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Telecommunications Regulatory Policy Dr. Iris Henseler-Unger, Vice-President Regulierungsbehörde für Telekommunikation und Post ITS Conference Panel Discussion – Plenary Session Berlin – 6 September 2004. Crisis? What crisis?.

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  • Telecommunications Regulatory Policy

  • Dr. Iris Henseler-Unger, Vice-President

  • Regulierungsbehörde für Telekommunikation und Post

  • ITS Conference

  • Panel Discussion – Plenary Session

  • Berlin – 6 September 2004


Crisis what crisis
Crisis? What crisis?

  • Compared with other sectors of the economy, the ICT sector was and is a very dynamic sector of the economy

  • However when after the boom of the late ’90ties the internet bubble burst in 2001 a turning point marked the beginning of a new phase with more realistic expectations

  • The capital market downturn had a real impact as funding became more difficult, especially for fixed new entrants

  • Consolidation of the market to be seen positively as a sign that market forces started to work

  • Diversity of market players as many different business models compete

  • High debt levels caused UMTS operators to adjust their roll-out plans, but optimism is slowly regaining


Yearly growth rates of gdp and ict market
Yearly Growth Rates of GDP and ICT-Market

Quelle: DESTATIS, Eurostat und BITKOM


German telecoms market
German Telecoms Market

  • Market volume 2003: ca. 63 bn. € (2002: 61.3 bn. €)

  • Number of jobs nearly unchanged

  • Competitors‘ market shares increased in fixed networks

  • Growth for

    • Fixed network services

    • Unbundled access to the local loop: 1.35 mio lines

    • Fast internet access: 5 mio DSL lines (estim. VATM) 4.7 mio DSL lines of DTAG, 400,000 competitors

    • Mobile telephony

  • Competitors of DTAG spent less on wholesale services of DTAG as they invest in own infrastructure!



Regulatory Challenges

  • Regulation can provide a stable framework for competitive and innovative forces to work

  • Enable investment in new technologies (emerging markets) while preventing the leverage of market power

  • Converging technologies lead to new markets as different markets overlap (e.g. VoIP)

  • Diversity of market players and business models require a more differentiated regulatory approach

  • High market dynamic requires more flexibility for regulators in order to intervene in a timely manner

  • Emerging competitive market structures require sector specific regulation to align towards general competition law

  • The New European Regulatory Framework on Electronic Communications Networks and Services provides a framework for the challenges ahead


Status of Consultation on VoIP

  • April 21, 2004: Consultation on VoIP

  • 64 comments received, which were published on 30 July

  • Questions adressed:

    • Competitive development of VoIP: legal, economic and technical aspects

    • VoIP business models (overview and possible classification)

    • Consumer protection and public interest (e.g.: emergency calls, intercepts)

  • Aims of the consultation: To develop

    • a framework enabling the market to exploit chances and potentials of VoIP

    • a first position on regulatory classification of VoIP based on comments

  • October 18, 2004: RegTP Forum in Bonn


New regulatory approach i
New Regulatory Approach (I)

  • The new Telecoms Act entered into force on 26 June 2004 transposing the European ECNS Framework

  • Regulation is still needed, but should be phased out slowly

  • Promotion of self-sustaining competition

  • Promotion of efficient investments

  • Technology neutral regulation

  • Market definition and analysis procedure according to the Framework Directive ongoing

  • National consultation of market no. 11 (unbundled local loop) started on 18 August 2004

  • Other market reviews are in the pipeline

  • Notification of draft measures planned for the next few weeks

  • Only general authorisation needed, except in case of scarce resources (spectrum)


New regulatory approach ii
New Regulatory Approach (II)

  • In case an operator is designated as SMP operator, at least one obligation must be imposed to remedy the competition problem identified

  • The general rule: strict regulation on the wholesale level, retail level regulation only if wholesale regulation is not sufficient

  • The new Telecoms Act provides for a differentiated set of remedies:

    • Non-Discrimination (section 19)

    • Transparency (section 20)

    • Access obligations (section 21, criteria must be checked)

    • Standard offer (section 23)

    • Interconnection dispute resolution settlement (section25)

    • Rates regulation (section 27ff) + accounting separation)


Conclusion i
Conclusion (I)

  • The European Framework is not in contrast to German ideas of regulating the telecommunications sector as it enforces the idea of stepwise liberalisation of the market towards general competition law

  • However, regulation is still needed, but needs to be justified in greater detail

  • While the initial phase of liberalization required strict automatic reactions, the second phase requires a more tailored approach

  • Regulatory measures depend on the outcome of the market reviews and must be proportionale and appropriate


Conclusion ii
Conclusion (II)

  • The new Telecoms Act gives RegTP the powers

    • to intervene in a timely manner

    • to react flexible

    • to make a more differentiated use of the remedies

    • to give adaquate answers according to the state of competition:- with less intrusive interventions in more advanced markets and - continued strict regulation where needed to prevent leveraging of market power (as in bottleneck type markets such as the local loop)

  • The complete regulatory toolbox is available and RegTP is starting to use it


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