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The ECTA Regulatory Scorecard 2008: Results, Analysis and Implications for the Framework Review

The ECTA Regulatory Scorecard 2008: Results, Analysis and Implications for the Framework Review. Richard Cadman SPC Network www.spcnetwork.eu. ECTA, Jones Day, SPC Network Scorecard 2008. Benchmark of regulatory environment as experienced by investors in the market Began in 2002

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The ECTA Regulatory Scorecard 2008: Results, Analysis and Implications for the Framework Review

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  1. The ECTA Regulatory Scorecard 2008:Results, Analysis and Implications for the Framework Review Richard Cadman SPC Network www.spcnetwork.eu

  2. ECTA, Jones Day, SPC Network Scorecard 2008 • Benchmark of regulatory environment as experienced by investors in the market • Began in 2002 • Now 104 Questions covering: • Institutional Framework (Sections A & B1) • Regulatory Actions (Section B2, B3, C and D) • Market conditions (Section E) • 20 Countries • 18 EU Member States + Norway • Turkey (new in 2008) • Researched through questionnaires submitted to ECTA Members and National Regulatory Authorities

  3. Results Overall results showing scores for Institutional Questions (A & B1) and Regulatory Questions (B2 – E)

  4. Scorecard 2008: Qualitative Findings • Institutional Questions • Power of NRA to impose fines: Ranges from no power to 10% • Average time required to complete appeals ranges from less than six months to two years • Government shareholdings in incumbents are above 50% in Belgium, Slovenia • Market enablers • Time required to port fixed and mobile number ranges from 1 to 45 days • Regulatory Questions • Next generation access approach varies from restrictions on access to FTTx networks (Germany, Spain) to proposed remedies for fibre unbundling or other wholesale access (NL, Belgium, Ireland, UK) • Essential ‘next generation’ Ethernet inputs for business services and service-level safeguards are divergent or missing in many countries

  5. Scorecard 2008: Qualitative Findings • Mobile regulatory and market outcomes • Mobile termination rates affecting fixed to mobile and ‘off-net’ call costs range from €0.05 in Sweden and Finland to more than €0.10 in Portugal, Poland, Italy, Greece, Czech Republic • Low use mobile price baskets range from less than €7.00 in Sweden to €23.00 in the UK • Broadband • Annual cost for unbundled access to the local loop ranges from approx €100 in Netherlands to approx €200 in Ireland • Proportion of incumbent lines unbundled by broadband competitors ranges from less than 5% (Belgium, Ireland, Hungary, Poland) to more than 35% (UK, France, Germany and Sweden)

  6. Effective regulation delivers better outcomes Where Regulators are more active, regardless of the institutional environment, market conditions are improved

  7. Regulation works – for investment Our analysis of the 2005 Scorecard and 2005 investment data shows a significant relationship: A better regulatory environment results in higher levels of investment

  8. Regulation Works – for broadband and NGA Competitive access by LLU and cable supports broadband market growth. Incumbents can grow alongside competition

  9. Regulation Works – for broadband and NGA As the combined penetration rate of unbundled access and cable increases, so too does the average access speed available to consumers.

  10. Scorecard 2008: Quantitative Findings • Regulation works • Effective regulation delivers more competitive markets • Competition works • Competitive markets promote investment and better consumer outcomes • Good regulation requires: • Empowered, independent regulators • Efficient operation by the NRA • Effective application of rules to enable entry and address significant market power

  11. Implications for the Framework Review • Pro-active and fully empowered regulators are keyto achieving results and should be the main focus of the review • Both infrastructure and services competition are important for end-user outcomes. Regulation should encourage efficient investment in infrastructure combined with access regulation where necessary to ensure retail markets are effectively competitive • Effective access requires fair access prices allowing a fair return for access provider and seeker with no discrimination favouring dominant firms (eg some forms of ‘risk sharing’) • Technologically neutral regulation of local access bottlenecks should be assured • Lesson: Open fibre architectures should be incentivised through the regulatory regime

  12. Implications for the Framework Review • NRAs enforcement powers should be strengthened – specifically through functional separation and credible sanctioning measures • Independence of NRAs should be guaranteed including measures to assure the tenure of Heads and to prohibit Ministerial guidance on issues concerning economic regulation. • Appeals processes should be ‘timely’ • Effective collaboration amongst NRAs and with the Commission is required. An efficient mechanism to ensure consistent remedies are applied in similar circumstances must be found.

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