Public Private Partnership Regulatory Aspects

1. Public Private Partnership Regulatory Aspects Christoph Legutko Global Public Policy CEE Intel Corporation November 2012

2. Outline Overview of PPP approaches in some countries Analysis of Europe Conclusions 2

3. PPP broadband approaches - world overview • USA - FCC introduced new rules for new wires – the owner operates its fiber - competition ensures broadband • Japan - "Zero Broadband Areas Elimination" policy, subsidies, 40% HH connected and commercialization of 10 Gbps FTTH next • Korea & China are “future proven” thanks long term, holistic political program • Australia - governmental actions compensate lack of competition • Poland - issued “Mega–Bill” enforcing “taking when passing” Countries are competing on broadband to ensure their economic future 3

4. Europe has 0.9% FTTH density and targets • EU targets of 2020 Digital Agenda: • 100 % coverage of broadband access technologies at minimum 30 Mbps, and • 50 % of European households subscribing to at least 100 Mbps • Broadband access status: • Basic supply with <2Mbit/s is mostly given • High speed Internet access >50Mbit/s is rare in the EU • Customer and operators‘ perception: • Response slower than 7 sec. discourages customers to use the Internet applications • Incumbents’ conflict between 10-30 years amortization of dark optical and need to deliver quarterly success reports • Optical fiber investment roadblocks : • obligatory unbundling for the last mile • ex ante regulation for not existing infrastructure • Europe must accelerate fiber deployment • to achieve the broadband targets 2020 4

5. European way towards PPP • In 1987 EU-Commission „Green Paper on the Development of the Common Market for Telecommunication Services and Equipment” opened the discussion about • the rights and obligations of the network operators, • the access to the telecommunication infrastructure owned by the incumbents • the liberties of service providers • the unification of standards in the Community. • In 1993 the European Council of Ministers set 1st January 1998 as the date of the complete liberalization of telecommunication in Europe • On 1stJanuary 1998 the „WTO Agreement on Basic Telecommunications“ has become effective • It obliged the WTO members to open their telecommunication infrastructures, especially the copper and coax cables, to all competitors wishing to implement their own equipment, protocols and services there. • The integrated „Reference Paper on Regulation“ invented basic principles of independent regulation • to ensure the equal treatment of all market players and • to avoid that the countries invent protective measures to combat aggressive newcomers. • The unbundling and ex ante regulation was born. Neoliberal regulatory principles worked well till copper networks became saturated 5

6. Do we ask the right questions? Questions like scope of the PPP? relationships between ‘market and state’? emphasis on the supply-side, demand-side, infrastructure-side or service-side? role of civil society organizations in PPP ? re-appearance of public investments shaping PPP discussions? public versus private investments/money? technology neutrality in PPP projects? general criteria for usage of public funds to develop network facilities? financial crisis creating a necessity for public investments? lack of incentives for incumbents to invest in new infrastructures? recommendations for roles for public and private partners? models for PPP arrangements? Can be replaced by one simple: Do we have right market structures to achieve Agenda 2020? 6

7. Video Coax Voice DSL Copper TV Radio Spectrum Cellular Spectrum Changing the PPP approach Source: FCC ~2001 Analogue World Narrowband Digital World Broadband Transition Voice, Video, Audio, Data, etc. There is enough private money seeking secure harbors but needing transparency Applications Platforms Cable Wi-Fi DSL3G FTTH 4G Satellite Mesh Anything else! Political Anxiety Consumer Confusion Potholes Optical Fibre Massive Capital Investment Incumbent Dilemma Risk & Uncertainty Vertical incumbents cannot compete with horizontal specialists 7

8. Conclusions Countries are competing on broadband to ensure their economic future Europe discusses regulatory modifications to accelerate broadband proliferation Transparent market structures motivate investors Automobile industry 1886 – first car with combustion motor Telecommunication 1844 – first telegraph line 8

9. Thank you! Christoph Legutko Global Public Policy CEE Director Intel Corporation Email: christoph.legutko@intel.com Telephone: +49 89 99143 0 Mobile: +49 171 55 202 43 URL: www.intel.eu 9