
19
35
28
34
3
500
0
31
00
00
0
na
10
00
97
0
26
85
0
0
530
27
1582
99
0
7539
2822
60
2033
6
na
724
1884
962
5286
88
4207
82
2047
46
8104
2
126
50
160
984 19
7566
2
1009
94
0
7438
50
520 120
0
0
732
0
4
150
0
0
60
00
2988
900
EN
EU
15
3136
3880
752
704 333
57 6
446
175
9
389
933
9
908
472
3
33
57
5
14
26
40
294
45 139 141
124 213 178 216 235 4035 639 410 214
791 730 389
007 60
0
0 0
65
65 4
815
41
765 47
20
6
83 3
99
142
754 447 411 910
33
14
EU
3401 194 469 960 610 827 2544 188 733 607
57
772 963 520
612
72 223 236
25
5647 464 6
0
4
0
3134 63 310 57
5
0 95 588 792
15
05 71 684
According to Danish NRA 25.900 new entrants' cable and 37.747 new entrants' other (LAN) lines, provided by non-profit user associations should be
added, even though the associations are themselves end-users.
Spain: Please note that the counting methodology for bitstream and resale DSL has changed.
1802
763
EN
90
317
50
64
38
65
10
39
60
74
78
25
1049
7327
2651
767
693 890 131
0 85 489 650
943
157
6
113
242
2
105
639
98
209 948
77 69
EU
10
2503 124 692 586
9614 67 227 14
24
22
1
15
56
7
39
78
8
EN
1230
0090
6.4.
Prices for unbundled local loop
This section illustrates the cost of connection and monthly rental for both full unbundled
access and shared access to the loop. Monthly rental and connection fees are presented as well
as the total average monthly cost (over three years).
It is assumed that the loop is active and it will be used to provide both telephony and DSL
services.
In some Member States where a whole range of additional one-off costs may exist, are not
considered in the chart.
These may include cost of co-location, of the cable termination point, installation at the enduser premises, or disconnection, etc.
Unless otherwise stated, LLU/SA connection fees include the technical expertise to assess the
speed that can be conveyed through and exclude the cost of co-location. Furthermore, charges
in Member States may be different in the case of subsequent access. Only the price for a
single line is presented here.
Data is not always comparable with that of the previous report, due to changes in
methodology occurring in some countries.
EN
91
EN
6.4.1.
Monthly average total cost
The following charts illustrate the monthly total cost for the full LLU and shared access
(connection and monthly fees) based on the assumption that the loop is used for three years.
EU average since 2004 is also shown.
Figure 71
Monthly average total cost per full unbundled loop
EU average October 2006: 11,51€
23
16.8
14.0
15.3
15.6
15.1
15.0
15.5
16.5
12.0
11.5
PL
10.8
10.0
11.8
11.6
10.4
AT
8.7
9.6
11.0
11.6
12.6
14.5
13.4
11.1
11.1
9.8
9.8
FR
8
10.7
10.7
ES
9.3
9.1
10.9
10.7
12.5
10.9
9.6
9.9
10.5
10.5
11.8
11.8
10.5
10.1
10
15.9
16.3
16.7
18.8
15.0
15
13.2
12.7
Euro per month
18
13
19.5
20
5
3
0
BE CZ DK DE EE
EL
IE
IT
CY
LV
October 2005
LT
LU HU MT NL
October 2006
PT
SI
SK
FI
SE UK
Figure 72
Monthly average total cost per shared access
EU average October 2006 : 4,53 €
15.3
16
13.2
14
7.7
7.4
8.2
5.8
4.9
3.4
3.4
1.2
3.0
4.0
3.6
4.0
3.0
0
BE
CZ DK DE EE
EL
ES
FR
IE
IT
CY
LV
October 2005
EN
8.3
8.2
9.5
8.5
8.4
5.6
4.8
5.6
5.6
4.0
3.8
3.6
3.7
3.7
3.2
3.2
2
3.2
3.2
4
4.4
4.4
5.2
5.2
5.8
5.6
5.9
6
6.9
6.9
7.4
7.4
8
8.8
8.8
9.1
9.4
10.2
10
5.6
Euro per month
12
LT
LU HU MT NL
October 2006
92
AT
PL
PT
SI
SK
FI
SE UK
EN
Figure 73
L.L.U. monthly average total cost in EU
16
13.35
14
12.71
11.51
Euro per month
12
10
8
5.69
5.12
6
4.53
4
2
0
2004
2005
2006
Shared access lines
Figure for 2004 do not include Malta, Poland and Slovakia.
6.4.2.
Connection and monthly rental for full unbundled local loop
Figure 74
Prices per full unbundled loop - Connection
EU average Oct. 2006: 65,93 €
249.7
250
October 2005
LT
October 2006
LU HU MT NL
AT
38.0
38.0
LV
40.9
IE
31.5
31.5
FR
28.8
14.3
0
BE
53.6
59.9
33.9
33.9
CY
58.8
58.8
40.9
40.9
IT
50.1
50.1
37.0
38.6
42.2
43.8
58.0
58.0
55.0
44.6
ES
50.0
50.0
57.4
57.4
EL
43.1
43.1
CZ DK DE EE
56.5
53.4
50
56.0
51.3
82.1
85.1
100
PL
PT
148.2
147.0
155.5
68.9
52.5
121.0
121.0
Euro
150
138.7
136.4
163.2
169.6
169.6
200
SI
SK
FI
SE UK
Line test to assess the speed that can be conveyed through is included in all countries except
Poland, Austria and Estonia. No information is available for Germany; Slovenia, The
Netherlands, Finland and Slovakia.
Belgium: Additional costs are charged to the incumbent if a cable termination point is not
present. The connection fee for a non-active loop is 47,47 €
Ireland: The connection charge becomes lower as the cumulative volume of the order
increases (above 20 000 lines).
Italy: Price not approved by NRA. The connection fee for a non-active loop is 55,7 €.
EN
93
EN
Austria: Disconnection fees are included. The connection fee for a less than 1 year duration
contract is 54.50 €.
Poland: Prices applied from 5 October 2006. Price for splitter is not included.
Finland: Weighted average of 39 SMP operators providing LLU. Prices vary between 80 €
and 202 €.
EN
94
EN
Figure 75
Prices per full unbundled loop - Monthly rental
EU average Oct. 2006: 9,67 €
11.3
11.3
11.2
11.2
9.9
9.9
PT
10.8
9.7
9.0
PL
10.6
14.5
14.7
9.1
10.9
10.7
8.3
9.6
9.4
10.6
8.7
7.8
7.8
8.4
8.4
FR
9.6
9.6
ES
8.3
8.1
EL
9.5
9.3
8.9
8.1
8.7
BE CZ DK DE EE
8
9.7
10.7
10.7
11.4
12.7
9.0
8.6
10
11.6
11.3
Euro per month
12
12.9
11.7
14.2
14
14.7
15.1
16
6
4
2
0
IE
October 2005
IT
CY
LV
LT
LU HU MT NL
AT
October 2006
SI
SK
FI
SE UK
Italy: Price not approved by NRA.
Poland: Prices applied from 5 October 2006.
Finland: Weighted average of 39 SMP operators providing LLU. Prices vary between 7.9 €
and 21 €.
6.4.3.
Connection fees and monthly rental for shared access
Figure 76
Prices per shared access - Connection
EU average October 2006: 59,72 €
166.3
178.3
178.3
180
160
96.9
95.2
51.7
51.7
68.9
59.7
38.0
38.0
15.4
37.4
LV
33.9
33.9
CY
20
39.6
42.0
81.2
81.2
50.1
50.1
IE
48.8
48.8
58.0
58.0
FR
44.5
40.6
55.0
55.0
78.8
80.9
51.4
51.4
46.4
47.1
40
56.0
56.0
60
65.0
54.2
80
77.7
90.6
100.0
100.0
86.2
Euro
100
109.0
109.0
121.6
121.6
120
82.6
73.8
140
0
BE CZ DK DE EE
October 2005
EL
ES
IT
LT
October 2006
LU HU MT NL AT
PL
PT
SI
SK
FI
SE UK
Line test to assess the speed that can be conveying through is included in all countries except
Poland and Austria. No information available for Germany; Estonia; Italy , Slovenia; Sweden,
the Netherlands and Slovakia
Figures include the cost of the splitter provided by the incumbent apart from Italy, Belgium;
Estonia; Latvia and Ireland. In Malta, Portugal, Austria and Ireland, the splitter is provided by
alternative operators. No information is available on this cost for Germany; Italy; Cyprus;
EN
95
EN
Lithuania and Sweden. In France and Czech Republic the cost of the splitter is included in the
monthly rental. In Slovenia the cost of the splitter is included in the connection fee if the
splitter
is
placed
at
the
collocation
facilities.
Belgium: Additional costs are charged to the incumbent if existing cable termination point is
not present.
Estonia: Price for new loops only.
Ireland: The connection charge becomes lower as the cumulative volume of the order
increases (above 20 000 lines).
Italy: Price not yet approved by NRA.
Austria: Disconnection fees are included.
Finland: Weighted average of 39 SMP operators providing LLU. Prices for the connection fee
vary between 60 € and 201.83 €.
EN
96
EN
Figure 77
Prices per shared access - Monthly rental
EU average October 2006: 2,88€
12
10.3
5.6
5.6
0.7
1.9
1.9
3.3
3.3
1.9
1.9
2.9
3.0
2.5
5.5
5.4
3.9
1.8
1.8
0
BE
4.7
4.7
4.7
4.2
4.2
FR
2.8
2.7
2.9
2.9
ES
2.1
2.3
2.3
1.6
1.6
2
3.0
3.0
4
4.1
4.5
4.3
4.7
4.7
5.5
5.5
5.6
6.3
6
5.4
5.4
7.4
7.5
7.7
8.3
8
3.3
Euro per month
10
CZ DK DE
EE
October 2005
EL
IE
IT
CY
LV
LT
October 2006
LU HU MT NL
AT
PL
PT
SI
SK
FI
SE UK
France, Luxembourg: Figures include the cost of the splitter.
Slovenia: The cost of the splitter is included in the monthly rental if the splitter is placed at
the end-users' premises.
Finland: Weighted average of 39 SMP operators providing LLU. Prices for monthly rental
vary between 4,31 € and 10,51 €.
EN
97
EN
7.
PUBLIC VOICE TELEPHONY TARIFFS
This section examines the charging system, the line rental charges and the main tariffs for
public fixed voice telephony charged by the incumbent operators in each Member State in
September 2006. The price trend over the past nine years is also analysed.
The incumbent operators are: Belgacom for Belgium, Telefonica O2 for Czech Republic,
TDC for Denmark, Deutsche Telekom for Germany, Elion for Estonia, OTE for Greece,
Telefonica for Spain, France Telecom for France, Eircom for Ireland, Telecom Italia for Italy,
CYTA for Cyprus, Lattelekom for Latvia, Lietuvos Telekomas for Lithuania, P&T
Luxembourg for Luxembourg, T-Com for Hungary, Maltacom for Malta, KPN for the
Netherlands, Telekom Austria for Austria, Polish Telecom for Poland, Portugal Telecom for
Portugal, Telekom Slovenije for Slovenia, Slovak Telecom for Slovakia, TeliaSonera for
Finland (formerly Sonera), TeliaSonera for Sweden (formerly Telia), and British Telecom for
the United Kingdom.
The incumbent operators still retain a large market share, but new entrants are increasingly
gaining market share by offering cheaper prices for certain types of calls (usually longdistance (national) or international) or destination. The prices charged by incumbents do not
necessarily, therefore, represent the lowest prices available. A comparison between the rates
charged by incumbents and alternative operators for a sample of countries is also shown.
The figures and information are taken from a study carried out for the Commission by
Teligen, Harris Interactive UK. The data are collected from primary sources (i.e. directly from
the incumbent operators).
NRAs were given the possibility to check these data before finalizing this report. All NRAs,
with the exception of Ireland, Italy, Latvia, Slovenia and Poland provided comments and
approved these data.
Different sets of charges for fixed national voice telephony services are shown in the
following sections:
- the minimum costs for different types of calls (local, long-distance (national), international
calls and calls towards mobile networks), depending on the charging system adopted;
- the monthly rental charged by incumbent operators;
- the charges for a composite basket of calls (local, long-distance (national), international
fixed calls and calls to mobile), that gives an estimate of the average monthly spending by a
typical “European business/residential user” for the whole range (national and international)
of calls;
- the charges for a basket of national calls, that gives an estimate of the average monthly
spending by a typical “European business/residential user” for fixed national calls;
- the basket of international calls for each country that indicates the average price of a single
call from the originating country to all other OECD destinations. In addition, the price of
individual calls to specific destinations is also shown.
EN
98
EN
- the price of some individual calls (3- and 10-minute local, long-distance (national) and
international calls) at peak time, inclusive of any initial charge. For those countries where
unit-based charging is used, the price of a whole unit is calculated.
For the various types of calls, a benchmark based on a comparison with US and Japan is also
included. For the USA, the prices for national calls are those charged by Verizon (in New
York city) and the prices for international calls are those charged by AT&T. For Japan, the
national call prices are those charged by NTT and the international call prices are those
charged by KDD.
The EU average tariffs shown in the charts are weighted average (by population of the
Member States).
7.1.
Charging system
The billing system for public voice telephony services usually comprises two components: an
initial charge applied at the beginning of a call and a charge for the remainder of the call (that
may not depend on the type of initial charge used).
7.1.1.
Initial charges
There are different types of charges applied at the beginning of a call, either alone or in
combination. The charging method used for the remainder of the call may not depend on the
type of initial charge used. The types of charges are:
• Call set-up charge raised at the start of the call (when the call is answered). This charge
does not offer any call time. Per second or per unit charges apply from the beginning of the
call.
• Initial charge that is used in the same way as call set-up, but in addition includes a certain
number of seconds call time before normal time-based charging starts.
• Unit charge in effect works the same way as the initial charge: A full unit is charged at the
beginning of the call, providing a certain number of seconds call time until the next unit is
charged. Depending on the principle used by the operator (synchronous/ asynchronous) the
number of seconds call time in the first unit may be less than the specified unit duration.
• Minimum charging is normally used with per second billing, to ensure the operator obtains
a minimum revenue per call. If the call duration is short, the actual call charge may be less
than the minimum charge. In such cases the minimum charge will be applied.
In the calculation of the minimum charge for calls using per second billing it is assumed that
the call is terminated as soon as it starts, making the minimum charge for the call equal to any
call set-up or defined minimum call charge. If no such additional charges exist, the minimum
charge will be zero.
7.1.2.
Charging system during the call
There are, in principle, 3 ways of charging calls. The fact that most operators tend to publish
the duration charges on a per minute basis does not itself indicate which system is used. The 3
principles are:
EN
99
EN
• Real time charging (also known as “per second billing”) allows the cost of the call to be
calculated to the exact duration of the call (normally nearest second). A call set-up charge,
initial charge or minimum charge may be applied to this structure, in addition to the
duration charge.
• Unit based charging uses a fixed price unit. The duration of this unit will vary with the
destination of the call and time of day. Call duration will always be raised to a multiple of
whole units, so the user will nearly always pay for more time than is used. A call set-up
charge may be applied to this structure, but is relatively rare.
• Fixed period charging uses a variable price, but fixed duration unit. The call is normally
charged on a per minute basis, or per 6 seconds. The price for the period will vary with
destination and time of day. The charged duration of the call will be raised to a multiple of
whole periods. A call set-up charge or initial charge is often implemented in the form of a
higher charge for the first minute or period. This initial charge may vary with destination
and time of day.
The real time charging method can be perceived to be the one fairest to the customer, as
he/she will only pay for what is actually used. This does however not guarantee that this
method will always give the lowest overall prices. What has happened in some countries is
that when going from a unit-based system to real time charging the average per minute price
have been kept the same. The cost per call has then often been seen to go up because an
additional (and new) call set up charge has been added. Especially medium duration calls may
suffer, depending on the price structure before and after the change.
But it is no doubt that the real time charging method is more convenient to the user, as it is
easier to understand and relate to.
The added cost of call set up charges is by some operators offset by a duration allowance per
call, making the first part of the call “free” once the call set up charge is levied. This provides
a similar mechanism to the minimum charge used by some other operators
Figure 78
EN
100
EN
Minimum cost of local and long distance calls, incumbent operator
BE CZ DK DE EE
EL
ES
FR
IE
IT
CY LV
12.8
LT
0.0
0.0
LU HU MT NL
Local calls 2006
7.3
6.2
8.0
8.0
2.5
3.0
3.1
3.1
1.4
1.4
1.7
1.7
0.0
0.0
0
4.8
4.8
4.3
4.1
4.1
3.1
3.1
2.9
2.9
3.4
3.4
4.0
4.0
4
5.0
5.0
5.2
5.2
5.2
6.0
6.3
6.3
6
7.7
11.0
8.5
8.5
7.9
7.9
7.8
7.5
8
2
12.2
12.5
12.5
10
10.5
11.2
11.2
11.2
12
€-Cents, VAT included
12.9
14
AT
PL PT SK
SI
FI
SE UK USA JP
Long distance calls 2006
DE, SI: No minimum or set-up charge.
Figure 79
Minimum cost of a call to a mobile phone, incumbent operator
50
45.9
45
40
27.1
30
25
BE CZ DK DE EE
EL
ES
IE
IT
LT
LU HU MT NL
PL PT SK
SI
7.7
4.8
8.0
10.0
5.0
AT
0.0
8.2
5.2
1.4
4.1
7.2
CY LV
13.2
13.3
FR
1.7
4.0
2.9
0.0
3.4
0
6.3
5
7.9
9.2
11.2
10
16.1
15
18.6
20
17.9
35
FI
SE UK USA JP
DE, SI: No minimum or set-up charge.
Initial charges for international calls will normally follow similar rules as for national calls.
Where unit based charging is used the initial period duration covered by the first unit may
change with the destination. In most countries prices are the same for business and residential
customers. Differences may occur in Austria, France, the UK and USA.
Figure 80
EN
101
EN
EN
90
80
70
60
50
40
30
20
10
0
BE CZ DK
10.4
10.4
18.5
48.3
3.4
3.4
DE EE
0.0
0.0
EL
0.0
0.0
2.5
2.5
FR
11.0
11.0
IE
7.7
7.7
IT
31.0
31.0
CY
LV
1.7
1.7
LT
102
4.0
4.0
4.1
4.1
AT
Distant
LU HU MT NL
13.7
20.6
1.5
1.5
14.6
80.3
10.4
10.4
9.5
18.0
PL
4.9
4.9
PT SK
12.2
12.2
12.3
12.3
SI
0.0
0.0
FI
10.0
10.0
SE UK USA JP
4.8
4.8
7.4
7.4
7.7
64.2
11.0
23.4
Minimum cost of an international call, incumbent operator
13.8
13.8
ES
Near
DE, EL, SI: No minimum or set-up charge.
EN
7.2.
Monthly rental charged by the incumbent operators
The following charts show the incumbent’s monthly line rental charges for residential and
business users in September 2006 and September 2005. In order to reflect the real charges
actually paid by users, values are expressed in €, including VAT for residential users and
excluding VAT for business users.
A number of countries have different rental charges for business and residential customers.
In Finland and Japan the monthly rental will depend on where in the country the line is
connected. The charges shown are for the capital/most densely populated area.
Figure 81
Residential monthly rental
30
24.18
25
BE CZ DK DE EE EL
ES FR IE
IT
CY LV LT
Sep 2005
16.31
LU HU MT NL AT PL PT SK
Sep 2006
SI
FI
12.44
12.44
6.81
15.57
13.37
11.77
7.84
10.70
7.84
8.44
10.70
11.77
13.37
15.32
12.53
15.32
12.53
15.98
18.16
5.96
12.13
5.96
6.66
18.40
6.66
5.07
12.95
14.57
24.18
13.99
15.28
14.16
5.89
15.95
15.95
11.62
17.15
0
5.07
5.89
10
5
15.98
18.16
18.40
12.13
13.95
14.57
15.00
15.58
14.76
15.95
14.25
15
15.95
17.15
€, VAT included
20
SE UK USA JP
EU 25 Sep 2006
Figure 82
Business monthly rental
40
34.92
35
IE
IT
Sep 2005
Sep 2006
103
FI
12.47
16.63
13.11
20.35
12.41
10.10
8.92
9.24
8.92
9.24
10.10
13.35
10.02
12.98
10.02
18.90
15.26
CY LV LT LU HU MT NL AT PL PT SK SI
12.41
16.63
18.90
15.26
13.15
10.58
13.15
12.52
6.87
16.00
6.87
8.60
12.13
15.25
19.98
8.60
EN
16.00
19.20
12.54
13.10
13.17
6.11
6.11
13.75
12.76
17.49
14.17
5
0
13.43
12.40
12.76
10
11.90
15
13.75
17.49
19.98
20
20.35
25
14.17
€, VAT excluded
30
SE UK USA JP
EU 25 Sep 2006
EN
The following charts show the EU weighted average variation in nominal terms of the
residential and business monthly line rental charge. Averages for EU25 and EU15 are
presented.
Figure 83
Residential rental per month
16
15
15.0
€, including VAT
14
14.5
13
11
13.6
13.4
12
14.7
12.5
11.6
10
9
8
Aug 00
Aug 01
Aug 02
Aug 03
Aug 04
Sep 05
Sep 06
EU 25 weighted
Figure 84
Business rental per month
16
15
14.8
€, excluding VAT
14
13
11
14.3
Aug 04
Sep 05
13.6
13.3
12
14.3
12.3
11.8
10
9
8
Aug 00
Aug 01
Aug 02
Aug 03
Sep 06
EU 25 weighted
EN
104
EN
7.3.
Average monthly expenditure (composite call basket)
The figures presented in this section are intended to provide an estimate of the average
monthly expenditure of a “standard” European consumer (business and residential). The
Basket Methodology for Telecommunications Cost Comparison has been devised by the
OECD and accepted in most countries as the most stable and neutral method of comparison.
The user is assumed to have a contract for the provision of voice telephony services with the
incumbent operator, and to use only this operator for all types of calls (local, long-distance
(national), international, calls to mobile). Since consumers are making increasing use of callby-call carrier selection, in particular for specific highly discounted types of calls (i.e.
international and long-distance (national)), the figures given below are purely indicative, and
do not necessarily reflect the cheapest solution available.
The charts below show the average monthly expenditure for standard residential and business
users as of September 2006, expressed in €, based on the standard tariffs charged by the
incumbent operators (i.e. excluding any discount packages). This means that lower costs can
be achieved if the user subscribes to one or more discounted packages.
The basket of calls used to estimate average monthly expenditure is the “2000 composite
OECD basket” which includes fixed national calls, international calls and calls to mobile
networks.
The OECD residential/business baskets are defined as follows (on an annual basis):
The fixed (i.e. non-recurring) charges include the annual line rental charge plus the charge for
the installation of a new line (depreciated over 5 years). Fixed charges for residential users
include VAT, while for business users VAT is excluded.
The usage charge for residential users refers to a basket of 1.200 national calls to fixed lines,
plus 120 calls (with an average duration of 2 minutes) to mobile networks (representing 10%
of the number of calls to fixed lines), plus 72 international calls (representing 6% of the
number of calls to fixed lines). The usage charges for national calls to fixed lines are
calculated with a weighted distribution over 14 distances from 3 to 490 km, at representative
times of day (4 calls during the week and 2 during the weekend). The call duration varies
from 2.5 to 7 minutes, depending on time and distance. The usage for residential users is
weighted towards off-peak hours, and with typically long calls. Only 36% of the calls are
within normal business hours; 74% are for distances below 10 km; 9% are for distances above
100 km.
The usage charge for business users refers to a basket of 3 600 national calls to fixed lines
plus 360 calls (with an average call duration of 2 minutes) to mobile networks, plus 216
international calls. The usage charges for national calls to fixed lines are calculated with a
weighted distribution over 14 distances from 3 to 490 km, at representative times of day (4
calls during the week and 2 during the weekend), and with a call duration of 3.5 minutes
regardless of time of day and distance. The usage for business users is weighted towards
business hours, and with typically short calls. Over 86% of the calls are within normal
business hours; 64% are for distances below 10km; 12.5% are for distances above 100 km.
EN
105
EN
There was a revision of the OECD baskets in February 2006.
Highlights of the new 2006 OECD baskets are:
• 5 new baskets for Low, Medium and High residential usage and business baskets for
SOHO and SME usage.
• Fixed to Mobile calls now include calls to up to 4 national mobile networks, weighted by
subscriber numbers.
• A range of tariff packages from the incumbent operator are now included, with automatic
selection of the cheapest package for each basket.
• Traffic weights and volumes have been updated with recent information.
Low usage residential basket
The usage charge for low usage residential users refers to a basket of 600 national calls, where
76% (456 calls) are to fixed lines, 19% (114 calls) are to mobile networks, and 5% (30 calls)
are to international destinations. The usage charges for national calls to fixed lines are
weighted towards off-peak hours, and with typically long calls. 58% of the calls are within
normal business hours; 76% are for distances below 10 km; 7% are for distances above 100
km.
Medium usage residential basket
The usage charge for low usage residential users refers to a basket of 1200 national calls,
where 75% (900 calls) are to fixed lines, 23% (276 calls) are to mobile networks, and 2% (24
calls) are to international destinations. The usage charges for national calls to fixed lines are
weighted towards off-peak hours, and with typically long calls. 55% of the calls are within
normal business hours; 70% are for distances below 10 km; 11% are for distances above 100
km.
High usage residential basket
where 65% (1560 calls) are to fixed lines, 31% (744 calls) are to mobile networks, and 4%
(96 calls) are to international destinations. The usage charges for national calls to fixed lines
are calculated with a weighted distribution over 14 distances from 3 to 490 km, at
representative times of day (4 calls during the week and 2 during the weekend). The call
duration varies from 3.7 to 7 minutes, depending on time and distance. The usage for
residential users is weighted towards off-peak hours, and with typically long calls. 60% of the
calls are within normal business hours; 77% are for distances below 10 km; 7% are for
distances above 100 km.
EN
106
EN
SOHO business basket
where 67% (1206 calls) are to fixed lines, 29% (522 calls) are to mobile networks, and 4%
(72 calls) are to international destinations. The usage charges for national calls to fixed lines
are calculated with a weighted distribution over 14 distances from 3 to 490 km, at
representative times of day (4 calls during the week and 2 during the weekend). The call
duration varies from 1.9 to 3.1 minutes, depending on time and distance. The usage for
SME business basket
The usage charge for low usage residential users refers to a basket where 30 users each have
2800 national calls, where 72% (2016 calls) are to fixed lines, 20% (560 calls) are to mobile
networks, and 8% (224 calls) are to international destinations. The usage charges for national
calls to fixed lines are calculated with a weighted distribution over 14 distances from 3 to 490
km, at representative times of day (4 calls during the week and 2 during the weekend). The
call duration varies from 1.9 to 3.1 minutes, depending on time and distance. The usage for
The different 2006 OECD baskets may select different tariff packages as the cheapest. The
revision brought a new element into the baskets, namely the inclusion of more tariff packages
for each country. This allows for a comparison of the “standard” package with the “cheapest”
package.
EN
107
EN
EN
54.49
19.25
63.72
59.64
76.07
14.42
67.31
9.68
73.38
14.55
69.54
17.57
67.62
21.05
64.45
IT
21.00
70.04
EN
FI BE LV UK JP
12.97
79.86
15.56
78.02
9.16
92.29
21.66
91.98
17.63
96.36
Usage
Usage
5.65
15.82
14.57
16.11
8.37
23.96
14.68
18.01
19.36
13.67
16.70
17.67
17.85
13.19
18.95
17.39
17.00
17.60
22.80
18.58
18.07
20.41
5.73
33.10
15.34
23.66
16.35
22.91
17.93
21.69
15.98
24.09
16.73
24.63
15.91
26.25
16.77
25.43
14.06
28.32
25.47
18.99
18.83
25.86
13.54
33.36
31.68
2000 OECD baskets
20.31
23.59
7.3.1.
56.53
6.66
Average monthly expenditure (composite basket)
Residential users
17.34
20.31
50
61.85
Fixed
11.44
16.18
8.11
45
53.90
12.18
40
54.59
17.24
35
14.46
6.71
30
55.23
8.30
25
12.89
20
49.90
15
44.16
10
42.80
5
42.82
15.19
FI
20.86
53.70
13.46
0
40.51
14.40
15.93
€ incl. VAT per month
CY EE SI MT LT USA SK SE LU DE AT UK HU NL DK LV EL CZ USA IT ES FR PT PL IE BE JP
LA
NY
32.66
Average monthly expenditure (composite basket)
Business users
13.59
120
18.15
100
16.83
80
10.15
60
30.80
40
6.81
20
0
Fixed
108
USA EE CY SI LU USA SE DE EL DK NL PL MT AT HU CZ LT ES SK PT FR IE
LA
NY
11.49
Figure 85
Figure 86
€ excl. VAT per month
EN
15.17
15.34
23.75
17.67
21.93
5.73
33.98
24.58
27.98
18.67
23.29
26.67
15.42
27.28
25.97
16.11
31.80
13.96
13.57
16.70
11.18
18.35
9.89
19.36
8.91
15.98
12.63
15.34
13.31
15.46
18.83
10.35
10.75
17.93
7.64
5.73
20.02
21.61
7.14
17.85
11.35
17.67
11.59
20.45
9.21
18.67
11.13
15.91
14.05
14.32
15.87
22.67
29.21
8.09
16.88
14.00
6.44
2006 OECD baskets
23.90
10.22
7.3.2.
11.16
14.51
12.18
OECD baskets for PSTN
26.53
6.66
Low usage residential basket
19.73
5.60
9.99
13.81
40
17.85
4.12
10.89
13.19
35
16.69
Usage
20.70
14.57
30
21.51
15.19
25
16.74
15.02
Fixed
19.36
20
12.95
15
21.61
10
18.57
10.50
BE IE
15.42
6.71
FI
15.53
8.25
EL ES UK AT NL CZ FR JP PT
17.93
8.11
SI HU SE USA LV PL DE DK LU IT
NY
22.55
10.89
Medium usage residential basket
19.97
5
19.49
13.19
29.21
0
24.38
MT EE CY USA SK LT
CA
20.18
6.66
18.83
€ per month, VAT included
11.56
22.78
15.91
50
7.32
8.11
15.98
45
40
35
30
25
FI
15.46
20
PL CZ PT FR BE IE
13.96
6.71
15
12.18
14.57
10
5
0
SI HU SK USA SE ES LU JP DE UK DK NL EL AT LV IT
NY
Usage
EN
CY USA EE MT LT
CA
Fixed
109
15.19
Figure 87
Figure 88
EN
22.61
11.44
27.19
26.04
10.61
29.06
20.31
26.09
21.09
16.36
BE FR JP IT
21.00
27.99
FI
12.97
36.16
CY UK
EN
20.10
42.08
7.10
24.63
26.30
17.57
19.62
25.13
28.46
28.42
40.80
49.84
45.90
12.18
47.03
19.36
39.87
21.64
37.61
36.65
22.99
28.80
31.49
34.83
25.54
32.90
28.15
21.61
39.48
16.24
45.53
6.66
58.19
29.14
38.58
17.67
50.32
41.21
28.97
22.24
15.46
71.46
LV
27.06
30.98
36.83
13.19
FI
23.53
27.57
CZ JP PT PL MT FR BE
19.25
Usage
Usage
13.59
19.07
5.73
82.15
15.02
58.72
22.67
51.13
13.96
60.02
8.11
65.88
15.91
58.32
38.78
39.21
15.93
16.05
High usage residential basket
19.21
Fixed
22.19
17.64
100
17.67
17.93
90
17.84
14.57
80
22.03
70
12.89
18.05
SOHO business basket
16.83
60
15.56
50
18.54
40
28.07
30
18.66
5.65
20
13.65
10
21.45
15.19
IT
12.32
10.15
14.55
0
21.67
CY USAUSA EE HU SI LU SE DE DK UK NL ES SK LT EL AT IE
CA NY
6.81
18.63
60
16.90
14.70
50
8.98
11.37
18.15
40
30
20
10
0
Fixed
110
USA HU EE USA SI SK LT DK LU EL DE MT ES NL PL SE LV PT AT CZ IE
CA
NY
11.49
Figure 89
Figure 90
€ per month, VAT excluded
EN
35.99
41.78
44.45
Ireland
42.33
Japan
38.83
38.83
Latvia
30.25
30.25
Lithuania
28.42
28.42
Malta
36.89
37.53
Netherlands
Slovakia
32.33
28.36
28.36
Slovenia
31.00
Spain
41.36
28.82
32.69
Sweden
35.45
35.45
UK
USA, CA
#N/A
USA, NY
#N/A
30.68
39.62
EN
36.50
38.48
941.28
178.64
204.20
922.67
834.39
355.59
304.57
906.75
544.53
668.83
505.00
800.59
409.49
901.52
664.37
660.68
636.68
698.35
451.01
1,007.62
477.79
1,011.59
407.76
1,091.76
609.29
960.17
440.93
1,167.21
577.62
1,030.79
169.35
1,469.62
811.72
838.67
389.10
JP
26.23
770.60
FI
Portugal
42.38
41.38
42.20
341.04
IE PT FR BE LV UK IT
36.20
Poland
Usage
EU25 Cheapest Average
33.03
33.03
Luxembourg
46.89
Fixed
Standard
111
40.07
40.07
Italy
Figure 91
Hungary
392.76
SME business basket
31.17
517.24
588.63
436.42
1,317.78
527.00
1,257.51
961.36
318.45
866.90
1,643.48
658.70
1,344.35
630.05
1,374.41
1,724.17
1,722.15
39.00
39.00
Greece
2500
34.08
34.08
Germany
OECD Residential Composite basket
Cheapest
42.16
42.16
France
2000
47.50
47.50
Finland
685.00
1500
23.95
23.95
Estonia
344.60
1000
36.40
38.48
Denmark
0
38.53
39.26
Czech
USA ES HU EL EE CY SI USA LU SK DE DK PL NL SE AT MT CZ LT
CA
NY
22.37
23.49
Cyprus
Comparison of the “Standard” package with the “Cheapest” package
44.68
€ per month, VAT excluded
500
50
38.43
Belgium
EU25 Weighted
45
40
35
30
25
20
15
10
5
0
34.68
34.68
Austria
7.3.3.
Figure 92
€ incl. VAT per month
Figure 93
OECD Business Composite basket
62.31
62.31
44.15
44.15
73.43
83.15
104.37
113.64
64.73
81.74
63.49
63.49
52.97
52.97
84.09
84.09
75.33
83.06
67.30
73.29
73.88
73.88
69.83
69.83
52.37
59.63
88.75
101.45
81.71
81.71
78.15
85.50
68.10
43.70
64.70
68.12
50.78
77.18
92.83
92.83
85.19
85.19
69.05
42.60
51.66
51.66
55.20
50
47.32
47.32
78.90
78.90
93.57
100
91.04
91.04
95.30
113.98
150
74.80
74.80
€ excl. VAT per month
200
Standard
EU25 Weighted
USA, NY
USA, CA
UK
Sweden
Spain
Slovenia
Slovakia
Portugal
Poland
Netherlands
Malta
Luxembourg
Lithuania
Latvia
Japan
Italy
Ireland
Greece
Cheapest
Hungary
Germany
France
Finland
Estonia
Denmark
Czech
Cyprus
Belgium
Austria
0
EU25 Cheapest Average
7.4.
Price of fixed national calls by the incumbent operator
7.4.1.
Prices charged by the incumbent operators for individual fixed national calls
This section shows the prices charged by the incumbent operators for individual fixed calls
(the same call prices apply to business and residential users). For those countries where unit
based charging is used, the cost of the amount of full units is calculated. Any call set-up
charges, minimum charges and/or call specific duration allowances have been taken into
account.
Prices refer to peak hours (weekdays 11.00) and are expressed in € including VAT. Except
where otherwise specified, the figures refer to September 2006. Prices are indicated for threeminute and ten-minute calls over two distances: 3 km (equivalent to a local call) and 200 km
(equivalent to a national call). In several countries the tariff changes at exactly one of these
distances: in these cases, the rates for the lower distance band are used.
The price of a three-minute call is more affected by the magnitude of the call set-up charge
than the price of a ten-minute call.
Where different tariff packages exist, the basic, residential package is selected. Otherwise the
standard tariff is used. No discount packages are taken into account.
The EU average value is the average of the EU countries weighted according to the national
population.
EN
112
EN
EN
14.48
14.70
12.82
12.94
13.35
13.40
14.48
14.70
14.77
14.78
14.79
9.02
14.79
15.03
15.84
15.84
13.40
CZ
16.75
SK
17.96
BE
SK
59.85
13.40
12.50
FR
BE
57.20
25
13.35
FI
CZ
55.82
20
12.94
IE
PL
59.85
50.11
15
IT
IE
49.26
57.20
EU 25 Average
49.00
49.25
55.82
2006
44.50
30.07
2005
39.52
10
AT
49.00
39.00
13.35
12.19
PL
UK
44.50
38.81
12.50
PT
HU
41.15
36.91
12.16
12.19
AT
DE
39.00
36.86
11.84
12.16
LT
LT
38.81
35.80
11.70
DK
PT
36.91
35.51
9.32
UK
DK
36.86
33.17
9.28
NL
FR
32.99
30.94
9.28
HU
LV
35.51
30.94
9.07
MT
NL
33.17
11.84
8.04
SE
30.94
29.41
11.70
LV
EL
EU 25 Average
LU
2006
SE
2005
113
30.94
9.32
DE
SI
26.25
29.41
9.28
CY
MT
25.01
26.25
9.28
EL
FI
24.38
25.01
9.01
LU
EE
23.46
24.38
7.88
8.87
EE
IT
22.17
23.30
7.88
ES
21.68
22.17
5
SI
CY
18.56
€-cent, VAT included
0
70
60
50
40
30
20
ES
21.68
10
0
28.36
Figure 94
Figure 95
20.80
16.20
16.75
17.96
20.80
EN
EN
18.35
BE
20.80
EL
22.15
PT
NL
49.08
49.00
49.08
23.47
9.07
65.47
73.80
79.36
PL
LV
103.14
HU
108.77
100.23
103.14
22.15
23.47
24.50
24.51
32.12
32.11
33.63
28.83
IT
SK
129.15
20.80
36.83
SK
IT
114.77
122.85
18.35
26.65
FI
104.42
114.77
17.70
FR
FI
94.00
122.78
16.75
HU
88.50
94.00
14.70
ES
FR
84.59
13.40
LV
ES
83.41
13.35
PL
81.69
84.48
12.19
LT
IE
81.68
IE
LT
79.36
9.32
EL
73.80
59.00
EU 25 Average
PT
65.47
57.20
2006
AT
59.00
55.82
2005
BE
57.20
CZ
112.70
45
17.70
NL
DE
49.00
40
33.81
AT
44.50
35
14.70
CZ
36.86
30
13.40
DE
44.50
25
13.35
DK
36.86
UK
EU 25 Average
12.19
UK
29.41
DK
2006
9.32
SE
SE
2005
114
9.01
CY
SI
29.41
20
7.88
EE
EE
26.25
15
7.88
23.46
26.25
10
SI
CY
23.30
5
0
140
120
100
80
60
40
20
0
21.68
21.68
Figure 96
Figure 97
26.65
30.07
32.12
32.14
32.29
33.90
35.20
35.20
36.86
38.75
39.94
39.94
EN
Figure 98
45
41.8
37.1
40
34.3
33.7
35
29.9
30
25.3
25.0
25
20
15
10
12.5
13.0
12.9
12.9
12.7
12.3
13.1
2000
2001
2002
2003
2004
2005
2006
5
0
Figure 99
140
133.3
116.9
120
107.6
105.6
91.8
100
76.3
73.9
80
60
40
39.0
39.1
38.5
38.8
37.7
35.4
36.5
2000
2001
2002
2003
2004
2005
2006
20
0
EN
115
EN
7.5.
Trend of the basket for fixed national calls (national basket)
Figure 100
EU25 national basket development
70
60
63.1
62.0
60.3
60.3
60.3
56.9
€ per month
50
57.5
40
30
29.1
29.4
29.2
29.2
29.3
28.2
2000
2001
2002
2003
2004
2005
29.6
20
10
0
Residential, Incl. VAT
2006
Business, Excl. VAT
Figure 101
EU25 composite basket development
120
100
103.0
96.9
94.8
93.9
€ per month
80
91.3
83.8
83.1
37.3
38.5
2005
2006
60
40
44.8
42.6
42.0
41.5
39.7
2003
2004
20
0
2000
2001
2002
Business, Excl. VAT
Since 2000 all EU25 MS are included except Malta, which is included since 2003.
EN
116
EN
7.6.
Price of fixed national calls by alternative operators
This section compares the prices charged for public voice telephony services by the
incumbent operators and by the largest competitor in each Member State. The tariff packages
selected will impact on this comparison, although care has been taken to ensure reasonable
comparability.
Figure 102
3 min Local calls, incumbent and competitor's price
20.8
12.2
11.9
13.3
7.9
6.6
0.0
5
18.0
17.0
15.8
15.0
14.7
14.7
15.0
13.8
14.8
14.8
12.9
11.5
9.3
8.4
11.6
12.8
11.6
12.5
14.5
11.8
9.3
6.8
9.3
8.6
8.0
8.4
9.1
8.5
10
11.4
12.2
16.2
13.8
14.8
16.7
15
13.2
13.4
13.0
11.7
13.5
€-cents, VAT included
20
20.8
20.8
23.7
25
0
IT CY LV LT LU HU MT NL AT PL PT SI SK FI
Incumbent, 3 min
SE UK
Competitor, 3 min
Figure 103
10 min Local calls, incumbent and competitor's price
80
71.0
70
51.9
59.9
56.7
24.4
22.0
29.4
28.3
26.3
22.1
35.2
36.9
36.9
44.5
49.0
49.0
50.1
33.2
29.0
39.5
35.4
31.9
0.0
0
IT CY LV LT LU HU MT NL AT PL PT SI SK FI
Incumbent, 10 min
EN
25.0
21.7
17.1
22.2
10
30.9
28.0
35.5
38.8
49.3
20.1
27.8
30.9
28.6
35.8
37.9
45.0
18.6
20
23.5
21.5
30
36.9
35.5
39.0
40
44.2
50
57.2
57.2
55.8
60
117
SE UK
Competitor, 10 min
EN
EN
100.2
111.6
SI
SI
26.3
22.1
44.5
51.9
SE UK
SE UK
29.4
28.3
32.1
22.4
33.9
18.0
24.5
11.4
39.9
12.2
9.3
6.8
32.1
32.3
26.6
21.1
32.3
19.8
18.4
15.1
17.7
14.7
30.1
36.7
23.5
23.5
7.9
6.6
38.7
26.5
35.2
33.9
FI
FI
94.0
92.0
22.2
17.9
SK
SK
129.2
88.2
27.6
9.1
8.5
PT
PT
65.5
65.5
14.7
12.2
11.9
13.3
20.8
3 min National calls, incumbent and competitor's price
59.0
49.0
45
49.1
38.9
40
104.4
62.9
35
79.4
63.7
CY LV LT HU NL AT PL
103.1
99.8
Competitor, 3 min
Competitor, 10 min
CY LV LT HU NL AT PL
21.7
17.1
13.4
13.0
IT
IT
114.8
18.5
16.7
13.2
IE
81.7
20.8
20.8
ES FR
37.9
88.5
Incumbent, 3 min
39.0
IE
118
Incumbent, 10 min
ES FR
84.6
74.8
30
73.8
59.5
25
23.5
21.5
20
92.0
15
49.0
10
BE CZ DK DE EE EL
36.9
35.5
10 min National calls, incumbent and competitor's price
BE CZ DK DE EE EL
55.8
44.2
5
0
140
120
100
80
60
40
20
0
57.2
57.2
Figure 104
Figure 105
EN
7.7
Incumbent operator price for an average fixed international call (international
call basket)
The basket of international calls for each country provides an estimate of the average cost of
an international call.
For the basket comparison of international PSTN call charges, the OECD traffic weight
basket methodology is used. The basket calculates an average charge for calls to all OECD
destination countries.
The residential basket includes VAT. Call charges are weighted between peak and off-peak
hours: 25% for peak hours and 75% for off-peak hours. The business basket excludes VAT.
Call charges are weighted 75% for peak hours and 25% for off-peak hours. The average price
of an international call is lower for business users than for residential users because of the
heavier weighting given to three-minute peak-hour calls, which are, on average, cheaper than
five-minute off-peak calls, and because VAT is excluded for business users but included for
residential users.
International call charges vary widely with the destination, and the basket results are based on
a weighted average call charge. Traffic weighting is used, as defined by the OECD for the
destination weighting, as per the revision in 2000. This method applies a weight to each
destination based on the traffic volumes reported on that route (ITU statistics).
All tariffs are standard prices from ex-incumbents operators, and both these operators and
new entrants may offer lower prices.
The EU average value is the average of the EU countries weighted according to the national
population.
Figure 106
EN
119
EN
EN
€, VAT included
2.5
2.0
1.5
IE ES FR DK CZ MT UK HU PT
0.39
0.39
0.51
0.51
0.53
0.53
1.28
0.56
Average price for an international call, residential user
FI EL
EU25 Average
CY USA SE LU SK NL EE AT SI DE BE
2006
0.76
1.0
0.5
0.0
2005
120
0.28
0.28
0.58
0.58
0.64
0.60
0.61
0.61
0.62
0.70
0.62
0.70
0.72
0.72
0.76
0.78
0.78
0.79
0.79
0.85
0.85
0.87
0.86
0.96
0.87
0.82
1.03
0.88
0.99
0.89
1.01
1.15
1.15
1.16
1.16
IT
1.19
1.19
PL LT LV JP
1.70
1.43
1.23
1.45
2.16
2.18
2.31
2.31
EN
Figure 107
Average price for an international call, business user
2.10
2.5
1.71
1.13
1.33
1.5
CY SE SK LU CZ NL EE
SI FR USA PL DE AT
2005
2006
IT
2.10
1.69
1.32
0.91
FI
0.96
0.83
PT
0.91
0.83
0.73
0.76
IE DK ES HU BE MT EL
0.83
0.66
0.76
0.61
0.61
0.61
0.61
0.55
0.64
0.55
0.53
0.47
0.53
0.46
0.47
0.47
0.47
0.43
0.40
0.44
0.84
0.42
0.43
0.40
0.40
0.40
0.43
0.39
0.39
0.40
0.41
0.37
0.39
0.55
0.33
0.33
0.0
0.20
0.20
0.5
0.54
1.0
0.54
€, VAT excluded
2.0
LT UK LV JP
EU25 Average
Figure 108
EU25 international basket development
1.8
1.6
1.54
1.4
1.23
1.18
1.14
€ per call
1.2
1.0
0.93
0.92
0.90
0.72
0.69
0.66
2004
2005
2006
1.09
0.8
0.83
0.6
0.80
0.77
0.4
0.2
0.0
2000
2001
2002
2003
EN
121
Business, Excl. VAT
EN
7.8.
Incumbent operator price of calls to eu, japan, usa
The following two charts show the prices of a 10-minute international call (including VAT)
during peak hours (weekday 11.00AM) to four different destinations: Near EU country,
Distant EU country, USA and Japan. Figures are expressed in €, including VAT, and they
refer to the European incumbent operators and the EU weighted average. The table below
summarises the definition of near and distant EU destination countries.
.From: Near EU
Far EU
BE
FR
EL
CZ
DE
FI
DK
SE
EL
DE
FR
EL
EE
FI
EL
EL
IT
DK
ES
PT
DK
FR
BE
EL
IE
UK
EL
IT
EL
DK
CY
EL
DK
LV
SE
EL
LT
SE
EL
LU
DE
EL
HU
AT
FI
MT
IT
FI
NL
DE
EL
AT
DE
EL
PL
DE
EL
PT
ES
DK
SK
CZ
FI
SI
AT
FI
FI
SE
EL
SE
DK
EL
UK
FR
EL
Figure 109
EN
122
EN
EN
€, VAT included
SE CY DK NL EE SK
SI
IE
CZ AT
FI
HU BE
IT
EU25 Weighted
10 min. call to near EU country
PL LU MT ES
2006
1.87
1.85
1.90
1.90
1.90
1.90
2.03
1.95
1.98
1.98
2.12
2.12
UK FR
2.52
PT DE EL
2.81
LT
4.07
LV
5.93
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
2005
123
0.58
0.59
0.67
0.67
0.77
0.77
0.85
0.85
0.93
0.93
2.77
1.23
1.25
1.25
3.74
1.26
1.37
1.37
1.59
1.45
1.53
1.53
1.54
1.54
2.22
2.27
2.32
2.81
1.23
2.96
2.49
2.97
4.07
5.93
EN
EN
10 min. call to distant EU country
LV
5.93
LV MT
FI
4.90
5.93
0.66
0.66
3.02
1.23
3.74
1.26
1.37
1.37
1.40
1.40
1.53
1.53
2.05
2.02
2.08
2.08
2.12
2.12
2.22
2.32
3.79
2.37
2.71
2.71
9.0
FI
4.07
4.90
8.0
LT DK
3.49
7.0
IE
3.11
2.93
6.0
SE BE HU NL AT PT EE DE EL
2.85
3.11
5.0
FR
2.38
2.97
IT
2.32
2.38
4.0
CZ UK
2.22
2.27
3.0
ES
LT
2.13
2.08
2.0
SI
EE UK FR DK HU PT EL
EU25 Weighted
IT
EU25 Weighted
2.12
2006
2.02
2.12
2005
10 min. call to USA
IE
BE CZ
ES MT AT
2.05
1.0
CY SK PL LU
SI
1.98
4.07
€, VAT included
0.0
DE CY NL SE PL SK LU
2006
1.98
2.40
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
2005
124
1.23
0.46
0.66
0.66
0.85
0.85
1.06
1.18
3.74
1.23
3.02
1.23
1.37
1.37
1.40
1.40
1.53
1.53
1.77
1.64
1.90
1.90
1.90
1.90
Figure 110
Figure 111
€, VAT included
2.43
2.85
2.92
2.92
3.10
3.10
3.11
3.11
3.21
3.21
2.46
3.48
2.49
3.49
3.87
3.87
4.07
4.07
4.05
4.72
4.90
4.90
6.78
6.78
8.15
8.02
EN
EN
Figure 112
€, VAT included
25.0
20.0
15.0
10.0
5.0
0.0
CY LU UK DE SK EL
10 min. call to Japan
FI
SI
LV ES
EU25 Weighted
FR BE HU
2006
NL PL AT SE CZ EE
2005
125
IE
0.82
0.82
1.37
1.37
1.48
1.48
7.90
2.96
3.78
3.12
2.93
3.49
3.50
3.50
6.49
3.60
3.60
3.60
3.42
3.80
4.03
3.99
15.04
4.80
4.98
5.02
5.20
5.20
5.92
5.68
5.70
5.70
5.70
5.70
5.93
5.93
5.64
6.52
8.58
8.58
IT
8.78
8.78
DK PT MT LT
9.08
9.08
12.69
12.69
20.17
20.04
22.60
22.60
EN
7.9.
Alternative operators’ price for fixed international calls
The equivalent prices for competitor providers in the EU countries are shown in the charts
below. One competitor per country has been analyzed. The prices are shown for a 10 minute
call, at peak time weekdays.
Prices include VAT and are applicable for September 2006.
Figure 113
10 min. call to near EU country, incumbent and competitor's price
5.93
6.0
5.0
IT
UK
Incumbent
1.20
1.50
2.96
2.09
2.81
1.23
2.73
2.32
FR
TG
BE
Lietuvos
gelezinkeliai
HU
Forthnet
FI
Arcor
AT
Oni
CZ
NeufCegetel 0.62
2.12
NTL
3.04
1.98
Wind
1.55
1.95
Telenet
1.98
1.90
Tele2
0.87
1.85
1.90
1.48
0.75
0.93
0.55
0.85
Competitor
IE
Elisa
MT ES
0.99
Ono
LU
Tele2UTA
Tele2
PL
0.78
Netia
SI
1.36
Voljatel
SK
Radiokomunikace
1.53
1.45
1.37
GTS Nextra
EE
0.00
1.00
1.25
Tele2
1.26
0.95
1.23
Tele2
NL
0.95
0.70
0.77
Tele2
CY DK
0.57
0.59
0.0
2.47
0.74
0.67
CallSat
SE
1.0
EsatBT 1.20 1.54
2.0
2.22
3.0
2.97
4.07
4.0
Tele2
Euro for a 10 minutes call, Including VAT
7.0
PT
DE
EL
LT
LV
EU25 Avg. Competitor
Figure 114
EN
126
EN
EN
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
0.95
1.23
PL
Netia
2.47
1.26
LU
Tele2
0.95
1.37
SI
Voljatel
1.08
1.40
Ono
CZ
Radiokomunikace
1.13
UK
NTL
3.04
IT
1.36
1.53
ES
Wind
1.55
2.02
2.08
2.12
Tele2
3.74
BE
Telenet
2.71
HU
Tele2
0.87
NL
Tele2
1.82
AT
Tele2UTA
2.83
PT
Oni
3.02
2.32
2.37
2.71
2.85
2.92
3.10
3.11
Tele2
1.71
DE
Arcor
2.45
Forthnet
2.09
EL
EE
NeufCegetel 0.92
SE
Incumbent
FR
Competitor
127
10 min. call to distant EU country, incumbent and competitor's price
CY SK
1.37
0.66
GTS Nextra
CallSat
3.21
3.48
3.49
LT
Lietuvos
gelezinkeliai
1.50
Tele2
4.04
Elisa
4.18
TG
1.54
DK
IE
EsatBT
1.20
3.87
4.07
4.72
FI
4.90
LV
6.78
MT
0.00
8.02
EN
EN
0.78
Wind
1.55
Tele2
1.71
NTL
1.56
2.12
2.13
2.22
Forthnet
Lietuvos
gelezinkeliai
FI
Elisa
LV
MT LT
9.08
TG
20.04
Lietuvos
gelezinkeliai
2.02
Oni
0.00
14.77
22.60
1.90
1.98
8.78
12.69
10 min. call to USA, incumbent and competitor's price
Radiokomunikace
2.36
Tele2
1.19
3.02
2.09
1.50
3.18
1.54
7.0
1.98
8.58
12.31
6.0
Telenet
LT
PT
Oni
1.90
EsatBT 0.80
EL
9.01
0.99
PT
DK
Tele2
1.64
Tele2UTA
DK HU
IT
3.30
1.53
0.00
FR
IE
Wind
1.40
Tele2
6.52
EsatBT 5.50
1.37
NeufCegetel 0.62
5.93
5.0
7.62
1.36
4.0
ES
Ono
5.70
Ono
3.0
1.54
1.08
2.0
LV
TG
5.70
1.0
1.08
0.0
SI
Voljatel
5.68
Voljatel
UK
5.68
0.95
EE
FI
Elisa
5.20
Tele2
IT
2.88
0.95
1.23
GTS Nextra
CZ
Tele2
2.47
1.23
BE
5.20
BE HU
Telenet
Netia
IE
FR
NeufCegetel 2.12 5.02
1.03
1.18
MT AT
13.21
4.80
Tele2
ES
EE
Tele2
0.46
0.85
SI
2.76
3.99
Tele2
LU
CZ
Radiokomunikace
0.74
0.66
CallSat
SK
3.36
3.80
1.23
0.46
SE PL
SE
Tele2
Arcor
CY NL
4.36
3.60
DE
Tele2UTA
Incumbent
3.64
3.60
Competitor
Netia
10 min. call to Japan, incumbent and competitor's price
2.45
3.50
25.0
Tele2
AT
Incumbent
2.09
3.49
PL
Competitor
128
Forthnet
NL
2.49
3.12
GTS Nextra
EL
7.98
2.96
DE SK
Arcor
20.0
7.49
1.48
NTL
15.0
0.95
1.37
10.0
LU
Tele2
5.0
0.0
1.81
0.82
UK
CY
CallSat
Figure 115
Figure 116
2.32
2.38
2.85
3.11
3.49
4.07
4.90
5.93
EN
8.
LEASED LINES RETAIL TARIFFS
This section contains an overview of prices charged by incumbent operators to end users in
each Member State for national and international leased line services as at 1 September 2006.
Figures do not cover wholesale prices. Price developments are also analysed over the period
August 2000 - September 2006.
The figures and the information are taken from a study carried out by Teligen-HI, United
Kingdom for the Commission. Data on standard retail prices charged by incumbent operators
have been collected in each country.
8.1.
Incumbents' national leased lines
National leased line data is provided for 2005 and 2006. Two distances are covered: 2 km
(local circuits), and 200 km. Tariffs are taken from the incumbent operator in each country.
Other operators may offer other prices. In order to properly reflect the tariff structures used in
some countries, the circuits may be considered in one of two different ways, depending on
tariff structure. The one to apply will differ from carrier to carrier. The principles used in this
report for calculating the price of a full circuit are:
1: When tariff specifies local tail 2: When tariff specifies a single
prices separately, in addition to price for the circuit, end to end,
main circuit.
including local tails.
Local tail length Main
circuit Local tail length Main
circuit
length
length
2 km circuit
1 km
0
0
2 km
200 km circuit
2 km
196 km
0
200 km
Note: The local tail length is per tail, i.e. there will be 2 such tails with each circuit.
Where several tariff options exist depending on type of location, the criteria for choice is as
follows:
• 2 km circuits are always within a major city (usually the Capital)
• 200 km circuits are between a major city and a “minor” city
As the definitions vary between countries, the type of tariff option chosen will also vary (see
details below). The countries where the price may vary with location or other non-distance
related definitions are: Belgium, France, Austria, Finland, Sweden and the United Kingdom.
Some operators apply termination charges per local end, without necessarily covering the
local tail circuit within that charge.
4 types of circuits are covered: 64 kb/s, 2 Mb/s, 34 Mb/s and 155 Mbit/s. As not all carriers
publish tariffs for all these bitrates and all years, there may be some gaps in the information,
especially for higher bitrates.
Some carriers offer 2 Mb/s circuits as both structured and unstructured. In this analysis only
unstructured circuits are included.
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Also, some carriers offer different types of leased lines, often in the form of “basic circuits”
and circuits in a managed network. Only “basic circuits” are included in this analysis, as the
managed network services are not comparable between carriers.
Lately a few carriers have decided not to publish their prices for some or all types of leased
lines. This makes it increasingly difficult to present a full overview of the prices in all 25 EU
countries.
For the USA the prices of Verizon intra-LATA circuits for New York State have been used.
The bitrates of leased lines offered in some countries may be different from the ones found in
most EU Member States. Some operators may offer 56 kb/s instead of 64 kb/s, 1.5 Mb/s
instead of 2 Mb/s, 45 or 50 Mb/s instead of 34 Mb/s, and 140 or 150 Mb/s instead of 155
Mb/s. Prices shown in the tables and graphs in this section of the report have been adjusted
according to the difference in capacity.
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All prices are presented in EURO per year, excluding VAT. National leased lines prices as at
1 September 2006
The validity dates of the tariffs used in this section are:
Belgium
Czech Republic
Denmark
Germany
Estonia
Greece
Spain
France
Ireland
Italy
Valid date
01/06/04
01/07/06
01/06/06
01/07/06
15/06/06
03/04/06
15/05/06
01/08/06
18/06/03
01/11/03
Cyprus
Latvia
Lithuania
Luxembourg
Hungary
Malta
Netherlands
Austria
Poland
Portugal
Valid date
01/01/06
01/06/99
27/06/03
01/05/06
01/01/02
01/12/04
01/04/06
01/09/01
01/01/00
01/09/06
Slovenia
Slovakia
Finland
Sweden
United Kingdom
Japan
USA, Verizon
USA, Pacbell
Valid date
01/12/02
01/09/06
01/01/04
01/01/05
21/05/05
12/03/03
Belgium: Belgacom has divided its network into 4 levels based on “economic concentration”.
The tariffs shown are for circuits within or between level 1 areas, “Very high economic
concentration”. Prices for 155 Mb/s shown here are adjusted from prices for 140 Mb/s
circuits. Local circuits within an exchange area are priced as a regular circuit of the given
distance.
Czech Republic: Telefonica O2 defines prices for all bitrates based on the price of a 64 kb/s
circuit. Coefficients are given for each bitrate available (up to 2 Mb/s), and the price is the
product of the 64 kb/s price and the coefficient.Local circuits are defined as a 0 km circuit. 10
distance zones are defined for circuits with more than 0 km between serving exchanges. There
are no incremental charges (i.e. per km).
Denmark: TDC divides the leased lines into two categories: Local circuits based on distance
bands and whether the two ends are connected to the same exchange or neighboring
exchanges. Long distance circuits connected to different exchanges, divided into 4 distance
bands. There are no incremental charges (e.g. per km). Prices for 155 Mb/s shown here are
adjusted from prices for 140 Mb/s circuits.
Germany: Deutsche Telekom offers different types of circuits. In this analysis the “Standard
Festverbindungen” is used. Tariffs are divided into: a) Local 1 (same exchange); b) Local 2,
up to or above 15 km; c) Long Distance, < 15km, 15 – 50 km, 50 – 150 km, > 150 km. Local
2 and Long distance use incremental (per km) charges. At 34Mb/s and 155 Mb/s access
circuit charges apply, with a distance (per km) element.
Estonia: Elion divides the leased lines into distance bands of 0 – 6 km, 6 – 10 km, 10 – 20 km,
>20 km. Trunk circuits above 20 km use incremental (per km) charges. Local circuits are
priced as a regular circuit of the given length.
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Greece: OTE divides the leased lines into: a) Local circuits, b) Trunk circuits (< 35 km, 35 –
70 km, 70 – 150 km, > 150 km). Trunk circuits use incremental (per km) charges. 64 kb/s
charges are for Hellascom service from 2003. Prices for 2004 are those OTE should apply
according to the EETT decision of December 2003. Prices have since changed again.
Spain: Telefonica strictly divides leased lines according to distance: a) Distance bands: 0 – 4
km, 4 – 20 km, 20 – 70 km, 70 – 300 km, 300 – 500 km, > 500 km. All bands use incremental
(per km) charges. Telefonica does not publish prices for 155 Mb/s circuits. Local circuits
within an exchange area are priced as a regular circuit of the given distance.
France: France Telecom offers leased lines in the products Transfix and Transfix 2.0. Transfix
is the basic service, and the one used in this analysis. The tariff is divided into distance bands:
0 – 10 km, 10 – 50 km, 50 – 300 km, > 300 km. 34 and 155 Mb/s divide at 30 km and 100 km
instead of 50 km. Prices for 2 Mb/s relate to 2,048 kb/s bit rate. 1,920 and 1,984 have
different prices. Prices for 34 and 155 Mb/s circuits relate to circuits with one end in a major
city (zone A), as defined by France Telecom. Local circuits within an exchange area are
priced as a circuit of the given distance. Additional definitions apply for higher speed circuits.
Ireland: EirCom defins the tariff for leased lines with a local end charge, and main link
charges for circuits 0 – 30 km and > 30 km. Local circuits may be made up by 2 local ends,
and no main link. Circuits equal to or above 1 Mb/s have a distance incremental charge for
local ends over 1.5 km.
Italy: All circuits have an access charge per end, and a main link distance related charge per
km. Distance bands are 0 – 60 km, 60 – 300 km, and > 300 km. Circuits from 2 Mb/s and
above are available with various levels of reduced charges depending on contract period and
overall spend. The most basic level is used in this analysis. Local circuits within an exchange
area are priced as two access circuits only.
Cyprus: CYTA divides the leased lines into: a) Subscriber segment, for access. b) Network
segment, between exchanges, at distance bands of 0 – 20 km, 20 – 80 km, > 80 km. Local
circuits within an exchange area are priced as two subscriber segments.
Latvia: Lattelekom circuits have the same price regardless of distance. Prices are only
provided for circuits up to 2 Mb/s.
Lithuania: Lietuvos Telekomas distinguish between circuits inside the local exchange area,
and those beyond the local exchange area.
Luxembourg: P&T Luxembourg divide the leased lines tariff into 4 types of circuits: Same
local network, contiguous local network of same nodal sector, same nodal sector or
contiguous local networks of different nodal sectors, and non-contiguous local networks of
different nodal sectors. This definition relates to the network hierarchy, and not to distance.
Distances at 200 km are not possible. Local circuits within an exchange area are priced as a
circuit in the same local network.
Hungary: Matav applies an access circuit charge for each end of the circuit, and a fixed basic
charge and a per km charge for the trunk part. Matav does not publish prices for national
circuits, so data have not been updated.
Malta: Maltacom has a flat charge regardless of distance, only dependent of bitrate.
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Netherlands: KPN Telecom offer leased lines as Digital Standard and DigiStream services.
Digital Standard is the basic service, and the one used in this analysis. Tariffs are divided into
a charge per connecting point and a main link charge. The main link charge is divided into
two zones: Up to 50 km with a fixed basic charge and an incremental per km charge, and over
50 km with a fixed basic charge. Prices are in effect capped above 50 km. Local circuits
within an exchange area are priced as two access connections plus a short main link of the
given distance. OPTA has found that the market for 2 Mb/s circuits is competitive, meaning
that prices indicated by KPN are maximum prices, and will normally be used as a basis for
negotiating a (lower) price.
Austria: Telecom Austria divides the “Digitaler Stromweg” circuits into 2 categories: Citytarif when both ends of the circuit are in category A cities (a defined list of 68 towns and
cities), and Normal-tarif when the above does not apply. This analysis used the City-Tarif.
The Normal-tarif would in most cases come out more expensive. For the years up to 2000 a
different tariff scheme applied, with a different list of towns, and 3 instead of 2 categories.
The tariff is based on a charge per local end, and a distance related charge per km. The
distance bands vary with bit rate. Local circuits within an exchange area are priced as two
access circuits only.
Poland: Polish Telecom has no recurring charges related to the access. A basic charge plus a
per km charge is applied for the full length of the circuit. Distance bands are divided into 0 –
3 km, 3 – 20 km, 20 – 30 km, 30 – 50 km, 50 – 100 km, 100 – 200 km, over 200 km.
Portugal: Portugal Telecom divides the leased line tariff into local access circuit charge, and a
main link with a fixed and an incremental charge per km. Distance bands are 0 – 10 km, 10 –
30 km, 30 – 50 km, 50 – 100 km, over 100 km. Local circuits connected to the same exchange
will not incur main link charges. Local circuits within an exchange area are priced as two
access circuits only.
Slovenia: Telekom Slovenije divides the leased line tariffs into 3 distance bands: 0 – 5 km, 5
– 50 km and over 50 km. Each of these bands have a basic price and a per km price. Distance
is calculated between serving exchanges.
Slovakia: Slovak Telecom defines the leased line tariff in two parts: Local Access and
Intercity. The Intercity part is divided into 3 distance bands: 0 – 50 km, 50 – 100 km and over
100 km. Prices are given for the 64 kb/s bitrate. Other bitrates between 9.6 kb/s and 2048 kb/s
are calculated based on the 64 kb/s price using a multiplication factor. This factor is different
for Local Access and Intercity circuit parts. For example 2048 kb/s has a factor of 4.4 for the
Local Access and 5.6 for the Intercity part.
Finland: Sonera stopped publishing full 64 kb/s circuit prices in 1998, and has also stopped
publishing 2 Mb/s circuit prices. Local circuit charges were divided into 3 categories: Urban
area, Rural areas I and II. Definitions of these areas relate to individual locations in the Sonera
coverage area. Long distance (main link) charges were also divided into 3 categories: Green,
Red and Blue. Green covers the main 5 cities, red a further 28 towns, and Blue the rest of the
countries. Distance bands are 0 – 50 km, 50 – 100 km, and > 100 km. Incremental charges per
km applied.
Sweden: Telia no longer publishes prices for national leased line. Prices below relate to the
last published price list. Telia divides their network into 5 categories: Metropolitan green and
green for the major cities and towns, red and blue for short distance network in smaller places,
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and white for rural areas. Circuits are priced according to the portion of the circuit falling into
any of these categories on its route. Here the green tariff is assumed, for a circuit between
reasonably large towns. The tariff is divided into local circuits and long distance. Long
distance circuits will have a separate access link charge per end, and a main link charge. Local
circuits are priced in 2 distance bands: 0 – 0.5 km and 0.5 - 3 km. Long distance circuits are
priced in the bands 0 – 20 km, 20 – 40 km, and > 40 km. The latter has an incremental per km
charge.
United Kingdom: BT divides their Kilostream (64 kb/s) and Megastream (2, 34 and 155
Mb/s) tariffs into circuits wholly within City London Zone (0207-area), and circuits with one
or both ends outside London. For local circuits within CLZ the main link does not apply since
both ends are connected to the same exchange (according to the definition used). The price is
calculated as the sum of two local access circuits. Distance bands outside London are < 15 km
and > 15 km. Incremental charges per km applies.
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8.1.1.
64 Kbit/s
Figure 117
Prices for 64kb/s, 2 km circuits
5,400
6000
2,235
886
2,052
2,417
1,128
692
1,200
1,673
1,902
2,065
1,440
1,547
1,668
2,761
1,544
2,466
2,766
2,519
2,118
1,936
1,104
1000
1,233
2000
2,883
3000
2,788
3,360
4000
2,374
€ per year, VAT excluded
5000
0
BE CZ DK DE EE EL
ES FR
IE
IT
CY LV LT
2005
LU HU MT NL AT PL PT
2006
SI
SK SE UK USA USA JP
NY CA
EU24
Blue line represents EU average=2124 €
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135
EN
Figure 118
Prices for 64kb/s, 200 km circuits
16000
13,977
11,168
12000
6,930
7,092
3,224
4,709
5,228
6,168
6,907
PL
4,800
6,654
6,792
CZ DK
3,823
5,022
4,456
0
BE
AT
1,547
2000
5,831
3,735
4,561
3,002
4000
5,833
6000
6,578
8000
6,627
9,115
10000
5,720
14000
DE
EE
EL
ES
FR
IE
IT
CY LV
2005
LT
HU
NL
2006
PT
SI
SK
SE UK USA USA JP
NY CA
EU22
8.1.2.
2 MBit/sec
Figure 119
Prices for 2Mb/s, 2 km circuits
22,680
25000
CZ DK
DE
EE
FR
IE
IT
CY LV
2005
LT
2006
136
AT
PL
PT
SI
SK
3,101
4,836
4,287
5,857
NL
3,480
3,600
HU
5,636
8,118
7,528
4,588
6,448
7,154
7,228
ES
4,571
EL
7,500
8,250
BE
4,080
2,145
0
8,338
9,441
10000
5000
EN
12,132
13,320
15,279
15000
6,559
20000
SE UK USA USA JP
NY CA
EU24
EN
EN
137
EN
Figure 120
Prices for 2Mb/s, 200 km circuits
80000
70,328
BE
CZ DK
DE
EE
EL
IE
IT
CY LV
2005
LT
56,908
NL
31,462
45,943
43,911
35,990
35,232
27,120
16,200
HU
8,693
0
19,115
16,657
6,434
10000
6,448
FR
43,297
49,137
ES
22,909
23,100
20000
35,345
30000
39,504
40000
39,450
43,537
50000
53,621
58,336
60000
24,051
70000
AT
2006
PL
PT
SI
SK
SE UK USA USA JP
NY CA
EU22
8.1.3.
34 Mbit/s
Figure 121
Prices for 34 Mb/s, 2 km circuits
60000
48,650
32,786
40,705
42,193
27,492
26,112
18,000
18,945
11,730
12,653
10000
30,600
35,772
37,076
46,605
47,340
35,352
30000
20000
44,919
47,476
40000
20,302
50000
0
BE
DK
DE
EE
EL
ES
FR
IE
IT
2005
EN
CY
2006
138
LT
LU
AT
PT
SI
UK
USA
NY
USA
CA
JP
EU16
EN
Figure 122
Prices for 34 Mb/s, 200 km circuits
600000
505,225
419,255
DK
DE
EE
EL
ES
FR
IE
IT
2005
305,547
167,637
64,122
84,756
0
BE
264,240
194,400
262,348
231,720
109,980
108,273
107,637
116,981
100000
211,458
200000
272,954
300000
112,099
400000
225,634
500000
CY
LT
2006
AT
PT
SI
UK
USA
NY
USA
CA
JP
EU15
8.1.4
155 Mbit/s
Figure 123
Prices for 140/155 Mb/s, 2 km circuits
145,429
160000
127,346
140000
96,575
108,000
100000
0
BE
DK
DE
EL
FR
IE
2005
EN
IT
CY
2006
139
LT
LU
AT
39,274
23,459
25,260
12,653
20000
39,043
40000
50,760
57,790
60000
36,000
76,200
80000
71,904
120000
SI
UK
JP
EU13
EN
EN
140
EN
Figure 124
Prices for 140/155 Mb/s, 200 km circuits
1,277,029
1400000
872,717
1000000
DK
DE
388,800
194,114
252,660
EL
119,736
460,800
BE
144,360
0
144,632
400000
200000
485,700
600000
FR
IE
2005
IT
2006
CY
LT
AT
239,482
699,839
800000
224,963
1200000
SI
UK
JP
EU12
EN
141
EN
8.2.
National leased lines price trends (1 august 1998 - 1 september 2006)
Figure 125
EU average price variation since 1998, 64 kb/s
0%
-5%
% change since 1998
-10%
-13%
-17%
-15%
-18%
-21%
-22%
-20%
-19%
-18%
-22%
-20%
-25%
-23%
-27%
-30%
-26%
-30%
-35%
-32%
-35%
-34%
-40%
1998
1999
2000
2001
2 km
EN
142
2002
2003
2004
2005
2006
200 km
EN
Figure 126
EU average price variation since 1998, 2 Mb/s
0%
-5%
-10%
% change since 1998
-10%
-14%
-16%
-16%
-15%
-22%
-22%
-46%
-45%
-45%
2004
2005
2006
-20%
-19%
-26%
-28%
-25%
-30%
-28%
-30%
-35%
-33%
-40%
-41%
-45%
-50%
1998
1999
2000
2001
2002
2 km
2003
200 km
Figure 127
EU average price variation since 1998, 34 Mb/s
-2%
0%
-10%
% change since 1998
-17%
-15%
-20%
-24%
-25%
-25%
-27%
-29%
-32%
-30%
-32%
-40%
-43%
-50%
-46%
-46%
-52%
-52%
-52%
2004
2005
2006
-60%
1998
1999
2000
2001
2002
2 km
EN
2003
200 km
143
EN
8.3.
International leased lines prices
This section examines the standard retail prices (annual rental) for international leased line
services (half-circuits in each country) charged by the incumbent operators in each Member
State. An analysis of the price development over the period from August 1998 to September
2006 is also included.
Three destinations are covered: international half circuits to the nearest EU country (hereafter
“near EU”), to the most distant EU country (“far EU”) and to the USA.
Three types of circuits are considered: digital 64 Kbit/s, 2 Mbit/s and 34 Mbit/s. Given that
price information on 155 Mbit/s international lines is only available for a few Member States,
the analysis of these circuits is omitted.
The data is presented with the following parameters:
• All charges in Euro per year
• Excluding VAT
• Variable / 1 year contract (shortest term available).
• AT&T prices are used for USA
8.3.1.
64 Kbit/s
Figure 128
64 kb/s half-circuit prices to Near EU country
45000
37,467
32,708
35000
30000
25000
BE
EE
EL
ES
FR
IE
IT
2005
LV
LT
2006
4,404
6,600
LU
HU
MT
NL
PL
PT
SI
11,118
9,096
14,259
CY
7,201
9,457
7,332
10,827
5,142
DK
6,769
CZ
7,855
4,375
0
0
5000
9,600
10000
12,982
15000
10,402
16,913
20000
10,560
38,677
40000
SK
UK USA
EU20
EN
144
EN
Figure 129
64 kb/s half-circuit prices to Distant EU country
100000
87,432
90000
70000
60000
BE
EL
ES
FR
IE
IT
CY
2005
LT
LU
2006
HU
MT
NL
PL
PT
13,152
12,000
12,000
24,806
25,423
8,304
LV
SI
15,883
35,821
18,914
16,361
EE
13,777
DK
8,415
0
14,352
14,488
CZ
10000
12,595
12,996
22,800
26,187
30000
20000
38,677
40000
45,978
50000
0
80000
SK
UK USA
EU20
Blue line represents EU average= 12960€
Figure 130
64 kb/s half-circuit prices to USA
83,368
90000
80000
58,524
60000
50000
35,254
41,899
DK
EL
ES
FR
IE
IT
8,808
15,816
25,004
25,423
27,227
24,072
16,361
12,126
15,240
EE
CY
LV
2005
LT
2006
LU
HU
MT
NL
PL
PT
SI
0
CZ
0
BE
8,781
0
12,610
0
10000
14,400
20000
21,997
30000
11,040
40000
25,946
70000
SK
UK USA
EU19
EN
145
EN
8.3.2.
2 Mbit/s
Figure 131
2 Mb/s half-circuit prices to Near EU country
621,823
700000
400000
300000
373,803
438,094
500000
BE
CZ
DK
EL
ES
FR
IE
IT
CY
LV
2005
LT
LU
2006
HU
MT
NL
PL
PT
SI
88,942
75,012
84,000
169,131
81,276
134,049
59,976
26,976
145,465
73,324
117,492
44,441
132,448
180,304
EE
84,480
62,703
0
0
100000
30,625
200000
110,400
600000
SK
UK USA
EU20
Figure 132
2 Mb/s half-circuit prices to Distant EU country
1400000
1,162,951
1000000
800000
EL
IE
IT
CY
LV
2005
LT
2006
LU
HU
MT
NL
PL
PT
SI
127,060
248,058
144,240
245,685
109,236
250,875
170,225
178,047
163,796
FR
261,872
142,326
ES
120,969
EE
151,200
DK
206,628
CZ
100,800
BE
0
116,036
0
200000
116,966
SK
536,033
400000
438,094
600000
211,200
1200000
UK USA
EU20
EN
146
EN
Figure 133
2 Mb/s half-circuit prices to USA
1,118,942
1200000
651,707
800000
EE
EL
FR
IT
CY
2005
LV
2006
LT
PL
PT
184,629
NL
0
245,685
116,976
192,171
190,858
418,994
IE
178,047
127,164
160,620
252,425
ES
139,200
DK
352,355
CZ
148,032
BE
0
0
145,200
200000
126,000
400000
207,568
600000
113,492
1000000
LU
HU
MT
SI
SK
UK
EU19
Blue line represents EU average=169384€
EN
147
EN
8.3.3.
34 Mbit/s
Figure 134
34 Mb/s half-circuit prices to Near EU country
800000
100,000
954,084
1000000
116,905
1,154,400
600000
0
0
BE
CZ
DK
EE
EL
ES
IE
IT
2005
LV
2006
LT
300,048
285,108
200000
116,905
262,499
400000
285,108
501,451
1200000
1,014,472
1,262,125
1400000
LU
NL
PT
SI
EU13
Figure 135
34 Mb/s half-circuit prices to Distant EU country
1,438,823
1400000
800000
871,200
1000000
1,068,297
1,145,448
1200000
1,481,304
1600000
600000
400000
0
200000
0
CZ
EL
ES
2005
IT
2006
NL
PT
EU5
Blue line represents EU average= 1222232 €
EN
148
EN
Figure 136
34 Mb/s half-circuit prices to USA
1,644,744
1500000
1000000
801,600
1,068,297
2000000
2,079,696
2,271,826
2500000
0
500000
0
CZ
EL
ES
2005
IT
2006
NL
PT
EU6
Blue line represents EU average= 1579538 €
8.4.
International leased lines price trends (1 August 1998 - 1 September 2006)
Figure 137
Average price variation, 64 kb/s
0%
0%
0%
% change since 1998
-10%
-20%
-20%
-20%
-22%
-15%
-15%
-21%
-21%
-26%
-26%
-26%
-30%
-33%
-40%
-41%
-43%
-49%
-50%
-54%
-45%
-45%
-50%
-50%
-55%
-55%
-47%
-53%
-56%
-60%
1998
1999
2000
2001
to near EU country
EN
2002
2003
to distant EU country
149
2004
2005
2006
to USA
EN
EN
150
EN
Figure 138
Average price variation, 2 Mb/s
0%
0%
0%
-10%
-17%
% change since 1998
-16%
-20%
-21%
-30%
-25%
-25%
-27%
-27%
-35%
-35%
-40%
-35%
-38%
-48%
-50%
-52%
-50%
-58%
-60%
-50%
-51%
-52%
-52%
-53%
-58%
-58%
-59%
-52%
-70%
1998
1999
2000
2001
to near EU country
EN
2002
2003
to distant EU country
151
2004
2005
2006
to USA
EN
EXCHANGE RATES AND POPULATION
8.5.
Exchange rate used (except tariffs).
Belgium
Czech
Republic
Denmark
Germany
Estonia
Greece
Spain
France
Ireland
Italy
Cyprus
Latvia
Lithuania
Luxembourg
Hungary
Malta
1
0,03535
19
0,13410
94
1
0,06391
16
1
1
1
1
1
1,73400
38
1,43657
52
0,28962
1
0,00362
48
2,32937
3
Netherlands
Austria
Poland
1
0,25376
85
Portugal
1
Slovenia
0,00417
36
Slovakia
0,02684
85
Finland
1
Sweden
0,10726
74
UK
1,48301
94
SOURCE: OJ C196/1 OF
4.10.2006
8.6.
Exchange rate used for tariff (on the mobile tariff - section 5, public voice
telephony tariffs - section 8 and leased line tariffs - section 9).
Belgium
Czech
Republic
EN
1
0,03533
152
EN
Denmark
Germany
Estonia
Greece
Spain
France
Ireland
Italy
Cyprus
Latvia
Lithuania
Luxembourg
Hungary
Malta
Netherlands
Austria
Poland
Portugal
Slovenia
Slovakia
Finland
Sweden
UK
Japan
USA
0,13404
1
0,06006
1
1
1
1
1
1,74581
1,43287
0,28962
1
0,00358
2,31965
1
1
0,25056
1
0,00417
0,02647
1
0,10695
1,48324
0,00665
0,77876
Euro rates as of 4
September 2006
PPP rates from Eurostat,
2005
8.7.
Population
2005
EN
2006
BE
10445900
10 511 400
CZ
10220600
10 251 100
DK
5411400
5 427 500
DE
82500800
82 455 800
EE
1347000
1 344 700
EL
11073000
11 122 900
ES
43038000
43 758 300
FR
60561200
62 886 200
IE
4109200
4 209 000
153
EN
IT
EN
58462400
58 751 700
CY
749200
766 400
LV
2306400
2 294 600
LT
3425300
3 403 300
LU
455000
459 500
HU
10097500
MT
402700
NL
16305500
16 335 500
AT
8206500
8 265 900
PL
38173800
38 157 100
PT
10529300
10 569 600
SI
1997600
2 003 400
SK
5384800
5 389 200
FI
5236600
5 255 600
SE
9011400
9 047 800
UK
60034500
60 416 200
EU 15
385380700
389 472 900
EU 10
74104900
74 090 800
EU 25
459485600
Source: Eurostat web site as of 1.10.2006
463563700
154
10 076 600
404 400
EN
9.
OECD TELECOMMUNICATIONS BASKET DEFINITIONS
9.1.
National PSTN basket
Business basket results exclude VAT. Residential basket results include VAT.
The non-recurring charge is calculated as an average between the charge for a new line
installation, and the charge for “same day takeover”, i.e. when there is a direct transfer from
the previous to the new customer. Valid for both Business and Residential baskets.
Weight
50%
50%
Non-recurring charge calculation
New line connection charge
Same day takeover connection charge
The non-recurring charge is depreciated over 5 years. An exception is made for countries
where the connection charge has a lifetime value (e.g. Japan, where the connection is a
tradable asset). Valid for both Business and Residential baskets.
Weight
5
20
Non-recurring charge depreciation
With normal one-off charge
Where connection is a tradable asset
Annual rental for the service is included in the basket. Any additional recurring charges (per
year) shall also be included (e.g. charges related to the use of specific calling plans).
Where the service (or tariff plan) includes a number of “free” calls or minutes, or any other
call-related allowance, the value of this allowance is deducted from the usage. The value of
the deducted allowance cannot be higher than the usage. Where the tariff clearly specifies that
the allowance is related to specific types of calls (e.g. local, international), the usage in
question shall only cover the defined type(s) of calls.
The number of calls to fixed line phones (i.e. excluding calls to mobile phones) is defined as:
Calls per year
3567
1215
Number of national fixed line calls
Business basket
Residential basket
The national usage will have a weighted distribution over 14 distances. Call charges relevant
at each of these distances shall be used.
Km 3
Bus 53
Res 60
7
11
14
12
7
5
17
4
3
22
2.5
1.5
27
3
2.5
40
3.5
2.5
75
3.5
2.5
110
2.5
1.5
135
2
1.3
175
1.5
1
250
1.5
1
350
1
0.8
490
4
3.5
Bus = Business basket, Res = Residential basket. All weights in percent of total number of
fixed line calls.
The national usage will have a weighted distribution over six time and day points. Call
charges relevant at each of these time and day points shall be used.
Day/Time
Bus
Res
EN
We 11:00
45.4
26.3
We 15:00
40.6
22.1
We 20:00
7
25.6
155
We 03:00
0.8
3
Sa 11:00
5.7
10
Su 15:00
0.5
13
EN
fixed line calls.
We = Weekdays, Sa = Saturdays, Su = Sundays.
EN
156
EN
National call duration will vary with distance and time of day. The charge for each call shall
reflect the actual charge for the duration in question, as defined by the tariff. Call setup and
minimum charges shall be included.
Day/Time
Weekday daytime
Distance
Bus
Res
3-12 Km
2.5
2.5
17-40 Km
3.5
3.5
40-490 km
4.5
3.5
Weekday
weekends
3-12 km
2.5
3.5
evenings,
17-40 Km
3.5
6
nights
and
40-490 Km
4.5
7
Bus = Business basket, Res = Residential basket. Duration in minutes per call.
9.2.
International PSTN basket
The international PSTN basket, when used separately, shall reflect the cost of a single call,
calculated according to the weighting method described below. No fixed charges are included.
Call charges for calls to all other OECD Member States shall be used. Peak and off-peak time
call charges are used, defined as the highest (most expensive) charge and the lowest (least
expensive) charge.
Call cost is based on average per minute charge. Call setup charges and/or different charges
for first and additional minutes are included.
The charges to different destinations are weighted according to the ITU call volume statistics.
An average over the latest 5 years of available traffic statistics is used. As there may be gaps
in the ITU statistics for certain destinations from some countries, calls on such routes are
excluded from the calculation.
Call charges are weighted between peak and off-peak:
Business basket
Residential Basket
Peak time weight
75.0 %
25.0 %
Off-peak time weight
25.0 %
75.0 %
Call duration differ between peak and off-peak time:
Business basket
Residential Basket
9.3.
Peak time
3 minutes
3 minutes
Off-peak time
5 minutes
5 minutes
Composite national – international basket
This basket is based on a combination of the national and international baskets, as described
above. The national basket remains unchanged, and the international basket is scaled using a
fixed number of international calls.
The number of calls to fixed line phones (i.e. excluding calls to mobile phones) is defined as:
Calls per year
Number of national fixed line calls
EN
157
EN
Business basket
Residential basket
3600
1200
The international portion of the basket shall have a number of calls equal to 6% of the
national fixed line calls, in addition to the calls defined in the national portion of the basket.
Business basket
Residential basket
EN
International calls per year
216
72
158
EN
Calls to mobile phones are added to the basket. The number of calls shall be 10% of the
number of national fixed line calls, in addition to the fixed line calls.
Calls to mobile phones
Business basket
Residential basket
Calls per year
360
120
Call duration
2
2
Call duration in minutes per call.
A weighted distribution over six time and day points is used. Call charges relevant at each of
these time and day points shall be used.
Day/Time
We 11:00
We 15:00
We 20:00
We 03:00
Sa 11:00
Su 15:00
Bus
45.4
40.6
7
0.8
5.7
0.5
Res
14.3
22.1
31.6
3
13
16
fixed line calls.
We = Weekdays, Sa = Saturdays, Su = Sundays.
Call duration will vary with distance and time of day. The charge for each call shall reflect the
actual charge for the duration in question, as defined by the tariff. Call setup and minimum
charges shall be included.
Day/Time
Weekday daytime
Distance
Bus
Res
3-12 Km
3.5
2.5
17-40 Km
3.5
3.5
40-490 km
3.5
3.5
Weekday
weekends
3-12 km
3.5
3.5
evenings,
nights
17-40 Km
3.5
6
and
40-490 Km
3.5
7
Bus = Business basket, Res = Residential basket. Duration in minutes per call.
9.4.
New OECD baskets for PSTN 2006
Number of calls per year
Number of calls per year
OECD Residential basket, Low Usage
OECD Residential basket, Medium Usage
OECD Residential basket, High Usage
OECD Business basket, SOHO
OECD Business basket, SME
National calls
456
900
1560
1206
2016
Calls to mobile
114
276
744
522
560
International calls
30
24
96
72
224
Total calls
600
1200
2400
1800
2800
The SME basket shall also reflect 30 lines and users.
Distribution over time
Fixed call distribution over time
Mobile call distribution over time
EN
We 11.00 We 15.00 We 20.00 We 03.00 Sa 11.00
30.2%
28.1%
23.6%
0.9%
8.2%
27.5%
28.0%
23.0%
2.0%
8.0%
30.0%
30.4%
20.0%
0.6%
8.5%
39.5%
39.3%
7.5%
3.6%
5.5%
40.2%
40.5%
6.5%
3.4%
4.7%
We 11.00 We 15.00 We 20.00 We 03.00 Sa 11.00
28.6%
28.6%
20.5%
0.6%
10.1%
29.1%
30.5%
20.5%
0.7%
8.5%
30.0%
30.4%
20.0%
0.6%
8.5%
39.5%
39.5%
4.5%
0.3%
9.0%
44.0%
42.0%
1.2%
0.1%
6.3%
159
Su 15.00
9.0%
11.5%
10.5%
4.6%
4.7%
Su 15.00
11.6%
10.7%
10.5%
7.2%
6.4%
EN
Distribution over distance
Fixed call distribution over distance
Fixed call distribution over distance
3 km
62.0%
56.7%
63.0%
55.5%
57.2%
75 km
2.1%
3.2%
1.9%
3.3%
3.0%
7 km
14.5%
13.3%
14.7%
13.0%
13.4%
110 km
1.2%
1.9%
1.1%
2.0%
1.8%
12 km
5.2%
4.7%
5.2%
4.6%
4.9%
135 km
1.0%
1.6%
0.9%
1.7%
1.5%
17 km
3.1%
2.8%
3.1%
2.9%
3.0%
175 km
0.8%
1.3%
0.7%
1.4%
1.2%
22 km
1.6%
1.4%
1.6%
1.5%
1.5%
250 km
0.8%
1.3%
0.7%
1.4%
1.2%
27 km
2.1%
3.2%
1.9%
3.3%
3.0%
350 km
0.6%
1.0%
0.6%
1.1%
0.9%
We 03.00 Sa 11.00
4.7
4.5
4.7
4.5
4.7
4.5
2.1
2.3
2.1
2.3
We 03.00 Sa 11.00
7
6.6
7
6.6
7
6.6
3
3.1
3
3.1
We 03.00 Sa 11.00
2.1
1.9
2.1
1.9
2.1
1.9
1.7
1.7
1.7
1.7
Su 15.00
4.5
4.5
4.5
2.3
2.3
Su 15.00
6.6
6.6
6.6
3.1
3.1
Su 15.00
1.9
1.9
1.9
1.7
1.7
40 km
2.1%
3.2%
1.9%
3.3%
3.0%
490 km
2.9%
4.4%
2.7%
5.0%
4.4%
Call durations in minutes
Call durations 3-22 km
We 11.00
3.7
OECD Residential basket, Medium Usage 3.7
3.7
1.9
1.9
Call durations >22 km
We 11.00
4.4
4.4
2.2
2.2
Call durations to mobile
We 11.00
1.8
1.8
1.8
1.6
We 15.00
3.7
3.7
3.7
1.9
1.9
We 15.00
4.4
4.4
4.4
2.2
2.2
We 15.00
1.8
1.8
1.8
1.6
1.6
We 20.00
4.7
4.7
4.7
2.1
2.1
We 20.00
7
7
7
3
3
We 20.00
2.1
2.1
2.1
1.7
1.7
International calls
International calls
Distribution
Peak
Off-peak
33%
67%
OECD Residential basket, Medium Usage 33%
67%
33%
67%
80%
20%
80%
20%
EN
160
Call duration (minutes)
Peak
Off-peak
5.5
7.2
5.5
7.2
5.5
7.2
2.9
3.9
2.9
3.9
EN
9.5.
OECD mobile baskets 2002
All baskets will include:
Registration or installation charges with 1/3 of the charges, i.e. distributed over 3 years.
Monthly rental charges, and any option charges that may apply to the package, or package
combination.
The three new baskets are:
Low user basket. The usage level of this basket is low, with a call volume less than half of
that in the Medium user basket.
Medium user basket. This basket will have 75 outgoing calls per month.
High user basket. The usage level is about twice the Medium user basket.
The usage profiles will also include a number of SMS messages per month.
Call and message volumes for each basket are:
Low user
Medium user
High user
Outgoing calls /month
25
75
150
SMS per month
30
35
42
The information received showed that there is little difference between the average pre-paid
usage and the low user post-paid usage. The low user basket can therefore be used for both
pre- and post-paid tariffs, allowing a simple comparison also between the two types.
Only national calls are included in the profiles, with 4 different destinations:
Local area fixed line calls. This is used to accommodate the tariffs that have separate charges
for the local area. When such charges are not available, this proportion of calls is included in
the National.
National fixed line calls. This covers all fixed line calls outside the local area, except in cases
as noted above.
Same network mobile calls (On-net). This includes all calls made to mobiles in the same
mobile network as the caller.
Other network mobile calls (Off-net). This includes calls to all other mobile networks in the
caller’s country. When the charges are different depending on destination network, the market
shares based on subscriber numbers are used for weighting the charges. Up to 3 other
networks will be considered in each country.
Distributions per destination for each basket are:
% of total
Fixed Local
number of calls
area
Low user
28.0%
EN
Fixed National On-net mobile Off-net mobile
area
14.0%
40.0%
18.0%
161
EN
Medium user
High user
24.0%
26.0%
12.0%
14.0%
43.0%
42.0%
21.0%
18.0%
As the information received produced little evidence on the split between local and national
fixed line calls, the assumption has been used that the ratio would be 2:1 for local:national,
i.e. 67% local and 33% national. This assumption is taken from the averages in fixed baskets,
and the scarce information received.
Instead of splitting time and day into distinct times and days the following approach will be
used:
Peak time calls at weekdays, most expensive time during daytime.
Off-peak time calls at weekdays, cheapest time before midnight.
Weekend time calls, at daytime Sundays.
Distributions over time and day for each basket are:
% of total number
of calls
Low user
Medium user
High user
ToD
Peak
38.0%
47.0%
63.0%
ToD
Off-peak
35.0%
30.0%
22.0%
ToD Weekend
Dur Mobile
On-net
1.4
1.9
2.0
Dur Mobile
Off-net
1.4
1.9
2.1
27.0%
23.0%
15.0%
There will be 3 separate call durations:
Local and national fixed line calls
Same network mobile calls (On-net)
Other network mobile calls (Off-net)
Call durations for each basket are:
Minutes per call
Low user
Medium user
High user
Dur
Fixed National
1.6
2.1
2.2
Any call allowance value included in the monthly rental will be deducted from the usage
value once the basket is calculated. The deduction cannot be larger than the actual usage
value, i.e. negative usage is not allowed. No transfer of unused value to next month is taken
into account.
Any inclusive minutes will be deducted from the basket usage before starting the calculation
of usage cost. The inclusive minutes are assumed to be used up with the same calling pattern
that is described in the basket, i.e. the same peak/off-peak ratio and the same distribution
across destinations. Where the inclusive minutes are clearly limited to specific destinations or
times of day this will be taken into account. No transfer of unused minutes is taken into
account.
EN
162
EN
Any inclusive SMS-messages will be deducted from the basket before starting the calculation
of the SMS message cost, up to the number of messages in the basket.
For each of the operators covered a set of packages shall be included so that the cheapest
package offered by that operator can be calculated for each of the 3 baskets.
Multiple operators in each country shall be included, with at least the two operators with
highest number of subscribers in each country. The operators included shall have a total
market share of at least 50% based on subscriber numbers.
Basket results are calculated for a period of one year.
9.6.
New OECD mobile baskets 2006
The basket structure remains the same as with the 2002 version of the baskets, with a few new
additions. All baskets will include:
Registration or installation charges with 1/3 of the charges, i.e. distributed over 3 years.
Monthly rental charges, and any option charges that may apply to the package, or package
combination.
Usage charges for voice calls and SMS and MMS message, as defined by the usage profile.
EN
163
EN
The three baskets are:
Low user basket. The usage level of this basket is low, with a call volume less than half of
that in the Medium user basket.
Medium user basket. This basket will have 65 outgoing calls per month.
High user basket. The usage level is about twice the Medium user basket.
The usage profiles will also include a number of SMS and MMS messages per month. The
number of MMS is low, reflecting a new service with still little use.
Call and message volumes for each basket are:
Outgoing
/month
30
65
140
Low user
Medium user
High user
calls SMS per month
33
50
55
MMS per month
0.67
0.67
1
The information received showed that there is little difference between the average pre-paid
usage and the low user post-paid usage. The low user basket can therefore be used for both
pre- and post-paid tariffs, allowing a simple comparison also between the two types.
Only national calls are included in the profiles, with 5 different destinations:
Local area fixed line calls. This is used to accommodate the tariffs that have separate charges
for the local area. When such charges are not available, this proportion of calls is included in
the National.
National fixed line calls. This covers all fixed line calls outside the local area, except in cases
as noted above.
Same network mobile calls (On-net). This includes all calls made to mobiles in the same
mobile network as the caller.
Other network mobile calls (Off-net). This includes calls to all other mobile networks in the
caller’s country. When the charges are different depending on destination network, the market
shares based on subscriber numbers are used for weighting the charges. Up to 3 other
networks will be considered in each country.
Voicemail calls. This reflects calls made to retrieve voicemail messages from the on-net
voicemail service.
Distributions per destination for each basket are:
% of total
number
of
calls
Low user
Medium user
High user
EN
Fixed
Local
Fixed
National
On-net
mobile
Off-net
mobile
Voicemail
15%
14%
13%
7%
7%
7%
48%
48%
47%
22%
24%
26%
8%
7%
7%
164
EN
As the information received produced little evidence on the split between local and national
fixed line calls, the assumption has been used that the ratio would be 2:1 for local:national,
i.e. 67% local and 33% national. This assumption is taken from the averages in fixed baskets,
and the scarce information received.
Instead of splitting time and day into distinct times and days the following approach will be
used:
Peak time calls at weekdays, most expensive time during daytime.
Off-peak time calls at weekdays, cheapest time before midnight.
Weekend time calls, at daytime Sundays.
EN
165
EN
Distributions over time and day for each basket are:
% of total number
of calls
Low user
Medium user
High user
ToD Peak
ToD Off-peak
ToD Weekend
48%
50%
60%
25%
24%
19%
27%
26%
21%
There will be 4 separate call durations:
Local and national fixed line calls
Same network mobile calls (On-net)
Other network mobile calls (Off-net)
Voicemail calls
Call durations for each basket are:
Minutes
per
call
Low user
Medium user
High user
Dur
Fixed Dur
Mobile Dur
Mobile Dur Voicemail
National
On-net
Off-net
1.5
1.6
1.4
0.8
1.8
1.9
1.7
0.8
1.7
1.9
1.8
0.8
Any call allowance value included in the monthly rental will be deducted from the usage
value once the basket is calculated. The deduction cannot be larger than the actual usage
value, i.e. negative usage is not allowed. No transfer of unused value to next month is taken
into account.
Any inclusive minutes will be deducted from the basket usage before starting the calculation
of usage cost. The inclusive minutes are assumed to be used up with the same calling pattern
that is described in the basket, i.e. the same peak/off-peak ratio and the same distribution
across destinations. Where the inclusive minutes are clearly limited to specific destinations or
times of day this will be taken into account. No transfer of unused minutes is taken into
account.
Any inclusive SMS- and MMS-messages will be deducted from the basket before starting the
calculation of the SMS and MMS message cost, up to the number of messages in the basket.
For each of the operators covered a set of packages shall be included so that the cheapest
package offered by that operator can be calculated for each of the 3 baskets.
Multiple operators in each country shall be included, with at least the two operators with
highest number of subscribers in each country. The operators included shall have a total
market share of at least 50% based on subscriber numbers.
Basket results are calculated for a period of one year.
EN
166
EN

403 VOLUME 1 COMMISSION STAFF WORKING

Transcription

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