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Assessment of the competitive situation in the market for broadband access

PLC Workshop, 16 October 2003. Assessment of the competitive situation in the market for broadband access. Leo Koolen DG Information Society European Commission. Context. A “competitive and dynamic knowledge-based economy” requires

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Assessment of the competitive situation in the market for broadband access

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  1. PLC Workshop, 16 October 2003 Assessment of the competitive situation in the market for broadband access Leo Koolen DG Information Society European Commission

  2. Context A “competitive and dynamic knowledge-based economy” requires “an inexpensive, world-class communications infrastructure” Lisbon European Council March 2000

  3. Broadband Access Implementation of a widely available broadband infrastructure is probably the key challenge for the Information Society and telecommunications in Europe, over the next 5-10 years. e-Europe 2005 Action Plan

  4. EU liberalisation policy Member States to ensure competition in the provision of networks and services EU Framework Directive for Electronic Communications Networks and Services Member States shall not grant or maintain in force exclusive rights; and take all measures necessary to ensure that any undertaking is entitled to provide electronic communications services or to establish, extend or provide electronic communication networks Commission Directive on competition in the markets for electronic communications networks and services

  5. Broadband penetration rate in the EU (% of population) 12% 10.44% 10.19% 10.03% 10% 9.36% 8% 6.64% 6.62% 6% 4.72% 4.65% 4.47% 4.43% 4.09% 4% 2.87% 2.82% 2.33% 2% 0.25% 0.02% 0% EL IRL L I P F E UK EU D A FIN NL S B DK Penetration rates in EU Source: European Commission

  6. The level of infrastructure competition in broadband supply* 100% 90% 80% Entrant using own infrastructure 70% Entrant using ULLs 60% 50% Entrant retailing 40% incumbent's DSL 30% Incumbent retailing its own DSL 20% 10% 0% UK Italy Spain Austria France Ireland Finland Belgium Sweden Portugal Denmark Germany Netherlands Luxembourg *Source: ECTA 2002

  7. The level of infrastructure competition in broadband supply* Source: ECTA Sept 2003

  8. Infrastructure-based competition and broadband take up* 10.0 B S 9.0 DK NL 8.0 US 7.0 Jap A 6.0 SF 5.0 Broadband services per 100 population D E 4.0 F P UK 3.0 2.0 I L 1.0 0.0 0% 10% 20% 30% 40% 50% 60% 70% 80% % market non incumbent *Source: OVUM

  9. Where are we now? • Broadband market development is encouraging but concerns about competitive conditions • New clamors that access network is a ‘natural monopoly’ • New clamors for safety and security and QoS, to restore special rights? • Marketplace approaching new status quo where local loop remains bottleneck

  10. What do we need? (1) A healthy market structure for genuine effective and sustainable competition in the long-run • Facilities-based competition • Policy that attracts powerful parties with key strategic interests (customer ownership) • A changing mentality that competitive dynamics at the network level is good for all

  11. What do we need? (2) Competitive dynamics in the supply of broadband networks • Facility based competition between alternative infrastructure of strong players with strategic interests superior to services based competition • Stimulates investment in network technologies, product and services innovation and pricing packages which do not exist with services based competition • Creates incentives for cost saving innovations, to become more cost efficient at network level, important in environment with rapid technological improvements • Create environment that enables talent, gives room to innovation, ensures rapid technology dissemination of R&D and reap dynamic efficiencies

  12. What do we need? (3) Legal certainty about regulatory treatment of technologies and systems • Stable and predictable regime and its enforcement should encourage investment • Risks for market players to be reduced to normal business risks

  13. Some statistics* • 375M people in EU (+100M from 2004) • 150M households (with central Europe 190M) • About 20M SMEs • Powerline grid in Europe is the best in the world • Powerline grid is ubiquitous • Number of powerlines comparable with number of household and SMEs *Dec 2002

  14. How can PLC help to achieve Lisbon goals? • PLC may help to introduce facilities-based competition in the access network • PLC IP platform may help to keep development of the market horizontal • PLC may enable the individual to participate in eEurope • PLC can help enhance regional development (local municipalities can become TO)

  15. Who needs to do what? • Market challenge is for market players (business case/model; partnerships..) • Government and regulators: • to create a regulatory level playing field for all technologies and remove regulatory uncertainties • to protect the legitimate use of radio spectrum against harmful interference • to encourage facility-based competition to create a dynamic and competitive growth environment which is sustainable in the long term

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