SHAPING A REGULATORY AGENCY IN A PERIOD OF CONVERGENCE OR EUROPEAN TELECOM SYSTEM FROM A COUNTRY PERSPECTIVE - CASE STUDY: CABLE TV Krisztina Rozgonyi 2006 Annenberg-Oxford Summer Institute 24th July 2006.
2 THE DEEPEST AND THE MOST COMPREHENSIVE SURVEY ABOUT THE CABLE TV PROVIDERS AND THEIR SERVICES SO FAR.
3 AS REGARDS INTERNATIONAL COMPARISON THE CONCENTRATION IS AT MEDIUM LEVEL: MORE THAN HALF OF THE SUBSCRIBERS BELONG TO TWO, AROUND 70% BELONG TO SEVEN PROVIDERS.
4 TAKING INTO ACCOUNT THE GEOGRAPHICAL SETTLEMENT STRUCTURE THE COVERAGE IN HUNGARY IS EXPRESSLY HIGH. (CATV: SIGNIFICANT ROLE IN THE DOMESTIC PROGRAM DELIVERY WITH SERIOUS FUTURE POSSIBILITIES FOR THE INFRASTRUCTURE-BASED COMPETITION.)
5 THE RESULTS OF THE PROJECT ARE PRESENTED IN THE STRUCTURE OF THE REGULATORY STRATEGY
6 THOUGH THE CUSTOMER PERCEPTIONS’ CABLETV PRICES GREW THE MOST AMONG ALL ELECTRONIC COMMUNICATIONS SERVICES, ONLY ONE QUARTER OF THEM ARE UNSATISFIED WITH THIS PRICE.
7 NOWDAYS % OF THE POPULATION THINK THAT MORE THAN ONE SERVICE PROVIDER IS AVALAIBLE FOR HIM \ HER (1), NONE THE LESS 30 % CONSIDER IT AS TOO FEW.
8 56 % OF THE SUBSCRIBERS ARE SATISFIED WITH THE COMPOSTITION OF THE CHANNEL-PACKAGES, AND ONLY 16 % SAID THEY ARE UNSATISFIED!
9 WE ASSUME, THAT WIDENING SCOPE OF CHANNELS IN A PACKAGE ARE NOT PULLED BY THE CUSTOMER DEMAND, BUT PUSHED BY THE SERVICE PROVIDERS THEMSELVES IN ORDER TO JUSTIFY THE PRICE INCREASE TO THE CUSTOMERS AND THE COMPETITION AUTHORITY.
10 IN CASE OF MONOPOLY PRICING THE „HYPOTHETICAL CHURN” IS 15% WHILE THE FACTUAL ONE IS 2,5%!
11 THE LARGER CABLE TV OPERATORS HAVE THE POSSIBILITY ON VERTICAL LEVERAGING OF MARKET POWER TOWARDS MEDIA MARKET.
12 AT PRESENT THIS COMPETITION PROBLEM CANNOT BE OBSERVED IN CASE OF CABLE TV MARKET.
13 LOW INNOVATION LEVEL IN THE SECTOR AS A WHOLE, FAVOURABLE DEVELOPMENTS AT THE LARGER COMPANIES.
14 FAVOURABLE INVESTMENT PERFORMANCE ON CABLE TV MARKET COMPARED TO THE WHOLE COMMUNICATION SECTOR, MODERATE GROWTH IN PERIOD.
15 EVEN ACCORDING TO A CONSERVATIVE ESTIMATE ABOUT 70% OF THE SUBSCRIPTION FEES STANDS AT CABLE TV PROVIDERS’ DISPOSAL AFTER HAVING PAID THEIR COSTS CONNECTED TO CONTENT PROCUREMENT - 40% OF THE EXPENSES ARE „OTHER COSTS”
16 PROBABLE SERIOUS COMPETITON PROBLEM REGARDED SINGLE MARKET DOMINANCE IN RETAIL RELATION, WHICH AFFECTS INNOVATION UNFAVOURABLY, AND ITS VERTICAL LEVERAGING CAN CAUSE NEGATIVE CONSEQUENCES ON MEDIA MARKET IN LONG TERM.
17 COMPETITION PROBLEMS RESULTING FROM SINGLE DOMINANCE MAY GRADUALLY REDUCE, WHILE VERTICAL LEVERAGING WILL INCREASE ALONG THE ‘ORGANIC EVOLUTION PATH’.
18 POSSIBLE REGULATORY APPROCHES Promoting infrastructure competition Wholesale regulation (Market 20 ?) Retail regulation (Market 19) Promoting infrastructure competition Wholesale regulation (Market 20 ?) Retail regulation (Market 19) Market 18
19 REGULATORY MEASURES ON CATV HAVE EFFECTS ON THE COMPETITION LANDSCAPE OF THE WHOLE COMMUNICATION MARKET
THANK YOU FOR YOUR ATTENTION!