Mobile Broadband A Substitute For Fixed?

Transcription

1 Mobile Broadband A Substitute For Fixed? Wolfgang Feiel Head of Legal

2 Yes under certain circumstances th ANACOM Seminar: Mobile Broadband - A Substitute For Fixed? page 2

3 Contents Market definition: reliable data necessary Instrument for market definition: HM-Test Market definition retail: focus on DSL Wholesale market for business customers only EC had serious doubts The way to convince the Commission th ANACOM Seminar: Mobile Broadband - A Substitute For Fixed? page 3

4 1) (Draft) market definition: reliable data necessary EC: Market for wholesale broadband access, but no retail market RTR: Observation of retail market may give information for situation/competition on wholesale market Various sources for data Market data from 2009, according to KEV Market research by reputable institution (IFES): 3000 retail customers, 1000 undertakings (SME); usage of internet access, (potential) substitutions ULL-data: quarterly reports by incumbent MNOs are investing in higher bandwith: HSPA+, LTE; connection to basestations th ANACOM Seminar: Mobile Broadband - A Substitute For Fixed? page 4

5 Text Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu DSL-Anschlüsse incumbentta Bitstream Bitstreaming im Netz der TA Entbündelte ULL Leitung Koaxialkabel CATV th Funk ANACOM FWA Seminar: Mobile Sonstige other Broadband - A Substitute mobiles For Fixed? Breitband page 5

6 Developments Strong growth of mobile BB (contracts with 250MB/month) Leads to stagnation/ decline of DSL/CATV Only after significant price decrease, fixed connections are growing again Margin for alternative operators became smaller -> decline in bitstream, ULL stagnating Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu Qu DSL-Anschlüsse TA TA Bitstreaming im Netz TA der TA ULL Entbündelte Leitung Koaxialkabel CATV Funk FWA Sonstige other mobile mobiles Breitband 4. Qu Qu th ANACOM Seminar: Mobile Broadband - A Substitute For Fixed? page 6

7 Coverage of technologies Mobile (HSPA) has high (and growing) coverage DSL TA (>95%) Hutchison 3G (>90%) 50% 100% Mobilkom (<90%) T-Mobile (75-80%) Orange (ca. 70%) mobile LLU ULL (all (alle operators) Betreiber) (ca %) CATV (all (alle operators) Betreiber) (ca. 50%) th ANACOM Seminar: Mobile Broadband - A Substitute For Fixed? page 7

8 Broadband access in Austria by technologies, End of March 2009; residential DSL leading (41%) mobile broadband mobiles Breitband 38% DSL DSL-Anschlüsse incumbent TA 30% But mobile already 38%, growing rapidly CATV 20% Other Sonstige <1% < FWA Funk 1% Koaxialkabel CATV 20% 20% DSL-Bitstream im DSL-Bitstream Netz der TA 2% DSL über DSL entbündelte unbundling Leitung 9% 9% th ANACOM Seminar: Mobile Broadband - A Substitute For Fixed? page 8

9 2) Instrument for market definition: HM-test According to SMP-guidelines (2002) SSNIP - small but significant non transitory increase in price Increase of price by 5-10% If the higher price may be maintained: no restraints for the hypothetic monopolist If the higher price may not be maintained: obviously further products (or services) to restrain the hypothetic monopolist product (service) is part of the relevant market How to operate the HM-Test? Reasoned opinion (theory) Empiric data for demand side Determining the extent of substitutional behaviour of customers by elasticity of demand change rate of demanded quantity in relation to change of price th ANACOM Seminar: Mobile Broadband - A Substitute For Fixed? page 9

10 Access residential customers 2006 and 2009 (2009, n=1897) 75% of mobile connections are used mobile only 25% complementary to a fixed connection 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 44,8% 34,9% 32,6% 29,1% 24,8% 27,0% 4,5% 5,9% 3,9% 0,9% ADSL CATV mobiles mobile Breitband Analoges Analogue Andere other broadband Schmalband- narrowband Internet th ANACOM Seminar: Mobile Broadband - A Substitute For Fixed? page 10

11 HM-test: Price for ADSL increases by 10%, prices for other access technologies remain. What will you do within one year? Keine Angabe, weiß No answer; I do not know nicht 9% Ich I keep behalte that diesen internet-access Internetzugang 52% 52% I am Hole not Angebote sure; looking ein, bin for mir different nicht sicher offers 11% Ich I am gebe terminatig diesen Internetzugang this accessauf 3% Ich wechsle zu einem anderen Internetzugang access 25% I am changing type of 25% Cable broadband 6% Kabel-Breitband- Anschluss 6% Mobiles Breitband Broadband über Datenkarte 8% oder USB-Modem 8% Anderer Other 1% 1% Keine No answer, Angabe, I do weiß not nicht know 10% 10% th ANACOM Seminar: Mobile Broadband - A Substitute For Fixed? page 11

12 ja nein, ich plane wieder einen festen Internetanschluss anzuschaffen nein, ich plane zusätzlich einen festen Internetanschluss anzuschaffen nein, aber Wechsel ist nicht möglich Weiß nicht, Keine Angabe % Is mobile broadband a good substitute for the former used fixed access? (residential customers) ,6 8,5 3,5 3,8 13,5 0 yes No, I am going to use fixed access again No, I am going to use fixed access in addition No, but I can not change I do not know; no answer th ANACOM Seminar: Mobile Broadband - A Substitute For Fixed? page 12

13 s Surfen Downloads Online Games Internettelefonie Online Shopping Online Banking Online Communities Teleworking Regular use of broadband access, residential customers, at least once a week, n= % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% th ANACOM Seminar: Mobile Broadband Breitband - A über Substitute Festnetzinfrastruktur For Fixed? Mobiles Breitband page 13 Broadband via fixed access broadband

14 Mobile/CATV/DSL: substitution (residential customers) Based on stated preferences ( What would you do if the price for DSLconnections increased by 10%? ) High own-price elasticity of DSL (-1.8 to -2.8; critical elasticity: -1.1 to -1.4) Best substitute: mobile, but CATV better in areas with CATV-availability Include CATV Repeat test for DSL and CATV -> Elasticity still high (-1.5 to -2.5), mobile best substitute Include mobile Also past switching behaviour shows that many consumers switched from DSL/CATV/narrowband to mobile >70% of users which switched from fixed to mobile broadband are satisfied with their connection. Residential market at retail level includes DSL, CATV and mobile th ANACOM Seminar: Mobile Broadband - A Substitute For Fixed? page 14

15 3) Market definition retail: focus on DSL Incumbent offers mainly DSL-access (retail) Incumbent has to offer DSL-wholesale access (bitstreaming) RTR is to find out: Are all DSL-Products part of the same market? Bandwith, Overbooking, symmetric/asymmetric Business customers/retail customers Experience, reputation, bundled services (VNP, voice, mobile, leased lines), repair & maintenance Products for business customers have special features: static IP-addresses, bigger webspace, enhanced virus-protection, QoS, less overbooking higher difference in price to retail products Even one-person-companies spend 60-90% more money for internet-access than retail customers Only 13% of businesses have a residential product Conclusion: Different retail markets for business customers and residential customers (no sufficient demand side substitution) Both retail markets did not pass 3-criteria-test (not questioned) th ANACOM Seminar: Mobile Broadband - A Substitute For Fixed? page 15

16 4) Wholesale market for business customers only DSL only Mobile broadband, CATV: no substitution Nationwide Ex ante-regulation justified (3-criteria-test) th ANACOM Seminar: Mobile Broadband - A Substitute For Fixed? page 16

17 Three criteria test for wholesale market Entry barriers High entry barriers due to economies of scale, sunk costs and reputation effects First criterion fulfilled No tendency towards effective competition Market share of Telekom Austria: ~75%, slightly decreasing external provision decreases stronger than internal provision increases LLU (60-65% coverage) as only parallel infrastructure Second criterion fulfilled No sufficiency of competition law Access regulation likely to be necessary -> extensive compliance requirements, frequent and/or timely intervention likely Third criterion fulfilled The wholesale broadband access market for business customers is a relevant market in the sense of the Recommendation th ANACOM Seminar: Mobile Broadband - A Substitute For Fixed? page 17

18 5) Commission had serious doubts Market definition at retail level: RTR should have analysed for instance whether all three types of broadband connections can be used for applications such as the download of music or films and whether they provide sufficiently secure connections allowing customers to use any of the connections for internet banking and other applications requiring a protected connection Also, RTR does not make reference to the role that double, triple or quadruple play offers already have in the retail market for residential customers. Market definition at wholesale level: Exclusion of self-supplied bitstream for the subsequent use of residential customers from the relevant wholesale market Inclusion of externally provided bitstream for the subsequent use of residential customers in the relevant wholesale market th ANACOM Seminar: Mobile Broadband - A Substitute For Fixed? page 18

19 6) The way to convince the Commission: IRG Expert Group Opinion of the IRG Expert Group (Nov. 2009): Retail market Market situation in Austria makes the particular case of mobile broadband in Austria particularly interesting Significant amount of Austrian households view mobile and fixed broadband as substitutes as opposed to the more normally accepted complementary use seen in other Member States. RTR has sufficiently shown that Austrian consumers use mobile broadband connections in an almost identical manner that they use fixed ones; broadband connections are secure and are used for internet banking; contract terms and the ability of consumers to move their connections with them from address to address would not change this picture; bundling is not a particular feature of the Austrian market that would inhibit switching. However, situation should be monitored: a move towards more bundled offers may change the analysis. the Expert Group is happy with the extra evidence brought forward by performed SSNIP test since it supports the trends observed in actual market outcomes However: the analysis is only performed at the highest possible price increase (10%) th ANACOM Seminar: Mobile Broadband - A Substitute For Fixed? page 19

20 The way to convince the Commission (II) Providing additional data on short hand Telephone conferences Commission has withdrawn its serious doubts Fixed and mobile broadband are normally not part of the same market But the situation in Austria is specific Remarks by the Commission Close observation of the markets necessary Considering FTTH Timing of market definition and market analysis th ANACOM Seminar: Mobile Broadband - A Substitute For Fixed? page 20

21 Mobile Broadband A Substitute For Fixed? Austrian Regulatory Authority For Broadcasting And Telecommunications (RTR) rtr@rtr.at wolfgang.feiel@rtr.at