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Experiences with Liberalisation and EU Accession. Views by Gabor Frischmann former president of the Communications Authority of Hungary, now independent consultant [email protected] Contents. History Why to liberalise? Liberalisation In theory In practice Results of EU accession?

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Experiences with Liberalisation and EU Accession

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Experiences with liberalisation and eu accession l.jpg

Experiences with Liberalisation and EU Accession

Views by Gabor Frischmann

former president of the Communications Authority of Hungary, now independent consultant

[email protected]


Contents l.jpg

Contents

  • History

  • Why to liberalise?

  • Liberalisation

    • In theory

    • In practice

  • Results of EU accession?

  • A balance…

G. Frischmann: Experiences...


History l.jpg

History

G. Frischmann: Experiences...


If the history is so nice why aren t we satisfied l.jpg

If the History is so nice, why aren’t we satisfied?

  • Nobody is happy!

    • Good sign, but must not be a target!

  • Still both Analogue and Digital divide!

    • Does the market solve everything?

  • It has been very slow!

    • Do we have effective tools?

  • Innovation has slow down!

    • Is there any incentive?

G. Frischmann: Experiences...


Why to liberalise l.jpg

Why to Liberalise?

  • Everyone do liberalise its telecom market…

  • It is an EU requirement…

  • Alternatives want it…

  • To let the market operate…

  • Market is the most effective regulator…

  • To cut the prices…

  • To create a continuously evolving market?

  • To create the basis of an I-Soc?

    Did we ask this Question before starting?

G. Frischmann: Experiences...


Slide6 l.jpg

  • If not:

    • Let’s look at the result!

  • If yes:

    • Did we find the good strategy of getting to the target?

    • Did we implement the strategy in proper way?

G. Frischmann: Experiences...


Liberalisation l.jpg

In theory:

Minimise state ownership

Just remove restrictions

Assure equal rights

Load incumbent by additional remedies

If market can’t solve supply, create USO

Create powerful NRA, improve enforcement

Depolitise NRA

In practice:

OK, lobby power remains

Nothing happens

Nothing happens

Hopefully works after 2-3 years

Is there a working model in CEE and EU?

OK, but final power at „amateur” court

Is it possible?

Liberalisation

G. Frischmann: Experiences...


Minimise state ownership l.jpg

Minimise state ownership

  • It is not enough just to sell majority or all shares

  • Difficult to manage:

    • All key knowledge remains with Incumbent

    • All personal and professional relations maintained

    • Increased lobby power: owners come too, and

      • „Leaving the country”

      • „No more investment”

      • Even government level pressure

      • Increasing unemployment etc.

  • But:

    • Why to place all government orders to incumbent?

    • Build independent (regulation, market and economics) knowledge!

    • Do not believe threats.

    • Real public hearings!

G. Frischmann: Experiences...


Just re move restrictions assure equal rights l.jpg

Just remove restrictions & assure equal rights

  • No legal entry barriers – far not enough

  • Equal rights – far not enough

    • Huge financial entry barriers

    • Huge differences in size (1:100-1:10000)

    • Asymmetric historical distribution of natural and network resources

  • But: create equal chance instead!

    • Why to place all government orders to incumbent?

    • Introduce asymmetric regulation

    • Real public hearings!

G. Frischmann: Experiences...


Load incumbent by remedies l.jpg

Load incumbent by remedies

This is a good idea,

But:

  • it is very complex and time consuming

  • doesn’t solve the problem of „final interpretation”

    It can be successful, in case of

  • well prepared NRA

  • well prepared and co-operative operators

  • open and transparent process

  • using best-practices…

G. Frischmann: Experiences...


Market regulation l.jpg

market

identification

market

analysis

EU

notification

SMP

identification

cost orientation

Data coll.

defining

remedies

fair wholesale

prices

no chance of

competition

non-discr.

account sep.

facility sharing

non-discr.

transparency

obligations

RxO

transparent

pricing

access,

co-location

publication

publication

price regul.

„approve”

control and supervision

Market Regulation

G. Frischmann: Experiences...


Time table of first market analysis l.jpg

2nd Q 04

3rd Q 04

4th Q

1stQ

4th Q 2003

1st Q 2004

2nd Q 2004

3rd Q 2004

Before new law

After new law in force

education

01.09.2004

prepare data collection

data coll.

evaluate

data

market survey – demand side

market

analysis,

def. SMP

define

remedies

other qualitative studies

EU notification

public consult

public consult

public consult

Time table of first Market Analysis

G. Frischmann: Experiences...


If market can t solve supply create uso l.jpg

If market can’t solve supply, create USO

It is a very good idea,

but very difficult to create a working solution

  • Affordability? According living standard or social problems?

  • What kind of services? Home and public telephone? In 21th century?

  • What kind of technology (e.g. telephone, but fix or mobile or both?)

  • Who shall be selected as US provider? And how? (huge lobbies!!!)

  • Who shall contribute? (huge lobbies!!!)

  • How to minimise market distortion?

  • How can USO contribute market development and growth?

G. Frischmann: Experiences...


Example changes in uso regime in h l.jpg

Example: Changes in USO regime in H.

G. Frischmann: Experiences...


Create powerful nra improve enforcement l.jpg

Create powerful NRA, improve enforcement

It is important, but can NRA be really powerful?

  • EU guarantees of limited authority power:

    • No legislative power, just application of legislation

    • Must of reasoning

    • Decisions may be appealed

  • But there are elements of power:

    • Knowledge and information

    • Transparency

    • Independence (both political and from market)

    • Enforcement and penalising

    • immediate applicability

    • Communications

    • Success in front of court (0-70-90-100%) – but after 1-3 years

G. Frischmann: Experiences...


Nra can and shall learn and be prepared l.jpg

NRA can and shall learn and be prepared

From advanced markets:

  • well working/non working models

  • benchmarks: business, productivity, price etc.

  • patience

    From advanced regulators:

  • best practices, methods, models

  • way of transparency, conciliation, moderation

  • real independence

    How?

  • active participation in IRG/ERG work

  • utilising relative delay

  • from general to specific education, some together with operator’s experts

  • preparatory projects on all new issues

  • preparing new procedures

  • completing IT investment

G. Frischmann: Experiences...


Example of transition l.jpg

01.Jan.04.

01.May.04.

01.Sep.04.

new act in force

membership based items

number portability (geographical)

number portability (mobile & nongeogr.)

HIF

new HRA (Hungarian Regulatory Authority)

old SMP

former SMPs – new remedies

first market analysis

new SMPs and remedies

old USO

transitory USO regime

new USO regime

access

deficit

comp.

account sep.

RIO/ROU

RIO/ROU

Example of Transition

G. Frischmann: Experiences...


Interpretation l.jpg

Newcomer’s

wish on

incumbent’s

room

Newcomer’s interpret. on incumbent’s restrictions

Newcomer’s interpretation on inc. obligations

Incumb’s interpret on what is obl.

Incumb’s interpret. on what is forb.

Incumbent’s wished room

forbidden

„uncertain”

free

„uncertain”

obligatory

NRA

Interpretation

Interpretation

NRA can

be wrong too

G. Frischmann: Experiences...


How eu accession influences all these l.jpg

How EU accession influences all these?

  • If your answer on „Why liberalise?” was, that because of EU, you will get a lot of problems with EU and yourself

  • If it was one of the last two (evolving market, i-soc), in that case EU adds a lot of new tools and power:

    • Best practices, tools

    • Relations

    • Safe legislative background

G. Frischmann: Experiences...


Summary challenges l.jpg

For the operators

higher flexibility, less pre-defined rules

wide scale of remedies

new customer protection rules incl. comparativeness

playing in EU playing field

audited account separation & data provisioning

Summary - Challenges

For the regulator

  • creation of a brand new decision process

  • market analysis, new SMP def, remedies etc.

  • implementing effective Customer’s Rights represent. function

  • higher flexibility, less pre-defined rules

  • development of competencies

  • notification (Art.7.)

G. Frischmann: Experiences...


Let s make a balance l.jpg

Let’s make a balance

Cost of conformity

Cost of

non-conformity

Total

cost for the

Society

Total

benefits

For the

Society

Thank You!

G. Frischmann: Experiences...


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