FICORA DSM Seminar 5 October 2015

Transcription

1 FICORA DSM Seminar 5 October 2015

2 Overview Summary of ECTA s regulatory vision What ambition for 2030? Suggestions for reforming the Regulatory Framework Reinforced focus on addressing persisting bottlenecks Pro-competitive mobile policy Creating a Single Market for business services Building blocks of a competitive Single Market Background data 18

3 Re-build the virtuous circle for NGA Competition Demand for new services Investments Choice & affordable prices Innovation 19

4 Key enablers for all players to invest, innovate and compete Two is not enough. Need for effective tools for NRAs to address duopolies/closed oligopolies. Bolstering infrastructure-based competition by ensuring effective access to enduring bottlenecks and pro-competitive co-investment/network sharing. Regulation should ensure the possibility for all players big and small to invest and make fair returns on their investmentsbut should not aim at guaranteeing high returns to a select few by disadvantaging others. Focus on creating a single market for cross border services and improving competitive conditions locally for local & global services. Consistent availability at non-discriminatory price of fit-for-purpose highquality (HQ) business grade wholesale products across the entire EU to boost business productivity and efficiency. Enable switching by business customers between incumbent and alternative operators. Spectrum policy to become more coordinated and pro-competitive. Viable challenger operators actively investing in their own infrastructure should not be squeezed out of the market as a result of protectionist spectrum decisions. 20

5 Reform Regulatory Framework where outdated Effective tools for NRAs to address duopolies/closed oligopolies Ensure that co-investment/network sharing in the last mile improves competition Recognition of business end-users and the distinct characteristics of business service provision across the whole Regulatory Framework Review the e-privacy Directive Reform Universal Service (e.g. remove public payphones, directories & connection at a fixed location but not for disabled users) but broadband to be left out of the USO basic broadband coverage gap closed, no need to expand USO & risk of re-monopolisation. Single authorisation process driven by BEREC Harmonise European MTRs 21

6 Ambition for 2030 All European citizens and businesses should have access to best connectivity encompassing: access to future proof broadband highways that can be readily upgraded that are open platforms, enabling innovation that allow technological independence from the network owner regulatory safeguards ensuring customers have genuine choice and thus can effectively opt for products offering maximum speeds at affordable prices Delivery of the access to best connectivity should be measured by: High take-up of very high speed broadband FTTX coverage Actual speeds delivered to end-users Zero disconnected households for unaffordability reasons Number of very high speed broadband providers a household can choose from Emergence of beat the speed market behaviour Zero tolerance policy to monopolies/duopolies/closed oligopolies across the value chain 22

7 Regulation, competition and investment: lessons learnt (fixed networks) Regulation safeguards competition, which in turn drives investments. Under the current access regime and on the basis of today s investment commitments, Europe will achieve approx. 80% coverage of FTTx by Altnets are not cream skimming without making significant investments of their own they were e.g. pioneers in FTTH/B deployments. There are real life examples that the ladder of investment has worked. Effective LLU, SLU and duct access, at prices which allow a fair return on investments, are key. LLU prices above actual costs delay incumbents investments in fibre. 23

8 Competition has led to higher quality products, increased penetration and lower prices EUR/month Broadband ARPU in the EU Prices have decreased also when taking into account bundling of more innovative services and higher speeds Broadband penetration in the EU % of households 80% 70% 60% 50% 40% 30% 30% 20% 40% 49% 24 71% 73% 68% 66% 63% 59% 55% Affordable prices and attractive products have increased penetration 0 10% 0% ARPU - access only ARPU - with bundled services Commercial in confidence Source: Analysys Mason Research

9 Broadband revenues have increased under the current regulatory framework Fixed broadband revenues in the EU EUR billion Expanding take-up, facilitated by alternative operators, led to an increase in revenues (despite reducing unit prices) All stakeholders benefited from this, including operators who could re-invest in additional network deployment and new network capabilities Commercial in confidence

10 NGA coverage has increased significantly under the current pro-competitive framework % of households 80% 70% 60% 48% 50% 39% 40% 30% 23% 20% NGA coverage in the EU (total and per technology) 19% 14% 10% 7% 54% 43% 30% 25% 20% 8% 62% 46% 37% 31% 25% 11% 68% 47% 38% 32% 15% 7% 7% 7% 0% 6% VDSL FTTC FTTH FTTx Cable NGA FTTB 47% Investments in FTTx access networks in Europe have increased from EUR3.7 billion in 2011 to EUR8.9 billion in 2014 Alternative operators have contributed heavily to the investments in FTTH Alternative operators have also (with cable operators) often played a role as a catalyst they were early adopters of new NGA technologies; incumbents have often responded to these moves Commercial in confidence Source: Analysys Mason Research, European Commission

11 Alternative operators have introduced innovations, including VoIP and IPTV VoIP subscriptions as a percentage of broadband subscriptions in EU 90% 80% IPTV subscriptions as a percentage of broadband subscriptions in EU 25% 27 % of broadband subscribers 70% 60% 50% 40% 30% 20% 10% 0% % of broadband subscribers 20% 15% 10% 5% 0% Incumbents Altnets Incumbents Altnets Commercial in confidence Source: Analysys Mason Research Telecoms Market Matrix

12 74% of Europeans consider that competition has a positive impact on them as consumers Source: Eurobarometer - DG Competition Stakeholder Survey

13 Competition drives affordability & speed the key factors in BB take-up decisions Source: Special Eurobarometer

14 Incumbent hold significant retail broadband shares across all technologies 30 Incumbents share of retail broadband market by technology in EU 100% 90% 80% % of retail subscribers 70% 60% 50% 40% 30% 20% 10% 0% All NGA DSL VDSL Cable FTTH FTTB Jan-15 Jan-14 Jan Commercial in confidence Source: EC Digital Agenda Scoreboard

15 Incumbent wholesale market shares remain high and are not changing rapidly over time Wholesale market shares (including self-supply) for supply of retail broadband connections in the EU of incumbent operators, cable networks and alternative networks 100% 9.4% 9.5% 31 80% 17.4% 17.7% 60% 40% 73.2% 72.8% Other alternative networks Cable networks Incumbent networks 20% 0% Commercial in confidence Jan-14 Jan-15 Source: Analysys Mason based on European Commission and Analysys Mason Research data

16 Focus on enduring economic bottlenecks where you know they will persist (consumer market) Last mile (local loop, sub-loop) is a natural monopolyor duopoly (where cable is present) regardless of being made of copper or fibre Copper LLU regulation created a level playing field evidenced by 42 million unbundled lines across the EU (30% of all fixed lines including cable) Hard-won benefits of competition are at risk in NGA fibre LLU mostly non-existent in the EU, limited SLU VULA is key and a complement -not a substitute -to physical access FTTC/VDSL becoming leading NGA technology & incumbents have 86% of VDSL subscriptions Zero tolerance policy to monopolies/duopolies/closed oligopolies across the value chain & regulation guaranteeing open access networks for digital innovation and technological independence 32

17 33 Appropriate NGA wholesale products need to be defined All architectures FTTC FTTH Equivalence of Inputs should be pursued Duct access can be effective where ducts are in good shape Sub-loop unbundling (SLU) can be effective Removing SLU to allow vectoring seems premature as multi-operator vectoring is under development VULA can be used but needs to be properly designed Fibre unbundling will be critical to allow competition Symmetric access to bottleneck resources such as in-building network Active wholesale access products may also need to be maintained in parallel to passive ones especially for serving multi-site businesses Commercial in confidence

18 Avoid creating closed & uncompetitive mobile markets Pro-competitive spectrum assignment procedures ensuring a sustainable competitive market structure More spectrum for mobile broadband (700 MHz), as and when needed Competitive network sharing Harmonise European MTRs Simple& pro-competitive solution for roaming Access to bottlenecks for mobile operators (e.g. backhaul for small cells, masts) 34

19 Create genuine Single Market for business communications Recognise the (i) distinct characteristics (ii) very often different, cross-border geographic scope of business communications Need for consistent and ubiquitous availability of highquality business grade wholesale access products across the EU (HQ WBA; traditional/ethernet Leased Lines) on suitable and non-discriminatory terms Cutting red tape for cross-border market entry and expansion Remove switching barriers for business customers between incumbent and alternative operators Avoid extending consumer regulation to business services 35

20 Building a pro-competitive Telecoms Single Market Consistent and ubiquitous availability of HQ business grade wholesale access products across the EU (HQ WBA; Leased Lines) Removing switching barriers for business customers Cutting red tape for cross-border market entry and expansion Avoid extending consumer regulation to business services Business services Fixed BB Mobile Ubiquitous open access networks to enable pan- European entry and expansion (physical access & virtual access) New financing models for new fibre infrastructure e.g. sharing, co-investment do not recreate monopolies/ closed oligopolies Pro-competitive spectrum auctions ensuring a sustainable competitive market structure More spectrum for mobile broadband (700 MHz) Competitive network sharing Harmonised MTRs Simple, pro-competitive solution for roaming 36

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22 Competition necessary to drive take-up of NGA networks (cf. historic development of DSL) Retail DSL market st triple play offers: Free Triple play offer of Triple play offer of Telecom (LLU) & France Telecom Neuf Cegetel (LLU) Italia France (LLU) LLU Bitstream France Telecom 0 avr-03 juin-03 oct-03 avr-04 juin-04 oct-04 avr-05 juin-05 oct-05 avr-06 All major leading broadband countries including Germany, France, UK and Nordics have benefited from unbundling of the copper network Competition brought lower prices and new services ( 30 triple play in France) 38

23 39 Unbundling of PON is available in Singapore FTTH network architecture and unbundling in Singapore P2P One fibre per customer Exchange GPON End users Shared fibre for n customers Splitter Exchange GPON unbundling End users Fibre for operator A Splitter A Exchange Fibre for operator B Splitter B End users Commercial in confidence

24 EU groups with more mobile subscribers than large US operators Source: ECTA research 40

25 Does scale drive wireless profitability or investment? No No correlation of size with profitability in European wireless: No correlation of size with capital expenditure ratios in European wireless: Operating free cashflow margin Capex as % of sales Service revenue EURm Service revenue EURm Wireless profitability and investment are much more complex than just bigger = more It s likely that scale benefits are passed to consumers in the medium to long term Figures for W. European wireless operators in each national market, 2013 Operating Free Cashflow = EBITDA minus Capex Source: New Street Research

26 US vs Europe: Europe leads on FTTx availability Comparing NGA availability FTTxavailability in W. Europe has now overtaken the US High-speed cable coverage in the US is well ahead of Europe (as US cable TV coverage is about 95% of homes, compared to just 51% in W. Europe) Source: New Street Research Hard to argue that European NGA availability shows an investment shortfall or policy errors vs the US.

27 Lessons to be learnt from deregulation: the reign of local monopolies & no single market 43

28 Lessons to be learnt from deregulation: less investment 44

29 The EU is ahead of the USA on VDSL and FTTH/B household coverage Current NGA household coverage by technology VDSL FTTH/B NGA cable EU 38% 19% 47% USA 37% 17% 83% Japan - 96% 58% Singapore - 100% 99% New Zealand 80% 29% ~14% 45 Large legacy cable network explains performance of the USA. This is not a result of deregulation EU ahead of USA Reached through public funds Source: Analysys Mason based on Analysys Mason Research, NTIA and operators press releases Recent Analysys Mason Research forecast for 2020 FTTx coverage: EU: 79% USA: 74%

30 Median prices in the EU are lower than those in the USA Comparison of retail median prices, in EUR/PPP (VAT included) >12 30Mbit/s >30 100Mbit/s Standalone Double-play Triple-play 0 Standalone Double-play Triple-play EU28 USA Japan Source: EC s Broadband Internet Access Cost 2014