Regulatory in Belgium
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From this document you will learn the answers to the following questions:
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1 Regulatory in Belgium Luc Vanfleteren, Director Regulatory At the heart of your digital lifestyle. Investor & Analyst Conference 2008 Mechelen, Belgium May 13,
2 Agenda regulatory Infrastructure based competition Unbundling of cable Sub-national markets Interconnection 2
3 Competition between infrastructures the most significant factor enabling broadband growth is the existence of alternative infrastructures, in particular cable. * Total BB penetration % 70% 60% 50% 40% 30% 20% 10% ES PL FR FI AT UK SL CZ BG NO DE HU R 2 = BE CH DK SE NL High broadband penetration in Belgium a direct result of intense infrastructure competition PC penetrat 90% 80% 70% 60% 50% 40% 30% 20% 10% Correlation between PC and broadband penetration (Dec 2007) Polen Slovaki Griekenland Bulgarije Zweden België VK Malta Frankrijk Luxemburg Slovenië Italië Duitsland Tsjechie Ierlan Estonië Oostenrijk Spanje Lithauwen Letland Portugal Hungarij Romenië Nederland y = 1,7202x + 0,1886 R 2 = 0,848 Denmarken Finland 0% 0% 10% 20% 30% 40% 50% 0% 5% 10% 15% 20% 25% 30% 35% 40% TV Market share of largest cable Operator (%) Broadbandpenetration per capita 3 * Commissioner Reding at the Conference of the International Telecommunications Union (ITU): Telecom World 2006, 4 December 2006.
4 Why viable infrastructure competition is better than service competition Infrastructure competition requires less regulation Infrastructure competition generates more competitive pressure Infrastructure competition leads to faster roll out of new services NRA should take account of these dynamic benefit when taking regulatory decisions SBC IBC Retail price competition Yes Yes Consumer service competition Yes Yes Retail cost efficiency Yes Yes Product innovations Less Yes Price innovations Less Yes Network innovation No Yes Network cost efficiency No Yes 4
5 Competitive pressure from Telenet on Belgacom Increase of speed Introduction of new products ADSL GO 4MB/ ComfortNet 512 kbps/ 128 kbps ADSL Light 512 kbps/ 128 kbps BasicNet 512 kbps/ 128 kbps ADSL Budget 512 kbps/ 128 kbps ComfortNet 4 MB/ 256 kbps BasicNet 1 MB/ 128 kbps 400 kbps ADSL Light 2 MB/ 265 kbps ADSL Budget 1MB/ 128 kbps May 1 June 9 July 1 Dec 14 Dec 10 Jan
6 Unbundling of cable, fiction of reality? Broadband market Full unbundling Bit-stream Position European Commission*: Full unbundling : the unbundling of cable networks at this stage does not compare technologically possible, or economically viable, so that an equivalent service to local loop unbundling cannot be provided over cable network. Bit-stream : Experience under the market analysis so far has indicated that, where cable networks exist, their geographical coverage is often limited and wholesale access to such networks does not constitute a direct substitute for DSL-based wholesale access products from the demand or the supply side, so that inclusion in the same market is not justified. Position BIPT: In line with European Commission 6 *Explanatory not on the recommendation on relevant product and service market, Nov. 2007
7 Unbundling of cable, fiction of reality? Television market Position European Commission: The wholesale broadcasting has been deleted from the list of relevant markets that could be regulated Position regulators: The federal regulator BIPT is also responsible for media in Brussels : market is evolving towards a competitive market and as such competition law is sufficient The Flemish regulator, VRM : in line with position of the European Commission decided not to pursue a market analysis 7
8 Regulatory Sub-national markets, a good idea? 1. In principle national markets 2. Considering sub-national markets by including alternative infrastructures if: Sufficient capacity? Capacity remains scarce on cable Equivalent network coverage? Altnets want national coverage Regional Price policy? Altnets and Incumbents apply national price setting Bitstream equivalence through cable within 1 year? Shared medium, complex and costly Switching costs for access seekers? Altnets invested heavily in ULL and bitstream 8
9 Interconnect Different regulatory approaches 25 Glide path for mobile and fixed in Belgium cent x Average decrease glide path : Mobile 15 % / year Telenet 40% / year Asymmetry increases : 2006: 3 times 2009: 9 times 5 9x 0 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Base Mobistar Proximus Telenet The difference between fixed and mobile termination rates is also rather hard to justify. Commissioner Reding, 8 may
10 Mobile termination negative effects Negative effects High MTR keep retail prices artificially high Countries with high MTR have lower usage High levels of non-transparent subsidies prevent the effective development of intermodal competition and convergence between fixed and mobile Hampers innovation such as VoIP 10
11 Mobile termination the costs What is the real cost? Ranges in Europe from 2 to 18 cent in Europe! Bulgaria Estonia Slovenia Average MTR, July 2007 Switzerland In a competitive market (called party pays) the cost is around 3 cent Netherlands Luxembourg Slovak Rep Portugal Greece Italy Malta European Commission (Redding) estimates the real cost from 1 to 1,5 cent Iceland Poland Czech Rep Ireland Croatia Hungary Spain Denmark Norw ay ARCEP, the French regulator estimates the current real costs from 3 to 4 cent and 2,5 cent in 2010 ERG discussion and recommendation by Mid Germany Belgium Latvia UK Turkey Lithuania France Austria Romania Finland Sweden Cyprus 0,02 0,04 0,06 0,08 0,1 0,12 0,14 0,16 0,18 0,2 :min Source : ERG 11
12 End Investor & Analyst Conference 2008 Mechelen, Belgium May 13,
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