Dick Harris - 18/10/2004 - 1

EU policy for electronic communications:what does it mean for Turkey?

Richard Harris, DG Information Society

EU policy for electronic communications:what does it mean for Turkey?

Richard Harris, DG Information Society

TELKODER 2004 TELKODER 2004

Istanbul, 19Istanbul, 19thth October 2004 October 2004

TELKODER 2004 TELKODER 2004

Istanbul, 19Istanbul, 19thth October 2004 October 2004

18/10/2004 2

This sessionThis session

• EU opinionEU opinion

• News from EU, near future projectionsNews from EU, near future projections

• Data collectionData collection

• Accession negotiations?Accession negotiations?

18/10/2004 3

AgendaAgenda

A short talk from an EU point of view covering, A short talk from an EU point of view covering,

Turkey's formal relationship with the EU, what this Turkey's formal relationship with the EU, what this

means for telecoms, how this might be affected if means for telecoms, how this might be affected if

accession negotiations begin and, finally, some accession negotiations begin and, finally, some

current issues in the EUcurrent issues in the EU

• The context – commercialThe context – commercial

• A lost decade - 1990 to 2000A lost decade - 1990 to 2000

• What is the motive - who has the initiative?What is the motive - who has the initiative?

• Monitoring the marketsMonitoring the markets

• A topical issueA topical issue

18/10/2004 4

Context – 1990s telecommunications sectorContext – 1990s telecommunications sector

• Liberalisation of telecomms had already begunLiberalisation of telecomms had already begun

• The “Information Society” gained currencyThe “Information Society” gained currency

• GSM and Internet technology arrivedGSM and Internet technology arrived

• Remaining EU monopolies abolished 1Remaining EU monopolies abolished 1stst Jan 1998 Jan 1998

• GATS was made, including the telecomms annexGATS was made, including the telecomms annex

• For C&EE telecomms the rate of change was hugeFor C&EE telecomms the rate of change was huge

18/10/2004 5

Context – 2000 telecommunications and ITContext – 2000 telecommunications and IT

• Lisbon agenda - eEurope action plans Lisbon agenda - eEurope action plans

• Third generation mobile technology arrivedThird generation mobile technology arrived

• The Internet bubble burstThe Internet bubble burst

• 2002 package, designed for an open market2002 package, designed for an open market

• 10 new members joined the EU 110 new members joined the EU 1stst May 2004 May 2004

• Slow progress in TurkeySlow progress in Turkey

18/10/2004 6

Preparing for accessionPreparing for accession

• Abolition of monopolies in line with treaty obligations Abolition of monopolies in line with treaty obligations

or with GATS - whichever is sooneror with GATS - whichever is sooner

• Implementation of market opening and of an effective Implementation of market opening and of an effective

regulatory regimeregulatory regime

• Full transposition and implementation of the Full transposition and implementation of the acquisacquis

before accessionbefore accession

• Promotion of knowledge based economyPromotion of knowledge based economy

• Use of EU aid programmes where neededUse of EU aid programmes where needed

18/10/2004 7

Regular report - 2004Regular report - 2004

• There is a certain level of alignment with the There is a certain level of alignment with the acquisacquis..

• Full market liberalisation was achieved at the Full market liberalisation was achieved at the end of 2003 in legal terms.end of 2003 in legal terms.

• Further efforts are essential to complete the Further efforts are essential to complete the regulatory framework and to implement and regulatory framework and to implement and enforce the rules in relation to the large powerful enforce the rules in relation to the large powerful companies.companies.

• The progress achieved in some markets, such as The progress achieved in some markets, such as mobile telephony or internet service provision, mobile telephony or internet service provision, could not be achieved in all telecommunication could not be achieved in all telecommunication services.services.

• Turkey needs to take further steps in order to Turkey needs to take further steps in order to achieve genuine competition in all achieve genuine competition in all telecommunication markets. telecommunication markets.

18/10/2004 8

Monitoring the markets Monitoring the markets

• Annual implementation reports by the Annual implementation reports by the Commission – for Member StatesCommission – for Member States

• Monitoring of regulatory aspects for 13 Monitoring of regulatory aspects for 13 candidates is available as a multi-client candidates is available as a multi-client commercial servicecommercial service

• Monitoring of commercial aspects was done Monitoring of commercial aspects was done for two years under a special contract for 13 for two years under a special contract for 13 candidate countriescandidate countries

• Monitoring for the present 8 candidate and Monitoring for the present 8 candidate and potential candidates will start soon under a potential candidates will start soon under a special contractspecial contract

18/10/2004 9

Telecommunications market indicators

Telecommunications market indicators

Fixed lines per 100 inhabitants in EUCCs

35,6

70,0

36,5

34,7

35,7

29,7

30,3

54,8

31,1

19,2

28,9

41,7

28,3

36,5

69,0

39,1

37,4

34,9

29,3

24,7

54,7

34,1

20,0

26,8

41,8

27,3

0

10

20

30

40

50

60

70

BG CY CZ EE HU LV LT MT PL RO SK SI* TR

06/2002 06/2003

18/10/2004 10

Telecommunications market indicators

Telecommunications market indicators

Digitalization rate of fixed networks in EUCCs

22%

82%91%

84%90%

73%

83%

93%96%

0%

20%

40%

60%

80%

100%

BG CY CZ EE HU LV LT MT PL RO SK SI TR*

12/2001 06/2002 12/2002 06/2003

18/10/2004 11

Telecommunications market indicators - 30/6/2003

Telecommunications market indicators - 30/6/2003

Fixed-to-fixed (single transit) lnterconnection charge (€-cents)0,

82

1,62

0,89

2,40

2,61

3,63

1,12

2,14

1,07

No

t ap

plic

able

No

t ap

plic

able

No

t ap

plic

able

No

t ap

plic

able

EU average: 0,96

0,0

0,5

1,0

1,5

2,0

2,5

3,0

BG CY CZ EE HU LV LT MT* PL RO SK SI TR

?

18/10/2004 12

Telecommunications market indicators - 30/6/2003

Telecommunications market indicators - 30/6/2003

Comparison F-to-F I/C charge to local call price

31%

33%

59%

86%

93%

33%

46%

34%

42%

38%

33%

76%

78%

93%

52%

77%

48%

No

I/C

ch

arg

e

No

I/C

ch

arg

e

78%

42%

No

I/C

ch

arg

e

No

t ap

plic

able

0%10%20%30%40%50%60%70%80%90%

100%

BG CY CZ EE HU LV LT MT PL RO SK SI TR

local level single transit

?

18/10/2004 13

Telecommunications market indicators - 30/6/2003

Telecommunications market indicators - 30/6/2003

Fixed-to-mobile lnterconnection charge (€-cents)

11,5

9

18,5

3

15,2

1

9,64

22,1

6

17,9

5

19,4

8

Co

nfi

den

cial

Co

nfi

den

cial

16,0

4

3,08

13,3

1

16,8

0

EU average: 17,45

0

5

10

15

20

BG CY CZ EE HU LV LT MT PL RO SK SI TR

18/10/2004 14

Technological neutralityTechnological neutrality

• The 2002 regulatory framework applies regardless of The 2002 regulatory framework applies regardless of

the technology involvedthe technology involved

• This means that mobile operators can be regulated This means that mobile operators can be regulated

just as heavily as fixed operators if necessaryjust as heavily as fixed operators if necessary

• Another consequence of this is that radio technology Another consequence of this is that radio technology

can be used for basic fixed accesscan be used for basic fixed access

• Where fixed penetration is low, this could be very Where fixed penetration is low, this could be very

significant, especially for GSM operators and radio significant, especially for GSM operators and radio

based broad band servicesbased broad band services

18/10/2004 15

What next?What next?

• 1010thth Implementation report later this year Implementation report later this year

• Next EU enlargement in 2007Next EU enlargement in 2007

• New external agenda:New external agenda:

• EU candidates - BG, RO, TR, HR

• West Balkans - ALB, BiH, MK(FYRo), SCG

• Neighbourhood - Belarus, Moldova, Ukraine, Mediterranean

countries, Caucasian republics

• Russia – treated separately

18/10/2004 16

What might this mean for large operators?What might this mean for large operators?

• Liberalisation is not an end in itself (and not a formula Liberalisation is not an end in itself (and not a formula for making easy money).for making easy money).

• It is a key building block of the Information SocietyIt is a key building block of the Information Society

• NRAs will have the powers. To avoid heavy NRAs will have the powers. To avoid heavy regulation, large operators need to help policy makers regulation, large operators need to help policy makers without being forcedwithout being forced

• When EU ministers meet, they no longer discuss When EU ministers meet, they no longer discuss liberalisation – this is historyliberalisation – this is history

• They discuss cartels, spam, IPRs, the digital divide, They discuss cartels, spam, IPRs, the digital divide, universal service, eGovernment, how to promote universal service, eGovernment, how to promote broadband access and securitybroadband access and security

18/10/2004 17

What is the EU doing?What is the EU doing?

• Liberalisation of telecommunicationsLiberalisation of telecommunications

• One framework – many situations

• eEurope action plans – LisboneEurope action plans – Lisbon

• Education

• Content

• Trust and confidence

• National broadband strategiesNational broadband strategies

• Common elements of strategies

• Supply side policies

• Demand side policies

18/10/2004 18

Broadband penetration rates – EU15Broadband penetration rates – EU15

Broadband Penetration Rates

0%

2%

4%

6%

8%

10%

12%

14%

16%

BE DK DE EL ES FR IE IT LU NL AT PT FI SE UK EU15

% p

op

ula

tio

n

Q1 2003Q1 2004

Source: Commission services' estimates on the basis of data provided by Informa Telecoms Group (Sweden, 2004 from ECTA)

18/10/2004 19

Broadband penetration in the New Member States (January 2004)

Broadband penetration in the New Member States (January 2004)

Broadband penetration in the New member States (as of 1 January 2004)

1.4

1.0

4.3

2.0

1.2

3.5

0.3

3.0

0.2

0

1

2

3

4

5

6

7

CY CZ EE HU LT LV MT PL SI SK

Bro

adb

and

lin

es p

er 1

00 p

op

ula

tio

n

Broadband penetration EU 15

Source: COCOM (Provisional data). Data for EE refer to July 2003. LV: No data

18/10/2004 20

Broadband take-up by technology in the EU15 - July 2002 to January 2004

Broadband take-up by technology in the EU15 - July 2002 to January 2004

Figure 2 - Broadband take-up by technology in the EU 15July 2002 - January 2004

0

5.000.000

10.000.000

15.000.000

20.000.000

25.000.000

July 02 January 03 July 03 January 04

Source: Commission Services

Nu

mb

er o

f su

bsc

rib

ers

Total broadband

DSL

Cable

Other technologies

18/10/2004 21

Facility-based competition (January 2004)Facility-based competition (January 2004)

Figure 4 - Facility-based competitionJanuary 2004

PT

NL

DKBE

FI SE

AT

EL

IE

LU

IT

UK

ES

DE

FR

0%

10%

20%

30%

40%

50%

60%

70%

0% 2% 4% 6% 8% 10% 12% 14%penetration rate

shar

e o

f o

ther

tec

hn

olo

gie

s

Source: Commission services

18/10/2004 22

DSL and cable modem coverage in the EU15 (December 2003)

DSL and cable modem coverage in the EU15 (December 2003)

Figure 5 - DSL and cable modem coverage in the EU 15December 2003

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

National Urban Suburban Rural

DSL CableSource: IDATE

18/10/2004 23

Conclusions - broadbandConclusions - broadbandConclusions - broadbandConclusions - broadband

• Growth of broadband has acceleratedGrowth of broadband has accelerated

• Wide differences between countriesWide differences between countries

• Most growth is in DSL and cable TVMost growth is in DSL and cable TV

• Other technologies are in evidenceOther technologies are in evidence

• Competition stimulates growthCompetition stimulates growth

• Even rural areas have 50% accessibilityEven rural areas have 50% accessibility

• Scope for increased take-up is highScope for increased take-up is high

18/10/2004 24

What might all this mean for Turkey?What might all this mean for Turkey?

• The political dialogue continuesThe political dialogue continues

• Turkey needs success regardless of the EUTurkey needs success regardless of the EU

• Accession negotiations could be helpfulAccession negotiations could be helpful

• Turkey has some unique problems but there are Turkey has some unique problems but there are

useful lessons to be learned from elsewhereuseful lessons to be learned from elsewhere

• Continuous monitoring and comparisonContinuous monitoring and comparison

• Turkish authorities cannot be compelled by the EUTurkish authorities cannot be compelled by the EU

• Industry must be active and constructiveIndustry must be active and constructive

18/10/2004 25

What might all this mean for Turkey?What might all this mean for Turkey?

• Most important to achieve successful market openingMost important to achieve successful market opening

• Settle the future of Turk TelekomSettle the future of Turk Telekom

• Monitor progress in the EU, through the Cocom and Monitor progress in the EU, through the Cocom and

the newly emerging ERG/IRG networkthe newly emerging ERG/IRG network

• Fully implement 2002 Fully implement 2002 acquisacquis only when the only when the

liberalisation has achieved some maturity but, in any liberalisation has achieved some maturity but, in any

event, before accessionevent, before accession

• Meantime, make full use of the formal dialogue with Meantime, make full use of the formal dialogue with

the EU under the association agreementthe EU under the association agreement

18/10/2004 26

Thank you for your attentionThank you for your attention

richard.harris@cec.eu.intrichard.harris@cec.eu.int

For more information:For more information:

See - Europa web-siteSee - Europa web-site

18/10/2004 27

For more informationFor more information

europa.eu.int/comm/enlargement/index_en.html

europa.eu.int/comm/external_relations/

europa.eu.int/comm/world/enp/index_en.htm

europa.eu.int/information_society/topics/ecomm/index_en.htm

europa.eu.int/information_society/topics/ecomm/all_about/implementation_enforcement/annualreports/9threport/index_en.htm

europa.eu.int/information_society/topics/ecomm/all_about/international_aspects/main_areas_work/eu_enlargement/index_en.htm

europa.eu.int/comm/competition/liberalization/others/#telecom

trade-info.cec.eu.int/doclib/cfm/doclib_search.cfm?action=search

www.wto.org/english/tratop_e/serv_e/serv_e.htm