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LIBERALISATION AND (DE)REGULATION OF SLOVENIAN TELECOMMUNICATIONS MARKETS

LIBERALISATION AND (DE)REGULATION OF SLOVENIAN TELECOMMUNICATIONS MARKETS. Nevenka Hrovatin Damir Cibic Matej Švigelj Berlin, September 2004. INTRODUCTION Slovenian telecommunications market. General indicators for Slovenia (2003): 2 mio inhabitants 685,000 households

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LIBERALISATION AND (DE)REGULATION OF SLOVENIAN TELECOMMUNICATIONS MARKETS

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  1. LIBERALISATION AND (DE)REGULATION OF SLOVENIAN TELECOMMUNICATIONS MARKETS Nevenka Hrovatin Damir Cibic Matej Švigelj Berlin, September 2004

  2. INTRODUCTIONSlovenian telecommunications market • General indicators for Slovenia (2003): • 2 mio inhabitants • 685,000 households • 12,273 EUR GDP per capita (17,090 EUR according to the PPP) • Slovenian telecommunications market: • 615 million EUR (2002) • Growth by about 8% since 2001 • 2,6% of GDP • Telecommunications market segments by revenues (2002) • Fixed telephony (40%) • Mobile services (52%) • Internet (6%) • Data and leased lines (2%)

  3. INTRODUCTIONReview of regulation • Changes in EU and Slovenian legalisation • Regulation of SMP operators • Telecommunication Act • Complied with old EU legislation • In force at time of our analysis • Electronic Communication Act (April 2004) • Adopted new EU regulatory framework • Regulatory authority • ATRP was established in second half of 2001 • Performs all regulatory duties stipulated by the EU law • Sector approach to financing • Problems in regulator operations: • Unsuitable education structure • At enforcing its discretional right as independent regulator (limited by the Government in 2002and operators) • Methodology of regulation • Price cap is statutorily used(in practice: benchmarking)

  4. MOBILE TELEPHONYMarket structure • Technology development of mobile telephony in Slovenia • (1991-NMT, 1996-GSM, 2003-UMTS) • Four companies: • Mobitel (operator) • 1991 NMT, 1996 GSM, 2003 UMTS • Market share (2003): 73% • Debitel (service provider) • Since November 1998 • Market share (2003): 4,7% • Si.mobil (operator) • Since March 1999 • Market share (2003): 20% • Western Wireless International: Vega (operator, national roaming) • Since December 2001 • Market share (2003): 2,2%

  5. MOBILE TELEPHONYNumber of GSM users

  6. MOBILE TELEPHONYPrices Average real price of a minute of call by companies (in SIT per minute)

  7. MAIN CHARACTHERISTICS OF THE MARKET Concentrated market structure due to: Late granting of licences to competing firms High call termination prices between operators (highdifference between off-net and on-net calls caused tariff mediated network externality) Competition leads to low prices Anomalies at granting UMTS licence Brings back monopoly position at the market for 3G services MAIN ACTIVITIES OF THE REGULATOR In July 2002 appealed to operators to set prices basedon the cost of efficient service provision Assigned status of SMP operator to Mobitel and Si.mobil (Nov 2002 and Dec 2003) Introduction of asymmetric model of call termination prices at the end of 2003 Accepted by Mobitel and Si.mobil Vega rejected the model and persists at its standpoint that ATRP should regulated end-user prices MOBILE TELEPHONYProblems and regulators activities

  8. MOBILE TELEPHONYComparison with selected countries Number of mobile operators and penetration rate in benchmark countries • Number of 2G operators: comparable • Penetration rate: comparable (2 percentage points above EU) • Number of assigned UMTS licence: lagging behind • More concentrated market than in the EU (leading operators in 9 countries of EU do not exceed 50% of market share)

  9. FIXED TELEPHONYIncumbent • Number of fixed lines of Telekom Slovenije (in 000) • Year end PSTN ISDN Centrex • 1998 726 46 0 • 1999 704 82 21 • 2000 664 132 66 • 2001 642 180 70 • 2002 580 232 111 • 2003 563 276 130

  10. FIXED TELEPHONYIncumbent • INCUMBENT’S TARIFFS • Monthly subscription 9,1 EU • Local call/min 2,2 €-cent/min • Long distance call/min 2,2 €-cent/min • Monthly subscription is increasing. • The call prices are decreasing in real terms since 2002.

  11. FIXED TELEPHONYDeregulation • FIXED – TO – FIXED INTERCONNECTION CHARGES • Phase One – Benchmarking (2003) • Phase Two – Cost based (2006?)

  12. FIXED TELEPHONYDeregulation • FIXED – TO – FIXED INTERCONNECTION CHARGES • Phase One – Benchmarking (2003) • Prices were set on EU average level: • Single transit 1,06 EU €-cent/min • Double transit 1,70 EU €-cent/min • Local call 2,2 EU €-cent/min • Positive difference was introduced in 2002.

  13. FIXED TELEPHONY Competition • New legislation • Removal of all administrative barriers to entry • fixed licences for free since 2003 • Reference Interconnection Offer since 2004 • Number of operators offering fixed voice telephony: 2 - 3

  14. BROADBAND • Number of connections (000) • YEAR DSL CABLE • end 2002 17.000 15.000 (est.) • end 2003 39.000 20.000 • mid 2004 53.000 25.000 (est.)

  15. BROADBAND • Number of DSL connections • YEAR Incumbent Others • end 2003 39.000 0 • mid 2004 52.000 1.000

  16. PROSPECTS • Fixed Voice Telephony • From monopoly to competition (international calls) • Broadband • From competition (dial up) to monopoly (DSL) • Mobile services (Voice) • From monopoly to competition • Mobile services (Data) and 3rd generation • Monopoly?

  17. NRA’s DILEMMAS • Service competition • Fixed telephony • Infrastructure competition • Mobile services • Data/Broadband

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