Mobile Access Markets throughout Europe Facts and Regulatory Aspects – Conclusions for the Polish...
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Transcript of Mobile Access Markets throughout Europe Facts and Regulatory Aspects – Conclusions for the Polish...
Mobile Access Markets throughout EuropeFacts and Regulatory Aspects – Conclusions for the Polish Market
Dr. Joachim Haas, MLEVice President Regulatory AffairsT-Mobile International AG & Co. KG
Warszawa, 10 March 2006
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Summary The Polish mobile market – Customer is King
Mobile penetration – very strong growth since 2003, but still potential for further growth
Fierce price competition lead to very low prices for mobile services
Mobile operators face a challenging investment situation
Access Regulation is a rare exception in the EU Market 15 is effectively competitive in nearly all EU Member
States Price competition on the retail market is key indicator for
effective competition on the wholesale market EU benchmark for access regulation: Is Poland comparable?
Conclusion – Stick to competition instead of regulatory intervention
Competition warrants the best outcome on the Polish mobile market
Access agreements should create win-win situations and stick to commercial negotiations
Doing it wrong can hinder necessary investment and stop a very promising market development
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Mobile penetration is rapidly increasing in Poland
Mobile penetration
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Market penetration (current forecast)
Market penetration (Strategia regulacyjna rządu2006 - 2007, CAS)
Market penetration (Strategia regulacyjna rządu2006 - 2007, URTIP)
Source: Era PTC, 2005
Poland has one of the fastest growing mobile markets in the whole European Union
With an increase of around 30% since 2004 Poland could already catch up with its CEE peers and close the gap
More growth ahead due to very attractive products and prices
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Ongoing price reductions are an indicator of vital competition on the Polish market
Consumers in Poland benefited from the biggest price decreases in Europe in 2005 Prices for mobile services in Poland are now among the lowest in Europe EU-Commission recognizes fierce price competition in Poland
Source: EU-COM, European Electronic Communications Regulations and Markets 2005 (11th report, Feb. 2006)
6
0,50 zł
1,00 zł
1,50 zł
2,00 zł
2,50 zł
3,00 zł
3,50 zł
Q2'01
Q4'01
Q2'02
Q4'02
Q2'03
Q4'03
Q1'04
Q2'04
Q3'04
Q4'04
Q1'05
Q2'05
Q3'05
Q4'05
ERA IDEA PLUS Heyah
Price erosion from 2001-2005 for prepaid services shows operators competing for the lowest price on the market
POP MAX
Zrób to Sam
Fajnie!
Cały Dzień
Era Love
Happy
Jedna IdeaMono
Heyah
Heyah – nowe objawy
Simplus Team
Simplus Team 7
Happy Taniej
Orange GO
Heyah „zdrabniamy”
Basis:Offerts without price reductionsThe lowest tariffs for offnet calls are presented. Gross prices (Source: Era PTC, 2005)
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Consumers in Poland already get a very good deal for their money spent in comparison to their peer countries
MoU/ARPU
0,00
1,00
2,00
3,00
4,00
5,00
6,00
Hu
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ary
De
nm
ark
Fra
nce
Po
lan
d
Po
rtug
al
Cze
ch
Italy
Gre
ece
UK
Irela
nd
Sp
ain
Ne
the
rlan
ds
Be
lgiu
m
Au
stria
Source: Merrill Lynch, Global Wireless Matrix 3Q05, 22.12.05, p. 2
Ratio of minutes of use (MoU) to the average revenues spent per user (ARPU) enables to compare different countries
Polish users enjoy very low prices for their minutes used (with 76 MoU the Polish ARPU is 18 U$; e.g. Czech Republic 85 MoU, ARPU 21 U$; Italy 125 MoU, 33 U$; Spain 155 MoU, 44 U$)
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The highly competitive mobile market environment poses huge challenges on mobile operators
Source: Merrill Lynch, Global Wireless Matrix 3Q05, 22.12.05, p. 2
Average Revenue per minute
0,000,050,100,150,200,250,300,35
Hu
ng
ary
De
nm
ark
Fra
nce
Po
lan
d
Po
rtug
al
Cze
ch
Italy
Gre
ece
UK
Irela
nd
Sp
ain
Ne
the
rlan
ds
Be
lgiu
m
Au
stria Operators face low margins in a highly competitive Polish market Revenue per minute is one of the lowest in CEE and Western Europe
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Market 15 is effectively competitive in nearly all EU Member States
No remedies SMP¹ Remedies
Austria X
Cyprus X (single dominance)
Denmark X²
Finland X (X – veto EU COM)
France ? (X – withdrawn by NRA)
Hungary X
Ireland X (X – joint dominance; resolved by agreement)
Italy X
Luxembourg ? (X – withdrawn by NRA)
Netherlands X²
Slovakia ? (X – withdrawn by NRA)
Slovenia X (single dominance)
Spain X (joint dominance)
Sweden X
UK X²
¹ significant market power ² remedies withdrawn after market analysis
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EU- benchmark: regulation of market 15 is a rare exception
Spain NRA assessment: Joint dominance for three operators; no SPs; price
competition impeded; Far lower MoU/ARPU ratio Situation not comparable with Poland
Slovenia NRA assessment: Single dominance (one operator 75 % market share, only two
operators) Large difference between market shares of operators Not comparable with
Poland where all operators compete for market leadership Cyprus
NRA assessment: Single dominance (one operator with high market share; only two operators)
Large difference between market shares of operators Not comparable with Poland where all operators compete for market leadership
Only in Spain, Slovenia and Cyprus NRAs found single or joint dominance. However, situations are not comparable with Poland
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Prices in Poland reduced 50% from 2004 to 2005 while Spanish prices stayed at the same level
Source: EU-COM, European Electronic Communications Regulations and Markets 2005 (11th report, Feb. 2006)
13
Prices in Poland reduced 50% from 2004 to 2005 while Spanish prices stayed at the same level
Source: EU-COM, European Electronic Communications Regulations and Markets 2005 (11th report, Feb. 2006)
14
Need for regulation on market 15 hard to proveSeveral NRAs decided to or were forced to withdraw their decision to regulate the access market
Finland: FICORA found single dominance of mobile operator with more than 60% market share EU-COM vetoed the decision for failure to take market dynamics into consideration FICORA had not referred to economic incentives to provide access to SPs and improve
capacity utilisation ratios No regulation of market 15 in Finland
Ireland: ComReg applied EU-COM “Airtours” criteria and found joint dominance; EU-COM did not
veto However, despite a long and indepth analysis by ComReg the subsequent appeal of
operators has been resolved by agreement: ComReg stepped back and agreed not to defend the case! No regulation of market 15 in
Ireland
France, Slovakia, Luxembourg: ARCEP notified MVNO obligations to the EU-COM EU-COM challenged ARCEP`s assessment. ARCEP decided to withdraw before receiving a veto from EU-COM Comparable situations in Slovakia and Luxembourg
Spain – the latest ambiguous decision to regulate the access market: Although GD Info and GD Comp could not agree to veto the NRA decision on EU-level,
the EU-COM’s press release revealed serious doubts on the NRA’s decision
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Price competition on retail market is key indicator of effective competition on the wholesale market
Two factors decisive in assessing whether a market is effectively competitive:
Price competition or Presence of SPs/MVNOs now or in the foreseeable future
Hungary and Italy as benchmarks NRAs - confirmed by the EU-Commission - refrained from access regulation due
to price competition on the retail market irrespective of any existing SP/MVNO landscape
Conclusions for the Polish market Poland already has a fierce price competition and prices are among the lowest in
Europe 4th Operator Netia auctioned UMTS licence in summer 2005 and is about to enter
the market with further competition potential
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Conclusion - Competition Warrants the Best Outcome on the Polish Mobile Market
A decision to regulate market 15 in Poland would be legally flawed because the market is effectively competitive
Prices are constantly falling due to intensive competition on retail markets
Impressive record of market penetration growth MoU/ARPU ratio better than peers
Concerns coming along with regulatory intervention in the Polish market:
Regulation will stifle the positive development on the Polish mobile market
Risk of doing it wrong: Necessary incentives for investment in expanding innovative networks such as 3G are at stake
No incentive for voluntary wholesale agreements because of risk of annulment after regulatory intervention
Thank you for your attention
Dr. Joachim Haas, MLE T-Mobile International AG & Co. KG Vice President Regulatory Affairs [email protected]