1. DG Information Society 205-13 1 Assessment of the competitive situation in the market for broadband access Leo Koolen DG Information Society European Commission PLC Workshop, 16 October 2003

2. DG Information Society 205-13 2 Context A “competitive and dynamic knowledge-based economy” requires “an inexpensive, world-class communications infrastructure” Lisbon European Council March 2000

3. DG Information Society 205-13 3 Broadband Access Implementation of a widely available broadband infrastructure is probably the key challenge for the Information Society and telecommunications in Europe, over the next 5-10 years. e-Europe 2005 Action Plan

4. DG Information Society 205-13 4 EU liberalisation policy Member States to ensure competition in the provision of networks and services EU Framework Directive for Electronic Communications Networks and Services Member States shall not grant or maintain in force exclusive rights; and take all measures necessary to ensure that any undertaking is entitled to provide electronic communications services or to establish, extend or provide electronic communication networks Commission Directive on competition in the markets for electronic communications networks and services

5. DG Information Society 205-13 5 Trend in the percentage of broadband lines provided by the incumbent 58.83% 63.20% 58.78% 60.13% 56% 57% 58% 59% 60% 61% 62% 63% 64% July 02Oct. 02Jan. 03July 03 EU

6. DG Information Society 205-13 6 The level of infrastructure competition in broadband supply* 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Austria Belgium Denmark Finland France Germany Ireland Italy Luxembourg Netherlands Portugal Spain Sweden UK Entrant using own infrastructure Entrant using ULLs Entrant retailing incumbent's DSL Incumbent retailing its own DSL *Source: ECTA 2002

7. DG Information Society 205-13 7 The level of infrastructure competition in broadband supply* Source: ECTA Sept 2003

8. DG Information Society 205-13 8 Penetration rates in EU Source: European Commission

9. DG Information Society 205-13 9 Infrastructure-based competition and broadband take up* 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 0%10%20%30%40%50%60%70%80% % market non incumbent Broadband services per 100 population L D F I E SF UK A B DK NL P S US Jap *Source: OVUM

10. DG Information Society 205-13 10 Where are we now?  Broadband market development is encouraging but concerns about competitive conditions  New clamors that access network is a ‘natural monopoly’  New clamors for safety and security and QoS, to restore special rights?  Marketplace approaching new status quo where local loop remains bottleneck

11. DG Information Society 205-13 11 What do we need? (1) A healthy market structure for genuine effective and sustainable competition in the long-run  Facilities-based competition  Policy that attracts powerful parties with key strategic interests (customer ownership)  A changing mentality that competitive dynamics at the network level is good for all

12. DG Information Society 205-13 12 What do we need? (2) Competitive dynamics in the supply of broadband networks  Facility based competition between alternative infrastructure of strong players with strategic interests superior to services based competition  Stimulates investment in network technologies, product and services innovation and pricing packages which do not exist with services based competition  Creates incentives for cost saving innovations, to become more cost efficient at network level, important in environment with rapid technological improvements  Create environment that enables talent, gives room to innovation, ensures rapid technology dissemination of R&D and reap dynamic efficiencies

13. DG Information Society 205-13 13 What do we need? (3) Legal certainty about regulatory treatment of technologies and systems  Stable and predictable regime and its enforcement should encourage investment  Risks for market players to be reduced to normal business risks

14. DG Information Society 205-13 14  375M people in EU (+100M from 2004)  150M households (with central Europe 190M)  About 20M SMEs  Powerline grid in Europe is the best in the world  Powerline grid is ubiquitous  Number of powerlines comparable with number of household and SMEs Some statistics* *Dec 2002

15. DG Information Society 205-13 15 How can PLC help to achieve Lisbon goals?  PLC may help to introduce facilities-based competition in the access network  PLC IP platform may help to keep development of the market horizontal  PLC may enable the individual to participate in eEurope  PLC can help enhance regional development (local municipalities can become TO)

16. DG Information Society 205-13 16 Who needs to do what? Market challenge is for market players (business case/model; partnerships..) Government and regulators: to create a regulatory level playing field for all technologies and remove regulatory uncertainties to protect the legitimate use of radio spectrum against harmful interference to encourage facility-based competition to create a dynamic and competitive growth environment which is sustainable in the long term