Roger Wilson Managing Director European Competitive Telecoms Association (ECTA)

1. Regulation and Competition in light of market developmentsEuropean Parliament - EPP Workshop30 May 2005 Roger Wilson Managing Director European Competitive Telecoms Association (ECTA)

2. ECTA: promoting competition • The leading pan-European trade association serving the alternative telecommunications industry. • 150 member companies – operators, service providers and suppliers, as well as national associations • 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 telecommunications industry to key government and regulatory bodies • Maintain a forum for networking and business development throughout Europe.

3. Competition stimulates innovation • 1984: British Telecom monopoly. Getting a telephone took 6 months. Installation anywhere you liked as long it was in the hallway. Color selected by you as long it is was black • The 2004 Spectrum/Indepen study ‘Reaping the Telecoms Dividend’: new entrants have been instrumental in developing innovative new services in the UK including: • Pay-as-you-go and unmetered Internet access • Triple play broadband offers including video on demand and voice over broadband (VoIP) • Value adding business access and services including differentiated service levels, IP MPLS and national ethernet • The same is true for the other European Member States

4. Competition boosts broadband penetration and adoption • Effective bottlenecks regulation promotes competition - Competition promotes choice for consumers - Choice best suit their individual needs - Boosts adoption.

5. Competition stimulates Investment Incumbent and new entrant investment follows similar pattern: highest in “best” regulated (most competitive) markets Source: JonesDay & SPC Network (Regulatory Scorecard)

6. The liberalisation process is NOT complete • Ofcom Strategic Review (2005): input of the entire industry – some interesting conclusions: • UK market has 20 years of liberalisation, and NRFmore substantially implemented than in any other Member State • “The market has made good progress, however, its foundations are unstable”. Bottlenecks still exist (local loop) • Regulation is still needed and Ofcom plans to reinforce its efforts to prevent discrimination by the incumbent: the equivalence debate • Detailed non-discrimination is probably a key building block in ensuring effective competition

7. Voice over Broadband (VoIP) • Voice market is today largely controlled by incumbents, as is the broadband market giving key leveraging opportunities of dominance into VoIP • VoIP (voice substitute) offers alternative operators substantial opportunities that will benefit the consumers • Light touch regulatory approach • was initially presented to facilitate market entry conditions (emergency services etc) • now used by SMP voice operators (incumbents) to request VoIP regulatory exemption (market analysis) • Powerful incentive for dominant operators to practice predatory pricing, discriminatory pricing, to introduce anticompetitive service bundles, to create non-replicable service propositions, etc • If this happen, this will undermine investment by new entrants in VoIP, and, largely as a consequence, undermine investment in local loop unbundling and restrict competition more generally • The future of competition is now in the hands of European regulators and Institutions: being pro-active is key!

8. Next Generation Network (NGN) • NGN is a converged Internet Protocol (IP) backbone network – NGN is NOT to be confused with fibre-to-the-home • Many alternative operators are already delivering converged services via IP networks: it’s an Evolution, not a Revolution! • NGNs involve a potentially substantial redesign of network architectures. • The future of competition is now in the hands of European regulators and Institutions: • Opportunity to ensure that networks are built in a way that enables effective competition based on non-discrimination (ex ante regulation) • Failure to act will enable incumbents to build networks that foreclose competition (reducing benefit for consumers for years to come) • The move to NGNs represent an opportunity for regulators to establish in advance ground rules for ensuring the continued passage to effective competition and minimize damage during transition

9. BRT vision - a virtuous circle in the use of ICT Industry is now poised to create a virtuous circle which will help achieve new Lisbon goals … Consumers buy devices and broadband to use these services Economic growth, productivity, social cohesion Compelling content based services and e-public services use these networks Widespread broadband take up creates potential for new services Investment in networks to enable delivery of these new services Source: BRT, 17 February 2005 … interoperability and open standards are critical for exploiting this virtuous circle

10. ECTA vision- virtuous circle in the use of ICT EU policy makers need to create the right investment climate Innovation Improved Quality of Services Better prices Boost broadband penetration Higher investment Economic growth, productivity, social cohesion Effective regulation of bottlenecks in order to ensure non discrimination Incumbent reaction Alternative operators entering the market