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Report on the Thematic Session 2: Information Infrastructure

Report on the Thematic Session 2: Information Infrastructure “Competition, Regulatory Framework and Investment” Chaired by Robert Verrue “ Broadband, Universal Service and Internet Security” Chaired by Mehmet Yurdal Rapporteurs: T.Kalin, W.Marcinski, H.-P. Gebhardt. The Main Groups.

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Report on the Thematic Session 2: Information Infrastructure

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  1. Report on the Thematic Session 2: Information Infrastructure “Competition, Regulatory Framework and Investment” Chaired by Robert Verrue “ Broadband, Universal Service and Internet Security” Chaired by Mehmet Yurdal Rapporteurs: T.Kalin, W.Marcinski, H.-P. Gebhardt

  2. The Main Groups • Regulation and USO • P.Scott (EU), M.Frendo (MT), A.Ognjanov (BG), D.Lloyd (UK) • Construction of infrastructure • K.Heller (PL), G.Eriksson (SE) • Investment • J.Brimacombe (UK), G.Clausse (EU), W.Beforth (DE) • Internet Security • E.Arslanagic

  3. European Commission The new regulatory framework for Electronic Networks and Services Peter ScottDG Information Society Brussels

  4. Two questions • Is the European Commission organised to play the crucial role to coordinate NRA’s and is it equipped - staff wise - to do so Answers: Yes, on both counts

  5. I V Institutional restructuring Restructuring options: major issues (M.Fendo) • Whether to retain distinct regulation for different sectors or to converge and what sectors • Whether to choose a single regulator or a collegial regulatory body, or a mixture of both • How to manage transition to the new setup in the most efficient and seamless manner • How to utilise existing expertise • How to provide for regulatory capacity building

  6. … CONCLUSIONS (N.Nikolov) • We will have to build up and upgrade the network in a competitive environment; • We try to privatize the incumbent in very unfavorable conditions: the investment needed for the digitalization of the network and a USO are a deterring factor in the privatization move; • It is hard to believe that in the present financial conditions any government would disburse public funds • In this rather difficult situation Bulgaria undertakes to implement USO

  7. Is US only possible on fixed lines? (D.Lloyd) • Importance of telecoms and mobile • Importance of investment, competition & regulatory environment - more important than universal service • Universal service mechanisms can’t make, but can break, a competitive telecoms market • Focus on the specific problems involved in the digital divide, not specific traditional solution - universal service • Mobile is already addressing the digital divide commercially - question the need for mobile inclusion in universal service schemes

  8. Golden age is over - in wrong time for the Candidates • (K.Heller) • Polish incumbent is already privatised: • slows the investments down (from 1.2 M lines/year to 0.2 M lines/year) • looks mainly for profitability (e.g. rural areas using NMT ) • Concerened with the costs of investment • Lowering investment cost • Alternative technologies (CATV, radio access, PLC) • Utilisation of existing assets • Avoiding overbuild – cooperation

  9. Sharing infrastructure Local loop unbundling Service Operator Infrastructure Operator-neutral infrastructure Service Operator Infrastructure

  10. Main messages (G.Eriksson) • The market has the main role in broadband expansion • The Government has aresponsibility to ensure that the infrastructure is available throughout the country • Crucial to define the border between government and market responsibility in order to avoid market distortions • Market changes influence the formulation of policy • Increased focus on the user

  11. EIB view on the ICT market in the future (G.Clausse) ICT market growth slow down to 5.3% in 2002, focus on broadband services : • Mobile 2.5G/3G (GPRS / UMTS) • xDSL • Cable (coax-TV FTTH) • Wireless Local Loop • Terrestrial digital TV

  12. What are investor attitudes to telecoms stocks now? (J.Brimacombe) Institutional investors Strategic investors Private equity • Wary, especially of 3G cost/benefits • Visibility/momentum of earnings… • Driving dividend • High liquidity/free float requirements • Where are they now? • Highly geared • 3G write offs • Strategies under attack • Beginning to play • But still relatively few in CEE • High rates of return • Stability of cashflow The telco reinvented as a utility?

  13. Deutsche Telekom’s future outlook: partnerships in emerging markets In general, the economies are growing steadily and robustly, and offer attractive perspectives for the development of the telecommunications environment Political stability has been gained by the democratization processes and efforts towards membership in the EU The earlier the enlargment takes place the easier the European integration of telecommunications societies will take place

  14. Why Internet? (E.Arslanagic) • Value of the network =2^N N-number devices connected to the network • News • Education • Public Service • Customer Service (B2B; B2C)

  15. Recommendations • There is no magic bullet! • Education • Cooperation • Responsibility • Technology

  16. Conclusions • Interesting day • A number of relevant issues raised • Few definitive answers • Will the time provide the answers ?

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