New regulation enabling Sweden’s digital agenda

Brussels, Robert LiljeströmApril, 2014

TeliaSonera Business Development2

Agenda

1. Sweden – Our situation and digital agenda

2. New regulation – EOI, only a first step

3. EOI – What does it mean in practice?

4. Implementation – Key success factors and risk

April, 2014

Vi

April, 20143

Swedish Digital Agenda: Best in the world in using the opportunities from the digitalization

TeliaSonera Business Development

TeliaSonera Business Development4

Challenging broadband target for a large country with small population

Sweden Germany

Population (million) 9 81

Area (000 km2) 450 350

Population density (per km2)

22 233

Cities over 1M pop. 1 (Stockholm) 4

Distances• North – South• East – West

1574 km499 km

876 km640 km

Other facts 73% of area is forest, lakes and mountains

April, 2014

Source: CIA world fact book; Wikipedia; visitsweden.se; travel-to-germany.net

40% of households to have 100Mbit/s

by 2015

90% of households to have 100Mbit/s

by 2020

Fiber driving growth of 100Mbps+ access

April, 2014 TeliaSonera Business Development5

2010 2011 2012 20130%

10%

20%

30%

40%

50%

60%

High speed broadband Coverage in Sweden

100 MbpsFiberCabel-TV

% of population

TeliaSonera Business Development6

Agenda

1. Sweden – Our situation and digital agenda

2. New regulation – EOI, only a first step

3. EOI – What does it mean in practice?

4. Implementation – Key success factors and risk

April, 2014

TeliaSonera Business Development7

Necessary to create a regulatory situation that enables deployment of fiber in increasingly expensive areas

April, 2014

Broadband target:

From 53% today to 90% 2020

Cost to deploy FTTH /SDU

Single dwelling units in Sweden

Increasingly expensive areas to deploy

Less expensive if optimal

deployment applied

TeliaSonera Business Development8

The regulatory challenge – From 1 access network (copper) to 200 local city networks (fiber)

April, 2014

City Networks(owned by

municipalities)Skanova

(Part of TeliaSonera)IP-Only

(private equity)

Geographical coverage 200 of 290 municipalities

National Plans to become a national fiber provider

% offering dark fiber% offering capacity

> 95 %> 80%

Yes No

YesYes

Annual investments (fiber access network)

1.5-2 billion SEK/year ~1 billion SEK/year Plans to invest 30 billion SEK in city networks

Estimated market share fiber (access)

66% 33%

A new regulation needed to secure access to relevant bottlenecks

9

A new regulation is necessary to enable investments and secure freedom of choice

April, 2014

1. Predictability and flexibility in pricing

Replace price regulation with increased non-discrimination(EOI)

2. Reduced cost for rolling-out infrastructure

New EU-directive. Secure access to civil infrastructure (electricity, water)

3. Access to relevant bottlenecks

SMP is replaced with “Symmetric access regulation”

Regulation enabling

• Investment in new infrastructure

• Freedom of choice for all consumers

EOI is only a first step

TeliaSonera Business Development

TeliaSonera Business Development10

Agenda

1. Sweden – Our situation and digital agenda

2. New regulation – EOI, only a first step

3. EOI – What does it mean in practice?

4. Implementation – Key success factors and risk

April, 2014

What will be different with EOI?

Same Product

- Same quality- Same

service(SLA)- Same contract

Same Price

- Same price list

- Same discount scheme

Same Informati

on- Same

interface for information

Same process

- Same order

interface,- Same process

from order to delivery

Same delivery

-Same delivery-Same

suppliers

Same billing- Invoice

generated in the same system

11 April, 2014 TeliaSonera Business Development

Same KPI´s that are measured in the same systems guarantee that EOI is working

= Not implemented today

Significant need for IT and process changes, in particular for Telia SP

April, 2014 TeliaSonera Business Development12

TS-TelSims

Current situation Wanted Position - EOI

TeliaSonera Business Development13

Agenda

1. Sweden – Our situation and digital agenda

2. New regulation – EOI, only a first step

3. EOI – What does it mean in practice?

4. Implementation – Key success factors and risk

April, 2014

TeliaSonera Business Development14

Clear scope of implementation of EOI is crucial – Risk of regulatory uncertainty during several years

• Clear scope of requirements to fulfill the coming 3 years (Not only EOI directive)

• Definition of limitations of scope. What is outside the scope for the coming 3 years?

• Clear rules regarding when and how price regulation will be lifted

• An economic replicable test that fulfills its purpose (not a new LRIC-model)

April, 2014

TeliaSonera Business Development15

Wrap-up

• A new regulation is necessary to achieve digital agenda targets

• Assuming PTS decision 2014 EOI finalized within 3 years

• Clear scope of implementation of EOI is crucial – Risk of regulatory uncertainty during several years

• EOI is only the first step. Long-term view and goal not defined – e.g. symmetric regulation

April, 2014

Thank you!