Fixed-Mobile Convergence
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Transcript of Fixed-Mobile Convergence
STATE OF ISRAEL
MINISTRY OF COMMUNICATIONS
Fixed-Mobile Convergence
Regulatory Point of ViewDaniel Rosenne
Director General, Ministry of Communications, Israel
STATE OF ISRAEL
MINISTRY OF COMMUNICATIONSPresentation Agenda
What is Fixed-Mobile Convergence?
Market realities: Mobile versus Fixed
The future: unified regulation
Example: the case of Israel
Conclusions.
STATE OF ISRAEL
MINISTRY OF COMMUNICATIONS
What isFixed-Mobile
Convergence?
STATE OF ISRAEL
MINISTRY OF COMMUNICATIONS
Fixed-Mobile Convergence: Different Meaning from Different Views
Consumers:Seamless Services, regardless of type of network.
Incumbent Operators:One stop shopping/one bill - bundling of fixed and mobile services.
Mobile Operators:Integrated services - cellular service positioning as fixed replacement.
Regulators:Ensuring fair competition - Fixed versus mobile, Mobile versus value added services.
STATE OF ISRAEL
MINISTRY OF COMMUNICATIONS
Fixed-Mobile Convergence:It’s All About Competition
Competition for voice minutes: Fixed versus Mobile.
Competition for value added services revenues: Mobile versus value added service providers.
Competition for content revenues: Mobile versus value added service providers versus content providers.
STATE OF ISRAEL
MINISTRY OF COMMUNICATIONS
MobileVersus Fixed:
Market Realities
STATE OF ISRAEL
MINISTRY OF COMMUNICATIONS
Fixed-Mobile Convergence:It’s All About Competition
When mobile offers: Similar tariffs: Additional competition. Similar services: Data services. Same quality: as fixed.
Can mobile substitute fixed? YES!
When will it happen?
STATE OF ISRAEL
MINISTRY OF COMMUNICATIONS
Mobile Tariffs Paradox
Why are mobile tariffs higher than fixed tariffs?
Let’s face reality: tariffs are not pushed down, neither by market forces, nor by regulatory action.
Simple economics: Marginal investment per customer:
Fixed: US $1000-1500. Mobile: US $300-500.
Operating expense: similar for both.
STATE OF ISRAEL
MINISTRY OF COMMUNICATIONS
Towards Unified Regulation
STATE OF ISRAEL
MINISTRY OF COMMUNICATIONS
Why Regulation?
Market controlled by limited number of dominant operators.
Abuse of market power by discrimination and unfair practices will eliminate competition.
Regulator’s goal - foster competition, for the ultimate benefit of consumers’.
STATE OF ISRAEL
MINISTRY OF COMMUNICATIONS
Fixed-Mobile Convergence: Regulator’s Role
Protect consumers’ interests.
Abolish artificial and historical barriers to competition.
Reduce entry barriers to new entrants, especially for innovative new players.
The meaning of “Fixed-Mobile Convergence” is a need for unified regulation for fixed & mobile markets.
STATE OF ISRAEL
MINISTRY OF COMMUNICATIONS
Key Regulatory Action Points (1)
Cost-based interconnection:
eliminating market distortion resulting from different methods for mobile and for fixed interconnection tariff setting.
Symmetrical airtime:
eliminating discriminatory practices resulting from charging different airtime tariffs from mobile subscribers and from fixed subscribers.
STATE OF ISRAEL
MINISTRY OF COMMUNICATIONS
Key Regulatory Action Points (2)
Open network access:
allowing long distance and value added service providers access to the mobile network, similar to their fixed network access.
Prevention of discriminatory bundling:
ensuring transparent bundling, in a non-discriminatory manner.
STATE OF ISRAEL
MINISTRY OF COMMUNICATIONS
The Case of Israel
STATE OF ISRAEL
MINISTRY OF COMMUNICATIONS
Israel's Telecommunications
2.8 million main telephone lines(47% penetration).
2.5 million mobile customers, on three networks, Pelephone, Cellcom & Partner/Orange. (42% penetration).
1.1 million Cable-TV connected households. (3 operators, 70% of passed households, 90% household coverage).
STATE OF ISRAEL
MINISTRY OF COMMUNICATIONS
Telecommunications Services Market - 1998
InternationalLong-Distance
CableTV
Terminal Equipment& Business Systems
Internet services
CellularTelephony 38%
Fixed Services 40%
11%7%
2%2%
Total telecom services market ~ $ 3.7 billion
STATE OF ISRAEL
MINISTRY OF COMMUNICATIONS
Israel’s Mobile Operators
Pelephone: 800 MHz NAMPS and CDMA. Operations since 1987. Bezeq (50%), Motorola (50%).
Cellcom: 800 MHz TDMA. Operations since 1995. BellSouth (34%), Safra Brothers (34%), Discount Investments (12.5%), PEC (12.5%), private investors (7%).
Partner/Orange: 900 MHz GSM. Operations since 7 October 1998. Hutchison (46.67%), Matab (20.31%), Elbit.com (16.5%), Tapuz (16.5%)
STATE OF ISRAEL
MINISTRY OF COMMUNICATIONS
The Mobile Boom:Israel Telecommunications Services Revenues, 1995-1998 ($US M)
0
500
1,000
1,500
2,000
1995 1996 1997 1998
Fixed
CATV
International
Mobile
STATE OF ISRAEL
MINISTRY OF COMMUNICATIONS
Israel’s Mobile Services Growth
High growth - 2.5 million subscribers, compared to 125,000 in January 1995.
Key stimulators for the explosive growth: Low tariffs: ~ US $0.11 to 0.23/minute air
time, ~ $11 to 29 monthly charge.(300 min average monthly bill - $56 to 74)
Calling Party Pays (CPP), in operation since 1994.
High quality, nationwide coverage. Fair competition.
STATE OF ISRAEL
MINISTRY OF COMMUNICATIONS
Israel’s Regulatory Issues Concerning Fixed-Mobile Convergence
Achievements Structural separation,
preventing discriminatory bundling
Calling party pays
Cost-based fixed interconnect tariffs
Open access, to fixed & mobile networks (including pre-selection/dialing parity to international long distance providers)
Open Issues Symmetrical air time
Cost-based mobile interconnect tariffs
Enhanced competition: Additional mobile
operators 3G frequencies
allocation.
STATE OF ISRAEL
MINISTRY OF COMMUNICATIONS
Conclusions
STATE OF ISRAEL
MINISTRY OF COMMUNICATIONS
Summary - Market Related Points
Fixed-Mobile convergence has several meanings: For incumbent Telco: one stop shopping. For competing Celco: fixed substitute. For consumers: additional competition? better service?
more service offerings? lower prices?
Mobile will not be true substitute to fixed, unless: Mobile prices will be similar to fixed. Mobile service offering will be similar to fixed, including
data services. Mobile will offer fixed quality.
STATE OF ISRAEL
MINISTRY OF COMMUNICATIONS
Summary - Regulatory Points
Competition in telecommunications services is still limited, and should be promoted.
In the context of “Fixed-Mobile Convergence”, regulators’ role is to prevent abuse of market power by discrimination and unfair practices.
The key issues are: Cost-based interconnection. Symmetrical airtime. Open network access. Prevention of discriminatory bundling.
STATE OF ISRAEL
MINISTRY OF COMMUNICATIONS
Regulation - It’s All About Competition
The future - from convergence to integration.
Regulation - uniform rules and principles for fixed and mobile.
Re-alignment of competitive positions - Mobile and fixed Incumbent and new operators.
STATE OF ISRAEL
MINISTRY OF COMMUNICATIONS
The Regulatory Equation
FMC = CBI+ONP
FMC: Fixed-Mobile Convergence
CBI: Cost Based Interconnect
ONP: Open Network Provision
STATE OF ISRAEL
MINISTRY OF COMMUNICATIONS
For more information about Israel’s
telecommunications:
http://www.moc.gov.il
STATE OF ISRAEL
MINISTRY OF COMMUNICATIONS
The EndThank you for your attention