1. Public Private Partnership Regulatory Aspects Christoph Legutko Global Public Policy CEE Intel Corporation November 2012 1

2. 2 Outline Overview of PPP approaches in some countries Analysis of Europe Conclusions

3. 3 PPP broadband approaches - world overview USA - FCC introduced new rules for new wires – the owner operates its fiber - competition ensures broadband Japan - "Zero Broadband Areas Elimination" policy, subsidies, 40% HH connected and commercialization of 10 Gbps FTTH next Korea & China are “future proven” thanks long term, holistic political program Australia - governmental actions compensate lack of competition Poland - issued “Mega–Bill” enforcing “taking when passing” Countries are competing on broadband to ensure their economic future

4. 4 Europe has 0.9% FTTH density and targets Broadband access status: Basic supply with <2Mbit/s is mostly given High speed Internet access >50Mbit/s is rare in the EU EU targets of 2020 Digital Agenda: 100 % coverage of broadband access technologies at minimum 30 Mbps, and 50 % of European households subscribing to at least 100 Mbps Europe must accelerate fiber deployment to achieve the broadband targets 2020 Optical fiber investment roadblocks : obligatory unbundling for the last mile ex ante regulation for not existing infrastructure Customer and operators‘ perception: Response slower than 7 sec. discourages customers to use the Internet applications Incumbents’ conflict between 10-30 years amortization of dark optical and need to deliver quarterly success reports

5. 5 European way towards PPP 1.In 1987 EU-Commission „Green Paper on the Development of the Common Market for Telecommunication Services and Equipment” opened the discussion about the rights and obligations of the network operators, the access to the telecommunication infrastructure owned by the incumbents the liberties of service providers the unification of standards in the Community. 2.In 1993 the European Council of Ministers set 1 st January 1998 as the date of the complete liberalization of telecommunication in Europe 3.On 1 st January 1998 the „WTO Agreement on Basic Telecommunications“ has become effective It obliged the WTO members to open their telecommunication infrastructures, especially the copper and coax cables, to all competitors wishing to implement their own equipment, protocols and services there. The integrated „Reference Paper on Regulation“ invented basic principles of independent regulation - to ensure the equal treatment of all market players and - to avoid that the countries invent protective measures to combat aggressive newcomers. The unbundling and ex ante regulation was born. Neoliberal regulatory principles worked well till copper networks became saturated

6. 6 Do we ask the right questions? Questions like 1.scope of the PPP? 2.relationships between ‘market and state’? 3.emphasis on the supply-side, demand-side, infrastructure-side or service-side? 4.role of civil society organizations in PPP ? 5.re-appearance of public investments shaping PPP discussions? 6.public versus private investments/money? 7.technology neutrality in PPP projects? 8.general criteria for usage of public funds to develop network facilities? 9.financial crisis creating a necessity for public investments? 10.lack of incentives for incumbents to invest in new infrastructures? 11.recommendations for roles for public and private partners? 12.models for PPP arrangements? Can be replaced by one simple: Do we have right market structures to achieve Agenda 2020?

7. Analogue World Narrowband Digital World Broadband Transition Potholes Consumer Confusion Risk & Uncertainty Incumbent Dilemma Massive Capital Investment Political Anxiety Changing the PPP approach Source: FCC ~2001 Platforms CableWi-Fi DSL3G FTTH 4G SatelliteMesh Anything else! Voice, Video, Audio, Data, etc. Applications Optical Fibre Voice DSL Copper Video Coax TV Radio Spectrum Cellular Spectrum 7 Vertical incumbents cannot compete with horizontal specialists There is enough private money seeking secure harbors but needing transparency

8. Conclusions 8 Countries are competing on broadband to ensure their economic future Europe discusses regulatory modifications to accelerate broadband proliferation Transparent market structures motivate investors

9. 9 Thank you! Christoph Legutko Global Public Policy CEE Director Intel Corporation Email:christoph.legutko@intel.com Telephone:+49 89 99143 0 Mobile:+49 171 55 202 43 URL:www.intel.eu