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Effective regulatory regimes and impact on investments in the telecom sector: A perspective from ECTA. Tom Kiedrowski Regulatory Affairs Manager, ECTA. 14 April 2005. ECTA European Competitive Telecommunications Association. What is ECTA?.
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Effective regulatory regimes and impact on investments in the telecom sector:A perspective from ECTA Tom Kiedrowski Regulatory Affairs Manager, ECTA 14 April 2005 ECTA European Competitive Telecommunications Association
What is ECTA? • The European Competitive Telecommunications Association is the leading pan-European trade association serving the alternative electronic communications industry. • ECTA has some 150 member companies, operators and service providers as well as national associations of such. • ECTA objectives are to: • Work for a fair regulatory environment which allows all electronic communications providers to compete on level terms in order to multiply investment and innovation throughout an effective European internal market. • Represent the electronic communications industry to key government and regulatory bodies • Maintain a forum for networking and business development throughout Europe.
Policy context • Recently Commissioner Viviane Reding outlined her i2010 agenda. • One of those ‘i’s is for innovation and investment in ICT. • [Europe]”should be world-class in the take-up of new informational products and services.” • Investment is critical to development in most industries and to the growth of economies in general: ICT is no exception
Communications Competition and Investment • In “ICT”, the “C” of communications plays a significant role in delivering EU growth objectives and driving innovation and productivity. • ECTA believes that effective competition is key to unlocking the potential of the electronic communications sector because: • it drives innovation • it drives down prices • it boosts broadband penetration and adoption and above all else: • it stimulates investment
The (not so) New Regulatory Framework • The single most important way of achieving the benefits of competition is through effective implementation of the new regulatory framework (NRF) • Mid-term review: the Kok Report • “the regulatory framework for electronic communications adopted in 2002 should be fully implemented and strictly enforced, so that competition is more effective in driving down prices for consumers and businesses.” • It provides the right tools to foster competition and many of the existing bottlenecks could be resolved by using these tools in an effective manner
The liberalisation process is NOT complete • transposition by Member States has been difficult – some better than others • Moreover, effective implementation still varies significantly across Member States and is not compliant with the directives in some cases • This leads to significant discrepancies that do not benefit end-users and can impact growth • Ofcom Strategic Review • Regulation is still needed and Ofcom plans to reinforce its efforts to prevent discrimination by the incumbent. • Non-discrimination is a key element of the NRF and probably the best tool to ensure effective competition
Regulatory Effectiveness Regulatory effectiveness still varies significantly across Member States
Uncompetitive Investment • European Commission and NRAs are being pressurised to shift their regulatory policies from one that encourages altnets to one which focuses on rewarding operators investing in new networks • The numbers game • It useful to look at all this incumbent investment …
Investment in Belgian telecom market – Platform members & Belgacom
Financial Results • A similar story is to be found looking at the results of other major telecos such as KPN in the Netherlands and Telecom Italia in Italy • It I can read financial statements, regulators and policymakers should, too!
Competition stimulates Investment Incumbent and altnet investment follows a similar pattern: highest in “best” regulated (most competitive) markets Source: JonesDay & SPC Network (Regulatory Scorecard)
Keys to fostering investment through effective regulation • Ensuring equivalence of access • Non-discrimination is not always understood or effectively enforced. Commission must clarify this concept and enforce it consistently • Key to relaxing burden of regulation is creating a compliance culture. Need to assess and embrace incentives, penalties and organisational structures which entrench compliance • Enabling convergence • ‘New Services’ , (e.g VoIP), offer the potential to transform regulatory landscape.Clear Commission Guidance and urgent amendments to the Universal Services Directive needed to remove barriers • Vital also to ensure that competition is maintained and enhanced with the transition to converged ‘next generation’ networks (legacy assets will still be fundamental to network roll-out)
Keys to fostering competition (cont) • Securing implementation of the framework • Many countries have yet to complete the market reviews. Directives don’t adequately specify deadline. • In some cases the Directives have not been accurately transposed, leading to uncertainty and less harmonisation. • Both issues need to be addressed through infringement or possibly formal mandate • Addressing lengthy appeals procedures • In some countries appeals are lodged as a matter of course and take up to 5 years. Action is needed by Member States to establish deadlines and ensure effective appeals process. The Commission must play a role in facilitating this.
Conclusions • i2010 is achievable given political will and regulatory guidance • Communications has and will continue to play a vital role in delivering an effective and productive European information society • Altnets must be allowed to climb the ladder of investment • Evidence demonstrates that competition and regulatory effectiveness is key in driving innovation, investment and growth. • Underlying implementation issues concern ‘equivalence of access’, implementation of the NRF and appeals procedures.
Thank you Tom Kiedrowski Regulatory Affairs Manager, ECTA tkiedrowski@ectaportal.com