WIK-Consult Final Study ATTRACTIVENESS OF INVESTMENTS IN THE BELGIAN TELECOMMUNICATION SECTOR

Transcription

1 WIK-Consult Final Study HELL OR PARADISE? ATTRACTIVENESS OF INVESTMENTS IN THE BELGIAN TELECOMMUNICATION SECTOR STUDY FOR PLATFORM TELECOM OPERATORS & SERVICE PROVIDERS Submitted by WIK-Consult GmbH Rhöndorfer Str Bad Honnef Germany Bad Honnef, 18 June 2013

2 Attractiveness Telecommunications Market in Belgium Contents Executive summary V 1 Introduction 1 2 The objectives guiding telecoms policy The Digital Agenda of Europe The Belgian broadband plan The Regulation on measures to reduce the cost of deploying high-speed electronic communications networks The Recommendation on non-discrimination and costing methodologies to promote competition and enhance the broadband investment environment 5 3 The contribution of the telecoms sector to the economy Direct contribution of the telecoms sector to the economy Indirect contribution of the telecoms sector to the economy 10 4 The benefits of broadband for households and businesses Residential broadband Coverage with, and availability of, broadband Broadband penetration Usage of online services Business broadband Availability of business broadband Business broadband penetration Business usage of online services 28 5 Competition in broadband markets Competition in residential broadband Competition in business broadband 34 6 Barriers to investment Barriers concerning the re-use and sharing of existing physical infrastructure Lack of transparency about existing ducts Lack of mandated access to ducts Barriers concerning the roll-out of new physical infrastructure Lack of transparency about planned civil works 42

3 Attractiveness Telecommunications Market in Belgium I Barriers related to permit granting procedures Barriers concerning in-building deployment of NGA infrastructure Problems related to regulated wholesale products Access to the unbundled copper loop Access to the unbundled copper sub-loop Bitstream access Multicast functionality Business-graded bitstream product Barriers related to pricing of wholesale products VDSL2 bitstream at local and regional level Excessive emission norms for mobile base stations High taxes on mobile antennas and masts Inconsistent decisions of federal, regional and local authorities Overlapping competences between the Federal State, the Communities and the Regions Fragmented and inconsistent policy regarding taxes on infrastructure Overcompensation of the administrative costs of the BIPT 64 7 Action plan with recommendations Facilitate re-use and sharing of existing physical infrastructure Facilitate the deployment of fibre Promote deployment and sharing of in-building NGA wiring Promote availability of wholesale products Review pricing of wholesale products Review emission norms for mobile base stations Facilitate deployment of mobile base stations Review taxation on mobile antennas and masts Monitor co-operation and harmonisation between federal, regional and local authorities Adjust contributions of telecom operator to the BIPT Raise general awareness for the importance of broadband for the Belgium economy and the specific requirements of business customers 72 8 Barriers to investment scorecard 72

4 II Attractiveness Telecommunications Market in Belgium Annex 1: Belgium compared to other EU Member States 75 Annex 2: Broadband performance scorecard 87 List of figures Figure 1: Telecoms revenue Belgium (million ), Figure 2: Investments Belgian Telecoms Operators (million ), Figure 3: Investments as % of total revenue, Figure 4: Employment in the Belgian Telecoms sector, Figure 5: Availability of NGA broadband of 30 Mbps and more, EU countries, Figure 6: Standard broadband penetration in Belgium and EU27, July 2006 July Figure 7: NGA penetration in EU countries (NGA lines in % of population), July Figure 8: Share of broadband lines with speeds above 30 Mbps, Figure 9: Fixed broadband lines by speed in Belgium (Digital Agenda categories), July 2010 Jan Figure 10: Mobile broadband penetration in EU countries (all active users), July Figure 11: Share of households buying bundles in the EU, December Figure 12: Bundling types in Belgium, Figure 13: Individuals who have never used the Internet in Belgium and the EU27 (in %), Figure 14: Figure 15: Figure 16: Figure 17: Individuals, who are using the internet on a regular basis (at least once a week in Belgium and the EU (in %), Individuals who have bought or ordered goods or services online within the last 12 months in Belgium and the EU 27 (in %), Individuals who have bought or ordered goods or services online from sellers from other EU countries within the last 12 months in Belgium and the EU 27 (in %), Individuals who have used the Internet for Internet Banking in Belgium and the EU (in %), Figure 18: Individuals who have interacted online with public authorities within the last 12 months in Belgium and the EU27 (in %), Figure 19: Purpose for Mobile Internet use via handheld devices (in %), Figure 20: VDSL2 coverage in EU countries,

5 Attractiveness Telecommunications Market in Belgium III Figure 21: Level of Internet access depending on the company size in Belgium and the EU27 (in %), Figure 22: Speeds of Internet access for businesses in Belgium and the EU27 (in %), Figure 23: Enterprises receiving orders and selling online (in %), Figure 24: Enterprises' turnover from e-commerce (% of total turnover), Figure 25: Enterprises in Belgium and the EU27 using the internet for interacting with public authorities (in %), Figure 26: Fixed broadband lines operator market shares, July July Figure 27: Fixed broadband lines by technology in Belgium, Jan July Figure 28: Fixed broadband lines by market party, July July Figure 29: Share of retail DSL lines based on wholesale services, July July Figure 30: Type of wholesale access, July Figure 31: Market share business broadband, Figure 32: Comparison between legal requirements and typical timescales for permission granting for base station deployment (in month) 45 Figure 33: Development of unbundling in Belgium 49 Figure 34: Price of the unbundled local loop of Belgacom, /month 52 Figure 35: Surplus of the BIPT budget in the period Figure 36: Standard broadband coverage in EU countries, Figure 37: NGA coverage in EU countries, Figure 38: VDSL2 coverage in EU countries, Figure 39: DOCSIS 3.0 coverage in EU countries, Figure 40: FTTH coverage in EU countries, Figure 41: Mobile broadband (HSPA) coverage in EU countries, Figure 42: LTE coverage in EU countries, Figure 43: Standard broadband penetration in EU countries, July Figure 44: Share of households with broadband internet access in the EU27, Figure 45: NGA penetration in EU countries (NGA lines in % of population), July Figure 46: NGA lines as a % of total broadband lines in EU countries, July Figure 47: Internet access technology used, Figure 48: Mobile broadband penetration in EU countries (all active users), July

6 IV Attractiveness Telecommunications Market in Belgium Figure 49: Share of households buying bundles in the EU, December Figure 50: Enterprises Level of Internet access, Figure 51: Individuals, who are accessing the Internet on a weekly basis (including every day) in EU countries (in %), Figure 52: Individuals who have never used the Internet in EU countries (in %), Figure 53: Figure 54: Individuals who have bought or ordered goods or services online within the last 12 months in EU countries (in %), Individuals who have bought or ordered goods or services online from sellers from other EU countries within the last 12 months in EU countries (in %), Figure 55: Online availability of 20 basic public services in EU countries (in%), Figure 56: Individuals who have interacted online with public authorities within the last 12 months in EU countries (in %), Figure 57: Individuals who have used the Internet for Internet Banking in EU countries (in %), Figure 58: Enterprises' turnover from e-commerce (% of total turnover), Figure 59: Enterprises in European countries using the internet for interacting with public authorities (in %), List of tables Table 1: Top 10 European countries for Foreign Direct Investment (FDI) 10 Table 2: Business sectors expected to drive economic growth in the coming two years, % of responses of surveyed companies 11 Table 3: Broadband categories 13 Table 4: Proposed scorecard for tracking the actions in respect to the identified barriers to investment 73 The study has been commissioned by the Platform Telecom Operators & Service Providers. It is endorsed by all members of the Platform. Nothing in the study restrains any member to have individual positions.

7 Attractiveness Telecommunications Market in Belgium V Executive summary The telecommunications sector is a major direct and indirect contributor to the Belgium economy: Directly, via the more than 11 billion revenue, 1.5 billion investment and over 22,000 people employed by the 11 telecommunications operators. Indirectly, via revenues, jobs and profits created by the sale of terminals and network equipment as well as via efficiency and productivity improvements in other sectors as telecom services are an essential input for businesses in general. Revenues of alternative telecoms operators have been steadily growing to 41% of total telecoms revenues in 2012 (see graph below). In terms of investments, alternative operators contributed 50% of total telecoms investments. After years of increasing investments, 2012 saw for the first time since 2009 a downwards trend (see graph below). The number of people employed by the telecoms sector remained relatively stable with 13% more people employed by the alternative operators in 2012 compared to Over the same period, the number of people employed by Belgacom decreased by 9%. Telecoms infrastructure is regarded by companies as one of the most important factors when deciding where to invest. A further set of economic benefits is derived from the productivity improvements made possible by the use of telecoms services, and notably broadband. A variety of studies have demonstrated that high speed broadband penetration and online usage are major stimulators of economic growth. Currently Belgium is among the best performing EU countries with regard to the Digital Agenda coverage targets. Fixed standard broadband ( 144 Kbps) is available to all households and, more importantly, fixed NGA broadband ( 30 Mbps) to 98% (see underneath figure).

8 VI Attractiveness Telecommunications Market in Belgium In terms of penetration, Belgium is also among the top countries in the EU in 2012: 78% of the households subscribed to standard broadband. Furthermore, 17% of the population subscribed to NGA broadband. As shown in underneath graph this is one of the highest scores in the EU and only second to the Netherlands. NGA broadband penetration is driven by the nationwide availability and competition of two NGA platforms (VDSL2 and Cable DOCSIS3) and the rising demand for multi-play bundles which include television. In terms of usage of online services and digital competences, Belgium fulfils many of the Digital Agenda targets. For many indicators, Belgium occupies a favourable to middle rank in the EU.

9 Attractiveness Telecommunications Market in Belgium VII However, the question arises whether this is enough? Belgium is among those countries in the EU, where Fibre to the Home (FTTH) connections are virtually nonexisting for residential customers. The Digital Agenda target of 50% of households to subscribe to ultrafast broadband by 2020 seems therefore ambitious. However, Belgium has an extensive cable network, which provides speeds above 100 Mbps (speeds above 100 Mbps are more a theoretical possibility on VDSL2 networks). Mid 2012, Belgium ranked 4 th in the EU with 10.3% of the broadband lines providing 100 Mbps (see underneath graph). Furthermore, there is a dynamic towards higher speeds. End 2012, the 10.3% of lines providing speeds above 100 Mbps has increased already to 12% (see underneath graph). If the described growth of the last year continues (+4.4%), the EU DA target might be in reach by 2020, however additional FTTH would most likely be necessary in order to realise the target.

10 VIII Attractiveness Telecommunications Market in Belgium A second point of attention is that despite nationwide coverage of mobile broadband, mobile broadband penetration is one of the lowest in the EU. Measured by the number of active users, it was only 26% in July 2012 and 32% by end of However, this is still significantly below the highest scoring EU countries and the EU average (see next figure displaying the EU situation in July 2012). Furthermore, very fast mobile broadband via LTE is insignificant due to the limited roll-out. A third note can be made on the degree of competition in the Belgian telecoms market. The residential market is characterized by platform competition between VDSL2 and cable DOCSIS3. In mid-2012, the market share for fixed broadband lines was divided almost equally between both platforms. In contrast, the extent of competition based on wholesale access services (local loop unbundling and bitstream) is relatively low. In the last 6 years, the share of DSL lines based on wholesale access services decreased from 23% to 14% compared to the EU average of 46% (see underneath graph). This implies that 86% of the broadband lines are still provided by Belgacom versus 54% elsewhere in the EU. This demonstrates that the access regulation might not be effective.

11 Attractiveness Telecommunications Market in Belgium IX With regard to business customers, standard broadband connections (over VDSL2 networks) are available to all businesses and Fibre to the Office is available to 60% of the businesses with speeds up to 10 Gbps. Belgian businesses subscribe to significantly higher speeds than the EU average as shown in the below graph. Cable operators are a less significant player in business connectivity services. Thus there is less platform competition between VDSL2 and cable DOCSIS3 in the business market compared to the residential market. Belgacom remains dominant in business broadband with a 61% market share in Telenet has a 15% market share and the remaining 24% was mainly shared by Verizon, Colt and BT. In particular, Belgacom has an advantage where business customers have multiple sites and where bundles with fixed telecoms services, mobile services and IT and specific SLAs are required. Barriers to investment in fixed and mobile NGA networks are very likely to have a negative impact on the longer-term development of Belgium s NGA infrastructure, on penetration and usage of new services, and ultimately on economic growth. Based on EU best practice, the following actions are proposed: Facilitate re-use and sharing of existing physical infrastructure Action 1: In accordance with the forthcoming European Regulation 1 transparency about the existing physical infrastructure should be improved. Belgium should establish a single information point for a minimum set of information about the existing physical infrastructure of all network operators, including 1 Regulation of the European Parliament and of the Council on measures to reduce the cost of deploying high-speed electronic communications networks.

12 X Attractiveness Telecommunications Market in Belgium those in non-telecom sectors. 2 More specifically, the existing activities in Flanders, Wallonia and Brussels-Capital should be closely interlinked and turned into a full mapping of physical infrastructure in Belgium. The system should also provide information on duct capacity and dark fibre. Furthermore, there should be an obligation for network providers to meet reasonable requests for in-site surveys of specific infrastructure elements. There should be precise procedures on how the survey is done including terms listing acceptable reasons to refuse access, how free space is calculated, timeframes etc. In addition, the BIPT should be empowered to handle any disputes arising from in-site surveys. Action 2: Action 3: Action 4: In line with the forthcoming European Regulation, any owner of physical infrastructure (including those of non-telecoms infrastructure, e.g. water, energy and railways) should be obliged to provide access on reasonable request under fair terms and conditions, including price, in view of deploying elements of high-speed electronic communications networks. The BIPT should be empowered to handle any disputes arising from access negotiations. An efficient and fast dispute resolution process should be implemented to avoid longer delays in case of disputes. Disputes should be resolved within a maximum timeframe of 2 months. The BIPT should revisit its decision to remove the obligation of Belgacom to provide access to its ducts (which are mainly in the feeder segment between MDFs and Street Cabinets). Such an obligation would facilitate FTTH/O deployment of alternative telecoms operators. It may also provide cost reductions for mobile operators when rolling out fibre to LTE base stations. The Federal State and the Regions should consider the conclusion of a cooperation agreement in order to implement the obligations required by the forthcoming European Regulation in relation to the facilitation of re-use and sharing of physical infrastructure. Facilitate the deployment of fibre Action 5: In line with the forthcoming European Regulation, all network operators should be obliged to provide a minimum set of information on planned civil works in order to facilitate the coordination and co-deployment of such 2 The minimum set of information should include: the location, route and geo-reference coordinates; size, type and current use of the infrastructure; name of the owner or of the holder of rights to use physical infrastructure, and a contact point.

13 Attractiveness Telecommunications Market in Belgium XI works. 3 The information should be collected and made available to interested parties through a single information point in order to facilitate coordination of civil works. For this purpose, the existing activities in Flanders, Wallonia and the Brussels-Capital should be coordinated and integrated. Action 6: Action 7: Action 8: Action 9: As provided by the forthcoming European Regulation, any undertaking performing civil works financed by public means shall be obliged to meet reasonable requests for civil works coordination agreements. Furthermore, where agreements are not achieved in one month from the formal request, the requesting party should be able to refer the issue to the BIPT as the designated dispute settlement body. The actions proposed in relation to the transparency about, and the coordination of, planned civil works affect competences of the Federal State in telecommunications matters and of the Regions in land use and urban planning matters. The Federal State and the Regions should consider the conclusion of a cooperation agreement in order to implement these measures. Permit granting procedures should be streamlined. Every undertaking authorised to provide electronic communications networks should be able to submit, via the single information point, applications for permits required for civil works. The single information point should facilitate and coordinate the permit granting process. The applications should be forwarded to the competent authorities involved in granting the permits. Compliance with applicable deadlines should be monitored. The aim should be to close permit requests within 6 months. It should be assessed whether a cooperation agreement between the Regions and the Federal State is required in order to mitigate the risks of divergent regulations and implementations and legal uncertainty. Promote deployment and sharing of in-building NGA wiring Action 10: As provided by the forthcoming European Regulation, house owners should be obliged to equip newly constructed or major renovated buildings with high-speed-ready in-building physical infrastructure, up to the network termination point. 3 The minimum set of information should include: the location and the type of works; the network elements involved; the estimated date for starting the works and their duration; a contact point.

14 XII Attractiveness Telecommunications Market in Belgium Action 11: Action 12: Action 13: Operators of in-building networks should be obliged to provide access to in-building wiring on transparent, non-discriminatory and reasonable terms, such that all households can benefit from competitive offers. In case no agreement can be reached in 2 months, the dispute should be forwarded to the BIPT as the national dispute settlement body in order to resolve this within 2 months from the date of referral. The Federal State and the Regions should consider the conclusion of a cooperation agreement to deal with overlapping competences. Promote availability of wholesale products Action 14: Action 15: Action 16: Action 17: Action 18: In line with the NGA Recommendation 4 Belgacom should improve transparency about the migration of alternative telecoms operators from unbundled local loops and legacy bitstream to corresponding NGA access products. In this respect, the BIPT should carefully monitor network modification plans of Belgacom and its implications for migration procedures. The BIPT should monitor the deployment of vectoring by Belgacom and put particular emphasis on the mandated local VDSL2 bitstream service in order to make it a true alternative to sub-loop (and local loop) unbundling. The BIPT should also carefully monitor that Belgacom provides related NGA based backhaul. The BIPT should ensure that Belgacom provides a fully-fledged bitstream access product in light of the on-going dismantling of the ATM transport network and the transition to an Ethernet network that allows alternative telecoms operators to differentiate themselves in terms of quality of service from Belgacom s own retail offers. The BIPT should carefully monitor alternative operators ability to replicate Belgacom s triple play offerings based on Belgacom s wholesale services 5. In line with the NGA Recommendation, the BIPT should make sure that Belgacom provides business-graded bitstream products that meet the specific demand of providers of business communications services and their customers in terms of speed, symmetry of upload/download speeds, and service level guarantees. 4 Commission Recommendation on regulated access to Next Generation Access Networks (NGA) of 20 September Including additional multicast functionalities as defined in the alternated proposal of Belgacom and confirmed in the BIPT Decision of 4 October 2012.

15 Attractiveness Telecommunications Market in Belgium XIII Review pricing of wholesale products Action 19: Action 20: The BIPT should revisit its costing methodology for the unbundled local loop, in particular, in relation to the valuation of copper assets at the replacement cost of copper. In any case, the price of the unbundled local loop should not further increase in real terms above the current level of 8 /month. The BIPT should maintain the cost orientation of Belgacom s bitstream prices. It should also actively monitor Belgacom s vertical price structure for margin squeezes and assure that the following margins cover the relevant costs: The margin between the retail price of key ADSL products and the corresponding regional bitstream price, respectively unbundled local loop price. The margin between the bitstream price of regional ADSL bitstream and the price of the unbundled local loop. The margin between the retail price of key VDSL2 products and the corresponding regional bitstream price, respectively local bitstream price. The margin between the regional and local VDSL2 bitstream price. The margin between the retail price for important bundles (which include broadband) and the corresponding wholesale charges. Action 21: The BIPT should be cautious in introducing pricing flexibility for NGA wholesale products, notably local and regional VDSL2 bitstream, including for business-graded bitstream. The BIPT should first fully and comprehensively implement technical replicability tests, economic replicability tests (margin squeeze tests), and Equivalence of Input, in order to exclude any discrimination of alternative telecoms operators. The methodology of the technical and economic replicability tests as well as the requirements for Equivalence of Input should be consulted and published. Review emission norms for mobile base stations Action 22: The emission norms for antennas in urban areas should be reviewed with regard to their appropriateness and effectiveness. Yearly reviews of the real emission through field tests with special attention for sensitive areas (schools, nursery and healthcare institutions) could bring the insight that there is space to increase the emission norms without causing health related risks. The review of emission norms should result in less stricter norms or in a differentiation between locations.

16 XIV Attractiveness Telecommunications Market in Belgium Action 23: Action 24: More flexibility should be provided for mobile operators that roll-out LTE in urban areas. Added flexibility could be provided during the time mobile operators continue to operate GSM and UMTS networks simultaneously to LTE. Alternatively, a separate norm for LTE antennas could be implemented. This would separate the compliance with emission norms of GSM/UMTS antennas on the one hand and LTE antennas on the other hand. Emission norms should be harmonized across Belgium. Facilitate deployment of mobile base stations Action 25: Action 26: The criteria, procedures and timescales for the granting of permits to build mobile bases stations should be reviewed to fit the different requirements of rolling out LTE. They should also be harmonised across Belgium in order to simplify the planning for mobile operators. A clear and common dispute procedure should be established with strict timelines in order to ensure consistent and timely decisions. The BIPT should act as a national dispute resolution body. To ensure the roll-out of LTE networks, in particular in the presence of constraining emission norms, public institutions should offer mobile operators access to public buildings for the deployment of an antenna. Review taxation on mobile antennas and masts Action 27: Local governments should review the existing and planned taxations on mobile masts and antennas as this discourages the roll-out of LTE to the levels achieved in other countries. Monitor co-operation and harmonisation between federal, regional and local authorities Action 28: In order to promote harmonisation of procedures, and avoid inconsistencies in case of overlapping competencies, the Federal State should stimulate cooperation between the regions and communities. Where possible this could be done via cooperation agreements or other shared coordination structures with clear and precise procedures.

17 Attractiveness Telecommunications Market in Belgium XV Adjust contributions of telecom operator to the BIPT Action 29: The BIPT should lower the contributions of the telecommunications providers to the level of its administrative costs (regulatory costs). Raise general awareness for the importance of broadband for the Belgium economy and the specific requirements of business customers Action 30: The BIPT should raise awareness about the importance of, and progress in, broadband connectivity through a broadband performance index. The BIPT should monitor the broadband performance of the Belgian telecommunications sector by regularly tracking the proposed key data in the broadband scorecard, Annex 2.

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19 Attractiveness Telecommunications Market in Belgium 1 1 Introduction Hell or paradise? The objective of the study carried out for the Platform Telecom Operators & Service Providers ( the Platform ) is to analyse the attractiveness of Belgium with regard to investments in the telecoms sector. Competitive investment into new telecoms infrastructure is crucial at this point in time, notably investment into next generation access ( NGA ) networks, which are paramount for competitiveness and economic growth of the Belgian economy. The study describes what has been achieved to date; it assesses which barriers continue to slow down competitive investment, and provides an action plan with recommendations on how to improve investment conditions for the benefit of Belgian citizens and the overall economy. The structure of the study is as follows: Section 2 sets forth a number of well accepted policy objectives in relation to the telecoms sector. Section 3 describes the importance of the telecoms sector to the Belgian economy, and notably to economic growth. Section 4 shows how households and businesses benefit from broadband connections. Section 5 assesses the extent of competition in residential and business broadband markets. Section 6 identifies barriers to investment and competition and points out best practices of other countries. Section 7 provides an action plan for regulators, governments and law makers and section 8 suggests a barriers to invest scorecard to track progress on proposed actions. The Annexes contains additional comparative information on where Belgium stands compared to other European countries and a proposed broadband performance scorecard.

20 2 Attractiveness Telecommunications Market in Belgium 2 The objectives guiding telecoms policy Telecoms policy is guided by the twin objectives of Promoting (efficient) investment and innovation, and Furthering competition. Both objectives are integrated into, and further guided by, a European policy and regulatory framework. The heart of the policy framework is the Digital Agenda of Europe which has led to National Broadband Plans such as the Belgian digital plan named Coeur de l'europe numérique / Digitaal hart van Europa To promote the goals of the Digital Agenda, the Commission has launched specific measures such as the proposed Regulation on measures to reduce the cost of deploying high-speed electronic communications networks. The core of the competition framework is the regulation of operators with Significant Market Power ( SMP ) as it is laid out in the Directives 6 and further specified in Commission Recommendations to which national regulators must take utmost account of. A major element of SMP regulation up to 2020 is the forthcoming Recommendation on non-discrimination and costing methodologies to promote competition and enhance the broadband investment environment. The Commission perceives the Recommendation as key to addressing barriers to investment and improving incentives for NGA investment. 2.1 The Digital Agenda of Europe The Digital Agenda sets targets for the deployment and take up of very high-speed broadband. 7 A main building block of the Digital Agenda is to ensure the comprehensive availability and take-up of very high-speed Internet. The relevant broadband targets are: By 2013, standard broadband should be available to all households. By 2020, broadband of 30 Mbps or more should be available to 100% of homes. By 2020, half of the households should have subscribed to a connection of at least 100 Mbps. 6 Directive 2009/140/EC, OJ L 337, p. 37 of European Commission (2010), A Digital Agenda for Europe, Brussels, , COM(2010) 245 final/2.

21 Attractiveness Telecommunications Market in Belgium 3 Another important objective of the Digital Agenda is to improve digital competences in the EU. The relevant targets on digital inclusion are: By 2015, the proportion of the population that has never used the Internet should be reduced to 15%. By 2015, 75% of the population should regularly use the Internet (at least once a week). By 2015, at least half of the population should conduct online purchases and benefit from e-commerce. By 2015, at least 20% of individuals should make online purchases cross border. 2.2 The Belgian broadband plan In 2009 the Ministry of ICT, together with Agoria, launched a digital plan called Coeur de l'europe numérique / Digitaal hart van Europa The digital plan aims to promote investment in an effective broadband infrastructure and ensure access to digital technology through the Internet, mobile phones, TV, etc. The digital plan sets five objectives for 2015: 1. At least 90% of homes should be connected to broadband. 2. At least one pupil out of two, from the age of 6, should use a computer or a netbook as his basic equipment % of the population should use mobile broadband % of bills should be in electronic format. 5. One worker out of three should use teleworking on a regular basis. The broadband strategy adopted by the former Government in 2009 was confirmed by the new Government in December The new federal Minister for Economics and in charge of Telecommunications announced to deliver a new digital plan called Digital Agenda.be. At the time of writing this report the new digital plan was not yet launched. 8 Minister voor Ondernemen en Vereenvoudigen Vincent van Quickenborne (2009), Belgie - Digitaal hart van Europa actiepunten. 9

22 4 Attractiveness Telecommunications Market in Belgium 2.3 The Regulation on measures to reduce the cost of deploying highspeed electronic communications networks The cost of civil engineering accounts for a significant portion of the deployment costs of NGA networks. To tap the potential savings in deployment costs, the European Commission has proposed a Regulation on measures to reduce the cost of deploying high-speed electronic communications networks. The proposal includes the following elements 10 : 1. A first set of measures shall increase the re-use and sharing of existing physical infrastructure. The Commission proposes an obligation for all owners of physical infrastructure to meet reasonable requests for access by telecoms network operators. Member States shall also establish a single information point and ensure that a minimum set of information concerning the existing physical infrastructure is made available. 2. A second set of measures is intended to improve the coordination of civil engineering works. The Commission proposes an obligation for all network operators to provide a minimum set of information on planned civil works. In addition, any undertaking performing civil works financed by public means shall be obliged to meet reasonable requests for civil works coordination agreements, which should facilitate co-deployment. Finally, permit granting procedures shall be streamlined. A single information point shall be established to facilitate and coordinate the permit granting process. In particular, Member States shall ensure that the applications are forwarded to the competent authorities involved in granting the permits as well as monitor compliance with the deadlines applicable. 3. A third set of measures addresses the deployment and use of high-speed inbuilding wiring. The Commission proposes that house owners become obliged to equip all newly constructed buildings with high-speed-ready in-building physical infrastructure up to the network termination point. Also, operators of inbuilding networks shall be obliged to provide access to in-building wiring, such that all households can benefit from competitive offers. 10 European Commission (2013), Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on measures to reduce the cost of deploying high-speed electronic communications networks, Brussels, , COM(2013) 147 final.

23 Attractiveness Telecommunications Market in Belgium The Recommendation on non-discrimination and costing methodologies to promote competition and enhance the broadband investment environment In order to foster roll-out of NGA networks and achieve the targets set out by the Digital Agenda, the European Commission proposed a Recommendation on consistent nondiscrimination obligations and costing methodologies to promote competition and enhance the broadband investment environment. 11 This new Recommendation seeks to create incentives for NGA investment by giving operators with Significant Market Power ( SMP ) more pricing flexibility with regard to NGA wholesale products. As a result of this Recommendation, Belgacom may be allowed to freely set the prices for its NGA wholesale products. In Belgium, the most relevant NGA wholesale product is currently VDSL2 bitstream, which is used by alternative telecoms operators to provide their own broadband products to end users. The pricing flexibility is subject to the following competition safeguards that should be implemented in parallel: 1. As a result of the Recommendation, Belgacom may have to make available NGA wholesale products on an Equivalence of Input basis. Equivalence of Input requires the SMP operator to implement a new wholesale management platform (including associated software systems) that deals with external access seekers and its own downstream business unit in an identical way, i.e. provides for identical delivery, provisioning and fault repair processes. Though implementation of Equivalence of Input creates certain costs, the Commission took the view that it is proportionate for NGA wholesale products. 2. Belgacom shall maintain a sufficient margin between its retail prices and the charges of corresponding NGA wholesale products, such that an equally efficient access seeker is able to break even. Such margin squeeze tests shall be applied to the most relevant retail broadband products ('so-called flagship products ) and the corresponding most relevant regulated NGA wholesale inputs. 3. To provide pricing flexibility for unbundled fibre, there should in addition be a sufficient competitive constraint, which could come from legacy copper products offered by the SMP operator or, alternatively, from operators providing retail services over an alternative infrastructure. Given the extent of platform competition between VDSL2 and cable in Belgium, this condition is clearly 11 European Commission (2012), COMMISSION RECOMMENDATION of XXX on consistent nondiscrimination obligations and costing methodologies to promote competition and enhance the broadband investment environment. Draft version of December 2012.

24 6 Attractiveness Telecommunications Market in Belgium fulfilled. It should however be noted that Belgacom does not offer any passive wholesale NGA inputs as it has not deployed FTTH to any relevant extent. The Commission believes that the implementation of pricing flexibility will improve investment conditions for NGA, while at the same time the safeguards will preserve competition based on network access.

25 Attractiveness Telecommunications Market in Belgium 7 3 The contribution of the telecoms sector to the economy 3.1 Direct contribution of the telecoms sector to the economy The telecommunications sector is a major contributor to the country s economy. In 2012 the telecommunications operators in Belgium: Generated well over 11 billion Euro in revenues 12 ; Created investments of 1.5 billion Euro 13 ; Generated profits of around 1 billion Euro 14 ; Provided employment to over 22,000 people 15 ; and Paid corporate income taxes to the government of around billion Euro. In addition, a considerable amount of economic activity is generated by the sector s upstream and downstream supply chains including, for example, retailers of mobile handsets and providers of goods and services to telecoms operators. Revenues in the telecoms sector The telecoms sector contributes directly to the Belgian economy with telecoms services related revenue. Despite declining revenues in fixed and mobile voice services and SMS, the Belgian telecoms sector experienced a stable growth over the last years up to over 11 billion Euros in Fixed services accounted for 52% and mobile services for 48% of total telecoms revenues. 17 Noticeable as well is the steadily growing revenue share of alternative operators in the Belgian telecoms market up to 41% in Charts Economic Review met sales BGC Platform 2013 and Belgacom key figures 2012, 13 Charts Economic Review met sales BGC Platform 2013 and Belgacom key figures Annual figures Belgacom and Telenet (2012). Estimated profit amount for Mobistar, Base Company, Tecteo and Brutele. 15 Charts Economic Review met sales BGC Platform Annual figures Belgacom and Telenet (2011). 17 BIPT (2011), Situation of the electronic communications sector 2011, Page 5.

26 8 Attractiveness Telecommunications Market in Belgium Figure 1: Telecoms revenue Belgium (million ), Source: Charts Economic Review 2013 Platform and Belgacom key figures Investments in the telecoms sector In 2012, the total investments of the 11 telecoms operators in Belgium equaled almost 1.5 billion Euros. This is 8% down compared to 2011 as both Belgacom and the alternative operators decreased their investments. As shown in figure 2, the investments of all alternative operators together equaled or exceeded Belgacom s investments in the last four years. Figure 2: Investments Belgian Telecoms Operators (million ), Source: Charts Economic Review 2013 Platform and Belgacom key figures

27 Attractiveness Telecommunications Market in Belgium 9 When the investments are expressed as a percentage of total revenues, it becomes clear that alternative operators have invested proportionally more than Belgacom in the last five years (see underneath graph). Furthermore, it shows a trend of increasing sector investments from 2009 to 2011 especially from the alternative operators. However, in 2012, the absolute and relative investments of both alternative operators and Belgacom have declined. Figure 3: Investments as % of total revenue, Source: Charts Economic Review Platform 2013 and Belgacom key figures Employment in the telecoms sector The sector employment remained relatively stable over the years with well over 22,000 people. However there is a slight decrease from 2008 onwards of -3%, which is due to the decreased number of people employed by Belgacom (-9%). On the other hand, the number of people employed by alternative operators has grown from with more than 13%. Figure 4: Employment in the Belgian Telecoms sector, Source: Charts Economic Review Platform 2013 and Belgacom key figures

28 10 Attractiveness Telecommunications Market in Belgium 3.2 Indirect contribution of the telecoms sector to the economy A considerable amount of economic activity is indirectly influenced by the telecoms sector as it provides essential services to virtually all sectors of the economy in the form of broadband connections, leased lines, VPNs, voice communication, etc. International companies base their decision to invest in Belgium on the availability, quality, and price of telecoms services. A recent European study 18 confirmed that 62% of companies regarded telecoms infrastructure as one of the most important factors when deciding where to invest. Thus, there is a strong link between the telecoms infrastructure and foreign direct investment in a country. The same study ranked Belgium as number 6 in the EU top 10 countries regarding foreign direct investment, with a share of 4% of all foreign direct investment in the EU. According to the study, this translated into additional jobs for Belgium in 2011 as is shown in Table 1. For 2012, Belgium s ranking has improved to number 5 with an equal 4% share of foreign direct investment but with 18% fewer jobs created 19. Table 1: Top 10 European countries for Foreign Direct Investment (FDI) Rank Country Number of projects Share of FDI Number of related jobs based on FDI United Kingdom % 29,888 2 Germany % 17,276 3 France % 13,164 4 Spain 273 7% 9,205 5 Netherlands 170 4% 2,229 6 Belgium 153 4% 3,599 7 Russia 128 3% 8,362 8 Poland 121 3% 7,838 9 Ireland 106 3% 5, Switzerland 99 3% 1,546 Source: Ernst & Young s 2012 European attractiveness survey A further set of economic benefits is derived from the productivity improvements made possible by the use of telecoms services. Such productivity improvements result from, for example: Significant enhancements in the speed and efficiency at which parties can communicate with each other; 18 Ernst & Young (2012), European attractiveness survey 19 Ernst & Young (2013), European attractiveness survey

29 Attractiveness Telecommunications Market in Belgium 11 The ability of users of telecommunications services to access vast quantities of information at high speed, and The expansion of market boundaries for existing Belgian companies made possible through various telecommunications services. The IT and telecoms sector is identified in many reports as a major driver of economic growth. In the above mentioned study, the ICT sector was even considered to be the most important business sector driving economic growth (Table 2). Table 2: Business sectors expected to drive economic growth in the coming two years, % of responses of surveyed companies Information and communication technologies (ICT) 33% Cleantech 26% Energy (including nuclear) and utilities (waste, water mgt) 24% Pharmaceutical and biotechnologies industries 19% B2B services excluding finance 15% Transport and automotive industries 13% Banking/Finance/Insurance 13% Consumer goods 12% Logistics and distribution channels 9% Real estate and construction 7% Source: Ernst & Young (2012), European attractiveness survey Impact on macro-economic performance Broadband access and related services play a crucial role as drivers of productivity improvements and economic growth. A variety of studies have demonstrated that high speed broadband penetration and online usage are major stimulators of economic growth. One report 20 found that an increase of 10% in a country s digitization (a composite index of broadband penetration, online usage, affordability, reliability, speed and skills related to broadband services) leads to a 0.62% increase in GDP per capita in advanced countries; a 0.84%.decrease of a nation s unemployment rate; and a significant increase in a country s score on the Global Innovation Index. 20 Booz & Company (2012), Maximizing the Impact of Digitization.

30 12 Attractiveness Telecommunications Market in Belgium Other studies have produced similar findings: A 10% increase in broadband penetration contributes a gain in per capita GDP of % 21 respectively %. 22 Broadband-induced innovation has the potential to generate 2 million extra jobs by 2020 on an EU-wide basis (0.9% of the 222 million total employed persons in the EU). 23 If applied to Belgium s workforce of 2.5 million people in 2012, this could mean 22,500 additional jobs for the Belgian economy. Online usage is key to maximizing the benefits from broadband deployment as the top 10% online active companies have a 2.5 times higher turnover than the lowest 10% companies Katz, R.(2012), The Impact of Broadband on the Economy: Research to Date and Policy Issues. Geneva: International Telecommunication Union at,.., S. aterlaus, P. enh usern, and S. Suter (2010), The Impact of Broadband on Jobs and the German Economy. Intereconomics 45 (1), pp outroumpis, P., The Economic Impact of Broadband on Growth: A Simultaneous Approach. Telecommunications Policy 33 (9) 2009, pp Czernich, N., Falck, O., Kretschmer, T., and Woessman, L. (2009) Broadband infrastructure and economic growth (CESinfo Working Paper no Commission estimate based on national studies (Liebenau, J., Atkinson, R., Karrberg, P., Castro, D. and Ezell, S. (2009), The UK Digital Road to Recovery; Katz R.L. et al, 2009, The Impact of Broadband on Jobs and the German Economy). See Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, Single Market Act II, COM (2012) 573 final, key action Mc Kinsey & Company (2012), Evolve or Paris, Digital Darwinism for Belgian Companies.

31 Attractiveness Telecommunications Market in Belgium 13 4 The benefits of broadband for households and businesses 4.1 Residential broadband Coverage with, and availability of, broadband Currently Belgium is among the best performing EU countries with regard to the Digital Agenda coverage targets as is shown in this section (more information on how Belgium compares to other EU countries is available in Annex 1). Coverage is described for the three Digital Agenda categories and distinguishing between fixed and mobile access as categorised in the table below. Table 3: Broadband categories Fixed access Mobile access Standard broadband of 144 kbps or more NGA broadband of 30 Mbps or more NGA broadband of 100 Mbps or more Source: WIK. Fixed standard broadband Standard broadband connections with a download speed of at least 144 kbps are available to all households. Thus Belgium meets the Digital Agenda target that requires all households to be made available a standard broadband connection by Fixed NGA broadband of 30 Mbps or more NGA broadband is already widely available. NGA broadband connections with download speeds of 30 Mbps or more are available to 98% of households, which puts Belgium among the leaders in Europe as is shown in Figure 5. Belgium is one of the few countries that are already close to fulfilling to Digital Agenda target that requires all households to be made available NGA broadband of at least 30 Mbps by the year 2020.

32 14 Attractiveness Telecommunications Market in Belgium Figure 5: Availability of NGA broadband of 30 Mbps and more, EU countries, 2011 Source: Point Topic (2011), Broadband coverage in Europe in Moreover, Belgium has quasi universal coverage by two network platforms. Belgacom uses a fibre to the curb ( FTTC ) network, which has been upgraded to the advanced VDSL2 standard. VDSL2 is currently available to 78.9% of households. Belgacom targets a further increase in 2013 to reach 85% of homes. 25 The cable operators use hybrid fibre coax ( HFC ) networks which have been upgraded to the DOCSIS3 standard. While cable networks are regional, they cover together more than 95% of households. 26 Fixed NGA broadband of 100 Mbps or more Belgium has not seen significant investments into fibre to the home ( FTTH ) so far. In fact, Belgium is among those countries in the EU, where FTTH connections are virtually non-existing for residential customers. It should be noted that Belgacom plans to roll out FTTH on a limited scale in Greenfield areas, where there is no existing copper 25 European Commission (2012), Belgium 2011 Telecommunication Market and Regulatory Developments, p Point Topic (2011), Broadband coverage in Europe in 2011, p. 49.

33 Attractiveness Telecommunications Market in Belgium 15 infrastructure. With regard to business customers, fibre-to-the-office ( FTTO ) is available to 60% of businesses with speeds up to 10 Gbps. 27 While FTTH is not available, households can subscribe to a 100 Mbps connection through cable DOCSIS3 networks. As of end 2012, 12% of the broadband lines in Belgium are lines providing speeds above 100 Mbps. This gives Belgium a top 4 ranking in the EU. Cable networks can be upgraded to higher speeds at lower cost compared to FTTH roll-out. Belgacom s FTTC-VDSL2 network cannot provide speeds above 100 Mbps, but Belgacom intends to further increase speed through the deployment of vectoring, bonding and phantoming technology. However, depending on the length of the connection lines, speeds are expected to remain below 100 Mbps. 28 Mobile standard broadband Mobile broadband over UMTS is available over three networks on a nationwide basis. The networks of Belgacom, Mobistar and Base Company operate in the 2.1 GHz frequency band. Substantial parts of the networks have been upgraded to the HSPA standard, 29 which allows download speeds of up to 21 Mbps. Mobile NGA broadband of 30 Mbps and more Availabilitly of mobile broadband over LTE is still limited. Belgacom has only recently launched LTE in the 1800 MHz band 30 in 8 cities, namely Antwerp, Ghent, Liege, Namur, Leuven, Hasselt, Mons and Waver. The Brussels region, however, is reported to be missing out on LTE due to the strict emission standards applied. 31 Mobistar is testing LTE in the 1800 MHz band in Antwerp and is planning to launch commercial offers in It is expected that Telenet, partner of Mobistar, will also follow with an LTE offer. 32 Base Company is also planning to test LTE in the near future. The 2.6 GHz band is also available for LTE. The spectrum has been licensed in 2011 to Belgacom, Mobistar, Base Company and the Chinese BUCD. 33 In addition, the 800 MHz spectrum from the digital dividend will be auctioned in European Commission (2012), Belgium 2011 Telecommunication Market and Regulatory Developments, p Plückebaum, T. (2013), VDSL Vectoring, Bonding and Phantoming: Technisches Konzept, marktliche und regulatorische Implikationen. WIK Diskussionsbeitrag HSPA = High Speed Packet Access

34 16 Attractiveness Telecommunications Market in Belgium Broadband penetration The situation in terms of broadband penetration is very similar to the situation in terms of broadband coverage. Fixed standard broadband Belgium performs very well in terms of fixed standard broadband penetration. As is shown in Figure 6, Belgium s penetration rate has steadily grown over the past years and was consistently above EU average. In mid-2012, 33% of the Belgian population had a broadband connection, which is five percentage points ahead of the European average. 34 In 2012, 78% of Belgian households had access to the Internet. This is 5 percentage points more than in 2010 and 28 percentage points more than in 2005, where only every second Belgian household had access to the Internet. 35 Figure 6: Standard broadband penetration in Belgium and EU27, July 2006 July 2012 Source: European Commission (2013), Broadband lines in the EU: situation at 1. July European Commission (2013), Indicators on the electronic communications market ( 35 Eurostat (2012).

35 Attractiveness Telecommunications Market in Belgium 17 Fixed NGA broadband of 30 Mbps and more The penetration of NGA broadband of 30 Mbps and more reached 17% of the population in mid It is one of the highest in the EU and only second to the Netherlands as is shown in Figure 7. Figure 7: NGA penetration in EU countries (NGA lines in % of population), July 2012 Source: European Commission (2013), Broadband lines in the EU: situation at 1. July The relatively high penetration rate is driven by the nationwide availability of two competing NGA platforms (VDSL2 and DOCSIS3) as well as the rising demand for multiplay bundles which include television. Thanks to the deployment and uptake of VDSL2 and cable DOCSIS3, the share of broadband lines with speeds of 30 Mbps and more is rapidly increasing as is shown in the following Figure. Figure 8: Share of broadband lines with speeds above 30 Mbps, Source: European Commission (2013), Broadband lines in the EU: situation at 1. July European Commission (2013), Broadband lines in the EU: situation at 1 July 2012, p.18.

36 18 Attractiveness Telecommunications Market in Belgium Fixed NGA broadband of 100 Mbps and more Penetration with ultrafast lines of 100 Mbps and more is low as it is in the rest of Europe. However Belgium was mid 2012 the fourth best EU country with 10.3% of the broadband lines providing speeds above 100 Mbps. Customers wishing to subscribe to such very high speed lines can do this in Belgium on cable networks due to the near absence of FTTH. The planned implementation of vectoring on VDSL2 networks 37 will also drive up speeds, although 100 Mbps is only possible on very short loops. Despite the high ranking, the Digital Agenda target of 50% of households subscribing to a broadband connection above 100 Mbps by 2020 remains ambitious. Nevertheless, as is shown in Figure 9, there is a dynamic towards higher speeds. Both the share of lines of Mbps and over 100 Mbps have increased over time. End 2012, 46% of lines provided speeds between 30 Mbps and 100 Mbps, and 12% of lines provided speeds of 100 Mbps or more. In a recent report, it was estimated that, based on historic uptake of broadband, the 50% penetration target for 100 Mbps broadband is achievable in Belgium 38. Figure 9: Fixed broadband lines by speed in Belgium (Digital Agenda categories), July 2010 Jan 2013 Source: BIPT (2013), Situation of the electronic communications sector 2012, figure 1.27 Mobile standard broadband While for fixed NGA broadband, we could draw an attractive picture, the situation is completely opposite for mobile broadband. In fact, the mobile broadband penetration is 37European Commission (2012), Belgium 2011 Telecommunication Market and Regulatory Developments, p Analysys Mason (2013), High Speed Broadband special edition

37 Attractiveness Telecommunications Market in Belgium 19 one of the lowest in the EU. Mobile broadband penetration as measured by the number of active users was only 26% in July 2012, which is 22% below the EU average penetration level (Figure 10). Figure 10: Mobile broadband penetration in EU countries (all active users), July 2012 Source: European Commission (2013), Broadband lines in the EU: situation at 1. July The situation is similar if penetration is measured by the number of dedicated data service cards/modems/keys as a percentage of the population. In terms of mobile broadband penetration on large screens, only Greece and Slovenia have poorer rates than Belgium (3.5%), which is substantially below the EU average of 8.8%. 39 Mobile NGA broadband of 30 Mbps and more Because of limited roll-out and commercialisation of LTE in Belgium, LTE penetration is still insignificant. Bundling Fixed broadband Internet access connections are increasingly bundled with other telecoms services. Customers buy multiplay bundles that combine broadband Internet access with voice, television and/or mobile services. Belgium is among the EU countries, where the share of households buying bundles is highest. A Eurobarometer survey shows that, at the end of 2011, 61% of Belgian households purchased bundles, a number only exceeded by the Netherlands (see 39 European Commission (2013), Broadband lines in the EU: situation at 1. July 2012, p. 31.

38 20 Attractiveness Telecommunications Market in Belgium Figure 11). The share of households purchasing bundles has increased within a few years. 40. Figure 11: Share of households buying bundles in the EU, December 2011 Source: Eurobarometer (2012), E-communications household survey. The penetration rate of bundled offers has been steadily growing to reach 49% at the end of 2011 (see Figure 12). 28% of households purchased a triple play offer, 19% a double play offer, and 2% a quadruple play bundle Figure 12: Bundling types in Belgium, Source: BIPT (2011).Situatie van de elektronische communicatiesector 2011, p Eurobarometer ( ), E-communications household survey reports Note that the double play share also includes bundles without broadband Internet (namely television bundled with voice telephony). 42 Note that the results are based on actual sales data submitted by operators and differs from the Eurobarometer figure, which is based on a household survey.

39 Attractiveness Telecommunications Market in Belgium Usage of online services In terms of usage of online services and digital competences, Belgium fulfils many of the Digital Agenda targets. For many indicators, Belgium occupies a favourable to middle rank in the EU. A summary of key indicators is provided in this section. More information on how Belgium compares to other EU countries is included in the Annex. Use of the internet As Figure 13 shows, the share of Belgians that have never used the Internet has steadily decreased and is clearly below the EU average. As the share dropped below 15% by 2012, Belgium has already reached the relevant Digital Agenda target. Figure 13: Individuals who have never used the Internet in Belgium and the EU27 (in %), Source: Eurostat (2012). Regular use of the Internet (at least once a week) Belgium is also ahead in terms of the share of individuals which regularly use the Internet. In 2012, 78% of Belgians regularly (i.e. at least once a week) used the Internet, which represents an increase of 25 percentage points compared to 2005 (see Figure 14). Thus, Belgium already reached another Digital Agenda 2015 target, which requires 75% of individuals to use the Internet at least once a week.

40 22 Attractiveness Telecommunications Market in Belgium Figure 14: Individuals, who are using the internet on a regular basis (at least once a week in Belgium and the EU (in %), Source: Eurostat (2012). Use of the Internet for purchasing of goods and services (e-commerce) The use of the Internet for purchasing goods and services has further progressed as is shown in Figure 15. Take-up of e-commerce in Belgium is in line with EU average. 45% of Belgians (and Europeans) have purchased goods and services online in The Digital Agenda stipulates that half of individuals should conduct online purchases by Given that Belgium is just 5 percentage points away, it can be assumed, that Belgium will achieve this target without problems. Figure 15: Individuals who have bought or ordered goods or services online within the last 12 months in Belgium and the EU 27 (in %), Source: Eurostat (2012).

41 Attractiveness Telecommunications Market in Belgium 23 Another Digital Agenda target is that 20% of individuals make online cross-border purchases by In 2011, already 23.6% of Belgians purchased goods and services online across borders, which was substantially above the European average of 9.6%. It represents an increase of 16 percentage points compared to 2008 (see Figure 16). Figure 16: Individuals who have bought or ordered goods or services online from sellers from other EU countries within the last 12 months in Belgium and the EU 27 (in %), Source: Eurostat (2012). Use of the Internet for banking transactions 56% of Belgians use the Internet for online banking, more than the European average of 38%. This is more than twice of the share in 2005 (see Figure 17) Figure 17: Individuals who have used the Internet for Internet Banking in Belgium and the EU (in %), Source: Eurostat (2012).

42 24 Attractiveness Telecommunications Market in Belgium Use of the Internet for interactions with public authorities (e-government) 50% of Belgians have interacted online with public authorities within the last 12 months. Again, this percentage is above EU average (see Figure 18). Figure 18: Individuals who have interacted online with public authorities within the last 12 months in Belgium and the EU27 (in %), Source: Eurostat (2012). Belgium is also above the EU average with regard to online services most frequently used in an interactive way with public authorities (i.e. sending filled-in forms electronically). In 2011, almost 26% of the Belgians sent filled-in forms to public authorities via the Internet compared to 20.6% on average in the EU. 43 A significant increase has been observed with regard to the electronic tax declaration (tax-on-web). The share of electronic tax declarations has tripled from 21% in 2006 to 61% in With regard to e-government, Belgium had an availability level 45 of 79% in 2010 for citizens, slightly below the EU average of 84%. 43 FOD Economie (2012), Barometer van de informatiemaatschappij 2012, p FOD Economie (2012), Barometer van de informatiemaatschappij 2012, p The indicator shows the percentage of the 20 basic services which are fully available online, i.e. for which it is possible to carry out full electronic case handling. These are: income taxes, job search, social security benefits, personal documents, car registration, building permissions, declaration to police, public libraries, certificates, enrolment in higher education, announcement of moving, healthrelated services (citizens), social contributions, corporate tax, VAT, company registration, statistical data, customs declaration, environment-related permits, public procurement businesses (full definition in the 9th egovernment Benchmark Report, chapter 3). CapGemini (2010) Digitizing Public Services in Europe: Putting ambition into action 9th Benchmark Measurement.

43 Attractiveness Telecommunications Market in Belgium 25 According to the United Nations E-Government Survey 2012 Belgium occupies the 24 th place in the UN s e-government ranking European countries have a better ranking than Belgium. Note that in comparison with 2010, Belgium declined by 8 places. An important reason is that e-government applications were found to be too little "citizencentred", i.e. not sufficiently integrated or insufficiently adapted to the real needs of users. Use of mobile Internet Mobile Internet is mainly used for sending and receiving s (21%) followed by playing or downloading games, sending images and videos (12%) and reading or downloading news (12%). Figure 19: Purpose for Mobile Internet use via handheld devices (in %), 2012 Source: Eurostat (2012). 4.2 Business broadband Availability of business broadband Business customers have particular requirements in terms of contention ratio, symmetry of transmission speed, resilience, availability and service level guarantees. Therefore business broadband services are typically provided over xdsl and fibre networks and to a lesser extent over cable networks. However, cable operator Telenet also offers services to business customers using a combination of cable, DSL and fibre optic United Nations (2012), E-Government Survey 2012, p

44 26 Attractiveness Telecommunications Market in Belgium Fixed standard broadband Standard broadband connections (over ADSL networks) are available to all businesses. Most businesses will however require more than standard broadband speeds. Fixed NGA broadband of 30 Mbps or more VDSL2 is widely available and coverage is high compared to other European countries. Belgacom s VDSL2 broadband service is planned to reach 85% of homes in 2013, which is only second to the Netherlands. Note that the household coverage rates shown in Figure 20 are likely to underestimate the business coverage rates. Figure 20: VDSL2 48 coverage in EU countries, 2011 Source: Point Topic (2011), Broadband coverage in Europe in This definition does not include implementations where fibre is provisioned to a large building, such as a block of flats, and the final connections are provided by VDSL2 within the building, which are defined as fibre-to-the-premises ( FTTP ). Cf. Point Topic (2011), Broadband coverage in Europe in 2011, p. 165.

45 Attractiveness Telecommunications Market in Belgium 27 Fixed NGA broadband of 100 Mbps or more In the business communications market, higher speeds are predominantly realised over fibre networks. Belgium has rolled out fibre to the office ( FTTO ) particularly for the larger business customers. FTTO is available to 60% of businesses with speeds up to 10 Gbps. 49 Mobile standard broadband and Mobile NGA broadband of 30 Mbps and more Mobile broadband is available over the UMTS networks of Belgacom, Mobistar and Base Company on a nationwide basis. So far LTE is only marketed in a number of cities by Belgacom and Mobistar, but further roll-out is to follow. Base Company is set to start LTE tests during the course of It should be noted that the above mentioned operators are the only three actively engaged in the mobile business communications market Business broadband penetration In 2012, approximately 96% of firms were subscribed to the Internet, which is slightly above the EU average of 95%. 50 Internet access in large and medium-sized enterprises is universal. Access to the Internet usually means access through a broadband connection, as narrowband connections no longer play a role in Belgium. Figure 21: Level of Internet access depending on the company size in Belgium and the EU27 (in %), 2012 Source: FOD Economie (2012), Barometer van de informatiemaatschappij 2012, p p FOD Economie (2012), Barometer informatiemaatschappij 2012, p.21.

46 28 Attractiveness Telecommunications Market in Belgium Business customers prefer faster lines. Lines with at least 30 Mbps represent almost half of the Internet connections provided to businesses in Belgium. This is substantially above the EU average. Figure 22: Speeds of Internet access for businesses in Belgium and the EU27 (in %), 2012 Source: FOD Economie (2012), Barometer van de informatiemaatschappij 2012, p.21. Bundles Business customers usually purchase fixed broadband Internet access together with other telecoms services as bundles. This is particularly true for multisite companies, many of which are multinational companies. They demand sophisticated, tailored business communications services which deliver seamless connectivity across multiple sites nationally and often cross-border. Business communications services are usually offered and purchased as bundles of broadband Internet access, leased lines (traditional interface and Ethernet), irtual Private Networks ( VPNs ), voice and mobile services Business usage of online services Use of the Internet for selling online (e-commerce) Enterprises consider it important to be visible on the Internet. In 2012, 76% of enterprises in Belgium had a Website or a Homepage, which is 5 percentage points above the EU average Eurostat (2012)

47 EU27 BE Attractiveness Telecommunications Market in Belgium 29 Only about a quarter of firms in Belgium sold goods or services via the Internet or received orders online as is shown in Figure 23. This is a higher share than for the EU as a whole. However, while the percentage in the EU is slightly rising, Belgium is characterised by a downward trend. Figure 23: Enterprises receiving orders and selling online (in %), Enterprises selling online (at least 1% turnover) Enterprises having received orders via computer mediated networks Enterprises selling online (at least 1% turnover) Enterprises having received orders via computer mediated networks % 10% 20% 30% 40% 50% Source: Eurostat (2012). In 2012, firms realised 14% of their total turnover from e-commerce. 52 Belgium s rate decreased from 18% in 2010 and is currently slightly below the EU average of 15% (see underneath figure). Figure 24: Enterprises' turnover from e-commerce (% of total turnover), 2012 Source: Eurostat (2012). 52 Orders from a website or via EDI-type (Electronic Data Interchange) messages. Eurostat (2012)

48 30 Attractiveness Telecommunications Market in Belgium Most of the e-commerce turnover is generated by domestic sales. In 2011, the share of domestic electronic sales was twice as large as the share of e-commerce sales to other countries. 53 Online interactions with public authorities (e-government) Enterprises increasingly use the Internet to interact with public authorities. During 2012, almost nine out of ten enterprises in Belgium reported that they used the Internet to interact with public authorities. 54 While this figure is above the EU average of 87%, Belgium s neighbouring countries such as the Netherlands have progressed even more in this regard. 55 Figure 25: Enterprises in Belgium and the EU27 using the internet for interacting with public authorities (in %), Source: Eurostat (2012). 53 Eurostat (2011). 54 Eurostat (2012). 55 Eurostat (2012).

49 Attractiveness Telecommunications Market in Belgium 31 5 Competition in broadband markets Competitive markets are essential in delivering choice, good quality and fair prices to households and businesses. The competition in the residential broadband market is almost only the result of platform competition between xdsl and cable. In contrast, the business broadband market is characterised by competition problems as cable is a less significant player in this market and access based competition is insufficiently developed. 5.1 Competition in residential broadband Belgacom s market share in the market for residential broadband has gradually fallen to 45% of fixed broadband lines, which remains slightly above the EU average incumbent market share of 43% as is shown in Figure 26. Figure 26: Fixed broadband lines operator market shares, July July 2012 Source: European Commission (2013). The residential market is characterized by a high degree of platform competition between xdsl and cable. In July 2012, xdsl lines represented 52% and cable 48% of fixed broadband lines. The share of cable has increased steadily over the past years, from 38% in January 2006 to 48% in July 2012 as is shown in Figure 27.

50 32 Attractiveness Telecommunications Market in Belgium Figure 27: Fixed broadband lines by technology in Belgium, Jan July 2012 Source: European Commission (2013). In contrast, the extent of access based competition (i.e. competition that is based on local loop unbundling and bitstream) is relatively low, such that access regulation does not appear to be very effective. Belgacom was actually able to increase its share of all DSL lines significantly in the past 6 years from 78% in 2006 to 86% in The increase of Belgacom s share in 2010 can be mainly attributed to the acquisition of Scarlet, an alternative infrastructure-based communication service provider. 56 It should also be noted that the proportions have not changed since Figure 28: Fixed broadband lines by market party, July July 2012 Source: European Commission (2013). 56

51 Attractiveness Telecommunications Market in Belgium 33 This trend very much contrasts with the development in the EU, where the incumbent s share of DSL lines has decreased on average from 60% in 2006 to 54% in In Belgium only 14% of all retail DSL lines are provided by alternative operators based on a wholesale service compared to 46% in the EU. Figure 29: Share of retail DSL lines based on wholesale services, July July 2012 Source: European Commission (2013). Furthermore, most of the wholesale lines purchased by alternative operators from Belgacom are based on simple resale. Only 16% of lines are fully unbundled local loops and 3% are based on shared access. Bitstream accounts for one third of all wholesale lines. 57 Figure 30: Type of wholesale access, July 2012 Source: European Commission (2013). 57 European Commission (2013), Indicators on the electronic communications market ( ).

52 34 Attractiveness Telecommunications Market in Belgium Bundling Bundles, which combine broadband Internet access with voice, television and also mobile services ( multiplay ), become increasingly common. Technical replicability of bundles has become possible using appropriate wholesale access obligations. Economic replicability very much depends on clear methodologies for margin squeeze testing and an on-going monitoring by the regulator. Managed and over-the top services A fixed broadband connection allows customers (against an additional payment) to access specialised managed services of their access provider such as VoIP, IPTV, video on demand and other services. Managed services are also provided over mobile connections. At the same time, customers can access over-the-top ( OTT ) services that are provided over the public Internet. OTT services are offered over both fixed and mobile connections. The biggest impact can be noted in the mobile market. Communication and messaging services of OTT providers, which mobile users access via their smartphones, include e.g. Skype, Viber and Whatsapp. As most of these services are for free or for a fractional amount of the competing service from the network operator this has led to a significant decrease in the voice and SMS related revenue of mobile operators. The increased usage of mobile data services has only partly compensated the loss of voice and SMS revenue. 5.2 Competition in business broadband Fixed broadband is used by companies to access the Internet, but also for establishing managed connectivity between multiple geographical sites (retail branches, manufacturing sites, remote employees). Businesses require higher speeds, more symmetrical upload/download speeds and service level guarantees. Business connectivity services are mainly offered over xdsl and in city areas, where available, over fiber networks, as well as over leased lines and over Virtual Private Networks ( PNs ). Cable operators are a less significant player in business connectivity services. Thus there is little platform competition between xdsl and cable. While in residential broadband Belgacom faces competition particularly from cable operators, it is likely to be dominant in business broadband:

53 Attractiveness Telecommunications Market in Belgium 35 The number of suppliers that usually respond to tenders of business customers is very low. In a BELTUG survey, 9% of the respondents received only a single bid, and 39% received only two bids, when tendering their services. 58 In general, decision makers in businesses would like to have four bids. Often Belgacom is the only bidder or one of the two bidders, notably if (i) the number of sites to be covered is high and some sites can only be covered by Belgacom, (ii) requirements in terms of service level guarantees can only be met by Belgacom, and (iii) the types and combinations of services can only be provided by Belgacom (mobile services focused on business customers, inclusion of IT integration services in the bundle). Belgacom has a dominant position on the business broadband market with 61% market share in Telenet had a market share of 15% in Other operators such as Verizon, Colt and BT share the rest of the business broadband market. 59 BIPT s regulatory framework is mainly focussed on the residential markets and not specifically targeted at promoting competition at the business service level. Figure 31: Market share business broadband, 2010 Source: BELTUG (2011), Competition in the business market, p

54 36 Attractiveness Telecommunications Market in Belgium Bundling In the business segment, business communications services provided to multi-site business customers involve bundles of broadband internet access, leased lines, VPNs, voice and mobile services. Business customers require services of a higher quality, with greater symmetry, higher reliability and availability than those provide to residential and small business customers. They are also often of a cross-border character as they are demanded by multinational corporations.

55 Attractiveness Telecommunications Market in Belgium 37 6 Barriers to investment The Belgium telecoms sector is characterized by a number of barriers to investment, which are analyzed in the following. These include: Barriers concerning the re-use and sharing of existing physical infrastructure 60. Barriers concerning the roll-out of new physical infrastructure. Barriers concerning the deployment and sharing of in-building high-speed ready infrastructure. Problems related to regulated wholesale products. Problems related to the prices of unbundled local access and wholesale broadband access ( bitstream ). The high and varying emission norms for mobile antennas. High taxes on mobile antennas and masts. Inconsistencies resulting from overlapping competencies of the Federal State, Communities and Regions. Excessive contributions of telecoms operators to the BIPT. These barriers increase the costs of investment into fixed and mobile NGA networks and have a negative impact on the economic viability of such investment. They also create delays in the deployment and uptake of NGA networks. The barriers that we have identified, are substantial and as a whole, very likely to have a negative impact on the longer-term development of Belgium s NGA infrastructure, on penetration and usage of new services, and ultimately on economic growth. 6.1 Barriers concerning the re-use and sharing of existing physical infrastructure Rolling out a fixed network requires significant investments in which civil engineering costs play a major part. According to a study 61, civil engineering works can make up to 80% of the costs of rolling out a fixed NGA network. Deployment costs could be 25% lower if existing infrastructure like ducts and sewers would be shared and re-used. 60 This may relate to physical infrastructure used in fixed and mobile networks. 61 Analysys Mason (2008), The costs of deploying fibre-based next-generation broadband infrastructure.

56 38 Attractiveness Telecommunications Market in Belgium There are two reasons for the lack of infrastructure sharing: Insufficient transparency about existing passive infrastructure, and Lack of mandated access to passive infrastructure. In the particular Belgium circumstances, these problems may not be of prime importance in the short term for the fixed networks, as the demand for higher bandwidth is largely satisfied by the existing cable and VDSL2 networks. Belgacom has also announced that, by end of 2013, it will start rolling out FTTH on a limited scale to Greenfield areas (no existing copper infrastructure). 62 Moreover, cable networks, upgraded to DOCSIS 3.0, enable download speeds well beyond 100 Mbps. Belgacom s VDSL2 network, once upgraded with vectoring technology, is capable of delivering speeds of 50 Mbps on 800 m loops and higher on shorter loops. In the longer run, if a greater need emerges for FTTH investment, insufficient transparency about the existing passive infrastructure and the lack of access obligations for owners of infrastructure may well represent a substantial barrier to such investment. In respect to mobile broadband networks, there is an increasing requirement for sharing the existing mobile base stations and other structures used for the mounting of antennas. The roll-out of 4G LTE networks requires the installation of extra antennas on top of the existing 2G and 3G antenna s. This aspect is further described in Barriers related to permit granting procedures. Furthermore, the required speed for connections linking mobile base stations to the core network is increasing as well. With the introduction of UMTS/HSPA and LTE, bandwidth requirements have moved substantially beyond what can be provided over traditional copper based connections or point-to-point wireless links. A UMTS base station covering 3 sectors could experience peaks of over 90 Mbps in total. For LTE base stations a guideline of 300 Mbps is used 63. Mobile operators need fibre backhaul or duct access (for deploying own fibre). Hence re-use of existing physical infrastructure is also of great relevance for mobile network operators Lack of transparency about existing ducts Cost savings in NGA roll out could be achieved by an increased transparency on available infrastructure such as ducts. While there are initiatives at a regional level, there is no satisfactory central infrastructure atlas capable of covering the needs. 62 No other operator has plans to roll-out FTTH. 63 White paper UBM Tech (February 2013), page 3, 13.pdf

57 Attractiveness Telecommunications Market in Belgium 39 In Flanders, all bodies that own or operate underground cables and pipes are obliged to provide to the Agentschap voor Geografische Informatie Vlaanderen (AGIV) information on the areas in which they operate. 64 The information is made available on the Kabelen Leiding Informatie Portaal (KLIP). The Cable and Conduit Portal has improved the processes, but so far lacks sufficient detail as the focus is mainly on preventing accidents caused by excavations rather than facilitating deployment of NGA networks. The exact position of underground wires and cables is not indicated nor does the existing database contain information on dark fibre or empty ducts. In addition to the Cable and Conduit Portal, the Flemish AGIV has initiated the Largescale Reference Database (GRB), a long-term project that aims to map the locations of passive infrastructure accurately with surface features. Again, this database does not contain information on potential duct capacity. AGIV is planning a second phase of the Cable and Conduit Portal named Informatie Model Kabels en Leidingen (IMKL). The aim of this project is to completely automate the excavation planning process. It is envisaged that, in the future, the GRB project and the Cable and Conduit Portal database will be ultimately combined in order to produce a complete mapping of passive infrastructure. A system similar to the Flemish Cable and Conduit Portal exists in Wallonia and the Brussels region (called KLIM-CICC), which is linked to the Flemish database. However, similar initiatives such as a Large-scale Reference Database (GRB) and its integration with the Cable and Conduit Portal do not yet exist in Wallonia. Best practice A number of EU countries have progressed in providing more transparency on physical infrastructure for high-speed broadband networks. Examples include Germany and Portugal: The German regulator Bundesnetzagentur introduced a central atlas in 2009 mapping the existing physical infrastructure. Bundesnetzagentur collects data on a voluntary basis from the infrastructure owners. No ground surveys are done. Authorized users get web access for viewing the mapping information. No fee is requested for accessing the database. In Portugal, a different approach is taken. The incumbent PT is required to provide information on the available capacity of ducts using three colors (redamber-green). Duct surveys are carried out on request of an interested operator 64 Analysys Mason (2012), Support for the preparation of an impact assessment to accompany an EU initiative on reducing the costs of high speed broadband infrastructure deployment. Final Report. A study prepared for the European Commission DG Communications Networks, Content & Technology, p

58 40 Attractiveness Telecommunications Market in Belgium to determine this availability and the related costs (69 ) are paid by the requesting party. Building on best practice, the European Commission has proposed a Regulation on measures to reduce the cost of deploying high-speed electronic communications networks which include an obligation for Member States to establish a single information point and ensure that a minimum set of information concerning the existing physical infrastructure is made available Lack of mandated access to ducts For historical reasons, Belgacom s cables between the Street Cabinet and the endcustomer s premises are directly buried into the ground. Belgacom only uses ducts for the feeder segment between MDFs and Street Cabinets. Following the withdrawal of the obligation of sub-loop unbundling, the BIPT also skipped the obligation of Belgacom to provide duct access in the feeder segments between MDFs and Street Cabinets. In case alternative operators intend to deploy FTTH, the absence of an obligation on Belgacom to provide duct access would increase the roll out costs significantly and therefore represent a barrier to investment. Another barrier is created by the lack of a symmetrical obligation for all owners of physical infrastructure to provide duct access on reasonable request. There are significant potential cost savings from also imposing infrastructure sharing obligations on electricity and water companies, the Belgium railways, etc. Best practice There are a number of European countries where regulators have mandated access to existing ducts of the incumbent as an SMP obligation (e.g. Spain, Portugal, Slovenia, Germany, UK and France). 66 It is however rare that telecoms operators other than the incumbent, or non-telecoms operators, are mandated to share their ducts. Two EU countries have been quite successful in their attempt to regulate mandated access to ducts: Lithuania and Portugal. Lithuania has one of the highest levels of high-speed broadband take up. FTTH represents 50% of all broadband connections. This is largely due to mandated duct sharing between telecoms and other non-telecoms infrastructure operators from 2004 onwards. Following a number of complaints, the regulator introduced 65 European Commission (2013), Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on measures to reduce the cost of deploying high-speed electronic communications networks, Brussels, , COM(2013) 147 final. 66 EC Study by Analysis Mason on the support for the preparation of an impact assessment to accompany an EU initiative on reducing the costs of high-speed broadband infrastructure deployment.

59 Attractiveness Telecommunications Market in Belgium 41 at the end of 2011 additional regulation of the incumbent operator specifying technical inspections, information provisioning and pricing. While the telecoms regulator has no competences with regard to non-telecoms companies, it participates in court cases providing expert opinion with the aim of consistent judicial practice. Furthermore, the regulator publishes the final decisions on its website in order to clarify rulings and discourage future disputes. As a result of mandated access to ducts, alternative operators could plan and deploy their network quickly and were responsible for almost all FTTH initially. Three to five years later, the incumbent came under pressure from this competition and was forced to deploy its own fibre infrastructure. In 2011, Portugal has a large cable footprint (87% of households) and an extensive FTTH network (58% of households). The incumbent PT is obliged from 1991 onwards to give access to its ducts and pole network to a rivaling cable company. In 2009 the regulator ANACOM extended this regulation by mandating duct access for all telecoms operators and public utilities companies. ANACOM sets the prices for government owned infrastructure, while other infrastructure owning companies must justify that their prices are reasonable. No obligation was put on operators employing new ducts; however the deploying operator is obliged to consult with other operators to determine if anyone is interested in joining. If so, then deploying operators must install ducts which are suitable for sharing, if not the deploying operator is free to choose the kind of duct. In order to address the relevant barriers to investment, the Commission proposal for a Regulation on measures to reduce the cost of deploying high-speed electronic communications networks provides for an obligation of all owners of physical infrastructure to meet reasonable requests for access by telecoms network operators Barriers concerning the roll-out of new physical infrastructure Co-deployment initiatives can reduce deployment costs by coordinating the work of multiple entities (possibly from different sectors) to save construction costs when rolling out new networks. Barriers are related to: Lack of transparency about planned civil works. Burdensome and time consuming permit-granting procedures. 67 Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on measures to reduce the cost of deploying high-speed electronic communications networks.

60 42 Attractiveness Telecommunications Market in Belgium Lack of transparency about planned civil works Lack of transparency about planned civil works is a barrier to co-ordination of civil works. It can lead to wasteful duplication of resources, when several companies need to perform street works in the same location. By creating a communications process whereby all planned civil works are published to interested parties, coordination of civil works is facilitated, costs can be shared among stakeholders, and disruption from street works is minimized. The database could be used to notify operators when civil works are planned in any locations of interest. In Flanders, all bodies that own or operate underground cables and pipes are obliged to provide to KLIP information on the areas in which they operate. 68 Moreover, any organisations wishing to carry out excavations must submit a planning application electronically using the KLIP interface in advance of the commencement of works. A similar system exists in Wallonia and the Brussels region (KLIM-CICC). AGIV is also planning a Informatie Model Kabels en Leidingen (IMKL), which aims to completely automate the excavation planning process. Further development and integration of the regional initiatives however seems necessary. Best practice Implementation of civil works co-ordination in Europe is in its early stages. However it seems that the successful initiatives are more based on a commercially incentivized concept for all involved than on obligations to notify civil works. Finland and Sweden are examples of this. Important is the envisaged participation of the utility companies in these countries as they manage extensive networks of ducts. In Finland the government has developed, in cooperation with the industry, an electronic platform, called Johtotieto Oy (Co-digging) which allows operators and infrastructure owners to inform about intended work. Projects are categorized per town or city. Parties are not mandated but commercially encouraged to join the system. Beside the cost savings also shorter lead times are mentioned. The Finnish portal is in its early stages, but Vattenfall, one of the main participants, claims that projects that have been completed in time, have an improved safety record and have a reduced number of warranty claims in a set period. Sweden s regulator is working on 3 initiatives: (i) setting up a business model encouraging utility companies to install extra empty ducts when installing their own ducts (the extra costs are compensated and when the empty ducts are used, an extra fee is charged); (ii) developing a commercial platform for co- 68 Analysys Mason (2012), Support for the preparation of an impact assessment to accompany an EU initiative on reducing the costs of high speed broadband infrastructure deployment. Final Report. A study prepared for the European Commission DG Communications Networks, Content & Technology, pp

61 Attractiveness Telecommunications Market in Belgium 43 ordination of excavation works (like Finland); (iii) developing existing IT platforms to create a duct co-ordination system. The Commission also suggests in its proposed Regulation an obligation for all network operator to provide a minimum set of information on planned civil works. 69 In addition, any undertaking performing civil works financed by public means shall be obliged to meet reasonable requests for civil works coordination agreements, which should facilitate co-deployment Barriers related to permit granting procedures Rights of way The processes regarding administrative permit granting are in many respects burdensome and time consuming. Depending on the location, long delays have to be respected before new digging is authorized (Brussels: 3 years, Antwerp: 2 years and Gent: 3 years). When an operator wishes to deploy new infrastructure, it is normally required to negotiate rights of way directly with the owner of the land on which he wishes to carry out work. For public land, applications must usually be made with the relevant local or regional authority, whereas access to private land is subject to wayleaves negotiated with the land owner. Furthermore, for some municipalities, operators are even obliged to work with specific (costly) subcontractors. In addition, if the planned work might affect any existing infrastructure, the operator must negotiate rights of way with the concerned owner. The process of obtaining rights of way can therefore be long and complex. Moreover, there can be difficulties in determining the land or infrastructure owners, and the operator must negotiate rights of way with each party individually. Thus, a relatively small deployment could result in a significant administrative effort to co-ordinate wayleaves. Building permits The siting of a mobile antenna is subject to regional planning permissions, i.e. administrative authorizations required prior to the completion of certain acts and work specified by the legislation. For new (LTE) mobile base stations, mobile operators need to obtain building permission in all regions, although in Flanders in 60% of the cases an exception is given. The timescales for building permits vary significantly on average: 400 days for Brussels region, 130 days in the Walloon region, and 180 days in Flanders. Once 69 Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on measures to reduce the cost of deploying high-speed electronic communications networks.

62 44 Attractiveness Telecommunications Market in Belgium granted, possible appeals processes at the relevant Ministry or Council of State level may last 3 to 24 months. Environmental permits Furthermore environmental permissions are required for mobile base stations: In Brussels, an environmental permit is delivered by the Brussels Environment for each installation, after local authorities consultation and local public enquiry. In Wallonia, a radiation certificate, delivered by the Scientific Institute of Public Service (ISSeP), has to be notified to the local authorities. The ISSeP is an organization of public interest, which is under the direct authority of the Walloon Government. In Flanders, a radiation certificate is delivered by the BIPT. The timescales for these permits are considerably shorter than for the building permits. However the appeals process in Brussels can be long as they first go to the environmental authority, then to the relevant Ministry and finally to the Council of State. The long timeframe especially in Brussels, possible long appeals processes and the regional differences require significant efforts from mobile operators and represent a substantial barrier to investment. When compared to other countries, Belgium is among the group of countries with the longest timescale for permission granting of mobile base stations as illustrated in the figure below. On average it takes more than a year in the EU to receive all permits necessary for the deployment of a mobile base station. It is observed that most delays are caused by bureaucratic and time consuming administrative permission processes, lack of coordination with operators or sometimes mere obstruction at the local level.

63 Attractiveness Telecommunications Market in Belgium 45 Figure 32: Comparison between legal requirements and typical timescales for permission granting for base station deployment (in month) Source: GSMA Europe, Base Station Planning permission in Europe, P. 7 Best practice - rights of way A one-stop-shop for rights of way and administrative procedures does not exist in the EU, but the Netherlands gets closest to this. In 2007, legislation was updated removing the power of public bodies to deny rights of way for operators wanting to deploy telecommunications networks as well as for uninhabited privately owned land. Furthermore, a key detail in the regulation is that there is no compensation for access granted by private and public land owners and operators are given automatically rights of way.

64 46 Attractiveness Telecommunications Market in Belgium Operators still have to approach municipalities, who coordinate excavation works locally mostly via automated systems informing all parties involved. Furthermore, operators must approach private landowners to coordinate the work. However, each land owner is obliged to give access and the regulator (Authority for Consumers and Markets) is overseeing the dispute process according to strict (time) procedures. The costs of implementing these measures are very low to the regulator or government and bring significant savings in time and administrative burden for the operators leading to earlier revenue generation. The need for a one-stop shop on permit granting procedures is also echoed by the Commission s proposed Regulation. 70 According to the Commission, a single information point should be established to facilitate and coordinate the permit granting process. Best practice - permit granting Considering the legal commitments and timescales, Germany, Portugal, Sweden and the UK can be considered as best practice. When reviewing their respective approaches, it is noted that, in most cases, mechanisms to avoid bureaucratic inefficiencies have been implemented. These include: Exemptions or simplified procedures for small installations, certain site upgrades or temporary base stations. One stop shop licensing procedures. Tacit approval if local authorities do not oppose an authorization request within a certain time period. In the UK, the relevant government body (the Department for Culture Media and Sport) is currently consulting 71 on a number of proposals to change planning regulations which are slowing down the roll-out of 4G in England. The Department insists that, at the same time, it is retaining important environmental safeguards. The proposals have been made after discussions between government departments and mobile operators and are intended to: Maximize the use of existing structures and buildings. Extend existing permitted development rights for mobile communications. Clarify existing permitted development rights to remove ambiguity and Amend some permitted development right thresholds. 70 Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on measures to reduce the cost of deploying high-speed electronic communications networks. 71 Mobile connectivity in England: technical consultation,

65 Attractiveness Telecommunications Market in Belgium 47 For instance, 4G infrastructure developers might be able to install additional equipment on existing sites without prior approval. The proposals also look at raising the height limits of antennae from four meters to six meters, and the height limit of masts from 15 meters to 20 meters. In addition, the document clarifies existing definitions in the regulation, which limit mobile site sharing and explores the technical options to boost capacity with the use of small cells which will be mounted near street level. 6.3 Barriers concerning in-building deployment of NGA infrastructure Another barrier to FTTH roll-out exists with regard to in-building infrastructure. House owners in Belgium are not obliged to equip new and refurbished buildings with highspeed-ready infrastructure. Retro-fitting existing buildings create substantial additional costs. A problem in gaining access to existing fibre in-house networks also provides a barrier to competition and deprives end-users from competitive offerings and choice. Best practice There are a number of countries which can be regarded as best practice, in particular Spain and France. Building owners in Spain are obliged since 1998 to equip all new buildings as well as buildings undergoing refurbishment with common infrastructure for telephone lines, TV connections (analogue and satellite) and broadband. In 2011, Spain updated its regulation to align it with the Digital Agenda targets: (i) Constructors of new and to be refurbished multi-dwelling units must install passive NGA infrastructure such as fibre or coaxial cables connecting each apartment to a central distribution chamber. (ii) Before the construction, a consultation between constructor and broadband operators in the local area must take place to assess the best suitable cabling and to avoid inappropriate cabling. Even multiple infrastructures might be an outcome if required. The Ministry of Industry, Trade and Tourism supervises this process. (iii) Technical specifications have been set for twisted pair installations stipulating maximum length and cable type ensuring the Digital Agenda targets. Furthermore additional details of individual in-house connection points are specified as well. At the end of 2011, the French regulator, ARCEP, implemented a regulation similar to Spain obliging all those applying for a construction permit to equip the building with in-house fibre connecting all units to a central fibre access point. France is the benchmark for regulation of access to in-building deployment of NGA and especially fibre. As early in 2009, ARCEP started regulating aspects of the shared access point in multi dwelling units. The building operator is responsible for managing the in-building infrastructure and ensuring access for

66 48 Attractiveness Telecommunications Market in Belgium other operators who have rolled out their respective fibre infrastructure to the building. In 2010, ARCEP clarified its regulations with regard to the shared access point. It defined 148 densely populated city areas, where the access point should be in the buildings premises. For all other areas, the shared access point is to be in a reachable public domain outside the building. The Commission has made the deployment of high-speed ready in-building infrastructure an important part of the proposed Regulation. 72 It proposes that house owners should be obliged to equip all newly constructed buildings with high-speedready in-building physical infrastructure, up to the network termination point. Also, operators of in-building networks should be obliged to provide access to in-building wiring, such that all households can benefit from competitive offers. 6.4 Problems related to regulated wholesale products Access to the unbundled copper loop Belgacom has an obligation to provide access to its unbundled copper loops at the MDF. However, use of the unbundled local loop is very limited and significantly below the level in other EU Member States. As Belgacom migrates to a NGA network, MDFs will ultimately be dismantled and local loop unbundling abandoned. This has the following implications: First, while no MDF has so far been dismantled by Belgacom, the weakening business case for local loop unbundling makes it highly unlikely that alternative operators will increase the use of unbundled local loops. As is shown in the following figure, full unbundling and shared access is stagnating in Belgium. This can also be related to the planned dismantling of local exchanges of Belgacom. 72 Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on measures to reduce the cost of deploying high-speed electronic communications networks.

67 Attractiveness Telecommunications Market in Belgium 49 Figure 33: Development of unbundling in Belgium Source: BIPT Decision regarding FTTH-roll out, 28 March 2013, paragraph Second, the operators that currently use the unbundled local loop need to be offered a transparent migration path to NGA wholesale products. In this respect, the BIPT has imposed the following obligations on Belgacom: - Belgacom shall inform the regulator and access seekers of network adaptations and the discontinuation of certain services such as local loop unbundling. - If access points used by alternative operators are to be dismantled, Belgacom is obliged to maintain access to the unbundling services for a period of 5 years after communication of the intention to dismantle them, unless agreement is reached with access seekers. While Belgacom is obliged to provide migration services in case it dismantles an MDF, there is however no transparent migration path communicated at this point in time. Furthermore, there is uncertainty among alternative operators regarding the location of access points to the future NGA network. This uncertainty makes investment by alternative operators risky and disincentives them to further roll-out their networks. Best Practice With regard to migration to NGA, the NGA Recommendation requires that 73 : 73 EC Recommendation on regulated access to Next Generation Access Networks, 20 September 2010, point 39,40,40 and 41.

68 50 Attractiveness Telecommunications Market in Belgium Existing SMP obligations remain in place unless agreement is reached on an appropriate migration path. In the absence of an agreement, N A s should ensure that alternative operators are informed at least 5 years in advance of de-commissioning of access points, such as local loop exchanges. N A s should put a transparent framework in place for the migration from copper to fibre-based networks. N A s should use their powers to obtain network modifications plans from the SMP operator and ensure that alternative operators receive all necessary information in advance so that they can adjust their own networks accordingly. In many EU countries, the regulator is facilitating migration to NGA in so called NGA taskforces, which coordinate efforts between all operators. E.g., in 2011, the German regulator established in cooperation with the industry basic principles describing the characteristics of fixed and mobile NGA services, their access technologies and possible wholesale services, including technical and operational aspects of access. Further issues dealt with by the taskforce involve the determination of the major wholesale services and the refinement of definitions, standards, interfaces and related operational procedures. Such taskforces can discuss the implications for current wholesale access agreements and preconfigure future NGA access products, and thus reduce uncertainty for alternative operators Access to the unbundled copper sub-loop Following a market review in 2011, Belgacom is no longer subject to a sub-loop unbundling obligation provided it deploys VDSL2 technology with vectoring. Vectoring is a technology that further enhances speed over the copper sub-loop. The sub-loop unbundling obligation has been withdrawn, since the regulator believed that it would jeopardise the speed enhancing effects of vectoring and thus would have a negative impact on Belgacom s incentive to invest into vectoring. To allow access seekers to also benefit from the speed increase made possible by the deployment of vectoring, the regulator obliged Belgacom to provide a fully-fledged local bitstream product to VDSL2 connections. The availability of this wholesale product is of utmost importance for the future development of access based competition. In fact, it is not only a substitute for sub-loop unbundling, but also an alternative for those operators that use the unbundled local loop once Belgacom will dismantle its MDFs as they already have established backhaul capacity to these MDFs. Any delays in the introduction of the local VDSL2 bitstream product or discriminatory terms and conditions would immediately turn into a barrier to further investment and have negative consequences for competition in the broadband market.

69 Attractiveness Telecommunications Market in Belgium 51 BEREC has advised with regard to local VDSL bitstream that regulators should ensure that this active product is in operation in adequate advance to the MDF decommissioning as bitstream products are likely to gain in importance in a scenario of MDF decommissioning Bitstream access Belgacom is obliged to provide bitstream, with collocation services and backhaul at regional and following abandonment of sub-loop unbundling also at local level. The regulator imposed on Belgacom a fully-fledged bitstream product which is based on Ethernet, and includes backhaul by means of GigaEthernet. The obligation is imposed in light of the on-going dismantling of the ATM transport network and the full transition to an Ethernet network. It is important that alternative operators are able to demand the use, through the bitstream offer, of all the functionalities of the DSLAM and are thus enabled to create diversified offers at retail level. They will thus get the ability to differentiate quality of service levels and service speeds from Belgacom s offers Multicast functionality Moreover, in a situation where the unbundled local loop - which allows the use of the multicast functionality - is developed to a very limited extent, and where there are no prospects of increasing the use of the unbundled local loop due to the prospective dismantling of local exchanges, the imposition of bitstream with multicast functionality is essential in order to ensure that alternative telecoms operators can effectively compete in the retail broadband market Business-graded bitstream product Bitstream products in Belgium do not seem to take full account of the particular requirements of multisite business customers in terms of quality of service, symmetry, resilience, reliability, availability and SLAs/KPIs. While there are bitstream products for business connections, they are not fit for purpose. It is noted that after long negotiations a symmetric bitstream product is available for business purposes, however, for the first phase of regulated bitstream offers using vectoring, the maximum symmetric speed is 10 Mbps. At the same time, Belgacom s non-regulated commercial product ( Explore ) has symmetric speeds well above 10 Mbps. It has been announced that the upstream 74 BEREC (2012), Common position on best practice in remedies on the market for wholesale broadband access (including Bitstream access) imposed as a consequence of a position of significant market power in the relevant market, BoR (12) 88, Best Practice 33.

70 52 Attractiveness Telecommunications Market in Belgium speed will not be increased above 10 Mbps, hence there is a competitive disadvantage for alternative operators using the regulated bitstream service. Furthermore, there is no distinction in terms of Service Level Agreements (SLAs) between the current regulated business bitstream product and the residential bitstream service. In terms of quality of service, there is an additional feature for the businessgraded bitstream service (additionally charged) which prioritizes the relevant data packages. Competition in business communications services requires fit-for-purpose wholesale products. Lack of such products constitutes a barrier to investment. 6.5 Barriers related to pricing of wholesale products The BIPT determines the price for the unbundled copper loop on the basis of a bottomup LRIC cost model, where the copper is valued at its replacement cost. The price of the unbundled local loop in Belgium has been at a relatively high level in the past as is shown in Figure 34. Figure 34: Price of the unbundled local loop of Belgacom, /month Source: BIPT. The use of replacement costs for valuing copper assets results in excessive charges for the unbundled local loop given that the modern equivalent asset ( MEA ) nowadays is fibre, and copper would no longer be replaced. Copper has also been largely depreciated. The costing methodology of the BIPT resulted in the past in local loop

71 Attractiveness Telecommunications Market in Belgium 53 charges in the vicinity of 10 /month. The high level, on the one hand, discouraged alternative operators from using the unbundled local loop and rolling out their networks to the level of MDFs. On the other hand, the high charges provided a disincentive for Belgacom to invest into FTTH. The competition provided by cable operators, however, led Belgacom to invest into fibre to the curb and VDSL2. High local loop charges in the presence of competition by cable operators creates another potential problem: Where incumbents respond to the competition of cable operators by reducing retail prices, high local loop charges can lead to a margin squeeze for alternative operators using the unbundled local loop. The BIPT reduced the price of the unbundled local loop to around 8 /month in This level, while at the lower bound of the band envisaged by the forthcoming Commission Recommendation on Non-Discrimination and Costing Methodologies, is still relatively high. In any case, its reduction may come too late to stimulate further demand for unbundled local loops given the prospective dismantling of MDF locations by Belgacom VDSL2 bitstream at local and regional level The BIPT determines the price of bitstream on the basis of a bottom-up LRIC model. In the Belgium situation, where Belgacom faces competition from cable operators, there is a high risk of margin squeeze. The BIPT has issued guidelines on its preferred method for calculating a margin squeeze as early as 11 July , however as of today there is no publicly available tool and details are not clear to the industry. Hence, a more transparent approach is required on this important topic. The Body of European Regulators (BEREC) has published common positions on best European practices with regard to margin squeeze testing 76 and expressly noted that the chosen principle and methodology for the assessment of a margin squeeze should be made known in advance (e.g. by advance publication). The forthcoming Commission Recommendation on Non-Discrimination and Costing Methodologies provides for pricing flexibility for NGA wholesale products including for Belgacom s VDSL2 local and regional bitstream products. Pricing flexibility for NGA wholesale products further aggravates the risk of margin squeeze, particularly in a situation, where Belgacom competes with cable operators at the retail level. In order to avoid margin squeezes, it is imperative that there will be a timely implementation of the 75 BIPT (2007), Besluit van de Raad van het B IPT tot vaststelling van richtsnoeren met betrekking tot de beoordeling van price squeeze, 11 July BEREC (2012), common position on best practice in remedies on the market for wholesale broadband access (including Bitstream access) imposed as a consequence of a position of significant market power in the relevant market, BoR (12) 88

72 54 Attractiveness Telecommunications Market in Belgium safeguards provided by the Commission s Recommendation (Equivalence of Input, technical and economic replicability tests). 6.6 Excessive emission norms for mobile base stations There are strict emission norms for mobile base station antennas located in urban living areas, which are substantially stricter than the recommendations of the World Health Organization. This has forced mobile operators to scale back the output of existing GSM and UMTS mobile base stations in city areas. As for the deployment of LTE networks, additional antennas need to be installed, and in most cases new locations have to be found. This has delayed the deployment of LTE in Belgium. In addition, the emission regulation differs across the three regions (Flanders, Wallonia and Brussels-Capital) making network design and compliance with standards more complex and expensive. This is caused by a decision of the Constitutional Court which confirmed that the choice of a stricter emission level, applying the precautionary principle, falls within the discretion of the regional competence. Hence, Brussels and Wallonia independently passed their own regional acts on emission norms as there was no need for regions to conclude a cooperation agreement. However, Flanders pursued a different path; instead of passing a new act, it chose to execute the federal act of 26 November 1985 by adopting the decree of 19 November Consequently, the following emission norms are applicable: Brussels-Capital has a particularly strict cumulative norm of 3 V/m for all radio frequency sources, allowing a strict quota of 25% of it to each of the three operators (which means maximum emissions of 1,5V/m for each). In Wallonia, the maximal emission norm for electromagnetic radiation is 3 V/m per antenna. Flanders has a double norm, a 3 V/m per antenna norm for mobile operators and a cumulative 20.6 V/m norm for all radio frequency sources. Especially the Brussels norm is particularly strict; the 3 V/m cumulative norm is 200 times stricter than the recommendations of the World Health Organization. In Brussels this norm came into effect in Practically this norm is even stricter since after a first transition period, each of the three existing mobile operators will only be enabled to emit within a quota of 25% of 3V/m (which means 1,5V/m max), while the remaining 25% was divided over new parties like Telenet, ASTRID, BUCD, the STIB, the SNCB and ClearWire.

73 Attractiveness Telecommunications Market in Belgium 55 The strict and varying emission norms lead to the following negative consequences: Operators in Brussels are in the process of adapting their GSM and UMTS mobile sites in order to comply with the stricter norms (implementation of the quota) by mid In practice, this means that most operators had to reduce the power at their mobile sites to remain within the allowed quota, which resulted in a loss of coverage and capacity. Hence quality of service decreased or investment into additional mobile sites had to be undertaken. Furthermore, maintaining the current level of in-house coverage required additional network costs. As the norms are cumulative, they prevent the deployment of new LTE antennas in zones close to already existing antennas. In urban areas, by nature, space is limited, so finding places for new LTE antennas in addition to the existing GSM/UMTS antennas is almost impossible. Operators argue that with GSM/UMTS antennas they have already reached their legal emission limit, which will inevitably cause delays in the roll-out of LTE networks. Furthermore, switching off existing GSM antennas is not considered an option as only 30% of the handset devices in Belgium are already compatible with UMTS. Moreover, the GSM network is still required for offloading of voice traffic in case of overload of the UMTS network. For new mobile operators not operating GSM and UMTS networks, the emission limitations are less pronounced due to the division in 4 quotas of 3 V/m per operator. The regulation thus disadvantages existing incumbent mobile operators. Mobile operators operate nation-wide networks, however due to the regional emission norms a different network setup per region is required. This increases network and compliance costs. There are still uncertainties regarding the emission regulation. Recently a study conducted for the Brussels Institute of Environmental Management found that, while current regulation is based on pulsed wave, the radiation of GSM and LTE networks are considered to be included (while pulsed), however radiation of UMTS technologies is not.

74 56 Attractiveness Telecommunications Market in Belgium Best practice Other countries have similar issues with regard to emission norms and roll-out of LTE, however there are successful examples of LTE roll-outs like in Sweden. A flexible and pragmatic approach seems to be crucial. A further example is Paris, which has known a similar strict regulation of emission norms; recently the authorities adopted a practical policy that will enable mobile operators to roll out their LTE network in Paris, while respecting health and safety limits. This is based on the following elements: Beside the existing emission norm of 5 V/m for 2G/3G in the 900 MHz band, a higher combined norm of 7 V/m for all bands (2G/3G/4G) to enable introduction of 4G. As there will be a need for more locations to place the new LTE antennas, it is considered to put antennas on municipality/government owned buildings. The emission norms will be reviewed on a yearly basis in the light of real emissions measured through an increased number of field tests. Furthermore there will also be specific measurements at schools, nursery and healthcare institutions. In Flanders, the adoption of a norm has been preceded with a complete impact survey 77, including a full and comprehensive review of health surveys. The emission norm per antenna is complemented with a cumulative norm for all radio frequency sources. This not only leads to a more flexible health approach but also gives mobile operators the flexibility in the transition from existing to new technologies like LTE. Recently, the Consultative Committee on Telecommunications in Belgium ( CCT ) issued an opinion to the Minister of Economy and Consumers on the standard of radiation in the Brussels-capital region. In this opinion, the CCT encourages all political leaders to consider the above described negative consequences and to adopt one of the solutions proposed by the BIPT: Harmonize exposure limit to the Walloon standard - 3 V/m per antenna in the 900 MHz band -, so at least to abandon the cumulative standard. - Implement the Flemish standard with 3 V/m limit per antenna on the 900 MHz band combined with a cumulative standard of 20.6 V/m for all radiation sources. - Increase the exposure limit to 5 V/m for 2G/3G and, when 4G is introduced, increase it to 7 V/m distributed among 2G/3G and 4G bands

75 Attractiveness Telecommunications Market in Belgium High taxes on mobile antennas and masts Local governments impose taxes on mobile masts (called pyloons in Belgium) and antennas. It is estimated that the costs for mobile operators are substantial: 79 Pylon taxation could amount to 57 million, meaning an increase of the operational costs per pylon by 91%. Antenna taxation was estimated to raise 500 million, which increased the yearly operational costs per antenna by 545%. Administrative costs related to the implementation of the taxation add another per year as the local regulations and payment procedures can differ significantly between each other. Due to the characteristics of the radio frequency for LTE networks in Belgium and the cumulative emission norms, additional sites will be necessary for the roll out of LTE. The same applies for extra antennas for LTE, hence the on-going LTE roll-out will cause an additional tax burden. The GSM Operator Forum made a cautious estimation that this might lead to 59 million additional taxation 80. While taxes on antennas and masts provide incentives for infrastructure sharing, they can lead to investment barriers if set at excessive levels. It remains to be seen whether, and at which costs, LTE can be rolled out to the levels achieved in other countries. 6.8 Inconsistent decisions of federal, regional and local authorities Overlapping competences between the Federal State, the Communities and the Regions Repartition of competences between the Federal State and the communities In the Federal State of Belgium, the Communities (French, Flemish and Germanspeaking) are explicitly empowered to regulate cultural issues, including radio and television broadcasting, with the exception of the content of communications of the federal government. 81 Providers in the bilingual Brussels-Capital Region which, with 79 GOF Report, okale belastingen op pylonen en antenna s van mobile operatoren 80 GOF eport, okale belastingen op pylonen en antenna s van mobile operatoren,paragraph Constitution belge, article 127, 1 and 130, 1; Article 4, 6 Loi spéciale de réformes institutionnelles du 8 août 1980 et Article 4, 6 Loi spéciale de réformes institutionnelles pour la Communauté germanophone du 31 décembre 1983.

76 58 Attractiveness Telecommunications Market in Belgium regards to their activities, may not be assigned exclusively to one of the Communities, fall under the competence of the Federal State. 82 According to the Constitutional Court, 83 the delimitation of the concept of broadcasting as a cultural matter should be based on content-related and functional criteria and not on the technology used for its transmission ( point-to-point or point-to-multipoint ). The type of infrastructure, networks or terminal equipment used is therefore not relevant. 84 The Court emphasises that broadcasting includes services that provide public information which is, from the viewpoint of the sender, intended for the public at large or a part thereof, and which has no confidential character, even when this information is transmitted at individual request and irrespective of the technique used for this transmission. Consequently, a service providing individualised information and characterised by a certain level of confidentiality does not fall within the scope of broadcasting. 85 As for the Federal State which has residual competences in the Belgian institutional system, it remains competent for the other forms of electronic communications (than broadcasting), such as voice telephony or data transfer other than broadcasting. 86 Due to convergence of the telecommunications, media and information technology sectors, the boundaries between telecoms and broadcasting get increasingly blurred. In this context, the Constitutional Court found that the technological convergence has tied the competences of Community and federal authorities with regard to broadcasting and other electronic communications together to such an extent, that they could only be exercised by mutual consultation 87. Consequently a cooperation agreement was concluded on 17 November 2006 (and entered into force on 19 September 2007). That agreement provides that the various administrations shall consult each other on new regulation concerning electronic communications networks. It also establishes a conference of telecoms and media regulators ( Conférence des égulateurs du secteur des Communications électroniques, C C) composed of representatives of the federal 82 Constitution belge, article 127, On the interpretation by the Constitutional Court of the competences the Communities have regarding broadcasting (including the definition of the concept of broadcasting), see P. VALCKE and E. LIEVENS, Media Law in Belgium, Alphen aan den Rijn, Kluwer Law International, 2011, p More specifically on the Court s definition of broadcasting and the criteria to be used, see P. A C E, D. STE ENS, E. IE ENS and. EFE E, Hoofdstuk 1: Communicatierecht, in P. VALCKE and J. DUMORTIER (eds), Trends in digitale televisie Juridische uitdagingen, Brugge, die keure, 2008, esp. p Constitutional Court, decision n 132/2004 of 14 July 2004, paras. B.4.2 and B.4.3. See also Constitutional Court, decision n 109/2000 of 31 October 2000, para. B.5.2. We note that we use the appellation Constitutional Court even for rulings adopted before 7 May 2007 when this jurisdiction was still called Court of arbitration (and had less competences). The Court s decisions are available at 85 Constitutional Court, decision n 128/2005 of 13 July 2005, para. B Constitution belge, article 35. See also R. QUECK and J. JOST, «Communications électroniques et répartition des compétences: chantiers importants en cours», RDTI, 2009, n 34, p Constitutional Court, decision n 132/2004 of 14 July 2004, paras. B.4-B.7.

77 Attractiveness Telecommunications Market in Belgium 59 telecommunications regulator (the BIPT) and the three Community media regulators. The CRC can be requested by its members to consider a draft decision if competence issues are involved. The CRC decides by consensus. The cooperation agreement also establishes a committee of the federal and Community ministers concerned ( Comité interministériel des Télécommunications et de la adiodiffusion et la Télévision ). In specific cases, the Committee may substitute itself to the CRC for the taking of a decision. It is also competent for consultation on draft legislation regarding electronic communications infrastructure. 88 Each Community has adopted rules regulating audiovisual content and has a minister for media as well as a separate regulatory authority. As regards broadcasting regulation, the relevant laws in Belgium are: The French Community s coordinated Act on Audiovisual Media Services of 26 March 2009 (the AVMS Act) 89 ; The Flemish Broadcasting Act of 27 March 2009 (the Flemish Broadcasting Act) 90 ; The German-speaking Community s Act on audiovisual media services and cinema exhibitions of 27 June 2005, as amended by the Act of 3 December ; The (Federal) Act regarding electronic communications networks and services as well as broadcasting in the bilingual Brussels-Capital Region of 30 March 1995, as amended by the Federal Act of 16 March On the basis of this competence related to electronic communications, the federal Parliament adopted the Electronic Communications Act of 13 June 2005 (ELA) 93. This act transposed the 2003 EU Telecoms Package. 88 L. GARZANITI, H. HOBBELEN, V. MUSSCHE, V. LEFEVER, "Belgium", in L. GARZANITI, N. GOOD, (eds.) Telecoms and Media An overview of regulation in 48 jurisdictions worldwide, London, Law Business Research Ltd., 2011, p ; R. QUECK and J. JOST, «Communications électroniques et répartition des compétences : chantiers importants en cours», RDTI, 2009, n 34, p ; P. VALCKE and E. LIEVENS, Media Law in Belgium, Alphen aan den Rijn, Kluwer Law International, 2011, p Arrêté du Gouvernement de la Communauté française du 26 mars 2009 portant coordination du décret sur les services de médias audiovisuels, M.B., 24/07/ Decreet van de Vlaamse Gemeenschap van 27 maart 2009 betreffende radio-omroep en televisie, M.B., 30/04/ Dekret der Deutschsprachigen Gemeinschaft Belgiens vom 27. Juni 2005 über die audiovisuellen Mediendienste und die Kinovorstellungen, M.B., 06/09/ Loi du 30 mars 1995 concernant les réseaux de communications électroniques et services de communications électroniques et l'exercice d'activités de radiodiffusion dans la région bilingue de Bruxelles-Capitale, M.B., 22/02/ Act of 13 June 2005 on electronic communications, M.B., 26 June 2006.

78 60 Attractiveness Telecommunications Market in Belgium Problems posed by the blurred repartition of competences The digital dividend stands for the amount of spectrum being released through the digital switchover 94. These available frequencies represent a considerable economic potential which arouses the interest of mobile operators as these frequencies can be utilised to create a new internationally harmonised frequency band for electronic communications services in the frequency range MHz (the so-called 800MH band ). The 800 MH band will be used for the deployment of LTE technology, complementing deployments of LTE in higher bands. At the EU level, Decision 243/2012/EU of the European Parliament and of the Council of 14 March 2012 establishing a multiannual radio spectrum policy programme (RSPP) obliges Member States to carry out by 1 January 2013 at the latest the authorisation process in order to allow the use of the 800 MHz band for electronic communications services 95. In Belgium, the repartition of competences raised major questions related to the procedure to follow in order to allocate the digital dividend as well as the financial compensations. Also the market analyses of common infrastructure are very time consuming as the BIPT, CSA, Medienrat and VRM have to cooperate intensively. As far as the operators are concerned, the obligation of co-operation means that the allocation process but also the market analysis take more time due to consultations and discussions between the federal and the community governments. However, there is no alternative to a cooperation agreement, as both are competent for regulating common infrastructure. Moreover, such cooperation eliminates the risk of litigation between the Federal States and the Communities Overlapping competences between the Federal State and the Regions As stated before, the Federal State which has residual competences in the Belgian institutional system, is competent for other forms of electronic communications than broadcasting, such as voice telephony or data transfer other than broadcasting. On the basis of this competence related to electronic communications, the federal Parliament adopted the Electronic Communications Act of 13 June 2005 (ELA) 96. This act transposed the 2003 EU Telecoms Package. 94 E. DEF EYNE, e dividende numérique : contexte et enjeux, R.D.T.I. 42, pp Decision 243/2012/EU of the European Parliament and of the Council of 14 March 2012 establishing a multiannual radio spectrum policy programme (RSPP), L 81/7, J.O.U.E., 21 March Act of 13 June 2005 on electronic communications, M.B., 26 June 2006.

79 Attractiveness Telecommunications Market in Belgium 61 Since 1980, matters of land use and urban planning are regulated by the Regions 97. The Flemish Region, the Walloon Region and the Brussels-Capital Region are each competent in the land planning matter within their respective territories Problems posed by overlapping competences and fragmented legislation The siting of mobile antennas and masts Articles 25 and 26 of the Electronic Communications Act impose obligations to the operators, in order to prevent the multiplication of the number of sites: The operators must make every effort to install, as far as it is possible, their antennas on existing supports (such as roofs of buildings, towers or walls, for example); The operators owning a support are required to authorize the use of the site by other operators in a reasonable and non-discriminatory way; The operator must notify the other operators its intention to establish another antenna. The Flemish Region, the Walloon Region and the Brussels-Capital Region are each competent in the land planning matter within their respective territories. Therefore three different regulations apply in Belgium. Flanders : «Decreet Ruimtelijke Ordening» (DRO) of 18 May ; Brussels : «Code bruxellois de l aménagement du territoire» (CoBAT) of 9 April ; Wallonia : «Code wallon de l aménagement du territoire, de l urbanisme et du patrimoine» (CWATUP) of 14 May The siting of a mobile antenna is subject to planning permission in the three regions. A planning permission means the administrative authorization required prior to the completion of certain acts and work specified by the legislation. The effects of planning permission are generally unlimited in time. Apart from the planning authorisation, an environmental permit is needed in the Brussels-Capital Region and an environmental declaration in the Walloon Region. The repartition of competence in this matter does not lead to inconsistent legislation between the Federal State and the Regions, but to a multiplication of legislation as each Region has its own regulation. In the matter of land planning, the Regions benefit from 97 Art. 6, 1er, I, 1, of the Special Act of 8 August 1980 on institutional reforms, M.B., 15 August M.B., 8 June M.B., 26 May M.B., 25 May 1984.

80 62 Attractiveness Telecommunications Market in Belgium their autonomy and their action cannot be limited by the imposition of a cooperation agreement. Emission norms One particularly delicate problem resulting from an overlapping of competences between the Federal State and the Regions are the emission levels, as the Federal State is competent for health matters while the Regions are competent for environmental matters. In 1985 (i.e. before the regionalisation of the competence in environmental matters), the federal Parliament passed an act, which aimed at protecting men and the environment of non-ionizing radiation, infrasound and ultrasound except when they are of natural origin 101. The text of this legislation is drafted in broad terms. Several years later, and after the regionalisation of the environmental matters, the royal decree of 29 April 2001 fixed a maximum exposure level for the human body to electromagnetic radiation from antennas, outside the security zone (i.e. area which the public can access) 102. The Council of State, in its decision of 15 December , confirmed the competence of the Federal State, but annulled the decree on procedural grounds. Therefore, the federal government decided to re-adopt a new decree containing the same provisions on 10 August However, the Brussels Parliament passed in 2007, with a clear majority, an order (legislative act for the Brussels-Capital Region) for the protection of the environment against electromagnetic waves, setting stricter rules. In this respect, the Brussels- Capital Region, in March 2007, was the first entity to legislate. The order regulates the electromagnetic waves of which frequency is between 0.1 MHz and 300 GHz. It states that the power density of non-ionizing radiation cannot, in areas accessible to the public, exceed a density of W/m2 is 3 V/m for a reference frequency of 900 MHz. The federal government and the mobile operators introduced a procedure against the Brussels order in front of the Constitutional Court. This jurisdiction confirmed, on the one hand, that the regional competence in environmental matters covers the regulation of the non-ionizing radiation, and, on the other hand, that it was not necessary for the Region to conclude a cooperation agreement before passing the order. The Court further states that the choice of a stricter emission level, applying the precautionary principle, fall within the discretion of the regional competence and cannot be dismissed in the absence of binding international or European standards in this area M.B., 26 November M.B., 22 May C.S., asbl Teslabel Coordination et Vanderhulst, n , 15 December 2004 and Lannoye et crts, n , 15 December Constit. Court, 15 January 2009, n 2/2009.

81 Attractiveness Telecommunications Market in Belgium 63 Following this decision, the parliament of the Walloon Region adopted the Act of 3 April 2009 on the protection against the possible harmful effects and pollution caused by non-ionizing radiation generated by stationary transmitting antennas 105. The Walloon Act provides that in living places, the intensity of the electromagnetic radiation generated by any stationary transmitting antenna may not exceed the emission limit of 3 V/m. The standard applicable in the Walloon Region is therefore less strict than in the Brussels Region. The Flanders Region has pursued a different path. Instead of passing a new act, it chose to execute the federal act of 26 November 1985 by adopting the decree of 19 November The federal act is therefore still applicable to the Flemish part. The content of the decree of the Flemish government also differs from the regulations applicable to the other regions. In summary, the Constitutional Court stated very clearly that the non-ionizing radiation is a regional competence, so that a reversal or a modification of jurisprudence does not seem to be conceivable. Therefore the operators must face three different regulations, which provide three different emission standards. Apart from the administrative problems created by the existence of three different regulations, the extraterritorial effects of regulations are also problematic: what if the electromagnetic waves emitted by a Flemish antenna enter the territory of Brussels, where the rules are stricter? A co-operation agreement between the Regions would make it easier for regulators to intervene and would put citizens on an equal footing. However, such a co-operation agreement is not required by the decision n 2/2009 of the Constitutional Court. Progress on market analysis and digital dividend were made in order to comply with the EU requirements. However, in this field, there is no EU requirement. Nevertheless, commissioner Neelie Kroes expressed her irritation on the Brussels emission norms in the press and social media and an official letter from the European Commission was addressed to Belgium asking what are the objective reasons for this very low level in the Brussels-Capital. 107 Recently, the Advisory Committee on Telecommunications (CCT), following the discussions on the high standard of radiation in the Brussels-Capital Region, and more precisely the impact of this standard on existing and future mobile networks, issued an opinion on this issue. The CCT requests the Minister to encourage all political leaders to 105 M.B., 6 May M.B., 13 January g?id=

82 64 Attractiveness Telecommunications Market in Belgium seriously consider this issue and consider the options presented in the communication of the BIPT Council, in particular aligning the exposure limit to the Walloon standard 108. As the Regions are not obliged to cooperate in this matter and there is no compulsory requirement coming from the EU levels, political pressure seems to be the only way to straighten out this issue Fragmented and inconsistent policy regarding taxes on infrastructure In order to increase their resources, many municipalities have decided to tax mobile antennas and masts. Operators challenged these taxes before the courts, relying on articles 97 and 98 of the Act of 21 March According to them, these provisions prohibit the taxing of the use of public and private property for cables, overhead lines and associated equipment to the networks of the operators of a public telecommunications network. This justification has often been successfully received by the courts. However, the Constitutional Court took a contrary position in recognizing the constitutionality of the tax 109. It considered a restrictive interpretation of the terms cable, overhead lines and related equipment, which does not include antennas, masts and pylons. In other terms, as mobile antennas, masts and pylons do not fall within the prohibition set in articles 97 and 98, they can be taxed by the municipalities. 6.9 Overcompensation of the administrative costs of the BIPT Telecommunications operators in Belgium pay yearly administrative charges to the BIPT to cover the BIPT s administrative costs of regulating the telecommunications sector. However, the contribution from the telecoms sector seems excessive as for more than a decade the BIPT has a significant budget surplus. From this surplus, the BIPT has transferred significant amounts to the Belgian State Treasury, where it is used for non-telecoms related purposes. On average 110, BIPT transferred 5.9 million per year to the State Treasury. For 2012, the estimated amount is even double and amounts to around 12 million 111. In addition, BIPT s budget has also been covering employee costs from the Dienst Kijk en Luistergeld (DKL), who works in fact for other administrations, hence should be paid by the Federal Government. So in addition to the 5.9 million, another 3.9 million per 108 CCT, Opinion of 23 April 2012 on the radiation norms in the Region of Brussels-Capital, available at the following adress Constit. Court, 2011, 15 December 2011, n 189/ Over the period , BIPT forwarded on average 5.9 million per year to the State Treasury amounting to almost 100 million in the period from onwards. 111 Not published yet, however BIPT announced this amount during an intervention in the Belgian Parliament.

83 Attractiveness Telecommunications Market in Belgium 65 year 112 is spent on DKL employees bringing the total average yearly surplus amount to 9.8 million. The excessive contributions burden telecoms operators and represent a barrier to investment. The surplus amounts to 24% of BIPT s yearly budget 113. According to European law 114, administrative fees imposed on operators should only cover the costs related to the regulatory activities. Therefore, the BIPT should adjust the contributions of telecom operators to the level of its administration costs. This would free up additional resources for the telecoms industry which could be used for further investment into NGA. Figure 35: Surplus of the BIPT budget in the period Source: BIPT annual reports From , BIPT paid yearly an average 3.9 million for DKL employees amounting to an estimated total amount of 60 million from BIPT budget 2011 is Euro. 114 Directive 2002/20/EC of the European Parliament and of the Council, dated 7 March 2002, article 12.1 and 12.2

84 66 Attractiveness Telecommunications Market in Belgium 7 Action plan with recommendations The following action plan seeks to address existing barriers to investment that have been identified in the previous section. The purpose of the action plan is to reduce the costs of deploying new networks and innovating new services. A better telecoms infrastructure will contribute to economic growth at a point in time when it is urgently needed. The action plan proposes the following measures: Facilitate the re-use and sharing of existing physical infrastructure, notably ducts. Facilitate the deployment of fiber. Facilitate the deployment and sharing of in-building high-speed ready infrastructure. Address problems in the regulation of wholesale products that are essential for competition and choice in broadband markets, and notably in the market for business communications services. Address problems related to the pricing of unbundled local access and bitstream. Review the high and varying emission norms for mobile antennas. Reduce barriers to the deployment of mobile base stations. Review the high taxes on mobile antennas and masts. Mitigate inconsistencies resulting from overlapping competencies of the Federal State, Communities and Regions. Reduce the contributions of telecoms operators to the BIPT to the level of regulatory costs. Raise awareness about the importance of, and progress in, broadband connectivity through a broadband performance index to be published by BIPT.

85 Attractiveness Telecommunications Market in Belgium Facilitate re-use and sharing of existing physical infrastructure Action 1: Action 2: Action 3: Action 4: In accordance with the forthcoming European Regulation 115 transparency about the existing physical infrastructure should be improved. Belgium should establish a single information point for a minimum set of information about the existing physical infrastructure of all network operators, including those in non-telecom sectors. 116 More specifically, the existing activities in Flanders, Wallonia and Brussels-Capital should be closely interlinked and turned into a full mapping of physical infrastructure in Belgium. The system should also provide information on duct capacity and dark fibre. Furthermore, there should be an obligation for network providers to meet reasonable requests for in-site surveys of specific infrastructure elements. There should be precise procedures on how the survey is done including terms listing acceptable reasons to refuse access, how free space is calculated, timeframes etc. In addition, the BIPT should be empowered to handle any disputes arising from in-site surveys. In line with the forthcoming European Regulation, any owner of physical infrastructure (including those of non-telecoms infrastructure, e.g. water, energy and railways) should be obliged to provide access on reasonable request under fair terms and conditions, including price, in view of deploying elements of high-speed electronic communications networks. The BIPT should be empowered to handle any disputes arising from access negotiations. An efficient and fast dispute resolution process should be implemented to avoid longer delays in case of disputes. Disputes should be resolved within a maximum timeframe of 2 months. The BIPT should revisit its decision to remove the obligation of Belgacom to provide access to its ducts (which are mainly in the feeder segment between MDFs and Street Cabinets). Such an obligation would facilitate FTTH/O deployment of alternative telecoms operators. It may also provide cost reductions for mobile operators when rolling out fibre to LTE base stations. The Federal State and the Regions should consider the conclusion of a cooperation agreement in order to implement the obligations required by the forthcoming European Regulation in relation to the facilitation of re-use and sharing of physical infrastructure. 115 Regulation of the European Parliament and of the Council on measures to reduce the cost of deploying high-speed electronic communications networks. 116 The minimum set of information should include: the location, route and geo-reference coordinates; size, type and current use of the infrastructure; name of the owner or of the holder of rights to use physical infrastructure, and a contact point.

86 68 Attractiveness Telecommunications Market in Belgium 7.2 Facilitate the deployment of fibre Action 5: Action 6: Action 7: Action 8: Action 9: In line with the forthcoming European Regulation, all network operators should be obliged to provide a minimum set of information on planned civil works in order to facilitate the coordination and co-deployment of such works. 117 The information should be collected and made available to interested parties through a single information point in order to facilitate coordination of civil works. For this purpose, the existing activities in Flanders, Wallonia and the Brussels-Capital should be coordinated and integrated. As provided by the forthcoming European Regulation, any undertaking performing civil works financed by public means shall be obliged to meet reasonable requests for civil works coordination agreements. Furthermore, where agreements are not achieved in one month from the formal request, the requesting party should be able to refer the issue to the BIPT as the designated dispute settlement body. The actions proposed in relation to the transparency about, and the coordination of, planned civil works affect competences of the Federal State in telecommunications matters and of the Regions in land use and urban planning matters. The Federal State and the Regions should consider the conclusion of a cooperation agreement in order to implement these measures. Permit granting procedures should be streamlined. Every undertaking authorised to provide electronic communications networks should be able to submit, via the single information point, applications for permits required for civil works. The single information point should facilitate and coordinate the permit granting process. The applications should be forwarded to the competent authorities involved in granting the permits. Compliance with applicable deadlines should be monitored. The aim should be to close permit requests within 6 months. It should be assessed whether a cooperation agreement between the Regions and the Federal State is required in order to mitigate the risks of divergent regulations and implementations and legal uncertainty. 117 The minimum set of information should include: the location and the type of works; the network elements involved; the estimated date for starting the works and their duration; a contact point.

87 Attractiveness Telecommunications Market in Belgium Promote deployment and sharing of in-building NGA wiring Action 10: Action 11: Action 12: Action 13: As provided by the forthcoming European Regulation, house owners should be obliged to equip newly constructed or major renovated buildings with high-speed-ready in-building physical infrastructure, up to the network termination point. Operators of in-building networks should be obliged to provide access to in-building wiring on transparent, non-discriminatory and reasonable terms, such that all households can benefit from competitive offers. In case no agreement can be reached in 2 months, the dispute should be forwarded to the BIPT as the national dispute settlement body in order to resolve this within 2 months from the date of referral. The Federal State and the Regions should consider the conclusion of a cooperation agreement to deal with overlapping competences. 7.4 Promote availability of wholesale products Action 14: Action 15: Action 16: In line with the NGA Recommendation 118 Belgacom should improve transparency about the migration of alternative telecoms operators from unbundled local loops and legacy bitstream to corresponding NGA access products. In this respect, the BIPT should carefully monitor network modification plans of Belgacom and its implications for migration procedures. The BIPT should monitor the deployment of vectoring by Belgacom and put particular emphasis on the mandated local VDSL2 bitstream service in order to make it a true alternative to sub-loop (and local loop) unbundling. The BIPT should also carefully monitor that Belgacom provides related NGA based backhaul. The BIPT should ensure that Belgacom provides a fully-fledged bitstream access product in light of the on-going dismantling of the ATM transport network and the transition to an Ethernet network that allows alternative telecoms operators to differentiate themselves in terms of quality of service from Belgacom s own retail offers. 118 Commission Recommendation on regulated access to Next Generation Access Networks (NGA) of 20 September 2010.

88 70 Attractiveness Telecommunications Market in Belgium Action 17: Action 18: The BIPT should carefully monitor alternative operators ability to replicate Belgacom s triple play offerings based on Belgacom s wholesale services 119. In line with the NGA Recommendation, the BIPT should make sure that Belgacom provides business-graded bitstream products that meet the specific demand of providers of business communications services and their customers in terms of speed, symmetry of upload/download speeds, and service level guarantees. 7.5 Review pricing of wholesale products Action 19: Action 20: The BIPT should revisit its costing methodology for the unbundled local loop, in particular, in relation to the valuation of copper assets at the replacement cost of copper. In any case, the price of the unbundled local loop should not further increase in real terms above the current level of 8 /month. The BIPT should maintain the cost orientation of Belgacom s bitstream prices. It should also actively monitor Belgacom s vertical price structure for margin squeezes and assure that the following margins cover the relevant costs: The margin between the retail price of key ADSL products and the corresponding regional bitstream price, respectively unbundled local loop price. The margin between the bitstream price of regional ADSL bitstream and the price of the unbundled local loop. The margin between the retail price of key VDSL2 products and the corresponding regional bitstream price, respectively local bitstream price. The margin between the regional and local VDSL2 bitstream price. The margin between the retail price for important bundles (which include broadband) and the corresponding wholesale charges. Action 21: The BIPT should be cautious in introducing pricing flexibility for NGA wholesale products, notably local and regional VDSL2 bitstream, including for business-graded bitstream. The BIPT should first fully and comprehensively implement technical replicability tests, economic replicability tests (margin squeeze tests), and Equivalence of Input, in order to exclude any discrimination of alternative telecoms operators. The 119 Including additional multicast functionalities as defined in the alternated proposal of Belgacom and confirmed in the BIPT Decision of 4 October 2012.

89 Attractiveness Telecommunications Market in Belgium 71 methodology of the technical and economic replicability tests as well as the requirements for Equivalence of Input should be consulted and published. 7.6 Review emission norms for mobile base stations Action 22: Action 23: Action 24: The emission norms for antennas in urban areas should be reviewed with regard to their appropriateness and effectiveness. Yearly reviews of the real emission through field tests with special attention for sensitive areas (schools, nursery and healthcare institutions) could bring the insight that there is space to increase the emission norms without causing health related risks. The review of emission norms should result in less stricter norms or in a differentiation between locations. More flexibility should be provided for mobile operators that roll-out LTE in urban areas. Added flexibility could be provided during the time mobile operators continue to operate GSM and UMTS networks simultaneously to LTE. Alternatively, a separate norm for LTE antennas could be implemented. This would separate the compliance with emission norms of GSM/UMTS antennas on the one hand and LTE antennas on the other hand. Emission norms should be harmonized across Belgium. 7.7 Facilitate deployment of mobile base stations Action 25: Action 26: The criteria, procedures and timescales for the granting of permits to build mobile bases stations should be reviewed to fit the different requirements of rolling out LTE. They should also be harmonised across Belgium in order to simplify the planning for mobile operators. A clear and common dispute procedure should be established with strict timelines in order to ensure consistent and timely decisions. The BIPT should act as a national dispute resolution body. To ensure the roll-out of LTE networks, in particular in the presence of constraining emission norms, public institutions should offer mobile operators access to public buildings for the deployment of an antenna. 7.8 Review taxation on mobile antennas and masts Action 27: Local governments should review the existing and planned taxations on mobile masts and antennas as this discourages the roll-out of LTE to the levels achieved in other countries.

90 72 Attractiveness Telecommunications Market in Belgium 7.9 Monitor co-operation and harmonisation between federal, regional and local authorities Action 28: In order to promote harmonisation of procedures, and avoid inconsistencies in case of overlapping competencies, the Federal State should stimulate cooperation between the regions and communities. Where possible this could be done via cooperation agreements or other shared coordination structures with clear and precise procedures Adjust contributions of telecom operator to the BIPT Action 29: The BIPT should lower the contributions of the telecommunications providers to the level of its administrative costs (regulatory costs) Raise general awareness for the importance of broadband for the Belgium economy and the specific requirements of business customers Action 30: The BIPT should raise awareness about the importance of, and progress in, broadband connectivity through a broadband performance index. The BIPT should monitor the broadband performance of the Belgian telecommunications sector by regularly tracking the proposed key data in the broadband scorecard Annex 2. 8 Barriers to investment scorecard For tracking the progress on proposed actions, a scorecard is a suitable instrument. Regulatory institutions often use scorecards to monitor progress on a year by year basis. Scorecards also allow benchmarking a country against its peers when comparable data is available. The scorecard proposed below measures whether actions have been undertaken to reduce barriers to investment. In accordance with the barriers identified in the study, the scorecard should encompass the following indicators.

91 Attractiveness Telecommunications Market in Belgium 73 Table 4: Proposed scorecard for tracking the actions in respect to the identified barriers to investment Facilitate the re-use and sharing of existing physical infrastructure, notably ducts Facilitate the deployment of new fibre infrastructure Facilitate the deployment and sharing of in-building high-speed ready infrastructure Whether network operators have been obliged to provide a minimum set of information on existing physical infrastructure (symmetrical obligation for all owners of network infrastructure) Whether a central infrastructure atlas accessible over a single information point has been established Whether Belgacom has been obliged to provide duct access on reasonable requests Whether network operators in general have been obliged to provide duct access on reasonable requests (symmetrical obligation for all owners of network infrastructure) Whether network operators have been obliged to provide a minimum set of information on planned civil works (symmetrical obligation) Whether a single information point for permit granting procedures has been established Whether house-owners have been obliged to equip new buildings with high-speed in-building physical infrastructure up to the termination point. Whether operators of in-building networks have been obliged to provide access to in-building wiring on reasonable requests Address problems in the regulation of wholesale products that are essential for competition and choice in broadband Address problems related to the pricing of unbundled local access Whether the BIPT has obliged Belgacom to provide a transparent migration path for legacy to NGA wholesale products, including clear specification of NGA wholesale products as well as the location of NGA access points and the date of their availability Whether Belgacom has provided a fully-fledged bitstream access product which allows alternative operators to differentiate themselves in terms of Quality of Service from Belgacom s retail offers Whether Belgacom is offering fit-for-purpose wholesale business broadband services which enable alternative operators to compete with Belgacom s business broadband suite. Whether the BIPT has obliged Belgacom to fulfil technical replicability tests for NGA wholesale products Whether the BIPT has obliged Belgacom to provide Equivalence of Input for NGA wholesale products Whether the BIPT has consulted and published transparently the methodology for the technical replicability tests and the Equivalence of input requirements Whether the BIPT has reviewed its approach to the pricing of unbundled local loops Whether the BIPT has obliged Belgacom to fulfil economic replicability

92 74 Attractiveness Telecommunications Market in Belgium and bitstream Review the high and varying emission norms for mobile antennas Reduce barriers to the deployment of mobile base stations Review the high taxes on mobile antennas and masts Monitor co-operation and harmonisation between federal, regional and local authorities Adjust contributions of telecom operators to the BIPT tests (margin squeeze tests) for NGA wholesale products Whether the BIPT has consulted and published transparently the methodology for the economical replicability tests and the Equivalence of input requirements. Whether emission norms have been reviewed and excessively restrictive norms removed or made more flexible Whether emission norms have been harmonised across regions Whether permit granting procedures for mobile base stations have been streamlined and timescale shortened Whether permit granting procedures for mobile base stations have been harmonised across regions Whether the taxes on mobile antennas and masts have been reduced Whether the taxes on mobile antennas and masts have been harmonised across regions. Whether the Federal State and the Regions have concluded coordination agreements and undertaken other coordination initiatives Whether the administrative fees of telecom operators have been reduced to a level that is limited to covering the BIPT s regulatory costs Raise general awareness about the importance of broadband for the Belgian economy Whether the BIPT has implemented a Broadband Performance Scorecard and has published results on its website Source: WIK

93 Attractiveness Telecommunications Market in Belgium 75 Annex 1: Belgium compared to other EU Member States Figure 36: Standard broadband coverage 120 in EU countries, 2011 Source: Point Topic (2011). Figure 37: NGA coverage in EU countries, 2011 Source: Point Topic (2011). 120 The Standard Coverage combination is meant to give an indication of the extent to which homes in each country or region can access fixed broadband service providing at least 144kbps downstream speed. Cf. Point Topic (2011), p. 23.

94 76 Attractiveness Telecommunications Market in Belgium Figure 38: VDSL2 121 coverage in EU countries, 2011 Source: Point Topic (2011). Figure 39: DOCSIS 3.0 coverage in EU countries, 2011 Source: Point Topic (2011). 121 This definition does not include implementations where fibre is provisioned to a large building, such as a block of flats, and the final connections are provided by VDSL within the building, which are defined as FTTP. Point Topic (2011), p. 165.

95 Attractiveness Telecommunications Market in Belgium 77 Figure 40: FTTH 122 coverage in EU countries, 2011 Source: Point Topic (2011). Figure 41: Mobile broadband (HSPA) coverage in EU countries, 2011 Source: Point Topic (2011). 122 Broadband provided over fibre optic cables going all the way to the home or business premises. This definition also includes "FTTB". Point Topic (2011), p. 165.

96 78 Attractiveness Telecommunications Market in Belgium Figure 42: LTE coverage in EU countries, 2011 Source: Point Topic (2011). Figure 43: Standard broadband penetration in EU countries, July 2012 Source: European Commission (2013).

97 Attractiveness Telecommunications Market in Belgium 79 Figure 44: Share of households with broadband internet access in the EU27, 2012 Source: Eurostat (2012). Figure 45: NGA penetration in EU countries (NGA lines in % of population), July 2012 Source: European Commission (2013).

98 80 Attractiveness Telecommunications Market in Belgium Figure 46: NGA lines as a % of total broadband lines in EU countries, July 2012 Source: European Commission (2013). Figure 47: Internet access technology used, 2012 Source: FOD Economie(2012), Barometer van de informatiemaatschappij, p. 8..

99 Attractiveness Telecommunications Market in Belgium 81 Figure 48: Mobile broadband penetration in EU countries (all active users), July 2012 Source: European Commission (2013). Figure 49: Share of households buying bundles in the EU, December 2011 Source: Eurobarometer (2012).

100 82 Attractiveness Telecommunications Market in Belgium Figure 50: Enterprises Level of Internet access, 2012 Source: Eurostat (2012). Figure 51: Individuals, who are accessing the Internet on a weekly basis (including every day) in EU countries (in %), 2012 Source: Eurostat (2012).

101 Attractiveness Telecommunications Market in Belgium 83 Figure 52: Individuals who have never used the Internet in EU countries (in %), 2012 Source: Eurostat (2012). Figure 53: Individuals who have bought or ordered goods or services online within the last 12 months in EU countries (in %), 2012 Source: Eurostat (2012).

102 84 Attractiveness Telecommunications Market in Belgium Figure 54: Individuals who have bought or ordered goods or services online from sellers from other EU countries within the last 12 months in EU countries (in %), 2012 Source: Eurostat (2012). Figure 55: Online availability of 20 basic public services in EU countries (in%), 2010 Source: CapGemini Digitizing Public Services in Europe: Putting ambition into action 9th Benchmark Measurement (2010).

103 Attractiveness Telecommunications Market in Belgium 85 Figure 56: Individuals who have interacted online with public authorities within the last 12 months in EU countries (in %), 2012 Source: Eurostat (2012). Figure 57: Individuals who have used the Internet for Internet Banking in EU countries (in %), 2012 Source: Eurostat (2012).

104 86 Attractiveness Telecommunications Market in Belgium Figure 58: Enterprises' turnover from e-commerce (% of total turnover), 2012 Source: Eurostat (2012). Figure 59: Enterprises in European countries using the internet for interacting with public authorities (in %), 2012 Source: Eurostat (2012).